#1October 2023 Investor Presentation SANDOZ#2Disclaimer This presentation contains forward-looking statements that reflect the current views of management, and which are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Sandoz Group to differ materially from those expressed or implied in this presentation. Statements are made on the basis of management's views and assumptions regarding future events and business performance at the time the statements are made. They are subject to risks and uncertainties including, but not confined to, future global economic conditions, pandemics, exchange rates, legal provisions, market conditions, activities by competitors and other factors outside Sandoz's control. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. Sandoz is providing the information in this presentation as of this date and does not undertake any obligation to update any statements contained in it as a result of new information, future events or otherwise. This presentation constitutes neither an offer to sell nor a solicitation to buy any Securities. 2 Management Presentation SANDOZ#3Sandoz at a glance USD 208bn Market size1 USD 9.1bn FY 2022 net sales3,4 A European champion Growing at 8% 1,2 with increasing share of Biosimilars Strong pipeline USD 1.9bn FY 2022 core EBITDA4 100+ markets served >400 Generics 25 Biosimilars Broad coverage across Europe, North America and International And the global leader in Generics and Biosimilars Strong management team Supported by >22,000 employees 5 3 1. Based on Company analysis using IQVIA Analytics Link MAT12-2022 data in LCUSD at gross price, excludes certain sizeable markets with no or limited Sandoz operations; 2. 2022-2031 CAGR for Biocomparable, Early Entry Generics and Generics as defined by IQVIA and includes all ATC and NFC forms; 3. Net sales to third parties; 4. Based on carve-out financials. For additional information regarding the core results, which are non-IFRS measures, including a reconciliation to the most directly comparable measures presented in accordance with IFRS, see "Appendix" starting on slide 31; 5. Approximate number of FTEs at spin-off. Management Presentation SANDOZ#4We have a clear purpose to pioneer access for patients to become the world's leading and most valued Generics and Biosimilars company Purpose Pioneering access for patients Vision Becoming the world's leading and most valued Generics and Biosimilars company Impact ~500 million 1 >USD 180 billion² patients served per annum estimated annual social impact of Sandoz medicines 1. Based on internal analysis, 2. Based on 2022 WifOR Institute analysis. 4 Management Presentation SANDOZ#5Highly experienced and diverse Corporate Officers 1 Not exhaustive Colin Bond Chief Financial Officer Richard Saynor Chief Executive Officer Ingrid Sollerer Group General Counsel Tripti Jha Chief People Officer Pierre Bourdage Chief Commercial Officer Claire D'Abreu-Hayling Chief Scientific Officer Glenn Gerecke Chief Manufacturing and Supply Officer Rebecca Guntern President Europe Alcon Bristol Myers Squibb evotec GSK Keren Haruvi President North America MSD Note: The third-party trademarks above are property of their respective owners; 1. Proposed Corporate Officers of Sandoz Group AG. 5 Management Presentation Francisco Ballester President International NOVARTIS Phion sanofi teva VIFOR PHARMA SANDOZ#6A broad portfolio generating USD 9.1bn in sales Net sales by business FY 2022, in USD Generics 7.1bn +3% 1 79% SANDOZ 9.1bn +4%1 21% One of the broadest Generics portfolios in the industry Biosimilars 1.9bn +9% 1 8 in-market Biosimilar products Increasing contribution from Biosimilars Note: Net sales to third parties based on carve-out financials. Numbers may not add up due to rounding; 1. Growth vs. 2021 in constant currencies. For additional information regarding constant currencies, which is a non-IFRS measure, see "Appendix" starting on slide 31. 6 Management Presentation SANDOZ#7Global scale and a European champion Net sales by region FY 2022, in USD International 2.5bn North America Market leadership and strong growth in Europe Capturing high-growth / high-return opportunities in International markets North America stabilizing Europe 4.5bn 27% +7% 1 SANDOZ +6% 1 50% 9.1bn +4%1 23% 2.1bn -2%1 Note: Net sales to third parties based on carve-out financials. Numbers may not add up due to rounding; 1. Growth vs. 2021 in constant currencies. For additional information regarding constant currencies, which is a non-IFRS measure, see "Appendix" starting on slide 31 7 Management Presentation SANDOZ#8Six strategic levers to drive long-term shareholder value 01 02 03 04 05 06 Attractive Leadership Multiple Margin Attractive market and scale growth improvement fundamentals drivers financial outlook Compelling sustainability story 8 Management Presentation SANDOZ#9Attractive market fundamentals | Leadership and scale | Multiple growth drivers | Margin improvement | Attractive financial outlook | Compelling sustainability story Attractive and growing market with increasing share in Biosimilars Off-patent market1 Gross sales, in USD bn 208 23 185 2022 Generics Biosimilars Key drivers 420 CAGR '22-'31 Supportive demographic trends +8% 122 +20% Challenged healthcare systems Growing value of loss of exclusivity 298 +5% 2031 1. Based on Company analysis using IQVIA Analytics Link MAT12-2022 data in LCUSD at gross price, excludes certain sizeable markets with no or limited Sandoz operations; 2022-2031 CAGR for Biocomparable, Early Entry Generics and Generics as defined by IQVIA and includes all ATC and NFC forms 9 Management Presentation Shifting share towards Biosimilars Increasing market adoption of Generics and Biosimilars SANDOZ#10Attractive market fundamentals | Leadership and scale | Multiple growth drivers | Margin improvement | Attractive financial outlook | Compelling sustainability story Global leadership and scale; #1 in Europe, Sandoz biggest market Breakdown of global Generics and Biosimilars players by region1 Gross sales, in USD bn SANDOZ Company A Company B Company C Company D 3.4 Company E 3.0 Europe North America International 6.7 9.1 11.2 11.9 #1 in stable and profitable European market At scale but not over-exposed to North America Targeted presence in International 1. Based on Company analysis using data from IQVIA MIDAS MAT 12-2022 data in LCUSD at gross price, excluding ATC J7,K,T and V, NFC V and Z and certain sizeable markets with no or limited Sandoz operations; Biocomparable, Early Entry Generics and Generics as defined by IQVIA. 10 Management Presentation SANDOZ#11Attractive market fundamentals | Leadership and scale | Multiple growth drivers Margin improvement | Attractive financial outlook | Compelling sustainability story Multiple drivers to deliver mid-single digit top-line growth¹ in the mid-term Expanding breadth and depth of pipeline Additional M&A activity E D C B Leveraging A Sales Maximizing near-term Improving product mix strategic partnerships execution Biosimilars launches Mid-single digit net sales growth¹ in the mid-term (2028) Included in business plan 1. In constant currencies. For additional information regarding constant currencies, which is a non-IFRS measure, see "Appendix" starting on slide 31 11 Management Presentation Incremental growth Upside to business plan SANDOZ#12Attractive market fundamentals | Leadership and scale | Multiple growth drivers | Margin improvement | Attractive financial outlook | Compelling sustainability story A Focused on sales execution Europe Building on our leadership position 50% of total Sandoz net sales • #1 in Generics and Biosimilars • Capitalize on our footprint, portfolio and pipeline North America Stabilizing and returning to growth 23% • of total Sandoz net sales Leading in segments where we compete Four high-value upcoming Biosimilars launches International Capturing high-growth / high-return opportunities 27% of total Sandoz net sales • Targeting attractive markets Leveraging our portfolio globally, supplemented by M&A and BD&L Note: FY 2022 net sales to third parties based on carve-out financials 12 Management Presentation SANDOZ#13Attractive market fundamentals | Leadership and scale | Multiple growth drivers Margin improvement | Attractive financial outlook | Compelling sustainability story B Maximizing near-term Biosimilars launches Targeted brand Therapeutic areas Originator net sales targeted¹ HumiraⓇ Immunology ~ USD 21bn adalimumab² TysabriⓇ natalizumab Neurology / Immunology ~ USD 2bn ProliaⓇ / XgevaⓇ Bone diseases ~ USD 7bn denosumab / Oncology EyleaⓇ Ophthalmology ~ USD 11bn aflibercept StelaraⓇ ustekinumab Key highlights High Concentration Formulation (HCF), proven supply reliability and strong cost position, differentiating features First and potentially only Biosimilar to market, leveraging experience from Omnitrope success Most advanced industry program, market expansion opportunity in Osteoporosis Strong target product profile, including prefilled syringe at launch Current status HyrimozⓇ launch in the US since July 1, 2023 EU launch expected in Q4 2023 FDA and EMA approval received Expected FDA approval in Q4 2023 and filed in the EU May 2023 Positive Phase III results Immunology ~ USD 10bn Exclusive commercialization rights in Europe and North America Phase III completed in November 2022 Note: The third-party trademarks above are property of their respective owners, 1. Originator sale covered based on Company analysis using Evaluate Pharma; at full year prior to expected market formation year 2. Only pertains to adalimumab high concentration formulation (HCF) 13 Management Presentation SANDOZ#14Attractive market fundamentals | Leadership and scale | Multiple growth drivers | Margin improvement | Attractive financial outlook | Compelling sustainability story Improving product mix Peak contribution to net sales from launches in USD Last five years Launch of three 31% additional Biosimilars Next five years 35% molecules 31% 1.6bn 49% 69% 3.0bn 51% 69% Launch of ~190 unique Generics products¹ 65% 2022 Biosimilars Generics Complex Generics Standard Generics Note: In USD; 1. Product defined as unique combination of molecule and dosage form. 14 Management Presentation 2027 Launch of four key high-value Biosimilars Planned launch of >120 generics products¹ Significant increase in launch value product with high focus on LoE launches and complex Generics assets SANDOZ#15Attractive market fundamentals | Leadership and scale | Multiple growth drivers Margin improvement | Attractive financial outlook | Compelling sustainability story D Partner of choice status reaffirmed with recent agreement with Samsung Bioepis Just EVOTEC BIOLOGICS Pipeline expansion through partnership to develop and manufacture multiple Biosimilars Numerous opportunities for future collaborations Approximately 120 biologics are expected to lose exclusivity by 20301 polpharma biologics SAMSUNG BIOEPIS Exclusive agreement to commercialize TyrukoⓇ worldwide, with close collaboration up to launch Exclusive agreement to commercialize biosimilar ustekinumab in Europe and North America Around 40 blockbuster drugs to face LoE by 20301 Biosimilars market size is expected to grow from USD 23bn in 2022 to USD 122bn by 20312 Note: The third-party trademarks above are property of their respective owners 1. Based on Evaluate Pharma's data as of February 2023. Blockbustrer drugs considered with > USD 1 billion LoE-1 sales 2. Based on Company analysis using IQVIA Analytics Link MAT12-2022 data in LCUSD at gross price, excludes certain sizeable markets with no or limited Sandoz operations; 2022-2031 CAGR for Biocomparable, Early Entry Generics and Generics as defined by IQVIA and includes all ATC and NFC forms. 15 Management Presentation#16Attractive market fundamentals | Leadership and scale | Multiple growth drivers Margin improvement | Attractive financial outlook | Compelling sustainability story E Expanding breadth and depth of pipeline 2x expected overall launch contribution to net sales in the next five years¹ >400 Generics in pipeline 25 Biosimilars in pipeline ~3x number of Biosimilars in development over the last five years Increasing contribution from complex products Focused on high-value opportunities -50% of launch contribution to net sales expected to be derived from Biosimilars in the next five years >USD 145bn of originator sales covered² >USD 206bn of originator sales covered³ 1. Compared to prior five years, for both Generics and Biosimilars; 2. LoE value covered based on Company analysis using Sandoz IP and IP database; 3. Originator sale covered based on Company analysis using Evaluate Pharma; at full year prior to expected market formation year. 16 Management Presentation SANDOZ#17Attractive market fundamentals | Leadership and scale | Multiple growth drivers Margin improvement | Attractive financial outlook | Compelling sustainability story Rigorously focused on improving core EBITDA margin to ~24-26% by 2028 Operational improvement C A Volume, price and product mix Growing share of higher margin products and portfolio simplification B Network design Internal and external network simplification Focused vertical integration Establish vertically integrated Biosimilars supply Operational excellence Continue to increase manufacturing productivity Procurement optimization Focus on long-term partnerships and scale Organizational efficiency Efficiencies through a leaner operating model ~200bps ~350bps Core EBITDA margin expansion from ~18-19% in 2023 to ~24-26% by 2028 Included in business plan Note: For additional information regarding the core results, which are non-IFRS measures, see "Appendix" starting on slide 31 ~150bps 17 Management Presentation SANDOZ#18Attractive market fundamentals | Leadership and scale | Multiple growth drivers Margin improvement | Attractive financial outlook | Compelling sustainability story Α A Growing high-value Biosimilars contribution Net sales by business 2023 2028 (illustrative) = -20% -80% Mid-single digit growth¹ 2023 Generics Biosimilars Generics Biosimilars -30% ~70% 2028 1. In constant currencies. For additional information regarding constant currencies, which is a non-IFRS measure, see "Appendix" starting on slide 31; 2. LoE value covered based on Company analysis using Sandoz IP and IP database. 18 Management Presentation Broad growth in Generics Attractive pipeline of >400 products targeting USD 145bn of Originator sales² Well-positioned to leverage strong Biosimilars pipeline 25 molecules in the pipeline Five key Biosimilars launches of adalimumab HCF, natalizumab, denosumab, aflibercept and ustekinumab SANDOZ#19Attractive market fundamentals | Leadership and scale | Multiple growth drivers Margin improvement | Attractive financial outlook | Compelling sustainability story B Significant opportunity to further rationalize the network Planned network efficiencies Internal manufacturing sites 18 Current 2023 15 Future 20251 External manufacturing sites² -700 Current 2023 ~350 Future 2027 Network design objectives Improve capital allocation Increase asset efficiency Optimize make-or-buy decisions Invest in cost efficient sites Modernize 1. After announced closures; 2. External finished drugs and API supplier sites. 19 Management Presentation Concentrate external spend Support our launch strategy SANDOZ#20Attractive market fundamentals | Leadership and scale | Multiple growth drivers Margin improvement | Attractive financial outlook | Compelling sustainability story Ⓒ Procurement optimization expected to contribute substantially to operational improvements in the mid-term Current scale and complexity >USD 4bn of external spend >13,600 suppliers Fragmented and dependent procurement organization Multiple procurement initiatives for standalone Sandoz Leverage scale Reduce complexity Simplify organization • • • • • Contract negotiation Consolidate suppliers and leverage strategic partnerships • Drive API and direct material substitution Optimize indirect services • Harmonize and simplify product portfolio • Exploit advanced data, analytics and digital tools Improve internal demand management Simplify internal business processes Global Head Procurement appointed Consolidate procurement team Expedite exit of agreements with Novartis 20 Management Presentation SANDOZ#21Attractive market fundamentals | Leadership and scale | Multiple growth drivers | Margin improvement | Attractive financial outlook | Compelling sustainability story Top line growth momentum continuing into 2023 Net sales by business 9M 2023, in USD bn 6.8 1.4 +6% 1 7.1 1.6 +11% +5% 5.3 5.5 9M 2022 Generics Biosimilars 9M 2023 Note: Net sales refer to net sales to third parties excluding sales to Novartis Group. Numbers may not add up due to rounding; 1. Growth vs. 9M 2022 in constant currencies. For additional information regarding constant currencies, which is a non-IFRS measure, see "Appendix" starting on slide 31. 21 Management Presentation Strong volume growth of 9%pts, price erosion of -3%pts below prior year Continued momentum of Generics business, driven by strong cough and cold season and contribution from recent launches Biosimilars growing double digit, with OmnitropeⓇ and HyrimozⓇ as key contributors to growth SANDOZ#22Attractive market fundamentals | Leadership and scale | Multiple growth drivers | Margin improvement Attractive financial outlook Compelling sustainability story Growth driven by launches in the US and strong performance in Europe and International Net sales by region 2023 2028 (illustrative) = Mid-single digit growth¹ 2023 Europe North America International 2028 1. In constant currencies. For additional information regarding constant currencies, which is a non-IFRS measure, see "Appendix" starting on slide 31. • 22 Management Presentation Europe consistently performing above the market • ~25% growth contribution Leverage footprint with new launches North America with US returning to growth • ~50% growth contribution • Growth primarily driven by four high-value Biosimilars launches Leveraging growth in International markets ~25% growth contribution Prioritize first-to-market and Biosimilars launches SANDOZ#23Attractive market fundamentals | Leadership and scale | Multiple growth drivers | Margin improvement Attractive financial outlook Compelling sustainability story Multiple levers to drive margin expansion Core EBITDA Margin = 2023 2028 (illustrative), % of net sales ~150bps ~24 to 26% ~350bps ~100bps ~18 to 19% ~100bps Strong volume growth across regions and businesses, price erosion in line with historical averages Growing share of higher margin products, esp. Biosimilars and complex Generics Operational improvements 2023 Volume Price Product mix Operational improvements Organizational efficiency 2028 driven by four key levers Network design ↑ Focused vertical integration Operational excellence Note: For additional information regarding the core results, which are non-IFRS measures, see "Appendix" starting on slide 31 23 Management Presentation Procurement optimization Leveraging organizational efficiencies through a leaner operating model SANDOZ#24Attractive market fundamentals | Leadership and scale | Multiple growth drivers Margin improvement | Attractive financial outlook Compelling sustainability story Core EBITDA margin expansion driving strong free cash flow uptake Free cash flow 2021 2028 (illustrative), in USD bn 1.0 0.8 ~2.5x 2021 2022 2028 % of EBITDA 53% 48% -70% Note: 2021 and 2022 based on unaudited carve-out financials extract. For additional information regarding core results and free cash flow, which are non-IFRS measures, see "Appendix" starting on slide 31 24 Management Presentation Attractive cash flow profile and strong balance sheet Increasing EBITDA to cash conversion Working capital optimization Prudent capital structure Capital allocation priorities 1 Investment in organic business 2 Return capital to shareholders 3 Deployment into value generating bolt-on M&A and BD&L SANDOZ#25Attractive market fundamentals | Leadership and scale | Multiple growth drivers Margin improvement | Attractive financial outlook Compelling sustainability story Investment grade credit rating confirmed by key rating agencies MOODY'S Baa2 stable Credit Rating 2023 S&P Global Ratings BBB stable Strong balance sheet offers future optionality Financing at spin-off through bank loans Successful issue of CHF 750 million in inaugural bonds Target Net debt to core EBITDA ratio in the range of 1.7-2.0x Credit Rating 2023 Note: For additional information regarding the core results, which are non-IFRS measures, see "Appendix" starting on slide 31 25 Management Presentation#26Attractive market fundamentals | Leadership and scale | Multiple growth drivers | Margin improvement | Attractive financial outlook Compelling sustainability story 2023 and mid-term guidance Sales growth1 % Core EBITDA % margin Dividend policy % of core net income 2023 guidance Mid-term guidance (2028E) Mid-single digit Mid-single digit -18-19% 20-30% Full year dividend based on FY 2023 core net income -24-26% 30-40% Note: Unless the context requires otherwise, the expression "mid-term" used in this section refers to a forecast until 2028. As with any projection or forecast, these five-year outlook measures are inherently susceptible to uncertainty and are based on various assumptions that may turn out to be incorrect. For additional information regarding core results and constant currencies, which are non-IFRS measures, see "Appendix" starting on slide 31; 1. Net sales to third parties, in constant currencies Management Presentation 26 SANDOZ#27Attractive market fundamentals | Leadership and scale | Multiple growth drivers | Margin improvement | Attractive financial outlook Compelling sustainability story We incorporate environmental responsibility in the way we operate Sandoz for access Strengthening healthcare systems through affordable medicines Sandoz for environment Decarbonization Sandoz for our people Building a diverse workforce and promoting equal opportunity Democratizing biologics Water and waste management Enhancing inclusion and organizational belonging Responsible manufacturing, access and use of antibiotics 27 Management Presentation Retaining and upskilling Sustainable supply chain talent Underpinned by a strong corporate governance framework SANDOZ#28Appendix SANDOZ#29Glossary Abbreviation API ATC CAGR EMA FDA FTE MAT PPE Definition Active pharmaceutical ingredient Anatomical therapeutic chemical Compound annual growth rate European Medicines Agency Food and Drug Administration Full-time equivalent Moving annual total (refers to rolling 12 months average) Property, plant and equipment 29 Management Presentation SANDOZ#30areas Immunology Biosimilar pipeline (status as of October 2023) Targeted brand Humira (adalimumab)³ Therapeutic Originator net sales targeted Source In-house ~USD 21bn TysabriⓇ (natalizumab) Neurology/ ~USD 2bn¹ Immunology ProliaⓇ/XgevaⓇ (denosumab) Bone diseases / ~USD 7bn1 In-house Oncology Eylea® (aflibercept) Ophthalmology ~USD 11bn¹ In-house StelaraⓇ (ustekinumab) Immunology ~USD 10.3bn² HerceptinⓇ (trastuzumab) Oncology ~USD 1.8bn² EirGenix AvastinⓇ (bevacizumab) Oncololgy ~USD 1.7bn² Lantus (glargine) Diabetes ~USD 2bn² Gan & Lee HumalogⓇ (lispro) NovoLogⓇ (aspart) Diabetes Diabetes ~USD 1.8bn² ~USD 4bn² Gan & Lee Gan & Lee 15 other undisclosed compounds Polpharma Biologics Samsung Bioepis Bio-Thera Solutions Current status Launched in US July 2023 EU launch expected H2 2023 Approved US August 2023 File accepted in EU in July 2022 File accepted in US February 2023 and EU May 2023 Positive Phase III results August 2023 Phase III completed in November 2022 File Accepted in US December 2021 and EU January 2022 File Accepted in US January 2021 and EU November 2020 File Accepted in US February 2023 and EU in August 2023 File Accepted in US in June 2023 File Accepted in US in June 2023 Note: Status as of September 2023; the third-party trademarks above are property of their respective owners, 1. Originator sale covered based on Company analysis using Evaluate Pharma; at full year prior to expected market formation year, Originator sales from Evaluate Pharma for 2023 since all of these molecules are post LOE, 3. Only pertains to adalimumab high concentration formulation (HCF) 2. 30 Management Presentation SANDOZ#31Non-IFRS financial definitions included in this presentation Core results The Company's core results - including core EBITDA, core operating income and core net income - exclude fully the amortization and impairment charges of intangible assets, excluding software, net gains and losses on fund investments and equity securities valued at fair value through profit and loss, and certain acquisition and divestment-related items. The following items that exceed a threshold of USD 25 million are also excluded: integration- and divestment-related income and expenses; divestment gains and losses; restructuring charges/releases and related items; legal-related items; impairments of property, plant and equipment, software, and financial assets, and income and expense items that management deems exceptional and that are or are expected to accumulate within the year to be over a USD 25 million threshold. Sandoz believes that investor understanding of its performance is enhanced by disclosing core measures of performance because, since core measures exclude items that can vary significantly from year to year, they enable better comparison of business performance across years. For this same reason, Sandoz uses these core measures in addition to IFRS and other measures as important factors in assessing the Company's performance. The following are examples of how these core measures are utilized: - In addition to monthly reports containing financial information prepared under International Financial Reporting Standards (IFRS), senior management receives a monthly analysis incorporating these core measures. - Annual budgets are prepared for both IFRS and core measures. As an internal measure of Sandoz' performance, the core results measures have limitations, and the Sandoz' performance management process is not solely restricted to these metrics. A limitation of the core results measures is that they provide a view of Sandoz' operations without including all events during a period, such as the effects of an acquisition, divestment, or amortization/impairments of purchased intangible assets, impairments to property, plant and equipment and restructurings and related items. Constant currencies Changes in the relative values of non-US currencies to the US dollar can affect the Sandoz' financial results and financial position. To provide additional information that may be useful to investors, including changes in sales volume, we present information about our net sales and various values relating to operating and net income that are adjusted for such foreign currency effects. Constant currency calculations have the goal of eliminating two exchange rate effects so that an estimate can be made of underlying changes in the combined income statement excluding the impact of fluctuations in exchanges rates: The impact of translating the income statements of combined entities from their non-USD functional currencies to USD - The impact of exchange rate movements on the major transactions of combined entities performed in currencies other than their functional currency. Sandoz calculates constant currency measures by translating the current year's foreign currency values for sales and other income statement items into USD (excluding the IAS 29 "Financial Reporting in Hyperinflationary Economies" adjustments to the local currency income statements of subsidiaries operating in hyperinflationary economies), using the 31 Management Presentation average exchange rates from the prior year and comparing them to the prior year values in USD. Sandoz uses these constant currency measures in evaluating its performance, since they may assist the Company in evaluating our ongoing performance from year to year. However, in performing its evaluation, Sandoz also considers equivalent measures of performance that are not affected by changes in the relative value of currencies. Growth rate calculation For ease of understanding, Sandoz uses a sign convention for its growth rates such that a reduction in operating expenses or losses compared with the prior year is considered favorable and hence shown as a positive change (growth). Free cash flow Sandoz defines free cash flow as net cash flows from operating activities and cash flow from investing activities associated with the purchase or sale of property, plant and equipment, of intangible assets, of financial assets and of other non-current assets. Excluded from free cash flow are cash flows from investing activities associated with acquisitions and divestments of businesses and of interests in associated companies, purchases and sales of marketable securities, commodities, time deposits and net cash flows from financing activities. Free cash flow is a non-IFRS measure and is not intended to be a substitute measure for net cash flows from operating activities as determined under IFRS. Free cash flow is presented as additional information because management believes it is a useful supplemental indicator of the Sandoz' ability to operate without reliance on additional borrowing or use of existing cash. Free cash flow is a measure of the net cash generated that is available for investment in strategic opportunities, returning to shareholders and for debt repayment. Free cash flow is a non-IFRS measure, which means it should not be interpreted as a measure determined under IFRS. Free cash flow conversion Sandoz defines free cash flow conversion as free cash flow divided by EBITDA. This measure represents a company's ability to convert its operating profits into free cash flow (FCF) in a given period. EBITDA Sandoz defines earnings before interest, tax, depreciation and amortization (EBITDA) as operating income, excluding depreciation of property, plant and equipment, depreciation of right-of-use assets, amortization of intangible assets, and impairments of property, plant and equipment, right-of-use assets and of intangible assets. Net debt Sandoz defines net debt as current financial debts and derivative financial instruments plus non-current financial debts less cash and cash equivalents and marketable securities, commodities, time deposits and derivative financial instruments. Net debt is presented as additional information because it sets forth how management monitors net debt or liquidity and management believes it is a useful supplemental indicator of the Company's ability to pay dividends, to meet financial commitments, and to invest in new strategic opportunities, including strengthening its balance sheet. SANDOZ