Gedeon Richter Ltd S/Gdr

Q3 2025 Earnings Conference Call. My name is Robert Reti. I'm Head of Investor Relations and ESG. As you probably noticed, there is a slight change in the lineup for today's call. The reason is very simple. Our CEO, Gabor Orban, is not able to participate in today's call because he's on route to Washington, D.C. He's part of the team. of our Prime Minister who is heading to DC to meet President Trump tomorrow and this probably doesn't come as a surprise given the very important role that Richter is playing in the business relations between Hungary and the United States especially when it comes to high value at R&D driven activities and trade relations of course on the other hand this created a bit of a Necessity for us to reset our plan for today. So instead of Gabor, today we have with us Tomas Sojak for the first time in this conference. He is the Chief Commercial Officer and of course Vlasov Kovacs, the Chief Financial Officer. And I'm highly confident that the quality of this discussion will not suffer from the absence of Gabor. Before we start the discussion, the usual technical details I'd like to go through. We will be doing a formal presentation using the slides that we published this morning and the Excel data sheets. After the presentation, there will be a Q&A session, and as usual, you will be able to ask your questions either using the raise your hand functionality of Microsoft Teams or putting your questions into the chat box. Two more things, this call is recorded and also I would like to draw your attention to the cautionary statement at the end of the presentation about the forward-looking statements which this presentation and this discussion may include. With that, I hand it over to Laszlo, who will discuss the financial results and then Tamás will go through the revenue, the top line developments.

Thank you very much, Robi. Good morning to everyone. We will be stepping in for our CEO, Gábor Orbán, for today. and we'll do our best to provide you with his perspective and to ensure that we cover all the important points. I think in this quarter it's particularly important to look a bit behind in numbers because what you see in Q1 to Q3 there's a temporary slowing dynamics in the third quarter. And overall I can say that the quarter was mixed. The strong growth across the innovative businesses including women's healthcare and CNS continued however it was contrasted by multiple headlines in the affordable segment both from biotech CDMO and genmed were impacted by internal and external challenges let me start with CDMO where the performance was constrained by the US market regulatory uncertainty limiting the inflow of new deals while technology related issues in our German side caused some further pressure during the ramp-up period On the other hand, GEMMAD faced a series of hits. First of all, there was supply chain, stock out problems affecting one key product. Then we noticed wholesaler destocking across several markets and we had an extremely high base back in Q3 2024. This mixed effect at the top line was partially compensated as we applied very strong operating cost controls, limiting the impact of the weaker top line on our profitability. So rather than being one of cost cutting measures, this is rather a reflection of the benefits of our longstanding corporate efficiency programs that we run in this company. Now, if we take a look on the color scheme of this slide, you may notice it's pretty similar what we saw in age one. However, the indicators remain the same, but the numbers are more moderate. They're close to 7% growth in nominal terms, including pharma sales, clean and EBIT figures. The ethics adjusted figures are a bit even lower, but the difference between the ethics adjustment and nominal values are getting closer. Both bottom line indicators show slight decline, driven entirely by adverse ethics dynamics and taxes. The swing between last year's ethics gains and this year's losses is close to 30 billion Hungarian Forints. Free cash flow, however, clearly stands out here. We managed to follow our capex controls. and networking capital was favorable during this quarter, so we are able to report an all-time high 200 billion Hungarian Forints here. So what does this picture mean for the rest of the year and further ahead? First of all, we strongly believe that the Q3 revenue shortfall is temporary in nature, but we may not fully return to our previous baseline and growth in Q4 yet. As a result, now we see that our full year revenue on constant exchange rate will be approaching 2.3 billion euros, which is around the lower end of the range we have previously given to you. On the other hand, we continue to expect profitability to visibly improve in 2024. Now we will use all of our tools at our disposal to make sure that we can expect constant exchange rate clean habit growth in the region of 8 to 10%. And given the very strong cash flow generation, we also expect to be in a position to continue to further increase our regular dividends fully in line what we shared with you in our capital allocation framework back in March. Now, I'm handing over to Tomasz to share a few thoughts on the top line. Thank you very much, László.

Good morning, everyone. As you can see from our numbers, our Q3 performance basically hindered a bit of our growth rate right now. We are sitting on a mid-single-digit growth year-to-date. If you look into the regional setup of this growth, we do see that Western Europe, North America and Asia-Pacific has very good results. I'm kind of proud to see that Western Europe is growing fastest right now, around 12.7% year-to-date growth, what we could recognize in that segment, and North America and Asia-Pacific as well, very high single-digit, close to 10%, but still it was a single digit altogether. This segment reflects very well that how well the innovative portfolio is performing. On the other side, in Central Europe and Eastern Europe, we had a much lower growth, what we achieved. We were basically prepared for this slowdown altogether due to the fact that we've seen the impact from last year, a higher base mostly. and as well we have seen some of the trends and activities what we initiated recently. So from that perspective, the slowdown of the growth of the Central European markets were expected. Taking into consideration the exchange rate that has been changed from the first half year, in Q3 we had basically it was mostly due to the weakening dollar and the strengthening Hungarian foreign altogether. Q3, as you see here on the full portfolio, we had a bit of a drop of sales compared to last year, Q3, year-on-year comparison. And I think it is good to look into the details. Thank you, Roby. So first of all, we would focus on the innovative business part, mostly from Vimeo Healthcare. which is very important to recognize that the quarter-on-quarter growth of the Vimine Healthcare portfolio was 11.7%, so the portfolio growth did not slow down at all. Our key products, again, quarter-on-quarter, Rieco, Drovalis and Lenzetto, all of them achieved growth above 60%, so it is still a very dynamically growing portfolio for us. The growth is mostly driven by Drovalis. This is fantastic. We still see a very big long-term potential in the product. The emergency contraception had a little dip in Q3, mostly due to the fact that we needed to reschedule some of the deliveries to the U.S. and to the Chinese market, which was, on the other side, a positive development that Evra portfolio strengthened. as we could complete our tender deals in Mexico. Fertility business, important therapeutic area is get back and taking back its market position. However, it takes time, it's a bit slower. We have seen some supply chain challenges for Benfula in the LATAM region. Uterine fibroids and endometriosis, this is one of the center in the center of the key women health care topics as we do see right now, or patient centric approach. It is important to see that how we are really improving the access for all innovative therapeutic options for women in this territory, which in the past did not have good solution. Rieco is flying on it, performs excellently, and it's providing an efficient and safety option for our patients. Manopause portfolio growth is mostly driven by a strong patient demand which is completely understandable because that issue is hindering significantly the quality of life of the women and this is a kind of a trend change what we do see as well in the professional community because they are focusing more and more on this territory. We do see as well more and more investment coming back to this territory in menopause which reflects as well the future potential of the women healthcare portfolio and we have a really robust growth for Lanzetto. Going to the CNS business part, Vrylar 6.7 growth, 934 million USD sales in Q3. Year-to-date growth is double-digit. This we quote from the reports of AbbVie. We would love to focus to our own performance, which might look bad based on the figures you can see. However, we need to know that all markets, which is managed by Richter, still have a double-digit growth. So we are managing this product under all premises. or partnering sales a bit slow down, but this was mostly shipment issues and we are absolutely confident in the performance because we do see that the market performance is not a high single digit, the middle or low single digit growth is provided throughout the years. So we do see that the Q4 numbers in the CNS portfolio will improve. General Medicine, this was the trouble child business unit set up for the Q3 results. Declined, we suffered on quarter by quarter comparison in 17%. As I mentioned to you, we partly were prepared to have a weaker growth of this portfolio. It was mainly made mostly based on the issue that in the last year in September the Hungary we had one of positive impact which increased our basis rather significantly. Together with Laszlo, we are working very heavily to manage the working capital in a better way. It's a high focus right now. With that one, we turn with managing our customers, especially in the traditional markets, with a higher rigor, and it has an impact when and how we can supply them with products. And that caused another negative impact, and we calculated when we looked to the Q3 numbers in order. Dewe saw other elements. Many of the traditional markets have a typical pattern of the quarterly sales. The Q2 is regularly rather high, which is followed by a weaker Q3. In Q3, the wholesalers regularly destocking. This year, this magnitude was much higher than we anticipated. And there were other elements that in September, they were already much better prepared how to handle the usual stockpiling of the wholesalers. We managed it with a much more financial rigor compared to the past years. and it had an impact. One of the most important impact is that the leading product of our affordable portfolio, Midatom, Midecon, Top Horizon, suffered a supply issue and a significant stock-out problem. This was basically high value, especially in September. We've already seen some impact in August, but September was critically hindered by these supply issues. that it will unfortunately hit October as well. We will stabilize the sales through in November. So from that perspective, we expect a gradual recovery from the supply to the markets of Thorpe, Arizona through Q4. Another negative element was the cause of market where legislation change pushed down the market and the wholesalers, they were this stocking. from four-month stock level they went back basically to a three-week stock level. This happened again in the third quarter. All of these impacts arrived to us basically parallel and therefore compared to the expectation we finished the Q3 on a lower level and all of them what we tried to manage resulted a kind of weaker performance. What we could see on the other side that the in-market sales did not suffer that much at all. We were basically throughout the year stable. We suffered an open 2% market share loss in the respective markets in the traditional markets what I do see and mostly it comes this loss from the impact of the Middleton sales. Therefore, we are confident that the base performance of the General Medicines Business Unit is kept on the market, and we do see that gradually we will gain back and build back our position step by step in that portfolio. Business unit revenue, it's again two-part what we have to look for. One is the tera-parotide sales. Altogether, the growth is 6.1%. and teriparatide year-to-date growth is 9.5%. In the quarter in Q3, we were able to grow still in 5.1%, so the terriporatite business altogether goes very well. We have seen some slowdown due to how we are managing the supply. We were deciding to move some of the supply to the partners later into Q4. However, the markets we are managing perform very well with terriporatite. On the other side, the CDMO, especially quarter by quarter, presented a different number, a minus 12% drop. This was basically due to the factors that in the very beginning of the year we had some technical issues. These technical issues actually delayed production for several months. Few batches what we could manufacture in this time compared to what we originally planned. and all of these manufacturing had been shifted backwards to Q4. We are working very hard, we condense production, we are looking for a significant improvement and most of the deliveries which already contracted will be managed through Q4. We have a very clear focus on how the company is performing from that perspective and looking for monitoring, testing and release times. We are aware that there are some macro factors which already have been mentioned by lots of tariff uncertainty tied to capital availability from the US, which clues that some of the project has been postponed, customers looking to adjustments in the contracts. However, we manage it proactively. We already secured some new development service And even more, we have a new European biotech company contracted recently. So we do see that the future is getting back for this portfolio as well. Looking ahead for Q4, we believe that the Q4 results will go back again We aim to achieve around double-digit growth quarter-on-quarter, year-by-year results in Q4. Basically, the above-mentioned factors, as you could have seen, were mostly one of factors and issues what we already handled. Therefore, we will go back to the trajectory where we've been with biotech and the GEMMED, and we are absolutely trust that the women healthcare portfolio growth will fly in the last quarter as well.

Thank you. On the operation cost side, we finally see some of the effect of the efficiency programs we have initiated in the recent years. This was combined with some timing effect and some further cost-controlling measures that we applied. Year-to-date Cox figures is relatively unchanged with Q3 showing some slight increase. This is a direct effect of the lower sales volumes because fixed costs were borne by fewer products in the end. And that short time horizon of three months, there's no real space for management intervention. I think the most important here is research and development costs. You can see a decline here, which is mainly due to the fact that our biosimilar portfolio reached some major crossroads now by releasing four products and three molecules over the course of the next 12 months. We can mark that an era of major investments into biotech R&D has now ended. You can see that the average quarterly spending of biotech victories by over 20%, while CNS and GEMMED is broadly unchanged in nominal terms. This is a well-planned and deliberate change to our R&D cost structure, which was created to have some space for women's health care's internal innovation, which is about 10% higher than in the past year. The third quarter, however, were below the normal run rate. This is a result of timing issues and some accounting driven adjustments that we had in Q2. So we may not be able to appropriately foresee the quarterly speeds, but at the moment we are very confident that in the year end the landing will be there where we want. So the Q3 figure will be at around or up to €20 million for women's healthcare. And looking further ahead, the quarterly run rate could be at around €20 to €22 million per quarter, which will provide us with a solid foundation for disability investment and sustainable innovation in women's healthcare. Both sales and marketing and G&A figures show reasonable 8% year-to-date growth in nominal terms. The latter is also boosted by the acquisition we had in the previous year. Now, as a result of all of the above factors, if you turn the slide to clean a bit, you can see that we have delivered a clean a bit of 66 billion Hungarian Forints in the third quarter, which is down by 7%, but the Q1-Q3 combined year-to-date number is 7% up, reaching 213 billion Hungarian Forints altogether. Let me emphasize that our innovative business units were the main growth drivers delivering a combined 10% increase in both quarter and quarter and year-to-date. These are notable achievements given the significant US dollar headwind in Q3. QFA decline reflects multiple top line headings in GEMMAD as it was just explained by Tomas as well as CDMO businesses where we saw the 12% decline in top line and also having an effect on the bottom line. Looking ahead, We expect a substantially better performance in all business units except for CNS, which was remarkable as well. So in Q4, we expect the substantially better performance and the full year constant exchange rate clean EBIT is projected to grow between 8% to 10% compared to 2025. One more thing to highlight here is that the in-market sales in all segments were in line with the market trends. This gives us further encouragement that we will achieve what we expected. If you look a bit below the line, then you can see the difference between clean EBIT to EBIT and then to net profits. There are two notable points here. One is the massive FX losses that we suffered, especially in the last two quarters, which provide us with accumulated 24.7 billion Hungarian for instance of losses compared to 5.8 billion Hungarian for instance of gains one year before. Taxes, we pay more than 33 billion Hungarian Forints. You know, this is the second year with the global minimum tax regime. Now, this year, we have some additional deferred tax expenses as a result of the acquisition. Only good news with deferred taxes, this is something you don't need to pay, but still, it elevates our profits. If we're taking a look on our cash flow, you can see that free cash flows reach the all-time high 200 billion Hungarian Forins. This is for the first time in nine months and this is 22% higher than a year before. This is a very strong performance that was driven by higher operating profit, lower capex and a much smaller build in working capital compared to the previous year, which is to some extent the result of our actions and to some extent to the missing top line what we have in Q3. Beyond the regular annual dividend of 93 billion Hungarian Forints, which we paid in Q2, there were only minor transactions that required cash, meaning that most of the free cash flows added directly to our net cash position. Let me highlight that recently we were close to finalizing two sizable potential acquisitions in women's healthcare having been shortlisted at the last round of the bidding. Unfortunately, none of them went through. But we remain very much disciplined here, so we will follow our M&A strategy and approach, pursuing only assets and businesses that clearly align with our strategy and adds value, so we will not make any acquisitions just for sake of spending additional money. One more slide I would like to discuss is research and development. First of all, there is no major changes in the pipeline. with FV and the CNS we are absolutely on track 932 is in phase 2 clinical trials with two indications and the expectation remain the same that by the end of next year we expect to be able to start the first phase 3 clinical trials so this is extremely good news we have one phase one project which is our own projects 202 and Nothing to report here. We expect that we can go through to phase two trials later on. I would like to highlight that denosumab, our molecule in biosimilars, is being launched, as we speak, in some of the Eastern European countries, and we expect further blood and cardio launches in the CE region in GenMed. And I think altogether that is what we wanted to share with you in a nutshell. And we are here and ready to receive some questions from you. And I'm handing back over to Robi.

Thank you very much, Laci and Tamás. And ladies and gentlemen, we are now open to take your questions. So as I mentioned, either raise your hand function or please put a question into the chat box. First question is coming from Gabor Bukta. Gabor, please go ahead.

Hi, this is Gabor. Thank you for your presentation. First of all, I'd like to ask a question about the GemMed business. Because you mentioned during the call that regular recovery and supply to the Eastern European markets or Russia is expected for Q4. And I'm just wondering when it will normalize. So at the end of Q4 or in Q1 next year? and another question regarding GEMMED that do you face any production issues which have already resulted in a significant impairment in Q2 or what we can see here in the future and going to another topic frankly speaking when I looked at the Kustof Gotze's I was very disappointed and you mentioned that it was around flat and you see some positive improvements on the cost side also but excluding the CNS segment the gross margin stood at around 36% in our calculation compared to 43% in the first half of 2025. And where do you see the growth margin in the fourth quarter of this year? If I can touch on the R&D side, you mentioned that 2022 million euro run rate on a quarterly basis is expected in the women's health care but can you give more call on where the 2026 R&D spending will land and the final questions if I may ask about the M&A strategy and I'm just wondering if you want to acquire a product or a small company with any kind of original platform in the future

Okay, thank you for a good bunch of questions. We'll try to answer them. So let me start with Jan-Mad. So we expect that Q4 will be stronger than Q3, but will not be on the normal run rate. So we maybe need an additional quarter, but here, Tamás, please make some further comments as you feel appropriate.

Yeah, I just would add One part that the major stockout issue will be handled throughout Q4. Q1 will be already normalized. Q4 is impacted mostly by October, somewhat by November. December is always a different month. We all know that by Q1, from that perspective, we will be fine with the major mid-autumn stockout issue.

You also asked for production issues. I would call out Miraton in this respect, which was uh we mentioned back in august that we had an issue with the starting material which affected uh uh production so that was one major issue that went through uh parallel to this one but i would somehow separate cdmo because uh and this is also links somehow to to your cox question because uh uh in in cdmo in germany we had some technical issues in the ramp up it's a very very complex production if you have anything with those cell lines it's not something that you just you know fix a screw and it will be fine it takes one so that is a separate problem except for these we don't see any production issues maybe on the other hand we increased some of the internal efficiencies here in Budapest period On the COX questions, maybe I've also asked for room because I was not able to fully follow through all the numbers you shared, but here there's one very important thing. So if you just take out CNS and you know Raylar in itself has like 99% COX rate, still you need to make some further distinction between biosimilars because the CDMO business reports a low gross margin rate, but basically there's nothing more than gross margin, only some G&A costs. So the gross margin almost equals to the net clean a bit from it. So besides that, why I also see some Partially due to the the production mix and it was around one and a half percentage points What I saw it was partially because of posting or one of our products sold in the Chinese market which has a very high gross profit rate really extremely high and now Thomas mentioned the financial rigor and It's not a secret that we changed one of the distributors and a major shipment was due this at the end of October. So this has an effect and some of the growing products like Drovalis, it's normal that in this rate or in this life cycle, It has a bit lower margin rates than its full scale. On R&D, the 2022 million I mentioned, with the 2026 expectation, let us come back at the end of February when we have the year-end figures and we will provide you with the full year guidance. If you just but just give you a hint if I give you the number on rate and what we had in German and CNS you can you can pretty much figure out but we'll discuss it in more details in early 2026 with M&A and M&A strategy I can highlight what we had here so first of all it could be either assets or businesses but in the past we were more successful with assets it's easier to find because it's not that easy but it's still easier to find assets that fits into our portfolio and we have very good track record in acquiring assets and embedding them to our daily operations and it's easier to find similarities because our strategy is based on therapeutic areas if you buy a company there's no guarantee that it will be only focusing on the same therapeutic area for buying anything more like a company for having R&D expertise. I don't see that happening because we just did it a year ago. We acquired the old Mitra part. This is called Estetra, this company. We hired some further really really black belt R&D people there. So we feel that we have enough muscles to do the exercises.

Thank you very much. I hope we answered most of your questions. So basically, in terms of cost of goods sold and gross margin, definitely going into Q4 based on what Asma and Tamás commented, we expect COPs to decline and gross margin to improve basically across all three segments excluding CLS, as you asked. The next question comes from Bram Burick. Good. Go ahead, Bram.

Hi. I'd like to touch on the cost efficiency point that you had made earlier. Probably not seeing, you said you're seeing some improvements there and I assume that they will continue into 2026. My question is where are we really going to see, which lines are we going to see these efficiency measures move strongly? That would be the first question. and then the second question with the bio you mentioned the technical issues and these technical issues are to do with the CDMO or to do with your own production or both if you could go into a little bit more about that and finally you also flagged Co-Founder Co-Founder

I'd like to give you some hints back at the capital markets day that's where we would like to improve and this was namely sales and marketing efficiency absolutely admin costs typically G&A but you know we have admin costs in other buckets as well and the normal run rate of R&D so these are the areas that that will be affected at sales and marketing we just would like to Tomas, if you would like to add any comments on sales and marketing, please.

Yeah, happily, actually, due to the fact that we are focusing very much on the Salesforce effectiveness right now. building a new approach where we run the sales forces in the countries, how we work together from that perspective with the countries, how we can improve the performance of the sales forces, attached certainly to the marketing strategy, what they have to implement. And if you don't mind, Laci, I'll jump back to the last question with that perspective. Where we suffered most in JAMA, this is the blood and metabolic therapeutic area, We had recent launches there and for different reasons in different countries not on an even way we suffered kind of lack of performance with these launches. It was in some countries due to the local January competition which proved to be much stronger than all capabilities especially in Russia. In other cases in Romania, in Poland, we realized that we need to do a better job how we are preparing for our launches, how we are deploying the sales force out in the markets, how we are preparing Gorsa for the straight channel management in line with the sales force promotion. So these are territories where we recognize the improvement opportunities. This is already in place if implementation And from these steps, we basically expect a further improvement of our return on investment into all marketing and sales activities. And I'll hand back to you if you want to answer the biotech.

Yeah, absolutely. Thank you. And maybe just one more comment to cost efficiency. So if you just take a look on the P&L itself, mainly it's going to be sales and marketing and G&A with R&D, it's a bit more difficult Because when we speed up some of our spending, then you will not be able to clearly distinguish what is efficiency and what is really some increase of actions. With biotechnology, let me be clear here, it's CDMO, it's Germany, it's one site and one line. So it's a very, very separated issue. Nothing to do with the operations here in Hungary, in Debrecen. there we need to be very proud of and maybe I just missed the opportunity to highlight that we are the very first company in country and region to get the first FDA approval of our site we went through nine different examinations you all know the drill and we did it and we are very happy and very proud so scientifically and technically we are good we have this extension project in CDMO in Germany in Bovenau and we expected more revenues coming in but due to these issues we will record most of those revenues in Q4 hopefully next year will be about really you know expanding not just the capacities but the revenues this is my expectation as a CFO can I have a follow-up on the CDMO question so

All right. You flagged before, yeah, issues with U.S. customers. You say that you proactively made adjustments to the value of those contracts. You have a new customer. So just generally for 2026, if you'll go that far, should we expect CDMO to improve on the 2025 run rate? Or is it going to be at a lower run rate because of changes in contracts with U.S. customers?

Okay, you know, I would, so let's, with next year's guidance, let's wait until the year-end numbers, but altogether what we see now hopefully is a turning of trends. So, we are positive about Q4 and let's see what we can put confidently into our guidance for next year. Thanks.

Thank you very much. Next question comes from David Gorjenski. David, the floor is yours.

Hi, thank you for taking my question. I actually also have three questions, so maybe just take them one by one. And the first one is a follow-up on efficiency gains that you achieved. And when I look at sales and marketing costs this year, sorry, this quarter, it was generally sluttish year on year. and I wonder like what part of that was related to just lower revenue in some units especially in general medicines and what part was this cost efficiencies thank you for the questions of course some of the variable costs was definitely attached to the lower top line numbers

On the other hand, as we do the promotions and the field for the activities, sometimes you need to make these investments before and then you see the potential returns. I'm not able to provide you with an exact number on this, but It's an identifiable difference from the internal management accounts that is related to the first round of efficiency programs and we hope that more will come in the course of the next quarter's 2026.

But it's fair to assume that sales is picking up again then or surely some expenses will be picking up too.

We won't be able to have higher revenues with cloud sales and marketing, but the ratio needs to improve. And this is what we see internally. Some improvement is there already.

This is kind of a system when you expect always your shares is growing much faster than your investment, basically. And then this is what we are working for. That's where we look to efficiency improvement on this territory.

Okay, thank you. Second question on R&D costs. I just wanted to confirm if I understood correctly that the run rate for women healthcare segment in terms of R&D costs is 20 million, 20, 22 million euro?

Exactly, yes. Next year. The last quarter, it's up to 20 million. This is how we see it currently. So hopefully lower than 20 in Q4 up to 20 million and 20 to 22 in quarters after that.

Okay, thank you. The third one on Reiler 02 project. I just also just wanted to confirm that you expect Phase 3 to be started in next year because I'm just a bit confused because I thought that Abvijal's guided on the recent call that the results of Phase 2 may be delivered only in 2027. No, I think it will be.

that's the second indication what they commented that may slip into 27 so the GAD which was launched in May this year as the second indication of phase 2 trials are running FB still as far as I know still expect the first indication bipolar depression to if the results are as as we and FB expect justify them to start phase 3 by the end of next year in BD, bipolar depression.

Okay, thank you so much. That's all from my side.

Thank you. Thank you very much, David. Next question comes from Sophie Tunfar. Sophie, go ahead.

Hi, thank you very much for the presentation. I suppose, could I just come back to R&D, please? Are you able to give us some kind of guidance at the group level, perhaps as a percentage of sales? I appreciate what you've given us for women's health care, but it would be helpful to understand how it will trend going forward in the other segments. And then just really briefly, how confident are you in receiving a patent extension for paediatrics for Vrela?

Okay, so with regards to any pediatric issues, AbbVie is leading the discussions around the topic, so I have to refer to them to respond on that one. With the run rates, one answer that we are very, very strict with is to make sure that all combined R&D spending cannot exceed 13% of revenues ever that is our commitment what we did with the strategy what you could see here or what you could expect that biosimilars will be on a lower run rate so definitely this year was the turning point and next year we don't expect to have an increase we are really focusing on the market now so 2026 is the year when we have All together, we have five products on the market, so it's going to be more about trying to bear the fruits of that investment. With Genmed, when we declared our strategy, we also remained committed, if needed, we put some further money Now you couldn't see that big increase in 2025. So there might be some further increase, but it's always a question if we are doing our own developments or we are, you know, teaming up with someone else. You could see some examples on that one. Women's healthcare, we commented. And in terms of CNS, definitely our cooperation with AbbVie is running the line. So if we can start phase three next year, definitely there's going to be some increase, but that is an increase to the good. We'll be very happy if we can spend money on phase three examinations partnered with AbbVie. on a molecule that has a good chance to be relayed to the toe.

So for any given year, I think the level of R&D is very much going to be or always going to be project-driven. So in CNS, depending on the progress of the molecules, in particular 932, but also 202, and in women healthcare, depending on our ability to bring in projects externally and to develop our own very early stage molecules in the coming years.

And maybe just one additional to give you some hint on that, that we also started an efficiency program on fixed cost. So you will always see the combined figures. So that is what we would like to gain efficiency with the fixed cost, keeping them as tight as possible. and you know having the room for the programs that's why at the very moment it's very difficult to give you an exact run rate for all business units for next year but definitely we'll come up with the guidance early next year fair enough thank you so much but you will not exceed 13% of sales is that what you said absolutely that's the grab level okay cool thank you thank you very much

I don't see any further questions at this point. So if there is no one else wanting to ask the question, then we shall thank you for your participation and for your questions. If there is anything else which we can help you with, then please reach out to investor relations and otherwise we will see you in three months time with the full year results. Thank you very much. Have a nice day. Bye bye.

thank you very much goodbye