Novartis seeking clarity in Indian patent laws, a critical incentive for long-term R&D investments into better medicines for patients

* Patents help patients and save lives by creating incentives for long-term R&D investments that lead to innovative medicines for currently unmet medical needs
* Potential changes in Indian patent law would not hinder the supply of essential medicines to poor countries due to safeguards in international WTO agreements
* Glivec patent granted in nearly 40 countries, including China; Glivec access programs have reached over 22,000 needy patients with chronic myeloid leukemia (CML), gastrointestinal stromal tumors (GIST) and other rare cancers
* Novartis social responsibility programs reached over 33 million patients in 2006 valued at USD 755 million

Mumbai, India, February 15, 2007 - A hearing began today in an Indian court to gain clarity on the status of the country’s laws regarding the protection of intellectual property and the granting of patents, which are critical to helping patients by creating incentives for long-term R&D investments into new and better medicines.

The hearing taking place in Chennai is part of efforts by Novartis - the world’s third-largest pharmaceuticals company and the No. 2 global manufacturer of generics - to gain a patent for its life-saving medicine Glivec.

Patients in India diagnosed with various rare cancers, including Philadelphia chromosome-positive chronic myeloid leukemia (CML) and gastrointestinal stromal tumors (GIST), had little chance for survival before Glivec. These patients can now resume everyday lives thanks to Glivec, with 99% of patients receiving Glivec in the country receiving it at no cost thanks to a generous access program financed by Novartis.

At issue is why a patent for Glivec - granted in nearly 40 countries, including China - was denied in India in 2006. Novartis believes Glivec is an important innovation and that Indian patent laws do not comply with the intellectual property standards the country agreed to when it joined the World Trade Organization (WTO) in 1995.

Novartis is also challenging a section of Indian patent law called "Section 3(d)" that does not permit to patent innovative medicines with therapeutically relevant safety advantages. A report from the Mashelkar Committee, commissioned by the Indian government and comprised of Indian experts, supports many of the concerns about Indian patent law expressed by Novartis, mentioning that the laws are not complying with international agreements like the Trade-Related Aspects of Intellectual Property Rights (TRIPS) from the WTO.

"Internationally compatible patent laws would spur investments in biomedical R&D activities in India, a promising field for the rapidly growing Indian economy, and help patients, the government and industry" said Thomas Wellauer, Head of Corporate Services and a member of the Executive Committee of Novartis. "Only if patents are respected can research-based organizations continue making long-term, risky investments in new medicines for patients"

Helping patients while protecting intellectual property
In India, more than 6,700 patients receive Glivec for free from Novartis, and over 100 new patients in India are being added to the program each month. More than 22,000 patients worldwide are currently enrolled in this access program, one of the pharmaceutical industry’s most far-reaching assistance efforts.

Copies of Glivec have been available in India for some time. However, generics are not the solution to improving access since a year’s treatment with generic versions is four to five times higher than the annual average salary in India. Generic versions of Glivec would remain on the market in India regardless of the outcome of this legal action.

In addition, the broader issue of barriers to providing healthcare in developing countries - poverty and the lack of an adequate healthcare infrastructure - are not addressed by generics alone.

"This case in India is not about patient access. Lost in this debate is that patents help patients by stimulating the long-term research and development efforts needed to develop breakthrough therapies like Glivec" said Ranjit Shahani, Vice-Chairman and Managing Director, Novartis India Limited. "Furthermore, India is seeking to expand its research-based pharmaceutical industry. This can only grow if patents are respected, allowing for collaborations with international companies and encouraging R&D investments"

"India has an independent judicial system, equally accessible to individuals and companies and one that ensures a fair process" Shahani added.

Safeguards in place to supply medicines to poor countries
This legal action will not hinder the supply of essential medicines produced in India and exported to poor countries.

Flexibilities that now exist in international trade agreements protect access to essential medicines by allowing for the export of medicines produced under compulsory licenses issued for public health reasons. These provisions safeguard access to medicines in poor countries that do not have sufficient local production capacity. Novartis fully supports these provisions and this legal action does not challenge them.

"Acknowledging innovation by granting a patent is unrelated to making medicines available" said Paul Herrling, Ph.D., Head of Corporate Research at Novartis. "Medicines can be made available through both the safeguards in international agreements and, in the case of essential and life-saving medicines, special pricing arrangements in poor countries must be made. We play an important role as well through our Glivec access programs worldwide"

Improving access to medicine is an integral component of the Novartis business strategy and global social responsibility commitment. The Group’s access-to-medicine programs reached over 33 million patients worldwide in 2006, with contributions totaling USD 755 million. This represented some 2% of total Group net sales donated to disadvantaged patients and research into neglected diseases such as malaria, tuberculosis and dengue fever.

Novartis has been widely recognized for its social responsibility efforts, ranking as the 2006 healthcare industry leader in the Dow Jones Sustainability Index, a leading global index that measures the economic, social and environmental performance of companies.

Further information on Glivec India case and patient testimonials
For more information about the Glivec India case, including testimonials from Glivec patients in India, and Novartis corporate social responsibility programs, please visit www.novartis.com.

About Novartis
Novartis AG (NYSE: NVS) is a world leader in offering medicines to protect health, cure disease and improve well-being. Our goal is to discover, develop and successfully market innovative products to treat patients, ease suffering and enhance the quality of life. We are strengthening our medicine-based portfolio, which is focused on strategic growth platforms in innovation-driven pharmaceuticals, high-quality and low-cost generics, human vaccines and leading self-medication OTC brands. Novartis is the only company with leadership positions in these areas. In 2006, the Group’s businesses achieved net sales of USD 37.0 billion and net income of USD 7.2 billion. Approximately USD 5.4 billion was invested in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 101,000 associates and operate in over 140 countries around the world.

For more information, please visit http://www.novartis.com.

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Novartis AG

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