Novartis AG
CH-4002 Basel

Dr. Raymund Breu
Chief Financial Officer
Tel ++41 (61) 324 25 71
Fax ++41 (61) 324 21 66
Internet: raymund.breu

Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street NW
Washington D.C. 20 549-0609

June 8, 2000

SEC Concept Release on International Accounting Standards (file S7-04-00)

Dear Mr. Katz,

Thank you for inviting comments from non-US companies on the SEC Concept Release.

Novartis, and its predecessor companies, Sandoz and Ciba-Geigy, have been using IAS for their primary consolidated financial statements since the early 1990's. During this time we have followed with interest the evolution of IAS and are now actively involved in implementing the final new standards resulting from the completion of the core standards.

We now consider that IAS has developed to such an extent that it provides a very sound basis for fully transparent, reliable and useful financial statements for all our stakeholders. We also prefer the IAS approach of focusing on concepts and principles rather than on thresholds which are found in many US GAAP standards even if as a result IAS is now becoming more strict than US GAAP in a number of areas. We also find that although inevitably IAS documentation is increasing in volume, it is still much better structured than US GAAP and so it is easier to locate the guidance on a given topic and to communicate the key principles.

We actively participated in the response dated May 22, 2000 from the Federation of Swiss Industrial Holding Companies and fully support their comments. Due to this, we have refrained from answering again each individual question.

We would, however, like to take this opportunity to comment on question 21 which covers the reconciliation process to US GAAP. As you are aware we have recently completed a Form 20-F registration. In order to produce the bridge to US GAAP it was necessary for us to account for a number of items in a different way. Some of these differences will disappear over time as IAS and US GAAP converge. There will, however, remain a few significant adjustments primarily relating to accounting for business combinations, that proved very costly to calculate initially, and which will need updating on an annual basis. We are not convinced that this costly reconciliation has increased the transparency of our financial statements nor has it led to our shareholders forming substantially different views on the future cash generating potential of Novartis and therefore the value of our shares. We would therefore strongly support the abolition of the reconciliation requirement as quickly as possible.

We thank you again for the opportunity of commenting on the Concept Release.

Yours truly,

Novartis AG

Dr. Raymund Breu

M.B. Cheetham

Chief Financial Officer

Head of Group Reporting