BUSINESS REPORT. INTERACTIVE ANNUAL REPORT 2016

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(1)INTERACTIVE ANNUAL REPORT 2016. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. BUSINESS REPORT..

(2) Our mission: treat more patients with groundbreaking medicines. CONTENTS 03. LETTER TO THE SHAREHOLDERS. 07. KEY PERFORMANCE INDICATORS. 08 09 13 15. Financial performance Actelion’s product portfolio Actelion’s clinical development pipeline Actelion’s people. 17. THE POWER OF THREEE. Actelion is a leader in the field of pulmonary arterial hypertension (PAH). Our portfolio of PAH treatments covers the spectrum of disease, from WHO Functional Class (FC) II through to FC IV, with oral, inhaled and intravenous medications. Although not available in all countries, Actelion also has treatments approved by health authorities for a number of specialist diseases including type 1 Gaucher disease, Niemann-Pick type C disease, digital ulcers in patients suffering from systemic sclerosis, and mycosis fungoides type cutaneous T-cell lymphoma.. BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. 2. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Actelion Ltd. is a leading biopharmaceutical company focused on the discovery, development and commercialization of innovative drugs for diseases with significant unmet medical needs..

(3) BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. 3. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. LETTER TO THE SHAREHOLDERS.

(4) A little over 19 years ago, a small group of researchers started out with an idea. Today, that idea has developed into a company valued at 30 billion US dollars – plus the opportunity to repeat the success story.. A UNIQUE VALUE PROPOSITION FOR SHAREHOLDERS. On January 26, 2017, following several months of discussions, we announced a structured transaction with Johnson & Johnson which represents a unique value proposition. This innovative transaction allows you, Actelion’s shareholders, to monetize your holdings in the. BUSINESS REPORT.. CONTENTS. company at a highly attractive cash price of 280 US dollars per share, while at the same time retaining a significant stake in the future potential upside of Actelion’s early-stage pipeline, through ownership of a new R&D company.. We are incredibly proud of what has been achieved over the past 19 years.. The proposed deal reflects the fact that Johnson & Johnson recognizes our expertise in rare diseases and our capabilities in shaping medical paradigms. In particular, it appreciates the quality of our PAH franchise, the potential of our marketed medicines and our promising late-stage development assets. Johnson & Johnson will launch an all-cash tender offer in Switzerland to acquire all of the outstanding shares of Actelion. The offer prospectus by Johnson & Johnson is expected to be published shortly.. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. 4. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. A SUCCESS STORY TO BE PROUD OF. Actelion’s Board of Directors and management team have always focused on long-term value creation. We are incredibly proud of what has been achieved over the past 19 years. In that time, Actelion has not only fundamentally changed the way pulmonary arterial hypertension (PAH) is treated, but also created a diverse R&D pipeline of bestin-class compounds. This success has been accompanied by growing profitability and increasing shareholder returns..

(5) As part of the transaction, immediately prior to the completion of the acquisition, Actelion will spin out its drug discovery operations and earlystage clinical development assets into a newly created Swiss biopharmaceutical company, which will be listed on the SIX Swiss Exchange. The proposed transaction, certain terms of which will be put before you at an Extraordinary General Meeting of Shareholders is the first of its kind in our industry. The Board of Directors and management unanimously recommend that you endorse the proposals, as we believe them to be in the best interest of all Actelion stakeholders. COMMITTED TO CONTINUED LEADERSHIP IN PAH. Today, Actelion is the leader in the field of PAH, with two major products – Opsumit and Uptravi – each with a long patent life ahead of it. Both of these products have demonstrated long-term outcome benefits in large randomized controlled trials where they were used in combination with other PAH-specific therapies. These products will have a major impact on the market by increasing the number of patients benefiting from treatment, with Actelion’s products set to capture a leading market share.. The roll-out of Opsumit is going extremely well, with sales of over 830 million Swiss francs in 2016. In addition, the launch trajectory for Uptravi has been exceptional, with over 2,400. BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. patients already treated in its first year on the market. In the US, the prostacyclin market is well established and physicians recognize the benefits offered by Uptravi, but because this treatment pathway is less well known outside the US, it is particularly encouraging to see how the product has been received by experts in Europe. Actelion has an unparalleled portfolio of outcome-based PAH treatments, offering a combination of efficacy, safety and ease of use, and helping physicians and patients to be proactive in the management of disease progression. Thanks to its global presence and commercial capabilities, Johnson & Johnson can help open new markets and opportunities for our marketed products. Ultimately, this will mean that more patients can benefit from our efforts. The same capabilities will also add value to our compounds in late-stage clinical development, including ponesimod (an S1P1 receptor modulator for multiple sclerosis) and cadazolid (a novel antibiotic for Clostridium difficile-associated diarrhea). REPEATING THE SUCCESS. As part of the proposal, we will create an independent clinical-stage biopharmaceutical company, which will inherit Actelion’s fully established and validated drug discovery engine and its early-stage clinical pipeline.. 5. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. ...the first of its kind in our industry. The Board of Directors and management unanimously recommend that you endorse the proposals....

(6) Under the leadership of an experienced and proven scientific team, we have high expectations for this new venture. As long-term shareholders, you have invested in Actelion’s pipeline, and the unique structure of the proposed transaction offers you the opportunity to share in future successes. If a small group of researchers with no more than an idea can create Actelion, imagine what can be achieved with a well-funded, highly productive drug discovery engine and a diverse development pipeline. As Chairman and CEO, we look forward to sharing this journey with you.. Jean-Pierre Garnier, Chairman of the Board of Directors. BUSINESS REPORT.. Jean-Paul Clozel, Chief Executive Officer. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. 6. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Yours sincerely,.

(7) BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. 7. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. KEY PERFORMANCE INDICATORS.

(8) FINANCIAL PERFORMANCE. 2014 2015 2016. Core R&D Expenditure CHF 1,956 million. 2014. CHF 2,042 million. CHF 369 million. 2015. CHF 2,412 million. Core Operating Income. CHF 404 million CHF 509 million. 2016. 2014. CHF 743 million. 2015. CHF 814 million. 2016. CHF 992 million. An outstanding commercial performance, driven by the continued highly successful rollout of Opsumit and the strong uptake of Uptravi, resulted in excellent product sales.. Actelion has made significant progress with its strong pipeline of best-in-class compounds to diversify the business.. The excellent commercial performance has allowed R&D efforts to be increased while continuing to deliver strong earnings growth. Focus on the bottom line, coupled with strong sales, resulted in core operating income growth of 17% at CER.. Core Earnings Per Share. Total Shareholder Return. Cash Returned to Shareholders. 2014 2015 2016. CHF 5.58. 2014. CHF 6.16 CHF 8.18. Core EPS increased by 27% at CER, driven by a strong underlying performance and enhanced by the share repurchase program.. BUSINESS REPORT.. CONTENTS. 3 Year TSR: 155%. 2014. 2015. 2 Year TSR: 60%. 2015. 2016. 1 Year TSR: 59%. 2016. Actelion shares continued to perform strongly during 2016, regardless of the extraordinary volatility created by the strategic discussions announced in late November. The share price performance, together with the increased dividend of CHF 1.50, resulted in a TSR of 59% for 2016.. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. CHF 133 million CHF 927 million CHF 428 million. In 2016, in keeping with its commitment to maximize shareholder value creation, Actelion returned 428 million Swiss francs to shareholders through the second-line share repurchase program and an increased dividend.. 8. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Product Sales.

(9) ACTELION’S PRODUCT PORTFOLIO. Actelion’s PAH franchise encompasses oral, inhaled and intravenous formulations of compounds, for patients at various stages in the course of this disease (WHO Functional Classes II–IV), enabling us to deliver treatments across the entire continuum of care.. Opsumit® (macitentan). Sales CHF million. Tracleer® (bosentan). 2015 516. 2016 831. 61% increase in Swiss francs 57% increase at CER Opsumit is an orally available endothelin receptor antagonist that resulted from a tailored drug discovery process in Actelion’s laboratories. Opsumit is commercially available in over 45 markets, including the US (since November 2013), Germany (since January 2014) and Japan (since June 2015). The registration process for other countries is ongoing.. BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. Sales CHF million. 2015 1,212. 2016 1,020. 16% decrease in Swiss francs 18% decrease at CER Tracleer, an orally available endothelin receptor antagonist, was the first oral treatment approved for PAH. Tracleer is commercially available in over 60 markets, including the US (since November 2001), the EU (since May 2002) and Japan (since April 2005). In addition to the PAH indication, Tracleer is approved in the EU for reducing the number of new digital ulcers in patients suffering from systemic sclerosis and ongoing digital ulcer disease.. 9. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Our PAH franchise Pulmonary arterial hypertension (PAH) is a chronic, life-threatening disorder characterized by abnormally high blood pressure in the arteries between the heart and lungs..

(10) Veletri® (epoprostenol for injection). Sales 2016 CHF million 245 Uptravi, originally discovered and synthesized by Nippon Shinyaku, is the only approved oral, selective IP receptor agonist targeting the prostacyclin pathway in PAH. Uptravi is commercially available in 9 markets, including the US (since January 2016) and Germany (since June 2016) with marketing authorization granted in Australia, Canada, the EU, Japan, New Zealand, South Korea, Switzerland and the US. The registration process for other countries is ongoing.. BUSINESS REPORT.. CONTENTS. Sales CHF million. 2015 83. Ventavis® (iloprost). 2016 97. 17% increase in Swiss francs 12% increase at CER Veletri, an intravenous prostacyclin, is stable at room temperature (77°F/25°C) for up to 24 hours, removing the need for patients to carry ice packs. Veletri is commercially available in 17 markets, including the US since 2010, Switzerland and Canada (marketed as Caripul®) since 2012, Japan (marketed as Epoprostenol “ACT”) since 2013, and some European countries since 2013. The registration process for other countries is ongoing.. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. Sales CHF million. 2015 105. 2016 73. 30% decrease in Swiss francs 32% decrease at CER Ventavis is an inhaled formulation of iloprost, a synthetic compound structurally similar to prostacyclin (PGI2). Actelion has marketed Ventavis in the US since 2007. Elsewhere it is marketed by Bayer Healthcare.. 10. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Uptravi® (selexipag).

(11) Valchlor® (mechlorethamine). Sales (CHF million). 2015 27. Zavesca® (miglustat). 2016 35. 30% increase in Swiss francs 27% increase at CER Valchlor gel 0.016%, a topical formulation of mechlorethamine, is used for the treatment of stage IA and IB mycosis fungoides type cutaneous T-cell lymphoma in patients who have received prior skin directed therapy. Valchlor is commercially available in the US (since November 2013) and Israel (since April 2016). Valchlor is currently under review with the European Medicines Agency under the trade name Ledaga®.. More details on the availability of our products can be found on www.actelion.com/investors/products. BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. Sales (CHF million). 2015 92. 2016 104. 13% increase in Swiss francs 12% increase at CER Zavesca, an orally active inhibitor of glucosylceramide synthase, is used as monotherapy in adult patients with mild to moderate type I Gaucher disease (GD1) for whom enzyme replacement therapy is not a therapeutic option. Zavesca is commercially available for the treatment of GD1 in 47 markets, including the US and the EU (since 2003). In the EU, Zavesca is also indicated for the treatment of progressive neurological manifestations in adult and pediatric patients with Niemann-Pick type C (NP-C) disease, a rare neurodegenerative genetic disorder. Zavesca is commercially available for the treatment of NP-C in 46 markets, including the EU (since 2009) and Japan (since 2012, marketed as Brazaves®).. 11. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Our specialty products Actelion is creating specialty franchises alongside PAH – discovering, developing and/ or in-licensing/acquiring products in new therapeutic areas..

(12) Otto Schwarz, Chief Operating Officer. BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. 12. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. “By the end of 2016, the efforts to transform our PAH business have reached a major milestone as more than half of our 2016 PAH sales came from our outcome-based portfolio. The significant clinical utility of Opsumit continued to result in strong patient uptake with more than 21,000 patients currently receiving therapy. Moreover, after just one year on the US market, we can say that the Uptravi launch has been very successful by any standards, proving the high unmet medical need for oral prostacyclin therapy and validating our commercial strategy.”.

(13) Phase. Compound. Indication. Study. Status. Phase III. Cadazolid1. Clostridium difficile-associated diarrhea. IMPACT. Ongoing. Macitentan1. Pediatric PAH. TOMORROW. Initiating. Macitentan1. Portopulmonary hypertension (PoPH). PORTICO. Ongoing. Macitentan1. Fontan-palliated. RUBATO. Initiating. Ponesimod1. Multiple sclerosis. OPTIMUM. Ongoing. Ponesimod1. Multiple sclerosis. POINT. Ongoing. Cenerimod2. Systemic lupus erythematosus. -. Ongoing. Clazosentan2. Reversal of vasospasm associated with aneurysmal subarachnoid hemorrhage. REVERSE. Ongoing. Dual Orexin Receptor Antagonist2. Insomnia. -. Ongoing. Endothelin Receptor Antagonist (ACT-132577)2. Specialty cardiovascular disorders. -. Ongoing. Macitentan1. Chronic thromboembolic pulmonary hypertension. MERIT. Complete. Phase Ib. Lucerastat2. Fabry disease. -. Complete. Phase I. New Chemical Entity 2. Cardiovascular disorders. -. Ongoing. New Chemical Entity 2. Inflammatory disorders. -. Ongoing. Selective Orexin 1 Receptor Antagonist2 Neurological disorders. -. Ongoing. T-type Calcium Channel Blocker2. -. Ongoing. Phase II. 1 2. Neurological disorders. Upon completion of the proposed transaction these assets would be developed by Johnson & Johnson Upon completion of the proposed transaction these assets would be developed by the new R&D company. BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. Status as of 31 January 2017. 13. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. ACTELION’S CLINICAL DEVELOPMENT PIPELINE.

(14) Jean-Paul Clozel, Chief Executive Officer. BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. 14. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. “Actelion has invested considerably in building a highly productive drug discovery engine and a diverse development pipeline. With Johnson & Johnson’s proposed acquisition of Actelion and the spin-out of a new R&D company, we have created unprecedented value for all of our stakeholders. Our current PAH portfolio and our late-stage pipeline will be able to reach their full potential as part of Johnson & Johnson. With the creation of a new R&D company we also have the opportunity to realize the value potential we have created with our discovery engine and early-stage pipeline.”.

(15) ACTELION’S PEOPLE. At Actelion, people make the difference Actelion has always been highly conscious of the fact that it’s people who make the difference. In turn, we have made sure our employees understand that we expect each of them to make a significant contribution.. transformed the vision of Actelion’s founders into reality: People with passion and expertise are paving the way to our future success.. As part of our strategy, we place a high priority on attracting, developing and retaining highly talented people. Employees who identify with the goals and values of our company have. Current Workforce. Total: 2,624. 1,313 Male Employees. 264. 213. 1,311 Female Employees. 780. Baby Boomers 1945-1964. 744 Generation X 1965-1979. 452. 341. 388. 1,443. Clinical Development. Corporate Functions. Drug Discovery. Marketing & Sales. BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. 268. 354 Generation Y 1980-1999. 1. Generation Z 2000-present. 15. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Actelion acknowledges that people come to us from diverse backgrounds, both culturally and professionally. We strive to provide our employees with the best environment in which they can fulfill their individual aspirations and contribute to innovative medicines that positively affect patients’ lives..

(16) Employees by Region. US 498. EU 533. CH 1,127. RoW 208. Employees by Nationality American 498. Chinese 51. British 101. BUSINESS REPORT.. CONTENTS. German 235. French 458. LETTER TO THE SHAREHOLDERS. Japanese 257. Italian 115. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. Spanish 56. Others 525. Swiss 328. 16. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. JP 258.

(17) BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. 17. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. THE POWER OF THREEE.

(18) UPTRAVI Prostacyclin, which is a signaling molecule in the human body, enables several important functions. It induces the widening of blood vessels (vasodilation), inhibits cell growth (antiproliferation), has anti-inflammatory effects and inhibits platelet aggregation, which is a precursor step for the formation of a blood clot. If the production of prostacyclin is impaired, as it is the case for patients with PAH, the consequences are severe. It is therefore not surprising that the prostacyclin pathway is one of three established targets in the treatment of PAH. However, the utilization of this important pathway is currently largely untapped.. BUSINESS REPORT.. CONTENTS. Until recently, available treatments which target the prostacyclin pathway have required either intravenous, subcutaneous or inhaled administration, which can interact with a variety of prostacyclin receptors. While the role of these therapies in the management of severe PAH is undisputed, the challenging administration of those treatments imposes a severe burden on the quality of life for PAH patients and their families. Even inhaled administration can involve up to 9 administrations a day, while the use of intravenous catheters requires a permanent line that is embedded in the chest. Additionally, in some cases. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. the medication needs to be prepared daily and to be kept cold, while intravenous medications carry the ongoing risk of infections. As a result of all these points, physicians are often reluctant to prescribe therapies targeting the prostacyclin pathway. According to the large US Reveal Registry, almost half of patients were not receiving a prostacyclin at time of PAH-related death. In Europe, where the prostacyclin pathway is even more underutilized, data from the large European COMPERA registry indicate that nearly 80% of patients in Functional Class IV at time of death have not received a therapy targeting this pathway.. 18. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Opening the prostacyclin pathway for many more patients.

(19) 55.9%. Intravenous/ subcutaneous prostacyclin therapy. 5.7%. No PAH therapy. 38.4%. Other PAH therapy. All patients (n=487). “Many physicians still view prostacyclin therapies as a ‘last resort’, only to be used once all other options have been exhausted,” says Alessandro Maresta, Head of Global Medical Affairs at Actelion. “What this means for the patients is that they are left with a progressive disease that has to become severe before their physician will consider using therapies targeting the prostacyclin pathway. Yet these therapies can help slow the progression of the disease and should be utilized to ease symptoms from a much earlier stage.” Filling the therapeutic gap With the launch of Uptravi (selexipag) in the US in January 2016, Actelion brought an orally. BUSINESS REPORT.. CONTENTS. Uptravi, originally discovered by Nippon Shinyaku, is indicated for the treatment of PAH (WHO Group 1) to delay disease progression and reduce the risk of hospitalization for PAH in the US. The effectiveness and safety of Uptravi was established in the long-term, placebocontrolled Phase III study GRIPHON, enrolling 1,156 PAH patients with WHO Functional Class II-III symptoms. The exposure to Uptravi in this trial was up to 4.2 years, with a median duration of exposure of 1.4 years. Adverse reactions occurring more frequently on Uptravi compared to placebo – greater than or equal to 3% – over the course of the study were headache, diarrhea, jaw pain, nausea, myalgia, vomiting, pain in extremity, flushing, arthralgia, anemia, decreased appetite and rash. These adverse reactions are more frequent during the dose titration phase. In the GRIPHON study, Uptravi showed a 40% relative risk reduction versus placebo to experience a PAH-related morbidity/mortality event. This is even more significant considering that almost 80% of the patients in the study (including the placebo arm) were on a targeted PAH background therapy, with almost half of these patients being treated with both an ERA and a PDE-5 inhibitor. Uptravi is the first PAH therapy proven effective to reduce the risk of disease progression, even in triple combination with an ERA and a PDE-5 inhibitor.. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. Today, treatment options in the early stages of PAH (Functional Classes II and III) are ERAs like Opsumit which target the endothelin pathway, and PDE-5 inhibitors targeting the nitric oxide pathway. As patients progress in the disease to Functional Class IV, a parenteral therapy targeting the prostacyclin pathway such as Veletri can be used. There is an urgent need to bridge the gap by delivering an oral medication that acts on the prostacyclin pathway. Uptravi has the potential to fill this gap, and to consequently open the prostacyclin pathway to many more patients – helping them experience the benefits of all three pathways. Sensitizing the market “We know from our research that PAH physicians are aware of the utility of therapies targeting the prostacyclin pathway, even if they don’t widely prescribe these treatments at the present time,” says Martin Grossman, Head of Global Strategic Marketing at Actelion. ”This is why we launched a thought-provoking initiative to help physicians think differently about when and how to utilize therapies that target the prostacyclin pathway. With the Power of Threee campaign, we wanted to challenge their thinking and encourage them to consider targeting all three PAH pathways sooner and together, offering their patients with PAH the potential for improved long-term outcomes.”. 19. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. available selective IP prostacyclin receptor agonist to the market. The IP receptor is believed to be responsible for the vasodilatory and anti-proliferative effects that are crucial in the treatment of PAH.. Treatment use at time of PAH-related death for patients enrolled in the US REVEAL registry.

(20) “Uptravi will be a core piece of my treatment. The endpoints are robust and meaningful, as is the information on the use in mono and combination therapy.” Pulmonologist. “We at the Pulmonary Hypertension Association welcome new treatment options that help patients and their families affected by this devastating disease. We hope that Uptravi will enable physicians to impact the long-term outcome for many of their PAH patients.” Rino Aldrighetti, President and CEO of the Pulmonary Hypertension Association. “The data on delayed worsening and hospitalization is compelling. The outcomes really align with our clinic’s objectives.” Nurse. BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. The Power of Threee. The third “e” isn’t a typo – and neither are the other triple letters. Actelion believes that there may be great benefits to be drawn from targeting all three(e) pathways in PAH effectively, so the campaign adverts make use of creative ‘mis-spelling’ to attract the audience’s eye and attention.. 20. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. More than a year into the launch of Uptravi, it is safe to say that this message has been very well received in the PAH community:.

(21) The figures add up as well: At the end of 2016, just over 2,400 patients worldwide were using Uptravi, and sales reached CHF 245 million after just 12 months on the market. The product is commercially available in 9 countries, with market authorization in the US, Canada, Australia, the EU, Japan, New Zealand, South Korea, and Switzerland. The registration process for other countries is ongoing.. Together with its long-term outcome benefits, relative ease of administration, and tolerability profile, Uptravi is a treatment option that could truly change PAH care. In triple combination therapy with an ERA and a PDE-5 inhibitor as part of the treatment algorithm across the continuum of care, Uptravi is set to help intensify patient treatment in PAH and help improve patient outcomes. Together with Opsumit and Veletri, Uptravi will further strengthen our leadership in the global PAH market, and Actelion will make every effort to make this option available to many more patients across the globe.. BUSINESS REPORT.. CONTENTS. LETTER TO THE SHAREHOLDERS. KEY PERFORMANCE INDICATORS. THE POWER OF THREEE. 21. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. With Uptravi, for the first time ever, an “all oral” therapy with significant clinical benefit in combination with one and even two other drugs is possible. Together with its long-term outcome benefits, relative ease of administration, and tolerability profile, Uptravi is a treatment option that could truly change PAH care..

(22) Phone +41 61 565 65 65 Fax +41 61 565 65 00 info@actelion.com www.actelion.com All trademarks are legally protected. Copyright ©2017 Actelion Pharmaceuticals Ltd. Details of Actelion Worldwide can be found on www.actelion.com Designed by Landscape www.yourlandscape.co.uk. BUSINESS REPORT.. 22. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Actelion Ltd Gewerbestrasse 16 CH-4123 Allschwil Switzerland.

(23) WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. FINANCE REPORT.. INTERACTIVE ANNUAL REPORT 2016.

(24) CONTENTS. Actelion Ltd. is a leading biopharmaceutical company focused on the discovery, development and commercialization of innovative drugs for diseases with significant unmet medical needs. Actelion is a leader in the field of pulmonary arterial hypertension (PAH). Our portfolio of PAH treatments covers the spectrum of disease, from WHO Functional Class (FC) II through to FC IV, with oral, inhaled and intravenous medications. Although not available in all countries, Actelion also has treatments approved by health authorities for a number of specialist diseases including type 1 Gaucher disease, Niemann-Pick type C disease, digital ulcers in patients suffering from systemic sclerosis, and mycosis fungoides type cutaneous T-cell lymphoma.. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. 03. FINANCE IN BRIEF. 07. FINANCIAL REVIEW. 23. CONSOLIDATED FINANCIAL STATEMENTS. 77. HOLDING COMPANY FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 2. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Our mission: treat more patients with groundbreaking medicines.

(25) FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 3. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. FINANCE IN BRIEF.

(26) CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 4. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. FINANCIAL REPORT..

(27) 5. PROFIT AND LOSS. (in CHF millions, except % variance and EPS). Twelve Months 2016 2015. variance CHF. Fourth Quarter 2016 2015. Sales Product sales Opsumit® Tracleer® Uptravi® Other. 2,412 831 1,020 245 317. 2,042 516 1,212 314. 18% 61% -16% nm 1%. 15% 57% -18% nm -2%. 627 235 229 85 78. 519 162 278 80. 21% 45% -17% nm -2%. 19% 43% -19% nm -4%. Core results Operating income Net income Diluted EPS. 992 881 8.18. 814 693 6.16. 22% 27% 33%. 17% 22% 27%. 211 190 1.79. 163 133 1.22. 30% 43% 47%. 27% 40% 44%. US GAAP results Operating income Net income Diluted EPS. 789 696 6.46. 656 552 4.91. 20% 26% 32%. 14% 19% 25%. 129 115 1.08. 122 100 0.91. 5% 15% 19%. 1% 11% 15%. CER. variance CHF. CER. CASH FLOW. (in CHF millions). 2016. Twelve Months 2015. 2016. Fourth Quarter 2015. Cash flow Operating cash flow Capital expenditure Cash returned to shareholders Free cash flow. 920 (57) (428) 90. 658 (44) (927) (800). 225 (16) (58) 85. 125 (29) (119) (294). December 31, September 30, 2016 2016. June 30, 2016. CASH POSITION AND SHARES. Cash position Net cash Share count (million shares) Issued common shares Treasury shares held Outstanding equity instruments. March 31, December 31, 2016 2015. 495. 411. 418. 472. 405. 107.8 4.7 4.2. 107.8 4.1 4.6. 114.1 8.9 4.7. 114.1 9.5 5.6. 114.1 9.1 5.9. Disclaimer and notes to this financial report: Actelion continues to measure and report its core operating performance, which management believes more accurately reflects the underlying business performance. The Group believes that these non-GAAP financial measurements provide useful supplementary information to investors. These non-GAAP measures are reported in addition to, not as a substitute for, US GAAP financial performance. Constant Exchange Rates (CER) percentage changes are calculated by reconsolidating both the December 2015 year to date and December 2016 year to date results at constant currencies (the average monthly exchange rates for December 2015 year to date). Rounding differences may occur nm = not meaningful Europe = EU28 and Switzerland. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 5 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. (in CHF millions).

(28) 6 Actelion in 2016. Building on the solid foundations of the previous years resulted in yet another exceptional year for Actelion. This success was driven by the company’s leading portfolio of PAH products, which saw continued overall growth in 2016 with the introduction of Uptravi in the US and other markets around the globe.. Product sales. Product sales for 2016 rose to 2,412 million Swiss francs, an increase of 15% at constant exchange rates (CER). This excellent commercial performance was driven by the outstanding Uptravi launch in the US and Opsumit’s sustained strong growth trajectory. During the fourth quarter of 2016, combined sales of the company’s outcome-based PAH portfolio, Opsumit, Uptravi and Veletri, reached 55% of total sales, demonstrating the significant progress made in the fundamental transformation of the PAH business.. Operating results. Core operating income rose to 992 million Swiss francs, an increase of 17% at CER. Core marketing, selling and distribution expenses amounted to 501 million Swiss francs, an increase of 7% at CER. This increase was driven mostly by costs relating to launch activities of Uptravi in the United States, Germany and other geographies. Core R&D expenses amounted to 509 million Swiss francs, an increase of 25% at CER as the company advanced its early- and late-stage compounds through the pipeline. US GAAP operating income increased by 14% at CER to 789 million Swiss francs.. Net results and EPS. Core net income rose by 22% at CER to 881 million Swiss francs, and core diluted earnings per share (EPS) rose by 27% at CER to 8.18 Swiss francs. US GAAP net income amounted to 696 million Swiss francs, and US GAAP diluted earnings per share amounted to 6.46 Swiss francs.. Cash flows. Operating cash flow amounted to 920 million Swiss francs, driven by the strong operating performance.. Balance sheet and cash position. Shareholders’ equity was basically unchanged as the Company continued to return substantial cash to shareholders. Actelion’s cash position amounted to 495 million Swiss francs at December 31, 2016.. Total shareholder return. On 26 January 2017, Actelion and Johnson and Johnson jointly announced that they have entered into a definitive transaction agreement under which Johnson & Johnson will launch an all-cash tender offer in Switzerland to acquire all of the outstanding shares of Actelion for 280 US dollars per share. The Offer Price implies a premium of 46% to the volume-weighted average price during the sixty SIX trading days prior to the publication of the pre-announcement published on 26 January 2017. Additionally Actelion shareholders will receive one share of the newly created R&D company for each Actelion share they own as a stock dividend. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 6 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. In keeping with its commitment to maximizing shareholder value, Actelion returned 428 million Swiss francs to shareholders through the second line share buyback as well as the increased dividend of 1.50 Swiss franc paid in May 2016..

(29) FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 7. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. FINANCIAL REVIEW.

(30) 8 2016 was another strong year for Actelion with the company delivering record sales and earnings. Product sales rose 15% at CER to reach 2,412 million Swiss francs, mostly driven by the strong Uptravi launch in the United States and continued strong Opsumit uptake in markets around the globe. This strong commercial performance coupled with tight financial oversight resulted in core operating income growth of 17%, US GAAP operating income growth of 14 % and US GAAP diluted EPS growth of 25%, all at CER. Moreover, 2016 was a busy year with the Company involved in strategic discussions to ensure maximum value creation for shareholders. On 26 January 2017, Actelion and Johnson and Johnson jointly announced that they have entered into a definitive transaction agreement under which Johnson & Johnson will launch an all-cash tender offer in Switzerland to acquire all of the outstanding shares of Actelion for 280 US dollars per share. The Offer Price implies a 100% valuation of 30 billion US dollars which implies a premium of 46% to the volume-weighted average price during the sixty SIX trading days prior to the publication of the pre-announcement. Additionally, Actelion shareholders will receive one share for every Actelion share they own of a newly created R&D company that will be spun out concurrently with the closing of the proposed transaction. The Board of directors of Actelion unanimously recommended the proposed transaction as its innovative structure allows Actelion shareholders to monetize their holdings at a very attractive price whilst retaining upside potential in the earlier stage pipeline.. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 8 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. It is worth noting the value creation for loyal shareholders over the last years: since the IPO in 2000, the value increased thirty-fold and during the last 5 years, the increase was more than nine-fold..

(31) 9. SALES Sales by product Twelve Months 2016 2015. (in CHF millions, except % variance). Product sales Opsumit® Tracleer® Uptravi® Veletri® Ventavis® Valchlor® Zavesca® Others Total product sales. 831 1,020 245 97 73 35 104 8 2,412. 516 1,212 83 105 27 92 7 2,042. variance CHF 61% -16% nm 17% -30% 30% 13% 7% 18%. CER 57% -18% nm 12% -32% 27% 12% 8% 15%. Fourth Quarter 2016 2015 235 229 85 26 15 10 26 2 627. 162 278 23 24 8 24 2 519. variance CHF. CER. 45% -17% nm 12% -37% 20% 10% -6% 21%. 43% -19% nm 9% -38% 19% 10% -7% 19%. Actelion’s excellent commercial performance during 2016 was driven by the outstanding Uptravi launch in the US and Opsumit’s sustained strong growth trajectory. During the fourth quarter of 2016, combined sales of the company’s outcome-based PAH portfolio, Opsumit, Uptravi and Veletri, reached 55% of total sales, demonstrating the significant progress made in the fundamental transformation of the PAH business. In the US, sales increased by 25% at CER, driven by the strong Uptravi launch, the continued Opsumit momentum due to share gains in an expanding ERA market. European sales were 1% higher compared to 2015. A strong Opsumit performance and solid Tracleer use in the digital ulcer indication were impacted by continued pricing pressure and market erosion from bosentan generics, particularly in Spain. Sales in Japan increased by 19% at CER, driven by very strong sales of Opsumit (launched in June 2015), Tracleer momentum in digital ulcer indication and Zavesca (Japanese trade name Brazaves). Comparing average exchange rates for 2016 to 2015, the Swiss franc weakened, mostly against the US dollar, euro and Japanese yen, resulting in a positive currency variance of 63 million Swiss francs.. (in CHF millions, except % variance). Product sales by region United States Europe Japan Rest of the world Total product sales. FINANCIAL REPORT.. CONTENTS. Twelve Months 2016 2015. variance CHF. CER. 1,306 646 258 201 2,412. 27% 2% 36% 5% 18%. 25% 1% 19% 6% 15%. FINANCE IN BRIEF. 1,026 634 190 192 2,042. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. Fourth Quarter 2016 2015 342 162 77 47 627. 259 159 58 42 519. HOLDING COMPANY FINANCIAL STATEMENTS. variance CHF. CER. 32% 2% 31% 10% 21%. 30% 4% 17% 9% 19%. 9 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Sales by region.

(32) 10. PAH FRANCHISE Opsumit® Twelve Months 2016 2015. (in CHF millions, except % variance). Sales by region United States Europe Japan Rest of the world Total. 524 176 72 59 831. 362 111 12 30 516. variance CHF. CER. 45% 58% nm 92% 61%. 41% 58% nm 92% 57%. Fourth Quarter 2016 2015 143 48 30 14 235. 109 35 8 10 162. variance CHF. CER. 31% 36% nm 50% 45%. 30% 41% nm 45% 43%. Sales of Opsumit (macitentan) amounted to 831 million Swiss francs for 2016, an increase of 57% at CER compared to 2015. The strong growth across all regions and all relevant markets (Opsumit is now available in almost 40 markets) was driven by solid quarterly increases in the net number of patients treated in an expanding ERA market due to increased use in combination with PDE-5 inhibitors, and some upgrades from Tracleer, notably in Japan. Tracleer® Twelve Months 2016 2015. (in CHF millions, except % variance). Sales by region United States Europe Japan Rest of the world Total. 370 387 156 106 1,020. 470 460 153 130 1,212. variance CHF -21% -16% 2% -18% -16%. CER -23% -17% -10% -17% -18%. Fourth Quarter 2016 2015 79 89 39 22 229. 103 107 43 24 278. variance CHF -23% -17% -10% -8% -17%. CER -24% -15% -20% -8% -19%. Sales of Tracleer (bosentan) amounted to 1,020 million Swiss francs for 2016, a decrease of 18% at CER compared to 2015, driven to a large extent by volume erosion resulting from the significant impact of Opsumit uptake on the Tracleer patient base and increased generic competition, notably in Spain where generic bosentan entered the market in January 2016. Tracleer sales were supported by the digital ulcer indication in Europe and Japan.. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 10 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Following the Pediatric Investigation Plan (PIP) compliance statement from the European Committee for Medicinal Products for Human Use (CHMP), applications for extension of the Supplementary Protection Certificate (SPC) were granted in all possible 19 EU countries until the end of August 2017..

(33) 11 Uptravi® Twelve Months 2016 2015. (in CHF millions, except % variance). Sales by region United States Europe Japan Rest of the world Total. 232 11 2 245. -. variance CHF. CER. nm nm. nm nm. nm nm. nm nm. Fourth Quarter 2016 2015 77 7 1 85. -. variance CHF. CER. nm nm. nm nm. nm nm. nm nm. Sales of Uptravi (selexipag) amounted to 245 million Swiss francs for 2016. Since the US launch at the beginning of January 2016, patient demand has continued to increase with sales of 232 million Swiss francs (which includes 30 million Swiss francs for the build up of inventory in the US). For the fourth quarter, US sales amounted to 77 million Swiss francs compared to 66 million Swiss francs for the third quarter, 45 million Swiss francs in the second quarter and 15 million Swiss francs in the first quarter of 2016. In other geographies, Uptravi sales were driven by the particularly successful launch in Germany. Uptravi is also available in several other markets, most recently launched with full reimbursement in the Netherlands and Switzerland. At the end of 2016, just over 2,400 patients were being treated with Uptravi globally, with more than 1,900 patients coming from the US. Veletri® Twelve Months 2016 2015. (in CHF millions, except % variance). Sales by region United States Europe Japan Rest of the world Total. 39 24 26 7 97. 39 15 23 6 83. variance CHF. CER. -0% 60% 16% 22% 17%. -2% 60% 2% 22% 12%. Fourth Quarter 2016 2015 9 6 7 3 26. 9 5 6 2 23. variance CHF. CER. 0% 17% 15% 54% 12%. -0% 21% 2% 52% 9%. Ventavis® Twelve Months 2016 2015. (in CHF millions, except % variance). Sales by region United States Europe Japan Rest of the world Total. 73 73. 105 105. variance CHF. CER. -30%. -32%. -30%. -32%. Fourth Quarter 2016 2015 15 15. 24 24. variance CHF. CER. -37%. -38%. -37%. -38%. Sales of Ventavis (iloprost) amounted to 73 million Swiss francs for 2016, a decrease of 32% at CER compared to 2015 due to competitive environment, including the availability of Uptravi. Underlying units decreased by 37%.. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 11 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Sales of Veletri (epoprostenol for injection) amounted to 97 million Swiss francs for 2016, an increase of 12 % at CER compared to 2015. This increase was mostly driven by France, Italy, Spain and the UK. Demand in Japan, where it is marketed as Epoprostenol ACT, remained strong, however sales growth was mitigated by a 12% price cut effective March 1, 2016..

(34) 12. SPECIALTY PRODUCTS Valchlor® Twelve Months 2016 2015. (in CHF millions, except % variance). Sales by region United States Europe Japan Rest of the world Total. 33 2 0 35. 25 2 27. variance CHF. CER. 33% -13%. 30% -15%. nm 30%. nm 27%. Fourth Quarter 2016 2015 9 0 0 10. 7 1 8. variance CHF. CER. 21% -17%. 20% -17%. nm 20%. nm 19%. Sales of Valchlor (mechlorethamine) amounted to 35 million Swiss francs for 2016, an increase of 27% at CER compared to 2015. In the US, the company has made good progress in establishing Valchlor as a valuable option in the treatment algorithm for early-stage mycosis fungoides, a type of Cutaneous T-Cell Lymphoma (MF-CTCL). In December 2016, the Committee for Medicinal Products for Human Use (CHMP), the scientific committee of the European Medicines Agency (EMA), issued a positive opinion for the use of chlormethine gel 160 micrograms/g (Ledaga®) for the treatment of mycosis fungoides-type cutaneous T-cell lymphoma (MF-CTCL) in adult patients and recommended that the European Commission approves the product. The European Commission is expected to issue a final decision by the end of February 2017. Zavesca® Twelve Months 2016 2015. (in CHF millions, except % variance). Sales by region United States Europe Japan Rest of the world Total. 34 47 4 20 104. 25 46 3 18 92. variance CHF. CER. 40% 0% 28% 9% 13%. 36% -0% 12% 10% 12%. Fourth Quarter 2016 2015 10 11 1 5 26. 7 11 1 5 24. variance CHF 36% 2% 16% -10% 10%. CER 34% 4% 3% -12% 10%. Sales in the US were strong due to a relatively low prior year base as a consequence of an inventory adjustment. In Europe, sales were flat due to the launch of generic miglustat (for the type 1 Gaucher disease indication only), which mitigated the continued strong, double-digit growth in the Niemann-Pick type C (NP-C) indication. Globally patients receiving Zavesca grew by 6% compared to 2015, driven by a 13% increase in the treatment of patients with NP-C.. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 12 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Sales of Zavesca (miglustat) amounted to 104 million Swiss francs for 2016, an increase of 12% at CER compared to 2015..

(35) 13. OPERATING EXPENSES Operating expenses break down as follows: Twelve Months 2016 2015. (in CHF millions, except % variance). Operating expenses Core cost of sales Core research and development Core SG&A Core operating expenses Depreciation of assets Amort. of acquired intangible assets Stock-based compensation Milestone payments Doubtful debt movements Accretion expenses (benefits) Other expenses Non-core operating expenses US GAAP operating expenses. 209 509 703 1,420 32 55 65 10 3 37 6 209 1,629. 176 404 648 1,228 36 53 57 11 4 0 0 162 1,389. variance CHF 19% 26% 9% 16% -10% 4% 15% nm nm nm nm 29% 17%. CER 17% 25% 6% 14% -10% 3% 15% nm nm nm nm 29% 16%. Fourth Quarter 2016 2015 64 148 204 416 8 14 17 8 1 27 6 82 498. 42 120 195 357 9 13 15 0 (0) 4 0 41 397. variance CHF. CER. 54% 23% 5% 17% -5% 5% 16% nm nm nm nm nm 25%. 53% 22% 3% 15% -6% 4% 16% nm nm nm nm nm 24%. variance CHF. CER. 18% nm 69% 54% nm nm. 16% nm 69% 53% nm nm. Cost of sales Twelve Months 2016 2015. (in CHF millions, except % variance). Cost of sales Royalty expenses on sales Royalty expenses on profit sharing Cost of goods sold Core cost of sales Non-core cost of sales US GAAP cost of sales. 108 20 80 209 37 246. 113 2 61 176 0 176. variance CHF. CER. -4% nm 31% 19% nm 40%. -7% nm 31% 17% nm 38%. Fourth Quarter 2016 2015 29 10 25 64 27 91. 25 2 15 42 4 45. Core cost of sales for 2016 increased by 17% at CER to 209 million Swiss francs.. Royalty expenses on profit sharing relate to the collaboration with Nippon Shinyaku for the commercialization of Opsumit in Japan and amounted to 20 million Swiss francs for 2016 as Opsumit sales in Japan increased strongly. Cost of goods sold increased by 31% in 2016. The increase was driven by higher sales along with a different product mix and some one-off Uptravi launch inventory write-offs. Non-core cost of sales relate to the accretion expense for the contingent consideration for Valchlor related to adjusted sales projections as well as the upcoming European launch, subject to EMA approval.. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 13 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Royalty expenses on sales for 2016 were 7% lower compared to 2015 at CER. This decrease was mainly due to ceased royalty obligations, following the patent expiry of Tracleer in the US (late November 2015) and Ventavis (mid-March 2015) and a favorable product mix with a low single-digit royalty rate paid on Opsumit sales compared to a high single-digit rate paid on Tracleer sales in markets where Tracleer is still under patent protection. This decrease was partially offset by midteen royalty payments to Nippon Shinyaku related to Uptravi sales outside of Japan..

(36) 14 Research and development (“R&D”) expenses Twelve Months 2016 2015. (in CHF millions, except % variance). Core R&D expenses Depreciation Stock-based compensation Milestone payment US GAAP R&D expenses1 Amort. of acquired intangible assets US GAAP R&D expenses. 509 23 27 10 569 6 574. variance CHF. 404 25 24 11 464 2 466. CER. 26% -10% 15% nm 23% nm 23%. 25% -10% 15% nm 22% nm 22%. Fourth Quarter 2016 2015 148 6 7 8 169 1 170. 120 6 6 133 1 133. variance CHF. CER. 23% -9% 17% nm 27% nm 28%. 22% -9% 17% nm 26% nm 27%. As reported in the consolidated income statements, excluding amortization of acquired intangible assets.. 1. The excellent commercial performance enabled Actelion to advance both the late and earlier stage pipeline resulting in increased R&D expenditure which translates into a ratio of R&D core operating expenses to sales of 21%, slightly higher than in 2015. Core R&D expenses amounted to 509 million Swiss francs, an increase of 25% at CER. This increase was driven by higher clinical trial expenses, mainly driven by the strong recruitment in the Phase III OPTIMUM study (ponesimod in multiple sclerosis announced in April 2015) and the Phase III IMPACT study (Cadazolid in Clostridium difficile associated diarrhea), as well as costs related to the preparation and initiation for Phase II studies for DORA in insomnia and Actelion’s new endothelin receptor antagonist in specialty cardiovascular disorders. US GAAP R&D expenses included depreciation of 23 million Swiss francs (relating to the research building and laboratory equipment) and stock-based compensation expenses of 27 million Swiss francs. The milestone payment of 10 million Swiss francs related to an exclusive option Actelion obtained in November 2016 to in-license vamorolone for the treatment of Duchenne Muscular Dystrophy from ReveraGen. Twelve Months 2016 2015. (in CHF millions, except % variance). SG&A expenses Marketing, selling and distribution General and administrative Core SG&A expenses Depreciation Stock-based compensation Doubtful debt movements Other US GAAP SG&A expenses1 Amort. of acquired intangible assets US GAAP SG&A expenses 1. 501 202 703 10 38 3 6 760 49 810. 459 189 648 11 33 4 0 697 51 748. variance CHF. CER. 9% 7% 9% -9% 14% nm nm 9% -3% 8%. 7% 6% 6% -10% 14% nm nm 7% -3% 6%. Fourth Quarter 2016 2015 144 60 204 3 10 1 6 224 12 237. 139 56 195 3 9 (0) 0 206 13 219. variance CHF. CER. 4% 8% 5% 7% 15% nm nm 9% -2% 8%. 2% 7% 3% 5% 15% nm nm 7% -2% 7%. As reported in the consolidated income statements, excluding amortization of acquired intangible assets.. Core marketing, selling and distribution expenses amounted to 501 million Swiss francs, an increase of 7% at CER. This increase was driven mostly by costs relating to launch activities of Uptravi in the United States, Germany and other geographies. Additionally, the company continued the roll-out of Opsumit and Veletri in various markets around the globe. G&A expenses increased by 6% to 202 million Swiss francs as the company is expanding its global footprint. US GAAP SG&A expenses included depreciation of 10 million Swiss francs, stock-based compensation expenses of 38 million Swiss francs as well as some legal expenses related to ongoing strategic discussions.. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 14 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Selling, general and administrative (“SG&A”) expenses.

(37) 15. OPERATING RESULTS Twelve Months 2016 2015. (in CHF millions, except % variance). Operating results Product sales Core operating expenses Core operating income Contract revenue Non-core operating expenses US GAAP operating income. 2,412 (1,420) 992 6 (209) 789. 2,042 (1,228) 814 4 (162) 656. variance CHF. CER. Fourth Quarter 2016 2015. variance CHF. CER. 18% 16% 22% nm 29% 20%. 15% 14% 17% nm 29% 14%. 627 (416) 211 0 (82) 129. 21% 17% 30% nm nm 5%. 19% 15% 27% nm nm 1%. 519 (357) 163 0 (41) 122. Core operating income amounted to 992 million Swiss francs, an increase of 17% or 135 million Swiss francs at CER. The weakening of the Swiss franc against the major currencies affecting Actelion’s performance had a positive impact of 43 million Swiss francs on core operating income. US GAAP operating income amounted to 789 million Swiss francs, an increase of 14% at CER. Contract revenue related to the return of the Xiaflex rights in Canada. Non-core operating expenses (excluding accretion effects and milestone payments) were slightly higher due to stock-based compensation expenses.. NET RESULTS. (in CHF millions, except % variance). Twelve Months 2016 2015. variance CHF. CER. Core net results Operating income Financial results Income tax Core net results. 992 4 (114) 881. 22% nm nm 27%. 17% nm nm 22%. 814 (20) (100) 693. Fourth Quarter 2016 2015 211 (0) (20) 190. 163 (1) (28) 133. variance CHF. CER. 30% nm nm 43%. 27% nm nm 40%. Core net income amounted to 881 million Swiss francs, an increase of 22% at CER.. Core tax expense amounted to 114 million Swiss francs, which translates into an effective core tax rate of 11.5%. Twelve Months 2016 2015. (in CHF millions, except % variance). US GAAP net results Operating results Financial results Income tax Net results Net loss attr. to the nonctrl. interests US GAAP net results. 789 4 (98) 695 2 696. 656 (20) (88) 548 4 552. variance CHF. CER. 20% nm nm 27% nm 26%. 14% nm nm 20% nm 19%. Fourth Quarter 2016 2015 129 (0) (14) 115 0 115. 122 (1) (22) 99 1 100. variance CHF. CER. 5% nm nm 16% nm 15%. 1% nm nm 12% nm 11%. Below the operating line, US GAAP financial result and income tax do not materially differ from the core results.. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 15 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Core financial result amounted to 4 million Swiss francs related to foreign exchange gains. Actelion aims to minimize the volatility of the company’s financial results and uses forward contracts to hedge transaction exposures arising from foreign currency cash flows and cash positions held in foreign currencies. Actelion no longer incurs interest expense as the company is debt-free..

(38) 16. EARNINGS PER SHARE (EPS). (in CHF millions, unless otherwise indicated). Net results Core net results US GAAP net results. Twelve Months 2016 2015. variance CHF. CER. Fourth Quarter 2016 2015. variance CHF. CER. 881 696. 693 552. 27% 26%. 22% 19%. 190 115. 133 100. 43% 15%. 40% 11%. Basic earnings per share Weighted avg no. of shares (in mm) Core basic EPS (in CHF) US GAAP basic EPS (in CHF). 104.6 8.42 6.66. 108.3 6.40 5.09. nm 32% 31%. nm 26% 24%. 103.3 1.84 1.11. 105.7 1.26 0.94. nm 46% 18%. nm 43% 14%. Diluted earnings per share Weighted avg no. of shares (in mm) Core diluted EPS (in CHF) US GAAP diluted EPS (in CHF). 107.8 8.18 6.46. 112.5 6.16 4.91. nm 33% 32%. nm 27% 25%. 106.2 1.79 1.08. 109.7 1.22 0.91. nm 47% 19%. nm 44% 15%. The increase in core and US GAAP EPS was driven by higher net income and the decrease in number of common shares. The average share count for basic EPS decreased by 3.7 million shares, reflecting the share purchases related to the second-line share repurchase program.. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 16 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. The average share count for diluted EPS decreased by 4.7 million shares as the average number of dilutive instruments decreased by 1.0 million shares despite an increase in the average share price (158.02 Swiss francs per share during 2016 compared to 126.96 Swiss francs during 2015)..

(39) 17. IMPACT OF FOREIGN EXCHANGE RATES ON SALES AND OPERATING RESULTS Actelion’s exposure to foreign currency movements affecting its sales and operating results as expressed in Swiss francs is summarized in the table below. (in CHF millions, except % variance). 2016. Twelve Months 2015. variance CHF. variance CER. Core operating results Product sales Operating expenses Operating income Net income. 2,412 1,420 992 881. 2,042 1,228 814 693. 371 193 178 188. 18% 16% 22% 27%. 307 172 135 151. 15% 14% 17% 22%. US GAAP results Revenues Operating expenses Operating income Net income. 2,418 1,629 789 696. 2,045 1,389 656 552. 373 240 133 145. 18% 17% 20% 26%. 310 219 91 108. 15% 16% 14% 19%. CHF %. CER %. As a result of the weakening of the Swiss franc against the main currencies that the company operates, foreign exchange rates had a positive net impact of 63 million Swiss francs on sales (29 million US dollar, 9 million euro and 32 million Japanese yen) and 43 million Swiss francs on core operating income (22 million US dollar, 7 million euro and 17 million Japanese yen) for 2016.. (in CHF millions, except % and fx rates). Exchange rates against Swiss franc US dollar Euro Japanese yen All other foreign currencies Total impact. FINANCIAL REPORT.. CONTENTS. 1 USD 1 EUR 100 JPY. FINANCE IN BRIEF. FINANCIAL REVIEW. Average rate 2016 minus 1 %. Net sales CHF. Core operating expenses. Core operating results. 0.975 1.079 0.009. (13) (5) (3) (2) (23) -1.0%. (4) (2) (1) (2) (8) -0.6%. (9) (4) (1) (1) (15) -1.5%. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 17 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. The table below shows the currency translation sensitivity for each 1% adverse change in average exchange rates against the Swiss franc..

(40) 18. CASH FLOW AND CASH POSITION Operating cash flow 2016. Twelve Months 2015. 2016. Fourth Quarter 2015. Operating cash flow Net results Depreciation and amortization Stock-based compensation Other non cash items Funds from operations. 695 88 66 26 875. 548 90 58 (24) 671. 115 23 18 23 178. 99 22 15 (5) 132. Net change in trade and other receivables Net change in trade and other payables Net change in other operating assets and liabilities Decrease (increase) in net working capital Decrease (increase) in deferred taxes. (12) 13 14 14 30. (31) (5) (29) (65) 52. 47 (11) 18 54 (7). (13) (2) 7 (8) 1. Operating cash flow. 920. 658. 225. 125. (in CHF millions). Operating cash flow amounted to 920 million Swiss francs for 2016. The strong underlying business performance resulted in funds from operations of 875 million Swiss francs. Working capital decreased by 14 million Swiss francs. Cash collection remained solid with days of sales outstanding (DSO) at 51 days. Deferred tax net positions decreased by 30 million Swiss francs mainly driven by the utilization of net operating losses in the US and Switzerland.. (in CHF millions). Free cash flow Operating cash flow Acquisition of tangible, intangible and other assets Acquisition of businesses Operating free cash flow Second-line share repurchase Dividend First-line share purchase Proceeds from exercise of stock options Debt repayment Other items Free cash flow. 2016. Twelve Months 2015. 2016. Fourth Quarter 2015. 920 (57) (4) 858. 658 (44) (8) 606. 225 (16) (1) 208. 125 (29) (6) 89. (270) (159) (393) 39 15. (785) (142) (327) 79 (235) 5. (58) (80) 14 1. (119) 0 (47) 12 (235) 6. 90. (800). 85. (294). Free cash flow reconciles the net cash position between the opening and closing period. Operating cash flow was mostly dedicated to return cash to shareholders and to manage dilution arising from stock-based compensation. The company paid a dividend of 159 million Swiss francs, purchased 1.7 million second-line shares for a consideration of 270 million Swiss francs (including withholding tax) and also acquired 2.5 million first-line shares for a consideration of 393 million Swiss francs. The Company suspended these activities due to strategic discussions.. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 18 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Free cash flow.

(41) 19 Net cash position The net cash position amounted to 495 million Swiss francs on December 31, 2016 and breaks down by currency as follows: (CHF millions unless otherwise indicated). December 31, 2016. in %. Closing rate against CHF. 212 107 115 16 45 495. 43% 22% 23% 3% 9% 100%. 1 USD = 1.02 1 EUR = 1.07 100 JPY = 0.87 -. Cash position by currency Swiss franc US dollar Euro Japanese yen Other foreign currencies Total net cash position. BALANCE SHEET December 31, 2016. September 30, 2016. June 30, 2016. March 31, 2016. December 31, 2015. 495 446 252 350 383 135 46 2,106. 411 496 176 344 395 134 44 2,000. 418 447 185 340 408 134 52 1,985. 472 452 166 343 401 134 52 2,021. 405 427 131 348 414 134 56 1,915. 569 216 785. 504 186 690. 467 175 642. 427 171 598. 421 179 600. Share capital and accumulated reserves Treasury shares Total Actelion's shareholders' equity. 2,006 (680) 1,325. 1,907 (594) 1,314. 2,522 (1,175) 1,347. 2,632 (1,206) 1,426. 2,455 (1,137) 1,318. Noncontrolling interests Equity attributable to noncontrolling interests Total equity. (4) 1,321. (4) 1,310. (4) 1,343. (3) 1,423. (3) 1,315. Total liabilities and equity. 2,106. 2,000. 1,985. 2,021. 1,915. (in CHF millions). Assets Cash position1 Trade and other receivables, net Other current assets Tangible assets Intangible assets Goodwill Other non-current assets Total assets Liabilities and shareholders' equity Other current liabilities Other non-current liabilities Total liabilities. Cash position includes cash, cash equivalents and short-term deposits.. There are no significant changes in the balance sheet which continues to be strong with a net cash position of 495 million Swiss francs.. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 19 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. 1.

(42) 20. ACTELION SHARES The movement of Actelion treasury shares is shown in the table below:. (numbers in thousands, except where indicated). First-line treasury shares. Second-line treasury shares. Total treasury shares. Average price (in CHF). Treasury shares (in CHF million). 2,988 264 (253) 2,998 498 (1,499) 1,998 1,205 (137) 3,066 544 (318) 3,292. 6,072 445 6,517 428 6,945 459 (6,367) 1,037 325 1,362. 9,060 709 (253) 9,515 926 (1,499) 8,943 1,664 (137) (6,367) 4,103 869 (318) 4,654. 125.6 136.7 125.1 126.7 153.6 115.3 131.4 166.5 130.9 132.0 144.7 150.9 141.1 146.1. 1,137 96.9 (29) 1,206 142 (173) 1,175 277 (18) (840) 594 131 (45) 680. Treasury shares - total December 31, 2015 Acquisition of treasury shares Q1 Outgoing shares Q1 March 31, 2016 Acquisition of treasury shares Q2 Outgoing shares Q2 June 30, 2016 Acquisition of treasury shares Q3 Outgoing shares Q3 Shares cancellation Q3 September 30, 2016 Acquisition of treasury shares Q4 Outgoing shares Q4 December 31, 2016. The movement in outstanding dilutive shares is shown in the table below: ESOP. RSU. PSU. Total. Issued shares. Equity overhang. 2,884 (860) (3) 2,021. 1,523 353 (673) (49) 1,155. 1,454 314 (666) (37) 1,064. 5,862 667 (2,200) (88) 4,241. 114.1. 5.1%. 107.8. 3.9%. (numbers in thousands, except %). Dilutive shares and equity overhang Outstanding dilutive shares Dec. 31, 2015 Grants Exercised / vesting Forfeited Outstanding dilutive shares Dec. 31, 2016. Q1 2016 three months. Q2 2016 three months. Q3 2016 three months. Q4 2016 three months. US GAAP Operating results Net revenue Operating expenses Operating income Financial results Income tax results Noncontrolling interest Net results. 590 (381) 208 (1) (29) 0 178. 590 (386) 204 4 (26) 1 182. 611 (364) 248 1 (29) 0 221. 627 (498) 129 (0) (14) 0 115. Core operating results Product sales Operating expenses Operating income Financial results Income tax results Net results. 589 (341) 249 (1) (32) 215. 590 (340) 250 4 (30) 224. 606 (324) 282 1 (32) 252. 627 (416) 211 (0) (20) 190. (in CHF millions). FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 20 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. QUARTERLY RESULTS.

(43) 21. RECONCILIATION US GAAP TO CORE RESULTS FOR THE FULL YEAR 2016. (in CHF millions, except per share amounts and EPS). Net revenue Product sales Contract revenue Total net revenue. Depreciation, Doubtful US GAAP amortization, Stock-based debt results impairment compensation movements. Milestones or contract. Other Accretion Core one-offs expense results. 2,412 6 2,418. -. -. -. (6) (6). -. (246) (569) (760) (55) (1,629) 789. 23 10 55 88 88. 27 38 65 65. 3 3 3. 10 10 4. 6 6 6. 4. -. -. -. -. -. -. 4. Income before income tax benefit (expense). 792. 88. 65. 3. 4. 6. 37. 995. Income tax benefit (expense) Noncontrolling interest Net results. (98) 2 696. (8) 80. (5) 61. (0) 3. (0) (2) 2. (0) 5. (3) 34. (114) 881. 6.46 107.811. 0.74. 0.56. 0.03. 0.02. 0.05. 0.32. 8.18 107.811. Operating (expenses) Cost of sales Research and development Selling, general and administration Amortization of acquired intangible assets Total operating (expenses) Operating results Total financial results. Diluted net income (loss) per share Weighted-average number of common shares. -. 2,412 2,412. 37 (209) - (509) - (703) 37 (1,420) 37 992. RECONCILIATION US GAAP TO CORE RESULTS FOR THE FOURTH QUARTER 2016. Net revenue Product sales Contract revenue Total net revenue. Milestones or contract. Other Accretion Core one-offs expense results. 627 0 627. -. -. -. (0) (0). -. -. 627 (0) 627. (91) (169) (224) (14) (498) 129. 6 3 14 23 23. 7 10 17 17. 1 1 1. 8 8 8. 6 6 6. 27 27 27. (64) (148) (204) (0) (416) 211. (0). -. -. -. -. -. -. (0). Income before income tax benefit (expense). 128. 23. 17. 1. 8. 6. 27. 211. Income tax benefit (expense) Noncontrolling interest Net results. (14) 0 115. (2) 20. (1) 16. (0) 1. (1) (0) 7. (0) 5. (2) 25. (20) 190. 1.08 106.236. 0.19. 0.15. 0.01. 0.07. 0.05. 0.24. 1.79 106.236. Operating (expenses) Cost of sales Research and development Selling, general and administration Amortization of acquired intangible assets Total operating (expenses) Operating results Total financial results. Diluted net income (loss) per share Weighted-average number of common shares. FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 21 ACTELION FINANCIAL REPORT 2014. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. (in CHF millions, except per share amounts and EPS). Depreciation, Doubtful US GAAP amortization, Stock-based debt results impairment compensation movements.

(44) CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 22. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. FINANCIAL REPORT..

(45) FINANCIAL REPORT.. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 23. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. CONSOLIDATED FINANCIAL STATEMENTS.

(46) CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENTS. (in CHF thousands, except per share amounts). Notes. Net revenue Product sales Contract revenue Total net revenue. 23 4/5/23. Operating (expenses)1 Cost of sales2 Research and development Selling, general and administration Amortization of acquired intangible assets Total operating (expenses) Operating income. 13. Interest income (expense), net Other financial income (expense), net Total financial income (expense) Income before income tax benefit (expense) Income tax benefit (expense) Net income. 6. Less: Net loss attributable to the noncontrolling interests Net income attributable to Actelion's shareholders. Twelve months ended December 31, 2016 2015. 2,412,198 5,740 2,417,938. 2,041,515 3,547 2,045,062. (245,537) (568,534) (760,158) (54,997) (1,629,226) 788,712. (175,794) (463,842) (696,650) (53,131) (1,389,417) 655,645. 1,183 2,539 3,722. (8,186) (11,977) (20,163). 792,434. 635,482. (97,599) 694,835. (87,547) 547,935. 1,551 696,386. 3,924 551,859. Basic net income per share attributable to Actelion's shareholders Weighted-average number of common shares (in thousands). 7. 6.66 104,626. 5.09 108,320. Diluted net income per share attributable to Actelion's shareholders Weighted-average number of common shares (in thousands). 7. 6.46 107,811. 4.91 112,484. Includes stock-based compensation as follows: (27,199). (23,561). Selling, general and administration Total stock-based compensation. (38,025). (33,235). (65,224). (56,796). 2. 20. Excludes amortization of intangible assets as presented separately.. The accompanying notes form an integral part of these consolidated financial statements.. FINANCIAL REPORT.. ACTELION FINANCIAL REPORT 2016. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 24 24. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. 1. Research and development.

(47) CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Twelve months ended December 31, 2016 2015. (in CHF thousands). Net income Other comprehensive income (loss), net of tax: Foreign currency translation adjustments Change of unrecognized components of net periodic benefit costs Amortization of components of net periodic benefit costs Other comprehensive income (loss), net of tax. 694,835. 547,935. (4,089) 5,231 1,433 2,575. (28,485) (3,672) 1,875 (30,282). Comprehensive income. 697,410. 517,653. Less: Comprehensive loss attributable to noncontrolling interests Comprehensive income attributable to Actelion's shareholders. 1,551 698,961. 3,924 521,577. FINANCIAL REPORT.. ACTELION FINANCIAL REPORT 2016. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 25 25. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. The accompanying notes form an integral part of these consolidated financial statements..

(48) CONSOLIDATED BALANCE SHEETS Notes. December 31, 2016. December 31, 2015. 8/9 10 11 6/9/12. 495,380 445,868 135,820 115,763 1,192,831. 404,892 427,223 62,107 68,828 963,050. 14 13 13 6. 350,215 382,705 135,048 20,528 25,150 913,646. 348,277 413,542 134,494 39,159 16,415 951,887. 2,106,477. 1,914,937. 83,009 445,730 40,211 568,950. 83,878 302,729 34,375 420,982. 66,427 115,630 34,312 216,369 785,319. 67,204 83,759 27,979 178,942 599,924. 53,881 2,187,889 (680,053) (236,220) 1,325,497. 57,064 2,636,931 (1,137,399) (238,795) 1,317,801. Equity attributable to noncontrolling interests Total equity. (4,339) 1,321,158. (2,788) 1,315,013. TOTAL LIABILITIES AND EQUITY. 2,106,477. 1,914,937. (in CHF thousands, except number of shares). ASSETS Current assets Cash and cash equivalents Trade and other receivables, net Inventories Other current assets Total current assets Noncurrent assets Property, plant and equipment, net Intangible assets, net Goodwill Deferred tax assets Other noncurrent assets Total noncurrent assets TOTAL ASSETS LIABILITIES Current liabilities Trade and other payables Accrued expenses Other current liabilities Total current liabilities. 15 2/6/9. Noncurrent liabilities Pension liability Contingent considerations Other noncurrent liabilities Total noncurrent liabilities Total liabilities. 18 2 6. EQUITY 19. 21. The accompanying notes form an integral part of these consolidated financial statements.. FINANCIAL REPORT.. ACTELION FINANCIAL REPORT 2016. CONTENTS. FINANCE IN BRIEF. FINANCIAL REVIEW. CONSOLIDATED FINANCIAL STATEMENTS. HOLDING COMPANY FINANCIAL STATEMENTS. 26 26. WorldReginfo - 4991eace-1e31-4a1c-847b-00245e8e7b9e. Actelion's shareholders' equity Common shares (par value CHF 0.50 per share, authorized 147,753,077 and 154,120,627; issued 107,761,427 and 114,128,427 shares in 2016 and 2015, respectively) Accumulated profit Treasury shares, at cost Accumulated other comprehensive income (loss) Total Actelion's shareholders' equity.