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Transactions with related parties | 12 Months Ended
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Dec. 31, 2020
Disclosure of transactions between related parties [abstract] |
Transactions with related parties | 27. Transactions with related parties Roche Holding AG Novartis has two agreements with Genentech, Inc., United States (Genentech), and one agreement with Spark Therapeutics, Inc., United States (Spark). Both companies are subsidiaries of Roche Holding AG (Roche), which is indirectly included in the consolidated financial statements using equity accounting since Novartis holds 33.3% of the outstanding voting shares of Roche (see Note 4). Lucentis Novartis has licensed from Genentech/Roche the exclusive rights to develop and market Lucentis outside the United States for indications related to diseases of the eye. Novartis pays royalties on the net sales of Lucentis products outside the United States. In 2020, Lucentis sales of USD 1.9 billion (2019: USD 2.1 billion; 2018: USD 2.0 billion) were recognized by Novartis. Xolair Novartis and Genentech/Roche are co-promoting Xolair in the United States, where Genentech/Roche records all sales. Novartis records sales outside the United States. Novartis markets Xolair and records all sales and related costs outside the United States as well as co-promotion costs in the US. Genentech/Roche and Novartis share the resulting profits from sales in the United States, Europe and other countries, according to agreed profit-sharing percentages. In 2020, Novartis recognized total sales of Xolair of USD 1.3 billion (2019: USD 1.2 billion; 2018: USD 1.0 billion), including sales to Genentech/Roche for the United States market. Luxturna In 2018, Novartis entered into an exclusive licensing and commercialization agreement and a supply agreement with Spark for Luxturna outside the United States. The agreements include regulatory and sales milestones as well as royalties payable to Spark on ex-US sales. On December 17, 2019, Roche acquired Spark. The net income for royalties, cost sharing and profit sharing arising out of the Lucentis, Xolair and Luxturna agreements with Roche totaled USD 217 million in 2020 (net income in 2019: USD 101 million; net expense in 2018: USD 34 million). Furthermore, Novartis has several patent license, supply and distribution agreements with Roche. Novartis Pension Fund In 2018, a Group subsidiary provided an uncommitted overnight credit facility to the Novartis Pension Fund, Switzerland, for up to USD 500 million with interest at the US Federal Funds Rate. This credit facility was not utilized during the years 2020, 2019 and 2018. Executive Officers and Non-Executive Directors compensation During 2020, there were 13 Executive Committee members (“Executive Officers”). There were 15 Executive Officers in 2019 and 17 Executive Officers in 2018, including those who stepped down. The total compensation for Executive Committee members and the 14 Non-Executive Directors (13 in 2019 and 2018) using the Group’s accounting policies for equity-based compensation and pension benefits was as follows:
|  | Executive Officers |  | Non-Executive Directors |  | Total |
(USD millions) |  | 2020 |  | 2019 |  | 2018 |  | 2020 |  | 2019 |  | 2018 |  | 2020 |  | 2019 |  | 2018 |
Cash and other compensation |  | 25.6 |  | 20.7 |  | 22.5 |  | 4.6 |  | 4.1 |  | 4.0 |  | 30.2 |  | 24.8 |  | 26.5 |
Post-employment benefits |  | 2.7 |  | 2.6 |  | 2.5 |  |  |  |  |  |  |  | 2.7 |  | 2.6 |  | 2.5 |
Equity-based compensation |  | 41.1 |  | 40.6 |  | 42.5 |  | 5.2 |  | 4.6 |  | 4.8 |  | 46.3 |  | 45.2 |  | 47.3 |
Total |  | 69.4 |  | 63.9 |  | 67.5 |  | 9.8 |  | 8.7 |  | 8.8 |  | 79.2 |  | 72.6 |  | 76.3 |
During 2020, the IFRS compensation expense increased due to higher cash and other compensation. This increase in cash compensation is mainly attributable to ECN members who joined the ECN during 2019, as a result 2019 represented only a portion of their annual compensation. Other compensation increased on account of higher social security payments on vested equity-based compensation. During 2019, the IFRS compensation expense decreased due to lower cash buyout payments to new executive officers and the forfeiture of equity-based compensation as a result of the resignation of an executive officer. These effects were partially offset by higher equity based compensation of executive officers appointed over the last three years. The Annual Incentive award, which is fully included in equity-based compensation even when paid out in cash, is granted in January in the year following the reporting period. The disclosures on Board and executive compensation required by the Swiss Code of Obligations and in accordance with the Swiss Ordinance against Excessive Compensation in Stock Exchange Listed Companies are shown in the Compensation Report of the Group. Transactions with former members of the Board of Directors During 2020, 2019 and 2018, the following payments (or waivers of claims) were made to former Board members or to “persons closely” linked to them:
|  | Currency |  | 2020 |  | 2019 |  | 2018 |
Dr. Krauer |  | CHF |  | 60 000 |  | 60 000 |  | 60 000 |
Dr. Vasella |  | CHF |  |  |  |  |  | 18 228 |
Dr. Alex Krauer, Honorary Chairman, is entitled to an amount of CHF 60 000 for annual periods from one AGM to the next. This amount was fixed in 1998 upon his departure from the Board in 1999, and has not been revised since that date.

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- Definition The entire disclosure for related parties. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Name IAS -Number 24 -IssueDate 2019-01-01 -Section Disclosures -URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IAS&num=24&code=ifrs-tx-2019-en-r&doctype=Standard&dita_xref=IAS24_g13-24_TI -URIDate 2019-03-27 + Details
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