Novartis increases dividend by 25% based on strong 2008 results from strategic healthcare portfolio

* Sustained momentum during 2008 from continuing operations

* Net sales rise 9% (+5% in local currencies) to USD 41.5
billion on accelerating growth in Pharmaceuticals along with
important contributions from Vaccines and Diagnostics and
Consumer Health

* Operating income advances 32% to USD 9.0 billion

* Net income up 25% to USD 8.2 billion, impacted by a higher
2008 tax rate and start of financing costs for 25% Alcon stake

* Basic EPS rises 28% to USD 3.59 from USD 2.81 in 2007

* Sustained R&D productivity with 14 major regulatory submissions
in 2008, led by Afinitor (US/EU), QAB149 (US/EU), ACZ885 (US/EU)
and Menveo (US/EU)

* Dividend of CHF 2.00 per share proposed for 2008, a 25% increase
from 2007 and representing a payout of 53% of net income from
continuing operations

* Record results expected again in 2009 in an increasingly
challenging environment

Key figures - Continuing operations

Full year

2008 2007 % change
% of % of
net net
USD m sales USD m sales USD lc
Net sales 41 459 38 072 9 5
Operating income[1] 8 964 21.6 6 781 17.8 32
Net income[1] 8 163 19.7 6 540 17.2 25
Basic earnings per share USD
USD 3.59 2.81 28

Fourth quarter

Q4 2008 Q4 2007 % change
% of % of
net net
USD m sales USD m sales USD lc
Net sales 10 077 9 931 1 8
Operating income[1] 1 680 16.7 897 9.0 87
Net income[1] 1 507 15.0 931 9.4 62
Basic earnings per share USD
USD 0.66 0.41 61

[1] Operating and net income in 2007 include exceptional charges of
USD 1 034 million (USD 788 million after tax) for a Corporate
environmental provision increase (Q3: USD 590 million) and Forward
restructuring (Q4: USD 444 million). Q4 2007 results only include the
Forward restructuring charge (USD 325 million after tax).

Basel, January 28, 2009 - Commenting on the results, Dr. Daniel
Vasella, Chairman and CEO of Novartis, said: "Thanks to successful
innovation and a leading market position of our healthcare business
portfolio, Novartis achieved a strong performance in 2008.
Pharmaceuticals returned to dynamic growth and gained market share in
the second half of the year, while Vaccines and Diagnostics continued
its double-digit growth. Recently launched pharmaceutical products
contributed USD 2.9 billion in sales in 2008 further rejuvenating our
portfolio, and we submitted 14 major new products filings that
underpin our innovation power. Organic growth was complemented by
several acquisitions and strategic investments, the most important
being the acquisition of a 25% share of Alcon. Novartis anticipates
another year of record results in 2009, continuing on its path of
sustainable growth."

OVERVIEW

Full year
Pharmaceuticals led the strong performance supported by contributions
from Vaccines and Diagnostics and Consumer Health. Net sales rose 9%
(+5% in local currencies, or lc) to USD 41.5 billion. Higher sales
volumes provided six percentage points of growth, while positive
currency translation added four percentage points. Price changes had
a negative effect of one point, while acquisitions had no impact. The
US remained the Group's largest country market with 31% of net sales
in 2008 (34% in 2007). The European region increased its contribution
to 44% of net sales (42% in 2007), while the rest of the world
provided 25% (24% in 2007) of net sales.

Operating income advanced 32% to USD 9.0 billion due to the solid
business expansion as well as productivity gains from Forward, the
Group's efficiency initiative that is freeing up resources for
investments in innovation and expansion in high-growth markets. The
2007 results included exceptional charges of approximately USD 1.0
billion (USD 590 million for a Corporate environmental provision
increase and USD 444 million of Forward restructuring charges).
Excluding these two charges, operating income rose 15% in 2008.

Net income grew 25% to USD 8.2 billion in 2008, rising at a slower
pace than operating income due to an unusually low tax rate in 2007
that included various one-time factors. Also affecting net income
were the start of financing costs in July 2008 for the acquisition of
a 25% stake in Alcon Inc. The agreement with Nestle S.A. provides
future rights to majority control of Alcon, the world leader in eye
care. Excluding the exceptional charges for the environmental
provision and Forward, net income rose 11%. Basic earnings per share
grew 28% to USD 3.59 from USD 2.81 in 2007 on fewer outstanding
shares.

Fourth quarter
Dynamic results from Pharmaceuticals and Vaccines and Diagnostics
secured the Group's excellent performance, with net sales growth of
1% (+8% lc) reflecting the severe negative impact of volatile
currency markets. Higher sales volumes provided nine percentage
points of growth, but negative currency translation reduced sales by
seven percentage points. Price changes across the Group had a
negative impact of one percentage point.

Operating income surged 87% to USD 1.7 billion on the business
expansion and amid increasingly challenging economic conditions,
aided by productivity gains across the Group. Excluding the USD 444
million Forward restructuring charge in the 2007 quarter, operating
income rose 25% in the 2008 quarter, a pace well above net sales
growth.

Net income was up 62% to USD 1.5 billion, as non-operating income
contributions were reduced mainly by financing costs for the 25%
Alcon acquisition. Excluding the year-ago Forward restructuring
charge, net income rose 20% in the fourth quarter of 2008. Basic
earnings per share (EPS) rose 61% to USD 0.66 from USD 0.41 in the
year-ago period.

Investing to achieve sustainable growth
Novartis has made significant progress in recent years to focus and
strengthen the Group's healthcare businesses, stepping up investments
in innovation, expanding in high-growth markets and improving
operational efficiency.

These remain top priorities for the strengthened leadership team of
Novartis in 2009 with targets set to deliver superior growth, achieve
more productivity gains, further improve cash flow management and
bolster the product portfolio.

Novartis completed a series of targeted acquisitions and strategic
investments in 2008, led by the purchase in July of a 25% stake in
Alcon Inc. (NYSE: ACL), the world leader in eye care, from Nestle
S.A. The USD 10.4 billion cash purchase is part of an agreement
providing future rights to take majority ownership. In the optional
second step, Novartis can acquire, and Nestle can sell, the remaining
52% Alcon stake held by Nestle between January 1, 2010, and July 31,
2011, for up to USD 28 billion. Also in 2008, Novartis acquired
Speedel Holding AG of Switzerland, gaining full control over future
development of the novel antihypertensive Tekturna/Rasilez. In
addition, the acquisition of Protez provided access to the
development project PTZ601 for severe bacterial infections. Novartis
also advanced its respiratory drug delivery capabilities through the
acquisition of Nektar Therapeutics' pulmonary business, which was
completed at the end of the year.

Sustained investments in innovation are providing better preventive
and therapeutic options, with the Group's medicines touching the
lives of an estimated 850 million people in 2008. Novartis completed
14 major submissions in the US, Europe and Japan during 2008.
Afinitor, a potential breakthrough for advanced kidney cancer, was
among three Novartis submissions that the US Food and Drug
Administration (FDA) accepted in 2008 for priority review. The
vaccine Menveo for protection against four meningococcal meningitis
serogroups was submitted in 2008 for US and EU approval and initial
use from ages 11-55, with late-stage trials in infants continuing to
support future submissions. Other submissions included QAB149
(US/EU), a once-daily bronchodilator for chronic obstructive
pulmonary disease (COPD) and planned to become a cornerstone for
future combination therapies; the antibody ACZ885 (US/EU) for initial
use in targeted autoimmune diseases such as Muckle-Wells Syndrome;
and a single-pill combination of the high blood pressure medicines
Diovan and Tekturna/Rasilez (US).

Novartis is expanding in high-growth markets with a longer-term
perspective, particularly among the leading emerging markets of
Brazil, China, India, Mexico, Russia, South Korea and Turkey. The
Group's net sales from these seven markets rose 18% lc to USD 4.3
billion in 2008. Emerging markets across the world generated net
sales growth of 13% lc to USD 10.0 billion, rising faster than
established markets to represent 24% of net sales in 2008 compared to
22% in 2007.

Operational efficiency initiatives have made rapid progress to
improve speed, flexibility and productivity while freeing up
resources. Forward, a Group-wide project launched in December 2007,
provided annual cost savings of approximately USD 1.1 billion in
2008, exceeding the target of USD 670 million, that included
procurement savings ahead of plan. Further significant cost savings
are expected in 2009, and the 2010 cost-savings target of USD 1.6
billion (compared to 2007) will likely be exceeded.

Ahead of the anticipated loss of patent protection for Diovan
starting in 2011 in Europe, and in 2012 in the US, Novartis is
investing in three focused areas to help drive growth through this
period for the Group as well as the Pharmaceuticals Division. Goals
of these investments: (1) Accelerate the Oncology pipeline, including
faster expansion into new indications; (2) accelerate growth in
targeted emerging markets by building up commercial organizations;
and (3) accelerate and broaden indications for 13 major pipeline
projects in General Medicines.
These targeted actions build on expectations for ongoing dynamic
growth from recently launched products, which contributed USD 2.9
billion of net sales in 2008, as well as current expectations for the
approvals and fast uptake for a number of projects now in late-stage
development.

25% increase in dividend proposal for 2008
The Board of Directors proposes a dividend payment of CHF 2.00 per
share for 2008, a 25% increase from the dividend of CHF 1.60 per
share in 2007. Shareholders will vote on this proposal at the next
Annual General Meeting on February 24, 2009. This marks the 12th
consecutive increase in the dividend paid per share since the
creation of Novartis in December 1996. If approved by shareholders,
dividends paid out on the outstanding shares will amount to
approximately USD 4.3 billion compared to USD 3.3 billion in 2007.
The payout ratio for 2008 is estimated at 53% of the Group's net
income from continuing operations. Based on the year-end 2008 share
price of CHF 52.70, the dividend yield rises to 3.8% from 2.6% in
2007. The payment date for the 2008 dividend is set for February 27,
2009. All issued shares are dividend bearing, with the exception of
190.5 million treasury shares.

Group outlook
(Barring any unforeseen events)
Novartis expects another year of record net sales and earnings in
2009, targeting superior growth in a challenging environment. The
Group's net sales are expected to grow at a mid-single-digit rate in
2009, while Pharmaceuticals net sales are expected to grow at a mid-
to high-single-digit rate, both in local currencies.

BUSINESS REVIEW

Full year

Net sales

2008 2007 % change
USD m USD m USD lc
Pharmaceuticals 26 331 24 025 10 5
Vaccines and Diagnostics 1 759 1 452 21 20
Sandoz 7 557 7 169 5 1
Consumer Health continuing operations 5 812 5 426 7 4
Net sales from continuing operations 41 459 38 072 9 5

Pharmaceuticals: +10% (+5% lc) to USD 26.3 billion
Accelerating momentum in Pharmaceuticals in 2008 was driven by
ongoing dynamic growth in Oncology, sustained expansion of the
cardiovascular portfolio and USD 2.9 billion of contributions in 2008
from recently launched products including Aclasta/Reclast,
Tekturna/Rasilez, Exforge, Exjade, Lucentis, Exelon Patch, Tasigna
and Xolair.

Outside North America, all regions achieved solid performances:
Europe (USD 10.1 billion, +10% lc), Latin America (USD 1.7 billion,
+8% lc), Japan (USD 2.6 billion, +4% lc) and rest of the world with
USD 2.6 billion (+15% lc). The priority emerging markets of China,
Russia, South Korea and Turkey together delivered more than 20% lc
net sales growth. In the US, net sales fell 2% to USD 8.6 billion,
returning to growth in the second half of 2008 and nearly offsetting
the 2007 impact of generic competition and the Zelnorm suspension.

Oncology (USD 8.2 billion, +14% lc) growth was led by Gleevec/Glivec
(USD 3.7 billion, +15% lc). Other products achieving annual net sales
of more than USD 1 billion were Zometa (USD 1.4 billion) as well as
Femara and Sandostatin (each USD 1.1 billion). Cardiovascular
strategic products (USD 6.7 billion, +10% lc) advanced on gains from
the new medicines Exforge (USD 406 million) and Tekturna/Rasilez (USD
144 million), which together provided over half of the franchise's
incremental growth, while the Group's flagship product Diovan (USD
5.7 billion, +10% lc) expanded at a steady pace.

Top performers among recently launched medicines included the
once-yearly osteoporosis therapy Aclasta/Reclast (USD 254 million),
the age-related macular degeneration drug Lucentis (USD 886 million)
and the addition of Exelon Patch, a skin patch formulation for
Alzheimer's disease that has reinvigorated the Exelon franchise (USD
815 million).

Vaccines and Diagnostics: +21% (+20% lc) to USD 1.8 billion
Deliveries of H5N1 pandemic influenza vaccines to the US government
and steady growth in diagnostics led the expansion. Additional growth
came from components sold for use in pediatric vaccines, all of which
more than offset lower US seasonal influenza vaccine sales.

Sandoz: +5% (+1% lc) to USD 7.6 billion
Modest growth was achieved as improving performances in many markets
were largely offset by a 10% decline in the US on a lack of new
product launches in 2008. Central and Eastern Europe advanced 13% lc,
with Russia at the forefront. Germany rose 2% lc, leading to 2.5
percentage points of market share gains to 26.4% in fast-changing
industry conditions. Canada, Turkey and Brazil were among other
top-performing markets.

Consumer Health continuing operations: +7% (+4% lc) to USD 5.8
billion
All businesses delivered higher sales in deteriorating market
conditions, particularly CIBA Vision thanks to new product launches.
OTC grew dynamically in emerging markets, while US sales declined due
to changes in consumer spending that have affected this industry.
Animal Health growth came from expansion of the companion animals
business.
Operating income

2008 2007 Change
% of % of
net net
USD m sales USD m sales %
Pharmaceuticals 7 579 28.8 6 086 25.3 25
Vaccines and Diagnostics 78 4.4 72 5.0 8
Sandoz 1 084 14.3 1 039 14.5 4
Consumer Health continuing
operations 1 048 18.0 812 15.0 29
Corporate Income & Expense,
net -825 -1 228
Operating income
from continuing
operations[1] 8 964 21.6 6 781 17.8 32

[1] Operating income in 2007 includes USD 1 034 million of
exceptional charges (USD 590 million for a Corporate environmental
provision increase and USD 444 million for Forward restructuring
charges, of which Pharmaceuticals: USD 307 million, Consumer Health:
USD 97 million and Corporate: USD 40 million).

Pharmaceuticals: +25% to USD 7.6 billion
Advancing more than twice as fast as net sales, operating income
benefited from the accelerating pace of growth in the second half of
2008 and increased productivity as well as from lower exceptional
charges. As a result, the operating margin in 2008 rose 3.5
percentage points to 28.8% of net sales from 25.3% in 2007. Marketing
& Sales costs fell 1.2 percentage points to 30.8% of net sales as
productivity initiatives involving new commercial models,
particularly in the US and Europe, provided resources to support
ongoing new product launches including Aclasta/Reclast,
Tekturna/Rasilez, Exforge, Lucentis and Exelon Patch. R&D investments
rose 0.5 percentage points to 21.7% of net sales and included
investments in late-stage projects such as QAB149, FTY720, ACZ885 and
in Oncology. R&D expenses in 2008 also included a one-time charge of
USD 223 million for full impairment of the terminated development
project Aurograb. Cost of Goods Sold fell 1.6 percentage points to
17.0% of net sales, primarily reflecting the 2007 impairment charge
of USD 320 million for Famvir. Excluding the exceptional Forward
restructuring charge of USD 307 million in 2007, operating income
rose 19% and the operating margin rose 2.2 percentage points to
28.8%.

Vaccines and Diagnostics: +8% to USD 78 million
Higher vaccine volumes and a better product mix helped support major
R&D investments in the Phase III meningitis vaccine candidates Menveo
and MenB as well as initiatives to improve vaccines manufacturing
quality and capacity.

Sandoz: +4% to USD 1.1 billion
Reduced income from the US overshadowed efficiency improvements and
solid growth in emerging markets, as the operating margin fell 0.2
percentage points to 14.3% of net sales. Sandoz made major
investments in emerging markets and in several R&D projects involving
"difficult-to-make" generics such as biosimilars that provide
competitive advantages. Cost of Goods Sold benefited from a more
favorable product mix.

Consumer Health continuing operations: +29% to USD 1.0 billion
Robust growth in operating income outpaced net sales thanks to the
business expansion, particularly in CIBA Vision, and Forward-related
productivity gains. Excluding the exceptional Forward restructuring
charge of USD 97 million in 2007, operating income rose 15% and the
operating margin rose 1.2 percentage points to 18.0% of net sales.

Corporate Income & Expense, net
Net expenses in 2007 included charges of USD 630 million for the
environmental provision increase and Corporate-related Forward
restructuring charges. Excluding these two factors, the higher net
expenses in 2008 came mainly from global IT infrastructure
investments, negative currency effects and an increase in provisions
for product liabilities.

Fourth quarter

Net sales

Q4 2008 Q4 2007 % change
USD m USD m USD lc
Pharmaceuticals 6 430 6 152 5 10
Vaccines and Diagnostics 491 398 23 33
Sandoz 1 804 1 971 -8 0
Consumer Health continuing 1 352
operations 1 410 -4 4
Net sales from continuing operations 10 077 9 931 1 8

Pharmaceuticals: +5% (+10% lc) to USD 6.4 billion
In a dynamic performance, Pharmaceuticals achieved its highest 2008
quarterly net sales growth rate in local currencies, reflecting the
return to growth in the US in the second half of the year after 2007
challenges that lingered into the first half of 2008. Growth drivers
in the 2008 quarter included the US (+11% lc), Europe (+12% lc) and
expansion in priority emerging markets (+23% lc) as well as USD 852
million in contributions from recently launched products.

Cardiovascular strategic products (USD 1.7 billion, +14% lc) gained
market share, with the new high blood pressure medicines Exforge (USD
118 million) and Tekturna/Rasilez (USD 46 million) delivering rapid
growth, and Diovan (USD 1.4 billion, +7% lc) remained the world's
top-selling antihypertensive medicine.

Oncology (USD 2.0 billion, +13% lc) represented 32% of
Pharmaceuticals sales with broad double-digit gains for many
products, including Gleevec/Glivec (USD 890 million, +12% lc), Femara
(USD 279 million, +15% lc) and Exjade (USD 145 million, +51% lc),
while Zometa (USD 345 million, +4% lc) continued its turnaround to
growth.

Neuroscience and Ophthalmics (USD 1.0 billion, +14% lc) benefited
from dynamic growth in Lucentis (USD 228 million, +60% lc) and the
Exelon franchise (USD 209 million, +33% lc) following the launch of
the new Exelon Patch skin patch formulation in 2007.

Vaccines and Diagnostics: +23% (+33% lc) to USD 491 million
Combination pediatric vaccine component sales more than doubled in
the fourth quarter of 2008, in part due to a one-time revenue
recognition of USD 50 million following a change of contract terms
with a customer. Rabies vaccines provided further growth, while
seasonal flu vaccine sales were largely unchanged from the 2007
period.

Sandoz: -8% (+0% lc) to USD 1.8 billion
Many regions showed solid growth, led by a 25% lc increase in Russia
and further gains in Central and Eastern Europe, with Canada,
Australia and Germany also delivering better performances. However,
sales in the US fell 12% amid continued launch delays in 2008. The US
was also affected by lost sales and costs for voluntary product
recalls as part of an FDA review of a US manufacturing site.

Consumer Health continuing operations: -4% (+4% lc) to USD 1.4
billion
Overall performance in local currencies was positive despite
deteriorating market conditions, with CIBA Vision achieving strong
momentum from new product launches. OTC sales rose in local
currencies on higher demand for "cough and cold" products.

Operating income

Q4 2008 Q4 2007 Change
% of % of
net net
USD m sales USD m sales %
Pharmaceuticals 1 562 24.3 925 15.0 69
Vaccines and Diagnostics 26 5.3 -107
Sandoz 200 11.1 250 12.7 -20
Consumer Health continuing
operations 190 14.1 85 6.0 124
Corporate Income & Expense,
net -298 -256
Operating income
from continuing
operations[1] 1 680 16.7 897 9.0 87

[1] Operating income in 2007 includes a USD 444 million exceptional
restructuring charge for Forward
(Pharmaceuticals: USD 307 million, Consumer Health: USD 97 million
and Corporate: USD 40 million)

Pharmaceuticals: +69% to USD 1.6 billion
Among factors contributing to the sharp rise in operating income were
the markedly improved business performance and benefits from
increased productivity as well as significantly lower exceptional
charges. The operating margin rose 9.3 percentage points to 24.3% of
net sales. Cost of Goods Sold improved 2.1 percentage points, while
other revenues rose on increased product royalties. Marketing & Sales
costs fell 0.5 percentage points to 33.3% of net sales despite major
investments in Europe, Japan, emerging markets and Oncology. Research
& Development investments rose at a slower pace than net sales in the
quarter, falling 0.4 percentage points to 23.0% of net sales compared
to the 2007 period, which included partial impairments of various
In-Process R&D assets. Other Income & Expenses, net, fell to 2.1% of
net sales from 8.0% in the 2007 quarter, which included a Forward
restructuring charge of USD 307 million.

Vaccines and Diagnostics: USD 26 million
The swing to profitability in 2008 from a loss in the 2007 quarter
was bolstered by pediatric combination vaccine sales that included
one-time revenue recognition of USD 50 million due to a change in
contract terms with a customer. Adjusted operating income (excluding
exceptional items and the amortization of intangible assets) rose to
USD 55 million from a loss of USD 14 million in the 2007 quarter.

Sandoz: -20% to USD 200 million
Productivity gains and sustained growth in many regions were more
than offset by lower contributions from the US, which included
one-time charges of USD 34 million for product recalls and related
costs as part of an FDA review of a US production site. As a result,
the operating margin fell to 11.1% of net sales. However, adjusted
operating income excluding exceptional items and the amortization of
intangible assets in both periods fell only 9%.

Consumer Health continuing operations: +124% to USD 190 million
Excluding USD 97 million of Forward restructuring charges in 2007,
operating income rose 4% mainly on strong underlying growth in CIBA
Vision and productivity gains across the businesses, but was impacted
by negative currency movements. The operating margin rose 1.2
percentage points to 14.1% of net sales when excluding the 2007
Forward charge.

Corporate Income & Expense, net
Net corporate expenses were higher on factors including the negative
impact of exchange rate movements and an increase in product
liability provisions. The 2007 quarter also included USD 40 million
of Forward restructuring charges.

FINANCIAL REVIEW

Full year and fourth quarter

Q4 Q4
2008 2007 Change 2008 2007 Change
USD
USD m m % USD m USD m %
Operating income
from continuing
operations[1] 8 964 6 781 32 1 680 897 87
Income from associated
companies 441 412 7 97 104 -7
Financial income 384 531 -28 58 245 -76
Interest expense -290 -237 22 -76 -61 25
Taxes -1 336 -947 41 -252 -254 -1
Net income
from continuing
operations[1] 8 163 6 540 25 1 507 931 62
Net income
from discontinued
operations 70 5 428 42 -18
Total net income[1] 8 233 11 968 -31 1 549 913 70

[1] Operating and net income in 2007 include exceptional charges of
USD 1 034 million (USD 788 million after tax) for Corporate
environmental provision increase (Q3: USD 590 million) and Forward
restructuring charges (Q4: USD 444 million). Q4 2007 results only
include Forward restructuring charges (USD 325 million after tax).

Income from associated companies
Higher contributions from Roche led to the slight increase in income
to USD 441 million in 2008 compared to USD 412 million in 2007. The
25% Alcon stake resulted in a net loss for 2008 of USD 11 million, as
the anticipated net income contribution of USD 255 million since the
acquisition in July was more than offset by a charge of USD 266
million for the amortization of intangible and other assets. In the
fourth quarter, income from associated companies fell to USD 97
million on a slightly negative contribution from Alcon.

Financial income, net
Financing costs to purchase the 25% Alcon stake in July 2008 led to
sharply lower average net liquidity, resulting in a decline in net
financial income to USD 94 million in 2008 from USD 294 million in
2007. In the fourth quarter, also due to Alcon financing, interest
expenses exceeded financial income by USD 18 million, with the 2007
quarter providing net financial income of USD 184 million.

Taxes
The tax rate for continuing operations (taxes as a percentage of
pre-tax income) rose to 14.1% in 2008 from the unusually low level of
12.6% in 2007. In the fourth quarter, the tax rate for continuing
operations fell to 14.3%, largely in line with the full-year tax
rate, from an unusually high 21.4% in the 2007 quarter.

Net income from continuing operations
Net income from continuing operations rose 25% to USD 8.2 billion.
Excluding the after-tax impact of USD 788 million for the two
exceptional charges taken in 2007, net income rose 11%.

Basic earnings per share from continuing operations
Basic earnings per share (EPS) from continuing operations rose 28% to
USD 3.59 in 2008 from USD 2.81 in 2007, at a faster pace than net
income due to fewer outstanding shares. In the fourth quarter, basic
EPS rose 61% to USD 0.66 from USD 0.41 in the year-ago quarter,
largely in line with the advance in net income.
Net income from discontinued operations
The 2007 results include net proceeds of USD 5.4 billion from the
divestments of Medical Nutrition (as of July 1, 2007) and Gerber (as
of September 1, 2007) along with the contributions of these
businesses before their divestments. Results for 2008 include modest
income from various adjustments to accruals related to these
divestments.

Balance sheet
Total assets rose to USD 78.3 billion at December 31, 2008, from USD
75.5 billion at the end of 2007. Non-current assets were USD 57.4
billion at the end of 2008, an increase of USD 9.4 billion mainly
from the acquisition of the 25% Alcon stake. At the same time, costs
for Alcon and other acquisitions during 2008 led to a reduction of
USD 7.1 billion in cash and marketable securities.

The Group's equity improved by USD 1.0 billion to USD 50.4 billion at
the end of 2008 compared to USD 49.4 billion at the end of 2007.
Recognized income and expense totaled USD 4.3 billion in 2008, as net
income of USD 8.2 billion more than offset USD 2.1 billion in
actuarial losses on pension plans, USD 1.1 billion in currency
translation losses and USD 0.7 billion of negative fair value
adjustments on financial instruments and other factors (including USD
0.3 billion of hedging costs deferred due to probable debt financing
in 2009). A total of USD 0.4 billion in treasury shares were
repurchased in 2008, of which USD 0.3 billion were on the second
trading line for Novartis shares before the program was suspended in
April following the announcement of the Alcon transaction. The
dividend payment made in 2008 amounted to USD 3.3 billion, a 29%
increase from the 2007 level in US dollars.

The year-end debt/equity ratio increased to 0.15:1 in 2008 from
0.12:1 in 2007 following the launch of significant financing programs
in 2008. Two Swiss franc bond issues totaling CHF 1.5 billion were
successfully completed during the second quarter of 2008, while the
Commercial Paper programs provided USD 0.6 billion in additional
financing. At the end of 2008, financial debt of USD 7.4 billion
consisted of USD 5.2 billion in current and USD 2.2 billion in
non-current liabilities to banks and financial institutions.

Credit agencies reduced their ratings for Novartis in April 2008,
citing expected financing requirements for Alcon while supporting the
transaction's strategic intentions. Moody's rated the Group as Aa2
for long-term maturities and P-1 for short-term maturities and
Standard & Poor's had a rating of AA- and A-1+, for long-term and
short-term maturities, respectively. Fitch had a long-term rating of
AA and a short-term rating of F1+. These agencies maintained a
"stable" outlook.

Cash flow
Cash flow from continuing operating activities rose 6% to USD 9.8
billion. The additional cash flow generated by the solid business
expansion was partially offset by higher tax and Forward
restructuring payments.

Cash outflows used for investing activities rose 66% to USD 10.4
billion in 2008, mainly on the acquisitions involving Alcon, Speedel,
Protez and the Nektar pulmonary business totaling USD 11.5 billion as
well as USD 2.1 billion of investments in property, plant &
equipment. These outflows were partially offset by USD 3.3 billion in
net proceeds from the sale of marketable securities. Cash outflows
used for financing activities were USD 2.6 billion as the dividend
payment made in 2008 of USD 3.3 billion and USD 0.5 billion related
to treasury share transactions were partially offset by cash inflows
of USD 1.3 billion related to net additions to financial debt.

Overall liquidity fell to USD 6.1 billion at the end of 2008 from USD
13.2 billion at the end of 2007. Taking into account additional debt
raised in 2008, net liquidity at the end of 2007 of USD 7.4 billion
swung to net debt of USD 1.2 billion at the end of 2008.

PHARMACEUTICALS PRODUCT REVIEW

Notes: Net sales growth data refer to 2008 worldwide performance in
local currencies. Growth rates are not provided for some recently
launched products since they are not meaningful.

Diovan (USD 5.7 billion, +10% lc), the world's top-selling branded
medicine for high blood pressure, grew steadily in all key markets
worldwide, with areas outside the US now accounting for about 58% of
net sales and delivering 10% lc growth. US sales also rose 10% as
Diovan strengthened its 40% leading share of the angiotensin receptor
blockers (ARBs) segment despite an overall slowdown in the
antihypertensive market, including ARBs. Diovan has benefited from
its status as the only medicine in the ARB class approved to treat
high blood pressure, high-risk heart attack survivors and heart
failure.

Gleevec/Glivec (USD 3.7 billion, +15% lc), a targeted therapy for
certain forms of chronic myeloid leukemia (CML) and gastrointestinal
stromal tumors (GIST), sustained solid double-digit growth in 2008
based on strong clinical data and its status as the leading therapy
for these and other life-threatening forms of cancer. In December
2008, Gleevec became the first FDA-approved treatment for use after
GIST surgery (adjuvant setting). Similar submissions were made in the
EU, Switzerland and other countries, with additional launches for
this indication expected in 2009. Data from the landmark IRIS study
at the American Society of Hematology meeting showed nearly 90% of
CML patients in the study were still alive seven years after
diagnosis when treated with Gleevec, demonstrating the longest
overall survival observed to date in this disease area.

Zometa (USD 1.4 billion, +3% lc), an intravenous bisphosphonate
therapy for patients with cancer that has spread to the bones,
returned to growth thanks to improved compliance for existing
indications and new data showing significant anticancer benefits of
this therapy. A study in premenopausal women with hormone-sensitive,
early-stage breast cancer showed the addition of Zometa to hormone
therapy after surgery significantly reduced the risk of recurrence or
death beyond benefits achieved with hormone therapy alone. Other new
data in 2008 showed the addition of Zometa to standard chemotherapy
before breast cancer surgery reduced the size of breast tumors more
effectively than chemotherapy alone in women with early-stage
disease. More studies are underway to review potential anticancer
benefits of Zometa.

Femara (USD 1.1 billion, +17% lc), an oral therapy for women with
hormone-sensitive breast cancer, continued with strong growth. New
data from the BIG 1-98 trial suggested a reduced risk of death for
patients taking Femara instead of tamoxifen in initial adjuvant
treatment. Although the results did not meet statistical
significance, these were the first data to suggest this survival
benefit for an aromatase inhibitor versus tamoxifen in the
monotherapy setting immediately following surgery. The entry of
generic competition in some markets, including some European
countries, had a modest negative impact on global growth.

Sandostatin (USD 1.1 billion, +6% lc), for acromegaly and symptoms
associated with carcinoid syndrome, benefited from growth of
Sandostatin LAR, the once-monthly version that accounts for 85% of
net sales, particularly in key regions such as Latin America and in
emerging markets. New competition in the US in this segment had a
minimal impact on Sandostatin LAR sales in 2008.

Lucentis (USD 886 million, +122% lc), a biotechnology eye therapy now
approved in more than 70 countries, has delivered dynamic growth
since its first European launch in early 2007. Lucentis is the only
treatment proven to maintain and improve vision in patients with
"wet" age-related macular degeneration, a leading cause of blindness
in people over age 50. It has been judged as cost-effective by
various government health agencies, including the UK National
Institute for Health and Clinical Excellence (NICE) in 2008.
Genentech holds the US rights.
Exelon/Exelon Patch (USD 815 million, +24% lc), a therapy for mild to
moderate forms of Alzheimer's disease dementia and also dementia
linked with Parkinson's disease, has experienced renewed growth
following the introduction of the once-daily Exelon Patch formulation
in late 2007 that quickly gained broad acceptance by patients and
caregivers.

Exjade (USD 531 million, +45% lc), the first and only once-daily
oral therapy for transfusional iron overload, a potentially fatal
condition linked to certain blood disorders, had dynamic growth in
2008 and is now available in more than 90 countries.

Exforge (USD 406 million), a single-pill combination of the
angiotensin receptor blocker Diovan (valsartan) with the calcium
channel blocker amlodipine, has set new standards since its launch in
late 2007 for the introduction of a high blood pressure combination
therapy. The US approved Exforge in July 2008 as a first-line
therapy, providing a new growth opportunity.

Lotrel (USD 386 million, -48% lc, only in the US), a single-pill
combination therapy for high blood pressure, fell sharply after an
"at risk" launch in mid-2007 by a generic competitor despite a US
patent valid until 2017. Sales in 2008 came from higher-dose
formulations that still have market exclusivity.

Trileptal (USD 332 million, -53% lc), for epilepsy seizures, has been
negatively impacted by generic competition for tablet formulations in
key markets, including the US, following the end of patent protection
in late 2007.

Aclasta/Reclast (USD 254 million), the first once-yearly infusion
therapy for various forms of osteoporosis, has now been used in more
than 350,000 patients and has experienced consistent growth since its
launch to treat postmenopausal osteoporosis in late 2007. New
indications approved in 2008 have broadened the use of Aclasta in
Europe and the US (known as Reclast) to include treatment of
osteoporosis in men. Aclasta has been shown to reduce the risk of new
fractures in patients who have recently suffered a low-trauma hip
fracture, and in the same patient group to reduce all-cause mortality
by 28% vs. placebo.

Xolair (USD 211 million, +42% lc, only Novartis sales), a
biotechnology therapy for moderate to severe allergic asthma that
targets a root cause of this disease, is now available in over 50
countries worldwide. Xolair Liquid, a new formulation that will ease
administration, received a positive EU opinion in November 2008
supporting approval. In December 2008, Xolair was submitted for use
in children from six to less than 12 years of age in the EU and by
Genentech in the US. Novartis co-promotes Xolair with Genentech in
the US and shares a portion of operating income. Genentech's Xolair
US sales were USD 517 million in 2008.

Tekturna/Rasilez (USD 144 million), the first new type of high blood
pressure medicine in more than a decade, showed consistent growth in
the US and Europe in a competitive market environment in 2008.
Positive data from the ALOFT (heart failure) and AVOID (kidney
disease) clinical studies, which are part of the ASPIRE HIGHER
cardio-renal outcomes program, were added to European product
information. Rasilez HCT, a single-pill combination with a diuretic,
received EU approval in January 2009, while a decision in Switzerland
is expected in 2009. This medicine is already approved in the US as
Tekturna HCT. A single-pill combination with Diovan was also
submitted for approval in the US.

Tasigna (USD 89 million) has gained quickly as a new therapy in the
second-line setting for patients with a certain form of chronic
myeloid leukemia (CML) resistant or intolerant to prior therapy,
including Gleevec/Glivec. Tasigna shows potential to become a leading
treatment for certain newly diagnosed CML patients based on new data
at the American Society of Hematology meeting in December. A Phase
III trial comparing Tasigna and Gleevec/Glivec in newly diagnosed CML
patients has completed recruitment.

R&D UPDATE

Pharmaceuticals

Extavia (interferon beta-1b) was launched in Germany and Denmark in
January 2009 to start the European rollout of this medicine for
patients with certain forms of multiple sclerosis (MS). Extavia is
the same medicine as Betaferon(R)/Betaseron(R), which is marketed by
Bayer Schering and was the first beta interferon treatment for MS.
Novartis gained rights to its own branded version in agreements with
Bayer Schering reached after Novartis fully acquired Chiron. Novartis
plans to launch Extavia in the US in 2009.

Afinitor (everolimus, RAD001), an oral inhibitor of the mTOR pathway,
is currently expected to receive a regulatory decision for patients
with advanced kidney cancer from the FDA in the first quarter of 2009
after the action date was extended by three months in late 2008 (no
request for additional studies). Regulatory submissions have also
been made in the EU and Switzerland, and other filings are planned.
Afinitor is also being studied in multiple cancer types including
neuroendocrine tumors, lymphoma, hepatocarcinoma as well as gastric,
non-small cell lung and breast cancer. Data from two early clinical
studies presented at the CTRC-San Antonio Breast Cancer Symposium
showed the potential of Afinitor to reverse resistance to Herceptin(R)
in women with metastatic breast cancer.

QAB149 (indacaterol) was submitted for US and EU approvals in
December 2008 as a 24-hour bronchodilator for chronic obstructive
pulmonary disease (COPD), an incurable condition in which the lungs
have been damaged, usually from smoking. Initial data from the Phase
III program with over 4,200 patients in 30 countries suggest a good
efficacy/safety profile. QAB149 is planned to form the cornerstone
for potential combinations such as QMF149 (indacaterol with the
corticosteroid mometasone) in COPD and asthma and QVA149 (indacaterol
with the anti-muscarinic NVA237) in COPD.

ACZ885 (canakinumab) is a new treatment for a group of rare, but
potentially life-threatening, auto-inflammatory diseases called
Cryopyrin-Associated Periodic Syndromes (CAPS), which includes
Muckle-Wells Syndrome. The first submissions were previously planned
for 2009, but were accelerated to December 2008 after data from two
clinical studies showed adults and children achieved rapid and
long-lasting clinical remission of symptoms of these diseases. Orphan
drug status has already been granted to ACZ885 in the EU, Switzerland
and US for treating CAPS, and in the US and EU for Systemic Juvenile
Idiopathic Arthritis (SJIA), the most severe form of arthritis in
children. Studies are underway in other potential therapeutic areas.

FTY720 (fingolimod), a novel oral development therapy for multiple
sclerosis, showed superior efficacy compared to interferon beta-1a
(Avonex(R)) in preliminary data from the Phase III TRANSFORMS study
made public in December. FTY720 met its primary endpoint in the
trial, and the initial analysis suggested a safety profile in line
with previous experience. Further results from TRANSFORMS are planned
to be presented at a congress in 2009. Regulatory submissions remain
on track for the end of 2009.

Vaccines and Diagnostics

Menveo (MenACWY-CRM) was submitted in August for US approval and in
October for EU approval as a new vaccine to protect against four
common types of meningococcal meningitis known as A, C, W-135 and Y
for this often-fatal bacterial infection. The first submission was
made for ages 11-55. The Phase III program for use of this vaccine
from age two months to 10 years is ongoing, and it will be expanded
by 1,500 additional infants following recent discussions with the
FDA. As a result of this new requirement, the US submission of Menveo
for use in infants is now expected in 2011.

Disclaimer
This release contains certain forward-looking statements relating to
the Group's business, which can be identified by terminology such as
"momentum," "proposed," "expected," "strategic," "anticipates," "to
achieve," "set," "optional," "can," "potential," "priority review,"
"future," "likely," "goals," "pipeline," "expectations," "proposal,"
"will," "if approved," "outlook," "expects," "suggest," planned,"
"potentially," "on track," or similar expressions, or by express or
implied discussions regarding potential new products, potential new
indications for existing products, or regarding potential future
revenues from any such products, or potential future sales or
earnings of the Novartis Group or any of its divisions or business
units; or by discussions of strategy, plans, expectations or
intentions. You should not place undue reliance on these statements.
Such forward-looking statements reflect the current views of the
Group regarding future events, and involve known and unknown risks,
uncertainties and other factors that may cause actual results to be
materially different from any future results, performance or
achievements expressed or implied by such statements. There can be no
guarantee that any new products will be approved for sale in any
market, or that any new indications will be approved for existing
products in any market, or that such products will achieve any
particular revenue levels. Nor can there be any guarantee that the
Novartis Group, or any of its divisions or business units, will
achieve any particular financial results. In particular, management's
expectations could be affected by, among other things, uncertainties
involved in the development of new pharmaceutical products;
unexpected clinical trial results, including additional analysis of
existing clinical data or unexpected new clinical data; unexpected
regulatory actions or delays or government regulation generally; the
Group's ability to obtain or maintain patent or other proprietary
intellectual property protection, including the uncertainties
involved in the US litigation process; competition in general;
government, industry, and general public pricing and other political
pressures; the impact that the foregoing factors could have on the
values attributed to the Group's assets and liabilities as recorded
in the Group's consolidated balance sheet; and other risks and
factors referred to in Novartis AG's current Form 20-F on file with
the US Securities and Exchange Commission. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated or
expected. Novartis is providing the information in these materials as
of this date and does not undertake any obligation to update any
forward-looking statements as a result of new information, future
events or otherwise.

About Novartis
Novartis AG provides healthcare solutions that address the evolving
needs of patients and societies. Focused solely on healthcare,
Novartis offers a diversified portfolio to best meet these needs:
innovative medicines, cost-saving generic pharmaceuticals, preventive
vaccines, diagnostic tools and consumer health products. Novartis is
the only company with leading positions in these areas. In 2008, the
Group's continuing operations achieved net sales of USD 41.5 billion
and net income of USD 8.2 billion. Approximately USD 7.2 billion was
invested in R&D activities throughout the Group. Headquartered in
Basel, Switzerland, Novartis Group companies employ approximately
96,700 full-time-equivalent associates and operate in more than 140
countries around the world. For more information, please visit
http://www.novartis.com.

Important dates

February 24, 2009 Annual General Meeting (Basel)
April 23, 2009 First quarter 2009 results
July 16, 2009 Second quarter and first half 2009 results
October 22, 2009 Third quarter and first nine months 2009 results

All product names appearing in italics are trademarks owned by or
licensed to Novartis Group Companies.

Please find full media release in English attached and on the
following link:
http://hugin.info/134323/R/1285325/288153.pdf

Further language versions are available through the following links:

German version is available through the following link:
http://hugin.info/134323/R/1285324/288154.pdf

French version is available through the following link:
http://hugin.info/134323/R/1285332/288155.pdf

--- End of Message ---

Novartis International AG
Posfach Basel

WKN: 904278; ISIN:
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SOURCE: Novartis International AG

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