Good morning and good afternoon, and welcome to the Novartis Q3 2016 Results Release Conference Call and Live Audio Webcast. Please note that during the presentation, all participants will be in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions A recording of the conference call, including the Q&A session will be available on our website shortly after the call ends. With that, I would like to hand over to Mr. Joe Jimenez, CEO of Novartis. Please go ahead, sir.

Thank you. I'd like to welcome everybody to our third quarter earnings call. Joining me here at Novartis are Harry Kirsch, our CFO; Vas Narasimhan, the Global Head of Drug Development; Paul Hudson, Head of Pharma; Bruno Strigini, Head of Oncology; Richard Francis, Head of Sandoz, and Mike Ball, Head of the Alcon Business. Now, before we start, I'd like Samir Shah to read the Safe Harbor statement.

So, good morning and good afternoon, everybody. The information presented in this conference call contains forward-looking statements that involve known and unknown risks, uncertainties and other factors. These may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Please refer to the company's Form 20-F on file with the U.S. Securities and Exchange Commission for a description of some of these factors.

Thanks, Samir. Okay. Starting on slide number four. We had a solid quarter taking into consideration the loss of Gleevec. Our sales were down a point in constant currency, so broadly in line with prior year due to strong performance of our Growth Products, which offset the Gleevec patent expiration. Core operating income was down 3% in constant currency reflecting that generic erosion, but also our investment in Cosentyx and Entresto launches as well as the Alcon turn. We had strong innovation, which we'll talk about in a minute, but on slide number five you can see that we have five key priorities in 2016, so let's start with the financial results. What impressed me about this quarter is really the strength of the Growth Products, which offset the loss of Gleevec in the U.S., so we had products such as Cosentyx and Gilenya, and the new oncology products performing very well. And I think this is really a testament to the strength of our innovation engine that's able to offset a patent expiration like Gleevec. Harry's going to talk about these drivers in more detail, but first I want to go through some of the key launches that are helping rejuvenate the portfolio. So starting with Cosentyx on the next slide; our strong launch continues in the third quarter, so we shipped about $300 million in sales. We're on track to deliver blockbuster status by yearend. Now, this momentum is being supported by some new data this quarter. We published a head-to-head study showing that Cosentyx is superior to Stelara in adults with moderate-to-severe psoriasis. So, this is turning out to be a very effective drug. And then second, we published a data that show the efficacy of the drug is sustained at four years. This also speaks to…

Thank you, Joe. Good morning and good afternoon, everyone. So on slide 19, you see a summary of our performance in quarter three. As a reminder, these numbers reflect our continuing operations, and my comments will be, as always, focusing on growth rates in constant currencies, unless otherwise noted. We had a solid third quarter with sales down 1%, broadly in line with prior year, despite a full quarter of Gleevec generic impact in U.S., which included a couple of new entrants as of August. Core operating income was down 3%, mainly due to generic erosion and growth investments in Entresto, Cosentyx and Alcon, partially offset by productivity improvements. Operating income was up 1%, mainly due to a prior-year legal provisioning. Net income benefited from the higher operating income and income from associated companies, driven by our OTC joint venture, and was up 7% in the quarter. Core EPS was down 3% to $1.23, and free cash flow was $2.6 billion, which I will come back to later in my presentation. Slide 20 shows the underlying volume growth and contribution to core operating income. Sales volume grew 5% in the quarter; we had negative impact of minus 2% on price and minus 4% from generics, which took us down to a minus 1% in constant currency. Currency impact was flat this quarter for the first time in two years, and so the U.S. dollar sales also declined minus 1%. On core operating income, you see a similar but more pronounced picture, volume growth of plus 15% was more than offset by minus 7% on price and minus 11% of generics. With flat currency, both constant currency and USD declined by 3%. On slide 21, you can see the growth drivers from the Innovative Medicines Division. Joe already talked about Cosentyx…

Thank you, Harry. In Q3, we had another strong quarter, progressing our pipeline of Innovative Medicines, which now includes 12 potential blockbusters reading out over the next three years. Moving to the first slide, before reviewing our major data releases in the quarter, I wanted to provide an update on our development organization. We have now fully implemented a single Global Drug Development organization across seven therapeutic areas and fully integrated our global operations to increase our efficiency and productivity over the coming years. With over a 100 projects in late-stage development and world-class operations, we're confident we can drive the steady stream of significant medical innovation. Moving to the next slide, we had another strong quarter in oncology, highlighted by our LEE data release at ESMO in October. In the MONALEESA-2 study, LEE showed significantly improved PFS with a hazard ratio of 0.556 versus standard-of-care in first-line hormone receptor-positive, HER2-negative breast cancer, with an objective tumor response in over 50% of women with measurable disease. It is the first CDK4/6 to meet its primary endpoint in a first-line setting at a preplanned interim analysis. Now the FDA has granted Breakthrough Therapy designation for this drug, and we are in the process of making regulatory submissions worldwide. On the next slide, when looking at the safety profile of LEE, we believe we've demonstrated a positive benefit risk profile with manageable and generally infrequent adverse events, consistent with other broadly-used agents. Discontinuations on the trial were very low with only 25 patients discontinuing due to adverse events. These adverse events overall were manageable with dose reductions and with dose interruptions, and specifically when we look at liver signals, we had four Hy's Law cases, but each of these cases resolved when we discontinued therapy and there were no fatal outcomes with…

Okay. So, to conclude, we had a solid quarter. Our launches are progressing well. We still have work to do on Alcon, but we had strong innovation across all of our divisions and that sets us up well for the future. Now, before we go to Q&A, I just want to make a final point. On January 25, we're going to present our full-year results and we're also going to provide guidance for 2017. We're going to take the opportunity on that day to provide a more in-depth look at our pipeline. So, we're going to host a live event for analysts and investors in Basel on that day with Vas, Jay, and some of their team members together with the ECNs. For those of you who can't make it in person, we're also going to have a live video webcast, so we hope to see you there. Now, I'd like to open the call to questions.

The first question comes from the line of Jeff Holford from Jefferies. Please go ahead.

Yes. Thanks very much for taking my questions, everyone. So just three questions. First on Alcon. You're saying this is going to take a bit longer to return to growth, but how long is that? Can you try and give us some expectation around that in 2017? Secondly, we've been reading in the Swiss press some updates around the Roche stake, that that's potentially going to take longer to execute the sale of that stock. Also, we would infer ourselves that the potential separation of Alcon could take a bit longer as well. And then we've also been hearing various pieces of commentary around your M&A focus. Is it on larger companies or smaller companies? Could you just give us an update on those potential disposals and your M&A focus? And then just last question, quick one on Entresto, just give us some sort of update around prior authorizations, any progress that might be making there in the United States? Thank you.

Okay. Let's start with Mike, on Alcon.

So, thanks, Joe. So, I want to just give you some color in addition to what Joe mentioned. So, we've had a really busy eight months, but the objectives remain the same, is to drive that top-line back to growth, to get to long-term sustainable growth. I think we have the right plan, I believe we're taking the right actions, and they will ultimately read through to the right result. Let me remind you what we were talking about on previous calls in terms of our major activities. That was four key things: we're going to invest to grow, we're going to drive innovation, we're going to improve Alcon's basic operations, and we're going to strengthen customer relationships. And as you step back and look at Alcon, really it's comprised of two major businesses. A Vision Care business, which is a consumer business, and then the surgical business, which is obviously a medical device business. If you look at the consumer business, consumer businesses tend to turn around faster as a result of investment in promotion. And so we took then the decision, right back in Q1, to put DTC, direct-to-consumer advertising, against Vision Care, and we started in Europe, because we were set to go there. And when I step back and look at the results in Europe, I'm very pleased. In the countries where we did implement direct-to-consumer advertising, we did see market share increases, and as a consequence, sales growth. And as Joe mentioned in his opening dialogue, if you step back and look at overall lenses, contact lenses actually grew over the last six months. And if you look at overall Vision Care, Vision Care actually was flat for last six months versus being down 6% for the prior six months. So, when I look through…

And Jeff just in terms of 2017, Mike's building the budget right now, we're going through some investment trade-offs. And so, we'll be able to provide guidance for 2017 on that January date. Regarding your two other questions on Roche and M&A, our strategy in M&A is to find bolt-ons that would enhance the pipelines of all three divisions, or improve the competitive position in a certain market, and anywhere in the range of $2 billion to $5 billion. We've been pretty consistent in terms of how we have talked about going after those. It would be ideal to redeploy cash held in assets such as the Roche stake into those kinds of assets. We're being very financially disciplined. So we're looking at everything, we're evaluating everything that comes on the market or even try to free up into the market. And so, there's really nothing new to report at this time. Next question, please? Oh sorry, Entresto prior auths.

Okay, Jeff, thanks for the question on prior auths. We're right in that window now where these things are getting announced with the major PBMs in the U.S., as you know. Just some headlines: we've made incredible progress I think on this area. There are two aspects to it. One is that we've got PAs now, we hope to have PAs set up for the beginning of the year where it will be reduced to almost nothing. But in the main, we just get an improved level of simplification of the PA, and that's what we're focusing on. So we should see some good progress in the New Year. I get asked a little bit about the changing guidelines and how that's helped. This is one of the key areas for the guidelines have really given confidence to simplification of the PA and we can talk about that again if you need to.

That's great. Thanks very much.

Next question, please?

The next question comes from the line of Richard Vosser from JPMorgan. Please go ahead.

Hi. Thanks for taking my questions. If I could just follow up, just a couple on Alcon, to start with. Just you alluded to improvements in IOLs, but could you just tell us whether you've stopped losing market share, first of all, very simply, and if not, what can be done to stop it in the short-term? Secondly, we see an increasing cost typically in the fourth quarter in Alcon. Should we be thinking about this continuing in the same pattern this year, in 2016? Then moving to Pharma, just a question, you talked about LEE, but could you just give a little bit more thought to the idea of the commercial rollout of LEE, given the monitoring requirement that, I think, you alluded to, the NGM alluded to, around the heart and given the fact that Ibrance doesn't have that monitoring requirement? And then finally just on Gilenya prescriptions, it seems like the prescription trends are starting to slow down, so a couple of questions here. Is that what you're seeing in your shipment data into the U.S.? And as we think about pricing into 2017, I think a lot of the growth is driven by price rises at the moment, so could you give some perspective in terms of pricing in that area going forward? Thanks very much.

Okay, Mike on IOLs.

Yeah. So, on IOLs, again if you look at it from a global standpoint, we are in fact losing market share. What we need to do is first of all return the sales to flat and then growing and then we'll come to market share after that. I think the list of things that I outlined are the right things to be doing in terms of turning the business. But it takes a period of time for it to read through. So, as we're just getting underway with some of these initiatives, the impact will not be immediate, as I said, they will come, I believe, but it will take some time. In terms of costs then on quarter four, as I mentioned, we're doing heavy direct-to-consumer advertising activities in Q3 that will continue into Q4. I think our strong sense is the overall objective, as I mentioned earlier, is to return the top-line to growth, and to do so, we're putting a bolus of money then in to try and get that top-line turned around. So that's what underlying that.

Okay. Bruno, on LEE commercial rollout?

So, one thing – as Vas mentioned before, side effects only occurred in a small number of patients, in the case of the QTc, it was 3.3% of the patients. And they were very quickly identifiable, manageable and reversible. And while each product in competitive situation is unique, I'd like to perhaps make a parallel with another product that we have in our portfolio, Tasigna, which had also QT prolongation, and which was launched second to the market, it's competitor didn't have QT prolongation and we ended up having Tasigna being a blockbuster, and the blockbuster that you know with almost half of the second-generation TKI market share. So we believe that these will be very manageable.

Okay. And Paul, on Gilenya scripts.

So, thank you. So, it's broadly flat but a little bit down, but I think we are – have some sensible plans, not a big impact from what I remember on price, and looking forward to the energy into Q4.

Okay. Thanks, Richard. Next question, please?

The next question comes from the line of Andrew Baum from Citi. Please go ahead.

Thank you. Three questions please. First on LEE011, the four cases of Hy's Law, each one might carry – or a 10% risk of death associated with it historically. We would imagine that you would get mandatory hepatic monitoring, as well as cardiovascular monitoring. Is that consistent with your own internal expectations? And then following on from that, while I note your point on Tasigna versus Sprycel, here you seem to have very similar hazard ratios. They certainly have a time advantage, they are not burdened with either, so what am I missing here? Why aren't physicians going to use Ibrance, at least until you have the Faslodex combination data? Second, on CDK4/6s, you had Tasigna removed from the CVS formulary for next year. Do you anticipate a similar dynamic here given there will be three CDK-4/6s on the market? Should we expect this is a new reality where small molecule oncology drugs are subject to PBM criteria? And then finally, Pfizer's CEO has commented on the need for consolidation within the industry given the pressures on reimbursement. How are you thinking about the broader context of large-scale M&A within that and the opportunities it may offer for Novartis? Thank you.

Okay. Start with Vas on LEE.

Yeah. So, thanks for the question. On LEE, on the four Hy's Laws cases, I mean certainly we're going to have conversations with FDA and EMA to figure out what's the best way to protect patients' interest. I would note that within the class of CDK4/6, neutropenia is an on-target effect and there is regular monitoring of these patients in terms of their overall blood levels of neutrophils. And so, you're going to have a situation here where we will add on potentially some additional monitoring with LEE, but we believe we can do this in such a way that it does not create additional patient burden or physician burden, and we also as I mentioned are doing subgroup analyses to look at how we might differentiate LEE from other drugs in the class in terms of efficacy in certain populations and onset of action.

Okay. And the Tasigna, Sprycel?

I think there was a question first on how we are going to commercialize and differentiate versus Ibrance. So, Andrew, I think that as Vas said, LEE was the only CDK4/6 to stop at interim analysis in the first-line setting on the basis of the MONALEESA-2 trial. In addition, we believe that the MONALEESA-3 and MONALEESA-7 studies are expected to grow and delivering (48:31) first-line setting. When you combine that to the fact that cancer is really an important focus area for us where we have a long history and experience in the space, as well as on global footprint, we believe that we'll be extremely competitive when it comes to launching LEE. In terms of the pricing, based on the results that were presented at ESMO, we believe that if approved ribociclib will offer an important new treatment options and as such we will be covered or reimbursed for eligible patients. And finally, our question on the formulary and Tasigna. We anticipate that patient on Tasigna, which are currently on Tasigna – or who are currently on Tasigna will continue to have access, indeed most of the patients that we have in the U.S. on Tasigna are patients who are on insurance and we are talking approximately 90% of the patients. For those patients, those new patients, we will continue to engage with physicians to obtain prior authorization, so that the patients who will benefit from Tasigna will receive it.

And then Andrew on your question on large-scale M&A. Look, we have been pretty clear that bolt-on strategy is really where we are focused at this point, that doesn't mean we won't do large-scale, but it would have to be very, very attractive for Novartis shareholders if we did. Right now, we're focused on bolt-ons and I think if you look at our pipeline, you look at the underlying growth of this company, as soon as we get through 2017, which will be the final year of the Gleevec patent expiration in Europe, the true growth rate of this company is going to come through in 2017 – in 2018, 2019 and 2020. So towards the backend of 2017, 2018, 2019 and 2020 and that's without the 12 blockbusters that you just saw up there on the list. So on top of that, I think we're in the position of not having to do large-scale M&A and there are some companies in our sector that will just from a pipeline standpoint. And so, we're going to see how things play out, but really focus on bolt-ons at this point.

Thank you.

(50:41) please.

The next question comes from the line of Matthew Weston from Credit Suisse. Please go ahead. Matthew J. Weston - Credit Suisse Securities (Europe) Ltd.: Many thanks. A number of product-specific questions, please. The first on U.S. respiratory strategy. Paul, I think you promised us an update at 3Q, so we're all ears. With respect to BAF and the data in SPMS and the potential filing of a single study, Vas, I'd be very interested, I think, Betaseron an SPMS claim in Europe. Clearly the EMA has normal policy of you needing to go head-to-head with an active control if something is approved. So should we think of this accelerated single-trial approval strategy as only something relevant for the U.S.? And then also sticking with filing strategies, AMG 334, Amgen has made it very clear that it's going to file the Phase II-B data to try and get a label in chronic and episodic. Is that something which you think is possible for you ex-U.S.? And then finally, Joe, one big picture. Novartis historically has used US price increases relatively significantly across its specialty portfolio to drive revenue growth. Given the current political environment and the focus of PBMs, in particular, should we be less focused on price going forward, and what impact that might have on growth rates for the company, particularly in 2017?

Okay. Thanks, Matthew. Starting with Paul on U.S. resp.

So thank you for remembering that I committed at the half year to update on the resp strategy in the U.S. I said at the half year I was going to look at the scenarios and also there were some variables that we were considering, one of which was how the market would change and how our head-to-head versus Noro in the U.S. would play out. We've done the work. We feel comfortable with the choices we have in front of us, but we are going to make you wait little bit longer, until we get the results of the head-to-head. We'll have them in four weeks, and very shortly after that we'll share with you what the plans are, but we're set up now, and we'll take advantage of how the data lands.

And Vas?

So on BAF312, we went to both CHMP for scientist advice before starting the single Phase III study, to ensure that we had a study design that would will enable potential licensor of the drug. And then similarly, with the FDA, we did do a special protocol assessment prior to moving forward with the single study. So, we feel confident that we've designed the studies in the way that the regulators will expect – would expect and we'll have those discussions, as I said, over the course of the coming quarter with both EMA and FDA to determine the path forward. On AMG 334, as you rightly note, the chronic migraine is a Phase IIb study, but it is our intention to be fully aligned with the Amgen study submission and we'll – so basically we will be taking for a global package. So, in the geographies that we are responsible for, we will plan to submit both for chronic and episodic.

And Matthew, on the U.S. pricing environment, if you look at our exposure to U.S. pricing versus our peers, it's less. We're underweight U.S. and if you look at some of the typical analysis that have been done, it shows that we are less vulnerable if that environment becomes worse. Some of the changes that we've been making to the company structurally are designed for a more difficult pricing environment, whether it's U.S. or Europe, right? The consolidation of our manufacturing sites across all divisions, the global consolidation of Global Drug Development, the movement that we made in some of the divisions in terms of making sure that we have focused divisions. These are all changes that we have made to ensure that Novartis is able to thrive in whatever environment, whatever pricing environment comes our way, whether it's in the U.S. or Europe. So, we are planning for a more difficult environment and that's really why we've made the changes that we have. In terms of specifically 2017 growth rates, we're putting together budgets as we speak, we're deciding on trade-offs, this is the first year that we're really able to look at the company as really an integrated company and making resource allocation decisions in a faster and better way I believe. So, we'll be unveiling that in the January meeting. Next question, please?

The next question comes from the line of Tim Anderson from Bernstein. Please go ahead.

Hello. This is Richard Wagner calling for Tim. I had two questions, if you would. One, I wanted to go back to the Roche stake. The report said that, that is on hold. Would it be a correct assumption that the hold is because you didn't like the market price that was offered? And then the second question on Fovista, one of those pipeline products, as one licensed from Ophthotech. As you know there was some negative data recently with a Regeneron competitor in the class. I'm wondering how Novartis views that data point. What does that suggest about your own upcoming data readout? Thank you.

Okay. Harry, on the Roche stake.

Actually nothing has changed in the Roche stake, just because there is a newspaper article, it doesn't mean there is anything behind it. So, we continue to evaluate the financial investment with the strategic component, and I think everything else has been said by Joe before.

And Fovista?

So, yeah, I think we saw the Regeneron data, but I think there's a couple of important points to note. So, Fovista is an aptamer that actually targeted different subtype of PDGF, whereas the Regeneron data was a monoclonal antibody targeting again the different subtype of the PDGF. We think there is reasonable preclinical data that supports that Fovista is targeting the right ligand that we want to affect for impacting this disease. So we look forward to the study results, which we expect in Q4. We feel confident that with the primary endpoint of four letter gain and again in that range will allow us to have a very successful product.

Next question, please?

The next question comes from the line of Graham Parry from Bank of America Merrill Lynch. Please go ahead.

Okay. Thanks for taking my questions. Firstly, on Pharma SG&A, you're seeing costs declining year-on-year in the third quarter. I'm just wondering if you could break out how much was FX, what proportion of the increased sales force costs that you're putting behind Entresto is actually in place in Q3, just to help us understand what that's going to look like as we head into fourth quarter in 2017? Secondly, on Alcon, you said you won't achieve growth this year, but do you think you can hit the planned exit rate of low single-digits top-line growth? And when, and at what levels, do you expect margins to trough? And then thirdly, on M&A, Joe you just said large scale would have to be attractive. Could you define attractive in terms of what would get you off the fence and into a deal and thoughts on potential sources of financing there? Clearly you've indicated Roche stake could be one, could also the GSK consumer stake be a further source of financing? Thank you.

Okay. Starting with Pharma SG&A.

So, minor FX impact. Overall, Innovative Medicines SG&A roughly flat, but that sort of hides a significant investment in Cosentyx and Entresto we put in for the back end of the year, some from productivity gains and just some sensible decision making. We'll get to by the end of Q4 a steady state, plus we've got a few more heads to add in early Q1 for Entresto, about 200 and then you'll know where we stand.

Okay, in terms of Alcon sales margins.

So, in terms of the Alcon...

Mike, pardon me.

In terms of Alcon in quarter four, what we're looking at is mostly likely flat to slightly down versus last year. Again underlying momentum in the businesses and the actions taken seem might the right ones and we'll see where they read through. In terms of the margins, again as we are facing a declining sales number and we're pouring on the M&S and R&D to get this thing turned around, it will be tough on the margin. So, we're not giving any forecast for 2017 at this point, as I said in earlier calls this will be tough on the margins in the short term.

And Graham, just in terms of large scale M&A, my point was that, that's really not our focus. The focus really is on bolt-ons. Obviously, we have a number of resources that we could use to redeploy, if it was something bigger than a bolt-on, but from a financial discipline standpoint, obviously we would look at synergies needing to be substantial in a way that could ensure that Novartis shareholders would look at any deal and say that that is a good deal for Novartis shareholders. So we would hold that standard whether it was a bolt-on or something bigger than a bolt-on.

Next question, please?

The next question comes from the line of David Evans from Kepler Cheuvreux. Please go ahead.

Thanks for taking my questions. Just one on BAF312 again. The data looks very good in SPMS. I mean clearly, as you said, there is very high unmet need and it's a multi-billion-dollar market. Could you just talk about the feedback you've had from physicians on this data, especially the level of the efficacy benefit? And then beyond that, how SPMS patients are currently treated. Are they all are mostly still taking largely unproven relapsing therapies and are there any challenges that you think you might face in switching SPMS patients on to BAF312 from any other drug? Essentially any reason why we should not be thinking about BAF as quite likely in the standard of care in SPMS? Thanks.

So thanks for the question. In our feedback from physicians, particularly the investigators that were involved in the study as well as the other experts, there was really a great deal of enthusiasm because when you look at the primary endpoint, a 23% reduction is pretty impressive, and then the fact that it's consistent at six months out and actually improves. And then importantly in both the subpopulations, as I mentioned, who do not have gadolinium-enhancing lesions or who are not progressing or actively progressing – sorry who are actively progressing, excuse me, these are populations that really are characteristic of this disease, so it shows that BAF is having the effect on the target population. So I think a lot of enthusiasm and a lot of support. Now when you think about these patients today, most secondary progressive MS patients have had the disease for 12 years to 15 years. They're typically older and they've typically had a long-term run with MS. And so, many of these patients might be on existing therapies or they may have failed existing therapies, but there's currently no drug that's really widely used or indicated or has really demonstrated an effect. In addition, there is a large installed base of patients who have had MS for a long period of time, who're currently not being treated at all with an on-label drug, and so we think there is a tremendous opportunity here for BAF312 to capture.

Next question, please?

The next question comes from the line of Kerry Holford from BNP Paribas. Please go ahead.

Thank you. Kerry Holford, BNP Paribas Exane. Four questions, please, if I can. On firstly, Sandoz, we saw a step-down in sales growth in the quarter versus the first half of the year; price erosion clearly above volume. Is that just a launch timing issue? I wonder if you can talk about your expectations also for price erosion going forwards. And then on Tasigna, you mentioned the growth clearly dropped off in Q3 in the U.S., presumably as a result of that multi-generic Gleevec competition. What are your expectations for that brand going forwards? Do you expect that to plateau from here? Can it still grow in the face of generic Gleevec? Your thoughts there, please. And Sandoz stats in the U.S. was also weak in the quarter. I wonder if you could talk about what's driving that? Is it increased competition? Are you losing market share there? Thank you.

Okay, Sandoz, Richard?

Hey, Kerry thanks for the question. So, with regard to the quarter, actually if you look across the regions, the regions performed very well, Western Europe up, Central Eastern Europe, and some of the emerging markets. So we had good growth. If you look at the U.S, which is where I think you're focused, then we had a very strong quarter through the prior year with, as Harry mentioned, a number of big launches with NAGx (63:55) with Exelon Patch, which obviously drove top line and bottom line. So from a price erosion, we don't see anything unusual in that at all. We see a level of consistency we've seen for the last nine months and 12 months. It really is that launch timing. And so, how do I think about pricing going forward? I think about it as the same way, and there'll obviously be a bit of volatility as competitors come in, and launches can be slightly lumpy, but I don't see there's any significant change.

And Bruno on Tasigna and Sandostatin?

So, first on Tasigna, Tasigna continues to grow very nicely at high single-digit rates, and has retained a strong share, about 47% of the worldwide second-generation TKIs. The vast majority of Tasigna patients are on insurance, as I said before, and in our experience they are not switched to generic imatinib when stable. The first-line setting is evolving and some payers are focusing on price, but given the deep molecular response achieved with Tasigna, we expect that it will remain competitive and continue to be used in those patients that require that product. In terms of Sandostatin, (65:05) continues to gradually increase through Ipsen's account-specific contracting strategy. And they captured de novo patients outside of carcinoid syndromes. Oncologists have gained comfort with that product and expressed intent to continue usage, capturing new patient starts and switches. But we believe that through our efforts and our experience in the field, we'll continue to be competitive.

Okay. Next question please?

The next question comes from the line of Florent Cespedes from Société Générale. Please go ahead. Florent Cespedes - Société Générale SA (France): Good afternoon, gentlemen. Thank you very much for taking my questions. Three quick ones. First, a follow-up on the respiratory. Paul, could you share with us that if you show positive head-to-head results of Noro, you would consider to launch a FLAME-like trial with the U.S. dosage? That's my first question. Second question is on Gleevec. The product is benefiting from a relatively modest competitive environment in the U.S. What could be the competitive landscape next year in the U.S.? And for the European market, do you expect the same scenario as in the U.S. or do you believe that the competition will be stronger? My last question is for Vas. Just to come back on LEE. Vas, could you tell us or could you share with us if you see the results of the FALCON trial as a major element of differentiation of LEE versus Palbo, and as you are the first company, of course, having this combination? Thank you.

Okay. Paul on respiratory.

Just to confirm, we'll get the data in four weeks on the head-to-head for Noro, and then after that there was no plan to launch a FLAME-like study. Florent Cespedes - Société Générale SA (France): And thank you very much.

Sorry, go ahead. Florent Cespedes - Société Générale SA (France): No, that was very clear.

Okay, and Bruno on Gleevec.

So, Florent, thank you for the question. So, on Gleevec in the U.S., so far we've had three competitors on the market, and we've managed to maintain over 40% of the imatinib molecule. Going forward, clearly, there are going to be other generics that are going to enter the market, but we cannot speculate on how many are going to enter the market and what the timing is going to be. But it's clear that as more generics enter the market, it will affect our share of the molecule in the U.S. With regards to Europe, the dynamic in Europe is very different with various countries having different characteristics. For example, there are some countries that implement mandatory prices when generics are introduced and others don't. So, we are working at the moment on preparing for this event on a country-by-country basis, and we'll provide full-year guidance at quarter four.

And Vas, on LEE.

Yeah, so on LEE, I mean clearly the FALCON study that showed that fulvestrant was superior to letrozole in this patient – in this first-line patient population with a significant factor in our strategy. And now as we push forward with the MONALEESA-3 study, we believe this is a powerful way for us to differentiate LEE to the other competitor markets, because we would have – be the only company with first-line data with fulvestrant in the market.

Okay. Next question, please.

The next question comes from the line of Tim Race from Deutsche Bank. Please go ahead.

Okay. Thanks for taking my questions. First one on BAF312. Just would like to understand, if you have special protocol assessment agreement there, what's holding you back from filing? Is it the P-value or is it something else within the primary headlines where we should be knowing about here? And also, do you think it's conceivable that the FDA will ask you to do a relapsing remitting study as well? Then moving on to Alcon, just to understand the temporary nature of the cost increase on sales and marketing. You talk about it being DTC and sort of a bolus of costs. But obviously, historically, the reason why you're in this situation is because of lack of investment, so how much of this sort of increasing cost should we see as sticky through 2017 and 2018 and beyond? Thank you.

Vas?

Yes. So BAF312, I mean, our agreement with the regulators was on our endpoint study population and the overall design of the study. And we did highlight that we would come back to them based on the study results for the potential of a single study submission. But it's important that typically in an SPA, we don't get specific regulatory guidance on the disposition of what the FDA may or may not do when we have the final data. I would also note that, I mean one of the challenges we will have to work through with the agency is the size of our safety database. If you could imagine, if we had had additional studies, the safety database would be much larger, so that's just going to factor into how they view the benefit risk on the drug.

And Mike, on Alcon spending.

So, with respect to Alcon spending, we're just putting together our plans for 2017. The cost that we've added are variable costs, so as we build our plan, then we'll have to consider where we're getting our returns and where we are not getting great returns.

Next question, please.

The next question comes from the line of Eric Le Berrigaud from Bryan, Garnier. Please go ahead. Eric le Berrigaud - Bryan, Garnier & Co Ltd. (France): Yes, thank you. Three quick questions, please. First, on Gleevec. You're delivering about $0.5 billion in ex-US sales per quarter, which drive us to around $2 billion for the year. Could you tell us maybe out of this $2 billion mark, how much would be exposed to generics in 2017? Second question, very quickly, how much of Entresto sales reported in the third quarter is in the U.S.? Third, Harry, you commented on the free cash flow for the first nine months; obviously, however, the third quarter goes in another direction. What is behind the difference between net income up by 7% and free cash flow down by 7% in the third quarter? Thank you.

Okay. Starting with Gleevec, Bruno.

So, on Gleevec, next year, the product will have lost its patent in all of the countries, we're losing it in Europe at the end of December, and that will be basically the end of patent protection for Gleevec around the world.

And, Paul, on Entresto?

Out of the $53 million, $35 million U.S.

And, Harry, on cash flow?

Yeah, Eric. Thank you for the question. As you know, free cash flow is a bit more volatile than net income or operating income. So, a couple of items drove net income, for example, the joint venture net income increase was due to a prior-year restructuring, but of course the cash payments from that come via the dividend. And the second piece being on the operating income prior year was a provision for legal case, the payout came actually this year. On the quarter three, specifically, we had for example some cash payments for intangible assets, which then declined in quarter three by $200 million to free cash flow. So, overall, I always recommend on free cash flow to look at year-to-date numbers, because then some of the moves between the net income and the free cash flow items are removed and you have a better picture. Eric le Berrigaud - Bryan, Garnier & Co Ltd. (France): Thank you.

Next question, please.

The next question comes from the line of Vincent Meunier from Morgan Stanley. Please go ahead. Vincent Meunier - Morgan Stanley & Co. International Plc: Thank you for taking my questions. The first one is a follow-up on Alcon. So based on your comments on the operating costs, is it fair to assume that the margin recovery will not come before 2018 and will not be the first priority in 2017? The second question is on the OTC joint venture. The contribution has been material this quarter again. Is it fair to assume that you want to keep it as long as possible, and at least until 2018 when the put expires? And the last question is a follow-up on the Roche stake, a very simple question, are you waiting for APHINITY readout or not at all?

Okay. Starting with Alcon, Mike, on an operating cost margin recovery?

Yeah. So, if we look going forward, as I mentioned, top-line recovery is number one. As I also mentioned, we're building our plans as we go forward. So, we're not talking about margin recovery at this point. However, from a long-term standpoint, what we did point out in previous calls was that our objective is to get to the industry average in terms of operating income percentage, which is in the low 20%s.

And Harry?

So, first on the OTC JV, so as expected the JV makes good progress. We are satisfied with the continued realization of top and bottom-line synergies. And as you mentioned, we have a put option between three years and 20 years, which would start in March 2018. We are in no hurry to exercise that put option. But of course, we continue to watch and we are also on the joint venture board to see that there is continued good progress, and as you know, the target margin of 20% plus is not yet reached, so we expect continued good progress here. On the Roche stake, we are not waiting for APHINITY or anything else, this is simply part of our overall evaluation of capital allocation and our assessment of the value of the stake.

Okay. I think we have time for one more question.

The last question comes from the line of Keyur Parekh from Goldman Sachs. Please go ahead.

Good afternoon and thank you for taking my questions. I've got three big picture ones, please, Joe. The first one, if we were to look out 12 months out, so third quarter 2017, do you expect the Novartis corporate structure to be the same as it is today or do you think there might be some additions and deletions to the businesses that you operate in? That's question number one. Question number two is, Harry and you both referenced some of the pushes and pulls on 2016 versus 2017. I realize this is still very early in the process, but broadly, should we be thinking about 2017 as a year of growth, decline or largely flat? And then thirdly, Joe again, you mentioned some commentary around U.S. pricing and how you're creating a group structure that enables for a harsher pricing environment. But if I could just get a sense from you on, over the next two to five years, are you expecting any structural changes to the U.S. pricing environment or do you see more of a slow bleed continuing? Thank you.

Okay. Starting with your first question, if you look out, let's say, a year from now, would the corporate structure include additions and deletions. The way to answer that question is, think about the restructuring that we've done in the last two to three years. It's been quite a bit. First, it was the portfolio transformation that now has Novartis focused on three divisions and then we went internal over the last 18 months to create the centralization of services that are going to allow us to take significant costs out over the next few years. So I would say, the announcements in terms of what we've done are significant. We've now created a platform and that platform is going to take time to seed. So, Global Drug Development is underway, the manufacturing centralization across divisions is underway, that's going to take quite a bit of effort and we're doing this all because of the external environment. What's coming, whether it's going to be a favorable run, favorable environment from a health system standpoint, Novartis is going to be able to weather that. Now in terms of portfolio, specifically, it remains to be same. We've said, look on Alcon, we're focused today on turning that business and that's where a 100% of our effort is going. In terms of other businesses that we may add or subtract, I wouldn't want to speculate, but I would say that this is a dynamic process. One of the things that we did learn from the GSK transaction, also with Lilly, is that focus is good on the company, and that's why we've made the changes to our divisions. We've – we took Pharma out of Alcon, and focused it into a medical devices company. We took mature products out of Pharma and put…

So, listen, I'd like to thank everybody for attending the call, and we look forward to giving you an update at our full-year results on January 25. Thank you very much.

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