Sandoz Aktie

Good morning, ladies and gentlemen, and welcome to the Sandoz call today. I will now pass on to Craig Marks, Head of Investor Relations for his opening remarks.

Thank you, and welcome to the Sandoz Q1 2026 sales update. Earlier today, we published a media release and an accompanying presentation on our website, which we'll follow on today's call. You can find these documents at sandoz.com/investors. Joining me on today's call are Richard Saynor, Chief Executive Officer; and Remco Steenbergen, Chief Financial Officer.

Please turn to Slide 2. Our sales announcement presentation and discussion include forward-looking statements. Please see our disclaimer here.

Please turn to Slide 3. Richard will begin today's presentation with the highlights of Q1, followed by an update on the business. Remco will give more detail on the net sales performance as well as guidance for 2026. Following the wrap-up of the presentation, we'll be happy to take your questions.

And with that, I will now hand over to Richard. Please turn to Slide 4.

Thank you, Craig, and hello, everybody. It's a pleasure to welcome you all on the call today. 2026 is a landmark year for Sandoz as we celebrate 3 milestones that tell the story of affordable medicines.

This month, we marked the first of these. 20 years ago, Omnitrope was approved in Europe as the world's first ever biosimilar. With this approval, Sandoz didn't just develop a medicine, we pioneered a new industry and laid the foundation for expanding patient access to vital biologics worldwide.

And we continue to build on that strong legacy, drawing on decades of experience that firstly made us the global leader in generics, including life-saving antibiotics, then in biosimilars, whilst remaining focused on sustainable and profitable growth through portfolio expansion and disciplined execution.

Please turn to Slide 5. Turning to our quarter 1 performance. We delivered sales growth in line with our expectations. And importantly, the fundamentals of our 2026 road map are strong. We achieved 3% growth at constant currencies. And when excluding the impact of adverse dynamics in the anti-infective B2B business, sales growth amounted to 5%.

Our biosimilar portfolio continued to perform strongly with net biosimilar sales up 18%, including an exceptional biosimilar growth in international and North America as well as further double-digit biosimilar growth in Europe. Total North America sales were very strong with growth of 12%. From a business perspective, we continue to build momentum.

We made strong progress on key launches, including Wyost & Jubbonti in the U.S. and Europe as well as Afqlir in Europe. Alongside the excellent progress we are making in building our biosimilar hub in Slovenia, we appointed Armin Metzger to focus our biosimilar development, manufacturing and supply activities under one roof.

This will drive faster decision-making, greater vertical integration and improved launch readiness across the expanding biosimilar pipeline. We also advanced our strategic partnership with Samsung as we strengthened our biosimilar pipeline. And finally, there were a number of positive regulatory decisions in the period, including for aflibercept in the U.S.

Based on the strong underlying start to the year and the visibility we have across the business, we are confirming our full year guidance today. We continue to expect mid- to high single-digit net sales growth at constant currencies in 2026, alongside core EBITDA margin expansion of around 100 basis points.

Now let's look at the sales performance in more detail, starting with Slide 6. Quarter 1 represented yet another quarter of attractive growth with biosimilars representing 31% of our total net sales. The underlying performance was strong with the shift towards biosimilars continuing to increase the quality of our top line. Generic sales declined by 3% due to a number of factors.

Firstly, we actively rationalized our portfolio, particularly in the international region, whilst we also continue to reduce the list of our partners that we use. Secondly, there was adverse phasing of sales, again, mainly in international.

Thirdly, our European business was impacted by the effect of a mild season on the sales of antibiotics and over-the-counter cough and cold medicines. And finally, there were the adverse dynamics in our anti-infective B2B business, and Remco will take you through these details in a moment.

Please turn to Slide 7. While biosimilars are the key growth engine for our business, generics remain a strong and essential foundation for sustainable growth, providing stability, scale and reliable cash generation to support our long-term strategy. Our attractive generics pipeline covers around 2/3 of loss of exclusivity and is centered on oral solids and injectables.

We continue to execute on consistent value-accretive launches and medicines such as Rivaroxaban and Estradiol illustrate how we can convert pipeline assets into tangible market opportunities.

I want to reiterate that Europe remains dependent on a handful of global antibiotic suppliers, and we continue to call for a fundamental shift in how Europe thinks about antibiotics, the backbone of modern medicine, especially given that they're a key part of the continent security infrastructure.

Now let's turn to the biosimilar performance in the quarter on Slide 8. Firstly, we delivered strong performance from both Hyrimoz and Pyzchiva. Hyrimoz continues to demonstrate strong growth, especially in Europe with our global market share increasing, and we continue to see strong expansion in biosimilar participation.

We're well positioned to benefit from this trend. Looking at Pyzchiva, we continue to see rapid and sustained market adoption in Europe. Sandoz' market share has grown quickly, making us the #1 ustekinumab biosimilar across the continent. Importantly, ustekinumab biosimilar penetration has significantly outpaced historic adalimumab. Pyzchiva sales are predominantly in Europe with the contribution from North America remaining subdued to date due to the level of competition.

Please turn to Slide 9. Let me now turn to Tyruko and Omnitrope. Starting with Tyruko, we are very pleased with the continued rate of adoption in Europe, and we expect further sales growth. Since launch, our market share has been stable, reflecting the strong clinical and economic value proposition of Tyruko as the only biosimilar approved in Europe for relapsing remitting multiple sclerosis.

The recent launch in the U.S. has been encouraging with a focus on naive rather than switch patients. We expect additional launches across more markets this year. Omnitrope continues to demonstrate exceptional stability and resilience in a highly competitive category, and we've maintained our leading global market share for this 20-year-old biosimilar.

Overall, both medicines showcase the strength and diversity of our portfolio. Tyruko as the only alternative to the originator brand and Omnitrope as a reliable long-standing leader in its class. Please turn to Slide 10. Let me now highlight the strong progress that we're already making with Wyost & Jubbonti and Afqlir. Starting with Wyost & Jubbonti, we've established a robust commercial footprint in the U.S., building a 62% biosimilar share for Jubbonti and a 50% share for Wyost.

We secured broad U.S. provider access early on alongside important wins with key players, enabling rapid uptake. In Europe, the launch has gone very well, rolling out into 27 countries on the first day, and I'm pleased with the early launch progress in Brazil and Australia. Turning to Afqlir.

The European rollout is well underway with launches completed in 19 markets, supporting improved patient access whilst contributing to a more sustainable health care system. Strategically, Afqlir plays a critical role in expanding our presence in the $15 billion global ophthalmology market for medicines that inhibit VEGF. In the U.S., we're looking forward to the launch in quarter 4.

Overall, being first to market with these medicines has given us a powerful head start and the early uptake confirms that our strategy is working. We are well positioned to continue to build momentum as access, adoption and payer coverage expand across the regions. Please turn to Slide 11. This slide highlights the depth and quality of Sandoz's industry-leading biosimilar pipeline, which is a cornerstone of our long-term growth strategy.

In the near term, we have several assets in regulatory review. And looking further ahead, our clinical development portfolio includes major immunology and oncology assets such as Keytruda, Opdivo and Ocrevus biosimilars to some of the most widely used biologics today.

Finally, we have a significant number of additional assets in early development, and it's important to recognize how powerful the extended partnership with Samsung is. Overall, this pipeline underscores our position as the global biosimilar leader with the scale, capabilities and focus required to consistently bring high-quality biosimilars to market and to capture a meaningful share of the approximately $320 billion opportunity over the next decade.

Please now turn to Slide 12. I'm very proud of the agreement that we recently signed with Samsung, reaffirming Sandoz as a leading partner of choice. The agreement will help us further strengthen our biosimilar pipeline ahead of our golden decade and accelerate patient access.

Sandoz will commercialize the biosimilar to Entyvio, addressing a $6 billion opportunity. Samsung will lead development and manufacturing, while Sandoz will be responsible for regulatory, commercialization and market access.

The agreement also paves the way for collaboration on up to 4 other biosimilar assets. Strategically, this partnership reinforces our commitment to building a significant share of the global biosimilar LoE opportunity, particularly in high-value therapeutic areas. This partnership demonstrates how we leverage targeted collaborations to expand the pipeline efficiently, accelerate access for patients and enhance long-term value creation whilst maintaining disciplined capital allocation and execution focus.

And with that, I hand over to Remco on Slide 13.

Thank you, Richard, and hello, everyone. Please turn to Slide 14. Turning to our top line performance. The key drivers behind our Q1 net sales performance were strong biosimilar momentum and strong execution in North America. Net sales increased to USD 2.8 billion, representing 11% headline growth and 3% growth in constant currencies, impacted by the movements in the price of penicillin API, meaning an underlying net sales growth of 5%.

Volume growth was a clear positive, contributing 7%, reflecting strong biosimilar demand. This was partly offset by a price impact of 4%. Foreign exchange provided an additional 8% tailwind. Overall, this performance reflects exceptional biosimilar execution and strong underlying fundamentals, which provides a good growth profile for the rest of the year.

Please turn to Slide 15. Looking at the business mix, biosimilar sales increased to USD 0.9 billion, reflecting strong volume growth and continued uptake of newly launched medicines, resulting in biosimilar growth of 18%. Generic net sales were broadly stable overall with an underlying decline of around 1% at constant currencies, excluding the impact of adverse dynamics of our anti-infective B2B sales.

As you may remember, Asian suppliers engaged in price dumping for key penicillin APIs, including some that we sell to other businesses. This had a significant impact on the value of these sales, though we anticipate a materially smaller impact in the rest of the year. Looking at the regions, underlying Europe sales were up by 4% when excluding anti-infective P2B sales.

Biosimilar sales grew double digit and the generic performance reflected the mild seasons conditions and factors such as health care policy changes in France. International sales were mixed with an outstanding biosimilar performance, offset by generic sales that were impacted by the phasing of sales and the pruning of our portfolio.

North America sales really stood out based on an exceptional biosimilar performance. Now let's have a look at the balance sheet on Slide 16. Last month, we further strengthened our balance sheet by issuing CHF 550 million in dual tranche bonds with 6- and 10-year maturities, while also extending our USD 2 billion revolving credit facility to March 2021.

These actions significantly enhanced our liquidity profile, extended our debt maturity profile to 2036 and supported the refinancing of upcoming maturities. Importantly, financing costs remain very attractive with annual interest rate on gross debt expected to stay below 4%, and we continue to strengthen our investment-grade rating.

I was very pleased to see that Standard & Poor's recently revised their outlook on Sandoz to positive. Overall, the strong capital structure gives us increased financial flexibility to support growth and execute our strategy.

Please turn to Slide 17. Finally, let's move to guidance for the full year. We continue to expect net sales to grow by a mid- to high single-digit percentage in constant currency, supported by the positive impact of our recent launches. The core EBITDA margin is targeted to increase by around 100 basis points weighted towards the second half of the year. We continue to anticipate price erosion in the low to mid-single-digit percentage range.

Outside of guidance, we now expect a 4 percentage point tailwind to net sales from currency movements based on recent spot rates and average rates in the quarter. Our prior assumption was a 2 percentage point tailwind. We still do not expect a material impact from currency movements on the core EBITDA margin this year.

And with that, I hand back to Richard. Please turn to Slide 18.

Thank you so much, Remco. I'd like to now wrap up the presentation on Slide 19 before we go to questions. To conclude, our quarter 1 performance was in line with our expectations with underlying results driven by biosimilars momentum and strong execution in North America.

This confirms that our strategic focus is translating into tangible results. The fundamentals of our 2026 road map remains strong. Our launches are going well, and we're accelerating access through our extended partnership with Samsung, which significantly enhances the breadth of our biosimilar pipeline and access for patients. Thank you for listening.

Please turn to Slide 20, and I'll ask the operator to open the lines for Q&A.

[Operator Instructions] Our first question comes from Sophia Graeff Buhl Nielsen with JPMorgan.

One on the guidance. Just could you outline further what gives you confidence in an acceleration in the top line growth through the remainder of the year despite the tougher base and also the annualization of the launch for denosumab in the U.S.

And then just on denosumab in the U.S., you've highlighted the high market share you have with Wyost and Jubbonti. How do you see the growth of these assets developing in the U.S. in the coming quarters given additional competition in the market?

Thank you, Sophia. Good to hear from you. Perhaps if I do the second question first, and then I'll pass to Remco, you can turn and talk about the acceleration that we expect in the second half of the year. Deno, I mean, the market share is that's the 66% of the available biosimilar. There's still a significant proportion to take of the originator assets.

So I think we're well positioned I think we had a nice runway. We took a leadership position by being first to market. We had the HCPCS code early on, and we've leveraged that relationship. So I anticipate further gains in market share as we go out through the rest of this year. And I'm really delighted with the performance of the U.S. team have delivered.

Remco, do you want to talk about?

Remco here. Yes, you have seen in Q1, we had a formidable biosimilar growth of 18%, and we expect this biosimilar growth to continue also in Q2, 3 and 4 in a very positive way based on the launches we have and still other things we have in the pipeline. As you have seen that the Q1 sales in generics were impacted by some incidentals.

We have been pruning the portfolio a bit in international. We had the impact of the B2B price dumping by the Chinese. As you know, that started in the summer last year. So by the second half of this year, this should have faded through the system. So the impact we have in Q1 on the generics, we expect as of Q2 that will mostly disappear.

And therefore, for the full year, we stick to our outlook for mid- to high single guidance. This was always what we expected. I think we gave the guidance in this regard. So we're very happy with the Q1 results that stand, and we stand fully behind our full year results.

Our next question comes from Victor Floch with BNP Paribas.

So maybe one on the different like generics headwinds that you faced over the quarter. So maybe any chance you can discuss the portfolio rationalization you've mentioned in international. So what's baked into this rationalization?

And what should we expect for the midterm? Can you also maybe quantify the phasing in international? And how should we expect the growth in international over the coming quarters? And finally, any comments would be helpful on the market dynamic in Germany and the policy changes you've mentioned in France.

Thank you, Victor. I think the second question about Germany. Was that correct? I'll take it. Yes. So let's talk. So we have a large portfolio, I think something like 29,000 SKUs across our business. So we are always constantly looking at pruning or moving out nonprofitable or margin-dilutive assets.

And particularly in international, as we've streamlined the business, I think we've exited a few smaller markets. We've cleaned it up, and it's ongoing. But really, the impact was Q1 a little bit into Q2. It won't have a broader impact beyond that. So I don't really see that continuing much more beyond this quarter.

And I think Remco covered the sort of the headwinds and the tailwinds. I think really, a lot of the headwinds wash out in Q1, particularly the Chinese dumping in the B2B and the soft cough and cold season in Europe. And then really, we see the generics business stabilizing and then strong momentum building and continuing in the biologics.

In terms of Germany, I think the question here relates to the potential changes in terms of tendering into the sick funds. We've had very good access to the German government. The team has done a phenomenal job. That legislation won't come until -- really until '28, I think in the current guidance. And that in the medium and long term, I see this as a positive. What that means is that access is going to be driven far more aggressively.

And as we expand our pipeline over the next few years, I see that as a significant growth driver, additional growth driver to the German market. So very pleased, but I think we're still working but delighted with the relationship that we've been able to build with the local government in terms of that policy. were very strong with growth of 12%.

Our next question comes from Charlie Haywood with BofA.

Charlie Haywood, Bank of America. Just one on phasing for the year. I think, obviously, 2Q, you're still getting some slight B2B headwinds, and you just alluded to the slight rationalization headwinds as well.

So is it sort of fair to think 2Q is still slightly down and then you're thinking of a better second half or I think slightly softer and a better second half? And then on that as well, just the phasing of FX in the year, I think plus 4% surprised many people. So how should we think of the phasing of that through 2Q, 3Q, 4Q? Any color there would be appreciated.

Thank you, Charlie. I'm going to hand that one to Remco.

Charlie, thank you for that question, Richard gave a little bit more details on the GX. As we currently see, we see Q2 at a better top line than we had in Q1, correct? So it's not something which fully weighs for H2. But for H2, we would still expect a higher full H2 versus a full H1.

So you can -- we should expect as of Q2 and higher top line growth number. The FX, you saw an impact of 8% in Q1, and we guided for 4% for the full year. There should be still also in terms of the phasing, relatively more material impact in Q2 and then becoming less in H2 of this year because also then the whole FX impact is phasing out.

But of course, we're happy with that because it impacts as well the absolute amount of EBITDA and EPS and net income. And you've also seen that in terms of the EBITDA margin, we're able to manage the FX, the margin has -- it has no impact on the margin. Perhaps then also to comment because some of you might also ask the phasing of the EBITDA over the year.

We expect still a step-up in the EBITDA margin in the guidance of 100 basis points. And of course, when the sales is a little bit more weighted to the second half of the year and also the margin improvement comes from the leverage on our cost base, there should be a little bit higher benefit in H2, but we still expect a very good benefit in H1 to come in. So everything here fully on track.

Our next question comes from Shyam Kotadia with Goldman Sachs.

The first one I have is on generic sema. So it looks like one of your competitors got the Health Canada approval yesterday for generic Ozempic. So just want to see if there's any update from your end in terms of timing of approval and launch? Or is the expectation is still that the second half '26 launch? And then yes, any updates you have as well on the potential Brazil and Mexico launches would be appreciated. And any color you could provide on the device or the approach because it looks like, I guess, Dr. Reddy's going with the chemical synthesis approach. That's the first question.

And then the second one is just on the biosimilar launches. So I think the key ones you flagged this year is Eylea in the U.S. in 4Q and then Lucentis in Europe. But are there any others that we should be aware of over that '26, '27 period? Because I can see you've got some insulins and some legacy oncology products like Herceptin and Avastin in your pipeline. So when could we expect them?

Okay. Thank you folks so much for getting the first GLP question. That was a little bit late than I was expecting. So thank you. Look, I'm not going to say anything particularly new to what I've already said before. We're extremely confident of launching in Canada and Brazil in probably the second half and the latter part of this year. That remains unchanged. So we will see. I think it's an exciting opportunity. Mexico, I think, is actually a little bit later because the patent situation in Mexico is difficult -- is different. So it's very much, I guess, Brazil and Canada this year and then a number of markets as you go into next year, so Turkey and a number of other markets around the world. Fascinating opportunity. And again, as we get more color, clearly, we'll give you more information as that evolves.

In terms of launches, I think the afli launch, I'm particularly excited about. I think it's actually a nice opportunity in the U.S. We know we obviously got approval, so we're well positioned for launching that in Q4. That will actually create some nice momentum as we go into 2027. And as you rightly say, there's a number of more local assets, so things like insulins, et cetera, that we'll launch in specific geographies. We tend not to disclose local assets because it gets so complicated. So we normally only talk about the bigger assets.

But that said, I think -- and I know a theme we get asked a lot is how you see '27, '28 shaping up? I think with the underlying momentum in the business, I think we could expect that growth momentum to continue into '27 and '28. But again, we'll discuss that perhaps a little bit closer to the time.

Our next question comes from Simon Baker with Rothschild & Co. Redburn.

Two, if I may, please. Just going back to one of the earlier questions in terms of the impact of rationalization, I'll just sort of try to get if you could give us any sort of quantification of that, the magnitude of that would be very handy.

And then secondly, a question on Hyrimoz share, but it's broader than that. It's more of a sort of conceptual question. And if we look at the global share for Hyrimoz, it's been pretty stable over the last few quarters at sort of 20%, plus or minus 1%. But I'm assuming if one looks regionally or at the country level, there's a lot more movement there. So I just wonder if you could -- either for Hyrimoz or more conceptually generally for biosimilars, how is the -- your market share changing beneath the surface there?

Do we see much movement at a lower level that averages out, so you end up with a reasonably stable global share. Any sort of thoughts on how we should think about that specifically to Hyrimoz, but going forward would be really handy.

Thank you, Simon. Perhaps if I take the second question first, then I'll pass the first question to Remco. It's a good question. And I think I touched on it in my presentation. So if you look at ustekinumab, what's interesting with uste, the penetration accelerated and the market expanded faster as we launched that. So we saw particularly in Europe, this really the adoption happening. So I think, a, what it's telling you is the payers and physicians are much more ready to accept biosimilars, opening up the market and driving momentum.

I think part of the problem with Hyrimoz is that the IQVIA data in the U.S. is pretty useless because the PBMs don't actually want to disclose the data or give the data to IQVIA. So it's actually very difficult to get a stable view. But globally, we've got a roughly, what, 20% share of the biosimilar market. I think that's a strong foundation. We're seeing faster adoption of biologics when we bring. And then certainly, in Europe, we see a very strong expansion of that market post launch for quite a period afterwards.

The U.S. does have a slightly different dynamic. If you look at adalimumab, actually, the number of patients on adalimumab has gone down as the originator effectively has used rebating to force patients on to newer assets. Now that will be illegal in Europe, but that somehow is acceptable in a U.S. environment, and that's just the nature of the business. But again, pleased with the position that we've got and strong momentum underlying.

Let me take the other question, Simon. Yes. I don't think it's appropriate to go in too much detail, but still try to help you as much as I can. So if you would take international generics growth, it normally should be in the low single digits, correct? And there are a couple of factors influencing this, which is one, the B2B, correct, which we give some indications about. And of course, we have the pruning and the phasing and a bit of the soft cough and cold. That combination explains roughly the delta between the number which has been published and the normal trend, which you would have, right?

We should be without that on the normal trend. Europe had an impact a little bit less on the B2B still the cough and cold season also impacted. There is no phasing or pruning in the European portfolio applicable. And in the U.S., this pruning and the one-offs is not applicable. So that without giving you any specifics, still helps you to give some idea of where it's coming from, and you can do your own homework.

Our next question comes from James Gordon with Barclays.

James Gordon from Barclays. Two questions, please. First one was '27, '28 outlook. So I heard some encouraging comments about top line momentum continuing into 2027. So do you think there is a scenario where you might still be able to do on the medium-term trends or mid-single-digit top line in '27 and '28 before the golden decade of launches really kicks off in '29? Or you still -- it would be sort of -- more likely that there is some deceleration. And then given that, what will be the appetite to do some in-licensing this year to boost things a bit inorganically in '27 and '28 before things kick off? That would be the first question, please.

And then the second one, I got to ask something else on generic sema. So [indiscernible] got approved by. I think it wasn't all doses. So is that like -- that's some sort of regulatory issue while that impact you as well that wouldn't be your doses? Or do you think you would hopefully get all doses approved?

And more generally, on generic sema, we've seen some very low-cost launches in India. I think there's 8 generics and the vial form is about $14, which is a very low price. And I know India isn't one of the markets you're going for. But is that a negative that suggests that very low-cost generics are going to come in the West, and this wouldn't be an attractive market for Sandoz because the prices can absolutely plummet? Or is it a bit positive because you're actually going to source this very low-cost material and that means you can really do well in the West? How to interpret these really low prices?

Thank you so much, James. I mean, look, let's talk about '27, '28. Look, I mean, we signaled '27, '28 more about this is a period where there's actually just very relatively few LOEs. Doesn't necessarily imply that Sandoz won't continue to grow in 2027 and 2028. So those 2 -- first of all, I think we need to separate those 2 things. There's a lot of small molecule launches. Obviously, we've not put semaglutide into our guidance either at this point. Clearly, we're going to launch that.

So there's a lot of good tailwinds going from '27 into 2028, launching aflibercept in the U.S. that will obviously contribute nicely in 2027. So I think there's a number of areas. We've not given guidance that I think we originally said, look, when we get to 2028, that would be, in aggregate, mid- to mid-high single digits. I think that -- we always said it won't necessarily be a straight line, but I think the direction of travel is clear. But certainly, we would expect '27 and '28 to continue growing. I think we'll give guidance when it's appropriate to do so.

Semaglutide, look, it's early days. I stand by what I said earlier. I think we're confident that we would bring presentations to Canada and to Brazil this year. I think it's an exciting opportunity. That remains unchanged. And look, the Indian generic market, if you look at any product in the Indian generic market, there's a wide range of pricing. And I don't think you can necessary -- I would never draw an analog from Indian pricing of generics into any other market in the world. It's a unique market. It has unique dynamics. I'm confident this is going to be a really interesting product.

I still stand by my comments. I think certainly in the first part of the first few years, I think this is going to be more about availability of supply than oversupply and commoditization. I think demand for this product will be substantial. And particularly in markets like Brazil, where these are really predominantly much more out of pocket, more, I guess, consumer-like markets, I think there's a phenomenal opportunity. So stand by that. I think we will discuss it more, no doubt during the year, but let's see how that evolves.

Our next question comes from Nicolas Pauillac with Kepler Cheuvreux.

Maybe 2, let's say, macro level questions for me. The first one would be that we -- since the beginning of the Q1 season, we saw a lot of comments from the pharma CEOs about the impact of MFN. I am trying to say that the Europe will have to step up in terms of pricing if they want to continue to see new innovative drugs. You guys that are sitting on the other hand, how do you think about the MFN impact for Europe and especially on biosimilars? Do you think it's a good opportunity to, I don't know, secure more market share and get a bit of a win on pricing there, too? So that would be the first one.

And then just second one is also macro level, but just it has been now, let's say, almost 2 years since we had the first Phase [ III ] waivers. How does that translate now when it comes to discussion on licensing deals, for instance, the new deal you did with Samsung Biologics. Do you see some change on the financials? Or is it the same as what you would have signed, let's say, 2 years ago?

Okay. No, first of all thank you so much for the question. So MFN, honestly, I think, from standard point of view, 0 impact on MFN. And I think what's interesting, I mean, we're getting very good access. I met more Ministers of Health and Prime Ministers and chancellors over the last few months than I have in the rest of my life. I'm not sure necessarily good or bad thing. But governments want to talk to us. I think they recognize that we're very much part of the solution rather than part of the problem.

I mean, fundamentally, Europe is getting older, sicker and poorer. We're very much part of that solution. We -- as an industry, we supply something like 80% of the drugs at about 25% to 30% of the cost. And then that also then positions us extremely well for this golden decade. Sandoz really leverages this incredible opportunity with something like $350 billion of biologics coming off patent and about $300 billion of small molecules. That's more than this industry has ever seen in the history of this industry.

So I think Sandoz is in such a strong position. And then that partly answers your second question is now is how we accelerate our pipeline? I think when we started this journey 7 years ago, I think we had 6 products in the pipeline. Clearly, we've launched quite a few of those now, but now we have only 32 growing. And that's really, really exciting.

And clearly, in relation to your question, the cost of developing these drugs is going down. It's still significant. It's still probably $80 million to $100 million a throw, but we're encouraged with that direction. So I think as we then leverage that scale that we've got, improving efficiency, then effectively, we can bring more assets as we invest in our pipeline and partnering. So very pleased. I think it creates a great opportunity for patients and a fantastic opportunity for Sandoz.

Our next question comes from Urban Fritsche with ZKB.

This is from ZKB. A couple of more big picture questions as well. So in recent weeks, we heard about Amneal, Kashiv and the Sun Pharma Organon business combinations driven clearly also by biosimilar opportunities. So I would be wondering about your thoughts on this announcement? And do you see this more as a one-off event? Or is this the beginning of a consolidation wave? And what does it mean for Sandoz is question one.

And then question two, big pharma in general, is very efficient for good reasons in developing extension strategies for the big brands. Have you seen any major shifts of time lines for your potential launches in your biosimilar pipeline portfolio?

Okay. Look, thank you so much for your questions, Urban. If anything, I think the Sun Organon deal validates a lot of the things that we've been saying. This is -- you need scale. Sandoz has a leadership position in the majority of the markets in which we operate. We're the largest player in Europe, we are the fastest accelerating biosimilar player in the U.S., aspiring to be the #1 player in the U.S.

So I think it's about scale, capability and execution. And I think it reaffirms that. So I think it's an interesting move. It's a little bit going back to sort of 10, 20 years ago where you saw some consolidation. I think the benefit that Sandoz has is already at scale a little bit, but I think it reaffirms the position that we've taken and the strategy that we're deploying.

In terms of big pharma, look, this is -- this story is as old as the hills. As long as I've been in this industry, which is quite a while, they've always been looking at the formulation changes, patent answers, whatever. Nothing is new. I think we've not seen any material changing to our pipeline. And again, this isn't about -- we're fortunate, this isn't about 1 or 2 products.

Today, we have 32 assets. We're covering about 60% of that $350 billion. Clearly, there's opportunities to improve that over the next few years, which then completely derisks any delays. And this is never normally about one product in one market. If we see from our launches, we've just launched denosumab in Europe. We're in 27 markets. Aflibercept, again, in significant number of markets at launch and then continuing afterwards. So I think we're nicely positioned, many markets, many launches.

Our next question comes from Chris Richardson with Jefferies.

Just a quick one on historical market shares for the disclosed biosimilars. They've all changed. I was just wondering if you could clarify how that recognition or reporting standards changed and if you saw any material change in trends? And just if you could quickly clarify the pricing pressure seen in Germany for Pyzchiva and whether we should expect this to spread to other regions or other biosimilars?

Okay. I mean I don't think anything specific in Germany and Pyzchiva. I think it's -- the point I made earlier was that we expect the sick funds to change some of their purchasing in 2028. So I don't see necessarily an unusual dynamic. And again, Germany, we're in a very nice position because what's unusual about Germany, particularly for products like Pyzchiva is the pharmacy chains don't exist in Germany. They're all mom-and-pop pharmacies, and we have a very strong relationship. So even when we win a formulary, we get strong leakage over into the pharmacy network. So I think that positions us extremely well. And again, when you look at the performance of Pyzchiva, we've taken a leadership position pretty much now across the whole of Europe, and we're very pleased with the performance.

And sorry, your second question was market share data. That's a very -- we're happy to come back to you. I mean I think the challenge, as I alluded to earlier on, is the U.S. And clearly, last year, the PBMs stopped reporting the sale of a number of biologic assets to IQVIA, which sort of means you have to sort of build an analog. That's really the only significant change that I've seen over the last couple of years. But I know it's made certainly looking at the U.S. market a little bit more tricky.

Our next question comes from Thibault Boutherin with Morgan Stanley.

Just a couple of questions. On the Samsung agreement, can you just give us any color that you can on the economic sharing here? Is the Stelara deal a good blueprint for the 5 biosimilars that you signed? Well, I think with Stelara you're not -- in the U.S., you're not booking revenues, booking royalties. So any details helping us to understand the margin contribution of these biosimilars would be helpful.

And then just second question on Tyruko market share in Europe has been stable for a number of quarters. So if you could just help us understand the dynamics here and how you expect this to evolve going forward?

Thank you, Thibault. So Samsung, this is a very different deal structure to the ustekinumab deal. That was a straight in-licensing deal. This is much more a partnership and development, which is why I did make the point that we were taking responsibility to the regulatory work, the market access work and all the commercialization. So much more, I guess, an equal partnership rather than a straight in-licensing. So clearly more attractive and accretive to our business. So I think it's a very different model.

So you can't really draw the same parallels. I think the nature of those 2 deals was very, very different. Tyruko, we've always said in the U.S., are targeting naive patients, and that's going exactly to plan. And then in Europe, we're pleased with the switches that we've taken and continue to win share. But again, this is always going to be a build rather than a bang. These patients really need a lot of support, physicians need support. So it's a great product. And clearly, we see no likelihood of a competitor anytime soon, and we will continue to deliver and work with customers to grow the product.

Our next question comes from Natalia Webster with RBC.

A few follow-ups for me, please. Firstly, on denosumab, you've reported the 62% and 50% biosimilar shares. But are you able to comment a bit more on how you expect this to evolve with the additional biosimilar entrants and how you're thinking about volume gains versus pricing erosion through the year?

Secondly, on aflibercept, are you able to talk more on how you're looking at potential contribution from the upcoming U.S. launch in 2027, factoring in the expanded label, but also Amgen's head start there?

And then finally, on margin, you mentioned you're still expecting the H2 weighting given the operating leverage. Are you still expecting that 130 bps of improvement coming from mix for the full year, as you indicated previously? And beyond the operating leverage and mix, are there any other phasing impacts to call out here?

Thank you, Natalia. Perhaps if I let Remco go first to take the third question, and I'll do the first 2.

Natalia, in terms of the structure of the improvement of the margin, nothing has changed. It comes from 2 elements from margin improvement in bio being a larger part of the portfolio, and that continues as you see this year.

And the second is the leverage over our -- particularly our marketing sales and G&A expenses. That continues. That is the case in H1. We expect to be the case. We expect that the case to be also in H2. What I just made a comment is that relatively the sales growth is a bit higher in H2 than H1. You have a little bit more impact of the leverage and therefore, the margin is a little bit more weighted for H2. That's the only difference for the rest of everything is the same. Back to you, Richard.

Thank you. On deno, I think partly said, look, there's still an awful lot of market to go at. So even though [ quarterly ] competitors are coming into the market. We're also -- in a sense, I'm less concerned about volume share, it's about value share. So here is keeping control of ASP, making sure that we don't lose control of the discounting and the rebating. So we're very thoughtful about the channels and the partners that we work with. We're not trying to solve everybody's problem.

So really, I think there's still momentum that we can create in that business and do that in a way that is sustainable and value creating rather than necessarily chasing this to the bottom and winning volume share. So really, this to me is a value game, not a volume game over the next few years.

Afli, I think it's too soon to call, but you're absolutely right. I think it's a super great opportunity. We're delighted with the performance that we've seen in Europe. Really, the team have really knocked it out of the park, I must say. And then I think as we go and look at taking that learning and applying it to the U.S., I think that, plus with Cimerli now coming back into the U.S. market, it puts us in a very nice position to bring that market into really late '26. And then really, I think the impact will flow through into 2027.

Our next question comes from Beatrice Fairbairn with Berenberg.

I just had a quick one on whether or not you had or expecting any inflationary impact on input costs such as energy or freight? And if so, how do you plan to mitigate this?

And then secondly, you've discussed the active portfolio rationalization in the international generics business. Can I just check whether or not this portfolio rationalization process is expected to be extended in kind of any significant way or kind of impact to other regions as well?

Yes. Look, I mean, on the rationalization, I mean, look, as I said earlier, we have something like 29,000 SKUs, and we're launching, I don't know how many thousand SKUs a year. So in a sense, it's a disciplined and an ongoing thing that happens in the business. Clearly, if you have products in particular lines that are underwater or dilutive, we are the challenge in terms of looking at raising pricing or end of the day pruning. And that's an ongoing process.

I think in international, we want to be much more targeted and specific about certain markets and certain products. As you see then, really, the business focus in international is accelerating than the biologics. And again, I was particularly proud with what the team has delivered in the first quarter. So you saw strong momentum coming in the biologics and then really less focus on very value-destroying small molecules in that.

In terms of input costs, I think we're nicely positioned. I mean, clearly, we're sitting on a good inventory. We got good API levels. So in a sense, that cost there, and we've hedged our energy. So we have a good, nice long-term hedge in our manufacturing sites. So in the short to midterm, I don't see any significant inflationary inputs. Beyond that, look, clearly, as fuel has gone up, shipping costs are going up, but that's true to everybody. So that's not -- clearly not a Sandoz-specific position.

But I think we're well positioned. I know there's some debate, particularly in the U.K. media about possible supply disruptions. Again, at the moment, we're tracking it very carefully. But certainly, we're comfortable at the moment in our ability to maintain supply to patients, particularly given our strength in Europe. So we'll see. But I guess your guess is as good as mine in terms of how long this thing is going to continue. So we will see.

Our last question comes from Florent Cespedes with ODDO BHF.

Can you hear me?

Yes, we can.

Florent Cespedes Speaking from ODDO BHF. Just to come back, a follow-up question on the pruning strategy. So do we have to understand that it is something -- it's business as usual. It's something that you may extend and maybe do more rationalization on the international on other territories. And if you have some proceeds and capital gains from this strategy, do you confirm it will be excluded from the operating profit guidance? That's my first question.

Second question on the generics business. Just to come back on the second half of the year. Do you confirm that you should have more new launches in the second half of the year on the generics business?

And last question, I know it's pretty small business, but in the U.S., the generic business, any comments on the performance here? And if you continue to be focused on the more profitable products rather than the products which are, let's say, facing a tough competitive landscape.

Thank you so much, Florent. Perhaps if I just talk about the generics and the U.S. Look, I think the generics business in the U.S. did extremely well. We're very pleased with the performance of the U.S. team delivered. And it's still an attractive market. I think there, we've always said, look, it's much more about specific opportunities. And obviously, we gave -- paclitaxel was a good example, I think last year, and then there's been a number of other that we've launched Ferumoxytol, et cetera, et cetera.

So there's been some very attractive launches that have performed extremely well in the U.S., and we will continue to look to do that and file. But our ambition in the U.S. have no desire for us to be the #1 generics player in the U.S. Clearly, our main growth driver is biologics and executing extremely well in the U.S., and I think we're doing that.

From a broader Gx timetable, I mean, I think our guidance here really is, look, we expect the headwinds of generics will wash out, particularly Q1 into Q2 as we get into Q3, Q4, that will be -- will stabilize and then continue to potentially grow. There's always launches. I mean we launched -- we've got something like 400 generic projects ongoing at any one time. So -- there's so many launches, it's very difficult. So it's not normally one big specific generic launch. So -- but I think really, we've tried to explain why Q1 into Q2 and why that washes out as we go into the second half of this year. And then with the strong underlying growth we're seeing in biologics, continuing to deliver and support the overall business. So I think that's really how I view it. Remco?

Yes, perhaps add then your question on the pruning. It's a bit of repeat what Richard already said. The biosimilars is really we want to double-digit growth. We have done that. We will continue that. That will also happen in international. Generics is a quite broad portfolio, and we just have any other company and responsibility to look at our portfolio. And if there are certain parts of the portfolio, which will make sense to discontinue, we will discontinue that.

And you saw a relatively a bit more impact in Q1, but it's something we have done also in the last years. So there's a relative more impact in Q1 and the rest of the year, we will expect or in H2, expect less of this impact to happen. That's all. There's no one-off related income or costs related to this pruning. This is just an adjustment of the portfolio. That's all.

I think that was the last question. So I just wanted to thank everybody for your time this morning. I think pleased with the first quarter, exactly as we expected it to come. Delighted with the momentum that we're seeing in biologics, particularly strong call out performance in the U.S. and international and excited about the momentum we're building throughout the rest of this year, again, confirming our guidance and look forward to talking to you again shortly.

Good morning, ladies and gentlemen, and welcome to the Sandoz call today. I will now hand over to Craig Marks, Head of Investor Relations, for his opening remarks.

Thank you, and welcome to the Sandoz Full Year Results Call for 2025. Earlier today, we published the press release and an accompanying presentation on our website, which we'll follow on today's call. You can find these documents at sandoz.com/investors. Joining me on today's call are Richard Saynor, Chief Executive Officer; and Remco Steenbergen, Chief Financial Officer.

Please turn to Slide 2. Our results announcement presentation and discussion include forward-looking statements. Please see our disclaimer here.

Please turn to Slide 3. Richard will begin today's presentation with the highlights of 2025, followed by an update on the business. Remco will cover the financial performance as well as the guidance for 2026. Following the wrap-up of the presentation, we'll be happy to take your questions.

And with that, I will now hand over to Richard. Please turn to Slide 4.

Thank you, Craig, and hello, everyone. It is a pleasure to welcome you all on the call today. Our second full year as an independent company was a very successful one, and I'm proud to share our achievements. 2026 is a significant year for us as we celebrate some very special anniversaries that reflect our legacy and our future.

20 years ago, Sandoz pioneered the world's first biosimilar, opening the door to advance treatments for more patients and setting new standards for access and affordability. 80 years ago, we transformed a brewery into a penicillin factory, making antibiotics more accessible and saving millions of lives.

Kundl remains Europe's last major end-to-end producer of penicillins, a legacy of reliability and innovation. And I'm delighted that we're also celebrating 140 years of Sandoz.

These milestones are more than history. They are a source of pride and inspiration as we build our future that remind us of the impact that we have made and the responsibility we carry to continue expanding access for patients everywhere.

Please turn to Slide 5. I am proud of the progress that we made last year when we cemented the fundamentals of our long-term growth potential. Let me take you through the 4 key areas where we made meaningful steps forward.

We advanced our deep, diversified and industry-leading pipeline last year. Crucially, this pipeline already includes 27 biosimilars. 2025 was also a year of successful launches. We rolled out a number of important medicines like Pyzchiva in the U.S., Afqlir in Europe and Australia and Wyost and Jubbonti in the U.S., Europe, Brazil and Australia. And as the last of our Capital Market Day commitments, I was delighted that we launched Tyruko in the U.S.

On the development supply side, we completed the acquisition of Just-Evotec Biologics Europe at the end of the year, which strengthens our technology base and accelerates our ability to scale next-generation biosimilar development and manufacturing. The construction of our biosimilar hub in Slovenia is also progressing very well.

And finally, it was a year of strong results across the P&L, cash flow and balance sheet. Net sales grew by 5% at constant currencies to $11.1 billion. Our core EBITDA margin expanded by 160 basis points to 21.7%, driven by improving mix of sales, cost control and operating leverage.

The return on our invested capital increased to 14.5%, reflecting growth of 2 percentage points. And finally, we're proposing to increase the dividend per share by 1/3 to CHF 0.80 a share.

Now let's move to more details of the growth in net sales, starting with Slide 6. Looking firstly at the full year, net sales surpassed $11 billion for the first time, supported by biosimilar growth of 13% at constant exchange rates. Whilst generics provided a strong foundation for our business, the overall performance reflected the increasing contribution from biosimilars and strong execution across our organization.

Biosimilars now represent 30% of total net sales, marking a significant milestone for our business and one we have proudly achieved earlier than expected. I am proud to say that quarter 4 represented our 17th quarter of consecutive growth. Underlying sales up by 7% and biosimilars representing 31% of the total.

Please turn to Slide 7. Generics remain a core growth engine for Sandoz. Here, you can see some examples of the many launches last year, such as iron sucrose, rivaroxaban and enoxaparin sodium. We have more than 400 generic assets in development, targeting an originator market worth around $220 billion.

Moreover, we're focused on a significant number of LOE opportunities, particularly in oral solids and injectables. Lastly, our global generic footprint includes 4 development centers and 15 in-house manufacturing sites, ensuring agility and reliability in supply.

It is worth noting that the adverse impact last year on penicillin B2B business. Asian suppliers engaged in significant price dumping for key penicillin APIs, including some that we sell to other businesses. This impacted the sales value of this part of our business in the second half, and we expect it to continue impacting our generic performance in the first half of 2026.

Furthermore, the recently announced introduction of minimum import prices in India for some penicillin APIs may well divert low-priced supply towards Europe, which continues to depend on Asia for key intermediates.

Europe's growing dependency on a handful of global suppliers underpins our call for a fundamental shift in how Europe thinks about antibiotics, the backbone of modern medicine, especially given that they're a key part of the continent's security infrastructure.

Please turn to Slide 8. Now turning to biosimilars. 2025 was a great year for this key part of our future. We delivered multiple successful launches that reinforced our leadership and execution capabilities. There were 2 major launches for Pyzchiva. Firstly, we launched in the U.S. earlier in the year, which included private label options. Secondly, we introduced the first commercially available auto-injector for ustekinumab in Europe, a major step forward in patient convenience.

Next, Tyruko saw strong uptake in Europe and was rolled out across the U.S. in November. We also achieved a significant milestone with Wyost and Jubbonti, the first denosumab biosimilars in the U.S., followed by the launch in Europe in quarter 4.

And finally, Afqlir entered the European market at the end of 2025, with the U.S. launch anticipated by quarter 4 this year. And you probably saw the great news last week that the FDA has approved an expanded label for Enzeevu to include multiple retinal indications. I fully expect these launches to perform strongly and contribute meaningful growth for Sandoz.

Please turn to Slide 9. Let me now walk you through the continued performance of Pyzchiva and Hyrimoz across our key markets. Starting on the left, Pyzchiva in Europe, we see very solid trajectory. What's particularly encouraging is the sustained increase in biosimilar participation, which continues to expand quarter-after-quarter.

This reflects not only strong underlying market growth, but also the faster uptake of ustekinumab biosimilars compared to what we saw with adalimumab. Alongside the auto-injector rollout last year, we're getting ready for more Pyzchiva launches in Europe and international in 2026.

Hyrimoz continues to demonstrate strong global growth. Our market share remains stable, and we continue to see strong increases in biosimilar participation. We are very well positioned to benefit from this trend.

Please turn to Slide 10. Now let me turn to Tyruko and Omnitrope. Starting with Tyruko, we are very pleased with the continued rate of adoption in Europe. Since launch, our market share has grown steadily, reflecting the strong clinical and economic value proposition of Tyruko as the only biosimilar approved in Europe for relapsing remitting multiple sclerosis.

Alongside the recent launch in the U.S. in quarter 4 and additional launches are planned across other markets, we expect uptake to further expand as awareness and familiarity grow.

Omnitrope continues to demonstrate exceptional stability and resilience in a highly competitive category. We've maintained the leading global market share, and we're delighted with the performance, especially in the international region. Overall, both medicines showcase the strength and diversity of our portfolio, Tyruko as a high potential launch with accelerating adoption, and Omnitrope as a reliable, long-standing leader in the class.

Please turn to Slide 11. Let me now highlight the strong progress that we're making with Wyost and Jubbonti. Firstly, in the U.S., our launch execution has been highly effective. We were able to rapidly leverage our commercial footprint that covers more than 80% of the denosumab market volume to ensure broad visibility and accessibility from day one.

We also successfully established average selling pricing, a critical milestone for provider confidence and reimbursement stability. And I want to call out the performance of Wyost and Jubbonti in Canada, where we've taken extremely high levels of share across the denosumab biosimilars.

Turning to Europe. The launch at quarter 4 has been progressing well. Our leadership across both hospital and retail channels has helped us execute with speed and precision. This strong on-the-ground presence is enabling us to secure access, build awareness and support physicians as they integrate Wyost and Jubbonti into clinical practice.

Overall, being first to market with these medicines has given us a powerful head start, and the early update confirms that our strategy is working. We're well positioned to continue building momentum as access, adoption and payer coverage expand across the regions.

Please turn to Slide 12. Our pipeline is where the next wave of growth begins and is designed for high impact. We're advancing targeted development in key biologics and therapies with a clear focus on access areas that matter most to patients and health care systems. In the nearer term, we have several assets already in regulatory review.

Looking further ahead, our clinical development portfolio includes major immunology and oncology assets such as Opdivo, Keytruda, Ocrevus and Tecentriq, biosimilars to some of the most widely used biologics today.

Finally, we have a significant number of assets in early development. This pipeline positions Sandoz to lead in biosimilars for years to come, delivering scale, innovation and access to patients.

Please turn to Slide 13. I am delighted by our sustainability progress in the year. In 2025, we served over 1 billion patients across more than 100 countries, a scale that underscores our global responsibility. Through our portfolio and partnerships, we've delivered $26 billion in savings to health care systems. This is a meaningful relief at a time when affordability pressures continue to rise.

We've delivered measurable reductions across our emissions footprint, down 18% in Scope 1, 15% in Scope 2 and 1% in Scope 3. We've also submitted our SBTi targets for validation, covering all emission scopes, reinforcing our commitment to transparent climate action.

Finally, on governance and integrity, we strengthened oversight and risk-based controls to ensure swift information decision-making without compromising compliance, and we continue to lead in transparency with open, compliant transfer of value disclosures across more than 36 markets aligned with global codes and standards.

Altogether, these achievements reflect who we are as a company driven by purpose, committed to access, anchored in strong values and focused on delivering long-term impact for patients, partners and our people as well as society.

Please turn to Slide 14. To secure long-term leadership in biosimilars, we're expanding our pipeline and commercial presence have been accompanied by significant investment in strategic integration and the expansion of in-house capabilities.

I'm excited to say that this year, we'll begin to complete building of our end-to-end European biosimilars hub in Slovenia that includes a state-of-the-art technical development center in Ljubljana, a high-tech drug substance production site in Lendava and an aseptic production center in Brnik. These facilities will give us full control over development and manufacturing, ensuring quality and scalability.

Secondly, our acquisition of Just-Evotec Biologics in Europe at the end of 2025 marks a major step forward. This brought us more capacity for growth as well as proprietary platform for integrated development and indefinite license to use Just-Evotec's continuous manufacturing technology.

Finally, our overall European biosimilar manufacturing network will position us as a unique leader of in-house development and production, strengthening supply security, enabling us to respond quickly to market needs. Together, these investments will allow us to capitalize on the overwhelming biosimilar market opportunities that lie ahead.

And with that, I hand over to Remco on Slide 15.

Thank you, Richard, and hello to everyone. Please turn to Slide 16. We delivered strong underlying net sales growth of 6% in 2025, driven by another year of double-digit expansions in biosimilars. Importantly, this momentum was broad-based, with all regions contributing, underscoring the resilience and diversification of our business.

Core EBITDA increased by 14%, with a margin expanding by 160 basis points to 21.7%, driven by a favorable mix shift, disciplined cost management and continued operating leverage.

On cash generation, we increased management free cash flow by USD 435 million to USD 1.5 billion, reflecting a strong underlying EBITDA performance. We improved core ROIC by 220 basis points, reaching 14.5%. This uplift reflected an improved operating performance and disciplined capital deployment.

It's an important indicator that our strategy is delivering not only earnings growth, but equally also high-quality returns. Finally, core diluted EPS grew by 33%, benefiting from the increase in operating profit, reduced financial expenses and a lower effective tax rate.

Please turn to Slide 17. Turning to our top line performance in more detail. Our generics business accounted for 70% of the total. The main growth engine, however, continues to be biosimilars, with the results reflecting successful launches and sustained adoption.

Regionally, the performance last year was well balanced. Europe remains our largest market, representing 54% of total net sales and delivering on strong underlying demand across both generics and biosimilars. International markets net sales were USD 2.7 billion or 24% of sales, supported by a robust performance in emerging markets and continued expansion of access-driven programs. North America contributed 22% of total net sales.

Please turn to Slide 18. Over the full year, the 18% underlying biosimilars growth included encouraging contributions from Pyzchiva and Hyrimoz in Europe and Omnitrope and Hyrimoz in International. In North America, Wyost and Jubbonti got off to a flying start.

Generics growth of 2% for the full year reflected many successful recent launches, including paclitaxel in North America, with International performance benefiting from price accretion. In Q4, biosimilars delivered an even stronger underlying growth of 20%, with generic sales up by 2%.

Now let's have a look at the performance of our 3 regions on Slide 19. Europe sales grew by 6% in the year and in the quarter. Strong growth in biosimilars continued, partly reflecting successful launches over the past 2 years, including Hyrimoz, Pyzchiva and Tyruko.

International sales were up by an underlying 9% in the year and even by 14% in the quarter, with strong contributions from Hyrimoz and Omnitrope. North America sales grew by 5% in the year on an underlying basis and 2% in the quarter, with the latter period adversely affected by the impact of a onetime gross to net generics adjustment in Q4 2024.

Please turn to Slide 20. In breaking down the sales performance for 2025, you can see that volumes contributed 8% while price erosion remained at a moderate 3%. Foreign exchange had a positive impact of 2%.

Let's now move to the P&L overview on Slide 21. Core gross profit increased by 5%, reaching USD 5.6 billion. A broadly stable gross profit margin of 50.6%, mainly reflected the favorable movement in the mix of sales, offset by price erosion.

Core EBITDA growth of 14% at constant currencies was primarily driven by our growth while keeping our SG&A costs in U.S. dollars stable. Going forward, our ambition remains to limit SG&A cost increases to the absolute minimum, while we will support our pipeline through focused and increased D&R investments.

Finally, core EPS grew by 1/3. Overall, 2025 was a year of strong profitability, underpinned by biosimilars growth and disciplined execution across the business. This positions us well for continued margin expansion and long-term value creation.

Please turn to Slide 22. Moving to the core EBITDA margin performance. This increased by 1.6 percentage points from 20.1% to 21.7%. The favorable mix of sales benefited the margin by 1.3 percentage points, while price erosion had a 1.1 percentage points adverse impact.

We reduced the ratio of OpEx to net sales, led by SG&A, reflecting disciplined cost management and the success of our transformation program. This illustrates the progress we are making in leveraging our cost base.

From the P&L, now let's move to cash on Slide 23. I was really delighted with the USD 1.5 billion of cash we generated last year, which represented the $435 million increase over the previous year. While we exclude one-off items when focusing on management free cash flow, the performance reflected both the strong uplift in core EBITDA and continued discipline in how we manage working capital, particularly inventory.

As Richard mentioned, we have continued to invest in our future, with CapEx in 2025 focused on the biosimilar hub in Slovenia.

Please turn to Slide 24. Last year, we successfully further strengthened our balance sheet and improved our maturity profile. A substantially stronger euro and Swiss franc against the U.S. dollar had an adverse impact on net debt, which ended the period at USD 3.6 billion. When excluding the impact of foreign exchange, however, underlying net debt decreased by USD 200 million to USD 3.1 billion.

Our strong balance sheet, improved liquidity and investment-grade ratings place Sandoz in a unique and excellent financial position to support our ambitions. Our net debt to core EBITDA ratio improved to 1.5x, reflecting continued balance sheet strengthening.

Please turn to Slide 25. Turning to CapEx. We invested around USD 700 million in 2025 with the majority directed towards manufacturing. This reflects our continued build-out of our development and manufacturing vertically integrated biosimilar capabilities.

Looking ahead to 2026, our peak year for CapEx investments, we expect an outlay of around USD 1.1 billion. The largest allocation will again be for strengthening our biosimilars capabilities. As Richard stated before, we expect our development in API biosimilar sites to be completed at the end of 2026 before we move to the tech transfer process.

We anticipate completing the construction of our biosimilar fill-finish site next year, i.e., 2027. We expect to enhance our biosimilar pipeline through BD&L investments, and we will continue our path to bring our IT infrastructure at a required level.

The uplift in IT will enable system upgrades that are designed to drive efficiency, streamline our operations globally and create a more scalable digital backbone.

Please turn to Slide 26. One-off cost continue to decline. In 2024, this cost peaked as we completed the bulk of the work related to separation, transformation and the manufacturing footprint. In 2025, one-off cost declined to around USD 0.4 billion, reflecting a lower level of separation-related spending and reduced transformation activities.

For 2026, we currently estimate the one-off cost to further decline to around USD 0.3 billion. This means that the one-off cost of USD 0.7 billion for '25 and '26 combined are fully in line with our prior expectations.

Please be aware that one-off costs exclude software implementation cost accounting impacts. We're in the process of implementing new future-ready IT systems for Sandoz. Due to the nature of software licenses meeting the accounting definition of Software-as-a-Service, the related implementation costs do not meet the criteria for capitalization as intangible assets under IFRS.

We have not guided for these costs historically as the assumption has been that such costs can normally be capitalized. These costs were around $50 million in 2025 and are likely to be similar this year.

Please turn to Slide 27. This year, we expect net sales to grow by a mid- to high single-digit percentage in constant currencies, supported by the impact of our recent launches. The core EBITDA margin is targeted to increase by around 100 basis points. We expect price erosion of a low to mid-single-digit percentage.

We also anticipate that the adverse dynamics of our penicillin B2B business will unfortunately persist in the first half of 2026. And as a one-off, we'll incur some costs related to the integration of the Just-Evotec business in France.

Outside of guidance, we expect a 2 percentage points tailwind to net sales from currency movements. Based on recent spot rates and average rates in January 2026, we do not expect a material impact from currency movements on the core EBITDA margin.

Please turn to Slide 28. Our hard work since the spin has led to strong results to date, which position us really well to reach our midterm outlook for 2028, which is unchanged. We have strong momentum, supported by numerous launches across key markets, and there is a clear visibility on the drivers of our margin expansion.

And on that happy note, I will hand back to Richard. Please turn to Slide 29.

Thank you so much, Remco. I'd now like to wrap up the presentation on Slide 30 before we go to questions. I'd like to remind everyone of the huge number of opportunities that lie ahead. The next golden decade presents a tremendous opportunity for Sandoz in both biosimilars and generics.

On the biosimilar side, we're targeting more than $320 billion in LOE opportunities, with 27 assets currently in development. These represent approximately $200 billion of originator sales, covering nearly 60% of upcoming LOEs. Combined with the game-changing impact of recent regulatory streamlining, this positions us extremely well to accelerate access and capture more market share.

On the generic side, the potential is equally compelling, around $340 billion in LOE opportunities, supported by a pipeline of more than 400 assets. These represent another $220 billion of originator sales or approximately 65% of LOEs over the next decade. And beyond that, we see GLP-1s as a long-term growth driver. Together, these pipelines create a powerful foundation for sustainable growth.

Please turn to Slide 31. In 2026, we will continue to strengthen our leadership in affordable medicines by advancing our network, our portfolio and our pipeline. We'll complete the construction of key new biosimilar facilities in Slovenia. And with the strategic acquisition of Just-Evotec Biologics, I am confident that we will consolidate our position as the undisputed leader in biosimilars.

Vertical integration will give us clearer control over our pipeline development and underscore our unwavering commitment to expanding access to high-quality, affordable biologics for millions of patients worldwide.

At the same time, we will continue to focus on accelerating access for patients. One example will be the launch of Enzeevu in the U.S. by quarter 4, which represents another key addition to our ophthalmology portfolio.

And finally, flawless execution remains central to how we operate. Across the organization, we're reinforcing capabilities, executing consistently against our strategic priorities and continue to embed our pioneering culture in everything we do.

I am delighted by our progress and by the strong momentum in the business as we move into 2026. I want to express my heartfelt thanks to our colleagues for their dedication and passion which makes such a difference for patients around the world. Thank you so much for listening.

Please turn to Slide 32, and I'll ask the operator to open the lines for Q&A. Thank you.

[Operator Instructions] Our first question is from Charlie Haywood from Bank of America.

Charlie Haywood, Bank of America. It's on the denosumab flying start that you called out. I think data suggests fourth quarter U.S. denosumab sales trending to around the mid double-digit million dollars per month level. So is that ballpark sensible? And then does your guide reflects an annualization of those fourth quarter levels into '26? Or is there anything we should consider on competition or pricing dynamics that might change that?

Charlie, thank you. And to answer your question, yes, we were delighted with the launch of denosumab. Obviously, we launched alone in the market. We set our ASP and executed well. I think, look, clearly, we expect volume gains to continue pretty much to that level, if not a little bit higher.

But clearly, you've got a significant number of competitors coming in, which will naturally push down the pricing. So I think the net will probably balance out. But clearly, we're delighted where we've started. We're still seeing strong growth and expect a good performance during 2026.

Our next question is from James Gordon from Barclays.

James Gordon from Barclays. First one would just be GLP-1s. I heard you talk about it being a longer-term growth driver, but no material contribution in '26. So when do you think you now could resolve and launch in Canada? And what's the plan in Brazil? Is the plan still that you could launch with a vial?

And longer term, so Novo's oral Wegovy launch is going well, which is also semaglutide. But will you do oral sema, so it's got the SNAC technology, and it needs more API? Is that also something that's in your plans? Or is a product like that not really attractive for a generic company and the GLP-1 plans you have are just to do injectable?

And then second question was just, one other quick one, which is just -- so you have got one ADC, you've got Enhertu in development. And your cost to develop ADCs and bispecific biosimilars, should we think that, that's just a start, and you're going to do quite a lot of ADCs and bispecifics? Or are they still significantly more complicated to develop and more expensive? So Enhertu is a bit of a one-off?

Great. James, thank you so much, and thank you for getting the GLP question in early. So look, we've not guided because I guess there's so many variables at the moment. We filed in Canada, Brazil and a number of other markets with one or more partners because when we get an approval and we launch a product, we will launch it. I've still said, look, we would look to anticipate to launch it probably in the latter half of this year in Canada, but we're very much dependent on the regulators. And at this point, nobody has got an approved file. Similarly with Brazil.

I think in the medium term, yes, it's a very attractive market. But I've never -- I think I commented before, I've never known a product where I don't really understand how the volume dynamics are really going to play out, given that demand is far greater than the market can supply. So I think it's just prudent that we sort of learn as we go a little bit. And I always said I see Canada and Brazil to a lesser or greater extent as sort of a bit of an experiment in terms of how market dynamics will grow.

As a generic company, yes, we will focus on bringing any product that we think is an attractive market opportunity, whether it's an injectable asset or in the medium term, an oral presentation of semaglutide. We've not disclosed our pipeline in small molecules, but naturally, we want to cover ideally about 80% of LOE for any product certainly in Europe. And that logic, I can't see would also -- or that logic should also apply to GLPs. But I think we're quite some way from the patent expiring from an oral GLP. And then there's still a dynamic of what that's going to play with the Lilly asset over the next couple of years. So this is really a long journey. We're going to be in it, and we'll make -- we'll share our journey with you as we do it.

In terms of ADCs, I think it's less a cost of the development, to be brutally honest. Surprisingly, it's not that technically difficult. You've got to remember, we are a small molecule company and a large molecule company. So our technical ability to link those 2 things is already embedded, whether it's ADCs, bispecifics or even trispecifics.

I think the question is more about the regulatory framework. You've got to remember 20 years ago, when we launched the first biosimilar, there wasn't really a regulatory framework about filing and launching biosimilar. That now has radically changed from monoclonals, and you're seeing that progressing quite quickly.

We're working closely with the regulators to find the right path. So we do a reasonable amount of study work, but not an excessive amount of study work. And I think at the moment, that's where the cost is.

It's not really the technical development. It's more the studies to satisfy the requirements of the regulators. We've not disclosed the quantum. But certainly, look, it's going to be more expensive than a classic monoclonal, but yes, we would expect to expand to that pipeline over the coming years.

Our next question is from Harry Sephton from UBS.

So I just wanted to touch on Slides 9 and 10 of the presentation. So given the progress on some of those biosimilars, it looks like that you're hitting more peak market share for those. So I would have implied that the strong guidance for the year is more for the more recent launches of denosumab, Tyruko and aflibercept.

So would love for you to touch on the progress for denosumab and aflibercept in Europe specifically? And then also for Tyruko in the U.S., given the REMS program that you set up there, what do you expect in terms of the progress or the trajectory of the launch in the U.S.?

Thank you, Harry. Perhaps I'll start with Tyruko first. Look, we're delighted to have brought that product to the market. I think it was the last piece of the CMD commitment. So very pleased that we delivered that.

Our strategy is to -- at this phase to acquire new patients rather than go for convergent patients. I think that way, physicians, clinics really get to work with us on the product. And so that means really the pickup will be incremental rather than switching.

So that's very much what we're seeing in the market that we're adopting new patients as they come on board, gaining the confidence. It's well accepted by the clinicians that we're working with. And so we just look forward to sort of a stepped growth over the next few years rather than sort of a rapid conversion of the market, which I think this way will be much more sustainable.

Deno in Europe, performing extremely well. Again, I think the data, we've taken a leadership position, a strong response from payers and great acceptance of the product.

Obviously, I think in the medium term, how we expand that market, not just in the oncology indication, but also for the osteoporosis indication where, I think, in Europe, because the price differentials are so great, is still an underserved population. So I think there's really nice opportunity to expand and grow that.

And then aflibercept has been a very entertaining journey over the last few months. Not with -- also with German court, et cetera, but really delighted with the launch, probably running a little ahead of where we expected in terms of volumes.

And then clearly pleased with the recent IP or PI injunction reversal in Germany, which, again, means that we are now back on the market and a number of our competitors are still blocked. So I think we're set up extremely well. I'm very pleased with the early positioning of those products.

And then your broader shape, I think, is directionally right. I mean, look, ustekinumab, we're still seeing strong market gains in terms of penetration of the market. Adalimumab is still growing years after LOE. But clearly, the bulk of the growth, you rightly point out, is going to come from our new launches.

And I think we almost get a bit complacent, but we've got a -- had a record number of launches into Europe last year with afli, with deno, with uste, again, we're the only one with the autoinjector. Obviously, we're just bringing out a Lucentis biosimilar later into this year. So a great set of positioning to set us up well for growth in '26 and into '27. So built on a solid foundation of the rest of our assets.

Our next question is from Victor Floch from BNP Paribas.

Victor Floch, BNP Paribas. So my first question relates to the recent FTC elements with Express Scripts, which seems to have weakened rebate-driven preferences for highly priced brands and, to some extent, favor lower net cost products.

So I just -- so I was wondering whether you see this as structurally affecting the biosimilar market in the U.S.? And is this directionally aligned with the PBM reforms you've been advocating for over the last few years?

And my second question relates on to your long-term pipeline with some recent analysis suggesting that some certain originator might be able to delay biosimilar entry longer than expected, leveraging their complex IP situation, and I'm thinking about a Keytruda and semaglutide.

So you've been quite vocal in the past regarding the unpredictability of the U.S. market on that front. So I was wondering whether you can discuss whether this impacts your long-term biosimilar plans in the U.S. and whether you continue to call for some reform on this front?

Okay. Thank you so much, Victor. The technical question you brought up, I'm going to have to come back to you. I think in terms of the rebates and what that impact is. So rather than trying to answer that now and take time, we'll come back separately through Craig.

I think the broader question, I mean, environmentally, I think we're moving in a positive direction in the U.S. I mean, clearly, having conversations around PBM reform, patent reform, clearly, the right moves with the FDA. So I think there is never one solution here, but I think certainly, I'm much more optimistic about the direction of travel in the U.S.

And again, as I said before, our access to the administration in terms of having a sensible dialogue about delivering sustainable, affordable medicines in the U.S. continues. So I think that's clear.

In terms of the long-term pipeline, I think it's a fair question. But as I've always said, in a sense, we define our biologics pipeline with a European lens to the very point that you make because there's so much uncertainty. Obviously, we filed against Amgen on Enbrel because they've managed to create a 31-year patent life. Now that case got overturned last week. We will look -- we're still judging whether we would appeal.

And we're all interested now that actually a number of payers are now suing Amgen for abuse of their position as well. So I think there's an environmental shift in the U.S. that this lazy innovation from innovators, particularly in the U.S. market, to prolong and abuse patents is being challenged, both at a Congress and a Senate level, but also from the industry and the payer level. So I'm encouraged.

But certainly it's a challenge, but it doesn't change our strategy because really, we define our pipeline from a European point of view, where we generally have a fairly clear sense of when we would bring a product to the market. And then the U.S. becomes a fantastic opportunity rather than the other way around because if we based everything on the U.S., you're always going to end up in court. It's part of the process and part of the system.

And as you can see, whenever you go to court, there's a degree of uncertainty. So leveraging our foundations, leveraging Europe and then seizing the significant opportunity in the U.S. has always been our strategy. So hopefully, that answers your question.

Yes. If I can just -- Remco here, just to add to it, correct. In the end of our press release, there's also a table where you see by region the split between generics and biosimilars. And just to reiterate, biosimilars, $3.3 billion out of our $11 billion. That $3.3 billion, 58% is from Europe, 17% is from International, which is 75% of the total, and 25% is from North America.

And Europe grew 14% last year in bio. International grew 30%, right? And on a comparable basis, the U.S. was 19%. So just to reiterate the point of Richard, correct, in the approach, also when you look at the numbers and the materiality, the weight is clearly outside the U.S. 75% of our bio portfolio.

Our next question is from Simon Baker from Rothschild & Co.

Two, if I may, please. A couple of big picture questions. Remco, you've given us a lot of quantification of the margin expansion through -- in '26. But I just wonder qualitatively, if you could just give us an update on what's being done, what's to come, the sort of split between mix and cost savings? Just a little bit of color on how things are moving on, that would be great.

And then a question really for both of you, possibly. We can see, obviously, how the regulatory changes make development more attractive and cheaper for you. But I just wonder what it means for the in-licensing opportunity. With lower development costs, does that potentially mean others were more likely to go it alone?

Or alternatively, does it mean that with those low development costs, more people are likely to try and use your global commercial infrastructure. So I just really want to see how the regulatory changes affect the in-licensing side of things.

Thank you, Simon. Perhaps if I answer your second question first, I think you've answered it yourself in a way. I think that's certainly our view is, look, yes, it's a reduction in regulatory costs, but it's still significant. You're still talking probably $80 million to $100 million per asset, and you still need manufacturing capability.

And then the bit that everybody forgets is you need a commercial footprint in tune with the market that can leverage its scale. And that is always the thing. And a lot of companies really struggle from that clinical to commercial setup and then commercial execution.

So we're seeing a significant number of partners coming to us, approaching us, wanting to work with us as a global partner. One signature, they get Europe, international, Europe, strong capability and are the leader in this player. So there's a lot to be said for working with us. So I very much see it as you see it in terms of that opportunity.

Remco, do you want to?

Yes. I think with the margin, let's go through the different elements. You've seen the low price erosion are relatively low with minus 3%. We still believe low to mid-single-digit price erosion to remain. Of course, that also requires work.

Clearly, the mix improvement with bio growing double digits and generics low single digits, which we expect to continue, but it has a mix improvement, but also within generics, we're looking at mix improvement, that is all on track.

The thing within the margin, where we expect in the coming years to step-up is in our cost of goods sold, that the manufacturing savings should pick up versus what you have seen so far. And that is something which we're looking forward for this year.

On the D&R expenses, yes, you saw a step up of 40 basis points higher expenses. So we are above $1 billion in '25, that you should expect to continue also in line with what Rich has said before, with the golden decade ahead of us, there's so much opportunity. We want to invest in that opportunity in the right way.

And with SG&A, I think we have all the opportunity to keep the increases, as I also said at the beginning, very limited. It was a minus 2% increase in '25. It was something similar in '24. And we really target to keep that at very low single-digit increase also in the years to come and have that leverage with the top line moving along.

We're also investing for the long term in our IT infrastructure in order to keep that SG&A and that infrastructure in place, which should also help significantly on the manufacturing side because that can also IT-wise, deliver also cost savings over the longer term.

So all in all, I think we're on track, with the only thing you could -- you should expect to pick up are the cost of goods sold unit savings as of this year. I hope that answers your question, Simon.

Our next question is from Urban Fritsche from ZKB.

Yes. Can you hear me?

Yes, we can.

Yes. Congrats on the business progress. A couple of questions coming back to generic sema. So it seems like that we will see first generic sema launches in India. While you're not there, my question would be what can you learn from those first launches? What are you looking for in India specifically to then apply to other countries and your launches?

And then a pretty open question relating to the new FDA guidance for the biosimilar approval. So how does that reshape some of those internally? What is already visible? And how will it shape going forward?

First of all, thank you so much for the question. Thank you for the feedback, Urban. I guess, look, it's interesting. I mean, for me, from an India point of view, 2 things is, one, the dynamic -- so how are patients willing to prepare to pay to this product? So in a sense, it almost behaves like a consumer product rather than a classic pharma product.

And how elastic is that at what price point? So it's more about trying to understand the volume dynamics and the willingness of patients to pay for our product in India. And it's certainly early days. Demand is significantly higher than the originator was selling to that market.

And certainly, as the price points come down, and it's interesting talking to my sort of Indian colleagues who have friends and family in India, just how many people now are wanting or acquiring that drug.

The other piece is this is a complicated product. It's a supply chain. It's a cold chain product. So trying to understand how you manage the logistics of managing a high volume cold chain supply product to manage that integrity. So those are really the things that I'm looking at from an Indian point of view. And certainly, it's fascinating.

Regarding your second question, I don't think -- I mean, look, the FDA move, I don't think it's structurally changing Sandoz. It's really thinking about how we run clinical trials and what the right data is. We've always had a good relationship with the FDA and the European regulators.

And really, it's all of the regulators moving in the same direction at the same time because if only one regulator moved, then it would be a real challenge for us, whereas we're seeing a degree of harmonization in terms of what's expected from Phase II trials, et cetera, and the low or no requirement for Phase III trials. So it's really more about how we phase our trials.

And then question is it's an opportunity because clearly, now it's going to cost us less money to develop a biologic, which means we can now develop more biologics. And given as we're about to go into a decade with something like 140 biologics coming off patent, I'm incredibly excited that we can then potentially serve those millions of patients who today don't have a choice.

Our next question is from Sophia Graeff Buhl Nielsen from JPMorgan.

So firstly, how significant a growth contributor do you expect biosimilar Lucentis in Europe to be in both 2026 and beyond? Do you expect the dynamics will differ from what we've actually seen in the U.S. context?

And then you've touched on this a bit in response to a prior question, but how should we think about the pace of the ramp for Wyost and Jubbonti in Europe this year relative to what we've seen in the U.S. so far? And how do your expectations differ between oncology and osteoporosis settings for this?

Okay. So first of all, thank you so much for your question, Sophia. I mean, the Lucentis biosimilar, I mean, I guess, modest, it's not the biggest launch. I mean, it's clearly a nice addition. It is not in all markets across Europe. So I think we have rights to the majority of markets because this is a co-licensed product with another party. They have the rights to Germany, which is our largest market.

So it's, I would say, modest. Certainly excited to be launching it for all sorts of reasons, but very pleased to be bringing it out to the market for the majority of Europe and a number of international markets.

And then deno in Europe, I think it will convert quicker. Naturally, the adoption of biologics in Europe, we're extremely well established. We have the relationships. I think the difference between the U.S. and Europe is really the use in osteoporosis. Given pricing pressures in Europe, most patients were generally on things like bisphosphonates. I think the opportunity now, as the price points come down, to really expand and offer this for osteoporosis is a real opportunity over the next few years.

So in short, I think a rapid uptake in the conversion and gain of the oncology market, and then a steady expansion and growth of the osteoporosis market. Whereas the U.S., I think, have a very different dynamic. Clearly there, the osteoporosis market is larger. We're taking a significant proportion very quickly. And again, we look to expand it. And again, perhaps a little better than we anticipated in the oncology indication in terms of the conversion. So different markets, different dynamics, but performing well in both.

Thank you so much. And I think with that, we will close the session. Thank you so much for your questions, and look forward to interacting with you over the next few months, and have a great day.

Good morning, and welcome to the Sandoz session of the 44th JPMorgan Healthcare Conference. My name is Sophia Graeff Buhl Nielsen. I'm an analyst here at JPMorgan on the European pharma and biotech team. And today, it's my pleasure to welcome CEO of Sandoz, Richard Saynor. [Operator Instructions] And with that, I'll hand over to Richard.

Okay. Well, thank you. Pleasure. And good morning, everybody. So I'll take you through a relatively brief presentation, talk about a bit of our history, our journey, how we're executing and then really much more importantly, thinking about the future, as we see it over the few years and an opportunity for questions. What I have said is we'll have a money box. Any questions on GLP-1s, we'll collect some money for disadvantaged Canadians because clearly, I'm getting a lot of questions on GLPs. So pioneering for access for patients. So good morning. Our mission as a company is simple. Our job is to pioneer access for patients. We treat more patients around the world than pretty much other pharmaceutical company in an area where patients are getting older, patients are getting sicker and affordability is becoming an increasing issue for many societies.

The role that Sandoz and companies like Sandoz play is increasingly critical and the role that we make for patients is a huge difference. I want to talk you through today about the edge that we believe we have as a company, how we are executing on our strategy and then focus on how we want to shape the future for what we see as an incredible opportunity for Sandoz. And then we'll have plenty of time at the end to ask me questions.

First, let's turn to our competitive edge. Sorry, go back one. What makes Sandoz truly unique is in the biogenerics and generic space. Really, it comes down to 3 key pillars: purpose built, global in reach and people-driven. Purpose -- firstly, we are purpose-led. Our focused model has trusted execution allowed us to remain the only pure-play generics and biosimilars company of scale. This clarity of purpose positions us as a trusted partner across healthcare systems, patients and investors.

Secondly, our global reach is unmatched. We have an excellent supply chain with very significant commercial presence in over 100 countries, strong internal and external manufacturing and development capabilities. So it allows us to deliver medicines where they're needed, reliably at scale and at high quality. And finally, perhaps most importantly, we're a people-driven organization with empowered teams, industry-leading leadership and is the engine behind our success with more than 23,000 committed colleagues around the world we combine expertise and passion to create impact every day.

Together, these 3 pillars, purpose, reach and people, allow us to build scale, trust and impact patients and healthcare systems globally. I can't believe that it's over 2 years since we created Sandoz. 2 years ago, we set out on a bold journey to become an independent company with a clear clarity of purpose, pioneering access for patients. Today, we can proudly say that we've delivered on all of the commitments that we made at the original CMD. Starting in October 2023, we completed the spin-off and immediately began investing in our future by opening a new antibiotic facility in Austria and a biodevelopment R&D center in Germany. A combined investment of about EUR 175 million.

In early 2024, we then announced our first U.S. private label partnership with Cordavis, again further strengthening our commercial reach. This year, construction began on a state-of-the-art biosimilars production center in Brnik, Slovenia, another milestone in building our internal global manufacturing scale. Along the way, we've also launched numerous biosimilars in 2025, including Pyzchiva, Tyruko, Wyost and Jubbonti in the U.S. and expanded with Afqlir, Wyost and Jubbonti in Europe. And to reinforce our leadership in biosimilars, we acquired the Just-Evotec Biologics biosimilars capabilities in France. Each of these steps reflect our commitment to scale, trust and impact, executing on our purpose as a stand-alone company and setting the stage for a long-term leadership in biosimilars and generics.

Let's take a look at why Sandoz is positioned for success in one of the most attractive markets in healthcare. Firstly, the biosimilars and generics market is worth more than $250 billion and it's growing strongly. Driven by increasing share for biosimilars over the next decade, we expect about $600 billion of loss of exclusivity opportunities, creating a significant opportunity for expansion. In 2024, we delivered $10.4 billion of net sales with double-digit growth in biosimilars. Our financial discipline is clear, maintaining a net debt to core EBITDA ratio below 2x and supported by a strong balance sheet that supports increased strategic investments. And finally, currently with 27 biosimilars in development, we hold the #1 position globally. Recently successful launches demonstrate our ability to execute and with GLPs as a key long-term opportunity, we're extremely well positioned to capture continued growth in biosimilars and generics worldwide.

It is this combination of market potential, strong execution and a robust pipeline that makes Sandoz a leader in an attractive and an expanding market. Now let's look at our market position in Europe and how we continue to build on it. Europe remains a cornerstone of our business, and the data here shows why. In the biosimilars and the generics European market, Sandoz has consistently expanded its leadership. Europe represents an $85 billion opportunity spanning over 40 individual markets and growing at a robust 8.5%. Our scale, our breadth and our ability to execute across these markets gives us a unique edge. So that was how we've established our edge. Now let's think about execution. Our hard work since the spin has led to the results we see to date, which positions us well to reach our midterm outlook. We have strong momentum in our business, which will be aided by several launches across key markets, and our margin expansion over the midterm will primarily reflect a favorable mix of sales and further potential in operating leverage. Generics remain a core growth engine for Sandoz. And in 2025, we doubled down on this strength.

On the left, you see some of the examples of key launches we saw last year. namely iron sucrose, rivaroxaban and enoxaparin sodium. On the right, let's look at what underpins this momentum. We have currently more than 400 generic assets in development, targeting originator sales of around $220 billion. This scale gives us a strong foundation for sustainable growth. Moreover, we're focused on loss of exclusive opportunities, particularly in oral solids and injectables. And lastly, our global generic footprint includes 4 development centers and 15 in-house manufacturing sites, ensuring agility and reliability of supply.

Now let's turn to specific generic opportunity, GLP-1s. This is a multi-phase roadmap designed to capture significant value in a rapidly expanding therapeutic area. In the near term, we plan to market launches in countries like Canada and Brazil in diabetes for partnered assets. For the larger opportunity relief starts beginning from 2031, where we plan to target major GLP-1 launches in Europe and the U.S., where the market potential is clearly significant. And beyond 2035, we're preparing the next generation of GLP-1s products to ensure that we stay ahead of the evolving patient needs and the innovative trends. What will make this journey successful, really 3 critical pillars again: delivering on the right medicine that meets the patient and the market expectations, ensuring continuous flexible and competitive supply because really reliability is the key to success in this space and executing timely launches with the right commercial model so that we can maximize uptake and value creation.

This is not just about entering a market, it's about building a sustainable position in one of the more dynamic and interesting segments in healthcare. Sandoz has built 1 of the most competitive and trusted biosimilar portfolios in the industry. And this shows -- slide shows why we lead. Our portfolio spans a broad therapeutic footprint, primarily across oncology and immunology from early launches like Omnitrope in 2006 to more recent additions such as Pyzchiva and Tyruko, we've consistently delivered first-class biosimilars that expand the market. This track record demonstrates proven launch execution as we know how to navigate complex regulatory pathways and bring products to market efficiently. It also reflects the strength of our scalable commercial platform.

And finally, our commitment includes strong access and patient support programs, ensuring that these medicines reach those who need the most. So in short, Sandoz is not just a biosimilars company, we're a trusted partner, driving sustainable access and in patient -- and impact across healthcare. 2025 was a landmark year for our biosimilar business with multiple successful launches that have reinforced our leadership and execution capabilities. Starting with Pyzchiva we launched in the U.S., including private label options and introduced the first commercially available auto-injector for ustekinumab biosimilars in Europe, a major step forward in our patient convenience.

Next, Tyruko. We saw strong uptake in Europe and expanded into the U.S. in November, demonstrating the strength of our commercial and development platforms. We also achieved significant milestones with Wyost and Jubbonti, the first denosumab biosimilar in the U.S., followed by further launches in Europe in quarter 4. And finally, Afqlir entered the European market at the end of the year with the U.S. launch anticipated in quarter 4 this year, further broadening our therapeutic footprint. These launches represent better access, more choice and improved affordability for patients worldwide, and they show why Sandoz delivers consistently on its promises.

Our pipeline is where the next wave of growth begins, and it's designed to find the maximum impact. We're advancing target development in key biologic therapies with a clear focus on areas that matter most to patients and healthcare systems. In the near term, we have several assets already in the regulatory review. And looking further ahead, our clinical development portfolio includes major immunology and oncology assets such as OPDIVO, YERVOY, KEYTRUDA and OCREVUS, biosimilars to the most widely used biologics today. And finally, we have 9 additional assets in early development, which we've disclosed for the first time today. This pipeline positions Sandoz to lead in biosimilars for years to come, delivering scale, innovation and access for patients.

To secure this long-term leadership in biosimilars, our expanding pipeline and commercial presence has been accompanied by significant investments in strategic integration and expansion of in-house capabilities. Firstly, we're creating an end-to-end European biosimilar hub in Slovenia that includes a state-of-the-art technical development center in Ljubljana, a high-tech drug substance production site in Lendava and an aseptic production center in Brnik. These facilities will give us full control over the development manufacturing, ensuring quality, supply and flexibility. Secondly, our acquisition of Just-Evotec Biologics in Europe last month marked a major step forward. This brought us more capacity for growth as well as the proprietary platform for integrated development and an indefinite license to Just-Evotec's continuous manufacturing technology.

And finally, our European biosimilar manufacturing network will position us as a leader in in-house development and production, strengthening supply and ensuring us to respond quickly to market needs. Together, these investments will allow us to capitalize on the overwhelming biosimilar market opportunities that lie ahead. Now before I turn to questions, let's move to our next chapter, shaping the future. The next decade presents a tremendous opportunity for Sandoz in biosimilars and in generics. On the biosimilars side, we're targeting more than $320 billion of -- in loss of exclusivity with 27 assets currently in development. These represent approximately $200 billion of originator sales, covering about 59% of upcoming LoEs. Combined with game-changing impacts in the recent regulatory streamline, this positions us extremely well to accelerate access and capture more market share. On the generic side, the potential is equally compelling with around $340 billion of LoE opportunities, supported by a pipeline of more than 400 assets. This represents around $220 billion of originator sales or about 65% of LoEs over the next decade. And beyond that, we see GLP-1s as a long-term growth driver.

Together, these pipelines create a powerful foundation for sustainable growth. This chart highlights the critical gap in the biosimilar landscape, a gap that we would call the biosimilar void. Over the next 7 years, with more than 50 biologics will lose exclusivity. And yet currently, we see no biosimilars in late-stage clinical development for these products. These bubbles represent the number of biosimilars in development by therapeutic area. And as you can see, between 2025 and 2031, the pipeline in the industry is relatively sparse. This is a significant missed opportunity for the sector and a clear area where Sandoz can lead. Why does this matter? Because regulatory streamlining and evolving market dynamics create a window for us to act decisively. By targeting these gaps, we can accelerate access, reduce healthcare costs and strengthen our leadership in biosimilars.

Our advantage is in commercial scale, our balance sheet strength and vertical integration in manufacturing compare extremely favorably against many of our competitors. So in short, it's not just a challenge, it's a strategic opportunity to shape the future of affordable biologics. This chart illustrates the fundamental shift in the loss of exclusivity landscape, a shift that, again, strongly favors biosimilars. If we look at the trend between 2016 and 2020, small molecule generics dominated the mix. But as we move forward, this picture changes dramatically. Between 2021 and 2025, biosimilars already accounted for a much larger share of the LoEs. And by 2030, they represent the majority of the opportunities. This signals a structural transformation in the market.

Biologics are becoming the primary drivers of value and biosimilars are the key to unlocking access and affordability. For Sandoz, this is where our expertise, our scale, allows us to lead by capturing significantly more growth in one of the most attractive segments within healthcare. The next decade brings a massive opportunity and a challenge for the industry, a major patent cliff with over $300 billion of LoE of worth branded drugs will lose exclusivity, creating one of the largest openings in healthcare. What is critical is that the majority of these LoEs fall squarely within Sandoz's development and commercial scope. With our proven expertise, our compelling pipeline and an investment-grade financial strength, Sandoz is uniquely positioned to capitalize on this cliff and deliver affordable high-quality biosimilars to patients around the world.

So to summarize, we're entering a period of unparalleled opportunity driven by structural shift in healthcare and a growing demand for affordable medicines. Our strong brand equity, our reputation and credibility for high quality gives us a solid foundation on which to build. We continue to drive operational excellence, further unlocking margin potential through efficiency and disciplined cost management. Our financial strength provides strategic flexibility, enabling us to invest in innovation and seize opportunities as they arise. We're one of the few investment-grade biosimilar and generic companies backed by a strong balance sheet and a proven commercial capability. And beyond that, we are a trusted collaborator across the healthcare ecosystem, working with partners, helping them to expand access.

We're vertically integrated biosimilar production will truly set us apart, ensuring reliability, scalability, combined with our position as the only pure-play biosimilars and generics company of such scale, we have the commercial presence and power to succeed globally. Our leading presence in Europe, combined with global momentum, gives us scale to reach that new -- our competitors cannot reach. We're not just partnering in the market, we're shaping it. These strengths position us to capture growth and deliver sustainable value for patients, partners and investors. Thank you so much for listening. I'm now happy to take your questions.

Thanks very much for the presentation. Do we have any questions in the room, GLP-1 or otherwise? I think we have one at the front here.

Peter Testa, One Investments. You showed a slide up there with the pipeline and you have the '26, '27 sort of gap in the pipeline, a big lift in '28. I was wondering if you could just help with 2 questions, please, they're related. One, if you look at the opportunity from your existing portfolio of products that you've launched late -- especially late '25, the growth in some of the others. If you could just give some sort of sense as to how annual cohort growth can continue to grow the biosimilar sales to that? Then I have a follow-up on how you feel that.

Sure. I mean look, I think part of the gap is just naturally a drier period for LoEs anyway. And some of those LoEs were Novartis assets, which I would have got fired if I developed copies of those, we couldn't do that. You're right. If you look at -- because obviously, we've launched denosumab relatively recently in the U.S., we're about to launch aflibercept in the year in the U.S. We've reintroduced CIMERLI in Europe, denosumab, aflibercept. So again, there's a number of drivers that will continue to grow quite strongly as we go through '26 and into '27. What's not on there, clearly is things like the GLPs, which we'll launch at some point end of '26, early '27 as we see growth. So there's a number of additional growth drivers we don't disclose, but it's predominantly those -- the biologics.

And then associated with that, are there opportunities partnering deals, you've been very good at doing certain partnering deals and also maybe some sort of corporate purchase of IP, which you've also been doing to try to bring products that would launch into, say, the '27 time frame?

If it's the right -- I mean, if it makes sense and they're the right assets. So Rebecca is here, but we're looking at potential products that we could partner or bring in, but we've been quite transparent in terms of this was naturally a bit of a quieter period to then get into '29 and then there's a real acceleration in terms of the biologics. So...

And then lastly, you disclosed the new assets on the right-hand side of that slide. We've also had some discussion about the FDA making it more -- streamlining the process. To what extent, when you look at the later slides on the launch, do you think some of those assets can fill in the '29, '30 period? Or are they going to be beyond that?

I mean the way we've structured this chart, the timing is where we think will be the first market entry. So we're trying to think about the way, a, we've got a lot of requests from our colleagues saying, well, we want more and more transparency about the pipeline. I think we've responded to that. Now we're trying to give some guidance when we think of the first month. So the timing is the first market entry. Now clearly, if we think we can go earlier, we will. I mean that's more of a patent question rather than a regulatory question. But I do think the shift with the FDA, to me is probably the most exciting event since Hatch-Waxman. The opportunity now to develop an asset in probably 2 or 3 years quicker and probably, I don't know, $50 million to $100 million cheaper, is a huge potential and clearly 1 that we intend to seize with both hands.

Any other questions?

Hello, this is Mohamed. You spoke a lot about Europe and U.S. Is there any specific strategy on Middle East and Africa region?

Less. I mean, we're primarily a European company, so -- and we're very proud of that. So when we select our assets, we start -- we're looking at it from a European point of view. And then the U.S. becomes an opportunity. So perhaps the first point I'd like to make is we generally don't develop biologic assets specifically for the U.S., we see that as an opportunity because you have the ridiculous patent down is frequent, I mean if you look at what's happening with Enbrel. We have a solid presence in Africa -- sub-Saharan Africa, South Africa, Middle Africa and Egypt, less of a presence in the Middle East. I think the question is with an unparalleled pipeline, are there opportunities to us to unlock value with local partners, which I think is clearly an opportunity. And it's something that we need to think -- we're thinking about how we would best do that. I mean we have infrastructure in many of those markets, but I think there may be other ways that we could extract value with the pipeline.

Maybe just a question on your midterm outlook. So you've reiterated your commitment to it yesterday. Well on track to achieving that. But as you commented, you've actually surpassed on some of the metrics that were integrated into those, including the proportion of sales that would come from biosimilars. Could we expect a refresh of some of these metrics or also on the building blocks then of how we get to your midterm given it looks like you're trending beyond this?

Yes. I mean, we'll stick with our guidance. I'm not going to say anything differently. And really, the point around that metric was more about explaining our strategy rather than necessarily being a target. Clearly, biologics are accretive in terms of growth but also accretive in terms of margin because generally they're more profitable. And so the way of explaining how we see our focus as a business, how we drive part of our margin expansion. And then as we go forward, clearly, as it becomes an ever larger proportion, it's going to actually raise the growth of the whole business. So really pleased with the momentum that we've delivered, but certainly at this point, we wouldn't change our guidance.

And to that point, in terms of shifting more towards biosimilars, which have this higher growth profile, also in light of this golden decade of unprecedented opportunity, how should we think about Sandoz's growth beyond the scope of your midterm? Is it reasonable for us to assume an acceleration?

I mean we've only guided to 2028. So -- and clearly, a lot of what I've just shown you happens after 2028. So I would say let's get there and then we'll think about how we characterize and explain the future. I mean that growth is coming because, as I said, increasingly, more and more of the products coming off patent are biologic. I think we're in this rarely privileged position, there are way more assets than there are resources for us to bring. I mean, so it's like a kid in a candy shop. How do we then bring that over the next few years? And then beyond that, you get into ADCs, bispecifics, trispecifics, radioligand, all of those things are open to us as a company. So I think we're really privileged. There are very few companies that over the next 10 years, we know exactly where our growth is coming from. It's now down to us to execute and make that happen.

And given, as you mentioned, you're more constrained in terms of the resources rather than the opportunities you have to capitalize on and in the context of the streamlining of biosimilar development. How are you balancing maybe looking back to assets that have been post LoE for a while versus this biosimilar void you're pointing to of biologics that go LoE and don't have any biosimilars currently in development? What are your screening criteria when thinking about what to target?

It's a good question. I mean, first, what's interesting, we launched the first biosimilar 21 years ago, which was human growth hormone. And actually, I launched that in Japan, which [indiscernible] my age. That's still growing. So we're now the world's largest supplier of human growth hormone. And so it shows some of the longevity. If you look at adalimumab now we treat twice as many patients today in Europe than we did at market formation. So we've expanded the market. We're giving better therapies to patients. And I think it was a number of our products, denosumab is a good example, which have continued to do that. When we look at the market, first of all, as I said, we'll start from a European lens, not just a U.S. lens. Most of our products are in immunology and oncology. We're the largest oncology and immunology company in Europe, so they're generally in the frame. And then it's a mix. Some of it is then timing, science, patent landscape and also the opportunity to expand the market, what's really cool as far as I'm concerned that we can now start bringing in the $2 billion, $3 billion assets, maybe with a much lower level of competitors that allows us to expand.

If you look at something like Tyruko, I think globally, it's a $3 billion product. It's unlikely we'll see competitors in that space. So it's got great longevity, great opportunity to expand access to offer better treatment options to patients. So it's a mixture.

Makes sense. And just thinking about the strength of your European business, as you mentioned, Omnitrope, Hyrimoz continued to grow their very double-digit growth. How do you think about the sustainability of that -- the growth of the base business in Europe? What's driving that?

I think Europe is getting older, sicker and poorer. So the needs of patients is only going to continue. So yes, you've got a great base. We've launched 13. I've just shown you 27. I think we've got a huge potential to continue to expand and serve and open up new markets in Europe, in markets like Canada or Australia where we're leading players, clearly in the U.S. and the rest of the world.

And you just mentioned Tyruko as well. One of the dynamics we've seen in Europe recently is a plateauing in relative market share. How are you thinking about the growth outlook for that product?

Again, incremental, but I was with the -- I mean to give you a good example. I was with the U.K. government just before Christmas and there, we've worked with NICE to really look at patient protocols. It means I think another 4,000 or 5,000 patients will now get access to Tyruko because of the price point, the opening up of the market. So now it's working clearly with payers, with regulators and physicians. So it's a stepped market-by-mark approach. But again, just as Keren has just launched it in the U.S., again, predominantly at this point, we capturing naive patients. But as confidence builds, we'll then start looking at switching and expanding the market, but the reception has been phenomenal.

Excellent. And you also mentioned that you've reintroduced CIMERLI to the market in the U.S. post the discontinuation or temporary pause last year. What were the conditions that allowed you to do this? What is the difference in terms of approach?

I'll let Keren answer that because she's the expert.

Thank you. Can you hear me?

No.

Can you hear me now?

Yes.

Yes. Okay. Good. So we recently -- January 5, we reintroduced CIMERLI. As we always said, we have commitment to patients and we wanted to bring it back to the market once possible. We kind of make sure that we have the right price point. We brought it back in 90% of WACC, so really a low-cost opportunity to compete in the market. We think there is a room for such price point in the market, and we are very committed to patients.

And perhaps another product where we've seen quite challenging pricing conditions has been STELARA and also Pyzchiva. What is your expectation in terms of the potential volume uplift we could see this year from the changing -- changes in formularies?

So we always said that in Pyzchiva, our strategy was mainly private table, and we secured 2 private label in the market. You need to remember that here we are partnered. This is a product that is not fully owned by Sandoz. We are partnered with Samsung. So if you look at the U.S., we don't even book it as sales. So different dynamics than we saw in adalimumab, but ESI announced that they will displace STELARA in January, and we have the private label [indiscernible], so we are anticipating to see uptick in volumes.

And perhaps another product where we haven't quite seen the same levels of pricing competition has been in the launch of Wyost and Jubbonti. Maybe if you could give some color on how the launch is going in that market? And also just a bit of context on why in the medical benefit space, we tend to see less pressure in the U.S. than the pharmacy benefit space?

That could take time. I would say summarizing really pharmacy benefit and medical benefit product. It's completely 2 different markets in the U.S. And if we need to think about it in the pharmacy benefit most of the control is owned by the PBM where in the medical benefit you have some payer access, but then you have also a lot of pull-through with the physicians. If you think of our launch of denosumab, we are super proud. We're the first company to get approval. We are the first company to have a HCPCS code, and now we are the only one who's established ASP. And we are doing very well in both the osteoporosis kind of our product is Jubbonti, biosimilar to Prolia and in the oncology space with Wyost. We always anticipated that the branded company will defend and they do, but we strongly believe that we are uniquely positioned with our experience.

We were the first company ever to launch biosimilars in the U.S. in the oncology space. And we have a lot of, as Richard said, a lot of experience in immunology. So we're really leveraging those experience in both areas.

Perhaps 1 more on U.S. generics for you as well. We've seen some quite challenging pricing conditions in U.S. generics over the past few years. Are you seeing any signs of this changing or how conversations going on that within the industry to improve this outlook?

We do see very low prices in the U.S. for generics. I would say you kind of see stabilization in the last few years, but at a very low price. I think, as Richard mentioned, many times before, this administration is doing a lot really look at sustainability in generics and what could be done. I think 1 of the elements that we are super proud of as an industry is our ability to distinguish in the tariff conversation between branded industry and our patent industry. If the prices will go up, I hope, but hope is not a strategy, but we are well positioned to capture the market. For now, we're really launching generics in the U.S. where we can leverage them outside the U.S. and not counting only in the U.S. as the main market for generics.

And a product-specific one in that context, just paclitaxel, you've seen a lot of success since you introduced it, I think, at the end of 2024. How is the outlook developing for that in '26? Are there more competitors on the horizon? And could you -- what are you taking from your learnings to replicate the success of that particular launch?

So we had great success, 40% share of the market. Super proud of what we were able to achieve. We did see 2 competitors getting now to the market. So as always in generic, you will see kind of pricing pressure and then overall sales go down. I think what we're very proud of is that we were able to replenish our pipeline. So now we have more assets coming and we'll have enough launches to offset this decline. But again, we will remain a very strong player in the U.S.

Thank you. Do we have any other questions in the room? If not, maybe 1 on manufacturing. So you recently had your Just-Evotec acquisition. You also have your -- announced expansions in Slovenia. How far does this go towards your production capacity necessary for delivering on the pipeline that you've set out?

A long way. In the short -- I mean, look we're super excited with the Just acquisition that gives us a transformative technology, which if we want, we can expand both into Toulouse or put a J.POD in Slovenia or anywhere else, we would choose. So that clearly is an opportunity. I was in Slovenia just before Christmas seeing all of the sites there, I mean, it's mindblowing seeing that facility, the scale of that facility, to do fed-batch and then obviously fill-finish. So I think certainly, for the plans that we have, we have more than that. We've also tried to future-proof it. So a lot of the sites we own the peripheral land, we've overscaled the building, so we can add more lines relatively quickly. So we've really tried to think about that. And clearly, look, at the moment, we have partnerships with our ex-parent. Clearly, we could continue to negotiate and use that. But the stronger negotiating position using our own network gives us optionality as well. So I think, certainly, from what we see, we're extremely well positioned.

Maybe a question for Remco about how should we think about margin development as these additional facilities come online over the next few years?

So we have given our guidance for '28 between 24% and 26%. So we expect for the coming years to continue. These new sites will be only up and running as of '29, end of '28, but of course, you can imagine that cost prices from our own side are lower than we would pay to our ex-parent. Of course, they need to make a little bit of money as well. But of course, you have the dynamic what will the price erosion do over that time. But certainly, we are in a very good position also after '28.

Okay. And maybe just a final one for you, Richard. Over the course of the next year, what are the growth drivers that you think are key for Sandoz? And any particular catalyst that we should watch out for?

I mean, look, What we're in -- it's a relatively unique position. The bulk of the growth drivers as we enter '26 are already filed and launched. So clearly, denosumab in the U.S., aflibercept in the U.S. later in the year and in Europe, now Tyruko in the U.S. So all of the main growth drivers, there's a number of smaller molecules. We don't list them all, both in the U.S. and Europe that we'll continue to launch. And then as we get towards at some point '26 and '27, and then we'll start seeing the GLPs coming in. So I think everything is in place for us to deliver. My focus and the team's focus this year is execution. I think we built over the last 2.5 years, a really strong reputation in the industry. We have shifted the sentiment, I think, on this industry generally to the benefit of ourselves and our competitors. I think we've become the voice of the industry, help shape policy. Keren and the team have done a phenomenal job in the U.S. And I'm keen that we continue to hold originators to account and bring products to market for patients around the world. So I'm really excited and looking forward to what we're going to do this year.

Great. Thanks very much.

Thank you.

Good morning, ladies and gentlemen, and welcome to the Sandoz call today. I will now pass on to Craig Marks, Head of Investor Relations, for his opening remarks.

Thank you, and welcome to the Sandoz 9 Months 2025 Update Call, which focuses on sales. We plan to publish our full financial results for the year on the 25th of February. Earlier today, we published a press release and an accompanying presentation on our website, which will follow on today's call. You can find these documents at sandoz.com/investors.

Joining me on today's call are Richard Saynor, Chief Executive Officer; and Remco Steenbergen, Chief Financial Officer.

Please turn to Slide 2. Our sales announcement presentation and discussion include forward-looking statements. Please see our disclaimer here.

Please turn to Slide 3. Richard will begin today's presentation with a summary of the highlights from the first 9 months of the year, followed by an update on the business. Remco will cover the sales performance as well as full year guidance. Following the wrap-up of the presentation, we'll be happy to take your questions.

With that, I will now hand over to Richard. Please turn to Slide 4.

Thank you, Craig, and hello, everyone. It is a pleasure to welcome you all to today's call, and I'm looking forward to taking you through another strong Sandoz performance.

Please now turn to Slide 5. I am pleased that the momentum in our business has continued. We are making excellent progress on our biosimilar launches and the pipeline as well as delivering strong ongoing commercial execution. In the first 9 months, we achieved 5% net sales growth at constant currencies, though the underlying result amounted to 6%. In quarter 3 alone, growth further accelerated to 6% at constant currencies and 7% on an underlying basis, with biosimilars growing by 13% at constant currencies. We also saw good performance across all geographies, including a significantly improved result in North America.

In line with our commitments, we successfully introduced several key medicines this year, including Pyzchiva, Wyost, Jubbonti in the U.S. Looking ahead, we are preparing for additional launches, notably Wyost, Jubbonti and Afqlir in Europe as well as Tyruko in the U.S. These launches will further strengthen our commercial footprint and long-term growth potential. This momentum supports our confidence in upgrading our full year core EBITDA margin guidance today. We continue to expect net sales to grow at constant currencies by mid-single-digit percentages and while we anticipate that the core EBITDA margin will be in the range of 21% to 22%.

Now let's move to more details of the business performance, starting with Slide 6. This was our 16th straight quarter of growth, primarily driven by biosimilars that represented a record 31% of net sales. The effect of this positive mix of sales as well as the momentum in the business was a key driver in the decision to upgrade our core EBITDA margin guidance today.

Please turn to Slide 7. Before we deep dive into biosimilars, let's take a look at generics. In the first 9 months of the year, we've delivered a full launch program with 115 medicines launched and around 280 total launches around global markets. Notable launches include Lisdex and iron sucrose in the U.S. Our pipeline is strong with over 400 assets currently in development, targeting around $220 billion in originator sales, covering approximately 65% of LOE opportunities.

It is worth noting that our generics growth of 2% this year has been materially impacted by a shortfall in our penicillin B2B business. This began with the imposition of U.S. tariffs that led to reduced associated exports from China to the U.S. In turn, this then prompted Chinese suppliers to very significantly lower prices for key penicillin APIs, including some that we sell to other businesses.

As the last remaining fully vertically integrated producer in Europe, we are pleased to see a growing recognition by policymakers for the need for sustainable European supply of penicillins, but more action is required. And we call on the European Union and national governments to implement measures that reduce geopolitical exposure and safeguard the long-term sustainability of European-produced penicillins.

Please turn to Slide 8. Turning now to biosimilars. We achieved half of our 2025 biosimilar launch milestones so far this year, and we are fully on track to deliver the balance by the end of the year. In the first half, we launched Pyzchiva in the U.S., followed by the successful rollout of the first ustekinumab biosimilar auto-injector in Europe. Our quarter 2 launch of Wyost and Jubbonti in the U.S. have also gone extremely well. These were the first and only interchangeable denosumab biosimilars in the U.S., providing new affordable treatment options for over 10 million patients. I'm looking forward to the remaining biosimilar launches before the end of the year, namely Wyost, Jubbonti and Afqlir in Europe as well as Tyruko in the U.S.

Please turn to Slide 9. Biosimilars continue to be a powerful growth engine for Sandoz, delivering constant double-digit performances and enhancing our margin. Our biosimilar portfolio is not only growing, but evolving through strategic launches, geographic expansion and innovation.

Let me now dive into the performance of our biosimilars, starting with Pyzchiva on Slide 10. It is encouraging to see the overall biosimilar ustekinumab participation in Europe increasing, outpacing the adoption rates we saw with adalimumab. This signals a growing confidence in biosimilars among health care providers and payers. We've seen strong momentum in Europe, where Pyzchiva has quickly gained traction following its launch last year. This has been supported earlier this year by the successful European launch of the first biosimilar ustekinumab auto-injector. Our European market share has been broadly stable in a market experiencing strong growth. Finally, we're planning for additional Pyzchiva launches next year, including entry into exciting markets like Brazil.

Please now turn to Slide 11. Switching to Hyrimoz, now our largest selling medicine. It continues to demonstrate strong and consistent performance globally with stable market share amid rising biosimilar participation. As shown in the chart, our global market share has been maintained. And at the same time, biosimilar participation has steadily increased, climbing from 55% to around 65% in 18 months, a clear indication of growing acceptance and adoption.

In Europe, Hyrimoz remains a strong foothold, while international sales growth has been exceptional this year. In the U.S., we lead the market through a dual strategy, namely private label and own brand. Together, they offer the broadest payer coverage, enabling us to capture originator share and reinforce our leadership position. This performance reflects the strength of our portfolio, the effectiveness of our commercial strategy and our commitment to improving access to high-quality biosimilars worldwide.

Now please turn to Slide 12. Let me now move to Tyruko, our biosimilar natalizumab, which continues to deliver encouraging progress in Europe. We are proud to be the first and only biosimilar approved in Europe for relapsing, remitting multiple sclerosis, a major step forward in expanding treatment options for patients. Looking ahead, we have additional launches planned in the U.S. and across various European and international markets, reinforcing our commitment to leadership in neuroimmunology and biosimilars.

Please turn to Slide 13. Omnitrope continues to deliver strong performance as the market-leading biosimilar for growth hormone-related disorders with a global market share reaching 37%. This steady upward trajectory from 24% in 2022 reflects our ability to consistently grow share in a competitive landscape, supported by good sales growth and rapidly expanding markets. The international region has been a key driver of our performance this year, even as we navigate increasing levels of competitor activity in the region. Our commercial execution, trusted brand and global reach position Omnitrope to continue being a leader in this space.

Please turn to Slide 14. Let's now look at the recent U.S. launch of Wyost and Jubbonti, which marked a major milestone in our biosimilar strategy with both medicines achieving first-to-market status and demonstrating strong early momentum. We rapidly established commercial footprint covering over 80% of denosumab volumes, ensuring broad access across key provider networks. We led with an interchangeable product exclusively and in addition, Q-code exclusivity drove an important early advantage in market positioning. We're seeing early wins with major players and recognition by the NCCN as a substitute for reference denosumab further validates our clinical and commercial approach. This launch not only reinforces our leadership in biosimilars, but also sets the stage for continued growth and patient impact in osteoporosis and the oncology space.

Now please turn to Slide 15. Sandoz continues to advance one of the industry's most comprehensive biosimilar pipeline with 27 assets spanning all stages of development. We have 5 near-term launches and assets in clinical development, 5 assets in regulatory review and have 9 additional assets in early development, targeting $50 billion of originator sales.

Now let's turn to Slide 16. Finally, as we continue to lead in biosimilars, regulatory streamline is emerging as a powerful enabler of growth and innovation with 27 assets currently in development. Our pipeline targets approximately $200 billion in originator sales, covering 64% of expected loss of exclusivity events over the next decade. Recent regulatory shifts are helping reduce complexity and cost across clinical development, ultimately accelerating access for patients and easing pressure on health care systems. These changes not only strengthen our pipeline, but also open up additional opportunities to expand our leadership position in biosimilars. By embracing regulatory innovation, we are well positioned to deliver more medicines more effectively to more patients worldwide.

And with that, I'll hand over to Remco. Please turn to Slide 17.

Thank you, Richard, and hello, everyone. Please move to Slide 18. I'm very pleased to expand on our sales performance, which reflected strong momentum and execution across our business. Our mid-single-digit growth in the first 9 months has comprised progressively improving results as we have moved through the year, with biosimilars again growing by a double-digit percentage.

At the regional level, the launches of Tyruko in 2023 and Pyzchiva in 2024 are continuing to drive European growth, while the international results reflected the ongoing success of Omnitrope and Hyrimoz. In North America, the success of the rollouts of Wyost and Jubbonti has been accompanied by the standout launch of paclitaxel at the end of last year. Finally, I'm pleased that we have upgraded our full year core EBITDA margin guidance today, a direct result of the favorable mix of sales driven by the contribution of biosimilars.

Please turn to Slide 19. I'm breaking down our sales performance this year. You can see that volumes contributed 8 percentage points to growth, while price erosion returned to a more familiar 3 percentage points.

Let's now dive into the business and regional mix on Slide 20. Biosimilars increased as a proportion of total net sales to 29% this year compared to 27% in the first 9 months of 2024. When looking at the Q3 performance, biosimilars comprised a record 31% of net sales, driving the upgrade to our core EBITDA margin guidance. Our regional sales mix has remained broadly unchanged with over half of our business in Europe, where we hold a strong leading position. International represents a quarter of net sales with 22% coming from North America.

Please turn to Slide 21. Biosimilars delivered strong underlying growth of 17% in both Q3 and in the year-to-date with launches in the last 12 months having a key impact. Generic sales increased by 3% in Q3 and by 2% in the first 9 months despite the effect of the B2B performance that Richard mentioned earlier. The overall generics result primarily reflected the impact of launches in 2024.

Now let's have a look at the performance of our 3 regions on Slide 22. So far this year, our geographic performance has been nicely balanced with the regions having delivered similar levels of underlying growth. European sales grew by 6% in both Q3 and in the first 9 months of the year. Strong growth in biosimilars continued, led by demand by Binocrit and the contribution from the launches of Pyzchiva and Tyruko. International sales grew by 4% in the quarter and by 6% for the first 9 months due to strong contributions from Hyrimoz and Omnitrope. North America sales grew by an underlying 7% in the first 9 months and by a full 12% in Q3 with the ongoing benefit of the 2024 paclitaxel launch accompanied by this year's Lisdex, iron sucrose and Wyost and Jubbonti rollouts.

Please turn to Slide 23. Now let's look at our guidance for the year. After achieving a mid-single-digit growth in net sales in the first 9 months, we expect a similar result over the full year. The higher mix of sales in favor of biosimilars means that we now expect a 21% to 22% core EBITDA margin this year. This represents an upgrade from the prior guidance.

Outside of guidance, our foreign exchange expectations are unchanged for 2025. We anticipate that if the latest spot rates were to prevail for the rest of the year, we would continue to anticipate 2 percentage points tailwind to net sales over the full year. The core EBITDA margin would continue to face a limited adverse impact of less than 50 basis points, which will be in line with what we had in 2024. If you look at currency movements based on average rates in the first 9 months, we would anticipate an immaterial impact on net sales and on the core EBITDA margin.

And with this, I hand back to Richard. Please turn to Slide 24.

Thank you so much, Remco. I'd now like to take a moment to wrap up the presentation on Slide 25. The key takeaway from today's update is another strong performance supported by excellent progress in our biosimilar platform. Our performance is exactly in line with our plans and strategic road map, including the launch program and the pipeline. Looking ahead to the rest of the year, we're preparing for several exciting launches that will support our strong momentum and keep us on track to meet our ambitious midterm outlook.

This is more than just performance. It's progress with purpose, positioning us well for sustained and attractive growth. I'm grateful to my colleagues around the world for delivering another excellent quarter, and I thank you all for your continued support and confidence in Sandoz.

With this, please turn to Slide 26, and I will ask the operator to open the lines for Q&A. Thank you.

[Operator Instructions] Our first question comes from Harry Sephton with UBS.

So the first one, following the HHS briefing yesterday, there's clearly an intent to meaningfully increase competition in the U.S. biosimilar market. So Richard, I just wanted to get your high-level thoughts on whether you see this as an initial step to potentially commoditize the U.S. biosimilar market? You talked previously about how the U.S. small molecule generics market isn't an attractive market for Sandoz. Just want to get your high-level thoughts on what the implications from this could mean?

And then my second question, just on the 2026 launches. Can you confirm your expected timing for the sema Canada launch and whether you're expecting that you'll be in the first wave of generic launches there? And then also just on the relaunched the relaunch of Cimerli, what your expectations are there in terms of timing and also the market environment, given that it will be quite different now that there is an aflibercept biosimilar available as well?

Thank you very much for your questions, Harry. Look, I'm super pleased with the HHS now. We've been working very closely with the AAM and Keren, our U.S. President, to position this. So I think this is a really good move. I'm very excited about that. I also encouraged to see similar moves with other regulators, particularly Canada and Europe.

Look, to be brutally honest, if you looked at the number of biosimilars for things like adalimumab, denosumab, I would argue that a lot of the commoditization happens already. So I don't think that it will fundamentally change the framework. This is still an expensive hobby. It's still probably $80 million to $100 million. You still need manufacturing. We always look at this as a global market, not just a U.S. market. You still have the patent challenges. This is just a step in the right direction.

If you look, there's something like 150 biologics that either come off patent or will come off patent in the next 10 years. That is a significant opportunity. And clearly, the vast majority of those, we don't see anybody developing a biosimilar. So this move means that we can expand our pipeline over the next few years. We can bring more products to patients. And I'm really, really excited. And then if you think even further out, you then get into ADCs, bispecifics and other more complex biologic products. So this is a huge opportunity, and I'm really thrilled about this moving in this direction.

On sema, I've got nothing really more to add than from previous calls. Clearly, our aspiration will be to launch amongst the first wave. As I said, this was outside any guidance we've given for the business. We see this very much as an experiment. I have no idea how this market is going to evolve, how this product will evolve. It's a unique set of circumstances. And it's also noting that nobody has yet has got an approval. So it's way too early to give any more details in terms of timing. But clearly, we would aspire to be amongst the first wave.

And similarly, again, we would look to return that to the market in Q1. I've also given the guidance that our intention to be settled on the aflibercept launch. So again, we'd look to launch that in next year. I think the combination of the 2. And so we're pleased that we bring that back for patients sometime in Q1 and then launch aflibercept later in 2026.

Our next question comes from Florent Cespedes with Bernstein.

Florent Cespedes from Bernstein. A quick question on 2026. Could you share with us which are the next biosimilar products that you expect to launch on the different markets? Some color on this would be great.

And my second question, on the penicillin situation, what is the next step? What do you anticipate in terms of decision from the European authorities and some color on the time frame?

Sure. Well, I got a lot of the launches that will show material growth in '26 are being launched as we speak, both in Europe. Clearly, we're excited to be launching denosumab for both the major indications in Europe. We're seeing great traction in the U.S., which will clearly flow into next year. We're looking to launch natalizumab in the final quarter, Tyruko this year, which again will flow very strongly and also bring that to a number of the European market -- additional European markets.

We're about to launch aflibercept across many of the European markets in the final quarter. And again, launching aflibercept and reintroducing Cimerli in 2026 as well as numerous other launches in many of our international markets. And also assuming that the base business will continue to grow as we're seeing strong growth in the adalimumab market globally and also the Omnitrope market globally. So I think a mixture. But clearly, everything now is in play, everything is approved, and I think we're well positioned to set ourselves up for 2026.

Penicillin, I mean, partly, look, it had an impact. I wanted to use this platform to really highlight the critical nature of this product. We're the only vertical manufacturer of penicillins left in the Western world. You've heard my frustration in the past that we sell this product more cheaply than a packet of M&Ms. We're working with regulators and governments, both in the U.S. and in Europe. We recently got the [ Alpha ] memorandum, which was requesting European governments acquire at least 23% of all their antibiotics from vertical suppliers.

Our challenge now is we turn that into law, and we execute that. These are critical assets, and it's important that governments understand the role that they play and move that forward. I'm pleased about the memorandum, but now we need to turn that into action. And I wanted to use this platform to highlight the importance of that. It's not material to the overall business. It had an impact in quarter 3, but I think it was important that I use this opportunity to talk about it.

Our next question comes from Simon Baker with Rothschild & Co.

Just continuing on the HHS announcement, a couple of things, if I may. Firstly, Richard, with that lower development cost level that these regulations envisage, what could that do to that $200 billion pipeline size that you have? And on this point about commoditization, I mean, if this were a commoditized market, then each of you would have a 10% market share of adalimumab. And that's obviously not the case. Your share is way, way above that. So I think -- could you just give us your thoughts on the sustainability of -- and also just remind us of your advantages within the biosimilars market in terms of commercial skills and the sustainability of that?

And then just moving on to a couple of product questions. I wonder if you could give us a bit more color on Tyruko penetration in the EU. It looks like it's kind of going sideways at the moment. Is that a function of where it's launched? And will that change as more markets come on stream? Or are there any other dynamics there? And for Pyzchiva, you pointed out that the rate of biosimilar participation is faster than HUMIRA. I just wonder if you could remind us by how much, just to sort of quantify that impact.

Okay. Well, thank you, Simon, for really great questions. Yes, I mean, I think the size of the opportunity is still about $200 billion in total absolute. It doesn't really change that. Again, I think let's take a step back. We select our pipeline from a European lens, and we see the U.S. as an opportunity. I know we tend to over-index the U.S. a little bit because of the visibility of the data. So we would never develop a biologic specifically for the U.S., we would develop it for Europe and then clearly file it in the U.S. Otherwise, if you look at the situation with Enbrel, we wouldn't have a business because somebody thinks that a 30-year patent life is somehow acceptable. So you still have all of those challenges.

So I think, first and foremost, it's focusing on that. Yes, I think it reduces potentially the cost of development, but there are many other components. We talk about legal. You talk about the commercialization. I mean I'm delighted with our denosumab performance. We're by far the strongest performer of denosumab in the market. We launched first. We had the only Q code. We really knew how to work and position this product. Similarly with adalimumab, we're by far the largest player with by far the best coverage in that market. So I think our commercial capabilities, coupled with our clinical, legal and manufacturing platforms.

And then similarly, we see these as global assets. We don't see this as U.S. assets. We're the #1 biosimilar player in Europe. We're very strong. We're seeing strong growth in international. So all of those things. And it's a little bit when you look back, I have a lot of respect for some of the Indian players in small molecule generics. Yet the reality is they're nowhere in Europe because they struggle to build scale. And I think you see a very similar pattern in biosimilars. So I think we're extremely well positioned. We've launched more biosimilars than anybody else. We have a stronger pipeline than anybody else. And clearly, we would see this as an opportunity to further invest and expand and really leverage that strength.

Tyruko, yes, I mean, we would look to see growth as we launch this product. A lot of this product is tendered. So you tend to get a rapid conversion and then it tends to stabilize. We will see growth as we both introduce that into North America, and we continue to launch it in other European and international markets as we go into 2026. Pyzchiva, yes, I think it's more of a reflection of clinicians and payers now rapidly accepting biosimilars. I think the days of debate around the acceptability of biosimilars really has gone. And clearly, we see a nice performance with Pyzchiva, and now in a nice position that we're the only company launching an auto-injector across Europe. So I think, again, well positioned to deliver growth as we go into 2026. So pleased with where we are. And as I said, we've been lobbying this from HHS and similar from the European regulators for a while. So I think common sense has prevailed.

If I may add to what Richard has said and particularly on the HHS, I think when we take a step back and we look at the size of the pie, indeed, the $200 billion on biologics and generics is unchanged. But what it, of course, does is that a lot of the biological medication for which no biosimilar has been developed or will be developed because the size is too small, become suddenly accessible. So we think that in the large -- with the large molecule also from a competitive perspective, not much changed. And as we said, we are very well positioned, but we can grab a larger part of that pie. And the competitive barrier is still very high. It takes a long time. So we look very, very enthusiastically because if you then fast forward 10 years from now and you look what part of the pie we can go after, it's incredible.

The second part is that the pie once a biosimilar is in the market, has often grown because a lot of medication cannot be used because it's too expensive. When we come in a market, that pie grows. So if you're coming more, we can go after more molecules and the market will grow. It's a gigantic growth opportunity and to put so much effort behind it. I think the additional point versus generics, generics is still with APIs coming from China. With biosimilars, it's a vertically integrated manufacturing process. It's much more difficult. We can produce in Europe. Scale is an incredible benefit, and we have the scale on the commercial, but we also have that on the development and manufacturing. And if I listen to your questions, this part, I just wanted to add because that's why we are so excited, and we think it's just an incredible opportunity.

Our next question comes from Charlie Haywood at BofA.

Charlie Haywood with Bank of America. I have 2, please, for Remco. So the first one, on your initial 24% to 26% midterm margin outlook, you've obviously added 1 biosimilar, 2 private label biosimilar contracts and your biosimilars mix has already reached your 2028 target of 30%, which drove -- partly drove your margin upgrade today. So given that momentum, how are you feeling about this midterm margin target? And is it fair to assume you're trending towards the upper half?

And then second one, just on 2026. I think the potential upside from the biosimilar launches, sema, ustekinumab private label and some early relaunch into '26 are well known. But I wanted to ask if there are any headwinds or potential moving parts outside of that, that you would flag into next year? Or is this really a very clean year on paper?

Charlie, thank you for that question. At this point in time, not surprised, I would say that the midterm guidance stays, right? So we expect a mid-single-digit growth in between '24 to '26. And for '26 versus this year, we -- you can expect a continual progressive growth in direction also for the margin. Of course, we are looking also the prior discussions which were asked, right, with the enormous amount of opportunities which are there over the coming years, we, of course, also have a look, how can we capitalize on this.

If you have to think about next year's and the one-offs depending on how Just-Evotec develops, if that would come to a conclusion, we will have some additional costs next year related to Just-Evotec. You have to take that in consideration because that was not there before.

But we are very happy because on balance, we progressively want to move on. And we want to find the right balance between the short and the long term. As I said before, there's so much opportunity and so much more we can grasp and we find the right balance. And we want this company in 10 years from now to be even more formidable than it is now. And that's what we're working on in the short and the long term. And yes, for the moment, the midterm guidance stands, right, but with lots of opportunities.

Our next question comes from Thibault Boutherin.

Just a question on Eylea in Europe and the launch in Q4. Eight biosimilars approved and ready to launch, it looks very competitive. Bayer is also saying they seem very confident they can hold off to some extent, biosimilars with the switch to high dose. So just if you could comment on your expectations here and how you differentiate in that context?

Second question, just on biosimilar HUMIRA. Is it fair to expect another price cut in private label next year? And could it be the same extent as this year? Just if you could comment on the pricing here? And then just a clarification or sort of on Tysabri U.S., you seem quite confident. I think it was not the case to that extent before. So if you could just help us understand the degree of confidence for the approval by the end of the year would be helpful.

Okay. Thank you, Thibault. So Eylea, yes, look, we're very confident of the launch. Look, we're used to competition. Denosumab 8 competitors in the U.S. In Europe, we used to have a significant number of competitors. If you look at ustekinumab, I think it's 11 or 12, and we still took a leadership position. Every originator always says that they're in a unique position to maintain share. Let's see. I think we have an amazing commercial platform and some great colleagues in Europe who I know will execute, and I've seen some of the plans, and I'm very excited about them. So I think we're well positioned to capture a significant share of the market given the strength that we have and the footprint that we have.

I think your question on HUMIRA, yes, clearly, look, it's a competitive market. We've always been extremely open about that. And I would anticipate that we -- as we continue to maintain our relationship as an own label or an own label product that clearly pricing would come down next year as we continue to renew our contracts with that provider. So I think probably a similar range to this year. And Tysabri, Tyruko, yes, very confident that we will launch. We've aligned in terms of the JCV assay. And now we're just positioning for the prelaunch phase. And then we -- as again, we're now committed to launch this specifically this quarter.

Our next question comes from Sidhartha Modi at Barclays.

The first one is on your Jubbonti. Like you have had a very, very good launch in the U.S. and obviously, you're on track launching in the Europe. But just wanted to know like have you kind of signed any long-term contracts in Europe and so that you can lock in low single-digit selling price declines or the pricing would still remain under pressure every cycle?

The second question is slightly different on competition. Like obviously, on Monday, we saw Cigna releasing a press release and they have spoken about rebate-free PBMs and full rebates to patients being passed on to the patients at the time of drug dispensing and also linking patient cost to lowest available amongst co-pay, DTC and PBM negotiated prices. I just wanted to understand the implication of this change and probably other PBMs would follow suit. So what are the changes that you kind of anticipate from this change? And does this mean anything for volume growth and margins?

So thank you very much for 2 good questions, Sidhartha. Look, Jubbonti and Wyost, I'm pretty delighted with the performance we saw in the U.S., really running really well on to our expectations, maybe a little bit ahead. And again, Europe, it's really market by market. Again, Europe for us is nearly 40 markets. Each one works in a different way, whether it's physician-led and a branded market or tender-driven. But I think, again, we're well positioned to leverage this both in oncology. You've got to remember that we're the largest oncology company in Europe. And I'm also excited in the long term to open up for this product for patients, particularly female patients for osteoporosis. This is an excellent drug, but I think it was prohibitively expensive again, looking to open up that access over the coming years with this. So I think it's got quite a lot of long-term growth in it as well, particularly for the osteoporosis indication.

Your question about Cigna, it's a [ fascinating ] I think somebody have to ask direct to Cigna. When you dig into the details, it only affects about 2 million patients. So it's a tiny proportion of patients. Now I think it's a positive move. I think the more clarity that people see in terms of the level of rebating around the market, I think, is a positive sign. So I think directionally positive. In the short term, I think it's immaterial. And certainly, in terms of the number of patients being offered this, it's tiny. I think it's only about 2 million patients in total. So it's a very small step. I'm encouraged about the direction, and I'm always have been encouraged to see more transparency. I don't think it will have any material change to our business, certainly in the short to midterm.

But again, what you are seeing is some nice reforms starting to come through. We talked about HHS. You're starting to see price transparency. I think we're being listened to about with tariffs. So I'm actually more optimistic about the mid- to long term. I think we need to see more on patent reform. And again, those things are being discussed. And it was never going to be one thing that fundamentally changes the U.S. market. It's several bits, but I'm encouraged that this administration does seem to be starting to address them.

Our next question comes from Beatrice Fairbairn at Berenberg.

Just on your H1 '25 results presentation, I noticed that there was a target for about 180 new generics launches in full year '25. I suppose could you possibly elaborate on where you are tracking relative to that and kind of what your expectations are for the full year?

Yes, I guess -- sorry, well on track. I think I said in my presentation, I think we launched about 115 of those. It nets out to about 280 absolute launches globally with the vast majority. We don't break them out normally because it's sort of relatively modest launches. I mean there were a couple of standout ones in the U.S., particularly iron sucrose and Lisdex which are having a nice impact, and we're very pleased.

But again, I think -- but it also -- we spent a lot of time talking about biologics. When you look at the forward landscape, just about half of the LOE landscape, about $200-odd billion is technically small molecules already. It does include GLP-1s. But there's still a significant opportunity. And so we would continue to want to deliver on that space as well as growing and expanding the biologics opportunity that we see.

Our next question comes from Sophia Graeff Buhl Nielsen at JPMorgan.

Firstly, just how are you thinking about the contribution of additional biosimilar launches to the top line in Q4? Should we anticipate another sequential step-up in local currency growth? And if so, how are you thinking about the growth profile as we head into next year?

And then just on denosumab in the U.S., you've mentioned you're delighted with the initial launch. Could you give any more detail on how market share is developing there? What do you expect as we see additional new entrants? And you mentioned an addressable patient population of around 10 million. How much of the volume opportunity do you see is coming from switches from the originator relative to growth expansion in the market from biosimilar entry?

Okay. I think Remco, do you want to take the first one?

Yes. Thank you, Sophia. Overall, we expect Q4 to be in a similar place as Q3 is. If you look at the consensus, correct, which is around 5% for the full year, the consensus sits around 7% for Q4. We did 6% in Q3. So that's something like that you have to take into account, correctly in line with our guidance.

The second question, I'll give it to Richard.

Yes. Thank you. So denosumab, yes, I think as I said, I'm delighted with the launch. And I think clearly, launching with a Q code and launching first to market allowed us to work very closely with payers and providers. And we've really seen a strong uptake. Actually, particularly perhaps a little more than we expected in the osteoporosis side of the equation, which actually stands well for the long-term use of this product. And again, I think we're acquiring both new patients, but also switching patients as well. So very, very pleased with the uptake.

And also, look, let's also not forget, we launched it in Canada. And there, we took a market share of 65% at launch. So I think really strong execution, well-accepted product and certainly also excited that we're launching it in Europe. So I think some nice growth there that we can see and also as we expand the use, as I said earlier, particularly in osteoporosis.

Our next question comes from Joris Zimmermann at Octavian.

This is Joris from Octavian in Switzerland. I have 2 related to the midterm and also the longer-term opportunities in biosimilars. So first, on the midterm, you mentioned that you have 5 assets in regulatory review currently. So could you maybe give us a bit more detail what about the time lines you see here and how that could shape the midterm biosimilars opportunity for Sandoz?

And then related to the HHS press release and the whole discussion ongoing about access for biosimilars in the U.S. Is there specific like indications or biologics that you currently haven't looked at and that you would say are white spots in the Sandoz pipeline that you might take a look again now?

Thank you so much, Joris. I'll answer your second question first, and then I'll come to you. I mean, yes, but I can't really disclose it because I don't want to make my life any harder than it already is with the competition. I think what Remco highlighted is there's a lot of assets maybe in the $1 billion to $2 billion range that economically people deprioritize given the, I guess, the relatively newness of the biosimilar market. I'm super excited that we can really target those, particularly in immunology and oncology because we have a strong platform. We can launch in that space. It's highly accretive. And in many ways, I'd much rather have 10, $1 billion products than 1, $10 billion asset. So I think that's our opportunity.

Also looking back, there's something like 40 biologics that no one -- that have come off patent that no one has yet ever developed a biosimilar. So there is way more opportunity than there is financial firepower for any company to develop. So I think we're almost a kid in the candy store in terms of where do we want to go and how do we extract that. So super, super excited about the direction of trial.

In terms of short-term assets, I mean, clearly, in the U.S., we're talking about aflibercept, a little bit further out in '29, Ocrevus, ocrelizumab, you've got pembrolizumab, nivolumumab and ipilimumab, all sort of coming in sort of the latter part of this decade. And clearly, on top of that, we're constantly looking at potential BD and strategic partners. So we would -- I would assume, don't be too surprised if we then come back with other products that we would launch in that space as well.

So -- but also, you got to remember that '27, '28 is quite a low period in terms of LOE -- so this isn't necessarily a function of Sandoz. This is a function of the market that we don't see many big LOEs coming in that period. So -- but excited about our pipeline. Also we're really excited as we look to expand and leverage that further.

Our next question comes from Natalia Webster with RBC.

Natalia, if you're there, we cannot hear you.

Can you hear me okay now?

Yes, we can.

Perfect. Sorry about that. Firstly, just on Just-Evotec on Slide 34, you lay out the biosimilars under development with them. Are you able to comment a bit more on what the improved yields and cost savings from the continuous manufacturing could mean for margins over the longer term, sort of appreciating some nearer-term costs there?

And then secondly, on the Slovenia expansion, are you able to provide a bit more color on how that's going and also around the phasing of anticipated investment that you've announced there?

Perhaps if I take Evotec, do you want to take Slovenia, Remco?

Yes.

Okay. So I mean, look, we talked about -- I mean, we were always excited about this as a technology. We've never been specific about the potential cost effectiveness. But certainly, we see a significant opportunity in terms of speed of development, but then also using the J.POD as a manufacturing platform. Clearly, by bringing it in-house means that it also further improves the margins because clearly, the royalty mixture and everything else that's associated with that and our ability to use and expand the technology for further assets without additional payments also makes it highly attractive as a platform.

And then we also then have optionality both to leverage the facility in Toulouse, but then if we so wish, put that technology into other locations around the world. So I think it gives us a lot more flexibility. I'm super excited about the technology. And hopefully, we can give you an update in the not-too-distant future in terms of what our position is there.

Slovenia?

Yes. Slovenia, very exciting for us. As you know, overall, we have 3 projects ongoing in Slovenia, one for development, one for the API and one for the fill/finish. All 3 are clearly on track versus the progress. We're also very happy with all the capabilities in Slovenia. As many of you know, from the prior, say, owner of us, there's a lot of activities in Slovenia. So we have been able to get a very capable group of people in Slovenia to handle activities. So everything is on track. We still expect as of '28 to start with the production, so fully up to speed.

And clearly, there are clearly also benefits, correct, because it will be fully integrated. Also from cost, it will be state-of-the-art, correct, hopefully, on a later point in time, as Richard said before, the Just-Evotec manufacturing abilities can be taken on board. So we're very, very excited, particularly then looking in the years 2030, 2035 with everything which comes then online that we can, with our scale, very cost efficiently produce the biosimilars going forward. And in that sense, have a very competitive base. So all on track. And yes, more to come in the coming years.

Our final question comes from Urban Fritsche at ZKB.

This is Urban Fritsche from ZKB. Three questions, please. First on HHS, we talked quite a bit about what you might expect. But still, I mean, you know what it takes to develop biosimilars. So would you expect that the existing players predominantly will expand their pipeline? Or would you also expect that quite a number of completely new players, specifically from Asia would also enter the market now?

Then second question, also a bit more on the market. We talked a bit about the growth expansion of market. So the addressable penetration or the penetration for addressable population. So can you put some numbers behind that, maybe on historic experience, maybe for biosimilar HUMIRA or Omnitrope, which has been growing for years now? That would be question number two. And question number three, could you talk a bit about the pricing dynamics in the U.S. for generics and then also for biosimilars?

Thank you, Urban. And three great questions to finish on. I mean, look, who knows what our competitors will do in a sense, that's a question for them, not so much for us. We're clear about we see this as a great opportunity. Again, this is a world market. It's not just the U.S. So again, I'd take a step back. We see our pipeline very euro-centric. Of course, we want to launch and bring those products to the market. Clearly, a feature of the U.S. generally -- but I think having a strong commercial footprint, as you can see from denosumab is important.

But traditionally, players tend to see this market as a more simplistic market and then they struggle to commercialize those assets in the rest of the world. I think we're uniquely positioned both to perform extremely well in the U.S., but then really leverage and grow our business and pipeline globally. So super, super excited. And I think the exciting thing is, I say, seeing the European regulators, Canadian, Australian regulators all moving into a much more sensible space in terms of data expectations. So then that does present us a significant opportunity.

And I think then linked to your second question, which is a nice follow-on. I think the days of when we first launched biologics like Omnitrope, which was the first biosimilar 20-odd years ago, I think the world has moved on. I think we've established ourselves as a credible high-quality supplier. The concerns that physicians and payers have had are really evaporating. And so really, the point there is already on ustekinumab is pretty much in a similar penetration rate to adalimumab, even though ada has been on the market for, I think, 6, 7 years in Europe. So you're seeing a much faster adoption and a much greater exception.

And then clearly, what's so cool about these drugs, I mean, Omnitrope is still one of our largest products, 20 years old, and it's still growing. We're great performance of international. There aren't many products in the generics industry where you can say that 20 years on, you're still getting leverage and growth. Similarly, adalimumab, strong growth as we really offer patient treatments. At launch, it was 5 years from diagnosis to treatment for RA. Now it's months. So we're transforming patients' lives, opening up and really saving a significant health care system. And I think that's true to many of the products that we will bring to market over the coming years. The opportunity to democratize and access to these medicines is really, really exciting.

We've not discussed price erosion at GX and biologics. I mean, certainly, we've seen, I guess, a more normalization of price erosion. I think roughly around about 3% this year. We always assume 3% to 5% in our planning assumptions. And I think as the market sort of stabilizes in terms of supply, I would expect that trend to broadly continue. So I think our assumption as we go into next year, probably price erosion, 3% to 5%. And I think it's one of the potential headwinds as you think about your models for next year for the business.

But nothing dramatic, but certainly, I guess, nothing remarkably one way or the other, but I guess more of a return to normal in terms of pricing dynamics. And then actual specific pricing depends on the market, depends on the level of competition. Obviously, on a drug like natalizumab, we see very little price erosion because we're a sole player in that market. There are others clearly like adalimumab, we have to compete in a sense, economics 101. So really depends on the market and depends on the product.

So thank you so much for your final question. And with that, thank you so much for your interest and support in Sandoz. Really delighted to take you through our results and look forward to connecting with you over the coming weeks and months.

Good morning, ladies and gentlemen, and welcome to the Sandoz call today. I will now pass on to Craig Marks, Head of Investor Relations, for his opening remarks.

Thank you, and welcome to the Sandoz H1 2025 Results Call. Earlier today, we published a results announcement and an accompanying presentation on our website, which we'll follow today. You can find these documents at sandoz.com/investors.

Joining me today are Richard Saynor, Chief Executive Officer; and Remco Steenbergen, Chief Financial Officer.

Please turn to Slide 2. Our results announcement presentation and discussion include forward-looking statements. Please see our disclaimer here.

Please turn to Slide 3. Richard will begin today's presentation with a summary of the highlights in the first half of the year, followed by an update on the business. Remco will cover the financial performance as well as our full year guidance.

Following a wrap-up of the presentation, we'll be happy to take your questions.

With that, I'll now hand over to Richard. Please turn to Slide 4.

Thank you, Craig, and hello, everybody. It's a pleasure to welcome you all to today's call, and I'm looking forward to taking you through the strong progress we're making as well as the significant opportunities that lie ahead for Sandoz.

Please turn to Slide 5. I'm pleased to provide an update on our strong performance in the first half and the continued execution of our long-term strategy. We delivered 4% sales growth, which on an underlying basis, amounted to 6%. The performance included accelerated sales growth in the second quarter, a period when 30% of our net sales came from biosimilars.

Our core EBITDA margin in H1 expanded by 2.5 percentage points, reaching 20%, reflecting an improving sales mix and operating leverage.

On the pipeline, we executed all launches successfully, including Wyost and Jubbonti and Pyzchiva in the U.S. and the Pyzchiva auto launch -- auto-injector in Europe. We have additional exciting launches planned for the second half of the year, further strengthening our portfolio and our long-term growth potential.

Also we announced the expansion of our manufacturing capabilities in Slovenia, reinforcing our commitment to reliable, high-quality supply for our global markets.

You've also seen the recent news of our planned acquisition of Just-Evotec Biologics in-house development and manufacturing capabilities in Toulouse, France. With these bold steps, we're building a leading global end-to-end biosimilars platform from development through to manufacturing and commercialization to fully capture the significant growth opportunities in the biosimilars space.

Looking ahead, we remain confident in our midterm outlook. I'm pleased to confirm our full year guidance, namely, mid-single-digit net sales growth at constant currencies and a core EBITDA margin of around 21%.

Now let's move to more details of the business performance, starting with Slide 6. Looking firstly at our biosimilar launches, we rolled out Pyzchiva in the U.S. this year. This was an important moment for millions of patients living with chronic autoimmune diseases and reinforces our commitment to broad access to treatment options for patients while helping to build a more sustainable health care system in the U.S.

Furthermore, I'm pleased that we launched the Pyzchiva auto-injector in Europe. This was the first ustekinumab biosimilar in Europe commercially available in an auto-injector. The device supports a more comfortable self-administration experience with an accurate automatic dosing and less frequent injection pain, offering the potential for improved adherence to patient treatment plans.

I'm also very excited about the launches of Wyost and Jubbonti in the U.S. in June. These were the first and only interchangeable denosumab biosimilars in the U.S. providing new affordable treatment options for over 10 million patients suffering from conditions such as osteoporosis and cancer-related skeletal events.

In the second half, we look forward to contributions from several other exciting biosimilar launches, such as denosumab and aflibercept in Europe. And we also have continued ambition to launch natalizumab in the U.S. by the end of the year.

Now let's deep dive into the performance of Pyzchiva on Slide 7. This important new medicine continued to make strong progress in the first half following the European launch in 2024. It has now been launched in 24 markets, and we've achieved a leading position in Europe.

The auto-injector launch marked another important milestone as we strengthen our leadership in the immunology biosimilar space and reaffirm our commitment to pioneering access across Europe's evolving health care landscape.

We're also pleased with the recent Pyzchiva launch in the U.S., which included private label. We look forward to updating you on the progress of this in the future as we move beyond the immediate launch phase.

Now please turn to Slide 8. Turning to Hyrimoz, our global market share has been cemented by the ongoing progress of biosimilar penetration, which has now reached over 60%. It is important to note these dates exclude private label, which means actual usage may be even higher.

We're seeing very strong momentum in Europe, accompanied by growth in international markets.

And in the U.S., Sandoz is leading the biosimilar space, driven by both private label Hyrimoz and our own label, adalimumab. We also benefit from having the broadest payer coverage in the U.S., a key advantage in such a competitive market.

Together, these trends position Hyrimoz as a cornerstone of our biosimilar portfolio.

Now please turn to Slide 9. Let me now turn to Tyruko, our biosimilar natalizumab, which continues to demonstrate encouraging momentum. Since we started rolling out Tyruko across Europe, this important medication has been growing consistently, achieving a 20% market share. Both tender authorities and health care professionals alike appreciate a more affordable option in the multiple sclerosis space.

Looking ahead, we have additional launches planned across Europe in the second half of the year, which we expect will further strengthen our position. As I said earlier, we continue to have the ambition of launching Tyruko in the U.S. before the end of this year.

Now please turn to Slide 10. Finally, after almost 20 years since it was launched, we again delivered double-digit growth from Omnitrope, which continues to speak to the sustainability of biosimilars. The performance underlined our continued market leadership, driven by a particularly strong ongoing performance in the international region. Equally important, we have benefited from being a reliable supply partner ensuring where we can consistently meet strong and growing demand.

With a 35% global market share, Omnitrope continues to lead in the treatment of growth hormone-related disorders and it remains a core pillar of our biosimilar portfolio.

Please turn to Slide 11. Moving now to our pipeline. We announced during the period a collaboration license agreement with Henlius, strengthening our position in oncology and underlining our purpose of pioneering access to patients. As the global leader in generic and biosimilar medicines, we are committed to innovation and dedicating to broadening access to more affordable biologics for patients globally by finding the right balance between leveraging internal capabilities and collaborations and partnerships.

This agreement, providing access to ipilimumab, strengthens our leadership position in oncology even further.

Now please turn to Slide 12. Today, we have an industry-leading biosimilar pipeline of 27 assets, covering around $200 billion of originator sales. Through a combination of in-house development and partnerships, we've been able to significantly increase the size of our pipeline over recent years. We plan to further increase it.

We're also encouraged by the recent movements towards regulatory streamlining such as the recent news on our development of pembrolizumab, ocrelizumab and nivolumab biosimilars. These dynamics have the potential to accelerate approval times and reduce complexity, ultimately benefiting patients and health care systems alike.

At the same time, we continue to identify and pursue additional opportunities that will strengthen and expand our pipeline.

Please turn to Slide 13. This pipeline of 27 biosimilars is industry-leading, both in the number of assets and the portfolio coverage of the addressable market value. It includes 5 near-term launches and assets in clinical development, 5 assets in regulatory review, 8 in technical development and we have 9 additional assets in early development targeting around $56 billion of originator sales.

This is an incredibly exciting pipeline, and we won't stand still. We aim to increase the number of assets even more, supported by the opportunities presented by regulatory streamlining and our growing in-house development capabilities.

Now let's turn to Slide 14. Biosimilars is the fastest-growing segment of our pipeline as the needs of patients and health care systems for these critical medicines continues to grow rapidly. As the global leader in the field, we're investing to meet rapidly growing patient demand.

We're proud to significantly expand our biosimilar manufacturing capacity in Europe as Slovenia's largest direct foreign investor. This is another major step that will position Sandoz uniquely to capitalize on the unprecedented biosimilars market opportunity over the next decade.

We've talked before about our state-of-art development center in Ljubljana and in Lendava, our high-tech drug substance production center. Last month, we also announced the start of the construction of a new state-of-the-art biosimilars production center for sterile product manufacturing in Brnik.

I'm delighted by our progress in Slovenia as we build internal capacity and drive biosimilar development. Of course, this was all complemented by our announcement from last week.

Please turn to Slide 15. The news of the proposed acquisition of Just-Evotec Biologics in-house development and the manufacturing capabilities in Toulouse, France marks a significant leap in our biosimilar future. The acquisition totaling around $300 million would seamlessly align with our strategic objective of capitalizing on the biosimilar market opportunity.

Just-Evotec Biologics has been a key strategic partner for Sandoz since 2023. The proposed acquisition would complement previously announced investments in Sandoz biosimilar manufacturing and development sites and will be fully in line with our strategy to reinforce in-house biosimilar capabilities whilst at the same time create additional strategic flexibility.

Following a successful completion, the site will be used to develop and manufacture our biosimilars. Just-Evotec's fully automated and high-throughput technology platform will help us move faster, scale smarter and maintain high quality while keeping costs under control. And I look forward to updating you on the progress of this proposed acquisition.

Now let's turn to Slide 16. Turning to our generics business, it continues to be a cornerstone of our company with over 180 launches across markets in the first half of this year from around about 90 different medicines. For example, our generic ferric carboxymaltose is the first-to-market launch in Europe and we target over $500 million of originator sales.

Generics at around 70% of our sales ensures continuous scale in the market with limited capital deployment and generation of significant cash flows. In the first half, our generics performance benefited from volume growth that partly reflected recent launches such as paclitaxel.

Looking ahead, our second half program is ambitious as we expect more than 3 individual market launches over the full year. Over the longer term, we continue to have an ambitious generics pipeline with more than 400 assets targeting around $220 billion of originator sales over the next decade.

And with that, I'll hand over to Remco. Please move to Slide 17.

Thank you, Richard, and hello, everyone. Please move to Slide 18. I'm very pleased to share our strong financial performance in the first half, which reflects momentum and disciplined execution across our business.

Firstly, we delivered underlying sales growth of 6% with accelerated sales growth in the second quarter.

Next, our relentless focus on operational efficiency is paying off, and the leverage down the P&L drove core EBITDA margin expansion of 2.5 percentage points bringing the H1 margin to 20.0%. We believe a meaningful improvement.

Thirdly, core diluted earnings per share reached $1.46 representing growth of 33% at constant currency.

Finally, we delivered a strong improvement in cash generation with management cash flow more than doubling to over $500 million, a significant milestone that further enhances our financial flexibility.

Overall, these results position us very well for the second half of the year.

Please turn to Slide 19. We produced a strong performance in the first half, and we are gaining momentum with further launches to come in H2. While generics provides a strong foundation for our business, the overall performance reflected the increasing contribution from biosimilars and strong execution across our organization.

As a result, biosimilars increased as a proportion of total net sales to 29%, compared to 27% in the first half of 2024. When looking at the Q2 performance itself, we hit the 30% target, the milestone that we have achieved earlier than expected.

Our regional sales mix has remained broadly unchanged with over half of our business in Europe where we hold a strong leading position. International represents 1/4 of net sales with 21% coming from North America.

Now let's dive into the performance of the business on Slide 20. Generics sales increased by an underlying 2% in the first half and by 3% in Q2, reflecting the impact of recent launches, including paclitaxel in North America.

Biosimilars delivered very strong underlying growth of 20% in the second quarter and of 17% for the first half. We were very pleased with this performance and strong progress that we are making with our biosimilars overall.

Now let's have a look at the performance of our 3 regions on Slide 21. Europe sales grew by 6% in the quarter and in the half year. Strong growth in biosimilars continued, partly reflecting the successful launches of Pyzchiva and Tyruko.

Generics momentum also accelerated in the second quarter.

International sales grew by an underlying 13% in the quarter and by 8% for the half year due to strong contributions from Hyrimoz and Omnitrope.

North America sales grew by 5% in the quarter and by 4% in the half year on an underlying basis. The region benefited from the strong generics performance, and we look forward to the impact of recent launches on the performance in H2, including denosumab.

Please turn to Slide 22. In breaking down the sales performance for H1, you can see that volumes contributed 7 percentage points while price erosion returned to a more familiar 3 percentage points. Foreign exchange had no impact during the period.

Let's now move to the P&L overview on Slide 23. I'm particularly pleased with the leverage we drove down the P&L in H1, producing strong profitability. Starting from net sales growth of 4% at constant currency, we delivered a 33% increase in core diluted earnings per share.

The core gross profit margin of 49.2% represented a decline of around 1 percentage point, reflecting price erosion and some cost inflation, which were partly offset by an improved mix.

This, combined with the impact of operating leverage resulted in a core EBITDA margin of 20.0%, which represented a 20% year-on-year improvement in core EBITDA.

Core EBITDA adjustments in H1 amounted to $176 million. This compares well to the $309 million in core adjustments in H1 last year. This year, adjustments were driven by anticipated one, of course, related to the separation from our former parent and the rationalization of internal manufacturing sites. For the full year, we're still expecting one-off costs of around $500 million.

Please turn to Slide 24. Moving to the core EBITDA margin performance, we drove an increase of 2.5 percentage points from 17.5% to 20.0%. We delivered a favorable product mix that was partly offset by the impact of price erosion.

Focus on cost leverage and discipline meant a positive impact on the margin from SG&A and D&R expenses, while foreign exchange movements had only a marginal adverse impact in the period.

Please turn to Slide 25. It's worth noting that we anticipated that the core EBITDA margin will further progress in the second half, partly reflecting continued improvements in the sales mix.

We also see operating leverage continuing to deliver with OpEx inflation set to remain below net sales growth. The year-on-year uplift in E&R expenses in the second half is expected, however, as we invest in the long-term growth of our pipeline.

As a result, we expect our full year 2025 core EBITDA margin to be around 21%, reflecting our ability to drive profitable growth while managing costs.

Now let's move to cash generation on Slide 26. To provide more insights on our underlying free cash flow, we exclude one-off items when focusing on management free cash flow.

As Richard mentioned, we have continued to invest in our future. CapEx included ongoing investments in our biosimilar facilities in Slovenia and there were also investments in facilities and technology. Importantly, we have not changed our view of midterm CapEx commitments.

We have been able to keep our inventory flat in constant currency and limit increase in other working capital items. This led to the doubling in management free cash flow, which also reflected the increase in core EBITDA.

Free cash flow of $207 million compared to $21 million generated in the comparative period last year. The improvement was mainly due to increased net cash flow from operating activities, partly offset by higher cash flows used for CapEx.

Please turn to Slide 27. Now let's have a look at our balance sheet. Earlier in the year, we successfully strengthened our balance sheet and improved our maturity profile by issuing new bonds to repay the spin-off term loans. At the same time, we signed a new $2 billion revolving credit facility. Both transactions give us continued financial leeway going forward with the annual interest rate on gross debt expected to fall below 4%.

A substantial weakening U.S. dollar against the euro and the Swiss franc had an impact on net debt, which ended the period at $3.9 billion. When excluding the impact of foreign exchange, however, net debt was broadly unchanged.

Our strong balance sheet and investment-grade credit ratings have placed our company in a very good financial position to support our ambitions.

Please turn to Slide 28. I'm pleased to say that we have reiterated our full year guidance today. We continue to expect net sales to grow by mid-single-digit percentage points In constant currencies this year with the core EBITDA margin set to increase this year to around 21%.

The guidance is based on 2 key assumptions. Firstly, we continue to expect a return to more normalized levels of price erosion of a low- to mid-single-digit percentage. Secondly, we prudently assume that the announced U.S. tariffs of the EU of 15% will be confirmed as applicable to generics and biosimilars. That will take the total impact this year to around $25 million.

Given the anticipated shape of the business in 2026, we would expect an additional $45 million of impact over full year 2026, taking the total impact next year to around $70 million.

Outside of guidance, we anticipate that if the latest spot rates were to prevail for the rest of the year, we would see a 2 percentage point tailwind to net sales over the full year. The core EBITDA margin would continue to face a limited adverse impact of less than 50 basis points, which will be in line with what we had in 2024.

If you look at currency movements based on average rates in the first half, we would anticipate an immaterial impact on both net sales and on the core EBITDA margin.

And with that, I will hand back to Richard. Please turn to Slide 29.

Thank you so much, Remco. I'd now like to wrap up the presentation before we go on to questions. Please move to Slide 30. In summary, we've delivered strong results in the first half of the year driven by great execution, our focused strategy and our commitment of our teams across the board.

I would like to thank all our colleagues at Sandoz for their fantastic efforts so far this year.

As we look to the second half, we're excited about the momentum we've built and the opportunities ahead. With several key launches planned, H2 is shaping up well. In short, we're fully on track to deliver our full year commitments.

Looking ahead, we will also continue to invest in long-term opportunities that will shape our future growth even further, centering on biosimilars.

For this, please turn to Slide 31. I'd like to conclude our presentation with a reminder of a huge number of opportunities that lie ahead, and these are at the heart of the Sandoz investment case. Today, we have an industry-leading biosimilar pipeline of 27 assets, covering around $200 billion of originator sales. Through a combination of in-house development and partnerships, we've been able to triple the size of our pipeline over recent years.

Our investment in and focus on expanding the pipeline is now accompanied by the exciting momentum in regulatory streamlining and the enhancement of our development and supply capabilities.

Our generics pipeline has more than 400 assets in development, covering around $220 billion of originator sales. No one single medicine makes up a material amount of our generics sales, so our large scale and robust infrastructure allows us to continually bring new generic medicines to market. And longer term, we also have the significant prospects from GLP-1s.

We're placed to take a leading position of all of these opportunities, and I look forward to updating you on our progress.

With this, please turn to Slide 32 and I will ask the operator to open the line for Q&A.

[Operator Instructions] Our first question comes from James Gordon with JPMorgan.

James Gordon, JPMorgan. First question with semaglutide. So hopefully, now less than 12 months from a Canadian launch. So can you provide an update on timing? And do you have a device or a device you can use [ for ] capacity? and are you also on track to Brazil next year? And where might that launch be as well, please?

Second question was just biosimilars in North America was a little bit softer, at least versus consensus for the quarter. How are you thinking about that into H2? Should we see an acceleration already in H2 or is it more like late in the year we get the acceleration? And is there a bit of a pipeline gap for North America or does next year look good for U.S. biosimilars?

And if I could just squeeze in a clarification. Other income looked a bit better today even on a core basis and other expense a bit lower. But was there anything one-off there? Or is the H1 number a good guide for H2?

Okay. Thank you so much. So semaglutide, I mean, look, we've filed, we would anticipate to launch market formation, again, reminding everybody for the diabetes indication, not for the weight loss indication. We've not given details about the device or volumes.

Again, I've always said, look, I see Canada as a bit of an experiment. We'll see how the market evolves. We've got no idea how as prices come down, market expands. And so we'll see as we get there. I mean, clearly, we would anticipate to launch in market formation at some point during 2026, but we'll see when we get there.

And similarly, with Brazil and a number of other emerging markets, again, we would anticipate to launch probably late '26, early '27 and see how that evolves again, how elastic this market is going to be. Depending on pricing, we will see.

U.S. biosimilars, yes, I think, look, again, we would expect much stronger growth in the second half. Underlying growth actually is very strong. If you strip out the Cimerli impact, I think we were growing about 9% in the U.S. and about 17% in total. So very strong underlying performance. And then clearly, we would give more detail in the deno and ustekinumab launches as we get into the second half of the year.

Again, I would sort of caution when we launched adalimumab, it took about 9 months before we started to see an inflection. So these things don't happen quickly.

Again, I think we're well positioned. We're pleased with the coverage that we've got. And I think we're well positioned for the second half of the year.

I'm sorry, your third question. I was just making notes.

Yes, I can take that. James, Remco here. It was around the other income. Let me answer, and then if you have another question, Richard will pick up again.

The other income in H1 was around $20 million. There were different kind of one-offs in there. Last year, it was negative. So the year-on-year comparison is an improvement. Yes, that other income could be a couple tens of millions, plus or minus depending on the half year. Nothing special to be mentioned here.

So it sounds like in H1, there wasn't anything exceptional that was one-off and H1 is roughly a guide what you do in H2 for this line in the P&L?

At this point in time, yes, something -- what I said, it could be $10 million, $20 million-plus and $10 million, $20-million in the minus depending on the smaller items going on, but nothing special here.

Our next question comes from Harry Sephton with UBS.

Brilliant. So my first one is on the sequential biosimilar performance. Can you say if there are any significant stocking or destocking dynamics in biosimilars across the first quarter and second quarter, especially in some of those new launch markets in Europe?

And my second question is on the Evotec proposed acquisition. Now their press release stated that the divestment would be immediately accretive to short, mid- and long-term revenue mix, profit margins and capital efficiency. So I'd like to get your view on why you will be the better owner of this asset and whether it will have any near-term dilutive effects.

And then if I can quickly have a third question, just on a clarification. Can you just remind us on how much more you're expecting in terms of separation costs? And are the last of these still expected this year?

Perfect. Thank you, Harry. I'll take the first question, and have Remco, I'll let you pick up the Evotec and the separation costs.

No. I mean, look, clearly, we had a number of launches in a number of markets, but I don't think anything material in terms of stocking or stock in trade was unusual given those launches. So I wouldn't see any impact to H1, H2 from that going forward. Evotec?

With regard to Evotec, what we have said is that our guidance for '25 and also our midterm guidance is unchanged, correct? At this point in time, what we see if that -- if the nonbinding comes to a binding agreement, what we believe is that clearly, the site would be mostly allocated for us anyway. So it's probably better if we run it and we get all the capabilities internally and therefore also have the flexibility when we talk on the mid, longer term to really capitalize on the capabilities. There's the capabilities on the development side and the capabilities on the manufacturing. And we believe we can handle that all within our current guidance as it stands now. Of course, it's an additional activity we take on our shoulders that we believe we will be definitely a very good owner in order to drive this forward as the largest bio player already now.

With regard to the last question, the separation costs, we had $176 million of cost in H1. We still expect around $500 million for the full year. The majority of the $176 million relates to still the IT disentanglement. We continue -- we expect that to continue in H2. We still have transformation costs and also some manufacturing-related restructuring we expect in H2.

But also to be mentioned that in H1 we had actually some positive legal benefit coming in. Normally, that's negative. Here also to mention that also when it's positive, it comes in that line item. So many thanks to our legal team here in Sandoz. I hope that answers your questions, Harry.

Our next question comes from Simon Baker with Rothschild & Co Redburn.

Three quick ones, if I may. Just going back to James' question on obesity, but rather broadening it out. It's clearly been a fairly eventful market recently. So I just wonder how your view of the opportunity has changed in light of what we've seen in terms of the demand, the growth trends in the U.S., issues in international markets, the clear power of prices we see from the compounders in the U.S. Just a sort of an update on how you frame the opportunity from a Sandoz perspective.

Secondly, on the regulatory streamlining, you cited the impact on biosimilar pembro, ocrelizumab and nivolumab. Longer term, you've said it will effectively allow you to do more for the same amount of investment. So in the near term, how quickly can you do more if you're spending less on those assets? I'm just trying to think how the costs of development are going to evolve over the coming years, whether you can immediately take advantage of that or whether there's a dip in spend before that manifests itself.

And then finally, just a quick one. I know it's been on the slide for a couple of presentations, but Enhertu as a development target, Astra have said that they expect biosimilar penetration for ADCs to be limited because of the sheer complexity of them. I just wonder what your perspective was, Richard, on the competitive dynamics in ADCs. Do you see this as being a market with far fewer players than a traditional biosimilar?

Thank you. I'll start with the last question first. I mean, they would say that, wouldn't they? I mean, the originator industry has been saying that since I started in this business. They said that about biosimilars, they said that about pretty much every product that we've launched.

I think we are strong in this therapy area. We have the relationships. Payers want the product. I'm very confident that when we bring this product to the market, we will open that market up and serve patients well.

Obesity growth trends, look, I think your guess is as good as mine. I think, clearly, this is a highly attractive product. As I said before, in my many years in the industry, I've never known a product where the originators can actually meet the demand at a different price point.

So I think really the question behind the question is what is the available capacity, how quickly can that come onstream and how rapidly that market opens up? And I think that's going to be very dependent by the individual markets. Some markets like Brazil are very much out of pocket, and I think has a rapid potential to expand. Other markets will be driven more by government payer frameworks who want to see more whole population treatment patterns going on.

It really is too early to say. Originally, when we put -- I think the first Capital Markets Day, we didn't even talk about GLP-1s. I think now every meeting I have I talk about GLP-1s. Clearly, it's evolving.

Our focus is clearly to bring to Canada for the diabetes indication, as I say, use that as a test case and then think about how we expand that. And then Europe doesn't really start opening up until 2031 and then the U.S. till the mid-2030s. So this is a long game. And clearly, it's going to be interesting how that plays out.

Your question on regulated, yes, I mean, clearly, look, we see opportunities very rapidly. I mean, I think we said -- I said in my presentation I'm very keen that we build on a world-class pipeline already. We have 27 assets. As we see savings and certainly in some of the reduced requirements in Phase III trials, we would look to reinvest that as aggressively as possible to expand our pipeline. We see a significant opportunity to continue to leverage and grow and bring and expand our pipeline over the next few quarters.

Our next question comes from Florent Cespedes with Bernstein.

Florent speaking from Bernstein. Two big picture questions, please. On biosimilars pipeline, when we look at the slides, we see that for the future, you have a lot of partnerships, not -- much less in-house. So maybe could you elaborate on what could be the impact on the margins on the medium term? That's my first question.

And second question, another big picture question on biosimilars. When you look at the penetration market share, it's kind of plateauing over time. So is it -- what could be done to increase your market share? Or is it fair to assume that you will grow first with the further penetration of the biosimilars? So any color on that would be helpful.

No, look, 2 important questions so thank you, Florent. In-house, I mean, look, we already -- as we separated from Novartis, we're investing heavily in our own in-house capability, both in Slovenia and clearly with the proposed acquisition of Just-Evotec. That means that then we can continue to expand what we develop in-house because clearly in-house products in the medium and long term are much more accretive.

That said, what's becoming very clear as the leader in this space, more and more companies want to work with us. And so it's much more can be capital efficient to bring in other assets that we can continue to leverage.

If you look at our performance with ustekinumab, which we partnered with Samsung, already now we've taken the leadership position in Europe, growing very strongly. And now other companies are seeing the benefits that we can come given our scale and capabilities.

So still highly attractive. Our job is to bring as many products to patients as quickly as possible. And clearly, by doing that as a combination of in-house and partnership and in licensing and a mix of all 3 is important.

In terms of market share, I think it's 2 dimension. I mean, clearly, as other entrants come in, market share dynamics change. But also don't forget the market itself is growing substantially. If you look at the adalimumab market today in Europe, I think it's now more than twice the size in number of patients than it was at market formation. So don't just look at the absolute percentage market, but also look at the size of that market because it's continuing to grow.

If you look back at Omnitrope, we launched human growth hormone 20 years ago, now we have a 35% market share, still growing and we're the world's largest supplier of human growth hormone, which, again, I think we've said before, really shows the strength and depth and value creation that biologics bring over a much longer cycle compared to traditional small molecule generics.

Our next question comes from Thibault Boutherin with Morgan Stanley.

First question is just on the -- from a strategic standpoint, the balance of geographies. At the time of spinoff, the U.S. was framed as a clear growth driver. I think U.S. framed as being half of the growth opportunities. I think since maybe we saw a bit less growth in the U.S., a bit more ex U.S., ex U.S. is closer to 80% of sales.

So since these initial plans, have things changed? And do you do no more expect the growth to be balanced between U.S. and ex U.S.? So should we think basically about the outlook a bit differently from a geographic perspective? That's the first question.

And then second question, I just want to broaden a bit the previous question on the adjustments and about earnings quality and basically the free cash flow as well. So you talked about the expectations for second half of the year, but when we think about 2026 and onwards, how should we think about the pace of reduction of adjustments in the future and transitioning from the management adjusted free cash flow measure to a more standardized measure of free cash flow. So basically, the pace of normalization going forward.

I'll let Remco pick up those. So thank you so much, Thibault.

Yes, first of all, at the moment of spin, we had a lot of assumptions with regard to the bio growth, the generics growth, the regional growth this year. Clearly, we see that Europe is doing fantastically. So Europe with 50% of the overall is actually contributing 50% of the total.

We have now to see what will happen in the coming years. It might be that Europe is continuing on this very, very strong growth. And certainly, that we hope for. That would mean that perhaps the mix in the overall growth over the coming years will change a bit.

For us, it's important that the overall company can grow the mid-single-digit growth. And of course, we will try to do better than that. Yes, if that's in a different mix, it's fantastic. If we are a little bit less dependent on the United States, considering the current geopolitical situation and the tariffs, I would say that's not even a bad thing. That's actually a good thing.

But it's too early to call that we already changed the overall growth. But certainly, we believe we're in a very good position.

With regard to the one-off costs, yes, what we said before is around $500 million this year, then going to around $100 million next year and then it should stop. We're still in that position. We still expect some of the IT changes still to take place next year with regard to SAP systems in our factories, and that will carry some cost. And then after that, it's gone. And then, of course, the managerial free cash flow and the reported free cash flow and the same on the margin would much more convert to a closer number. So no changes from what we said before. We are on track with this.

Thank you, Thibault.

Our next question comes from Joris Zimmermann with Octavian.

This is Joris Zimmermann from Octavian. Richard, Remco and team, congratulations on this set of numbers.

Two, if I may, one on the U.S. biosimilars performance. Here if you could share a bit more flavor to the launch products? So similarly, you said this is on a temporary hold. Is it still the plan to relaunch early next year?

And then on Hyrimoz, if I remember correctly, you mentioned increased pricing pressure in the last call. So here, I would be interested in understanding how this has developed.

And then the last one on the U.S. biosimilars is concerning Pyzchiva. Can you share a bit more details about the private label deals? Which partners you've closed those deals?

And then the last question would be on the manufacturing expansion, so to say, and your announced plans with the additional site in Slovenia and the acquisition of the site from Just-Evotec. If you could just help us understand the difference of the 4 sites a little bit more and how that integrates into your broader plans, also including the Novartis manufacturing capacities that you currently use?

Thank you for the comments around our performance. Yes, we're clearly delighted. So thank you.

U.S. biosimilar, yes. I mean, similarly, obviously, we're on a pause. Actually, the underlying growth in the business is pretty strong, but that clearly at a headline level distorts the numbers a little bit. We would anticipate to reintroduce that product probably late this year, early next year and then slowly build that up.

Hyrimoz, yes, I think, look, clearly, this is a highly competitive market. That said, we're by far, have by far the best payer coverage. We have the leading position in terms of market share with our own product, both branded and unbranded ada. And then clearly, we have the partnership deal, which, again, clearly is subject to price renegotiations.

So it's a mixture of those things. We don't break out individual products or individual market pricing, but clearly, this is a competitive market. But I'm pleased in terms of position that we've built.

And similarly, with Pyzchiva, we've not disclosed the details, but clearly, this is structurally a different product. This is an in-licensed product from Samsung. So it's a partnership deal rather than a vertically integrated product. In this case, we don't actually book the top line. We only book the income and then clearly we have our own product.

Again, it's too early to share in terms of market share assumptions and performance. But again, early indications are we're pleased with the coverage that we have and would expect that to build in the following quarters.

So again, we hopefully give you a little bit more color on that on the next earnings call.

In terms of manufacturing capacity, I think with the investment in Slovenia, I mean, we have a long history in Slovenia anyway. We have a very good relationship. I think it's a high-quality, relatively low-cost location in Europe. Our ambition there is to build both drug substance and that was the initial announcement in terms of that development capability, which we've also built there.

And our most recent addition was drug product, i.e. fill/finish, which can be clearly used for other products as well, potentially GLP-1s in the future as well.

So really thinking about a vertically integrated capability, co-locating development and manufacturing in one location to make it as efficient as possible.

Our goal there originally was to put potentially a J.POD in from Just-Evotec, transfer a number of assets, which were currently supplied from Novartis as well as using that from development.

Obviously, with the potential acquisition of Just-Evotec, that means we then also get additional development capability and also additional manufacturing capacity, particularly centered around the J.POD and continuous manufacturing. I think that then positions us extremely well, both in terms of existing portfolio, but more importantly, for our future portfolio.

And in terms of our relationship with Novartis, clearly, we have a long-standing supply agreement with them. If we wish to, we may choose to continue to leverage that capacity in various forms beyond the sites, our sites coming onstream. I think I've always said I want to build security of supply and flexibility of supply. Novartis had been a good partner and potentially we would continue to look at that. But I think we'll have that conversation when we get nearer to the time.

But that, in essence, is our manufacturing strategy. Thank you so much for your question.

Our next question comes from Charlie Haywood with BoA.

Charlie Haywood, Bank of America. First one, your guide implies second half sales acceleration to a sort of 6% constant exchange rate, in line with your first half underlying. Could you talk to the pushes and pulls for that sales growth into '26? I guess, is the second half 6% CER sales rate a good exit rate proxy to think of that '26 growth rate? Or could we even see an acceleration from annualizing biosimilar launches, sema and your Cimerli relaunch?

And then the second one, obviously, 20% first half margin, 21% for the full year, how should we think of your annual cadence to your midterm '24 to '26 margin guide by '28? And how much of that margin progression is still driven by post-spin efficiencies versus underlying mix and operating leverage?

Yes. Charlie, the line was not 100% correct, but I think I understood your question, so I will take them. Remco here.

So indeed, we had in H1 around 4% sales growth for the full year, we guide mid-single digits. So depending, that is then 5% or 6% because we expect a step-up in H2. You talked indeed in the range from 6% to 8% in H2, that would be mathematically correct.

We don't give guidance yet on '26, so I don't comment. But clearly, the midterm guidance is mid-single-digit growth. So that is still what we're striving over the years through '28. And for '26, you have to wait a little bit later in the year.

With regard to the profitability in H2, yes, indeed, we expect a step-up in H2 versus H1 to come to the 21%. What is important to keep in mind that in H2 we will step up our D&R expenses versus H2 last year. So also for the others on the call that -- and I'm talking not only in amount, I'm talking also in percentage because we want to make sure that not only we handle the short term, but we also really invest in the longer term.

And we have a little bit of an impact on the margin of the FX because of the U.S. dollar-euro impact. So that's also a little bit of step-up versus H2 last year. That corresponds then with around 21% for the full year, and we have to see how that then further develops because we have some fantastic launches planning. But we are very confident with the H1 results under our belt that we can meet our full year guidance.

Further out for '26 or '27, '28, we expect a progressive growth on the margin to come to the 24% to 26%. Again, it's too early to say anything on the individual years, but we are really, really confident that we can meet those targets and well on track.

So I hope that answers your questions, Charlie, and understood them well.

Our next question comes from Victor Floch with BNP Paribas.

Victor Floch, BNP Paribas. So 2 questions on GLP-1 actually. So first of all, Richard, you recently alluded to the fact that Canada being the second largest semaglutide market in the world likely reflects some cross-border business dynamics. So in this context, I was wondering if you expect that the Florida drug importation program could be extended to GLP-1 at some point? And if that could potentially pave the way for more U.S. states to apply?

And my second question is still on GLP-1. I'm interested to know if you can confirm if ever the semaglutide API that you source is manufactured through chemical synthesis or same way as the originator through yeast cell production?

Thank you very much, Victor. I mean, we've not commented on the manufacturing process in terms of API. So we actually have a couple of partners on that. And again, we can discuss that closer to launch.

Your question on -- I mean, again, I think I try to be super cautious in terms of how I view GLP-1s in Canada. A, we were only focusing on the diabetes indication; b, we've got no assumption that we would be shipping cross-border. I have no intention of getting injuncted by anybody. So in all our planning assumptions, it's very much diabetes and very much for Canadian use only.

As I said, this is an experiment. We've not put any guidance in terms of numbers, expectation. This is a whole new category and opportunity. I would much rather have a modest expectation in terms of how we view this and then build on it rather than see this as transformational for the business.

So I think it's important. I know I get a lot of questions on GLP-1s. But again, we see this very much opportunistically at this point. We'll see how Canada evolves. Clearly, it's a unique set of circumstances given the lack of patent or the failure of the patent there. And then as the various data exclusivity on weight loss and diabetes fall, but again, our focus diabetes for the Canadian market.

Our final question is from Sidhartha Modi with Barclays.

Sidhartha Modi from Barclays. Two, if I may. The first one is on Wyost and Jubbonti, which you have launched in the U.S. Obviously, the discount to branded products is much lower compared to what we have seen for Pyzchiva and Hyrimoz. But then this space is very, very competitive and a lot of new entrants would come into the market in the second half. How do you expect the price erosion? And how would you position yourself to defend a large share of market share? That's my first question.

And second like recently a lot of manufacturers, branded manufacturers, have been talking about DTC sales. How does that impact Sandoz? And what are your takes on DTC sales from branded manufacturers in the U.S.?

First of all, thank you for your questions. I mean, look, we are at the moment with Wyost and Jubbonti, we're the only one with a Q code. We're the only product that technically can be reimbursed. None of our competitors yet have yet got a Q code.

I would point to our performance in other biologics. If you look at how we perform both with ustekinumab and it's an in-licensed product; and adalimumab, which is a vertically integrated product; as is denosumab, I think we're extremely well positioned to leverage our commercial capabilities and channel capabilities.

Yes, it's a competitive market. We're used to competition. And so -- but in terms of how I expect price erosion, really we'll see how that evolves in the latter part of this year. But certainly, we're in a position, a, to compete in terms of our cost of goods; and b, to execute in terms of our commercial footprint.

DTC, it's a fascinating subject. I think, clearly, I'm watching with interest to see how other competitors look at exploring this space.

Clearly, I think one of the issues in the U.S. is the middlemen and any mechanism that potentially changes that is interesting. Certainly, something we've not explored at the moment, but it is something that I would watch with interest.

Thank you so much for all your questions. Thank you for your time today. And apologies if we started a little bit late, very un-Swiss of us. But thank you so much for your time.

This concludes today's call. Thank you, everyone, for joining. You may now disconnect.

Good afternoon, everybody. Welcome to this afternoon session at the Jefferies Global Healthcare Conference. My name is James Vane-Tempest. I'm Jefferies' European Specialty pharma analyst. Delighted to be hosting Sandoz this afternoon, and we've got Craig Marks, who's Head of Investor Relations. Format of this is a hybrid format. So we'll have a few slides in terms of the overall business, and then we'll get straight into a discussion. So with that, thanks very much, Craig, and over to you.

Thanks, James, and hi, everyone. It's a real pleasure to be here and to have the opportunity to finally bring some British weather to New York. So good to be here. As James says, I'm going to be spending just a few minutes going through some basic slides on the company, highlighting some recent results just so we can put the conversation with James and his amazing questions into context.

If I skip forward, so this is a kind of combination of some of the slides we presented recently at JPMorgan, Q1. And you can see here some of the headlines we delivered with our full year presentation when we published on the 5th of March. So broadly where Sandoz is as a pure-play generics and biosimilars company with the world's leading biosimilars pipeline is that we're really fulfilling upon our commitments.

So I'll talk about our midterm outlook a little bit later on, on how we're driving this business towards improving our sales performance, improving our margin, generating more cash flow and increasing the level of dividend we're paying out. But you can broadly divide our recent results in 2024 in 4 key columns that represents really the direction of travel for the business.

So first and foremost, we're advancing our pipeline and predominantly within biosimilars. So generics today makes up around 72% of our sales, but our strategic focus you could argue is more on biosimilars, where we have 28 biosimilars in our pipeline. We're getting more and more approvals around the world. And as you can see there, we have numerous opportunities to increase our coverage. On coverage, right now, we're covering in terms of losses of exclusivity for the next few years, broadly just over 60%, but you could argue there are more opportunities than we can handle in terms of biosimilars, and we can go through that. And that doesn't even include the opportunities within GLP-1.

The second element is driving that top line. So last year, we delivered over USD 10 billion of sales for the first time. And within that, the biosimilar performance was extremely strong at 30% constant currency. And nicely -- it's nice to see that all our regions are contributing strongly to our growth. So I'll go through our regional split a little bit later on.

We are improving the margin. So last year, we hit 20.1% core EBITDA margin. We're guiding to around 21% this year. And longer term, we have an opportunity to drive the margin even further. The way we're doing that partly is through mix. So biosimilars tend to have a better margin profile than generics. So mix is becoming more important as we drive that core EBITDA margin. We're also making progress as we pull away from Novartis, which we did in October 2023. There are still outstanding links on things like biosimilars manufacturing on IT that we're working our way through, but we've transformed our business and made good progress so far on ensuring that we are becoming a much more agile, lean and focused business, really, really focused on concentrating on that development, especially within biosimilars.

And then lastly, on the financials, we've now introduced ROIC into management incentives. We're deciding around 30% of management incentive payouts. And we've improved that, as you can see on screen to around 12%. And we are improving our dividend as well. So our dividend now represents about 24% of core net income, and we want to get that to between 30% and 40% of core net income by 2028. So we're well on track to do that.

And all of this is allowing more generation of free cash flow that really should start to kick in from next year. Our one-off costs as part of the separation from Novartis were $700 million in total as one-off costs last year and should actually be much, much lower from next year. You'll see a decrease this year, but more of a decrease next year. And that means with the free cash flow generation, improving margin, increasing profile and further operating leverage that we're then able to invest in multiple growth opportunities.

We've got more opportunities than we can handle, as I was saying. So in terms of LOE opportunities, you can see on screen, there's so many across generics and biosimilars. It's nice that we are in a position where we can cherry pick. So there are more losses of exclusivity over the next 10 years than in the history of the industry. There are many off-patent biologics in the market where there is no biosimilar. And one development that we can talk about a little bit later on is potential moves by the regulators to move towards regulatory streamlining and possibly removing -- and we've seen evidence of this already, removing the requirement for Phase III trials, which can account for almost 50% of the cost of developing a biologic, which we could open up a significant number of opportunities for us.

So as I was saying earlier on, we have a nice generics pipeline. There are multiple opportunities, and we're covering around 2/3 of the market. But biosimilars is really where the strategic focus is. And that's across a number of therapy areas. We actually therapy area indifferent. But you'll see over the next few years, for example, some IO opportunities. We have pembrolizumab. We have nivo. We just signed a deal on ipi with a Chinese company called Henlius. So -- and then further on, we'll have Tecentriq and then Enhertu, an ADC and so on. So many opportunities, some weighted towards oncology, but immunology is also a key backbone for us as well.

So the strategic focus is really, as I say, getting towards the focus on biosimilars. So we're now at 28% of our sales in biosimilars. We wanted to reach 30% by 2028. I'd argue we may get there a little bit sooner, and that clearly helps our margin in terms of mix.

On regionals, quite justifiably, 95% of the questions we get as an IR team and management get are around the U.S., which is less than 20% of our business. It's a key growth driver for us, but coming off a reasonably low base. We are a European champion. Over half of our sales are in Europe, but we also have a very attractive rest of world business. Now we did pull out of China last year. We divested our China business in May of last year, which is a little bit of a headwind for us in terms of sales comparability, but we are nicely balanced as a business regionally.

This is a cut from our Q1 performance deck. So I won't dwell on that. But if you see, as an example, our biggest seller, Omnitrope, 19 years after coming to market and grew double digit last year. So a nice performance there. Tyruko, our TYSABRI biosimilar doing well in Europe, and we're hopefully going to be launching that by the end of the year in the U.S. This week, I'm pleased to say that we launched denosumab or Wyost/Jubbonti in the U.S., and we'll hopefully launch that in multiple sclerosis in Europe in Q4.

Sorry, I'm thinking of Tyruko. So for Hyrimoz, our adalimumab biosimilar, performing well, both in Europe, but also more recently in the U.S. with regard to our private label contract that we have -- agreement we have with Cordavis. Pyzchiva, this week, we are again pleased to announce in Europe that we have launched the first auto-injector in that space. So we're very pleased to announce that. We've already taken significant share in the biosimilar part of that market in Europe, and we've launched a few weeks ago in private label in the U.S. for biosimilar STELARA or Pyzchiva.

So it's going to be difficult to give you an idea of how that launch is going in the U.S. because we're a few weeks into it, but we'll do our best when it comes to the Q2 print. And then finally, the Eylea biosimilar or aflibercept, you can see at the bottom right. We will launch in Europe in Q4 this year. We're not quite sure because of dealings, obviously, around the originator medicine. We're not sure when they'll launch in the U.S., but hopefully in the next year or 2.

We recently refinanced the balance sheet. So we had -- we've replaced our revolver, and we've also replaced some term loans that we had. So we refinanced there, bringing down interest costs, extending the maturity profile with a debt-to-EBITDA ratio now of around 1.6x as of the end of last year. So a good place in terms of our investment-grade credit ratings, nice level of gearing gives us firepower to do more bolt-ons like the ipilimumab deal that we did recently.

And we'll continue to look at opportunities as part of our capital allocation priorities. Our capital allocation priorities are broadly threefold. First is to reinvest in the business through OpEx and CapEx. The second is to ensure that we are paying 30% to 40% of core net income as a dividend by 2028, and we've increased our dividend per share by around 1/3 earlier this year.

Then finally, allocating some capital towards BD and potential M&A opportunities. We have so many opportunities for organic growth. I wouldn't expect us to conduct transformational M&A deals tomorrow. But having said that, we'll probably do that, knowing my luck, but hopefully not.

I'll just kind of finish up with a couple of slides. Our priorities in 2025 are really to get those launches away, keep delivering on the pipeline, drive our financials and just maintain that unrelenting focus on execution. We do have various competitive advantages. For example, our European moat that we call it, which is the extent of our commercial and distribution capabilities in Europe, where we have multiple offices, multiple sales teams within each country in Europe that's fully resourced, been there for a long time with established relationships, not only with physicians and hospitals, but also the pharmacy chains, for example, where other distributor -- where other developers can come to market, but they don't have that kind of capability commercially. So they tend to struggle.

And then finally, really on the midterm outlook. So we think we -- after delivering 9% growth in constant currency in sales last year, we think we can deliver a mid-single-digit CAGR over the midterm. And then in terms of the core EBITDA margin, you can see there a broad split of how we'll deliver margin improvements. I mean essentially, you can almost condense it down to operating leverage and mix. So plenty of opportunities as you see biosimilars becoming a bigger and bigger part of our sales to drive -- help drive that operating leverage and deliver that 24% to 26% margin for 2028.

And we had a quick look at the latest consensus this morning, and it's 24.7%. So I think the Street is pretty much in line with our midterm outlook. So that was longer than 5 minutes. I'm really sorry, James, but very happy to answer your questions as well.

Thanks so much for the introduction, Craig, and to talk about the business. I guess you mentioned more than 90% of your questions' on the U.S., which is 20%. So I might as well start with the U.S. to not disappoint. Yes, maybe to start, you -- you're one of the few companies that have actually quantified the potential impact from tariffs from what we know at the moment, which is to be commended. I think from the discussions with your U.S. teams, how are you seeing the situation evolving from here? And the White House also seems quite keen to prevent the risk of shortages just given generics are such a high proportion of volume. So I know your U.S. Head of the U.S. is sort of part of the association, which probably gives you a unique lens. So I'd love any thoughts on that to start.

Yes. In a public forum, it's always difficult to talk about what we think the White House might do. So I might reserve some comments there. But certainly, we haven't seen biologics, biosimilars and generics impacted to any significant extent. So far, we've seen the original 10% on China plus the additional 10% more recently impacting our business. At a COGS level, we think that's fairly minimal in the low millions. So we can absorb that within our guidance for the full financial year '25.

If the EU was faced with a 20%, for example, tariff and generics and biosimilars were included on that. And we think that potentially may be less likely than it was maybe 3 months ago, but who knows, then we think if it was a 20% tariff, given the size of our U.S. business and a few other factors, we think the total tariff impact, including China as well on an annualized basis would be up to $65 million on a COGS basis. So given -- and that's pre-mitigation such as price increases.

So we think we're nicely insulated from that perspective. However, you never know what's going to happen. We are insistent not only as part of the generics and biosimilars sector, but also, as James was saying, we -- our Head of North America is Head of the lobby in the U.S. And she is very insistent and the lobby is very insistent that if you do see tariffs in this space, given the level of pricing in the U.S. and some of the margins achieved on some medicines in the U.S., that you may well see shortages and no one wants to see that. So we are making that case clear, but who knows what's going to happen.

On the subject of known unknowns, I guess, investors are sort of concerned about most favored nascent pricing impacting the IRA, particularly more on the branded side, but the prices come down, how do you see that evolves for you guys in terms of we might have to take price cuts there?

Yes. So I mean, it's a good question. Right now, most government business is quite -- is a very small proportion of our U.S. business. Our U.S. business is predominantly commercial. So any kind of MFN impact right now is fairly limited. But we are launching -- if you look at the profile of what we're launching over the next few years, particularly some of the monoclonal antibodies in oncology and immunology, then you may see government business increase as a proportion of sales. So we're not -- we won't be immune to the fact that we may be working off a lower base of originator final pricing before they get to patent expiry. So we are conscious of that. But right now, it's a fairly limited exposure because of the level of government business that we do.

Switching to generics, again, in the U.S. Small molecule generic pricing trends, at least for you guys, still seem to be quite favorable. I think you sort of said the low single digit, which does seem to be better than some of your peers are kind of seeing. So I'm just kind of curious why that is with your portfolio. And similarly, if trends persist there because I know many companies like yourself like to be conservative how they think about pricing. If they maintain at that level, is that upside to your guidance this year?

Yes. I mean I never take the approach and Sandoz management doesn't take the approach of sandbagging to look like here. We try to provide the market with a realistic impression of how we'll perform. So we are seeing overall this year, we do anticipate worsening pricing levels versus last year, not just in the U.S. but globally. So last year, we saw prices decline overall by 1%. We think it's going to be more like a return to normal this year of low to mid-single-digit declines.

And broadly, we are -- where we are with our generics business, particularly in the U.S., we are launching at a rate of not. We launch multiple generics per year, but they tend to offset pricing declines. So our business in the U.S. is more of a low-growth business. I'd suggest going forward, what we're doing differently I am not quite sure, I'm sure it's the brilliant execution of the team in the U.S. just in case they're listening. But yes, I'm not sure there's any kind of secret sauce. I mean, I guess it's our strength, our scale, our level of distribution, our level of relationships we have to the market and maybe the mix of our portfolio as well.

So the introductory presentation, you covered a lot of materials, but perhaps if we could just focus a little bit on GLP-1 just we do get a lot of questions on that and recognize it's a staged opportunity. So what role does that essentially play in your pipeline? And how do you see the opportunity evolving? Investors are quite -- not concerned, but quite keen to understand the level of investment in terms of CapEx, use of partners, how much risk you take on board, et cetera.

Yes. No, it's a great question. So we see the GLP opportunity in phases. So next year, we will launch in diabetes in Canada. We frankly don't know how that market and that opportunity is going to pan out. We know at market formation, there will probably be a number of competitors because it's GLP-1. So we're anticipating significant levels of competitor activity. We want to ensure it's just Canada and it's just diabetes. And then after that, there are opportunities in Brazil and potentially Mexico as well.

Now that's not within our guidance. If those opportunities do well, there would probably be upside. But we are using partners. We're not manufacturing ourselves. We're using almost kind of a test case like an experiment to see how the opportunity pans out. But the next wave then really comes in terms of the weight loss opportunity, which is obviously in a number of years' time you're into the 2030s.

So we definitely want to be the market formation. How we achieve it in terms of CapEx and how much we make and how much we buy, we haven't disclosed to the market yet. Any implications for CapEx, we haven't disclosed. But clearly, the opportunity for a company the size of Sandoz with our position in the market and being one of the strongest generics and biosimilars companies in the world, we would absolutely want to take a very strong position. Now the question we then get is, well, other originators struggle with capacity and fulfilling the demand. And it's the first time we see originators struggling to such an extent to fulfill demand. We are not looking to fulfill demand for the whole market.

If we take a small part of that market, that market could be enormous. I mean if you take, for example, the price of Wegovy in the U.K. at, say, GBP 200 a month, GBP 250 a month, you can imagine how much the price would come down once it's gone off patent and then the expansion of the market from there on in. And then you multiply that by however many countries. So it's going to be an enormous opportunity. The market will be -- Rupert and I were chatting with an investor yesterday who was saying that he's spending $330 a month for his New York gym. And he said that could easily -- he could save some money by taking some GLP-1 when it comes off patent. So yes, the market could clearly expand significantly. If we're a small part of that, that could be very lucrative for Sandoz.

Switching gears to the biosimilars business. You mentioned also in the presentation upfront that there's more opportunities than you can handle. And I guess also alluded to potential regulatory changes. And that's also a theme we've heard as well throughout the conference in terms of companies focused in this area. And some numbers we've heard is it could be as much, say, normally to do $200 million, $250 million to develop a biosimilar, but actually, you remove the Phase III, it's $40 million to $70 million or so. So that cost massively comes down.

The reason why I'd like to pause and think about that for a second is when we think about what you've outlined to achieve over the next kind of few years, on the one hand, that could be potentially a margin opportunity for you in terms of the costs you've laid out with the guidance you've given. But then on the other hand, if you keep those costs, then that's a revenue opportunity going for products, which historically you haven't been able to go for. So how should we think about the push-pull levers of that and the viability of some of these other products? And if it's about bandwidth, is it staff? Is it resources? Is it money in the budget? So a few things in there around the same kind of theme around this legislation and the push-pull levers for the P&L.

I mean my answer is going to be incredibly unhelpful because we haven't fleshed it out yet. And the reason we haven't fleshed it out until to the market about it yet is because regulatory streamlining is at a very, very early stage. And we're not -- we're unsure as to how it's going to pan out. We know the MHRA in the U.K. has dropped the requirement for a number of years for the requirement for a Phase III.

We know a German company, Formycon, that many of you probably heard of that I think didn't continue with their pembrolizumab Phase III trial earlier in the year. I think they announced that. We've done the same thing. We've closed off the new recruits in our pembrolizumab Phase III trial based off we had communications with regulators.

The EMA recently published a paper, I think, in March or April, they call it a reflection paper that you'd be able to Google, I'm sure, and it talks about potentially moving away from the requirement for Phase III. Now that hasn't happened yet. So we're almost kind of in the speculation stage right now. So we don't want to promise the earth.

And so if we get more clarity from the regulators at some stage, and we know that other regulators around the world have fed back that they will effectively follow FDA and EMA, meaning you can cover other markets as well, so you can be sure that you've got markets where you can go to. Once we get more clarity, then we can give the market more clarity as to how it's going to work. But again, it will just be a really nice problem to have. If we've got 28 assets in our biosimilars pipeline right now, we could potentially, as you say, reduce the cost of our development and regulatory build, but then reinvest that back into more assets.

And there are so many assets we can go after. Someone yesterday had a nice jab at us by saying, why haven't you got assets like Tagrisso? Why haven't got this out? Why haven't got that asset? And it's a case of we can do anything we want, but we just can't do everything. And this just opens up the door potentially longer term.

It would be transformational for the industry. And that's a really long answer that I'm going to make even longer now, so James. But -- the question we then get from people is an obvious question is, okay, well, if you're reducing the cost of developing biosimilars, doesn't that then mean you'll potentially get more entrants coming to the market, you'll get more developers and you'll get more of a commoditized market like in, for example, in various parts of the generics market. And the answer is no.

I mean, if you're still looking at maybe $100 million, $120 million to develop a biosimilar, that's still expensive. That's an expensive hobby. How many people -- how many companies can do that. You still need huge amounts of technical expertise. You still need to develop a biosimilar, which is not a generic. It's a little bit more complex. And there are a number of companies that can do that. They can develop these assets.

Can they commercialize? That's the real trick. Have you got the distribution? Have you got the relationships with the PBMs, with the GPOs? Have you got the relationships with the doctors, the hospitals, the pharmacy chains? We have how many developers have. And that's the real trick. And that's why we are not so concerned about the risk of increased competition if you get this regulatory streamlining.

That's very helpful. A few questions on some individual products in the time we have. We understand you recently launched biosimilar STELARA through [indiscernible] Can you give us any thoughts on the initial uptake on that and how material this opportunity could be given competition?

Yes. I mean so it's really difficult because we're a few weeks into it. So it's quite difficult. And obviously, we can give the market an update when we print, unfortunately, in August, which kind of ruins a lot of summer holidays. So sorry about that. We're fixing that next year.

But certainly, if you look at a proxy of how STELARA or biosimilar STELARA has performed in Europe, versus the HUMIRA launch, the biosimilar launch is actually performing better at this stage in terms of penetration than we saw with HUMIRA. And that's because doctors over time are getting more and more comfortable with biosimilars. That's the feedback we get.

There's clearly some reluctance, some hesitation around biosimilars, I would assume partly because it's got the word similar in it rather than exact. So I'm sure there's been some reluctance, but the feedback we get is that doctors are just getting more comfortable prescribing and using and administering a biosimilar. So I can't really give any update right now on biosimilar STELARA. We're very happy that we've launched in the U.S., and we'll give the market an update as we go through the year. it's worth saying that we're unlikely to get huge amounts of switches on day 1. It's going to take time. If you look at the biosimilar HUMIRA launch or HYRIMOZ as we call it, it did take a number of months before you then saw the jump in switches. It depends when the taps get turned on, and it may well be the case with biosimilar STELARA.

Understood. A couple of quick questions on adalimumab, if we can, especially since the loss of kind of IQVIA data for Cadarvas. Can you give us a sense in terms of how the trends of that are progressing? And I guess also related to the deal on that, I know there's not much you can say on specifics, but we understand that maybe that was renegotiated before you gave your margin guidance. We definitely get a lot of questions on that in terms of understanding if that's like 1 year, multiyear, thinking about volumes, et cetera. So to understand the risk parameters to the business with that over time.

Yes. So adalimumab or Humira in the U.S., it's definitely still a growth opportunity. We know the level of competition is intense. If you look at the ex private label market, we do tend to -- sorry, the ex Humira market in biosimilars, we do have a very commanding #1 position in that space. There's nothing to suggest that, that won't continue through this year, but we know the level of competition can potentially intensify.

However, we know that the originator has said publicly that they may well lose market share as they lose some formulary access. That gives us an opportunity, given our very strong position already in biosimilars to take some share. And the market continues to expand as well as access improves. So I think given the size of the market and the dynamics at play there and given the originator's potential loss of formulary access puts us actually in a good place.

We did come to market at the Q1 print, and we did talk about the fact that there was a step down in pricing for adalimumab. And we enjoy very strong volumes. We enjoy a great deal of visibility. We're able to plan effectively. Obviously, we're not spending the cash in any kind of similar way on SG&A to promote. So we enjoy a very strong position with HYRIMOZ, and hopefully, that will continue.

Excellent. Final question, I think we're going to be running out of time just on denosumab. Given the high level currently in [indiscernible] therapy, what are the key levers to gaining share? And I guess also the opportunity if you are kind of first to launch, we know it's a competitive space.

I think that probably the most important thing right now is the fact that we have obtained a Q code where we have effectively exclusivity in the U.S. until October on reimbursement. That's effectively how it's going to work. So we are in a commanding position to be first to market. And hopefully, we can consolidate that and get a strong position before we see others achieve that reimbursement at a patient level.

So it's really about that. And again, we can update the market as we go through the rest of the year. But again, we're very confident. We're very pleased to bring a biosimilar to market. And I wouldn't discount the importance of the launch in Europe in Q4. That's very important for us. And again, just broadly and overall, Europe is 3x the size of our U.S. business in terms of sales. So that is a very important launch for us for denosumab as well.

Thank you very much. I try not to make the questions 90% U.S., but we covered a lot of materials. So Craig and Sandoz, thanks very much.

Great. Thanks, James. Thanks, everyone.