Recordati Industria Chim

Good afternoon. This is the Chorus Call Conference Operator. Welcome and thank you for joining the Recordati 2020 First Half Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Marianne Taschke, investor relations, and corporate communication of Recordati. Please go ahead, madam.

Good afternoon or good morning to everybody, and thank you for attending the Recordati conference call. Andrea Recordati, our CEO, and Luigi Lacorte, CFO, will be presenting our first half 2020 results. For a better understanding of his presentation, please access the set of slides available on our website, www.recordati.com, under the Investors section and Presentations tab. At the end of the presentation, we will answer any questions you may have. Please go ahead, Andrea.

Good afternoon, ladies and gentlemen. So, as Marianne just anticipated, we're here to discuss the first half 2020 results. So, I ask you to please move to slide two of the presentation, which carries that title. So, despite the first half having been impacted by the COVID-19 epidemiological emergency, net revenues have increased, and both operating income and net income grow significantly, now in line with expectations thanks to the positive contribution of new products and the reduction of expenses. As you can see, revenues are up by 2.3% and include 32.8 million euros of revenues from the sales of Signifor and the initial sales of Exorita. EBITDA is 311.1 million or 40.9% of sales, growing on the previous year by 11.4%. Net income grew by 13% and adjusted net income at 225.6 million grew by 16.8%. and is now 29.7% of sales. Net revenues in the second quarter was impacted by expected stocking, as we've mentioned at the end of the Q1 call. And furthermore, this quarter saw an intensification of the impact of the COVID-19 pandemic in all geographical areas in which the group operates, leading to weak demand, which particularly involved non-chronic therapies in our specialty and primary care portfolio. Although pharmaceutical operations were allowed to continue in order to ensure the availability of drugs for the population, the restrictions implemented by the local authorities inevitably affected our markets, mainly due to, for example, fewer visits to doctors, since our sales forces obviously were not on the field, and obviously diagnostic procedures carried out by doctors, and lower patient traffic in pharmacies. Lower consumption of OTT lifestyle products, such as vitamins and supplements, a reduction of clinic and hospital procedures, as well as a lower incidence of mild infectious disease resulting from the diminished circulation interaction between people. However, the impact on net revenue was more than offset by a favorable product mix and a reduction in operating costs, leading to continued double-digit growth in EBITDA and adjusted net income, with further improvement in margins. Net debt at the end of June is $922.4 million, compared to the net debt of $902.7 million at the 31st of December 2019, reflecting strong cash generation of around $189 million, before milestones of net share repurchases and dividend saving. We are very pleased with the strong revenue contribution from Signifor and Signifolar, and are also very encouraged to stay the lead by the early signs on the stories of launch in the US and France. With the clinical benefits now being also confirmed by the link for study with the potential peak year sales forecast of 300 to 350 million euros for the product in the current indication, with the current indication, and in our current geographical footprint. So moving to slide three, to give you a bit more color on our, on the Signifor and the Isuris. So the commercialization of Signifor and Signifolar is on track. The marketing authorization was transferred in March in the U.S. and Japan in May. In the U.S. and Japan, sorry, and in May in the EU. Novartis transferred the distribution of the products to reproductive most major EU markets during June and July, with the transfer of distribution in smaller CE markets taking place during Q3 and Q4. We have new patient acquisitions in the U.S. across all approved indications, and the first half 2020 growth of in-market sales is estimated to be about 10% versus the previous year. Moving on to Isturiza, the launch sequence was successfully initiated in the U.S. and part of the EU, despite the many challenges posed by the COVID-19 pandemic. We are pleased with the early performance of Isturiza in the U.S. and EU, as it's trending in line with our expectations. The first commercial shipment in the U.S. took place on May the 15th, and we have strong support from top U.S. KOLs, patient organizations, and an effective market access strategy. Regarding Europe, we launched in France in early June, Germany in mid-July, just a few weeks ago, and in Italy, we expect our first patients under early access any day now. This encouraging early patient uptake is thanks to new patient acquisitions and the transition of patients from our early access programs. We're estimating our 2020 net revenues to be about 10 million euros, and this is made coming from the U.S. In addition, we are very pleased that the Phase III LIG4 trial met its primary endpoints in Christian disease, confirming the strong clinical prophylaxis tourism. We also submitted to the NDA in Japan in March, and we are targeting to launch sometime in the second half of 2021 in this market. Finally, we expected Teresa to achieve a leading market share with peak year sales estimated, as I mentioned before, between 300 to 350 million euros and potential further upside from the expansion of indications to pushing syndrome in the U.S. and through our geo-expansion strategy in new territories. As announced in the Q1 results call, the plan is to give further color on the potential for recovery going forward at the presentation of a new three-year plan in early 2021. So, I think we can now move to the presentation on slide four, which comments our corporate product, and I will pass it to Luigi to take it through to the presentation. Thank you very much.

So thank you, Andrea. And again, good morning and good afternoon, everyone. So as usual, I will start by giving a little bit more granularity on our revenue performance and starting with product sales. And I think this slide actually illustrates well the different impact that the pandemic had on the different parts of the portfolio. With chronic therapies continuing to perform well, an impact more felt in the acute and lifestyle medication. You see growth of Zanidib, Livazo, and Celucan all continue strongly. Growth of Zanidib of 16.6% was particularly strong, driven by growth in Nordics, Germany, Italy. but a very strong growth also in our international markets. Also on the back of some shortage of generic products. Pitavatsartine growth was driven by Russia, Spain, Greece, and Turkey, and silicon growth was driven by Nordics, Poland, and other Central Eastern European markets where we've established our footprint more recently. Xaniprex decline was really driven by impact of new measures introduced in France at the beginning of this year, which favored the adoption of generic options. And Ulurek decline is very much in line with expectations, reflecting the entry of generics in Q1. In fact, the Nururek in several markets, our market share has been holding up well and slightly better than expected. Again, here, this is offset by somewhat higher erosion in France following introductions of those measures that I've referenced earlier. So, stronger growth of those chronic medication products. Other corporate products, which include OTC, is really the part of the portfolio which bore the brunt of the impact of COVID-19, with the decline really driven by five products. Citrafleet in Spain, which is a product used to prepare patients for colonoscopies, clearly was impacted by the effective stop of elective procedures throughout many of the markets, particularly impacting in Spain. Our cough and cold portfolio, particularly in Russia and Central and Eastern Europe, was impacted by the lower incidence of seasonal flu and normal pathologies, which particularly impacted revenue of esophra and tergium. And we also saw an impact on Casenlax in Spain and some of our probiotics line, Bioro Suero in particular, which led to the decline of 10.8% in corporate products. Within that, some positive news as well, Riagila sales almost doubled in the first half relative to prior close to six million, but slightly below our ideal trajectory. Again, their sales slightly held back by the lack of ability to interact face to face during part of the quarter. Revenue of rare diseases clearly grew strongly. Clearly, the majority of the growth came from the growth and the contribution of Cinefor and Isteriza. But our base business grew, existing business grew as well. We had in the quarter good growth of Carboglue, Cystodon, Cystodrops and Justapede in addition to the contribution of the Daga. This was however partially upset by a decline of premium in the US. which is the one product in the rare disease portfolio which did feel an impact from the COVID pandemic, being put clearly at a disadvantage over the period of lockdown versus the new competitor entry, given the need for infusion. It shows signs of stabilizing in June, but we did suffer from patient traffic to clinics and hospitals for infusions reducing. So again, mixed different impact on different parts of the portfolio with chronic therapies continuing to grow strongly. Page five, I'm looking at the composition of our revenue. To highlight here clearly the growth of rare diseases which now accounts for just over 20% of revenue, up from 18%. with on the other hand OTC and other corporate products which as I said are the areas where we felt more of the COVID lockdown impacts both declining by just over one percentage point relative to prior periods. Looking at revenue performance by key geography on page six, Again here, different growth profile, which reflects the diversified portfolio of the group in different markets. Revenue in Italy was down by 4.5%, reflecting to a large extent the erosion from generic entry on Ularec, and also continued erosion from generic competition on patoprazole and lovastatin, which we started seeing in the second half of 2019, which offset continued good growth of Cardicor, Lercanidipine, again, two products for chronic therapies, and good growth of Regela. I've mentioned already France, Revenue decline of 5.5%, driven by the impact of new Article 66 measures on their county-based product, and also driving a somewhat higher erosion than previously anticipated on Ularek, offsetting a good contribution of clearly the rare disease portfolio, which benefited also Italy and a good growth of Metadome. Germany was somewhat less impacted by the ongoing pandemic with revenue broadly flat, with good growth of Craver South, American EDP and, you know, really good performance of our ITC portfolio offset by generic competition in tenders on Orthoton. U.S. revenue, which in local currency was up by 13%, clearly is driven by the addition of sales from Singapore, initial sales of East Teresa, good growth of Carbonew and Cistodon, but again, also reflecting erosion on Panimatin. Russia and CIS and Ukraine, Really, together with Spain, are two regions which most felt the impact of the ongoing crisis, both for the impact that they had specifically on the cough and cold portfolio, which I've referenced, but also being economies which have been more severely impacted by the ongoing pandemic. Good growth in those regions of Zanidib and Livazo helping to set part of the effect. Turkey, on local currency basis, continues to grow in double digits, 14.3%, with growth across the portfolio, both of our corporate products and also of our local product portfolio. Clearly still not growing at a rate similar to that of previous quarter. It's a very promotional sensitive market. Fuel Force was off the field for a number of weeks but now is back at work as of the month of June. I've spoken to Spain, Portugal less affected and delivering growth on the back of good growth of Livazo and also contribution from the launch of Regila at the beginning of the year. And you see at the sort of bottom of the page in the let's call it newer markets, Western Europe which includes the Nordics and the Benelux. Central and Eastern Europe, which includes the Baltics, Romania, Bulgaria, countries where we've established more recently our own direct selling organization, all growing still nicely, really driven by the growth of Metoprolol in those markets and other products which we're now supporting directly, and clearly the contribution as well of rare diseases. North Africa growth driven by our Tunisia business on the back of really strong local growth of close to 17%. And international sales reflecting continued growth of American EDP in international markets, but also once again the contribution of rare diseases in Singapore in particular, and also just repeat and more broadly a rare disease portfolio in Japan. Switching to slide seven, and if you look at the geographical breakdown of our revenue, clearly here we see a slight increase in the share of the revenue which rises from the U.S. And an increase though particularly from 16.3% of revenue which comes from those newer markets where we have established our footprint more recently, and international licensees. Switching over to the P&L, I've spoken to revenue, so 2.3% increase in the first half, which is 3%, which would be 3% adjusting for the effects headwind of 0.7 that we faced, which was mostly coming in the second quarter of the year. In fact, it was fully dropping in the second quarter of the year, first quarter being broadly flat in terms of the exchange rate effect. Growth profit at 72% of revenue reflects the continued growth of the rare disease business in the overall portfolio and also benefit from a favorable product and country mix. The good progress relative to the first half of last year. SG&A expense of 27.7%. It's 22.9% selling, 4.8% G&A with a decline of roughly 5% in selling expenses really reflecting the reduction in activity costs to the disruption in the field from the COVID pandemic, which more than upset the additional investments that we put behind the creation of our endocrinology franchise and particularly incremental investments that we deployed at the beginning of the year in the US behind the early launch of Easterisa. GNA again slightly increasing, again driven by the additional resource and infrastructure we put in place to support our endocrinology franchise. R&D expenses at 9.4%. Increasing versus the same period of last year with 8.7 million of the growth coming from the additional amortization, both of Signifor, but obviously as of this quarter also of Easteriza, now that we have commenced commercialization. Other expenses of 4.8 million reflect 4 million of non-recurring COVID related costs being mainly the donations which we agreed to help in the acute moment of the emergency. We still expect these to be somewhere between 6 and 8 million euros for the full year. This results in operating income of 261.5 million or 34.4% of revenue. and EBITDA of 311.1 million or 40.9% of revenue up 11.4% versus last year which confirms clearly a strong operating performance in the context of a very challenging environment. Net income of 197 million up 13% reflects both the good operating performance but also lower financing expenses which reflects in the first half of the year a 2.6 million gain on two cross currency swaps which as of beginning of 2019 were no longer deemed as hedges which had resulted in a loss of 1.9 million in the same period of last year. Those slots are both closed, so we will not see any ongoing effect of those in the second half of the year. It also reflects a more favorable tax rate at 22.6% in the first half of 2020 behind both the ongoing benefit of the patent box, which we agreed with Italian authorities at the end of 2019, which is coming in slightly higher than originally anticipated, and also a more favorable country mix. We now see tax rates for the year to be between 22 and 23% versus the 23 to 24% guidance that we're given at the beginning of the year. And finally, adjusted net income, which is new performance measure which we introduced at the beginning of this year, is 225.6 million, 16.8% versus the first half of 2019. Switching over to slide nine, clearly highlights once again the growing importance of the rare disease business within our portfolio, now delivering just over 25% of EBIT and EBITDA. as a percent of total group. It was 20% in the first half of 2020, with both EBITDA on rare diseases and specialty and primary care improving versus prior periods. And as we see with rare diseases north of 50%, specialty primary care above 38%. Once again, reflecting reduced spend, particularly in the specialty and primary care side in the first part of the year. Slide 10, looking at our net financial position, as commented by Andrea, very pleased to see continued strong cash flow performance of the group. Increase in net debt of $20 million is after Obviously, payment of 110 million euros in dividends in the half year, $80 million of milestones for its re-approval in US and Europe, and a net 22.5 million euro disbursement for share repurchases in the first half of the year. Cash flow before those effects therefore at 189 million euros, which is very close to 100% of net income, which is in line with guidance that we had given in the three year plan that published mid of 2019. And finally, with cash and short term investments at the end of June, over 200 million euros once again reflecting a very strong financial position of the group. And with that, I will turn back to Andrea to talk about expectations for the remainder of the year.

So if you can please turn to slide 11 of the presentation, full year 2020 outlook. So we expect a gradual return to normal operating conditions in the latter part of the year. And I would say gradual. The impact on Q2 and Q3 revenues driven by the COVID-19 lockdown, as well as a first effect headwind, which are estimated to be around minus two for the full year, lead us to expect our full year 2020 net revenues to be below our original guidance issued in February. Cigna for an Easter Eater reported net revenue is now expected to be around 80 million for the full year. with stronger underlying growth of Signifor and strong initial take-off of Istoriza, U.S. sales more than offsetting the slight delay in EU MA transfer of Signifor from Novartis. The reduced operating expenses due to the reduced field activity offset lower revenues and incremental investments in the U.S. for the Istoriza launch. We need to confirm that EBITDA margin improvement is on track to be able to maintain our EBITDA and adjusted net income targets for the year. Please turn to slide 12 where you can see the actual targets. So we therefore expect to achieve for a full year 2020 revenues of around 1.5 billion euros. And EBITDA, as mentioned before, is the only line with our previous targets between 518 and 590 million. and adjusted net income of between 408 and 418 million, in line again with our previous estimates and thus confirming profit margin growth for this year. This brings us to the end of our presentation, so I think we can move on to the Q&A. I pass the word to Marianne.

Yes, operator, could you please open the Q&A session? Excuse me, this is the Carver School Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. To remove yourself from the question queue, you may press star and 2. We kindly ask you to use handsets while asking questions. Anyone who has a question may press star and 1 at this time. That's star and 1. The first question comes from Nicola Storer from Kepler. Please go ahead.

Yes, good afternoon, everybody. I have two questions. The first one is on Isturiza. How fast should we imagine the ramp-up of this new drug and the peak reached? The second one is we have some rumors, basically, on possible reimbursement cuts in Spain in 2021, and maybe other countries might decide to tighten the belt. given the current situation. So what's your take on the outlook for EU pricing both for Southern Europe and Eastern Europe? Thank you.

Okay. Hi, Anifa. I'll have a first test test. So first of all, in terms of the speed with which you will reach a peak, Andrea did say he will come back with more specifics on that as part of the As far as the update we will provide early in the new year, clearly it expects sort of a faster update as is typically the case in the U.S. relative to Europe where we have to go through the pricing and reimbursement process on a country by country basis. With regards to the cap in Spain and what does that mean in terms of expectations for pricing in Europe, I think we've commented before. I mean, Europe is not new to pricing interventions. There is no sort of clarity as to which way this will play. Yes, we know that there are discussions undergoing in Spain with authorities around the implications for the industry and how the industry can contribute to the current and to the cost of the pandemic. There's positive signs as well. I mean, in Italy, for example, as part of the financial package, more funding has been made available for the health service. As I'm sure you know, pharmaceutical spend is a percentage of that. So if you like, the cap in Italy, if anything, slightly improved at the moment. So I think it's too early to say how this will play out. in Europe with regards to pricing. And it's in any case not something which is new and the companies in our sector and like us have had to sort of deal with this at least over the last decade.

Thank you.

The next question is from Joe Walton from Credit Suisse. Please go ahead.

Thank you. Following on Isterisa, I wonder if you could tell us if there was a significant amount of wholesaler stocking in there, because presumably there was an element of Isterisa revenue within the quarter, if you can tell us how many patients have moved across from your early access programme and how many more patients there are on your early access programme that can move across to give us some sense of how many patients may be on the drug relatively quickly, particularly within Europe. I suspect you're not going to answer this one. It's going to be the longer-term one, but we're just wondering whether you felt that there was any opportunity for significant off-label use in Cushing's syndrome beyond the disease because you explicitly highlighted the expansion of the indication as being upside beyond your 300 to 350 million. My second question is surrounding costs. So you've kept your profit expectations, but you've got lower sales. So inherently, that's slightly higher margin. I wonder if that is a mix and a margin benefit that you can sustain as you go through into 2021, or whether this is just very much a short term function as you have lost some of your lower margin products, but you would expect those to bounce back. So I'm really trying to think about how to look at the margin going into next year. Many thanks.

Thank you. Thank you, Joe, for the questions. So we need to read on that. In terms of wholesalers, there hasn't been any sort of significant pipeline fill yet. in the first month. We were not anticipating that and we haven't seen that. And in terms of patient numbers and rollover of patients, we're not gonna give specific patient numbers but clearly we expect the majority of the patients on our early access programs both in U.S. and in France to roll over to commercial sales, obviously, over the course of this year. In terms of cost, yes, if you look at the – sorry, with regards to the off-label, I mean, clearly, you know, we are not – the reason for clarifying that is that We know that Cushing disease is a subset of Cushing disease. It accounts for 70% to 80% of Cushing syndrome patients. And we just want to be clear that when giving the estimate that we've given, we are referring to those patients that are on label for us. Clearly, I cannot comment on whether or not physicians would be using their discretion on patients that can benefit beyond that. Obviously, we will be looking at the opportunity to extend the label in the US, and we're obviously looking at that to open up that additional patient pool, but that's work in progress, and as we said, we'll provide more color on that in the beginning of next year, so hopefully that gives you a reasonable sense on that. With regards to cost, now clearly, if you take the guidance that we've given for 2020, as you've mentioned, that sort of would point to a unique dollar margin around 39%. You will recall clearly there's a mix in that of two things that we had said at the beginning of the year. We were planning and expecting EBITDA margin improvement in 2020 relative to 2019 and we're on track on that. There's also clearly also a benefit of the lower spend in the first part of the year. Guidance for 2021 that will be updated of course in February. The only thing I will say is you'll recall the guidance was for an EBITDA margin of 38%. We're clearly tracking somewhat better than that, but I'm not gonna be more specific at this point in terms of 2021 expectations.

Maybe I could just ask then whether there are any things that you have learned from how you've moved to promotion with less face-to-face time that you feel will continue and whether there are any elements of lower costs that you will be able to take on through to next year. A number of companies have suggested that allude to e-detailing, telehealth, etc., has lowered their costs and they would expect some of those to remain in the future.

Yeah, possibly, and I think we've commented ourselves to that as well. However, we do strongly believe that face-to-face detailing will remain a key and core part of the promotional mix. It will be enhanced. I'm sure it will be growingly complemented and enhanced by digital. for sure. The area where potentially I could see lasting benefits in terms of cost is to the extent that major gatherings in terms of conferences and events, you know, which still account for a reasonable spend in the sector, where to sort of more permanently turn to digital as people become more used to them.

Thank you. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Casey Arikapla from Goldman Sachs. Please go ahead.

Hello, everyone. Thank you for taking my questions. I have two, please. You talked about potential upside from launching ISTA visa into new territories that is beyond U.S., Japan, and Europe. And you previously talked about China and South Korea as being countries that you're looking at. Can you confirm whether you need additional clinical trials to launch in these countries or will the data from Link 3 and Link 4 be sufficient? That's my first question. The second one, I know it's very early in the launch period in the U.S., but on Ishtariza, are you able to give any insights into where you're getting your patients from? Is that from existing therapies or are these patients dominated from the newly diagnosed category? Thank you.

Okay, so I think in terms of, sorry, on the second part of your question, I think it is very early days, right, in terms of the Teresa launch. First commercial patient was end of May. So I think in terms of starting to elaborate on where those patients are coming from would be very difficult. I think if the question behind the question is whether or not we expect patients patients to come to reach Teresa from new versus switching from existing patients, clearly we'll see a benefit, we see Teresa offering a benefit to both. And so we certainly expect to gain both new patients and the switched patients in a disease where, as I'm sure many of you recognize, many patients today are treated with which were not specifically studied in Cushing's disease. And so clearly we see that with its clinical profile offering a benefit for both. Yes, with regards to your first question around geographical expansion, well, first of all, you've understood correctly. So when we reference that sort of potential upside from new geographies, we mean those where we don't have today an existing footprint. We are evaluating still that the needs for expansion in countries like China. We feel the phase three data that we have may be robust enough, but we're still looking at that. And hopefully that addresses your question.

It does. Thank you.

The next question is from Isako Brambilla from Mediobanca. Please go ahead.

Hi, good afternoon, everybody. I have three questions. The first one is on your profitability in the first half. For sure, this is benefiting from the fact that you're building only margins from Novartis. Can you help us understand how would look like the BDA margin excluding these, let's say, non-recurring benefits? related to Martin's book from Novartis. Second question, again, on profitability. If I take the midpoint of your EBITDA guidance, this implies a 37% EBITDA margin in the second half of the year. What should drive this materially lower profitability in the second half versus profitability recorded in the first half? And then last question, I was curious to understand in your guidance of 1.5 billion euro sales for the full year, which kind of top line trends are you assuming for the third quarter?

Yeah, so thank you. So in terms of profitability, I think certainly clearly the improvement in margins that we see from the growth of the rare disease business, including obviously the additional contribution that we're getting from C4 and that we will have from Mr. Rizat is not more recurring. I mean, it is sort of helping drive part of the overall margins that we are seeing. If you are referring to the small uplift that we may have because for a few months of the year we only record net margin of Singapore as opposed to the sort of full revenue. I actually don't have that off the top of my head, but I assume that's going to be minor, certainly in the sort of full year number, given that the majority of, in fact, the second half sales will effectively all be on a kind of gross basis. In terms of second half of availability and why is it down versus the first half, there's a number of factors, there's a number of factors there. Clearly we're seeing now in the second half, you know, more effects headwinds. Recall we had a relatively benign first quarter when it comes to effects. Unfortunately, you know, part of that was triggered by the COVID crisis as well. That turned against us in Q2, and we expect that to continue, number one. Number two, you know, clearly we do expect revenue in Q3 to still have a drag from the ongoing pandemic. We have assumed only a gradual return to sort of normality as far as the markets are concerned, but our intent is, is to number one, you know, be back in the field and we are pretty much back in the field in all markets now and have been progressively so since June. So effectively what you should think of the second half as a second half which still has some hangover on the top line from the pandemic, but where we're starting to return to fuller operations from an activity. And finally, a number of events, conferences, et cetera, which have been canceled in the first part of the year have been rescheduled for the second. So you also have a shift of activity. So it's a number of factors, but I think as I mentioned in one of my responses earlier, I certainly wouldn't take the second half margins as a projection of the future. And as I said, we're so far tracking on track, in fact, slightly ahead of the margin target that we had set for the business. And third quarter sales, I don't think that we're given a sort of direction and range for full year. We're not gonna try and be precise on Q3. I think there's way too many variables as I'm sure you will appreciate. And so I'm afraid I'm not going to give a response on that one. Sorry, Daco.

Okay, it's very clear. Very thanks.

The next question is a follow-up question from Casey Arikapla from Goldman Sachs. Please go ahead.

Thank you for taking my follow-up question. It's a very quick one. On design interest, you talked about... Headwinds in France, given the country's difference with generic products, is that something that is very specific to Zanypress? Or do you expect that to be much more broad ranging? And should we think about an additional headwind for second half or even in 2021? Thank you.

No, that has been very specific to three products in France. That's where we've seen the impact, and I think I've referenced them. It's Zanypress, Zanydeep, and Wurek. If you like, Zanypress is the one where it's just more noticeable at a total level because on Zanydeep, we have very strong growth in other markets in relatively terms of France is just a smaller percentage of the overall sales of Zanidip. And Eurorack, again, as I said, there is an impact there in France as well, but is offset by us holding up better on market share in a number of other markets to the extent that we still see erosion on Eurorack for the full year in line with the guidance that we had given at the beginning of 2020. And, sorry, I would add, Casey, we did see a drop when the measures came into force. We have implemented a strategy to offset that, which has been to you know, align our price to that of Virgin Eric. France is a very, very big volume market in which we have a relatively small share. And therefore, we do see a big opportunity in volumes. So far, the restrictions have not allowed us to communicate as effectively as we would like to pharmacies and physicians, you know, our positioning also in terms of pricing. And so, Again, we hope that we would be able certainly to stabilize and hopefully, once having taken the hit, to start growing again on the back of growing volumes.

Thank you. The next question is a follow-up question from Joe Walton from Credit Suisse. Please go ahead.

Thank you. Just minor ones, but we're now much closer to the Levasso Our patent's expiring in August. Are you still confident that we should be expecting about a 7 million generic impact from the year? I just don't know whether you've got any visibility as to whether generics will be entering. The second one on pan-hematin, just to understand your level of confidence that the decline in pan-hematin was because of COVID-related inability of patients to come in for infusions rather than them moving to a competitive product. which obviously would presumably accelerate the decline, because if that was the case, then panheumatin wouldn't come back up again. And just for modeling purposes, can you give us an idea of what the amortization charge should be in a quarter going forward? Presumably, the 2Q increase in amortization only captured a small amount of istirisa. I guess we need for our modeling what it will be when you're amortizing both Signifor and Isterisa for a full quarter. Thank you.

Yeah, sure. So quickly, thank you, Joe. Livazo, very much in line with what we originally said. I mean, clearly the product has continued to perform very well in the market. We're still anticipating generics in August and we still estimate roughly a 7 million impact from this year. I'll pick the easier ones first. In terms of amortization, the full charge for the year that we're expecting is around 70 million. I think we may have actually given that when we were giving you the adjusted net income guidance equivalent for 2020. In terms of Panimetin, we believe, so clearly there's two, both effects are playing out. And, you know, we, at the very beginning of Gibnari entry, we saw very limited impact, very limited impact, very much in line with what we were expecting. If you recall, we said we were expecting this year an impact of, and certainly in the early months of high single digit, low double digits. And unfortunately we clearly saw a step up in that as of the moment of it here. And unfortunately from as far as the pandemic franchise is concerned, it couldn't have come at a worse time because we are at a competitive disadvantage with an infusion product competing against one that can be delivered at home. Now, we did see that, and clearly when the hospitals, clinics, and infusion centers started to be locked up, there was an immediate effect. We have started to see patient traffic now adjust and start moving to office-based infusion, hematology, oncology centers, physicians. We have seen the drop stabilize already in June. We are looking at, and obviously clearly we're not just sitting still, we're looking at a number of measures to educate patients, educate physicians. We're looking also at potential home infusion options, but there's still a bit of work to be done there. Clearly it's easier to hold and gain back, but we have seen that erosion stops. Clearly the US is difficult to call now because the COVID pandemic is still playing out. So we still need to see how it evolves. Clearly now we see the impact for the year more likely to be in the high teens, the mid to high teens. So higher than we anticipated, which is unfortunate. But again, we will be working on measures to try and recover that. We still see panimethin having an important role for patients. I think we've said this before. Patients on GIVLARI in the clinical studies still require hemming during acute phase. So we still believe panimethin will be an important therapy for patients and we'll be working to regain the ground that unfortunately we've lost in these few months because of the COVID crisis.

And could I just ask you to clarify, you mentioned that there had been some shortage of generics which had benefited you. Was that, was there a particular drug there, was there a shortage of generic Xanadac or generic Celican, and have you seen those shortages turn around again?

Yeah, I think there's been, it's largely temporary in the acute phase of the pandemic. benefiting somewhat American EDP, the McGovern Law, I think we commented also on the Q1, and American EDP in that we saw particularly strong purchases from Latin America and some of the international markets that we feel may also be benefiting, as I said, from that, but more temporary in nature rather than structural. Thank you.

For any further questions, please press star and 1 on your telephone. Ms. Tatschke, there are no more questions at this time. Okay, thank you. Goodbye to everyone. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.