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 9 Months 2026 sales update call. Earlier today, we published our sales update together with the accompanying presentation that we will follow on today's call. 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 sales update announcement, presentation and discussion include forward-looking statements. Please see our disclaimer here.

Please turn to Slide 3. Richard will begin with the highlights of our sales performance and an update on the business, including the continued expansion of our pipeline and further enhancements of our biosimilar capabilities. Remco will then take you through our sales performance in more detail as well as our guidance for 2026. Richard will conclude the presentation before we go to your questions.

And with that, I'll hand over to Richard. Please turn to Slide 4.

Thank you, Craig, and hello, everybody. It is a pleasure to welcome you to today's sales update. Since we spoke to you at our Capital Markets Day last month, we've continued to make good progress across the business. And I'm delighted to say we've continued to strengthen our position as the global leader in affordable medicines whilst achieving our 20th consecutive quarter of net sales growth. Please turn to Slide 5.

Let's turn first to the key highlights of our progress. We've again expanded our biosimilar pipeline this time through collaborations with Henlius and mAbxience, taking the pipeline to 40 assets including our first hemophilia biosimilar. We've also made the first GLP-1 shipments to our partner in Brazil, and we achieved GLP-1 regulatory approval in Canada. It's been a very strong year so far in generic filings, while we all have already launched around 270 generic medicines this year.

At the same time, we've continued to invest in our future. At the CMD, we introduced our Bio100 ambition. Since then, we've opened our advanced high-volume drug substance manufacturing center in Landover and announced further investments in Ljubljana in disposable fed-batch technology. Together, these excellent developments will further strengthen our in-house capabilities and support our long-term growth ambitions.

Looking at our top line performance, net sales grew by 5% in the quarter, but at an underlying level by 7% when excluding the anti-infectives B2B business. It is worth noting that we don't expect to see a material B2B headwind in quarter 4 or for next year. Biosimilars continued to be our growth engine, delivering another double-digit performance in the period, whilst representing 34% of net sales. We're delighted with the underlying performance of the business. Demand is strong. Our launches are performing well, and we recently strengthened our balance sheet, and we're delivering in line with our Bio100.

Today, we have narrowed our 2026 net sales guidance to 5% to 6% and upgraded our core EBITDA margin guidance for the year to 23% to 23.5%. Importantly, today's update to guidance doesn't change our previously communicated outlook to 2028 or our recently announced outlook to 2030. Remco will take you through the full year guidance later. We will enter 2027 with strong momentum as we capture more market share, launch more medicines for more patients around the world and expand our pipeline further and deliver more growth.

Now let's look at the sales performance in more detail, starting with Slide 6. Quarter 3 was another period of strong underlying growth for Sandoz with net sales of $2.9 billion. Once again, biosimilars were the standout performer, growing by 17%. This reflects continued momentum from the established portfolio as well as the excellent contributions from our recent launches. Excluding the B2B impact, generic sales grew by 2%, in line with our long-term trend. From the regions, North America was the standout in the quarter with growth of 20%. Please turn to Slide 7.

I am so pleased to see the progress that we're making in generics. We now have the leading global market share in generics, accompanying our #1 position in biosimilars. This is a true milestone for our business. We continue to see strong execution across our portfolio. In GLP-1s, we made our first shipments to our partner in Brazil, whilst we achieved regulatory approval for Sandoz Semaglutide in Canada, our generic version of Ozempic.

Our pipeline contains more than 300 generics and our disciplined portfolio strategy is focused on the most attractive LOEs, particularly in oral solids and injectables. We are targeting around 70% of generic LOE opportunities by value, and we continue to convert our huge pipeline into new medicines. We've launched around 270 medicines alone so far this year. Overall, this demonstrates the continued strength of our generics engine, combining excellent market share progress, disciplined portfolio management and a deep pipeline and consistent launch execution.

Challenging conditions in the B2B market for penicillin API sales still remain. We continue to urge the European Commission to investigate alleged dumping and consider antidumping duties or tariffs to safeguard European antibiotic supply. We also continue to advocate structural reforms that ensure a level playing field for European producers.

Now let's turn to biosimilars on Slide 8. Our industry-leading biosimilar pipeline continues to expand. It includes 6 assets in regulatory review or yet to launch, 7 in clinical development, 14 in technical development and 9 in early development. We also reached another milestone with the recent EU regulatory submission of our pertuzumab biosimilar. As I said at the CMD, building the next generation of biosimilars requires both strong in-house capabilities and selective partnerships. The continued expansion of this pipeline demonstrates how we're combining these 2 approaches. Another important point is that we're building a broad and diversified pipeline of future opportunities across multiple therapeutic areas.

Now let's look at how some of the biosimilars in our portfolio are performing. Starting with Hyrimoz, we continue to see strong performance. Our global biosimilar market share has increased now to 23%, supported by broad preferred payer access in the U.S. and continued volume momentum in Europe. Turning to Pyzchiva. We continue to hold the #1 position across the European markets. Our biosimilar market share now stands at 25%, while overall biosimilar penetration of the ustekinumab market has increased significantly beyond 50%. Together, these performances demonstrate both the strength of our established biosimilar portfolio and our ability to grow alongside increasing biosimilar adoption. Please turn to Slide 10.

Moving to Tyruko. Our European market share remained stable at 17%. We continue to see opportunities for further geographic expansion, including our recent launch in Saudi Arabia. Omnitrope continues to demonstrate the durability of our established biosimilar portfolio, maintaining a strong global market position with a 36% market share. Its established daily treatment profile remains resilient and a more sustainable U.S. distribution model provides a stronger foundation for future growth opportunities. Now please turn to Slide 11.

Let's now look at some of our more recent launches. Starting with Wyost and Jubbonti, we continue to see very strong commercial momentum in the U.S. Jubbonti has already achieved a 56% biosimilar share and Wyost, a 49%. The European launch continues to advance, whilst the international rollout is also progressing well, including in Brazil and Australia.

Turning to Afqlir. The European launch is progressing very well, supported by strong execution and favorable competitive dynamics. Afqlir is now available in 22 European markets with a 73% biosimilar market share and has become an important contributor to our European biosimilar growth. The launch of Enzeevu in the U.S. is exactly in line with our expectations, providing an additional opportunity to build on our strong European start. These launches illustrate what we discussed at the CMD, the ability to move successfully from pipeline development into launch execution and global commercial scale. Please turn to Slide 12.

As we build towards Bio100, partnerships will be an important complement to our in-house development and manufacturing capabilities. Our collaboration with Henlius includes 4 initial programs covering numerous assets. Henlius will lead development and manufacturing, whilst we will leverage our global commercial reach. Our partnership with mAbxience adds our first hemophilia biosimilar. Again, mAbxience brings development and manufacturing capabilities, while Sandoz holds exclusive global commercialization rights. These partnerships increase the breadth and opportunity of our pipeline, whilst allowing us to concentrate our own resources where we believe they can create the greatest value. Please turn to Slide 13.

Alongside the expansion of our pipeline, we are building the manufacturing capabilities needed to support the next phase of biosimilar growth. In Lendava, we've opened our advanced biosimilar drug substance manufacturing center, adding 120,000 liters of large-scale fed-batch capacity. In Ljubljana, we're investing in new drug substance facility focused on disposable fed-batch technology. This will add 8,000 liters of biologic drug substance capacity by 2029 and give us an additional in-house capability for low to medium volume production, complementing our continuous and high-volume technologies. Together, these investments provide greater flexibility and control of our capacity and further strengthen our vertically integrated biosimilar network. This is an important practical element of Bio100. As the portfolio grows, we'll have plenty of capacity to support it.

And with that, I will hand over to Remco on Slide 14.

Thank you, Richard, and hello, everyone. Let me start with our 9 months net sales performance on Slide 15. Net sales increased by 8% in U.S. dollars and 5% at constant currencies. Excluding the B2B impact Richard mentioned before, underlying net sales growth was 6% at constant currencies. The major driver was volume demand, while price erosion reflected portfolio mix and market dynamics. Most importantly, biosimilars continued to drive growth, supported by both successful recent launches and strong demand across the whole established portfolio. Please turn to Slide 16.

Now let's have a look at the performance by business. Our underlying momentum continues to be strong, but we did face some temporary headwinds in the quarter. German market dynamics were a bit more challenging than we originally expected, while the additional biosimilar volume amount that we had anticipated could not be fully matched by supply. In the quarter, the 5% growth included biosimilars with up to 20% growth. They now represent 34% of total net sales. Underlying net sales growth in the quarter was plus 7% when excluding the AI B2B impact. Underlying generic sales in the quarter were up by 2%. While we ended up facing the same B2B impact we saw in Q1, we do not expect further impacts from Q4 onwards. Please turn to Slide 17.

Let's turn to the regions. North America was again the strongest contributor to growth in Q3, driven by an excellent biosimilars performance. Europe continued to deliver increased market share, including significant gains within biosimilars. As already mentioned, the performance in Germany in the quarter was more challenging than we expected. Stronger volume demand in the third quarter also resulted in short-term biosimilar supply constraints. In International, underlying growth was 5% despite impact from active portfolio rationalization, divestment activity and the supply constraints. Now let's have a look at the debt maturity profile on Slide 18.

Our balance sheet remains strong and continues to provide financial flexibility. We recently issued a EUR 500 million bond with a 12-year maturity, extending the average maturity of our debt profile. Importantly, we continue to maintain attractive funding costs with expected average interest rate on long-term debt remaining below 4%. We continue to enjoy investment-grade ratings with positive outlooks from both Moody's and Standard & Poor's. This framework gives us a strong foundation as we continue to invest in our pipeline, manufacturing network and future growth opportunities. Please turn to Slide 19.

Finally, let me turn to our guidance for 2026. We have narrowed our expectations for net sales growth to 5% to 6% at constant currencies compared with our previous guidance of mid- to high single-digit growth. This primarily reflects the constraints in biosimilar supply from strong volume demand, as I mentioned earlier, as well as the stronger-than-expected adverse market dynamics in Germany. As Richard mentioned before, our confidence in '27 is very strong. Importantly, the net picture for 2026 is also positive as we have upgraded today our expectations for the core EBITDA margin for 2026, which we now anticipate being in the range of 23.0% to 23.5%. This compares with our previous expectation of around 100 basis points year-on-year expansion. If you remember, our margin last year was 21.7%. This new guidance has increased our expectations for core earnings per share this year. Our assumption for pricing remains a mid-single-digit decline. Based on recent spot rates and assuming these prevail for the remainder of the year, we continue to anticipate an approximate 2 percentage point FX tailwind to net sales with no material impact on the core EBITDA margin.

And with that, I'll hand back to Richard. Please turn to Slide 20.

Thank you so much, Remco. Now please turn to Slide 21. Let me conclude with the bigger picture. Last month, we set out our ambition for the next decade and introduced Bio100. By 2035, our goal is to more than double our net sales compared with 2025 before any additional upside from GLP-1s, whilst delivering a core EBITDA margin of more than 30%. Today, you can already see the progress that we are making here. And through Bio100, our ambition is to build a portfolio of more than 100 biosimilars by 2040.

Our biosimilar pipeline continues to expand, and we're investing in the manufacturing capabilities required for the next wave of growth. Recent launches are building strong positions in their respective markets, and we continue to broaden our opportunities through both in-house development and partnerships. At the same time, our generics business provides a strong foundation while we continue to advance near-term growth opportunities, including GLP-1s. Together, this reinforces our confidence in our long-term growth prospects and our ability to continue delivering on our purpose on pioneering access for patients. Please turn to Slide 22.

Before I move to questions, we look forward to welcoming many of you to our Slovenia sites next month for a firsthand look at our new biosimilar capabilities. We will visit our recently opened development center in Ljubljana and our drug substance manufacturing facility in Lendava. The visit will demonstrate how our investments are bringing Bio100 to life through an integrated network spanning development and manufacturing. We look forward to seeing you there. Thank you for listening. Please turn to Slide 23, and I will ask the operator to open the lines for questions.

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

One on the guidance. So given you don't anticipate any further headwinds from the B2B API business in Q4, and you should also see the benefit of the launch of Enzeevu in the U.S. and GLP-1s, how should we think about the lower end of your top line guidance? Why would that be in the range of the 5% performance that we've seen year-to-date. And just in terms of the recent supply constraints that we've seen, will this have any implications for the upcoming Enzeevu launch in the U.S.? And how can you ensure that this won't become a recurrent issue for Sandoz ahead of the ramp-up of the Slovenia facilities? Could these provide you any flexibility in terms of supply before the end of the decade?

Thank you so much for your questions, Sophia. If I comment on the second 2 part -- the second 2 questions, and then I'll get Remco to comment on the guidance comment. First of all, we see no issues or constraints with the Enzeevu launch. But really, that will be pretty soft this side of the year, but we see quite a very attractive opportunity as we go into 2027. So again, our confidence around that, and we're quite excited about that opportunity in the U.S., but really that impact flows through mainly into 2027. And the same with the GLPs, we always said in 2026, it was never really significant to the overall because of the business. Delighted that we've now launched in Brazil, and again, we would look to launch in Canada later this year, but don't see a significant impact.

And I think you make a really good point. I mean in a sense, part of our core Bio100 strategy with building our own internal capacity in the medium and long term. So we've got greater control. The issue around supply is more a demand question than a supply question. What we saw was, and you see that partly why it flowed through to the bottom line is an acceleration in demand, particularly in markets like Germany where the pricing frameworks have changed. And we're now working to catch up that volume. We don't see an impact flowing into 2027. We're working with our partners to increase capacity. But in the sense, some of that demand was perhaps a little ahead of where we thought it was but some of that will get lower pricing, which I guess in terms of market share is actually a positive, but in the short-term course, some frustration in terms of the overall supply capacity available to meet that demand.

Remco, do you want to talk about guidance?

Yes. Thank you, Sophia. Yes, indeed, excluding B2B, we had a 7% growth in Q3 and underlying that sort of the direction you should assume going forward in Q4 and also for next year, we're looking very positive at the growth outlook. Always when you give out guidance, correct, you have to give some kind of range. So that's why we ended up with the 5% to 6%, 7% growth in Q4. Would that be applicable with then so on an average of slightly above the 5.5%. So that will be more around 6%, but it's so precise. So we give around that range of 5% to 6% as give you the best indication we have at this point in time. We have still 2 months to go. But overall, we expect to step up in Q4 versus Q3. That's very clear, and we look very positively as well in the overall mix of the portfolio. And also the upgrade we did on the EBITDA margin.

Our next question comes from James Gordon with Barclays.

James Gordon from Barclays. Two questions, please. The first one was extrapolating the top line growth. And I think I heard that effectively implied in the guidance, it would be that you would grow something like 7% for Q4 and that we could extrapolate that to '27. So for that, what does that assume in terms of biosimilar EYLEA in the U.S. and generic sema because I think for generic sema, it's technically not in the full year guide for this year, but is that 7% assuming you do get a bit of a boost from generic sema in Q4 this year and into next year that is material? And what are you seeing so far on biosimilar EYLEA?

And then the second question was on the EBITDA margin and the upgrade there. So you've taken the margin up by 30 to 80 bps for the full year, so twice that in the second half, so more than 1 percentage point. So how sticky will that benefit be? And where does the benefit come from? Is it more some cost avoidance in the second half of this year, which then comes back or even more of it into 2027? Or are some of these things that are going to be the margins materially higher in the second half of this year could not apply to '27 and beyond, please?

I'm going to pass -- I think both of those questions are great for Remco. So I'm going to let him have his breakfast this morning.

Thank you, James, for allowing me to have breakfast this morning. Yes, as I said before, with the prior question from Sophia, correct, we expect a step-up in Q4 versus Q3. And indeed, the underlying growth was around 7%. So that is not a strange number from our perspective. The consensus for next year currently stands at around 5.5% growth currency comparable. And that's something we fully support. At this point in time, it's too early to give a guidance for next year. We will come with that next year. But we would encourage anyone to change their position with regard to their outlook for '27. As Richard said before, we're looking very positive to this.

For this year, with regard to the margin upgrade, as the biosimilar growth is going very well, we benefit really from the mix improvement. In terms of cost on the SG&A, as we said before, we try to keep that as flat as possible. We are doing that. With regard to D&R, we are actually investing more than we originally planned, also in line with what we said at the CMD. So there is nothing we are holding back on the investment in growth. On the contrary, we have only accelerated this. So the underlying improvement purely comes from the mix and all the cost constraints with regard to SG&A fully in line with our plan. So very positive and nothing special to be mentioned here.

And again, just to reiterate, I think to Sophia's question, in Q4, really the EYLEA launch and the GLPs really don't make any material difference to the outlook of the business, but set us up extremely well for 2027, and we're very optimistic around that, but don't see that as really a significant driver in this quarter.

Our next question comes from Shyam Kotadia with Goldman Sachs.

First one was on Germany. So you flagged stronger-than-expected headwind in the quarter for both generics and biosimilars. How much of a drag was it to the group? And could you remind us what your expectations are for this impact as I believe you flagged this is only being a 2026 impact. Is this still the case? Or could we see this going into '27 also?

And then my second question is on the anti-infectives impact. So you mentioned the impact will be immaterial in 4Q '26 and next year. But just wanted to get a sense check on the visibility regarding that because I recall prior commentary that 1Q '26 was going to be the largest impact, and it was going to probably taper from there as it was in the base for second half '26. So just wanted to get a sense check there on the visibility going forward, given the release also mentioned there is no imminent return to predumping conditions being expected.

Thank you, Shyam. I'll start with anti-infectives. I think clearly, we've taken quite a big hit this year. It's been a bit lumpy Q1, Q3. But really now, as we get into Q4, we don't see in the sense, we've already taken that hit, and it's pretty much washed out. So our visibility -- so that is pretty good. So we don't see any impact really as we go into 2027. So that headwind will wash out. Again, I'm trying to use this call both with the commentators, but also the media to put pressure on European government, super frustrated that we've spent so much time to try and protect a European asset and yet we're still facing quite heavy dumping from Chinese suppliers.

And then Germany, yes, I think, look, it's been an interesting story. I mean, Germany, we talked about at the beginning of the year that the government changed the sick fund contracts potentially to open house contracts. We started that -- that triggered sort of an expansion of the market, which I think in the medium and long term is very good for us, but also some price declines, particularly in biologics. The government then changed its mind and changed the rules, but then clearly, the sick funds still were behaving in that way. So you had this very unsettled dynamic in the German market.

When we look at our internal data, we're encouraged because we see we're winning share. I think it's also worth noting that we became the world's largest generics company this quarter. So again, building on that momentum. I think the bulk of that impact will wash through into 2027. Again, I think there's some structural opportunities to better position our business as we go through in 2027. And again, it supported the margin expansion.

But in the sense, this was probably the main driver in terms of the acceleration of the volume, which then put tension in terms of the overall supply network. So these things always become a little bit interlinked. But Germany has been not a straightforward journey. But I think clearly, in the medium and long term, it's an attractive place because given our scale and given the Bio100 positioning, I think the adoption of biologics will accelerate. Anything, Remco, to add to that?

No, I think when you say, where is the difference coming and how much is Germany out of the total. The consensus for the full year was around 6.5%. Now we guided now between 5% and 6%. So let's say, we talk about EUR 100 million. That will be a combination of supply in Germany, 50-50 roughly of impact of both to that EUR 100 million.

Our next question comes from Harry Sephton with RBC.

So first one on the U.S. Enzeevu launch. Just want to get your thoughts on how you see this market evolving given the very strong biosimilar incumbent and then also the buy-and-bill model, which creates certain pricing incentives, which you'll have familiarity with some early on the market where you have to withdraw it.

And then my second question, there are a number of clinical-stage biosimilars that are going off patent in 2027. Can you give us some indication as to what time frame we should expect some of these to come to market?

Thank you, Harry. I guess, which anything specific because, again, it's quite a long list. I mean, clearly, we've disclosed. We've tried to be incredibly transparent in terms of our pipeline and where we'd anticipate our first launches. So I guess it's not -- if there's anything new, we would update you. So nothing has really changed. Obviously, in a sense, Novartis Biologics, we were always going to necessarily be there given the nature of the separation. So I think we've been quite consistent with that.

On the U.S. Enzeevu, I mean, I think having [indiscernible], it's certainly informed us on our position. I think you're going to have to forgive me here because I don't particularly want to disclose our strategy and our positioning to the market other than I think this is a really exciting opportunity, and I think we're extremely well positioned. And I think something we can comment on a little bit later, but I don't particularly want to disclose much more at this point given that we're really just in the very -- the launch phase of this product, and I don't want to signal to our competitors what we intend to do.

Our next question comes from Charlie Haywood with Bank of America.

Charlie Haywood, Bank of America. I just wanted to dig into the supply chain issues, which sounded like they came as somewhat of a surprise. And I think a bit more color on that would be appreciated by us in the market. So first part is, could you just help us understand specifically what happened? Is it a manufacturing? Is it a delivery issue, a timing issue, et cetera? And part 2, just sort of more hypothetically on volumes. I imagine the volume demand change on a group level from something like this must have been a low single-digit change at most. So I'm surprised your ability to supply is operating at that narrow of a bandwidth.

And then into sort of next year and the following year, biosimilar volumes will likely be growing at greater than 20% per year. So what's the confidence on delivering that? And even if there is some sort of surge in demand on another price cut, how confident are you to supply that going forward?

No, thank you. I think this is a demand question, not a supply question in its root. And clearly, if you look at our business, I mean, today, 34% of our business is now biosimilars. That's like 4 points ahead in value. In volume terms, that's significantly where we thought we would be even a few years ago. You've got to appreciate with a biologic, you need to forecast normally a year, 18 months in advance to build capacity. It's not a small molecule of generic. And I think part of the challenge fundamentally is we never have 100% of any market. So if a competitor has challenges or whatever, how that flows through.

So it is naturally a constrained market. Demand has accelerated, particularly in markets like Germany. So pricing has come down, but then we've seen a corresponding increase in volume. As we see that then flowing through, we're working very closely with our partners. We're packing capacity. So I don't really see that -- I don't see that as an impact going into 2027, and we're working extremely closely. But this is -- the nature of this business is that clearly, it is demand sensitive. But really, the root of this is we've seen an acceleration of our volume demand rather than necessarily a constraint of our supply, and it's now just matching those 2 things.

Our next question comes from Urban Fritsche with ZKB.

Yes. So just coming back to the supply constraint discussion and to understand a bit the market dynamics in general, what did happen when you were recharging supply? Were there some other competitors which were stepping in immediately so that in the end, you would lose some market share? Or is it product specific and that it's really demand for your specific products? And maybe the second question...

No, I mean, if you look -- sorry.

And maybe the second -- sorry for that. Yes, the second question on the B2B penicillin impact. Is there in general -- is there a risk for spillover effect on other generics as these players know now how they have to play the game?

Okay. I mean, supply constraints, if anything, it's the opposite. If you look at our market share data, we're winning share. Our evolution index is accelerating ahead of all our major competitors. So I don't see that we've necessarily lost anything here. And as I said, this has always been -- this is a dynamic market. There are very few products where we have sole supply or very -- only one other competitor. So I think it always ebbs and flows between markets. But when you look at it as a whole and also in Germany from our internal data, we're winning share. We're not losing share. So this is, I say, very much a demand question rather than really a supply question.

The B2B -- I think there's 2 different things here. Don't confuse B2B supply with generic supply. So what has happened is Chinese API sources have been supplying directly, but predominantly through Indian manufacturers who then have been blockaded. So Prime Minister Modi has effectively put a tariff on B2B imports into India, but allowing exports. So then Indian manufacturers have particularly then had a very low-cost API and are then dumping. So both the -- there's an indirect link through India. So it's not changed the generics dynamics. I don't think there's a winning formula here. It's certainly not the winning formula when a government is heavily subsidizing a key strategic asset.

So I think this is a very different dynamic, but clearly something that I find incredibly important and incredibly frustrating that we call this out and challenge European governments to make sure that this critical business, whilst it still exists, is protected. But thank you for raising the point, Urban.

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

Some quick ones, please. Just on the antidumping issue. If the European Commission does act to sort this out, is there a potential upside going forward if this problem is resolved? Or is it -- it can't get any worse, but it can't get any better?

A quick question also following on from Germany. Can you just give us any points you'd flag on any other markets in Europe where there is potential structural changes that we should be aware of, be they positive or negative?

And then just a very quick one on sema in Canada and Brazil. We're getting a huge amount of interest, obviously, in this as to when this will become impactful. It's early days in both markets. Any idea you could give us on when we should start to see the trajectory emerging in these 2 markets would be really helpful.

Yes. Look, I guess on your first -- so first of all, good morning, Simon. I guess, look, I can always dream. I think you're absolutely right. It's one of those things now pretty much and this is why unfortunately, our confidence that it can't be much more of a drag because I don't think it can get much worse. And clearly, there is an opportunity if we can convince Europe to maintain -- keep this product on critical medicines list. It's a modest impact, but I think the ability to add probably EUR 1 a pack to maintain these products across Europe makes this basically a difference between a particularly unattractive portfolio to being a critical but sustainable franchise.

And it's not just in Europe. We're having similar conversations with the U.S. administration about how we supply anti-infectives to the U.S. government given that at the moment, they're predominantly buying from Asia as well. So I think clearly, I don't think it's a downside, and I think the way you articulated it quite well it could be an upside.

Germany, I think we've talked about. You're seeing France, I think, potentially moving. But again, I think there's an opportunity to expand our market share and penetration rates. And other markets, again, the conversation we're now having with governments is, we're part of the solution and we're not part of the problem. We did a back-of-the-envelope calculation for the North American markets, we could save about $1 trillion a year in health care costs over the next 10 years if we accelerate and adopt the Bio100 we propose. So really, those are the conversations about how do we get better market reform, how do we then drive better access and penetration of biosimilars. So I think, again, positioning Sandoz in a very nice place over the next few years.

And then GLP-1, very fair question. I think, look, the time to have this conversation probably when we close the year in quarter 1, when we do the full year earnings. I mean, clearly, I think it's going to be an attractive contributor to 2027. Clearly, we'll have launched in Brazil, Canada, Saudi, Turkey and a number of other markets, and we'll have a much better sense of how that's going to evolve. But I think it will have an impact next year and certainly it's not going to be negative. So how big a positive, I think that's the time to have that conversation. But thank you for the question.

If I may add on, just a technicality, which is probably not always well understood. Biosimilars is more profitable than generics on average. Even when the price erosion is a little bit higher, what you see in Germany. So with volume going up and a little bit more price erosion that you see also coming back in our updated guidance and upgrade of the guidance. It's not negative, correct? When we gain market share in biosimilars much faster, it's a net positive for us.

Our next question comes from Thibault Boutherin with Morgan Stanley.

Just a quick follow-up on the previous question. Can you tell us if there are specific products that are being impacted by supply constraint? Is it Humira, Stelara? Is that across the portfolio?

Just second question on the margin. So you're already guiding for 23% to 23.5% on core EBITDA this year. The midterm guidance was 24% to 26% '28. So just if you could help us how we should think about the margin progression over the next couple of years? Could you be a bit back-end loaded? Or do you expect margin improvement next year basically without giving a guidance, just the shape?

And just last quick one. GLP-1 Brazil. So if I understand correctly, you have a commercial partner there. I think you previously said that you are sourcing API and finish elsewhere. So just if you could explain what role you're playing in Brazil, GLP-1 and what are your margins on that country, for GLP-1 Brazil.

No problem at all. Thank you, Thibault and good to hear your questions. Thank you so much. Look, you've got to forgive me, I'm not going to disclose individual products partly for competitive reasons. But again, there isn't any specific one. I think it's more about the general sentiment. But again, we talked enough, I think, about -- this morning about the supply and the demand side, but I'm not going to disclose individual products. I'll let Remco talk about margin in a moment. On GLP-1, we have a strategy -- we have a 2-product launch strategy. So the first wave through a partner, we'll access certain channels of the market. And then early in quarter 1 next year, we will launch a Sandoz semaglutide in addition. So in a sense, it's a 2-product strategy that we intend to adopt, which we think is the right way for us to penetrate and access the market and play both to our strengths and our relative partner strengths in various sectors of the market.

I don't -- we don't disclose the margin mix of individual products. But again, it's an interesting market. It's an out-of-pocket market. And I think we'll have better insights really to Simon's question earlier on as we get into the earnings call early next year. Remco, do you want to talk about margin?

Yes. Thibault, thank you for the question. Yes, indeed, in '28, we have given an outlook for between 24% and 26% EBITDA margin. And then in 2030, 25% to 27%. If you would indeed end up between the 23% and 23.5% for this year, with the outlook that always we try around 100 basis points improvement year-on-year, we are ahead of the outlook at this point in time. It would mean that in '27, we would already be in the range for '28. So in that sense, we are looking very positive at the numbers we currently see. It's too early to give a guidance for '27. But on balance, clearly, we are ahead of our plans.

Our next question comes from James Vane-Tempest with Jefferies.

James Vane-Tempest from Jefferies. If I can -- I have 2 if I can. If I could just come back to the biosimilar temporary supply again. I understand your point, Richard, it's a demand question, which you mentioned. But if supply can't keep pace with demand, I'm trying to understand why this isn't a supply question because if there's 12 to 18 months time line to build capacity, I guess, looking today through the end of 2027, how should we think about the timing of the ramp in Slovenia to help mitigate any future supply issues if there is excess demand above your contracted supply agreements? Or do you have enough potential excess capacity secured for next year?

My second question is just on margin guidance and I guess, the cadence longer term. Is any of this, just to clarify, temporary due to mix? Or with a regular cadence, do you simply have increasing confidence in the midterm margin range? Or are some of the benefits more one-off in nature this year?

Thank you, James. And I'll let Remco take the margin question. Look, Slovenia, we don't see the Slovenia impact in terms of supply really coming until late '29, early 2030s. But as we go into '27, we will be working with our partners to free up more capacity. As I said, we're putting more packing capacity, more fill/finish capacity. So we have, certainly as far as we see it, more than enough capacity to meet the demands that we see for 2027. And we're confident in terms of how we will build that momentum. But again, I think it highlights the importance of our mid- to long-term strategy to bring more and more of our capacity in-house to give us the flexibility and also the cost leadership that we want in this business. Remco?

Yes. James, thank you. Again, obviously, there was a previous question in this regard on the cost. There are no one-offs we currently see in '26, bringing this margin increase. There's also no additional cost savings or something we pull back on investments. There's nothing in this. This clearly comes from a better mix and the operational performance going in line. If you then think for the years after, correct, the baseline reset. So if the mix of bio and generics is better this year than we originally estimated, from there, you just move into next year. So there's not a headwind coming negatively suddenly that's reversing and actually, we don't see that. It's just the baseline which reset. And from there, we move onwards. So nothing special to be said here.

Our next question comes from Victor Floch with BNP Paribas.

Maybe just 2 on my end. So maybe just looking a bit further out, you seem pretty confident in delivering mid-single-digit growth next year. But maybe just beyond Eylea in the U.S., can you walk us through the key launch drivers for 2027 and 2028? We have relatively a few major biosimilars launches on our radar for this year. So I was wondering whether there are any opportunities that we might be overlooking? And the second one is just on CapEx and then coming back a little bit to the CMD. With CapEx expected to remain around EUR 1.1 billion annually over the medium term, how should we think about the trajectory of free cash flow over the next couple of years?

Thank you, Victor. And I think the second question is a great question for Remco. So I'll let him deal with that.

I can hold breakfast.

So I think, again, there's momentum in a lot of products. And I know we talked about this at the Capital Markets Day. As you get into sort of late '28 or '29, you've got the etanercept launch in the U.S., 13 years after our first launch. We've got a number -- we've got insulins launching in Europe. We've got aflibercept launching in the U.S. Deno is doing great or at least great, great in Europe. But also, we've launched 270 generics so far this year. No one talks about that. They will deliver growth. We've got some interesting generic launches potentially coming up in the U.S. in the small molecule space. And again, we don't break those out.

So I think as you go into '27, everything is in place for the '27 growth. We're not waiting for any approvals. So now it's about execution and continuing to build on the strength that we have. And then as we flow into '28, let's get into '28 when we get closer, I think let's focus on closing '26 and talking about 2027. But I think we've disclosed a lot of our pipeline, particularly in biologics. But I would look at some of the legacy assets, particularly, there's some very attractive growth opportunities.

Another example, I think we can see some nice growth coming out of things like the estrogen patches. I was with a lot of the U.S. government last week. We're going to serve another 300,000 American women next year. That's all a growth opportunity. And I think there's still a significant untapped potential in that space as well. So again, this isn't just a bio story. It's also the scale of our generics business as well.

Let me take the one on the CapEx, Victor. We have said also on Capital Markets Day correctly, the CapEx slightly above EUR 1 billion, and that amount will stay about the same for the coming 5 years through 2030. And then as a percentage of sales, it will grow -- further grow. That is what we have said. Now over the coming years, with the top line growing and the EBITDA margin growing, of course, the EBITDA amount will go up, and therefore, the free cash flow would also correspondingly go up.

With regard to the working capital, we try to keep it as flat as possible. There might be a very modest increase. But we have to think about the end of this decade is when also the site in Slovenia up and running, we would need some more inventory, of course, in the working capital with being vertically integrated, which now sits with our partners, but that's also manageable. So we would expect a further increase in the free cash flow. And also at Capital Markets Day, we have given some indication of what the free cash flow could be by 2030. So I hope that answers your question.

Our next question comes from Florent Cespedes with ODDO BHF.

Florent Cespedes with ODDO BHF. A quick one on the hemophilia portfolio strategy. Do you intend to launch different products on this field or the focus will be on emicizumab? And could we have a little bit more color about the time lines if you have an idea of when you could launch this product on the market?

Okay. Good morning, Florent. Other than what we've disclosed and the partnership with mAbxience, I can't really say very much more. I think that's a very detailed question. Thank you for the question. I need to reflect on that, but I'll let Craig pick that up with you separately. But other than what we publicly disclosed, I'm not going to disclose anything else.

Our next question comes from Urban Fritsche with ZKB.

Two more on products. For the sema launch in Canada, what is holding you back from launching in Canada? And is this Canada specific? Or is there some learnings that you should apply for other sema launches in other markets as well? And then maybe a second question on -- building up on the Wyost, Jubbonti success. In terms of other biosimilars, what could be a next Wyost, Jubbonti-like opportunity? Which of all the biosimilars in the pipeline are you most excited about?

Thank you so much, Urban. I mean asking which of my both bio is asking which of my children do I love the most. It's very difficult. I think, look, I'm not going to -- again, some of this sort of falls into sort of competitive intelligence. I would look backwards rather than forward. I think, again, we have a track record, whether it's aflibercept in Europe, adalimumab when we did the first own label in the U.S., the excellent work the team have done now with Wyost and Jubbonti in the U.S. and how we've managed that strategy. I think what it shows is consistently our commercial capability as the leading player in this industry to be the partner of choice, not just in terms of inflow of product, but in terms of commercial execution.

So I think there's a number of products. Clearly, I'm excited about the potential of the upcoming aflibercept launch in the U.S. I think that is a very interesting opportunity. And then we'll just look at it asset by asset. But I think, again, it plays to that strength. You make a good point on semaglutide. I think, a, semaglutide is not a straightforward product. If you look at the Canadian market, the 2 companies that have already technically launched, both of them have had challenges, one in terms of their API and then now working with the regulators. And clearly, one of those partners, we will work with in the short term, but then we have an additional partner that we will launch earlier into Q1 next year.

And then the other company that has launched had problems with its device and is working with the regulators. So this is not a straightforward product. It's technically not a straightforward product. It's cold chain. It's not necessarily easy. I think it plays to Sandoz' strength, our ability to manage partners, to manage cold chain. We're a strong biologics player in Canada. I think, the #1 player in Canada. So I think we're well positioned. We've always said this was a very small launch, not material launch in Canada this year. We would still anticipate to launch this year.

This is now a question of supply being available and bringing it to the market. And then we would launch with additional partners as we go into 2027. And I think that puts us in an extremely strong position to take a nice position in Canada during the year. But we've always kept this away from guidance. We've always said this is where we're going to learn and experience, and I will still stand by that. But it's an interesting opportunity. And it also partly goes back to, I think, one of the earlier questions about an additional growth driver next year. Clearly, I think has the potential to certainly be attractive and accretive to our growth next year as well. So nice position to be in.

I think that's probably pretty much where we're at. I think that's all of the questions. I look forward to seeing hopefully many of you in Ljubljana in a few weeks' time. I will bring a rain jacket because it's obviously in November in Ljubljana, but I look forward to seeing you then. Thank you so much for your questions, and thank you so much for your support. Have a great rest of your day.

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

The fight for access to affordable medicines is every day. That line from Cheryl sums up our purpose at Sandoz, the critical importance of access to biosimilar medicines and the ultimate reason we're all here today.

Good afternoon, good morning or maybe even good evening, depending upon where you are in the world, and welcome. It's fantastic to see so many familiar faces today. My name is Craig Marks, Head of Investor Relations at Sandoz, and thank you for joining us in person and online.

For those in person, there are goody bags by your feet, there are copies of slides and some very expensive chocolates. That's where most of the budget has gone. But it's a real pleasure to introduce you to our Capital Markets Day.

So before we begin, I'd like to just cover some practicalities in the event of an emergency, please whatever you do run, and also leave the room immediately. If you hear the word evacuate, event staff can be on hand. If you require assistance or notice any issue, please alert a member of staff. Now you'll find WiFi details on your badge for easy access. In your goody bag, you'll also find a copy of the slides to write on.

If you're joining via the webcast, you're very welcome to participate in the Q&A sessions. We have 2. [Operator Instructions]. And finally, please note today's session is being recorded, and a replay will be available on the website soon.

Now you can see our disclaimer here. Let me briefly walk you through today's agenda. Gilbert Ghostine, our Chairman, will kick off by outlining how we're translating our potential into excellent progress.

Richard, our CEO, will then take you through how we will enhance our long-term growth and profitability.

He will be followed by Rebecca, who will explain why Sandoz is best positioned to make the most of the upcoming loss of exclusivity opportunity in biosimilars by accelerating our leading pipeline.

And Armin, our President for Biosimilar Development, Manufacturing and Supply, will focus on how we are scaling biosimilar development and driving vertical integration of our manufacturing and supply network.

Now following Armin's presentation, we'll pause to cover any questions you have, and then we'll have time for a cup of tea.

When we come back, we'll shift to commercial execution when our 3 regional presidents: Christophe, Peter and Keren for Europe, International and North America, respectively, will bring our world-class commercial engines to life for you.

Remco, our world-class CFO, will then take you through how all of this will translate into attractive and sustainable value creation for our shareholders, but even more importantly, into value for the patients we serve.

Now Richard will close the presentation, and then we'll move to the final Q&A session, where we'll finish, we think, around 5:00 U.K. time. For those in the room, we will be delighted if you could join us for drinks outside.

And with that, it's my pleasure to hand over to Gilbert.

Thank you, Craig, and thank you all for joining us here today. It is an honor to be with you all. Moving from promise to performance. At Sandoz, our ambition has always been clear: to improve patient access to medicines around the world. Over the past 3 years, we have sharpened our focus, prioritized the right medicines, strengthened our development engine and built a more resilient, scalable supply network. At the same time, we've become more disciplined commercially, capturing the full value of our portfolio.

What defines Sandoz is not a single attribute, but a combination of strength that few companies can match. We are a company built on leadership in biosimilars and generics, on scientific innovation, on quality and integrity, and on a deep commitment to patients. Our Swiss heritage gives us strong foundations, but our impact is global. Every day, our medicines reach millions of people around the world and help health care systems expand access to treatment.

At Sandoz, these principles are not independent of one another. Innovation without access has limited impact. Scale without quality cannot be sustained. Leadership without integrity cannot endure. The strength of Sandoz comes from bringing all of these elements together. That combination has allowed us to build a leading position in biosimilars and generics and has made Sandoz one of the most respected companies in affordable health care.

As we look ahead, these strengths will become even more important. Health care systems need partners that can deliver innovation, quality, reliability and access simultaneously. We believe Sandoz is uniquely positioned to do that exactly. 2026 marks a special year for Sandoz. It brings together 3 significant milestones: 20 years of pioneering leadership in biosimilars, 80 years at the forefront of antibiotics and 140 years of Swiss heritage rooted in entrepreneurship. These anniversaries are about more than longevity. They reflect our ability to adapt, innovate and remain relevant in a constantly evolving health care landscape.

Over the decades, Sandoz has continuously adapted to scientific advances and societal needs. From expanding access to life-saving antibiotics in the mid-20th century to scaling complex biologics today, the company has grown alongside breakthroughs in medicine and alongside the patients it serves. This progression is underpinned by a clear and enduring ambition: improving access to high-quality affordable medicines worldwide.

While Sandoz began its latest chapter as an independent publicly listed company only in 2023, we stand on the shoulders of giants. The company traces its origins back to 1886 in Basel, a legacy shaped by generations of pioneers, entrepreneurs and creators who laid the groundwork for what Sandoz is today. The 3 anniversaries we are celebrating this year tell us that story. Over 140 years of heritage gave us the entrepreneurial spirit to adapt and evolve. Our 80 years of antibiotics demonstrate our ability to bring essential medicines to patients at scale. And our 20 years in biosimilars show how we continue to lead in some of the most complex and innovative areas of health care.

Together, these milestones are more than markers of our history. They are the foundation of the impact we deliver today and the ambition we have for tomorrow. The reason these milestones matter is not simply because they reflect our past. They matter because of what they enable us to do today.

In 2023, we set out to become an independent company. Today, we could proudly say that we have delivered on the commitment we made and most importantly, that we are living up to our purpose of pioneering access for patients. The same strength that allows us to thrive for 140 years, lead antibiotic for 80 years and pioneer biosimilars for 20 years are now translating into measurable impact for patients and health care systems around the world.

Biosimilars and generics account for around 80% of global prescriptions, yet only about 30% of their total cost. This is why access and affordability matter. In 2025, we reached more than 1 billion patients. We delivered USD 26 billion in health care system savings and generated an estimated $400 billion in broader social impact.

Looking ahead, we are significantly raising our ambition. We see a clear path to reaching over $1 trillion in social impact through accelerated portfolio expansion, increasing biosimilars penetration and our expanding global scale. This is ambitious. But after you hear the rest of today's presentation, I believe you will also see it is realistic. Sandoz is not only a growth and a margin story, but also a company uniquely positioned to benefit patients and health care system at an unequaled scale.

As we build on our rich heritage and prepare for the opportunities ahead, we have also evolved our leadership team. Since listing, 7 members of our Executive Committee have either been appointed or changed positions, bringing additional capabilities in the areas that are critical as we further develop our business: commercial excellence, biosimilars, manufacturing, supply chain and financial discipline.

What you see here is a highly experienced and globally diverse executive committee, bringing together deep expertise across commercial, science, supply network, finance, legal and intellectual property, with a strong track record of execution where scale, discipline and operational excellence matter most.

The Board fully supports the Executive Committee, and I'm extremely pleased with the performance of the team and the platform they have constructed to deliver this new and exciting phase in our history. The first 3 years were about building the platform. The next decade is about capturing this opportunity.

Turning to our Board. All our directors are independent, providing objective oversight and supporting balanced decision-making. This is a Board that combines independent experience and diversity, providing the governance framework we need to execute our strategy with discipline.

I'm honored to serve as Chairman of Sandoz and at the same time, very proud of the Board we have assembled. I'm also grateful for the strong support it provides Richard and the Executive Committee. With the right governance, the right leadership team and a clear strategy, Sandoz is well positioned to capture the significant opportunities ahead.

Together, Richard and his team have built a strong platform over the past 3 years. Today, you will hear how we intend to build on that momentum and further accelerate our impact for patients, health care systems and shareholders.

And with that, let me hand it over to our best CEO, Richard Saynor. Richard, over to you.

That would be hard to live up to. Thank you so much. It's a real pleasure to be here. Thank you so much, Gilbert, for the introduction. I'm incredibly proud and privileged to be here today. As you heard from Gilbert, since we launched the first ever biosimilar 20 years ago, we have shaped and defined the global biosimilar market. We've built the industry's broadest portfolio, delivering medicines across a range of therapy areas and serving patients globally.

Today, we stand at the beginning of our golden decade of opportunity with an unprecedented loss of exclusivity. The originators talk about a patent cliff. Their patent cliff is what we see as Sandoz' golden decade, where more importantly, it is the golden decade for people like Cheryl, whom you just watched on the video, as more patients will have more access to affordable medicines.

In the last 3 years, we have established our business credibility, our global scale and the value that we add to patients and the health care systems around the world. Now we can do so much more. We are already a leader in our field, but we can accelerate and amplify that leadership.

Bio100 is how we will meet this huge opportunity. It is a clear strategy for how we will deliver more than 100 biosimilars to the market by 2040, supported by a vast and vertically integrated development, manufacturing and supply engine. This is not just a pipeline aspiration. It is a comprehensive clear plan that will shape how we will invest, how we will operate and how we will grow over the next decade and beyond.

If there's only 3 things that you should leave with today. Firstly, our purpose. This remains the same. We remain driven by our purpose and committed to expanding access to high-quality affordable medicines and driving meaningful benefit for millions of patients like Cheryl.

Second, we have a clear ambition to be more -- to have more than 100 biosimilars in the market by 2040. This scale will enable us to broaden our reach, deepen our presence across therapy areas and drive long-term sustainable growth.

And thirdly, along the way to our 2040 ambition, we have a clear delivery plan on how to at least double net sales by 2035 versus last year and deliver a core EBITDA margin above 30%. That margin will be one critical element, although not the only one of our long-term value creation.

We are building a high-growth biosimilar platform designed to provide differentiated capabilities at scale. The following presentations will show you how Sandoz is in a unique position and how we're turning this ambition into reality. We are focused on 2 businesses where we have a clear competitive advantage: biosimilars and generics. Together, they create a complementary and resilient platform, combining innovation, scale and cash generation.

Critically, we have the proven capabilities to deliver. We have the commercial reach and the financial strength to invest, a leading and expanding pipeline, strong development platforms and strategic partnerships, a robust global manufacturing and supply network, deep regulatory and IP expertise and as I said before, financial strength to continue that investment. This consistent strategy is already delivering. And with the same fundamentals, now we can do so much more.

Looking ahead, we're significantly raising our ambition. As Gilbert already mentioned, we see a clear path to reaching over $1 trillion in social impact and delivering high-quality affordable medicines to ever more patients. And why do we believe this? Well, the best place to start is our track record. We are the largest pure-play generics and biosimilar company operating at scale worldwide. This scale matters as it gives us the relevance with our customers, leverage in our operations and a strong foundation for future growth.

At the same time, we are a true European championship with leadership positions in around 95% of the markets that we serve and a presence in Europe of over 40 markets. This breadth and scale deliver both a huge competitive advantage and a significant expansion potential. Importantly, our growth is consistent and proven. We have now delivered 19 consecutive quarters of top-line growth, driven specifically by our biosimilar business.

In addition, we've delivered strong operating margin expansion, a core EBITDA of 21.7% last year, representing a near 4 percentage point improvement since we became an independent company. Underpinning all of this, we have developed the strongest pipeline in the industry with 39 biosimilars and more than 300 generics, giving us clear visibility on future launches and strong momentum.

And finally, our global footprint is comprehensive, serving more than 100 markets. I hope that you will agree that Sandoz has a unique combination of pipeline breadth and commercial scale backed by a strong financial position. In terms of our sales growth, we started at $9.6 billion in 2023, and we've produced a compounded growth rate of 7% at constant currencies.

Biosimilars continue to be a key driver, while our generic business provides scale, resilience and strong cash generation. You can also see the increasing contribution and momentum from biosimilars. Our sales growth and increased profitability reflect excellent value drivers.

Firstly, pipeline execution, ensuring successful launches. Secondly, the strength of our portfolio with increasing contribution from higher-value biosimilars. Thirdly, a continued focus on operational excellence across the supply chain. And finally, ongoing organizational efficiency as we simplify and scale our business.

And we see a clear path to further margin expansion. With around $15 billion in gross sales, we are significantly ahead of our closest competitors. Importantly, this leadership is not concentrated in just one region. It is global, spanning Europe, North America and international markets, reflecting both scale and diversification.

But what differentiates Sandoz more than anything else is our end-to-end integrated model. We combine deep capabilities across development, manufacturing, the supply network and business development and then commercialization, allowing us consistently to bring biosimilars to market and scale them effectively.

We've been building this opportunity for several years now. We've committed to around $1 billion to build a leading fully integrated European biosimilars hub. This was a deliberate strategic decision to invest ahead of the opportunity and create another competitive advantage. This delivers a highly differentiated end-to-end platform spanning technical development, drug substance, fill/finish manufacturing, all anchored in Europe.

You can see this across our footprint, with Ljubljana as a core development hub, Lendava for drug substance production, Brnik for injectables and manufacturing, and Toulouse as an important development and supply network center, complemented by additional capabilities in Germany and the U.K.

We've created this network so that we have control, speed and reliability needed to internalize biosimilar manufacturing and strengthen our capacity for growth. It allows us to accelerate development time lines, ensure availability of supply at leading cost and support global launches at scale. This translates directly into value as we will have greater resilience, flexibility of supply, improved margin profile over time.

So this now brings us to Bio100. The slide shows the overall size of the opportunity and how it breaks down into biosimilars compared to generics, including GLP-1s. As I said, whilst originators talk of the patent cliff, we see this as our golden decade. We see a huge step-up in the volume and value of LOEs, particularly in biosimilars. And whilst at the same time, generics continue to provide a broad, resilient base, as I said, delivering sustainable cash, customer intimacy and overall generation of support. You'll hear more in detail about how we're positioning ourselves to ride this wave from my colleagues.

However, I first wanted to cover why now is the right time for Sandoz to introduce Bio100 to you and provide you with more detail of the opportunity ahead. We're launching Bio100 now because the window of opportunity is wide open. We believe it is our responsibility to capitalize on this opportunity in the interest of patients, shareholders and stakeholders worldwide.

Firstly, there is a significant untapped value. Over $300 billion of originator sales are not targeted by Sandoz today. This is clearly an actionable expansion opportunity.

Secondly, the environment is becoming more supportive. Regulatory streamlining, including the removal of Phase III requirements is accelerating our development time lines and lowering our cost per program.

And thirdly, there is an evolving industry focus on biosimilar development, but this remains a complex space requiring capital, scale and technical expertise. The players that can do this are few and far between. And given the sheer scale of LOEs ahead, competitive intensity at asset level is expected to moderate.

To put all this together and the conclusion is clear. This is a unique alignment of market opportunity, favorable regulation and competitive dynamics. Sandoz is perfectly positioned to double down, scale faster and affirm leadership in biosimilars.

Today, we have a pipeline that covers about 50% of the LOE value. By 2035, we plan to have around 70 biosimilars in the market, covering around 80% of available opportunity. And by 2040, we intend to have more than 100 biosimilars, sustainably covering about 80% of the relevant value.

We're building this engine to deliver this, significantly ramping up internal development from around 2 assets entering the pipeline per year to around 7 by 2035 and up to 10 by 2040. That step-up is critical because it gives us greater control, delivers higher margins over time and offers us more attractive returns. These targets are also supported by being the partner of choice. A great recent example is our deal with Henlius that can deliver an additional further 10 assets in key therapeutic areas.

So in summary, Bio100 is not simply an aspiration. It is a structured phased scaling plan with key milestones, delivering coverage and a disciplined buildup of capabilities. It positions Sandoz to translate the originator patent cliff into long-term shareholder and patient value.

Bio100 is the heart of our equity story. We are only a pure play -- we are the only pure-play generics and affordable medicines company operating at a global scale. #1 globally with deep market intimacy, a combination that is critical to drive adoption and win share consistently across regions. We pair that with an industry's leading pipeline, not just in size, in quality, but also the disciplined purpose framework protection and acceleration of our pipeline. And Rebecca in a while will take you through that.

Importantly, we control more of the value chain through in-house development and a strong partnership model, we combine flexibility and capital efficiency, accelerating delivery while enhancing returns. Underpinning this will be a fully integrated, scalable biosimilar manufacturing and supply network, giving us reliability, speed and flexibility and the cost advantages at scale.

Add to that, our regulatory and IP expertise, we have a proven track record of successfully challenging weak or duplicative patents. For example, some 89% of cases we challenge with the European Patent Office are ultimately revoked or amended, enabling up to around 8 years earlier in terms of patient access.

That clearly generates huge savings for health care systems and great opportunities for patients. But we also go beyond litigation by tackling complex patent structures such as patent thickets, whilst also engaging directly with policymakers to address the practices, including serial patent litigation.

And finally, we have the financial strength to invest, with a disciplined capital allocation and a clear commitment to sustainable profitable growth. So this is why we believe Sandoz is in a powerful position to win in biosimilars. And that's the why.

Now, for the what. What will this look like in terms of net sales over the next decade and beyond. Our new midterm outlook from 2025 to 2030 is to accelerate net sales to grow at mid- to high single-digit percentages by 2030 and then to deliver more than $22 billion of net sales by 2035. That is more than double our net sales of 2025, which were just over $11 billion.

At the same time, the sales mix will continue to improve. Biosimilars are expected to grow from around 30% of our sales today to around 55% of our sales by 2035, becoming the majority of Sandoz' revenues by then. The number of biosimilars in our portfolio is expected to increase from 13 today to around 30 by 2030 and to around 70 by 2035, providing clear visibility on how this growth is delivered.

So this is not just a volume story. It's a deliberate shift towards larger, higher-quality, faster-growing businesses, with Bio100 acting as an engine to drive both scale and value over the next decade and beyond.

And it would be remiss not to mention the meaningful opportunity in GLP-1s, an additional growth factor that is not part of the core Bio100 trajectory. GLP-1s present a significant opportunity, and our approach is phased and disciplined. We will start with early market entries such as Canada and Brazil and other international markets, allowing us to build capabilities, establish presence and derisk execution.

Through 2030, this phase is additive to our group growth. From 2031 to 2035, we plan to move into the major markets, the U.S. and Europe, where GLP will become a material benefit to Sandoz' sales. Whilst it's too early to make sales forecast given the many uncertainties around how this very new, very different market will evolve, we see considerable potential sales upside here over that period.

Firstly, selecting the right molecules, i.e., the most competitive, with semaglutide as our anchor, liraglutide, tirzepatide and so forth, is critical. These medicines are where we expect we can compete effectively and create value. Secondly, ensuring continuous flexible and competitive supply. This is a key differentiator in this category.

And thirdly, delivering timely launches with the right commercial model to capture share quickly and efficiently. GLP-1s provide a meaningful opportunity on top of the core Bio100 strategy to further enhance our sales growth and drive incremental value.

In summary, I want to bring all of this together so that our ambition becomes very clear. Our targets are explicit. Over the next 2 years, we will build our portfolio, resulting in more than 100 biosimilars in 2040, giving us a commanding breadth and depth. This would be around 80% of the biosimilar LOE coverage, opportunity by value, which we're systematically capturing the most attractive pools.

Along the way, we'll have more than doubled our net sales by 2035, with GLP-1s as an additional potential source of growth. What underpins this is equally important, and you'll hear from Rebecca about how we're building structural advantages in the way that we accelerate our biosimilar pipeline.

And from Armin, you'll hear how we continue to differentiate through development, manufacturing and supply chain capabilities.

Later, you will hear from our 3 regional presidents about how we will leverage our world-class commercial engines, translating launches into rapidly increasing market share and thus patient access.

And finally, you will hear from Remco on how we're stepping up value creation combining growth, margin expansion and other key financial deliverables to provide high-quality returns.

This is a commitment with clear milestones, and I'm incredibly proud of what we've achieved so far and amazingly excited about what we will deliver for patients, shareholders and stakeholders in the years to come.

And with that, I hand over to Rebecca.

Thank you, Richard, and for the introduction, and good afternoon, everyone, also in the room. It's a great pleasure to be here at the London Stock Exchange today. I'm Rebecca Guntern, Chief Commercial Officer at Sandoz.

Since the spin-off, the last 3 years have been exciting period of growth. Together with Richard and my colleagues, we've been working hard to deliver on our vision to be the leading and most valued biosimilar and generic company. We are proud of what we have achieved so far, and we're even more excited about the future. In my 20 years with the company, I have never seen an opportunity as compelling as the one ahead of us.

So today's presentation is a key opportunity to get you equally excited about our growth story and how we're going to drive value in the future. I will focus now on one of the most important drivers of our ambition, accelerating the leading Sandoz biosimilar pipeline. Let's dive right in.

We are at the start of the largest opportunity in the history of biosimilars and generics. We are entering a uniquely attractive period driven by a record number and value of LOEs. As you can see on the left-hand side, the value of LOE opportunities across biosimilar and generics is expected to increase around 5x, reaching about $1 trillion by 2040. Sandoz is uniquely positioned to translate this opportunity into value.

In generics, we are a leading company with global scale and with over 300 assets in our pipeline, we are targeting a significant LOE opportunity of $450 billion. In biosimilars, our ambition is to extend our lead by addressing an LOE opportunity of $550 billion, supported by a pipeline of 39 assets that already by now leads the industry.

So let's start with our generic business. Generics remain core to what we do. They offer scale and a strong platform for growth with attractive financial returns. Indeed, we are the only global pure-play biosimilar and generic company. The 2 businesses have strong synergies that are central to our competitive advantage. Our generic portfolio strategy is focused on areas where we can compete and win, particularly in oral solids and injectables. Oral solids account for 80% of the LOE ahead of us, thus further supporting our portfolio strategy.

Our strong pipeline of more than 300 generics provides a steady flow of planned launches over the coming years, translating into an LOE coverage of 70%. This strategic focus is already translating into delivery with recent successful first-to-market launches, including nintedanib, dapagliflozin and sitagliptin.

Before I move to biosimilars, let me take a moment to share with you our GLP-1 ambition. GLP-1s represent an additional meaningful long-term growth opportunity for Sandoz. We're approaching it with the same pioneering mindset and discipline that has underpinned our leadership in biosimilars and generics.

Our ambition is clear. We want to be a leading player in expanding access for GLP-1 treatments for more than 2 billion patients around the globe. Our initial focus is on semaglutide and on launches in selected early markets, starting with Brazil and Canada. This would be followed by launches in major markets in Europe and the U.S.

From 2036 and beyond, we plan to continue strengthening our position through next-generation product launches. We have already made significant progress. We have received our first GLP-1 approval in Brazil for the indication of type 2 diabetes in July this year. We're now aiming for a Q4 launch. Weight management is anticipated to follow.

With only a single-digit percentage of patients getting access to GLP-1 treatments across indications, Brazil offers substantial headroom for market expansion and a great opportunity to improve access. Following our first approval in Brazil, our next major opportunity is Canada, the second largest market after the U.S., with the GLP-1 segment valued at approximately $2.6 billion.

Across both markets, we are following our multi-source supply strategy, which provides flexibility, resilience and scalability. This strategy supports sustainable growth and supply resilience. Importantly, these early markets are helping us to build the capabilities, experience and platform that will support further expansion into larger markets, including Europe and the U.S.

So how do we build a sustainable leadership position in GLP-1s? Let me show the playbook. To realize this ambition, we are building a broad and sustainable platform. First, portfolio relevance. We already have 8 assets in our pipeline, addressing some of the most attractive LOE opportunities over the next 15 years. These assets extend our pipeline beyond semaglutide into key future products, including tirzepatide, orforglipron and retatrutide. We have already reached our first important milestone with our in-house tirzepatide application accepted for review by the FDA.

Second, supply. We are also establishing a multisource supply strategy tailored by market, complemented by in-house manufacturing capabilities, pen device expertise and fill/finish capacity. This approach is designed to provide scale in a market where demand capacity and market access dynamics matter most.

Finally, our preferred commercial partner position and patient-first approach set us up to have strong go-to-market strategies and local access pathway. Note that our opportunity is not simply to compete for share within today's market. Our opportunity is to play a leading role in expanding the overall size of the market and those total access to GLP-1 treatments over the next decade.

Today, less than 2% to 3% of 2 billion patients are getting access to GLP-1 treatments. We estimate a market expansion in patient number in the range of 2 to 7x, depending on market maturity and treatment affordability. The combination of market expansion, portfolio breadth and commercial strength is what gives us confidence to deliver on our long-term GLP-1 ambition.

Let me now turn to biosimilars, where I will spend most of my time today. Biosimilars are the single biggest opportunity and the major driver of our growth trajectory. This is a space we know exceptionally well. Sandoz is the pioneer of biosimilars. And 20 years on, we are the leading biosimilar company globally, with 19% market share and a diversified portfolio of 13 in-market products. There are 2 key points I would like to highlight.

First, as you can see on the left-hand side, we have proven time and again our ability to successfully launch products across regions. Today, 8 of our 13 biosimilars are ranked either #1 or #2 globally, demonstrating the breadth and competitiveness of our portfolio.

Second, we are leading at scale across therapeutic areas, market archetypes and regions. It shows that we can consistently bring a wide range of biosimilars to market and execute well. Our diversified portfolio reduces reliance on a single product and provides a balanced risk profile.

In summary, we combine scale, proven execution and diversification. That is what underpins our leading global position today. As I always like to say, it is no coincidence that we are the global leader. We have worked diligently over decades to get there.

However, we can never be complacent. As the global leader with an industry-leading pipeline, we must remain very ambitious and very focused to stay consistently ahead of the competition. This slide demonstrates our Bio100 ambition, as already outlined by Richard, to expand from 13 assets today to more than 100 assets by 2040, creating the broadest and most competitive biosimilar portfolio in the industry, targeting an LOE coverage of about 80%. We have a clear plan to get there.

First, through disciplined and rigorous pipeline selection, focusing on the most attractive and commercially relevant assets. Second, by combining in-house development with strategic partnerships. This allows us to scale faster while managing risk and capital efficiently. And third, by leveraging our strong commercial platform.

As I've shared before, we have consistently demonstrated our ability to translate launches into leading market positions. In essence, Bio100 is all about building on a success story with sustained global leadership in biosimilars, reinforced by a rapidly expanding pipeline.

Let me talk briefly about another development that could significantly and materially benefit Sandoz. Recent moves towards regulatory streamlining worldwide are a major structural tailwind for biosimilars and a clear accelerator for our Bio100 ambition over and above the LOE opportunity. What's changed is not the underlying science. It is the regulatory thinking.

With Phase III efficacy trials no longer required, development time lines and development costs can be reduced substantially. This allows us to redeploy capital into additional assets, expand our pipeline faster and ultimately bring more biosimilars to more patients sooner. In other words, regulatory streamlining significantly increases both the speed and the scale of what we can achieve through Bio100.

Indeed, recent progress on streamlining will play a key role in addressing a critical remaining gap in the biosimilar landscape, the biosimilar void. To illustrate this, over the next few years, more than 60 biologics will lose exclusivity, many with no biosimilars yet in late-stage clinical development. This is a clear and significant opportunity where Sandoz can lead.

As streamlining makes more molecules economically viable, you may see some smaller assets in our pipeline that will have the advantage of limited competition. Why does this matter? By targeting these gaps, we can accelerate access for patients, reduce health care costs and further strengthen our leadership in biosimilars.

Our advantages in commercial scale, balance sheet strength and vertical integration in manufacturing compare very favorably to many competitors. The key to successfully realizing this opportunity is a rigorous pipeline selection framework. This slide shows how we bring discipline and scalability to the process.

First, we filter for attractive opportunities, now focusing on products with over $0.5 billion in LOE sales. The effect of regulatory streamlining have reduced it to that level.

Second, we refine based on operational feasibility and longevity assessment, including make versus buy decisions, ensuring we allocate capital efficiently and build the right balance of in-house and partnered assets. We also assess IP feasibility early on, providing visibility on the timing and likelihood of market entry and helping us to focus resources on opportunities with the clearest path to value creation.

Third, we select the assets based on commercial value, risk and strategic fit, ensuring a high-quality pipeline. In short, Bio100 is not about pursuing every opportunity. It is about selecting the right assets to drive sustainable, high-quality growth. In the coming slides, I will show how this framework helps us to build our Bio100 ambition.

Let me now quantify the opportunity behind the ambition. This chart shows the biologic LOE landscape over time and the opportunities it creates for Sandoz. A quick word on how to read it. The dark blue segments represent the LOE value already covered by our current pipeline, while the lighter blue segments show the additional opportunity enabled by Bio100. And the white portions represent LOE opportunities that exceed the Bio100 opportunity. Directly below, you can see the corresponding number of assets in each period, again, split between our current pipeline and the incremental Bio100 opportunity.

Let me highlight a few key messages. First, the sheer scale of the opportunity. Our current pipeline already addresses an LOE opportunity of approximately $250 billion through 2040. Bio100 expands that by $200 billion. So it's almost doubling the LOE value we will pursue.

Second, Bio100 adds more than 50 assets to our existing leading pipeline of 39 assets. Combined with the 13 biosimilars we market today, this creates a pathway to more than 100 biosimilars by 2040.

Third, it materially increases the share of the biologic LOE opportunity we can address. Beyond 2035, as many of these biologics are still being developed and the LOE landscape evolves, our ambition remains to steadily maintain coverage at around 80%.

Ultimately, Bio100 is much more than a pipeline expansion exercise. It gives us access to a deep and evolving pool of biologic opportunities and creates sustainable long-term growth extending well beyond 2035.

So this slide now provides a more qualitative look at how we designed the Bio100 ambition. First, modalities. Monoclonal antibodies will remain core, covering around 60% of the value, complemented by emerging technologies such as ADCs and other modalities.

Second, therapeutic areas. Most of the opportunities are in oncology and immunology. Together, these account for roughly 80% of the total and represent some of the largest and most attractive assets losing exclusivity. We can leverage our strong market presence and established commercial capabilities and infrastructure for future launches.

And third, development type. Bio100 will be driven primarily through in-house development, complemented by partnerships for acceleration.

Let me share our approach in more detail. Bio100 is explicitly designed to increase the in-house share over time. Up to 70% are targeted to come from in-house development. This is our default approach because it delivers the best economics and allows us to fully leverage our end-to-end capabilities. We will continue to prioritize in-house until capacity is fully used.

The remainder will be delivered through strategic co-development partnerships and targeted BD&L. Development partnerships are critical to accelerate pipeline expansion in a capital-efficient way beyond internal capacity. Great examples are the recent strategic co-development agreements with Samsung and Henlius. These will be complemented by targeted in-licensing deals used to selectively capture near-term opportunities.

So taking a step back, let me now help you to size the Bio100 opportunity for Sandoz. Starting with volume, there are 3 key drivers. First, market expansion. Biosimilars are not just substituting originators. They enable earlier treatment and broader patient access. While the range of market expansion outcome has been wide, we estimate an average expansion of around 10% to 20%.

Second, biosimilar penetration. This is essentially the adoption rate, which varies significantly by market archetype and channel. Europe continues to lead U.S., driven by more favorable pricing, reimbursement and market regulations, including incentives. We expect an average biosimilar penetration rate of around 60% to 80%.

Third, our market share within biosimilars. This is where execution really matters. Share is driven by the level of competition and by the launch timing, but critically also by our commercial scale and capabilities. Based on our past performance, we would expect an average share of around 20% to 40%.

Then on price, the key factor is the discount to the originator. We assume peak sales typically occur several years after market formation, and pricing at that point reflects the net discount in a competitive biosimilar market. We assume a price discount of at least 65%.

Overall, this would translate to an approximate 5% share of the total LOE value for Sandoz. So when we put this all together, the Bio100 opportunity is not just the function of originator size. It is the result of access-driven market expansion, adoption dynamics, execution on market share targets and disciplined pricing.

Let me now illustrate how Sandoz wins in practice using the Hyrimoz launch in Europe as a case study. Hyrimoz targets Humira, historically the largest biologic globally, with close to $18 billion in peak sales in a market characterized by intense competition. What you see on the left side is the critical dynamic since the introduction of biosimilars in 2018, driven by broader and earlier patient access, the adalimumab market in Europe expanded by roughly 90% in volume.

Biosimilar penetration increased consistently, reaching around 80% by 2025, mainly driven by fast adoption in tender markets, but also share-of-voice markets like Germany. Sandoz captured meaningful sustainable share of around 20% despite increasing competition. This demonstrates 2 key capabilities.

First, our ability to win share in a highly competitive market, where success is determined by scale, access and commercial strength. Second, our strength in sustaining share over time, even as more competitors are entering. And we're seeing a similar playbook developing in the U.S., where we have now reached #2 position in adalimumab.

So how will we ramp up Bio100? In the near term, our focus is on execution. We will ramp up development and manufacturing capabilities as well as strategic partnerships, which will build the foundation to reach around 30 assets by 2030. To put this into perspective, since the launch of our first biosimilar in 2006, we have launched 13 products.

Over the next 5 years, we plan to launch 17, meaning we would more than double our in-market portfolio by 2030. By 2035, we plan to further expand our global leadership position by reaching our goal of 70 in-market products.

Beyond 2035, the focus shifts to sustaining and expanding our leadership further. We expect to reach 100 launches by 2040 with even more expansion into emerging technologies. Armin will talk more about how we will get there and the preconditions for success.

So let me close by bringing it all together. We will remain relentless in our focus on what matters most, delivering excellence for patients and expanding access to high-quality medicines around the world. We have a clear road map, establishing Sandoz as a sustainable long-term leader by 2035. We're building our next chapter of leadership in biosimilars, with a pipeline designed to cover around 80% of LOE by value and more than 100 biosimilars in our portfolio by 2040.

But perhaps most importantly, we have the capabilities, the commercial platform and the execution track record to turn this ambition into reality. Sandoz stands alone as the only global integrated pure-play company across biosimilars and generics.

That's why we are so strongly positioned to shape the next era of affordable medicines, delivering sustainable growth, strengthening our leadership for years to come and continuing to pioneer access for patients more than ever before.

And with that, I would like to hand over to my colleague, Armin.

Thanks, Rebecca, and welcome, everyone. My name is Armin Metzger, and I'm responsible for our end-to-end biosimilar development and manufacturing, all the way from early development through to manufacturing and supply. To put it simply, my team takes what's in our pipeline and develops and manufactures those assets. I was delighted to join Sandoz around 6 months ago. It's a true honor to hold this key position in the company that is doing more than any other to redefine affordable health care, and it's a pleasure to be with you all day to talk about our plans to make this all happen.

I would like to focus now on how we are going to translate the Bio100 ambition into reality. Specifically, I want to explain why our biosimilar development, manufacturing and supply chain platform can be unique competitive advantage.

In biosimilars, success is not just about the pipeline. It's about execution at scale, supply reliability and cost leadership. Actually, 6 months ago, like you, I looked at Sandoz investment decision from the outside, and I was really impressed how the foundation was set to achieve those objectives.

At the core of the model, we are creating this full vertical integration. As our in-house network comes online, we are going to be in full control of the end-to-end value chain from development to drug substance manufacturing to fill and finish.

Our setup is flexible with significant capacity and built-in opportunities for further expansion and the network spanning Slovenia, France and Germany. This will be a true European geopolitical stronghold, producing reliably and at competitive cost.

I'm looking forward to a site visit in November, and we will show many of you our new fit-for-purpose biosimilar development and manufacturing facilities in Slovenia. This, along with our acquired site in France, provides an excellent platform across both fed-batch and continuous manufacturing.

Of course, we can't and we won't do everything ourselves. We will continue to work with third parties where appropriate. For instance, our recent agreement with Henlius to commercialize up to 10 additional biosimilars. As Rebecca already said, our in-house capabilities will be complemented by strategic partnering to ensure that we optimize our overall use of resources in light of rapidly expanding demand.

The map here shows our integrated European biosimilar hub. Some is still under construction, but I will take you through the time lines in a moment. Once completed, it's going to be a fully integrated along the value chain, geopolitically resilient, anchored in Europe and designed from the ground up to operate at significant scale. Importantly, it will allow us to serve all major global markets and launch many new medicines cost effectively.

Let's look in more detail at the fully integrated end-to-end biosimilar engine we are building and how that will support a distinct sustainable advantage. So how we do turn our biosimilar development capabilities into a true competitive edge to ensure success of Bio100? As a disclaimer at this point, I'm focusing today on our development, manufacturing control setup. But of course, we will continue to benefit from our strong clinical and regulatory functions, which are equally essential for our biosimilar business. Back to the slide.

Along the top row, you can see our key development locations across Europe, each with a clearly defined role. Ljubljana is our core hub for CMC development, particularly for fed-batch development. This is a huge step-up in our biosimilar development capabilities, covering drug substance, drug product and analytics.

Toulouse complements this and complement is a very important word here, complements with CMC development for continuous manufacturing. Holzkirchen in Germany focusing on analytical characterization, clinical bioanalytics and bioassay development, and Cambridge adds device development capabilities. Note that Dave, our Head of Device Development in Cambridge, is here with us today. As I mentioned earlier, and Rebecca also stressed it, all this will be complemented by our strategic partnerships with, for example, Samsung Bioepis, providing additional external development capabilities and capacity.

Overall, the in-house share is increasing over time. This integrated and strategic leap forward in the scale of and access to development capability is one key reason why I'm confident in our ability to deliver Bio100. That development engine that seamlessly connects into our industrial scale supply network also benefits from geographic proximity.

Turning to the manufacturing side. In Lendava, we will produce soon drug substance at large scale using stainless steel fed-batch technology. In Toulouse, we will operate continuous manufacturing technology. Alongside them, as announced earlier today, will give us disposable fed-batch capacity for our low to medium volume products.

And for fill and finish, Ljubljana covers vials, while our new site in Brnik completes the value chain with syringes, cartridges and auto-injectors. By the way, all this could be eventually also used for GLP-1 fill and finish operations. This is not just a network of individual sites and technologies. It's a fully coordinated end-to-end ecosystem that for us, is the ideal platform to deliver Bio100.

Let me go into a bit more detail on the newest part of the network, the new kid on the block. As we announced this morning in Ljubljana, next to our development center, we are building an 8,000-liter disposable fed-batch drug substance facility, around $300 million of investment due to be operational from 2029.

This will do 2 things. It expands clinical and commercial production capacity for our low to medium volume drug substance products, and it puts drug substance production right next to the development site, taking real time out of tech transfers. Note, this is advanced disposable fed-batch technology in Ljubljana is for us an important bridge technology for biosimilar platform, complementing our in-house high-volume platform in Lendava and the continuous capabilities we have in Toulouse for low to medium volume production.

A key point is that our hub is already being built and funded. In Ljubljana, our new state-of-the-art digitally integrated biosimilar development center was recently opened. Alongside it, we're building our disposable fed-batch drug substance facility. While next to the airport in Brnik, we will finish construction of the aseptic site in 2028.

In Lendava, the 120,000-liter stainless steel drug substance center completes construction this year and will start validation for commercial production in 2027. In Toulouse, the development center is already up and running with continuous manufacturing on the same timetable. All the sites will use state-of-the-art digitally integrated systems and will follow, of course, the highest quality standards.

So timing works for us. We're already beginning to feel the positive effects of regulatory streamlining on our biosimilar development programs and major LOE opportunities are kicking in. Volumes will ramp up and the capacity for growth will exist with our network, significantly reducing execution risk and supporting reliable delivery of our programs. Bringing development and supply in-house is one of the most important levers for value creation in our model.

Today, as is the case for many other industry players, a large part of biosimilar development and manufacturing is externally sourced. What we are doing at Sandoz is fundamentally changing that, with a clear ambition to move between 50% and 70% in-house development and around 60% in manufacturing. The real benefit to our financials will be felt in the 2030s and is aligned with our new midterm outlook that Remco will take you through later.

By creating and expanding this in-house capability and development, we will decrease development costs and provide greater production flexibility, allowing us to prioritize, accelerate or adapt programs based on market dynamics. In the near term, external partners will continue to help us bridge capacity and share investment. But over time, we will shift towards owning the critical capabilities, which will significantly improve returns.

On the supply network side, the impact will be even more direct. Lower product costs through in-house capabilities, higher supply flexibility, which is critical in tender-driven markets, and ultimately, greater competitiveness in pricing and access. At the same time, we retain flexibility to access adjacent technologies through selective partnerships.

So when you bring both sides together, this is a fully integrated operating model. This shift to in-house is structurally margin attractive, will enable us to grow faster, compete more effectively and expand margins over time. All of this will translate into clear financial outcomes over time.

We expect near-term benefits from procurement as well as sourcing and productivity improvements across development and our supply network. From 2030, the impact becomes more structural through in-sourcing, vertical integration and scale. So the internalization is not only about control. It's also a key lever for lowering costs, improving supply resilience and strengthening our long-term economics.

Diving deeper into manufacturing. We are going to go from making none of our biosimilars volume, which was the post spin-off status quo, to making the majority. Along with significant scale of the facilities, a key differentiator is our 3 technology substance -- drug substance platform.

Disposable fed-batch at 2,000 to 4,000 liters in Ljubljana gives us the flexibility to run moderate volume products and clinical batches on the same platform. Stainless steel fed-batch at 15,000 liters in Lendava will deliver significant reliable output for our highest volume products at low cost per gram. Continuous manufacturing in Toulouse will provide higher yields for appropriate molecules with their technology at limited cost and with more output per unit of bioreactor volume.

By leveraging this complementary set of technologies across our network, we can allocate products to the most appropriate platform and optimize manufacturing performance. This approach will enhance operational flexibility, allow us to respond efficiently to evolving demand profiles and support cost competitiveness.

So what does all this mean for our cost base? The network I've just described doesn't only give us more control. It changes the economics of biosimilar supply as the effect builds over time. Three things will drive it.

First, top-line growth. As Bio100 volumes come through, we will absorb more output across the same asset base, scale and the flexibility to move products between our 3 drug substance technologies will keep us utilization high as portfolio expands. That flows straight through to unit cost.

Second, continued disciplined working capital. We will keep inventory and planning tight across the network so that growing volumes do not tie up more cash than they need to.

And third, productivity, process optimization, better yields and procurement excellence across a much larger in-house space. This will be steady compounding improvement rather than one-off steps.

Put those together, and the implication is clear. Significant unit cost reduction from 2030 and a structurally lower cost of goods sold through the decade that follows. The step change will come as the network reaches scale. Remco will take you through what this means for our margins later.

We've also put in place a range of extensive capability to support delivery of Bio100. We will drive cost competitiveness from early development and accelerate our speed to market through in-house efficiencies while increasing our flexibility via selective partnering. On the right, you will see that we are going to combine supply reliability, specialized know-how and disciplined cost control within a scalable network.

Together, this capability will create an end-to-end model from cell line development to commercialization, positioning Sandoz as a leading biosimilar company with the ability to scale based on substantial and high diverse development and manufacturing capacity.

So to conclude, the foundation of our future success is already largely in place. We have actively invested to support growth with a fully integrated European network already increasingly in place. This is about ensuring scale, reliability and efficiency across our key markets.

By 2030, we will move into the next phase, optimizing how we develop and manufacture biosimilar medicine. Here, the focus will be on achieving the right balance between internal and external development and manufacturing. By combining in-house capabilities with targeted external partnerships, we can accelerate speed to market while maintaining disciplined resource allocation.

By 2035, the model will have evolved further with greater in-house strengths, including leading manufacturing capacity capabilities that deliver significant benefits. At this stage, we will have leveraged our internal capabilities to accelerate growth, turning our integrated platform into sustainable competitive advantage. The 2030s will be the decade when the full benefit of the in-house network comes through with greater control, faster execution and stronger value creation.

In summary, this is a multistage process that starts with building the foundation, progresses to optimizing the model and concludes by fully realizing the value of an integrated self-reinforcing network. And with that, thank you for your attention.

And I would like to invite Richard, Rebecca and Craig back on stage, and we will pause here so that people in the room and through the webcast can ask questions about what you have heard so far before we go to a short break. Thank you very much.

Thanks, Armin. So bearing in mind, for those online, you can't see, but it's -- there's more people than a U2 concert here. So we really should have charged and we have over 1,000 people online right now. So we're expecting quite a few questions. This is the shorter of the two Q&A sessions. But feel free to put your hands up. What I would say for those in the room, if you can make yourself very visible because the lights are really bright, so just so we can see you. If you let us know your name, where you're from, that would be great. So as I said, we'll take questions for the webcast and moderate through the iPad. But maybe, I think, James, you had your hand up. James Vane-Tempest.

It's James Vane-Tempest from Jefferies. Two, if I can, please, just on the growth drivers. Firstly, how much of the value growth from biosimilars is from the larger products to give us a sense of product concentration versus the smaller opportunities with the removal of the requirement for Phase III? And then my second question is if you have an aspiration to double the business, excluding GLP-1s by 2035, how much of that can be underwritten from current business and pipeline versus expected new pipeline and business development in the outer years give a sense in terms of to bridge what can be delivered from the business today?

Thank you so much, James. Perhaps if I take the first question for me, Rebecca, do you want to have a stab at the second? On the growth drivers. So look, so growth is in a sense, it's more effective for me as a function of competition. If you look at a product like denosumab, I think we have 7 competitors in the U.S. And clearly, it's been a very attractive growth driver. We've taken a leadership position both in Europe and in the U.S. I think a smaller asset, and it goes back in Slide 33 in Rebecca's presentation gets into the slightly counterintuitive view.

A question I get a lot is, are we going to get more competition? I think perversely, we see less competition, particularly in the small and midsized assets. You see this describing IQ, we describe it as a biosimilar void. So I think you see a materially lower number of competitors. So actually, I think over time, there's a significant value opportunity from some of the more modest assets. And I guess the best proof point is Omnitrope. We launched it 20 years ago. It's still one of our largest products and the one thing I guarantee, it's never going to go off patent. So it continues to drive value. So I think it's going to be a combination very hard to predict. But I do think, perversely, we're seeing this reduction in competitive intensity rather than increasing. Rebecca?

Yes. So thank you, James, for the question. I think one big strength of the Bio100 ambition, which we just presented is actually diversification of the pipeline across the operating areas, across different technologies and also size, right, different sizes of the products. And I think this is keeping us a great risk profile, which is very, very balanced and really reduces the, I would say, reliability on dependency on a single asset or a single market. So actually, this is a core strength.

And of course, why the larger products will contribute a large portion of growth we actually benefit and will benefit also from the smaller assets, which Richard just explained because we expect limited competition. Cetuximab, which we just signed with Henlius is a fantastic example, right? It's a midsized asset. And actually, what we're seeing currently is there's very limited competition. So we do believe we're going to create great access in this product, but also long-term value.

There's also still some legs to your point, the existing. If you look at etanercept, it's one of my big frustrations. We launched in 2017 in Europe. We still haven't launched it in the U.S. because the U.S. courts perceived that it had a patent expiry in 2030. That is still an asset that's going to create value for us as a company. It just happens to be 10 years later, more than 10 years later than we first launched it in Europe. And similarly, I could say exactly the same with aflibercept. So I think there's still momentum on growth. And then you'll hear from Peter later on a lot of the portfolio that we're still currently launching in Europe, we're still yet to launch in international markets. And on top of that, I think there's a formula, I think this is Page 35 on Rebecca's slide that actually, we try to think about how we could explain to everybody how to model the market expansion element and how that value creates.

And I think the gain here, our existing portfolio has a significant opportunity to do that. So there's still a lot of lungs left in there -- a lot of legs left in the portfolio that we have existing launch as well.

James Gordon from Barclays. I know we haven't heard from Remco yet, so I won't ask on margins yet, but I will have a question there. So a couple of questions on biosimilars. One was, can you talk about the flex on the mid- to high single-digit sales outlook, it's quite a wide range. I assume the flex really is in biosimilars. And Slide 38 was useful in terms of talking about some of the factors to get to our peak. But is the key flex from really about the competitive question, and it might be that there's not as much competition in some of the smaller biosimilars.

But if the outlook is as strong as you described, it sounds like, why wouldn't lots of companies want to go for this. Is that the key flex whether we get lots of new players coming in maybe from Asia trying to go after some of the western markets? So what are you assuming about more competitive intensity when you build this out? That would be the first question, please.

The other two are quicker, which would be when you talk about the peak, how quickly do you think that fades away because you can get some really big numbers, but did they stay there for a long time? Or do you think they erode from that peak quite quickly? And then finally would be -- so it sounds like a sustained double-digit biosimilar growth CAGR all the way out to 2030. But how linear is that? Could there be a big slowdown in that in '27 and '28 and then it gets really exciting? Or do you think -- could you do double-digit biosimilar growth for the next couple of years as well?

Three great questions. If I start with the sustained growth, I think, look, if you look at the last 3 years, we've consistently delivered sustainable growth out of those biosimilars. And they're still launch -- I mean, we'll look to launch aflibercept later in the year in the U.S. So there's still -- and then clearly, I mean, I'll get Rebecca to comment on some of the launches that bridge to 2030. So I think there's some very nice momentum in the existing portfolio and clearly some of those deals. So I don't -- I'm not too concerned. I think there's some very nice momentum.

And in many ways, part of the reason we're here is that we committed to delivering 30% of our net sales from biosimilar by 2028. Clearly, we've done that nearly 3 years early. So the momentum and the access. And also, I think the bit we consistently underestimate is the expansion of the market as we serve more patients. Biosimilar effect, honestly, I don't see it so much. It goes back to the Slide 33. I think the IQVIA this biosimilar void, this $500 million to $1 billion assets, do I expect to see 10 competitors? No. Do I expect to see one or two? Yes, maybe. Are we good at competing? I think, absolutely.

I think we have a strong platform in Europe. You'll hear from Christophe and Keren and Peter in a little while. I think we've built a strong commercial moat. And also Sandoz is unique. A lot of our competition maybe are in-licensing a portfolio. They're losing the flexibility that Armin heard. We have a great front engine. We have a great IP capability. We're building the manufacturing. We have partners that want to work with it. We're pretty unique. And so competition, we're used to it, the way that works, actually, I think, I'll see less going to my other one. Do you want to talk about peak, Rebecca?

Yes. Maybe just quickly on '27, '28 because you asked, just to comment on the '27, '28, I think an important driver of our biosimilar growth is actually also that you have, of course, the in-market portfolio, and we have proven this in the past, right? If you look at the European performance, even in years, and there was 2, 3 years without launch, we continuously to grow the business based on market expansion based on the formula we presented because you see this broader and early access for patients, which is then driving volume, which is driving at the end of your top line.

And '27, '28, don't forget, we just had recent launches with ranibizumab in Europe and the U.S. We're still going to see the aflibercept launch in Q4 this year happening in the U.S. So we will have benefit of exactly those launches also translating into '27 and even, I would say, in '28 in the case of Europe and beyond. So there is growth momentum. There are big LOEs to come. We will launch insulins in Europe with Christophe, we're going to launch potential pertuzumab in those time frame. So there's a couple of really exciting opportunities for us to grow the business and drive patient access '27, '28.

And then, of course, post '28 it's an exciting period to step in with the big oncology launches coming to the plate. And I think we have a lot of opportunities to build on our existing strong commercial platform to drive incremental growth. Then on the peak sales, I think it depends. What we try to do with this value creation slide, is to help you and hope you found it useful. The way we think about value creation, right? And you saw three metrics, which are on volume, which is this market expansion, the penetration, the adoption rate and then the market share. And then, of course, you have at the end, the price. So peak sales depending on the market archetype, the product, the therapeutic area.

If you take Omnitrope, I think we have not yet seen peak, right, 20 years in a row because we're still growing. We're still expanding the market and driving access. While, of course, in other oncology assets, you may see these peak sales 5 to 7 years post in-market formation, so that's why we are giving ranges in this value creation because there is not the one-size-fit-all formula depending on the asset.

Yes. I'm just going to take one from the webcast, if that's okay. This is Joris from Octavian. Hi Joris, good to hear from you. I've touched on these, so whether you have any other comments. So for the '26 to '30 period, you have 10 biosimilars in development to target LOE opportunities with a further four planned under the Bio100 ambition. Can you provide more detail on when exactly you expect to launch these next biosimilars?

Again, there's a slide in the backup that highlights -- and again, it's the LOE, so don't get misled. And that's -- I mean, I know we laugh a little bit about etanercept, there's an 11-year gap between first launch and last launch. So it's not as though we launch everything on 1 day all over the world. And that's just the nature of the business. So the slide shows, I guess, were the first market -- regulated market formation, the first large market. But clearly, there's value creation for years afterwards. And I think that gets underappreciated a little bit. So there is a very good slide. We've tried to disclose as much as we can without me getting into too much trouble in terms of my colleagues are disclosing that, making our competitors' life any easier, but there should be enough detail in the backup there for you.

Okay. It's difficult to see you guys, but we'll go to Thibault.

Just a question on CapEx. Since the spin-off plan, the CapEx plan, I think, for the period, I think it was $23 billion, $28 billion -- it was $23 billion. there was a ramp up of $1 more billion that's been announced since, then there was the Evotec deal and the recent announcement for the manufacturing facility in Slovenia. So just with this sort of additional CapEx that you've announced over the period, how much of the Bio100 is covered with that capacity? And if you could comment in general on the capital intensity you're expecting for the business as you want to expand the number of biosimilar market to 100 versus next. Yes, that's next to 2030.

Thank you so much. I mean I'll ask Remco to comment briefly, but effectively, you've just summarized most of his presentation. So perhaps if -- I don't know if you want to add anything, Remco, other than I'd rather let Remco perhaps cover quite a lot of that in detail and if it's not adequately covered, perhaps then we could come back to you right at the beginning for the next session. Is that okay, Craig?

We have some more of the question directly to your left, Thibault.

Florent Cespedes from ODDO BHF. Two quick questions. First, regarding the U.S. market. So you are very strong in Europe. You have great ambitions. So could you maybe share with us how you will increase your presence in the U.S. market, which is very relevant for biosimilars? Second question, a quick one on GLP-1s. Are you planning to also develop the oral formulation of semaglutide or Rybelsus pill as well when it will be off patent or will you remain focused on the injectable formulations?

First of all, thank you so much for your questions. Again, I'll let Keren -- I don't want to steal Keren's presentation again. I think exactly to your point. I mean I'm very delighted how the U.S. business is performing. I mean you're seeing great execution, but I really don't want to steal Keren's thunder, so I'll let her onto that. GLPs, we're a generic and biosimilars company, in a sense, of course. Our job is to develop copies. We're pretty agnostic. As you've seen in our filing, I think our portfolio of GLPs is very broad, both oral and injectable. We would look to be at market formation for both injectables and orals for Europe.

Obviously, we just filed -- had a fast file accepted in the U.S. for tirzepatide. This is the joy in a sense, I'm a relatively agnostic on products and molecules. Our job is to deliver the broadest possible portfolio to patients.

Yes, the strategy is hybrid, right? So we have in-house development, and we will launch our own semaglutide post 2030 which we are also investing now very targeted manufacturing capacities and fill and finish. As Armin has presented, we can leverage Brnik. And then we have a huge portfolio of 8 assets, which we're also going to look into in-house development beyond semaglutide tirzepatide, where we got the approval from FDA. And fundamentally, I think it's bringing those assets to patients. And of course, we're going to target those for formulations and injectables to really reflect the customer needs, and I would say, the evolving markets you currently see.

Right. Can we take one from the webcast. So this is Nicolas from Kepler. Good to hear from you, Nicolas. So the second question on profitability, I may well suggest that, that's covered by Remco in the second half of the session. So on the first is around IP. So when it comes to patent litigation, I believe you've mentioned you had an 89% win rate in Europe. Any color on what the rate would be in the U.S. and the rate in the larger assets, so $10 billion-plus peak sales as we'd expect much higher patent tickets on the massive LOE coming early next decade.

It's a great question. I'm looking at my general counsel. I don't know the specific actually on the percent in the U.S., I think, certainly, we win more than we lose, which is good. Ingrid, I don't know if you want to comment?

Yes. So I think it's -- we need to differentiate because the system is very different between the U.S. and Europe. So comparing the numbers would not give a clear answer. What we can say is that our litigation track record on both sides in the U.S. and Europe is very strong. We are very committed to continue doing that. And then in addition, as I heard patent ticketer litigation, I think we are really the thought leader in the industry when it comes to challenging these patent tactics and these what we see as abusive behavior. And we will continue doing that because we are fully committed to also be the voice for patients and accelerate the access for them.

Simon Baker from Rothschild & Co Redburn. Two quick ones, if I may, please. Just picking up on something you said, Rebecca, your slide on thinking about the value generation was very comprehensive. The one bit that was missing was something you just mentioned, which was the time to peak is about 5 to 7 years. I just wonder if you could give us any idea of how that varies by region and by therapeutic area. Was 5 to 7 a reasonable estimate for the piece the whole piece?

And then on the GLP-1 opportunity, I believe at the moment, all of the API manufacturing is outside your network presumably as that opportunity develops, you'll start to bring that in-house. What's the capacity at the moment? Because if this market really does become 2 to 7x peak or 2x volumes at peak, it could be colossal. So I wonder if you could sort of talk us through how big this could be and how much of that scale is an advantage of going to Sandoz given the difficulty of replicating manufacturing at that sort of volume?

I'll take the GLP and then Rebecca, I'll pass to you on -- we're not an API manufacturer. I mean we want to be clearly vertically integrated in biosimilars. We have no intention of being vertically integrated in peptide. There is plenty of peptide availability in terms of a number of suppliers that we work with. Where I do think we have a unique position is really certainly in injectable fill/finish. So we have numerous partners that we're working with. And as well as Armin described, we're building injectable capacity in Brnik, which, again, certainly as we look to launch in some of the regulated markets, we would leverage in combination with a number of strategic partners.

But to be absolutely clear, I don't see a point where we would want to get into industrial manufacturer of GLP-1 peptides. There are plenty of suppliers out there that we can work with, who are investing in building capacity. Do you want to pick on peak sales, Rebecca?

Yes. So on the peak sales, I said, it depends, right, on product and therapeutic areas. It's not every time, 5 to 7x. In Europe, of course, we benefit really from a very favorable biosimilar adoption framework. So in a sense, what you would see, adalimumab in Europe, we launched in 2018 that the product is still growing, meaning it's more than 5 to 7 years post LOE that the product is still growing. And I think we see the same as I was mentioning also in pegfilgrastim. So it really depends. And the most important part of the entire value creation, if you think about why we are here is the market expansion. And this is really the broad range where you see up to 100%.

And I brought the example of adalimumab, which was doubling actually access for patients. We do see the same, by the way, in pegfilgrastim, infliximab, where we're really driving and doubling market expansion over time. So which means in Europe, this peak sales could go endlessly, periodically, right? I mean there is not a dead end. And also in the U.S., I mean, we saw some great examples where we really see continuous adoption rate because it takes a bit more time, right? It's more gradual than what you would see in Europe with the benefit that also here, especially in the medical benefit part that is really driving continuously access, but they have different dynamics.

And then last but not least, don't forget the international markets, for us, a huge opportunity to drive access and expand the market. In many cases, in markets we're seeing patients not even have access to biologic treatments as of today. So another huge opportunity for us to drive access. And there, we have a very customized approach market by market and depending on the current maturity.

But I think as you launch 100, I mean, again, back to etanercept, peak sales are going to be 12 years after we first launched it. I mean how do -- and clearly, you had this very -- and as you launch potentially 10 products a year, the momentum that builds in terms of cash generation, value generation, the ability to accelerate is, I think, really a huge opportunity for us over the next decade.

Okay. We'll take the last one before the break. Harry?

It's Harry Sephton from RBC. So my first question is on your top-down view of the biosimilars market and specifically that price discount, which you set at about 65%. Now much of your pipeline is in very high priced oncology products, which are much more expensive than some of the originators of your current biosimilar portfolio. So my question is whether that price discount that we've seen historically with some of these products actually holds going forward when you see a product like KEYTRUDA which in the U.S. is $200,000 a year to treat, whether we still see that level of price decline or actually is meaningfully higher, especially as some of the development costs have come down.

And then my second question is on the Henlius still. So one interesting portion of that was the Halozyme assets. Now your portfolio has a number of subcutaneous products. My question is whether you have good line of sight that the regulatory framework actually allows to use that Henlius enzyme for your subcutaneous products and whether that could be a meaningful competitive advantage?

I think probably the second part, you probably answered your own question slightly, Harry, I mean in a sense -- maybe I'll get Armin to comment on that. And the first, in a sense, we don't price our products from cost. It, basically, is a function of competition. In the case of pembro, if there's a lot of competitors in a sense, the market will set the price based on the level of competition. I mean, the 65% in a sense is a slightly historical view. I mean, clearly, if there's lower levels of competition, we price it to be attractive to drive access, but also sustainable to us as a business.

So in a sense, it's a guide. It can't be a rule, but I think historically, it's around about that sort of figure. Equally, if we launch a lot more smaller assets with lower levels of competition, then clearly, we wouldn't expect to give away 65% on a drug like pembro. I think you probably give more because you're going to see more competition. Oncology assets tend to be more tender-driven through hospital-based pooled procurement. Retail assets tend to be more fragmented, but it's a guide. I mean really it's more, I guess, a function of competition. I don't know -- Armin?

Sure. Thanks, Harry, for the question. Yes, indeed, we have a couple of programs in the pipeline. And of course, enzyme is very important. But I think it's a question a lot of different countries, regulatory processes, how much you can use certain enzymes from different manufacturers. Of course, the bid is in our program on. Therefore, that's value to our pipeline, right? So definitely.

I want to talk about -- on the pricing, I think one other part, which is important is even in the most competitive markets and if you take adalimumab, it's at the end, still not on price only, right? I mean we're winning in this highly competitive market, not only because of pricing, but because of portfolio breadth, trust a brand, access, I think, contracting tender capabilities when it comes to Europe and tender market. So this is how we have built a Bio100 assumption, right? I mean we did a level -- asset-by-asset level analysis to exactly what Richard said. What is the future competition looking like? So we built it really on a very detailed plant and also taking into account what we have seen on the recent, I would say, the highly competitive launches. So I feel really confident on how we have built the Bio100 ambition. And again, price is one of the criteria to win.

Just to add, we have some colleagues outside Dave and James from the Cambridge site if you want to have a look at some of our devices, including some of the potential GLP-1 devices, heaven forbid, are outside. So when you're grabbing a cup of tea, I know they'd be delighted to show you some of our device technology. Just the device, obviously, it's not free GLP-1s. [indiscernible] Alongside the chocolates, which is [indiscernible].

Just so you know, Richard just massively stole my thunder because I was going to say exactly that.

For that, I do apologize.

So we are going to come back and restart at 25 past. Thank you for your time and thank you for listening.

Thank you.

[Break]

So welcome back, everyone. I hope you had a good break. And before we start, I'd like to play a second video that reinforces once again the critical importance of biosimilar access.

[Presentation]

Powerful work from Gustavo. Access for me doesn't mean when we celebrate the first person who gets this life-changing drug, we celebrate when the last person gets this drug. In other words, everybody who needs it has access. So now let's talk about what we, at Sandoz, will do to get these critical medicines to the people who need them region by region. You'll see from the following three presentations that we have a very well diversified and balanced geographic footprint. Europe, our champion have represented the majority of our sales last year, followed by international and then North America, both roughly similar in size. In biosimilar alone, we generated over $3 billion in net sales last year, now about 1/3 of our total net sales.

All regions are expected to continue to see strong biosimilar growth over the next decade. In Europe, our scale and deep local presence gives us a strong market penetration rate and high conversion rates, supporting expected market growth rates of around 15% in biosimilars and 5% in generics. In our international markets, we benefited from disciplined market and pipeline execution, continuously expanding patient access. Here, we anticipate market growth rates of 19% in biosimilars and 4% in generics.

And in North America, our broad portfolio and our commercial strength positions us as a partner of choice, particularly with strong market growth prospects of 23% in biosimilars and 11% in generics. You'll now hear more details from our three regional presidents on how we committed to deliver on the BIO 100 ambition representing Europe will be Christophe Delenta; representing international will be Peter Stenico, and for North America, you'll hear from Keren Haruvi. Finally, Remco will take you through how Bio100 will translate into attractive and sustainable value creation. I will close the presentation and then we'll move on to the final Q&A, finishing around 5:00, ready for drinks outside. Okay.

So Christophe, over to you.

Thank you, Richard, and good afternoon, everyone. It's really my pleasure to be here with you today. My name is Christophe Delenta. I'm the President of Sandoz Europe. And over the next 10 to 15 minutes, I'd like to walk you through our European business, what makes it special and how we will contribute to realizing Bio100. As you have heard previously from Richard, Europe plays a central role within Sandoz as we represent over half of Sandoz net sales. It is a stable foundation from which we operate in the rest of the world.

You can see that in our numbers. We have delivered 21 consecutive quarters of growth in Europe, consistently supporting Sandoz' overall performance. And that is all thanks to our team-wide commitment to delivering on purpose with strong execution supported by distinctive market expertise. While biosimilars are the key growth engine, our generic business remains the backbone of our European platform, providing scale, resilience, trusted customer relationships and broad patient access. So today, I'd like to begin by sharing how region Europe has built a world-class commercial engine, leveraging scale and portfolio strength to expand access and capture new opportunities across the markets. So let me start with the big picture.

We are Europe's leading biosimilar engineering company with 11% market share, roughly twice the size of our nearest competitor, and we continue to expand that lead year-on-year. From an external market perspective, we operate in a large, attractive and growing sector. The European biosimilar market alone is worth USD 18 billion in 2025, and is set to grow by 15% per year over the next decade, creating a significant and sustained opportunity for us. What differentiates Sandoz Europe is the strength of our commercial platform across 40 countries and the associated expertise that allows us to succeed equally across all the three market archetypes so tenders, share of voice and substitution. This footprint gives us critical reach and proximity to local customers and patients.

Indeed, we are not only the overall regional market leader. We hold leading positions in almost all individual European markets. We have strong go-to-market capabilities, leading in first-to-market execution with strong market access and commercialization excellence. These capabilities allow us to consistently capture new opportunities that translate into purpose-driven impact at scale. Last year, we delivered 455 million treatments to patients across Europe. That's the equivalent to about one treatment for everybody living in the 27 countries of the European Union because that is what we really mean when we talk about world-class commercial engine, that we combine scale, growth and execution to drive patient access and performance.

It's also the reason why Region Europe is at the center of our Bio100 ambition. As the largest Sandoz region, accounting for over half of global sales, our growth is critical to overall Sandoz success. We'll continue to provide the greatest absolute growth and will, therefore, always be the foundation for success through Bio100 and also beyond. To repeat, the fundamentals here are highly attractive. We see the European biosimilar and generic market growing from roughly USD 75 billion in 2023, to over USD 180 billion by 2035. But what is particularly important is the mix biosimilars are the key growth engine with a projected market growth of 15% per year, while generics continued to grow steadily at mid-single digits per year.

As you can see on the right side of the slide, we look at a market that is expected to grow strongly and become more biologic driven, which plays directly to our strength. Growth is expected to be driven by three structural trends. The first one is a larger wave of biologic expiries of up to 15 molecules by 2035. The second one is the generic loss of exclusivity pipeline, which will secure our growth in generic. And the third one is ongoing biosimilars launches that will lift the biosimilar contribution from 21% in 2025 to around 39% in 2035.

Now turning to our performance over the last few years. This slide shows that we are already well on track. As you can see, European net sales increased from approximately USD 5 billion in 2023 to around $6 billion in 2025, representing 6% annual constant currency growth and 9% volume growth, with biosimilar growing 15% per year, more than twice as fast as the overall business.

The steady growth underpinned by a constantly improving product mix reinforces our leadership position and gives us confidence as we start to execute on Bio100. Now digging a little bit deeper, you see here that our biosimilar market share has now reached 28% driven by both the continuous strong performance of our 13 in-market biosimilars and our proven leadership in biosimilar launches, one of our key competitive advantages.

Note that we successfully recovered share after previously growing slightly below the market. When we launch a biosimilar regardless of competitive density in the market, we typically achieve a #1 or #2 position, consistently demonstrating our ability to execute at scale and speed. Thanks to our launch preparedness and capabilities, we are now with 9 out of 13 launched biosimilar being #1. Coupled with over 86% tender win rate, we are the #1 biosimilar company in Europe, and now with 28% biosimilar market share, demonstrating clear evidence of both commercial strength and excellence in market access.

Moreover, we anticipate a wave of five launches in the next 24 months, which will further reinforce our leadership and support continued growth. Let's look into more details at our two most recent launches, Afqlir and Wyost/Jubbonti. With Afqlir, success started well before launch. We combined IP strategy, a differentiated formulation, manufacturing readiness and country-specific execution to achieve first-to-market availability across Europe. In tender markets such as the U.K., we translated early availability into rapid contract wins. In substitution-based markets, we ensure broad supply and pharmacy confidence from day 1. And in physician-driven markets, we engage customers early and focus on reliability of supply and execution.

The result was a rapid leadership update with a biosimilar market share of around 80% for the region. And we see the same play when it comes to Wyost & Jubbonti. Despite a highly competitive environment, rapid launch preparation enables day 1 availability across multiple countries while our broad European footprint allowed us to execute simultaneously across different market archetypes. This resulted in a strong early market position across both osteoporosis and oncology segment despite intense competition. This proven and repeatable launch model continues to deliver market-leading position, and I'm confident that we will continue to perform consistently well as we execute on Bio100.

Now this is an important slide, so I will spend a little bit more time on it. In addition to launch excellence, two other key differentiators are what we call our local market intimacy and our local execution model. It's a model that is easy to describe, but extremely hard to replicate successfully. It's like the old adage, think global, but act local. What sets us apart is our ability to consistently take what is the major barriers for most of our competitors, the sheer complexity of the European market and turn it into a competitive advantage.

As I explained earlier, we have built commercial platform based on all three market archetypes and we win at every level from tenders with health care or government organizations through share of voice with prescribers to substitution at pharmacy level. All of this enabled by our competitive COGS as well as capabilities built over time through deep stakeholders' relationship and best-in-class market access. Importantly, these archetypes continue to evolve. We see increasing elements of pharmacy substitution in markets such as France or Switzerland, while procurement mechanisms in Germany are becoming more structured. We view this development as a continuation of trend we already manage across Europe rather than a fundamental change in the competitive landscape.

Because we operate successfully across all three archetypes today, we are well positioned to adapt our model as the market will continue to evolve. For example, in the U.K., success is often driven by tender execution and supply reliability. In France, market access increasingly depends on the ability to execute at pharmacy level. And in Germany, physician engagement remains critical, while procurement mechanisms continue to evolve. And in most of the countries, we have an end-to-end approach. We are one of the few companies with the capability to support both prescriber engagement and pharmacy execution, helping ensuring patient access from prescription to dispensing.

Our strength comes from being able to win across all three environments rather than trying to apply or adapt a single commercial model to different market frameworks. Finally, on the right-hand side of the slide, you can see the impact of two tangible biosimilar examples. Both pegfilgrastim and adalimumab biosimilars have demonstrated rapid biosimilar uptake driven double-digit growth ensure significant health care system savings and help us to deliver on our purpose pioneer access for patients.

So we have talked about launch excellence and our strong local affinity. Our scale and heritage are also significant competitive advantages for us in Europe, supporting sustainable growth and leadership in our home markets. So Europe's health care system face budget pressure, fragmented market dynamics and evolving regulation, posing significant commercialization barriers. In this environment, scale, local presence and end-to-end capabilities really matter. Our strengths extend beyond commercial execution and include IP strategy, regulatory expertise, manufacturing reliability and supply network execution allowing us to consistently launch and scale biosimilars across Europe.

All of which brings me back to my main point, why Europe is the foundation of our Bio100 strategy? As Europe is the largest Sandoz region, it is the engine for all of our future growth plans. As I mentioned before, it is the absolute growth that matters because this translates into patient treatment and also into absolute sales. Now to how we will get there? We already operate at significant scale across more than 40 countries with above market growth and a clear #1 position in both biosimilars and generics. At the same time, we are building for the future. So the targeted expansion from 13 in-market biosimilars globally today to more than 100 by 2040 is supported by an increasingly broad biosimilar pipeline, which has recently expanded to 39 assets and with the potential to increase up to 46.

This will be done through our cooperation with Henlius. This does not require a complete transformation or significant expansion of our existing commercial organization. Our existing teams already manage a field force of over 2,300 sales reps. They already engage with the relevance to customers and stakeholders daily. As a result, each additional biosimilar can increasingly leverage the same commercial platform, creating attractive operating leverage as the portfolio expands. So in Europe, Bio100 is a highly focused progression from a position of strength and heritage today. We are already set up for success, thanks to our scale, our existing #1 position in biosimilars and our proven ability to execute across all three market archetypes.

This is the solid foundation that I believe will allow us to carry on winning as the market develops and grows. Until 2030, the focus will be on expansion and the next five launches will be an important proof point. Unlike some recent launches where we benefited from first-to-market positions several upcoming products will enter more established competitive market. Our focus, therefore, extends beyond launch timing along and will include leveraging our scale, market access capabilities, customer relationship and execution excellence to continue gaining leadership position.

In the affordable medicine industry, leadership is defined less by individual product and more by the depth and the breadth and continuity of the portfolio we build. By 2035, the ambition is clear to accelerate Sandoz as Europe's leading and most trusted biosimilar and generic company, not just by size, but by consistency of execution, reliability and value delivered to health care systems and obviously, to patients.

Thank you very much for listening. And with that, let me hand over to Peter, who will take you through how we plan to continue our success in the international region.

Thank you, Christophe, and good afternoon, everyone. It's a pleasure being here today. My name is Peter Stenico. I'm the President of Region International, the second of our three world-class commercial engines worldwide. I have spent 25 years with Sandoz from seeing Omnitrope come to market in 2006, to launching multiple biosimilars across Europe and Germany, and this experience has given me a firsthand perspective on how we have built, scaled and led in that space. Our international markets represent a significant and highly attractive growth opportunity, powered by expanding access, rising demand for affordable medicines and rapidly evolving health care systems around the world.

All this is made possible, thanks to a highly experienced, passionate and fantastic team in Region International. In the next few minutes, I'll walk you through how we are scaling our platform, accelerating our growth and how we intend to further strengthen our leadership in both biosimilars and generics across these markets. Our international business is a focused, scalable platform with a strong history of growth and even stronger growth prospects. In 2025, the biosimilar market in our region was worth USD 3 billion and is set to grow by 19% per year in coming years, a clear tailwind for sustained expansion.

We are highly selective in how and where we deploy capital, focusing on the most attractive markets, i.e., those where our capabilities best set us up to succeed and make a difference for patients. We have a direct presence in more than 20 countries and an additional 30 markets are served through a capital-light distributor model. We have a leading position across our core markets with well-established commercial infrastructure and the proven ability to maximize global scale with highly tailored localized execution.

Our strong position translates into impact at scale as the region reached around 280 million patients annually while helping to improve access and strengthen health care systems. All in all, this is a disciplined high-growth platform, combining sharp market focus and strong local execution, backed by a strong global pipeline to drive sustained value creation. International is shifting structurally towards the higher-value segment of biosimilars, and we are well positioned to capture that upside at scale.

The overall market is expected to grow from around USD 70 billion in 2023 to more than USD 140 billion by 2035 with a particular focus on biosimilars which are expected to grow by 19% per year. Biosimilars have historically represented a smaller share of overall sales compared with our European markets in the U.S. This has largely reflected structural market dynamics, including varying levels of health care system maturity and a slower pace of biosimilar adoption.

Today, however, we are seeing a clear inflection point. Health care stakeholders are increasingly focused on expanding patient access and improving system sustainability. These dynamics, together with the volume of LOEs over the next decade and the strong growth trajectory of Region International markets is creating a more favorable environment for biosimilars in international markets with total biosimilar sales expected to reach $17 billion by 2035. Biosimilar growth in our market is clearly reflected in our financials with sales up 27% per year over the past 3 years, significantly outpacing generics and accounting for 21% of our total sales today.

Crucially, this has translated into consistent commercial performance, and we are #1 in biosimilars across the region, giving us both scale and diversification across key molecules and therapy areas. Our biosimilar market share in the region has expanded to around 14%, clearly ahead of competitors, supported by a strong track record in tenders. And over the past 5 years, we have translated market share gains into clear regional leadership. Interestingly, our market share is growing, thanks to both new launches such as Wyost & Jubbonti, and long-term assets like Omnitrope. On the next slide, let me dive deeper into Omnitrope as an example that highlights how we win consistently and across our markets.

Over the past 4 years, we doubled our market share in Omnitrope across region from 16% to 32%, gaining significant ground against incumbent competitors. This success has been driven by a unique combination of local execution and global scale. In our markets, we build preference to a targeted physician engagement, comprehensive patient and caregiver support programs and market-specific pricing strategies tailored to both share of voice and tender markets. At the same time, our global supply network and in-house development capabilities ensure reliable access, device innovation, strong patient adherence. These are clear differentiators in a competitive set of markets.

And the outcome is a proven scalable model that consistently delivers growth, expand patient access and sustains our leadership position even after substantial time on the market with a given asset. Our ability to turn regional complexity into true competitive advantage allows us to establish new brands as well as keep growing in long-standing assets such as Omnitrope. With 12 in-market assets across more than 50 countries, our breadth across markets and products, create durable leadership position that we continue to build on.

We do not apply a one-size-fits-all approach. We are disciplined in where and how we deploy capital, combining scale and flexibility in over 20 markets with a direct presence, complemented by capital-light distributor model across 30 additional countries. We constantly review our footprint to ensure we can compete effectively and make a difference for patients. At the same time, we remain open to innovative partnership models, further enhancing our ability to scale efficiently and with speed.

Our global scale is amplified by strong local customer trust, and a tailored go-to-market model. I will now take you through some examples in the following slides. We hold #1 positions across Australia, Japan and Brazil, each underpinned by locally tailored execution models. In Australia, we lead with breadth and first-to-market execution, supported by a strong presence across both retail and hospital channels.

Our position as the #1 biosimilar player in Australia with 11 molecules commercialized across community and hospital channels gives us deep customer relations, strong distribution capability and illustrates our proven launch execution. Combined with one of the industry's strongest biosimilar pipelines, Australia is well positioned to remain an important growth market for Sandoz over the coming decade. Over in Japan, we combine strong customer relationships across the broad spectrum of stakeholders, including prescribers, co-medicals and pharmacists with targeted partnerships allowing us to maximize reaching a more complex substitution environment. By 2030, we aim to have over 10 biosimilars on the market in Japan, commercialized jointly with strong local partners to extend our reach.

And now in Brazil, success is driven by a dedicated specialty model and long-term government partnerships that give us access and scale. Sandoz Brazil, therefore, holds a strong position in the local health care sector with a broad portfolio coverage among nationwide retail partners, established relationships with major nonretail specialist channels and the relevant presence in the public market through public private technology transfer agreements, tenders and strategic alliances.

On the following page, I'll give a practical example of how Sandoz translate by a similar scale in the tangible patient impact in Brazil, one of our most important Region International markets. In Brazil, we have built a productive development partnership with the Ministry of Health, combining long-term supply with progressive technology transfer to local manufacturing. This model delivers three things: first, access. We bring biologic therapies to patients who would otherwise not be able to afford private care. Second, system strengthening. We support the development of long-term public health care infrastructure and know-how. And third, scalability. This is not a one-off. We have proven that this is a repeatable, sustainable model to expand biosimilar access. You can see the impact clearly with adalimumab. Since the introduction of the PDP, the number of treated patients has increased by approximately 45% from 58,000 to 84,000 with over 25,000 additional patients gaining access.

Today, around 30% of public demand is covered by Sandoz. This is exactly how we think about biosimilars, not just as a treatment opportunity but as a long-term access platform, creating value for patients and health care systems. So far, I took you through our track record for our footprint and portfolio. Now looking into the future, we are at a critical turning point. Over the past 20 years, we have successfully delivered 57 launches across our largest biosimilar markets. Over the next 5 years, we expect to double that number. With health care systems and regulatory frameworks maturing in our region, complemented by the appropriate internal regulatory strategies and commercial capabilities we are now well positioned to accelerate our growth going forward.

And our strategy is already taking effect. To give you some examples, last year, we launched Wyost & Jubbonti, first to market in Australia and in Brazil. For the first time in 20 years, we launched a biosimilar international region in the same year as Region Europe. Going forward, this will become the norm. This year, we received approval for Tyruko in Mexico in 30 days, and Jubbonti in Egypt in 45 days, leveraging fast track and reliance procedures.

These achievements highlight that over the last two decades, we have built the commercial, regulatory and operational engine required to operate impactfully. With that foundation firmly in place today, we are now well positioned to capture a substantial market opportunity and extend our leadership over the coming years.

Now to bring it all together on one slide, the road map to how Sandoz International region will be a key driver of incremental value with the context of Bio100's strategy. First, we start today from a position of strength. Across Sandoz International, we are the #1 player in biosimilars, and #2, when we combine biosimilar and generics. Second, our global scale is amplified by strong local customer trust and a tailored go-to-market model. And third, we are highly disciplined in how we prioritize launches across countries, aligning each asset with the most attractive markets to maximize value.

Over the next 5 years, our end market portfolio will expand significantly, and more importantly, we are increasingly launching those assets first to market, reinforcing our competitive edge and increasing our patient impact. Our ambition for 2035 is to be the clear market leader, but it doesn't stop there. We also want to drive higher adoption of biosimilars to further increase patient access and to expand the market. We are looking at roughly doubling international regions biosimilar penetration in the next 10 years with key markets like Australia, going from 26% today to 51% by 2035, and Japan increasing penetration from 15% today to 51% by 2035.

So in closing, what we said is in the International Region look like in 2035. We expect to have extended market leadership based on a high-growth platform with the capabilities to translate Sandoz global scale into clear local leadership.

The international region is not simply participating in Bio100 opportunity. We are one of the key engines that will convert that opportunity into sustainable growth, attractive returns and lasting value for patients and health care systems.

With that, I'll hand over to Keren to walk you through our third regional commercial engine, North America.

Thank you, Peter. Good afternoon, everyone. Every day, millions of patients depend on medicines that can improve and extend their lives. Yet for many, access remains a barrier. Expanding access to the medicines they need at the cost they can afford is what drives my team every day. I'm Keren Haruvi, President of North America. It's a privilege to be here and a moment I approach with both pride and humility.

Over the past several years, the team in North America has remained firmly focused on doing what we said we would do. We delivered consistent growth, advanced our position in the market and most importantly, built capabilities that are increasingly difficult to replicate in one of the world's most complex health care markets.

The one message I want you to take away today is that the question is no longer whether we can win. We have already demonstrated that we can. The question now is how we can replicate that success across the next wave of biosimilars consistently and at scale.

North America, the world's most dynamic and competitive health care market stands as a core growth engine for Sandoz. The region represents 22% of our global net sales, serves approximately 140 million patients annually and Sandoz ranked second in the region across the biosimilar and generic markets. That scale did not happen by accident. It reflects a focused strategy, disciplined execution and a deeper understanding of what it takes to win in this market.

Our success in the region is built on a focused portfolio strategy. Biosimilars drive growth, while generics provide stability, scale and a strong foundation. The biosimilar market in North America is highly attractive, growing at approximately 23% and representing one of the most significant growth opportunities of the next decade.

In the U.S., approval does not automatically translate into adoption. Access is fragmented across pharmacy benefit managers, payers, providers and health system, and uptake is shaped by formulary design, reimbursement dynamics and provider confidence. To capitalize on this opportunity requires the capabilities to convert access into adoption through market access expertise, trusted customer relationships and disciplined execution. Approvals create opportunity. Adoption creates value.

The biosimilar market is at its inflection point. Biologics today account for a disproportionate share of health care spending, yet access remains limited. In the U.S. today, approximately 2% of patients receive biologic medicines, while those treatments account for roughly 50% of total drug spend. At its core, this reflects one of the largest opportunity in health care today, expanding access to advanced therapies while improving the sustainability of the health care system.

We are also seeing encouraging momentum across the broader environment. Policymakers are increasingly focused on affordability, payers are under growing pressure to manage specialty drug spend and the U.S. health care system already understands the value of competition through decades of generic adoption. But as the U.S. experience shows, access and adoptions are not the same thing. Take Humira, the largest loss of exclusivity in history. Despite multiple biosimilar launches, adoption is taking time. 6 months after 10 companies launched, biosimilars have captured just 1% of total adalimumab share. One year later, biosimilars still accounted for less than 20% of total volume across channels. And even into 2025, Humira continued to retain a majority share in key markets.

The lesson is clear. Market entry alone does not guarantee adoption. In contrast, markets like Canada demonstrate what is possible when barriers to biosimilar adoptions are removed, when transition policies are aligned, biosimilars adoption has been faster and penetration has increased significantly. Our responsibility and opportunity are clear, but success will still depend on execution. That means accelerating adoption through policy engagement, partnerships, customer education and disciplined commercial execution to ensure biosimilars deliver on their full potential because we are not waiting for the market to evolve. We are actively shaping it.

Let's turn to our recent performance. Since 2023, total net sales from biosimilars and generics have increased by an average of 7% per year. Biosimilars have been the key growth driver, expanding from $500 million to $800 million, a 36% CAGR. At the same time, our generic business has remained broadly stable at around $1.6 billion, reflecting disciplined portfolio management in a more mature and competitive market. What you see here is the evolution of our portfolio with biosimilars becoming an increasingly important growth driver in North America, while generics continue to provide scale and resilience.

What is also important to mention is that since 2022, we have successfully stabilized the generic business in the U.S. after multiple years of decline. Our results demonstrate that we are well positioned for future growth, and our recent performance gives us confidence that we are already making meaningful progress and impact. Strong performance in both the U.S. and Canada now makes Sandoz the third biosimilar player in the region. This reinforced that we are not only competing at scale, but we are also leading with many of the biosimilars we have launched.

Across key biosimilars, including adalimumab and denosumab, we have achieved leading positions, demonstrating that we can translate launches into competitive share gains in highly dynamic markets. This reflects our access capabilities, customer relationships and disciplined execution. But the largest growth opportunity remains in the U.S. and winning there requires more than strong position today. It requires understanding how decisions are made, how adoption happens and how to convert market complexity into sustained growth.

To understand how we win in the U.S., it's important to recognize that the U.S. is not a single market. It is 2 access systems operating side by side. On one side is the pharmacy benefit channel, where access is largely controlled by pharmacy benefit managers through formulary decisions that shape patient access and prescription volume. Winning here requires strong contracting, formulary access and reliable supply at scale.

In the medical benefit channel, medicines are administered by physicians or infusion centers and adoptions happen across a highly fragmented provider landscape with more than 20,000 sites of care. Winning here requires reimbursement confidence, trusted customer relationship and local execution along with reliable supply. What sets Sandoz apart is our ability to compete across both channels. We don't view this complexity as a barrier. We view it as a competitive advantage. We've built the capabilities, relationships and expertise required to navigate both markets at scale.

Let me bring the U.S. model to life through 2 examples. On the pharmacy benefit side, Hyrimoz, our adalimumab biosimilar, shows how we can expand access at scale in a crowded U.S. market. When traditional access pathway were constrained by originator contracting and formulary dynamic, we took a different approach. By introducing private label, we created an additional access to patients, expanding both reach and market share. This was made possible by strong customer partnerships, reliable supply and disciplined execution.

On the medical benefit side, Wyost and Jubbonti, our denosumab biosimilar show what it takes to lead in a fragmented market. Success required expertise in IP, disciplined launch execution, a deep understanding of the provider landscape, reimbursement support and reliable execution across many sites of care. Together, these capabilities allowed us to move quickly, establish an early leadership position and demonstrate our ability to win. The question is no longer whether we can win. The question now is how we replicate that success across the next wave of biosimilars consistently and at scale.

So what makes us successful? It starts with our people, a team with deep market expertise, trusted customer relationships and the ability to win in one of the world's most complex health care markets, all grounded in our purpose of pioneering access for patients. Three capabilities define how we compete. First, a commercial mindset. We see complexity not as a constraint, but as an opportunity to create new pathway to access. Private label and Sandoz Direct are a great example of how we've turned that mindset into action.

Second, agility. In a constantly evolving market, success requires speed, adaptability and decisiveness. And third, execution because strategy creates value only when it is delivered consistently, launch after launch, customer by customer, patient by patient. Everything we do is focused on one goal, expanding patient access at scale. Bio100 is not simply about launching more biosimilars. It's about scaling the model we have already proven to win consistently across the next wave of biosimilars.

As our portfolio expands, the capabilities we have built become even more important. We will continue to build on our leadership in the region through scale, supply reliability, disciplined execution and ongoing policy and regulatory engagement that helps us remove barriers to biosimilar adoption. At the heart of Bio100 is a simple goal, turning portfolio breadth into greater patient reach and sustainable growth. We have the capabilities, experience and focus to become the leading biosimilar company in the market.

As we look ahead, we have a clear road map to set the industry standard for biosimilars in North America with defined strategic ambition at each stage. Today, we are already a leading player. We have delivered consistent pipeline execution, pioneered new models to expand access and build the customer relationships and local market expertise required to win.

By 2030, our ambition is to become the leader in biosimilars. That means advancing a leading pipeline, scaling a proven operating model and being the partner of choice. By 2035, our ambition is to be the market leader in the region with the largest biosimilar portfolio, strong customer partnerships and North America serving as a strategic growth engine for Sandoz. What matters most is the patients we reach. Every few seconds, a new patient starts on a Sandoz medicine. That is the impact behind everything I shared today.

Thank you, and I will hand over to Remco.

Thank you, Keren, and hello, everyone. It's great to have you with us today. It's my pleasure to walk you through how Sandoz will transform these ambitious plans which have just turned into reality. My colleagues have already highlighted the progress we have made since we became independent. I want to highlight what this means for us from a financial perspective and why it matters as we prepare to deliver on our next chapter in Bio100.

As you can see on this slide, we have had strong sales growth and through sustained operating leverage, we expanded our core EBITDA margin and driven strong levels of cash. The return on invested capital has increased above our expectations, and we have driven material core earnings per share growth at the same time as strengthening our balance sheet. To summarize, we have been disciplined in our execution and absolutely laser-focused on our strategy, which has translated directly into clear value for Sandoz and therefore, the patients we serve.

Now let me outline what this looks like at the business and regional level. From a business perspective, I would like to share with you how we performed across both our biosimilar and generic businesses. Between '23 and '25, net sales increased on average by 7%. Biosimilars were the key driver with annual growth of 21%. Importantly, we reached our '28 ambition of 30% of net sales coming from biosimilars 3 years earlier than planned in 2025. That achievement underlines both the market demand and our successful execution, including such launches as Hyrimoz, Pyzchiva, Wyost and Jubbonti.

With a market share of 19%, we remain a clear global leader in biosimilars. At the same time, our generic business has continued to be strong and resilient, growing in line with the market at around 2% and providing a unique foundation for our biosimilar growth. With a market share of 4%, we are 1 of the top 2 generic companies globally.

So overall, we are combining high-growth biosimilars with a strong generic business, driving both the scale and the quality of our growth. As you have heard from our regional presidents, our geographic track record also underlines the strength of our biosimilar and generic portfolio, with the former as the key engine of growth across every geography.

As you have heard from Christophe, Europe delivers the majority of our sales and remains our most established market, growing from $5 billion in '23 to around $6 billion last year. That translated into a 6% CAGR overall, with 15% for biosimilars, again, for the period '23 through '25, reflecting continued market expansion and our ability to grow our leadership position.

In International, an overall annual average growth of 8% and 27% growth in biosimilars for the period '23 through '25 also shows the incredible potential for this region with Bio100. But North America is where we see the most pronounced momentum with a 36% biosimilar CAGR, driving 7% overall growth for the period '23 through '25. This reflects the strength of our execution in both the U.S. and Canada with strong recent launches, increasing physician adoption and ultimately improved access for patients.

Now turning to the future and the impact we believe we will have with Bio100. Today, our pipeline covers around 50% of biologic LOEs by value. With Bio100, we intend to increase that coverage to around 80%. This is a real change in scale, meaningfully benefiting patients and health care systems all around the world and positioning us to fully capture the upcoming wave of biologic LOEs.

In the next few years, a significant part of these new launches will be enabled through business development and licensing, allowing us to move quickly and secure attractive assets. Over time, however, our international pipeline will become -- sorry, our internal pipeline will become the main contributor, reflecting the strength we have built in development capabilities and platform expertise with targeted benchmark cost levels for development and manufacturing.

Now I want to focus on how we will translate this momentum into long-term growth. As Richard said earlier, we expect to more than double our net sales by 2035 versus last year. By that time, biosimilars would represent the majority of our net sales. Looking further ahead, we are targeting to increase our biosimilar global market share from around 19% currently to around 20% to 40%. At the same time, our generic business will remain very important and cash generative, and we expect to grow in line with the generic market.

So what you see here is the transformation of our business from a generic-led portfolio to a biosimilar-led growth company. In addition, we also expect to see a step change opportunity for GLP-1s by 2035, which, as Rebecca said earlier, is too early to quantify now. To be clear, this long-term GLP-1 ambition is over and above the doubling of net sales by 2035 through Bio100.

Now let me break this down a little bit further by first looking at the midterm outlook. I'm delighted that we are today confirming an unchanged 2028 outlook. This includes the expectation for net sales to grow by a mid-single-digit percentage at constant currencies through '28 with a core EBITDA margin in the range of 24% to 26% by that time.

But as of today, we're also extending the lens beyond '28. With our new midterm outlook, we expect net sales growth to accelerate to a mid- to high single-digit CAGR from '25 through 2030. This will be back-end loaded. The core EBITDA margin is also expected to expand further to within a range of 25% to 27% by 2030. To be clear, the new 2030 midterm outlook includes GLP-1s. Our dividend policy will remain unchanged with dividends expected to increase to a range of 30% to 40% of core net income from 27% in '25.

Strong capital discipline will continue with investments in Bio100 expected to pay off not only in terms of higher growth, but also in terms of increased core ROIC, which is targeted to be in the range of 16% to 18% by 2030 versus 14.5% last year. Upfront funding is set to be followed by accelerated growth. Bio100 is about deliberately investing an additional USD 2 billion to USD 2.5 billion over the coming 5 years, investing in our pipeline, portfolio capabilities and manufacturing assets to unlock even more value-accretive growth.

But 2030 is not the endpoint. In fact, this is when it scales will really get interesting. We are targeting to more than double our '25 net sales by 2035, plus GLP-1 related sales that are expected to be material, but again, are too early to quantify now. That means double-digit growth in the 2030s, which will be accompanied by targeted core EBITDA margin of at least 30% and targeted core ROIC of at least 20%. We believe that this is an attractive high-growth, high-quality earnings profile, which we see as a real opportunity for Sandoz and our shareholders.

For those of you who are thinking this is ambitious, but how realistic is it? Let me point out that between now and 2030, we have multiple well-identified levers that support increase in core EBITDA margin. First, price erosion is expected at a mid-single-digit percentage, reflecting the increasing size of the biosimilar launches over the coming years. But more than offsetting this, we see strong tailwinds from the mix of sales. Second, we expect to deliver further operational improvements and procurement savings each year, which should result in efficiency gains and reduce costs.

Third, with our top line increasing significantly, operating leverage is expected to further improve as we absorb operational expenses more efficiently. We expect these SG&A costs to decline as a percentage of sales, reinforcing the margin trajectory. Finally, we are making targeted disciplined D&R investments while benefiting from regulatory streamlining. Some of these investments will continue to be capitalized in line with our existing accounting policy, but it means that D&R as a percentage of sales is expected to remain broadly in line with current levels.

Now the 2030s is where the real step change cost of goods sold opportunity begins, reflecting in-house vertical integration of biosimilar development and manufacturing, as Armin outlined earlier. As of the 2030s, we'll have biosimilar development and manufacturing operating at scale in-house, strengthening by the multiple new biosimilar development, drug substance and fill/finish sites in Slovenia and by the Just-Evotec acquisition. This means greater control, faster execution and importantly, capturing more of the value chain in-house. With these sites, we will be driving ongoing process optimization, continually improving yields with proportionately fewer third-party additional costs.

And finally, scale. As we grow, we intend to unlock significant capacity advantages, allowing us to produce more efficiently and support future pipeline expansion at limited incremental cost. So we intend to structurally redefine our cost base and strengthen our long-term competitive advantage. That's the real impact of Bio100 from 2030.

Now turning to one-off costs. As you can see, this peaked in '24 at around USD 700 million and expected to decline to around USD 300 million this year. This is expected to reduce to around $200 million in '27 and around $100 million in each of the years thereafter. This reflects the final phase of the transformation and separation programs, the completion of the simplification and transformation of our supply network and organizational structure and the implementation of new state-of-the-art IT systems.

Next year, we still expect around USD 100 million of IT separation costs from our former parent company and around USD 100 million for transformation programs, which we expect to continue around this level in the years thereafter. As such, we expect only limited one-off costs going forward. For completeness, this excludes legacy litigation costs and software implementation cost accounting impact.

Now turning to CapEx. As you have heard from Armin, we have already significant investments underway in Slovenia. You see that reflected in our CapEx expectation of around USD 1.1 billion for this year. We expect similar annual U.S. dollar capital investments for each of the years over the midterm, which means that CapEx should decline as a ratio to net sales from this year's 9%. With Bio100, we will see better asset use, higher throughput and more efficient tech transfers, allowing us to absorb growing volumes within our existing footprint.

In terms of free cash flow, as I mentioned earlier, versus our prior plan, we intend to spend around USD 2 billion to USD 2.5 billion more, mostly in D&R, but also partly on further manufacturing expansion. And again, this includes the benefit from regulatory streamlining. At the same time, we intend to continue our very disciplined working capital management. Therefore, free cash flow is expected to grow by around a further 50% by 2030 versus last year. Consequently, a further reduction in the ratio of net debt to core EBITDA is expected by 2030. Overall, this underpins a clear plan of investments in Bio100 while ensuring growing cash generation and continued deleveraging.

This slide brings together the 3 pillars that underpin our financial strategy. Disciplined capital allocation, improving quality returns, core ROIC, and financial resilience. Our Bio100 priority for capital is clear. We're going to reinvest into our biosimilar business for accelerated growth. At the same time, we remain selective on business development, focusing on value-accretive opportunity. All of this will be complemented by a progressive dividend policy. What we'll do is anchored in maximizing capital efficiency. We will be focused on driving the further step-up in core ROIC over the midterm, supported by Bio100 and continued margin expansion, while maintaining strict discipline on working capital.

Finally, financial resilience will remain key, and our track record shows that we do this well. Our model is built on sustained cash generation, a clear commitment to maintaining an investment-grade rating and a strong balance sheet that gives us the flexibility to invest and grow.

Moving on, I want to take you through more details of our plans to increase core ROIC as set out on the prior slide. We have a very deliberate focus on quality growth and investment discipline. On growth and profitability, we're accelerating our shift towards biosimilars, where we see structurally higher returns. At the same time, vertical integration in biosimilars will deliver significant long-term benefits, and we expect further operating leverage as OpEx costs grow slower than net sales.

On invested capital, we are focusing on deploying capital with discipline. Investments into the biosimilar pipeline will benefit from regulatory streamlining, of vertical integration will further enhance efficiently. Importantly, our generic business will continue to act as a cash engine. Therefore, we are targeting to improve the speed and the quality of growth through a better business mix and drive higher margins, disciplined capital deployment and resilient cash management, resulting in a structural step-up in core ROIC.

The strong growth and the higher core ROIC combined are intended to deliver excellent long-term value creation. Bringing this all together, what you see is a company with proven leadership and targeting clear acceleration ahead. Since the spin, we have performed consistently well, driven by our strong and sustained growth in biosimilars across every region. At the same time, I hope you see that we're providing clear visibility, confirming our 2028 outlook while providing a new and exciting midterm outlook for 2030 as well as significant ambitions for 2035 and beyond.

With Bio100, we will be doubling down by targeting a portfolio of more than 100 biosimilars supported by increased absolute D&R investments and opportunities enabled by regulatory streamlining. And we are optimizing our supply network. With all of this, we expect to drive enhanced top line growth, profitability and ROIC.

Now before I hand back to Richard to close this out, I have to say that as a CFO, it's incredibly rare in a career to be in this position, presenting to you with this company with a proven track record at this moment in time when we have an unprecedented commercial opportunity ahead of us. And if you get this right -- correction, when we get this right, it will mean we can make affordable health care reality for countless patients. This is a moment which is not lost for me or any of us.

Richard, over to you.

Thank you, Remco. You'll be glad to know I'll just take a couple more minutes to get us over the finish line. This could not be a better time for Bio100 and patient access. Firstly, there is a huge patient access need as biosimilars and generics represent the vast majority of prescriptions worldwide, but only account for around 30% of their total cost. These medicines are affordable and are core for health care provision, supporting scalable adoption.

Secondly, there's an exceptional market opening. We are entering an unprecedented wave of loss of exclusivity for biologics with over $300 billion up to 2040, creating a once-in-a-generation opportunity. Third, development and manufacturing, regulatory streamline is now a significant tailwind for Sandoz and is now combined with the first-rate supply chain capabilities with capacity. Together, this creates a uniquely attractive environment and timing that positions Sandoz perfectly to scale growth while expanding patient access faster than ever before.

In case I wasn't already clear, Bio100 is not just an ambition. It is a clear strategic road map. We start from a position of strength today with a deep biosimilar portfolio and a proven global platform. From here on in, it's about disciplined execution, building our launch engine to get around 30 biosimilars in the portfolio by 2030, then scaling investment as we plan to expand by around 70 by 2035 and then over 100 by 2040.

I said at the beginning that there are only really 3 messages that I should leave you with today: purpose, ambition and delivery. Our purpose remains the same. We are remaining driven by our commitment to expand access to high-quality, affordable medicines and drive meaningful benefit for more than 1 billion patients. We have a clear ambition to have more than 100 biosimilars in market by 2040. And along the way, we have a comprehensive delivery road map on how it leads to double our net sales by 2035 versus last year and deliver a core EBITDA margin of above 30%.

Finally, I would like to take this opportunity to acknowledge our 23,000 colleagues who have been and will be the ones that bring this opportunity to life. All of us are united with a clear purpose, pioneering access for patients because by pioneering access, we expand it. And as Gilbert said right at the beginning, this is anchored in strong values, collaboration, ambition, accountability and openness. Together, this gives us a highly aligned, motivated organization ready to deliver on our Bio100 targets. And we're making the most of this upcoming golden decade for our colleagues and our shareholders and most of all, the billions of people like Cheryl and Gustavo who have the basic right to affordable health care.

Thank you. Now we'll be happy to take your questions.

Okay. Same format as before. Wow, look at the hand up. That was amazing in terms of the hands that were raised.

I'm going to start with Harry because I was conscious Harry, did we answer your question, because I think that was...

Harry Sephton from RBC. It's actually going back to the CapEx point, which I think Thibault raised earlier. So you previously talked about CapEx spend really peaking in 2026. You're now saying that, that absolute level of CapEx is going to carry forward. That has quite a meaningful impact on free cash flow going forward. So I just want to challenge what's changed that means you've got a higher capital intensity going forward.

So Harry, thank you for the question. As I said, Bio100 requires to additionally invest about $2 billion to $2.5 billion and that is partly in D&R, and that is partly related to CapEx. So the manufacturing will have to ramp up as you go to the 80% LOEs. The CapEx also include part of the development costs, which are capitalized. So that's also included because that's also more than we originally had foreseen. So as a percentage, it comes down as an absolute amount, it will stay roughly flat rather than go slightly down.

James?

James Gordon from Barclays. One question was on the top line. So if I look at the slide, you've given a projection out to 2030 for what the group is going to do, which is mid- to high single digit. And you also said what proportion is going to be biosimilars. But if I back that out, it looks like then that generics would be growing at about 4% versus about 2%, which is what you've done in the last couple of years.

I know that the IQVIA projections, they look like it's faster growth, like about 5% growth in the generics market. But I think that's gross without the pricing headwind, which you face. So is that right that the guidance is assuming you're going to do better in generics now because you're going to take more share or the market is going to change? Or am I misinterpreting that? That's the first question, please. So what to put in our models for the generics growth rate for the next few years?

The other one was on margins. So on gross margin, I think you previously said biosimilars were something like 20 percentage points higher gross margin and then there's a shift to selling more biosimilars and then you're going to get better making biosimilars. So there should be quite a big uplift there. But if I look at Slide 96, it looks like much of the benefit there is swallowed up by pricing headwinds. So is that the right interpretation that there's not much gross margin benefit from that sort of mix shift to 2030, and it's really a 2030 to 35%, we get that benefit once the Slovenia site is going?

Do you have another question?

So there's one element on the growth, as you asked, right? There's one, the market growth which is shown in and underlying is what we expect of our own growth. We expect biosimilar to growth in the double digit. There's no change from what we had before. It might even accelerate a little bit. GX, the market numbers you see is including GLP-1. But these are estimates from the market expectation, correct? So we would expect still low single-digit growth of the GX market, excluding GLP-1 and the GLP-1s will come on top of. We have guided for 2030 for mid- to high single digit, including GLP-1.

I would say that without GLP-1, we would also probably sit in the mid- to high single-digit kind of growth range. So the biosimilar is really picking up along the way. The range of biosimilar being in gross margin higher than the average of the group that's higher than generics, it's on average still correct. The only thing we have to still keep in mind that it's very different if it's a partnered biosimilar asset or it's an own development asset. So in the shorter years when we have partnered assets, we share the cost, but we also share the profit with the other party.

And then net-net, the gross margin is not to the same level when it's fully in-house. In terms of the EBITDA improvement, yes, price erosion is not low single digit, mid-single digit, but we have also seen and we see that the first half of this year, biosimilar grows really a lot and you launch a new product. Of course, in the first year, the price erosion significantly. So that's not so much a margin topic. It's just an inherent implication of launching a lot of biosimilars. Procurement savings, we still expect to continue, right, but not completely offset the 5%. The mix impact will really remain significant, and therefore, net-net, we expect the benefit on the gross margin, and we expect that over the coming years through 2030.

Of course, in 2030, when the vertical integration comes in, and we do a lot in-house, we expect significant benefit on our cost prices. And in principle, the gross margin should go more up, but then depends as well what the price erosion is in the 30s, and that's too early to say. However, net-net, we still expect to come to at least the 30% by '35. How much is then the equation of how the price erosion during that time comes out and the competitive environment.

And also bear in mind, we'll be transferring a number of the assets that we currently take from our parent into our own network with a corresponding improvement in COGS over time, but that doesn't really kick in until the other side of 2030.

And perhaps the last part is also what the regional presidents clearly indicated. The infrastructure we have on marketing and sales, but also general administrative costs, they should benefit in percentage vis-a-vis the top line very clearly. And that benefit comes then on top of the gross margin and both should drive the EBITDA margin up over time. It's just a mathematical equation.

Thanks, James. I'm going to take a question from the webcast, if that's okay. So this is from Victor at BNP Paribas. So it's a U.S. question. You recently said that you wouldn't rule out investing in additional capacity outside Europe in response to the potential threat of U.S. tariffs on generics. With the new investment in Slovenia announced this morning, should we take this as a sign that you remain fully committed to expanding your European manufacturing footprint, or are investments outside Europe still on the table?

Yes. The simple answer, I'll let Keren comment about the U.S. I mean we have a clear road map in Europe. The U.S. is clearly as a single market, the single most important growth market. I mean the industry is the largest biosimilar market in the world. So clearly, it's a significant opportunity. I'll let Keren comment about the conversation we're having. We clearly have good dialogues with the U.S. I think if you take a step back, generics and biosimilars account for 90% of all the drugs dispensed in the U.S. or about 11% of the cost. The vast majority is supplied overseas. I think in terms of sustainability of health care, it's a critical part, and we're aligned with the administration in terms of how we think about it. But Keren?

Absolutely aligned with the administration. I think we strongly believe that generics and biosimilars should be exempted from tariff. So far as an industry, we did a very good job. So we would not manufacture in the U.S. just as an answer for tariff, but we are absolutely thinking, as Richard said, as a critical market that we will continue to have the conversation and find a path. It needs to be sustainable and makes sense. So we'll continue to work on that, but absolutely committed to this market.

Beatrice Fairbairn with Berenberg. You've talked about moving from a reliance on external CMO supply to about 60% in-house manufacturing. What do you view as the key risks for this? And how conservative you've been about the ramp-up assumptions for this internal capacity? And then if I may, would you be able to give us a bit more of a quantification about how much of your margin expansion target is driven by this ramp-up?

That's a great question. Armin? Can you perhaps give Armin the microphone?

Yes. Thank you for the question. I mean, currently, we are ramping up the capacity on our various sites. I don't know where I should look at actually here. Maybe I stand up.

So we are currently ramping up. We are building up. We're starting tech transfer. So basically, it's purely execution risk, what we say. Now we have experience in tech transferring. So we are doing it. Actually, we start with products. We tech transfer in-house, which we see there is a lower risk of failure because we know the molecule very well. It maybe not the most complex molecule. So we're doing it step by step.

So this is what we see. Basically, it's rigorous execution, it's performance management, getting a good knowledge transfer from our contract manufacturer that we tech transfer in, but it's normal business actually. And we are in the process of starting it as we speak now on the drug substance side, continued with the drug product side.

The second part I didn't get actually acoustically, sorry, of the question. What was the second part of the question?

[indiscernible]

Well, that's a question of from whom we tech transfer basically and what technology we transfer. Let's say, on an average contract manufacturer basis, you can have on the drug product side on the finish side, 30% to 50% benefit of the internal cost. Of course, if you be on the drug [indiscernible] it varies. But actually, for us, important that we can leverage our scale, right, because the tech transfer alone doesn't save the cost challenge basically. It's about how we utilize our various platforms in the most efficient way, and this basically drives the cost down.

Charlie at the back.

Charlie here with Bank of America. Two questions on sales growth. The first one is to double your sales growth from '25 to '35 implies a roughly 7% sales CAGR. And if we take the midpoint of your mid- to high '25 to '30 sales guide, that would imply maybe 7% to 8% sales CAGR in the 2030 period. You guide to double-digit sales growth beyond 2030. So does that suggest '25 to '30 sales growth closer to the lower end of that, so closer to mid? Or does that actually imply upside to the outer year target, i.e., doubling a bit more upside there?

And then second one, just on sales phasing, so '25 to '30 mid- to high single digits. I think this year, you're looking at mid-high. I think the implied '27, '28 commentary is mid. And then to get to a mid-high, you're looking at maybe high for '29 and '30. On the moving parts to get to high single digits, is that upside to '29 and '30? Or could we actually see upside to '27 and '28?

I think I understood the question. I'm going to let Remco try and answer that one. I mean we can't win. We've given directional guidance to 2035, and you're asking for levels of accuracy.

Thank you, Charlie. I think you did the math very correctly, right? We have guided at least 2x by 2035, right? And we said mid- to high through 2030. We expect double digit through to 2035, and that would be at least doubling. So you can draw your own conclusions from this and then GLP-1 will come on top of. And if you do the math also based on the molecules and the launches and the different market share, you will see that you will come in a similar equation there. We have guided mid- to high.

I've said as well that it is more backloaded, correct? So that also gives already the answer to your question. It's too early to say on '27, '28, correct? We will give the guidance at the beginning of next year. How that will pan out? Is it mid? Is it mid to high? We will have to see what it is. But for the moment, it's indeed, we say backloaded. But thank you for the very good quick math you did, but we are aligned.

Okay. I'm just going to take one from the webcast. You might have to bear with me because it's Nicolas from Kepler, and I think he's paid by the word because it's quite long. So I'll try to paraphrase as much as I can. So this was his second question we didn't get to in the first half. So the first question is about manufacturing upside, I believe that in one of the slides, you mentioned you'd be able to have a significant unit cost reduction from 2030. Any way you can quantify that if we were to compare it to some of your previous comments on biosimilar profitability?

If maybe I can squeeze the last one probably for Christophe. I'd be curious to know if you have received any changes in the discussion with the different administrations in Europe since all the MFN noise started. Is there any risk that EU countries would potentially further reduce the price of off-patent drugs, mostly biosimilars to free some additional budget for innovative drugs. Also, do you see any upside in the mid- to long-term potential from your full EU production footprint when it comes to winning in Europe, more from a European sovereignty angle again as the U.S. is trying to pull the industry there. In brackets, sorry for the question length.

Christophe, do you want to have a go at that first part? And then I think we partly answered some of that on the manufacturing side. I mean, clearly, look, it depends also as we define our own pipeline with cell lines, all of those things, there's a lot of opportunities to expand margins. I think Armin covered the bulk of that question. So Europe?

So the discussion on the MFN and the prices is more about how can we accelerate the penetration of the biosimilar to generate the savings that we are generating today. So you think about generating savings, it's around $10 billion, I mean, today annually from the biosimilars we are launching. And this will be what will be used to obviously accept the launch and the prices for the new -- for the innovators and the innovative products. We do not see prices declining beyond what we have observed in the last 5 years. So no accelerating trend here. Nonetheless, what we see is a shift in archetypes in some of the countries, as I said before.

When it comes to protecting the European manufacturing, tomorrow, we'll have the European Procurement Act being disclosed. We believe that most of what we have advocating for in the Critical Medicine Act meaning favoring European production in the tenders, for example, having a single slot from European productions and the medicines will be there. So this is moving in the right direction, and it will help not only to preserve our European autonomy for the biosimilars, but I'm thinking also for our anti-infective plant in Kunda and moving forward, a definite advantage for us as we will produce in Europe most of our biosimilars.

Perhaps 2 builds on that. Interestingly, MFN, I mean you see a number of originators questioning whether they're going to launch assets in Europe. Actually, there is a sort of philosophical opportunity for us, I think, in the mid- to long term, that we need to get our head around a little bit. Price in most European markets is not a function of the regulator, it's a function of competition. And that's nothing different to today. So if there's 10 competitors, you're competing in a very different way to no competitors.

So I think in the majority of European markets, and let's be clear, as we bring Bio100, that is where the European governments can deliver savings. That's a huge opportunity to bring massive savings and access to patients across Europe. Quite honestly, kind of scrape a little bit more out of the 30% that's being -- the money on the table is really sitting with the originators and the patent cliff.

Shyam, at the front.

Shyam Kotadia From Goldman Sachs. I had a question on going back to the subcu point. So you've got a fair few subcu biosimilars in your pipeline with KEYTRUDA QLEX and you've also got other formulation for EYLEA HD. So I just wanted to check, once that compound patent goes off, is that an appropriate time for you to go after it? Or would you need to wait for the actual formulation patents for KEYTRUDA QLEX or EYLEA HD to go off end of 2039, early 2040s? That's the first question. And how does that differ in Europe, U.S.

And then the second one, I think you've touched on it a bit anyway, but before, I know you mentioned like being a European-focused company and launching in the U.S. was like an optionality and opportunity. Now with Bio100 and regulatory streamlining, are you planning to launch all your pipeline biosimilars in both territories? Or will you be selective still in the U.S.?

Yes. I guess, look, I'll comment on the EU focus first. Let's be clear. My point was more about -- we talked about etanercept Enbrel. Of course, we're going to launch it in the U.S., but there's always that degree of uncertainty around the U.S. because you've got to go to court, and there's always a question mark whenever you go to court. Of course, the vast majority of Bio100, we will launch in the U.S., either through the strategic partnerships. You've seen the deal terms there or through -- clearly through our own development. So absolutely.

But I just -- I think it's a subtle shift to say, look, we've got a very clear runway when we launch in Europe. And clearly, the U.S. becomes the opportunity. I think historically, everyone is sort of over-indexed to the U.S. It's just that uncertainty around the patent framework. We tend not to disclose too much about what we're doing in terms of patent because I don't want to make -- I don't think we disclosed a lot in terms of our pipeline, but there is a limit. So that's probably the limit about where we would disclose in terms of what we intend to do with things like subcu and the patent strategy around that. I'm getting a hands up from Ingrid so clearly, I've said the right thing.

I think we've got maybe a couple of minutes past 5:00 because there's still plenty of hands going up. James on the front.

James Vane-Tempest from Jefferies. First of all, just to come back to the double-digit growth in 2030, which is an acceleration. Just wondering how much of that can be delivered from visibility today versus further new pipeline and business development. So as new deals are announced, you essentially know what that means versus your guidance.

Second question is, clearly, you're expecting to maintain the level of investments aiming for more than 100 biosimilars in your portfolio by 2040. So how should we think about the phasing to more than 30% margins over time in 2035, given a 25% to 27% range in 2030? And is that sustainable?

And then my final question is, it's great to have a longer-term vision, but I was interested in, I guess, your framework and philosophy to regulatory changes, just given how much of that can happen unexpectedly given the long-term framework you've given. So I guess on the positive side, in Europe, there's a Critical Medicines Act, which clearly could be beneficial if that expands. I know it's mainly directed at anti-infectives at the moment, but it could be expanded into other areas. But on the flip side, you've got the Urban Wastewater Management directive. So how are you thinking about sort of managing both the pros and cons of the regulatory framework in your guidance?

Okay. Perhaps if I take the third, Remco can take the phasing, and I'm going to pass to Rebecca for the growth drivers beyond 2030. So have we planned in the growth drivers? I'll give you a moment to think about it. Yes. I guess just a couple on -- it's not really the -- it's the regulator, but it's actually the patent framework that drives it, not the regulatory framework. So I don't see clearly as the regulators think about that. But also bear in mind, the next wave of things like ADCs, bispecifics, trispecifics, we're having very constructive conversations with the regulators in that space.

So again, I think that's what's driving it. I'll perhaps get Christophe to comment on Urban Wastewater because actually I think there's as much an opportunity as a risk there, which is interesting. And then I'll pass to Remco.

Christophe, do you want to talk about Urban Wastewater?

So about the Urban Wastewater, I mean, if we think about the cost, I mean, today, it's extremely hard to understand exactly what will be the cost for pharmaceutical industry and the cosmetics. If you've seen the news from last Thursday on the 3rd of September, the Advocate General has issued her opinion against the EPR scheme, which is the extended producer responsibility, which were allocating the quaternary treatment costs to cosmetics and pharmaceutical industry. So today, we are in a good position, and we are waiting to see whether the European Court of Justice will follow the Advocate General and annul the EPR scheme.

I mean also against the whole industry. So it's not aimed at Sandoz. And also bear in mind, as Remco discussed, in a sense, by -- into the 2030s, we become predominantly a biologics company, which it tends to be more value-driven rather than volume-driven. So I think at the moment, it's -- philosophically, it's a volume tax. It's not a value tax. And as we become more and more of a value portfolio company, that exposure also shifts. But I think to be fair, it's one thing that's a level playing field across the whole industry. But clearly, we're working hard to help regulators and government understand the implications of that.

And we've never been in a such better position, right, since it started.

Perhaps first on the growth drivers and then Rebecca will add. So our growth is always our existing business plus the new launches, correct? And you can see also in '29, '30, there are significant launches, which are coming in. And of course, they contribute to the double-digit growth in the years thereafter. I'm sure Rebecca can be a little bit more specific.

With regard to the margin improvement, we like to be very boringly consistent in the sense that SG&A, correct, as a percentage of sales every year should benefit the margin. And as well on the gross margin, we have every year a job to do with the mix improvement and the procurement savings and the prices to make also some improvement there. So I don't see it's a significant step-up in one way or another. Of course, you can argue that in the 30s, particularly on the manufacturing, we will get some benefit.

But also there, when you -- when we ramp up the sites, correct, this benefit when you come to a full leverage of the site and the site that will also take a little bit of time. So when we start ramping up in '29, it probably has some ramp-up costs in '29 and '30 and we're not full and as of '31 that will come in. But also then with scale, that will further multiply. But that's why we are quite confident that the 25% to 27% over a 5-year period should at least hit 30% by '35. Rebecca?

Yes. Maybe adding in terms of 2030 to 2035, I mean, you saw the numbers.

We can't see you. We can hear you.

No. Listen, we go from 30 products in 2030 to 70, so which means we're going to add 40 launches. And of course, not all the launches start by 2030. So you have a phasing up of those launches. We're seeing a huge LOE between 2030 and 2035 with you know the examples, right, KEYTRUDA and some of the bigger oncology launches, but also in immunology, and we will continuously look for partnered assets across this period.

Fundamentally, the dynamics we monitor currently, right, and consistently in a sense, if we would see that competitive landscape is changing, this would, of course, be in favor of what we currently think the growth rate and the ambition is going to be. And we think conservatively in terms of pricing. So we believe we have a strong plan in place. We might see upside depending on competitive landscape.

We'll take a few more, I think, before we close out. So just one from the webcast. So Joris has come back with -- and this is definitely for you, Remco. So you indicated that delivering the Bio100 ambition requires additional investments in the range of USD 2 billion to USD 2.5 billion. Could you help us think about the expected timing and composition of that spend? Specifically, if I can say it, how should we think about the split between CapEx versus OpEx?

Remco?

Of course, we will not spend $2 billion to $2.5 billion in one single year. You can be sure of that. So that will be equally spread over the coming 5 years. Most of that $2 billion to $2.5 billion, as I said before, is to be spent in development. So about, let's say, 2/3 of that and 1/3 is going in manufacturing. The manufacturing part clearly gets capitalized. On the development in the overall portfolio, there's also a part which gets capitalized, but that you have to see in the context that bio as part of the total D&R goes up. So relatively also our capitalization goes a bit up. So you can't only link that to the $2 billion to $2.5 billion.

I'm struggling to see the top. So do you want to take a pick at the top. There you go. Simon?

Simon Baker from Rothschild & Co Redburn. Two quick ones. I'm conscious of the time. Can you just give us an update on where we are with interchangeability in the U.S.? How important is that to unlocking biosimilar penetration within the U.S.? And how successful has it been ex U.S. where it's more established?

And then a quick one for Remco. Obviously, the COGS is sensitive to the proportion of group revenues, which are biosimilars. But how sensitive is COGS to the mix within biosimilars beyond ownership? So are there any meaningful differences we should think about between therapeutic areas, between size? Are these smaller opportunities, lower gross margin, higher gross margin about the same? Any sort of color you can give on the sensitivity of biosimilars themselves to the gross margin?

Keren, do you want to have a go at something we've not talked about for a while, actually interchangeability.

Indeed. I would say, generally speaking, that it's getting less and less important. I think the FDA recognized that it should not be a decision-maker for the physicians, and it's not part of the label anymore. Congress is working to change the legislation around it. So there is a lot of support. It didn't happen yet, but we're optimistic. I would say from a commercial perspective, there is still people that believe that interchangeability is something different than what it is. The reality is just allowing the pharmacist to change the product if the prescription does not say a specific biosimilar.

So in medical benefits, we don't see an impact, and we did -- and we never saw an impact. I would say in pharmacy benefit, the perception is that there is a benefit, but we were very successful with adalimumab, and we got our interchangeability 1.5 years after we've been in the market. So I would say it's something that people consider becoming less and less important. And honestly, the other attributes of the product, the patient service and everything around the product are much more critical other than interchangeability.

And I would say rest of world development broadly. I mean it's not a conversation that we have anymore. Remco, I mean...

I approach it more from a margin perspective overall. And as I said before, biosimilars, which we fully develop ourselves have a gross margin, which is higher than the average. If we partner, it is lower, but also we have lower costs because we don't develop and we share the profitability. If you think about the different biosimilars, the larger and the smaller one of the cost of goods sold per unit, I don't think that's the real driver of the gross margin. The driver is really the discount, which -- and that depends on the competitive intensity. So we expect indeed that with smaller assets, we will have less competitive intensity, and we will have a higher margin, much less related to the cost of goods sold per unit.

And also, I think bear in mind, if you take a drug like Omnitrope, it's 20 years old, it behaves like an originator product. No one is likely to ever develop and I could be wrong, but I can't see anyone ever developing a biosimilar to a drug like Omnitrope. And so in a sense, the terminal value on a product like that is very significant. And it's continuing. It's still one of our largest assets. It continues -- and I could say the same with a number of other biologics. So in a sense, they don't decay in the same way that small molecules do. They have much longevity. And then you don't -- it's much harder then for new competitors to come into those markets. So as we add more and more assets, you build this foundation of business that is highly accretive.

Okay. Before we go to the last question, and I hand over to Richard for final remarks, I'd just encourage you to have a look at the slides in your goody bags along with the chocolates because it's in the appendix. It does show that the full range of assets we're looking to target. So there's comprehensive pipeline slides in the back. And also, it shows a calendar of all of the events and the corporate access we're looking at over the next few weeks or so. Let's go to the last question. Let's go with that. Right in the center, I think that's Urban in the center.

Urban Fritsche from ZKB. So question to Keren and Christophe and Peter the second one. So in the U.S., I mean, we have favorable changing regulatory environment. But on the other hand, we have the very protective behavior of the originators. So a situation like Humira, is that something which is still possible to some extent, at least in the U.S.? Or is that history?

Keren, go for it.

Well, I'm very optimistic. And I do think that there is a lot of opportunity. I think it's clearly that we are the solution for a lot of the challenges that we have in the health care system in the United States. I think still more policy is required, and we are working hard to provide it, but things like biosimilar first and other ideas that we have in mind. But we absolutely will continue to shape the market. I think also Humira, yes, it took time, more time than we want, but already 60% of the market without -- if you look without private label, 60% of the market is already biosimilars. So we're absolutely progressing.

I mean, the patent reform, you're seeing great work there, PBM reform. The FTC is looking at the behavior of a number of the originators in the marketplace. So you're seeing a shift when 3 biologics in the U.S. cost more than all of the generics and biosimilars, which supply 90% of the patients, something is wrong. So I think there's a huge opportunity for that change. And to be fair, the administration see the -- they see the huge disparity. So I think we're sitting on a position of opportunity with the pipeline that we have and the relationship that Keren and the team have built. So I think we're extremely optimistic.

Okay. And then maybe to Christophe and Peter, I mean, you mentioned you are the leader in biosimilars in Europe, international. So you're also the one to go after. So in terms of competitors, what do you think where are competitors really picking at you, where are they trying to pick up? And how do you defend yourself?

Thank you. Thank you very much for the question. And indeed, we see -- and we have competition as well in Europe. And this has been the case forever, right? Now as I said before, Europe is a mix of different archetypes, right? We have tender, share of voice and substitution. The one that is the easiest to go for price sake is obviously the tender archetype, right? And we see competition coming our way in this tender archetype gaining share based on the volumes that they can gain. Our response is quite simple. The first thing is, as I said, Europe is 40 countries. It's 3 archetypes. We have a model that is built to be successful in all 3 archetypes.

And when it comes to tender, obviously, cost of goods are important, supply reliability are important. And just to give you an example, aflibercept in the U.K., we were supposed to have many competitors. Today, we have 80% share, and we have been awarded as a backup supply -- national supply in the U.K. by the NHS, right? So it shows that it's not only the price that matters. It goes way beyond the price and we need to be good at all the different items rather than just the price.

And maybe I think it's for international. International, we have a very selective play, right? We think on which are the markets we want to play in where we have a good commercial presence, which is 20 direct markets and then 30 markets where we have a distributor model. So in those 20 markets, which are very diverse among each other. I mean, I mentioned Australia, Japan and Brazil as examples, we have really strong local customer intimacy and presence in order to be able to compete.

The example I gave in Brazil with the PDP is an important one. We have that relationship, the experience, the portfolio and the breadth of the portfolio to succeed in that. But that's only one side of the coin, right? I think for international, what's really important -- so one side is the market share we're having and the competition. The other side, which is really important, is the overall biosimilar acceptance. In international, we are still a bit behind Europe in terms of biosimilar acceptance, biosimilar penetration, but that is changing now rapidly.

We see a real shift in the acceptance of biosimilars in large markets like Australia, Brazil, especially also Japan. Japan is the third largest biologics market and has the lowest biosimilar -- or one of the lowest biosimilar penetration today. This will change, thanks to a new law that is being implemented, which will push double penetration over the next years. So I think apart from having a discussion on shares against competitors, it's also about really providing more access for patients and reaching more patients by better biosimilar penetration in international.

And also, I go back to Page 33 on Rebecca's slide, the biosimilar void. I think it's 2 parts. Going back to what I just said, do you think a lot of the local competitors are going to develop a biosimilar to human growth hormone? No. So in a sense, there's an opportunity for that to continue to grow. You're sitting here with a huge number of assets coming off LOE. Of course, some of them will get competition, but do I expect them -- so I think it's this unique combination.

And I think then as we move perhaps to a close, it's a nice segue to say what's unique about Sandoz? We've had this global scale. We have pedigree in terms of delivery. We've consistently executed across that pipeline. We're now sitting with a golden decade that the originator industry sees as this patent cliff. We see as our patent opportunity. We're investing. We're vertically integrated, and we have a commercial scale. So I think in a sense, this is now an execution story. It's an incredibly exciting time.

Hopefully, we've given you a flavor of what we want to do over the next few years. I'm incredibly proud of the colleagues and the team that are here and the 23,000 people around the world.

And thank you again for your questions. Happy to have a drink in the corner, no doubt we'll have to continue the conversation. I'm here as well as the management team are here. So happy to continue the conversation over a glass of wine or a cold beer.

And Remco team, Gilbert, our colleagues, thank you so much, and thank you all of you for your active participation and questions.

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 2026 Results Call. Earlier today, we published a media 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 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 the company's performance in the first half of the year, followed by an update on the business. Remco will give more detail on the financial performance as well as a recap on guidance for 2026. Following a 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. Before we turn to our H1 performance, I'd like to take a moment to reflect on the growth of Sandoz. Over recent months, we've continued to strengthen our position as the global leader in affordable medicines and as an increasingly important voice in health care policy and medicine security. Alongside the 3 anniversaries shown on the slide, we're also approaching another important milestone. We are delighted that Sandoz will join the blue-chip Swiss Market Index in September, less than 3 years after becoming an independent company. This is a strong recognition of our execution, our colleagues and our growing relevance in capital markets and investor confidence in our long-term growth prospects.

Please turn to Slide 5. Now let's look at our performance in the first half. We delivered a strong set of results with excellent progress in our pipeline, business and financials. We further strengthened our industry-leading biosimilar pipeline through the addition of 4 in-house assets, bringing our total biosimilar pipeline to up to 36 assets. We also achieved important regulatory milestones, including EU approvals for our insulin biosimilars and U.S. regulatory submission acceptance for our in-house generic tirzepatide.

In addition, we received regulatory approval for a new semaglutide treatment option in Brazil, paving the way to expand patient access in this important market. From a business perspective, we continue to leverage our scale and competitive advantages. We moved up to become the #2 biosimilar and generic company in North America. We opened our new state-of-the-art biosimilar development center in Ljubljana, and our climate targets were validated by the Science Based Targets initiative. These achievements were matched by a strong financial performance that was in line with our commitments.

In the first half, net sales increased by 5%, including 7% growth in quarter 2. Biosimilars reached a record 33% of net sales in the half, while our core EBITDA margin expanded by 90 basis points to 20.9%. Management free cash flow remained strong at around $500 million despite a significant uplift in CapEx. Based on our performance in the first half and our confidence in the outlook for the remainder of the year, we are confirming our 2026 guidance today. Taken together, this outlook and these achievements reflect the strength of our business model and our ability to translate execution into sustainable growth and value creation.

Now let's look at the sales performance in more detail, starting with Slide 6. H1 was another period of strong growth for Sandoz with top line momentum led by an outstanding biosimilars performance. Indeed, biosimilars grew by 20% in the first half, increasing to 22% in Q2. We continue to benefit from successful launches and excellent commercial execution across every region. Generics also gained momentum from Q1 into Q2. The modest decline in the first half was largely a result of temporary headwinds in the first quarter, including adverse dynamics in the anti-infectives B2B business. In Q2, low single-digit growth for generics was more in line with the long-term trend.

Please turn to Slide 7. While biosimilars are the key growth engine for our business, generics are a strong and essential foundation for sustainable growth, providing stability, access, scale and reliable cash generation to support our long-term strategy. For the period '27 to '36, we have over 300 assets in the generics pipeline, targeting 2/3 of the loss of exclusivity opportunities by value.

Our portfolio strategy remains highly disciplined. We focus on the most attractive LOE opportunities, particularly in oral solids and injectables, where our scale, development capabilities and commercial footprint provide meaningful competitive advantages. At the same time, we continue to convert our generics pipeline into commercial launches. Recent examples for Europe and the U.S. are shown on this slide. We are also making important progress in GLP-1s. In Brazil, ANVISA recently approved Sandoz' first GLP-1 medicine with the launch of semaglutide planned for later this year.

This represents a historic milestone for us, establishing our presence in the GLP-1 market and providing access to one of the world's largest semaglutide markets. Together with our multisource strategy, this strengthens our ability to participate in what we believe will be one of the most significant growth opportunities in health care over the coming years.

Now let's turn to biosimilars on Slide 8. Starting with Hyrimoz, we continue to hold leading positions. Alongside an expansion of biosimilar adoption, we have grown our global market share, and I was pleased to see Hyrimoz delivering double-digit net sales growth in the first half. Turning to Pyzchiva, we have quickly established a leadership position in the European ustekinumab market. Today, Pyzchiva is the #1 biosimilar across major European markets with a 35% market share. It also grew double digit in the first half. While short-term market dynamics in Germany have created some headwinds for Pyzchiva and biosimilar pricing more broadly, the underlying performance of our biosimilars clearly remains very strong.

Please turn to Slide 9. Let me now turn to Tyruko and Omnitrope. We continue to make encouraging progress with Tyruko in the European natalizumab market with market share increasing from 7% at launch to 17% today. Importantly, that share has remained stable over the last few quarters. Looking ahead, we see potential upside from further adoption in Europe, a longer-term ramp-up in the U.S. and additional launches across Europe and international markets.

2026 marks the 20th anniversary of our first regulatory approval of Omnitrope as the world's first biosimilar. Today, it remains the class leader with a consistently strong market share of more than 1/3.

Please turn to Slide 10. Now let's move on to our most recent growth drivers, starting with Wyost & Jubbonti, where the launches have exceeded expectations. In the U.S., both medicines have quickly established leadership positions after the launch in quarter 2 last year, with Jubbonti achieving a 64% biosimilar market share and Wyost 54%. These results reflect broad provider access, strong commercial execution and early wins with key players.

The European launch has also been progressing exceptionally well with rollouts completed across 27 countries on day 1, whilst international launches in markets such as Brazil and Australia are also gaining momentum.

Turning to Afqlir, our aflibercept biosimilar, we're equally encouraged. Launch execution across Europe has been strong, and the medicine is now available in 19 markets. With limited competition to date, Afqlir is well positioned to drive broader patient access while supporting more sustainable health care systems. Looking ahead, Afqlir represents another meaningful growth opportunity in 2027 and 2028, supported by U.S. launches in the coming months.

Please turn to Slide 11. This slide highlights the depth, quality and scale of our industry-leading biosimilar pipeline. I am very proud of the progress that we're making. Our biosimilar pipeline now stands at 36 assets. This breadth is unmatched in the industry and provides multiple future growth opportunities across a wide range of therapy areas.

Importantly, this is not just about the size of the pipeline. What differentiates Sandoz is our ability to continue to expand our pipeline and convert assets into successful commercial launches. This is creating an increasingly attractive portfolio of market-leading biosimilars. Today, we have 5 assets either in regulatory review or we are yet to launch, 6 assets in clinical development and 10 in technical development with a further 15 in early development. The shape and expansion of this biosimilar pipeline underpin our increasing confidence in the Sandoz road map. We have multiple assets entering late-stage development, a growing number of regulatory milestones ahead and a broad set of future launch opportunities that support our ambitions for the Sandoz golden decade.

Please turn to Slide 12. Beyond the medicines we have in the market today, we are investing to ensure we are the leader of the next wave of biosimilar growth. One of the key milestones in the first half was the opening of our new state-of-the-art biosimilar development center in Ljubljana, Slovenia. More than simply a new facility, it is a strategic investment in scientific and technical capabilities that will support our industry-leading pipeline and long-term growth ambitions.

It is a huge step-up in our development capabilities, and we look forward to showcasing the center to many of you in November. As our biosimilar pipeline becomes larger and more complex, speed, efficiency and execution become critical competitive differentiators. This center strengthens all 3. Alongside our growing commercial scale, the benefits of this investment give us greater confidence in our ability to deliver a leading program of launches and capture significant growth opportunities over the coming years. And with that, I will hand over to Remco on Slide 13.

Thank you, Richard, and hello, everyone. Please turn to Slide 14. Let me start with our strong first half performance, which demonstrates the strength of the Sandoz model and our disciplined execution. In the first half, the 5% increase in net sales was driven by the very strong performance of biosimilars, where sales grew by 20%. This growth was broad-based. All regions contributed with strong results from legacy biosimilars as well as the recent launches.

We continued to make excellent progress on profitable growth. Core EBITDA increased by 15% and the margin expanded by 90 basis points to 20.9%, supported by an increasingly favorable sales mix, continued operational efficiencies and operating leverage. The combination of higher operating profitability and stronger core net income drove a 17% increase in core diluted EPS to USD 1.71, demonstrating our ability to convert top line growth into higher earnings growth.

At the same time, our cash profile remains strong. Management free cash flow was stable at USD 503 million despite additional capital investments to support future growth. Please turn to Slide 15. Net sales increased by 10% in U.S. dollars or 5% at constant currencies, taking sales from USD 5.2 billion in H1 last year to USD 5.8 billion this time. The performance reflected significant volume growth.

Biosimilars were the standout contributor. In North America, biosimilar sales grew by 47%, while Europe and international markets also delivered double-digit biosimilar growth. The impact of price erosion was more than offset by strong underlying demand and enhanced market access. The level of erosion primarily reflected short-term market dynamics in Germany and an outstanding biosimilar performance in North America. Currency movements provided a 5 percentage points tailwind in the first half. I'll touch on our full year FX expectations in a moment.

Please turn to Slide 16. Alongside the rapid growth of biosimilars, generics remain a resilient foundation of the business. H1 generic sales were broadly stable with the performance improving meaningfully in Q2 after onetime headwinds in the first quarter. While residual headwinds remain in generics in the international region, driven by active portfolio rationalization and market dynamics in Brazil and Japan, the Q2 improvement reinforces our confidence in the trajectory of the business and the sustainability of our growth outlook.

Please turn to Slide 17. Looking at the regions, North America delivered a particularly strong performance, growing by 15% in H1 and even by 18% in Q2. This was mainly driven by the successful launches of Wyost & Jubbonti, which continued to exceed our expectations and illustrates the commercial potential of our biosimilars platform. European biosimilars were also up double digit, while the generics business returned to growth in the second quarter. In international, biosimilars continued to gain traction with growth of 19%, supported by Rixathon and recent launches.

Now let's have a look at the P&L on Slide 18. Top line growth was supported by strong biosimilar momentum and an increasingly favorable sales mix. This helped lift the core gross profit margin to 49.7%, an increase of 50 basis points. At the same time, we generated further operating leverage, supporting a 90 basis point expansion in the core EBITDA margin to 20.9%. Importantly, we achieved these margin expansions while continuing to invest in our pipeline, launches and future growth opportunities. With core diluted EPS increasing by 17% to USD 1.71, we delivered a more profitable growth, combining strong commercial execution with disciplined cost management and increasing operating leverage.

Please turn to Slide 19. As I mentioned, a number of factors helped to grow the core EBITDA margin. The most significant contributor was business mix. Strong double-digit biosimilar growth increased the share of accretive medicines in our portfolio, contributing around 2 percentage points to margin expansion. While price erosion is a constant headwind, this was almost offset by continued operating efficiencies, including in manufacturing and supply as well as support functions. Currency movements continue to have no material impact on our operating margin.

Let's now have a look at one-off costs on Slide 20. Excluding litigation and some IT expenditures, we had one-off costs of USD 142 million in the first half. I continue to expect these one-off costs to amount to around USD 0.3 billion over the full year, in line with my previous commentary.

Importantly, these costs are trending down significantly from the peak in 2024 as the major separation activities move towards completion. Outside of underlying one-off costs, we announced this week another important step in addressing legacy U.S. generic drug litigation. We have resolved all pending class actions in the U.S. generic antitrust litigation as well as all claims filed by any U.S. federal or state government against the company.

The only remaining antitrust claims against the company in the U.S. generic antitrust litigation are those brought by individual plaintiffs who opted out of class settlement. We reached a settlement agreement with 43 U.S. states and territories covering USD 400 million spread cash-wise equally over 7 years starting in 2027, resolving all federal and governmental claims.

The resolution of these claims requires an additional payment of approximately USD 50 million to states that settled earlier. We also entered into a settlement agreement with a putative class of indirect reseller plaintiffs and will therefore pay USD 28.5 million in exchange for a full release of all claims. These settlements reflect our commitment to operating with integrity, maintaining strong governance and responsibly resolving legacy matters as we continue to work to expand access to affordable medicines. These settlements do not affect our full year 2026 guidance or midterm outlook.

Please turn to Slide 21. Turning to cash. The strong operating performance translated into management free cash flow of around USD 500 million. This was achieved despite a meaningful step-up in CapEx to around USD 500 million as well as higher interest and tax payments, demonstrating the underlying working capital resilience of the business. Be aware that higher interest expense in the first half mainly reflects the coupon payments in March 2026 on recently issued bonds.

We continue to expect CapEx to peak during the current investment cycle this year at around USD 1.1 billion. These are deliberate investments to support our future growth and the performance of management free cash flow underlines the resilience and cash-generative nature of our business model.

Please turn to Slide 22. Our balance sheet remains strong and provides significant financial flexibility to support both growth investments and disciplined capital allocation. During the first half, we further strengthened our liquidity position to USD 2.3 billion, supported by successful Swiss bond issuance in April earlier this year.

Gross debt increased to USD 5.9 billion. Strong cash generation, however, largely offset this impact, leaving net debt broadly unchanged at USD 3.5 billion. This meant a net debt to core EBITDA ratio of 1.4x at the end of the period, down from 1.5x at the end of last year. Our strengthened balance sheet, improving liquidity and investment-grade rating puts us in an excellent financial position to support our ambitions.

Please turn to Slide 23. We continue to maintain investment-grade ratings for S&P and Moody's with both having positive outlook on Sandoz. Our debt maturity profile is well diversified with an average maturity of around 5 years, while our average borrowing costs remain below 4%. At the same time, we remain disciplined on leverage, targeting net debt to core EBITDA below 2x in the medium term.

This combination of financial strength, flexibility and disciplined capital allocation ensures we can continue investing for growth while maintaining an attractive risk profile and delivering value to our shareholders.

Please turn to Slide 24. And now finally, let's recap on the guidance for the full year. We continue to expect net sales to grow by a mid- to high single-digit percentage at constant currencies, supported by the positive impact of recent launches. The core EBITDA margin is targeted to increase by around 100 basis points. We now expect overall pricing to decline by a mid-single-digit percentage in 2026 compared with our previous expectation of a low to mid-single-digit percentage decline.

This reflects the near-term dynamics in Germany and North America I mentioned earlier. Outside of guidance, we now anticipate a 2 percentage points tailwind to net sales from currency movement this year based on recent spot rates and average rates in the period. Our prior assumption was a 4 percentage point tailwind. We still do not expect a material impact from currency movements on the core EBITDA margin this year.

Looking beyond this year, we remain highly confident in the outlook for Sandoz in both 2027 and 2028. Recent launches will continue to contribute more meaningfully, and we have a strong pipeline of biosimilar and generic launches ahead, including the rollout of GLP-1 in early markets.

Importantly, our multisource GLP-1 strategy positions us well to capture this significant market opportunity. With strong business fundamentals and clear visibility on our growth drivers, we are very confident in what Sandoz can achieve. And with that, I'll hand back to Richard. Please turn to Slide 25.

Thank you so much, Remco. I'd now like to wrap up the presentation before we go to questions. Please turn to Slide 26. To conclude, our business continues to perform strongly across pipeline execution, market position, capability building and financial performance. We further strengthened our biosimilar pipeline, which now comprises 36 assets whilst also achieving important regulatory milestones. And we received our first GLP-1 approval, a historic milestone for Sandoz.

We moved up to become the #2 provider of affordable medicines in North America, and I am delighted that we have now opened our state-of-the-art biosimilar development center in Ljubljana, further strengthening our long-term development capabilities. Financially, we delivered strong growth, core EBITDA margin expansion and robust cash generation. And based on our performance in the first half, our confidence in the remainder of the year, we are confirming our full year 2026 guidance today.

Taken together, these achievements demonstrate the strength of our business, the momentum across our platforms and our ability to create sustainable value whilst continuing to pioneer access for patients worldwide.

Please turn to Page 27. As we look forward, we are focused on delivering sustainable growth and creating value for patients. We're excited by the opportunity to share more about this and our golden decade for biosimilars with you at our Capital Markets Day on the 8th of September in London.

Thank you again for listening. Please turn to Slide 28, and I will ask the operator to open the lines for Q&A.

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

Just one on Afqlir in Europe. Where are you seeing most of the volume come from? Is it mostly from the originator or competitor brands? Or are you seeing significant uptake in naive patients? And then just what is your expectation for how that volume opportunity might develop or be limited as the originator converts patients to the high-dose formulation. I think they were saying yesterday, they expect 70% of volume to be on the high dose by the end of the year.

And then just on Wyost & Jubbonti in Europe as well. How are you seeing biosimilar market share penetration progress in Europe relative to what we saw in the U.S. for Sandoz? And have you been able to establish a clear lead as you did in the U.S.? Or is the volume competition a lot closer amongst biosimilar peers in Europe?

Thank you so much for your question, Sophia. Afqlir, I mean, look, we're seeing very strong uptake. I think what you've seen, we clearly took a very strong position in terms of our patent strategy, and I think we've been rewarded from that. I really -- and really, it's a bit early today. We need to see the IQVIA data, but certainly, we're seeing strong uptake broadly in all of the markets that we've launched.

And I don't really see a massive -- I mean, clearly, some patients will migrate to high dose, but also this is an opportunity to offer far more patients this medication. So this wasn't a very expensive medication. So what we're seeing is payers in Europe using this as an opportunity to drive access. So it actually goes back to our very core purpose as a company.

And similarly, Wyost & Jubbonti, yes, we've taken a very strong lead. I think we're by far the largest player in Europe. Again, we're yet to see the most recent IQVIA data, but very pleased with the performance and uptake of the product.

Our next question comes from Victor Floch at BNP Paribas.

Maybe one for Richard on potential U.S. tariff. I believe you flagged this morning constructive dialogue with the U.S. administration and openness to expand your manufacturing capabilities beyond Slovenia, I guess. So should we read that as a commitment to U.S. CapEx? And should we assume that you need both generics and biosimilars capabilities on the ground locally to comply with U.S. demand?

Thank you, Victor. Yes, look, I mean, I think as I said this morning, we have a very open dialogue with the administration. I was in Washington actually 2 weeks ago. I met with quite a number of senior members of the cabinet. I do see opportunities. I think it's too early to say what that would look like. We've always said, look, I think we're broadly aligned to the U.S. administration. We want to find ways to bring affordable medicines to U.S. patients.

And I think that's the dialogue that we need to have now. And I think certainly, we're talking. I think we want the same thing. And I'm optimistic. It's way too early to say what that would look like. And so I would -- I couldn't comment on what the specifics would look like. But certainly, based on the conversations, I'm very optimistic.

Our next question comes from Charlie Haywood at Bank of America.

Charlie Haywood, Bank of America. I have one on sema and one on Eylea, please. So first on sema, I know you didn't want to commit too much before approval, and it's not part of your '26 guide, but I think some more positive commentary out of yourselves today. So now that you have one approval and potentially decent visibility on the Canada approval, how are you thinking about that potential contribution '27, '28?

And then on Eylea U.S. launch in fourth quarter, you've got a competitor annualizing at $1 billion sales. I think you're likely third to market with 4 or 5 more coming by end of 1Q '27. And you're clearly excited as well. So what could you point to, to help us understand potential differentiation there? Is this dosing, device, access, contracts?

And any market proxies that you would flag where you've been a long way behind an original player that's formed the biosimilars market and you've quickly gained market share?

Thank you. Thank you, Charlie. Yes, look, clearly, we're pleased with the approval in Brazil. I think certainly for 2026, we never said it would be particularly material, but I think it's a step in the right direction. And we still have the ambition that we would launch in Canada this year as well. It becomes more interesting as you get into 2027, and I guess it sort of underpins our confidence in terms of the momentum we would expect to see. Clearly, we would launch in Brazil. We expect a number of the other international markets, markets like Turkey, et cetera, and clearly, Canada flowing through into '27. So it becomes more material and meaningful as we go into '27 and '28.

As we've talked many times, it's actually a very difficult product to characterize in terms of how that market will expand. But certainly, we're pleased to be participating and excited to be moving forward.

In terms of Eylea, I think the key here is we have a phenomenal relationship. Remember, we bought an ophthalmology capability a couple of years ago, really with this product very much in mind. So we have the relationship with the payers and we're well established. And I can give you numerous examples where we weren't necessarily first to market, but over a period of time, we've ended up taking a very strong position. And I think the commercial capabilities and our strength in the market sets us up well.

So it's clearly -- we're excited about the launch later in the year. And again, I think it's a great opportunity as we go into 2027. And again, another one of the reasons sort of underpins our confidence in terms of how we see the outlook going. It's very hard to give you a proxy, unfortunately, as much as I'd like to try and think about how to help you in terms of modeling. There really isn't sort of an obvious one. But certainly, I think it's an attractive opportunity, and I think we're very well placed to position the product.

Our next question comes from Shyam Kotadia at Goldman Sachs.

Just circling back on to the GLP-1 opportunity in Brazil. So you got the approval. I wanted to check if you could provide a little bit more color on the commercial dynamics given that there's around 5 to 6 players, including Novo's rebranded version that's now approved.

It seems like price erosion is more steep than initial expectations. So can volumes offset that? So any color there would be great as well as commercials with Adalvo in terms of a profit share, royalties? Any color there would be great.

And then my second question is on the other revenues line item. This came in below expectations. And looking at the half year report, it seems as though this was due to hardly any profit sharing income. I believe this might relate to Pyzchiva in the U.S. through your collab with Samsung. So can you talk through what's happening here? Is there some sort of phasing that would unwind in the second half?

Okay. Thank you, Shyam. GLP-1s, it's too early to say. I think, look, it's going to be a dynamic market. I think we've always said in a sense, this is an underserved opportunity. Clearly, we have a strategy with -- as we enter that, I think let's get into the market. It will be something we'll talk about many quarters ahead. I don't really want to disclose our strategy or how I see that market will evolve and make our competition any harder. So let's see, but clearly, pleased that we're there.

And I think we're now pretty much the only international generic company coming into that market at this point. So we have a strong brand and a strong relationship. And so let's see. I think other revenue, I was just looking at Remco. I'm not sure if you want to comment, Remco, but you might.

I think with regard to your question with the profit sharing, et cetera, there's nothing particular which has happened in H1. I don't have so quickly the answer on the other revenue movement, but there's nothing special to be considered in H1 versus what there was before. There are no major changes.

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

Two, if I may. Another one just continuing on the sema in Brazil theme. About half that market is, we understand, compounded product. I just wondered if you could give any thoughts on how that affects the dynamic. Does that affect price? Or will quality be a selling point there?

And more broadly on sema and indeed tirzepatide, Lilly and Waters were recently commenting that establishing purity of these chemically synthesized peptides is far from trivial. I don't see that as an issue for Sandoz, but it could be an issue for some of your competitors. So I just wondered if you could update us on the quality, quantity and sourcing of your peptides in this space?

And then secondly, a slightly bigger picture question. As we see repeatedly in this presentation and previous ones, it looks like the market tends to underestimate the longevity of opportunity for an individual biosimilar that your share stays stable, penetration increases. So I'm just trying to get an idea, and I'm sure this is something you've discussed more at the CMD, about how long we should think about the duration. Time to peak may not be quite the right phrase, but it feels like it is a multiyear opportunity and some color on what multiyear looks like, if indeed there is a one can generalize would be really helpful.

Thank you so much for your question, Simon. And I think I couldn't have put it better myself, so I'll come back to the moment. Look, semaglutide, I think the compounding -- in a sense, why is compounding there? It's a reflection that the patients want this product at a lower price point. I think in many ways, with the entry of generics or copies of this product, I think a lot of the compounding will disappear because quite frankly, the economics don't make sense. You want to have the security of a fully manufactured product and the appropriate supply chain.

So I think actually, I see that as an indication of the opportunity, and I expect it to erode pretty quickly as generics enter the market and convert it. To that -- I mean, your comments made me smile. I mean, I've been in the industry a very long time. Every originator right from the first original generics has been going around saying generics are poor quality. And then we had that same with biosimilars that how can a biosimilar be the same? I'm sorry, it's the same old stick that originators always try and disparage this industry.

I'm comfortable with the product. I stand behind the products and our quality. And I think it's just a normal response from originators who are desperately trying to hang on to legacy products and legacy shares. So it's not something that unduly concerns me.

And I love your question around longevity. This year, Sandoz launched its first ever biosimilar. We created this market as it were. We launched Omnitrope 20 years ago. Today, Omnitrope is still one of our largest products. We still have -- we are still the leader in that share. And the markets don't go away. And I think it's very hard to say what is that longevity, but yes, I can't help with it, it's a high degree of confidence, say, well, no one is ever likely to launch another biosimilar to human growth hormone.

So patients will need those products. And similarly, with a lot of the portfolio we have, unlike small molecule commodity generics, absolutely, there's a very long life cycle. And I think that goes back to the fundamentals of the investment case around Sandoz as we bring more biosimilars to the marketplace, they're accretive, and they continue to deliver year after year, and we're broadening that portfolio.

So again, I think you're right, we will touch on that at the CMD, but I think we're extremely well positioned. And that's exactly why I keep saying this is Sandoz' golden decade as we look forward over the next 10 years.

Yes. Richard, if I may add to it, we're often being looked at as an individual biosimilar, biosimilar case. For example, we're not an originator with a few biosimilars. It becomes a whole portfolio together. And there's also no end date. With an originator, there's an end date. For us, there's no end date, which is also forgotten in the equation, if I can add those 2 things, Richard.

Our next question comes from Harry Sephton at RBC.

The first one is on pricing, and you called out in your guidance that you're seeing price erosion step up to the mid-single-digit level rather than low to mid. Can you maybe just expand on that where you're seeing that pricing and your ability to offset that with volume gains?

And then my second question on denosumab U.S. It appears that, that continues to be a very strong tailwind for you in the U.S. What is your expectation for the continued market share gains in the second half? And what are you seeing on pricing? It looks like the originator has been a bit more aggressive on rebating there. So any help on the pricing side would be helpful.

Remco, do you want to pick the pricing up?

Yes, I pick -- so the pricing, there are 2 elements which play a role. One, the success in North America that, of course, sounds strange the higher price erosion. But if bio grows really, really fast in the U.S. and particularly the early launches attract a relatively higher price erosion percentage. It still doesn't mean that the product isn't profitable because pricing relatively starts high and then you have a steeper price erosion.

Now with that high growth, you've seen the 47%. Proportionally, it attracts a bit more and more price erosion. But indeed, the growth, which is behind it is more than offsetting it. Second was Germany. Germany at the beginning of the year, there were some new pharma substitution rules introduced for the biosimilars for which some tenders came in. They're stopping now through '28 and they're relooking at it. On the other hand, in Germany, we had a fabulous growth as well on the volume side. So it's more than offsetting it.

We are not worried. We see this tendency in different markets around Europe and around the world. So it's a normal part of our business. So we don't see any impact on nor the profitability nor the top line. That's also our guidance is completely unchanged. So for us, nothing special, although I understand it attracts a little bit your attention.

And then on denosumab, I mean clearly, we're going to lap ourselves. So the growth rate naturally will slow down, but we still see good share gains. So I still see it as a growth driver in the second half. And I'm sorry, I've been, again, my comment earlier, I've been in generics a long time. Originators always fight to try and keep share. It always ends up being a zero-sum game for them because their business models are very, very different. You could argue that every single biologic that we've launched in the U.S. the originators claim that they can defend and they take aggressive pricing. In the end, the industry normally wins out as a generics and biosimilars.

So I don't see anything unusual in terms of what they are doing. And I'm clearly delighted that we've taken such a strong leadership position in the U.S. with quite strong competition. So, and still see some growth potential in the second half.

Our next question comes from James Gordon at Barclays.

James Gordon from Barclays. A couple of questions, please. One was on Germany. So there have been these headlines about health care spending cuts, which you mentioned and short-term market dynamics. So is your understanding it's just a one-off hit on biosimilars and then pricing goes back to normal? How will pricing work beyond this? Could there be a longer-term headwind for what you charge for biosimilars in Germany? And do you think there might be any offset in terms of Germany is trying to save money? Could there be more spending on generics and biosimilars as some volume benefit? Or is Germany just going to be a tougher market?

Second one, just a clarification on sema and Canada where I think you said you hope to be approved by the end of the year. Do you think you're just going to be with the 1 mg dose or the 2 mg dose? Because I think that the approvals so far haven't been the full dose range. And if it's not the full dose range, does that materially reduce the opportunity because patients want to have the full dose range with the innovator?

And then just quickly finally would be gross margin. So you're up 50 bps year-on-year, which look good. But do you think you are going to get much more margin expansion from gross EBITDA margin expansion from gross margin? When we're hearing about like pricing pressure in Europe and tariffs and in-licensed products or pay aways, is the margin expansion going to be much more about SG&A leverage and gross margin more modest? Or do you think you're going to see that start to see a step-up in gross margin expansion even ahead of Slovenia coming in?

So perhaps Remco, do you want to take the first and third question? Sorry. Thank you, James. Thank you for your question. And then I'll take the sema.

Yes. James, good to hear your voice again. Indeed, for Germany, we see this for the moment only as an implications for '26. These tenders have continued for '27, '28, and Germany is relooking at the process here. Clearly, to save money in the health care systems, you need more generics and biosimilars, right? And as that participation of us in the market grows faster, it clearly has a benefit. Germany has different channels. Tenders is one of them. The tenders have also big opportunities with regard to volume, we become a larger player, we can provide also the volume.

So these dynamics are something which we see in every market in Europe, and we will deal with it. But for the moment, we don't see the price erosion we have seen now in Germany in '26 to continue in '27. We don't see that.

On the last question, yes, we see the EBITDA margin improvement to continue year-on-year through different dynamics. One is the biosimilar part of the portfolio to keep on growing and biosimilars have on average a higher margin. That trend will not change. Secondly, the recovery on our fixed cost structure will still help us in the leverage of the cost. The mix between gross margin and TFC, that will vary depending year-on-year, quarter-on-quarter of the different dynamics. But both of them will play a role also in the coming years ahead. That's part of our midterm guidance. And I have to say very boringly, it's the same story. Nothing has changed here. Richard, over to you for the second.

Yes. Thank you so much. On sema, we've not disclosed what presentations. Again, we still have the ambition that we will get an approval and launch in Canada this year. It's also worth pointing out, we're not dependent on one partner. We have a numerous partner strategy. So it gives us more capacity, it gives us more flexibility, and it gives us better confidence in terms of our ability to supply this market.

Also bear in mind, in Canada, we're in a very strong position. We have an extremely strong relationship. I think we're the #2 Canada there, the company in Canada. So it becomes a very interesting opportunity. But clearly, no doubt, we will have many conversations about this once we're in the market over the next few quarters.

Our next question comes from James Vane-Tempest at Jefferies.

Two, if I can, please. It's James at Jefferies. I'll leave with the first one and then come with a follow-up. You talked more about there's some negative pricing of mid-single digit from low to mid. I mean there's been questions already on Germany, but I was sort of wondering, thinking about biosimilars, are there any particularly you're having to discount more to win share versus what you previously thought just to kind of raise the pricing pressure at this first part of the year.

Remco, do you want to...

Yes. I think you notice, there's nothing more particularly to mention then other than North America, which always has a higher price erosion when we launch and just the sheer volume of it makes the mix having a bigger impact. Germany, I just explained as well. There's nothing else which is there. You still have to keep in mind where there's such a focus on this relatively price erosion, which is a bit weird on balance because we look, of course, at the mix and the profitability on a product-by-product level and biosimilars are very profitable or, let's say, more profitable than the generics as part of the portfolio.

So we look more at the mix of the products we sell and the profitability of that mix. And clearly, that's improving. You see that also in our gross margin, where we have the 200 basis points improvement year-on-year in our profitability. And that's something we expect to continue also in the coming years. So also with what Richard said that for the outlook for '27 and '28, we see a good volume growth. We see this mix to continue in the P&L. And therefore, we have also a very positive outlook on the profitability and that we expect the margin to continue.

And just a couple of comments on Germany. I mean, first, obviously, this is only relates to the sick funds. And actually, the law that was driving substitution has been reversed. I think eventually, substitution will arrive in Germany. But actually, I'm net positive. If you look at our pipeline, the depth and breadth of our pipeline means that as we bring more modest sized biologics to the market, we see much more rapid uptake and penetration.

So actually, I could argue it's net benefit to the company overall. And clearly, I think given the overall strength in the German market, and as Remco says, I tend to not over-index relative price erosion. I know we get a lot of questions, and I understand why. But it's not something I look at it so much because as we launch more biologics, you're naturally starting from a much higher starting point and you're always going to discount percentage-wise much more. It doesn't materialize when it flows through to the P&L. But I know you all look at it and model it, but I look at it slightly differently.

And then just to follow up on your guidance construct and particularly thinking about phasing for this year. Business clearly accelerating into 2Q to 7%. But if we think about the momentum as we move through Q3 and Q4, is an exit rate of 10% reasonable this year, just given the acceleration and the new launches ramping up?

And then related to margins, around 100 basis points and you've done 90 in the first half with the sort of momentum you've got in the second half, what would you need it to have seen to perhaps change this from around 100 basis points to greater than 100 basis points, just to sort of help us understand what held you back there? Or is that how we should really be thinking about it this year?

Thank you so much, James. I'll let Remco answer that one.

James, very, very, very fair questions. What we have said before and also at the beginning of the year, correct, we believe, first of all, that H2 will have a higher growth than H1, which is, of course, not a surprise. Because to end on mid- to high that is higher than the 5% without quantifying that exactly. So we need to come with a higher point in H2, which we clearly have on the radar screen.

But still have to be seen if you think about the phasing in H2 that we expect to be Q4 to be higher than Q3, something similar as we have seen in H1 between Q1 and Q2. We also there have to keep in mind that in Q3, we still expect some headwind from the Anti-infectives, which is that we had some anti-infective headwinds in Q1. In Q2, we didn't have much, but there is still some impact of that in Q3, which also makes the Q3 top line growth a little bit lower, although underlying in the quality of the sales is there.

And then Q4, we expect a further step up. So we come to the mid- to high. I can't comment on an exact percentage, correct? That's not how we give the guidance. So sorry about that. With regard to the profitability, indeed, if you want to come 100 for the full year, it's 90 in H1. The average would be then 110 in H2. We clearly stand behind that. And we're very confident on the current trend, the way the business is going, the mix is going, that we can make again that step-up is in line with our commitment.

And by the way, that's not something we only expect in '27. Our midterm guidance for '28 stands there in full. So the 24% to 26%. So also that trend we expect to continue in each of the coming years. So it's not only a '26. It's also '27 also '28.

Our next question comes from Nicolas Pauillac at Kepler Cheuvreux.

Maybe just a quick follow-up on what was asked before on the, let's say, long-term profitability of biosimilar. I would be interested to have your view on what's this time instead of the, let's say, revenue generation, but rather the profitability of this biosimilar as time passed on because I would assume that the competition reduced. And so do you get some leverage maybe on SG&A or things like that on this product?

And then also, when you say that you are looking at the, let's say, golden decade and so adding new layer of growth on this biosimilar division, is there a point in which you see that there might be some, let's say, manufacturing competition between all of the biosimilar franchise or the new investment plan that you have done has been done thinking that, for instance, you will keep growth on Omnitrope for the next 10 years?

Let me take you a little bit to a higher level, if I may. So we have a generics and a biosimilar business, and they are very synergetic, right? So the advantage we have with a very high generics business that we have an infrastructure commercially, but also for our overhead, our G&A, which we can fully leverage.

So it's not that the biosimilar attracts a different kind of commercial cost on top of or extra general and administrative cost. And that is a bit of the really good position we have versus any other company which is out there because if you start only with biosimilars, you don't have that big infrastructure, which you can leverage, which we can. So the margin improvement you have to see over the coming years comes again from biosimilars being a larger part of the portfolio and having on average a higher margin and the whole infrastructure, which we can further leverage. And also, we are driving productivity in different angles.

Now what later, of course, comes with the infrastructure we have with what we all built in Slovenia, you get also that benefit of the full vertical integration over the coming years. And then we get new bio in the portfolio where probably we will have less competition. So all that equation makes us very, very positive over the years to come. And yes, with now quite a nice portfolio of products with 36 in, 13 launched in the market. And there's so much opportunity, correct? We know that with the $650 billion of LOE over the coming 10 years, that can only grow further.

And we have a great infrastructure to leverage. And percentage-wise, we also shouldn't forget the faster biosimilar growth, a larger part it becomes the portfolio. So the average growth will also for the group go up, correct, in the total. So it's all reinforcing it together. So it's the only thing...

Yes. But if you then think about the golden decade, I think it's always a little bit counterintuitive, but actually, the competitive intensity is going down, not going up. So you've got something like 100 biologics coming off patent in the next 10 years. So the average number of competitors per biologic is maybe 1 or 2. And so yes, everyone is focused on the denosumab and the pembros and we've seen 10 players in denosumab. And I think we've demonstrated our capability to win in those sorts of markets.

But also now you see some of the more modest-sized LOEs, maybe $2 billion and $3 billion, but we just don't see any competitors or very, very few competitors. So I think leveraging our scale, leveraging that. And I think the other part of your question is then the infrastructure and Remco touched on it, but broadly, we're investing now in capacity in terms of manufacturing, both fed-batch, large and small and the continuous manufacturing platforms that we have in France gives us really the optionality to supply that network.

So I think we're in such a nice position with this combination of mature assets and then the strengthening opportunity as we look into our golden decade, which is why we described this as Sandoz' golden decade, not the industry's golden decade.

Our last question comes from Florent Cespedes at ODDO BHF.

Florent Cespedes at ODDO BHF.

Just about you are very faint, but thank you Florent.

If you can speak up a little bit.

Two quick ones, if I may. First, from Remco regarding the Slide 20, the one-offs. Just could we have a little bit more color on how we should think about the rest of the year for eventually the legal costs and the software costs as well? And regarding the underlying one-off costs, we understand it's clear that you have reiterated that you will record $0.3 billion costs this year. But how should we think about the underlying one-off costs going forward? Is it fair to assume that the transformation will be stable or separation will go down? So any color on this front would be great.

And my second question, let's say, big picture question for Richard. When we look at the pipeline, the assets on the pipeline, most of the long-term projects are in-house. So is it fair to assume that going forward, this will have a positive impact on the product mix and on the margin because in the short term, we'll see more projects in the pipeline which are partnered. So any color on this front would be great.

Thank you, Florent. Remco, I'll let you go first and then I'll close.

Thank you, Florent, for this question. First, on the underlying one-offs, about $150 million in H1. We guided for the full year around $300 million. We still stand behind that. So nothing changed. And we expect as well in '27 that to go further down, correct, in line with the guidance we have given.

So there, we deliver exactly what we said. Software has to do with a bit of the strange accounting rules around SAP in the clouds, where somehow that cannot be capitalized and align with other companies. The fact that we can't capitalize, we show it separately. It's a similar number for the full year as it been last year with our SAP introduction. And that will also remain for the coming years whilst we complete that software upgrade with our SAP systems.

The legal element, you have to remind that it's a legacy. It's something which comes more than 50 years ago that was also from our predecessors and we're cleaning up that mess. H1 is the big impact, and we don't expect at this point in time any material impact in H2.

I think Florent, for your final question, I think you're absolutely right. Clearly, a larger proportion of our pipeline will come from our own in-house network. I wouldn't say it's an 'and' rather than an 'or'. So clearly, we are really the partner of choice in this industry because we can give share, we have this capability.

And also, I think it will increasingly become a moat. It's interesting, a lot of companies claim to be biosimilar companies. But quite frankly, just in-licensing a few products doesn't make you a biosimilar company. Matter of fact, we have a broad capability in terms of technical development, manufacturing, legal, commercial really means we are in such a unique position to leverage this huge opportunities as we look forward.

So very pleased to see our pipeline expanding. I would still look to continue to work with partners, and that means that we can service more and more patients. But you're absolutely right. Clearly, it will gain, it's another positive impact on margin growth in the midterm because clearly, we're not having to share revenues with third parties as we develop products in-house.

So I think with that, that's our final question. So look, thank you so much. It's been a pleasure to give you our performance for H1. I look forward to seeing many of you in London at the Capital Markets Day. Look forward then to giving you more clarity about how we see the business coming.

Hopefully, you got a sense in terms of our confidence in the business in the second half of this year and also particularly our confidence as we go into '27 and '28. Thank you so much for giving us our time today, and good day.

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.