Novartis to launch new CHF 3 billion share buy-back program

Novartis to launch new CHF 3 billion share buy-back program

Basel, 9 August 2004 - Novartis AG announced today that its Board of Directors has decided to launch a new share repurchase program for up to CHF 3 billion following the completion of a program initiated in 2002. The new program was approved by shareholders at the Annual General Meeting (AGM) in February 2004.

Novartis intends to repurchase the shares over an unspecified time via a second trading line on virt-x. The program will apply exclusively to Novartis registered shares listed on the SWX Swiss Exchange and not to Novartis American Depositary Shares (ADSs) traded on the New York Stock Exchange.

In addition, the Board of Directors intends to propose at the next AGM in 2005 that the share capital of Novartis be reduced by an amount corresponding to the shares repurchased so far under this new program.

"Launching a new share buy-back program enables Novartis to continue returning surplus liquidity to shareholders, which is a result of our dynamic organic growth and robust free cash flow," said Daniel Vasella, Chairman and CEO of Novartis. "At the same time, we are maintaining a high degree of strategic flexibility and financial strength to seize appropriate opportunities."

Two earlier share buy-back programs were initiated in 1999 and 2001, both of which ended after the purchase of CHF 4 billion in shares in each program. Novartis completed its third share buy-back program on 6 August 2004 and bought back 69 779 000 shares for an amount of CHF 4 billion. A proposal will be put forward to shareholders at the Annual General Meeting in 2005 to cancel 22 839 000 shares, or 0.82% of the current share capital, after 46 940 000 shares were cancelled at the Annual General Meetings in 2003 and 2004.

The existing second trading line for Novartis registered shares will be maintained on virt-x for this new program. Novartis will be the exclusive buyer on this line and intends to repurchase its own shares for the purpose of subsequently reducing its share capital. Ordinary trading of Novartis registered shares under the Swiss security number 1 200 526 will not be affected and will continue as usual. A shareholder wishing to sell Novartis registered shares has the option of selling either via the ordinary trading channel or to Novartis via the second trading line for the purpose of the subsequent share capital reduction. Novartis has, however, at no point in time any obligation to purchase its own shares on the second trading line.

Shares purchased on the second trading line are subject to the Swiss federal withholding tax rate of 35% on the difference between the repurchase price of the Novartis registered share and its nominal value.



About Novartis

Novartis AG (NYSE: NVS) is a world leader in pharmaceuticals and consumer health. In 2003, the Group's businesses achieved sales of USD 24.9 billion and a net income of USD 5.0 billion. The Group invested approximately USD 3.8 billion in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ about 80 000 people and operate in over 140 countries around the world. For further information please consult http://www.novartis.

Disclaimer

This release contains certain forward-looking statements relating to the Group's business, which can be identified by the use of forward-looking terminology such as "intends to repurchase", "will apply", "intends to propose", "to continue returning surplus liquidity", "are maintaining", "will be put forward", "will be", "will continue", or similar expressions. Such statements reflect the current views of the Group with respect to this share repurchase program and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual performance of the share repurchase program to be materially different from any expectations that may be expressed or implied by such forward-looking statements. In particular, subsequent events may make the repurchase program and the intended reduction of share capital unattractive. Other factors are discussed in the Group's Form 20-F filed with the 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 this press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.

The following applies, among others, to the United States of America and to US persons:

This offer is not made in the United States of America and to U.S. persons and may be accepted only by non-U.S. persons and BY PERSONS outside the United States. Offering materials with respect to this offer may not be distributed in or sent to the United States and may not be used for the purpose of solicitation of an offer to purchase or sell any securities in the United States.