Bioethics and commercial R&D in the life sciences WIPO LIFE SCIENCES SYMPOSIUM ON INTELLECTUAL PROPERTY (IP) AND BIOETHICS SEPTEMBER 4, 2007

2 | Corporate Presentation | Corporate Communications | May 2007 Our mission at Novartis We want to discover, develop and successfully market innovative products to prevent and cure diseases, to ease suffering, and to enhance quality of life. We also want to provide a shareholder return that reflects outstanding performance and to adequately reward those who invest ideas and work in our company. Daniel Vasella Chairman & CEO

3 | Corporate Presentation | Corporate Communications | May 2007 Novartis at a glance  Unique portfolio to meet changing healthcare needs: Leading innovative pharmaceuticals High-quality, low-cost generics Preventive vaccines Consumer health products  World’s third largest pharmaceutical company by sales  One of 20 largest companies by market capitalization  Ranked among most respected companies worldwide

4 | Corporate Presentation | Corporate Communications | May 2007 Innovative medicines Reducing economic burden PreventionSelf careAccess  Answering unmet needs  Better efficacy and side-effect profiles  Diagnosis, vaccination, patient compliance  Quality, safety, availability  Helping to reduce global burden of disease  Generics – freeing up funds for innovation Our strategy: How we address the trends

5 | Corporate Presentation | Corporate Communications | May 2007 Bioethics, IP and Commercial R&D R&D (Bio)Ethics IP

6 | Corporate Presentation | Corporate Communications | May 2007 Bioethics & Commercial R&D  Bioethical issues are inherent in almost all life-science R&D  Many of them relate to very fundamental ethical questions (e.g. use of animals in biomedical R&D, healthy volunteers)  Large, multinational corporations represent a “melting-pot” of diverse intra- and international values and norms  Proper understanding of key ethical issues is essential to gain and sustain trust and credibility internally and externally  For many of these issues an external ethical review is mandatory (e.g. ethics committees for clinical trials)  However, often neither societies at large nor legal systems provide clear guidance (e.g. somatic nuclear transfer technologies)

7 | Corporate Presentation | Corporate Communications | May 2007 Basel Tsukuba Horsham Novartis R&D is Global R&D  example Pharma/NIBR/Corp. Research: R&D-Sites Cambridge East Hanover Emeryville San Diego Vienna Vienna Singapore

8 | Corporate Presentation | Corporate Communications | May 2007 Global R&D requires common grounds – an immense challenge for applied ethics Huge conceptual differences Highly diverse norms

9 | Corporate Presentation | Corporate Communications | May 2007 In a global environment…. Which “Ethics” is the right one?

10 | Corporate Presentation | Corporate Communications | May 2007 IP and Commercial R&D  IP is central to all Novartis R&D activities  Our unique position in the market (strong Rx, Gx and Vaccines business) enables us to better analyze and understand many controversial issues  However, very rarely intellectual property per se can be considered as a leading cause for (bio)ethical problems  In the majority of publicly debated cases the ethical problems arise either prior to initiation of the IP process (e.g. “production” of transgenic organisms) or by the way successful inventions are commercialized (e.g. appropriate benefit sharing or adequate access to medicines) Proposition: Like the famous knife the IP system itself is morally neutral. It is rather the means chosen to achieve innovation and the ways in which successful innovations are being commercialized which require ethical justification.

11 | Corporate Presentation | Corporate Communications | May 2007 Human genes from Early Onset Alzheimer’s Disease Patients DNA Injection into mice eggs Transgenic Mouse + human genes from Early Onset Alzheimer’s Disease Patients Example: APP mutations (e.g. Swedish Mutation the APP 23 mouse model) “IP” seems not to be “IP”

12 | Corporate Presentation | Corporate Communications | May 2007 Bioethics, IP and Commercial R&D  Although different disciplines, cultural values, moral and ethics are essentially different throughout the globe – and often even within a given nation/society  Commercial entities have to operate in an ethically sound way – however, they are not (and shall not) act as norm- setting entities  If critical assessment of existing norms and their applicability to real-life business/R&D activities reveals a gap of interculturally acceptable guidance ethical support/facilitation is most appropriate  Novartis is seeking external ethical advise on different levels  example: Novartis Ethics Advisory Board