US Department of Health and Human Services awards Novartis USD 486 million contract to build manufacturing facility for pandemic flu vaccine

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* Holly Springs, North Carolina site will have capacity to provide
150 million doses of pandemic vaccine within six months of
declaration of influenza pandemic
* Novartis novel cell-based manufacturing technology vital
alternative to traditional egg-based vaccines production
* Commercial production of pre-pandemic and seasonal flu vaccines
planned after completion in 2012
* Plant to provide 300 highly skilled jobs at opening

Basel, January 15, 2009 -- Novartis announced today that the US
Department of Health and Human Services, Biomedical Advanced Research
and Development Authority (HHS, BARDA) has awarded Novartis Vaccines
a contract for up to USD 486 million over eight years to support the
design, construction, validation, and licensing of U.S. cell-based
influenza vaccine manufacturing facilities in Holly Springs, North
Carolina, to provide a pre-pandemic supply of influenza vaccine and
to provide the capacity to manufacture 150 million doses of pandemic
vaccine within six months of declaration of an influenza pandemic.

"I am delighted that Novartis Vaccines' facilities in Holly Springs
will be able to support the US Government's ability to respond
quickly to a potential pandemic, as well as contribute to America's
vaccine infrastructure for seasonal flu," said Dr. Joerg Reinhardt,
Chief Operating Officer of Novartis. "We believe that this contract
award underscores the US Government's commitment to ensure pandemic
vaccine supply, and reflects their confidence in Novartis."

A major advantage of Holly Springs' future influenza cell culture
production is that it will not rely on the availability of eggs.
Avian influenza virus is currently considered the most likely source
of the next pandemic - and it is lethal to both chickens and their
eggs. Without eggs, traditional influenza manufacturing techniques
cannot produce vaccines, so the Holly Springs flu cell culture
production capabilities would be a vital alternative.

"This HHS contract builds on the strategic investment made by
Novartis in vaccines innovation, and reinforces the significant
financial and technology investments we have already committed to
Holly Springs," added Dr. Andrin Oswald, CEO of Novartis Vaccines and
Diagnostics. "We currently anticipate that by 2012 the site will
provide jobs for more than 300 highly skilled people with the
capability to produce cell-based seasonal flu vaccine, pre-pandemic
vaccine and 150 million doses of pandemic vaccine within six months
of the declaration of an influenza pandemic."

Under the contract, Novartis is responsible for, among other things,
pre-construction document development, land use and zoning,
construction, commissioning, validation and licensing of the
facilities (which are already under construction in Holly Springs,
North Carolina), with the goals of regulatory licensure, manufacture
and release of seasonal and pre-pandemic vaccine, as well as
provision for pandemic vaccine supply in the event of a pandemic. The
contract also requires Novartis to provide two commercial-scale
annual lots of pre-pandemic vaccine for a minimum of three years. In
addition, HHS has the right to exercise options to purchase
additional influenza vaccine over 17 years.

About influenza
Influenza is a contagious, potentially serious respiratory illness
caused by influenza viruses that attack the upper respiratory tract.
It can cause mild to severe illness, and can lead to death. Influenza
viruses easily spread from person to person in respiratory droplets
created by coughing and sneezing. According to the World Health
Organization (WHO), every year an estimated 3 to 5 million people
worldwide become seriously ill from influenza, and as many as 500,000
- primarily children and the elderly - die from ensuing
complications[1]. A recent study conducted by researchers at the
Centers for Disease Control and Prevention (CDC) concluded that, in
the US alone, the total economic burden (including direct medical
costs, lost wages and impacts on productivity) imposed by such
epidemics averages somewhere in the neighborhood of USD 87 billion
every year[2].

About pandemic influenza
Pandemic influenza occurs when a new influenza virus emerges that
causes serious illness and is easily transmitted among humans. In
this situation, the virus can result in a worldwide outbreak of
disease, or pandemic. Pandemic influenza occurred three times in the
last century. Avian influenza, or "bird flu," does not normally
infect humans, but recent outbreaks of H5N1 avian influenza have
resulted in hundreds of human cases, with a mortality rate of more
than 50%. Billions of birds have been destroyed in an effort to
contain the virus, which is now considered endemic in parts of Asia.

Disclaimer
The foregoing release contains forward-looking statements that can be
identified by terminology such as "will," "planned, "potential,"
"believe," "commitment," "strategic," "anticipate," "would," "can,"
or similar expressions, or by express or implied discussions
regarding the potential completion of construction of the production
facility at Holly Springs, the potential commencement of and
continued successful production of vaccines at Holly Springs,
regarding the amounts to be paid by the government under the
agreement described in this release, or regarding potential future
revenues from vaccines produced at Holly Springs. You should not
place undue reliance on these statements. Such forward-looking
statements reflect the current views of the Company regarding future
events, and involve known and unknown risks, uncertainties and other
factors that may cause actual results at the Holly Springs facility
to be materially different from any future results, performance or
achievements expressed or implied by such statements. There can be no
guarantee that we will complete construction at Holly Springs,
commence production there, or successfully continue production of
vaccines there. Nor can there be any guarantee that we will be paid
the full amount referred to in this release. Neither can there be
any guarantee that vaccines produced at Holly Springs will achieve
any particular levels of revenue in the future. In particular,
management's expectations regarding the Holly Springs production
facility and vaccines produced there could be affected by, among
other things, unexpected regulatory actions or delays or government
regulation generally; unexpected construction difficulties or delays;
unexpected production difficulties or delays, including difficulties
or delays relating to the novel cell-culture production technique to
be employed there; unexpected clinical trial results, including
unexpected new clinical data and unexpected additional analysis of
existing clinical data; 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 impact that the foregoing factors could have
on the values attributed to the Novartis Group's assets and
liabilities as recorded in the Group's consolidated balance sheet,
and other risks and factors referred to in Novartis AG's current Form
20-F on file 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 vary
materially from those 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.

About Novartis
Novartis AG provides healthcare solutions that address the evolving
needs of patients and societies. Focused solely on healthcare,
Novartis offers a diversified portfolio to best meet these needs:
innovative medicines, cost-saving generic pharmaceuticals, preventive
vaccines, diagnostic tools and consumer health products. Novartis is
the only company with leading positions in these areas. In 2007, the
Group's continuing operations (excluding divestments in 2007)
achieved net sales of USD 38.1 billion and net income of USD 6.5
billion. Approximately USD 6.4 billion was invested in R&D activities
throughout the Group. Headquartered in Basel, Switzerland, Novartis
Group companies employ approximately 97,000 full-time associates and
operate in over 140 countries around the world. For more information,
please visit http://www.novartis.com.

References
[1] WHO Fact Sheet No. 211. March 2003
[2] Molinari, A., et al. Vaccine. 28 June 2007; 25 (27): 5086-5096

# # #

Novartis Media Relations

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