Novartis AG (NOVN) Earnings Call Transcript & Summary

Good morning and good afternoon. And welcome to the Novartis ESG Conference Call and Live Audio Webcast. [Operator Instructions] And the conference is being recorded. [Operator Instructions] A recording of the conference call, including the Q&A session, are available on our website shortly after the call ends. [Operator Instructions] With that, I would like to hand over to Samir Shah, Global Head, Investor Relations. Please go ahead, sir.

Thank you very much, and welcome to Novartis' Annual ESG Investor Call. Before we start, I'll just read you the safe harbor statement. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties and other factors. These may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. For a description of some of these factors, please refer to the company's Form 20-F and its most recent quarterly results on Form 6-K that respectively were filed with and furnished to the U.S. Securities and Exchange Commission. And with that, I'll hand across to our CEO, Vas Narasimhan.

Great. Thank you, Samir, and thanks, everyone, for joining today's conference call. As a company dedicated to reimagining medicine for patients around the world, our ESG efforts are a top priority for us as an executive committee, our Board of Directors and for all of our 108,000 associates. We're really pleased to be able to provide you an update today, both on the progress we're making and some new commitments we're making as well as we continue to endeavor to be a leader in our sector and hopefully, across sectors over time as a trusted partner to society. If we move to Slide 3. I just wanted to introduce the individuals we have with us on the call today: Patrice Matchaba, our Group Head of Global Health and Corporate Responsibility; Klaus Moosmayer, our Chief Ethics, Risk and Compliance Officer; and Shannon Klinger, our Chief Legal Officer. Moving to Slide 4. Over the course of the next few minutes, we'll be taking you through our overall ESG strategy and a general update. Patrice will take you through some of the important progress we're making on pricing, access to medicines and global health. Klaus will give you a deeper dive on our efforts on ethics, risk and compliance. And then after some concluding comments, we'll move to questions and answers. So moving to Slide 5. We've made important progress over the last 12 months across all of our ESG-related efforts. And I wanted to highlight a few of the key milestones that we've accomplished on this slide. First, with respect to ethical standards, I think importantly, we've resolved the material legacy compliance issues at the company. Of course, we will need to remain diligent in the future, but I think this is a very important step for us to put the past behind us and now look to building our new highly ethical organization powered by our unbossed, curious and inspired culture. Importantly, this week, we're launching a new code of ethics, which Klaus will tell you a bit more about. Now in the area of corporate citizenship, we've expanded our D&I efforts across the operations and are making important progress, which we'll describe to you, on gender equality in management, pay equity amongst other targets. And overall, our culture metrics are trending positively. With respect to pricing and access, one of the most exciting efforts we've had over the last year is the creation of our new sub-Saharan Africa strategy, which brings together all of Novartis into a single operating unit with the sole goal to expand access to medicines for the 1 billion people living in sub-Saharan Africa. Profits are not the priority for this group. The priority for this group is access to medicines, including access to our most innovative therapies. With respect to global health, we've made, I think, remarkable progress on our sickle cell effort, including the launch of a national sickle cell program in Ghana, which Patrice and I were able to attend; and now as Patrice will describe to you, important rollouts across sub-Saharan Africa and what is proving to be the first sustained effort to tackle a genetically inherited chronic disease on the continent. And then lastly, on the governance side, we continue to put in the framework we believe that will enable us to make progress on ESG for the long term. Importantly, we've strengthened the trust and reputation committee of our executive committee, which I chair. We are building a new ESG management office, which will report to me. And we also will be putting in place an external Global Health and Corporate Responsibility Advisory Board by the end of this year. So moving to Slide 6. I did want to say a word about our efforts on COVID-19. In case -- as I know, this is, of course, high on everyone's mind. In terms of our internal efforts, we've really ensured -- with respect to our people and our associates, we took a people-first approach to our response to COVID. We put in place additional paid leave, a strong child care assistance program. We've committed to no COVID-related layoffs in the company. And we've also now put in place a flexible working policy, which we call choice with responsibility, which allows our associates around the world to make the determination for the foreseeable future as to how they would like to work, whether in the office or at home. This is a real fundamental shift for us as a company, but I think fits with our overall cultural transformation. Now in terms of our response efforts, we've had a couple of major efforts that we've been focused on: first, a COVID response fund where we've distributed now $40 million to organizations around the world. Our pandemic response portfolio through Sandoz, which, today, we announced a new collaboration with the African Union to enable access to those medicines, which include dexamethasone, which is, I think, proven one of the more effective therapies for patients hospitalized with COVID, which will provide that group of medicines now to over 50 countries. We're very pleased with that collaboration and are committed to continuing to make that portfolio available to low- and middle-income countries at no profit to the company. In terms of finding new therapeutics to tackle the pandemic, we've been very active in all of the major collaborations for drug discovery, including code sharing the Gates COVID accelerator effort, making our compound libraries available. Our Phase III clinical trials continued their progress. Canakinumab in COVID has completed enrollment, and we expect to read out in the fourth quarter. Our ruxolitinib trial continues to progress. And we have 35 active investigator-initiated trials, looking at 20 Novartis medicines to see could we impact the pandemic. So overall, we continue our efforts to be part of the ecosystem, including making available our manufacturing sites where appropriate and supporting a broad range of efforts around the world. Moving to Slide 7. Now turning to our -- how ESG fits within our strategy. I think all of you now are well aware that ESG is a cornerstone of our overall Novartis strategy. We aim to be a leading medicines company powered by advanced therapy platforms and data science. Over the last years, we've focused where we want to play within Innovative Medicines through a range of deals, efforts and technology platforms. Now in each of our 5 priorities on how we want to win, 2 out of those 5 priorities are related to ESG, both unleashing the power of our people and building trust with society. Moving to the next slide. We continue to, I think, look carefully at our materiality assessment. This materiality assessment that you see before you was completed in 2016, and our core pillars of our ESG-related efforts come from our materiality assessment. We will be refreshing our materiality assessment over the coming year and of course, keep you updated on how these things evolve. But the 4 areas that we use as our framework are clearly linked to this materiality assessment. Now moving to Slide 9. We want to announce some new ambitious ESG targets, which you've likely seen through our press release earlier today, to increase access to medicine and achieve full carbon neutrality as part of our goal to be part of the solution for a healthy planet. First, with respect to the ethical standards, one of the key priorities now for us is on third-party assessments, and our goal is to conduct 100% of our suppliers to have those assessments complete by 2022. With respect to corporate citizenship today, we're announcing our goal to reach full carbon neutrality by 2030. This builds on our previous goal by 2025 to be carbon neutral in our own operation, scope 1 and 2. Now we expand this to scope 3 by 2030. With respect to pricing and access, we're announcing a goal to increase by 200% in patients reached with our innovative therapies by 2025 in low- and middle-income countries. And Patrice will talk more about the way we approach this. And then lastly, with respect to global health challenges, a 50% increase in patients reached through our various flagship programs. These last 2 targets in total could enable us to reach over 23 million patients around the world with our medicines. Now moving to the next slide. I'd like to now walk you through some of the highlights of each of these 4 areas before we go into a little more depth. So first, with respect to ethical standards, if you go to the next slide, we wanted to highlight the progress we are making now with respect to some of the rankings from the various ESG-related agencies. I hope many of you have seen our ESG index, which covers well over 300 specific ESG-related topics. We keep it updated to make it easy for all of you to understand where Novartis stands on the broad range of issues that are tracked by ESG-related agencies. You can see here, across many of the key agencies, we've made significant progress versus last year. In Sustainalytics, ISS ESG and FTSE4Good, we are ranked #1 in our respective sectors with important improvements. Still more work to do. We know we have to do even better. I think important progress as well with respect to CDP in climate and water. One area where we have not made as much progress as we would like is with respect to MSCI. We are in discussions with MSCI, and we have submitted a written objection with respect to the scoring, particularly as it relates to some of our legacy compliance and legal matters. So continued progress with respect to ESG-related rankings, and we'll continue to have this as a top area of focus. So moving to the next slide. When you look at corporate citizenship, I wanted to highlight on the next slide our continued progress that we're making with respect to achieving our goals and environmental impact. I think what's important to note is we track very carefully on an ongoing basis the progress we make with respect to climate, waste and water. You can see here that -- our progress towards our 2025 target. In climate, we've made about 14% and continue to work to accelerate that to reach our 2025 goals in scope 1 and 2. With respect to waste, already making very strong progress, primarily driven by our manufacturing operations. And lastly, with respect to water, we're continuing to make solid progress on reducing our consumption and very good progress with respect to reducing effluents from our manufacturing facilities. So overall, I think a very solid approach and more to do, but I think we have the right plans and teams in place. Now moving to the next slide. One of the other elements of our corporate citizenship goal relates to people, diversity and our role in society and ensuring diversity with respect to suppliers and clinical trials. I'll take each of these in turn. First, with respect to equity. Our gender pay gap continues to improve. You can see here that our gender pay gap in terms of median salaries, men versus women was minus 3.1%, so very good versus the benchmark. And you can see the mean is 3.6%. So our goal here will be to continue to be within the range, as close as we can, to true equality across -- equity across this particular metric. With respect to racial equity, we have an ongoing engagement. We had a Juneteenth seminar where we had a large number of participants in our U.S. organization, a day of reflection as well. We're scaling up our efforts in the United States with respect to this. But we have a lot more to do, and we'll look forward to really making concrete progress both in terms of how we support diversity within our own workforce, diversity with the organizations we work with, but also with a special focus on diversity within clinical trials and our ability to address some of the health inequities that exist within the United States. And lastly, with respect to LGBTI equity, another priority for us. We continue to make what I would characterize as excellent progress on this front, with our goal to really meet the UN standards for LGBTI workforce policies. In terms of inclusivity, you can see some of the metrics here. We're trending well towards our goal of 50% women in management, continue to be something we track very closely with targets for all of our top leaders and continuing to work as well to expand our efforts in inclusive leadership. And then lastly, I'll highlight on supplier diversity. We've taken some very concrete efforts to improve supplier diversity with continued expansion of those over time, as you can see, out to 2023. We're formalizing our effort to improve clinical trial diversity and address disparities of care. We plan to dedicate our U.S. foundation for Novartis -- to efforts to reduce disparities in care in the United States in black and brown communities. So moving to Slide 15. Now in terms of our culture journey, which has been a big priority for us, one of our top 5 priorities, you can see here across engagement, growth and learning and leadership and management effectiveness. We've had a trend break versus where we've been over the last few years, which I think highlights that the sustained effort we've made over the last 2.5 years is starting to pay off. You can see our engagement scores trending up to 80 with respect to Glint and versus benchmark, well ahead of the relevant benchmarks within our sector as well as beyond our sector. In terms of curiosity and learning, you can see here as well we continue to see very good progress. And importantly, in terms of how our leaders lead, we continue to see very good progress in the feedback -- upward feedback that our managers receive on their leadership behaviors. We plan to now take the next step in using advanced analytics to understand better how organizational culture can drive business performance. We plan to have a prototype of that released internally in 2021. And of course, we'll keep you up to speed on that moving ahead. Now moving to Slide 16, lastly on pricing and access and global health challenges. If you move to Slide 17, you can see here for us -- and this is, I think, at the heart of the matter for us as a medicines company. We believe that global health is where we can have and drive the largest and biggest lasting impact to society. And on Slide 18, I just wanted to highlight that this remains, I think, the challenge that all of us have to band together as a sector and we as Novartis want to be a leader, to really tackle the access challenge with 2 billion people having not -- still no access to basic medicines and health care. Some of the metrics you can see here, where we still have much work to do on leprosy, malaria and other neglected diseases as well as in chronic diseases like sickle cell disease. This is a place where we believe, with our portfolio, with our global reach, with our science-based innovation, with our passion for public health and global health, we can make a significant difference. So before handing it to Patrice, we wanted to share a brief video with you that highlights, I think, why we've taken sickle cell disease as one of the core platforms for us in global health. So if you please play the video. [Presentation]

So with that, I'd like to hand it over to Patrice Matchaba, our Global Head of Global Health and Corporate Responsibility. Patrice?

Thank you, Vas. If we start on Slide 20 there. We're really trying to show you that the access to medicines in low-income and middle-income has been a 20-year journey. We started off quite with a simple view, thinking that it's simply drug donation. But what we've managed to do in particular in 2014 with our emerging marketing brand, and I'll explain that, and the Novartis Access Principals and our reorganization of sub-Saharan Africa, we have made this a core part of our business, integrated in through the Innovative Medicines and Oncology and integrated with the generics. Now it seems easy, but it's actually an organizational and cultural shift that has taken us 20 years. And as you know, we've moved from -- in the Access to Medicine Index from #7 to #2. If you go to the next slide, the Access Principles, talking about the ESG and the governance part. We have full endorsement from the ECN and the Board and the trust and reputation committee that Vas had shared and integrated this into our drug development teams, that at the end of Phase II, all the 200, 300 teams that are developing medicines will ask themselves a fundamental question of whether their assets can be applied to a high disease burden in low income and middle income and if so, what are the price points and affordability and what health system strengthening is required. If you move to Slide 22, I'll give you just an example of what we call adaptive development. And this shows you why the cultural aspect of having teams that are inspired and unbossed is important. So if you look at the first example with Lucentis, there's a condition called the retinopathy of prematurity, and babies who are premature basically become blind because of the fragile vessels at the back of the retina. The current treatment is laser. Now there's no way you're going to have lasers in low-income clinics and hospitals around the world. And the team did a study of Lucentis versus laser, and Lucentis, as a result, now just a single injection is applied to these newborn babies to prevent blindness. Similar with Entresto. I used to lead the cardiovascular team developing Entresto. Well, the second most common cause of heart failure in South America is caused by a disease called Chagas disease. There are 6 million patients, and about 30% of them develop heart failure. In Colombia, it's the most common cause of heart transplantation. Chagas is discovered about 100 years ago, no clinical trials done. This is the first clinical trial that we -- that is being done in Chagas heart failure, to look at Entresto in Chagas heart failure. So that's a classical example of where teams now are allowed to look at the assets and answer the question about access in high disease burden countries. Slide #23. This, we executed on last year and created 1 sub-Saharan Africa unit. There were 7 different units operating there, 1 billion people, not totally organized. But now we have 1 unit that has access to the full portfolio from the Sandoz product, oncology product, the innovative medicine products and gene therapies. And this will allow us to double patient access in the next year or 2. Now I want you to look at Slide 24. This captures the success of our integration of access into our core business, which we started with the emerging market brands in 2014. And what I want you to see there, our target was 100 emerging market brands. These are the innovative brands. We're now with 277. The second category, you can see that in 2020 year-to-date, now we've reached 376,000 patients. The third category in terms of time to launch, this is critical because you really need a really efficient regulatory team that can do simultaneous dossier preparation, submissions and negotiation for labels. And as you can see with Piqray, we've now reduced the time of launch from the U.S. and launch in India 1 month after the U.S. and before Europe. This captures the journey -- the 20-year journey and the cultural change that has gone on in the business and permeated toward access. If you go to Slide 25. We now feel we have the right culture, the right organization and teams in place throughout innovative medicines, development and commercial that we want to stretch ourselves out. And for 2025, we are now targeting a 200% increase on patients who are on the strategic innovative therapies in low income and middle income. So from materiality analysis that Vas presented, which indicated that access is a material issue in developing countries, we're actually delivering on that, but more importantly, we are also discovering new markets that are sustainable. Now if you go to the next slide, and the build -- the team could build it up quickly, Slide 26. The Access Principles, we've applied it throughout the portfolio, and that is working well. And you want to be more ambitious. But -- however, we've discovered that there are certain diseases where there's a high disease burden but there's market failure. People just cannot afford those medicines. You know about our work in leprosy. We've been donating leprosy drugs for the last 20 years to the WHO as a sole donor. We started working now with Microsoft to add a diagnostic, working in Brazil and in India, so we can diagnose more patients with leprosy and give them prophylactic treatment in terms of contact. I'll talk more about malaria, we know we've been in the malaria space now for the last 50 years, and the work that we are doing there. Chagas, I just talked about, the first randomized controlled mobility -- cardio mobility trial in 100 years. And I'll elaborate on the sickle cell. And again, here, because of the structure and the cultures and the teams that we've put into place, we're going to stretch ourselves and say we want to increase patient reach in these key flagship programs with disease burdens by 50% by 2025. So that is captured in Slide 27. And we are confident we can do it because, as I said, this has been a cultural capability build over the last 20 years. We have the right teams in place. We have the sub-Saharan structure in place, and we've started creating ecosystems as a global leader. And I'll illustrate that to you when I talk about sickle cell. If you go to Slide 28. Now this is important in the context -- the experience of COVID shows us that any infections -- or what we used to consider neglected tropical disease or infections that are okay in 1 country can easily spread throughout the world and impact not only health but wealth. Malaria, if you look at the numbers, 228 million cases per year, over 405,000 cases (sic) [ deaths ] per year. And the majority of them, about 270,000 are children. This is a yearly occurrence. Now put that in the context of COVID. So it is really important -- when I started practicing about 30 years ago, we started with quinine and then there was resistance. Then there was chloroquine. Then there was Fansidar. And we came with a combination with Coartem. So we have 3 assets in preparation. In case there is resistance to malaria globally, we would have the efforts to apply and also prophylactic treatment and simplify the doses. Slide 29 just shows Caleb again, who you saw in the video that Vas showed. The message there is this, sickle cell is the #1 cause of strokes for children in sub-Saharan Africa. Over 1,000 children are born with sickle cell disease. Only about 20% of them make it beyond 5 years. They die from infections and they die from strokes. So if you move to Slide 30. I'll leave the team to build it up. Because of our innovation power, if you start where we have the sickle cell, the diagnostic, all newborns should be screened. And that already is ahead of -- because not all babies are born in the central hospitals. So we partnered with our Biome team with veteran diagnostic company coming out of California called Hemex that can do diagnosis on blood within 10 minutes and also do a malaria diagnosis. All babies that are now being screened are put onto an app, that's the Dimagi app, and that is structured data. It allows us then to apply machine learning and understanding which profile of patients, despite getting hydroxyurea, are still having crises and clotting. We've started manufacturing hydroxyurea and making it available. And because of our efficiencies, the price has dropped down by 70%. We have a pediatric formulation. We've applied our own anti-counterfeit technology that does spectrophotometry in Ghana. You know we've been working with Zipline to work out delivery to the last mile. And our SEG101 product would be undergoing clinical trials, and we've applied for -- we are going to apply for market approval so that it's available there. The key issue here though is both Gates and the NIH -- and there's a lot of people that are working on gene therapy. This is a simple gene therapy. And the key issue here is to keep these children alive with hydroxyurea and SEG101 so that when gene therapies do come, they can have access to that. And now we've partnered with 4 African countries to make it real. Now the last slide, Slide 31. I think COVID has given us -- all of us a wake-up call. You do know that we have the Novartis Institute of Tropical Diseases. I just wanted to call out one disease that has been there for some time, dengue, which is passed on by the Aedes mosquito. If you look at the numbers there, almost a 500% increase in Brazil, Singapore; 1,200% in Cambodia. Global warming is going to change global health and diseases. And this one, in particular, dengue has no treatment so we are working on an asset which is an NSB4 (sic) [ NS4B] which impacts all 4 serotypes. You look at the numbers there, 390 million people infected; then those who develop fever, about 20%. But key there is about 2 million to 3 million develop life-threatening complications not too dissimilar from COVID and almost 40,000 patients die. No current treatment as we are progressing with that. So with that, I will then transfer to Klaus to talk on ethics, risk and compliance.

Thank you very much, Patrice. If you go to Slide 33, please. That's the 4 areas I want to do a little bit of deep dive in the next couple of minutes. So let's talk about how do we embed ethics and human rights in our systems at Novartis, how do we do an innovative integrated enterprise risk management, how do we approach the challenges of modern third-party risk management and, of course, about our operational compliance. Let's start with the next slide, with the ethical inspirational level, I would say. So as we talk today, we have launched our new code of ethics 1st of September, our commitment to doing what's right. This code of ethics replaces the nearly 10-year-old Code of Conduct Novartis had in place. So this is -- to put in easy words, that's the ethical constitution of the company. The code of ethics has 2 key elements, 4 principles and 22 statements and commitments, what's important for the organization from an ethical point of view. So we approached the new code of ethics in a completely different, I may say disruptive way in the company. So we listened to our associates. So we included thousands of associates via digital platform, town hall, feedback rounds, roundtables, workshops to create -- co-create our new code of ethics. And it's, of course, also a policy in a document, but it's much more embedded into an ethical decision-making framework, interactive, which is accessible to all associates around the globe, where they can test their own biases, where they get material ethical conversations in dilemma situations, where they can put own dilemma stories to support other associates. And it's also very -- from a practical point of view, a one-stop shop because, as I said, it's a constitution of our policy, so to say, but you can get from each of the commitments -- whether it's anti-bribery, animal welfare, health and safety environment, diversity and inclusion and many others, you can go directly to the respective policies the company has in addition to the code of Ethics. So we have the EthicsWeek this week. We had the kickoff yesterday with our CEO and colleagues and the Executive Committee. We had more than 12,000 colleagues active in the kickoff event. We have, in this week, all the external speakers from the OECD, the United Nations, the World Economic Forum and renowned academics who are also giving their voice to our launch of the code of ethics. If you go to the next slide, of course, building on the code of ethics with our professional practice policy, which was put in place a couple of years already. It was a big, big shift in the way -- how we handle compliance and the company, moving away, although being aware we are working in a heavily regulated industry, from pure policy and SOP point of view to a principle-based decision. So each of these principle-based policies, of course, have their own guidelines, their trainings, but it's really fitting very well to our code of ethics, which is more than just policies and guidelines, but also the question of why are we doing this and how can I get support. Of course -- and we're coming now to the risk management on the next slide. Good policies are based on an innovative effective risk management. So we're now in the second year of our new Novartis risk compass system. And we have put this compass in place to give structure in our bottom-up approach for risk management. So we discuss it on all levels, on country level, management level, divisional level, corporate level, strategic risks for the company, operational risks, emerging risks and awareness risks. And next week, we have our global risk workshop at Novartis where we put all this information we gathered over the year from the different levels of management and associates in the company together and to define our risk corners for the Executive Committee and for the Board, especially there for the risk committee. And just to remember, one thing that is, of course, important is assessment, but mitigation, clear accountability, monitoring and review of the risk it has detected and continuous control is of essence. And this leads over to our more holistic way of how we want to do risk management. Next slide, please. Because we're linking the risk management to our one Novartis policy and guidelines and internal controls. It means the risks should be covered by good policies and guidelines. And these good policies and guidelines have to be covered by comprehensive, holistic set of internal controls and is underpinned by the very clear accountability and responsibilities to come to a high assurance level. So for us, it fits all together, the ethics, the constitution, the good policies, the innovative risk policies and control framework. And now coming to a focus topic, coming towards the end of the presentation. Next slide, please. It's one topic which is absolutely on the front of many, many questions we are receiving. Certainly, it's on your plate. It's about third-party risk management because that's a risk which is more difficult to control for companies because it's about third parties, but the company as a whole is responsible from a reputation, sometimes from a legal point of view for the actions of the third parties. So what we have done at Novartis following our one Novartis approach on ethics and policy and risk management is to have one third-party risk management. You see here on this slide we have combined on 1 platform our different risk assessments for third parties we have in place. That's, of course, substantial work. You see we have more than 1,000 supplier assessment per month, and this all needs to be done in a diligent way. And if you go to the next slide, you see the system behind. That's -- although we have different risk areas, we have 1 standard. We have 1 responsible owner. Of course, that's the business ultimately. And then a very important rule, which is of extreme importance in practical life, no risk assessment, no contract. It sounds easy, but that's the basis to get discipline in the organization. One framework, there's no other framework in our third-party risk management framework. And of course, remain vigilant means ongoing monitoring and audits of the third parties. And then closing on something which I believe is, on the next slide, on the hearts and minds of all of us, being a business, being family, people and society. That's about human rights management. And we know how difficult this is because we have challenged situation. But what we have done here in the company is we have embedded human rights management in our governance structure and in our diligence -- due diligence structure and third-party risk management. So we are conducting embedded human rights diligence in our third-party risk management. We do deep dive human rights assessments in specific high-risk areas and countries. We do a certain and increasing amount of training and awareness. We do also strategic rights promotion in areas we believe we need to have specific focus and stakeholder engagement. And that's important because we need a level playing field on this. So 2 things I want to highlight here. First of all, in times of COVID, that's a real human rights challenge. We need to take care, to the extent possible, that our suppliers treat their associates and employees the same way as we do this at Novartis. So we developed COVID-19 protection guideline for our suppliers. And we said let's do a bold move and give it out for free to the whole world. So via the business association, the OECD and others, we have given this standard we develop internally for free to hundreds of companies who have implemented this in their system. The other last topic is we can only win together. So we are a founding member and the long-term chair of the Pharmaceutical Supply Chain Initiative. There, we do not only standards in human rights for 47 pharmaceutical companies around the world, we are also engaged in the stakeholders. We are doing on-site projects, for example, in India to also have really, really results on the ground. So closing here with the human rights management, which is a part of our integrated efforts in ethics, risk and compliance. Thank you.

Thank you, Klaus. So just in closing, if we go to Slide 42, we want to emphasize that we take progress on these initiatives very seriously. So we have our mid- to long-term targets across all of the 4 areas. And then we have annual targets, and these annual targets are embedded in my CEO scorecard, embedded in the relevant Executive Committee members' scorecards and then ultimately driven down through the organization. You can see some of the examples here for our 2020 targets across access to medicines, global health and environment. And we, of course, have these across the full range, and we'll transparently publish them in our annual report. And they, of course, all link up to our mid- to long-term goals. I think that demonstrates the level of commitment that we have in the company. And maybe that's what I'll close with. If you go to the next slide. I hope this has given you a sense of the breadth, depth of the commitment that we have as a company towards being a leader in ESG and importantly, a leader in access to medicines around the world. The picture you see here was taken at the launch of our sickle cell effort in Accra, Ghana, which was attended by the vice president of Ghana, the minister of health, the head of the Ghana health service. But most importantly, attended by -- the children that you see here are all sickle cell sufferers. It was a launch of what we hope will become a very innovative program to tackle this challenge for millions of children across the continent. But I think it also demonstrates the passion that we feel as a company, that we feel as an executive team to really make a difference for the world. We do these things because we believe that they are the right things to do. It's, of course, nice to have better scores and all of the other elements, but we do them because it fits with the purpose of Novartis to reimagine medicine, it fits with our belief that we need to be leaders in doing the best we can for patients all around the world. So we'll stop there and open it up for questions. Operator?

[Operator Instructions] The first question is from the line of Keyur Parekh from Goldman Sachs.

Two, please. Klaus, you mentioned about kind of setting up a new Board kind of for your global health and corporate, kind of risk Board. I was wondering if you might be able to give us a bit more flavor of what kind of you aim to achieve with that Board. And what is the kind of people you would like to have on that Board? And then secondly, kind of as you think about risk measures in the world of COVID, kind of with a lot of your employees potentially kind of working from home or having kind of flexible working arrangements, can you give us a sense for kind of what extra measures you are taking currently from a compliance perspective or from a control perspective to try and assess the incremental risk of people potentially not being in the office for a long time?

Thanks, Keyur. Nice to hear from you. So I think on global health -- the global health CR advisory Board, maybe, Patrice, you want to take that question.

Yes. Thank you for that question. Now when you look at where we've implemented our global health programs, so we are in South America, we're in Africa, we're in Asia. It is really important that we include people who understand that ecosystem well, that's the first thing, both from a disease perspective but also from a supply chain perspective, also from a talent perspective. The second category of people that we will be looking at are people who understand the use of technology as an enabler for diagnosis and access. As you know, in East Africa and Asia, the uptake of technology in the financial sector, the agricultural sector has actually been way ahead of a lot of countries in the north. So having someone who understands that also would be critical. And then finally, the FMCG companies understand these markets much better than we do. They understand the supply chain and the barriers and access right to the last mile. So having people who've worked in that area is going to be critical. The intention is to have the Board members finalized by the end of the year, and we will communicate this to you, who the Board members are.

Thanks, Patrice. And on the COVID-related risk measures, I'll make a few comments and perhaps Klaus may want to add as well. I think first, we've really endeavored to separate the world of office-based associates from those that work in our manufacturing sites as well as in our labs. We continue to provide, I think, as rigorous public health protection measures as we can to those associates who need to be in the work site but then also ensuring that we maintain our operations. And I think we've been largely successful at that in terms of delivery of medicines, clinical trial performance as well as continuing to meet the needs of customers and patients. So we feel good with where we are, but also aware that we need to stay diligent as the environment evolves. Now for those associates who have flex -- who have the potential for flexibility, we made the decision a few weeks ago to announce a new policy, which we call choice with responsibility, which gives the associates the power to decide do they want to work in the office or do they want to work at home. We feel sufficiently confident with our IT technology as it's performed thus far over the course of this year that we can work seamlessly in a more "distributed" way. So we provide the associates flexibility as long as they're within their home country. We are providing support to those associates at certain managerial levels and at the lower levels within the company with financial support to enable them to have an appropriate home office setup. And then we're collecting data to understand better how is this working with respect to the effectiveness of these teams, how much are campuses being used and how do we have to reshape the work site at the campus. And then when people do come to the campus, we have rigorous cutoffs in terms of the epidemiology in a given country, which drives what measures that we're taking. For example, here in Switzerland, as the cases evolved, we've changed the policy here on campus in terms of meeting room use, masks, et cetera. And this is just happening on an ongoing basis, largely under the oversight of Klaus' team. Klaus, anything you'd like to add?

Yes, very quickly only. I mean our management setup for the risk management has proven, I would say, quite effective. So we have a Novartis emergency management, a business continuity organization. And the big value of this organization is we have all relevant work streams there together. So we have the colleagues manufacturing in there. We have Novartis Business Services in there; the chief medical officer in there; Shannon Klinger, our counsel, in there. We have our P&O Head, Steve Baert, in there and the colleagues here from my organization, from ethics, risk and compliance. And this structure, which is broken down on a division and country level, was greatly effective because we could immediately align on upcoming risks. When we saw, for example, supply issues upcoming, we could immediately come together, get the right solution. We could decide on certain situations how to react to lockdown in countries. And closing on this, we have a very effective group of country presidents, which is very well organized, and that's a very important team for us because, especially after the initial more centralized risk management, the countries needs to also be in charge of the local risk management for COVID-19. And the country presidents did a great job over time to embrace this responsibility.

Thank you, Klaus. Thank you, Keyur.

The next question is from the line of Daniel Wilkinson from Morgan Stanley.

I was wondering if you could talk to how important the ownership of Sandoz alongside innovation medicines is in terms of the pricing and access for the group as a whole. And then also with the next wave of biosim opportunities, emerging this decade from insulin, first-generation immunology, first-generation immuno-oncology, how significant could the biosimilar business become for the group more broadly?

Sandoz plays -- thanks for the question. Sandoz plays a very important role when you look at Novartis overall. I mean we produce over 800 million doses -- sorry, over 70 billion doses a year of medicine, 800 -- reaching 800 million patients. And roughly 70% to 80% of that, depending on the year, comes from Sandoz. In terms of our overall reach, Sandoz, of course, plays an important role. At the moment, we are integrating our efforts within Africa and within our overall access portfolio. So we take a company-wide approach rather than having a divisional approach. That was the reason to bring together our sub-Saharan African unit under 1 roof, so that a country could access the full breadth of Novartis' innovation as well as generic medicines in one place and really focus on access over profits in that case. In the case of COVID, we've had 2 Sandoz initiatives that have been highly -- high impact. One is the decision to maintain, for essential medicines, our pricing before the pandemic, through the pandemic so that there was no distortions that enable inhibited countries from getting access to medicines. And then more recently, our COVID response portfolio, which we are making available at no profit and as I mentioned and you may have seen, is now one of the, I think, pioneering partners with the African Union to make critical medicines available, including dexamethasone. So Sandoz plays an important role. Patrice mentioned hydroxyurea, which we make available at low cost, and we're trying to lower the cost further to companies -- to countries across sub-Saharan Africa. That, of course, is also a Sandoz-produced medicine. But we try to integrate the effort. We try to take a company-wide approach to our approaches to global health. Specifically on biosimilars, we do have a broad portfolio of biosimilars. We continue to remain committed to being a leader in biosimilars, not only in the first wave that we're sort of seeing the end to right now, but then the next wave of biosimilars through 2023, '24 to 2030 and beyond. We believe biosimilars can be a powerful force, as we've seen in Europe and other parts of the world but hasn't fully materialized in the U.S., to really remove costs from the health care system so that those resources can go towards the next waves of innovation. So we remain committed internally but also externally with partners in areas like insulin, some of the areas that you mentioned. And I would say also Sandoz is working to bring biosimilars as well to emerging markets around the world where appropriate. So thanks for this question.