Novartis Animal Health expands presence in Japan with acquisition

Novartis to acquire animal health business of Sankyo Lifetech Co., Ltd.

Acquisition follows long-term partnership started in the early 1990s

Basel, October 19, 2006 - Novartis has agreed to acquire the animal health business of Sankyo Lifetech Company, Limited, expanding the presence of its Novartis Animal Health business in Japan.

Under the agreement, the terms of which were not disclosed, Sankyo Lifetech, a subsidiary of Sankyo Company, Limited, will transfer its animal health business to a new company that Novartis Animal Health K.K. has agreed to acquire. The transaction is expected to close at the end of March 2007. The transaction includes the transfer of consenting staff and all marketing authorizations and intellectual property related to the commercialized brands and R&D portfolio of Sankyo Lifetech’s animal health business, which generated USD 48 million (JPY 5.7 billion) in product sales in the fiscal year ending in March 2006.

Novartis and Sankyo started this collaboration in the early 1990s, which was particularly successful in the development and commercialization of milbemycin oxime. This broad-spectrum parasiticide is marketed by Sankyo under the trade names Milbemycin A (heartworm control) and Systec® (combination product to control heartworm and fleas), which correspond to the Novartis brands Interceptor® and Sentinel®. Sankyo has a long tradition in the Japanese animal health market and is highly respected for its superior products and customer service.

“Japan is important to Novartis Animal Health, and I am very pleased that we have the opportunity to strengthen our presence and position in one of the biggest animal health markets globally,” said George Gunn, Global Head of Novartis Animal Health. “The combination of product ranges will significantly broaden our offering to veterinarians in both the companion animal and farm animal segments, making the combined pro-forma business rank among the top ten animal health companies in Japan.”

Novartis Animal Health K.K. is a fully owned subsidiary of Novartis Holding Japan K.K., which was established in July 2000. Novartis Animal Health and its predecessor companies have been present in the Japanese animal health market for more than 25 years.

About Novartis
Novartis Animal Health Inc. researches, develops and commercializes leading animal health treatments that meet the needs of pet owners, farmers and veterinarians. Headquartered in Basel, Switzerland, and present in almost 40 countries, Novartis Animal Health employs about 2,300 people worldwide. For more information, please consult www.ah.novartis.com.

Novartis AG (NYSE: NVS) is a world leader in pharmaceuticals and consumer health. In 2005, the Group’s businesses achieved net sales of USD 32.2 billion and net income of USD 6.1 billion. Approximately USD 4.8 billion was invested in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 99,000 people and operate in 140 countries worldwide. For more information, please visit: www.novartis.com

Disclaimer
This document contains “forward-looking statements” within the meaning of the US Private Securities Litigation Reform Act. Forward-looking statements are statements that are not historical facts and are generally identified by the words such as “would”, “expected”, “will”, or similar expressions, or by express or implied discussions regarding potential future revenues, or other express or implied discussions of strategies, plans and expectations. Such statements reflect the current plans, expectations, objectives, intentions or views of management with respect to future events, are based on the current beliefs and expectations of management and are subject to significant risks, uncertainties and assumptions. There can be no guarantee that the transaction referred to in this press release will close as expected or that the products mentioned in this press release will achieve any particular level of sales. In particular, management’s expectations regarding these products and the success of the transaction described above could be affected by, among other things, unexpected research results; additional analysis of clinical data; new clinical data; unexpected clinical trial results; unexpected regulatory actions or delays, or government regulation generally; the company’s ability to obtain or maintain patent or other proprietary intellectual property protection; competition in general; government, industry, and general public pricing pressures; the risk that the business being acquired will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; as well as factors discussed in the Novartis AG’s Form 20-F filed with the US Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ materially from those set forth or implied by the forward-looking statements. These forward-looking statements speak only as of the date of this press release and no undertaking has been made to update or revise them if there are changes in expectations or if any events, conditions or circumstances on which any such forward looking statement is based.

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Corinne Hoff

Novartis Global Media Relations

Novartis AG

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