be observed in countries with rapidly growing Gross National Product (GNP), such as China and India. In each of these countries, the new middle class already comprises more than 150 million people.

A fundamentally different situation prevails in the poorest countries, for example in parts of Africa, where HIV/AIDS, malaria, tuberculosis and various other infectious diseases kill millions of people every year. The pharmaceutical industry is neither the cause of this plight, nor can it prevent it on its own. Nevertheless, the pharmaceutical industry is able and ready to make a valuable contribution. Accordingly, at the World Trade Organization (WTO) negotiations in Cancun, the industry did not insist on patent rights for essential medicines in the poorest countries. Novartis, however, has gone even further. Thanks to our good results last year we were able to provide, at no charge, all the drugs used by the World Health Organization (WHO) for the treatment of leprosy patients worldwide. Furthermore, we are providing the WHO with our new malaria drug Coartem at cost. Recently, we additionally committed to supply medicines for the treatment of 500 000 tuberculosis patients over the next five years, free of charge.

We continue our endeavors to fulfill every regulation, no matter how work-intensive or formalistic it may be. In 2004 we will comply with every part of the Sarbanes- Oxley Act, including Section 404, thus fulfilling every demand made by US authorities. Despite all internal and external controls, and our declared intention and related efforts to comply with all laws and regulations, it is unlikely – given our 78 000 associates – that we will be successful everywhere at all times. But at a minimum, the transparency of our report will enable you, our share-

owners, to assess the current situation, risks and opportunities of your company. I can assure you that the Board of Directors and I are fulfilling our leadership and controlling responsibilities to the best of our knowledge and abilities.

At the next Annual General Shareholder Meeting, Heini Lippuner and Walter Frehner will retire from the Board. After last year’s meeting, you, the shareholders, have already prepared the succession. Professor Srikant Datar is professor of accounting at Harvard Business School, and Dr.-Ing. Wendelin Wiedeking is Chairman of the Executive Board at Porsche AG.

Here, I also wish to express my deep regrets regarding the death of our honorary Chairman, Dr. Louis von Planta, who played a decisive role in the founding of our company.

Finally, I would like to take this opportunity to thank everyone who contributed to last year’s good results – especially all our associates. And I wish to thank you, as shareowners of Novartis, for your loyalty and confidence.

Daniel Vasella, MD
Chairman and CEO