Recordati Industria Chim

Good afternoon, this is the Chorus Call Conference Operator. Welcome and thank you for joining the Recordati Full Year 2025 Preliminary 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 Miss Eugenia Leeds Investor Relations of Recordati.

Please go ahead, Madam. Thank you, and good afternoon, everyone. I'm pleased to be here today with Rob Cormans, our CEO, and Mike McClellan, our CFO, who will present preliminary results for full year 2025. Scott Pescatore, Executive Vice President of Rare Diseases, will then provide an update on the exciting Isterisa opportunity, as well as the recent deal with Moderna. Also joining for the Q&A session will be Alberto Martinez, Executive Vice President of Specialty and Primary Care, and Milan Droskowitz, Executive Vice President of R&D. As always, the presentation is available in the Investor section of our website. It is now my pleasure to pass the call over to Rob. Please go ahead.

Thank you, Eugenia. And good morning, good afternoon, wherever you are in the world. Thank you for joining us today. We're delighted to share our strong results for the full year of 2025. Last year, we once again delivered on our financial targets, executed across the business, and further strengthened our foundation for continued growth in the years ahead. Starting with net revenue, we reached 2.62 billion, an increase of 11.8% versus last year, or 8.3% like-for-like at constant exchange rates. Growth was driven by the sustained momentum in SPC and an exceptional performance in rare disease. As expected and already guided before, we saw a strong currency impact with minus 2.7% primary due to the US dollar and also the Turkish lira. Turning to profitability, EBITDA came in at 991 million, up 14.5%, sustaining sector-leading margins of 37.8%, thanks to strong operating performance, positive business mix, and very disciplined cost management. Adjusted net income increased 14.5% to 651 million, while net income grew 6.5%, highlighting the underlying strength of our business. With 559 million of free cash flow in 2025, we ended the year with a leverage just below 2.1 times, providing us with a solid financial flexibility. 2025 was also a pivotal year for business development across SPC and rare disease. We signed the VASCEPA licensing agreement with Ameren last June, and in December we further expanded our rare disease footprint in Japan through a regional agreement with Impact Biomedicines, a Bristol-Myers Squibb subsidiary, to commercialize Inredic for myelofibrosis. In January of this year, we entered a global partnership with Moderna for the development and commercialization of mRNA3927 that Scott will allude to a bit further on in the presentation. On the commercial side, we're encouraged by the continued progress of NGMO and the progress and significant opportunity ahead for Istoriza, which Scott will also expand upon shortly. With that, it's now my pleasure to hand over to Mike for his first, basically, performance update on Recordati's behalf and to walk you through full year 25 financial results.

Great. Thanks, Rob. Happy to be here. Starting with rare diseases, we delivered a robust performance in 2025 with strong double-digit growth, up 29.7% year-on-year despite increasing U.S. dollar headwinds. or 16.6% light for light at constant exchange rates. The endocrinology franchise grew 22.5%, driven primarily by Esterisa, which increased almost 30%. This reflects an acceleration of patient uptake in the U.S. in the second half of the year, as well as solid growth across all geographies. Cignafor also delivered good growth of 11.2%, driven by higher volumes across regions. For hemo-oncology, Carciva and Sylvant both grew by double digits, and Njimo achieved a strong performance with sales reaching 146 million euro, representing 26.7% growth versus last year at constant exchange rates, despite a significant adverse FX impact in the U.S. Lastly, it's great to see the metabolic franchise delivering solid mid-single-digit growth in what was an exceptional year driven by panhematin and carboglut. Overall, rare diseases remains a key driver of the group's performance, supported by strong execution, expanding patient access, and continued demand for our therapies across all major markets. Now I'll turn the call over to Scott to elaborate on the exciting ISTERESA opportunity and our new Moderna partnership. Great. Thank you, Mike.

It gives me great pleasure to provide a bit more color on slide five around the performance of ISTERESA in the last quarter of 2025. We continue the strong patient uptake that we saw post the FDA approval of the expanded label in April, and we closed the year with just around 1,400 net active patients on therapy. I think importantly to mention that not only do we see additional patients that are being put on to hysteresis, but also that the patients that we have on therapy continue to up titrate to the appropriate levels to maintain their treatment, which is allowing us to achieve also our financial objectives with the product. Just to provide a little bit more color also on some of the investments that we had mentioned we're making in 2026 to capture the broader Cushing Syndrome market, we are in the process of expanding our field force in the U.S. We're adding additional field personnel on the commercial side, but also, importantly, additional MSLs to support medical education and diagnosis of these non-overt patients, which should be in place by the end of quarter two of this year. We're also working extensively on improving our medical education and plans with CME events and medical congresses to support also the expanded opportunity. We're also continuously improving our high-touch patient services at our specialty pharmacy partner, Inovo. And finally, we're initiating new and innovative digital NIA initiatives that will continue to raise the awareness of patients that are not only suffering from the overt severe hypercortisolemia, but also the non-overt, less severe version of the disease. So if you move to slide six, I'm also very pleased to have the chance to talk to you a little bit about the deal that Rob had mentioned that we closed earlier this year with Moderna to develop and commercialize mRNA-3927 for propionic acidemias. A few words on what propionic acidemias are. They're a very rare inherited metabolic disorder that basically prevents the body from processing and breaking down certain parts of proteins and fatty acids. This leads to a buildup of toxic metabolites and basically allows patients to, particularly neonates, to failure to thrive. They cause seizures and all kinds of of other issues and systematic complications that eventually can lead to death or complications in adulthood. There are no disease-modifying treatment options at the moment, but mRNA-3927, which is an investigational product still, it's aimed at restoring this PCC enzyme activity in patients with propionic acidemias. We're excited about this deal because it fully complements our existing rare disease metabolic portfolio. As many of you know, we have Carboglu that we've had in the market for many, many years now. And this is certainly an innovative new approach to treating these patients that builds on our legacy in rare diseases with the specialists treating these metabolic disorders. We expect that the patient enrollment for the ongoing clinical trial to read out by the end of this year. And you can see a bit of the deal terms on the slide. We paid an upfront of $50 million with some additional near-term milestones that total to about $110 million. And I think important to mention that we don't expect any significant impact on Arbitra prior to the potential launch of this product. As we know, Moderna will continue to lead the development of mRNA-3927 and, if approved, will then be the commercial stewards for this product moving forward.

So with that, I'll hand it back over to Mike for the rest of the presentation. Great. Thanks, Scott. Turning to slide seven, especially in primary care, we delivered resilient growth of 3.8% at constant exchange rates, excluding Vescapa. This result was driven by the continued strong performance of our promoted portfolio compared to the reference markets across most countries. Importantly, this momentum held despite a softer cough and cold season in key markets such as Russia and Italy, as well as a broader slowdown in reference market growth. Shifting to Turkey, we're very pleased that we secured a 17% price increase at the start of 2026, as the last increase was in Q4 2024. Broadly speaking, I'm encouraged by the performance of many of our prescription and OTC products across therapeutic areas, Both the urology and cardiovascular franchises delivered stable growth, while gastrointestinal franchise achieved high single-digit growth. Meanwhile, Veskepa continues to track fully in line with expectations, reaching 9 million in sales in 2025. Taken together, these results highlight the strength, resilience, and diversification of the franchise. Our promoted brands continue to be the primary engine of growth, demonstrating the effectiveness of our commercial execution and market strategy. If we go to slide eight, looking at the revenue by geography, it's nice to see that overall there was growth across most of the regions, with a few expected headwinds in Italy and Turkey. The U.S. grew almost 32%, driven by the histories of ramp-up and NGIMO, and in local currency grew even higher at 38% versus the previous year. There was a solid growth across European countries with the exception of Italy, which was impacted by several factors, including a softer growth in the reference markets. Strong growth in Russia and Central and Eastern Europe were driven by both volume and select price increases. Turkey continues to deliver strong volume growth. However, the full year 2025 performance reflects less impact of the late price increase as compared to the significant currency devaluation during the year. In local currency, revenue grew 28%, confirming the operational performance remains strong. Finally, strong growth of international markets reflects the continued broad-based expansion of our portfolio globally. We move on to slide nine. On the P&L, we're pleased to report double-digit growth across net revenue, EBITDA, and adjusted net income. If we look down the P&L at the increases in operating expenses, SG&A increase is the investments to support ISTERISA and the integration of NGIMO. R&D is mainly driven by the amortization of NGIMO, as well as medical investments in the rare disease businesses. And other expenses are mainly driven by a one-off expense related to Eurorack, costs for optimizing our commercial organization SPC, and a minor Q4 impact from the liquidation of our rare disease subsidiary in China, following the denial of Is Teresa's inclusion in the national reimbursement drug list. Importantly, our EBITDA margin reached 37.8%, driven by strong operating performance across both business units and despite significant foreign exchange headwinds. Overall, we're very pleased with this year's financial performance and with our continued track record of consistently delivering on our targets. Now, if we turn to cash flow, we delivered another strong year of cash generation with free cash flow of $559 million, up $24 million versus last year. This was driven by solid EBITDA performance, but partially offset by an intentional increase in working capital to continue building U.S. inventory. With this effort, we are now covered for the majority of 2026 sales, and with the uncertainty around potential tariff implementation, we are proactively securing additional stock there. We close the year with leverage just below 2.1 times net debt to EBITDA, reflecting both the increased inventory levels and the continued share repurchase activity during the year. So if we now move on to slide 11, our guidance for 2026, We expect revenue in the range of $2.73 billion to $2.8 billion. For rare diseases, we expect high teen organic growth at constant exchange rate, driven primarily by the continued acceleration of hysteries of patient uptake in the U.S., but also by continued strong performance of other key growth drivers in endocrinology and hemo-oncology. For SPC, we expect low single-digit organic growth at constant exchange rates, reflecting some of the one-off headwinds. The fundamentals of the business remain strong, and we are confident to return to mid-single-digit growth at constant exchange rates in 2027. We note that our net revenue guidance is significantly affected by the projected FX rates. We are estimating an approximately negative 3.5% impact, driven mostly by the U.S. dollar, given the external bank consensus view of an average of around 120 U.S. dollar to the Euro for 2026. For EBITDA, we expect a range of $995 million to $1.3 billion, including the investments behind the ISTERISA opportunity in the U.S. and the FX headwinds of around 4%. This still leaves us with sector-leading margins of approximately 36.5% for the year. And for adjusted net income, we expect a range of $655 million to $685 million with a margin of approximately 24%. For 2027, our targets remain unchanged with strong organic growth expected to be complemented by ongoing BD and M&A despite facing currency headwinds. And with that, I will turn the call back over to Rob for some closing remarks.

Thanks, Mike. So to summarize, our equity story remains clear and unchanged, and I believe we are exceptionally well positioned for continued success. First, we continue to drive strong organic growth across our diversified portfolio with excellent momentum in rare disease and a solid contribution from specialty and primary care to our growth. We consistently deliver sector-leading profitability, maintaining both high margins and a very disciplined cost management across the business. We are focused on pursuing targeted pipeline opportunities, advancing lifecycle management programs and strengthening our R&D engine, but also delivering meaningful innovation in areas where we can lead. And then we have a very disciplined capital allocation framework that remains unchanged. This includes progressive dividend policy and the financial flexibility to pursue selective, bold-on M&A while maintaining balance sheet strength. M&A remains crucial to what we have been doing and will continue to be important in 26. Underlying all of this is a business that generates strong and reliable cash flow. This gives us the strategic flexibility and positions us well to capture future opportunities. And then finally, as this year we mark our 100th anniversary, we are extremely proud of the heritage and strength of our business. This milestone reflects a century of consistent execution, a resilient business model, and strong relationships with the medical community. Looking ahead, we will continue to build upon our solid foundation of delivering disciplined growth and achieving operational excellence to support the next 100 years of growth and success. Together as a team, we're very happy to take your questions.

This is the Coruscall conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star First question is from Sophia Graf Bull-Nielsen, J.P. Morgan.

Good afternoon, thanks for taking my questions. Firstly, just on Esteriza, could you give any further colour on the proportion of patient ads you're seeing coming specifically from Cushing syndrome following the label expansion, particularly what proportion might already be coming from that non-overt patient population and how you expect this mix to develop in 2026 and beyond? And then I think we're also awaiting your go-no-go decision for NGIMO in ITP by the end of this quarter. Maybe you could give us some insight into your latest considerations on this and what would be the next steps and timelines in the event of a positive decision.

Hi, Sophia. Scott Pescatori. I'm happy to take the question on Ms. Teresa. So it's a very important question, and I'm glad that you asked it because the market split is still heavily weighted towards the overt population. And this is something that, you know, as much as we talk about the opportunity in non-overt, that's an opportunity that the market is still in its immature phase and needs development and focus. So the majority of our patients that we'll see this year and into the foreseeable future will come from the overt split. If your question is around the difference between Cushing's disease and Cushing's syndrome patients, I mean, we have a majority of the patients that are Cushing's syndrome patients post the label update that we had in April last year. But we're seeing more and more non-overt patients that are coming on therapy post the label update. And the split is somewhere around 80-20, 15-85 percent. So, it's a majority of them are the non-overt patients versus the overt. As you had asked, you know, that population will continue to evolve, and certainly that split will continue to grow more in favor of the non-overpopulation as that patient pool population grows. It's heavily dependent upon the factors that I mentioned in the investment that we're making, of course, the education, the diagnosis, the awareness of these patients, the benefits of treatment, and then, of course, the referrals of getting them into the endocrinologist. I'll take a bit of time, but that will be the evolution of the market over time.

So I'll try to answer your question around ITP. So the basis for the ITP discussion that we are having is, you can say, very, very strong phase one data in highly treatment-resistant patients. where we saw very strong response rates also on platelet counts with, you can say, an ability to address a potentially very significant unmet medical need. On the strength of those data, in addition to, you can say, the already existing experience within the CAT indication, we had a very encouraging meeting with the FDA, essentially being able to agree on a single phase three trial to potentially allow for a registration pathway. Now, we're putting the last hands, you can say, on the business case, and on the strength of that, we will take a decision in Q1, which we are well on track to delivering on.

Thanks very much.

Next question is from Sian Hammer, Jefferies.

Hi, thank you so much for taking my questions. Just two from me, please. Could you perhaps speak to the main pushes and pulls of the guide as in what factors could drive you more towards the lower end and the higher end of the REVs and EBITDA ranges? That's my first question. And then my second question is for Cignaforum PBH, how easy or difficult is it to penetrate this patient population, particularly given there are currently no approved treatments to my knowledge? Thank you.

Yeah, thanks, John. So I'll take the first one on pushes and pulls. So, of course, in revenue, we need to ramp up as Teresa. That will be one of the things that we'll be looking at very closely. We also have currency impacts. We've tried to model what we think is a reasonable consensus. But, you know, last year we saw that that can go one way or the other. In terms of the EBITDA, it's really going to be around that mix between rare disease and SPC. So the strength of those two businesses are slightly different in margin. So depending on which one is doing better or less well, that will affect the mix. And of course, you know, we can always potentially add M&A if something comes along. We are looking at different opportunities, but too early to put anything in the mix there.

And then maybe I'll start on the Cignafor PBH question and then hand over to Milan for additional commentary. I mean, this is a market that there's clearly an unmet need for treatment of patients that are coming out of bariatric surgery that have hypoglycemia. A large majority of those patients that have bariatric surgery suffer from hypoglycemia. We know that we have some existing data in this space, and as you know, we're working on the phase two at the moment. But this market continues to evolve. Patients that are going into bariatric surgery continues to rise. We're targeting countries that have the highest rates of bariatric surgery, which would be the U.S., which would be Brazil, which would be some countries in Europe like Germany. And this market, we still have a tremendous amount of potential there. Now, the guidance that we've already given, I think, several calls ago, which is about 150 million peak year for the PBH indication, we still believe in that market space as we continue to develop the trials. Maybe I'll hand over to Milan for additional insights. Thank you.

Yeah, no, I think it's clear that the obesity market has been evolving. I think there is, to Scott's point, a very significant unmet medical need in patients that develop hypoglycemia after bariatric surgery. We are focusing on the more severe forms of hypoglycemia, so-called level 2 and level 3. I think we have seen encouraging enrollment into our clinical trial once we got it going. So, and I think one way or the other, I guess, the interesting aspect here is that you somehow need to start with those that have had bariatric surgery and you don't need, you can say, to carpet canvas everyone. So, I think we're encouraged by this opportunity. We look forward to seeing the phase two data and the strength of that will take a decision. But we're very much driven by the unmet need in this disease.

Thanks very much.

Next question is from Nicola Stora, Kepler Sugar.

Good afternoon, everyone. Thanks for taking my three questions. The first one is on historisa. We have had the news of potentially competing drug being knocked out by the FDA. So how has this changed your assessment on this series of opportunities in the U.S.? ? The second one is again on Isturiz and China. I guess this is not moving much the needle in terms of targets. Can you confirm that? And the last one is about the agreement with Moderna. If you can share more colors in particular about the role that you are going to play from now up to the approval of this new drug. also if you can give us some insights about expected peak sales and margins thereafter. Thank you.

Thanks for your three questions, Nicodò. I'll ask Scott afterwards to give a little bit more color But on your question on China, following the decision of the lack of national reimbursement in China, we didn't see the right conditions going there to pursue and continue to, in essence, invest in a market with very little expectancy of a good return. We continue to help Chinese patients and want to help patients anywhere in the world. uh but financially and business-wise this was for us not uh the right thing to continue to invest where we have this big opportunity for historyza in in the us where we are really putting our investments behind and yes you're right to assume that the 1.2 billion peak year sales did already include the fact that we would not be commercializing in china so it doesn't alter our outlook there um On Moderna, we are very happy with this deal and I think also in a way that we negotiated it so that Moderna will continue to do the clinical development and bring this product if the clinical trial phase 3 is where the data are expected end of this year. If the results are positive, we would continue to pursue registration for this product initially in the US. but also globally remains really an important product and then we would do the global commercialization which means that for in terms of impacts on the EBITDAF for instance in 26 we expect basically none and it should really help us to start generating if successful and the data are positive revenues from early 28 onwards. So that's something that we're excited about. There's a huge unmet medical needs and we're well positioned, have field force in in the market and know this place really well so we see it as a fantastic strategic fit and an important partnership with a company like Moderna where we are quite proud to be able to take these products if successful in clinical development to market. Right so maybe Scott you want to give a little bit of extra color also on this Teresa?

sure no thanks rob so um you know i can't comment directly on on what core step strategy is post the the crl but what i can tell you is is that our our own strategy uh we're very confident in the strategy we're very confident in the numbers that we um we already communicated um we already see that in the uptake and some of the commentary we already made around the not overt segment, we're also confident that that market is still a market where there's tremendous opportunity moving forward. We had many conversations with external physicians around this opportunity post the CRL, and they remain very, very bullish in their approach to this, and they see a lot of benefit for the use of this to reason non-avoid patients. Certainly, we need to continue to educate and develop that market, as I had mentioned, but we remain very confident and positive towards the strategy that we have in place, the investments that we're making, and our peak year guidance. I think, if anything, on the back of the CRO, we see positive benefit to that, but nothing that would allow us to change our guidance at this point.

Thank you.

Next question is from Charles Pitman King, Barclays.

Questions. Firstly, just coming back on the mRNA-3927, just wondering if I could push you a little bit more, giving us a few more steering points on how large you think this asset could be. I mean, you kind of highlighted it's huge on medical need, but what are you assuming the addressable patient population is as far as kind of the modelling that we should be looking at for this asset? And then just secondly on Isterisa, I'm just wondering if you'd give us a bit more detail on the titration that you're seeing in the market. I mean, what level are patients typically reaching on average within that kind of two to seven mig range? Or how many patients are you seeing titrate to higher levels than that? And how long is it typically taking them? Maybe if I could just sneak in a little third one. For Turkey, you can imagine the slightly later pricing negotiation coming in January this year. Are you expecting a further price negotiation in 26 for Turkey?

Alberto, you might want to comment on Vaskepa and also Turkey?

Sorry, on Turkey, I mean, it's essentially not a price negotiation. It's the Ministry of Health granting price increases for all companies. As you probably know, during 2025, There were no price increases in Turkey and that has led to our Turkish business in SBC to decline in Euros despite relevant volume growth of 10% last year. And we saw a decision from the health authorities to increase prices on an average of 17% in January. And we are waiting to see whether there would be further increases, but this is not confirmed at this stage. We certainly lobby with all other pharmaceutical industries in the country, but that is not within our control. I didn't get the question on Basquepa. There wasn't a question on Basquepa. It was on East Orissa, as far as I know.

Hi, Charles and Scott. Maybe I can provide a bit more color on the dosing strategy for ischias. It's a little bit hard, tough to, you know, tell you on average how the patients titrate. But what we know that in the U.S., I mean, they follow the label, which is to start at two milligrams per day and then dose titrate, if appropriate, every two weeks thereafter. So what we're seeing now is our patients that have been on the product for, you know, quite some time that continue to dose titrate up to, to levels that we're seeing now on average with the overt population in the six milligram per day range. As we mentioned in the previous call around the peak year guidance, for the non-overt population that there's a much lower dose needed for those patients and they start at a lower dose and then the titration period takes a bit longer there. So, you see a slightly lower value of those patients in the short term, but more of them in the longer term. So, that's why it's a bit of a mix that you'll see moving forward in terms of net patient uptake and in terms of the value of those patients. I think one of the other points was around, you know, how many high-dose patients we have. I mean, that's something I can't comment specifically on the number of high-dose patients that we have, but we typically carry about A fairly decent number of higher dose patients, which are those we consider high dose to be more than 20 milligrams per day. But again, those patients are usually much more fragile, tend to be much more severe disease, and don't tend to stay on product as long as the less severe patients do. On Moderna, so just to give you a bit more color, I mean, you know, we can't provide, you know, again, we can see our sales at the moment, but we can tell you that this is a very, very rare disease. And the ratio of patients in the U.S. is about 0.5 to 1 for 100,000. So you can tell that, you know, there's very few patients there that have this. It's akin to our CarboBlue business that we've seen. And it's a little bit also hard for us to comment specifically on where we see the peak here at the moment because, A, we don't have the data, and, B, we have to go through the pricing negotiation both in the U.S. and ex-U.S. And before we know specifically what the pricing is, it's a bit hard for us to comment on exactly where we see the peak here at this point.

Thanks very much.

Next question is from Martino D'Ambrogi, Equita.

Thank you. Good afternoon, everybody. The first question is on 27 targets that you are confirming. Very straight question. Are they achievable under the current perimeter and the current Forex environment, at least at the low end? And if I understand correctly, no Moderna impact positive or probably negative in case of costs included in 2027 figures. This is my first question.

Hi Martino, yeah. We have a very good momentum and what we didn't, when we shared the 27 targets in April of last year, we didn't yet factor in any uptake on the increased opportunity in specifically history in the US with the increased label to pushing syndrome. We see very good traction there and we will definitely We expect that in 27 we will end at a very high end or above the targets for the endocrinology with this. So we're in a good position to deliver on our 27. Of course, it's very difficult to predict what the currency will be, but from our current in-market performance and momentum across the business, we feel that they'll be very well on our way to achieve on the 27 targets. These targets did factor in a little bit of BD and we're also very actively pursuing a number of opportunities there. But the organic momentum behind it is actually even a bit better than what we would have expected when we shared it. Currency is not within our control and what we also, just to remind you, for the 27 targets we also explicitly in April of last year made it clear that we did not factor in anything like your most favorite nation pricing or tariffs as those things were and remain unclear frankly for the US. Moderna will not impact 27, you're right, so I can confirm that.

Okay, thank you. And the second question is specifically on price assumption in your guidance. Because I clearly understand Turkey is unpredictable, but there is a delayed possibility to revise upward prices. But specifically for the U.S., are you implementing any price adjustment or any strategy in order to offset the devaluation of the dollar?

Well, we definitely continue to look at opportunities in the US in terms of pricing, monitoring what our competitors are doing and making sure that our products are not only the right medical solution, but also economically attractive, but continue to also be fair priced right so that's what we monitor and we keep doing that so it's something that whenever feasible possible and needed we and we feel that it's a responsible thing to do we adjust our prices to you can do that without any implications on additional discounts in terms of gross to net as long as you stay in the inflation range basically and sometimes we do it beyond As a rule, we have not been the most aggressive pricing company in the market. As a rule, we've been known to bring fantastic quality products for a fair price and that's not something I want to change in this current environment. But we look at every opportunity and be guided more by what the market is showing us and competitors are doing and the need than anything else.

Okay, so overall there is a positive impact in any case on prices specifically for the U.S. market?

No, the currency impact will probably be greater than the net price impact we'll get in the U.S. So, I mean, we're talking about 3.5% on top of the currency and a big chunk of that's coming out of the U.S. And in our U.S. business, we won't be able to fully offset that with pricing.

Okay, thank you. And very last on Isturiza, am I right in modeling Isturiza this year up at least 80, 90 million euro in terms of sales?

We have not been given this sort of... I think we share your optimism, but I'm not going to specify any number. There are competitive reasons not to do this, but Estreza is performing extremely well, very happy with the momentum, and that's as far as I can go. Sorry for that, Martino.

No, no. Thank you. Thank you, Rob.

Next question is from Natalia Webster, RBC.

Hi, thanks for taking my questions. First question on specialty and primary care. You talk about continued decline in reference markets. Are you able to provide a bit more color on the market outlook and how you expect this to progress into 2026 and over the midterm? And also specifically if you're expecting further headwinds from cough and cold into Q1? And then any color around what you see as the key drivers behind the return from low single digits to mid single digits sales growth in 2027 would be helpful. Secondly, just on 2026 costs, I appreciate that your margin guide reflects additional histories, investments, but are you able to talk more around the efficiency initiatives that you're expecting to contribute to next year? Thank you.

Sorry, Natalia. Acoustically, it's very difficult to completely, so I'll ask Alberto to answer, but maybe also if it's not exactly the question you've been asking, please let us know, because it's been difficult to hear you very well.

Thank you, Natalia. This is Alberto from SPC. I mean, I understand that you ask about the reference markets and our ability to get back to mid-single-digit growth in 2027. What I can reassure you is about the strong in-market performance across our core therapeutic areas. We see a strong in-market performance in neurology and in cardiology. Yes, there might be some temporary headwinds, sometimes one-off, sometimes more sustained, either on Forex or on stocks, but clearly we see a resilience performance that should enable us to get back close to that mid single digit performance in 2027. You also mentioned about cough and cold. Cough and cold, we are particularly exposed in certain markets. It's not all over SBC. It's mostly concentrated in countries like Russia, where the seasonality has been less than in prior years and we are seeing also not very strong seasonality early in 2026. But we are confident that the decline that we saw sustained through 2025 will stabilise more into 2026. And then the last question, I think, or the beginning was around the reference markets. As I mentioned before, we focus very much on our promoted portfolio and we see there a strong performance, but what we have noted is a certain slowdown in the markets over the past couple of years after COVID rebound, moving more from five to six percent growth to more like three to four percent growth of the reference market. We are still expecting to be able to outperform or be somewhere as a total portfolio in line with that. And we're also seeing that late in 2025, there was some recovery of this slowdown. This is more pronounced in certain markets that a slowdown of the growth like Italy or France, But overall, let's say it's resilient, but that obviously is in our large and complex portfolio, the influence of the market, the acceleration is still relevant and noticeable. Hopefully that answers your questions.

And I'll take the 2026 efficiency. We will see the increased investment behind Ms. Teresa. We'll also see, of course, inflation hitting many of the other line items and labor cost increases. But some of that will be offset by the efficiencies and the optimizations we've done in SPC and other places. So not the full amount of the new investments all hits the bottom line. But we do have, of course, increased distribution costs because of the growing sales and some other things. So overall, that's all factored into the guidance.

Great, that's very helpful.

Thank you. Next question is from Isacco Brambilla, Mediobanca.

Hi, good afternoon everybody. Thanks for taking my questions and for the efforts in providing a high degree of granularity in your 2026 outlook. This is much appreciated. I have two follow-ups on the building blocks of Margin Outlook. How do you see gross margin evolving directionally speaking in 2026? I mean rare diseases are visibly outperforming but we are still running with gross margin below 2022-2023 and this is a bit counterintuitive. Second question, again on cost, should we think these 13% R&D on sales as the new normal for Recordati or should we look at this at a sort of peak level, at least in terms of incidence of revenues?

Thanks for the question, Zizeko. Maybe start with the R&D expenditure. So we really invest behind opportunities and when the opportunities are there and they make business sense and we also strive to maintain our high margins overall as a company, right? And when the risk is right, we will invest. So I don't think we put ourselves a target, if you like. We will never go above 5 or 7 or whatever percent. But you've seen that In terms of percentage, we've actually not been increasing our R&D expenses over the last year as much. In absolute terms, yes, but also on the back of a strongly growing business per se in terms of net revenue. And we continue to be committed to do targeted investments that generate value for patients and for us. And we will not start to do discovery or very high-risk R&D. So I think that what we currently have is... is a good reference. But let's also not forget that we have a little bit of an impact on the cost side and that helps in that sense from the currency. So I don't know how the currency will evolve in 27 and the years going forward. I don't want to predict that. But I hope that answers your question.

Let me take the gross margin. The gross margin, I would expect it to be relatively similar to 2025. We do have growing rare disease business, but that's the one getting hit by currency. So all those things will factor into a gross margin percentage around the same level. And just to go back on R&D, just remember that a big chunk of what we see in that R&D line is actually amortization of intangibles. The actual cash end is around 8%, and that's been relatively stable. It's been ticking up a little bit, but that's not been the real growth. If you look at the real growth from 24 to 25, It's the amortization of the NJMO intangibles. So it's really a non-cash charge. That will remain constant from 25 to 26. So hopefully that helps you with what you're looking at.

Very helpful. Very thanks.

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If there are no further questions, I would like to thank everyone for joining on our call. As you can hear, we are enthusiastic about what we've achieved and proud of our achievements in 2025. We have a really nice momentum going into 2026 with exciting opportunities in both businesses, but extremely clear on the Istoriza side. in the rare disease we're well on track to deliver for our targets for this year and for next year and continue to be focused on delivering profitable growth so look forward to interacting with you on our next call thank you all and have a wonderful day ladies and gentlemen thank you for joining the conference is now over you may disconnect your telephones