Independent Auditors Report To Management of Novartis Pharma AG Report on the Audit of the Abbreviated Financial Statements Opinion We have audited the abbreviated financial statements related to the worldwide rights to

Independent Auditors Report

To Management of Novartis Pharma AG

Report on the Audit of

the Abbreviated Financial Statements

have audited the abbreviated financial statements related to the worldwide rights to Xiidra , AcuStream, SAF312, and OJL332 (collectively, the Assets ) of Novartis Group ( Novartis ), which comprise abbreviated statements of

assets acquired and liabilities assumed as of December 31, 2022 and December 31, 2021, the related abbreviated statements of revenues and direct expenses for the years then ended, and the related notes (collectively referred to as

the abbreviated financial statements ).

In our opinion, the accompanying abbreviated financial statements present fairly, in all material

respects, the assets acquired and liabilities assumed of the Assets as of December 31, 2022 and December 31, 2021 and the revenues and direct expenses for the years then ended in accordance with International Financial Reporting Standards

( IFRS ) as issued by the International Accounting Standards Board ( IASB ).

We conducted our audits in accordance with auditing standards generally accepted in the United States of America ( GAAS ). Our responsibilities under

those standards are further described in the Auditors Responsibilities for the Audits of the Abbreviated Financial Statements section of our report. We are required to be independent of the Assets and to meet our other ethical

responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter Basis of Preparation

discussed in Note 2, the accompanying abbreviated financial statements were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission statements as set forth in Rule

3-05(e)(2) of Regulation S-X under the Securities Act of 1933. The abbreviated financial statements are not intended to be a complete presentation of the financial

position, results of operations or cash flows of the Assets in accordance with IFRS as issued by the IASB. As a result, the abbreviated financial statements may not be suitable for another purpose. Our opinion is not modified with respect to this

Responsibilities of Management for the Abbreviated Financial Statements

Management is responsible for the preparation and fair presentation of the abbreviated financial statements in accordance with IFRS as issued by the IASB, and

for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the abbreviated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors Responsibilities for the Audit of the Abbreviated Financial Statements

Our objectives are to obtain reasonable assurance about whether the abbreviated financial statements as a whole are free from material misstatement, whether

due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS

will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the

abbreviated financial statements.

communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

Xiidra , AcuStream, SAF312, OJL332

Assets of Novartis Group

Abbreviated Financial Statements

(in US Dollar thousand)

For the years ended December 31, 2022 and December 31, 2021

Xiidra , AcuStream, SAF312, OJL332 Assets of Novartis Group

Abbreviated Financial Statements

Statements of Assets Acquired and Liabilities Assumed

The notes, on the following pages, are an integral part of these Abbreviated Financial Statements.

Xiidra , AcuStream, SAF312, OJL332 Assets of Novartis Group

Abbreviated Financial Statements

Statements of Revenue and Direct Expenses

The notes, on the following pages, are an integral part of these Abbreviated Financial Statements.

Xiidra , AcuStream, SAF312, OJL332 Assets of Novartis Group

Abbreviated Financial Statements

Notes to the Abbreviated Financial Statements

On June 30, 2023, Novartis Group ( Novartis ) entered into a Stock and Asset Purchase Agreement (the Agreement ) with

Bausch & Lomb ( B+L ) for the divestment of Xiidra , the first approved prescription treatment for the signs and symptoms of dry eye disease, investigational medicine SAF312 (libvatrep), in development as a first-in-class therapy for chronic ocular surface pain, as well as the rights for use of the AcuStream delivery device in dry eye indications and OJL332, a second generation

TRPV1 antagonist in pre-clinical development (collectively the Assets ).

The agreement provides for

the sale of the worldwide rights to research, develop, manufacture and commercialize the Assets for a closing consideration of US $ 1,750 million and up to US $ 750 million of milestone payments. Novartis will assign to B+L the prior

acquisition agreements with respect to its purchase of Xiidra from Takeda Pharmaceutical Company Limited ( Takeda ) and sell the legal entity Kedalion Therapeutics, Inc. ( Kedalion ), which holds the rights to the AcuStream

delivery device, both of which include certain contingent consideration obligations. The transaction is subjected to customary closing conditions and is anticipated to close in the second half of 2023 ( closing date ).

The manufacturing process of Xiidra is mainly performed by contract manufacturing organisations. On the closing date, Novartis will enter into a separate

transition agreement to manage the contract manufacturing organisations and provide transition services to B+L, including the distribution of Xiidra for a limited period of time to avoid interruption of supply.

The Abbreviated Financial Statements include Statements of Assets Acquired and Liabilities Assumed as well as Statements of Revenue and Direct Expenses, and

notes thereto, for the Assets of Novartis as discussed below.

These Abbreviated Financial Statements were prepared to present the net assets to be

acquired pursuant to the Agreement and the revenue and direct expenses related to the net assets acquired. They have been prepared to be included in a Securities and Exchange Commission ( SEC ) form of B+L in accordance with the

requirements for abbreviated financial statements set forth in Rule 3-05(e)(2) of Regulation S-X under the Securities Act of 1933. The basis of preparation describes how

these Abbreviated Financial Statements have been prepared.

As these Abbreviated Financial Statements include only assets and liabilities identified in

the Agreement as being transferred to B+L as of closing date and income and expenses directly related to the Assets, they are not intended to provide a complete presentation of the Assets in B+L s financial possession, results of operations or

cash flows in conformity with the International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). The Abbreviated Financial Statements do not necessarily represent the

assets acquired, liabilities assumed, revenue and direct expenses of the Assets had it been operated as a separate independent business and may therefore not be indicative of the financial position and financial performance that would have been

achieved if operated as an independent entity or of future results of the Assets.

Throughout the periods covered by the Abbreviated Financial Statements,

the operations relating to the assets acquired and liabilities assumed were not segregated within separate legal entities but were embedded within Novartis legal entities. Historically Novartis has not maintained separate records for these Assets.

The Assets were never operated as a separate independent business or division and separate financial statements have not been prepared in the past. As a result of the foregoing, it is not practicable to provide complete financial statements.

These Abbreviated Financial Statements, including the accompanying notes, have been derived from the underlying historical accounting records of Novartis,

which are maintained in accordance with IFRS as issued by the IASB. The accounting policies herein are reflective of those used for the historical Novartis consolidated financial statements, which were prepared in accordance with IFRS as issued by

the IASB. As these Abbreviated Financial Statements have been derived from the Novartis accounts, the reference date used for determining adjusting post balance sheet events is the date that the Novartis accounts were approved for issuance. Any post

balance sheet events that occurred post the approval date of the Novartis accounts are accounted for in the period in which they occurred.

Xiidra , AcuStream, SAF312, OJL332 Assets of Novartis Group

Abbreviated Financial Statements

In accordance with the Agreement, B+L acquires certain intellectual properties and contingent consideration obligations and assumes certain accrual for

employee benefits relating to unused vacation and paid time off and does not acquire other assets and liabilities related to the Assets, such as trade receivables, inventory, trade payables or other accruals related to the Assets. Accordingly,

Novartis has retained these liabilities and assets pertaining to the Assets acquired.

Novartis entered into a separate agreement with B+L to supply

Xiidra to B+L starting from the closing date, for a limited period of time and at fair value pricing and customary terms and conditions. At the end of the supply period Novartis will sell to B+L at a fair value price the inventory on hand, in

accordance with the terms of the supply agreement.

These Abbreviated Financial Statements include a consistent and reasonable allocation of costs, based

on reasonable assumptions and estimates. The cost allocations were based on the direct and indirect costs incurred to provide the respective services. When specific identification was not practicable, a proportional cost allocation method was used,

primarily based on sales or level of effort. The allocations and estimates in the Statements of Revenue and Direct Expenses are based on assumptions that Novartis management believes are reasonable.

The Abbreviated Financial Statements are presented in US dollars. Some of the transactions and asset related to the Assets were denominated in functional

currencies other than US dollars. These amounts have been translated into US dollars using the following exchange rates:

Net revenue in the accompanying Statements of Revenue and Direct Expenses represents net revenue directly attributable to the Assets. Costs and expenses in

the accompanying Statements of Revenue and Direct Expenses represent direct and allocated costs and expenses related to the Assets and allocated general and administrative expense (such as finance and accounting, human resources, information

technology systems and legal). All intercompany transactions have been eliminated.

The Statements of Revenue and Direct Expenses exclude allocation of

expenses relating to Novartis corporate level indirect activities and overhead (such as treasury, public relations, tax) as they are not associated with the revenue generating operations of the Assets.

The funding and management of Novartis operations (including the Assets) are performed on a consolidated basis; accordingly, costs of funding the operations,

including financial debt and related interest expense were not allocated to the Assets. Novartis also maintains its tax functions on a consolidated basis and current taxes and deferred taxes were excluded under the Agreement, accordingly, current

taxes and deferred taxes were not allocated to the Assets.

Cash receipts and disbursements relating to the Assets are aggregated within the cash for the

entire operations of Novartis. As the Assets have historically been managed as part of the operations of Novartis and have not been operated as a stand-alone business, it is neither practicable nor does sufficient data exist to prepare separate

historical cash flow information for the Assets operating, investing, and financing cash flows; therefore, statements of cash flows are not presented.

Although, the Abbreviated Financial Statements reflect management s best estimate of all historical costs related to the Assets, this may however not

necessarily reflect what the results of operations or financial position would have been had the Assets been a separate standalone entity, nor the future results of the Assets as they will exist upon completion of the planned acquisition by B+L as

described in Note 1.