Q1 2023 Novo Nordisk A S Earnings Call - London
Good day and thank you for standing by welcome to the Q1 2023 Novo Nordisk a S presentation, London Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session from the audience in the room.
Be advised that today's conference is being recorded I would now like to hand the conference. So what's your speaker today Karsten Munk Knudsen CFO . Please go ahead.
Actually it's <unk> from Citi.
Welcome everyone.
Nice to have customers Hudson group, CFO and head of R&D.
Various members of the <unk> team in London for the Q1 Roadshow, you all know the drill.
Presentation straight into Q&A a bit of.
Housekeeping.
Sorry.
Tables, which are all currently so if you'll have refineries and silenced can try it quietly and collected last day will be fantastic.
Thanks, Pete Thanks for the invitation.
Your hosting.
<unk> Q1 roadshow.
The London meeting and conduct adjustment in Q1.
We're bringing a fantastic set of number so it's great to be in London.
And also for the ones that being.
Available online.
OSP.
A few slides and then onto Q&A and and.
I'm sure we'll have some questions about the future and how is that things are going to pan out so.
The future has the tendency to pay it out differently compared to what we expect today based on state College.
Sure the cautionary statement in terms of forward looking commentary.
When we look at.
And our strategic aspirations and you've all seen it before.
This is how we hold ourselves accountable specific in terms of our strategy execution.
As a company.
And not going through all the details, but just say when we look at persons assisted.
<unk> ability is Gee, if you will.
We are progressing very nicely both in terms of our patients' needs.
Sue true remissions, as well as being a sustainable employer.
And the diversity of targets, we set out there.
The pipeline will get back to a question, but very good progress across the <unk> service I think this is a very exciting year for <unk> in terms of.
Readouts on a number of very exciting to us.
And then there's two of commercial execution.
We continue to be the global leader in diabetes.
Global diabetes value market share.
At 32% now.
By one seven percentage points over the next year.
More than doubling our obesity franchise of Australia.
Relaunch of maintenance.
Mainly in the U S and the timing of our rare disease business is down 60%.
We unfortunately have had some.
Very unfortunate production challenges head on on the client side.
It's posted on sales.
On rare disease and.
All of that.
Yields a topline growth for the quarter of 25% and operating profit up 28% and corresponding capital allocation to shareholders. While we still continue to invest in our business Capex et cetera.
Going through.
Our commercial performance for the quarter.
What is the split is really worth noting is the step up in sales growth in North America, 41%.
Really being a key driver of Av.
The new business growth in the quarter to 25%.
I do note that we had some wholesale inventory.
Late in the quarter amplifying the.
In North America, and hence Great group results.
However, when we look at the full year.
I think we are still operating in.
In the trenches in terms of top macro Idaho, continuing to deliver double digit growth driven by it.
The different geographies.
One note on China, <unk> down 5% in the quarter.
The good part about five percentage.
First of all that this is the last quarter with <unk>.
Feedback from ETP on the growth rates. So now we will have annualized it when we get into Q2.
And secondly, when you look at our Chinese business results.
And of course, we have been moving our resources towards specific and price to take our growth opportunities in the market and showing very strong growth there and hence you should expect us coming back to growth already from the second quarter and almost in China.
Actual therapies.
The 20% to 25% growth is really being driven by coupon in diabetes now cost of securing around 50% of group sales.
So really it is.
Delivering strong growth of 50% both Io in North America.
Instead of down 11%, that's PPP, China, and its U S pricing and I think remarkable to note now here to monetize it as profit doubled.
Top of the size of excellence and diabetes.
So just want to kind of 2% of group sales.
<unk>, 25% of future in the quarter.
We're basically doubling again thats, the Gobi will come back to.
And Ramsey is down 16% linked to the north shore and manufacturing challenges.
Sure.
Talking about David.
Brought this slide just shows the excellent ratings.
Sales.
Only a few years back we were talking about incremental sales year on year.
Call. It 1 billion, one 5 billion and then look at how we're staffing up now so really a dramatic step up.
So that share ex trajectory you see in the middle of the slide.
In round terms when you look at added <unk> on.
On a year to date basis of <unk> across doses.
The incremental weekly editor exit to the tune of $6 six options.
And as a consequence, we.
We have had two.
To adjust the number of new patients being able to Saddam Jacoby. So we're producing.
In chasing doses lowered our strengths because we simply scaling.
Biologic based platform, so very very significant level of sales growth. So you should expect.
Perhaps not imminently qualified in the coming months you should expect.
Step down in terms of new patient starts.
And we do this to be responsible and have a sustainable business. So we're not creating.
Hey.
Biggest.
Paul in the market and what we can sustainably supply in patients titrated through took strengths and as a consequence, we are also pursuing a gradual rollout.
Ex U S.
We will be very eager to launch it amendment in August .
We have approval.
Demand is there but of course, we need to invest.
Surplus available.
Sorry about that.
So.
That is my assessment headed automatic.
Development.
Go through with the latest and greatest side arty.
Thank you very much.
So I think you're talking about high doses of all generics.
The space of diabetes.
You talked about the need to show.
Equivalents from an efficacy perspective from a safety perspective, but also from an exposure.
As compared to simply too conservative.
But also compared to $2 four milligram.
Yes.
I will now read out.
These results were still waiting for the PC resource those will come.
The next couple of months.
But just looking at the diabetes results, we obviously its related.
<unk> was designed to compare.
40 milligrams of <unk>.
The most basic metal type 225, and 50 milligrams.
Achieving basically all desired outcomes in terms of.
<unk>.
When it comes to weight loss as compared to 14 grams for both 2550 milligrams and also a differential between 25%.
And.
Equivalent dataset placebo control at the same time, you can see both weight loss and placebo control comparable to that of <unk>.
So really achieving the data that we wanted to put disposal, obviously both for that portfolio.
The data.
Full disclaimer she'll have not.
It's also important to call out there.
Given.
Yes.
The supply chain.
Rather the high demand that we've seen.
In other areas of your maintenance on franchises.
We had to consider how we roll this out.
Okay.
Brought up.
Supply and demand.
And we will also have to when we had.
The same consumers.
Yes.
Broadly speaking is constantly alluded to 2023 first of all it has been.
We'll also be.
In the next couple of months.
Got it.
We have faced.
These ongoing.
With time.
All of those units.
So maybe in the diabetes space, obviously, calling out instrument I've done a global regulatory expertise to use.
U S and Europe and China.
Securing that debt.
Debt.
Obviously, it will be made available to patients with diabetes.
Both of them.
Also I think important to call out.
<unk> data.
Very strong efficacy.
In face of all treatment superior to that of both banks.
Got it.
Have a good safety profile.
And indeed basal bolus treatment parity on efficacy.
Safety profile and then obviously, it's upside in all cases with 313 days of ejection Baseload.
So britta and attractive offerings in type two diabetes in type one diabetes, we did see more of that because.
You still have a diabetes.
Diabetes signings for both Taiwan et cetera.
But we do expect more dialogue with the regulators on stuff like that.
And just as a reminder from a value perspective.
I wanted to be two 7%.
So obviously, that's a big big potential.
In this space.
Talk about the timing cost results, but maybe just calling out something that has caused a good deal of interest.
Bolted on two studies, a phase II study with <unk>.
Fixed dose combination between magnetite.
Yes.
And then a one.
Other component.
<unk> agonist.
One.
Okay.
For the first one.
We are convinced suezmax side and the <unk>.
Ed.
Some interest we saw no checks of adding CIP.
On Windows, and most when adding <unk> Smith.
Let's see.
Several different sort of interpretation.
And we can make it go.
And if you're interested.
But we did see a.
50.
Safety profile of the co equity interest.
And probably mentioned auto announcements.
We also saw some efficacy.
Clients.
And therefore, we look to Chris.
Robert.
In the space.
Obviously that would be the split the same skills.
Yeah.
I had to call out the select.
Incredibly exciting.
We are in the process of closing down listening.
You heard us.
So to have the readout around the middle of.
Of this year.
All mature in terms of how we assess that we're now working towards.
July August .
It may be closer towards.
So.
Two.
Sort of.
So much more and as you will recall all of this.
Dictated by nature.
Excellent.
So so.
I'll add a sufficient number of events to announcements that drove that down.
The remaining events during the first half.
And then maybe also talk about.
All Im just very briefly is going to be incredibly exciting.
Ron.
Follow on to.
<unk>.
Similar.
Profile.
Basically.
And in Egypt, sepsis, but you didn't make sense for that.
Yes.
We've obviously announced some flexibility and we can hit that.
As an offering voice and messaging as well.
Her skills.
In the rare disease space.
Probably noticed.
Approval of <unk>.
Canada and almost at the same time, a complete response letter.
Yes.
Smith.
Not related to the Doc, but most of the companion diagnostics.
Following the glaucoma components.
Consistent.
If they requested more data and we're working with them.
Hum.
Sure.
So I would go.
<unk> deficiency.
Chris declining.
One statement.
Sorry.
And then maybe other serious chronic diseases, just calling out to three doses.
Our opinion.
In pockets, but since this is for one hour.
Okay.
Thank you.
Thank you Allison.
We are in the final stretch in terms of flats for Q&A.
Yes.
So.
So we pre released our guidance for the year the links with the second CMO coming online almost four weeks ago. So so now we're guiding a topline growth.
Between 20, 30% Im just repeating between 24% and 30% contract sales growth.
Amazing growth. If you asked me that translates into 28% to 34% operating profit growth.
Getting an average given the attitude of our sales growth.
And then yes, we have currency going against US this year linked to the weakening U S dollar tools for Europe , and some of the currency strong emerging market countries.
No changes to tax rates and free cash flow up command linked to the growth of the business. So between 6% and 74 billion DKK. Despite the fact that we're investing.
<unk> 5 billion in Capex this year to expand manufacturing capacity and with this cash flow, we have been able to increase our share buyback program. This year from 28 to 30 ability 80 kicking so.
So that covers.
Outlook and our strategic aspirations.
Now, we're ready to move into Q&A and.
The host was the fastest so we'll start with people.
Even though it is a race to get great people.
Thank you. Thank you.
Look I'm sure, we can discuss supply and selection and revenue seems like extremely quick the music.
Maybe we start off on regulation and I repeat the question I asked last week on pricing so just on regulation.
Law.
For the Congress Tomorrow is it any thoughts there and also in Australia.
You talked about over the years is are you hearing anything in Washington.
Moves towards getting Medicare reimbursement obesity. So that's the regulation question around pricing I mean, there we.
We go the different brands different doses different price points, Kevin Majora same same brand same doses.
So you're going to see this separate price points between diabetes obesity.
Especially rapid.
Mary.
Price erosion on GMP, one of the PC pricing.
Thanks Pete.
And thank you focused range up to two questions. Sir I think after last weeks conference call, perhaps said, we get a better process.
And everything all of us to answer.
Two questions.
And then we do have multiple rounds.
If possible.
On regulations, yes, Nashville will attempt the Senate hearing the British standards Cemetery Tomorrow, together with with the Lilly and Sanofi.
It's around to include pricing and.
I think.
Rarely do you see a lot of regulation coming out of Senate hearings.
Right. So so.
Thank you.
It will be a hearing on <unk> pricing.
Net losses looking very much forward to discussing and we provided a lot of transparency on our U S insulin pricing in there.
In our annual report and you have seen our incentive price going down consistent phenomenon for years.
In terms of.
Based on net pricing so and so.
So that's that pattern regulation triad.
Still TBD.
You said.
Of course, we are.
We are encouraging as much as we can.
It should be neutral to reimburse it.
The treatment for <unk>.
In the U S and.
And at the same time, we do know that more and more states have decided to cover the.
Covid.
Yes.
For the Medicaid population and that states so making.
Making it even more confounding in Hawaii.
Should be covered for seniors, but thats.
Political decision that then of course, we will have to accept and live with them.
Soon cheers.
The size of an upfront.
Marriage.
As to as to the secret brand versus.
Yes.
Well Brent type strategy I think.
Ultimately, it's module needed to answer.
I bought back commercial strategies.
We've noted the EU approval of <unk>.
Yeah.
Two seven times.
Whereas in the U S.
It is still TBD.
In terms of the linear commercial approach, whether it's single or dual print.
Approach.
I would say.
From a.
From our perspective of course, the synergies running with one brand, but that also benefits.
It jumps up to blueprint in terms of how to manage and navigate the market I think most recently evidenced in terms of it.
Typical with starting doses.
And so on so so I think actually given the nature of the PC market I think that that could be a benefit of upfront with France.
France strategy sure.
From a from an overall perspective.
Of course, our competitors.
Free to make up their mindset decisions accordingly.
Thanks Pete.
And we'll go to Michael Thank you.
From UBS.
Two questions one.
Despite the inventory impact in Q1, the value of the volume both for aseptic epic Ob sort of very different effect when compared to Q4 and Q3, just wondering how you could speak to channel mix or anything in that that'd be a normal now.
And then just going back to to supply so as we think about the NTS being restricted the.
The way that ramps through the year.
The moment that becomes really relevant is when your new plan should come online in UCD CMO online already so the buyer's strike the new startups now as you go into that incremental supply in coming months.
Thanks for the question Mike.
And I would say is true.
Thank you volume in the U S on the Pacific and began with an I would say.
The Kobe as rapidly so nothing special there I think.
One one trillion worth making is linked to my prior comment on on the increasing Medicaid access.
So having some.
Some channel mix impact on pricing, but on a very positive background across it.
More than 5 million incremental as we have.
From the Medicaid segment of be sufficient so so thats conscious decisions, where we have been out and negotiating with the with the.
State Medicaid agencies.
The Texas.
So thats, the <unk> and <unk>.
Part of that you see.
They always be careful about.
Or interpreting on quarterly volume value because.
It doesn't take that big swing factors in terms of.
Wholesaler inventory movements and so on to the calculation of so so so to boil it down and ultimately to what were seeing that she is similar to what we've seen in the past few years, so call it 10% to 15% net price declines linked to <unk>.
To regain enhancements.
And kind of makes sense.
So apart from that that's a plus minuses on inventory and IRA.
Going opposite ways.
If you Peel that away.
Change competitive price.
Then.
Answer the question about.
Limiting the starting doses.
This is really about safeguarding continued share of care for patients and allowing patients to step up.
Through the doses and be able to deliver the right treatment experience for patients.
Had assessed most put options on Hodgkin's market.
Is it linked to the very significant uptake in demand.
So this is something we do wild wild with scale at full speed supply chain wise. So this is this is Sam.
There's no real triggers.
The supply chain. This is just full speed on scaling and then we adjusted how can I.
And market uptake of course, so we have a sustainable business scale.
Okay.
Yes, I'm a little bit of that.
<unk>.
If I take the Sabre first parts here, we have mics in them then we can move around for the mindset, if I call. It this way.
Richard.
Perfect. Thanks.
Okay.
You've clearly got three plants this year and we know that they are being scheduled and you've got to online. So how should we think about that next year in terms of additional lines coming on.
Is it the same magnitude as this year in terms of theorizing three or what should we think about that.
On the existing lines, how should we think about over the years, you've been able to scale capacity.
As the chart from the capital markets day, where you.
Unit cost guidance, how can you increase capacity at the existing mines as well and then second question just on architect.
When the follow up came through the deck simply statistical significant and say how did the regulators.
Yes.
Thank you Richard.
Yes, you are correct.
And Joe.
The Kobe.
Talks device supply chain in terms of feeling.
One smaller internal line.
One CMO lines up and running.
Already from the beginning after year, one CMO line up and running as per April this year, that's linked to our press release.
For the outlook.
And then the third CMO line coming online at the end of this year.
So and then we have additional lines that were contracted for in the year to come in.
And the magnitude I would say the lights are broadly of the same size.
Just for you to size how much we're stepping up so so when we exit this year our capacity will be almost all around effects of three compared to when we exit.
In terms of filling capacity so.
Very significant.
Ramp up and we'll continue to layer on.
Additionally, in the east.
I don't want to continue this about when is the next time, we have to make line just to say expect continued runway in terms of adding line capacity.
And then a reminder.
For the Kobe X U S. We also have our existing.
Manufacturing platforms, with Pinterest and flex touch sure to utilize for ex U S.
The Cougars rollouts, so we have.
To shrink their approach to supply chain wise.
Martin on <unk> absolutely.
It's close to recall talk about almost a month.
Right.
Onwards, one.
Rich.
Obviously.
One of our pivotal studies in this space, we did a 26 week extension that's for regulatory reasons, we do that to secure public school system on this so the primary focus of the extension.
And when you do that in open label studies, you lose a little bit up.
Right.
Our assumption was that from an efficacy perspective also given that we've now seen the same sourcing almost one.
So.
One five.
You would expect.
Cleveland.
We would expect that that.
Sort of superiority that we demonstrated.
Both studies will be reflected.
But I also think that it takes.
Census data was in Texas.
Statements that this was safety.
Searching for.
Thank you Ross.
I think perhaps is having an impact thank.
Thank you.
Excellent.
Two please.
Firstly.
On capacity, but not we're not.
Talking about.
Understand that we are focused on fill and finish for.
Sure and just where you are in terms of full capacity, given what <unk> seen with mix.
So important.
Absolutely.
And then the second one slide five you talk about broad commercial coverage.
Just wonder if you could give us a little bit more detail on how things have changed in 2020.
Okay.
So.
So all supply.
As you know some.
Five years back or so we initiated.
Nature.
I kept expansion project in Clayton North Carolina.
Where we're producing some exercise API.
That factory is ramping up as we speak so that's a significant step up in terms of SMA API.
55 on the on site.
And then on top of that we're currently in the process of constructing Additionally, cash 30 in chemical and.
And that will come online.
A few years down the road.
It's kind of the competitive scale.
And that's also why given the private beautiful than we are apart from Capex. We're also looking at upgraded formulation solution set.
But the oil products.
That would reduce to get capacity stream.
Supply chain wise.
And then if we have the portfolio, playing so exactly to what patient populations and important disease areas and and what dose strengths.
Buying our.
Products and and before we finally conclude on that we'd like to wait and see.
Both ways, one, but also with <unk> four and then we'll make portfolio decisions.
I would take the right choices between the capacity available and the clinical benefits and commercially attractive and stuff.
Alex.
And.
So that's your first question and the second one in terms of it.
Broad access for <unk>.
So.
I assume that's I'd say to my slide five but I assume it's a it sounds if it goes live.
So that means that for formulary access.
Around the 8% mark but its employer opt in so we are more than $40 million.
Covered.
In the U S 40 million people with obesity covenants so it.
So in terms of runway and opportunity with $40 million covered.
Currently the run rate for the group is call it 200, cartons, which week a little bit more than that.
Half a million.
Patients undergo refresh minus as we speak.
It's been a barrier of significant runway and duly noted we are continuing to talk to.
Access is 50.
Just because you say 40 that commercial or commercial plus bedroom.
I'm a surplus mitigates so in total.
For it.
I'm not sure I got here.
Hi, Charlie Mallet from Morgan Stanley .
I'll go into detail.
Additionally, as high the injectable seller.
Ah trial at the 7000 teammates is that it's currently around the same time in three years to find one.
Which of those expenses produces Arizona.
Is it to inform our future high debt coverage then the combination that's sort of an insurance policy in case something it doesn't work or is it back up in case, the manufacturing issues for the more complicated products.
I think it's.
It's obviously.
Very natural sort of potential.
Since it also okay.
Okay.
An expansion of that opportunity, but it's also true.
While we still have a decade and expires next.
Next month's venue.
Thank you Todd.
And I think.
<unk>.
Those data should they be successful.
We'll have a step up as compared to current doses of cement.
Everything is that the current downturn.
That would be a further step up to that.
So.
Our model is suggesting.
Seven two milligram.
Okay.
Okay.
And having those opportunities also kicking into what caused this thing not only having.
So the region, but also maybe from country to country opportunities.
Work with our portfolio.
So it's not to be considered but extra maximizing some every time.
It goes without saying.
When you look at that.
This increase also.
That's right.
Yeah.
On the maximum level of weight loss I mean, do you think there'll be a macro level, that's safe and desired in the market eventually.
Beth will then shift sort of consistency in quality and sort of what level do you see that Maxim.
Yes.
So.
I don't want to speculate to maximum level right now.
Okay.
25%.
Got it.
Safe and efficient.
And if you consider that a patient might have a 45% weight loss.
Yes.
And that basically means that potentially.
Cisco.
Maybe we can achieve that.
Maybe we need to have.
Something else I think.
To your point.
Now the thing about the right Windows and maybe also the quality of Windows becomes important.
This was flat.
We have to.
Six months.
25%.
What's going on.
Okay.
But that will be.
Put proportionately.
20%.
Bob.
Got it.
That's a substantial proportion of patients.
There may be modest.
We just have to secure that is.
Okay.
Okay.
Jeffrey.
Two questions. So first one just coming back again to the supply side.
Just to understand with me so.
She's a bias in the original Belgium, right now he's not still operating.
Turning to say, perhaps it was the whole risk ultimately adopt is actually dwindling likely not start going on yet because we don't see or read about.
But I think just some.
I guess, if we hit the limit.
Three months ago, or it's appropriate we shouldn't really be thinking about doubled.
But there's a bit of a lag until it comes back to me.
Equally on the ex U S patients who stand in terms of given.
<unk> device in your existing silica lines, given the delayed ex U S launches it is not a constraint on semi.
Say again the estimate.
It could easily fill finish it did impact the ex U S like a needle biopsy.
And then just simple I mean, that's too many.
So I counted two alright.
[laughter] my message.
Helpful.
Hope to get back to you.
And then in the next town so so on the <unk>.
And the limitation of.
A lot of strength, that's purely a reflection of the very aggressive domain uptake, it's not the cost of our proposition.
Factoring so.
Just to put a put that out.
A lot of concerns out there.
If this is a reflection about some of the recent.
Publications front from catchment and no that's not the case. This is simply a question of demand.
Facing supply and so on.
Our supply plans are intact.
For the year just to be very clear about that.
And so as to ex U S.
Mobile launches and the breadth of approach the gradual approaches.
As a function of that that would be colby.
It's sharing.
API with Pacific Fiddling with Sandvik Succentor Insulins.
Simply.
The same impacting also so we have that.
Because on the <unk> platform is sharing a lot of capacity with other products and as you've seen some.
Some centric than we have structural notifications in many markets ex U S. So so adding more pressure onshore that entire platform.
It's of course, something that we do not do like unless we have.
Smart ways to do so so I wouldn't want to get into individual bottlenecks and so on because we have the supply chain, which as you know.
It fits together.
Whole supply chain, we're lifting so increase.
Increasing our capacity across the supply chain from API through packaging.
As we move to I think we'll move to protect with microphones.
There are patients that have actually if you can move that microphone, sorry, Emily field from Barclays.
One how inter linked is a successful outcome with select and movement forward of the treat and prevent obesity Act. We get asked that a lot like is that something that could help move things too.
Congress and then secondly, while you are limiting supply of that starting dose regarding the you asked will you be scaling back promotional efforts as well and then just any commentary you could provide on the compounding pharmacy is out in the market. We get asked a lot given lack of FDA oversight on the production there if that could.
The rest of the story overall.
I am sorry, M&A commentary again, sorry, I didn't get it.
And I'm getting really good at the supply demand.
Yeah.
So your supply.
The mandatory questions about supply too.
Certainly we're practicing supply demand in this context.
Also so select versus triac, Unfortunately science meeting politics.
I would love to say, yes, it's the same.
In reality.
No it's not.
So it would be another piece to the body of evidence why it's a good idea I think it's already a good idea right now and of course, we'll.
Upon knock on wood, a successful select set.
Evidence as where you select.
Other payer negotiations because they will of course assuming beneficial.
Play favorably into our quality.
And health economic assessments, and hence or watching a payer discussions and negotiations.
As to commercial tactics.
The group in the U S.
This will be reducing.
On the solid doses than then I would say given the concentration we are not going all in on the on all our commercial tactics.
But of course at the same time, we're building a new therapy area.
That immunotherapy area and.
In that context, it's important that we inform and educate around the appropriate use and the benefits of obesity treatment with Goldman So don't expect radio silence.
But also to know that.
We.
Have another gear in.
And the gearbox.
At the appropriate point in time.
Then we move to back table here Richard.
Hum.
A couple of questions. Firstly I know this is currently unknown.
But in terms of commercial client coverage going into next year.
No.
Note that the success, you've had with regard to what risk.
Risk is that you start to see plans put in place.
Place restrictions.
Eligibility criteria of treatment duration.
Anything you would see as being.
Commercial coverage.
Yeah.
And then.
I'll come back with the second one is.
Absolutely.
And then I won't have to remember one.
So.
So first of all our market access in the U S Gulf with slightly different compared to some other disease categories in the sense that that we have broad formulary coverage and commercially.
In the U S for the Kobe and from there it's very much an employer opt in so it's employers electing that they want to Copa Entropic communications.
It's a slightly different mechanism.
Could we see.
In forest opting out when they see the cost associated with the.
We see coverage.
Yes, but at the same time I think we're not at the end of the road in terms of building access with the with other employers.
Medicaid et cetera, So that's something we navigate as we move forward and at the same time.
With some of the additional clinical data reading out and I will just discuss select.
Of course, the stronger evidence we can generate.
Both from our clinical trials.
Also from just real world evidence about the benefits of intravenous treatment post a stronger position with would be and so it's something where we will navigate.
What time and I'd say right now with the current supply demand situation.
It is not our primary concern.
In the near term going into next year, but of course, something we look carefully at.
Second question is the margin.
On the call but.
Youre expecting more of a margin improvement this year than you'd originally anticipated.
Thanks.
Well it will scrap of R&D as quickly.
And I think so.
<unk> must be possibility of business development.
Up vessels.
So can.
Can you just talk about how you're thinking.
Thinking about balancing that.
Sure.
So going forward.
Would you commit to maintaining margins at current levels.
Moving to some contraction for attractive acquisitions.
And so if I talk to margins and then Martin can talk to a PV projects because it's all about the pipeline and in his part of the.
The company then.
As to margins.
When you look at our Q1 margin is four 7% right. So.
And we don't adjust price so it's a clean operating margin so at that level of margin.
But more value to shareholders, if we invest in our business in terms of growth both short medium and long term.
So we don't have a marketing strategy, we don't have a catch up in terms of margin.
We have an innovation based growth strategy and very focused on driving that.
Through investing in scaling supply.
<unk> markets.
In terms of commercial cloud and infrastructure.
And then.
Building and expanding our R&D pipeline to the extent the rational.
Within all therapy areas, so thats, our strategic resource allocation principles and as I said at last week's call then they clearly when growth rates come up as high as they are now.
In the high <unk> for this year.
Naturally.
Would it be a margin benefit because in an organic type of cross selling.
But of course, if we are if we.
End up buying something sizeable inorganic.
In our string of pearls strategy.
That of course can have kind of a net negative impact on our margins.
As you saw with Diana just a few years back.
That doesn't really accepted to take a dip on that.
And not just to get that technology platform in house.
It's benefiting from that now and actually we had.
We ended up recruiting.
That margin impact so that's.
Just to say, we start from the innovation based growth.
We are rational about the marketing afterwards.
So that's kind of the consolidated margin.
MPD.
Maybe just a little more costly.
<unk> been in a situation, where we've had to say no to.
Deployment opportunity because of budget considerations.
Clearly take the gross debt working within Australia, and strategic focus areas posted triple therapy areas, but also in terms of technology platforms, we do provide acquisition.
By collaboration.
From a strategic maybe you also technical perspective.
The approach of at this point in time focusing on.
So the preclinical and clinical assets, where you can iterate venue.
Rather than doing pickup latest paychex systems with obviously, both margins, but also by new generation.
Given our current point of time in current situations that can allow us to do that okay.
Okay.
<unk>.
Having sort of it.
Standpoint in terms of strong internal innovation in all of our areas, but equally strong external focus.
Yeah.
Yeah.
Thank you, it's Matthew Weston of Credit Suisse. Two for me as well. Please the first one follows on from Richard's question about costs and cost savings.
So you said yourself that it's normally organic within a pharma company, but obviously now you have this exceptionally broad revenue guidance I'd be really interested if there are any large chunks of opex, but at some point in time, you have to commit to we'll make a decision on and how youre going to go about making those are its very simply and organic decision of waiting for the cost to catch up with the revenue.
And then the second question is a few months and it is a bit bigger picture.
We're looking at this market of obesity now and everybody is debating Bon jour versus would go the everyone's asking about state time, if I look at any other big chronic therapeutic area no. One stays on a single drug and there is no simple approach. If you start with one and carry on going forever, There's always finesse, whether its a treatment.
And then the maintenance phase you look at people moving different modes of action I'd be really interested as to your views since you've kind of looked through your crystal ball and obesity, how you see it evolving and how you think you need to start looking at combination strategies or treatment maintaining strategies to actually make this.
<unk> thousand 30 year market.
Yeah. Thanks for the question Matthew and no we don't have any singular nature cost step.
Step up or down say.
This is a classic organic built it comes down to.
Employees and cost of running the business and of course as the supply chain. So it's classic escaped scalability and Thats flat.
We have paid for good.
A good chunk of the infrastructure so when growth it reaches a certain magnitude than we cannot scale R&D more in terms of organic scaling and then we have.
A good flow through to the <unk>.
Bottom line and it's margin so it's kind of a classic discipline in terms of planning commencements.
Yes, really good question, probably a little bit of a complex access because clearly we are at the very early stages.
Treatment here.
They might buy in energy cyclical contextual to the advent of <unk>.
To that you can have a call it what you saw.
UK Pds.
One to two treatment available.
A lot of sophistication in terms of understanding different initiatives into two pieces.
We have several a few types of progressive disease and over the years, we've seen different modalities, just coming in and changing.
And optimize it.
<unk> aircraft, but also offering more sophisticated treatment.
Yes.
I think we will see the same development.
Okay.
To your point I mean, we have one.
It is.
Sales of 50% plus weight loss.
But right now.
And called for a lot of sophistication also because it's really less than 1%.
In this population.
What you would see I think in the coming into this a lot of focus on it.
Okay.
That will drive a focus on just the actual data.
Yeah.
But combination treatments to your point.
And I want to take with us for.
For those that.
That may not be sold.
But also thinking.
Impact on liquidity.
A major decision cycle.
I think that would also be the case.
Yes.
Looking at impact of weight loss.
And so on.
Yes.
And then to your point.
Okay.
I currently and obviously I'm biased.
I'm currently.
Yes.
Quantities.
Need for chronic treatment.
When do you see people going off treatment today.
So.
Sure.
That means the chronic treatment, but we have to look at different modalities I understand treatment dose maybe.
So it may take me a coup radios.
All of that decline.
Apologies.
I'm Gonna see looser.
Blue shirts, but also innovations.
Yes.
Absolutely.
I think at the strongest both the clinical but also preclinical pipeline.
Sure.
Thank you.
Thanks Matthew.
Let's stay with this table before we move forward.
Two questions.
That's not a quick one have you done any modeling on the higher dose.
Okay great.
You can get that 25%.
Putting numbers on that.
So so.
Yes or no.
In the sense that we've done the modeling and.
Seven two pans out.
Yeah.
Your life.
Confidence plus a motive and all at once.
Copayments.
One more.
Think it's reasonable to assume that it's seven two new brand most of the paper side.
Providing additional benefits that would also be an interesting consideration.
Yes.
Perfect.
Then we're back to Michael.
Just going back to the Calgary, several manufacturing and the alternative in phase one.
Given your capacity every semi hardly limited will you wait to see some of that clinical data or the alternative to decide how much capex behind it are those two independent from each other.
Which concerns.
Are they all in Mexico and came from Sumit.
And that's a that's an easy answer because no.
Scaling and catering growth.
So part of the step up in.
In our Capex that we announced beginning of this year 25 billion this year and shaping in the 10% to 15% Capex to sales ratio in the coming years that that is catering to both the scaling API.
<unk>.
As well as for finished so so the currently ongoing API facility.
We're currently building in Campbell and Denmark is what you would call a multi purpose facility for peptides. So so as a consequence, it will be able to deploy that across a number of system benefits.
Hi.
Hum.
Just going back to the.
Cushing chunky weight loss.
Customer going back a long time.
I remember on some of the early <unk> studies.
Bose.
Those points and minus 40%.
Almost 40% of which is quite extreme.
But it goes to the point the point estimates you can see here.
We have reviewed quite a distribution or just wanted to get the current dose is what is the range.
Which would go if we if you push it to 25 way, but you see that playing together.
Is that what you're in itself as well.
And you could have some some fairly extremely closer.
In 24 hours.
So just listening to the numbers that you say.
Maybe the rates for some extra doses.
More than 65.
Most of it.
But anyway, let's.
Let's say the best majority.
95% plus.
Wait.
And more often.
But anyway, so I don't think.
Great.
But it's more or less frequently and that to me without actually having the food enzymes.
This is a natural limit to the range.
I think we'll see okay.
Sure.
But it will not be driven towards.
5%, but still within the range that doesn't exceed something that.
Yeah.
Okay.
But that would be my opinion.
Right.
Martin.
On select we will know the powering assumptions just to repeat what we said about the ranges but.
Two questions in terms of what we see from the press release will be solely related to the program.
Discuss about what you would fulfill not there'd be any potential not the secondary endpoints and we see that headline press releases.
To the question is.
That's the closest couldn't be better because easier adoption.
For the low end of the ranges, but number needed to treat.
Stroke is 100 plus patients.
And that does come out with discussions with some kols.
We discuss those.
Absolutely so so.
On the <unk>.
First release, I think you will see us unless something with it.
On the positive or otherwise it comes up sick ourselves to pigment on the primary endpoint.
And on the technical side.
Hum.
Sort of await further information.
Big companies.
Okay.
I think from a clinical perspective.
And you also see that some of the diabetes space.
Once.
Reporting on.
So I would say 50%.
Hi.
What's that.
At 11 15.
15% risk reduction.
That is it.
Yeah.
And obviously.
And something that prescribers patients and payers.
Consumer.
Cynically speaking if I see.
But obviously when it comes to <unk>.
Death stroke myocardial.
I think that's right.
What I can see something more.
From a statistical perspective, we can actually into chips.
Right right.
No.
Got it.
Well I think it's important to convey that we're still delivering around 70%.
Our base assumption that would be.
Typically relevant but also.
But it should not be sitting next to me.
That will be a number of other countries.
That's nine points.
Will be important to move it from but that will also be a number of our businesses.
Process.
Career philosophy.
And that to us.
And I'll, let somebody else.
Got it.
Great.
Okay.
Okay.
Got it that's when we move to the left I think we need to find that it gets you close to a microphone.
Okay.
On line items can here.
Got it.
Yeah.
And the U K.
Hello, Mark.
Okay.
Part of that.
Okay.
Right.
Yes.
Yeah. Thank you for that question.
It's correct that's been the case around it.
The synthetics practices in the U K end to end assessment.
By the industry Association API in that context.
The starting point and the objective on our side was was sure to educate and inform.
The medical doctors pharmacists around the appropriate use of it.
Oh for B communications, so that was our intention which we believe is important in a niche area like it like Beachy treatments.
And.
In that context, some mistakes were made and.
<unk>.
And we deal with the consequences would have been transparent about our dialogue.
And clarification.
About the.
What and why now.
Now, we'll take the consequences and learn from it. So so we've put in place a number of it.
Additional initiatives to strengthen that we don't face similar issues.
Elsewhere.
In the U K so.
Very unfortunate.
And of course, we have <unk> regulations in this context.
Okay.
Im just incident.
As a result, if we look at your chart you could lose the chalk bogeys exactly now almost the majority of markets now integrate bogey yeah.
Is that simply a fact that transitory or if it isn't acuity mix it might not be as dynamic going on in the world.
Yeah.
Does that mean Youre planning point of view are you planning now basically you interesting category.
Jumping up when you price yourself.
Is that like eating out.
And sorry for me.
Because actually you do see sort of steady state.
And so so on the influence you are right the global volumes are slightly down.
After looking at infill market for many many years now and it is a really really sticky really really slow moving markets right. So.
And I would say our historic and learnings in this context has been that every time, we thought that that whatever.
Violet volumes violin syringe volumes are going down and eventually if we ended up realizing in fact, no they're not so just speaking too so the effects.
Around the stickiness of the market and again this is chronic therapy and we have growing populations. So even if we have.
Better treatments and Ikea to launch that that might take some of each instrument.
No way.
Then all the macro dynamics with key global insulin volumes reasonably reasonably flat.
Slide 10, whilst what does that mean that that means that there.
Of course it is.
Incidence driving the big Capex volumes.
When we built our facility we built platforms that can be utilized ultra for instruments. So the capex I was just alluding to before.
And so Michael <unk> question.
That would also be fitted.
Produce insulin API.
And for some of our finishing capacity we're building they will.
<unk> modules, and hence be able to fulfill.
And their products.
So then we have one last question, which comes from the fact cycle here, Yeah, Hi, Kathy.
And just kind of a b D and you talked about looking at maintenance.
Got it.
And then some.
Tell us how the ground pitofsky like Xiaomi bottleneck.
To what extent is looking at.
<unk> reshaped hunting.
Alright.
I mean, you got to make sense.
Gaslog.
That is clearly a priority and a focus area and it will go into the bigger weight losses.
Not all of it.
Focus area, but clearly it's something that makes sense.
We are very focused on good speed.
Please.
We also hear those concerns.
Right now the one place that peak.
I think it's balanced but we aren't.
This has to do something.
Thank you for that question.
Fortunately I have to close the call now so thanks, a lot to sort of opinion.
And Citi for hosting and debt and with.
We will continue our ranch with our Q1 results. It's a historic year for Nynorsk, delivering 2024, and 30% topline growth and as a consequence investing a lot of resources and scaling accordingly, so so really really fantastic growth.
So thank you for listening in and thank you for attending hit the city. Thank you. Thank you.
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