Q3 2024 Sandoz Group AG Corporate Sales Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Harry Sephton - UBS - Analyst : Brilliant. Thank you for taking my questions. So my first question is on the aflibercept US launch and whether there's any implications for you potentially launching your product after Amgen launched at risk? And if not, can you maybe walk us through what the milestones are on the litigation front to get line of sight on the US launch? And then also your appetite for a potential at-risk launch. And then, my second question is on the margin. And just to play devil's advocate, you've raised your sales guidance from mid-single digit to high-single digit through the year, mainly driven by the stronger biosimilar performance. Now, we would expect biosimilars to be higher margin and we'd also expect you to get some operating leverage on the stronger performance. So my question is why have you not seen as much benefit on the margin front from the strong performance at the sales line? Thank you.

Question: Harry Sephton - UBS - Analyst : Brilliant. Thank you.

Question: Thibault Boutherin - Morgan Stanley - Analyst : Thank you. First question is on the sustainability of US biosimilar revenues and particularly next year. Looking at IQVIA data, and I understand these aren't necessarily fully reflecting the reality, but the script seems to be wholly stable. Vast majority is still generated through (inaudible) of this. So how -- could you help us think about the stability next year? Is pricing a topic or is it secured? And same thing on volume commitment from Cordavis? So that's the first question. And the second one is just on your strategy for biosimilars in immuno-onoclogy. You are developing biosimilars for Keytruda and Opdivo. There are also products like the (inaudible), which are also (inaudible). And could there be a meaningful opportunity with likely less biosimilar competitions than Keytruda? So if you could just talk a little bit about the strategy here, and is it because you're thinking that, in the long term, immuno-oncology volumes are going to be mostly Keyruda or Opdivo, or is there something else in your choice of biosimilar? Thank you.

Question: James Gordon - JP Morgan - Analyst : Hope you can hear me okay. This is James Gordon from J.P. Morgan. Thanks for taking the questions. Two, please. First question was on North America generics, so I can see very nice performance from biosimilars in Europe today. But if I had to find a weak point, it looks like it would be the North America generics performance. And if we try and back it out, it looks like that business year on year is down mid- or maybe even high-single digit. Is that right? And is what you're saying that's going to go from mid- or even high-single digit year-on-year decline to grow in in Q4? And is that acceleration just from Abraxane or are there other meaningful launches in Q4 and into 2025? How are you thinking about that business? Is it declining that much? And is it going to flip to such strong growth? And why would that be? And the second question is on reinvestment. So it sounds like you're well on track with EBITDA margin, stepped up a lot in H2 this year. But then when we look to next year, do we extrapolate off H2? Which is where you are now or only off the full-year '24 margin? And are you thinking about a lot more R&D investment for pipeline maybe -- for generics pipeline next year? So could R&D be like double-digit growth next year or how are you thinking about that, please?

Question: Simon Baker - Redburn Atlantic - Analyst : Thank you for taking my question. Sorry I took a while to unmute there. Two, if I may please. Firstly, returning to the adalimumab. As you said, the real opportunity is the 80% that AbbVie still controls. I just wonder if at this stage, if you've got and if you can share anything on in terms of visibility of (inaudible) that may change in 2025? AbbVie have said that they will see continued roll-off of contracts, so they're clearly expecting it to go down. I just wonder what you're seeing at this stage? And then secondly, on Omnitrope. It has been a great performer helped by supply constraints and I just wondered if there's any update on the evolution of the supply constraint there? Do you expect (inaudible) to '25? (technical difficulty) in that scenario? How sticky (inaudible) in that market? Thanks so much.

Question: Simon Baker - Redburn Atlantic - Analyst : Okay, thanks so much.

Question: Eric Le Berrigaud - Stifel Nicolaus & Company Inc - Analyst : Yes, good morning. Two questions. First, on Tyruko in Europe. Could you maybe contrast a little bit of the performance so far with history? You've shown on the graph kind of [8%], 16% market share gain after six, eight months. How does that compare with traditional biosimilar launches in Europe? Can you maybe also point which countries the drug has been launched at this point? And maybe if one was relatively early like Germany, in most of the cases, how much market share did you gain into the first market launches? And which one are still to come? And then the second question is about Abraxane and paclitaxel opportunity in the US. Just to give me -- to give a sense of how much competition you will face? Is it several players' game or are you among a few there? Just to see what kind of competition you may have there. Thank you.

Question: Victor Floc'h - BNP Paribas - Analyst : Hi, good morning. And thanks a lot for taking my question. (inaudible) and first of all, congrats for a very strong [brain]. So my question is on Pyzchiva and the importance of securing a preferred status with the US TDM, just like what you've done with [Erimos] over the last year -- over this year. And so, I was wondering if it's fair to say that the recent launch in Europe could actually help your discussion on the other side of the [Atlantic]? Any update on this discussion will also be very much appreciated. Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 8:00AM, SDZ.S - Q3 2024 Sandoz Group AG Corporate Sales Call

Question: Emily Field - Barclays - Analyst : Hi, thanks for taking my questions. Firstly, just on the down 1% pricing erosion, I know you guys don't guide for erosion by geography, but I was just wondering if you could provide any descriptive color on where you're seeing the pricing environment as more supportive versus between the US and Europe? A question on Hyrimoz. That was helpful commentary about thinking of the gains being incremental going into 2025 but more of just like a big-picture question. I guess, what is it going to take for the biosimilar share and aggregate to become meaningfully above this sort of 19%, 20% that we've been at for a while? And then just a quick clarification question, as I wasn't familiar with this change that IQVIA is going to be putting through in the data. Is that coming from you guys for '25? Or is that a change moving to this estimate that is driven by IQVIA? Just so we can understand just how the data presentation is going to change. Thank you.

Question: Naresh Chouhan - Intron Health Inc - Analyst : Thanks for taking my questions. Could I just push a bit on Hyrimoz biosimilar kind of dynamics for next year? Obviously, the contracts and negotiations are largely done and while I appreciate you may not comment on Hyrimoz directly, just more broadly. Now you've seen what the kind of backdrop looks like. How should we think about biosimilar share of adalimumab next year? And you mentioned step changes. So is it something you've seen that we should be thinking about in terms of the step change for next year at a kind of total US level? And then, just on the 1% price decline, can you just confirm whether you're referring pricing? Is this just price or is it a combination of price and mix? And then lastly on R&D spend, and as we think about R&D growth. Can you help us understand the mix of R&D spend between generics and biosimilars and the extent to which over the next few years, biosimilars kind of dominate your R&D investments? And how we may be able to absorb some of that growth in biosimilars as you shift away from generic investments to more biosimilar investments? Thank you.

Question: James Vane-Tempest - Jefferies - Analyst : Hi, can you hear me?

Question: James Vane-Tempest - Jefferies - Analyst : Thank you. Two questions, if I may. Firstly, revenue growth has sequentially gotten stronger through the year. So if you've grown 9% at nine months and 12% in Q3 driven by new launches, as you mentioned, with the momentum you're seeing, what's holding you back from not including low-double-digit in your top-line outlook? Because it does seem as if you should be able to deliver more than 10% growth for the full year. So is that conservatism or something in the Q4 base that we need to be mindful of? And the second question is, I appreciate this is a revenue call, but can you give any flavor on profitability in Q3? Just given you need to do more than 22% margins in the second half to meet your guidance. So I guess for example, can you comment directionally on the relative profitability in Q3 to Q4 to reach this target or the $50 million of savings? Is that more likely to be Q4 versus Q3 weighted? And any comments on that would be helpful. Thank you.

Question: James Vane-Tempest - Jefferies - Analyst : Thank you.

Question: Victoria Lambert - Berenberg - Analyst : Thanks for taking my questions. I've got three, please. The first one is just on the stronger Swiss franc. What impact is this expected to have on four-year margin? I think it had [CHF100 million] to [CHF200 million] impact last year. And then the next one is just a clarification question on your Humira market share. It looks like this is down 80 bps from July. Is this just because of the change in how IQVIA is reporting because of the data that's being given from Cordavis? And then lastly, just on your biosimilar Stelara launch plans. So you haven't announced a pharmacy benefit agreement yet. How much lead time do you need to give once an announcement -- once an agreement is reached? Is this like three or four months? And do you think this will be necessary to get a similar shared development as you have in Humira? Thank you.

Question: Graham Parry - Bank of America Merrill Lynch - Analyst : Great. Thanks for taking my question. Actually, I've got a couple of follow-ups to Victoria's questions there. So just on the Humira point though, you were same penetration to the overall market at lower share. So can you confirm whether Humira biosimilars actually fell quarter on quarter versus Q2? Or did overall market growth still see revenues for that biosimilars in the US go up? And then secondly, just on the potential for our PBM contracting or stick in the map, When would you expect to update the market on that? So I know you say you've got plenty of time, but is that something we shouldn't expect to hear anything confirmed on until full-year results next year? Or could we get an update before the end of this year, for example? And then thirdly, just your thoughts on aflibercept launch timing in next year, I know you said this is TBD pending litigation, but just any thoughts on whether the (inaudible) court ruling and their intent to launch at-risk changes? Anything for you in terms of your legal position or intent to launch? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 8:00AM, SDZ.S - Q3 2024 Sandoz Group AG Corporate Sales Call

Question: Graham Parry - Bank of America Merrill Lynch - Analyst : Thank you so much.

Question: Joris Zimmerman - Octavian AG - Analyst : Thank you. This is Joris Zimmerman from Octavian. So first, congratulations on the good results and then thank you for taking my question, which is related to the partnership of Blue Shield of California together with Fresenius. In that partnership, my understanding is Blue Shield is able to directly purchase their Humira biosimilar from the manufacturer, thereby circumventing the PBM. So here, the question is, do you think that has any impact on the Hyrimoz business? And in more general, is that deal structure that you expect to see more often in the future? Could it be something for Pyzchiva? And then lastly, just more general, probably as the PBMs are quite in the media in the US as well, any views on the role of PBMs moving forward? Thank you.