a Novartis company

2013 Sustainability Report with integrated Environmental Statement of Sandoz GmbH for its plants in Kundl and Schaftenau and for Biozym GmbH (updated data to 2012)

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1. The Company

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Corporate Overview

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The Sandoz GmbH Plants

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Important Terms from the Sandoz World

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Overview of the Main Production Processes

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2. 2012 Highlights

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3. Corporate Citizenship

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The Four Pillars of Novartis Corporate Citizenship

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It‘s All about our Associates

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Table of Contents

Health20 Workplace Safety at Sandoz21

Contact Information

Sandoz Apprenticeships23

For more information, please contact Karoline Hochkogler, Head Communications Sandoz GmbH, Biochemiestrasse 10, 6250 Kundl, Austria Tel: +43-5338-200-0 Fax: +43-5338-200-460 Email: [email protected] www.sandoz.com

Completed apprenticeships in second chance education24 The Works Council at Sandoz24 Sandoz Team Creativity24  The “Diversity & Inclusion” Project – Diversity is the Key to Success24 More Examples of Sandoz GmbH‘s Commitment to Social Responsibilit

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Novartis and Sandoz Crisis Assistance26 Commitment to People and Communities26 Communication with Stakeholders

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Environmental Protection

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The Environment and the Public

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4. Systems for Health, Safety and the Environment

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The Sandoz Health, Safety and Environmental (HSE) Policy

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HSE Management at Sandoz

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The Department of Health, Safety and the Environment (HSE)

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5. Environmental Measures

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6. Facts and Figures

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Environment

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Overview 

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Consumption of Resources51

Wastewater, Emissions, Waste56

Economic and Social Indicators

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7. HSE Targets

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8. GRI Index

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9. Verifier’s Declaration on Verification and Validation Activities

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Editor-in-chief and coordinator: Dr. Christian Mueller Editing: Evelyn Back and Dr. Christian Mueller Translation from the German: [email protected] Graphic design: Brigitte Roberts, www.punkt-werbeagentur.at Photos: Sandoz GmbH, Christoph Ascher, Hermann Nageler, Photocase, Shutterstock Copyright: Sandoz GmbH, 6250 Kundl, May 2013

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Letter from the CEO 20 years of “Responsible Care,”16 years of EMAS, eleven years of ISO 14.001 and now six years of OHSAS 18.001. Why is Sandoz GmbH so committed to health, safety and the environment?

Ernst Meijnders CEO of Sandoz GmbH and Director of the Anti-Infectives Global Business Unit

It goes without saying that the production of medicinal products entails the consumption of raw materials, power and water. We feel committed to protecting the environment, and Sandoz therefore operates according to the highest standards, ones that even exceed legal requirements. In the last fifteen years we have invested considerable sums of money in the sectors of health, safety and the environment. Existing systems have been improved, new concepts developed and measures taken in all sectors. Such investments include, for example, responsible production process design, the ecologically sensible reuse of byproducts, well thoughtout closed systems and special recycling facilities for used solvents. One of our priorities is the reduction of energy consumption, and we are therefore pursuing an intensive energy-savings program, which was certified by TÜV Austria at the end of 2010 according to ÖNORM EN 16001. Sandoz GmbH was the first large industrial concern in Austria to qualify for this certification. In 2013, the energy management system was switched to EN ISO 500001. You can read all the details in this 2013 Sustainability Report, which will provide you with an overview of Sandoz GmbH’s achievements to date in Austria with regard to the responsible use of resources and the new goals for improvement we have set for ourselves. This brochure provides you with insights into environmentally, economically and socially important topics. Novartis, and therefore Sandoz as well, want to be recognized as an organization that conducts business in a sustainable fashion – economically, socially and ecologically. At Sandoz, this integrated socially responsible approach very clearly begins with the success of our core business. As a global leader in the production of generics, we deal with health on a daily

basis. Our mission is to provide people all over the world with high-quality, reasonably priced medicinal products. With this, we wish to ensure, on the one hand, that more people have access to medical care and, on the other hand, help healthcare systems save money. Around 190 million packets of medicinal products leave the Kundl facility every year to treat people all over the world. The health of our associates is also of utmost importance to us. Sandoz therefore has an internal health management system that aims at improving the well-being of our employees, both in the workplace and beyond. Proven systems ensure that working at Sandoz is as safe as possible, and over the past several years, we have been able to significantly reduce the number of workplace accidents. In addition, we make every effort to be a good neighbor in the communities in which we operate and where our associates and their families live and work. One example of this is our annual “Community Partnership Day,” during which Novartis employees all over the world are encouraged to use their work day to provide community service. We are certain that through responsible management, we will be able to contribute significantly to positive social development and to better ensure the long-term success of our business. We recognize that being aware of our social responsibilities and being successful in business go hand in hand. With this in mind, we hope to continue our longstanding dialog and welcome any insights and feedback. With best regards, Ernst Meijnders

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The new gate building for the Schaftenau plant with its integrated Security Center was completed in 2009.

1. The Company More than sixty-five years of expertise in healthcare and quality of life: At Sandoz GmbH, growth and progress are closely linked to social, economic and environmental accountability. The Austrian Sandoz GmbH, located in Kundl, Tyrol, with facilities in Schaftenau and Vienna, is part of the Sandoz Group, a division of the global Novartis Concern.

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Corporate Overview 26,000 employees in 140 countries, Sandoz holds the #1 position globally in biosimilars as well as generic injectables, ophthalmics, dermatology, and antibiotics. Key product groups include antibiotics, treatments for central nervous system disorders, gastrointestinal medicines, cardiovascular treatments, and hormone therapies. Sandoz develops, produces, and markets these medicines along with pharmaceutical and biotechnological active substances and anti-infectives. In addition to strong organic growth in recent years, Sandoz has made a series of acquisitions including Lek (Slovenia), Sabex (Canada), Hexal (Germany), Eon Labs (US), EBEWE Pharma (Austria), Oriel Therapeutics (US), and Fougera Pharmaceuticals (US). In 2012, Sandoz posted sales of USD 8.7 billion.

Sandoz Austria

State-of-the-art manufacturing equipment guarantees highest quality medicinal products.

The Sandoz Division Sandoz, a Division of the Novartis group, is the second-largest generic pharmaceuticals company globally, offering a broad range of about 1,000 high-quality, affordable products that are no longer protected by patents. With approximately

Advisory Board Novartis AG

The Sandoz Division in Austria organizationally belongs to Novartis Austria GmbH, the Novartis holding company in Austria, which includes Sandoz GmbH and the Sandoz facility at Unterach am Attersee. Sandoz GmbH consists of the two production facilities in Kundl and Schaftenau as well as Sandoz Commercial Operations in Vienna. This Sustainability Report covers exclusively the Sandoz production facilities in Kundl and

Management Board Novartis AG

Novartis Austria GmbH Division Pharmaceuticals including Vaccines & Diagnostics Novartis Pharma GmbH Novartis Institutes for BioMedical Research Research Unit Dermatology

Division Alcon

Division Sandoz

Division Consumer Health

Alcon Ophthalmika GmbH

Sandoz GmbH

Novartis Consumer Health-Gebro GmbH

CIBA VISION GmbH

EBEWE Pharma Ges.m.b.H. Nfg.KG

Novartis Animal Health GmbH

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Schaftenau, as well as Biozym GmbH, which Sandoz GmbH operates as a joint venture with Henkel KGgA. This Sustainability Report does not cover Sandoz Commercial Operations in Vienna. The cooperation with Henkel KGaA ended in the 3rd quarter of 2012 upon request of Henkel. Sandoz’s largest development and production site worldwide is located in Kundl in Tyrol. Annually, 190 million packets of medicinal products leave the Kundl facilities for use in over one hundred countries. Thus, the Sandoz GmbH counts among the largest producers of antibiotics worldwide and is the last fully integrated manufacturer of penicillin in the Western world. Sandoz GmbH’s second production site is located nearby in Schaftenau. Enzymes, hormones and modern biopharmaceuticals are produced there. Sandoz Austria’s sales and marketing office, Sandoz Commercial Operations, is located in Vienna. This office coordinates the management of business activities on the domestic Austrian market. Following acquisition of the former Ebewe in Unterach am Attersee in 2009, Sandoz now also has a fourth production site in Austria and with it a new global center of competence for generic oncology injectables.

Pioneer in Biosimilars1) Sandoz focuses on the development and production of so-called differentiated products, above all highly complex biosimilars. Sandoz is the global pioneer and market leader in the biosimilar sector. In 2006, the company succeeded in having the world’s first biosimilar, the growth hormone Omnitrope® (somatropin), approved for sale. This was followed by approvals for Binocrit® (epoetin alfa) and Zarzio® (filgrastim). Sandoz is thus the only company in Europe that manufactures three approved biosimilars, two of which are produced at the Tyrolean plants in Kundl and Schaftenau. The basis for Sandoz GmbH’s success with biosimilars is the company’s many decades of expertise in the field of biotechnology. For example, antibiotics such as penicillin have been produced in Kundl for 65 years. Today the plants in Kundl and Schaftenau are known as important centers of competence for modern biotechnology within the Novartis Concern. Such innovations are only possible in connection with ultramodern technology. Every year Sandoz GmbH invests considerable sums of money in the expansion and modernization of its facilities. In combination with strict work regulations, these investments ensure high product quality recognized by health authorities the world over.

1) More information on the topic of biosimilars is found on pages 10 and 11.

Sandoz GmbH Management

Ir. Ernst Meijnders CEO, Sandoz GmbH

Mag. Hubert Hirzinger Dr. Peter Gasteiger CFO, COO Human Resources Director

Dr. Günter Stempfer Head Biopharmaceuticals Kundl

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Located near the Prater and Trotter Race Course in Vienna, Austria, the “Viertel Zwei” office complex provides spacious and friendly workspace for Sandoz associates.

The Sandoz GmbH Plants Kundl Plant Sandoz GmbH’s Kundl plant, its first and largest manufacturing facility, was founded in 1946. The plant is located on the western outskirts of the town of Kundl (pop. approx. 4000) in the Lower Inn River Valley. The general direction of expansion for the plant is toward the southwest, in a rural setting. The plant’s maximum east-west diameter is approx. 800 meters and north-south approx. 600 meters. The grounds presently cover more than 270,000 m2, of which 80,000 m2 have construction and 115,000 m2 have a compacted surface, and are accessible via the Inn Valley Freeway, state highway and a company-owned rail spur. Sandoz GmbH management, as well as the global Anti-Infectives Business Unit, are located here. In The Schaftenau plant with sandostatin facility.

addition to the business units for anti-infectives (active ingredients for antibiotics) and biopharmaceuticals, the Kundl plant also produces active ingredients and other pharmaceuticals (final products) and is home to logistics, engineering technology, research and development, product approval, quality assurance as well as a number of administrative functions. The range of products includes biotechnologically engineered medicinal products such as antibiotics and highly complex biopharmaceuticals as well as enzymes.

Schaftenau Plant Sandoz GmbH’s second manufacturing facility in Austria is located in the municipality of Langkampfen, near Kufstein, and covers approximately 210,000 m2.­ (Of that, 16,000 m2 have construction and 37,000 m2 a compacted surface.) The plant lies south of the town proper between the main highway and the railroad. Maximum diameter of the enclosed plant area in an east-west direction is approx. 400 meters and north-south approx. 300 m. Predecessor factories have occupied these locations since

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1928. The Schaftenau facilities were purchased in 1958. Schaftenau site is bustling with construction activity again. A new laboratory building for the development of finished dosage forms of Biosimililars was officially opened in March 2013. In addition, a new office and laboratory complex as well as a new solvent warehouse are being built. These numerous extensions also require investments in the infrastructure on site, such as the power supply system. Enzymes, hormones and modern biopharmaceutical substances are produced at Schaftenau site.

Commercial Operations – Vienna The sales and marketing activities for Sandoz Austria (Commercial Operations) are located in Vienna. The “Viertel Zwei” office complex houses the combined business activities for Sandoz, Hexal and 1A Pharma for the domestic Austrian market.

Biozym GmbH Integrated in the Kundl plant, Biozym GmbH was an outstanding example of an innovative longtime partnership between two different industry sectors.­ Due to the changed economic environment, the production was gradually reduced in the course of 2012 and stopped by the end of the third quarter of 2012. The plant was dismantled, the building actually is demolished under consideration of all environmental aspects.

Sandoz GmbH Organigram

A bird’s eye view of the Kundl facility, covering more than 270,000 square meters.

Sandoz GmbH Facilities Kundl Plant

Sandoz GmbH

(approx. 3500 staff)

Schaftenau Plant

Vienna Operations

Biozym GmbH

Sandoz GmbH Production Plants

Sandoz GmbH Commercial Operations

Sandoz GmbH

Health/Safety/ Environment

Quality Unit

Commercial Operations Anti-Infectives

Biopharmaceuticals Global Reg. Affairs

Commercial Operations

Legal

Finance & Administration

Supply Chain Anti-Infectives

Biopharmaceuticals Kundl

Technical Operations Kundl

Communications

Human Resources

Operations Anti-Infectives

Biopharmaceuticals Schaftenau

GSCM/SCM Biopharmaceuticals

PharmOps Schaftenau

Sandoz Development Center

Global Development & Strategy Anti-Infectives

Global Technical Development BP

Biotech Cooperations

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Important Terms from the Sandoz World Generics Generics are successors to pharmaceuticals whose patent protection has expired. Generic medications are just as effective as the original namebrand equivalents, but are available at considerably lower prices. The Bioequivalence Study proved that generic medicinal products are identical to the previously patented original. This clinical comparative study guarantees that generics have the: • identical active ingredient • identical dosage • identical effect • identical patient tolerance

In 2011 enoxaparin became the world‘s first blockbuster generic medication.

In addition to bioequivalency, the manufacturer must prove that every step of the production process complies with the highest quality standards. This begins with production of the active ingredients, ongoing quality controls throughout the production process and ends with analysis of the final

product. Only when all criteria are fulfilled will the authorities approve the product for sale. Years of comprehensive development work are required for generic drugs, though basic research need not be repeated. This makes it possible to offer generics at a lower price than the original drugs and plays a key role in ensuring that healthcare systems are sustainable in the long term. Generics allow governments and other purchasers considerable savings and ensure that more patients have access to medical treatment. Visit www.generikaverband.at for more information about generics.

Fermentation, Biotechnology and Genetic Engineering The Latin word fermentum means nothing more than “sourdough.” Today, the term “fermentation” is used to designate every kind of biotechnical reaction. The pharmaceutical and chemical industries manufacture a large assortment of products with the help of microorganisms like bacteria, fungi, viruses or cell cultures. Biotechnology is the technical application of biological systems for the production of substances useful to humans, such as medicinal products, agricultural products, accessory agents for the pharmaceutical, food and materials industries as well as biological catalysts. Genetic engineering, or molecular genetics, is a subcategory of biotechnology in which the genetic material of living organisms is intentionally altered with special methodologies to give these organisms enhanced or new characteristics. Sandoz utilizes both classical and modern methodologies. The general characteristic of such biotechnical production methods is that they take place in aqueous

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(water-based) solutions using renewable agricultural raw materials at low pressures.

Antibiotics Antibiotics are defined as pharmaceutical active ingredients that hamper bacterial metabolism or kill bacteria. Modern science knows several thousand substances that have an antibiotic effect. At the practical level, the focus is on several dozen molecules that have completely proven themselves in routine medicine. Penicillins and cephalosporins belong to the important group of beta-lactam antibiotics. Further significant groups are the macrolides, aminoglycosides, glycopeptide antibiotics, fluorchinolones and many others. One billion people can be treated each year for bacterial infections with active ingredients produced by the Austrian Sandoz GmbH. The product portfolio covers the entire manufacturing spectrum, from basic molecule to finished medicinal products. Today, the Austrian Sandoz GmbH is the only remaining, fully integrated manufacturer of penicillin and the largest producer of antibiotics in the Western world.

Biosimilars Biopharmaceutical medicinal products have revolutionized modern medicine. They make it possible to treat complex diseases such as cancer or autoimmune disorders, and in many fields of therapy they are the only therapeutic option. Thus, the percentage of biopharmaceuticals on the medicinal product market has increased steadily. By 2016 seven of the top ten medicinal products worldwide will be biopharmaceuticals. Already today approx. one-third of the global pharmaceutical development pipeline consists of biopharmaceuticals.2) However, the high costs for treatment with biopharmaceuticals are threatening worldwide to restrict patient access to these vitally important medicinal products. Thus, healthcare payers face an enormous challenge. Biosimilars, which are follow-on versions of pharmaceuticals whose patents have expired, are a true alternative. They have comparable quality,

efficacy and safety and at the same time offer clear potential savings. Thus, it is possible to provide patients with a sustainable supply of these modern medicinal products. Complex Development, Production and Approval Biosimilars are proteins produced using genetically modified living microorganisms or cell lines. Contrary to classical chemical active ingredients, biopharmaceutical active ingredients are complex, high molecular weight proteins with a molecular weight between approx. 3,000 and more than 150,000 daltons. In comparison, aspirin has a molecular weight of 180 daltons. This means that for a biosimilar the timeline from development to approval by the authorities generally covers seven to eight years, compared to the two to three years for standard generics. Navigating the process for government approval of a biosimilar is even more complex, since the proof of identity through bioequivalency studies required for market access for generics is by far not sufficient for biosimilars. Instead, proof must be provided that, with regard to its physical and chemical properties, biological activity and purity, the biosimilar matches the original product and is comparable in clinical safety and efficacy. Very comprehensive clinical studies are required for this. Since these molecules and the method in which they are produced are so complex, only a few companies worldwide have the necessary expertise and financial resources to develop and produce high-quality biosimilars. With three approved biosimilars, Sandoz is the global pioneer and market leader in this field. The Tyrolean plants in Kundl and Schaftenau, where two of the three approved biosimilars are produced, play an important role. (More information can be found in Chapter 1, The Company.)

2) Source: World Preview (2016), Evaluate Pharma (May 2010, third edition)

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Overview of the Main Production Processes In general, production processes can be differentiated in a biological stage (fermentation), recovery and purification of the fermentation broth (downstream processing) and, frequently, numerous downstream physical and chemical stages.

purification facilities. In addition, recycling processes help minimize purchase of raw materials and waste disposal. For more details, see Chapter 5, Environmental Measures.

Especially when manufacturing antibiotics, downstream processing of the fermentation broth from the biological stage requires large volumes of organic solvents, such as acetic acid compounds or alcohols.

Fermentation Active ingredients are produced by the tiniest of living creatures, such as fungi or bacteria. These are placed in huge steel vats and then cultured under constant stirring, the addition of agricultural raw materials and sterile air. The active substances must then be removed from the fermentation broth, isolated in subsequent processing facilities and, finally, purified. The microorganisms are consistently optimized for greater productivity using classic and molecular-genetic processing methods.

Raw active ingredients are refined, in some cases at slightly higher temperatures or using catalysts, in the chemical synthesis facilities. Here, too, various organic solvents are used. Both the Kundl and Schaftenau plants also have facilities for mixing as well as for filling and warehousing raw materials, intermediates and final products. Contaminated exhaust air and wastewater are collected and treated in Sandoz’s own sophisticated

Production of Active Ingredients

Product groups generated: • Antibiotics: penicillin V, cephalosporin C, pleuromulin • Immunosuppressives: ciclosporin, rapamycin • Recombined proteins • Enzymes

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Processing Procedures Isolation and purification of the desired active ingredients from the fermentation broth, for example by extraction using organic solvents or by diaphragm technology. Biological Harvesting from Natural Tissues Harvesting and separating pharmaceutically effective enzymes such as pancreatin from animal tissue. Chemical Synthesis For example: Refining of antibiotics Active antibiotic ingredients from the fermentation matrix are isolated and purified and then can be used either directly for pharmaceutical final products (e.g., penicillin) or further processed to make more complex pharmaceutical products. To do so, a lateral chain must first be split off the basic molecule. This splitting can either be done enzymatically, as in the case of penicillins, or chemically, as in the case of cephalosporins. The next step is introducing a new lateral chain through chemical synthesis. The result is a series of additional recombinant antibiotics with various ranges of effectiveness (diverse intermediate products and active ingredients from the cephalosporin antibiotics group).

Granulation This physical process allows the formation of easily pourable granules from compact, non-pouring powders. It facilitates the manufacture of pharmaceutical dosage forms (accuracy of dosage, speed of processing, etc.).

Pharmaceutical Production In producing pharmaceuticals, additives are introduced to the manufactured active ingredients to make finished medications in diverse dosage forms. • Solid forms: Powders, (film) tablets, capsules • Liquid forms: Juices, solutions, suspensions • Sterile forms: Injection vials Next to the actual active ingredient, the form of the medicinal product and its packaging play a significant role in the efficacy of the medicinal product. The form essentially determines the speed, duration and location of the active ingredient’s release as well as shelf life and storage capabilities.

For example: Thyroid hormones The Schaftenau plant has been producing these socalled thyronines (sodium levothyroxine and liothyronine) for about three decades. From the annual production volume of active ingredients, several billion tablets can be manufactured due to the high hormone activity. This corresponds to about one half of the world’s annual demand. Other Chemical and Physical Processes Sterile Precipitation This is the separation of a substance in solution from that solution in an absolutely sterile production environment. Chemical reactions are used to produce a solid precipitate of the desired compound. Such processes are used to manufacture sterile, injectable penicillins and cephalosporins.

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„Be Healthy“ celebration week: For one whole week our Kundl and Schaftenau plants hosted events centered on physical activity, healthy nutrition, health check-ups and health management.

2. Highlights 2012

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“Be Healthy” Celebration Week 2012 with Star Guest Matthias Lanzinger From September 10 to 14, 2012 the “Be Healthy” Celebration Week was held at our Kundl and Schaftenau sites for all Sandoz associates. This was the highlight of Novartis’ interdivisional health initiative, “Be Healthy.” All week long a comprehensive program gave our associates the opportunity to make an active contribution to their health. Every day’s program ran under a different motto, corresponding to the four pillars of the “Be Healthy” initiative (move, choose, know, manage). The program included information, activities and advice on how to improve health and prevent illnesses. The highlight of the week was a panel discussion at Kundl Town Hall with star guest Matthias Lanzinger. In 2008, Matthias Lanzinger suffered a heavy blow of fate during the World Cup ski race in Kvitfjell, Norway. Mastering it impressively, he explained what was important on his “back way”: “Don’t quarrel with the past, you have to look forward. Sure you can be angry about things that have happened, but that will not do any. You can’t turn back the past, but you can positively in-

fluence the future.“ Subsequently, Matthias Lanzinger drew parallels between competitive sports and business. He conveyed his personal insights in dealing with difficult situations: “You have to dare to step out of your own ‘comfort zone’ and to be open to new ideas. With a positive attitude there are always new perspectives. To set objectives, even if they seem out of reach for the time being, is crucial. This applies both to sports and to economics.“ Together with Ernst Meijnders Matthias Lanzinger then discussed ways how to create an optimal working environment for employees who return to work after an illness. The famous Austrian cabaret artist Andreas Vitasek approached the topic completely differently. His current program “39.2° – A fever monologue“ offered humorous and critical thoughts about illness and well-being. Ernst Meijnders: “The Celebration Week is a motivation for our associates to take responsibility for their own health. Matthias Lanzinger certainly inspired us with his positive attitude and his willpower. And Andreas Vitasek brought a lot of humor and cheerful moments – to stay healthy, which is just as important!”

Andreas Vitasek with his program “39.2° – A fever monologue“

Prominent Guest: Ex Ski Racer Matthias Lanzinger drew parallels between competitive sports and business.

Sandoz GmbH | 2013 Sustainability Report

English from kindergarten to graduation is the right way – agreed Beate Palfrader, Regional Minister of Education, Jeff George, Global Head of Sandoz, Tyrolean governor Günther Platter, Ernst Meijnders as well as Kundl’s mayor Anton Hoflacher and Breitenbach’s mayor Alois Margreiter.

Sandoz Kids continues to grow Just one year after the opening of the Sandoz childcare at Kundl site, “Sandoz Kids” was too small for the little ones. Thus, the existing building has been extended by one floor and the number of childcare places increased to 50. Regional Minister Beate Palfrader officially opened the new “Sandoz Kids” floor on June 20th, 2012. Thereafter, a family party for the children and their parents took place. All interested associates had the opportunity to stop by and have a look at the new premises. The groundbreaking ceremony in October 2012 marked the start of construction of the second San-

doz childcare at Schaftenau site. From 2013 on, 24 children between 18 months and six years will find a day care place there.

English for the Youngest Children Since autumn 2012, “Sandoz Kids” at Kundl site is a bilingual kindergarten. This initiative is supported by the pilot project “Bilingual Education – English from kindergarten to graduation”, a collaboration of Tyrol and Sandoz GmbH. Native speakers support the children in learning English. “It is impressive how professionally the children are supervised here, learning English playfully,” said Tyrolean governor Günther Platter and Regional Minister of Education Beate Palfrader during their visit in Kundl. The bilingual education leverages the extensive learning potential of nursery and kindergarten children and lays the foundation for more comprehensive training and career opportunities.

First Sandoz Safety Day

Regional Minister Beate Palfrader officially opened the new „Sandoz Kids“ floor.

Safety has a high priority at Sandoz. The individual associate is the most important determinant of a safety culture. The first Sandoz Safety Day on 25 October 2012 gave associates the opportunity to consider the issue of safety from very different perspectives and to sharpen their awareness. “The idea of safety awareness has to be firmly

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rooted in all levels of the organization to ensure a long-term safety. On one hand, there is the individual associate who executes his tasks with care and foresight. On the other hand, there is the manager who creates the appropriate environment and lives the values of safety in his daily business. Teamwork is the connection between these two positions. Practiced self- and team-responsibility are key to success,” says Alexander Haidekker, Head HSE at Sandoz. The highlight of the Sandoz Safety Day was the associate event in Kundl, focusing on how personal responsibility, teamwork and leadership can sustainably improve safety within an organization. Keynote speaker Andreas Huber, senior security specialist at Voestalpine in Linz, shared his best practices and professional experiences. Next-Level Emotion’s safety cabaret considered the topic from a totally different – and very humorous – angle. In the end, it was clear: Safety can be funny. Nevertheless it has to be taken seriously.

15 Years of Employee Ideas – A Success Story In early October 1997, the Employee Idea Process (MI) was launched. The motto was: “MI is DOING, and ALL join in!” Finally, the best consultants are the associates themselves. Today, the MI initiative is an integral part of the Sandoz culture and makes a valuable contribution to the company’s competitiveness. Since 1997 over 8,300 employ-

ee ideas were submitted, every fifth of them could be implemented. All ideas implemented hitherto brought Sandoz an annual net benefit of € 33 million in total.

New experiences during Sandoz Safety Day: Associates participating in „Blind Vision“ (in cooperation with the Tyrolean Association of the Blind).

Sandoz employees “walk” donation to the Mountain Rescue in Kufstein The traditional Sandoz company run brought a record profit in 2012. 352 associates took part in the sixth edition of the event and did counted 1,705 rounds on the Sandoz company premises. Each round was endowed with five euros by the management board. Including the entry fees of the Sandoz associates the total amounted to 10,285 Euro, which were donated to the Mountain Rescue in the district of Kufstein.

Thomas Lindner from PHP received a travel voucher for the 8,000th employee idea - improving the „bottles‘ introduction into the sterile area“

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3. Corporate Citizenship A sustainable world is frequently measured by the extent to which economic, social and ecological aspects are taken into consideration over the long term.

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The Four Pillars of Novartis Corporate Citizenship Novartis, and with it, Sandoz, wishes to be recognized as an organization that takes our social responsibility seriously. In our own best interest, we want to conduct our business in a sustainable way – economically, socially and ecologically.

At Novartis, social responsibility begins with the success of our core business. Innovation is foremost in our ability to change people’s lives. At the same time, we follow the ethically correct path and operate our business in a responsible and sustainable fashion. At Novartis, Corporate Citizenship rests on four pillars: the patients, corporate conduct, people and communities and environmental protection. The Patients Novartis has a unique portfolio of pharmaceuticals that optimally fulfills the ever-changing needs of patients and of society as a whole: state-of-the-art medications, generics, vaccines, diagnostics as well as prescription-free drugs. Novartis aims to reduce the suffering of ill people and improve their quality of life. This also holds true for patients who are unable to afford treatment. In 2012, over 100 million patients were treated via collaborative patient-­ assistance projects, valued at USD 2,051 billion.

and directs all corporate activities. It is our desire to achieve outstanding performance with integrity. Associates and Communities Novartis wishes to ensure the utmost workplace safety for our associates and promote their health and well-being. In addition, Novartis strives to be a good neighbor in the communities in which our associates and their families live and work. Health, Safety and Environment Novartis places great value on the responsible use of natural resources and makes every effort to rigorously control the volume of waste, reduce greenhouse gas emissions and promote energy efficiency.

Why does Novartis place such great importance on Corporate Citizenship? “First, it is ethically speaking the right thing to do, and secondly, it makes good business sense. We reduce our risks as a result and win the necessary trust of people, communities and authorities. After all, they give us the legitimation to

If you would like to learn more about the Novartis Corporate Citizenship Philosophy, please visit www.novartis.at or www.novartis.com.

conduct our business, press ahead with innovations and grow.” Source: Novartis Corporate Citizenship Brochure

Corporate Conduct The Novartis Code of Conduct establishes standards for the ethical behavior of our associates

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It’s All about our Associates Health “Be Healthy” – Health Promotion at Sandoz Novartis and thus also Sandoz are dedicated worldwide to their associates’ best health. A study by the World Economic Forum (WEF) found that on-the-job programs to promote the health of a company’s associates can help significantly reduce non-communicable disease, such as cardiovascular diseases, stroke, diabetes but also cancer. That is why Novartis in 2011 launched the “Be Healthy” initiative as a long-range goal for all its divisions. Our Be Healthy Festival is held every year in September and offers our associates a comprehensive

program and the opportunity to actively do something for their health. Every day stands under a different motto, according to the four basic principles (pillars) of the Be Healthy initiative: • Move • Choose • Know • Manage The pillar “Move” aims to have our associates place a stronger focus on regular physical activity. Even the smallest changes in your daily routine can have a great impact on your health. In keeping with this motto Sandoz offers a comprehensive physical activity program.

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Choosing healthy eating habits ensures that your body and mind stay in top shape on the job and off. That’s why our cafeteria offers an active meal every day that is low in fat, calories and cholesterol. And it is also the lowest-priced meal of the day.

be seen from the various training and ongoing education offerings in the field of HSE. In addition to a comprehensive training catalogue on job-specific issues, seminars are also offered on the safe way to ski off-piste or safe driving for motorcyclists.

Knowing starts with awareness. Regular health check-ups help our associates keep an eye on their health. Our Sandoz Medical Service and our plant first-aid station offer our associates a convenient opportunity to regularly check important health markers such as blood pressure, cholesterol and blood glucose.

In order for safety to be sustainable, the individual worker must think in terms that are broader than only his own health and safety. As part of a larger whole he must also take on team responsibility. Only when the individual units work together as cross-linked teams and help each other can the vision of zero work accidents be achieved. This type of cooperation naturally also extends to all the partner companies and contractors who work on site at Sandoz.

Managing is where we provide advice and information to help our associates maintain or recover their performance potential on and off the job. Managing also covers all strategies to ensure that our associates can return to their jobs after a longer sick leave.

Workplace Safety at Sandoz Workplace safety is very important at Sandoz. As a company, our vision is to achieve zero job accidents. This is an ambitious goal, but one we can reach. Numerous improvements in workplace safety are aimed to ensure a sustainable reduction in accident statistics. In addition to many technical and organizational systems, the individual worker remains the most influential factor in implementing a successful safety culture. Sandoz bases its workplace safety efforts on the so-called “behavior-based safety” method, a model developed from the behavioral sciences. Sandoz provides the necessary resources and conveys a clear message in order to support our associates in adopting and maintaining safe work practices. Such practices are certainly not confined to the workplace. A safety-conscious associate will carry his safe behavior over into his private life. This can

2. Corporate Citizenship

A safety culture that is lived and breathed also needs an open and transparent information policy. This is why associates are continuously informed about the company’s safety status. A virtual Sandoz safety train symbolizes the number of days without workplace injuries and is shown via the Sandoz Intranet and on large outdoor plasma screens. For every day the virtual train runs nonstop, EUR 100 are donated to the Austrian nonprofit campaign, “Licht ins Dunkel.” Every lost time workplace incident stops this symbolic “safety train” for an entire week. Then the count begins again. Working safely pays off at Sandoz in two ways: for the associates and for a good cause. In 2012, EUR 30,000 were raised in this way and donated to “Licht ins Dunkel.” Another key to a successful safety campaign is for company managers to set an example with convincing and authentic leadership. Safety is an elementary leadership task that must be conscientiously practiced by every associate holding responsibility for other associates. The results that Sandoz has achieved in the field of workplace safety prove we are on the right track.

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For example, since these programs were implemented in 2003 the number of work-related accidents of Sandoz employees that resulted in one or more days of lost working time declined from 26 to six in 2012. That places Sandoz well below the industry average for Austria. Implementation of Workplace Safety • Walk-through inspections More than 600 walk-through safety inspections are conducted every year by specially-trained associates at the Kundl and Schaftenau plants. All employee levels are included in these inspections. At the focus is the individual worker and his immediate work environment, but technical and organizational aspects are also considered. Since introducing this system 4,875 hours were spent on walk-through safety inspections. • Communication and social competence Especially for line managers, who are at the forefront between management and associates, communication skills and social competence are

Sandoz associates know right to the minute what the company’s safety status is. On the Sandoz Intranet and on large outdoor plasma screens a virtual Sandoz safety train comes to halt when an accident occurs.

of immense importance. Associates at this level of management undergo special training to be equipped for these demands. • Integration of all employee levels For the success of our safety programs to be sustainable all employee levels must be integrated in the various safety systems. Particularly the line employees must be actively integrated. In its diverse sectors Sandoz has developed various systems such as, for example, the so-called safety cells and the buddy system. Safety topics are also a prime part of Sandoz Ideas Management. • Training Every year the HSE Department puts together an extensive training catalog on work-related subjects. Current topics are added every year as needed. The training program for 2013 currently includes approximately 30 training courses on various topics. In 2012 Sandoz reached almost 6,600 associates in 265 courses. In order to meet the needs of our increasingly international staff, some courses are also offered in the English language.

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• Activity-related safety goals In order to better integrate especially our line associates, so-called activity-related safety goals were introduced in 2010. This means that persons in this employee level do not focus on reaching a company-wide performance figure, but instead they will be assessed on how they make an active contribution to work related safety. • Analysis of incidents and accidents Analyzing incidents and accidents is also a fundamental part of how we steadily improve our systems. Work-related accidents that result in lost working time, as well as accidents and incidents with hazardous potential, are systematically analyzed with special software (TapRooT). For all accidents and for a large part of the incidents with hazardous potential (near-misses) so-called “lessons learned” must be drawn up. These include a brief description of the accident or incident, the causal factors and the steps that were taken to prevent such occurrences in future. The lessons

learned are drawn up by the departments involved.

Sandoz Apprenticeships A Good Career Starts Here For decades, the in-house training of apprentices has been a big concern for Sandoz GmbH. More than 1,600 apprentices have already been trained as skipped workers. Many of them work for Sandoz, some in management positions, and thus make a special contribution to the success of our company. Every year Sandoz offers up to forty young people the opportunity to learn an interesting and ever-changing career with excellent prospects. The Kundl facility has its own training facility and a team of outstanding instructors, each of whom is committed to the success of every apprentice. The apprenticeship program is based on a “three-

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pronged” training system that combines conventional vocational school classes, in-house classes at the facility and on-site training to prepare students for their future career. In addition, it is also possible to acquire a high school diploma on an alternative educational track. Currently, 137 apprentices are being trained at the Sandoz Kundl facility as chemical laboratory technicians, chemical process technicians, electrical plant technicians, mechanics and pharmaceutical technicians.

Completed apprenticeships in second chance education Higher qualification/training of skilled staff Sandoz offers the possibility to complete the apprenticeships in Chemical Laboratory Technology and Chemical Engineering in second chance education. For this purpose, the participants attend approximately 1000 teaching hours in theory and practice in the company. The modular design allows for easy adaptation to personal and corporate needs and opportunities.

Foreman Education Technical Chemistry and Environmental Engineering Sandoz offers in-house professionals the possibility to continue their education alongside their job by training as a foreman of Technical Chemistry and Environmental Engineering. For this purpose, all training rooms, laboratories and technical equipment of the training center can be used by renowned training institutions.

The Works Council at Sandoz At every Sandoz site there is a works council for company employees. Its job is to represent the interests of Sandoz’s employees towards management. Disabled persons are represented by a Disabilities Representative and the apprentices by a

Youth Representative. The legal definition reads: the Works Council is to represent “the economic, social, health and cultural interests of the employees.” The rights and duties of the Works Council are stipulated in the Austrian Labor Relations Act. The Central Works Council, the Concern Works Council and the Europe Works Council in Novartis make it possible to represent the interests of all employees in the concern. All Sandoz employees with the exception of a few executive employees, who are excepted by the Austrian Labor Relations Act, are covered by the collective bargaining agreement for the Chemical Industry. This collective bargaining agreement is negotiated every year by the union and the management.

Sandoz Team Creativity “Every company lives by the creativity and inventiveness of its employees.” It was under this motto that Sandoz Ideas Management, or “IM,” was created back in 1997. It’s not the big strategies for the future that count here, but rather the many small and not-so-small ideas that simplify procedures and can consequently bring large savings. Over 8,000 ideas have been submitted by Sandoz associates to date. This noteworthy number highlights the high economic importance of ideas management for Sandoz. All the ideas implemented have resulted in first-year net savings in excess of EUR 33 million.

The “Diversity & Inclusion” Project Diversity is the Key to Success “Diversity and Inclusion” is a global project that was initiated at Novartis and Sandoz in 2008 and subsequently rolled out in the other individual countries. Why is this such a current issue today? Because the market environment is changing, and with that the demands on us as a company. An aging population, more and more women who choose to combine a career AND a family and a customer base that is becoming more international because of globality and mobility are just a few issues and new challenges that companies today have to tackle with determination.

Corporate Citizenship | 25

„Sandoz Kids“: The childcare facility erected in 2010 at the Kundl site and expanded in 2012.

This is exactly where “Diversity & Inclusion,” or D&I for short, begins. D&I is strictly speaking not a project but rather a company management concept that is specifically aware of the differences and similarities of the people in the company, incorporates these into the company culture and consciously appreciates them. D&I applies to all differences and similarities imaginable that our associates bring with them. Time and time again D&I projects center on two special topics, at Sandoz Austria as well: on the one hand, the increase in female management trainees, which is often a topic closely connected with the compatibility of a career and family, and on the other hand, the topic of work-life balance. What incentives can a company offer in order to support employees in finding their own personal work-life balance?

“Sandoz Kids:” A D&I Project It was precisely these ideas that ultimately were crucial in Sandoz’s decision to start its own childcare facility at the Kundl site, “Sandoz Kids”. “Sandoz Kids” makes it easier for parents to reenter the work force after maternity/paternity leave and promotes the principle of equal opportunity for both sexes in the work process. “Sandoz Kids” at Kundl site Thus, the existing building was extended by one floor and the number of childcare places increased to 50. “Sandoz Kids” at Schaftenau site opened in the spring of 2013: Here, up to 24 children can be supervised.

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More Examples of Sandoz GmbH‘s Commitment to Social Responsibility

“Community Partnership Day:

Novartis and Sandoz Crisis Assistance

In 2012, 220 Sandoz associates from the sites in Kundl and Schaftenau volunteered in social projects.

On a global basis, Sandoz and Novartis support a wide range of service projects, both financially and personally. Already in 2001, the Austrian Novartis Group companies decided to combine their resources to offer even more effective assistance. Examples include a partnership since 2002 with the “Make a Wish Austria” foundation, which helps fulfill the wishes of severely ill children. In addition, considerable donations of medicinal products are given to national and international aid organizations. In 2012 alone, Sandoz GmbH donated 7,6 tons of medications to 32 different Austrian relief and charity organizations.

Commitment to People and Communities Community Partnership Day Every year, Novartis associates all over the world, and thus also those from Sandoz, participate in a community service day. Instead of their regular workday, associates are given the opportunity to participate in some form of service for the community in which we live and work. In this way, on the Group’s birthday every year Novartis wishes to show social commitment to its communities, nur-

ture external relationships and at the same time, enhance team spirit and mutual support internally. Worldwide, around 14,000 associates in more than fifty nations participate in diverse community service projects on Community Partnership Day. Sandoz GmbH associates are fully involved. In 2012, 220 Sandoz associates from the sites in Kundl and Schaftenau volunteered in social projects and helped more than 1,000 people. The Sandoz Team Collects for a Good Cause In 2012, Sandoz organized the sixth “Run/Walk for a Cause” around the Kundl facility. In addition to the health aspect of such a “marathon,” the social aspect was also at the fore, as it is every year. Every participant paid an entry fee of EUR 5 that was donated to a good cause. In addition, Sandoz donated EUR 5 for each round completed by each participant. 352 associates participated in the “Run/Walk for a Cause” and completed 1,705 rounds. A total of EUR 10,285 were collected and donated to the mountain rescue in the Kufstein district.

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The Sandoz employee magazine “Connect“ appears four times a year.

bettina Mayr, Hansjörg toll

corinna sonderegger

Eva Matos garcia, Fabio

M i ta r b E i t E r M aga Z i N

ÖstErrEicH

1|12

M I TA R B E I T E R M

AGA Z I N ÖSTERREICH

Mixed Leadership

„FDA Readiness“

Sandoz Kids

Die Mischung macht’s – auch in Führungspositionen

Vor- und Nachbereitungen laufen auf Hochtouren

Ein neues Zuhause für unsere Jüngsten

Sandoz Visitor Cent

er Neues Aushängesc hild für den Standort Kundl geht in Betrieb

Project SCOPE am

ÖstErrEICH Start

Initiative zur Etabli erung einer starken Qualitätsor ganisation

Communication with Stakeholders

2|12

„Be Healthy“-Initi

ative M I tA r B E I t E r M AG

Der erste Sandoz „Pink Ribbon Day“ war ein voller Erfolg

3|1 2

A ZIN

rung: Kundenorientie

itt auf der CPhI

stwoche „Be Healthy“-Fe schaftenau

Jubilarehrung: ezeichnet rbeiter ausg 105 Mita

bewegt Kundl und

Auftr starker sandoz

The Sandoz website

Sandoz is committed to engaging in effective communication with its internal and external stakeholders. For this reason, we conduct a regular exchange of information and transparent dialogue with all relevant stakeholder groups. The Sandoz associates at Kundl and Schaftenau are informed on a running basis by the Department for Company Communication through various print and online media. These include the Sandoz Intranet, videos and our company newspaper as well as the employee information published four times per year by the management. The Department of Company Communication also provides current, subject-specific press releases or holds press conferences for the broad public, as well as general and specialized media. Compre-

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Sandoz Visitor Center

hensive information and news about the company are also available on our website www.sandoz.at. Sandoz is in close contact and discusses matters of public infrastructure with state and local political representatives and with the political administration of the surrounding municipalities, above all Kundl and Langkampfen. Sandoz counts among Tyrol‘s largest organizations that train apprentices. For this purpose we maintain close contact with local schools, training organizations, the Chamber of Economics and the Chamber of Labor. The development of effective medications and therapies requires a constant dialogue with patient advocacy groups. Sandoz always makes an effort to work in partnership with these groups in an atmosphere of openness, transparency and mutual respect. Moreover, we lay great importance on informing our clients on the right way to use and handle our products.

Visitors to our Kundl and Schaftenau plants, who would like to learn more about how our medicinal products are developed and produced can take a plant tour designed for this purpose. In the early summer of 2012 we opened our Visitors Center in Kundl, where we receive our guests – medical doctors, pharmacists, customers, schoolchildren and students – in a modern setting and inform them about Sandoz and our medicinal products using multimedia presentations. Sandoz‘s field staff is our company‘s first-line contact in all matters concerning products and therapies and is intensely networked with medical doctors, pharmacists and other specialist medical personnel. Our field staff works out of our Commercial Operations in Vienna. As one of the world’s largest producers of antibiotics Sandoz has a complex supplier chain; thus, many questions about our company’s social responsibility and the CSR-performance of our suppliers arise.

Corporate Citizenship | 29

ethics, observing human rights, avoiding discrimination, fair working conditions, employee health and safety as well as environmental protection. How suppliers should implement these principles is also set forth in a special Novartis guideline that states that already before a contract is awarded it must be determined whether a potential supplier observes the Third Party Corporate Citizenship Principles. When awarding supplier contracts, Sandoz gives this criterion the same importance as it does price and quality. The Novartis rules also stipulate how to conduct talks from the standpoint of Corporate Citizenship. Standard questionnaires and supplier audits help Sandoz recognize whether and to what extent a supplier meets our standards.

Cooperation with Partner Companies The company rule concerning “Work Performed by Third-party Companies and Personnel” ensures that our corporate philosophy with regard to HSE is also shared by third-party companies who work on company grounds. This company rule contains HSE-relevant prerequisites for preparing and awarding contracts and governs not only HSE training sessions but also the breaking-in and training of third-party personnel. Other subjects are the assessment of HSE conduct by third-party companies and providing support in selecting third-party companies. With regard to cooperation with our suppliers, the Novartis Corporate Citizenship Policy sets the ground rules. It clearly states that we give priority to those business partners, suppliers and contractual partners who share our Corporate Citizenship principles (see also Chapter 3). The Novartis Third Party Code of Conduct is even more precise. It states that our suppliers must comply with high standards for

In order to ensure that suppliers of raw materials for our medicinal products also meet the strict quality criteria, Sandoz also has a series of company operating procedures. These determine which companies will be included in the list of qualified suppliers and how the repeat quality audits are to be performed in detail. Novartis Emergency Management In an emergency we take all necessary steps to protect our associates, the public and the environment as well as our good reputation. A central part of our strategy is the Novartis Emergency Management (NEM) that covers the entire concern and reacts quickly and in a coordinated manner in case of emergency. Our emergency management is headed by a core team consisting of management persons in key positions. The team takes appropriate precautions for possible emergencies in order to avoid negative consequences and safeguard the continuity of our business operations. In addition, it is in direct contact with the local security forces (police, fire department, emergency rescue services). In an emergency these forces will be closely integrated in all plans and strategies.

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Environmental Protection The production of sophisticated medicinal products generally entails a high consumption of raw materials, power and water. We feel committed to using these resources sustainably, and Sandoz has therefore developed forward-looking standards, ones that even exceed legal requirements. In recent years we have invested considerable sums of money not only in the sectors of health and safety, but also in improvements for environmental protection. Existing systems have been improved, new concepts developed and measures taken in many sectors. Such measures include, for example: • resource-friendly production process design • ecologically sensible reuse of byproducts and waste heat • well thought-out closed systems to prevent emissions to the atmosphere • special recycling processes to permit reuse of certain raw materials. One of our priorities with regard to environmental production is the reduction of energy consumption.

We are therefore pursuing an intensive energy-savings program that has made it possible in recent years to reduce our consumption of electric power and natural gas by optimizing and improving our operations despite steadily increasing production volume. Sandoz‘s underlying energy management system was certified by TÜV Austria at the end of 2010 according to ÖNORM EN 16001. Sandoz GmbH was the first large industrial concern in Austria to qualify for this certification. In 2013, the energy management system was switched to EN ISO 500001. Waste heat from our production processes is reused in an ecologically sensible manner. On the one hand, it is used in Sandoz‘s own hot water supply system, and, on the other hand, large quantities are fed into the Kundl remote heating network. Now, more than 70 percent of the households in Kundl are connected to this environmentally-friendly heat source. As another important aspect we are minimizing the effects of our production and business processes on the environment. For example, the emission of organic solvents was markedly reduced by improvements made in the processes and by implementing special downstream procedures. Exhaust gases from our production processes are thermally treated in the boiler houses or in special afterburner facilities. The wastewater produced at our plant is collected separately in a five-line wastewater system according to its origin and contamination and piped into Sandoz‘s own water treatment plant (process wastewater), the local municipal sewer system (sanitary wastewater) or directly into the Inn River (cooling water, rainwater and snow melt). The cooling water, which is fed into the Inn River without any contamination, accounts for more than 90 percent of Sandoz‘s total wastewater. The steps taken by Sandoz to protect our environment are described in more detail in Chapter 5, Environmental Measures.

Corporate Citizenship | 31

The Environment and the Public Sandoz Austria has received the following awards and recognitions for its performance with regard to its environmental responsibility:

1987

2006

“Grüner Zweig” (“Green Branch”) awarded by the Tyrolean State Government

Novartis Energy Excellence Award

2007 1993 First “Responsible Care” certification; since then, continually received at three-year intervals

First “OHSAS 18001” certification, thereafter every year in conjunction with EMAS and ISO 14001

1994

2008

“Environmental Oscar”

Novartis Energy Excellence Award

1995

2009

ETA Prize for Energy Efficiency

Two Novartis Energy Excellence awards; winner of the Climate Protection Initiative “klima:aktiv” award

1997 Tyrolean Environmental Protection Prize

2010 1997 First EMAS audit and registration of environmentally audited locations (Kundl, Schaftenau and Biozym plants), thereafter every year

Novartis Energy Excellence Award; winner of the “klima:aktiv” award; first “EN 16001” certification

2011 TRIGOS award for corporate sustainability

2002

2012

Third EMAS audit in accordance with EU Regulation 761/01, confirmation of registration as well as first ISO 14001 certification; fourth “Responsible Care“ certification

Winner of klima:aktiv award for an enrgysaving project in the pharmaceutical production (galenics)

2013 2004

Switch from EN 16001 to the new energy management system according to EN ISO 50001

Novartis Energy Excellence Award

2005 Sustainability Prize awarded by the State of Tyrol

REG.NO. AT- 000123

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4. Systems for Health, Safety and the Environment

Systems for Health, Safety and the Environment | 33

The Sandoz Health, Safety and Environmental (HSE) Policy Sandoz GmbH is committed to the fundamental philosophy of sustainable development and the chemical industry’s “Responsible Care” program. Sandoz falls under the auspices of the Novartis Health, Safety and Environmental Policy. Health, safety and environmental protection (HSE) are integrated in our business strategy, with the goal of enhancing the value of the organization, controlling risks and fortifying our good reputation. Sandoz GmbH strives to achieve a leading role in health, safety and the environment. For this reason, we take the public’s expectations and concerns seriously.

5. Sandoz strives to be among the leading companies with regard to HSE policy by applying the best available and economically viable technologies.

Toward this end, the following guidelines apply:

7. Health, safety and environmental risks in plants and processes are systematically identified, assessed, reduced and documented.

6. By optimizing the uses of raw materials and energy and by minimizing environmental impacts it should be possible to consistently improve the environmental situation. To monitor progress, Sandoz records relevant data at regular intervals. These figures provide the basis for ensuring compliance with environmental objectives.

Overview of Management Systems at Sandoz GmbH

3. Health, safety and environmental protection are a fundamental responsibility of management. Management therefore fulfills and realizes a decisive exemplary function.

9. Sandoz advises its customers on HSE aspects related to the handling, application and disposal of its products.

Sandoz GmbH applies quality management, risk management as well as knowledge management systems. Quality management at Sandoz GmbH follows the guidelines of Good Manufacturing Practices (GMP), the guidelines of the US Food and Drug Administration (FDA), the directives of the European Health Agency and numerous other national health authorities as well as guidelines established by the Novartis Group.

4. HSE is an integral component of training programs. This ensures that all associates are informed about HSE goals and programs before being instructed to bring awareness and responsibility to their jobs.

10. In matters of HSE, Sandoz works together with the public, the authorities and other organizations in a trusting and open manner and regularly communicates on the company’s HSE activities and their impacts.

With regard to Health, Safety and the Environment (HSE), we have had a comprehensive management system in place for many years.

1.  Legal regulations and corporate guidelines provide the basis for Sandoz GmbH’s HSE Management System. 2.  The compliance of company activities with laws, ordinances, directives and Novartis guidelines is reviewed regularly.

8. In cooperation with the authorities, Sandoz develops emergency plans for critical HSE activities. These plans lay down the organizational and technical steps to be taken to prevent the possible release of hazardous substances and energy in the case of an accident.

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HSE Management at Sandoz With its Health, Safety and Environment (HSE) Management System, Sandoz GmbH implements its company policies in Austria at the Kundl and Schaftenau plants as well as at the Biozym facility. The HSE Management System encompasses all cyclical activities of the organization with regard to HSE, establishes goals and monitors the achievement of these goals. The HSE Department documents and publishes the results both internally and externally. Since 1997, Sandoz has been participating in the Eco-Management Audit System (EMAS). This commitment and the first ISO 14001 certification in 2002 caused Sandoz to develop its HSE Management System and the corresponding HSE Handbook. In subsequent years, the management system has undergone continuous development, so that today, it is entirely state-of-the-art. It will continue future expansion and improvements and contains those elements that are necessary and suited for translating the Sandoz HSE Policy into a sustainable future. In conjunction with the 2013–2015 audit cycle, Sandoz’s targets were updated and expanded,

new programs were established, appropriate sub-goals were defined, deadlines were set and persons accountable were determined. The latest figures are set forth in this Sustainability Report. The HSE Handbook provides information about documents and guidelines that are necessary and valid for diverse areas, such as saving energy, industrial hygiene, safety or emergency plans. It also contains a detailed description of the ways in which Sandoz complies with all legal and administrative regulations with regard to the environment. Observing Legal Developments To ensure that the company is in legal compliance, the HSE Department uses the following electronic sources to remain current on changes to the laws: automatic reports on changes in the Austrian Federal Law Gazette, reports from the Extranet of the Chemical Industry Group and topical information from the Novartis Group’s website. Through the regular participation by experts in relevant working groups and in-house workshops, Sandoz ensures that it keeps an eye on developing legal requirements and that these are implemented throughout the organization.

Systems for Health, Safety and the Environment | 35

Transferring Information to Responsible Departments The HSE Department communicates all relevant information or summaries to the responsible departments, either via email or in regularly scheduled meetings.

HSE Intranet pages inform associates about workplace safety, emergency management, environmental management, training and much more.

Verifying Compliance with Laws and Ordinances The HSE Department at Sandoz GmbH conducts regular audits and environmental operational testing in accordance with EMAS, ISO 14001 and OHSAS 18001. Walk-through inspections of operations and facilities comply with the need to verify implementation of all regulations and official decisions. These follow-up activities also incorporate the results of the periodic review in accordance with Section 82 b of the Austrian Industrial Code, which the HSE Department is also responsible for. Having our Sustainability Report with integrated Environmental Statement on the Internet provides interested parties outside the organization with insights into the Sandoz HSE Management System. Via the Sandoz Intranet, associates have ready access to the HSE Handbook. SIEM In addition to other resources, both electricity and natural gas are essential for the manufacture of our products. We are vitally aware of the impacts that energy consumption have on the environment and climate and are therefore committed to the ef-

ficient, sustainable and ecologically sound use of energy. To this end, Sandoz Integrated Energy Management (SIEM) was introduced at both the Kundl and Schaftenau facilities. SIEM rests upon the principles set forth in the Novartis Corporate Citizenship Guidelines and HSE Guideline 13, “Energy and Climate Management.” Furthermore, we are engaged in minimizing the indirect energy consumption through our production processes, for example by our suppliers, customers, contractors, waste removal companies and so on.

SIEM Sandoz Integrated Energy Management (SIEM) is an initiative with the goal of integrating the careful use of energy as an essential production factor into our daily work in a comprehensive way in order to increase the energy efficiency with which our products are manufactured and decrease associated costs. To do so, the following new positions have been established: • Site Energy Manager: This person is responsible for internal and external energy management agendas on site and ensures that system elements comply with Novartis Guidelines. • Sandoz Energy Committee (SEC): This committee is comprised of representatives from the business units, as well as from HSE, to ensure the smooth internal exchange of information. It makes decisions about the fundamental activities and procedures within the scope of the energy management program and verifies adherence to the energy goals.

3. Systeme für Gesundheit, Sicherheit und Umwelt

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Our energy goal is to reduce the amount of energy utilized annually per ton of product and thus the volume of pollutants emitted per ton of product.

At Sandoz, steam is generated with natural gas. We voluntarily converted from heavy heating oil to natural gas in 1999.

We strive to obtain sufficient and secure supply through appropriate agreements with well-known and reliable energy suppliers at best-possible rates. The utilization of renewable energy sources with corresponding environmental benefits within the framework of economic constraints is also seriously taken into account. For all our products we are making every effort to successively reduce specific energy consumption and thus continuously improve the energy efficiency of our production processes. This should result in reducing overall energy consumption, even when production facilities are expanded. The following measures shall ensure that we reach our energy goals: • Management considers energy-efficient production to be an essential component of our corpo-

rate philosophy and provides organizational structures and adequate personnel resources to do so. • Energy efficiency assessments shall be conducted for all existing and new processes and facilities to optimize these in accordance with latest technologies. • Energy consumption in all our production processes will be monitored continuously according to a range of criteria, evaluated and audited. • Energy efficiency will be monitored within the personal performance management process at all relevant levels and tracked using appropriate benchmark values. • Comprehensive communication, motivation and educational opportunities as well as the focused application of the Idea Management program shall be applied to support and promote energyefficient behavior among our associates.

Systems for Health, Safety and the Environment | 37

HSE goals and tasks are communicated in direct meetings with the associates.

The Department of Health, Safety and the Environment (HSE) The task of coordinating all activities having to do with health, safety and the environment falls under the auspices of its own staff unit, HSE. The head of the department reports directly to Sandoz GmbH management. HSE oversees technical safety, rele-

vant communication with authorities, environment/ auditing, product/process safety, health management, business continuity, employee safety/industrial hygiene, emergency management as well as emergency services.

Organization Health, Security und Environment Head HSE

Country HSEO

Point of Contact BUs on site

Environment Auditing

HSE AI

HSE BPO/SDC/ PharmOps

Legal Compliance

Technical Safety RiskManagement Official Notifications

Chemical Regulatory Affairs Process Safety – PRORA

Global Competence Center PRORA

Occupational Safety and Industrial Hygiene

Company Healthcare

Emergency Management

Health Promotion

Firebrigade Kundl

Safety Experts

External/IBG HealthcareManagement

Firebrigade Schaftenau

Safety Data Management

HSE TechOps

3. Systeme für Gesundheit, Sicherheit und Umwelt

Transport Services Kundl/ Schaftenau/ Holzkirchen Ambulance Services Kundl/ Schaftenau

Occupational Medicine

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5. E nvironmental Measures

Environmental Measures | 39

Production Philosophy At Sandoz, we are committed to the responsible design of manufacturing processes and the prudent use of natural resources and raw materials. Our philosophy is put into action at all locations. The detailed examples given below show what we mean by commitment. Almost all these measures have been incorporated on a voluntary basis without statutory mandate. In some cases, our guidelines have even served as the basis for subsequent legislation.

Reuse versus Refuse Thoughtful process design and refining means that a number of Sandoz’s byproducts can become the raw materials for other products. Biosol® and Biosol Forte® Reprocessing the fungal mycelium resulting from the manufacture of penicillin into fertilizer is an example of an ecologically very sensible practice. This fertilizer is retailed under the name Biosol®. Biosol® has been approved as an organic fertilizer and undergoes annual inspections by the Austrian Bio-Guarantee agency for certification. Biosol® reactivates soil life and promotes long-lasting soil regeneration. In addition, Biosol®’s high organic substance content raises a soil’s humus content and contributes to better root penetration. Furthermore, its high chitin content and beneficial influence on mycorrhiza (fungus roots) means that plants are more robust and less susceptible to many plant illnesses. A second high-quality organic fertilizer is Biosol Forte®, which has been approved for integrated agricultural production. Biosol Forte® considerably improves soil dynamics by activating microorganisms to provide plants with optimum nutrition without premature leaching of nitrogen into the groundwater.

4. Environmental Measures

Biosol® and Biosol Forte® are sold worldwide and are used as fertilizer for such crops as apples in South Tyrol, pistachios in Iran, ginseng in South Korea, wine grapes in Italy, olives in Greece, tea in India and vegetables in Austria. In addition, they are also applied successfully to fertilize German golf courses and sports fields and reforestation projects after forest fires in California. Continuous internal inspections and review by fertilizer inspection authorities ensure the maintenance of a high quality standard. Potassium Tetrafluoroborate Extensive research has made it possible to modify a series of procedures to produce potassium tetrafluoroborate instead of waste products. These activities not only contribute to longer-term sustainable production but also produce positive bottomline results for the company. Central Recycling and Collection Center With its own warehouse and a number of collection sites, non-hazardous solid wastes are systematically separated, collected and prepared for recycling. Since 1990, this system has reduced the volume of household-like industrial waste by over forty percent. Plastic foils, polystyrene, fiber drums, paper and metals like stainless steel, aluminum, tin, iron or electrical wires are collected, along with a range of other recyclables, such as neon lighting tubes and electronic components.

Solvents Solvents are essential in modern chemistry. For example, the active ingredients such as penicillin produced biotechnologically as part of the fermentation process must be recovered and purified from the fermentation broth in a downstream process using organic solvents such as butyl acetate.

It makes very good ecological sense to convert fungal wastes from penicillin production into fertilizer. Biosol® has been on the market since 1981 as a high-quality organic fertilizer.

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Solvents used and lost at Sandoz GmbH 2012

Recycled solvents

96,3% 0,04% Exhaust gases 0,46% Sold 0,83% Waste

6-APA The penicillin produced using fungal cultures in the fermenting process can also be used as the source material for a number of downstream products. The penicillin molecule must be split and then recombined. Splitting can be done either chemically or using an enzymatic process. The enzymatic process is advantageous, for it means considerable savings in chemicals, solvents and energy, and has been utilized for penicillin production at Sandoz from the outset.

0,96% Incinerated exhaust 1,44% Wastewater treatment plant

Within the raw materials solvents play an important role. The recycling rate in 2012 was 96.3 percent. The remaining 3.7 percent are divided as shown here. The distribution varies with the product mix.

In contrast to the former belief that solvents can be used only one time, Sandoz already in the 1960s installed the first circulation processes that allowed multiple use. Today, the system has been perfected with well-designed closed-loop systems, special recycling facilities for used solvent mixtures and extensive recirculation systems, achieving a recycling rate of 96 percent. This means that on average solvents can be reused in the production process approximately 25 times before being degraded in the plant’s own biological wastewater treatment plant, incinerated in the exhaust air incinerators or turned over to an outside waste disposal company. These results have not only meant savings; they came with a price tag. Sandoz has invested more than EUR 10 million, and the intense commitment of research and development experts was needed to obtain the necessary know-how.

Alternative Production Methods We have been giving considerable thought to alternative manufacturing processes for at least two decades. Years of intensive efforts have brought about several decisive breakthroughs. The following three examples are particularly noteworthy:

Elimination of Chlorinated Hydrocarbons Over the past several years it has been possible to replace chlorinated hydrocarbons (CHCs) with more environmentally sound organic solvents used to manufacture several important active ingredients. Efficiency-enhanced Fermentation Processes By optimizing our large-scale fungal fermentation processes it has been possible to significantly enhance specific performance factors, such as the carbon-source and energy utilization coefficients. This was done by means of innovative process engineering and by improving the morphological properties of the fungus cultures.

Energy Sources and Utilization The plants in Kundl and Schaftenau were among the first in Tyrol to switch from heavy heating oil to natural gas for steam generation and have been filling all steam demand with natural gas for years. As early as 1984, Sandoz voluntarily switched to low-sulfur heavy oil, and for their efforts, received the “Gruener Zweig” (“Green Branch”) award from the Tyrolean Forestry Authority. Total energy consumption at the Kundl plant rose through 2003 due to dynamic production growth. From 2004 through 2012, we significantly reduced our consumption by switching to energy-efficient manufacturing processes and implementing energy-efficient

Well-designed closed systems, special recycling facilities for used solvent mixtures and extensive recirculation systems give a recycling rate of 96.3 percent.

Environmental Measures | 41

technologies. Sandoz accomplished this reduction by improving fermentation processes, installing a higher-efficiency air compressor, reducing the pressure in the compressed air supply and cooling water systems, acquiring energy-efficient motors, installing high-efficiency frequency converters as well as expanding the heat-recovery systems. For these efforts, Sandoz received the Novartis Energy Excellence Award in 2004, 2006, 2008, 2009 and 2010. Community Heating In Kundl, usable waste heat is captured and utilized both internally for heating distillation facilities and buildings and externally in the form of community heating. Sources of heat include that generated by the dryers used to dewater the Biosol® and Biosol Forte® fertilizers and the air compressor plants. After clarifying numerous technical, legal and financial issues, Sandoz signed a contract in 1996 with the local community heating utility established especially for remote heating. Since then, more than seventy percent of the households in Kundl have decided to utilize this environmentally-friendly heat source. At present, approximately 23 million kilowatt hours of heat energy are provided each year. These promising investments mean that connected households enjoy significant reductions in dust, carbon dioxide and NOx emissions from elimination of their primary fuel source.

actual production. Continuous expansion of production has also increased the demand for cooling water. A series of efforts aimed at reducing consumption, such as the recycling of cooling water, are aimed at stabilizing water consumption. Water fed into the Inn River has a maximum temperature of 35° C and increases the temperature of the river by less than 0.15° C. Wastewater Collection and Treatment Sandoz has implemented a number of steps to protect groundwater flow and the Inn River. The Kundl plant has five separate wastewater sewer systems (for precipitation water, sanitary wastewater, cooling water, process wastewater and cleaning water from the production plants) to catch and ensure the proper treatment of the different types of wastewater. An improvement in Sandoz‘s

Rainwater and snow melt are collected in their own drainage system that normally feeds directly into the Inn River. If contaminated, this water flows

fermentation processes also made it possible to significantly reduce energy consumption.

For more details on the Sandoz Intergrated Energy Management (SIEM) introduced only a few years ago and on the resulting strategies, please see Chapter 4.

Water and Wastewater Bank filtrate from the Inn River For its biotechnical production Sandoz requires large volumes of cooling water and for many years now has stopped using groundwater for its production processes. Instead, it mainly uses bank filtrate pumped from the Inn River. Potable water pumped from Sandoz’s own deep wells is still needed for

4. Environmental Measures

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Sandoz uses vast quantities of cooling water for its biotechnical production. For many years, Sandoz has used primarily bank filtrate from the Inn River rather than groundwater.

into a 2.4-million-liter retention basin and is treated accordingly. Within the plant areal, asphalted surfaces ensure that contaminated surface runoff is collected to the greatest possible extent and does not enter the groundwater. Sandoz GmbH contaminated wastewater is purified biologically. Sandoz researchers developed a wastewater treatment plant (ARA 1) to treat contact water from the manufacturing facilities with higher levels of organic contamination. The principle behind this plant rests within Sandoz’s own fermentation expertise. ARA 1 outflow undergoes a final purification process, along with contact wastewater with lower levels of organic contamination that was collected separately, in a conventional biological purification step (ARA 2)

that was supplemented with a membrane aeration plant several years ago. The precise separation and specific treatment of the different types of wastewater ensures an excellent degree of purification. The effective average annual value for biochemical oxygen demand (BOD) removal exceeds 99 percent; that for chemical oxygen demand (COD) is approx. 94 percent. Both these values show that the industrial wastewater contains contaminants that respond well to biological degradation and that these contaminants are almost completely eliminated in Sandoz’s wastewater treatment facility. The sanitary wastewater at our Kundl plant is collected in a sewer system separate from all other

Environmental Measures | 43

wastewater and is piped through the public sewer system to the municipal water treatment plant. Ecological and infrastructural measures have been implemented at the Schaftenau plant as well, and these undergo continuous improvement and expansion. In the areas given priority south of the railroad tracks, there are separate pipelines for sanitary water, rinse water and water used for industrial purposes as well as a retention basin for contaminants. Sandoz has also been able to strictly separate its wastewater streams into streams with either higher or lower levels of organic contamination to ensure appropriate disposal. Wastewater from the manufacturing facilities with higher levels of organic contamination is transported to the ARA 1 treatment plant in Kundl by tanker truck.

Exhaust Exhaust gases contaminated with solvents and odors have already for many years been collected in closed exhaust systems and thermally treated in the boiler houses and facilities specially erected for this purpose. In this way we were able to reduce emissions to a minimum. Over the past few years, it has been possible to eliminate major odor sources by implementing the following measures: • Equipping all wastewater basins in our Waste Water Treatment Plant 2 with covers • Installing a regenerative post-oxidation facility to incinerate exhaust from the wastewater treatment plant and from Biozym GmbH • Transferring exhaust from the fertilizer drying facility to the boiler house • Improving accessibility of the incineration facilities on a permanent basis Moreover, some two years ago we were able to clearly improve purification efficacy with regard to the ethanol-laden granulation exhaust from our pharmaceutical production by installing a catalytic incineration plant. Complaints about odors from our neighbors have

4. Environmental Measures

consistently remained low in recent years. At the Kundl plant, our efforts to improve the odor situation are ongoing.

Dust Wherever dust is generated during the manufacturing process, dust filters are installed in the exhaust systems to ensure that all particulate matter is removed from the air. In the pharmaceutical production areas, fluid bed dryers are equipped with dust extractors to minimize the occurrence of dust. The plants must conform to the rules of “Good Manufacturing Practice” (GMP), which prescribe high standards for cleanliness and care when manufacturing medicinal products. For more details on the emissions associated with incineration gases, please see Chapter 6, Facts and Figures.

Solid Waste Solid Waste Generated All relevant data on solid waste are recorded in various data processing systems and analyzed as needed, however at least quarterly. If obvious differences from forecast values are noticed, steps for improvement are undertaken immediately. Consignment notes for hazardous waste are required of or issued by waste disposal companies, as is required by law. The consignment notes are filed together with Sandoz’s other business records, such as invoices, for the required length of time for storing information. A joint list for Kundl and Schaftenau of the types of hazardous waste generated and the amounts thereof is sent to the Tyrolean State Government each year. Novartis guidelines require that the waste disposal companies, a majority of which are EMAS-certified companies, are checked in an internal audit according to certain specifications at least once every three years. The results of these audits are available for inspection at the waste officer’s office.

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Solid Waste Logistics Non-hazardous Waste Because of the size of the company, the collection of non-hazardous waste is divided into primary, secondary and tertiary collection sites. • Primary Collection Sites: Trash cans and wastepaper baskets, containers for biodegradable waste that are stationed everywhere waste is generated (offices, laboratories, production facilities, break rooms, etc.). The cleaning staff is responsible for emptying these primary collection sites. • Secondary Collection Sites: Containers for waste and recyclable waste obtained from the primary collection sites in the various buildings and that are emptied as needed by the Logistics Department into bulk containers. • Tertiary Collection Sites: Bulk containers that are picked up and emptied by waste disposal companies. Employees can dispose of problem substances in the technical warehouse. A central waste collection site was approved and built in 1991, where a very wide range of waste materials can be stored separately and subsequently passed to recycling companies. Hazardous Waste Hazardous waste generated in laboratories and production facilities is first separated according to various categories and then brought to the secondary waste collection sites. In laboratories, for example, solvents are divided into three categories (halogenated, non-halogenated and safe for wastewater treatment plants) and filled into safety cans. As soon as the amount of solvent waste reaches the maximum amount allowed to be stored in laboratories, it is brought to a waste collection site and deposited in appropriate solvent waste drums under the supervision of a laboratory technician. Solvents generated during the production process are usually filled directly into drums or containers.

Other hazardous waste is handled in a similar manner. The receptacles are classified, packed and labeled according to the methods laid down in the internal regulation “Waste Management.” Drums and containers that have been filled and labeled are brought to the central waste collection sites for hazardous waste by the internal transport service and stored there until they are turned over to the waste disposal companies. All hazardous materials (including hazardous raw materials) are stored pursuant to the Novartis guideline “Warehousing” and separated according to their hazard potential in separate fire compartments. The amounts of hazardous waste can be found in the so-called waste list. In addition to non-recyclable and recyclable waste, hazardous waste and waste oils are classified in this list according to ÖNORM S2100 ID numbers.

Waste Prevention Sandoz continuously works on reducing the amount of waste produced. The considerable expansion of production and the sometimes large amount of construction activity may time and again cause an increase in the total amount of waste generated. Our current goal is thus to identify the major processes contributing to waste material production and subsequently, together with our plants, work out strategies for waste reduction (see Chapter 7). Our Research Department developed a procedure for process risk analysis that also takes ecological criteria such as the use of raw materials, materials cycles and output volumes into consideration, in addition to other aspects. Numerous measures, of which the most important ones are listed here, have already been implemented in recent years to reduce the amount of waste produced. • Having raw materials delivered in tanks has led to a reduction in the number of empty drums and sacks. • Recycling instead of throwing away. Wherever possible, small containers have been replaced by larger ones: sacks by big bags, drums by containers or tanks. Whenever possible, large containers are returned to the supplier for refilling. • The increase in the concentration of materials used, in cases in which this can be justified from

Environmental Measures | 45

a safety standpoint (formaldehyde, various acids and lyes), has led to a reduction in the number of empty containers. • By changing or optimizing procedures, the use and thus also the disposal of many problem materials has been replaced either partially or completely. • By implementing organizational measures, such as computer networks, emails and the electronic management of reference data, the use of paper as well as the amount of used paper generated has been reduced. • By reducing the cleaning frequency and use of cleaning supplies to an amount that can be justified, less packaging accumulates. • Waste disposal containers are checked more often for wrong contents.

Reuse & Recycling Various non-hazardous waste materials such as paper, cardboard, plastic packaging materials, polysty-

4. Environmental Measures

rene, metal, glass and biogenic waste are collected separately. This is the prerequisite for our disposal contractors to be able to feed the collected lots into the various recycling streams and to minimize the production of household-similar industrial waste that must be disposed of externally (incineration).

Soil A professional monitoring system of the underground pipelines, e.g., wastewater piping, combined with a long-term plan for their replacement and expansion, ensures that no contaminated wastewater escapes unnoticed into the surrounding soil. Traffic and other surfaces in our plants, where fuels or waste materials are handled, are protected by sealed surfaces and the sewer system for rainwater and snow melt to ensure that no soil contamination can occur. Whenever excavating is done in paved areas, soil quality is monitored. Readings obtained at regular

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• Purchase of acoustically insulated equipment • Implementation of procedures at the plant, such as closing doors, windows and gates

Biological Safety Six decades of experience at Sandoz have shown that working with the smallest living creatures is safe, both for associates and for the environment. This is not only true for the microorganisms optimized through classical culturing methods but also for those that have been enhanced using modern molecular-genetic methods. A classification system has been established worldwide for projects using genetically modified microorganisms: Level 1 covers work that results in no or only a negligible risk; Level 2 work is low-risk; Level 3 work entails a moderate risk; and Level 4 work is high-risk.

In its biotechnical production, Sandoz uses only microorganisms

intervals through soil sampling in the vicinity of facilities where methylene chloride is used confirm that no contamination has occurred.

classified as Level 1 (no or negligible risk). Above, a microscope photo of E-coli bacteria.

At Schaftenau, the soil was found to contain contaminants from a company that previously occupied the site. These were discussed with the authorities and appropriate measures were established.

Noise At 45 dB, the noise generated by the Kundl plant lies within the acceptable background level caused by trains, highways and other companies along the Inn River Valley. The value used for planning set forth in the Austrian standard ÖNORM S 5021 is 50 dB (equivalent continuous noise level). Annual measurements taken at the property boundary were 46 dB for each of the past few years. This low noise level was achieved through various noise abatement efforts during those years, including: • Installation of mufflers in the exhaust pipes • Installation of sound-absorbing façades on buildings

All Sandoz projects involving recombinant organisms can be classified as Level 1 in both production and research. Nevertheless, both to protect our associates and the environment, all Sandoz work is done in closed systems to prevent any release. These systems are routinely maintained and monitored. Biological safety is based on our use of safe strains of microorganisms that can be cultured only under optimum conditions in Sandoz’s own fermenters. Working from international recommendations, Sandoz has developed additional organizational and technical concepts that ensure the clean and controlled use of microorganisms. Already many years before Austria passed the Genetic Engineering Law in 1994, Sandoz established its Biological Safety Committee, which approves new projects and process modifications only after thorough examination. The six-person committee also includes two outside experts from academia. In addition, numerous Sandoz experts from various fields, such as HSE, serve on an expanded committee. Before beginning any biological or biotechnical project, a thorough analysis of all potential risks

Environmental Measures | 47

is conducted. Biological substances are classified according to national and international guidelines. Laboratories and production sites are checked to ensure that they comply with relevant safety precautions and are equipped accordingly. Sandoz voluntarily complies with the internationally recognized guidelines established by the US National Institutes of Health as well as all Austrian laws. Moreover, all projects are forwarded to the Novartis Group’s Biological Safety Committee for review by its experts. In some cases, internal approval procedures are stricter than are legal requirements. Internal corporate audits and official inspections ensure that these high standards are maintained.

Warehousing The Novartis Group has developed stringent guidelines that classify warehoused materials according to their specific categories, provide for separate storage and establish accordingly graduated safety measures. These guidelines are also valid for Sandoz and are consistently and routinely applied in the company’s daily activities.

Transportation Sandoz not only places importance on the safe warehousing of its materials, it is also firmly committed to the environmentally friendly transportation of these goods. Annually, approximately 60,000 tons, or approx. 35 percent of total goods shipped, are transported by rail rather than by road. Our company operates its own transport service, whereby considerable value is placed on operator safety training (routine driver safety training on special courses) as well as on environmental impacts (fleet fuel consumption and individual driving behavior).

Fire Prevention A look back at past years shows that the plants in Kundl and Schaftenau have experienced only a few serious fires. This can be attributed to early detection and alarms as well as to regular fire prevention and fire-fighting training sessions for all associates. All manufacturing facilities and warehouses at Sandoz in Kundl are equipped with fire alarm systems, and more than 8,000 fire and gas alarms have been installed. In Schaftenau, most of the buildings are also equipped with fire alarm systems.

Plant Firebrigade Sandoz’s own firebrigades are an essential component of our safety system. These firebrigades are linked to the state’s central fire watch and for larger fires can request assistance from local municipal firebrigades. The majority of the Kundl plant’s 77 firefighters and the Schaftenau plant’s 34 firefighters are trained to work with selfcontained breathing apparatus. They must also undergo compulsory annual physical exams to ensure their ability to serve in emergencies. Every year, at both plants combined, the firebrigades are called out around 150 times. Half of these instances, however, are false alarms triggered by the fire alarm system. The Kundl plant firebrigade is not only responsible for fire protection, it also serves as a chemical hazards response unit within the scope of the Transportation Accident Information System (TUIS) and supports local hazardous material bases in Western Austria. In this way, Sandoz assists local municipal firebrigades in fighting fires and helping with hazardous material accidents outside the plant and also provides advice through its chemical experts. The Sandoz private firebrigade provides 24/7 support whenever chemical manufacturers or suppliers cannot be reached. The Kundl plant is classified as a potentially hazardous facility according to the Austrian Industrial Accident Regulation, primarily because Sandoz

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uses large quantities of flammable solvents. To prevent and contain accidents, a number of safety measures have been put in place. These measures are set forth in specific documentation, the socalled Safety Report. People living near the plant are provided with information thereon at regular intervals.

Indirect Environmental Aspects Direct environmental aspects are those related to activities, products or services under Sandoz’ direct operational control. For example, these include energy and water consumption, waste volume, emissions to air and water as well as the areas of the plant property with construction or a compacted surface. Exact figures regarding this area of concern are presented in Chapter 6, “Facts and Figures”. In contrast thereto are indirect environmental aspects. For the most part, these involve monitoring and managing interfaces with various stakeholders. Some prime examples include:

• Selecting business partners (in particular, vendors, subcontractors who work on site, waste management companies, transportation firms and external warehouses) who comply with specific criteria, such as HSE certification or passing HSE audits (currently, approximately 30 percent of all Sandoz business partners are ISO 14001-certified). • Having a standardized process (capital appropriation request) that insures that prospective investments include the HSE Department in relevant decisions. • Informing customers of possible means of product disposal, among other aspects, via material safety data sheets provided with products. • Considering CO2 emissions, among other things, during the production of utilized raw materials in two “Carbon Footprint” pilot projects.

| 49

6. F acts and Figures

50 |

Environment Starting with the year 2008 the following facts and figures count only 51 percent of the production volume, resources consumed and emissions and waste at Biozym GmbH. This corresponds to the share held by Sandoz GmbH in Biozym GmbH.

Overview

t: tons, TJ: terajoules (1 TJ = 278 MWh), GJ: gigajoules

Quantities of Materials and Energy Biotechnical production Kundl (in t) Biotechnical production Schaftenau (in t) Production Biozym (in t) Fertilizer production (in t) Raw materials (in t)3)

2006

2007

2008

2009

2010

2011

2012

10,142

10,053

9721

10,585

11,224

11,299

11,353

690

942

1030

931

823

978

1347

6360

6601

3219

2200

3002

2815

2076

24,850

22,914

20,700

19,433

19,110

19,331

19,344

162,120

166,750

136,605

139,336

138,421

140,726

132,668

Electrical power consumption (in TJ)

1390

1299

1204

1159

1148

1136

1108

Natural gas consumption (in TJ)

1485

1434

1374

1357

1358

1271

1280

Other thermal energy carriers in TJ4)

34

53

55

56

53

64

53

Total caloric energy in TJ

1519

1487

1428

1413

1411

1335

1333

Water consumption (in million m³)

38.2

36.6

35.4

35.9

37.4

37.4

35.9

3) The reduction in raw materials since 2008 can be traced to the conversion of a production process that brought about a considerable decrease in raw materials and energy consumption. 4) Energy obtained from heating oil (trial operation) and energy released when burning VOC in the boiler houses or at the Ecocenter.

Production Volume and Raw Materials

Key production figures show quantities produced in the following areas: biotechnical production, enzyme production and fertilizer production. In addition to the production of the Biosol® and Biosol Forte® fertilizers, other secondary products are also produced. The most important raw materials are glucose syrup, sodium hydroxide solution, sulfuric

acid, finely ground soybean meal, urea, ammonium sulfate, organic solvents, lactose permeate, corn steep liquor and potato protein. The increase in production at Schaftenau site in 2012 was due to the expansion of the production of enzymes and antibiotics for the veterinary medicine.

Output 2012

Water: 35.9 Mio. m3 Raw materials: 132,668 tons Thermal energy: 1333 TJ Electricity: 1108 TJ

Input 2012

Products: 12,700 tons biotechnical production (Kundl and Schaftenau) 19,344 tons fertilizer Exhaust Emissions: 44 tons nitrogen oxide (NOx) 73,126 tons carbon dioxide (CO2) Wastewater: 142 tons suspended solids 50 tons biochemical oxygen demand (BOD) 1502 tons chemical oxygen demand (COD) Solid Waste: 7289 tons hazardous waste 4844 tons non-hazardous waste

Facts and Figures | 51

Use of Raw Materials, Kundl (excluding Biozym):

Consumption of Resources

The reduction in raw materials since 2008, which is clearly shown in the following tables and diagrams, can be traced to a very successful conversion of the penicillin production process.

Tons

Use of Raw Materials and Materials Efficiency

20

180,000 180000

18

160000 160,000

16

140000 140,000

14

120000 120,000

12

100000 100,000

10

80000 80,000

8

60000 60,000

6

40000 40,000

4

20000 20,000

2

0

2006

2007

2008

2009

2010

2011

2012

Tons/tons of product

Absolute and Relative 200,000 200000

0

Annual Mass Flow of Various Materials used since 2006: absolute [t]

Kundl

2006

2007

2008

2009

2010

2011

2012

150,000

158,000

131,700

135,600

133,908

136,363

129,477

Schaftenau

5880

1970

1657

1516

1651

1765

1,676

Biozym

6240

6780

3248

2220

2862

2599

1,515

162,120

166,750

136,605

139,336

138,421

140,726

132,668

Total

Annual Mass Flow of Various Materials used since 2006: Relative [t/t] 2006

2007

2008

2009

2010

2011

2012

14.79

15.72

13.55

12.81

11.93

12.07

11.40

Schaftenau

8.52

2.09

1.61

1.63

2.01

1.80

1.24

Biozym

0.98

1.03

1.01

1.01

0.95

0.92

0.73

Total

9.43

9.48

9.78

10.16

9.20

9.32

8.98

Kundl

Current Figures All graphs show absolute quantities as green bars and relative quantities (per ton of product) as blue lines.

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52 |

Water Water for the Kundl plant is supplied by eight wells that are fed primarily by bank filtrate from the Inn River as well as by the deep wells on the plant grounds. At the Schaftenau plant, drinking water is obtained from the municipal water supply system,

while water for industrial purposes comes from four deep wells on the plant grounds. Sandoz obtains its water for industrial purposes in compliance with an Austrian Water Law Permit and uses some 92 percent of that water solely for cooling purposes.

Total Annual Water Consumption since 2006: Absolute [m3] 2006

2007

2008

2009

2010

2011

2012

35,239,052

33,610,393

32,722,580

33,362,768

34,798,307

34,615,351

33,129,233

1,806,460

1,848,834

2,107,535

2,089,989

2,084,378

2,220,068

2,351,214

1,135,314

1,131,559

593,985

460,720

536,410

521,879

383,598

Total

38,180,826 36,590,786

35,424,100

35,913,477

37,419,095

37,357,298 35,864,045

Cooling water

35,167,846

33,592,763

32,675,944

33,096,444

34,477,405

34,554,000

33,077,690

3,012,980

2,998,023

2,748,156

2,817,033

2,941,690

2,803,298

2,786,355

Kundl Schaftenau Biozym

Water for processes and sanitary facilities

Total Annual Water Consumption since 2006: Relative [m3/t] 2006

2007

2008

2009

2010

2011

2012

Kundl

3475

3343

3366

3152

3100

3064

2918

Schaftenau

2618

1963

2046

2245

2533

2270

1746

179

171

185

209

179

185

185

Total

2221

2079

2536

2618

2486

2475

2427

Cooling water

2046

1909

2339

2413

2291

2290

2239

175

170

197

205

195

186

189

2006

2007

2008

2009

2010

2011

2012

151,355

172,781

174,145

184,737

166,632

166,508

162,983

Biozym

Water for processes and sanitary facilities

Water from public supply lines: Schaftenau site [m3]

Water Consumption Kundl (excluding Biozym): Absolute and Relative 45,000,000

5000

40,000,000

4500

35,000,000

4000

m3

2500

20,000,000

2000

consumption is used for cooling

15,000,000

purposes and is fed back into

10,000,000

1000

5,000,000

500

taminated (non-contact) water.

1500

0

0 2006

2007

2008

2009

2010

2011

2012

m³/t product

3000

25,000,000

the Inn River as chemically uncon-

Relative consumption in relation to one ton of product

3500

30,000,000

The majority of water

Water consumption Kundl (excluding Biozym): Total

Water consumption processes and sanitary facilities – Kundl (excluding Biozym) Relative consumption in relation to one ton of product

Facts and Figures | 53

Energy

dition, Kundl also has three special exhaust gas incinerators fired with natural gas; one of the incinerators is equipped with a boiler that is used to generate saturated steam as well.

Electricity Electric power consumption has steadily declined in recent years thanks to various energy-efficiency projects. The largest consumers of electrical power are above all the air compressors and the numerous electrically powered motors (for example, for pumps and stirring units) at the plants, primarily the fermentation operations because of their large need for compressed air and stirring power.

Heating oil consumption will remain at zero in the coming years; oil will be used only if natural gas supplies are cut off. The Schaftenau plant is equipped with two natural gas-driven steam boilers, of which one can be converted to heating oil in an emergency. Solventladen exhaust can also be incinerated in these steam boilers.

Natural Gas/Heating Oil The main consumers of thermal energy are above all the drying process for our fertilizers (Biosol® and Biosol Forte®) and the distillation plants for solvent recycling. The success of numerous energyefficiency projects can also be seen from the development of natural gas consumption in recent years.

Sandoz generates heat energy using six steam boilers fired by natural gas. Four of the boilers can also be run on heavy heating oil if natural gas is not available. Two of these six steam boilers also regularly incinerate solvent-laden exhaust. In ad-

Electric Power Consumption Sandoz Kundl (excluding Biozym) 140

120

1,200,000

120

1,000,000

100

1,000,000

100

2012

200,000

0

1,039,638

2011

20

1,069,128

2010

400,000

1,080,374

2009

40

1,091,602

2008

60 1,134,029

2007

80

600,000 1,222,025

1,153,595

2006

0

800,000

1,314,799

1,154,193

200,000

1,236,806

400,000

1,231,747

60 1,261,378

80

600,000 1,331,360

800,000

GJ/ton

1,400,000

GJ/year

140

1,200,000

1,382,051

GJ/year

1,400,000

2006

2007

2008

2009

2010

2011

2012

0

GJ/ton

Natural Gas Consumption Sandoz Kundl (excluding Biozym)

Numerous energy-efficiency

40

projects have significantly

20

reduced energy consumption

0

in recent years.

Sandoz GmbH | 2013 Sustainability Report

54 |

2006

2007

2008

2009

2010

2011

2012

Relative Energy Consumption 2012 [GJ/t]

1,382,051

1,331,360

1,261,378

1,231,747

1,236,806

1,154,193

1,153,595

101.611

5)

5)

5)

5)

5)

5)

5)

5)

Energy Consumption since 2006: Absolute [GJ] Natural Gas Kundl Biozym Schaftenau Total Heating Oil, Light

102,780

102,609

112,168

125,448

121,590

116,490

126,003

93.543

1,484,831

1,433,969

1,373,546

1,357,195

1,358,396

1,270,683

1,279,598

86.600

2006

2007

2008

2009

2010

2011

2012

Kundl

0

0

0

0

46

239

245

0.022

Biozym

0

0

0

0

0

0

0

0.000

Schaftenau

0

0

0

0

0

0

0

0.000

Total

0

0

0

0

46

239

245

0.017

2006

2007

2008

2009

2010

2011

2012

Kundl

0

0

0

0

32

14

7

0.0006

Biozym

0

0

0

0

0

0

0

0.0000

Schaftenau

0

0

0

0

0

0

0

0.0000

Total

0

0

0

0

32

14

7

0.0005

2006

2007

2008

2009

2010

2011

2012

32,196

50,652

52,038

54,040

49,767

60,720

49,457

4.356

6)

6)

6)

6)

6)

6)

6)

6)

1656

2380

2517

1680

3212

3180

3487

2.589

33,852

53,032

54,555

55,720

52,979

63,900

52,944

3.583

2006

2007

2008

2009

2010

2011

2012

5805

3301

5172

4856

4966

2820

2889

Heating Oil, Heavy

Energy Released when Burning VOC-laden Exhaust7) Kundl Biozym Schaftenau Total Diesel Fuel (for company vehicles) Energieverbrauch Diesel Electric Power

0.195

2006

2007

2008

2009

2010

2011

2012

1,314,799

1,222,025

1,134,029

1,091,602

1,080,374

1,069,128

1,039,638

91.574

Biozym

31,225

30,959

14,818

11,509

13,064

11,556

8065

3.885

Schaftenau

44,188

46,410

54,963

56,278

54,539

55,469

59,927

44.489

1,390,212

1,299,394

1,203,810

1,159,389

1,147,977

1,136,153

1,107,630

74.961

Kundl

Total Total Direct Energy Consumption Kundl (incl. 100% diesel for company vehicles) Biozym Schaftenau Total direct energy consumption Total Consumption Renewable Energy

2006

2007

2008

2009

2010

2011

2012

2,734,851

2,607,338

2,452,617

2,382,245

2,371,991

2,287,114

2,245,831

197.818

31,225

30,959

14,818

11,509

13,064

11,556

8065

3.885

148,624

151,399

169,648

183,406

179,341

175,139

189,417

140.621

2,914,700

2,789,696

2,637,083

2,577,160

2,564,396

2,473,809

2,443,313

165.357

2006

2007

2008

2009

2010

2011

2012

Percentage of electric power from renewable energy – average 2011 (see TIWAG supplier mix) Kundl Biozym Schaftenau Electric power from renewable energy [GJ] Renewable energy as percentage of total consumption [%] 5) Thermal energy consumed by Biozym is included in consumption at Kundl 6) No VOCs are used by Biozym for production 7) New and improved method for calculation since 2012

85,60

90,71

915,220

943,090

83.070

9892

7316

3.524

47,484

54,362

40.358

972,596

1,004,768

68.000

39

41

Facts and Figures | 55

TIWAG Supplier Mix 2012 (in %) Energy Carriers (Source: TIWAG invoices)

Jan to April 2012

May to Dec 2012

84.55

81.06

Wind energy

3.66

3.74

Solid and liquid biomass

3.64

3.64

Other green energy

1.11

1.15

92.96

89.59

90.71

7.04

10.41

9.29

92.96

89.59

90.71

Hydroelectric power

Subtotal Natural Gas Electric power from renewable energy carriers (%) Electric power from non-renewable energy carriers (%) Total CO2 Emissions from Electric Power Production [g/kWh] (according to TIWAG, conversion losses taken into account)

Land Use8)

Built-up Area [m²]

Average 2012

7.04

10.41

9.29

100.00

100.00

100.00

31.0

45.8

40.87

Total Area [m²] Percentage Built-up Area

Kundl

80.000

270.000

Schaftenau

16.000

210.000

8

1300

7000

19

97.300

487.000

20

Biozym Total

30

8) Includes the EMAS Core Indicator „Biological Diversity“

Sandoz GmbH | 2013 Sustainability Report

56 |

Wastewater, Emissions, Waste Wastewater Around 92 percent of the well water pumped is diverted into the Inn River as chemically uncontaminated (non-contact) cooling water, while sanitary wastewater is fed into the municipal sewer system. Contaminated wastewater from Kundl, which also contains wastewater from Schaftenau, is piped in concentrated form to the company’s own wastewater treatment facility. Sandoz complies with all requirements set forth in the Austrian Water Law Permit concerning readings and procedures.

The following tables and diagrams show the quantities of process wastewater produced since 2007 and the pertinent pollutant loads in the discharged water. Not included in the quantities of process wastewater are sanitary wastewater and cooling water. The quantities of cooling water are shown on p. 52. The given process wastewater quantities thus largely show the quantities that are fed into the company‘s own wastewater treatment facility in Kundl, from where the treated wastewater is piped into the Inn River. An exception is posed by the process wastewater from Schaftenau (approx. 130,000 – 170,000 m³/year), which has only low contamination; this is fed into the municipal sewer system.

Readings are taken daily and pH is measured continuously, whereby these values are within the permitted pH tolerance levels of 6.5 to 8.5.

Wastewater Emissions (discharge) [t/year] 2008

2009

2010

2011

2012

2,700,981

2,766,873

2,891,524

2,753,132

2,736,277

59

53

62

62

50

1477

1544

1550

1585

1502

Total suspended solids

152

143

145

127

142

Total nitrogen

195

183

187

181

156

Process wastewater (m³)9) Biochemical oxygen demand Chemical oxygen demand 9) Excluding sanitary wastewater, excluding cooling wastewater

Facts and Figures | 57

Process Wastewater 250

3,500,000 3,000,000

200

1,500,000 2,891,524

2,753,132

2,736,277

500,000

100 2,766,873

1,000,000

2008

2009

2010

2011

2012

m3/t

150

2,000,000

2,700,981

m3/year

2,500,000

50 0

0

Total quantity of process wastewater produced has not changed considerably in recent years.

Chemical Oxygen Demand (discharge) 0.010

60

0.008

0.20

1600

0.18

1400

0.16

2009

2010

2011

1502

0.000

1585

50

62

62

53

59

200

0.06 1550

400

0.002

2008

0.08

600

20

0

0.10

800

1544

0.004

0.12

1000

1477

30

t/year

0.006

40

10

0.14

1200 t/t

t/year

50

1800

2008

2009

2010

2011

2012

0.04 0.02 0.00

0

2012

t/t

Biochemical Oxygen Demand (discharge) 70

The purification performance of the Company‘s own

The purification performance of the Company‘s own wastewater

wastewater treatment facility exceeds 99% for biochemical

treatment facility exceeds 94% for chemical oxygen demand;

oxygen demand, which explains the comparatively small

the quantity of pollutant load in the discharge has not changed

pollutant load in the discharge.

considerably in recent years.

Total suspended solids (discharge)

Total Nitrogen (discharge)

200

0,020

250

0,020

180 160

142

2011

2012

0

156

127

2010

181

145

2009

187

143

2008

0

t/t

0,005

50 183

0,005

40

0,010 100

195

60

t/year

80

20

0,015

150 0,010

t/t

120 100

152

t/year

200

0,015

140

2008

2009

2010

2011

2012

0

0

Solids emitted with the discharge at the Company‘s own treatment

In recent years the quantity of nitrogen in the influent to the

facility are closely related to the sedimentation properties of the

sewage treatment facility has declined slightly, which is also

bacterial biomass in the wastewater treatment plant.

true of the discharge.

Sandoz GmbH | 2013 Sustainability Report

58 |

Emissions to the Atmosphere Combustion Gases These result from heat generation in the boiler houses and during exhaust incineration. The total quantity of the required thermal energy is largely determined by the amount of active ingredients and intermediates. Today, only natural gas, which is low in pollutants, is used for power production.

of the boilers use only natural gas. NOx, CO2 and particulates are measured at predetermined regulatory intervals. SO2 emissions occur only in minor amounts during maintenance of the emergency power system. Conversion to oil operations would be necessary only if the supply of natural gas were to fail. By implementing energy-saving measures, Sandoz was able to decrease CO2 and NOx emissions.

Of the eight boilers used for power generation, five can be fueled with either natural gas or oil. Three Direct Emissions to the Atmosphere since 2006: Absolute [t] or [kg]

Global Warming Potential [t CO2 equivalents/year] Direct Emissions Kundl

2006

2007

2008

2009

2010

2011

2012

79,193

76,782

72,678

71,676

71,462

67,586

66,577

70,580

70,366

66,402

66,577

5821

5921

6254

6963

6871

6622

7224

–

–

–

–

–

–

–

85,014

82,703

78,932

78,639

78,333

74,208

73,801

2006

2007

2008

2009

2010

2011

2012

50,777

50,421

57,454

51,449

50,433

45,973

42,121

3.71

2140

2499

2300

2740

2620

2520

2300

1.71

–

–

–

–

–

–

–

52,917

52,920

59,754

54,189

53,053

48,493

44,421

Values, according to new method

10)

Schaftenau Biozym Total NOx [kg] Kundl Schaftenau Biozym Total

Relative Emissions 2012 [t/t] or [kg/t] for NOx

In addition to the emissions occurring on site as a result of combustion processes, particularly with regard to greenhouse gases it is interesting to know what emissions are the result of electric power sup-

5.86

5.36

ply. To estimate this figure for 2012 Sandoz’s electric power consumption and information provided by the electric power supplier (TIWAG) was used:

Global Warming Potential [t CO2 equivalents/year] Indirect Emissions from External Electric Power Production CO2 emissions from electric power production [g/kWh] (Source: TIWAG) Electric power consumption [GJ] Electric power consumption [kWh] GWP emissions indirect [t CO2 equivalents/year)

10) Kundl, new method for calculation of CO2-emissions from VOC combustion, retrospectively applied for 2009 to 2011

This calculation shows that the emissions from electric power production amount to about 17 percent of Sandoz‘s direct CO2 emissions.

01.–04.2012 05.–12.2012 31 362,383 100,661,944 3,121

2012

45.8 745,248

1,107,631

207,013,333 307,675,278 9,481

12,602

Facts and Figures | 59

1 0

0 2006

2007

2008

2009

2010

2011

2

10

1

2006

2007

2008

2009

2010

2011

2012

0

0

2012

Thanks to the clear decrease in natural gas combusti-

NOx emissions are related not only to the quantity

on achieved by implementing diverse energy-saving

of natural gas burned, but also to the boiler‘s

programs (cf. p. 54), Sandoz was also able to steadily

operating parameters, and have remained largely

reduce CO2 emission in recent years. In 2012, the

constant for years.

CO2 emissions from the combustion of exhaust air containing solvents were determined with a new, more accurate method of calculation (cf. table on page 58).

kg NOx/ton

3

20 42

2

4

30

46

66,577

67,586

71,462

10,000

71,676

3 72,678

4

30,000 76,782

40,000

40

50

5

5

51

6

50,000

6

50

57

60,000

7

60

50

7

Comments on the Exclusion of Certain Parameters:

NOx Emissions Sandoz Kundl (excluding Biozym)

51

8

70,000

t NOx /year

80,000

t CO2-Äq. /ton

9

20,000

70

10

90,000

79,193

t CO2-Äq. /year

100,000

GWP Emissions Sandoz Kundl (excluding Biozym)

SO2 emissions are not relevant, since we use only natural gas and no heating oil for normal operations. Most of our forklifts run on rechargeable batteries; only a small number of forklifts drive outdoors using diesel fuel. Dust emissions are not mentioned, because the company has high-quality filter systems to prevent cross-contamination when producing medicinal products.

Waste Total Annual Production of Non-hazardous Waste [t]

Kundl Schaftenau Biozym Total

Relative Waste Quantities 2012 [t/t]

2006

2007

2008

2009

2010

2011

2012

2958

3251

2910

4106

2982

4339

4419

0.39

126

169

184

184

166

285

319

0.24

36

36

15

22

23

17

106

0.05

3120

3456

3109

4312

3171

4641

4844

0.33

Total Annual Production of Hazardous Waste [t] 2006

2007

2008

2009

2010

2011

2012

2383

3044

4063

5148

6612

7447

7027

0.62

Schaftenau

278

314

260

238

275

236

242

0.18

Biozym

102

35

20

24

11

15

20

0.01

2763

3393

4343

5410

6898

7698

7289

0.49

Kundl

Total

Total Annual Production of Waste [t] 2006

2007

2008

2009

2010

2011

2012

5341

6295

6973

9254

9594

11,786

11,446

1.01

Schaftenau

404

483

444

422

441

521

561

0.42

Biozym

138

71

35

46

34

32

126

0.06

5883

6849

7452

9722

10,069

12,339

12,133

0.82

Kundl

Total

In 2012, the amount of hazardous waste declined by 5% compared to 2011 due to production reasons. The amount of non hazardous waste increased by 4%.

Sandoz GmbH | 2013 Sustainability Report

60 |

Total Waste Production Sandoz Kundl (excluding Biozym)

Important Quantities of Hazardous Waste 2012

55370 53501

Type of Waste Solvent mix, no halogens
 Medicinal products, not hazardous to water

Quantity [t] 2862 1028

14,000

1.8

12,000

1.6

10,000

1.4

t /year

Code No.

1.2

8000

1.0

Solvent water mix, no halogens

799

55403

Resources with solvents, halogenated

730

55351

Ethanol

553

53502

Production waste from production of medicinal products

295

55220

Solvent mixes, halogenated

205

57127

Loose plastic package with hazardous content residue

138

The increase in waste quantities in recent years is

58201

Filter cloths, filter bags

106

caused, on the one hand, by changes in the produc-

55307

Butyl Acetate

71

tion mix, particularly also because several newly

55315

Methanol

63

introduced processes did not permit recovery of the

55301

Aceton

58

solvents used. On the other hand, changes in legal

55318

Methyl isobutyl ketone

54

provisions in 2011 caused noteworthy quantities of

54122

Silicon oils

52

materials to be classified as waste, that were previ-

57124

Ion-exchange resins

44

ously listed as by-products.

59305

Laboratory waste and surplus chemicals

41

57501

Rubber

18

54102

Waste oils

12

55206

Dichloromethane (methylene dichloride)

12

35106

Loose metal package with content residue

10

55302

Ethyl acetate

10

t /t

55374

9254

9594

11,786

11,446

2000

6973

0.6 6295

0.8

4000 5341

6000

2006

2007

2008

2009

2010

2011

2012

Type of Waste

91201

Packaging material and cardboard

1882

92117

Mycelia

1554

91101

Municipal waste and similar industrial waste

368

35103

Iron and steel waste

208

12302

Fats (e.g. deep-frying oils)

130

57119

Plastic films

126

18718

Used paper, paper and paperboard

115

94302

Excess sludge from biological wastewater treatment

104

17201

Wood waste

104

92107

Vegetable food

83

57118

Loose plastic packaging

71

31408

Glass


67

91501

Street sweepings

52

0.2 0.0

0

Means of Disposal, Hazardous Waste 2012 [7289 t] n Incineration n Recycling

Important Quantitites of Non Hazardous Waste 2012 Code No.

0.4

29%

Quantity [t] 71%

Means of Disposal, Non-hazardous Waste 2012 [4844 t] n Incineration n Recycling

48% 52%

Facts and Figures | 61

The cafeteria offers inexpensive lunch menus for Sandoz associates.

Economic and Social Indicators Sandoz‘s defined social benefits (EC3) Sandoz grants all associates comprehensive additional company benefits. In 2012 approx. EUR 10.3 million were invested in voluntary additional benefits. These included: • a modern company pension, combined with disability and survivor‘s benefits including additional endowment life insurance • a 24-hour accident insurance for accidents on and off the job • low-priced lunch menus and snacks in our cafeterias • free company shuttle bus or driver commuting allowance • voluntary commuting allowance • other allowances

Sandoz GmbH | 2013 Sustainability Report

62 |

Voluntary Social Benefits 2012

Cafeteria subsidy

Driver commuting allowance

Employee insurance plans

Company shuttle bus

Voluntary Social Benefits 2012 [in EUR 1000] Company pensions

5489

Employee insurance plans

1059

Cafeteria subsidy

1607

Driver commuting allowance

1508

Company shuttle bus

496

Other benefits and subsidies

117

Total

10.277

Other benefits and subsidies Company pensions

Percentage of associates covered by collective bargaining agreements (LA4): At Sandoz GmbH all associates, except executive management associates, who are exempt under the Austrian Labor Relations Act, are covered by the Collective Bargaining Agreement for the Chemical Industry. This agreement is negotiated every year between the union and the employer representative. Training (LA10): Ongoing training plays a central role at Sandoz GmbH. We see our associates as the key to our success and we thus invest a great deal in their vocational and personal education. For example, for almost 60 years Sandoz has been training young people in top-rank specializations. These young employees make an essential contribution to our company‘s success (for more on apprentice training at Sandoz, see Chapter 3, Corporate Citizenship). Sandoz also lays great stock by maintaining and improving its work force: In 2012 every Sandoz associate in Kundl and Schaftenau invested on average 20 hours in ongoing training. This gives a total of 2.5 days per associate. A comprehensive catalogue gives a good overview of the various courses and workshops offered, which our associates can and should attend

after consulting with their superiors. Our training opportunities enable our associates to take specialized courses in their particular field of work or to acquire a high school diploma on Sandoz‘s premises. Everyone who works for Sandoz in Austria is naturally also part of the global Novartis Group, one of the world‘s largest healthcare providers with a wide range of career and personal development opportunities. Many of our associates decide to work at a different Sandoz site or in a different country for a longer or shorter period of time – and benefit personally as well vocationally. Percentage of associates trained in anti-corruption policies and procedures (SO3): High ethical standards are an important part of our performance-oriented company culture. These standards are based on conduct that reflects the highest integrity, trust, respect and legal compliance. We support this form of training because we are convinced that we must do what is ethically right, and because is makes good economic sense. Business Practice The Novartis Code of Conduct and the corresponding principles define the framework for ethically correct conduct for all Sandoz divisions. These are important as a means of creating and maintaining trust and promoting value-based actions. Our values and principles are firmly anchored in the

Facts and Figures | 63

management processes and, for example, are a component of performance assessment. In 2005 Sandoz established its Business Practices Office (BPO) to give our associates the opportunity to report cases of actual or presumed misconduct. The Business Practices Office investigates such cases and recommends suitable steps to be taken by management. Ethical marketing practices The marketing and sale of all Novartis products are governed by high ethical standards. Every Novartis division has its own marketing code that is binding for operations performed anywhere in the world and that supplements national, international and branch codes. Where local laws and regulations are less strict, Novartis standards take priority. Our local Medical Clearance Committees approve marketing and sales campaigns for our products and ensure that marketing materials and activities meet our codes and local regulations. In addition, our associates in marketing and sales are trained and tested for compliance with all guidelines.

sociates had to take a new anti-corruption course in 2012. In addition, in 2012 all Sandoz associates were requested to attend a training course in “Reporting Misconduct – Business Practices Office.“ This training course clearly stipulates that all infringements of the Novartis Code of Conduct and all cases of a similar suspicious nature must be reported so that the facts can be investigated. The responsible parties to be contacted in such a case are the superiors or the Business Practices Office. Training courses in the Sandoz Guidelines and Processes on Advertising Practices (SP3), which more precisely define the ethical marketing practices and also contain a series of anti-corruption aspects, are primarily intended for the sales organization of Sandoz, Sandoz Commercial Operations Austria, in Vienna. All associates at the Vienna site must periodically attend this training course. At the Kundl and Schaftenau sites approx. 1300 associates took an electronic version of this course in 2011, particularly management-level associates.

Anti-corruption training All Sandoz associates are instructed in compliance with the Novartis Code of Conduct and Corporate Citizenship when they join the company and periodically thereafter. The chapter “Partners in Healthcare“ of the Novartis Code of Conduct explicitly states that Novartis will not tolerate any form of bribery or corruption. Associate training on the subject of Corporate Citizenship also includes a chapter on “Bribery, Gifts and Corporate Entertainment“ that defines the basic zero tolerance principle for bribery and sets the limits for allowed small gifts and corporate entertainment. Associates with computer access take these two training classes online in an electronic course, while all other associates attend the courses in person. In this way approx. 95 percent of all Sandoz associates are sensitized for anti-corruption practices. The implementation of a new Novartis Code of Conduct in early 2012 means all Sandoz as-

Sandoz GmbH | 2013 Sustainability Report

64 |

Occupational injuries and illnesses (LA7) As already set forth in Chapter 3, Corporate Citizenship, Sandoz places great importance on health and safety performance. The established systems and measures should contribute to our achieving the vision of zero workplace accidents. The data on work-related accidents and illnesses throughout Novartis are analog to the environmental data in the HSE-DMS (Health Safety Environment – Data Management System). These data are validated before they are published. The table at the top right gives a breakdown of the data for the years 2009 to 2012 for Sandoz GmbH and includes only Sandoz associates, and not leased personnel or personnel from outside companies: Lost time injury and illness rate (LTIR) This indicator shows the number of work-related accidents and illnesses with lost working time in relation to total time worked and is a Key Performance Indicator (KPI) generally applied for work safety. Values are related to 200,000 hours worked at Novartis. The targets set by Novartis AG, the Sandoz Division and Sandoz GmbH generally refer to the LTIR figure. The LTIR achieved in 2012 was 0.23 and thus did not meet the goal of LTIR