47.0% of the revenue from sales was used for purchasing goods and services from our suppliers. Of the Net Value Added of USD 13.7 billion, 47% was paid either directly or indirectly to the employees, 24% was retained in the business for future expansion and 17% was paid to public authorities and financial institutions. Dividends paid to the shareholders represented 12% of the Net Value Added.

Novartis share price increases by 11% in 2003

In 2003 the equity capital market recovered after a difficult 2002. The Swiss Market Index (SMI) increased 19% with the Morgan Stanley World Pharmaceutical Index increasing 14% over the year. The Novartis share price evolved broadly in line

Dividend continuously increased since 1996

The Board is proposing to the Annual General Meeting to increase the dividend payment for 2003 by 5% to CHF 1.00 per share (2002: CHF 0.95) This represents the seventh consecutive increase in the dividend per share since the formation of Novartis in late 1996. If the 2003 dividend proposal is approved by the shareholders, dividends paid out on the outstanding shares will amount to USD 2.0 billion (2002: USD 1.7 billion), resulting in a pay-out ratio of 39% (2002: 36%). Based on the 2003 year-end share price of CHF 56.15, the Novartis dividend yield is 1.8% (2002: 1.9%). The dividend payment date for 2003 will be on February 27, 2004. With the exception of 275 million treasury shares, all issued shares are dividend bearing.

Third share repurchase program initiated

On July 22, 2002, Novartis initiated its third share buy-back program to repurchase shares on the SWX Swiss Exchange for up to a total of CHF 4 billion. During 2003, 24.3 million shares were repurchased via a second trading line for a total amount of USD 939 million and 17.1 million shares, net, were sold on the first trading line for a total of USD 666 million. In 2003 the Group’s share capital was reduced by 22.7 million shares relating to shares bought on the second trading line in 2002. A proposal will be made to the Annual General Meeting to reduce the share capital by a further 24.3 million shares relating to the shares bought on the second trading line in 2003.

US dollar reporting

The Group changed the reporting currency of its consolidated financial statements from Swiss francs to US dollars from January 1, 2003 and restated prior year consolidated financial information into US dollars. At the same time the 2002 income statement classification was changed by transferring USD 336 million from Marketing & Sales to other expense categories (Cost of Goods Sold (USD 86 million) relating to certain finished goods, warehousing and distribution expenses; Research & Development expenses (USD 55 million) relating to certain Phase IV clinical trials performed after launch of a new product; General & Administration expenses (USD 195 million) relating to certain third party royalty expenses on in-licensed products).