Roche Holding AG

Ladies and gentlemen, welcome to the Roche Full Year 2020 presentation Investor and Analysts webinar. My name is Marco and I am the technical operator for today's call. Kindly note that the webinar is being recorded. I would like to inform you that all participants are in listen-only mode during the call. After the presentation, there is a question and answer session planned. You are invited to send in questions throughout the entire session using the Q&A functionality of Zoom. In addition to that, you may also raise your virtual hands to address your questions verbally. For participants joining via phone, to raise your hand, use star 9 on your phone's dial pad. When you then get selected to ask your questions, please follow the instructions from the phone and press star 6 to unmute yourself. At this time, it is my pleasure to introduce you to Karl Mahler, Head of Investor Relations and Group Planning.

Karl, the stage is yours. Thank you, Marco. Welcome to our full year 2020 analyst call. Personally, I hope that you're all well, safe, and in good condition. I trust in that. Basically, you have two hours booked with Roche, one hour presentation and one hour will be Q&A. Most of you are familiar with the Zoom functionalities. Marco already highlighted that, so you can raise the hand if you have any kind of questions. You can also use the telephone line. We'll organize this one. And you also can send me an email, and then I can read those things to you. in these unstable times. So we wanted to give you some stability. So actually we have the same setup as always. So that is good news. And with this one, I want to hand over to Severin. Severin, the floor is yours. Thank you. Severin, you're on mute.

That helps. Thank you. and welcome everybody to our year-end briefing. Let's go right into the numbers. If I can have the next slide, please. Next slide. Good. So you have seen overall results, 1% growth on the sales side, EPS growing over proportionally with 4% and a dividend increase in this range. If we move on, please. That's, I feel, an interesting slide, because even though the sites might look a little bit boring at first sight, that was happening a lot below the surface. On the one hand, what you can see is continued good growth on the pharma side, which actually would have compensated for the biosimilars impact if we wouldn't have suffered from COVID-19, where patients delayed appointments and as a result of it, there was less prescriptions for medicines. the impact of biosimilars was significant. Some were higher than we originally expected. And then of course you have seen a very good momentum in particular in the second half of last year with diagnostics. Now on the cost side, I think it's really remarkable that we could increase R&D spend for pharma with over 800 million. That is an 8% increase versus a sales decline of 2%. It's investments in our pipeline. We have really fantastic opportunities we want to fund. And we could do that with all the savings in other areas, manufacturing, energy, etc. So I'd say, yeah, pretty good. Pretty good story in terms of protecting our margins, but at the same time, investing into the future if we move on. That's an overview of all our contributions over the last year in the fight against COVID-19. And all of that happened on top of the ongoing business. Diagnostics, really fantastic to see the buildup of the portfolio, literally out of nothing, 15 new solutions. And you might have seen just this week we announced a nasal antigen test. So we hope that that will be yet another opportunity to broaden testing for more people because it's more convenient and you don't need a healthcare professional to assist for the testing. Likewise, on the pharma side, important collaborations with Regeneron, with Artea. We'll come back to that in a moment. If we go to the next slide. That's another angle to look at our various efforts in COVID-19. And really the point I'd like to make here is COVID-19 in some form or another will stay with us. I mean, we all hope that we will overcome the pandemic, but COVID-19 will continue to stay with mankind like the flu virus. And that's the reason why we are investing in particular into the development of a small molecule in this collaboration with Athea. If clinical trial results should read out positively, that would be a very important contribution, potentially during the pandemic, but certainly also beyond. We go to the next slide, please. Right here, the numbers again, you have seen that already minus 2% on the pharma side and plus 14 on the diagnostic side. Next slide. The quarterly picture. Next slide. Right. That's an interesting slide because you can see how the business was impacted by the lockdowns. First time in the second quarter with really a significant impact on the pharma portfolio. And you see here in orange, the newly launched products where we started off extremely well in the first quarter. And then you see the impact where patients just simply didn't go to their doctor or to the hospital anymore and growth came down. Now it's somehow somewhat recovered in the third quarter. And then again, you see a decline in the fourth quarter. So partly this is due because a number of countries were going into lockdown mode again. And partly this is also true to this carryover effect of Ocrevus, which patients are supposed to take every six months. And then on the diagnostic side, you see the contrary effect because here we have been ramping up our production capacities and as such could increasingly meet the demand. If we move on. Right. So that's good to see. On the pharma side, an increasing portion of our business is now from the newly launched medicines. On a group level, it's over 40%. And as we see continued good growth with the new products, that should really make us confident for the growth over the coming years. Next slide, please. Profitability, we could keep the margin with all the efficiency gains we had throughout the organization. Next slide. That's again an important one. And as we discussed so much about COVID-19 and the pandemic and when it is over and kind of contributions we make here, we forget that the vast majority of our work is on our other portfolio. And today, still many more people die from other severe diseases other than COVID-19. So we keep investing in our portfolio. And 2020 was a really good year in terms of portfolio progress. You see that we transferred a number of new molecular entities into the late stage in our pipeline. And as a result of this, we have now a record of 19 new molecular entities in our late stage portfolio. And that is not counting for the indications. So this is just new molecular entities only in late stage phase three registrational trials. We've never had a stronger pipeline than today. And we intend to move additional molecules into late stage in the current year. So that's really, I mean, understandably, everybody focus on COVID-19. But I think that's the real story. of 2020 when it comes to our mid and longer term prospects. And likewise on the diagnostic side, whilst we have been heavily investing into COVID-19, we did not stop working on our new platforms and on our menu of essays. And again, there is a number of very important launches to come already starting in 2021. And again, that should provide us with growth for the years to come. Next slide, please. Bill will cover this in much more detail. You have probably seen the more recent data on Farisimab, also PDS. So ophthalmology is really increasingly a tremendous opportunity for us if we move on. So in terms of our guidance, in terms of our outlook, good continued momentum with our new medicines in pharma. We expect very good growth in the first half of the year in particular. And then it will depend on how the COVID-19 pandemic develops. And that is offset by still a significant impact from the entry of biosimilars. Parallel will work, of course, on our efficiency across the organization. And we move on to the next slide. That gives us the confidence for an acceleration of growth in 2021. So our guidance is mid-single-digit growth on the sales line, EPS in line with sales, and that should again allow us to increase dividends in Swiss francs for the next year. So who is next? Bill, Thomas? Bill, over to you. Thanks.

Thanks, Severin. Thanks, everyone, for joining us. And obviously, a very eventful year. I'd like to just underscore a couple of comments that Severin made about the nature of what was 2020. Well, there was a tremendous flurry of activity regarding COVID, and that hasn't stopped. And we're very involved in a lot of aspects of fighting COVID. However, if you go back three years ago, we were talking about our industry-leading pipeline with 10 exciting molecules in phase three of registration. And now we have 19 molecules in phase three of registration. In fact, we added six in the course of 2020. One of those was related to COVID, but five are in other areas. And for example, we doubled our late stage oncology portfolio in one year in 2020. And I think between the massive shift of resources from operations, from SG&A over into R&D, between that and the progress on actual molecules, I think the real story of 2020 for at least the pharmaceutical division was one of progress in the pipeline, despite all the obstacles posed by COVID. So I'm really proud of the work that everyone's done. we've spoken in the past about our bold ambition to deliver three to five times as much patient benefit as we have in the past, but at half the cost to society. And I think we've laid a very strong foundation for that over these last two years, and in particular in 2020, big advances both with the science, the molecules, and the investment profile. So we're looking forward to more of that in 2021 and some really exciting results ahead. Let's put up the first slide, thanks. Yeah, so, you know, again, here you can see the geographic breakdown, minus 2% overall, and obviously the biggest hits were in the U.S. and Japan, where we had the most biosimilar impact with AHNR all exposed in those markets. Next slide, please. So the P&L is actually, I would say, a pretty interesting story to follow because the Despite that 2% loss on the top line, we were able to offset that, deliver basically a stable operating profit, but also to invest $800 million incremental in pharmaceutical R&D in the year. And I'm really proud of the efforts that we've made over multiple years now, but a lot of those really paid off in a big way. We did have lower write-offs in the operations area and manufacturing than we had in 2019, but also strong gains on efficiencies and big gains in terms of our effectiveness and our focus in SG&A as well. So good progress. Next slide. And this is what it adds up to. And again, you can see our ambition at the top. and we're talking about doubling of medical advances. I explained what we want to do is have twice as many NMEs, twice as many new products. And we want each of those products to have a bigger impact. So that's where we get from doubling medical advances to three to five times the patient benefit. And we're going to do that at half the cost to society. Again, those costs can be in the price of medicines, but they also can be in terms of like early cures and things that avoid future healthcare costs or avoid current healthcare costs. And I think we've made some good gains and some good examples of that already. But if you look, this requires a lot of internal innovation and we're investing there, but also a lot of collaboration. We had 92 new agreements in the pharmaceutical realm, five new agreements in late stage alone. And you can see the modalities and we really have the waterfront covered You see on the left is small molecules. We have 12 of those in clinical development across the enterprise. And when I say the enterprise, I'm talking about G-RED, P-RED, Chugai, Spark, and the late stage organization. And so 12 small molecules all the way over to personalized MNRA vaccines, two, and a personalized T-cell therapy, one. The grand total of molecules in clinical development is just over 90. And I'm super excited about that. I'm by background a science nerd. So the opportunity to work with over 90 new molecules is a dream come true. And we're going to take it up from there. Next slide, please. So this is really the revenue picture. And obviously the big blue bars at the bottom is the U.S. impact of biosimilars. I think we've seen the worst that it can get. The impact was bigger certainly than our base case with a total impact in the U.S., Europe, and Japan of about 5.1 billion declines on those three products. The worldwide impact was about 5.7 for the year. And we, again, I think that's, we forecast that's probably the worst that it'll get. We think this year in 2021, the number will probably be closer, roughly 4.6 billion. So about a billion less impact from biosimilars. But we do expect to have continued strong growth from products at the top, including T-Centric, which has continued progress in penetrating a number of indications, especially in the international realm, in Europe, in Japan, outside the U.S. The reason being is we're already highly penetrated in the U.S. with T-Centric. Hemlibra, which continues to rapidly penetrate markets around the world, but a lot of growth left there. Okravis we'll come back to, but again, good progress there. And so I think in this year ahead, yeah, we feel really good about the lineup we have and more to come. Next slide. So this is the Q4 numbers on the left. And you can see we're now up to 47%. It's interesting if you look at the percentages versus the heights of the bar, the bars get squashed a little bit on the right side because of the appreciation in Swiss francs. So the bars are actually in actual rates. And so we see a bit of an impact towards the end. But it's really an impressive performance of these new products. And we added four more new products to the portfolio this year. And we'll either be filing or getting approval for four more in 21. So again, I think the pipeline investment over many years is continuing to realize benefits for patients and for Roche. Next slide. So in oncology, overall, minus 10%. really combined impact of biosimilars and COVID, mostly in this case, mostly biosimilars as an impact. But I think what I'd point out here is if you look now at Herceptin and Progetta, Progetta has surpassed Herceptin. In fact, the Progettas now are number three medicine. Ocrevus is now number one, and AHNR are numbers two, four, and seven. in the lineup. So it's quite a big change in a year. Next slide. In hematology, I think this is one to watch. I would just point out here that what's not in shown is Van Clexta. And as you know, Van Clexta is now a blockbuster. We book approximately half of the profits for Van Clexta, but not the revenues. And so you don't really see that on the bar chart. But we've had good progress with our portfolio in hematology, including a couple things I'll come back to. So next slide. Yeah, so this is some of the latest data from MOSIN and from GloFit. And these are our two anti-CD20, CD3 antibodies. These bispecific antibodies recruit CD3 positive T cells and take them to the tumor. And we've been really encouraged by both the tolerability and the progress on that of these regimens, as well as the clinical benefit. And you can see Mosin in highly refractory patients with follicular lymphoma. This is a breakthrough designation from the FDA. And again, if you look at different patient groups, but you can see between 65% and 76% overall response, which is a really great result and a great option for these patients with more indolent disease. In DLBCL on the right, this is Glofit. And I think what was really impressive about this is the dosing is providing for response rates up in the 60s, which you might expect from a CAR-T therapy, but this is an off-the-shelf therapy. And so again, we're quite optimistic about our prospects for approval of both of these medicines in the next 12 to 18 months. And we're also, by the way, we're examining a sub-Q dosing for Moson that could even further improve the dosing profile. So good progress here. Next slide. So here's Dicentric. And again, I would remind you that the bar chart is affected by currency because the bars are in CHF and And over the last 12 months, there's been about a 6% to 10% increase of the Swiss franc against the major currencies that we're realizing our sales in. But you can see in Q4, we had 35% year-over-year growth. And looking forward again, I think a lot of the growth we will see is outside the U.S. because we have a relatively high level of penetration already in the U.S., I think the other thing I would mention here is just the high potential for the TIGIT combination because there really hasn't been a big step forward in cancer immunotherapy in terms of the MOA since the advent of the checkpoint inhibitors. And we have a number of phase three studies that could show that type of step forward. That'll have obviously an effect on tiragolamab, our TIGIT-targeting molecule. But because these studies are being run in combination with T-centric, then there's the potential for quite a big effect of pulling T-centric up with that. On the outlook for T-centric, I would highlight a couple of things. The adjuvant studies in non-small cell lung cancer and in squamous cell head and neck cancer Those studies have been long anticipated. We believe they'll both read out in 2021. I want to mention that earlier we had talked about the neoadjuvant study for lung cancer also reading out in 2021. We now think that's more likely to be 2022. And the reason being is that study will look at the pathologic response, but also event-free survival. And In our ongoing discussions with the regulators, we believe that event-free survival is probably going to be seen as more the gold standard. And so the event-free survival endpoint was always going to be after the pathologic response endpoint, and that result we anticipate in 2022. But we do anticipate the adjuvant studies in lung and head and neck cancers to read out in 2021. Next slide, please. So just a brief note, you can see Allicenza continuing good progress. It's very much the standard of care now in ALK positive lung cancer. And we're really pleased with the continued growth of Allicenza. And you can see in Q4, we were up over 300 million. So well into the blockbuster category. And again, really pleased with the long, the durable benefit of Allicenza for these patients. Next slide. So Hemlibra, I think this is a really good illustration of the effect of the pandemic. So you saw very strong growth really across countries up through Q1 of 2020. And then in Q2, basically almost no new patients going on and some existing patients having disruptions. Then Q3, actually a very strong growth. rebound and Q4, again, healthy growth. And so we have every expectation that Hemolibro will continue to have strong growth as it penetrates in the inhibitor markets in the international area, but increasingly in Europe and the U.S. penetrating outside inhibitor. So look for continued growth here. Next slide. All right, immunology. What was a little surprising on immunology in 2020 is that we weren't surprised by the reduction in Rituxan sales due to biosimilars, but obviously Actemra, upside there, based on the use of Actemra in many countries for treating critical patients with COVID, and those studies continue to read out. I'll say a little more about that in a bit, but you can see the overall immunology franchise at plus 2% in constant exchange rates. Next slide, please. So, Ocrevus. So, you know, basically, here's what's going on in the MS market from what we can see is that, you know, people with MS, especially relapsing MS, are dealing with the disease for 30, 40 years. And there was a high level of switching to Ocrevus up through Q1 of 2020. We were up in the high 30s to 40s in terms of our percent of new and switched patients. And there were a lot of those patients switching. Beginning with late March of last year, the switching slowed dramatically. And in addition to that, there were a lot of existing Ocrevus patients who were nervous about whether or not to get a dose who delayed their doses. because of either concerns about safety or concerns about the therapy itself or concerns about going into a hospital or infusion center. So in Q3 of 2020, we saw those returning patients who delayed their doses in Q2, they all came back in Q3. So we got a bounce in Q3 and you can see that reflected here. In Q4, essentially, what happened was that the patients whose doses got delayed out of Q2, that meant they were also delayed out of Q4, right? So, you know, if you were supposed to get dosed in May and you didn't get dosed in May, but instead on July, then you also didn't get dosed again in 2020 at all. Your next dose shows up in January of 2021. In addition, the rate of switching is still lower than pre-pandemic for sure. It's hard to estimate exactly how low, but when we've done our market share survey, and it's a monthly market share survey, we have the data through October, and we follow a three-month moving average, and that number was about 40% for October. So we don't see any reduction or significant impact on people's interest in Okravis or their choosing of Okravis versus the other 17 alternatives in the market. It still remains very high, but the rate of switching is still lower, I think, as people are kind of riding out the pandemic and waiting to see what to do next. But overall, we have strong confidence in the future of Okravis, and we expect that we'll have good growth in 2021 and that we'll continue to see this cycle because that actually could last for years where we'll have every other quarter up and down. Next slide, please. All right, so Evrizdi. So this has been very well received. There's no other way to put it. We have more than 350 doctors in the U.S. that are prescribing Evrizdi, which is quite remarkable because there's not so many doctors who treat SMA. Virtually all the specialty centers are now using Evrizdi broadly. We've got about 1,000 patients treated And that was after less than five months in the market. And this is a launch in the middle of a pandemic, which I probably don't have to tell you is a bit more of a challenging exercise. So frankly, the reception has been overwhelming. We're getting quite a few naive patients. About a third of the patients are new to therapy. Those tend to be older patients, children or adults. About two thirds, though, of the patients are previously treated with one of the existing therapies. And again, it's a broad range of ages from two months old up to 70 plus years. And about half of the patients are adults. So again, we think this is going to be a very important therapy for a long time in the future. It's very well tolerated. It's a convenient once a day dosage, oral dosage, and it doesn't require contact with a healthcare provider. And again, it's been a really good start. And we'll have more data coming this year in the previously treated patients. We'll have the two-year data from the pivotal studies. And we have ongoing study in newborns. So really excited what we see. Next slide. Oh, and I should mention at RISD, we are still looking forward to approval in EMA in the first half of this year and in many other countries around the world. Let me make a few comments about ophthalmology. So you've noticed since our last quarterly call that we've actually had four phase three studies with furosemab have read out. So two in DME and two in AMD. And we were, again, very pleased with what we're seeing. You know, about 50% of the patients with DME were able to achieve 16-week dosing. About 45% of patients with AMD achieving 16-week dosing. This has really never been seen before in trials of molecules targeting angiogenesis in retina. It's a $12 billion global market. And we think that furosemab is going to be a really important new choice for physicians and patients. Some people might ask, well, how does that relate to the port delivery system? Again, in May, we showed data that we had about 98% of patients getting six-month dosing intervals with the port delivery system. And how do these things all fit? And I think one way to think about it would be furosemab is a very well-understood route of administration, right? So it can be given the same way that Lucentis and other therapies are given in a simple dose, but with a 16-week interval. The port delivery system, well, sorry, and let me say, and that'll be really great for the half of patients that are able to get a 16-week dosing interval. But other patients may need a 12-week, eight-week, even four-week dosing interval on furosemab. Those patients would be great candidates for the port delivery system. They have the implant done and then they can have basically twice a year dosing. We've also announced a study of the port delivery system on a 36-week dosing which would extend the time out to nine months for the PDS. So we just think that more choices are going to be really important. This is a really large therapy area and there's a high unmet need for continued efficacy over time. Next slide. All right, let me just touch on the infectious disease area. And obviously this is something that's on everybody's mind these days. I'll start with Actemra maybe because that was the first thing that we studied And as you know, we've run a number of randomized controlled studies. We've had mixed results. And I would say we think a good part of that has been due to different endpoints and different patient populations. And we think we're sort of zooming in on both the most relevant endpoints and relevant patient population. It seems like the ideal candidates are patients who are really in that acute phase of inflammatory attack. They're characterized by needing high flow oxygen or some ventilation support, but not yet requiring organ support and then not too early. And so the REMAP-CAP study read out in January that was announced in England. We don't have the full data on that. That's actually a study being run by the NHS. But based on that study, And what they reported was a 10-day lower time of hospitalization, also lower need for mechanical ventilation and other important endpoints. So based on that, they've authorized Actemra on the NHS, which I'd say is a fairly high bar. And we have two more phase three studies reading out for Actemra and COVID over the next six weeks or so. And so those should really confirm what we have. Also, the Regeneron cocktail, with Cassie and IMDEV, and you may have seen the news, but there was some studies published in the last week that looked at the ability of these molecules to overcome the resistant variants. And so far, at least the cocktail is holding up. And so I think that validates their decision and ours in working with them to really focus on having two or more molecules to target COVID so that we can overcome resistant variants in the future. Next slide. So in terms of the final say on 2020, we were able to add a couple more green checks. We were pleased on the key outputs, including those two phase, three studies for furosemab. But, you know, it was, it was, yeah, It was a year where we had some big wins and then some challenges and some setbacks. But we know that, you know, if we're not taking big risks, then we're not going to drive medicine forward. And that's really what it's all about for Roche. I think you know that we have a real passion for innovation in medicine. And some years we're going to have some more red Xs. But we have a lot of, yeah. a lot of excitement about what's in the pipeline and our prospects. And I'd say we ended the year in a reasonable place. If you go to the next slide, you know, this is some of what's coming up. And I think, again, the, you know, additional studies that are going to read out on outpatient and prophylaxis of the cocktail, that's significant. I mentioned already the adjuvant studies of T-centric. I didn't talk about Polarix. which is PoloV plus RCHIP in DLBCL. This is a big deal. It's been 20 years since Rituxan was established as the standard of care in diffuse, frontline diffuse large B-cell lymphoma. And now we have an opportunity to best Rituxan. And so that's what we want to do with PoloV. Looking forward to that readout mid-year. Also, MOSUD and GLOFIT, you know, some important data readouts there that will enable filings. And then, you know, continued, as I mentioned, the switching data on Evrisdy. So I think quite a good year for news flow. And we think it's going to leave us in an even stronger position at the end of the year than we're starting. With that, I think I want to turn it over to Thomas.

Thank you, Bill. Hello also from my side, and I hope that you had a good start to the year, despite this terrible pandemic and all the personal consequences that everyone has to deal with due to this pandemic. Now, if we go to the next slide, I'm happy to present the full-year diagnostics division performance. With sales of 13.8 billion, we had more than 14% growth for the year. This growth was driven predominantly by molecular diagnostics with 90% growth and point of care, which is part of the centralized and point of care business area, which grew 212%. This was driven by antigen testing. And really, we only had the antigen test available the last two months of last year, so on the that regard, then having 212% growth for the year is really significant. Now, Severin already showed the growth by quarters. Q4, we had more than 28% growth, and we do expect further acceleration of this growth, particularly in Q1 and Q2 of this year. Now, centralized and point of care declined by one percent. And this was due to a decline in the routine testing due to the pandemic and the lockdowns. And if we go back during the quarters in Q2, we had minus 17 in this business, minus 17 percent. This was really the hard lockdowns all over the world with 30, 40 percent volume drop in the months of April and May. June was much better. So you can see how well this business recovered. But obviously also the antigen testing did play a role. And by the way, we already saw a Q1 impact at the time because in China we had the first impact. And here we had specifically in March a significant impact in volumes in this business. Sales in tissue diagnostics grew 5%. Also here, we had fantastic Q1, Q3, and Q4. Q2 was really impacted by the lockdowns. Otherwise, in the other quarters, much higher growth even. So this business is doing extremely well. Diabetes care sales declined partly due to COVID, but also because of a continued adoption of competing technologies to BGM. So overall, we do expect the COVID-19 portfolio to grow significantly also in 2021 and particularly in the first half year. But we also expect that the non-COVID business, the kind of core business, will grow very well in 2021 because we did have certain impacts this year and we will get a certain tailwind out of that. Now, going to the next slide here, this is the regional split. Sales growth was driven strongly by North America, EMEA, and Latin America. In these regions, we did have a lot of COVID testing sales business. At the same time, we did have an impact in our routine business, but net, it was definitely positive. And we did see a recovery of the routine business, particularly in Q3 and Q4 over the time. Asia Pacific is the only region that actually had a decline. Again, due to this preventative measures, particularly in China, which was at minus 11% for the year. And China was the first impacted and really didn't have much of the upside in terms of COVID testing sales beyond the MagnaPure and light cyclers. And if I take China out, actually APEC also grew double digits. And one other specific information on China is that we actually did also take the opportunity to further lower inventories from 80 days inventories to 45 days inventories, which is approximately 200 million Swiss francs. And most of that was happening in Q4. And with 45 days, we're at the lower end of what we need in terms of inventories in China. Going to the next slide here, just focusing two areas, centralized and point of care, which decreased by 1%, mainly due to immunodiagnostics and clinical chemistry. Again, largely impacted by China and also by this inventory reduction. And then if you look at point of care immunodiagnostics, two months of sales in antigen. And for the entire year with that, we grew 667%. So really strong impact here. Molecular grew 90%, mainly due to the PCR testing. Within the virology line, we report the tests for the high throughput, 6800, 8800, which in Q4 grew 250%. And the light mix systems, this is where we report on the MagniPure and light cycler, and this grew by almost 200% in Q4. Now going to the next slide on cooperating profit, here we had substantial growth in cooperating profit by 50%. And thereby we grew the operating profit faster than sales. And this was one hand a favorable product mix. But also, as you can see, we had very good and tight cost management across the organization. Cost of sales, you see, with a 10 percent. This on the one hand is, of course, higher volumes. But also, you know, we sold more instruments than we normally do. And the margins on instruments are lower. And the third piece is really higher costs in terms of global supply chain. to really bring these products faster to different places. Also, you know, flights and containers work more expensive than they normally are. And we really needed to bring the products where they were needed as quickly as possible. M&D is flat, but here again, if you look at marketing and sales was actually down. Here also the local distribution costs was rising significantly. So again, superb cost control. R&D, this is what we want to do. We want to invest in new products. And this was really driven on the one hand by all the COVID products that we launched. But also, I mean, we didn't neglect the rest of our portfolio. So we really pushed forward on that. And you will see 2021 will be a fantastic launch year. And so this is really paying off. G&A is slightly above zero. And this is due to legal expenses in the U.S. So also here really going in the right direction. So overall, very happy with this development. Now, going to the next slide. Here you can see our portfolio on what we have launched. And, you know, the virus was not even sequenced and the sequence was not known in the beginning of the year. So it was only the very beginning. couple of first weeks of January when this sequence was published. And to develop this many products in such a short period of time and at that quality was really a huge effort by our organization, working day and night, also to ramp up in production. I have to say the team really did everything they could to help the world fighting this pandemic. Now, we have developed those solutions on the molecular side, so PCR, And on the immunology side, which is antibody testing and antigen testing. Antigen to detect the disease, antibody to detect previous infections. but also in clinical labs and point of care. So really a comprehensive solution for everyone. And they can pick the options that they need in order to fight the pandemic the best way in their country. Now, let me highlight just three things on the slides. Two of them, I'll get back to it on a later slide. One is the anti-SARS-CoV-2 S antibody test, which got emergency use approval in the U.S., This is very much needed, specifically in conjunction with vaccines that also target the spike protein. And then the second piece is the authorization for the Alexis antigen test. being able to detect the antigen on these lab machines that are basically present in every hospital around the world very quickly, very precise. Again, another weapon to diagnose people quickly, specifically healthcare workers, et cetera, a very important one. And just beginning of the week, we also announced that we received CE mark for our rapid nasal antigen test. Again, very important weapon specifically because it allows for much easier collection of the sample. And obviously with that, it's more convenient and people will be more willing to do it on a more regular basis. And then this is a great opportunity to then open up more of society and more of the industry as well, because you can control infections much better. Going to the next slide. And this is something that we didn't talk about that much last year. We always said that we were working on a ramp up, but we wanted to take this opportunity now because Now it's happening because normally it takes 18 months to really do this. We took a risk back in March, April, invested more than 600 million Swiss francs, hired more than 1,200 people, and really focused on, first of all, buying 90 manufacturing lines from our suppliers, then building buildings. and, you know, validating those lines. And the first of those lines now came in end of last year and beginning of this year. I mean, what we could do in the beginning of this pandemic is really, you know, maximize the usage of our existing lines, which means people worked day and night, not only in our organization, but also with our partners. People were not taking vacation. They were working weekends. They were working during holidays between the Christmas and New Year. There was only one day where people didn't work. So really, they are giving everything to make sure that we can do the best for the world. And they're doing it with pride. And they're doing it out of free will because they know it's important right now. Now, you know, this was really a huge effort. And, you know, When you talk about the test, often people think, oh, it's only one test that you have to ramp up. That is not correct. We actually need 17 different products that we need to ramp up. There are multiple different consumable pet tips, different plates, etc. There are raw materials that you have to ramp up. And so there is a lot that you have to do. And in a typical test on its own, only the test itself matters. There are 600 components. So, you know, this is really complicated. And to do this in such a quick time was extremely important. And again, these are very specialized clean room automated manufacturing processes. And this would only take much longer. Now, what would that mean now? Well, our wrap up will actually result in a doubling of our PCR capacity by end of Q1. And then again, a doubling approximately by half a year. And I just want to say that we obviously did the mathematical theoretical calculation what that would mean in sales. And these are obviously mind-boggling numbers. But there are other factors that make it a bit unclear on how things are going to develop. So we did not include all of the sales in our outlook because we know that sales Testing sales can be impacted by the rollout of vaccines, can be also impacted by the different variants and mutations that are coming, and can be impacted by pricing. Now, there are things why I think we are well positioned. One of them around pricing, I mean, we are charging less than than the average other company out there. So we have a certain buffer in there that our prices, I mean, others would have to go down significantly to match the price. That's one end. But also, a lot of the testing that's being done as well is very manual. And with that, also very cost intensive. And the quality, if it's so manual, is then higher. also not at the same level when you have such high level of automation that we have with our systems. I mean, with our systems, you can take the sample, put it on the machine. You can go home. You don't even have to do any other manual intervention. So I believe as potentially volumes will go down, people will switch mostly to our systems because it's just a lot, lot easier. Yeah. So there are certain things where I see as a potential. But from my outlook, we really mostly included sales of COVID testing the first half year and then Q3 and Q4 would then be a potential upside. Now, going into the next slide, some of the portfolio that I wanted to highlight around COVID. One is the Alexis SARS-CoV-2 antigen test. And here this is a new solution. It's an immunoassay for the qualitative detection of the nucleocapsid antigen of SARS-CoV-2. And as you can see, the performance is truly excellent with almost 3,000 patients in our clinical trials. And what I think is also special about it is the virus inactivation time. Right now, there are not many players that have such a solution on the market, and most have a virus activation time that's more than an hour. We have a virus inactivation time of two minutes. And, you know, this solution can work in all the hospitals. They can screen healthcare workers on a regular basis. if they see the virus and the results are available in 18 minutes and you can do up to 300 tests an hour. So that is really significant and another important contribution to fight this pandemic. Next slide, please. Here we launched in December our Lexis SARS-CoV-2 anti-S antibody test, which received emergency use authorization. Now this antibody, compared to the nucleocapsid one that we launched in May, targets the receptor binding domain of the spike protein. So it's anti-S. And it's, you know, our nucleocapsid assay was already used, for example, in Moderna trials. to baseline the start of the trial. So they use that, but now they're also using this assay to monitor the level of antibodies and also the duration on how long this vaccine is going to work. So we're working very much with these vaccine companies on this. And you can also see the results on the performance, which is confirmed also by these companies is really excellent. Now, we developed this assay before there was a international WHO standard in terms of quantification because this is a fully quantitative assay. The good thing is, you know, WHO came out with a standard in last month, and it's a perfect correlation to our assay. So this is really good news because everyone that will develop something like this will have to standardize against this international standard. Now, moving outside of COVID into oncology, we recently also launched the PIK3CA mutation test to enable fast decision making for targeted treatment decisions. In advanced or metastatic breast cancer, PIK3CA mutations are often associated with tumor growth and resistance to endocrine treatments. This test detects 17 different mutations in the PIK3CA gene. and can also help identify then patients who can benefit from a PI3 kinase inhibitor target therapy. As you may know, PIK3CA is one of the most commonly mutated genes in advanced or metastatic breast cancer. 40% of the patients do have mutations in this gene. And our studies have shown high analytical sensitivity and clinical reproducibility. Going to next slide. With nearly 2.1 million cases of breast cancer that are diagnosed every year and 15 to 20 percent of those being heard to positive. It's obviously important that people get the very good and fast diagnosis. And, you know, if you look at those slides, you know, there may be some. Very good pathologists that can read that very accurately. But clearly, with the rising amount of cases, it's important that we digitalize this and standardize this. And with these algorithms that use the latest advances in artificial intelligence, we can do that. And we have launched three this year. We're going to launch more next year. And this can be used in conjunction with our scanner, the DP200. but also is run on the UPath software and can then be, the information can be transmitted into the Navify tumor board. Going to the next slides and giving you a bit more of an outlook. I believe 2021 will be an amazing year in terms of launches for us. Here you have three system launches. In addition, we'll also launch another system called the Cobus Pulse, but beyond even the system launches, we have really a fantastic pipeline of medical value assays and solutions that we're going to launch. Now, we did this exercise looking at how much we launched, not in 2020, but because we launched more in 2020, but the years before we launched an average five of these medical value assays. 2021 is going to be 17. So this is really fantastic to see this progress. Now, what I also think is, you know, labs need great systems that are easy to use to be able to run those. And on the St. Verke area side, we had the Cobus Pro, which was the next generation system. But now we're launching a system for the high throughput with the Cobus Pro ultra high throughput and the Cobus Pure for the low end. And this is unique because many of our peers, they play maybe in one of the segments mostly, but to really have a family approach across all is really what our customers need because they think it networks. And the same we did on the molecular side. We had the 6800 and the 8800, which have been proven to be, you know, perfect for a situation of a pandemic. And I would say there's no comparison. you know, peer out there that has systems in that throughput range. And most were playing more in the area where we're going to play on the 5800. So we had, I would say, somewhat of a gap here because we had with the Cobus 4800, not such an automated system. To now launch this, we have, again, a full family approach and really something that is extremely competitive in this space. And again, all of these systems have identical user experience, identical reagent concept, same performance, same quality, allowing standardization across. So really excited about this. Next slide, please. And here, I would really like to invite you to our Diagnostics Investors Day, which is going to be on the 23rd of March, and will be taking place virtually in our new customer experience building in Mannheim. So you will get the feeling that you're actually in that building. In 2020, we did launch our new diagnostic strategy. And with my leadership team, I would like to give you the opportunity to see that, but also give you a look into really our exciting pipeline. And yeah, I can just invite you to that. Next slide, please. Now, the team did tremendous efforts to not only deliver the 15 COVID solutions, we also were very productive in the rest of our pipeline. And this will definitely ensure a continued success of our business. Last slide, please. And I'm also very excited on how 2021 is going to look like. I mean, you can see that the font is getting smaller and that's because we have a lot of launches. And I believe, you know, 2021 will be huge. And also this will drive our growth in the following years. So really looking forward to your questions later. And I hand over to Alan.

Thanks, Thomas. Great to see the excitement and great to see how. diagnostics is flourishing and what you've really done in case of contributions really to testing and to society, I would even argue. So really great. So welcome from my side. I hope everybody is safe and healthy. I think you can imagine I'm excited about the contributions that Roche made in 2020 and certainly about all the contributions to come. really to create more safety and health in our society. With that, let's go to slide 55. Yeah, so you've seen the agenda very quickly, nothing unusual. And the highlights, I will tap on all of them. So let's move on to the next slide. And here you see really what what seven has alluded to already. I think that the major shuffle reshuffle, if you like, of resources in our company, I think on the sales side, as you mentioned, a minus one point two billion sales reduction on the pharma side. Nevertheless, I think extreme growth is. from the new products, you've seen that. And then certainly the diagnostics division was 1.8 billion up, 2.6 billion of COVID related sales, which I think also shows that there was really an impact on the underlying business on the routine tests. On the right hand side, you see the profits. And really, I think what is amazing is one on one hand, I think the momentum that you're seeing and the profit grows. But the other piece is really here that from a loss to sales that I've mentioned already invested eight hundred and three million more into R&D and then really balance that out with pharma efficiencies and other gains in that area to stay basically flat on the cooperating profit. And then you see the diagnostics coming in with a significant growth, incorporating profit of nine hundred eighty one million, which then really resulted in the four percent growth as mentioned. Good with that. Let's go to the next slide. And this is the comprehensive view. Let me very quickly lead you through this. I think sales in constant rates up one percent. I think my colleagues did a great deal and explained that already. Then the cooperating profit up by four percentage points. Good cost management. I've explained that a little more into detail. Then the core net income by even a higher dynamic with plus 5%. And here the financial result plays a role. We'll dig into that as well. And then you see where the core EPS loses a little bit of dynamic in constant rates by up plus 4%. And here the point is that certainly you take the minorities out for Shugai. And I think we all know that Shugai had a great year in 2020. The IFRS net income up 17% in constant rates. And this is certainly due to a base effect coming from 2019, where we wrote off the goodwill for the diabetes care business. And you will see that later on. Operating free cash flow down by 21% in constant rates. I will dig into that. In my opinion, not a major worry. because very well explainable. And you will see an increase on the networking capital side, which I think really we can benefit from in the outer years when that really turns into cash. So with that, yeah, let's go to the sales bridge here. Nothing, I think, unusual. You see really pharma now in a little bit more detail. From a regional point of view, and you see the impact in the United States, certainly driven by the biosimilar impact. You see Europe, which could overcompensate the biosimilar impact. International with solid growth, I would argue, especially in China. Shugai also impacted by biosimilar competition and then the diagnostics growth that I've mentioned. You see really the group growth of 620 million, and then you see the significant currency impact of 3.8 billion, which I will allude to later on as well, which gives us a minus 5% in Swiss francs. Good. With that, let's go to the core EPS development, the bridge over here. And let me start really with the point that I think overall core EPS has grown by 4.2% from 20.35 to 21.20. And you know that when you look at half year, I think we had a momentum of 1.9%. So we even increased the momentum in the second half. And let me lead you through this. I think the first bar is about income from disposal of products. And we had less disposals compared to last year by roughly 250 million. You know, at Javier, we had a large and negative impact here of roughly 300 million. So we did some smaller things in the second half, but still, let's say a gap of 250 million to last year. You see other royalties and operating income that's basically flat. Same applies to the gains in equity securities, completely different composition, but basically flat. And then the bond redemption that we did in December of 2019, It had an impact of minus 202 million Swiss francs. And you see really that gave us a base effect in the second half when it comes to core EPS. Resolution on tax disputes, I have a slide on that. I think we had positive impacts from resolution of tax disputes in 2020 as well. like in 2019, but a little bit lower, a little bit lower, admittedly. And that took a little bit of momentum away. But look at really what we contributed on the operations side to bring the core EPS up and increase of plus 4.9 percentage points. Good. With that, let's go to the P&L. Let's jump right away to the royalties and other operating income gave the explanation already really lower income from the disposal of older products. The 250 million, I think that explains that line. You see the cost of sales. And on the cost of sales, really, I think you see a reduction here of a billion, so a saving of a billion. And there is an impact from the pharma side of roughly 1.6 billion. And on the dyer side, an increase of 600 million. And that really that nets to a saving of a billion. I will explain that because that deserves a little bit of explanation on one of the next slides. M&D in pharma down by 600 million flat when it comes to diagnostics. R&D an increase of roughly a billion, 953 million, 803 million. on the pharma side and the rest on diagnostics, which I think is amazing because you really see how we reinvested the money, I think in a time where we faced a lot of challenges. And then you see GNA, and that is, how should I say, that could be worrying, it isn't, because the 1 out of 57 million is driven by Spark, you know, we consolidated Spark. relatively late in the year 2019, in the second half of December. So basically no effect here. But then in 2020, we had the full base effect of Spark, which really explains 100 million of that increase of 157 million. And the rest is really in FMI and Flatiron as they build their organizations. And the cooperating profit, I've mentioned a couple of times already, up by 981 million, which represents an increase of 4%. So let's dig a little bit into things. I think on royalties and other operating income, I can be quick. You see royalty income, outlisting income and other operating income is balancing out, as you can see. The other operating income is driven by Bank Leicester. I think Bill made a comment about that product. I think that product is becoming really meaningful when it comes to profits. and has contributed significantly on the profit line for Roche and for Pharma. And then you see really the income from the disposal of products, which I've mentioned already, which was by 250 million, roughly 250 million lower compared to last year. With that, let's go to the cost of sales. As said, I think that deserves a little bit of explanation because you see overall, and I've mentioned that in the last line here, in bold group, you see the saving of a billion, 15 million. When you go to the pharma division, you see a saving in constant rates even of 1.6 billion, 1.7 billion, if you round precisely. And certainly you ask yourself, wow, that's a big figure. So let me explain that a bit. I think really, first of all, you see the manufacturing costs went down by 800 million roughly. That's the plus 787 million. I think we had a couple of base effects here. We had great efficiencies here. So I think really this is really what matters here. The rest, so over 800 million, basically half of the overall effect, is really driven by the fact that we paid lower collaboration and profit sharing. I think that was one element which came down. That is around 400 million. And the other point is lower royalty expenses. Well, Kibili came down or Kravis came up a little bit with the royalty expenses, which is understandable. But I think overall that gave us a saving of around 200 million here. So I think just to put that into perspective. And but as Bill said, I think a major improvement in efficiencies and in Daya, it's a pretty straight increase of six hundred thirty seven million, which is also represented in the manufacturing costs. With that, let's go to the cooperating profit and the margins. And you see really the margins went up in all divisions. And not just in concentrates, also in Swiss francs. And let me the point here on the pharma side. I think that's amazing because, as said, with lower sales and a higher investment into R&D of 803 million and still defending the margin, I think it's quite an achievement. And look at diagnostics and look at the group overall. With that, let's go to the core net financial results. And the core net financial result has improved quite significantly, as you can see, by 339 million Swiss francs. And let me lead you through the bridge. You see the net interest income has deteriorated while we had lower cash on hand in 2020 and interest rates went lower. Equity secures basically flat, currency, no impact. And then you see where the debt redemption as mentioned already, which we didn't do again in 2020, but did it in 2019. So a base effect in 20. And then you see where the interest expenses, which is certainly to a major portion, also the result of the debt redemption that we have done. So an improvement of 182 million, and then you see the position of that, which is a nice mixture of a lot of things. So with that, let's go to the group tax rate And the group tax rate in the middle, you see that when you look really at the underlying group core tax rate, not a lot of not a lot of move from 18.4 percent to 18.6 percent. But what you also see in green is that in both years we had quite some help. from positive impacts from the resolution of tax disputes. You see really in 2019, we came out with 16.3%. The resolution of tax disputes meant a reduction of the tax rate of plus 2.1 percentage points representing an absolute amount of 454 million. And you also see in 2020, where the reported rate is 17.1%, that we had some help here from the resolution of tax disputes coming in here by a reduction of minus 1.5 percentage points, representing a positive impact of 317 million. When I look at 2021, let me say here, I expect a group tour core tax rate of about 19%. See a little bit of an increase in Japan in sugar that plays into this, but roughly 19% should be should be in the cards. With that, let's go to 67, slide 67. And this is about the non-core items. And you see the cooperating profit increase, which I've mentioned, plus 4% in constant rates. And then you see the global restructuring plan, basically comparable to what we have seen in the past years. Amortization of intangible assets a little bit up, driven by Rossley Track, which came new to the portfolio, if you like, and then the impairment of intangible assets, which went down significantly by over a billion. And here the major driver is that we have written down the Diabetes Care Goodwill in 2019. M&A and alliance transactions flat, basically. And then legal and environmental, it's quite some swing of 800 million. And you see really the negative impact in 2019 of minus 480 million, very much driven by one legal case we reserved for, for MISO on the dire side. And then I think really in 2020, we released the Accutane provision of roughly 300 million. So 347 million here positive. I think that all adds up to quite a positive here of roughly 2 billion from the non-core item, which brings the IFRS operating profit up by roughly a billion. So plus 16% in constant rates, which is then reflected in the IFRS net income, which goes up by 17% in constant rates. Good. With that, let's go to cash on slide 69. And as said, I think a significant impact from 20.9 billion in 2019, the operating free cash flow went to 14.8 billion in 2020 in Swiss francs. And you see that the first point to make is for an exchange of 1.7 billion. And that leaves us with two major impacts. One is investments into intangible assets. And I think that's a good thing because this is what supports our pipeline, especially on the pharma side. So when you think about Sarepta, Blueprint Bio, Atea, I think this is all investments which are reflected here. And if you see really the increase in networking capital, the major driver here is inventories up by 1.4 billion in both divisions. in pharma and basically equally in diagnostics. And on the pharma side, it is really about the new launches. And on the diagnostic side is that we have good inventories for all the COVID tests and what we're seeing over there, what we're doing over there. And I think that's justified. So no doubt that this will turn into cash over time. Another piece here, I should mention this, that we have taken lower provisions in 2020. And with that, let's go to the group net debt level. I think, well, we are not net cash positive. We still have net debt on hand with a minus 1.9 billion. Start of the year with a minus 2.5 billion. You see the bridge here. And I'm not going through all of that because I think that's pretty obvious. Let me make a point about the bar on the lower part of the slide. And because what we have seen in 2020 is that we had quite a tradeoff between intangible assets, investments into intangible assets and M&A. And perhaps it was a reflection of all the high valuation in the market that we did more in licensing deals and agreed on more milestones and more sharing of opportunities and risks moving forward. But you see, really, when you look in total at our investments into innovation, there is not a huge difference to what we have invested, at least from a balance sheet point of view, in 2019 compared to 2020. Good. And with that quick look at the balance sheet, balance sheet, nothing really extraordinary. Cash and marketable security is pretty flat. Other current assets up by a billion roughly. And that is basically inventories. The non-current assets. This is the increase in intangible assets of more than a billion. And then you look at the liabilities, the current liabilities went up by short term debt of plus 2.3 billion. The non-current liabilities went down by long term debt by minus 2.4 billion. And then you see the equity equity portion now at 46 percent and roughly 40 billion. Now, when you look at the absolute number, which I think is a nice improvement compared to how equity looked like when I joined the company 10 years ago, net debt to total assets at 2 percent. Good with that, quickly to currency on 73. And when you look at currency, well, we've taken quite a hit. in 2020, but let me emphasize once again that we have a pretty good natural hatch, which means we have our major sales in currencies where we also have our major costs. When you look at the US, we have a full supply chain, a full value chain. In the US, we have a full value chain. In China, we have a full value chain when it comes to Europe. So I think that's, for me at least, a little bit more of a reporting point. But when you look really at the impact in 2020, and you see that on the right hand side with a minus 6% on sales, 6% percentage points on sales, with a minus 8 percentage points on cooperating profit and a minus 9% on core EPS. And if we assume that all currency rates stay flat from year end 2020, we would expect impacts between three percentage points to five percentage points on sales, cooperating profit and core EPS in 2021. Good. Core EPS, slide 74. Let me set the stage for your assumptions and for the analyst assumptions for core EPS in 2021. And to do that, I think we have to get the basis right for 2020. So a core EPS 2020 as reported is 19.16 Swiss francs. You see now that you need to take an adjustment for the foreign exchange losses as we apply and all apply to a constant exchange concept, exchange rate concept to be precise, and to get to this 0.19 Swiss francs. To eliminate that, you take the currency losses of minus 206 million. You find them on page 65 of the finance report and you take the taxes away from them. That's roughly 38.31 million. And you get to that by when you multiply the 206, the minus 206 to be precise, with the underlying tax rate of 18.6%. So when you do so, you get to a 167.68 million and you divide that by 865 million shares. That means voting and non-voting shares. And you will find that number on page 171. in the finance report. So once you do that, you get to 0.194 Swiss francs. And that is exactly the number that we have highlighted here in the slide. And you have to add that up to get to the 19.35, which then represents the basis for the projections for 2021. Good. And with that, I think the last slide is the outlook. I think Severin has alluded to that. Looks a bit boring, but I think given all the the uncertainties and the momentum and every all the challenges we have seen in 2021, very happy to provide that guidance. And I think we all look forward to your questions now. Thanks.

Yeah, thank you. Could we get again the administrative illustration here on how we can. ask questions and participate in the call.

Operator, please. Yes, of course. You are invited to send in questions for this event. The entire session is a Q&A functionality of Zoom. In addition to that, you may also raise your virtual hand to address your questions verbally. For participants joining by phone, to raise your hand, use star nine on your phone's dial pad. When you then get selected to ask your questions, please follow the instructions from the phone and press star six to unmute yourself. And with that, back to you, Karl.

Yeah, thanks a lot, Marco. So just for the record, we had at peak about 870 people joining. So it's still well above 800, 830. So that is really an excellent participation. So I just wanted to already thank you for your interest in Roche. Maybe for, let me get through the questions. If you could kindly maybe limit your questions to two questions. We will try to keep our answers short so that we make best use of the remaining time and get through all your questions. And the first one I got via the web here and also via the chat from Michael Leuchten and from UBS in San Francisco. They had basically the same question. So I just tried to summarize it and it's going to you, Bill. They were wondering about the impact on Avastin, Herceptin and Rituxan during the year, but in particular in Q4. So if you could maybe illustrate a bit what happened in Q4. Also, maybe if you could give it a try, what happened to COVID, what happened to foreign exchange, what happened really to the biosimilar. I know that is a bit of a difficult, but so that is basically the line of questions which we got from these two gentleman.

Sure. Thanks, Carl. And I'm not sure I can, there's too much color I can add to it. I mean, essentially the impact that we saw in the U.S., which was obviously the biggest country impacted last year, was, I would say, you know, rather linear over time. I mean, as the year evolved, we weren't sure. We thought, oh, maybe it's leveling off a little and then it would accelerate again and then it would level off a little and then it would accelerate again. But if you step back and look at the whole year, it was, you know, pretty, uh, pretty linear. And, uh, the, the reason Q4 was, was, uh, such a large impact is just, you know, it, the, the impact in, uh, 2019 was rather small and, and the, the monthly impact was just growing over the course of the year, following down that curve. So Q4 just had a big number, but, um, I don't know that there was anything really special there to, to point out. Um, I saw another question that was sort of related, and maybe I answer, which is just, you know, why was the number bigger than we had projected? I think we started the year saying that we thought the number for US, Japan, and Europe would be about 4 billion, and it ended up being about 5 billion for those territories. And honestly, I think the reason that it was bigger than we expected was that we, we thought that maybe the U S and I think this was very consistent with what we said. We always said the U S would be, you know, like Europe, but maybe a little less steep. And in, in fact, it ended up being pretty much like Europe. So we gave it, you know, we gave the erosion a little bit of a haircut and thinking that maybe in the U S it would be a little slower and largely just because of, systemic factors in the U.S. healthcare system and some of the incentives and things. As you're aware, there were a lot of other biosimilars that had very poor uptake in the U.S. We always said that you shouldn't expect that with AHNR because some of the reasons those other biosimilars weren't used as, you know, were kind of historic reasons. In the end, Yeah, the uptake was quite large, consistent with what we saw in Europe. And I think, you know, it's a new chapter, but fortunate for us, we've got a strong pipeline and able to continue, you know, growing those new products right through.

Yeah, thank you. I wanted to take a call here via the telephone line, Matthew Weston. So, Matthew, I open your line now.

Matthew. Can you hear me, Carl? Yeah, we can hear you. Yeah. Perfect. Thank you. I've got two questions, please. One for Bill and one for Thomas. So, Bill, on a crevice. two comments please your suggestions around the the six monthly cycle and the weakness in q2 therefore having an impact on 4q would suggest that the very strong bolus we saw in 3q20 should lead to a very strong recovery of a crevice in 1q21 so can you give us some indication as to whether what you've seen in january to date supports that but also i'd be very interested in your thoughts You've said previously you're following data around COVID survival rates on patients who've had B-cell depletion. And I'd love to understand now that we've had significantly longer and a deeper pandemic, whether you remain confident that doctors are committed to B-cell therapies during the pandemic. And then secondly, a question, an easier question for Thomas. You've set out, you know, the uncertainties, but also the opportunities of diagnostics in 2021. I'd be very interested if you could get your crystal ball out and let us know what proportion of profit you think will be booked in the first half versus the second half of the year.

Well, before you answer, we had a similar question from Neresh. from Intron Health only that we get everybody aligned here. So over to you, Bill.

Okay. Yeah. Thanks for the questions, Matthew and Naresh. So let's see in terms of the six month cycle and that play out, I would just say from, from what we've seen so far this year, we don't see any reason to, to change our view on that. And if we did, I would have said something different, but yeah, we, we, There's really been, since April, May, there's really been no change in the dynamic on returning patients. We have a high level of returning patients, and they come in about every six months. So we haven't seen any reason to change our view on that. In terms of confidence in B-cell-related therapies, you know, let's see, our latest data point was October. where we had approximately 40% of new and switching. So that was pretty well into the pandemic. And again, so I don't really have any reason to doubt that doctors are going to have confidence in this MOA. The safety profile has been unchanged since launch, which frankly in itself is a bit unusual because I think every other MS therapy that I followed the launches, usually over time, some additional things got added to the safety profile and Ocrevus has held up really well. So again, we're very confident in the future. There was also this question about whether there's pent-up demand and that will we have a glut of new patients later this year? I don't know. We'll see. And Naresh, I think you also asked if there was a bolus, but now we're almost four years on the market. So I don't think you could really characterize the continued strong growth as a bolus. I think it's really just patient's The existing MS therapies have a lot to be desired in terms of preventing disease progression. And when patients' MS worsens, they look for an alternative, and Ocrevus is the number one choice.

Yeah, I guess the other question was for me. Yeah, having a crystal ball will definitely help in these very uncertain times. And there are a number of factors that really can impact the sales positively or negatively throughout 2021. But what is clear is that the growth we had in Q4 with 28%, and I mentioned that we had some then opportunity to outgrow that even in Q1 specifically, but also Q2, so that we will have very strong growth in the first half year. And that will translate also in strong profitability growth. Now, what's going to happen in the second half year is, you know, a question mark. One is, you know, how quickly is the rollout of vaccines? Now, is this going to take longer? Then the question is really on the different variants. You know, what kind of level of, you know, vaccine rate do you need to have to get ready to herd immunity, etc.? ? And as this may take longer, then there is an opportunity to have a stronger second half of the year, but always against a much higher base. Because if you look at this year, we did have a very high base in Q3 and Q4. So for me, I think the first half year is very clear. You know, this is, you know, where we have most of our sales in in terms of, you know, COVID sales for 2021. And then second half year, we'll see how certain things develop. And as the year progresses, we can we can inform you and update you on that.

Thank you. There is a question from the chat from Emily Hutchinson. She's asking for Andrew Baum. Bill, one for you, your confidence in Cantinero Map going forward. I guess this is on the mind of many investors, not only.

Yeah, well, believe me, it's on our minds. You know, we have lots of reasons to believe and we have, you know, reasons to be concerned. And, you know, until there is a definitive, unassailable pivotal result or pair of pivotal results, You know, I think we we have to we have to handicap, you know, all these studies. And that's just how it is when you're pioneering in a new area. So, I mean, I could give you the, you know, the five reasons we're excited. And then I would still say it's, you know, I don't know. Is it 50 50? It's something like that. It's I don't think it I don't think we need to get precise. But, you know, it. Yeah. this is a difficult, difficult disease. We don't understand the pathophysiology of Alzheimer's disease, and we're targeting something that is in, you know, huge evidence that it's linked to Alzheimer's, but the causative role that it plays, we don't know. And, you know, the data that came out from another company in the last quarter, people got really excited about, and I want to be excited, too. But, you know, again, that's a little bit of a slight tweak on the MOA. It's a novel endpoint. It's a small data set. And we haven't seen the data yet. So I'm not going to take that and run off to the, you know, run off to celebrate. I think the good news is that we're coming up on a readout. You know, it's in our sights. And this day has been waited for a long time. And we've got a sub-Q formulation. which is very exciting because if you can imagine, you know, hundreds of thousands or millions of elderly people going to get their monthly IV infusion, I struggle with that one. And so I'm pleased that we were able to get to a sub-Q formulation and we'll look forward to that readout. Thanks, Andrew. Yeah.

Thank you, Bill. Next one would be Sajin Jain. Allow you to talk.

Hi, it's Asa-Jane here. Thanks for taking my questions. A few, please. First, I want to just kick off with guidance. In 21, I want to just comment on the balance of growth between pharma and diagnostics within GroupGuide. So does pharma grow CER in 21, and is the majority of group growth coming from diagnostics, just to get the shape of the divisional growth correct? Second question is on furosemab. The profile you've delivered, Bill, you weren't particularly excited by non-inferiority with three Q calls. I wonder if you could just clarify that. the change in your thought process there, and how you frame the dosing frequency advantage. Is this, in your mind, transformational to current practice or incremental and becoming a marketing battle? And then I can just add one on to centric adjuvant lung. You've given, in your introductory comments, timing for polyvia mid-year. It doesn't seem like you're giving timing for adjuvant lung anymore. But I wonder if you could just comment, do you still expect to be first and by a margin that's important enough commercially, as you'd commented before, or not? Thank you.

Sachin, perhaps I can just comment on the first question around the guidance and where the growth is coming from before I hand over to Bill. Of course, with the pandemic, There are different scenarios and there's a certain uncertainty, but I think it's safe to say that we should see a very good growth for diagnostics in the first half of the year. And there are really two factors underlying that. One is that the pandemic, of course, still leads to big demand. But also we have a base effect. I mean, if you look at the sales development last year, diagnostic sales were really kicking in only in the second half of the year. So there's no doubt that in the first half of this year, we will have a very strong growth in diagnostics. Then we will have a base effect kicking in in Q3 and in Q4. And the uncertainty is around, you know, how big is demand and, you know, how does the pandemic develop? But I think it's fair to assume that the sales growth in the second half will be lower than the sales growth in the first half. Now, for pharma, it might just be the other way around, right? Because if we do see the pandemic getting under better control, I mean, patients will take up their medical appointments. And then, of course, we also have... you know, more, I mean, an increasing benefit of the growth of the new products on the one hand and a decreasing effect of the biosimilars on the other hand versus the previous year. So I hope that gives you a bit of a bit of color, how we see it evolving. But, you know, at the end of the day, there's a lot of uncertainty as well. Overall, we are confident to grow low to mid single digit with this kind of reverse effects in the first and the second half. But let's see where we get. Bill, over to you.

Yeah, question about furosemab. I think I've probably said most of what I can say without divulging data. And so we look forward to that opportunity to present the data at the upcoming retinal media conference. And then, you know, I think then we'll let the doctors decide what it means. But I would say that we have a high degree of confidence in what we're seeing, that this does represent a meaningful step forward for patients and physicians. And, you know, it's certainly made a difference in the past, the dosing interval. And now we're talking about, you know, for example, doubling or tripling the dosing interval for many patients between parisimab and PDS. So, you know, in chronic therapy, those kinds of things can make a big difference. And I think there's a, you know, there's a long history of that in some important medicines, including one that's been the largest therapy in the world. It was all about a dosing interval. So, yeah, I look forward to your view when you see the data. Yeah. I think you had another one about... Adjuvant, if you will, be first. Yeah, adjuvant one. Yeah. I think, let's see. Yeah, there's no change on that. And we're confident in the timing. I think, what have we been saying? First half?

No, we have said that we have a chance to be first ahead of the competitors, but we didn't precise when exactly it is first half or second half. but we can confirm the readout in 2021, Edwin, that we can confirm. We know that, yeah.

Okay, thank you. Can I just go back to Severin? So very kindly provided the phasing of growth, but 1H, sorry, on 1H research, but the question was more around the divisional. So does pharma grow in 21?

Thanks. Severin, you're on mute.

Sorry for that. No, that's certainly our ambition that we grow for pharma next year. Thank you. Sorry.

Next one. Thank you. The next one would be Tim Anderson. Tim, I'll open your line now. Tim, you're on mute.

Yeah. Can you hear me?

Yeah. Now we can hear you. Yeah.

Okay. Thank you. Two questions, please. Evrizdi for SMA, you mentioned sources of switching business, both Spinraza and Zolgensma, and I'm just trying to understand Zolgensma and how that would be a switch exactly. Are you saying patients, you know, forwent Zolgensma in favor of your product, or there was patients who received Zolgensma and then went on to receive your product? And then a second question on a pipeline product, Tomanersen for Huntington's Are we going to see any data related to this program in 2021? And what's your level of enthusiasm for this program relative to your level of enthusiasm for Gantt and Ahriman? Which excites you more?

Crystal balls today, huh?

Great. Yeah, let's see. Just to clarify, and I think this is just maybe it's just a convention, but usually switching just means that you know, there's naive patients who haven't had a therapy and then there's patients who have had a therapy. And we don't differentiate between someone that had, let's say, Spinraza last week and somebody who had Spinraza last year. And likewise, if someone's been treated with gene therapy and then they go on Evrizdi, then they would be counted as a switch. Although, you know, I certainly see your point. But to be clear, we're not talking about people who forewent gene therapy. We're talking about people who received gene therapy and subsequently at some point after that were put on Evrizdi. But the bulk of patients, as you might imagine, because many, many more patients have been treated with Spinraza than have been treated with Zolgensma. So the bulk of the switchers are patients coming from Spinraza, but we've had a not insignificant number of patients that were treated with gene therapy coming on to Evrizdi. And on Tomonersen, Again, I sort of repeat what I said about Alzheimer's. And unfortunately, Huntington's, there's never been a therapy. It's a promising target we're pursuing. And we know we have a biological effect. So we have a pharmacodynamic effect on the mutant Huntington's protein. We also have an effect on the wild type Huntington's protein. So we Yeah. I mean, to translate that into clinical impact, it's going to require the phase three data. And we thought we might have some sort of an early look. This was, I don't know, 16 months ago or so. We thought, oh, maybe there'll be an opportunity to see something early. But we now think we're just going to have to wait for the phase three. And so I don't believe there's going to be any sort of game-changing data in 2021. I think the final outcome is going to be the one that matters in 2022. Yeah.

Thank you, Bill. Thank you, Tim, for your questions. Richard Parks would be the next one. Open your line, Richard.

Hi. Great. Hopefully you can hear me. Just a couple of questions. Firstly, on the biosimilar, looking back now, it's obviously the impact's been a bit more than you expected. I wonder, looking back, is there anything that you would do differently in terms of pricing or contracting strategy, if you could look back. I'm just kind of thinking about when we model by a similar impact for Ektemra and Progetta over the next few years, is this a good example of what to expect or are there other things that maybe you could do differently to mitigate some of that impact? So that's the first question. The second question, and I understand you're probably frustrated with you've given a 2021 outlook and start to ask about 2022. But if you could help us to understand some of the trajectory of the headwinds as you go into 2022. Obviously, we've got the, I think, the Esprit pattern expiry and a loose census by similars, maybe a continued tale of erosion of the legacy three. And I know some investors are concerned that diagnostics could then become a a kind of headwind versus the tailwind currently. So could you just talk about the trajectory of those headwinds into 2022 and maybe your ability to maintain or improve the current momentum in terms of earnings growth? Thanks.

Perhaps I can start with the outlook beyond 2021. I think on a high level, what we have is a really huge impact on of Avastin Matera and Herceptin this year as we had last year, right? So of course, there will always be products losing exclusivity. But we will get out of this phase where we have such a huge effect in a very short period of time. And if we combine that with the dynamic we see with newly launched medicines such as Evristi, if I now look at the upcoming opportunities with Farisimab in particular or PDS, where we have the data, you know, I mean, this This is not speculation anymore. We know what the clinical benefit is and we're very confident about the opportunity here. If I put all of that together, the dynamic of the newly launched medicines and how the portfolio is ramping up, then I think it's safe to say that we will see an acceleration here. of growth into 2022. The question then is really of whether some of the really kind of big opportunities and risky opportunities materialize, such as Huntington or Ganten-Eron map. That, of course, would be transformative But even if those do not work out, I think we have the worst behind us in 2021. And the worst is not so bad after all. I mean, who would have thought a couple of years ago that we can grow through this biosimilar erosion phase. So yes, we are pretty confident beyond 21. Bill.

Yeah, and I would just add to that on a couple of things you mentioned. For example, Lucentis biosimilars are becoming, but so we will also have the port delivery system with ranibizumab launching, and we'll have the farisumab launching shortly behind. And Lucentis is really quite a small product now. Esbriat. is obviously much smaller than the things that we've lost. The Actemra biosimilars, our understanding is those have been delayed. And so that's out sometime. So I think, you know, when you look at the things that are coming, whether it's tiragolamab or potential for gantanarumab, you know, just go down the list. I think we feel quite good about our long-term growth prospects. And let's see, you asked about alternate actions or the things we would have done differently. Yeah, it's not, it's not obvious. It's not obvious. We, you know, the main thing you could do is you could try to compete on price. And frankly, what we see in the biosimilar realm is very, very deep discounts. So, you know, for example, in Europe now, there are discounts, 85% discounts, 87% discounts. And you can imagine it's pretty hard to win in that kind of a race. So I think we feel good about the actions we've taken. And again, our real focus is on innovation and out-innovating ourselves.

Thank you. Next one would be Wimal from Bernstein. Wimal, I open your line now.

Thanks, Carl. Wimal Kapadi from Bernstein. So, Bill, I just want to ask a little bit about the upcoming catalysts, just to get a sense of your level of confidence. And in particular, Pelivian, Firstline, DLBCL, and Ticentric and Adjuvant. And particularly tied to the former, how quickly do you actually think the standard of care can change if we see success? You know, dogs have been using R-Trop for quite a while, like you highlighted. So, you know, how realistic, if we see success, could you see a relatively rapid transition? So just your level of enthusiasm for both of those two readouts. And then can I just ask a little bit about pharma in China, please? So you saw a strong uptake of Pageta and Alicenza, you know, now partly offset by impact from the NDRL. But can I just ask a little bit more about the dynamics of the biosimilar exposed assets and ticentric in the region? And then how are you really thinking about 2021 for pharma in China? Thank you.

Yeah, thanks. Thanks for the questions. First, in terms of Polovi and, well, Polovi, You know, we had some really exciting data in the preclinical models that led us to take this molecule forward in the first place. And, you know, the efficacy is really outstanding. So we really believe this is the best opportunity we've seen yet to advance on what Rituxan does in first-line DLBCL. Beyond that, again, you know, that's why we do the phase three study. there's not an opportunity to see it in this type of setting, to see that kind of impact. So I think this is kind of like, you know, like the Cleopatra data for Progetta or something where you're going for the adjuvant when this is like that. We're going for cure. It's in first line and we'll know when we see it. But I believe that the standard of care would change relatively rapidly because, and you may recall when Cleopatra was presented, people looked at that and said, well, you know, yeah, how big of a increase is it? And, you know, it's an extra medicine and we'll, you know, and, and we were confident always that the standard of care would change. And it's really simple. You're going for a cure and these are younger patients and, you know, everybody can see the difference between curing 75% of people and curing 80% of people. That's five people who you're saving. And, and so I, I think the, we won't have trouble convincing people if we have the data. Decentric and adjuvant, I think we're quite enthusiastic about that. You know, there's, I mean, it's true that in lung cancer, there's not as much adjuvant treatment as you have in, say, breast cancer, because unfortunately, typically lung cancers, you don't catch them until they're metastatic. So the market size is not as large as, say, adjuvant breast, but it's definitely a blockbuster potential and a very meaningful market size. And we're, you know, we've run a really good study. I think we have a great opportunity to show a positive benefit if, you know, if cancer immunotherapy is going to matter. And there's a lot of reasons to believe it should, because, you know, you are looking for sort of microtumors that are not detectable. And, you know, ability to kind of control those or wipe those out. And there's a lot of reasons to believe that a cancer immunotherapy would aid in that. Let's see, you asked about China. And, you know, China is, yeah, there's a tremendous unmet need in China. There's a huge population to benefit. And we, you know, we've had this dynamic where we had to reduce prices in order to get in the national distribution and really have all patients eligible. And that has an immediate effect on your sales because if you cut price by 30%, your sales go down the next day by 30%. And so you've got to grow sales by 50% to make up for that. And it takes some time to do that. The pandemic hurt us this year because we cut prices on some important products at the end of 2019 in order to get on the NRDL. And then there was a lockdown in Q1 across China. And as you know, and you've no doubt heard that that has left a lasting impact in the China health system in terms of their capacity. But that said, we saw a nice recovery by the end of the year. We had solid growth in China for the year. I think it was 8%. So, you know, solid. And that was despite the fact that there are local competitors to H and R, but we still had very strong volume gains on those, on those products, despite the local competitors. So I think, you know, China is going to be a different kind of market than say Europe or the U S I think there's still a lot of room to penetrate on volume and we will have, you know, some price challenges. So it's, it's, um, and, and I think you asked about, uh, did you ask about to centric centric China? You know, I think this is one where there's a number of local competitors, checkpoint inhibitors, and the market has been really substantially deteriorated. And so, you know, I think we have to take that into account in our outlook.

Thank you. Thomas, can you also quickly comment on China for your business? Yeah, thanks so much. Yeah, thank you very much for your questions. Thomas, maybe you could kindly comment because we've got one online question here which goes in the direction. Happy to do that.

I mean, we did have a significant impact on our core business, particularly in March, April, May in China. But the sales in China did recover. And if I just look at in-market growth, so not what we sell to distributors, but what our distributors sell from our products into the market, it was already in the high single-digit range. You don't see that because... We also lowered inventories from 80 days to 45 days. And yeah, we'll see strong growth in China in this year. One, because we have wins in our back. It's a tailwind because of the lowered inventories, but also because we see in-market growth. So, you know, I do believe we will have good growth. And yeah, and we're seeing that already.

Yeah. Thank you. Thank you, Thomas. Next question would be from Emmanuel Papadakis from Deutsche Bank. Emmanuel, open your line now.

Carl, thank you for squeezing me in and taking the questions. Maybe I'll take a follow-up to Thomas on the diagnostic side, just to try and get a bit more of a sense to which scene... extent to which the growth may be durable there so obviously what we've seen so far is very much driven by molecular biology and improve the point of care and antigen testing what extent is that going to translate into a more durable expansion of the instrument footprint so far it looks like it's pretty much concentrated in those two segments which really correlate with the prevalence of immediate COVID diagnostic testing, but is there going to be a consequent durable uplift in your view for, in particular, for example, the clinical centralised lab business? So that's question number one. Maybe I'll take one perhaps from Bill on the R&D side of things. It's nice to see some of the spark assets coming through the pipeline. Perhaps you could talk a little bit about timelines and intent on the enzyme replacement gene therapy side with the phase two Pompe initiation. Thank you very much.

Yeah, happy to take the first question. Yes, please. Yeah. Yeah. So, I mean, we definitely see very strong testing, particularly first half year, you know, likely some testing also the second half year and for the years to come, simply because this virus is endemic. And so we will have to deal with it. It mutates frequently. So we will have to monitor this. With regards to the level of testing, that's very hard to predict, but definitely a lot more than what we would see today with influenza testing. And it may even have an impact on other tests like influenza testing because simply they want to know, you know, what kind of respiratory disease is it? and just scan that. Now, with regards to beyond that in the Outlook, first of all, we made extreme progress in expanding our menu on the 6800, 8800. There's still a number of tests that we can bring onto that platform. So that's fantastic. And also we are installing in one year, what we have installed the prior five years. So, you know, we are more than doubling our installed base out there of these systems. And there is, I mean, a huge opportunity. And I just want to pick three. One is around cervical cancer. There are more than 300,000 women that die every year of cervical cancer. Many countries still do pap testing, which has a sensitivity of 50 to 60%. 2,000 almost won like 20 to 30 years ago a Nobel Prize showing that HPV causes cervical cancer, and still many countries don't do it. Well, they can save 300,000 women's lives every year. And then, I don't understand, they do so much around COVID, which is great, but they forget that a lot of people are dying of other diseases, and they should do this. Next is hepatitis C. 80 million people in the world have hepatitis C. Hepatitis C leads to liver cirrhosis, to liver cancer. Many people are dying every year. There is a cure for hepatitis C. If we screen all the people, how much suffering can we take out of the world Just looking at these 80 million people that at the end will suffer, their families will suffer, and the healthcare system will suffer because they have a lot of money that they need to spend to help these patients later in their life. Tuberculosis, one-fifth of the population has infection of the bacteria of tuberculosis worldwide. Look at how much we can do. We need to start to recognize what healthcare systems can do by intervening much earlier. And I have to say there's such an opportunity, and governments need to get going on this. I'm sorry to get a bit emotional on this, but, you know, I've been fighting for 10 years with governments to include HPV screening, and all the clinical data is out there, and they need to get going and not just, you know – let it go like they have in the past.

Absolutely. And there are, let's say, durable cases or use cases clearly beyond COVID. And I think Thomas made it very clear and illustrative that there is a lot to do in the healthcare systems. Thank you, Thomas.

Bill, could you kindly... I think from an economic point of view, just to add here, Of course, if you go into screening programs, part of the problem is the upfront cost, right? And then you only have the benefits in the longer term. And that typically is a political hurdle because politicians, at least in our Western democracies, are very linked to election cycles. And therefore, you know, they hesitate to invest when they are not sure whether they will be reelected and the benefit might only come in the next period. And what should help here and what should give a bit of momentum is that now the investments have been made, right? So these molecular diagnostic platforms are out there, and this is considerable investments, which are now done because of COVID-19, because the political pressure is also so high, and that should help to reduce the hurdle to now also use these platforms for other parameters like HPV or HCV or tuberculosis. Actually, these are all assets which you can run on exactly the same platforms. And I think there's also an economic argument. Rather than having those platforms sitting idle in the cellar, use it. It's good for people and actually it's a lot of cost savings in the long term. and the data are so clear, you know? So I, I think there is an opportunity to, to have a structural shift in the diagnostics business.

And there was a question about the Pompe's disease and gene therapy. We're really pleased at the progress that Spark is making. And yeah, I think it's so far quite a good match because we've been able to provide significant funding for their pipeline and, They're able to leverage some of the global resources. And so, for example, in Pompeii's disease, they just had their first patient in the phase two. Now, in Pompeii's, because there's available therapies, the gene therapy will probably have a higher standard than you'd have in some of the monogenic disorders. So we do expect a full phase three there. So it is going to be some time yet, I think beyond 2023 for launch. I think the phase three would be out in – Yeah, sometime after the phase two. So it's going to be some time, but yeah, a lot of good progress in Philadelphia, and we're excited about our new colleagues. Thank you.

Thank you. I suggest, thank you, Emmanuel, for your questions. I suggest we give 10 more minutes because we're running over a bit with the presentation time, if that is okay for you, Sylvain, Alan, Thomas, Bill. Okay. Okay. It needs to be disciplined from both sides, from the investor side and from our side now with the cues and the answers. But the next one would be Luisa Hector. Luisa, please, I open your line.

Thank you, Carl. Can you hear me?

Yes. Perfect. Thank you.

Thanks, everyone. So one was a point of clarity on the guidance for the biosimilar impact this year of the 4.6 billion. Is that still U.S., Europe and Japan guidance? And if so, what's happening with the international markets for Herceptin and Rituxan? And then the second question, just to understand a bit more on Evrizdi. So it's off to a good start. So just wanted to know, can patients start this drug literally from home or do they have to come in for a first dose kind of clinic appointment? And have you lowered your expectation for sales this year, given the COVID environment, or is this more of a unique launch scenario? due to the high levels of awareness of the patients and the doctors. Thank you.

Yeah, thanks for the questions. Easy. Biosimilar guidance, the 4.6 billion is the whole world. Before we were talking about a smaller set of territories or a specific set of territories, because those were the ones where the biosimilar impact was happening. But now, essentially, there are biosimilars in many places. So we just said we'll handle them all together henceforth. And so that's the 4.6 approximation. You know, let's see where it ends up. A VRISD absolutely can be started from home. It's a, yeah, it's a simple oral formulation, liquid formulation. And so that's not an issue. And we, no, we haven't lowered the sales forecast based on COVID. It's, we really don't see any need to with more than a thousand patients starting in the first four and a half months. And 350 physicians prescribing, you know, these are motivated people. And for many, well, you can imagine for the parents of young children, they're very motivated. And for people who are older, who haven't had good options, they're very motivated as well. So they're, yeah, I think it should be a good launch in the U.S. and our continued good launch in the U.S. and strong launches outside the U.S. as well.

Thank you, Bill. Thank you, Luisa, for your questions. Mark Purcell. Mark, I open your line now. Mark, you're on mute. Now you're on mute.

Thanks very much. A couple. So just following up from that last question on biosimilars, what would you recommend us to do when it comes to modeling the decline in revenues in international markets? So I guess we don't have much visibility there. We obviously have now high visibility what happens in Japan and the U.S. and Europe. But whether you're going to see sort of flattish sales or slightly declining sales as prices come down, but volumes obviously go up in those markets. Secondly, by specifics, Bill, could you talk to your confidence in terms of this modality where you have 15 assets being able to be delivered subcutaneously in an outpatient setting? I'll be interested in the comments around the CD20, CD3s, but also where you are with HER2 CD3 in terms of gaining share back through innovation in the breast cancer space. And then a very quick one, which is a clarification one for Thomas. Thomas, thanks for your presentation. It was really, really helpful. In terms of thinking about diagnostics through the course of 2021 without giving a growth rate, for your own business specifically, are you assuming much in the way of pricing pressure or capacity utilization pressure in the second half? And are you playing a part in what could become new tests, depending on what the correlates of protection are with these COVID vaccines? So we may be shifting from nucleosing antibodies to total antibodies to T cells to all sorts of other things. And so I would have thought with your innovation focus, you may play a leading role there, which again, could you give you a little bit more longevity when it comes to the COVID revenues? Thank you.

So maybe I could start with the question about the biosimilars impact in international. Yeah, Mark, I mean, it's definitely, it's a little hard to call because there's definitely some growth potential. And so some of this will come down to, you know, what are pricing impacts in 2021 and future years? I think certainly the great bulk of the biosimilar erosion will occur in the U.S., Europe and Japan, because again, China, for example, China's in international, and we have every reason to believe that we would have some growth in China this year for AHNR. So, but I don't know that I can help you much beyond that. You know, we're going to have to wait and see. On the bispecifics and the encouragement or the potential for sub-Q dosing, Yeah, I think we're pretty impressed with the data that we showed at ASH in terms of the ability to administer Mosin, you know, to basically be able to give a much higher dose with sub-Q, but have it be well-tolerated. So, you know, I think this is something that could be, you know, could be quite useful for a number of these. Well, in this case, I think that's really more specific to the hematology indications where you have CRS is an issue, but it's something that we think could be an important phenomenon in hematology. And then you asked about the HER2 CD3 bispecific. It's in phase one. We've had some delay on that one based on COVID. So we look forward to further progress on it, but right now it's moving a little bit slowly.

And then let me answer your second question, you know, with regards to pricing pressure, volume, etc. So as I mentioned in the presentation, you know, most of our outlook is really having COVID sales in Q1 and Q2 and then a reduction in Q3 and Q4. And this can either be pricing pressure or also difference in volumes. And it will all be dependent on, you know, the speed of the vaccine rollout, you know, the variants, you know, with more of the variants of, you know, South Africa and Brazil, most likely you have to get to a much higher rate of vaccination in order to get to herd immunity because the higher infected virus, you need to have a higher level of vaccination. So there's a lot of uncertainties that are going to play in. And so we didn't really detail out what part of its price pressure, what part of it is volume. But, you know, we said, OK, the first half year is pretty clear. The second half year is a bit more unclear. So so we take more of it in the first half year and then we can give updates as the year proceeds. I also think that we are pretty well protected compared to some of the other players, both on price and on volume. Price, because we do have a lower price than most other players and significantly, partly. So, you know, if there's a price erosion, others will be hit first before we will be hit. And we did price in line with our other portfolio, right? So it's not like we priced higher. And then on the volume, I also think we are somewhat protected because our machines and instruments are so highly automated that, you know, all these more manual procedures will go away because, you know, people are just tired. They don't want to keep pipetting and work on these more manual instruments. So I think there's a certain level of protection. Now, with regards to more innovation in this case, you know, we do have now an opportunity also on the MagniPure and LightCycler to be able to differentiate in this new variants already. And we are working on something on our 6800, 8800 that, you know, you can then take basically the samples that turned out positive and you can kind of look, you know, is this a new variant or is this... the previous virus, and that through PCR rather than sequencing, because sequencing just takes days versus hours of PCR, and you don't really want to wait that long. Then, of course, this question around T-cell immunity, and there are possibilities to test that, and we are working on that as well. We do believe, however, that most of the testing will still remain on antibody testing, because that will show, uh, you know, also correlation to the, to the T cell immunity because the T cell testing is quite more, um, uh, you know, cumbersome, but we do look into that and are working on solutions there as well. But I think, you know, if they're looking at, uh, this testing, you know, they will do more of the antibody than the T cell testing simply because antibody tests, antibodies presence will correlate to T cell. And, um, And diesel is just, you know, a lot of manual effort.

Thank you, Thomas. I can see that your crystal balls are, let's say, forecast here. Our guests are really in high demand. So we have a bit of a timing issue. We have Richard Foss and Peter Welford as the last to identify, let's say, people in the queue. I would say let's give it a try. Two quick questions from Richard and from Peter. And we try to also keep ourselves in a good shape with the answers. So, Richard, you first, please. Richard, I open your line.

Thanks, Carl. So one question on diagnostics. Just you mentioned the the the ramp up in capacity. But what is the demand level like? We've seen PCR selling out this year. But is there the demand to sell out of that ramped up capacity in the first half? And maybe an idea on the sustainability of margins. We could expect margins to go up, but would they be sustainable at sort of a 20 percent level going forward? How should we think of that? And then very quickly on Cad Siler, just adjuvant growth. I'll stop there, Carl. I heard the sign.

Thank you. I hope already can hear. That's good. Thanks a lot. No, please go ahead. Yeah.

Yeah, so regarding the ramp-up capacity, the numbers that I mentioned are always at end of quarter. So don't take kind of this as during the entire quarter. So this is doubling by end of quarter one and end of half a year, another doubling. Now, since there is so much demand out there and not enough supply, it's really hard to say what is the real demand. But based on all of our models, it's likely that the demand will be higher than what we can supply still, despite investing 600, more than 600 millions of francs. And then we'll see how second half year goes, right? And regarding sustainability of margin, yeah, I mean, we've had a significant margin increase, you know, also driven through COVID tests in 2020. And as you have seen on the cost lines, we're working very hard on our efficiency in the organization, and we'll continue to do that to make sure that we protect our margins.

Thank you, Thomas. And the last one would be Peter. Thank you. I hope we could address your questions, Richard. Thanks for asking. And the last one would be Peter Walford. I'll open your line now. Thank you, Peter. You have the privilege of the last question.

Hi, thanks so much for squeezing me in. I just have one question to keep it short, just to Thomas again, though, just continuing on the same theme of the outlook, actually. Just want to check that when you say you assume little testing in the second half relative to the first, is that both antigen and PCR tests? And also when we consider the PCR, then am I right in thinking you're at 20 million tests per month at the moment, 40 million by the end of the first quarter, presumably that 80 million by mid-year, if I understand it right. And so when we think about the second half, you're saying your guidance assumes down from 20 million a month, essentially. But actually, the upside, if you like, could be as much as 80 million a month test. Is that the right way of thinking about it? Thank you.

Yeah, so by half year, I would say, to be more accurate, it will be around 70 million in total. And it's a mix of our high throughput platforms, which is 60 million, and the other 10 million come from the MagnaPure and LightCycler platforms. And it is correct that we assume lower testing at the moment in our outlook for the second half of the year. But the other view that I would just like to bring in, we believe that PCR testing will be sustainably longer, will be longer sustainable than, for example, antigen testing. I think one of the reasons for antigen testing also is because there was not enough of PCR testing. So I believe that the PCR volumes will remain longer than antigen testing.

Thank you. So I think we are coming to an end. I apologize with those who are still in the line. I can see that you just came in in the last moment. I see that Ben had some questions on ESG. We had some other questions for Michael Leuchten and some on the digits and so on. So we take note of it. We'll get back to you. I apologize again for those whom we couldn't address here, but I wanted to thank you from my side for your interest in Roche. Wishing you health and success, health for you and your families, of course, and wishing you a nice day. Thanks a lot for your interest.

Thanks, everyone. Bye-bye. Thank you. Thanks for joining.

Thank you. Thank you. Ladies and gentlemen, welcome to the Roche. Bye-bye. Thank you. Thanks for joining.