Bayer Aktiengesellschaft (BAYN) Earnings Call Transcript & Summary

A warm welcome to everybody to our Capital Market Day 2024 here in London. It's fantastic that so many were able to join us on site. Thanks a lot for making a way and for being with us. And thanks also to everybody who dialed in online and joins the webcast. Great having you as well. The session today will be divided into 3 parts. We will have our CEO, Bill Anderson, starting with a strategic update; followed by Wolfgang Nickl, our CFO, diving into the financials; and then we'll have the first round of Q&A. Following a short break, our divisional heads will present their businesses. We'll have Rodrigo Santos starting on Crop Science; followed by Stefan Oelrich on Pharmaceuticals, and then Heiko Schipper on Consumer Health. And then we'll have all the Board up on stage for a second round of Q&A. For those of you that are in the room now with us, we'll invite you for continued discussions and to meet management at our reception. And before we start, I'd just briefly like to draw your attention to the cautionary language included in our safe harbor statement here on the slide. And with that, Bill, the floor is yours.

Great to see all of you in person. And hello to everybody joining us on the webcast. Yes, we're excited to be here with our whole management team, and we've got some new members. Heike joined in September, so some of you may have had a chance to get to meet her; and of course, Julio, he is so new, that he's not even official yet. His first day on the Management Board is April 1. And I'm sure you won't have anything you have to deal with before that. But -- and then Heiko Schipper will leave us at the end of April, so that they have a month of handover, which is really great. But I thought I would just take the opportunity since Julio is with us, and he's going to be part of the management board going forward, at least that he could introduce himself. So why don't you take a minute, Julio?

Thank you. Thank you. So thanks, Bill, and hello to everyone. I see some familiar faces from my past. I'm looking forward to joining the Board of Management, also the Consumer Health team. The Consumer Health is a very attractive business for us. Our business is home to great brands and very exciting science. Heiko and the team have done a really, really good job in the last years to turn the business around, and I intend to continue to keep that sustainably. And just looking forward to getting started. So I cannot wait. Thank you so much.

Great. Thanks, Julio. Yes, I think my wife and I thought we had done a lot because we've lived and worked in 6 countries, but Julio has got us beat. He's actually managed 8 countries. So yes, a lot of respect. He knows the crop -- I'm sorry, the Consumer Health business well and the Pharma business well, and we're really pleased that we had an outstanding leader like Julio ready to take this role. Well, again, we really appreciate you being here. We appreciate the folks joining on the webcast. We appreciate your interest in Bayer, and we're happy to share more about our vision and plans for the future. Bayer is a EUR 48 billion company with 3 really important businesses. And we have about 100,000 dedicated employees and one really powerful mission, Health for All, Hunger for None. I thought it might be useful, before we sort of lay out our plans, to take a minute to reflect on how we got here today and where we are. These businesses in Crop Science, Consumer Health and Pharma, they were built over many decades. There was a lot of organic growth, a lot of in-house innovation, but there was also a lot of M&A. In fact, in just the last 20 years, Bayer has had 12 major M&A transactions, and that's not counting things like Vividion or BlueRock. We're talking big, kind of division size or at least massive chunks of divisions, 7 acquisitions and 5 divestitures. If you think about it, 20 years ago, Bayer was one of the world's largest chemical companies. And now we've essentially totally exited that business. We had 10 business lines, we're down to 3. And that -- yes, that's a remarkable feat. And I have to say that my predecessors possessed a lot of foresight and a lot of guts to make that kind of change. But all that change came at a very high cost. It came at a cost of debt that we have on our balance sheet today and the interest payments on that debt. But it also came, really crucially, with a sort of disruption and focus. It took the focus away from operations and on to transactions and everything that's -- that needs to happen around a transaction. And when we say operations, that's kind of a throwaway word. But what it means is the ability of tens of thousands of employees to focus on what a customer needs, to focus on advancing the product, advancing innovation, improving a process. That's what operations is. And when you have a lack of focus on operations, there are consequences. So that's, I think, really important background for the choices that we face today. If we fast forward to 2024, I mean it's a very dynamic situation. Just in the last 10 weeks, we've had a lot of things going on. 65 days, here's a snapshot. We got pharma market authorization for Eylea of 8 mg. We got our experimental medicine, elinzanetant, with 2 positive Phase III studies, all primary and secondary end points positive. We announced the plan for our major changes called Dynamic Shared Ownership. But really critically, we announced that our employee representatives fully support the plan and the massive changes that are required. In order to address the debt, we've proposed cutting our dividend to the minimum legal requirement. That's a big change. That's something that hasn't been done in post-war history for Bayer. We received another adverse verdict in glyphosate litigation. But last Friday, we also got a positive verdict and a mistrial. So that continues to move. We're launching short stature corn in the U.S. right now and preparing launches around the world. Yesterday, we strengthened our pipeline in Pharma by adding an important cardiovascular medicine. and so we're very excited about that. And then tomorrow, is the 125th anniversary of aspirin. Think about that. 125 years, that was our entry into Consumer Health. And just to illustrate how Consumer Health works and how it's different than Pharma, this year, we have 2 major new product launches in aspirin, in both the U.S. and Germany, so 125 years later. All the time this is happening, all these events I just listed, our share price is hovering near a 20-year low. And I have to say this is indicative of what I found upon joining Bayer last year. This is a company with a very important mission, and that mission translates to an intense level of motivation amongst our employees. That impresses me every day. And we have incredibly strong science and innovative capacity. That's a great asset. It includes a deep talent roster that ranges from R&D all the way through the value chain to the commercial end. In Crop Science, I mean, we have industry-leading innovation and a business that's really important for the world. We're launching blockbuster products in Crop Science that are going to give us decades of differentiation. In Consumer Health, we have this sort of combination of product innovation and really well-known brands around the world. That's really powerful. And in Pharma, we've made great strides in just a very short period of a few years' time to really change the course of our pipeline, to say goodbye to some older products and to bring in some new things and to really freshen up that pipeline. But we're facing challenges, and I don't have to tell you that. These challenges, they weigh us down, they weigh our people down and they weigh the stock price down. And people feel it. It's time to change. And let me just take a moment to share a personal experience that I think has some interesting analogies to the situation that Bayer's in. In 2021, so 3 years ago, I had some, I thought, some pretty interesting, pretty cool personal and professional goals for the year. I was doing stuff. We were kind of coming out of the worst of the pandemic phase and excited about a lot of things in life. But one Sunday morning in early June, I was out skateboarding, something I've been doing for more than 40 years, never had a broken bone, okay? But I had a freak accident, and I fell and I broke my right femur in 4 pieces, okay? I was face down in the street, no family or friends around. My leg was literally -- it was bad. I'm looking at that, right? And the pain was so intense. They ask you, how is the pain on the 10-point scale? I now -- I know what 10 is. 10 is where you're in and out of consciousness, okay? And so in that moment, all those plans and goals I had for the year, they were suspended, okay? Facts took over. I needed to get to a hospital, I needed an orthopedic surgeon, I needed some -- a lot of titanium parts to put it back together, I needed -- I lost almost a litter of blood, but I didn't need a blood transfusion, I was right on the edge of it. But I spent 11 nights in the hospital, and I had kind of 12 grueling months of physical therapy to get back, okay? Now circumstances didn't stop everything I was doing, but it altered all of my plans. So before the accident, I was a man with a plan. And after the accident, I was a man with a plan, but a shattered femur. And so it changed a lot, but it didn't stop me from pursuing my plans. In fact, thanks to the wonders of modern video conferencing, I barely missed a day of work because, yes, I could do stuff from there. I wasn't a lesser person, but my immediate actions and my choices, my options were very limited. And I think there's some important parallels for Bayer, okay? Because today, Bayer -- is Bayer a great company? Absolutely. I mean Bayer makes an impact on millions of farmers, patients, customers every day. That's important. Sustainability. I think all of us are learning to care more about sustainability, as we just endured the hottest year on record. And this year, it looks like it might be another one. This company may have one of the greatest opportunities to help the world with climate change by our regenerative farming practices, but also health equity. So there's a lot there. We've shown the ability to lead in industries. We've shown the ability to turn around a business. We've shown the ability to manage a portfolio. I mentioned 7 acquisitions, but 5 divestitures, okay? We know we have that muscle to evaluate a business and say, hey, we don't think we're the best home for this business. We know how to send it out. If I stop with that list, then there's some pretty interesting questions we could ask, right? Do we have the right structure? Why should these 3 businesses all be under one roof? Are there some new business areas we should be pursuing? But the problem is that the list doesn't stop there. We're a high-impact, mission-driven company with 3 great businesses, but we're also badly broken in 4 places. The shareholders have felt the pain, our employees have felt the pain. We've had multiple rounds of layoffs and it's been intensely frustrating for shareholders and employees because we haven't fixed the problem. That's very unsatisfactory. Those 4 broken areas is the loss of exclusivities in Pharma, and we haven't yet got the pipeline to offset it; it's the litigation situation; it's the level of debt; and it's the bureaucracy that prevents our people from doing the best thing for customers or driving product innovation every day. And those 4 problems, they really limit our choices. And they limit our choices, whether we're 3 divisions in 1 company or whether we're in smaller pieces. And so that really brings us to the topic of structure. Since I arrived, we've had intensive efforts on this. Before I arrived, it was called the defense team, okay? Like defending the current structure. And we talked at the Management Board and we said, hey, that's not what this ought to be. We shouldn't be defending the current structure. Our job is to figure out what is the best approach for Bayer. And so we actually created 2 teams. We created a team that's focus was, hey, give us all the reasons and yes, justification for breaking up in every possible option. So we looked at valuations and what value the different parts of the business could bring, we looked at how a change could increase value creation, we looked at the speed of execution, we looked at the cash flow timing, the amounts and timing, we looked at the leverage ratios for the RemainCo and for the NewCo in very -- a number of different scenarios, business scenarios. And we looked at what does this do for improving our future options. I mean it's pretty clear, for example, pure play. All around us, our competitors have moved to pure-play companies. Virtually all our competitors are now pure play. And it's pretty clear why that happens. That is the simplest approach. And it's got a lot of appeal. That said, you also have to consider where your starting point is. And those 4 broken areas that I mentioned, they do limit our degrees of freedom. We looked at IPOs and spins. It's clear that to do either an IPO or a spin, that's an all-hands-on-deck effort for generally 24- to 36-plus months, because there's the pre-IPO or spin and then there's a lot of stuff that has to happen after it, in terms of service agreements and all these sorts of things. The challenge we had on this, quite frankly, was what happens with cash and leverage ratios, and it just created some situations that from an ability to provide reliable financing, we thought were unacceptable. We also obviously considered a sale of Consumer Health. That's pretty obvious because you can take the money and immediately pay down some debt. But on that one, there was a combination of factors. I mean the costs are significant, the tax losses would be significant, the onetime costs associated are significant. But also valuation-wise, yes, there've been consumer health businesses sort of out there for the taking in recent years, and it's not a real strong environment on that. And we would have to say goodbye to a business that is reliably generating cash flows and is growing on that. So when you take all those things together, it wasn't obvious. Neither one of those options, a spin, an IPO or a sale of Consumer Health, they don't directly address our litigation problem. In some ways, having a new pot of cash, I would say there might be other people who would have designs on that cash. It doesn't address our LOE situation. I know that the company sometimes try to buy their way out of a patent cliff, but the industry track record on this is very poor. And I think many of you who've studied the industry for many years, you know this. The sweet spot for deals tends to be preclinical or Phase I deals. Once you're into Phase II, Phase III post proof of concept, generally, those are negative NPV deals. And I -- personally, I don't like negative NPV deals. I know sometimes companies justify them for strategic reasons. But I think maybe we could all agree that if there's ever been a company that shouldn't be pursuing negative NPV deals that, that would be Bayer today. So those were important considerations. But finally, any kind of structural move, it's clear, it would be a 24-month minimum, all hands-on deck exercise. Now since I became CEO of Bayer, I've had an opportunity to talk with many fellow CEOs of companies that you know that have done or been a part of these breakups over the last 5 to 7 years. And I asked them a lot of questions about it. Would you do it again? What was the hardest part? What did it look like? One thing they all told me is they said, look, you can do a major kind of restructuring, focus on performance, or you can do a breakup, but you cannot do these things at the same time. It is everybody 100% focused on -- we're in 100 countries. You're talking about splitting legal entities in 100 countries. It's a full employment act for lawyers and accountants, but it's not a time where you're revamping operations. So in the end, we said, yes, this could be a good reason to have all hands on deck, but not today. So in short, our answer on this question of structure is not now, but that shouldn't be misunderstood as never. We are going to keep an open mind, but our priority for now is to tackle these challenges that I laid out so that we can improve our performance and increase our flexibility. We're going to do what we believe is best for Bayer, which is for all the stakeholders of Bayer. And for the next 24 to 36 months, we're going to focus on implementing Dynamic Shared Ownership, on getting our debt level down and working towards a single A rating, on getting -- reining in the litigation situation, containing that and on improving the pipeline in Pharma. Now we still need to ask, is our system competitive? Is Bayer the right home for these 3 businesses? And I can tell you, I don't believe we've earned the right to answer that question affirmatively. We've got to either change that or we've got to change the structure. That would be my view. Now let me say this. We've done a lot of assessments over the last 11 months, a lot of evaluations, but we haven't stopped at that. We've been very busy with actions as well. And I think we've taken a lot of bold actions. Perhaps the most sort of all-encompassing was our decision last July to start this transition, this transformation to a new operating system, to deliver faster decisions greater accountability for everybody in the company, faster innovation, simpler processes. And we've managed now to mobilize large parts of the company, including the employee representatives who are fully supportive of what we're doing. And by the way, that's no small feat to accomplish that in a short time. In July, we made the tough call to reduce our guidance for 2023. We were very disappointed to do that. In August, we said we need to deliver to regain the trust of our investors. We need to be consistent. We need to make promises that we can keep. In November, we said that we were confident we could keep our guidance. And today, we've delivered on that. But we have 12 more 90-day cycles between now and the end of 2026, and we intend to get up in front of you all 12 more times and say, we've delivered. So that's something that we need to do. Our Supervisory Board has also made major changes. First, they're refreshing the membership with 3 new members, representing capital markets, biotech and pharmaceutical product development and litigation. We think those are very important additional perspectives to have. And then also the Supervisory Board is recommending a new incentive structure, long-term incentives, short-term incentives to more strongly align management interest with shareholder interest. So we think that's also important. Finally, we are pursuing a new guidance approach. I was surprised when I got to Bayer, at the amount of stuff Bayer was guiding on and also the time lines. Trying to predict what revenues are going to be for 3 different businesses in 3 years' time, I don't think that's a very reliable exercise. And so what we're going to do is we're going to guide on current year and we're going to try to have guidance that reflects a range of outcomes that we could with reasonable -- yes, with reasonable certainty, we can deliver. It's not aspirational. It's our best estimate of what we're going to deliver. Midterm, we will have certain commitments, but they will be only things that we can control. So for example, we can control cost cutting. We can't control what the price of grain is going to be in 2026, but we can control costs. And we're also going to share ambitions for the businesses and also some useful information for investors so that you can model our company's financials. And this is all about really having greater transparency, but also greater accountability on our opportunities, our results, our -- yes, our wins, but also our challenges. And so yes, we're beginning that today. And I think as part of that, we need to start by having a hard look at those 4 challenges I mentioned. So the first one is the situation in Pharma with the LOEs and the pipeline. And I start with this because I think that our Pharma division is the biggest lever that we haven't really fully grasped yet. We have some amazing growth opportunities in Crop Science with the blockbuster products you've heard about, and you're going to get to hear more about that today. I think that's -- a lot of that is sort of underway. The Pharma pipeline is a huge area to be developed. And there's big upside here, but we got to make it happen. I'm really impressed with the progress that Stefan and Christian Rommel, our Head of R&D, have made, but we've got to do more on that. We have a strong early pipeline now with 13 INDs over the last 2 years. That's 13 new molecules that we're taking into the clinic. That's great, but we need more in Phase II and Phase III. And one of the ways you get there is have great molecules going into the clinic and then implement, get the trials done, turn it around, keep them moving. So there's no doubt we're going to have some challenging years losing patents on Eylea, the low dose and on Xarelto. But I think we can fight through this, and we can come through the next few years with a very strong pipeline. So that's going to be the focus in Pharma, implementing DSO and using that to drive innovation. Next, let me make a few comments about litigation. Obviously, this is a huge obstacle for both our finances and our ability to pursue the mission. I know it's a big obstacle for investors. The issues with litigation on PCBs and glyphosate are at the top of my agenda, they're at the top of the board agenda. We are on this, I'd say, in -- probably in a more strategic way, perhaps. They are very different situations, and I'll -- maybe I'll start with PCBs, but we're going to make a number of changes on both of these. And PCBs, let's remind folks, we -- where Monsanto company stopped selling PCBs in the 70s, there were multiple parties involved in the sort of production chain. And so we're not alone on this. We expect the litigation on PCBs to sort of ebb and flow. It doesn't have the same dynamic as glyphosate by a long shot. We expect the individual cases will arise, and we'll need to defend ourselves. And as this is happening and the situation is evolving, we'll continue to assess the best course. On glyphosate, let me start with the facts, okay? Fact number one, glyphosate is safe. This has been affirmed over and over and over again by regulatory authorities and by scientific panels all around the world. Most recently, the European Union reauthorized glyphosate for another 10 years based on the updated assessment of the European Food Safety Authority. They did a super thorough assessment because there's a lot of folks who are -- yes, they don't like any pesticides and so they really challenge this. And so I think this is like a golden seal of approval on the safety of glyphosate. All these years later, a new updated assessment. Even California, a state I've lived in for many years, a state that routinely lists things as causing cancer. By the way, I have to -- just a quick story. I have a son who lives in Dallas, and he and his buddy were outfitting their apartment, his roommate. And he bought a lamp at Target and he got home and the lamp had a sticker on it that said, this product is known to the State of California to cause cancer, okay? And he -- so he called me and he was like, dad, do lamps cause cancer? So anyway, even California, the court recently ruled that any attempt to put a cancer warning on glyphosate would be false and misleading, okay? So that's a fact. Glyphosate is safe. Glyphosate is essential. It's the most used agriculture crop protection chemical because of its unique ability to keep weeds at bay and to protect the yield, the crops -- of row crops, essential row crops, fruits and vegetables, and frankly, that's really important for being able to put food on the table. And a lot of folks don't maybe know this, but food prices as a percent of income now are at 30-year highs. And that's a big deal. If you're working to make ends meet, removal of glyphosate from agriculture would result in a massive food inflation. And so that's a big deal. Second, feeding the world. There's an increase in population, but we have less arable land. Glyphosate plays an important role there. Glyphosate plays a unique role in supporting no-till carbon, which is important for keeping carbon in the ground instead of going into the atmosphere. It's important for keeping energy consumption in agriculture down. It's important for keeping fertilizer requirements down. If you take out glyphosate, you take out those opportunities. And finally, glyphosate plays a major role in the farm economy. And threats to glyphosate availability are threats to farmers. And that's why probably 360 advocacy groups in America are contacting members of Congress with their strong advocacy on this topic. Now those are facts. Let me talk a little bit about actions. There's going to be a number of cases go to trial this year. We've got a new General Counsel. We're bringing in some new external counsel as well. We're bringing a litigation expert on our Supervisory Board. We're going to defend ourselves vigorously. We welcomed the positive verdicts last week on Friday. We got a positive verdict, a 9-3 for us and a mistrial. We welcome that. But we're going to continue to appeal every unfavorable verdict. We continue to average about 90% reductions in awards, but we're also continuing to work, even when we've had the awards reduced to have the verdict set aside entirely. And we're not nearly through with that. But it's also clear to us that defense is -- alone is not enough. We're going to look at litigation through every angle, both inside the courtroom and outside the courtroom. We have to thoroughly engage with more stakeholders on this because it's not just a Bayer problem. This is a problem for farmers, it's a problem for eaters and it's a problem for the world and for the environment. And so we are going to be doing more there, and we're going to evaluate every appropriate measure to bring closure to the situation. I just want to conclude by saying you should expect to see considerably more action from us, but we will only be talking about these things when and where it's in our interest, because we don't want to give our plans to the litigation industry to use against us. Let me move on to the third challenge, which is the debt load. You should expect from us a really intense focus on improving our profit base. We've got to improve our profit base and then we've got to convert the profits to cash. And these are 2 topics that we know we can do better, we know we need to do better. Wolfgang will elaborate more of the steps we're taking, particularly on working capital and CapEx. But we're also -- we're not stopping there. As you know 2 weeks ago that we shared our recommendation to move to only the legally-mandated minimum dividend for the next 3 years. That was not an easy decision. We listened to your input. I know -- I see many people in the room that I've asked about this, and we took your input very seriously on this. I'm pretty confident this will be approved at our AGM, because yes, we did get a lot of shareholder input on this. I want you to know we're going to be very responsible with what we do with the money. Our focus on this is going to be to use the money to the greatest extent we can to pay down our debt, because we want to be on a path to a single A rating again. Servicing the debt is an increasing cost for us and it's time to get the debt down and increase our flexibility. Finally, bureaucracy. Now it's important to note on this, the number that we talk about is EUR 2 billion, but this is really about 3 things. It's customer centricity, it's speed of innovation, and it's going to yield EUR 2 billion in organizational cost savings. But the customer centricity and the innovation speed, those will deliver top line, all right? And we'll see how that evolves, but I'm very confident. It's simple math. If something used to take 20 people a month to get done, and now it's going to take 5 people a week to get done, you can do the math. It's not just the cost savings, it's like, hey, you're pulling things in. Things get a lot faster, and you're going to hear some examples about that. I feel great about the momentum we have on implementing this. In fact, it's really surprised me how quickly the people at Bayer have adopted this. In my previous work, I had to take a lot more effort to explain the why. At Bayer, nobody's asking why. Nobody is saying, no, we got everything figured out, we don't need change. The people at Bayer are voting with their feet literally. They're wanting to get into the new system as fast as they can. And we ended last year with about 50 teams up and running. We have 70 design teams kind of laying out the new architecture. We now have about 300 teams that are up and running. All geographies and functions are represented in the plans. And by the year-end, we hope to have sort of every part of Bayer affected. We won't be done -- we won't be completed the rollout, but we hope to have at least made an impact in every part of Bayer, and we hope to have it done next year. So I will say -- the colleagues will say more, but yes, it's exciting. Let's move and now talk about our financial commitments. So as I said, we've delivered our revised 2023 plan. We feel good about that. We worked hard, especially on free cash flow. We had a real challenge because we started very soft last year. We were aiming for a minimum of 0. We ended up at EUR 1.3 billion. I feel good about that. Yes, net financial debt, we managed to get it down a bit, EUR 34.5 billion, and we're counting by the tens of millions because we want to make this happen, but we're pleased where we landed. Moving forward, in 2024, we really view '24 as the first year and kind of a 3-year rejuvenation period. We have sort of a soft growth environment we're projecting into due to the ag cycle dynamic, which impacts volumes in Crop Science and also the LOEs in Pharma. There's actually a bit more profit pressure on EBITDA, because we're losing some high-margin sales there and particularly with Xarelto. So that brings our EBITDA to somewhere between minus 9% and minus 3%. On core EPS, we're looking at EUR 5.10 to EUR 5.50 on a constant currency basis. And free cash flow, we're looking to improve that from a soft year last year up to EUR 2 billion to EUR 3 billion in cash flow. And then we want to have our net financial debt down to between EUR 32.5 billion and EUR 33.5 billion. So you'll get to hear more from Wolfgang about specifics on that. But that's where we're at, at the big picture level. So later, you're going to hear from my colleagues, Rodrigo, talking about efforts to rebuild -- sorry, to build additional leadership in Crop Science; Stefan on providing top line resilience as well as refreshing the pipeline; and Heiko on how we continue to innovate with these trusted brands. But I want to kind of provide a vision of where we would like to be when we fast forward out into 2026, okay? We've got 3 important businesses to drive forward and we've got these 4 challenges to tackle. And we're going to be doing this all together. And what we would like to see and what we believe we can see is that we've weathered the worst of the LOE hit in Pharma. And we've managed to significantly rebuild the pipeline so that, that promising kind of early pipeline now is more like a promising mid- to late-stage pipeline. That we've managed to advance our strategies and approaches in the litigation area, and we've substantially contained litigation risk, okay? That we've managed to bring our debt level down to substantially improve our leverage ratios and that we're at or on track to that single A rating. And that we've used Dynamic Shared Ownership to accelerate our progress right across the value chain in Crop Science, that we've launched the first of those 10 blockbusters and we've got a bunch more coming in rapid succession. In Consumer Health, that we're outperforming our competition on sales growth and on margins. And most importantly, that not only have we overcome bureaucracy with our system, but that we've regained that strategic flexibility that we're missing today. So that's a picture of where we want to be. Why is this so important to us? We have this mission of Health for All and Hunger for None. And I want to assure you, we're not naive people. We know, okay, that's an impossible mission to accomplish even in a lifetime. But what we do know is we have a company that's very important to addressing those goals and those are important goals for the world. And so our business, the 3 businesses have developed what we think are really compelling visions, not just for the world or for the outside, but especially for our people because our new system, one of the key elements of Dynamic Shared Ownership is a compelling vision that aligns everyone's action every day with what's important and we get rid of everything else. And we believe that these visions that you're going to hear more about today for the 3 businesses, they will focus all Bayer people to do that, and we're going to eliminate everything else. So again, thanks for your interest in Bayer, and I want to invite Wolfgang up now.

Well, thanks, Bill. Welcome, everybody. It's good to see so many familiar faces. Hello on the webcast. Our pleasure to have you here. Yes, let me follow and go into a bit more of the details on some of the important things that Bill mentioned. I want to accomplish 4 things with you this afternoon from my end. I'd like to speak a bit more about 2023. You have seen the numbers, but I'll tell you some of the things that I think are important also in a historical context. I will zoom in on 2024 on the guidance. I want to pick up on 2 of these boxes on one of the last charts that Bill showed, DSO, what does it mean, how does the CFO look at it from a financial perspective? And then I want to really talk about capital allocation as well. I mean Bill mentioned already a few important topics there, but I want to zoom in on this, and I'm actually also really looking forward for the exchange and the Q&A session with you because we can't cover it all in a short half an hour. Let me get started with 2023. And let me start by saying the same thing that Bill said, we're not proud. I mean we started the year with a false assumption on our glyphosate pricing. We had to do a major profit warning. It's not something that you want to do. We had to do it, and we regret it. We did it in end of July. And as Bill said, we said come hell or high water, we're not going to miss that number, and we're not going to miss numbers going forward. And I'm actually really happy with the attitude that the team showed. You see from the numbers, 5 check marks that are green. On revenue, on EBITDA, on core EPS, we are at the higher end of the range that we provided. We feel good about that. I want to tell you this, the FX effect is because these are all reported numbers were actually somewhat higher than expected. I mean everybody is following what's going on in Argentina and in Turkey and other countries knows what I'm talking about. But the effect just for illustration on sales was about EUR 2 billion. And on EBITDA, was about EUR 375 million. So it was quite significant. I also want to tell you that while we had a lot of negative effects, in particular on glyphosate, we had some natural hedges coming in from our variable incentive programs. Just to give you a flavor, the STI, the short-term incentive that we earned in 2022 is about EUR 1 billion higher than 2023. So that helps the profitability in 2023 to offset some of the glyphosate effects. It will actually help the cash flow in 2024 because we're paying out much more -- much less than in 2023, but it will also imply a hurt on the profitability, because we're going to put our targets at a level where people can earn some better STI if we achieve them, and I'm sure we're coming back to that as well. Net financial debt was better than expected. And that was mainly a function of free cash flow that we saw our way to 0. We knew a lot of options exist to make it better than that, and we activated the whole organization to achieve that. We have done a lot better on inventory. We have done better on AP, accounts payable, I'll show you an example later on, on that. And we have also activated, quite frankly, some safeguards from the corporate level to ensure that we don't miss the target. So we deployed, for instance, a factoring instrument at a low EUR 100 million number to make sure that we hit that number and also get to the net financial debt. I've seen some reports that expected us to be at EUR 38 billion net financial debt at the end of '23. And that assumes people counted on us not achieving the number. So we overachieved the number. And quite frankly, at the end of the year, we got a little bit lucky. The dollar got a little bit weaker. So we got a few hundred millions of a tailwind from currency as well. 2023 was an important year for refinancing as well. We refinanced about EUR 10 billion during the year. Got a bit tough at the end, but at the end, we had good demand. I know we have debt investors in the room as well. We are in a situation now where we have EUR 45 billion gross debt and EUR 34.5 billion net debt. That means in return, we have about EUR 10 billion in cash and cash equivalents. If you look at the maturities for the next 2 years, you will understand that we have put ourselves in a position where we are not depending on the debt financing markets in the near future. And that was the attempt in a very difficult geopolitical environment, as you can imagine. I want to point you to the appendix. I know a lot of you want to understand it in much more detail. We did our best to show you a few bridges and a few additional pieces of information in the appendix to the organization. For instance, we have decided, by business, to also give you more P&L lines. Instead of just giving you EBITDA, we give you COGS, we give your R&D, we give your sales and marketing and other and so forth. So we do this in an effort to give you more transparency as we go. I wanted to do a real quick review of the last 5 years. And my colleagues will later on do more on that on the top line and on the EBITDA line. You see here that the business had kind of a solid top line. It was growing by 2%. The bottom line was growing by 1% when you look at EBITDA. But what I want to focus on is if you take the average of the EBITDA line, you have EUR 11.9 billion per year. And if you now go down to the bottom of the chart that I want to focus on, and you focus on the blue boxes, that is the free cash flow, the real free cash flow. There are no special items in free cash flow. That's the money that came into the bank. And you will see that, that number was EUR 2.3 billion. So from almost EUR 12 billion, you get down to a free cash flow that is EUR 2.3 billion. Now you're all finance pros and investors. So you understand that there's a lot happening between CapEx and free cash -- sorry, between EBITDA and free cash flow. You have CapEx, obviously, you've got to pay some taxes on the way. You have the financial result. Your special items that are not special when it comes to the cash flow, for instance, for restructuring. What I did here is I wanted to illustrate what the impact of litigation is. And you see a little gray box on top of the blue boxes, and that is the impact of litigation over the last couple of years. And in total, when you take the settlements, the judgments against us, offset that by insurance proceeds and take the defense cost, you're getting to a total of about EUR 13 billion, EUR 13 billion over that period of 5 years. And again, if you hypothetically added back on top of it, you're actually coming to almost EUR 5 billion per year in free cash flow. And I wanted to illustrate that to just underline one more time how important it is to get a handle on the litigation situation, because this is money that we could spend otherwise on R&D to help farmers, to help patients around the world. I wanted to share that. On the next chart, I want to illustrate this on a different angle. And I start with the net financial debt at the beginning of the study period and the net financial debt that we just talked about, the EUR 34.5 billion. And what you see is that if you were to take that cash flow without litigation, almost EUR 5 billion, multiply it by 5, you get over EUR 24 billion in that cash flow. The second thing that I wanted to point out is that we actually raked in more money by divestments than what we reinvested in M&A projects. There are still some milestones outstanding that the sellers can earn, but we actually raked in more on divestments than we invested in acquisitions such as BlueRock, AskBio, Vividion. You'll hear Stefan talk about this later on. And of course, you know the projects that we sold, Animal Health, Environmental Science and many more. Litigation, we need to manage. But the other big topic that takes cash away and increases debt is the dividend. And over that same period of time, we paid almost EUR 12 billion in dividends. And in order to influence the elements or take advantage of the elements that we influence, we made the very tough decision to cut into that dividend, and I'll come back to that when we come to the capital allocation strategy. I wanted to provide you that walk through for those of you who wonder, at the last -- in the last box, that's mainly foreign exchange, because about 40% of our debt is denominated in U.S. dollars. And as the dollar gets stronger, it actually translates into more euro in debt. With that, I would like to pivot to 2024. You already heard from Bill that we're taking a different approach when it comes to guiding in two ways. Number one, we focus on the year that we just started. There's just too much uncertainty out there in the years to come. So we focus on 2024, and we also set the guidance in a way that we have a very high probability to actually achieve it. So that doesn't mean that we put a lot of buffers in there, but we have really, really thought through hard what can we impact and what can we not impact and how would we position that relative to the guidance. And I want to give you a couple of examples for that. Let me probably talk about the business drivers a little bit and then I repeat the numbers that Bill mentioned. In Crop Science, we will grow above the market on the core business. Obviously, glyphosate will come further down. Rodrigo will talk a lot about it. And we indeed see the effects that we already mentioned in November. We see Crop Protection pricing under pressure, in particular due to the over-inventory situation of our competitors. And we see a shift that's happening in North America from corn acres shifting to soy acres. And those of you who follow us closely know that that's a more profitable business for us, so it impacts our financials. To be very specific, on glyphosate, it's very hard to predict. We plugged in the 13 -- 15 years average price, excluding the peaks, and that is equivalent to a reference price out of China of $3.80 per kilo. So you see we have -- what we hope and believe is a very reasonable assumption there. On Pharma, you will hear Stefan talking about a double-digit Xarelto decline. A lot of the litigation and the court rulings are still out. We don't know for sure, but we anticipate a double-digit decline in Xarelto and continued pressure on China. We still have to deal with some of the aftermath of the anticorruption campaign that really affect us only indirectly, but volume-based pricing is certainly something that we also have still to deal with. What's really good is that Kerendia and Nubeqa, our new drugs that we launched are progressing well. They were at about EUR 1.1 billion together last year. We anticipate them to be over EUR 1.5 billion in 2024. Bill mentioned the mix effects. Xarelto is very, very profitable because we're also paying no licenses on it. Nubeqa and Kerendia are also very profitable, but not quite as profitable as Xarelto. That's why you see a mix effect there. Consumer Health. You'll hear from Heiko. It's progressing steadily on the growth front and also on the profitability front. We're pretty happy with the development there. Our forecast includes, for 2024, EUR 500 million of the EUR 2 billion that Bill mentioned. And that's not a soft number, that's a number that's included in our incentive systems. So we're there to make that happen. And I'll talk a little bit more about this. On the headwind side, there is still inflation. Some areas have eased, like, for instance, freight, but other areas are under heavy pressure, including, for instance, labor, not only our labor, but also the labor with our suppliers. I want to mention to you, because this is important for your modeling and likely also the reason for a disconnect in the Street expectation in our guidance, that the financial result will be a bit more negative than last year. It was minus EUR 1.9 billion last year. It's going to be more like minus EUR 2.3 billion this year. Two reasons. Number one, we refinanced EUR 10 billion at higher rates. And obviously, now we have to pay the interest on that for the entire year. Remember, the U.S. 144A was in December. So we had the higher interest for one month, now we have it for 12 months. And the second portion is really related to hyperinflation countries, where we have translation effect, hedging cost and in particular, also cost of getting money out of the country. And here, we are speaking predominantly about Argentina. And with some of you, we have talked about this in the past. Now what we are seeing is that litigation has an effect. Settlements have an effect on cash flow. We are not spelling it out this year for technical reasons that were mentioned before. So all of these taken into consideration will get you to a guidance that looks as follows. And you see this by division first, and then I'm going to I show you the corporate numbers as well in a second. And I'll focus on the column with constant currencies. We're also giving you the expected currency impact in the far right column. You can pick so many different currency points. This one is the end-of-the-year currency. The constant currency is the average for the year, this is the end-of-the-year currency for illustration. At Crop Science, we see somewhere between minus 1% and 3%. I mentioned the reasons. And we, again, expect an EBITDA range between 20% and 22%. Pharma, we see somewhere between minus 4% and flat sales growth. I talked about Xarelto, I talked about China. Stefan will talk much more about this. The margin here at constant currencies is 26% to 29%. Consumer Health grows between 3% and 6% and again, between 23% and 24% margin based on a strong delivery also in 2023. You will hear much more from my colleagues about this. And with that, I want to pivot to the guidance on the group level. And again, you have seen these numbers from Bill already. I want to again comment on the constant currencies. That all translates to growth for the company in a range from minus 1% to plus 3%. If you translate that into euros, it's between EUR 47 billion to EUR 49 billion. EBITDA will decline between 3% and 9%. That will then be EUR 10.7 billion to EUR 11.3 billion. I want to mention one point here on the recon, because this is something that was an outlier in 2023 and also the difference between the Street expectation and what we delivered. Recon is usually at about EUR 500 million negative. And that includes enabling functions costs that we are not allocating. It also includes peaks and valleys in the LTI that we have set the targets for 4 years ago, and we're adjusting as we go. With the results last year and the forecast, we had to significantly adjust the LTI accruals. So it was actually no loss in Recon last year and we are predicting that to come back to normal levels this year. I think that's important for you for your modeling. The EPS, Bill already mentioned it, is between EUR 5.10 and EUR 5.50 at constant currencies. Free cash flow is going to be higher. So profit going down, free cash flow going up is a function of numerous things. Three, to mention is, while we don't give out the settlement number, you can't believe that it's significantly less than it was last year. I already mentioned the STI payouts this year for last year that are significantly lower than in the prior year. And you can also expect some improvements on working capital management, in particular, and I'll give you a few examples on that. Now consequently, net financial debt will also reduce. You'll have probably already figured out that it's not quite reducing all the way of the free cash flow, because we have the dividend in there and we have milestone payments in -- for prior acquisitions that we made. And that is the reason why we believe it's somewhere between EUR 32.5 billion and EUR 33.5 billion. So the next page is really more for you as an illustration. These are all the items I mentioned. We didn't put the exact numbers there because they fluctuate a little bit, but you see the puts and takes. You see Xarelto again, you see glyphosate. You see higher merit inflation and higher STI and LTI numbers. But in contrast, you see the savings from DSO as a positive. And you actually see a lot of growth in the non-Xarelto non-glyphosate business that my colleagues will talk a bit more about. Lower earnings, lower tax, that's why the tax box is in contrast to last year, a positive. The tax rate we model is still around 23%. So there is no change in that. So with that, let me quickly reuse one chart that Bill already showed. This is really our objective through 2026 to enhance the performance and create flexibility again. Crop Science, Pharma, Consumer Health, my colleagues will talk about later on. On the group side, Bill already mentioned litigation. And I want to just give you a few more points on DSO and a few more points on cash management and then capital allocation. So I like this chart because it illustrates a few things. DSO is different than your usual cost-cutting programs. Cost cutting is almost a bit of a byproduct, where you really look at everything that you're doing and you're stopping things that are in the way of helping customers and getting to new products. You're really reviewing areas where you can simplify quite a bit. But the real deal is if you liberate the organization from bureaucracy, it will translate in more customer centricity. That should translate into more share and more revenue, and you'll see a couple of examples later on, where we're already doing this. And the same thing on the product development side. If you leave people to finding new products, you should get better innovation faster, which will also contribute to growth. On the cost side -- and by the way, these jobs are just illustrative. I mean in both sides and timing, but you can imagine that some of the cost elements will come in earlier, then influence from the innovation and better products faster. What I want to tell you is the following. I want to repeat that we start with EUR 500 million this year. It's in our incentive programs. And we want to get to the effect of full EUR 2 billion by 2026. By the way, sometimes we have heard throughout the day that EUR 2 billion is a little bit wimpy. But it is not a EUR 2 billion applied to our entire cost base, it's applied to our organizational costs. So a good proxy is to compare it with the payroll we have. It's not all payroll related, but the vast majority is payroll related, and our payroll is about EUR 11 billion, just to see you -- show you how significant it is. I want to also talk briefly about the onetime cost. You will remember from prior cost programs that the onetime cost was somewhere between 1.5 and 1.7x the savings. We have tightened the programs a bit and it's much more focused on personnel cost and not cost of outsourcing and reconfiguring systems. So the ratio will be much more closer to 1. So when you think about the savings on the onetime cost, it's a much lower ratio than what you have seen in previous programs. I want to switch to the cash generation piece. And I put this chart in just to show you the triangle. It was mentioned earlier, this is, by the way, how the STI system is proposed to be changed for the Board of Management. There will be 3 components: growth, profitability, cash, all equally weighted. So I think this is a very important. Dynamic Shared Ownership is an enabler, the most important enabler. Obviously, cash is driven by growth and by margin in the first place, but then also by balance sheet efficiency and divestment proceeds. And now here, we're not talking about divestments at the divisional level, but we permanently divest of brands and buildings and other fixed assets, and we have kicked into relatively high gear on that to help additionally with reducing debt relatively quickly. Obviously, conversely, we're also trying to impact the adverse effects and rein in litigation as soon as possible. And I talked about the severance payouts and how we have brought these down. So one more deep dive on the working capital and CapEx pieces of the cash program. I think it's very obvious that we address the 3 items of working capital. The strongest focus last year was accounts payable. Just to illustrate this, we benchmarked how fast we are paying suppliers with best-in-class. And I can tell you, we were several days faster. We made a lot of changes. You've always got to be careful on the contractual side. You just don't want to drive over to the supplier and say, I'll pay you later because there will be some rebate involved and you're getting cash, but you're jeopardizing the P&L. So you've got to do it with the right timing. But we also beefed up our supplier financing programs, for instance, where we have longer terms, but they can refinance themselves really quickly. And quite frankly, we also changed our internal processes, a number of payment cycles and so forth significantly. Just to illustrate that, I believe, over the next 3, 4 years, this is EUR 1 billion -- over EUR 1 billion possibility. Every day of payable is about EUR 75 million and we got 2 to 3 last year. This is something where you've got to be a little bit patient, but we're attacking it vigorously. The second focus area is inventory. You have seen that inventory has risen quite a bit over the last couple of years. Inflation, but also protection from potential energy shortages. We are reversing that and we are reviewing every S&OP cycle in the company. On CapEx, probably a few more words. The CapEx ratio compared to revenue is relatively stable. The point I want to make here is -- and it's very important when we talk about capital allocation. CapEx includes investments in intangible assets. So when you hear Stefan later on talking about the deal we just did in Cardio, that's actually not an acquisition in cash flow statement sense, that is the purchase of a license, which is part of our CapEx, which we covered there and then with ongoing R&D. So just because we don't allocate much free cash flow to M&A, doesn't mean that we are not investing in business development aggressively. It's probably 25% of EUR 3 billion CapEx per year. So I think I wanted to share that insight with you as well. And that gets me to my final chart on capital allocation. And I want to use a wider term. I could ask every one of you about what's capital allocation, we would probably get different answers. So often, people say, how are you actually allocating your free cash flow? But I want to take one step before that. Because before we get to the free cash flow, we have already invested billions in the business. We have about EUR 6 billion in R&D, and you'll hear from my colleagues how we are prioritizing that. We've invested in CapEx, and we have invested in launches of new products. And if you have followed in Pharma what we have done over the last couple of years, to put ourselves in a position to market products like Kerendia and Nubeqa, we've very consciously got to invest into that market. If you add it all up, that's about EUR 10 billion a year. So that's before we talk about how we use the free cash flow. I've already told you that we also intend to supplement the free cash flow with divestment proceeds of fixed assets that we don't need. So we have gotten much more flexible in our working habits. I can tell you, we sold a campus in Pittsburgh, we sold half a campus in St. Louis, we sold buildings in Berlin. And you may not think that's a lot, but that's EUR 100 million here, EUR 50 million there, EUR 80 million there, it all adds up. So we're very focused on that as well. And then it comes to the usage of the free cash flow and the divestment proceeds. And they have a clear focus. I mean we have set it abundantly clear, top priority, debt reduction. You hear us talking about moving towards an A category. By the way, for all of you who wonder, we categorize that as a leverage ratio of about 2.5. Currently, we're in the low 3s, so we have a bit of work to do. Hence, the reduction of the dividend as one measure to the minimum, and you see that as a very small sliver here. That doesn't mean that we don't do any acquisitions in an M&A time at all, but will not be focused on acquisitions that bring us immediate revenue. It will probably be bolt-ons that are very early stages of product innovation. How do we evaluate this, and I'll probably stop after that. On the left side, on the organic investments, we're really challenging the 3 business to get the industry-leading business models. So we challenge how much R&D do we invest compared to competitors, how much marketing and promotion do we invest and so forth. On the right side, it's NPV-driven. You can't NPV everything, but that is the leading indicator for us when we look at M&A transactions for instance. So I hope that gave you, in a quick half an hour, an overview of '23, our guidance of '24, how we think about DSO more from a financial perspective. Cash is really in focus and I hope the capital allocation is stringent also in your eyes. And with that, we come to the first Q&A section on Bill's and my part. We'll have Heike join us as well for that. And then the 3 divisional presidents will talk, and we do a second Q&A session after their part and a short break, obviously. So with that, I suggest we transition into Q&A.

Yes. So I think some of you may have had a chance to see Heike and meet her, but she joined after a very long career, more than 30 years with Bayer, and she's done, yes, almost every job there is to do in the Pharma division, including most recently running our business in Europe, Middle East and Africa. Previous to that, in Japan, for a number of years. So those of you who speak Japanese in the room, you can try it out on Heike. But very importantly, she -- yes, she made a really excellent choice as our Head of Talent and Labor Director, based on her wealth of experience and just great leadership qualities. And she's been really involved our employee representatives in the discussions over our changes. I just thought maybe we start out the Q&A almost might just give you a chance to talk about that a little bit about the process and where we stand.

Yes. Thanks, Bill, and happy to meet all of you. I think we heard it already in your part, Bill, Wolfgang, you touched on it. I think in a place of core determination like Germany, sometimes changes of the order of magnitude that we are undertaking can take more time. So I think I've been spending the bulk of my first couple of months' time with working with the employee representatives. And I'm happy to say, I think they very well understand the urgency of our situation. And we have a joint understanding of the changes that need to happen in the company. And that allows us to now also move very quickly and swiftly and at the pace that's required as we go about the implementation. So I'm spending a lot of my time working with them collaboratively and jointly, because I think as you heard before, we do go about the implementation this year and also next year. And I think that's where having the support, the tremendous support of the employee representatives is going to be very important.

Emily Field from Barclays. I just -- I'll ask 2 questions on glyphosate litigation. The first one, just if you could give us perhaps some more tangibles about how you're changing the litigation strategy. We have seen some media reports about new efforts in terms of lobbying state legislatures or if any broader settlements would be under consideration. And then secondarily, going into this event, we've been getting a lot of questions regarding whether the level of provisioning was appropriate, particularly in light of some of the adverse judgments that we've seen as of late. I think you said earlier today, you're expecting to pay out less in settlements this year than in 2023. But I guess, more broadly, has your overall assessment of the ultimate liability of glyphosate changed at all?

Yes. Maybe I'll start with the question in terms of the changes. Honestly, Emily, I hate to disappoint you, but I'm probably really not going to say much more than I said, just because I don't think it's in any of our interest that we're sort of describing our new plans to the -- handing that over to the litigation industry. But yes, I think you will see more from us and maybe you've seen some of that already. Then maybe Wolfgang, you want to comment on the provision?

Emily, provisioning, just to give the numbers, the total, I mentioned, the EUR 13 billion in cash that already went out the door, the provision on the balance sheet right now is about EUR 6.5 billion or so, with 85% -- 80%, 85% on glyphosate. The rest basically on PCBs. Can I absolutely guarantee you that, that's it? It will not go over that? I don't know. I really don't know. What I can guarantee you is that a lot of people look at this very methodically, including the auditors of the company. I don't want to bore you with all the details, but you obviously look at how many cases do you have outstanding, what's the per case average that you predict, that you have demonstrated that you do, what are your win ratios after you shorten the losses by the 90-plus percent, what do you pay out? I mean it's a pretty mechanical exercise. And those of you that have looked into accounting pronouncements, it always -- you've got to be able to estimate it and it's got to be more likely than not, in order to put it on the balance sheet. This all gets audited. We certainly hope that we can live within that envelope, but I can't guarantee it.

Richard Vosser from JPMorgan. How should we -- just a question on free cash flow really. I mean how should we think about the development in free cash flow in the coming years? I think, Wolfgang, you highlighted an extra EUR 1 billion coming from working capital. You have an EUR 11 billion EBITDA number. The actual billion suggests you can get to EUR 4 billion, maybe EUR 5 billion by 2026. But why can't we get EUR 6, billion, EUR 7 billion? Just the levers around the free cash flow. And then maybe also just a second question on the cash outflow timing around the restructuring, is that spread evenly throughout the period to '26 as well?

Thanks, Richard. I mean there's a good reason that we haven't given out the guidance for '25, '26. But I want to give you the levers that we have. The biggest lever is obviously profitability, right? The more profit you have, the more you can translate into cash flow. Like I said in my charts, we're attacking everything. We're looking at all elements of working capital management. I gave you the EUR 1 billion on AP, but I can also tell you that EUR 14 billion on inventory is too high. So we're going to carefully look at that, obviously, always weighing capability to deliver because we're delivering seats, and we're delivering essential medicines and optimal operating cycles in our supply chain. And then we obviously look at the receivables part as well. On CapEx, a good portion of the CapEx actually is a growth investment, so we got to be careful there. We also want to be very, very careful in everything that is related to the license to operate. I mean what you don't want to do is lose good manufacturing practice standard in one of your factories for pharma. And then you saved some CapEx in one year, but you're paying it with a warning letter in the next year. So we're going to be very careful. We're attacking on all fronts. It's in the incentive targets. And the reason why I showed you the EUR 5 billion, if you magically would make the litigation go away, is that you see the potential without having even gotten that next level of growth and some of the optimization potential we have. I hope that gives you a little bit of an indication there. Cash of restructuring, it always depends when exactly people are leaving the company. It depends on, is it an early retirement, then the cash outflow has a longer tail. If it's a separation agreement, the cash flow is upfront. So we'll spell that out as we go because all of these plans are developing.

Christian Faitz from Kepler Cheuvreux. I was wondering what you will do to monitor the progress of Dynamic Shared Ownership. Because I remember some 14, 15 years ago, also a new CEO came in from the outside, cut significant costs, identified layers of decisions. And yet 14, 15 years later, we seem to -- or Bayer seems to have gotten a little crusty again, with one acquisition and one bigger divestment. So what are you doing to monitor this progress and keep on the toes?

Yes, yes. Well, first off, in terms of monitoring progress, we've got to deliver EUR 500 million of cost savings in the next 10 months. So yes, that's a rather acute thing. And EUR 2 billion by 2026. So that's also rather acute. So yes, we're going to be very closely monitoring that. I have to say though, don't think this is like that -- those previous things that were done. I think those were probably very good things to do, but that was more classic reorg. You take out layers, but you don't change the fundamental way decisions are made. Decisions are still run up flagpole and back down if they ever get there, all right? And we're taking that out. So the reason why big companies do these cost-cutting programs, streamlining, whatever word, and then a few years later, you're back to where you were is because nothing really changes. It's just sort of like -- it's like going on a crash diet after Christmas. I eat too much whatever, and now I've got to lose a few pounds. How well does that generally stick, okay? And that's what corporate reorgs are. They're like crash diets, and you've got to have a new lifestyle if you want to keep the weight off. And we're talking about a new way of operating. And yes, check out the companies that have done this, all right? And look at someone like Nucor steel in the U.S. and see how often they're doing reorgs. They're not, because they have a way of operating that is lean and it's taken out layers and they stay out. And that's what we're intending to do. But we expect to be accountable to you on that.

To the back of the room again.

Pete Verdult, Citi. Two questions, one for Bill and Wolfgang, sorry. Bill, I realize -- I'm going back to litigation. I realize you can't say much, but we're in this chicken-and-egg situation, because the wider market is not going to engage with your equity story until litigation is perceived to be dealt with. And obviously, you can't say much, so I'm going to push my luck. On PCB is your stance changing at all in terms of your strategy? Or is it just about we're indemnified, we're going to -- we've got people that are going to share the losses with us? That will be a multiyear process? Or are you actually changing legal strategy there? That's question number one. And then just more simply for Wolfgang, just a clarification. Is there any assumption on an impact on dicamba trade sales or chemistry sales this year from the ban? And secondly, I know the free cash flow is clean, i.e., the DSO costs are in there, but the EBITDA number you've given, is that including the DSO costs? Or is that going to be excluded?

So on the first one, on PCB strategy, I'm sorry, I'm going to say again, we're not going to say much more than what we've just said, because it's just -- it's not in the company's interest to do so. And I totally understand the frustration about people wondering whether to invest. I -- yes, but it's something that, unfortunately, we just can't say more. Wolfgang?

On dicamba, I give you my view and then Rodrigo can supplement later, but you have probably seen that the EPA has reacted very swiftly. So inventories and shipments in the channel can be used. So if at all, the impact for this year should be modest. On the onetime cost for DSO, we've actually revised the special item guidelines. I mean you know about this cleaning everything quite significantly, because the more you clean out, the more the disconnect is there between real deal cash flow and what you show in EBITDA. We actually only have two things that actually go into special items: One is litigation-related cost; and the second one is the severance cost, just the severance cost, not like the cost of reconfiguring a system or something like that. That was a much wider definition in the past, but now it's just the severance cost. So whatever is associated with that EUR 500 million would not be in the clean EBITDA number. I hope that helps, Pete.

Pauline from EOS at Federated Hermes. I have a question to go back on organizational change. So Bill, you are fresh to Bayer, relatively fresh. And I wonder if you could share maybe about your impression on the culture you're inheriting. Is it the right one to successfully transform the business? Where are the gaps? And maybe could you talk about how you will monitor this and report on progress?

Sure, sure. Yes. I've been very impressed with the culture at Bayer in a sense of it's a culture of mutual support. It's not a back-stabbing place at all. It's a culture that puts the needs of the patient, the consumer, the farmer, is -- that's really valued. Then you might say, well then, what's the difference, okay? The problem at Bayer is not the culture, it's the bureaucracy, it's the layers, it's the approvals, okay? Personally, I call that the system, not the culture. Because think of it this way, you can have all the positive culture you want, but if it takes 5 signatures to replace a pump in the plant, okay, then the culture is not going to save you. This is the phenomenon that we face at Bayer. We had, I think, maybe many of you've heard me say, Bayer has a 1,362-page rule book that supposedly all the employees in the company are supposed to follow. I just -- for fun, I looked that up, War and Peace is only 1,300 pages. So it's actually -- our rule book is longer than War and Peace, for those of you who had to suffer through that in high school. But it's -- and we see this, in fact, one of my colleagues today was just saying that he had to sign off on something because we had a contract with the supplier and we ended up using EUR 52,000 less of their services than the contract called for. And there had been some sort of prepayment clause, so they actually needed to refund us EUR 52,000. But this is a person who's at very senior levels of the company, one of the top 20 people in the company. He had to sign off permission that the EUR 52,000 could be returned to us, okay? This is this craziness. And so -- but anyway, what I found is the people of Bayer are ready for change. They're saying, bring it on. We saw this with our employee representatives as well. When I was interviewing for the job, I talked to our employee representatives, because at a German company, you're not getting hired if the employee representatives don't basically approve you. So essentially, they hired me. But I told them the system and said, look, we're going to put the mission first, employees second, shareholders third and senior management last. We're going to put all our energy on driving the mission outcomes, better results for customers, better, faster product innovation. And there's going to be a huge amount of change. And there's going to be lots of jobs that are going to go away. We're going to have many fewer managers, many fewer layers. And if you don't like that or if you can't see that as a vision for the company, then please don't hire me because it's not going to work. And yes, and not only -- they hired me, but those conversations, they've been the most diligent students of the new system. Several of them canceled their summer vacations, and we're basically having workshops on the new system to figure out how do we do this. So I think the culture is super, yes, enthusiastic about the new system. I think that we couldn't have better grounds to do this. Thanks for the question.

So Sachin Jain from Bank of America.

Sachin Jain, Bank of America. Two questions, please. So firstly, on the savings, just to get a bit of color as to whether the upside to consensus or the extent of reinvestment. The EUR 500 million you've included in '24 essentially got you to consensus EBITDA. So just -- is the EUR 2 billion needed to get to consensus or does it offer upside? The reason for the question is partly the pharma margin pressure seems to have been worse than consensus, and we're just getting into the Xarelto pressure, which we'll magnify out here. So I'm just trying to balance those 2 items. And then secondly, Bill, I know PCB, I might just try my luck again if I may. But it's a slightly different question. So Wolfgang has outlined the provisions roughly EUR 1 billion based on the 15% of the EUR 6 billion. You've had some sizable headline numbers so far. So 5 states of EUR 2 billion, Sky Valley at EUR 2 billion. So I wanted to understand why that EUR 1 billion provision is correct relative to only 5 states and 1 education center that totaled EUR 4 billion? And what's the event path from here that will confirm to the market that you're correct or otherwise?

Go ahead, Wolfgang.

Yes. I'll do say things first. First of all, I'm not going to contrast it to a consensus because then I would imply any guidance or something like that. But what I would tell you on the EUR 500 million and then also on the EUR 2 billion, and sometimes I they get asked, is it gross? Is it net? It always depends on your definition of gross and net. And so what I can tell you, there is no plan that we say we take EUR 2 billion out and then we put it in R&D or we put it in sales and marketing. We have certain forces like inflation, labor inflation that we really got to offset. So I would be very careful to just take it to the bottom line. And we'll inform you as we go. If you look at that 1 chart that I have basically almost jumped over where you see the savings, you also see merit inflation and so forth. So there's always a few offsets there. I wanted to just say something. I said 85% of the provision is glyphosate, but it's not only PCB on the other side, there is a little bit of a rest on dicamba and Essure and the few other complexes that we have. So don't conclude is all PCB. And I think you're going to probably want to touch on litigation, not much more...

Your question was around the provision and -- yes. I mean, I don't know what are we saying about the PCB provision? And because as Wolfgang mentioned earlier, provision, it has to be reasonably likely to happen. There's -- so things -- to be provisioned, they have to be reasonably likely to happen. In the case of PCBs, it's -- as I said, it's sort of ebbing and flowing. It's more episodic. So I think there's less -- yes, there's less things that are reasonably likely to happen, so there's probably not as much provision. Does that make sense?

Totally makes sense.

The next one is Florent.

Florent Cespedes from Societe Generale. A question on M&A. You say that you have limited resources, but could you consider some innovative deals or multipart transactions, asset swaps that could let's say, for instance, the midterm pharma pipeline, for example, or even strengthen the consumer business to create an even stronger entity that could be more attractive for investors? Any thoughts on this would be great.

Yes. And we can maybe take this up again when we have Stefan and Heiko at the later Q&A. Yes, we're open to innovative deals, and we have been for some time. And I think the deal that Stefan mentioned in his presentation that we announced on Monday, so it's a great example of -- I mean that's a classic win-win. BridgeBio is a young company. They're launching their first medicine in America. They need to focus on that, building out infrastructure in Europe, it's not attractive to them. And we have strong expertise there. So -- and for us, it's like, hey, this is an opportunity to get a late-stage deal in a geographic area, but at a cost that we think is attractive to us in terms of what we can deliver on the top line and profits.

I can probably add one thing. We're really flexible on these, what I call bolt-ons. I mean, we did two deals in Heiko's business Natsana and GloryFeel for instance, to beef up our digital capability. We did -- it's called Blackford Analysis, it's an AI shop in Scotland, that's really helping us with the Radiology business. We did CoverCress in the U.S. We're doing these things, and we're financing them out of divesting smaller assets. So we're very creative that way. But it doesn't distract us from our objective to take the majority of the cash flow and what we're not paying on dividends towards delevering.

More questions, one here, then Jo and then in the back.

Sebastian Bray from Berenberg Bank. My first question, Bill, just on the terminology of the program, Dynamic Shared Ownership, getting employees to behave like equity holders of the company. How many employees in Bayer currently hold stock? That's my first question. And would there be a target to change that? And my second question is, if we take, Wolfgang your earlier comments on the net debt target of the company, let's call it 2.5x EBITDA by 2026, say, that's a number of EUR 26 billion. It's -- I know opinions vary on this. But it's only really possible to get litigation payments are at or below the level where they have been for the last few years, in my view, or R&D gets squeezed. Could you give me a sense of how you expect R&D spend to develop at the company? And I've -- I'm not going to ask you for definite litigation numbers, but if I'm in the ballpark with that assumption.

You want to do the latter one?

I can do the first one or the latter one or both. Heiko, why don't you do that?

How about we set -- yes.

Yes. The first one, I think, was around how many of our employees hold shares? I can't give you the exact number, but we do have employee share purchase programs that we regularly do. So I do know quite a number of our employees do hold our shares. And obviously, they're also impacted by the recent dividend cut.

Yes. Yes. And I would just say, I'm a big fan of employee stock programs full stop, whether it's issuing shares, it's part of compensation or whether it's employee stock purchase plans, all of that. I'm a big fan, but most companies that have those, they have employee ownership plan or they have employee stock plan. And at the same time, what they give us, they take us away by having 8, 10 layers of bureaucracy that basically nobody is fooled. Most employees in big companies, they don't feel like owners. You don't feel like an owner when you need 3 levels of approval to do some basic change to solve a customer's problem. And it's a funny thing about humans. I mean, it's easy for us to focus on the money, but at the end of the day, the thing that really matters is what am I allowed to do? If I and my colleagues in Ohio or in Western India, we could see a need of the farmers, and we can make a decision, commit resources and do it without asking permission then we are acting like owners, and we feel like owners. If we can't do that, then ownership talk is kind of culture crap. Personally, I've worked too long to engage in that anymore. I have no interest in empowerment talk. But you want to cover the...

I'll just say -- want to add one thing on the stock thing. We have on the -- we can -- have employee purchase program as one thing. You know that 18% of the shareholders are retail shareholders. So we have a very, very big retail shareholder base. I can't tell you how many employees or pensioners or whatever are in there. But the other number we can share is we have an STI program and we have an LTI program. The LTI program is not a direct share ownership is 100% tied to the stock price and to a very large degree to TSR. That's about 11,000 people on that program for your information. The second one I'm really glad you asked the question on the net debt. The math is pretty straightforward, right? I mean it would have to be somewhere in the ZIP code. But it's very important that we said towards an A rating by 2026, right? I mean, I hope we make as progress as possible. But I can't guarantee you that we are there because exactly for the points you made, I don't know what the litigation, probably somebody wants to settle the whole thing for a reasonable amount, and we would do it right away. So I can't tell you that number. As it relates to R&D, this is a really interesting question, and this is a really application -- a good application of that triangle that we showed. You always have to make that trade-off between cash, profitability and growth. Like we made a very conscious decision in Stefan's business, and he will talk much more about this to not cut R&D as a matter of fact, to expand R&D a little bit over the last couple of years by what we will, for instance, give to the platform companies. So we always do this in the context of this triangle, but I want to make sure, yes, A rating is super important for us, we are committed to it. But without a clear 3-year commitment on the numbers, I couldn't give you a clear commitment to the A rating in that particular year either. I hope you can accept that.

We'll take the last question from Jo. We hold that question until the second Q&A if okay, and then we'll take the break.

Jo Walton, UBS. Shared ownership again and also a bit on litigation. But in terms of shared ownership, have you done any benchmark work to see are you overmanned in your divisions relative to others. It looks like you're going to get rid of a significant number of people. It's sort of EUR 2 billion of cost savings, one-to-one costs, severance being the biggest element and getting EUR 2 billion back by the end of 2026. I'm sure they're on averagely more expensive than your average staff person. But that's taking a lot of people out of the business. Does that leave you scrabbling around trying to do too much with too few going forwards? So just that element of benchmarking. And are you taking the opportunity at the same time of restructuring to make your businesses more separate and more stand-alone, just in case you were to make a decision going forward in terms of different structures. So just are you separating them? And my litigation question is just a simple one. You highlighted in your press release this morning that you've still got 2 appeals going at various Circuit Courts. Is it still an opportunity for you to get those to the Supreme Court and actually reverse some of this -- the preemption right stuff? Or was that a great idea but something that is actually just really, really difficult? You didn't get it last time. The Supreme Court just showed no interest in picking it up. Is it still an option going forward?

Do you want to do the third one?

The third one I can do very easily. We try everything on every vector to resolve this litigation. And if we can get to a circuit split at one point in time, we'll certainly follow that and right now, there is two avenues. We might find more, but will not give up on that.

Yes. And we also know that -- yes, this is a major policy issue. And yes, it's -- there's thousands of cases that could go to higher courts. This is a unique one in terms of the scope of its impact the nation. Yes, in terms of the question on benchmarking, the divisions are regularly doing various types of benchmarking. And I don't think there's not a sense that we're overmanned from a classic point of view. If you compare us to another hierarchical organization, we mentioned multiple rounds of layoffs, there have been multiple rounds in the last few years. And I would -- my assessment as an outsider coming in as much as I can pick up on that is that, this is not a -- it's not a fat organization, but it is an organization that's trapped in rules and bureaucracy and in the hierarchy. And in that, it's not totally in a different category from many large companies, but maybe a little bit by degree. And so to your question about, well, is there some risk we have to the business with these savings? I don't think so because we're not talking about having people do more work. There's nothing about like, "Oh, well, now we have 8 people doing this job, and we're going to do it with 6." That's not it. It's literally when you have -- for example, there was a group we reviewed recently, an example. It was a department that has 15 individual contributors that are assigned to product teams and then they have 4 managers and 1 leader of the group. So basically, 15 individual contributors, 5 managers. And they went through an immersive in the new system, talking about different ways of working, different ways of organizing and they concluded, "Hey, we don't need that management layer. I mean they're just -- that's not really something that's adding value." And so instead of having 15 people assigned to product teams, and this was in oncology where we actually have a lot of programs growing, we can have 19 people assigned to product teams and have 1 manager. So I use this as an example because we're not -- you see that there's not -- the individuals are not doing more work. And yes, we're not like leaving ourselves exposed somehow. We're basically saying, "Hey, we don't need that, that sort of chopping up this group into 4 pieces is not doing anything for the business." And again, I've got so much experience with this now after, I guess, I'm in year 8 of this. And the first things that I did in my organization like 8 years ago, none of them have been undone. So I have no hesitation that this is the right thing to do. In terms of your question about, are we going ahead and sort of like doing separation work. The short answer is no. Because a lot of the stuff you have to do when you're separating it's like, oh, we've got 1 finance system, now we need to create 2. We've got legal entities in 100 countries, and we need to split them. That's something you're either doing it or you're not doing it. There's kind of like not a halfway. So thanks, Jo.

Okay. That concludes our first round of Q&A and brings us to the first break. For those of you online, we'll back 10 past the hour. We will shut down the webcast now and then invite you also for a break. We'll also have online questions in the second Q&A. And for all of those in here, we'll have coffee outside, and we'd like to also see you back at 10 past the hour then. Thank you very much. [Break]

[Presentation] So good afternoon. Also, I want to say thank you for being here with us and also for the ones that are on the webcast. It's a pleasure to share with you a little bit our journey on Crop Science in the next year. So after getting Bill and Wolfgang, we're going to see the 3 divisions, a little bit of the information about that. So let me start. We had here a short video of the Innovation Summit that some of you were there 6 months ago where we talk a lot about our regenerative culture and our pipeline and the 5 platforms that we have in our R&D and how we are scaling that one. So this is a continuation of that. On this presentation, I'll talk about 3 things. Basically, I'll provide a little bit about the vision for the Crop Science division, what we are aiming on the mid- to long term, but then bring back to our performance and how we're driving operational excellence on the short and midterm and we'll connect with the triangle that you saw from Wolfgang and the consistent that we are having there. And then also just provide you a brief overview about our innovation, how important innovation will play on that one? So if you take a look on this slide, it's just the first slide. If you think about 3 key strategic priorities for Crop Science. Starting from the right here, world-class innovation. We are planning to launch 10 blockbusters in the next 10 years. Each of them has more than EUR 500 million of sales. So that's a very important element of our plans here. And we combine that with operational excellence, how we drive growth, margin and cash. And all the elements that we're putting together on that one, including the Dynamic Share Ownership that we discussed already. To combine with that and then really scale regenerative agriculture, delivering value for the farmers, for the society and also for the owners that we have. So the financial return that we have. That's the intend that I want to share a little bit with you on Crop Science. So starting a little bit about with this vision. We established that we want really to help farmers to produce 50% more, and this is a really enormous challenge that we have. At the same time, different from the past to produce more with less is to produce more and restore more at the same time, and you have some elements here of the commitments that we made in green gas emissions, in water usage, in rice and impacting small holders, farmers globally, that's another element. And how we're going to scale regenerative agriculture to help the farmers to do that. That is the equation, producing more and restoring more at the same time. And why is that important for us as well as a company, right? With that, you see this graphic here that represents a little bit of the market. Today, we compete on this market, and we have seeds and traits and crop protection, and we have a very strong position there. And that market will continue to grow on an expectation of 2% -- more than 2% year-on-over year. But also, we are tapping now on new areas that will help us to expand that market opportunity that we have, and we talk about EUR 200 billion, at least on that one. So good examples of that, and you heard it already. CoverCress and biofuels. We have an agreement. We acquired with a partnership with Bunge and Chevron and how we tap on these biofuel markets in U.S. If you're in U.S., you heard about that one. Or the nitrogen fixation that can have a significant impact in crop fertility and our partnership with some of the companies like Ginkgo Bios as an example, that we also mentioned. Our carbon platforms. We have the platform in the U.S., we have the platform in Brazil, and we're also in Europe. And this is the first year that we saw already some revenues coming out of that platform. So this is new areas that we are exploring. The digital platforms, the partnership with Microsoft, the expansion of our Orbia platform are other great examples of the opportunities that we want to use on the mid-, long term to expand the market that we are participating and drive even further growth than we have in our core business. So that's the goal that we have on that one. But that starting from the position that we have today. So how is the performance of today and how we are performing? And I'm very proud to share with you after the last interaction that I had with some of you was in, as Bill said, in November. We closed the year and we reestablished very clear the performance that we have in our core business comparing to the market, comparing to the key competitors and the peers, right? So core business is everything. Excluding glyphosate, all the innovation that we have is on that one. So the good news is that the performance that we closed the year on the core business really set a great performance versus the market again and versus the peer and we are established leader on that one. And you know this number, but I want to reinforce that. Here is some information. '23 was very important for us because not only we grew in all the 4 regions. And I'm mentioning that because there was a lot of noise in the market in '23, but Bayer Crop Science in the core business, we grew on all the 4 regions that we have, including LatAm, including Asia, but also a very important element, we grew in our core business in '23 in all very strategic segments, 14% in the corn business, 6% in soybean, 9% on the fungicide and we go for all the strategic lines here. The only segment that we work -- was a decline was cotton basically because it was less planted acres, but we gained share on cotton as well. And that gives us a very strong position. The farmers give us the #1 position in corn, the #1 position in soy, the #1 in herbicides, including glyphosate as well, #2 in fungicides, #2 in veg and #2 in insecticides. So a very strong position that we have in the market that help us to tap that opportunity that I was just mentioning. And very aligned to what you saw from the Wolfgang's presentation. Let me just share one of the things that you asked me as well is about share a little bit about the performance of the business in the last years after the acquisition, the integration of the 2 companies. And this is a good chart to show that one. On the left side of the slide, you see the performance of the business. The dark blue is the core business and the green bar is the glyphosate. As you see, far majority of our business is in our core business where we have our innovation. And if you look on the last 5 years, we had a 4% CAGR on the core business. We added EUR 3.5 billion on the top of our sales in the core business. One of the key drivers for that, as you know, was pricing and mainly driven by the innovation that we have and all the new launches that we have. We had the glyphosate on the top. All of you know on 2022, as was said, you had the peak of the sales and peak of profitability of glyphosate because we had a record pricings because of the short of supply in the global market. That's the same for the margin here. We are -- we had '23 delivering 22% margin, and this is the guidance that we established for '24. We're going to come back on that one as well. And this is the position that we established in '23, and I'm very proud about the final results that we had here on the core business. But this is just an important element to go back to the same triangle that you saw and how can we further generate growth, improve our EBITDA and also generate really leading industry cash conversion, that's a goal. And a lot of initiatives in place because we wanted to continue to improve that one. And let me mention some of that, that was mentioned by Wolfgang, but in Crop Science makes a lot of important component. You know that in the last years, we had a significant impact on COGS after the pandemic, the war in Ukraine, the energy crisis in Europe, you had a significant COGS increase in our CP, in our Crop Protection products, especially. One of the major efforts in the next years is starting already in '24 is to reduce that, reduce the raw material cost and reduce COGS. And this is one of the core elements that we are tapping to improve the numbers that we have here on this triangle. We also have a lot of the impact on that on the inventory. One of the impacts of the inventory increase that you heard from Wolfgang is also the impact of the cost of that inventory. And that also, again, aims not only to improve our EBITDA, but also impact positively our cash flow. And that's an important element of that in this year in 2024. Center of that, as you're going to hear from me, you're going to hear from Stefan and Heiko, we are taking the new operating model, the Dynamic Share Ownership to really drive the 3 elements here to further generate growth for us, also help our profitability and our cash flow. And we're going to talk a little bit more about that, but that's the focus. That's the focus of the organization and the Crop Science team as well, we would be on these 3 elements of the equation here. So let me just talk a little bit more about how we apply the new operating model to Crop Science. And we've been working a lot on that one. So on the graphic here that you have is we had more than 1,500 people from Crop Science from the organization working on the model that applies for Crop Science with the same principles, the same principles that you're going to hear, how we designed the organization to be focused on customer facing and the product teams? How we delayer the organization? How we simplify the organization? How we increase our spin of coaching to make sure that we have the most effective fast and agile organization in place. So we apply the same principles to the Crop Science organization. Crop Science, if you think about our business, it's a B2B business, right? We work with farmers, they acquire our products to make money, to produce and make money. So it's very important that more time that we spend with the farmers, you can see the result of that, especially if you tie here things, right? You just saw the beginning here a short video of our 5 R&D platforms that we're going to talk more, how we bring breeding, biotech, gene editing, chemistry, biologicals, digital platforms. How we bring that to help the farmers to increase their production and restore soil health and restore nature as we talk about. So the design that we have for DSO in Crop Science aiming that. We designed 450 customer-facing squads in all the 4 regions and how we increased the time with the customers. We started with 50, we have front runners, and we designed from that one. And also, the product teams, how we ensure in R&D as an example, that we are more flexible with the resources, and we can advance faster the innovation that we have. So those are the elements applying the same principles, applying in Crop Science, how it works for Crop Science. So -- but -- let me share with you a little bit of the -- what we call front runners, and you heard Bill talking a little bit about that because it's not only the design we implemented, and we have regions, in all the regions that we already implemented, and we are testing the model, and we are advancing on that one. So I'll ask to share the video -- a short video about a little bit of some of the elements of applying DSO in Crop Science, please. [Presentation]

So just building on that one, it's so important to reinforce what I said. We have these 5 engines on R&D. And you know that we have some competitors more focus on the seeds, some other competitors on the CP and some other competitors on digital platforms. Bayer has this unique opportunity to bring these 5 platforms and helping the farmers to be successful. And that's the leverage that we have. And of course, when you think about that, bringing these 5 platforms with a model that we are designing, really having the customer-facing squads. I'll give 1 number. In U.S., 21,000 farmers makes 42% of the market. 16,000 farmers in Brazil makes 45% of the market. The potential that you have really to leverage that relationship and to take the 5 platforms is really unique. So that's the goal that we have, and that's the work that we have. Because again, driving operational excellence, ensuring that we are delivering the performance that we talk a little bit about here and how we enhance that performance, that combines with the second element. And the second element is very important as well. On the chart here, and you're going to see that one, this is the revised peak sales of our R&D. We just revised it to EUR 32 billion of peak sales, 50% that is incremental and very unique. On the next 10 years, we have 10 blockbusters launched with more than EUR 500 million that I said to you. That's very special for Crop Science. It's very unique for us. And of course, we are seeing that impact of those launches coming in the pipeline. So that's the overall pipeline. And we -- some of you that doesn't cover Crop Science so close. So let me tell you something that is very important because probably there are some of the difference between the Crop Science and the pharma. But in the Crop Science, the base of innovation is on this slide here. The growth not only comes from some new launches, but also with the base. We have a very potent foundation of our business. That's our breeding, our germplasm, our Crop Protection business. And this is the first part of how we drive growth, how we bring innovation. So let me give you some numbers. We are launching 400 to 500 new hybrids and varieties every year. We have 100 new formulations. Only last year, we had 190 registration in Crop Protection. That engine is extremely important for us because those new hybrids, new varieties comes with yield gain, and we share value with the farmers, and we have the power of innovation, feeding our pricing mechanism to be able to grow -- to drive the growth business. So when you think about the core business of Bayer and Crop Science, let me just go back a little bit. We had 10% growth in '21. We had 6% growth in '22. And we had 7% growth in '23. This is our core business. Everything excluding glyphosate, the engine of innovation here. So just to reinforce that and the importance of that to continue to do that. But at the same time, of course, it's always great to have some new biotech traits that will fuel our platform, right? And I'll just mention 3 examples here -- 3 or 4 examples here, and we would like to go deeper and share more of that. But I just want to share 3 of them. The first 1 is the short stature corn, right? We are launching now the breeding version, and we have that in the hands of the farmers in U.S., we have in the hands of the farmers in Europe and Latin America. So the breeding version is already in the market, but we just advanced to the Phase IV the biotech version that we will be launching in 2027. And the biotech version is important because we can expand exponentially that product to the market to farmers as well. And that's a unique feature. Some of you, I remember some of you were in the field with us seeing the difference between the short stature corn. This is one of the unique opportunities that you have to really change how farmers grow corn and you don't do that every year. So this is really unique, and this is something that is exciting. It's not only how we produce grain but also how farmers produce silage with corn. So that's a very unique opportunity that we have on the Preceon Smart Corn System. At the same time, soybean, and I said that soybean we grew 6% last year. We continue to expand our platform in Brazil. We hold our share in U.S. We had new launches coming. So we have 2 new launches coming in soybean that are very important. The first one, we just advanced to the Phase IV, the 5 mode of action herbicides for soybean in U.S.This is -- again, this is important blockbusters. Farmers today, they need to decide which herbicide trait and package the use. We have these 5 mode of actions coming in '27 on the market that will make a significant impact. At the same time that we advanced to the Phase IV, the launch of the third generation of Intacta for Brazil as well. So -- and as someone asking me, well, I see the '28 launch of -- the third generation of Intacta. Just to remember, we launched the second generation a year ago and we are ramping up. We got 13 million acres in Brazil with the second generation and I already mentioned with you the third generation. That's the importance of the renewal of the portfolio and the pipeline that we have in the Crop Science division. And you heard from Bill as well, this is the new herbicide, right? So this is also advancing to the Phase III, planning launch in '28. This new herbicide is the first one in 30 years that we were able to develop, a broad spectrum herbicide. At the same time that we are developing the herbicide, we're developing the tolerance in soybean, corn and cotton. One of the key elements of combining this platform on R&D is to be able to bring these 2 solutions to the market at the same time and to complement our pipeline. So some of the examples. And again, for the ones that say, well, I would like to see more of those blockbusters. I invite you to watch the Innovation Summit for the ones that didn't have the opportunity. Online it's available. We really go through the 5 platforms, and we talk a lot about the innovation that is coming there, but I can also answer some of the questions on the second session that we're going to have here. So that brings me back to the '24 outlook here that we have. This is a little bit of the -- you heard already from Wolfgang, just bringing home a little bit what we have for '24. The core business, we are planning to grow from 1% to 4% on the growth that we have of 7%. So this is very important to highlight that when I compare to the peers in the market, right? We are managing glyphosate, it's important that because you're going to see a softer Q1. Of course, glyphosate on Q1, the prices versus Q1 of last year is lower than that one. So you see the final normalization of glyphosate and also some of the shift that we have in the market from corn to soybean. So this is planned for the year as well, and we are planning for our EBITDA margin for 20% to 22%. On the triangle that you saw, our organization is highly focused on really growing our business, our core business outpace the market and our peers. This is one of the key first priority that we have. We are also aiming to really generate and convert cash. That's a very important element of all the work that we are doing, and I mentioned some of that. You heard other elements from Wolfgang on the payments on the receivables. I mentioned on inventory as well that we're doing. So that's another important element. And we're going to focus also on our profitability, and we're going to manage in the midterms here our EBITDA margin on the low to mid-20s as well. That's another element that we are managing and this is an information that I think is important. For specific in '24, we have a soft Q1, but that's the plan that we have for the full year moving forward here. So let me go through the final slide that I have here on my presentation and was a short overview of Crop Science here. So I think that our leadership position in the market and all those platforms that I mentioned and our global presence really gives us this unique opportunity to set this bold but achievable vision of helping the farmers to produce 50% more and restore nature scaling regenerative agriculture. That's a very clear plan that we have. And for doing that, we need to combine these 2 key elements. One, continue to drive operational excellence in the organization, ensuring that we are bringing innovation, we are pricing, we are managing costs, we are reducing inventory. That's the gain that we need to really be focused, and this is part of the element that we have. At the same time, continue to really be upfront in the market in terms of our innovation, our pipeline. Because when you combine these 2 things, again, we really see the opportunity to really have a significant impact for our customers, also for the society as a consequence and for us as the financial results that we have. And we -- you're going to -- you heard and you're going to hear a lot about that. The new operating model will feel a lot. We'll boost all the elements that we have here, and we are designing and you're going to hear how we're designing with the same principles for pharma. You're going to hear how we are designing that in consumer health, but a lot of work have been done in the last months in the organization to design that, applying that to specific on a B2B business as Crop Science. So with that, this is basically what I want to share briefly with you and I will invite Stefan to present you the pharma. Thank you very much.

Well, thank you, Rodrigo, and good afternoon, everyone, here in the room and also good morning, good afternoon, good evening to those that are following us online. In the next half hour or so, I'm going to try to answer to the challenge that was posed to me by Bill this morning saying that our biggest vector or lever for growth in the future comes from our Pharmaceutical business. So I'll try to provide some color of both how we're going to try to navigate the LOE situation, which is going to affect us mostly in the next 3 years, even though we've seen Xarelto exclusivity expire since 2020. So how we navigate the next 3 years, but also provide some idea on how we're making progress on really a completely renewing our R&D approach and accelerating our -- I think, at this point, a really exciting early pipeline. For that, we are seeing 3 priorities in our Pharmaceutical business, in renewing that top line in the short term, but really growing that pipeline value in the long term and using DSO as a leverage in this new operating model to unleash more of the potential that we see inside of our organization and really focus on what really matters in terms of employment of our resources. Just a little reminder because the Bayer Pharma portfolio is a little different. So in the 5 -- in 4 of the 5 areas that we compete and where we got revenues of about EUR 18 billion over last year, we really hold a leading position. But what makes us also a little different from some of our peers is our strong position in Europe, and also relatively over-indexed position in China, where we have been traditionally in the top 5 of multinational companies. As a negative to that, we have been relatively underexposed or small in the United States. And this is largely due to the fact that we don't hold rights to Eylea in the U.S. and that we are partnering Xarelto in the U.S. As you can imagine, as we move forward, we're going to balance this out much more. We hold global rights to all of the products that are currently underway and being launched with the exception of the one that we announced yesterday, acoramidis, I'll speak to that a little bit more in detail, which we for now only hold European rights to. But this will give us an opportunity to also benefit of the most attractive pharmaceutical market much more in the future than we may have done in the past. Rodrigo and also, I think Bill showed you where our business was going over the last 5 years. I'm not going to belabor that too much, but we've been facing with the beginning loss of exclusivity of Xarelto, starting in 2020, but most importantly, with the volume-based procurement, some significant headwinds over the last years in our pharma business, and we've been balancing this nicely with some of the growth that we've seen, also mostly compensating for the margin pressures that came with that top line wins that were going against us and that have significantly also eroded margin plus inflationary trends in the market. So let's go into a little bit more detail how from here, we want to move forward. So I mentioned to you EUR 18 billion in 2023. So the big question is how you're going to manage the coming years. And we can see it if you like, in different shades. First, and I'll go into this in more detail a very resilient, stable base business that we have of about EUR 10 billion. Then, of course, some stability that we see given the approval for the 8 milligrams in Eylea, which sort of like compensates for some of the headwinds that we're going to be seeing with the loss of exclusivity starting in 2025 there. And then our ability to manage the decline of Xarelto and compensate for that through our launches with elinzanetant, now acoramidis and asundexian, but also with what we've been seeing on Nubeqa and what we've been seeing on Kerendia. So you can see that we expect between '24 and '26 despite basically a full erosion in Europe of -- from an LOE perspective, we expect to compensate this with top line counters that help us grow the business at the same extent that we expect to lose in Xarelto. Now as we go into this into more detail, one of the unsung heroes, like in many companies, but in this one, maybe even more to be highlighted is our base business. If you think about the Bayer base business, half of it roughly, is in radiology and in women's health. Women's health, an extremely resilient business where we managed to maintain pretty much our sales now for quite a while. We're a leading company and long-acting contraception more than anything. But also in many regions of the world, we continue to be a champion in short-acting contraception and also menopause management. And then there is radiology where we are clear market leaders, both in contrast media, but also in delivery -- fluid delivery of our radiology agents and other agents than our own. And we've seen here significant growth over past years, and we're fully capitalizing on our leading position you heard, I think it was Wolfgang mentioned that we did an acquisition last year there in the IT space, where we now also act as a consolidator in this space, and this with great success. So this is -- this should give you some comfort that we really have a very strong base of our business that is sort of like not touched by some of the changing dynamics that we see elsewhere. Then we were very pleased last year with the development of -- that we saw with Eylea with the approval that we now recently received with 8 milligrams. The data was just stunning. And to the surprise of many has not only sort of like maintained our position as the standard of care, but I really think has broken new ground and there is good reason to believe. And when I look at our share development and also our current volume expansion with our base business that we can build on that and continue to see a very positive situation for Eylea. Last year, we were showing still, despite some pricing headwinds in some European countries, we were showing double-digit volume expansion. And that with another product that had entered the class. So you can see that there is some -- still some elasticity in this marketplace. And despite also the fact that we, as the leader, have been expanding on dosing intervals through more data on our 2 milligram version, the -- we expect that to continue with 8 milligrams that can allow for even higher dosing intervals. So a strong position here continues to be strong, certainly along that 3-year outlook that I was giving you on the earlier slide. Now let's move to Xarelto. This is obviously the tricky one. The tricky one because we've been seeing these -- loss of exclusivity is now moving over a longer period of time starting in China and starting in Latin America, where we sort of like have digested a big part of this. This year, we'll see lots of exclusivity for atrial fibrillation in Japan. We're also going to see the expiry of our substance patent in Europe as of next month. We are happy to confirm that we have additional IP protecting us. And we've been battling this over the last 2 years or so with the main protection being our '24 oral tablet patent that we hold in Europe. And European Patent Office has confirmed this pattern on appeal. We've been now having, I think, 4 or 5 countries where this has challenged in courts, and we've prevailed in all of them in different European countries. We had said that we would have to basically go country by country now and defend that patent. So all good on that side. But we're also seeing activity of generic companies trying to go around the patent. One way of going around it is using different pharmaceutical forms than a tablet, and that's exactly what they're trying to do. So while we cannot assert our patent in itself against these challenges, we'll have to wait until they come to market to then go after them legally and file for preliminary injunction. So it's going to be a battle that's going to be unfolding over the next 2 years with some uncertainty on when this is going to hit and where this is going to hit if it is hitting. Let me make it very clear. We believe in the validity of our IP and we will defend it rigorously across all of the territories where we have this protection, especially in Europe. But it's hard for me to give you the exact date and time. One thing is certain, our protection expires in '26 in Europe, so that is when we, in any case, expect this type of erosion that you're seeing here on the slide. So 60% of our Xarelto sales come out of Europe. You can expect 80% of those 60% to be eroded relatively quickly in the course of about 2 to 3 years. And I think that is -- that part is easy to model. The exact time when it happened in which country, that's a little bit more difficult to model. And we've tried to capture this a little bit also in our guidance for this year. So that's about Xarelto, by the way, U.S. is still a patent protected until '27. So no -- we don't expect any generics to enter. You know that Janssen is our partner in the U.S., and they have exclusive marketing and sales rights there. Which brings me to our true growth vectors in the short term. Nubeqa, I think, has been, for some of you, maybe less for me, a very pleasant surprise. I'm looking into somebody's face there without mentioning anyone in particular. So we had last year above $900 million in sales. We continue to enjoy very attractive growth rates. And this by only capturing a fraction of the total market opportunity so far, having been approved in non-metastatic castrate-resistant prostate cancer patient. And on the other side of spectrum in metastatic hormone-sensitive patients in combination with chemotherapy. We expect this year not only to be significantly above EUR 1 billion in sales, we also hope that we get the readout positive from the ARANOTE trial, which sort of like opens up the entire space of metastatic hormone-sensitive prostate cancer, including monotherapy. And then in the mid to long term, we have initiated new programs that would actually expand significantly the potential use of Nubeqa in earlier patients with the ARASTEP and the DASL-HiCaP trials where we would go into the non-metastatic setting early on. So all in all, something that I'm more than pleased with and it comes to show how strong our organization is and actually replacing lost sales that we see on the Xarelto side. Kerendia is another one, and this is maybe less of a surprise, this is more of a slower animal than we see with Nubeqa. And I think that follows a pattern that we see in cardiovascular medicine very often. So here, we have -- we are present in the market in the renal indications. And have a relatively -- not a relatively -- a strong body of evidence from early onset of kidney disease to later stage kidney disease in diabetic patients. We've seen sales of EUR 270 million last year. We still see good growth and expect over EUR 0.5 billion this year. The development of the kidney evolution is a little slower than we would have expected. But we've placed additional bets on the secondary indication that we're pursuing with heart failure. You know that this class of product of spirenone analogs. Thank you. Analog has been widely sought to be used in heart failure with a strong efficacy proof, but a poor safety track record, which really sort of like limited the use. We have now proven in the kidney setting how well this product is tolerated, and we expect that this could become a foundational treatment also for heart failure patients. We expect readouts from the FINEARTS trial, which is studying more advanced or more sick patients with reduced ejection fraction of more than 40%. But we've doubled down here in adding trials that cover the entire spectrum of heart failure. So by the time that we would expect approval for coming out of the FINEARTS, we should also have data by then on these other programs that we're putting into place. We think this could truly offer an incredible opportunity in an area where people are underserved, especially with this mechanism of action. If you want some proof about this beyond spironolactone analogs, you can see that we've seen evidence from our Phase III on secondaries that this would work in heart failure as a good mechanism of action. Let me quickly go to asundexian, where we continue to go along on stroke prevention. Needless to say that this is a highly prevalent indication with 1 in 4 adults that at some point in their lives suffers a stroke, and with a high reoccurrence in the first year and in the first 5 years post stroke. So this is one of the most debilitating diseases. We know this -- basically any of us know as family members that have undergone this terrible experience. We've seen good evidence from our Phase II settings that also the dose that we're using that there should be strong efficacy in patients with atherosclerosis. So there's a strong rationale behind continuing this trial, and we remain optimistic about this. We will have data readout in the second half of next year, and then we will see about asundexian furthermore. I mentioned to you, acoramidis or acoramidis. We're still debating how to pronounce this. So acoramidis is a novel compound that is currently being looked at by the European Medicines Agency for approval. Here, we have about 200,000 patients in Europe that are diagnosed with this debilitating cardiomyopathy. This is a disease where you have a tetramer building up in your heart muscle and ultimately leads to a lower contractability and will ultimately lead to death. There is a product in the market currently that is tafamidis, which in Europe is selling slightly over $1 billion in sales. And if you look at how few patients ultimately have been treated that are affected by this disease, we see clear opportunity for further market expansion. And we think that we have in the product that we have partnered with BridgeBio, we see a very competitive profile. And given our legacy in cardiovascular medicine in Europe, this is a perfect fit for us. So we think that this adds to all those interesting things that we're launching in the coming 18 months or so and to those that we've already introduced in our late-stage pipeline. And there's one left in our late-stage pipeline that I feel tremendously about, which is elinzanetant. Elinzanetant is going to be the first dual mechanism, nonhormonal that targets here these candy neurons in our 1R and our 3R are. We believe that this gives it a further differentiated profile to other products that have launched recently in this class because it allows to both reduce symptoms, vasomotor symptoms, but also address sleep disturbances. And we've seen evidence in our first 2 trials where we've met all primaries and all secondary endpoints of the strong efficacy. We're waiting any day on the OASIS 3 trial. In the OASIS 3 trial, this is a longer running trial. We've exposed patients for over a year to elinzanetant, and we expect a very -- more telling situation on safety, both in terms of endometrial safety but also in terms of liver safety for this drug because those are important to note. So this should be coming in any day. I would have wished to share it with you today, but please give me a few more days, and then we'll hopefully have everything together there, at least from a top line perspective, but we feel really strong about this. And we feel strong about this because it's such a prevalent condition. 4 in 5 women will develop menopause, hot flashes. 3 and 5 will develop sleep disturbances that are associated to these symptoms. And so the market opportunity is just tremendous. 1.3 million women go into menopause every year in the U.S. alone, where we see a tremendous opportunity. And this is a class that's just building. It's building after many years of sort of like question marks behind hormone replacement therapies. And so there needs to be awareness that needs to be created. And we think we will come in just at the right time to fully capitalize on this growing opportunity and our long track record as a leader in women's health care, certainly will help us here in making this a very valuable asset in our overall portfolio. Don't forget, we continue to be a leader in women's health today with more than $3 billion in sales in a very stable business. We've served more than 60 million patients as we speak. And reached out to over 100,000 OBGYNs during that time. So it's our bread and butter business. We've been in this for over 100 years now. So it's just logical that we feel strong about this product going forward. Let me shift gears quickly and talk to you about -- a little bit about the future and what we're doing on the R&D side because one area that I feel extremely strong about since I joined Bayer in 2019 or early 2019 is what we've done on R&D. We've not only brought in new people, we've not only done a lot of change in our portfolio. I can give you very concretely some areas of what we've done in terms of focus, in terms of change of quality, in terms of change of capabilities that we have today, but also in terms of shifting productivity and really shifting to value creation, responding to the challenge that was given to me by Bill of accelerating innovation and bringing out more innovation through our pharma organization. Let me first start by talking about the focus that we're putting in. We've clearly -- we've made it very clear, we focus around 4 areas being oncology, neurology and rare disease, cardiovascular and immunology. There's a clear reason why we do that. Cardiovascular is sort of like the most logical one because we've been in that for a long, long time. And I think we have second-to-none expertise in the area of cardiovascular that is largely housed in our German sites in Wuppertal and a little bit in Berlin. And the example of not only of Xarelto or Kerendia will be further sort of like renewed with some of the things that I'll share in a second in our pipeline. Oncology, we now have a cornerstone in Nubeqa, but with some of the acquisitions that we made in terms of platforms, I think we have today a much more credible play in oncology and to claim to be, over time, one of the leading oncology innovators. And also with that, one of the leading oncology companies. Neurology and rare disease became an area of high interest to us with the acquisitions of BlueRock and of AskBio. Here, we hold a leading platform position in terms of cell and gene therapies, and our 2 lead assets in Parkinson's are extremely promising. Immunology is the one that I get asked about the most, so why immunology? With our acquisition of Vividion there we have also a strong platform opportunity to actually go into the undruggable space into targets in immunology that are high-value targets and that no one has been able to unlock before. STAT3 is a one of those promising targets that we're in the clinic with first compound in oncology, and we expect to go further into immunology, that could truly be if it proves to be what we hope it could, could be a pipeline in a molecule. So let's talk about quality. The first thing when you go after quality is you need to really ask yourself, do I have the right things in my pipeline? What Christian Rommel and his team did is impressive. They pruned over 40% of all of our assets. So when before people were already saying like your pipeline is not very rich. Well, after that pruning, it got really poor. And -- but we did it. We did it because we have the quality to turn out new molecules, and we want to focus our money where we think the true value creation is, and not just produce another me-too or just do a check mark behind -- become behind some -- we are producing so many, I don't know, decision points in our pipeline. No, we wanted to really go and raise the bar to where this has not been done before and to establish very clear criteria along which we move products through our pipeline. And we could do this because we had so much work over the last years on our capabilities. If you compare the capabilities of Bayer Pharma today to what I found 5 years ago, this is an unrecognizable company. 5 years ago, this was a German-centric, mostly cardiovascular footprint with an interesting track record in cardiovascular with Xarelto mostly. But with from there onwards, a relatively poor track record. Since then, we've done over 120 deals over the last 5 years and have been one of the most active actors in the space despite limited cash availability. Someone once I think out of your group said, you've done a lot with little. Well, if you translate that to our capabilities, you can see that today with Vividion and proteomics, I think we have the strongest small molecule capability of any company out there, and it shows with the productivity that we're unleashing from that platform. With AskBio and BlueRock, I think we have a leading position across the entire value chain from manufacturing and the capabilities to manufacture, to our ability to generate new clinical-stage opportunities in cell and gene therapies. And with Algeta which I must confess was already there when I came. We have one of the leading radiopharmaceuticals platform, an area that is highly sought after by many and where I think we have one of our most promising mid-stage molecules in our pipeline. So all in all, see that if I add even leaps as a potential source of innovation, we have strong platforms which give us strong capabilities. And we try to bring those into this triangle of productivity of generation of high innovation, but also with rapidity in moving them through the funnel and accelerating now as we move through the funnel. DSO is going to be instrumental in actually moving the pace up and getting that productivity into turning an early pipeline, which is very promising into a great late-stage pipeline. So those are things that we're working on. Add the 2 components together of how much we have to replenish in the next 3 to 4 years with the products I just showed you at the late stage and that have been launched and take some of the early stuff and then you're going to get to an interesting combination. So what does this mean concretely on the early side? I mentioned Vividion to you. The KEAP1 advanced solid tumors is a target highly sought after. We have solved it through our chemoproteomics platform. We're in the clinic now. This could be a potential strong blockbuster product. I mentioned our radiopharmaceuticals pipeline with the PSMA-TAC. This is a first-in-class, best-in-class opportunity in targeted radiotherapeutics with the continuum conjugate, we think we have a very strong position there. And I mentioned also the STAT3 inhibitor. This is the second medicine here -- new medicine from Vividion that has entered the clinic for a company that's only 4 years old, it's quite impressive how fast we're advancing. And everyone, and I invite you to come if you're interested to San Diego, where we've won, I think, twice in a row employer of the area to see the spirit and the positivity and the can do from these biotech platforms that we continue to operate very independently then you can get a sense of what the future of Bayer Pharma may look like. On the later stages, I mentioned to you, BlueRock with bemdaneprocel in Parkinson's, we're presenting tomorrow 2 orals and a couple of poster sessions tomorrow at one of the Parkinson's conferences that are ongoing. And it shows that this product is really well tolerated in Phase I in both doses that we've given. And we can't wait to get this now into a comparative trial Phase II, which should hopefully start later this year. Another one from our own platform out of Germany is the anti-alpha2 antiplasmin monoclonal antibody. This is an area which is right where we have the best knowledge. It's an effective thrombolytic with no increase in bleeding risk. So this is to treat acute stroke. So today, there is no good standard of care for those patients that are basically when the ambulance comes and they need to dissolve the clock immediately. So here, we have, we believe, a potential new standard of care, first-in-class and potential best in -- best anyway because first-in-class potential. HER2, EGFR is one where we just got breakthrough designation a few days back by the FDA. Here a nice targeted cancer therapy for the underserved non-small cell lung cancer mutations. We think, another one with best-in-class potential. So you can get a sense of we're really increasing the pace and the quality of our pipeline. I mentioned that we want to use DSO as our operating model to actually even further increase the pace. How are we going to do this? I had in the break, I got the question, so all I do -- it was a little bit -- the question was like, do you really believe in this stuff, okay? And I said, what I do believe in is that if you're truly following a product-centric approach in your R&D world, then you basically convert yourself into a biotech. Today, most pharmaceutical, large pharmaceutical companies, they follow a functional hierarchical approach. That means functions optimize functions. And they mean all the best for product. But when product wants something, they first have to check in their hierarchies if this is the right course of action. And hierarchies are going to decide what is best for their budget optimization. But we're going to take that away. The budgets that are currently in these functions, we're going to just take them away and product will have a financial frame just like we operate our biotech platforms, and we're going to give them a framework in which they have to produce outcomes over a certain period of time. And if we do that, we're going to just create a dynamic allocation of resources that we've never had before. Today, it's a much more static thing in our hierarchy. So we're basically turning the hierarchies, not upside down, but sideways. And I think this is going to unleash a lot of the potential and also going to take away a lot of some of the frustrations that I sometimes feel in the organization when they say that we can't get things done fast enough. With that, I wanted to share a few examples with you. You've heard maybe about our U.S. commercial team, which was sort of like our first go-to-life front runner. We've taken out 40% of our management in late December in our U.S. commercial footprint. This is something that's already operative right now. Now we need to train everyone to actually function along those rules because when you're a manager in the sales force and now all of a sudden, you have 20 people reporting into you, you can't do like before and drive along with your reps and tell them exactly what to do. No, they need to peer-manage some of the objectives and also some of the allocation of resources, and this is something that we're still learning. But we're putting in place, and we're moving fast. I would say, we're moving even very fast. I could also give you the product supply inventory management, for example, which I really loved because it's so simple. And some of the things are so simple that you wonder why haven't you done this before? Well, because then someone is going to say because there was a rule that wouldn't allow us to do this. Like, for example, when you get a product from a third-party supplier. Well, instead of using the quality control at your supplier, which is also GMP-certified, well, we have to do it again because doing it twice is much better. Well, it's not good for your capital -- for your working capital. That one I can assure you. So we're improving there, too. But let me give you 2 examples in a movie, in a little film from our colleagues. One of them, I have to caveat is the leader of our Eylea team. They have started to do, if you like, a precursor of DSO a little bit earlier. And this was at a time that Julio Triana was part of my team, running our transformation efforts. And the interesting thing, and this is why I mentioned to you, we thought like a good company that we can learn from in order to sort of create a bigger dynamic on our product teams. And I tapped to Bill who I knew very well as my peer in the pharma space, and he gave us a tutorial on how to do this. So if you like, that was the beginning of DSO even without knowing that Bill would permanently land at Bayer. So let's look at it. [Presentation]

So that brings us to the pharma guidance. So we expect the top line change of 0 to minus 4%. This is largely the large interval is largely linked to some uncertainty on the Xarelto situation and represents the ongoing generic entries. We expect with that a margin between 26% and 29%. You've heard this from -- already from Wolfgang. Midterm, we aim to support our top line resilience while we manage the continued loss of exclusivity of Xarelto, Eylea 2 milligrams and assess the continued effect of the China VBP. So let me get to closing here of my remarks by just repeating some of those important things. First, you heard me say that we focus along 3 strategic priorities: renew the top line, grow pipeline value and then ultimately leverage our new operating model. It's all about now large success of our new entries with Nubeqa, I think we're we've put a very big exclamation mark behind our capabilities in the marketing and sales area. And with Kerendia, elinzanetant, acoramidis and Eylea 8 milligrams we're continuing to follow on this. Our advanced R&D capabilities, I hope you got a sense of how -- not only that we have increased our quality, but that we are also increasing our pace. And then the productivity gains that we expect out of the new operating system that will further unleash growth. I think we're at a great time to see sort of like pharma coming back from Xarelto 5 years ago, people were telling me, why are you going there? There is no future after Xarelto. I hope you got a sense of the future that we have built. There's still more to be done, but I feel very, not just hopeful, but also optimistic that we're on the right path. Thank you very much. And with that, I hand over to Heiko.

Thank you, Stefan. Yes. It's cool to see all this innovation. Actually, it was one of the reasons why I joined Bayer 6 years ago. And -- that chapter is coming to an end, at the end of April. You've probably seen that, that I'm going to move to a company that is very close to here. I'm going to join the executive leadership team of Unilever where I will lead one of the large divisions called Nutrition, which is fundamentally the food business of Unilever. So the journey will -- the 6-year journey will end, the end of April, and I'm here with my twin for the next month Julio, who you met earlier, who's going to be my successor. A great leader who I think can ride to the next chapter of consumer health in the right way. Actually, I'm very happy that I could be here to also reconnect with you. It is a journey that started, also with many of you 6 years ago. I don't know if all of you were here. Probably some of you still are, but probably most of you have moved on. It was actually 2 months when I was into the job, it was April of 2018, and there was a COVID after a pretty poor Q1 of 2018. And the overwhelming question I received was, why does Bayer own a consumer health business? Isn't that kind of business much better suited outside of Bayer? And we've heard more of that over the past months because the confidence that we could turn it around and bring it to the forefront of the industry was pretty low. So what is nice is that at least today, I stand in front of you that we did turn it around and that I think we have put it at the forefront of the industry. So it just shows that inside Bayer, we can do quite a lot of good business developments. So I'll start maybe first now to talk about the future and not speaking too much about the past. We believe that the consumer health market remains a highly attractive market for a number of reasons. We would expect there be a CAGR of about 3% to 5% for the market. And it's fundamentally driven by a few very important underlying drivers. Firstly, there is just a continuous focus on doing more and more self-care. People get to know their health much better, thanks to digital technologies. And I think also COVID has helped a lot in that to have a much greater focus on taking better care of yourself. Also, so that's more the pull factor. And then you have the push factor. Health care systems are super overstretched. They don't want to just do curing. They also want prevention. And of course, that starts with people being more conscious about their health. And then the third element that I want to highlight is some demographics. The population is aging and -- but there's also a fantastic middle class emerging from the -- specifically from the emerging markets of this world that are going to drive growth in self-care. Just to give you a sense of magnitude here. If we go to the U.S., the annual spend per capita on self-care products is EUR 115. And if we go to China, that's only EUR 11. And if we go to India, that's only EUR 3. So just think of the magnitude of growth that is still there through penetration, which is something that is, of course, a fantastic growth driver for our business. So it's going to be a healthy market. It will continue to grow, and that's why there's also so much interest in these markets across many industries that look specifically at Consumer Health. And I hope I know many of you are more pharma and ag people, but I hope that you're continuously learning and seeing how interesting such a Consumer Health business is. So now let's move to Bayer. We had sales last year of EUR 6 billion. That makes us the #3 player in this business worldwide. I think we have a very good balanced category portfolio. As you see here in the percentages, we're pretty evenly spread around the main categories, which gives us a much better portfolio effect in case of sort of spikes and downturns. We saw that, for example, in the past year, with cough and cold going up and then significantly down. It went down a lot during COVID because the cold was not called a cold, it was called something different. And then when the latest variants came, which was more demonstrating itself like a cold, we saw a big spike over the last 1.5 years in that specific category. Geographically, we're also well placed. I think the developed geographies like U.S., North America and EMEA are well balanced amongst each other. And then we have good presence in the emerging markets with a kind of even split in our sales between Latin America and Asia Pacific. And even within Asia Pacific, I think we're quite well balanced between China and the rest. China is about 8% of the 13%, and the other ones are also Southeast Asia and India, where business is developing very rapidly. Now the most important part of our business is brands. Yes, that is the consumer world. That's the attractiveness of long-term value creation. We don't have patents in brands. They have a fantastic terminal value. They last very long. Bill already spoke this morning about tomorrow being Aspirin's 125th year of existence. So you just imagine the terminal value, and that was -- that brand was created, probably no one thought it was going to be 125 years. And I'll talk a little bit more about it. How to keep these brands alive. This is an amazing portfolio of brands. I would argue it's the best one that we have in the industry. And there's even one missing on this chart, which is the Bayer brand. I always say to many of my colleagues, this is probably one of the most important values that we have, that we can put that logo on these brands, because we know that this brand brings trust, credibility, efficacy. And that's why we have a tremendous benefit when my people go to pharmacies or to a health care professional, the fact that it comes from Bayer really helps us to sell these products. So maybe then a little bit of looking back to prove that we have the right to win in this industry. Here, you see -- so how we have delivered over the past 5 years on growth, on margin and also on cash. On the growth side, we have outperformed our peer group. We had a CAGR of 6%, and we also exceeded the guidance that we gave you of 3% to 5%. On the margin side, it looks like a pretty easy arrow upward, but it certainly wasn't that. It was a lot of work on productivity gains at a time when there was a lot of inflation going on. So there was a lot of blood, sweat and tears, but we managed to get to 330 basis points improvement. And I had committed to bring this business towards the mid-20s. Mid-20s is what you should expect from a leading Consumer Health business. You shouldn't go beyond that, because that's usually when people start to cut marketing investment, and that's kind of like cutting R&D investment in a pharma or in a core business. That just doesn't benefit you in the long term. In the past years, we've also put a lot of emphasis on higher cash generation for the obvious reason in the company. And we greatly focus on working capital, because we saw versus -- Bill was talking about benchmarking before. When we were looking at our peer group in Consumer Health and even in CPG, our working capital was much too high. We were like in the mid-20s. So we started to really work on that, on all the elements of working capital. We brought the working capital to sales ratio down to the mid-teens now. And basically, over the last 3 years, we have generated more than EUR 3 billion free cash flow for Bayer. So this is a very attractive, solid cash-generating business. Now let's look at the future. Obviously, with this kind of performance that we've had, we're not dramatically overhauling the strategy. The turnaround has been done, what we now need to do is to keep it at a high level. Obviously, I'm going to give Julio a chance to touch this slide again, because this is still very much my slide. So he will have sufficient time to look at that in the coming months and year. So what did we really change? There's a few areas that we -- that for the coming years that we want to focus more on. First of all, we've sharpened the definition of our vision to help over 1 billion people live healthier lives with the most trusted self-care solutions. What does it mean is want to penetrate deeper. I spoke to you about Southeast Asia and China and India opportunities to grow further. We believe our brands are very well suited to do that. And also when I look at where to play, we're trying to be more targeted there optimize the use of our resources. So we doubled down on India over the past years. We didn't have a business there 3 years ago. And next year, we're going to -- we thought it was going to last 5 years, but we're going to hit EUR 100 million already in the -- probably in 2025. So that's a big area to win. Like I mentioned, only EUR 3 per capita of spending there at this moment. So India is going to be a growth driver. And the other area that we identified fairly quickly was the e-commerce opportunity in this category. It's clear that maybe when you have a pain, you don't go to e-commerce, because you probably want the solution pretty quickly. But when you think of vitamins and supplements in general, you use e-com much more these days. So we started to evaluate where are we and we were not really satisfied with our position on e-com. So we made a few strategic investments there. So we looked at what are the leading companies in e-commerce or in Amazon in Europe. So we bought two of them, one is called Natsana and the other one is called GloryFeel. These are two highly performing businesses. They are -- last year, they were already generating EUR 250 million in sales. And we believe that in the coming years, we can build a EUR 500 million platform. This is going to help a lot of our growth. And so India and e-commerce will remain drivers also for the future. So how do we keep these beautiful brands really up to its value. And maybe just to give you a couple of color on that, so here you see some of our brands that are very important to us. Bepanthen in our skin -- or in our dermatology range. You saw that our growth was very good there, 12% growth last year. And here, it's about continuing to innovate these brands. For example, what we did with Bepanthen is we saw an opportunity to extend from a brand that really comes from wound healing and we saw that, that brand could actually move into dry skin because the existing dry skin solutions were just not delivering sufficiently. It kind of solved the problem for a couple of days, but then the dry skin came back. So we just have very good molecule there that really works to build the skin from the bottom up. So that's one growth driver. The second growth driver is to identify new unmet needs. And this is where the switch is coming. So are there opportunities to switch products that are still Rx today into OTC? Don't think only about the products that are in Bayer Pharma that we can switch to Bayer Consumer Health, but there's many other companies, pharma companies, big or small, that have assets that are maybe coming to the end for them and that could be switched, but they don't have a Consumer Health business. So we can in-license them. And this is what we did, for example, we saw there was a big part of allergy was growing more the intranasal allergy rather than general allergy solutions. So we identified a very good Rx product called Astepro. This product works way faster than the existing products that were in the market. It's also nonsteroidal, which is something that consumers like. So we in-source that, and we were able to do the switch. Again, this is where maybe a Bayer Consumer Health business is stronger, maybe then a straightforward more CPG consumer health company. Because we know how to talk to an FDA, we know how to make a dossier. And that's where some of the expertise that we have learned from our pharma colleagues really comes very handy. So we launched that today, already the #2 player in intranasal spray, allergy sprays in the U.S. And then maybe the third element where we can see good growth coming is expanding our brands to new geographies. We have an amazing digestive health brand called Iberogast, it's something that we bought about 10 years ago in Germany, but the geographic footprint was pretty limited. And we are now expanding that. And actually, this month, we're launching that into the U.S., an amazing product that works very, very well. And I think this brand -- we already expanded it pretty much through Europe. And then I already spoke about the e-commerce business, that's going to remain a major growth driver. The last point maybe to mention what will drive growth in the Consumer Health business is capabilities. Marketing and sales has changed dramatically over the last 5 to 10 years. It's become a much more digital game. Do you understand how to build a brand online? And this is something that when I arrived, this was quite underdeveloped. And now also AI is starting to play into this. So if you don't stay at the forefront of digital marketing and sales, you're going to go backwards in this industry. So I believe we have built it up quite nicely. And we will continue to keep our eye on that because otherwise, we will not deliver the growth ambitions that we have. So what's the other thing that we have changed. Some of my colleagues have already shared how DSO applies to their specific divisions. Of course, DSO has a very natural fit with the consumer business where we always say there's only one boss, and that's the consumer. So to have an organization that is focused on consumers and customers just naturally is a very good fit. We were also quite organized around functions before. And in this high [ ecosystem ], that slowed us down to respond faster to needs of consumers and of customers. So we have already started to reorganize our division to have specific teams that center around category teams. You see here some of them mentioned and also around certain customers. These are cross-functional teams that are constant in either thinking only about the allergy consumer or are working with Walmart or CVS or any of our other important customers or Amazon on a continuous basis to optimize our product and category offerings. Maybe just to share already because we started with 50 front-runner teams, and there are some cool sort of first learnings that we have there. First, maybe to move to a faster organization. In China, we had a fairly hierarchal system in place there. We had 8 layers in the organization, and that has now been reduced to 4. And what we used to call span of control, it's not called in diesel world, it's not called span of control because if the control and command system is not there, it's called span of coaching. So that went from previously 8 span of control, has now moved to 29 span of coaching. And even in some parts of the organization, they're even up to 88, which is quite a wild number. And it shows just flattening the organization much more, much higher speed. And then maybe the last one to mention is Southeast Asia. We see it as a very attractive growth market. We all know that this is 650 million consumers there. And we believe it's a fantastic opportunity to grow more. The problem that we had is that we were only good in one category, which was our supplement business. And so we needed to launch much quicker some of our other categories, dermatology and allergy. But unfortunately, we had extremely complex processes to bring these products to market to local production because in those markets, you need local production. So we have incredibly cut down on these heavy processes that we had, which could typically even take from 60 months to bring to another factory or to approve a co-manufacturer. And that basically has been halved, which therefore greatly increase our ability to launch in these markets. So basically, 3x faster time to market, thanks to DSO. So here's also a video from our U.S. team, maybe to illustrate even better. [Presentation]

All right. Another from the ground experience, you see these guys are excited. They're super engaged because they love the speed, of course, also. So with that, I just want to move into the guidance also for next year and also some sense of the midterm where we are going. So on the sales growth next year, we expect to grow between 3% to 6%. I expect that also to kind of accelerate from Q2 onwards, we just closed February, so I have a kind of sense where we are. So I think Q2 onwards is going to be sort of starting to move in that direction. EBITDA margin is going to be in that range of 23% to 24%. So that's kind of the '24 picture. And sort of midterm, what you should expect from us is what we have proven already in the past 5 years, that we can sustainably grow above the market and also bring our profitability towards these mid-20s, which I think is exactly where we should be -- push to go higher than that. I would never recommend -- I've been working in the consumer goods industry for over 25 years now. And companies that chase sort of higher than 25% profitability on a consumer business, do one thing, they start to cut brand investments and they start to cut R&D. And we are at a very good place. We have industry-leading R&D investment at around 4%, and our marketing spend is about 20% of investment, which is exactly right for consumer business. So that's where we are. Thank you for working with me and giving me some patience to turn around this business and bring it to the forefront of the industry. I appreciate -- you could have asked me a few more questions over the years, but I guess that's all I should ask. There was always an inside joke. Let's see how many questions Heiko gets. But I take it as a positive sign. So all the best to all of you. Thank you. One more comment. I think with that, we move to the Q&A -- the second Q&A.

Well done. I'm inclined to ask Heiko a question now. So 1 minute for the questions that we received online, because we privileged the questions from the room in the first session. I'll take a couple of those, and then we'll move to the room in a second, starting with you Heiko as outlined in the first Q&A. So the first one goes to you, Wolfgang. It's from Raj Kumar from HSBC. What levers are available for management to improve margins between '24 and '26 apart from labor costs? And the second question, when can you move away from EBITDA before litigations and restructuring to EBITDA?

I mean there are plenty of levels on margin, obviously, in any business as well. Pricing is one. I mean the better we are in a position to pass on inflation, the better the margin is going to be. That is a bit easier in some of the markets than in other markets where you have market pricing or you have pricing dictated by governments. Being relentless on the cost beyond the payroll, I mean, working with our suppliers on taking cost out of the COGS would be another one that comes to mind. And certainly, I would say, looking at the efficiency of cross-the-net programs, so rebate programs in the market, that would be a third area that is relevant. Regarding EBITDA, when do we get from a clean EBITDA to a EBITDA, this is something that we have to watch. I think people who know me know that I'm not a really big fan of special items. I said earlier on that we have greatly reduced them to just litigation and the pure separation cost. I think there's a benefit as well because you normalize out something that's irregular. My philosophy, our philosophy is really much more to focus on the triangle, because you can stay on the clean as long as you don't take the free cash flow and the growth out of focus. So we have no immediate plan to take this out. Our focus is on giving you more transparency. I hope you find some of that in the material we shared today, and we'll keep assessing it as we go.

Thank you. The next one goes to Rodrigo. It's from Joel Jackson from BMO. What would you say you would regard the most incremental data points for Crop Science today versus the Innovation Summit last June?

Well, thanks, Joel, for the question. And I think that there is a very important element here. So first, we advance in the terms of phasing, right? So I shared the Phase IV example products. So we advanced a lot of the R&D elements that we -- in our pipeline. But also, I think that from that session to today, another very important element is what we call the drive operational excellence. A good example of that is the performance of the core business that I highlight. Another great example of that is that our performance, and I had a lot of questions at that time about while we've been seeing your competitors talking about stocking in the market, and I think that I mentioned that time that no, we are operating this with excellence in the last years. To be very clear, we even end '23 with 10% even lower inventory in the channel that we had one year before, even better than that one. So I'm very proud of the organization driving the operational excellence on that one. So that's a combination of advancements on the pipeline and very important advancements on the operational excellence.

Thank you, Rodrigo. And with that, we can move to the first question from Falko back in the room.

It's Falko Friedrichs from Deutsche Bank. My first question goes to Rodrigo. On your guidance slide, you mentioned a low to mid-20s EBITDA margin. Just to clarify, was that for 2024 or for the midterm?

That's midterm, midterm. What we are guiding for '24 is the 20% to 22% EBITDA margin, specifically, Falko.

Okay. And then my second question for Stefan. Firstly, have any of your peak sales targets for any of the new drug launches changed? And then secondly, can you help us a little bit with the Xarelto sales in 2024, how we should think about that?

So thanks for asking the question on peak sales, because this was a thing that we've debated a lot about the value of adding or not adding those on the slide. So nothing has fundamentally changed other than I have to say that now that I've done this for the last 5 years that I've seen that the accuracy that you provide in either direction is probably never perfect. So if you look at Nubeqa, I'm not going to give you a new number, but this looks really, really good. If you look at the renal uptake, it's slower than we thought. So we're putting a lot of expectations on the heart failure indications that will follow, but where we have more risk, because we don't have the data yet. So we sort of like for that reason, let those peak sales away, but nothing has fundamentally changed. On -- and don't expect me to give you these type of peak sales going forward, because I don't think that they add the value that I was seeing in them. The -- on Xarelto, that's a tricky one. And because there is variability in that number, because we really have uncertainty in Europe, and I'm really struggling to give you a good number. And I think that's reflected in the big spread that we're having on the top line.

Continue in the back of the room.

Mazahir Mammadli from Redburn Atlantic. I have -- my first question is to Stefan. So now that you've basically abandoned the OCEANIC-AF study, what is the revised peak sales of asundexian? And if you don't have a direct answer, how should we think about it? And second question to Wolfgang. I appreciate you disclosed the -- you disclosed that most of the restructuring costs are payroll, but if you can split it into sales and marketing versus G&A and by function, basically.

I think I've -- well, half of the answer I already gave you. So -- but it's obviously a very attractive unmet need. I think a lot will depend on how Factor XI is ultimately going to be used. Is Factor XI going to be effective in the setting that's being studied in AF with milvexian, which is still ongoing. I don't know the answer to that question, but it will certainly have an impact on pricing for stroke. So if stroke was a singular indication for this product, then probably the price point will be different than if there's also an AF indication in the mix, and that determine the peak sales of either asset.

And then on the restructuring and the savings, it's probably a bit early to split this by P&L line. The only thing that I would say is it's not just G&A and sales and marketing, we're also attempting efficiencies and reduction of spin-off control -- increase of spin-off coaching in R&D. So you will see some of the savings also there, but it's a bit early. I would just give you as an orientation that we are looking in every corner of the company for these kinds of efficiencies.

Because the microphone is over there, we continue here and then we go across the room in this way. All noted.

Pete Verdult. It's two questions for Stefan and one for Rodrigo. Sorry, Heiko. I think consumers are looking after itself, that's fine. I'm not trying to be controversial here, but I've been coming to enough CMD supplier to hear the radioligand therapies are looking great. And you had Xarelto in the past. But we know that it's a hot area. We can see it, but it's other companies that are getting the value afforded to them. So Stefan, come to push you in terms of when we're going to see data that could move the needle as it relates to people valuing your RLT business. And then secondly, cheekily, VEOZAH has launched badly. The elinzanetant -- Astellas has launched VEOZAH badly. I know you think the drug is better. We haven't seen the data yet. Based on the Phase II data, you look like you have a better product, but is it good enough to -- do you think you can launch better? And then Rodrigo, a strange one for me, but I'm not a crop expert. When you launch short stature corn, will a farmer be able to use his or her machinery and anything -- will there be any incremental cost for a farmer to harvest short stature corn versus what they do now?

So thanks for the question, Pete. And sorry, Heiko. So PSMA, so the difference is, I think, -- and we have -- this is something that I don't feel particularly proud of. We've for too long pursued the wrong radioligand. And now that we've moved on, I think that we're going to see better output and also hopefully, then better data. So we're in Phase II. So give me another 12 months, and I'll let you know. But what we're seeing early on in terms of how this is being tolerated, it looks good. So the -- the second question was around elinzanetant and VEOZAH. So we've seen this time and again when a new class has to be built, that there is a heavy load to be carried in the first place. The hormone-free -- hormone replacement therapy was often seen as the Holy Grail. And I think a lot of people are surprised how slow this is taking. I think we have an advantage because of our historic position. But there is -- this is a heavy lifting to build a new class. And when there's going to be more noise, I expect this is going to have an impact. And then ultimately, you're going to see the product with the better data is going to prevail. So I can't wait to show you all of the data at an upcoming scientific meeting of our 3 trials. And what I failed to say today, we're also studying on top in women that are really struggling to have sleep find the right sleep with these conditions as primaries. We're studying this on top. So we feel strongly about what our product can do, and then we'll take it from there. But this opportunity is massive.

And I'll control myself to not extend my answer to you. But -- so in short, this is one of the benefits of the short stature corn. Let me share you why. So first, we designed short stature corn so the years is well positioned in the corn that they can use the equipment, they combine to harvest as they have today. What I'm saying is the benefit is because of the short stature corn allow the farmers to come later in the season. So today, farmers in U.S., they have a disease in the field, they need to contract an airplane to apply that fungicide in that field. And you can imagine that this becomes harder and harder to do. With short stature corn, he can come with his own equipment and to apply when it's specifically needed. So the benefit is even what we call accessibility to that field. And there's other benefits that will come on applying fertilizers and that combines with the regenerative agriculture as well. So that's a short answer for that one, but thank you.

So the next one is Christian, then Vincent and Sachin.

Christian Faitz again from Kepler Cheuvreux. First of all, production economics of the new herbicide 2028, I believe, can you share with us your insights? Is it more economical to produce than glyphosate? I think glyphosate is a very easy molecule. And could it take away share from glyphosate? And then one for Wolfgang, maybe. Wolfgang you mentioned the tax effect or severe tax effect from a scenario of spinning off or selling in whatever form Consumer Health. Why is that? Because if I look at your other divestments such as Covestro or LANXESS quite some time ago, yes, but legislation hasn't changed. That was essentially tax free as far as I can tell.

Let me start. So let me talk about the herbicide, and I was with the team in Frankfurt where we are developing that one and now in Phase III. So it's still a lot to be developed to give you a concrete answer. It's a broad spectrum. That's clear like glyphosate, it's a broad spectrum. It's also a new herbicide. We believe that we will not replace completely glyphosate. I think there is a wonderful complement for the system. It's still a lot to be developed, but we saw great, great benefits early stage on that development. So I will tell you more in the coming years when we get closer to the launch that we set. What is also unique, let me highlight that one because this is one of the elements in the past when you would get a new herbicide like that, only when it gets to the market, you would develop a tolerance on the crops. The beauty of what we are doing today is that we are developing that in parallel. So while we have the herbicide development, our biotech team is developing the traits to tolerate to that herbicide, and that fits really nice for corn, soybean, cotton on the places that we can have biotech. So more to come, more to come, but it's really promising this new herbicide.

Production cost?

Well, it's too early to say. Of course, glyphosate is a very competitive one. It's hard to beat glyphosate on that one, but we still -- it's too early to say, I would say. Thank you.

And on the tax effect, real quickly, Christian. Probably two thoughts. Some of the media outlets misinterpreted. In November, they said the tax effect is by far the biggest one of the effects. It's one effect. We have onetime costs, we have dissynergies, we have synergies, we have time to cash and so on. But there is a tax impact, and it simply has to do with the book values you have in this business around the world was as the allocation of a purchase price that you would have to spread over different countries. And the way how we see, where the IP lays, where the book values are, it would lead to a very significant tax effect. Only the final structure would determine what it would be, but what we have seen in different scenarios would be that it would have a billion in it, billions in it.

Vincent goes next.

Vincent Andrews from Morgan Stanley. Rodrigo and Wolfgang, first of all, thank you for the increased transparency at the segment level from a financial perspective. So could you help me benchmark your SG&A to sales versus your peers? And in particular, I'm wondering if you can bridge us to sort of a core SG&A versus sales. As we know glyphosate causes volatility in the sales line. And I'm wondering if that's the same in the SG&A line and maybe there's also some legal expense and the SG&A line is clouding the comparison. So I'm really trying to understand how you compare versus your peers. Are you best in class today or not? And either way, as part of the DSO plan, where do you want to get to over the next couple of years? I have a follow-up.

Vincent, thanks on that one. So let me provide you the first reaction on that one, and we're going to need to provide you more information. When you have that detail that you saw there, there are some adjustments that you need to do because of the acquisitions and so on. Short answer for you, our gross profit margin today is at 46%. You're going to see on that P&L, our peers in the range of 42%. So we are more effective today on the core business that we have. Of course, one of the targets that we have with DSO is to continue to improve that as we talk a little bit about that one, and should improve our margin should improve our cash flow as one of the targets on that one. And we're going to provide you a little bit more. When you think about R&D, you see that line as well. We are investing close to 10% on R&D. Our competitors, they are ranging from 8% to 9% investment on R&D. So that transparency you're going to get there, and we can go deeper on that one vision. But the first answer that I will give you in the gross profit margin, I think we are competitive, but opportunities to continue to improve.

On SG&A?

Well, overall SG&A I think that we are competitive because of our size, but I would say that this is the area that we will improve with the DSO, especially. I think that when you tackle the key element of the [ EUR 2 billion ] on that one, we're going to be even more effective on that one. We are today because of the scale that we have.

My follow-up is on dicamba. You referenced an earlier question, the '24 seasons, okay, because of the EPA issuance. What's the plan for 2025? Are you anticipating EPA will reregister the product by then? And if for whatever reason they don't, what's your work around?

Thanks for the question. Because I just come back on that one and reinforced that point that Wolfgang did. Yes, for the season '24 that the farmers are planting right now, the stock order that really minimized the impact and we already have it on the plan. For the '25, we are working with different options, Vincent. We are exploring different alternatives here. We are working with EPA on the registration for soybean and cotton and how we're going to place for these two products. So that will depend on EPA. There are alternatives that we have. Also, there are alternatives on the platform. And just to share with others here, because I saw some of the reports for the ones that doesn't cover as close. Farmers that use Xtend, our platform, 50% of them use the herbicide, the dicamba herbicide on that crop. There's other alternatives of glufosinate and of course, glyphosate as well. So we are exploring different alternatives for the '25 season. We're going to come back on that one, working very close with EPA. We've been working with them because we were expecting that decision on Arizona when we planned what we planned for this season. And we are now working with EPA for the next season. And hopefully, I can give you a more concrete answer, Vincent, in the next months because it also depends on how they will be -- how fast they will do what we are working with them.

Okay. The next one goes to Florent, and then we go back to this side of the room here.

Florent Cespedes from Societe General. Two questions for Stefan. First, on Kerendia failure. Could you maybe give more color on the timing? Do you need a second trial before any submission and when this product could be in the market? And any idea of how fast could be the ramp-up? So a huge market with still high unmet medical need despite the competitive landscape. So some color would be great on this. And my second question is on radiology. You talked about focus, but how this business fits with your organization? Could you leverage some of your products on the pharma side with this business? Or -- and is it an independent activity? So any thoughts on this division would be helpful.

Thank you, Florent. Very good questions. By the way, Pete, I misspoke, it's Phase I, not Phase II, the PSMA. So my mistake. So on heart failure, we expect with the FINEARTS study that we have everything we need for registration. But in order to fully capture the opportunity, we need to double down. So the additional data is going to be ready for use at launch, but not label-wise. So that will come, obviously then, a year later. So yes, we should be able to have in '25, a heart failure drug in the market. And on radiology, this is a really good question. So it's -- I don't think that there are too many synergies in the let's say, at the sales force level, we have production synergies because there's a joint use of facility. We have backbone synergies, yes. But right now, the radiology business has been one of our fastest-growing businesses and has been really a stabilizer for our base given everything else that's going on. But yes, you're right. This is not necessarily the same as our core business.

Sachin Jain, Bank of America. A couple for Stefan. And then just one clarification for Wolfgang, if I may. So Stefan, I'll just repeat the question from this morning on Pharma margins. You've commented very clearly to stable top line gross products offsetting the Xarelto decline. Any color on the margin mix over the midterm? The other 2 divisions have given directional margin color unless I missed that you didn't. The second one was just on the growth products to help stabilize how much data success is baked in, in the next 2, 3 years. So you flagged Kerendia heart failure. You sort of need -- is there any other data that is important in that time frame? And then just a clarification for Wolfgang, if I may, on leverage. There was a question earlier on getting to the single A rating by '26 and you said moving towards that target. I think you referenced also it was roughly around 2.5x, and you're currently at low 3s. That therefore implies limited deleverage over the next 3 years, if that's correct, and that's a misunderstanding. So if you could just clarify that.

So on margins, a lot is riding obviously on Xarelto now. So it's hard to give you on a yearly basis, the margin. But when -- Xarelto going off patent is really having significant impact on my mix. So my gross margin is taking a hit. We've actually been remarkably stable. If you go through the P&L lines of my business, we've been managing this very nicely. Actually on OpEx, everything that we've spent more on R&D, we've taken out of SG&A. So we've been super frugal in the way how we spend our dollars. So it's mostly a mix issue. And with -- we have EUR 4.2 billion in Xarelto still. And with this going down by, let's say, eroding to the levels I was mentioning to you, it's not so difficult to make the math. We're talking about a 90-plus percent margin product, and it's going to be refilled with products that are gross margin-wise, less attractive, some of them because we have to pay royalties. In the case of Nubeqa, we have some royalty payments. In the case of Eylea, we share the proceeds with Regeneron. The first one, which is going to be fully owned by us, obviously, Kerendia growth. And with elinzanetant, that's going to be positive. With acoramidis, we'll also have relatively high cost of goods. So gross margin in the mix is not going to be as good as with a 90-plus percent product. And that's going to -- I think you're going to see -- you're already seeing it in our margin guidance now until '26. We're not doing that guidance, but you can see some of the issues that we're facing. But then growth should get us out of there, okay? So through growth, I think we're going to improve profile. And when you look at the areas that we're in with our portfolio, we're going to be a little bit less dependent on large primary care stuff, and we're going to be more on specialty. I mean you take something like Nubeqa, SG&A cost is relatively modest. So that's going to help run margins. And on the data, yes, we have ARANOTE that needs to come out positive. And obviously, also, Kerendia would be good to have heart failure positive. We have derisked this in our projections. So we are not assuming 100% probability of occurrence. And then we haven't built into what I was showing, acoramidis was not built in because this was so brand new. Actually, we had to change some of our slides yesterday because this was so new.

And on the leverage, let me just reconfirm also, Sebastian had that question earlier. I mean if we are currently somewhere in the very low 3s and we want to get towards 2.5, you can do the math, that's 7/10 or 6/10 of an EBITDA that you have to reduce. You apply 3 years of a dividend that we're not paying, that we're applying to the debt. And then hopefully, we'll get more free cash flow than what we would have given to the dividend and apply that also to a degree to the debt. And then at one point in time, hopefully, EBITDA will also help. Now the other thing is, because I don't want to get too technical, but you take the net financial debt, and you've got to put on top of that the net pension liability. So there is a whole bunch of moving parts just for everybody's background information, we have pension funds of about EUR 22 billion or so. So it depends largely on the returns on the capital markets, the returns on the discounting of the future liabilities. So there's a lot of moving parts. That's why I said a category is a given for us. I just can't tell you today is that in '26, is it in '27? But we're making progress towards that, so you should expect us making progress all the time on that. I hope that gives you a bit more color.

We have 5 more minutes to go. I would say Richard was -- has the microphone first and then Emily.

Richard Vosser from JPMorgan. Maybe a couple of questions on crop. Just thinking about trade royalty revenues rather, just how should we expect those to develop over the coming years? And maybe specifically on soy, you've been losing market share to enlist in North America. Do we have to wait until '27 for that share be regained as you bring the new soybean seed traits online and the new protection? And then maybe just one farmer question as well. Just ARANOTE, the ARASENS trial was actually pretty differentiated. You didn't have competition there, and you have taken share. The ARANOTE trial is a carbon copy of trials that have already been there for competitors. So how does that actually bring incremental sales for you?

So Richard, let me start here on the crop size. And just to share with everybody, so just the dynamic of soybean, our key competitor moved from our platform to their platforms. This is really the trade share in the last years. We talked a lot about the equilibrium, and last season was a great example of that. We have 45% share with our platform, and that was exactly what happened and was flat share. We didn't lose share on that one. We have also, of course, the key element of the new launch that we talked with the 5 mode of actions, that's clearly a great opportunity for us to expand trade market share in U.S., no doubt. And that ties to your first question with our licensing approach, right? 95% of our licensing revenue comes from medium to small regional companies. It doesn't come from the big multinationals that we have. So moving forward, our licensing approach will continue and we see that opportunity to expand, first, trade market share in U.S. with a new launch. And of course, we're going to continue to work with these regional small, medium companies to license that platform as well. So that's clearly a unique opportunity that we have ahead of us on soybean as well. But we talk a lot about the equilibrium, and we saw that specifically in the market last year.

So very quick. With ARANOTE, we're closing a very important data gap in the hormone-sensitive metastatic patient population. And without that, we can't speak to this. And I don't want to rely on off-label use in that indication without the data. So it's just a must have.

Okay. Then last question goes to Emily.

Okay. I'll just ask one quick one then. Emily Field from Barclays. Just in terms of timing of rebuilding the Pharma pipeline, I think you said that you hope to have it rebuilt by 2026. So are you more looking for assets that would be then launching in 2027? Or is that more kind of, by that time frame, you hope to have a line of sight into perhaps date-certain launches for assets in Phase III? Just trying to think about that cadence of potential growth beyond '26.

Yes. So thank you. It's more the latter. So we're going to be building so that we have a -- we come back to what I would expect from a pharmaceutical company, that we have a strong Phase III pipeline, a good Phase II and a strong early pipeline. And I think we've built all of the elements to get us there, but now we get -- we have to get there. The good news, I think, in all of this is, if you look at the exposure that we have from Xarelto, yes, and Sachin highlighted it so nicely. I mean I have a -- I'm getting squeezed on the gross margin, but actually the top line problem is one, I think, that's actually really well manageable given what we're having in terms of launches over the next 3 years. So for a company our size, we're actually launching quite a lot. And actually, if you look at this historically for Bayer, we're launching more than ever before. And I'm not saying with some things that may be launching or may not be launching. Acoramidis is in registration. Elinzanetant is going to be submitted for registration we expect this year. So these are really credible assets. And when you look at heart failure play, in principle, the mechanism of action is very prone to be effective in that area. And Nubeqa, well, I think we've told the story. So it's not that we have some pipe dreams about what we want. And then I -- you hear me, I'm not even mentioning asundexian, which is a potential bonus.

Thank you very much. With that, I would leave it to Bill to say some closing remarks and then...

Very briefly, I think you see in us, we have 3 businesses that are very important, and we have great opportunities to grow these 3 businesses. And we make no secret of it, we have some big challenges as well but we believe we have a plan and we can attack each of those challenges so that we're sitting here in 2 years' time with a very different outlook for the company. And so we're -- yes, we're very happy to have many of you as shareholders, and we think we can have a very prosperous run together. And we look forward to tomorrow morning. We can get back at it full time. So thanks again for your interest in Bayer and look forward to catching up with those of you that are here in person during the reception. Thanks.