Roche Holding AG

Ladies and gentlemen, welcome to Vogue's full year results webinar 2023. My name is Henrik and I'm the technical operator for today's call. Kindly note that the webinar is being recorded. I would like to inform you that all participants are in listen-only mode during the call. After the presentation, there will be a question and answer session. You are invited to send in questions for this throughout the entire session using the Q&A functionality of Zoom. In addition to that, you may also raise your virtual hand to address your questions verbally. For participants joining via phone, to raise your hand, use star nine on your phone's dial pad. When you then get selected to ask your questions, please follow the instructions from the phone and press star six to unmute yourself. One last remark. If you would like to follow the presented slides on your desk wall, please feel free to go to roche.com slash investors to download the presentation. At this time, it's our pleasure to introduce you to Thomas Schieneker, CEO of Roche Group. Mr. Schieneker, the stage is yours.

Thank you very much. Hello and welcome. And I look forward to sharing our full year 2023 results with you. In 2023, we managed to exceed our guidance. As you see on the right hand side, the group sales growth increased by 1% in constant exchange rates. And this is despite significant headwinds from COVID-19 and also by a similar erosion. In total, headwinds of about 6.4 billion or more than 10% of our sales. And we managed to grow through that. As the headwinds will become less for us in 2024, and we have a strong underlying business, this underlying business will shine through in 2024. And you will see in the guidance, we do expect good growth for 2024. Core EPS, we also exceeded our guidance by reaching 6% growth at constant exchange rates. Now, we had a one-time positive effect due to the resolution of a tax dispute. And even without this effect, we grew our core EPS in line with our group sales at 1%, again, exceeding our guidance. And with that, we managed to further increase our dividends to 9 Swiss franc 60. So overall, I mentioned a strong growth of 1% that is really supported by a very strong base business growth of 8%. The base business growth is excluding COVID-19. Pharma grew a strong 9% and diagnostic at 7% in the base business. We had the expected COVID-19 sales decline of 4.3 billion Swiss franc and AHRNR of 1.1. On top of that, we had to compensate for decline in Lucentis and Esprit as well due to biosimilar and genetics erosion, really showing that the strong underlying business made us grow this year despite these headwinds. The co-operating margin stable, core EPS plus 6%, operating free cash flow plus 4%, all at constant exchange rates. We've achieved a number of very important key milestones in Q4. The approval of Babaismo in RVO and Thesentric as sub-cuts. The US Priority Review granted for Xolia in food allergy. We've had a number of positive phase three readouts. One that I would like to highlight is the readout for enamelisib that Theresa will also cover. Really fantastic results, and this means we're going to launch this medicine hopefully already this year. We've also had very good results in Xolair in food allergy. We've had a number of launches on the diagnostic side, but also a number of deals for Pharma, Televent, the anti-TL1A, Kamot, the dual GLP-1 GAPs, and Lumira DX, really a revolutionary point-of-care technology. You have significant news flow in 2024. On the diagnostic side, let me say with mass spec, with the AccuCheck SmartGuide, the CGM, C703, updates to COBUS 6800, 8800, COBUS Pro serology solution, et cetera. We will have the biggest launch year for diagnostics in the history of this division. On the pharma side, we have a number of phase three readouts. Let me call out specifically, Gazeiva in nuplus nephritis. But also we have a number of phase three enabling readouts. We have in total 12 NMEs. that could potentially transition into a phase three during this year. Now again, let me highlight on this slide the strong achievements of the organization, growing 1% at constant exchange rates. If we exclude COVID-19, you see the strong 8% growth. On this slide, you see the different movements of the sales lines. The diet-based business is growing 1 billion. There are actually not that many diagnostics companies that are even the size of 1 billion, and we add that every year. And that's the underlying base business growth of 7%. You see the expected COVID-19 impact. And as I mentioned before, this impact will be easing. We have a strong growth of our new portfolio in pharma. and we have the expected impact in RONAPRIV and AHNR. And here you also see the appreciation of the Swiss francs versus other currencies that specifically in Q4 accelerated. What I also wanted to show is how the quarters have developed over the last couple of years. In Q4 2023, you see 0% growth, but this is due to the COVID effect in Japan of about 1.2 billion. Without this, the group grew 8% also in the fourth quarter. So again, very strong underlying growth of the base business. What I also wanted to show, and you see that in the blue boxes, how the base business, so the business excluding COVID, this is what's going to carry us forwards, has developed over the recent years. And you see a massive acceleration from 2022 to 2023 in our base business, growing from 3% in 22 to 8% in 23. So strong delivery in our commercial organizations with a good portfolio. Here again, you see the base business development both in pharma and diagnostics. On the diagnostic side, we have again achieved 7% growth in the base business, the same as the previous two years. So we've consistently grown in the high single digits for the diagnostics business. On the pharma side, we've seen really the acceleration from 2% growth in the base business in 22 to 9% growth in 23. And what I can say is also when we look at the guidance, we see a strong continued trend also into 24. The key growth drivers of the portfolio are in diagnostics. We see very strong growth in core lab, in pathology, but also in the molecular lab. In ophthalmology, Vabaismo now reached 2.4 billion Swiss francs. Fesco reached 1.1 billion Swiss francs. Hemlibra has reached 40% patient share in the US and the EU5. And PolyV is becoming the new standard of care in first-line DLBCL. And we've had strong launches with ColumV and Lunsumio in third-line DLBCL and follicular lymphoma. Ocrevus is the number one globally with 24% market share. And Evristi is the number one globally in patient share. So you see a strong portfolio throughout the different disease areas. Now, beyond the portfolio, we've made significant progress in terms of strategic and organizational development in 2023. And I will not go through everything, but let me give you some highlights. On a digital health strategy, we have focused our efforts in certain areas. We have decided to go for one technology platform across the group and one center of excellence for digital product development. On the disease area strategy, specifically cardiovascular and neurology, we defined the strategies and we moved forward. On R&D excellence, we've done a productivity analysis and we've seen that there are areas where we are best in the industry, but there are also areas where we can be better. And we set goals to be in the top in all of those measures. We've also set the goal to have 80% of our portfolio either best in disease or first in class. And we are working towards that goal. We're investing in the latest technologies, AI, ML, but also large language models. And we are really accelerating promising projects, going through prioritization of a portfolio, Deprioritizing projects that are not as promising and moving those efforts into the most promising projects. And we've seen a couple of effects already. Inevalicip, which was supposed to read out in 2024, came in early because of these efforts. Trontinumab was accelerated because of these efforts. So you've seen that we have done a lot to really move our portfolio ahead. We also looked at our operating model to simplify, clarify, and align structures and processes and technologies to get rid of duplications in our organization, to make fit-for-purpose right processes, slim processes to accelerate everything that we're doing, and also to set standards around technology. And some of these things you can see with diagnostics and diabetes care integration or the integration of FMI into diagnostics. On the people and culture side, we've made significant progress as well. Not only do we have a new corporate executive committee, but we also have gender parity now in the corporate executive committee. And we're working on culture. We have a really high engagement from our employees and very good culture scores. We're working on having more debate leading to better and faster decisions by our empowered people and really an excellence to deliver ambitious goals. So we're setting very ambitious goals across the organization to be able to deliver those. It will be very important to build on that with our people. Now, what you can already see, and we already did that in Q3. In Q3, we have already de-prioritized three enemies. In Q4, you see we have deprioritized another eight. And we're shifting the resources to projects that we want to accelerate. You will see a similar number in Q1. So really making sure that we put our efforts behind those projects that are most promising, really working towards achieving a portfolio that not only has the most enemies in the industry, but 80% of those enemies either best in disease or first in class. And one way we built that is also through bringing in external innovation. Televent, this being one of them, Theresa will comment on it. Alnylam in hypertension, Comets, again, Theresa will comment on that. We've done deals around ADCs, RNA therapies, molecular glue degraders, and also generative AI together with NVIDIA. We've done a very interesting deal which is now at this stage a definitive merger agreement. The closing will be later this year around point of care, where you can do multiple modalities on one single platform and where we have a very strong and very good cost position. So you see we're building and accelerating our pipeline through our internal efforts and complementing that with our external efforts. Also on the ESG side, we have made significant steps ahead. On the Dow Jones Sustainability Index, we were not only number three, we were also number two with Shugai. So we have two of the top three positions in the Dow Jones Sustainability Index. In reducing the scope one and two in the greenhouse gas emissions, we've managed to reduce 79% since 2004. We've also made progress in our portfolio and the contributions that we do there with HPV molecular testing and a novel antibiotic class that was developed and discovered by our researchers. Now, let me take you through what 2024 will look like. First, We have a young portfolio. We've been launching about two medicines every year for the last 10 years. We're going to launch another two medicines this year. Crovalimab for a certain type of disorder where red blood cells are attacked by the immune system. This medicine has potential also in other diseases. It never listed where we just got the data end of last year. And it was very promising to a point where we do believe that we can actually bring this to market already this year. And you see that this young portfolio will continue to drive growth in the next years. And on top of that, the headwinds are becoming less. The last time where we really have a major impact from COVID-19 will be in Q1. In 2023, we had an impact of 4.3 billion. This impact is going down to 1.1 billion. In 2023, if you look at biosimilar erosion and you take everything together beyond even AHNR, we had an impact of 2.1 billion. This is coming down to 1.6. So you see the overall headwinds is coming from 6.4 to roughly 2.7 billion. And with the strong momentum in our underlying business, this will shine through and help us grow in the mid single digit range in 2024. On top of that, we have a number of things in the pipeline that will continue to drive growth in the outer years. And let me start with diagnostics. MassBac, Cobus Pro serology solution, blood screening in the US, Cobus C703 ISE, our Alzheimer panel for Alexis, the Cobus 6800, 8800 version 2 molecular diagnostics, next generation sequencing, Continuous glucose monitoring. We are on fire when it comes to launches in diagnostics. We have the best launch year in the history of this division. On the pharma side, and I'm just showing you some of the assets that have significant opportunity for growth. And most of those are not even covered in any of the models out there today. And we have significant readouts in 2024. Many readouts, phase three readouts will be in 2025, such as Astigolimab, such as Fenabrutinib, Geodestrin and others. But there are 12 enemies that could transition this year into phase threes. So we have a strong pipeline also on the pharma side that can drive and will drive growth in the other years. We will not need everything to work, but all of those are significant additional market opportunities, and most of them not included in any of the models. So again, looking at 2024, we see a strong base business growth in 23.8%. We do believe that our base business will continue to do well. The headwinds are becoming less, significantly less. And with that, we believe that group sales will grow in the mid single digit range. For the 24 guidance, core EPS will then grow broadly in line with sales growth. Now, this is excluding this impact from the resolution of tax disputes in 2023. You've seen that on the 23 slides. I mentioned we grew 1% and core EPS 1% excluding this effect. So, we're excluding the effect in both cases. So, you see that we're continuously... We are continuously delivering on keeping the margins stable. And this will actually mean that from an operating cost perspective, we'll need to be very disciplined because we will need to grow operating profit in a high single digit range to get the core EPS in line with sales growth. But I know Alan will cover more of that. For the dividend, we want to further increase the dividend in Swiss francs. Thank you. And with that, I hand over to Alan. Yeah, thanks, Thomas.

Lots of good remarks. I have now to do something first, which I'm not so used to normally. I have to do a little bit of advertising. But it ties very well in what you have said, Thomas, because we would like to deliver even more information to the opportunities that you've talked about in 2024. So we have a neurology update from an investor relations point of view at March 11th, where we have Levitis, we have Trantinamab, and we have Pratenetumab. So in Parkinson's disease, we'll have an update there. And we have the Diagnostics Day. Really, how should I say, lots of excitement around that. More talks about the technologies and perhaps one or the other machine might be visible there and even, how should I say it, touchable, if I might say. And then we have the Pharma Day on September 30th. And on this day, it's not just about the pharma strategy, it's also about the group strategy on top. So I think a very important day. Good. With that, let's go into the numbers. First, I give you a quick overview and then I dig into the details. You see on that slide first that I will focus on the right-hand side, so really the numbers and the improvements, if you like, in constant rates. I think that's really justified. We have a very solid natural hedge when it comes to currencies. I come to that and I will show you a slide on this, but just to explain to you why I'm so focused on the constant rates development. So you see really sales, and as Thomas said, I think even without COVID, I think we have grown by 8%. I think pharma up 6%, DIA minus 13%. When you then look at it without COVID, pharma up 9% even, diagnostics up 7%. I think that's really great, and Matt and Theresa will dig into this. And then we have the cooperating profit minus 1%. Well, we invested into R&D, so we have an increased sale of plus 5%. And we have an increase in SG&A of plus 4%. I come to this. Majorly driven by M&D and pharma, so we invested into the product. I think in case of a BISMO, they'd made a hell of a sense. And we have some increases on the corporate side. When you look at current income plus 3%, I think that's really the tax impact. That's really a tax resolution that we had the pleasure to experience in 2023. It was a major uplift. It is admittedly at that size a one-off. And that's also why we've decided to exclude that from the 2024 guidance. And then really you see from the cornered income plus 3% to the core EPS plus 6%. And that's interesting because that's a base effect coming from Shugai last year. You might all remember we had the settlement at the time around a product called Altamiris. That saddle mask gave us 668 million, if you like, pure profits. And I think that boosted the Shugai result at the time. That's not existing anymore in 2023. So you know we have a 60% share in Shugai. 40% is really the minority share. So the deduction, if you like, or the adjustment for profits based on this is much lower compared to last year, which then certainly brings the comparison up and brings the core EPS to plus 6%. IFRS net income plus 7%, better performance, less impairments, a couple of restructuring charges. And then we have the operating free cash flow with 15.8 billion, up 4% in constant rates. I would argue it's still allowing us to do whatever we want to do and certainly also investing into M&A. And I will come to that later on. The same applies to the free cash flow. Good. With that, let's go rather quickly through the P&L. I think sales, I would argue, is covered and there's more to come. Other revenue, you see a minus $664 million, so reduction compared to last year. That's Altamiris. Altamiris is $668 million, so I think that number fits perfectly. Then you really see the cost of sales with a plus $1.35 billion, so that's a major improvement. It also brings the cross-profit margin up. What certainly I can say here, it's a fantastic achievement because in group the volumes went up 5%, in pharma it went up 12%, and in pharma we provide a saving, you will see it later on, of roughly 100 million. And then certainly there's diagnostics and they really provide the bulk of the saving, if you like, but certainly also due to the fact that the sales went down significantly. I think when you look really, because I heard a little bit of a question about royalty expenses, I see the royalty expenses itself went up because of Crevice and Evristi, but we had an offsetting effect, even a little bit of an overcompensating effect, coming from collaborating and profit-sharing agreements, where we had, if you like, a little bit of an ease of the expenses here, and the explanation is similar to what Ron approved. Good. With that, let's go to the next line, which is R&D. As I said, up 5%, really driven by pharma with 725 million. And then SG&A with a 590 million increase. M&D from pharma, 346 million. And then we had 100 million really coming from the corporate side, driven by informatics and a little bit by P&C, so people and culture. And then other operating income and expenses, rather stable. It's a relatively small number, I would argue. Good. I think maybe look at the margins. And you know, we said we want to defend the margin. And I would argue in constant currencies, I think we were quite successful. You see the margin decline is small in constant currencies with minus 0.5 percentage points. you see without Altamiris it would have even increased. I think you see quite a nice development of pharma division with the minus 0.4 percentage points without Altamiris plus 1.1 percentage points. And then you see the diagnostic solution going down, but I think here a simple explanation, when you lose sales in a magnitude of 2.3 billion, I think it's very hard to keep the margin. Good. With that, let me go to the core net financial results. Here currency helps us, as you can see, because you see a roughly 90 million deterioration in constant currencies, a minus 197 million. And let me lead you through this. I think the equity securities This year, we had a gain. Last year, we had losses. So this is really what comes from the Roche Venture Fund. We're investing into minorities, as you know, and private companies. Evidently, I think we see an uptick here. And then you see the net interest income. I think the team did a great deal here. You know, we've issued bonds in Q4 or in the total of 2023 of 6.5 billion, vast majority in Q4. Certainly, we made use of these funds, and that brought the net interest income up. Then you see the currencies. Well, we have currency losses, no doubt about that, of minus 243 million, but it was less than last year. And that's the 35 positives that you're seeing here. And then you see the interest expenses. Very clear. We had the refinancing. We refinanced at higher rates. We brought more debt in, certainly also at higher rates. compared to history. So, okay, a minus 208 here. And then other is hyperinflation, a minus 233 million in total, which came in basically triggered by Turkey and Argentina. So nothing unexpected, so to say. Good. Tax rate. Yeah, let me start on the right-hand side because that's a big pleasure. Effective tax rate for 2023 is 11.9%. We all enjoy the moment. I think really this resolution of a tax dispute was very, very beneficial, accounted for 774 million Swiss francs, so a significant number. Certainly also, how should I say, it helps us from a cash-out point of view because this number is not going away in cash. So I think that's quite positive. I think if you add back this impact, you get to an effective tax rate of 16.2%. Now, you might ask yourself, okay, what's going to happen in 2024? Let me be precise here about 2024. What we expect is that the 16.2% goes to 18%, and that's the basis for the guidance. And in addition, 1.5 percentage points, so in total 19.5% tax rate, is coming from the Swiss minimum tax. That's coming in here, which is working a little bit against us. So you see there is quite a jump on one hand on the underlying tax rate, but also, let's say, from the Swiss minimum tax. And I come back to that. Core EPS developments, a bit of a summary when you look at profits. Let me start with the full year 2022, so the 20.62%. and then going over to the full year 2023, excluding the resolution of the tax disputes. And what you see a nice uptick in operations of 2.5 percentage points. Altamiris worked against us and all other effects netted out basically. And then you see really from full year 2023, the tax effect was plus 5 percentage points. So quite significant to bring us to the overall plus 6.1% core EPS increase. Very important when we come later to the guidance. Yeah, a couple of non-core items. First, you see cooperating profit asset minus 1% on the right-hand side. You see the IFRS operating profit on the right-hand side going up by 3%. And you see really the total non-core operating items plus 670 million. I would outline two effects here. One effect is we had significantly less impairments compared to last year. I think really, let me mention Rossley Track here. It's just one element which came in in 2023, but significantly lost impairments on intangible assets. And we had a little bit more on global restructuring charges, as you can take from that slide. When you take the IFRS operating profit with plus 3%, you get to the IFRS net income with plus 7%, which is quite a boost. Well, the point comes from that really impairments are not tax deductible. So we have less impairments, if you like, which are not tax deductible. And that brings, if you like, the tax effect up in a positive way. And therefore, we get to a plus 7% on the IFRS net income. Good. I think really now we get to cash. And that's where it all comes together. When you look at the group operating free cash flow, let me start on the left-hand side with the 17.6 billion. You see full year 2023 in constant rates, 18.2 billion. I would argue the 18.2 billion is matching pretty well what we have delivered historically in the last couple of years. So that's fine. Let me lead you through this operating net profit, net of cash adjustments, a minus 230. Well, I think Altamir is once again. Then you see the net trade working capital and networking capital, an improvement of 1.2 billion. I think that's great. Nevertheless, accounts receivables went up, inventories went a little bit up. So I think there is still more work to do, which I think gives us a good outlook for 2024. Investments and PP&E, an increase of 506 million. And then you see the investments in intangible assets with an increase of 173. Let's say with a decrease of 173, which then shows as an improvement here on the cash side. So I would argue pretty balanced. Certainly, I think the foreign exchange impact here with a minus 2.5 billion is significant to bring us to the 15.8 billion reported. Good. I think with the margins here, as you can see, I think group looks better in constant rates. Pharma division looks significantly better in constant rates. And then diagnostics going down, that's clear. I think when your profits come down, I think it's not surprising that your cash flow comes down as well. Good. Group net debt development. We are at 18.7 billion net debt. You see on the left-hand side, we started the year with minus 15.6 billion. So we had an increase here of 3.1 billion, certainly driven by the M&A activities. But let me lead you through this. I think the operating free cash flow I've led you through, 15.8 billion. We paid taxes 3.6, Treasury 900 million. And then I think you see the 14.4 billion, the dividend, 7.9 billion, and then M&A with 6.2, which basically is Taliban. And you might remember it was 7.1 billion in U.S. dollars. It's 6.2 billion in Swiss francs. So I think really that all makes sense, brings us to 18.7, as said, increase of 3.1. Well, a quick look at the balance sheet. You see cash and marketable securities go up in constant rates quite significantly, 19%. As said, we have issued bonds of 6.5 billion in the year 2023. Other current assets plus 5%, that's accounts receivables with 0.8 billion slight reduction in the balance sheet, which is at a different currency rate of inventories. And then your non-current assets go up 13%, and that's settlement coming in with 6 billion goodwill. Then on the right-hand side, you see the capital current liabilities go down minus 2%. That's the lower income tax payable that we're having now after the release of the tax provisions. We have the non-current liabilities. This is the gross debt, which has increased to 29.2 billion. And then we have equity, which has increased, and we have a solid equity ratio of 37%. Okay, reporting changes. I think that's important to mention. As you might know, I think we will move Foundation Medicine from the Pharma Division to the Diagnostics Division. And with that, certainly, I think we see some changes here. That does not mean that we change the independence of foundation medicine. I think that keeps intact. The whole change is effective at January 1st. Certainly, we would like to enable you that you come up with the right estimates for 2024. So we have no restatements made in the 2023 financial statements. This all is going to come during the year 2024 and in 2024 we will restate the 2023 results and certainly we will apply that structure that you're seeing here in the 2024 financial statements. And these changes will have no impact on sales, operating profit, net income, and EPS of the group as a whole. It has an impact on pharma and dyer, as you can take easily from that slide, but not for the group at all. But we said, however, for modeling purposes, I wanted to provide you a heads up about the changes and how they impact the divisional margins. And as you can take easily from that slide, it's an uplift for pharma, and it's more pressure from a margin point of view on diagnostics. Good. With that, let's go to currency. You hear me always saying we have a solid natural hatch, and that's why I'm not so concerned about the currency impacts. For me, more a reporting topic, to be honest. And why do I say this? I think when you look really at the major countries we do business in, and let me start with the U.S., 46% of our sales in U.S. dollar, 43% of our costs are in U.S. dollar. You look at the euro with 16% and 15%, even the Japanese yen, it's 7% and 5%. And then you look really at others, 30% of our sales are in others, and we have 18% of our costs in other currencies. So I would argue overall, I think very solid. The only thing, and you know that for a long time, the only point we have an imbalance in is in the Swiss franc. And it certainly shows when you look at our numbers. Well, currency impact and outlook, you know, I don't want to go on the left-hand side. You see really the major deviation compared to the average last year as coming from the US dollar has even increased. Middle of the year, we had a minus 3 percentage points difference. Then it increased to a minus 5% and then it increased to a minus 6%. You see it on the left-hand side in that Swiss franc US dollar slide. But what this all went cost, if you like, it's on the right hand side, full year impact 2023. You see the minus 8 percentage points on sales, the minus 12 percentage points on cooperating profit, the minus 15 percentage points on core EPS. And all that has been disclosed already at the JP Morgan conference on January 9th to enable everybody to come up with the right predictions here. You know what we're doing at year end? We keep all currency rates stable and then project them until the end of 2024. And then we ask ourselves what's the impact on sales, cooperating profit and core EPS and you see it in that red box. It's around minus six percentage points on sales, minus eight percentage points on core operating profit and nine percentage points on core EPS. This is really when you do that modeling and I say modeling because we all know this is a very, how should I say it, this is a heavy assumption because one thing is for sure it will be different. And if you were applying today's currency rates, and you would keep them stable and project them until year end, we would be one percentage point better. We would be at a minus five percentage points on sales, minus seven percentage points on cooperating profit, and a minus eight percentage points on core EPS. Good. With that, another important slide. Let me give you the starting point for the forecasting for 2024. And let me lead you through this diligently. I think really core EPS, as reported, 18.57. The foreign exchange loss, which needs to be extracted or taken away from the core EPS, accounts for 0.42. How do we calculate this? It's the FX losses, minus 243 million. I've mentioned them even in the presentation. You find them on page 62 in the finance report. And then in addition, the net monetary position in hyper-inflationary economies, I've talked about that as well, the minus 233 accounts for 476. You deduct tax, you deduct the net controlling interest, here you have to trust me, the 138.32 million, and then you get to a minus 337.68 million Swiss francs. You deduct it through 804 million shares. This is on page 176 of the finance report and you get to the mentioned 0.42. That leads you to the 18.99 in the middle of the slide and then I think to have the right base you have to deduct the impact from the tax resolution of 2023 and that's a minus 0.97 leads you to the 18.02 which is the starting point for the predictions for 2024. Good. With that, last slide, guidance. Thomas talked about it already, but let me give you a couple of specifics here. Let me say when we talk about mid-single-digit sales growth, we mean mid-single-digit sales growth, which I think is very important to reflect. So mid is mid. As said, we lose 1.6 billion on loss of exclusivity, sales losses, and we have the 1.1 billion that we still lose on the COVID side. So there is some headwind here. When you look at the core EPS growth, and Thomas has mentioned it, I think we have a couple of things going against us. And let me be clear here about these impacts, because it means we need a very, very significant increase on the cooperating profits side. As said, we face a group tax rate increase from 11.9% to 19.5%, based on that guidance from 16.2% to 19.5%. And when you calculate that, that's roughly 800 million on the tech side. So that's a significant impact. And furthermore, we face an increase on the interest expenses of roughly 500 million. So that's a 1.3 billion in total. And to compensate for that, to get really to a broadly in line with sales growth, we need a cooperating profit increase in the high single digits. So that's a significant commitment from our side and will take a lot of effort to bring us to this. Okay, and I think with that, I'm happy to hand over to Theresa.