Full Year 2022 Roche Holding AG Earnings Call

February 2, 2023

Launched drone Sonya, we'll talk about those opportunities later and that's.

A lot more to come for the current year now.

Just to remind US again are we did deliver on the guidance both in terms of sales and core earnings per share and on that basis The board.

<unk> is proposing.

To their HCM to increase the dividend to nine Swiss francs, and 50 of them.

Now if we look.

On the division that will this outage.

You see a 2% growth on the pharma side. So if it was corrected for the Covid sales actually the underlying growth is 4% and on the diagnostic side.

Again, if we would correct for the COVID-19 testing then the underlying growth of the base business.

It is 7% so on that side actually you you can see the the impact of COVID-19 also on a quarterly basis and it's quite interesting.

To look at a new focus into the kind of last four quarters on that.

Slide on the right hand side you.

You've seen the first quarter last year, we still had double digit growth from from Covid.

It came down sharply down to a flat growth in the second quarter and you saw a declining business as expected I should say in the third quarter of 6%.

So what do you also see is in the fourth quarter, we have again a positive growth.

And then it's really driven by one single order, we got at the very end of the year from Japan Order, which has been placed already for some time for Warner Please and that brought us up to 4%, but if you look at the underlying business, we clearly see it.

The impact of the declining COVID-19 business and that is going to accelerate.

For 2023, but we'll come back to the guidance.

In a moment so here again.

On that slide on the left hand side, you see a bit more granularity in terms of what is happening with the underlying business.

Tire base business up 900 million. So this is the 7% I referred to and if we then include the half of half a million a COVID-19 testing sales, which should hold at last year. Then you come to the overall, 3%, which I showed on the initial slide.

Now on the pharma side actually for the purpose of fish slightly excluded two parts on the one hand.

COVID-19 related sales, which is one of <unk> and that was positive because of just Japan order. If it wouldn't have had that Japan or that actually would have been.

Negative Israel and you also see this impact a negative impact of Actemra, which is also driven by less demand.

For COVID-19.

And then on top of it we have continued.

Ocean on Avastin, Herceptin, and Rituxan <unk> of $1 9 million. So if you correct for those two effects.

Ben.

The underlying growth has been a $3 4 billion Swiss francs do you see the business the underlying growing business.

Is the underlying business is growing in the high single digits very much driven by the.

Newer medicines.

Now I find the the.

Right hand, part of slide quite interesting as well if you look back over the last five years in 2017, we still have the full sales for EHR you can see this was about half of our sales for the pharma Division.

And you can really see two things here one is we.

We were not only to compensate for that decline.

But actually we grew the business overhaul from about 50 billion back then to over $60 billion.

Today.

But what you also see is how much the portfolio has diversified.

We have a less prominent position in oncology, even though this remains our most important segment, but we have entered other areas.

In particular neuroscience of course with with ultra boost with every stupid and spring.

We are the leader in hemophilia a bit with him Libra and you see this kind of small part here.

This slice in light blue, which is by by small.

And for sure that part of the Pie charts, Bill will enlarge over time as we see a very strong growth.

Our forward buys more.

And in an area, where we want to take a leading position.

So again here.

Uh huh.

A slide which shows the rejuvenation of our pharma portfolio.

Last year. In addition to the launch of a bias movie also launched.

Loan Sameer the second new molecular entity.

As you know in bladder cancer and there's more to come in this in this field also this year.

We expect.

Hopefully three NME launches this year, you'll see them up.

In aggressive lymphoma, you have the collaboration with <unk> in Duchenne and <unk> actually wait for our data for call volume up mid should come in a very soon.

Here again.

Look at the underlying business, excluding COVID-19 related sales and I guess the message here is we have.

It's a good uptick in the fourth quarter actually both in pharma and in diagnostics with a 5%.

Growth on the pharma side and 8% growth.

In in diagnostics, so good momentum.

We ended the year.

Now stable margins.

Margins.

Yes.

In terms of cooperating.

Syed.

And I'm sure Alan.

Alan will be later dive a bit more into.

The overall financial besides clothing.

The non operating items.

Good as we announced.

This morning, the board is suggesting a dividend increase a two nine Swiss francs 50, Rappen, let me conclude.

It's a the outlook for the current year.

We have a number of Readouts are Thomas will bill will cover that in more detail let.

Let me just make a comment on.

Golar mop.

In our non small cell lung cancer.

As you know.

We didn't reach.

The stock.

Positive criticized for progression free survival.

And as you also know we are waiting for the overall survival results.

This year, so statistics, let me again.

Talk about.

Yes.

The timelines during this year.

First of all I should say behalf.

No data in house today, we have no additional information.

There's no data in house.

And we.

We expect an interim readout.

Read out still in in February .

But from all what we know today the most likely scenario is that the study will continue until the final readout in the second half of this year. So we think this is about.

Six months later, it's an event driven study.

But it will only read out in the second half of the year and again. This is by far the most likely scenario that is of course as always with an interim study a possibility that we either get a positive or negative decide if that should be the case, then we would immediately communicate that reside.

Outside because that would be clearly be material if however.

The study just continues.

Until the final readout.

And then.

We are not going to make a specific announcements in other words.

If you don't hear back in February then you know that the study will continue.

Until a final readout in the second half.

This year.

Good.

Just a word on the on the sales outlook.

We've guided as you have seen for low single digit decline and its really entirely driven by by the expected decline in our COVID-19 related sales of roughly 5 billion Swiss francs.

That is about 8% of our overall business and we will largely compensate for that.

We've also given you guidance here of what we expect on the EHR font.

They expect a further erosion but of course in the meantime, this is on a much lower level.

One 6 billion, but what that means is.

For the underlying business.

As an implied conclusion that there is a strong growth on the pharma side of course.

And our strong momentum from our ongoing.

Launches and existing portfolio NV.

And we also expect that our base business in diagnostics is going to.

Keep strong momentum so overhaul.

It should decline on the sales side core EPS to do it.

In line with sales.

On that basis, we should again be able to further increase the dividend in Swiss francs.

You very much and with this I hand over to Thomas I guess, the last time that you present.

Pharma before you take over from me in much over to you. Thank.

Thank you very much Severin and good morning, and good afternoon to everyone now before I go into the presentation, Let me just comment.

On the changes that were announced this morning first two weeks of Gran who has been announced as the CEO of pharma and the second change is that in.

If you should need like airway, our chief Medical Officer, and head of product development will also have a seat at the corporate Executive Committee with that I'm very happy that we have a complete team in S. E C and also happy with those two people because they have great leaders.

And they both have an extremely good track record and known for good expertise in this area.

Now let me take you through the numbers for pharma now with sales of $45 6 billion and we had a strong growth of 2% in constant exchange rates and you see.

That's what <unk> has said is that Actemra and <unk> had a certain effect on b cells. So underlying the pharma business was actually growing with a good 4%.

And then looking at the different regions. Let me just give you a bit more insight into that.

United States as you know, we never had access to run up rates.

But here, we had the impact of a camera.

Which was used to fight COVID-19, without this effect the underlying the U S was growing 2% in EU, we had both the <unk> and Actemra thing without this the EU was growing 7%.

Without <unk> orders to the shop.

These government in Japan, we were growing 3% and international was 5%. So you see an underlying good growth and dynamic in the pharma division.

Now let me take you through.

The P&L.

I mentioned already the sales the corp increased by 5% so our head.

Sales and with that we increased margins to 42, 1%.

Taking it to the next slide the royalties and other operating income which grew slightly faster than sales now here, we have two different effects on the one hand, we had the income from the Ultra marathon patent settlement and on the other hand last year, we had a.

0.6 billion impact from the run them brief profit sharing the U S is two things basically equaled each other out.

But these were the underlying effects in that line.

Cost of sales decreased 2%.

While volumes increased 7%.

And here, we also had some special effects underlying where we had higher costs last year due to costs related to COVID-19.

<unk> increased in line with sales and R&D costs increased by plus 1% here again, we had some one time effects last year related to COVID-19, without that we would be growing more than 45% range. So overall a good looking P&L.

From a portfolio diversification perspective, you see the acceleration of the new products at the same time.

You see impact of Biosimilars in the lower half now.

Now if I would add together the top six growth drivers octopus <unk> a baseball.

Christie centric and petco leasehold at about $3 6 billion.

Our new sales, we have 16 products now with more than 1 billion in sales to that our emerging buys more than physical.

In the coming year.

On the bottom half.

Again, our Athena pairing the herceptin and <unk>.

H&R declined $1 9 billion, so less than what we had expected and we do expect that in the.

The coming year, it will be around one 6 billion so the erosion.

Is declining further we.

We did have impact on Lucentis in SPX SPX here just.

Being a small molecule we had generic erosion in the U S and as it is with small molecules.

Is it pretty fast event.

In the centers we had.

Part of this being switches to revise and I'll talk about that later.

And also we had some biosimilar effects here.

Now let me take you through.

More details on the different parts of our portfolio first starting with the oncology portfolio.

Kotila growing 7% and this growth is really driven ex U S. In early breast cancer.

And this is the Overcompensating a decline seen in the U S.

<unk> growing 5%. This is driven on one hand by international.

In specifically, China as we got onto the <unk> last year.

And also we do see a decline in the EU, but this decline is due to the fact that we actually have a switch.

And you see that <unk> is growing extremely well.

With 121% now making $740 million.

About 33% of all patients on project that we're now really switched to <unk> and we see this conversion ongoing.

So the outlook is for this coming year that we will continue to see strong conversion and also our growth for the project in fiscal <unk>.

Combination.

For the switch from project, the tobacco and polka Tyler we see.

Sales to be stable in the coming years.

On the hematology side with <unk>, we have two pivotal trial.

Phase III studies that we'll read out in 2023.

Pulling me I have a special slide on that but the growth in uptake is really strong with 85% and this is driven by first line <unk> and the uptake in already more than 50 countries, where this has been improved if the new standard of care.

With regards to <unk>.

Much on the sales side, yet because we've only launched.

In the U recently in the U S got approval just in December So we do expect the Stefan impacting this year.

I think to note is that consume yield was now.

Added to the NCC and guidelines in the U S. As a category to a treatment with a very high level of evidence.

And so this is good to see and we will certainly help our uptake.

Finally at the center.

And.

Fantastic Medicine.

Coming from Chugai.

Partner.

Here growth of 15% in the first line market share is more than 70% and we do expect more data coming this year in adjuvant, setting, which will fuel further growth.

I promised a slide on <unk>.

<unk> in first line diffuse large b cell lymphoma.

Now this is.

A disease with a very high unmet needs.

More than 40% of the patients.

Not cured with R chop and for those patients.

Prognosis is very poor with a median overall survival of less than two years.

We will present.

<unk> updated data on phase III results with a median follow up of almost 40 months with a PFS benefit of a hazard ratio of <unk> 76.

And so we have really exciting data here and this is really recognized and PFS is recognized as a <unk>.

Good endpoint for most health authorities in fact, we have more than 50 countries now have approved this <unk> plus R. CHP combination and in fact, we.

We have now a fund.

Funding recommendation from nice, which is fantastic because we received end of January and on January 25th. We also received or we were included in the NCC and guidelines as category. One the highest level you can get in the U S.

So this is I think a very good signal for us.

You may have seen that there is an odor coming up so in oncology Advisory Committee on March 9th.

The Paducah date is for April 2nd So we'll see how this goes and obviously, we will present our case at the <unk>.

And then we'll see how the FDA decides.

Given that we have the approval in more than 50 countries.

We do hope that the FDA and supports this at the end.

Yeah.

Now, let me talk a bit about the two CD 20 <unk>.

Bi specifics.

We have.

Then sue meal.

Which comes from the GE Reds, our organization to put them up which is out of the <unk> organization.

So assuming you as had been launched in third line Follicular lymphoma.

And up is being filed in the U S and EU in third line <unk>.

Now needs to first in class and potentially best in class <unk> bi specific antibodies.

But they're also address different patient needs.

Off the shelf fixed duration treatments with the response and manageable safety.

That is assuming that is good for outpatient and community settings for indolent Follicular lymphoma, and also for elderly unfit patients.

<unk> has the best in class efficacy potential and.

It can be used in more aggressive disease on the right hand side, you see that we have a number of ongoing trials that will readout in the next couple of years.

Yeah.

The next slide let me take you through to centric.

We have a first in class indications in first line hepatitis a lung carcinoma first line small cell lung cancer and also in adjuvant non small cell lung cancer and these are the main drivers for this growth.

We've had a positive readout for subcutaneous version and this has been filed in the EU and U S. With a <unk> date set for September 15th.

Subcutaneous, it's much more convenient for patients and physicians.

And in fact, it will reduce treatment time to seven minutes and here, we have the opportunity to be first in the market for PD, one PDL, one subcutaneous formulation with likely a lead time of over one year.

As you have seen we had our first positive meat out phase III I embrace 50 point centric in August in adjuvant, <unk> Silicon Noma, which met the primary endpoint, which was a relapse free survival.

And the last data as communicated is still immature and we will share these data with regulators and at an upcoming conference.

The empower.

So were 13.

Centric and new adjuvant pass the interim analysis, and we will continue to 2024, let me say, we have not seen any data in house.

What's the recommendation of the iden DMC to continue the study.

In terms of the outlook, we have this year.

Exciting hopefully data that will come in phase III.

For <unk> head and neck cancer, and triple negative breast cancer.

We will then have also.

Also mentioned the final data face suite the skyscraper one.

Century can kill the Golden up in PDL, one positive first line non small cell lung cancer.

As a as Evan mentioned, we have not seen any additional data the interim OS analysis has not yet occurred.

And.

Has there been also mentioned the most likely outcome is that we will continue anyway. The study until.

Later this year.

Because also most of the alpha in the statistical analysis is spent on the final analysis. So this is the most likely outcome.

Okay.

Let me talk about him Libra.

Growing extremely well we have now a $3 6 billion in sales.

The growth was 24% growth was driven both in the U S and EU, beating consensus by <unk> 2 million and we do.

This momentum continue into 2023.

This is now the new global standard of care and we have.

Patient share of 36% in the.

You and the U S.

In the EU, we have delivered extension to include moderate patients and what's also exciting is that we've now moved our gene therapy into phase III.

This is based on five year follow up data with the majority of patients with more than one year follow up showing no decrease in fact eight activity so very stable expression of fluctuate.

And based on these results we initiated the phase III.

In this year.

Next let me come to immunology here, we have a decline of 17%. This decline was driven by two factors one in September .

And.

The use of.

Less use of Actemra in COVID-19.

And also the generic.

Erosion of Sps.

<unk>, 948%.

A temporary is the leading <unk> monotherapy and we are still shifting IV to subcutaneous formulations now subcutaneous formulation.

Counts by about 60% of our sales.

So they are seeing well with 6% for the full year now here, we are the market leader in asthma Biologics and we will also have a news this coming year and.

<unk> auto injector and also the phase III in food allergy.

Moving to multiple sclerosis, where would it go.

The market leader.

<unk> is now more than $6 billion in sales we have good momentum in Q4, and we do expect this momentum to continue into 2020 suite with.

We're the number one M S treatment in the U S and EU and we're the first and only therapy in RMS P. M S.

It's a six month IV and with very high retention rates now in the meantime, we have nine year follow up data so the data.

In the back is very solid.

Solid from that perspective.

And we have exciting news to come in the future we have phase III ongoing for six months subcutaneous home administration. This will come in the middle of the year and this will open yet another market for us because the IV and the <unk>.

So cute markets two different markets and we had really have a differentiated product with six months subcutaneous administration.

We have completed our.

Recruitment for the high dose study so it was even higher efficacy. So again, we are continuing to develop this franchise.

Okay.

Now let me, let me talk about spinal muscular atrophy.

Yeah. This is a small molecule splicing modifier, where we.

Have children that have less expression of SMN, one and now with.

This alternative splicing weakened and increases by using the SMA two gene.

We have sustained efficacy now for up to three years with over 7000 patients.

And this achievement is tolerated well, we have very high retention rates every city has now achieved $1 1 billion in sales and market leadership in several key markets such as the U S and Japan and many other major markets.

U S growth is driven by switching and naive patients, including patients that are less than two months old.

Following that neither the extension.

The outlook for 2023.

We will have growth from treatment naive patients and switches as well as babies of less than two months old.

Yes.

At the end of this year, we will have hopefully.

Readouts for the pivotal phase III study in Duchenne muscular dystrophy. This isn't X chromosome linked Jeanette.

Genetic disorder, so impacting mostly boys not only but mostly boys with the dystrophin gene is not properly expressed his children.

Usually it's sitting in the wheelchair by the age of 10 to 12 and you hear die in the Twenty's. So this is 100% failed to see if there are no treatments available today. So this would be a relief for these children and these parents.

This is a potential first in class and best in class gene therapy.

And we have positive functional and clinically meaningful results at multiple time points for more than 80 patients with a good safety profile based on that we have also the phase III.

And we expect this readout in Q4 in the U S.

A rep is in priority review.

With the FDA with the Paducah date set for May 29.

We have two additional studies that will run one.

So it's a three year olds and then the other one for the older.

As well from eight to 18.

Yes.

I'll come to ophthalmology by buys more had an excellent start in the first 11 months, we've achieved 577 million sales.

If we just take the last quarter last quarter, we had 300 million of sales if we multiply that times four we were already in a linear run rate you had $1 2 billion.

And we definitely had a strong acceleration in the U S. After we received the J code on October 1st.

And about 70.

Percent of the new.

New patients are switches from a competitor product.

15% to 20% of the switches from the centers or the 50% to 20% of the patients up from incentives.

And the rest is from the patients.

We've received.

<unk> uptake.

After the nice reimbursement also in the UK.

And in.

On the phase three sides. We also had very positive results in the ophthalmology franchise first.

Adding a third new indication.

Retinal vein occlusion for the baseball, but also two positive readouts for CMO, both in the <unk> and <unk>.

I think we can.

Jesse.

As you know we had a voluntary recall of four so simo.

The device the sometimes it's in the eye in the U S. We do expect to be on the market in a year or so with this device.

Again, we have very strong momentum with a biomarker.

We do believe that with.

By specific the two arms <unk> and <unk>, we are highly differentiated.

And the clinicians are giving us that feedback as well that they see strong anatomical improvements and with that we are well positioned for further growth.

The more we have.

So.

Another phase III.

Which is going to be started.

Which is anti IL six and this is another pathway that operate related and involved.

In inflammation also in the eye, but many other inflammation and we will look forward to this reading out in the future.

Now this is a slide that I.

We have shown.

In the past into Q3.

We just wanted to show it once again.

This is a post talk analysis.

Of our data applied to.

The study protocol of another company's study.

And let me first say again that we have dual inhibition of VEGF and <unk> choose a dual mechanisms we have our key anatomical benefits, Brian of the eye and longer treatment intervals.

And our studies actually reflects real world practice, we're not putting patients at risk.

We start the patients with more frequent dosing in <unk> patients.

Okay.

Fulfill all these five criteria and they have to fulfill all the five criteria.

Then.

If they miss one than we already are.

Move them to a more frequent interval.

Whereas in the other study the less stringent criteria was used in here all patients irrespective of disease States, we're actually put on the extended treatment.

And there were only two criteria and the patient had to failed both criterias in order for that criteria to be changed.

What we have done is we've actually applied our raw data to the study protocol.

And with that you can see on the bottom right side of that.

96.

And then those patients would be Q12, more and only 4% of the patients are <unk>.

I've mentioned the different phase III Readouts that you see here.

We're very excited to present all of this data at the Angiogenesis conference in Miami and just a couple of days.

Good to see how our ophthalmology franchise.

Franchise is developing now finally, let me finish with the key late stage and use those slides.

On the regulatory side, we've had approvals already for Libre and moderate hemophilia, a and also it was a.

And young children.

The late stage pipeline, we will have 19 pivotal readouts that I expected three of them have been achieved in January .

Centric and adjuvant AUC.

<unk> do you mean.

Diabetic retinopathy as mentioned before.

We have three potential new enemies this year.

Reading out cribellum up.

We mentioned that we have.

Gene therapy.

So really excited to see that but we also have a number of very important line extensions that will.

Potentially readout this year puts us centric and clicks the Vincenzo fiscal August .

<unk> <unk> bi specifics and Oculus.

With that Ah ha.

Hand over to Matt to take us through diagnostics. Thanks Thomas.

Thank you good morning, good afternoon, everyone.

My pleasure to present, the full year 2020 to Roche diagnostics results.

So with sales of $17 7 billion Swiss francs, we had good growth of 3% for full year 2022.

This was driven by strong base business growth of plus 7%.

And offset partly by decline in Covid, 19 testing, which contributed $4 2 billion Swiss francs at constant exchange rate.

And is no longer a driver of growth for the division going forward.

Yeah.

So if we go into the different product categories, what you'll see is our immuno diagnostics business core lab growing at plus 6%. However, excluding custom biotech this is growing at 9%.

Our point of care business growing at plus 17% and this is mainly driven by our COVID-19 rapid antigen sales. However, strong base business growth of plus 13% driven by the strong flu season in the northern hemisphere.

Our molecular lab business, you see minus 15, and this was driven by a decline in COVID-19, PCR testing. However, there was strong underlying base business growth again of 8%.

Our diabetes care business declined by 2% however, excluding the settlement in 2021, this business was flat and stable.

Our pathology lab, you see 11 strong 11% growth and this is driven by our advanced staining immunohistochemistry business as well as our companion diagnostics business.

So if you look at the regional drivers of performance, what you see a strong base business growth across all of our regions.

Starting with North America, you see plus 13 overall sales driven.

Driven by COVID-19, However base business grew at plus 7%.

EMEA you see minus 16%. However, this again related to COVID-19, the base business growth was 5%.

Asia Pacific plus 23.

Mainly again driven by the COVID-19 testing sales however, underlying base growth was 6%.

Latin America minus 1%, however base business growth plus 18% so across all the regions. We had really good performance on our base business.

So if you look at the development of the Roche diagnostics sales by quarter over the last three years what.

What I'd like to point out is the strong base business growth.

<unk> Q4, 2022 of plus 8%.

And in fact, if you look over the last eight quarters, what Youll see is strong mid to high single digit growth in every quarter for base business with the exception of Q2 2022, we were heavily impacted by the Lockdowns in China.

Now if you look at the Blue line, which is our overall sales you'll see a minus 9% for Q4 2022 and this reflects again the decline in COVID-19 testing where year over year for the fourth quarter, we saw a 58% decline in our COVID-19 testing.

Looking forward, we expect to continue to see good performance from our base business.

Continual decline of COVID-19 testing as the disease moves to an endemic state.

So when we look at the P&L.

For diagnostics.

Core operating profit declined 5% and this is mostly driven by our COVID-19 portfolio, where we have lower overall sales.

With lower PCR and higher rapid antigen.

However, overall, we managed to maintain our core operating profit margin above 20%.

And our improvement in our base business productivity.

Where we had a decline in <unk> of minus 2% it enabled us to offset impacts such as inflation and fund additional R&D spending which will drive the future growth of our business in areas, such as mass spec and digital solutions.

So now I'd like to talk about.

Some of the innovation that this R&D is fueling and specifically some FDA approvals we received in 2022.

So in Q3 of 2022, we received FDA approval for our mid to low throughput system, the cobalt pure which completes our family of serum work area automation.

For the United States.

Additionally, in Q4 of 2022, we received FDA approval for our cobalt 5800, molecular diagnostics system again this rounds out the full family of molecular diagnostics automation for the U S.

Why this is important as it allows us to effectively compete in large integrated healthcare network tenders.

They have a large core laboratory as well as satellite labs.

Which makes us more competitive in that space. Additionally.

Additionally, these mid to low throughput analyzers are going to enable us to continue to grow our market share and mid to low income countries, where this level of automation fits the local market needs.

Yeah.

So I'd also like to talk about the Roche diagnostics response to the <unk> outbreak in 2022.

So in May shortly after the WHI flagged the spread of <unk> outside of the countries where it is normally endemic we very quickly launched a modular virus test on our lifecycle our instrumentation.

In September of 2022, the FDA opened an emergency use pathway for FDA.

FDA authorization of <unk> SaaS within two months, we had received an emergency use authorization for our fully automated X 800 Amp Hawks tests.

And why this is important.

As it shows our commitment to public health globally.

And the speed with which we're able to get tests to patients in need.

So I'd also like to highlight an example of innovation with our existing portfolio.

And I'll talk about our strong hff's trial in acute heart failure.

So the strong Hs study was a prospective study.

Where are we had patients who are discharged with acute heart failure from the hospital and in the experimental arm. These patients had their dose of standard heart failure medications titrated.

And also we're serially tested with our <unk> Pro BNP diagnostics.

The results of this study.

34% decrease in hospitalization and death.

And in fact, the study was terminated early due to the superior efficacy of the experimental arm.

And this shows the power of diagnostics to change clinical practice and again, our ability to vertically differentiate our existing cardiac portfolio with additional approvals.

Okay.

So now I'd like to turn.

So the topic of neuroscience.

Which I know figured as well into the pharmaceutical overview.

Roche diagnostics also has a commitment to deliver innovation along the patient journey for Alzheimer's disease, and what we're very happy about is our approval in Q4 of 2022 for our confirmatory tests for cerebral spinal fluid for Alzheimer's disease I would also point.

Out that in 2022, we received FDA breakthrough designation for a blood based Alzheimer's Triage test, which is currently under development.

As you all know there is a significant global disease burden for Alzheimer's disease.

By the year 2030, we expect over 80 million people worldwide to be suffering from this illness and it's our commitment to develop diagnostic solutions that help them live a better life.

So without looking at 2023.

We have some exciting launches this year one.

One of those is going to be the launch of our point of care instrument. The cobalt pulse for hospital blood glucose in the United States.

We also expect to launch three tests into our hepatitis portfolio and as well as expand our offering around digital solutions for example, adding medical value algorithms in the oncology feel to our algorithm suite solution.

Thank you very much and I'll pass it down.

Alright. Thank you thanks a lot.

Yes, I have a little bit of a package today.

I have to bring together and I'll come to that but let me first welcome you from my side as well I hope everybody is.

Safe and healthy and happy to show you a couple of solid financials for 2022.

Yes, that's why I'm, saying I think it's not just about the results cash flow and outlook.

We will come up for next year with the new income statement representation and I would like to guide you through what we're going to change and how that looks like.

Good with that I think the highlight I will touch on all of them. So.

I skipped that one.

For the sake of time, and we'll go to the group performance right away and I think my colleagues have done a fantastic job on explaining the sales so plus 2% in constant rates as you can see and then you see really the core operating profit.

3%.

I think really good cost containment that would explain that later on.

So pretty good here then you see really the move from cooperating profit was plus 3% to the core net income was minus 1%.

So the question is what's going on here and there are two explanations for it one is.

The taxes, you might have seen that the effective tax rate went from 45% in 'twenty one.

264% in 'twenty, two that's one element and the other measurement is higher interest expenses and a burst in financial result, which I will come through but I think well explainable and shouldnt be a surprise.

And then the core net income from a minus 1% through our core EPS growth of plus 5%. This is the accretion effect from buying back our shares if you like from Novartis and terminating them, we terminated $53 3 million shares and as you can imagine I think now the share base is lower and we have a higher profits disk.

Debuted to this so that gives you a higher momentum with plus 5% good core EPS and plus 5% to an IRS net income of minus six.

And what we've done here, we've looked at our balance sheet and nobody's intangible assets on the balance sheet.

It looked really at the outlook for these assets and then came up with corrections and impairments. So I think we had higher impairments compared to last year.

That brought the IRS net income down with a minus 6% and then you'll see the first the operating free cash flow was a minus 8% will talk about this but nothing concerning here.

Had sales with shoe Guy was rone approve a $1 2 billion, we booked them at the 27th of December and I think it is absolutely understandable, but this was not converted into cash right away, that's something which will convert into cash with you at the beginning of this year. So we'll have a jumpstart, but certainly we are missing this $1 2 billion. If you like in the operating free cash flow and.

The free cash flow down by minus 16%.

As said in which came through I think we had pretty good sales and profit impact coming from Japan, where we have a higher tax rate. So we paid higher taxes for Japan, and partially for the U S. As well so that's good let's get now.

Through the details.

I think seven has made a did a great job on that slide let me make a comment about the COVID-19 sales, you'll see that on the left hand side I think in 2021, we had roughly seven 4 billion cobot sales in 2022 that dropped to $6 4 billion that's the billion.

And now I think as set for 2023, we expect that this will come down by roughly 5 billion. So I think there will be a little bit of a tail end of the of the COVID-19 sales in 2023.

That's what I wanted to add to that slide So let me get to the P&L and give a little bit on light. Yet also hear my comments of my colleagues have made comments already.

Don't want to repeat the 2% on the sales side to see royalties and other operating income I have a slide on that one I have a slide on the cost of sales. So that's going to come. So let me make a comment on MD MD I think a modest increase of 2% on the diagnostics side really investments in digital and higher distribution costs.

When you look at pharma certainly we had the launches predominantly by buys more which triggered a little bit of an increase here. When you look at R&D and that's a pretty modest increase was plus 3% and window get pharma, even plus 1%, but here are a couple of base effects on one hand, we had higher R&D expenses in 2021 due to <unk>.

<unk> and <unk> and then in 2022, we had even the release of a couple of provisions when you add that to get that as a $420 million, which worked for us if you like coming from the base effect as well as from the release of the accruals in 2022. If you were adjusting for that I think at least pharma would have grown by 4% to 5%.

I want to make us the statement, we're definitely investing into R&D and we are committed to innovation.

I really think when you look at G&A I think really.

Good cost containment good management here, which then brings us to the core operating profit growth of plus 3%.

With that let's get to the royalties and other operating income and Thomas made a comment here. We had a couple of of impacts. So you see really here the increase of 3%, which I had outlined before in constant rates. The royalty income came down by $122 million that is predominantly due to lucentis, we had lower lucentis sales as you know.

And then we have the out licensing income increased by $713 million and Thats. The settlement of sugar due to Altamira sensor patent settlement that we had that was a onetime payment which came in positively and at the same time, certainly and Thats, something which goes back to 2021.

We missed really at the Rona profit share these where the sales here in the U S where we just got a profit share we didn't show the sales to just add if you like a part of the profit and that declined by 611 million. So that youll see that matches pretty well and then we had a little bit of a higher income from product disposal of a $116 million.

Good with that lets get to get to the core cost of sales and also yeah. I think the explanations are pretty straightforward as.

As you've seen I think we had a relatively modest growth with an underlying volume growth of 6%. So you ask yourself, okay. How is that going and what you see here is when you start really was the $18 1 billion that we had incremental production cost for <unk> and to pay off in 2021 of 613 million. So.

A base effect and then I think really to get to the normalized number for 2021, and then when you put <unk>.

5% increase on top you get to the 2022 number the 5% matches very well the 6% volume increase so.

I would argue nothing unusual here and when you look at the margins Yeah. Let me, let me say here I see in the morning, I receive a couple of messages about how about profitability.

And honestly I think what youll see as we defended the margin quite well in 2022 pharma even brought the margin up as promised and as hoped for and as expected to 42% and diagnostics I think gave the explanations basically on R&D, while they have seen a decline yet.

And when we go through the core net financial result.

Worsened by $475 million in constant rates.

Let me go through the explanations equity securities that the Roche venture fund I see in the market is declining we all know that.

And I think for that I think we've done pretty okay ish net interest income I think interest rates have risen so a $77 million last year currency is predominantly hedging and that comes predominantly from Russia. And then you have the interest expenses, which was a major increase of $269 million well that's pretty clear.

That's the additional debt from the share buyback related to Novartis, we bought the shares back for roughly 19 million Swiss francs. I think we have seen that that then on the balance sheet at the end of 'twenty, one, but we just had it in the end of 'twenty, one and 2021 and then certainly we had it for the full year of 2022 and that triggered the.

The increase here than other is really hyper inflation expenses and some losses from associated companies.

Good with that let's go to the tax rate.

And to let me say here I think we ended up with an effective tax rate.

Cortex rate I should say of 16, 4%, which I think is not a bad achievement and we guided for 18% of around 18% as you know so underlying 17, 9%.

Had a couple of releases of tax provisions in 2022 as well.

To a lower extent compared to 2021.

So I think really pretty okay with what we've achieved here on the tech side. So let me summarize Ed when we go through the core EPS development.

And when you look at it at the plus four eight which is C ascend, which you see on the Brexit above that's the round at 5%.

Core EPS increased you'll see operations up by three one percentage points, you'll see then the Altamira is peddled settlement.

Really that was basically offset and more than offset.

By the loss of the Rona pre profit share, which didn't reoccur in 2022, while the minus one 5% you might ask yourself, okay, well when you look at the cooperating profit.

The Rona pre profit share is a lower number compared to the Altamira settlement. So why is it now overcompensating says in the core EPS and the explanation is relatively simple altamira comes from Japan, and Japan means a high tax rate and it means we have a minority in play for shoe guide so that reduces.

That impact and it makes I think that that movement. Explainable, then we have the net accretion of the Novartis shares.

Our buyback with the plus four eight percentage points and other is Texas.

Good with that let's go to the noncore section and the IRS income Youll see the cooperating profit plus 3% as mentioned before in constant rates and then you see the IRS net income with a minus 6% and then youll see what happened here in between I think really you see.

The global restructuring plans, which are let's say a little bit lower than last year, you'll see the amortization of intangible assets well, that's <unk>, which I think is amortized now so we don't have that anymore impacting this number we have the impairment of intangible assets, which has increased compared to last year nothing extraordinary here. We just went through our app.

And then there was not a lot of activity on the M&A side and the same basic life to legal and environmental yet. So I think when do you then take the financial resolve the Texas on top of this you get to the IRS net income development of minus 6%.

Let's talk about cash a little bit.

And cash came down as I've said, but very explainable and I would even say well I think a good good indications for 2023.

You'll see really basically every number it's pretty balanced what sticks out is the networking capital movement, and let me say net trade working capital here, even while the accounts receivables went up sugar is once again the explanation here Mr. Rohner pre sales that I've explained before the $1 2 billion project counts receivable up will convert into cash sooner.

Sure and then we have the inventories, which went up by roughly $1 billion in both divisions by roughly $500 million. So that's also something we can work against that which will.

Will materialize when it comes to cash in 2023.

Good I think really don't want to go through the margins Yeah, Let's go straight to the group net debt development.

When you look at this I think we ended up 2021 with.

With net debt of minus 18 point too.

2022 of minus $15 six an improvement or reduction if you like of $2 6 billion.

Well, let me explain that quickly I think you'll see the operating free cash flow, which I've given a couple of explanations about of $17 seven.

We paid the taxes was a higher number compared to the previous years of the Treasury and then certainly the dividend payment of $7 8 billion of the dividend we paid in 'twenty to 'twenty one.

Is another factor here.

Certainly I think this reduction could have been larger with the $1 2 billion bridge from from Sugar and <unk>, which will come in 2023.

Quick comment on the balance sheet, just for the sake of completeness.

Cash and marketable securities went down a little bit. This is because we repaid debt. If you like so we used our liquidity to do this.

The other current assets the accounts receivables as to inventories as mentioned the non current assets is really the impairments reduced debt.

Bye.

A certain number then we have the current liabilities and they have decreased significantly and that short term debt. We have converted short term debt into long term debt. When the team did really great because basically when you look at the average interest rates that we're paying I think this is pretty balanced what we had last year. So I think really.

Timing here the non current liabilities very clearly that's the long term debt now kicking in and that leaves us with an equity ratio of 36%, which I perceive a pretty solid balance sheet good with that.

Let's go to the auto can start let me start with the currencies here.

And I don't want to go back and say well what happened in 2022, you know the major effect was that the U S. Dollar basically got stronger as the euro got weaker against the Swiss franc, and I think that balanced out quite quite a little bit. So I think we were okay. In 2022, despite quite some volatility and what's your thinking what is striking.

Our model I think we're always assuming that the year end rates from 22 remained stable over the course of the year and if you do that this year well, let's say at the end of 2022 and projected on 2023, you get too heavy impacts as outlined on the slide on the right hand side, so impacts of around minus four percentage points.

<unk> six percentage points on sales core operating profit and core EPS honestly you know this is a pretty wild assumption that this is going to happen that everything stays constant. This is surely not the case for the course of 2023, so stay tuned and we will update you on a quarterly basis and you will see what's going to happen.

And my my basic argumentation, certainly would be we have a natural hedge in all the countries in all the region. So we have area are also major sales so I'm not really concerned here.

Let me set the stage as well for your projections on 2023 and Juno has the core EPS I think this is now the core EPS 2022 as reported you'll find it on page three in the in the Finance report.

You have to correct that number for the foreign exchange losses could could habit every year.

That number is an all 0.32 or three strengths. So it's early to happen how do you get to that number.

You go to page <unk>.

<unk> nine in the Finance report, you'll find in foreign exchange loss of $278 million, you would take that $278 million you put a tax rate on it.

So that reduces the impact and.

And then you divide that by roughly $808 million.

Shares and goodness, China, if you like.

You'll find that number on page 116 of the Finance report and that brings you then to the basis for 2023, which is a 20.6 to.

Good with that.

On the outlook I think well I think pretty reasonable outlook that we bring in here for 2023 don't forget I think really we expect to lose roughly $5 billion in cobot sales, which is a very significant number represents roughly 8% of our sales and you see really we work against that don't forget on top we loose on the on the <unk>.

From our side roughly $1 6 billion.

Due to <unk>, our Biosimilar competition.

So I think really.

We closed the gap quite well.

We want to maintain the margin and defend the margin was the core EPS growth broadly in line with the sales decline and we stay on track with the dividend.

Good that leads me to my last section and this is really about.

The income statement.

Presentation.

And we would like to change that for a couple of reasons and there will be a couple of changes, but let me lead you through this really step by step.

The first one is really that we would like to.

Apply more to what our peers do and we would like to go to SG&A to selling General administration and that is a relatively simple step because we just have to add marketing and distribution and G&A and that's what we're going to do in the future. We will introduce a line of other revenues.

That's another point here.

So really we had before revenue, but now we use other revenues instead of royalties and other operating income.

And I think that is very important.

Because it is a little bit let's say when you look at <unk>. The discussion about what is revenue and people want to we want to protect that well.

You will see there will be now a line other operating income and expense in the P&L and that will be very much characterized by the disposal of products that will come in there where you can debate is it revenue or not in ICB project here evidently that this needs to be in another line. The other piece is really about removing allo.

Patients that is certainly something we do on if you like because we wanted to do it we want to simplify and standardize what we're doing internally and we had quite a hefty allocation system and Roche and we want to get rid of that.

And certainly I think what that means is.

That we really reduce our costs that we allocate to the divisions that will have an impact certainly on their margins, what's not going to change is certainly the key metrics sales group operating profit and EPS all of that remains unchanged.

Good So let me now lead you through this I think the first step is certainly and you see a small number one on that slide here right in the middle and this is just adding up.

M N D. In G&A and then all of this and summarized on the right hand side into.

SG&A. So we have now an SG&A line erosion you see on the right hand side, how that would look for 2022. So that's the first step and then you have the second arrow and the second the number too. So we moved $612 million income from disposal of products and 184 million other income from within.

DNA to the new line other operating income and expense, so youll see that and as a third step we rename.

The line royalties and other operating income into other revenue.

So I think that's more of the <unk> move that I've mentioned before good and then the last step is really about the allocation. So we are removing allocations from various reporting lines and that leads to a $660 million lower cost of sales and the $788 million.

Lower R&D costs, the major driver hits informatics caused by the way. So it's I think as other group functions as well, but the major drivers informatics the sum of the two which accounts for its mentioned on the slide 1.458 million. Sorry, 145, 8 billion is moved to SG&A as you can see so you saw.

See it on the far right.

How the restated P&L looks like and of course still with the same core operating profit of 22.1 dollars 73 billion Swiss francs.

Good I think that's what you wanted to bring to your attention I think they'd be close that section by saying.

Well very clearly I think when you look really at cooperating profit in absolute terms I think nothing's going to change what will change, though is how the results look like in the divisions and for corporate and when you look at the margins and that's really on the right hand side on the lower part of the slide you'll see for the Roche group cooperating profit margin.

<unk> remains the same with 35%.

But it's going to change for pharma, which then really goes up from 42, 1% to 46, 4% and then for diagnostics from 21% to 24, 7%, but this is just due to the fact that we're allocating less from corporate as we did in the past good with that.

I think I want to close my section as well and so I assume we are happy to receive your questions in <unk> that it took quite a while.

Thanks, Allen and we will open the line and actually the first question comes from Emmanuel Papadakis Dr Bank.

Please.

Thank you for taking the question, perhaps so could kick off with a.

Question around the breast franchise Handbook.

Curt sorry, a lesser decline in Q4 for the first time is that now likely to continue.

And we are anticipating some head to head new adjuvant data from the same competitive product is pressuring geared metastatic.

What's your confidence around the sustainability of the franchise in the midterm as well.

And then on progesterone phase go.

Please go it seems to have slightly plateaued in the last couple of quarters. So just give us a sense of what percentage of the franchise. You believe you can convert by the time the jet faces Biosimilars and perhaps you could also remind us when you expect that actually to be.

And then perhaps.

Since amongst firstly it may be premature question on broader strategy may be.

A little early to comment but is there an intent to use the forthcoming management change as an opportunity to review current group strategy for example.

<unk> to the group perimeter, and then I intend to indeed, the R&D structure the company or should we really be looking at continuity of approach. Thank you.

Yeah.

Okay.

Thank you very much for your question.

Thomas.

Just calling them good is it.

I mentioned in the presentation, we do believe that for the next couple of years could tell US Ken remained stable and this is due to the fact that already I think more than 60% of.

Although our sales with Qatar that are in the adjuvant setting.

As you mentioned there is a certain competitive pressure, especially in the metastatic setting.

And these trials will probably read out in a couple of years and so we will see how these trials.

Then going to readout and depending on that we will.

We see an impact at the same time, we know that that's about the same time when we also have.

Our patent life ending on Cotai, though.

Now you asked the question on Tesco.

And the conversion, we don't really see them.

A slowing down of.

The conversion.

And.

For fiscal we have patent life, which is much longer.

And this is a triple combination so and very difficult to manufacturers. So we do believe that physical and has a longer.

Our lives.

Then the question was around reviewing of our group strategy.

I do believe that as biology will be more and more better understood that.

Diagnosis will become more accurate it will become earlier.

And this combination of diagnosis and medicines is going to be really essentially at the same time, we know that.

Data and artificial intelligence digitalization in health care is still a huge opportunity.

Is something in healthcare, that's lagging behind but here. We can also have an impact and I think this combination of these three fields is absolutely critical so with that I do believe that we have the right strategic.

Action from my perspective.

Thank you.

Can we have the next question please.

Next question will come from John Christner J P. Morgan.

Hi, Thanks for taking my questions. So.

The first being how big of a benefit Wally do you see from the Embraer adjuvant liver cancer indications with centric both in China and ex China, and then how would you view the reimbursement in China versus the local players.

And then my second question is around defending the margins in 2023.

So maybe kind of what sort of level of product disposal income have you assumed in your guidance given we saw about $600 million in 2022 should we assume the kind of the continued streamlining of the portfolio. So just trying to get a feel of how much cost savings will be needed to defend the margin and kind of where they're.

Coming from.

Right.

You want to take the margin question the guidance for I think we have I think the guidance implies that I think we are very prepared to defend the margin and I think that's the stigma we want a center and honestly I think all the ingredients here that you didn't have in the P&L have to play out. So I think we will see what that means to product disposals in 2023, certainly be up.

Number in mind, I think not worth to mention it now because we have to see how all the other things come together, but very clearly I think we want to defend the margin in a period, where basically we say we have declining sales, which I think is quite a commitment.

Comment on I'm sure 50, so we've only communicate topline results. These results.

Now going to be shared.

With our regulators and they are going to be presented in the next.

Conference.

Obviously, <unk>, a big disease burden in China, but I would say, it's still too early to comment on China, but.

Is is.

An opportunity both outside of China and in China in my perspective.

Next question please.

Okay.

Next question would come from.

Matthew Weston <unk> Suisse.

Thank you very much.

A number of questions. Please I'm going to start with a big picture one I don't know whether its the Thomas as incoming CEO or whether it's the sovereign is incoming chair.

But you've lost a number of late stage products over the course of the last few months cancer didn't contract soon has gone out to phase III in <unk> is uncertain.

Still have a very strong balance sheet.

M&A has not really been a feature of Rosh previously, but is now the time for you to act to bolster the late stage pipeline.

But also I'm aware of the family ownership is now much less of an issue such that a share buyback is much more possible. So is there any way that we can see improved capital allocation.

Or changed capital allocation, perhaps I should say at Roche.

And then just a couple of quick product questions. The buys moat. The strong demand can you confirm that you have no concerns about manufacturing capacity and ability to supply.

And then the second issue is around to centric adjuvant lung has been a key driver you have a competitor with now a broader label is there a risk to growth.

Okay. So let me have a first go on the overall.

Big picture question in terms of our strategy and capital.

Allocation first of all the overall capital structure a bit.

The ownership of the founding families. I mean this is absolutely.

No influence on how we run our operations and there's also no impact or change in our strategy following the shift by.

Of Novartis.

No.

As far as M&A is concerned.

Yes.

It's always interesting to bring in opportunities from the outside and we keep looking for opportunities.

Uh huh.

<unk>, which which potentially if ice but there's also a price to be paid and what we have seen in the past.

In particular for late stage opportunities.

It was difficult to justify from a business case on the few so we will see in.

In the future, but Thomas I guess.

You would agree that we keep looking rightful opportunities.

We did in the past, but I don't see any.

Fundamentals.

<unk> overall strategy.

Yes, I can confirm that I mean.

We always do due diligence so whenever anything is on the market.

Usually aware of that and so we look at it and we make decisions.

Based on the science and based on the financials and we will continue to do that as we go forward as we've done in the past.

Then you had a question around <unk>. If you have any concerns if we can manufacture enough we don't see that.

That will be an issue.

And yes, we are excited about.

The strong uptake and the clinical benefit that patients are seeing with the dual action.

Of the two arms of the bi specific antibody.

And then you were mentioning.

Study that was just reading out or got approval.

Lately in adjuvant non small cell lung cancer.

Key notes of 291 study I would say.

We have looked at data some of the data is a bit counter intuitive. So I think it will be a bit of a discussion also among oncologists.

Colleges.

Because actually the hazard ratio was it better in PDL one negative then in PD Lone positive population now.

But it is a broader label as you mentioned, but yes, I think that will be a bit of a discussion. That's the first point the second point is that.

Yeah.

We have.

The label in PD one positive.

We have first mover advantage and we have a significant better hazard ratio in fact, our hazard ratio and the PD. One positive population is to your point 43 versus <unk> eight two in the keynote 291 study, which is a significant benefits to patients.

Well typically answer all your questions or any additional questions.

That's perfect. Thank you Bernard.

Okay and.

And we move on.

Next question would come from Emily field from Barclays Mlps.

Okay.

Hi, Thank you for taking my questions two please.

The first one just on the competitive landscape for <unk>.

A lot of attention being paid to the recent launch three BMD Rituxan app at a lower price point could you just.

Give some thoughts on how you continue to expect to continue to take share with OCA, that's given that development.

And then also just a clarification on <unk> on that on skyscraper one.

I appreciate the commentary that you haven't seen any of the data, but I was just going through some of the comments. The company made at the Ash Conference recently that talked about the interim data expected in the first quarter of 'twenty three and then a final analysis.

Being in the earlier part of the second half of the year.

Just wanted a confirmation that nothing from.

Timing perspective has changed since ash. Thank you.

I just would like to clarify on the timing because we gave a more narrow window here. So the interim readout will actually be in February .

Only in the first quarter.

And the final readout will be six months after the interim readout, but its event driven. So therefore, you can be so precise when exactly it will happen, but but we have confirmed that so so that's timing.

This is confirmed.

Thomas.

You can actually also on the <unk>.

Sure and thank you Emily for the question so.

They are.

As you mentioned to be in class.

Now competitors okay.

And it takes a month now we have the longest data with more than nine years of data we're the only company.

It's approved in Pms and Rms.

What we also see is that the market is kind of there are two different markets. One is the IV market and one is the <unk> market.

Yeah.

<unk>.

We have the six months.

Dosing.

Uh huh.

I E.

On the one hand, but we will be also hopefully on the market with sub Q version, where the trial readout in the middle of the year. So then we can play in both markets right now I would say it is two separate markets with regards to six months I think from a.

From a data perspective from a.

Where we are approved if you missed this RMS and also in terms of the dosing frequency etcetera, we see ourselves significantly differentiated that's also from a commercial presence.

We are much more present in the different markets.

And a company that's selling of the six months.

Okay.

And I believe seven answered the question on tickets for skyscraper one.

We don't have.

More information on any data so nothing has changed.

And so it's still consistent to what we said in the past.

And yes, we are.

Hopeful that this will be positive and the final readout for sure.

How many did we answer all your questions or you have any additional questions.

That was great. Thank you.

Okay.

So the next question would come from Luisa Hector from Bloomberg.

Lisa.

Thank you for your time, Thank you for the call just excluding David as we think about 2023.

On.

Any particular Nathan talks.

So it would lead to arrange for the new numbers.

We've touched a little bit on.

To catch Joanna.

Anything unusual citycenter camera.

Potential biosimilar at the end of the year, you feel everything's on a fairly stable.

Trajectory.

And maybe just follow up on those impairments.

<unk>.

I mentioned that just some explanation about what went wrong and Nike.

The hemophilia a.

Because that is dependent yet you are still planning to start the phase III, Yes, David update there an end date.

Plans for the phase III as well thanks.

Alright Super.

Perhaps just a word on the impairments. So for spark is primarily a matter of.

Of delays.

Our timelines have moved out actually for the whole field, but we are impacted as well.

So spark as part of the.

And we also took an impairment on <unk>.

B B you have seen that the sales.

<unk> bin.

Very slow and and we have adjusted our projections and as a result of it.

The respective impairment calculator alone just to put it into perspective.

About 700.

Liam.

Yes, there was some more granularity on.

On the on the guidance on a product level.

Sure.

As you said.

Both in severance presentation in Alan's presentation is that.

The biggest impact for us in coming years.

The decrease in COVID-19 related sales of 5 billion and when you calculate that on our total sales that's about 8%. So that's definitely the most significant effect.

Also.

So on one slide the effect of H R.

Roughly $1 6 billion.

With regards to other moving parts, we do believe that.

Erosion will continue as well as under the census side.

We don't see any impact of timber.

'twenty three because biosimilar will not be on the market yet.

Towards the end of the year.

Okay.

Thank you.

Can we have the next question please.

Okay.

Michel did we answer all your questions do you have a follow on question.

Fine. Thanks, Thanks, very much okay.

Then we move on the next one would be Andrew Baum from Citi.

Hi, many thanks couple of questions. So firstly on Sky, one just going back to the alpha spending in relation to the interim analysis and apologies for this somewhat nerdy question, but my understanding is you're using O'brien Fleming.

I'm sure that your team would know as a sort of exponential fund spending which means that that will be an exponential increase in the alpha spend maybe the probability of hitting at the interim if it is positive is materially greater than it would be additional analysis I wasn't actually improve that much by the time you get to the final so I'm just.

Somewhat confused why you're downplaying the relative importance of the interim assuming you are using O'brien Fleming. So thats. The first question the.

The second question is more big picture.

The organizational changes, which you and Thomas announced this morning.

Bring Thomas into greater proximity with development decisions through the direct line report, leaving Teresa focusing on the commercial could you talk to what you hope to achieve beyond the obvious with this is is about prioritization of portfolio is at decision, making in clinical trial design, how should I think about the key function underpinning that the key.

Drive underpinning this discuss decision thank you.

Thank you for the questions Andrew.

Well on the first one.

I'm not the expert here, but talking to the scientists are what they are.

Tell us is that the most.

The most likely scenario is that it only reach out for the final and this is perhaps we can make some follow up on your specific question I can just reflect what I hear.

From our scientist and again, that's what they have been saying.

Throughout that process, because we don't have any new data right. So.

Hi.

Just wanted to put that.

Into perspective, there is no change in our assumptions.

Just wanted to make clear, what our internal expectations, but perhaps.

Thomas you can give even more color to that and then also talk to the organizational changes.

So we've never disclosed.

Physical plan.

Regarding the.

The mode of analysis.

Used O'brien.

Mentioned.

It does increase overtime.

Alpha and so the highest likelihood is at the end.

So we just ask you to be patient on that one again, we have zero view on the data. There is no change in what we are communicating and I think that's that's important for you to know.

Then regarding the organizational change.

Yes, whenever you have a management change this is an opportunity. When you also look at how you organize the team and.

As you know in the corporate Executive Committee, we have already P Reds and T Red Bee bridges and.

Hans gave us representing those two organizations.

Yes, we felt it was a good moment in time to then also add late stage into the future.

Now there has been committees like the late stage portfolio from video.

Yes.

They have been talking about the R&D portfolio as a whole, but nevertheless, given that there was this kind of opportunity we thought it would make a lot of sense to have the holistic end to end R&D discussion and also in the corporate Executive Committee.

Yeah.

Yes.

Yeah.

Any additional questions Andrew from your side.

Many thanks I appreciate it.

Okay.

Then we move on to the next question would come from so we take a pillar.

Yeah.

So Richard please.

Yeah.

Hi, Thanks for taking my question there is from Morgan Stanley .

The first one on the buy side.

Physician feedback just suggested that switching EMEA refractory patient has led to mixed outcomes with some patients getting whacked intended try England section to the buy side is there a risk that the launches Eylea hi, Jay fully proficient SaaS exhausting today Monday with Eylea for switching the remaining with vaccine.

And then secondly, just a follow up on <unk> Acton and liver.

Okay.

Can you update us on the approval timelines and will be immaterial IMS data and it alive and appraisal. Thank you.

Yes, So let me just answer the second one first with the centric.

So we just recently.

At least the data we will show the data in the next conference we're in discussions with authorities.

So at this stage, we can't comment on exactly when we will get the approval.

But we are in discussion.

Regarding the biased more.

I mean.

I've had a lot of interactions lately with our people.

Who.

Get a lot of positive feedback from physicians in fact, especially on this our technical and clinical improvement.

Drawing.

The eye, where the dual mechanism plays a very big role so increasing the dose of <unk> if it doesn't impact.

From that stage also when you compare the two trials and you do a fair comparison, you see a significant.

Benefit using <unk> versus.

The product that you just.

I mentioned, yes, so I would say.

I've not heard that.

And in fact, we see.

Very high switching rate from this other product to our product and we are confident that the growth of the business will continue.

Beyond the mid of this year.

Into the future.

So retaliatory answer your question or you have any additional questions.

Thank you.

Okay.

And let me maybe pick a question here from the.

Cats it.

Comes from Simon Baker, and that goes to you might say well gosh.

I also get the question finally.

Can you give us a bit more color on the solid growth ex Covid and the question was also referring to here what evidence and trends are you seeing for the non COVID-19 use of the machines, which were installed during the pandemic and maybe you can fine not thank you.

Sure. So I can maybe start with the second part first so.

We expanded our installed base of our automated molecular diagnostics instruments significantly during the course of the Covid pandemic and you see that as well.

The 8% growth in our base business in molecular diagnostics.

So what we see is those instruments, which are placed in a lot of hospitals and laboratories across the world are contributing to future growth.

Of all of our non Covid diagnostic space.

And.

So that's the second part of the question. The first part if you look at the general growth of the diagnostics market.

Mid single digits, and we expect to Outcompete that and.

And so our expectation is that our performance should be somewhere in the mid to high single digit range as.

As we as we head into 2023.

Thanks for the answer.

We'll take the next question here from the Q it's.

It's from Peter Welcome Peter.

Peter Please.

Yeah.

Peter Your line is open.

Yeah.

Okay, maybe we move on and Sam can try again later.

Then we would go to Matthew Weston.

Matthew.

Please.

Thank you the fastest follow up ever.

It's a finance question.

Alan tax there were a number of moving parts you set out a whole series of moving parts 'twenty one versus 'twenty two.

There's also a lot of debate globally about what will happen.

Tax rate in terms of OECD millimeter and everything else can you give us some help in pointing where your best guesses for the tax rate for 2023.

Yes, I said I think I'm pretty clear here I think about 18% this what we're heading to.

I think I expect really.

The minimum tax being applied I think.

Earliest 24, I think 12, perhaps 25.

Is it more realistic date, if we can really agreed if countries clinically.

On the right basis to put the 15% on so we will see let me also say I think even if I think that scenario comes into play I think that appears to us rather manageable suddenly it wouldn't be it wouldn't be a positive, but I think rather manageable. So I think from today's point of view I feel pretty okay about that but to answer your question right away you want.

Again, I think 2023 should be around 18%.

Thanks, Alan so.

And then we have another follow on question this time from them by the way Matthew.

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