Sandoz Group Ag S/Adr

Good morning, ladies and gentlemen, and welcome to the Sandoz Call today. I will now pass on to Craig Marks, Head of Investor Relations, for his opening remarks.

Thank you, and welcome to the Sandoz 9 Months 2025 Update Call, which focuses on sales. We plan to publish our full financial results for the year on the 25th of February. Earlier today, we published a press release and an accompanying presentation on our website, which will follow on today's call. You can find these documents at sandos.com stroke investors. Joining me on today's call are Richard Saylor, Chief Executive Officer, and Remco Steenbergen, Chief Financial Officer. Please turn to slide two. Our sales announcement, presentation, and discussion include forward-looking statements. Please see our disclaimer here. Please turn to slide three. Richard Saylor. We'll begin today's presentation with a summary of the highlights from the first nine months of the year, followed by an update on the business. Remco will cover the sales performance, as well as full year guidance. Following the wrap-up of the presentation, we'll be happy to take your questions. With that, I will now hand over to Richard. Please turn to slide four.

Thank you, Greg, and hello, everyone. It is a pleasure to welcome you all to today's call, and I'm looking forward to taking you through another strong Sandoz performance. Please now turn to slide five. I am pleased that the momentum in our business has continued. We are making excellent progress on our biosimilar launches and the pipeline, as well as delivering strong, ongoing commercial execution. In the first nine months, we achieved 5% net sales growth at constant currencies, though the underlying result amounted to 6%. In Q3 alone, growth further accelerated to 6% at constant currencies and 7% on an underlying basis, with buyer similars growing by 13% at constant currencies. We also saw good performance across all geographies, including a significantly improved result in North America. In line with our commitments, we've successfully introduced several key medicines this year, including Pischiva, Wyost, Gibonte in the US. Looking ahead, we are preparing for additional launches, notably Wyost, Gibonte and Afclear in Europe, as well as Tyruco in the US. These launches will further strengthen our commercial footprint and long-term growth potential. This momentum supports our confidence in upgrading our full year core EBITDA margin guidance today. We continue to expect net sales to grow at constant currencies by mid single digit percentages. And while we anticipate that the core EBITDA margin will be in the range of 21 to 22%. Now let's move to more details of the business performance starting with slide six. This was our 16th straight quarter of growth primarily driven by biosimilars that represented a record 31% of net sales. The effect of this positive mix of sales, as well as the momentum in the business, was a key driver in the decision to upgrade our core EBITDA marketing guidance to date. Please turn to slide 7. Before we deep dive into biosimilars, let's take a look at generics. In the first nine months of the year, we've delivered a full launch program with 115 medicines launched and around 280 total launches around global markets. Notable launches include Listex and Insucrose in the US. Our pipeline is strong, with over 400 assets currently in development, targeting around $220 billion in originator sales, covering approximately 65% of LOE opportunities. It is worth noting that our generic growth of 2% this year has been materially impacted by a shortfall in our penicillin B2B business. This began with the imposition of US tariffs that led to reduced associated exports from China to the US. In turn, this then prompted Chinese suppliers to very significantly lower prices for key penicillin APIs, including some that we sell to other businesses. As the last remaining fully vertically integrated producer in Europe, we are pleased to see a growing recognition by policymakers the need for sustainable European supply of penicillins. But more action is required, and we call on the European Union and national governments to implement measures that reduce geopolitical exposure and safeguard the long-term sustainability of European produced penicillins. Please turn to slide 8. Turning now to biosimilars, we achieved half of our 2025 biosimilar launch milestones so far this year, and we are fully on track to deliver the balance by the end of the year. In the first half, we launched PeaceGiva in the U.S., followed by the successful rollout of the first Oosterkinema biosimilar auto-injector in Europe. Our quarter two launch of Wyost and Gibonte in the U.S. have also gone extremely well. These were the first and only interchangeable denosumab biosimilars in the U.S., providing new affordable treatment options for over 10 million patients. I'm looking forward to the remaining biosimilar launches before the end of the year, namely WIOST, JUBONTI, and AFCLIR in Europe, as well as TYRUCO in the U.S. Please turn to slide 9. Biosimilars continue to be a powerful growth engine for Sandoz, delivering constant double-digit performances and enhancing our margin. Our biosimilar portfolio is not only growing, but evolving through strategic launches, geographic expansion, and innovation. Let me now dive into the performance of our biosimilars, starting with Peace Jeeva on slide 10. It is encouraging to see the overall biosimilar ustekinumab participation in Europe increasing, outpacing the adoption rates we saw with adalunumab. This signals a growing confidence in biosimilars among healthcare providers and payers. We've seen strong momentum in Europe, where Pisgiva has quickly gained traction following its launch last year. This has been supported earlier this year by the successful European launch of the first biosimilar ustekinumab autoinjector, our European market share has been broadly stable in a market experiencing strong growth. Finally, we're planning for additional Pestiva launches next year, including entry into exciting markets like Brazil. Please now turn to slide 11. Switching to Heimer Wars, now our largest selling medicine, it continues to demonstrate strong and consistent performance globally, with stable market share amid rising biosimilar participations. As shown in the chart, our global market share has been maintained, and at the same time, buyer-similar participation has steadily increased, climbing from 55% to around 65% in 18 months, a clear indication of growing acceptance and adoption. In Europe, Hiram Oz remains a strong foothold, while international sales growth has been exceptional this year. In the U.S., we lead the market through a dual strategy, namely private label and own brand. Together, they offer the broadest pair coverage, enabling us to capture originated share and reinforce our leadership position. This performance reflects the strength of our portfolio, the effectiveness of our commercial strategy, and our commitment to improving access to high-quality biosimilars worldwide. Now please turn to slide 12. Let me now move to Tyruco, our biosimilar nataluzumab, which continues to deliver encouraging progress in Europe. We are proud to be the first and only biosimilar approved in Europe for relapsing remitting multiple sclerosis, a major step forward in expanding treatment options for patients. Looking ahead, we have additional launches planned in the US and across various European and international markets, reinforcing our commitment to leadership in neuroimmunology and biosimilars. Please turn to slide 13. Omnitrope continues to deliver strong performance as the market leading by similar for growth hormone related disorders with a global market share reaching 37%. This steady upward trajectory from 24% in 2022 reflects our ability to consistently grow share in a competitive landscape supported by good sales growth and rapidly expanding markets. The international region has been a key driver of our performance this year, even as we navigate increasing levels of competitor activity in the region. Our commercial execution, trusted brand and global reach position Omnitrope to continue being a leader in this space. Please turn to slide 14. Let's now look at the recent U.S. launch of Wyost and Javante. which marked a major milestone in our buy-a-similar strategy, with both medicines achieving first-to-market status and demonstrating strong early momentum. We rapidly established a commercial footprint, covering over 80% of Denosabag volumes, ensuring broad access across key provider networks. We led with an interchangeable product exclusively, and, in addition, Q-code exclusivity drove an important early advantage in market positioning. We're seeing early wins with major players, and recognition by the NCCN as a substitute for Respirant's Denosumab further validated our clinical and commercial approach. This launch not only reinforces our leadership in biosimilars, but also sets the stage for continued growth and patient impact in osteoporosis and the oncology space. Now, please turn to slide 15. Sandos continues to advance one of the industry's most comprehensive biosimilar pipeline, with 27 assets spanning all stages of development. We have five near-term launches and assets in clinical development, five assets in regulatory review, and have nine additional assets in early development, targeting $50 billion of originator sales. Now let's turn to slide 16. Finally, as we continue to lead in via similars, regulatory streamline is emerging as a powerful enabler of growth and innovation, with 27 assets currently in development. Our pipeline targets approximately $200 billion in originator sales, covering 64% of expected loss of exclusivity events over the next decade. Recent regulatory shifts are helping reduce complexity and cost across clinical development, ultimately accelerating access for patients and easing pressure on healthcare systems. These changes not only strengthen our pipeline, but also open up additional opportunities to expand our leadership position in biosimilars. By embracing regulatory innovation, we are well positioned to deliver more medicines more effectively to more patients worldwide. And with that, I'll hand over to Remco. Please turn to slide 17.

Thank you, Richard. And hello, everyone. Please move to slide 18. I'm very pleased to expand on our sales performance, which reflected strong momentum and execution across our business. Our mid-single-digit growth in the first nine months has comprised progressively improving results as we have moved through the year, with biosimilars again growing by a double-digit percentage. At the regional level, the launches of Tyruco in 2023 and Pischiva in 2024 are continuing to drive European growth, while the international results reflected the ongoing success of Omnitrope and Hyramos. In North America, the success of the rollouts of Viost and Jubonti has been accompanied by the standout launch of Paclitaxel at the end of last year. Finally, I am pleased that we have upgraded our full-year core EBITDA margin guidance today, a direct result of the favorable mix of sales driven by the contribution of biosimilars. Please turn to slide 19. And breaking down our sales performance this year, you can see that volumes contributed eight percentage points to growth while price erosion returns to a more familiar three percentage points. Let's now dive into the business and regional mix from slide 20. By similars increased as a proportion of total net sales to 29% this year compared to 27% in the first nine months of 2024. When looking at the Q3 performance, buy-similars comprised a record 31% of net sales, driving the upgrade to our core EBITDA margin guidance. Our regional sales mix has remained broadly unchanged, with over half of our business in Europe where we hold a strong leading position. International represents a quarter of net sales, with 22% coming from North America. Please turn to slide 21. Biosimilars delivered strong underlying growth of 17% in both Q3 and in the year-to-date, with launches in the last 12 months having a key impact. Generic sales increased by 3% in Q3 and by 2% in the first nine months, despite the effect of the B2B performance that Richard mentioned earlier. The overall generics result primarily reflected the impact of launches in 2024. Now, let's have a look at the performance of our three regions on slide 22. So far this year, our geographic performance has been nicely balanced, with the regions having delivered similar levels of underlying growth. European sales grew by 6% in both Q3 and in the first nine months of the year. Strong growth in biosimilars continued, led by demand by Binocrit and the contribution from the launches of Pischiva and Tyruco. International sales grew by 4% in the quarter and by 6% for the first nine months, due to strong contributions from Iramas and Omnitron. North America sales grew by an underlying 7% in the first nine months and by a full 12% in Q3, with the ongoing benefit of the 2024 Paclitaxel launch, accompanied by this year's LISTEX, Iron Sucrose, and Weiss & Giubonti rollouts. Please turn to slide 23. Now let's look at our guidance for the year. After achieving a mid-single-digit growth in its sales in the first nine months, we expect a similar result over the full year. The higher mix of sales in favor of biosimilars means that we now expect a 21% to 22% core EBITDA margin this year. This represents an upgrade from the prior guidance. Outside of guidance, our foreign exchange expectations are unchanged for 2025. We anticipate that if the latest spot rates were to prevail for the rest of the year, we would continue to anticipate two percentage points tail width to net sales over the full year. The core EBITDA margin would continue to face a limited adverse impact of less than 50 basis points, which will be in line with what we had in 2024. If you look at currency movements based on average rates in the first nine months, we would anticipate an immaterial impact on net sales and on the core EBITDA margin. And with this, I hand back to Richard. Please turn to slide 24.

Thank you so much, Remco. I'd now like to take a moment to wrap up the presentation on slide 25. The key takeaway from today's update is another strong performance supported by excellent progress in our Biosimilar platform. Our performance is exactly in line with our plans and strategic roadmap, including the launch program and the pipeline. Looking ahead to the rest of the year, we're preparing for several exciting launches that will support our strong momentum and keep us on track to meet our ambitious mid-term outlook. This is more than just performance. It's progress with purpose, positioning as well for sustained and attractive growth. I am grateful to my colleagues around the world for delivering another excellent quarter, and I thank you all for your continued support and confidence in Sandoz. With this, please turn to slide 26 and I will ask the operator to open the lines for Q&A. Thank you.

Ladies and gentlemen, we will now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Or if you have dialed in, please press star nine to enter the queue. Once your name has been announced, you can ask a question. If you want to withdraw your question, please lower your hand using the raise hand function in the Zoom app or via telephone press star nine. Thank you. Our first question comes from Harry Sefton with EBS. Please unmute your line and ask your question.

Brilliant. Thank you very much for taking my questions. So the first one, following the HHS briefing yesterday, there's clearly an intent to meaningfully increase competition in the US biosimilar markets. So Richard, I just wanted to get your high level thoughts on whether you see this as an initial step to potentially commoditize the US biosimilar market. You've talked previously about how the u.s small molecule generics market isn't an attractive market for sandoz just want to get your your high level thoughts on what the implications from this could mean and then my second question just on the 2026 launches Can you confirm your expected timing for the SEMA Canada launch and whether you're expecting that you will be in the first wave of generic launches there? And then also just on the relaunch of Simerly, what your expectations are there on terms of timing and also the market environment, given that it will be quite different now that there is a Flibercept biosimilar available as well. Thank you.

Thank you very much for your questions, Harry. Look, I'm super pleased with the HSS and we've been working very closely with the AAM and Karen, our US president, to position this. So I think this is a really good move. I'm very excited about that. I'm also encouraged to see similar moves with other regulators, particularly Canada and Europe. And to be brutally honest, if you looked at the number of biosimilars for things like adalunumab, denosumab, I would argue that a lot of the commoditization happens already. So I don't think that it will fundamentally change the framework. This is still an expensive hobby. It's still probably 80 to 100 million dollars. You still need manufacturing. We always look at this as a global market, not just a U.S. market. You still have the patent challenges. This is just a step in the right direction. If you look, there's something like 150 biologics that either come off patent or will come off patent in the next 10 years. That is a significant opportunity. And clearly, the vast majority of those, we don't see anybody developing a biosimilar. So this move means that we can expand our pipeline over the next few years. We can bring more products to patients. And I'm really, really excited. And then if you think even further out, you then get into ADCs, bispecifics. another more complex biologic product. So this is a huge opportunity and I'm really thrilled about this moving in this direction. And Sam, I've got nothing really more to add than from previous calls. Clearly our aspiration will be to launch amongst the first wave. As I said, this was outside any guidance we've given for the business. We see this very much as an experiment. I have no idea how this market's going to evolve, how this product will evolve. It's a unique set of circumstances. And of course, I'm noting that nobody as yet has got an approval. So it's way too early to give any more details in terms of timing. But clearly, we would aspire to be amongst the first wave. And similarly, again, we would look to return that to the market in Q1. We've also given guidance that our intention, we've settled on the Aflibicep launch. So again, we'd look to launch that in next year. I think the combination of the two. And so we're pleased to bring that back for patients sometime in Q1 and then launch Aflibicep later in 2026.

Thank you. Our next question comes from Florence Suspires with Bernstein. Please unmute your line and ask your question.

Good morning everyone, Florence from Bernstein. Quick question on 2026, could you share with us which are the next biosimilar products that you expect to launch on the different markets? This would be great. And my second question on the penicillin situation, what is the next step? What do you anticipate in terms of decision from the authorities and some call on the timeframe? Thank you.

Well, a lot of the launches that will show material growth in 26 are being launched as we speak, both in Europe. Clearly, we're excited to be launching denosumab. for both the major indications in Europe. We've seen great traction in the US, which will clearly flow into next year. We're looking to launch Nataluzumab in the final quarter, Tyruco this year, which again will flow very strongly, and also bring that to a number of the European market, additional European markets. We're about to launch Aflibicept across many of the European markets in the final quarter, and again launching Aflibicept and reintroducing Simile in 2026, as well as numerous other launches in many of our international markets. And also assuming that the base business will continue to grow just as we're seeing strong growth in the Adalunumab market globally and also the Omnitrope market globally. So I think a mixture, but clearly everything now is in play. Everything is approved. I think we're well positioned to set ourselves up for 2026. And penicillins, I mean, partly, look, it had an impact. I wanted to use this platform to really highlight the critical nature of this product. We're the only vertical manufacturer of penicillins left in the Western world. um you've heard my frustration in the past that we sell this product more cheaper than a packet of m m's um we're working with regulators and governments both in the u.s and in europe we recently got the outback memorandum which was requesting european governments acquire at least 23 of all their antibiotics from vertical suppliers Our challenge now is we turn that into law and we execute that. These are critical assets and it's important that governments understand the role that they play and move that forward. I'm pleased about the memorandum, but now we need to turn that into action. And I wanted to use this platform to highlight the importance of that. It's not material to the overall business. It had an impact in quarter three. But I think it was important that I use this opportunity to talk about it.

Thank you. Our next question comes from Simon Baker with Rothschild & Co. Please unmute your line and ask your question.

Thank you for taking my questions. Just continuing on the HHS announcement, a couple of things, if I may. Firstly, Richard, with that lower development cost level that these regulations envisage, what could that do to that $200 billion pipeline size that you have? And on this point about commoditization, I mean, if this were a commoditized market, then each of you would have a 10% market share of adalumumab. And that's obviously not the case. Your share is way, way above that. So could you just give us your thoughts on the sustainability of, and also just reminders of your advantages within the biosimilars market in terms of commercial skills and the sustainability of that? And then just moving on to a couple of product questions. I wonder if you could give us a bit more colour on Tyruco penetration in the EU. It looks like it's kind of going sideways at the moment. Is that a function of where it's launched? And will that change as more markets come on stream? Are there any other dynamics there? And for Pischiva, you pointed out that the rate of similar participation is faster than Humira. I just wonder if you could remind us by how much, just to sort of quantify that impact. Thanks so much.

Okay, well, thank you, Simon. Some really great questions. Um, yeah, I mean, I think the size of the opportunity is still about 200 billion in total absolute set, it doesn't really change that. Again, I think So let's take a step back. We select our pipeline from a European lens and we see the U.S. as an opportunity. I know we tend to over index the U.S. a little bit, but give it the visibility of the data. So we would never develop a biologic specifically for the U.S. We would develop it for Europe and then clearly file it in the U.S. Otherwise, if you look at the situation with Embrol, we wouldn't have a business because somebody thinks that a 30 year patent life is somehow acceptable. So you still have all of those challenges. So I think first and foremost, it's focusing on that. Yes, I think it reduces potentially the cost of development, but there are many other components. We talk about legal. You talk about the commercialization. I mean, I'm delighted with our Denosumab performance. We're by far the strongest performer of Denosumab in the market. We launched first. We had the only Q code. We really knew how to work and position this product. Similarly with Adelunumab, we're by far the largest player with by far the best coverage in that market. So I think our commercial capabilities coupled with our clinical, legal and manufacturing platforms. And then similarly, we see these as global assets. We don't see this as US assets. We're the number one by a similar player in Europe. We're very strong. We're seeing strong growth in international. All of those things. And it's a little bit when you look back, you know, I have a lot of respect for some of the Indian players in small molecule generics. Yet the reality is they're nowhere in Europe because they struggle to build scale. And I think you see a very similar pattern in biosimilars. So I think we're extremely well positioned. We've launched more biosimilars than anybody else. We have a stronger pipeline than anybody else. And clearly we would see this as an opportunity to further invest and expand and really leverage that strength. Ty Ruko. Yes, I mean, now we would look to see growth as we launch this product. A lot of this product is tendered. So you tend to get a rapid conversion and then it tends to stabilize. We will see growth as we both introduce that into North America and we continue to launch it in other European and international markets as we go into 2026. And Peacejiva, yes, I think it's more of a reflection of clinicians and payers now rapidly accepting biosimilars. I think the days of debate around the acceptability of biosimilars really has gone. And clearly we see a nice performance with Peacejiva and now in a nice position that we're the only company launching an auto injector across Europe. So I think, again, well positioned to deliver growth as we go into 2026.

pleased with where we are and as i said we've been lobbying um this from hss and similar um from the european regulators for a while so i think common sense has prevailed if i if i may add to what what richard has said and particularly on the the hss i think when we take a step back and we look at the size of the pie indeed the 200 billion on on biologics and generics has unchanged But what it of course does is that a lot of the biological medication for which no biosimilar has been developed or will be developed because the size is too small, becomes suddenly accessible. So we think that in the large, with the large molecule, also from a competitive perspective, not much changed. And as we said, we're very well positioned, but we can grab a larger part of that pie. And the competitive barrier is still very high. It takes a long time. We look very, very enthusiastically because if you then fast forward 10 years from now and you look what part of the pie we can go after, it's incredible. The second part is that the pie, once a biosimilar is in the market, has often grown because a lot of medication cannot be used because it's too expensive. When we come in a market, that pie grows. So if they're coming more, we can go after more molecules and the market will grow. It's a gigantic growth opportunity. And to put so much effort behind it, I think the additional point versus generics, generics is still with APIs coming from China. With biosimilars, it's a vertical integrated manufacturing process. It's much more difficult. We can produce in Europe. Scale is an incredible benefit. And we have to scale on the commercial, but we also have that on the development and manufacturing. And if I listen to your questions, this part I just wanted to add, because that's why we are so excited and we think it's just an incredible opportunity.

Right. Thank you very much.

Our next question comes from Charlie Hayward at BFA. Please unmute your line and ask your question.

Charlie Hayward, Bank of America. Thanks for taking the questions. I have two, please, for Remco. So the first one on your Initial 24% to 26% mid-term margin outlook, you've obviously added one biosimilar, two private label biosimilar contracts, and your biosimilars mix has already reached your 2028 target of 30%, which drove your margin upgrade today. So given that momentum, how are you feeling about this mid-term margin target? And is it fair to assume you're trending towards the upper half? And then second one, just on 2026, I think the potential upside from the biosimilar launches, SEMA, Estacan and Mab private label and Somali relaunch into 2026 are well known. But I wanted to ask if there are any headwinds or potential moving parts outside of that that you would flag into next year? Or is this really a very clean year on paper? Thank you.

Charlie, thank you. Thank you for that question. At this point in time, I'm not surprised I would say that the mid-term guidance stays. So we expect a mid-single-digit growth in between 24 to 26. And for 26 versus this year, you can expect a continual progressive growth in two directions, also for the margin. Of course, we are looking also at the prior discussions which were asked. With the enormous amount of opportunities which are there over the coming years, we of course also have a look at how can we capitalize on this. If you have to think about next year's and the one-offs, depending on how just Evotech develops, if that would come to a conclusion, we will have some additional costs next year related to just the Evotech. You have to take that in consideration because that was not there before. But we are very happy because on balance, we progressively want to move on and we want to find the right balance between the short and the long term. As you said before, there's so much opportunity and so much more we can grasp and we find the right balance. And we want this company in 10 years from now to be even more formidable than it is now. And that's what we're working on, on the short and the long term. And for the moment, the medium guidance stands. But with lots of opportunities.

Thank you. Our next question comes from Thibault Boutherat. Please unmute your line and ask your question.

Yeah, hello. Thank you. Just a question on Alia in Europe and the launching Q4. 8 biosimilars approved and ready to launch, so it looks very competitive. Buyer is also saying they seem very confident they can hold off to some extent biosimilars with the switch to high dose. um so just if you could comment on your expectations here and how you differentiate in that context Second question, just on the biosimilar eumira. Is it fair to expect another price cut in private label next year? And could it be the same extent as this year? Just if you could comment on the pricing here. And then just a clarification on Tysabri US. You seem quite confident. I think it was not the case to that extent before. So if you could just help us understand the degree of confidence for the approval by the end of the year, it would be helpful. Thank you.

Okay, thank you. So, Ailea, yeah, we're very confident in the launch. We're used to competition. You know, Denosum have eight competitors in the U.S. In Europe, we used a significant number of competitors. If you look at Ustakinova, I think it's 11 or 12. We still took a leadership position. Every originator always says that they're in a unique position to maintain share. Let's see. I think we have an amazing commercial platform and some great colleagues in Europe who I know will execute. And I've seen some of the plans and I'm very excited about them. So I think we're well positioned to capture a significant share of the market, given the strength that we have. and the footprint that we have. I think your question on Humira, yes, clearly it's a competitive market. We've always been extremely open about that. And I would anticipate that we, as we continue to maintain our relationship as an own label or an own label product, that clearly pricing would come down next year as we continue to renew our contracts with that provider. So I think probably similar range to this year. And to Sabri, to Ruko, yeah, very confident that we will launch. We've aligned in terms of the JCV SA, and now we're just positioning for the pre-launch phase. And then again, we're now committed to launch this, specifically this quarter.

Thank you. Our next question comes from Siddhartha Modi at Barclays. Please unmute your line and ask your question.

Hi there, thanks for taking my question. The first one is on your Ubuntu. Like you have had a very, very good launch in the US and obviously you are on track launching in Europe, but just wanted to know, like, have you kind of signed any long-term contracts in Europe so that you can lock in low single-digit selling price declines or the pricing would still remain under pressure every cycle? The second question is, Slightly different on competition, like obviously on Monday we saw Cigna releasing a press release and they have spoken about rebate-free PBMs and full rebates to patients being passed on to the patients at the time of drug dispensing and also linking patient costs to the lowest available, you know, amongst copay, DTC and PBM negotiated prices. I just wanted to understand the implication of this change and probably, you know, other PBMs would follow suit. So what are the changes that you kind of anticipate from this change and does this mean anything for volume growth and margins?

So thank you very much for two great questions. Giovante and Wajost, I'm clearly delighted with the performance we saw in the US, really running really well on to our expectations, maybe a little bit ahead. And again, Europe, it's really market by market. Again, you know, Europe for us is nearly 40 markets. Each one works in a different way, whether it's physician led in a branded market or tender driven. But I think, again, we're well positioned to leverage this both in oncology, largest oncology company in Europe and I'm also excited in the long term to open offer this product for patients particularly female patients for osteoporosis this is an excellent drug but I think was prohibitively expensive so again looking to open up that access over the coming years with this so I think it's got quite a lot of long-term growth in it as well, particularly for the osteoporosis indication. Your question about Cigna, it's a fascinating one. I think somebody would have to ask Director Cigna. When you dig into the details, it only affects about 2 million patients. So it's a tiny proportion of patients. Now, I think it's a positive move. I think the more clarity that people see in terms of the level of rebaiting, But around the market, I think is a positive sign. So I think directionally positive. In the short term, I think it's immaterial. And certainly in terms of the number of patients being offered this, it's tiny. I think it's only about two million patients in total. So it's a very small step. I'm encouraged about the direction and I'm always being encouraged to see more transparency. I don't think you'll have any material change to our business, certainly in the short to mid term. But again, what you are seeing is some nicer reform starting to come through. We talked about HSS. You're starting to see price transparency. I think we're being listened to about with tariffs. So I'm actually more optimistic about the mid to long term. I think we need to see more on patent reform. And again, those things are being discussed. And it was never going to be one thing that fundamentally changes the U.S. market. It's several bits. But I'm encouraged that this administration does seem to be starting to address them.

Our next question comes from Beatrice Fairbairn at Berenberg. Please unmute your line and ask your question.

Hi, thank you for taking my questions. Just on your H1 25 results presentation, I noticed that there was a target for about 180 new generics launches in full year 25. I suppose, could you possibly elaborate on where you are tracking relative to that and kind of what your expectations are for the full year?

Yeah, I guess, sorry, well on track. I think I said in my presentation, I think we've launched about 115 of those. It nets out to about 280 absolute launches globally. And with the vast majority, we don't break them out normally because it's sort of relatively modest launches. I mean, there were a couple of standout ones in the US, particularly Iron Sucrose and Listex, which are having a nice impact and we're very pleased. But again, I think, but also, you know, we spend a lot of time talking about biologics when you look at the forward landscape just about half of the LOE landscape about 200 billion dollars is technically small molecules already it does include glp-1s but there's still a significant opportunity and so we would continue to want to deliver on that space as well as growing and expanding the biologics opportunity that we see thank you our next question comes from Sophia Graff Bull-Nielsen

at JP Morgan. Please unmute your line and ask your question.

Good morning. Thanks for taking my questions. Firstly, just how are you thinking about the contribution of additional biosimilar launches to the top line in Q4? Should we anticipate another sequential step up in local currency growth? And if so, how are you thinking about the growth profile as we head into next year? And then just on Donosimov in the US, you've mentioned you're delighted with the initial launch. Could you give any more detail on how market share is developing there? What do you expect as we see additional new entrants? And you mentioned an addressable patient population of around 10 million. How much of the volume opportunity do you see is coming from switches from the originator relative to growth expansion in the market from biosimilar entry?

Okay, I think it's Remco. Do you want to take the first question? Thank you, Sophia.

Thank you, Sophia. Good morning. Overall, we expect Q4 to be in a similar place as Q3 is. If we look at the consensus, correct, which is around 5% for the full year, the consensus sits around 7% for Q4. We did 6% in Q3. So that's something like that you have to take into account, correct, in line with our guidance.

The second question I'll give to Richard. Yeah, thank you. So Denosum, yeah, I think, as I said, I'm a bit delighted with the launch and I think clearly Launching with a Q code and launching first to market allowed us to work very closely with payers and providers. And we've really seen a strong uptake, actually, particularly perhaps a little more than we expected in the osteoporosis side of the equation with it, which actually stands well for the long term use of this product. And again, I think we're acquiring both new patients, but also switching patients as well. So very, very pleased with the uptake. And also, let's not forget, we launched it in Canada, and there we took a market share of 65% at launch. So I think really strong execution, well-accepted product, and certainly also excited that we're launching it in Europe. So I think some nice growth there that we can see, and also as we expand the use, as I said earlier, particularly in osteoporosis. Thank you so much. Thank you.

Our next question comes from Yoris Zimmerman at Octavian. Please unmute your line and ask your question.

Hi, this is Joris from Octavian in Switzerland. Thanks for taking my question. I have two related to the mid-term and also the longer-term opportunities in biosimilars. First, on the mid-term, you mentioned that you have five assets in regulatory review currently. Could you maybe give us a bit more detail? What about the timelines you see here and how that could shape the mid-term biosimilars opportunity for Sondos? related to the hhs press release and the whole discussion ongoing about access for biosimilars in in the us is there specific like indications or biologics that you currently haven't looked at and that you would say are white spots in the sondos pipeline that you might might take a look again now thanks

Thank you so much, Iris. I'll answer your second question first and then I'll come to you. I mean, yes, but I can't really disclose it because I don't want to make my life any harder than it already is with the competition. I think what Remco highlighted is... There's a lot of assets maybe in the one to two billion range that economically people deprioritized given, I guess, the relatively newness of the biosimilar market. I'm super excited that we can really target those, particularly in immunology and oncology, because we have a strong platform. We can launch in that space. It's highly accretive. And in many ways, I'd much rather have 10 $1 billion products than one $10 billion asset. So I think that's our opportunity. Also, looking back, there's something like 40 biologics that have come off patent that no one has yet ever developed to buy a similar. So there is way more opportunity than there is financial firepower for any company to develop. So I think we're almost a kid in a candy store in terms of where do we want to go and how do we extract that. So super, super excited about the direction of In terms of short-term assets, clearly in the US, we're talking about Flibicept, a little bit further out in 29, Ocrevus, Ocrelumab, we've got Pembrolizumab, Nivolumab and Ipilimumab, all sort of coming in sort of the latter part of this decade. And clearly, on top of that, we're constantly looking at potential BD and strategic partners. So I would assume, don't be too surprised if we then come back with other products that we would launch in that space as well. But also, you've got to remember that 27, 28 is quite a low period in terms of LOEs. um so yeah this isn't necessarily a function of sand or this is a function of the market that we don't see many big LOEs coming in that period so um but excited about our pipeline also really excited as we look to expand and leverage that further thank you our next question comes from Natalia Webster with RBC please unmute your line by pressing star six and ask your question

Natalia, if you're there, we cannot hear you.

Hi, can you hear me okay now?

Yes, we can. Good morning.

Ah, perfect. Sorry about that. Thanks for taking my questions. Firstly, just on JustEvaTech, on slide 34, you lay out the biosimilars under development with them. Are you able to comment a bit more on what the improved yields and cost savings from the continuous manufacturing could mean for margins over the longer term, sort of appreciating some nearer term costs there? And then secondly, on the Slovenia expansion, are you able to provide a bit more colour on how that's going and also around the phasing of anticipated investment that you've announced there? Thank you.

Do you want to take Slovenia? We were always excited about this as a technology. We've never been specific about the potential cost effectiveness, but certainly we see a significant opportunity to In terms of speed of development, but then also using the J-Pod as a manufacturing platform. Clearly, by bringing it in-house means that it also further improves the margins because clearly the royalty mixture and everything else that's associated with that. And our ability to use and expand the technology for further assets without additional payments also makes it highly attractive as a platform. And then we also then have optionality both to leverage the facility in Toulouse, but then if we so wish, put that technology into other locations around the world. So I think it gives us a lot more flexibility. I'm super excited about the technology. And hopefully we can give you an update in the not too distant future in terms of what our position is there. Slovenia?

Yes, Slovenia, very exciting for us. As you know, overall, we have three projects ongoing in Slovenia, one for development, one for the API, and one for the fell finish. All three are clearly on track versus the progress. We're also very happy with all the capabilities in Slovenia. As many of you know from the prior say owner of a lot of activities in Slovenia. So we have been able to get a very capable group of people in Slovenia to, to handle security. So everything is on track. Um, we still expect as of 28 to, uh, to start with the, with the production. So fully up to fully up to speed and clearly they're clearly also benefits, correct? Because it will be fully integrated. Um, Also from cost, it will be state-of-the-art, correct? Hopefully on a later point in time, as Richard said before, the just evotech manufacturing abilities can be taken on board. So we're very, very excited, particularly then looking in the years 2030, 2035, with everything which comes then online that we can, with our scale, very cost-efficiently produce the biosimilars going forward. And in that sense, have a very competitive base. So all on track and more to come in the coming years.

Thank you.

Our final question comes from Urban Fritsch at ZKB. Please unmute your line and ask your question.

Yes, good morning. This is Urban Fritsche from CKB. Three questions, please. First, on HHS, we talked quite a bit about what you might expect, but still, I mean, you know what it takes to develop biosimilars, so would you expect that the existing players predominantly will expand their pipeline, or would you also expect that quite a number of completely new players specifically from asia would also enter the market now um then second question also be more on the market uh we talked a bit about the uh the gross expansion of of of market so the addressable penetration or the the penetration for for addressable um or addressable population so Can you put some numbers behind that, maybe on historic experience, maybe for biosimilar Humira or Omnitrop, which has been growing for years now? That would be question number two. And question number three, could you talk a bit about the pricing dynamics in the US for generics and then also for biosimilars? Thanks a lot.

Thank you, Evan. Three great questions to finish on. I mean, look, who knows what our competitors will do. And in a sense, that's a question for them, not so much for us. We're clear about we see this as a great opportunity. Again, this is a world market. It's not just the US. So again, take a step back. We see our pipeline very Eurocentric. Of course, we want to launch and bring those products to the market. Clearly, a feature of the US generally is But I think having a strong commercial footprint, as you can see from the Notomap, is important. But traditionally, players tend to see this market as a more simplistic market. And then they struggle to commercialize those assets in the rest of the world. I think we're uniquely positioned both to perform extremely well in the U.S., but then really leverage and grow our business and pipeline globally. So super, super excited. And I think the exciting thing is, as I say, seeing the European regulators, Canadian, Australian regulators, all moving into a much more sensible space in terms of data expectations. Then that does present as a significant opportunity. I think then link to your second question, which is a nice follow-up. I think the days of when we first launched biologics like Omnitrub, which was the first biosimilar 20 odd years ago, I think the world has moved on. I think we've established ourselves as a credible high-quality supplier. The concerns that physicians and payers have had are really evaporating. And so really the point there is already on ustekinumab is pretty much at a similar penetration rate to adalunumab, even though ad has been on the market for six, seven years in Europe. So you're seeing a much faster adoption and a much greater exception. And then clearly what's so cool about these drugs, I mean, Omnitrope is still one of our largest products 20 years old and it's still growing um you know great performance of international um there aren't many products in the generics industry where you can say that 20 years on you're still getting leverage and growth similarly adalunumab strong growth as we really offer patient treatments. At launch, it was five years from diagnosis to treatment for RA. Now it's months. So we're transforming patients' lives, opening up and really saving a significant healthcare system. And I think that's true to many of the products that we will bring to market over the coming years. The opportunity to democratise and access to these medicines is really, really exciting. We've not discussed price erosion at GX and Biologics. I mean, certainly we've seen, I guess, a more normalization of price erosion, roughly around about 3% this year. We always assume 3% to 5% in our planning assumptions. And I think as the market sort of stabilizes in terms of supply, I would expect that trend to broadly continue. So I think our assumption as we go into next year, probably price erosion 3% to 5%. And I think it's one of the potential headwinds as you think about your models for next year for the business. But nothing dramatic, but certainly, I guess, nothing remarkably one way or the other, but I guess more of a return to normal in terms of pricing dynamics. And then actual specific pricing depends on the market, depends on the level of competition. Obviously on a drug like Nataluzumab, we see very little price erosion because we're a sole player in that market. There are others clearly like Adalunumab, we have to compete. In a sense, economics 101. So it really depends on the market and depends on the product. So thank you so much for your final question. And with that, thank you so much for your interest and support in Sandoz. Really delighted to have taken through our results and look forward to connecting with you over the coming weeks and months.