Galderma Group AG (GALD) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to Galderma's conference call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Emil Ivanov, Head of Strategy, Investor Relations and ESG, to introduce the call. Emil, please go ahead.

Warm welcome to Galderma's '25 First Quarter Trading Update Call. As customary, the press release was published at 7 a.m. Central European Standard Time today and can be consulted on our corporate website at any time. Today's presentation slides as well as a recording of the webcast will be made available on our website after the call. Please be advised that today's presentation contains forward-looking statements, which should be treated with the appropriate level of caution as advised on this slide. Let me now introduce today's trading update webcast. Dr. Flemming Ornskov, CEO of Galderma, will provide a performance update for the first quarter, including key highlights by product category. Thomas Dittrich, CFO, will then introduce the trading update and the financial outlook for the year. Both Flemming and Thomas will be available to answer questions from the financial analysts before Flemming provides his final remarks to close the webcast. With this, I'd like to invite Flemming to start the Galderma highlights for the first quarter of 2025. Flemming, over to you.

Thank you, Emil. Good morning, good afternoon, and welcome to Galderma's First Quarter 2025 Trading Update Webcast. We are proud to report record performance ahead of expectations and a strong start to what we expect to be a year of opportunity for Galderma. There are 5 key opportunity areas for Galderma in 2025. This is the first of 2 years with significant launches. This includes the introduction of our 2 biologics with blockbuster potential, Nemluvio and Relfydess along with Sculptra in China and also in South Korea later this year, Restylane Shaype in Brazil and continued innovation in dermatological skin care. For 2026, we have further launches planned along the same trajectory. We'll also continue expanding our fillers and biostimulators offering, including launches of multiple Restylane indications in the U.S. We're confident that our continued focus on industry-leading innovation, focused commercial execution and commitment to training and education will fuel growth acceleration of injectable aesthetics toward our midterm guidance. Global market share gains remain a major opportunity. In international market, our largest geography and growth driver, we continue to see strong momentum in underpenetrated high-growth markets. As for the U.S. we maintain modest growth expectations, excluding, of course, Nemluvio, given ongoing volatility and market uncertainty. We continue to strengthen our financial profile. This includes ongoing progress on our rapid deleveraging trajectory and sustained robust cash flow, contributing to a stronger balance sheet. We're now in a position to focus on long-term growth. With more strategic optionality, we can invest in an additional pipeline opportunities. Organically, we have differentiated innovation across our product categories, including plans to explore additional indications for nemolizumab. These will be announced later this year. We also have the option to explore external opportunities where we see a strong strategic set. Last but of course, not least, we maintain a dynamic approach to commercial investments to drive continued growth. Our broad portfolio and international exposure helps us navigate external challenges and market volatility. Galderma has a proven resilient business model as demonstrated since becoming an independent company in October 2019. Over the past years, we have set a strong foundation for our company. With that in place, I'm excited about what we can achieve this year and beyond. Let's look at our financial highlights for the period. Galderma achieved a record USD 1.1 billion in net sales for the first quarter. These results are ahead of expectations with net sales benefiting from focused execution, some favorable phasing in injectable aesthetics and a stronger-than-expected ramp-up of Nemluvio. For the period, growth was up 8.3% year-on-year at constant currency with broad-based growth across product categories and across geographies. Growth was primarily driven by volume complemented by favorable mix. Following the strong start, we are confident our full year guidance of net sales growth of 10% to 12% and a core EBITDA margin of approximately 23%, both at constant currency. This reflects both our strong growth trajectory where we still expect growth acceleration as of the second quarter and our manageable exposure to current U.S. tariffs, which we will discuss later. Importantly, our over-delivery in the first quarter increasingly derisked our guidance for the year. This gives us flexibility to absorb some further tariff impact and some consumer demand related pressures. With these achievements and despite ongoing economic and geopolitical volatility, we remain confident in our guidance and are firmly on track to meet our full year targets. Moving to our detailed performance update. Galderma started the year strong with broad-based growth across product categories and across geographies. Starting with our product categories. In injectable aesthetics, net sales grew 9.9% year-on-year at constant currency. Neuromodulators grew by an impressive 21.4% with double-digit growth across geographies. The majority of neuromodulator growth was driven by focused execution and continued market share gains, including the Relfydess launch, while also benefiting from some favorable phasing. Fillers and biostimulators declined 2.3%, impacted by a very strong Q1 2024 comparative base in the U.S. despite double-digit growth in international markets. Overall, we gained market share in key markets across both neuromodulators as well as fillers and biostimulators. In dermatological skincare, growth for the period was 7.8%. Both of our flagship brands, Cetaphil and Alastin continued a strong trajectory with strong performance in international markets. In therapeutic dermatology, growth was 4.9%, driven by a strong ramp-up of Nemluvio sales. We reported USD 39 million in the first quarter ahead of expectations. As expected, our mature therapeutic dermatology portfolio, excluding Nemluvio declined due to anticipated lower volumes and pressures from generics. Looking at growth by geography. International markets, Galderma's larger geography and main growth contributor delivered continued double-digit growth, up 10.4% for the period. Performance was strong in both injectable aesthetics and in dermatological skin care. And Europe reported its first Nemluvio sales. The U.S. returned to growth, up 5% for the period. This was driven by strong uptake of Nemluvio in atopic dermatitis and prurigo nodularis alongside growth in injectable aesthetics and in dermatological skincare. Over the next slides, I'll cover key highlights by product category. Let's start with injectable aesthetics. We saw several innovation milestones in international markets, further broadening our science-based portfolio. Relfydess, our next-generation liquid neuromodulator was featured at 2 major European aesthetics congresses. At the International Master Course in Aging Science World Congress, IMCAS, in Paris, in January, we reinforced our leadership in education and in training. Two Galderma symposium were among the 5 top rated sessions of the Congress. At the 23rd Aesthetic and Antiaging Medicine World Congress, AMWC in Monaco in March, Galderma was recognized with 2 awards voted by health care professionals. Relfydess, was named Best Neuromodulator and Restylane Lyft was awarded best HA injectable. Relfydess is off to a strong start in its first market. Now approved in 18 international markets, it's available in Southern Europe, Germany, Australia, the Nordics and Poland. We also accelerated the launch of Sculptra in China marked by a major launch event just last week. Early signals are very positive with first sales already coming in from our prelaunch activities. Additionally, Restylane Shaype was recently launched in Brazil, in just 1 month we reached over 2,500 health care professionals through early engagement. This included dedicated events and training, local congress symposium and 100 injection demonstration workshops. In terms of advancing and amplifying our in-market execution, we've seen strong efforts and results across markets. To share some highlights. We launched a reenergized global campaign for Dysport, highlighting its efficacy and proven results. In the U.S., this was underpinned by strong sales representative engagement and activation through ASPIRE, our loyalty program for both consumer and health care professionals. Together, these efforts helped us gain further market share for Dysport. We activated our journey of Globe campaign in Asia focused on empowering individuals on their skin care journey, while highlighting the strength of Galderma's injectable aesthetics portfolio. This campaign featured key products like Sculptra and Restylane skin booster to help consumers achieve healthier looking skin. In Thailand, an immersive in-person event was held in February, attracting over 4,500 participants supported by an omnichannel approach. Healthcare professionals and skinfluencers helped amplify the event on social meeting, generating over 1.7 million engagements across platforms. We also saw outstanding performance from Sculptra in Latin America with significant market share gains and record consumption across margin. This was driven by a robust commercial strategy and leading education. We also continued expanding our market-leading education and services. A standout example again come from Latin America, where Galderma remains the #1 player in injectable aesthetics. At the Brazil international conference of dentistry, the leading dental congress in Latin America and the largest in the world with 100,000 dentists attending. Galderma clearly stood out. We hosted a 550 square meter booth with multiple activations throughout the event. In Colombia, we significantly increased local consumption following a well-executed local gain event that engaged nearly 500 health care professionals. And on the services side, we launched ASPIRE in Brazil, the first aesthetics loyalty program for health care professionals in that market. A key differentiator in the U.S., ASPIRE is off to a strong start in Brazil with over 1,500 health care professionals registering within just 2 months. As these examples show, our injectable aesthetics business has solid growth momentum for 2025 and is setting the stage for acceleration from 2026 and onwards. Switching now to dermatological skin care. We are continuing to drive differentiated innovation, bringing new products to market through both geographic and portfolio expansion. For Cetaphil, this includes the launch of Cetaphil Acne Fast Rescue Pimple Patches in the U.S., Canada and the U.K. as well as Cetaphil SPF 40 Everyday Sunscreen Tinted Face Lotion in the U.S. We also continued the global rollout of the Cetaphil portfolio. This includes Cetaphil Gentle Exfoliating cream and line in Canada and the U.K. and the Bright Healthy Radiance line in Brazil. For Alastin, we're just launching our newly enhanced restorative skin complex with next-generation TriHex Technology in the U.S. This formula includes 2 groundbreaking addition proven to help visibly restore facial radiance and plumping by supporting the skin's own regenerative abilities. As Alastin celebrates its 10th anniversary, we continue to advance our leadership in physician-dispensed skincare and to innovate further, including in our existing [ hero ] products. The image below on this slide shows volume change for a patient after using Alastin restorative skin complex with next-generation TriHex Technology for 12 weeks. On the right side of the face, you will see it was used there only. This represents a 1.08 cubic centimeter volume improvement. With demonstrated clinic effectiveness, this innovation targets key concerns such as loss of collagen and of Alastin, it also helps address the loss of volume as a result of medication driven weight loss or other factors. With this launch, we are taking regenerative skin care to a total new level while further strengthening the synergies between Alastin and our injectable aesthetics portfolio. We continue to support growth in Dermatological Skincare through focused execution and by leveraging our leading education and training platform. Digital first activation remains key, especially as we rebrand Cetaphil for Gen Z consumers. Recent advocacy campaigns have featured healthcare professionals and skinfluencers, including Nara Smith, who joined the campaign for Cetaphil Restoraderm Eczema Pro line with over 10 million followers and personal experience with eczema. Nara is bringing authenticity and strong reach to this campaign. We continue to take a holistic approach to our portfolio, including opportunities to co-promote Cetaphil Restoraderm with Nemluvio. We also maintain our focus on retail fundamentals, both in-store and online with e-commerce remaining our fastest-growing channel. Recent highlights include a strong resell presence for Cetaphil India and continued benefits in the U.S. from our improved Walmart shelving for Cetaphil Face. We're also seeing growing penetration of Alastin in health care professional offices and early traction for Cetaphil on TikTok shop in South East Asia markets. Finally, we continue to deleverage Galderma's full portfolio to benefit dermatological skincare. In collaboration with therapeutic dermatology, this includes the global rollout of SKIN, which is in Skin Knowledge and Innovation Network, were the first symposium in Korea. It also includes making our cleanse, treat, moisturize, and protect skincare regimen as central showcase at major congresses. Combining dermatological skincare and therapeutic dermatology, it was a centerpiece at the recent India Dermacon annual congregation, which brought together over 5,500 dermatologists. Now for therapeutic dermatology focusing on Nemluvio highlights. In the U.S., Nemluvio continues to progress strongly with a sales ramp-up ahead of expectations, underpinned by growing underlying demand, we continue to see growth in new patient starts, new prescribers and weekly pull-through. In terms of weekly market share for paid new patient starts. For prurigo nodularis, Nemluvio was trending at about 30% on a 6-week rolling average from mid-February to end of March and the PN market is expanding rapidly. For atopic dermatitis, although still in the earlier stages of the launch, Nemluvio was trending at 3.4% market share for the month of March. We keep increasing our reach with health care professionals through ongoing sales force expansion and with consumers, with the recent launch of our first direct-to-consumer campaign. This campaign here shown on the right, emphasizes the science and the patient benefits -- it highlights Nemluvio's unique mechanism as the first and the only treatment that blocks interleukin 31 or IL-31 signaling, a key driver of itch of inflammation and a skin barrier dysfunction. We also continue to expand commercial access. Reimbursement discussions are progressing very well with forthcoming enhancements to payer coverage. Nemluvio has now also been launched internationally, starting with Germany and showing a positive experience similar to U.S. across 3 areas. First, activation has been strong. A skin event brought together 100 dermatologists from 8 countries, and we're currently ahead of targets for health care professional reach, patient demand and pharmacy reorder rates. Second, patient and health care professional feedback has been very positive, especially regarding the fast itch relief. Engagement has focused on health care professionals during this early stage with over 700 speaker events reaching 1,800 health care professionals in just 6 weeks. Finally, we're leveraging the breadth of our broader portfolio, as highlighted earlier with Cetaphil Restoraderm to help address rapid itch resolution. So as we covered, Galderma has achieved a strong start to 2025, both in terms of results as well as the progress made across our leading dermatology platform. I would now like to hand over to Thomas to share more details on our financials.

Thank you, Flemming. It's my pleasure to comment on Galderma's Q1 2025 trading update and outlook, starting with an overview of net sales for the period. As mentioned by Flemming Galderma had a strong start to the year. Galderma achieved a record net sales of $1.129 billion for the first quarter, representing year-on-year growth of 8.3% at constant currency. Net sales growth was ahead of expectations, benefiting from focused commercial execution, some favorable phasing in injectable aesthetics as well as a stronger anticipated ramp-up of Nemluvio. Growth in the first quarter was broad-based across product categories and geographies, and it was primarily driven by strong volume, complemented by favorable mix. Looking at injectable aesthetics, net sales were USD 547 million, up 9.9% year-on-year at constant currency. This was ahead of expectations due mainly to focus commercial execution globally, along with some favorable quarterly phasing for the U.S. as well as an earlier-than-expected Sculptra launch in China. Neuromodulators achieved double-digit growth across geographies with global net sales of USD 311 million, up 21.4% at constant currency. Growth in neuromodulators was driven by 3 things: one, strong execution with continued market share gains in the U.S. and across key markets; two, the Relfydess launch with sales in first European markets and Australia, noting the launch also benefited the growth of fillers and biostimulators; and three, favorable quarterly phasing, especially in the U.S., which is expected to be rebalanced in the quarter. Fillers and biostimulators net sales were USD 236 million, down 2.3% at constant currency. This decrease is also not representative of growth expectations for the rest of the year as Q1 was against a high comparative basis in fillers and biostimulators. As a reminder, for the first quarter of 2024, this category grew 18.2% at constant currency, significantly ahead of the 2024 full year growth of 7%. The comparative base effect impacted U.S. growth for this subcategory, while international markets continued on a strong double-digit growth trajectory. Overall, in fillers and biostimulators, we continue to gain share both in the U.S. and across key international markets. Fillers specifically continued to be impacted by market softness in key countries, along with some temporary impact in the U.S. from the wildfires in Southern California. We continue to see strong performance in Asia-Pacific and Latin America. Sculptra remains a key growth driver with continued double-digit growth in international markets, including exceptionally strong demand in Latin America, Europe and first sales in China in anticipation of the launch. Overall, in Q1, our teams have continued to demonstrate our ability to deliver strong performance in injectable aesthetics globally. As a result, we remain confident in our trajectory for 2025 as well as acceleration towards our midterm guidance. Next, moving to dermatological skin care. Net sales for the first quarter of 2025 were USD 370 million, up 7.8% year-on-year at constant currency. Both Cetaphil and Alastin continued their strong trajectory globally. Despite the slower consumer demand, the dermatological skin care market remains attractive and continues to grow ahead of the broader skincare market. We had especially strong performance in international markets with notable growth in e-commerce and in Asia. Growth for Cetaphil was particularly strong in China leveraging the Chinese New Year campaign and in India, supported by continued investments to strengthen Cetaphil's leadership position. Meanwhile, Cetaphil growth in Latin America was impacted by a high comparative base. As for Alastin, we continue to progress on our international expansion, growing its base and nicely gaining market share. In the U.S., we successfully navigated an environment of constrained consumer spending growing both our flagship brands. For Cetaphil, we performed broadly in line with the market with e-commerce remaining our fastest-growing channel. For Alastin, we outperformed the market and continued on our growth trajectory as the only top 5 physician-dispensed brand in the U.S. to gain share year-on-year consistently for the past 6 years. We grew across channels with the core focus remaining on health care professionals, engagement and education, benefiting from our integrated dermatology platform. Overall, we see ourselves on a strong trajectory for continued growth in dermatological skincare. Now on to the therapeutic dermatology. Net sales for the first quarter of 2025 were USD 212 million, up 4.9% year-on-year at constant currency. Growth was driven by the strong ramp-up for Nemluvio, more than offsetting the expected decline of our mature therapeutic derm portfolio. The decline in the mature portfolio, excluding Nemluvio, stems from anticipated lower volumes and generic pressure globally and especially from the annualized effect of Oracea's loss of exclusivity in the U.S. which is expected to lapse in the second quarter. It was also our last quarter recording sales for TWYNEO and EPSOLAY with the expected termination a year early of the related agreement between Galderma and Sol-Gel. This does not impact our outlook for the year as sales contributions from these brands are not material. Our strategy in therapeutic dermatology remains unchanged, with a clear focus on Nemluvio along with life cycle management of our mature portfolio. Nemluvio, tracking ahead of expectations, achieved $39 million in sales for the period. This includes a strong initial uptake in both prurigo nodularis and atopic dermatitis in the U.S. as well as initial international sales from its launch in Germany. Nemluvio is on a strong launch trajectory and sets therapeutic dermatology up for significant growth going forward. Now looking at net sales, geographically growth continues to be driven by Galderma's larger reporting geography international. Starting with international markets, we saw continued growth momentum with double-digit performance. Growth was strong in injectable aesthetics with double-digit growth across both neuromodulators as well as fillers and biostimulators. Growth was also strong in dermatological skincare, driven by Asia, more than offsetting Latin America, which was impacted by a high comparative base. In therapeutic dermatology, Nemluvio recorded its first sales while the mature portfolio was impacted by anticipated competitive pressures. Galderma's overall performance was strong across international markets with double-digit growth led by Canada, China, Germany, India and. U.K. which remain highly attractive and largely underpenetrated. Now on to the U.S. As anticipated, the U.S. returned to growth driven by the strong uptake of Nemluvio in atopic dermatitis and prurigo nodularis as well as growth in injectable aesthetics and in dermatological skin care. In injectable aesthetics, Galderma continued to gain share in neuromodulators as well as in fillers and biostimulators. As mentioned earlier, growth was particularly strong in neuromodulators benefiting from favorable 2025 quarterly phasing, while fillers and biostimulators growth was impacted by a high comparative base last year and ongoing market softness in fillers. In dermatological skincare, Galderma grew both of its flagship brands and in therapeutic dermatology for the first time, Nemluvio sales more than offset the anticipated decline in its mature portfolio. As we look at the remainder of 2025, I would like to reiterate that Galderma's exposure to currently announced U.S. tariffs continues to be manageable and is fully factored into our guidance for the full year. As per the currently announced U.S. tariffs, Galderma's U.S. portfolio is mostly exempt from tariffs with the only notable exception being the U.S. fillers and biostimulators portfolio, which represents approximately 9% and of total Galderma net sales. These are imported from the European Union into the U.S. using transfer pricing, thus exposing only a portion of the in-market net sales prices to tariffs. In the U.S., injectable aesthetics market overall, more than 90% of all products sold are being imported, whether from the European Union, the U.K. or South Korea. In that context, and given its strong market position, Galderma's focus continues to be on gaining market share. Lastly, our sales over delivery in the first quarter allows us to increasingly derisk our full year guidance. This enhances our ability to absorb some further tariff impacts and some consumer demand-related deterioration. These could include, for example, some potential tariffs on products classified as pharmaceuticals. For reference, Dysport is produced in the U.K. compared to the majority of competing neuromodulators that are being imported from either the European Union or South Korea. Nemluvio's final manufacturing step occurs in the U.S. The semi-finished product produced in Germany is imported into the U.S. at a small fraction of its list price using transfer pricing. Thirdly, the mature U.S. therapeutic dermatology portfolio exposure would be very limited. It represents approximately 3% of group sales is also imported using transfer pricing and includes difference with a U.S. MCA compliant production in Canada. Overall, we remain confident in our ability to manage the impact of tariffs on our business. Following a strong start to the year, we are firmly confirming our guidance for 2025. We continue to expect net sales growth of 10% to 12% at constant currency and a core EBITDA margin of approximately 23% in constant currency. As just mentioned, the recently announced U.S. tariffs are fully factored into the guidance. In terms of our additional modeling metrics, they remain unchanged. As a note, our recently placed inaugural Eurobond and the new dual tranche Swiss franc bonds announced last month do not impact our expected net financial expenses for the year. Overall, we are confident in our trajectory for 2025. I would now like to take a moment on this slide to show the expected phasing of net sales growth for the year. It now reflects that the first quarter came in higher than previously expected, especially in injectable aesthetics which will have some impact on the growth rate we expect for Q2, especially in neuromodulators. Overall, let me highlight that we clearly expect further growth acceleration as of the second quarter. We remain confident in our 3 key growth drivers for 2025. Number one, new launches of disruptive innovation and particularly -- in particular, the ramp-up of Nemluvio and Relfydess. Number two, continued strong growth momentum in International, supported by further geographic and portfolio expansion in underpenetrated and fast-growing markets; and number three, the U.S. where we have modest growth expectations, excluding Nemluvio, factoring in a volatile market environment. This concludes the introductory remarks of Galderma's trading update for the first quarter of 2025. Before we close meeting with Flemming's final remarks, I would like to now hand back to the operator to open the call for questions. In the interest of allowing sufficient time for all analysts to ask questions, I would kindly remind everyone to please limit yourself to one question each. Operator, can you please open the line?

[Operator Instructions] The question comes from the line of James Gordon from JPMorgan.

James Gordon, JPMorgan. My question was about injectable aesthetics. So in Q4, you flag that Q1 will be a slower growth quarter for Injectable Aesthetics, LA wildfires, comps, market slowdown, but you still did 10% today, that was very good, albeit with some phasing benefits. So how much should we extrapolate Q1? How much should we assume was the phasing benefit that we need to be a bit cautious about taking out before we extrapolate? And can you talk about beyond the phasing benefit, was there any stocking for Relfydess or anything else that we need to be cautious on? And then just how did the growth breakdown within injectable aesthetics, U.S. versus ex U.S? And what are you thinking or seeing in terms of the market for these 2 categories, please?

Thanks very much, James. I can take a first shot at it, and then I can pass over to Thomas. I think what we are seeing in the injectable aesthetics marker is a diversion. We see very strong continued growth of neuromodulators, both U.S. and international, particularly international, where we continue also in the U.S. to take market share. We see continued good growth of our biostimulatory portfolio with Sculptra. Fillers are still a bit subdued but less subdued than we saw last year. And I think what we've also seen is that we've been able to drive growth and particularly outside the U.S. with our many launches Restylane Shaype, other launches we've had and now Sculptra for the biostimulatory products. So I would say our overperformance against expectations has been better sales execution, both U.S. and international. It's been ability to drive further engagement with physicians through training. It's been more launches, particularly internationally. So I think whether we can extrapolate or not, that's a bit early to say, but we are very confident in the outlook for the injectable aesthetics, probably more on the neuromodulator side and on the Sculptra side, then on the filler side, that probably will be a little bit subdued. We're planning more on international growth than U.S. growth, but we are very encouraged by what we see in the U.S. Thomas, anything to add?

Flemming, you summarized it really well. James, you asked for this phasing benefit that was in there versus what was the execution. I mean I'm pleased to say that the majority of the benefit we saw was actually execution. So then less than the majority, so to speak, was the phasing benefit in injectable aesthetics. And then you have, of course, Relfydess on top, which is the ramping up brand that doesn't have a comparable base from last year. So of course, that contributes very nicely. It's highlighted as a growth driver. And yes, from a growth standpoint, subcategories, I mean, you saw the 21.4% neuromodulators minus 2.3 fillers in biostimulators. We hinted also that expect some reversal of those, so to speak, extreme due to the high comparable base effect against last year, to occur in Q2. Yes, I think that should.

But I think it's very important, James, to realize the way we drive growth is through commercial execution. And what we've seen is that when we have new launches be those on the fillers side, new indications for Sculptra or significant events like Relfydess, we strengthened our overall market position. We invest more in the market. And as you know, in Europe, we now have 3 neuromodulators in multiple countries. And what we're seeing is incredibly strong growth. And as you know, in those markets, we are taking ourselves to overall injectable aesthetic leadership. So we basically use the launches, the new innovation, more training, more investments to drive growth, which is, I think, a pretty simple formula, but it's worked so far.

To Flemming's point, the real metric to track and that we track here is market share gains, and we have gained in both neuromodulators and fillers and biostimulators both in international and in the U.S. And that's the key one. And yes, sometimes year-on-year growth rates with phasing or comparable base, the percentage can throw one off a little bit. But that underlying competitive market share grab happening, that's the one we are tracking very carefully internally, and I want to point out.

And the question come from the line of Thibault Boutherin from Morgan Stanley.

Just on tariff. You already have some tariff on fillers. Have you already reflected that in prices already or is it planned for a decision here? And just if at some point, we see -- we may see tariffs in pharma. To what extent can you build inventory today in the U.S. on aesthetics to sort of try to offset potential pharma tariffs? And what's the constraint here? Is it just the ability to manufacture? Or is it the shelf life of the products that would prevent you from doing this at a scale large enough to sort of offset tariff?

Yes. I think as Thomas mentioned, this would affect 2 products. It would affect Dysport, which is manufactured in the U.K. and with -- sorry...

Western and South China.

Yes, yes, yes. So today, the impact of the -- you mean -- your question was about the pharmaceuticals get impacted wasn't it?

Yes, exactly. I mean, if there is tariffs on pharmaceuticals and that impact and that should impact aesthetics, so yes, that's part basically.

So that would be Dysport, which is manufactured in the U.K. and that which has deemed a pharmaceutical product. That, of course, would then -- if there were the situation of pharmaceuticals, then that would be -- we would be -- there would be an applied tariff to that. But of course, it's not to the end price. It's to the transfer price out of the U.K. As you know, it's manufactured by Ipsen. So there are things also to agree with Ipsen there. And on Nemluvio, which has a multiple step, it has a step in Japan, has a step in Germany, but the final step is in Florida. And of course, when it gets imported into the U.S., it's at a much lower price, given it's not the finished product. So we have already considered that in the various scenario planning. And as Thomas said, with a strong performance in the first quarter. We've added to the buffer. I think you also... [Technical Difficulty]

The next question comes from the line of Jo Walton from UBS.

I don't know whether it was just me, but I know that everybody here at UBS wasn't able to hear the answer to the last question because it all went very robotic and it was as if there was a lot of interference on the line. So it might be worth just summarizing that in case it wasn't just us at UBS that couldn't hear it. We're all on different lines. So I assume that's fairly standard. I would have a couple of questions.

UBS has a top quality audio visual equipment, but maybe it could be on our side as well. So sorry?

Repeat your answer.

Yes. I understand. So we will basically repeat the answer to the question. I think that would be the right thing. Sorry, if someone got it the other way around. So the question, if I understood it correctly, because we also had some issues in fully understanding it. So the question was if there are pharmaceutical tariffs, what would that impact your portfolio? And there are 2 products that would fall under that category. They would be Dysport, which is produced in the U.K. by Ipsen and would then have to be imported. The tariff, whatever size, would be applied, of course, to what is the transfer price into the U.S., which would be, I imagine, significantly lower than the end sale price. And then the other product is Nemluvio. Nemluvio has a complex manufacturing supply chain starts off in Japan then goes to Germany. From Germany, it's product -- it's exported to the U.S., Florida, where the final step, of course, what is imported into the U.S. is not the final product. So this would basically be at a much lower cost or price than the fully sales price. So I think we have considered that in our guidance and reconfirmed our guidance, and we will see what happens. Then there was a question, I think, implied, are there any pricing opportunities and all that. That's a much more complex answer to say. We're just rolling out Nemluvio. We're just getting market access, which is of course involved both pricing and discounts. Most of our sale, as you know, today is at full price because where we don't have to cover, we get full price. And for Dysport, it will be also, of course, a discussion. But we feel very confident that we have what it takes to mitigate this, and we have built, you could say, a buffer which has been increased by our strong first quarter results.

That was helpful. My questions, please, 2 related ones on the neuromodulators and the broader one on China. So you say that it's important to look at your share gains -- can I just ask you who you are gaining share from? Are people trading up from some of the cheaper perhaps, South Korean products towards more premium products? Or are you gaining more from your sleepy large AbbVie competitor? And related to that, do you see any risk now that they're presumably going to be reinvigorated just having filed their new short-acting products. So if you could give us some sense about that. And my second question is on China. You've talked a lot about China. Perhaps you could tell us a little bit about where your infrastructure is and how quickly you can turn that into something profitable because I assume that you must put a heavy level of investment to build at the moment? And is it that you can actually capitalize on perhaps some anti-U.S feeling and gain share, particularly in relation to AbbVie?

So I think the first question -- thanks for the 2 questions. The first question was centered around the ability to gain share and who do we gain share from? Yes, as you know, the injectable aesthetics market, in particular, is almost a duopoly. 60-some percent is hosted by Galderma and by AbbVie. So of course, if we take shares, that probably would be the one we take most share from but I don't comment on them. They are a formidable competitor. They're still the leader in the U.S. In multiple places outside the U.S., they're no longer the leader. We look forward to further competition with their short-acting BOTOX. We -- also you know, we have also Relfydess, so we look forward to increased competition. I think the market share gains is broad-based. And if I look at all of the smaller players, they still have relatively low market shares. But of course, the one that typically would lose market share is the major player. So nothing about that. I think your assumption about China is a little bit wrong. It is actually not only growing and profitable and very strong for us. We do invest a lot. We are based in Shanghai. We are focused on the large cities. We're not in the second-tier cities yet. We are, of course, still small compared to AbbVie in this situation. But also remember, we just launched Sculptra, which we will be competing with local players, but we've seen phenomenal stock to this. We got Dysport not too long ago approved. We get more and more fillers in there. Restylane Shaype is coming there as well. We are continuously building out. We're #1 with Cetaphil in the e-commerce channel. We have the big white jaw, which is almost synonymous with Cetaphil. So we grow, we expand -- and of course, we also have an eye on profitability. But we are a miniscule, both in terms of our overall aspiration and in terms of how we compare, for instance, in this sector. And we see -- I have not -- I've been there many times. We don't harvest from any anti-American thing. We harvest from the fact we have a great portfolio, top-notch product and a very strong execution.

Jo, from a profitability standpoint, I mean we entered China seriously only when we took the business over before that it was miniscule, which was a big opportunity because the way we entered it was from a premium position. So I don't want to boast or say what where our ASP is in China for Cetaphil compared to the U.S., but it's way higher because it's premium. And as soon as you do that and then with the focused execution and e-commerce, and you don't get lost in the weeds, then growth and profitability don't become 2 [ antidotes ] that can go very nicely together, and that's what, what is the case.

It's also very important to understand that given we had a new start in China, given our product are seen to premium, if you look across our portfolio, including Sculptra that we just launched, it is at a significant premium to the U.S. prices because we are clearly perceived in China as premium. If you want to see advertising for Cetaphil, you can see that on some of the very high-end streets in Shanghai. So we have a different position in China than we have in the U.S.

The questions come from the line of Shyam Kotadia from Goldman Sachs.

A question on Relfydess. So I report you mentioning that you recorded some sales in Europe and Australia. So I would be interested to hear what initial clinician feedback has been? And whether you saw any reorders from the same clinics again in the quarter? And is the launch currently going above or below your expectations? And is it impacting your Dysport sales at all? Or is it more additive? So any quantification of the sales figure would be great. And then secondly, just touching on Relfydess. You mentioned that's going to be a phased approach in your launch. I just wanted to get an understanding of when you might start accessing markets that are outside of your Ipsen partnership agreement and therefore, when you may be able to see some sort of inflection in the top line from that perspective?

Yes. I think Relfydess, yes, we had what I'll call a focused launch focusing on Germany and on Spain initially. Also remember, we have a complex manufacturing process. We're new to the game of sophisticated neuromodulator manufacturing, but I'm very proud of what the team achieved. We have -- but are in the process of expanding a very high-end manufacturing facility in Sweden. The team has done really well. We have better and better batch consistency. We're now rolling it out in more and more European countries. We have filed in many, many countries so that we also can get into countries where we today don't have access to a neuromodulator, which we clearly will have, will see overall growth because to have the full portfolio in the Middle East and others will drive overall growth. What are we hearing back? Well, we don't hear a third head. I went to Dusseldorf where they was first launch to spend a day in a clinic there with a doctor, one of the highest volume doctors in Dusseldorf. Most of the patients are on Relfydess. She likes the very fast onset. She likes she doesn't need to have to reconstitute. The patient feedback is very positive. We had looked at whether they would have the same experience as with [ Alluzience ] with some different feelings, some call it pain, we didn't see -- she didn't report that. And we've also seen that the duration now has been in the market for some time. People like the promise of a duration of 6 months. So I think we also launched it with a 10-pack. I got so much positive feedback about the 10-pack, which will allow them to try it out on more patients. It's too early to say what the sales data is. We have the same watchful eye that you are implying that it has to be additive to our overall portfolio and not take away from Dysport, and we don't see that. We want to underscore. We want to have a full portfolio, Alluzience, Azzalure or Dysport and also with Relfydess, all 3 products have a clear place. We want to drive all three products and that's what we see today.

That's what you're really seeing that the premium pricing from -- premium position from Relfydess that's coming through based on what Flemming shared with you, Shyam, on that one. And then also in the market, where we have launched, we actually see that Relfydess and Dysport continue to grow. So one feeds off the other, which shows, first it was our aim, but now we see it in the data that this portfolio effect is really there and it just enforces the strength of our portfolio. The other thing that's, of course, very important in aesthetics, both in Europe, the U.S., Australia and others is that there's driven by private equity. There's a significant corporatization of many clinic. So that also means that in many cases, they combine and having multiple products on the neuromodulator side, including Relfydess as a premium, allows us, of course, to basically look at without -- with having the opportunity to also offer certain products to certain clinics and not to others. But we anticipate that we also starting next year, we already will start to see markets where we don't have Dysport today, where we will be able to also come with a neuromodulator. And wherever we've seen an introduction of a neuromodulator, it strengthens our market position. It also drives the sales of our rest of our portfolio, and we look forward to that.

And the questions come from the line of Ben Jackson from Jefferies.

Great. Just 2 relatively related ones for me today. On the first, have you got any kind of evidence or backward-looking records of when previously injectable aesthetics has gone through macroeconomic pressures or even recessionary environment, how the elasticity of both neuromodulators and also fillers and biostimulators has been on a relative level? Does one appear stickier than the other? And to what extent does that occur? And then if I can really quickly squeeze the second in there. You mentioned at the start about thinking about external possibilities as part of the long-term growth. Would you be able to rank the 3 product categories that you have based on the interest or the opportunity that you see for external innovation for those?

Yes. I think that -- I worked with our owners, private equity, including EQT when they were looking at acquiring together with ADIA and then subsequently GIC to acquire the Nestle business unit which today is Galderma. So they had done a lot of sensitivity analysis. How does overall injectable aesthetics react in market downturns. There had been a few financial crisis. We saw the same thing with COVID. So it goes down. In COVID, it was driven by the access to the offices. It was a transitory. I think the dispersion between fillers and neuromodulators is more a new phenomenon. What we see is it looks like neuromodulator is now the new base therapy for anyone getting aesthetic therapy and that there is some substitution for biostimulatory product because it gives you not only volume and skin quality versus fillers, but fillers still plays an absolutely key [indiscernible] in part of the [indiscernible]. And now you have all the medication driven weight loss. So I think that even in economic downturns, the impact is probably not that great, and there may be some shift behind the categories. There may be more demand for discounts -- but I really think the newer modulators, and I think the very strong growth we've shown in multiple markets show that you still can drive that very strong. And we also see that Sculptra continues to do very well, and we launched a new market. So I'm very confident in the outlook for the aesthetics market. But I think Tom has also said, you have to put more effort in particularly on the sales, training and other sites, which is what we do and which is drive our market share gain. And then I think you had a second question with about external opportunities. Do we rank order them. We get a lot of inbound calls. You can look at our portfolio as well as we can. We have a pretty full portfolio in aesthetics with multiple new launches. We're tied on both hands currently with making sure that Nemluvio has a phenomenal start, which we think it has and also the new indications. It is clear that in dermatological skin care, if we have the opportunity maybe to add something that was supplementary, we would take a serious look at that. But we like tuck-ins. We're not in the transformative business at this stage -- so that's the way we would probably look at it.

We are now going to proceed with one final question. And the questions come from the line of Victor Floch from BNP Paribas Exane.

Maybe just a quick follow-up on the last one. I mean, in the press release this morning, you've been alluding to the fact that over delivering in first quarter give you room to potentially mitigate some consumer demand-related deterioration moving forward. So I was just wondering if you -- if you could comment on that point and whether you already see some deterioration in some of your KPIs? And the second one is on Nemluvio. I was just wondering if you could update us on your progress in terms of payer access. I think last time you've updated the market you reported 40% covered lives. I was just wondering if you could update us on that. And finally, if you could give us a sense of where Nemluvio gross to net is currently trending at?

Yes. I think I can start with Nemluvio. I think we see very impressive coverage of Nemluvio on the commercial side. I would imagine it's higher than the percent we gave last time. I don't have a specific percent. What is most impressive for me, even in the Medicare part where we can ask for exemption, we have a very high success rate of exemption. But I think the most impressive when I look at our access is it's not with tier. We have first line, both in AD and PN. And I think that's really important, and we have a very strong position. And I think what we are seeing is that the strong uptake in PN is spilling over to AD because in many cases, it's the same doctors. They see that the rapid itch relief basically help them enormously in managing and they also see, of course, excellent skin clearance. So overall, we've been very, very positive about that. I don't think we give out any specific gross to net data at this specific issue. And the other question was...

On the over-delivery, yes, you got it right. I mean, we over delivered. We had a good start. It didn't hurt us on this -- the machine is doing really well. We're on a good track. Are we seeing deterioration? Do we have -- maybe we didn't highlight that. But of course, we are cognizant of the fact that there may be an impact in the future, secondary impact and all we wanted to transmit is that we are confident in our outlook and guidance and that through the overdelivery and through the strong position, we were able to compared to the beginning of the year, if anything, further derisk our guidance, and we would leave it at that.

Thank you for the questions. So before we close the call, Flemming will just wrap it up with a few final messages.

Yes. So thank you very much for your thoughtful questions. They, of course, reflect that we are in volatile times and a lot of uncertainty. But I think you've seen that we basically hunkered down, focused on execution, and I think that's created the results you're seeing today. We had a very strong start to the year, I think, ahead of expectations. We're benefiting from this focus not being distracted. We had some favorable phasing in injectable aesthetics but we also had a very strong ramp-up of Nemluvio, also driven by a very strong situation on the access side. We achieved record net sales of USD 1.1 billion record first quarter for us. We grew 8.3% in constant currency, volume driven, some mix. Growth was broad-based, which I really like as well. It was across categories. It caused geographies. And I think it's proven that our integrated derma strategy works and it delivers even in times like these. We also are absolutely confirming our full year guidance with net sales growth of 10% to 12% year-on-year and core EBITDA margin at approximately 23% of course all at constant currency. And we have also said today that the guidance factors in currently announced U.S. tariff exposure, which we deem manageable. Full year guidance is also increasingly derisked with the ability to absorb some additional tariff impact and some consumer demand related deterioration should that happen, following, of course, the very strong over-delivery in the first quarter of this year. So we think we are well on track for our full year results and we're absolutely confident in our growth trajectory of '25 and we would love to talk about '26, but we didn't have the time to do that today. So with that, I will thank you for your attention today.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Speakers, please standby. Thank you.