Gedeon Richter PLC (RICHTER) Earnings Call Transcript & Summary

We're going to start the Q3 2025 Earnings Conference Call. My name is Robert Rethy, I'm Head of Investor Relations and ESG. As you probably noticed, there is a slight change in the lineup for today's call. The reason is very simple. Our CEO, Gabor Orban, is not able to participate in today's call because he's moved to Washington, D.C. is part of the team of our Prime Minister, who is heading to D.C. to meet President Trump tomorrow. And this probably doesn't come as a surprise given the very important role that Richter is playing in the business relations between Hungary and the United States, especially when it comes to high value-add R&D-driven activities and trade relations. Of course, on the other hand, this created a bit of necessity for us to reset our plan for today. So instead of Gabor, today, we have with us Tamas Szolyak for the first time in this conference call, he is the Chief Commercial Officer; and of course, Laszlo Kovacs, the Chief Financial Officer. And I'm highly confident that the quality of this discussion will not suffer from the absence of Gabor. Before we start the discussion, the usual technical details, I'd like to go through doing a formal presentation using the slides what we published this morning along with the earnings and the Excel data sheet. After the presentation, there will be a Q&A session. [Operator Instructions] Two more things. This call is recorded. And also, I would like to draw your attention to the cautionary statement at the end of the presentation about the forward-looking statements, which this presentation and this discussion may include. With that, I hand it over to Laszlo, who will discuss the financial results, and then Tamas will go through the revenue, the top line development.

Thank you very much, Robbie. Good morning to everyone. We will be stepping in for our CEO, Gabor Orban, for today. And we will do our best to provide you with his perspective and to ensure that we cover all the important points. I think in this quarter, it's particularly important to look a bit behind the numbers because what you see in Q1 to Q3, there's a temporarily slowing dynamics in the third quarter. And overall, I can say that the quarter was mixed. The strong growth across the innovative businesses, including women's health care and CNS continued. However, it was contrasted by multiple headwinds in the affordable segment, both from biotech, CDMO and GenMed were impacted by internal and external challenges. Let me start with CDMO, where the performance was constrained by the U.S. market regulatory uncertainty, limiting the inflow of new deals, while technology-related issues in our German site caused some further pressure during the ramp-up period. On the other hand, GenMed was really faced a series of hits. First of all, there was supply chain stock-out problems affecting one key product. Then we noticed wholesaler destocking across several markets, and we had an extremely high base back in Q3 2024. This mix effect at the top line was partially compensated as we applied very strong operating cost controls, limiting the impact of the weaker top line on our profitability. So rather than being a one-off cost-cutting measures, this is rather a reflection of the benefits of our long-standing corporate efficiency programs that we run in this company. Now if we take a look on the color scheme of this slide, you may notice it's pretty similar to what we saw in H1. However, the indicators remain the same, but the numbers are more moderate. They're close to 7% growth in nominal terms, including pharma sales, clean EBIT and EBIT figures. The FX adjusted figures are a bit even lower, but the difference between the FX adjustment and nominal values are getting closer. Both bottom line indicators show a slight decline, driven entirely by adverse FX dynamics and taxes. The swing between last year's FX gains and this year's losses is close to HUF 30 billion. Free cash flow, however, clearly stands out here. We managed to follow our CapEx controls and net working capital was favorable during this quarter. So we are able to report an all-time high HUF 200 billion here. So what does this picture mean for the rest of the year and further ahead? First of all, we strongly believe that the Q3 revenue shortfall is temporary in nature, but we may not fully return to our previous baseline and growth in Q4 yet. As a result, now we see that our full year revenue on constant exchange rate will be approaching EUR 2.3 billion, which is around the lower end of the range we have previously given to you. On the other hand, we continue to expect profitability to visibly improve in 2024. Now we will use all of our tools at our disposal to make sure that we can expect a constant exchange rate clean EBIT growth in the region of 8% to 10%. And given the strong -- very strong cash flow generation, we also expect to be in a position to continue to further increase our regular dividends, fully in line what we shared with you in our capital allocation framework back in March. Now handing over to Tamas to share a few thoughts on the top line.

Thank you very much, Laszlo. Good morning, everyone. As you can see from our numbers, our Q3 performance basically hindered a bit of our growth rate right now. We are sitting on a mid-single-digit growth year-to-date. If we look into the regional setup of this growth, we do see that Western Europe, North America and Asia Pacific has very good results. We are kind of proud to see that Western Europe is growing fastest right now, around 12.7% year-to-date growth, what we could recognize in that segment and North America and Asia Pacific as well, very high single digit, close to 10%, but still it was a single digit altogether. This segment reflects very well that how well the innovative portfolio is performing. On the other side, in Central Europe and Eastern Europe, we had a much lower growth, what we achieved. We were basically prepared for this slowdown altogether due to the fact that we've seen the impact from last year a higher base mostly. And as well, we have seen some of the trends and activities what we initiated recently. So from that perspective, the slowdown of the growth of the Central European markets were expected. Taking into consideration the exchange rate target has been changed from the first half year. In Q3, we had basically a headwind. It was mostly due to the weakening dollar and the strengthening Hungarian forint altogether. Q3, as you see here on the full portfolio, we had a bit of a drop of our sales compared to last year quarter 3 year-on-year comparison. And I think it is good to look into the details. Thank you, Robbie. So first of all, we would focus on the innovative business part, mostly from women healthcare, which is very important to recognize that the quarter-on-quarter growth of the women healthcare portfolio was 11.7%, so the portfolio growth did not slow down at all. Our key products, again, quarter-on-quarter, Ryeqo, Drovelis and Lenzetto, all of them achieved growth above 60%. So it is still a very dynamically growing portfolio for us. Contraception, the growth is mostly driven by Drovelis. This is fantastic. We still see a very big long-term potential in the product. The emergency contraception had a little dip in Q3, mostly due to the fact that we needed to reschedule some of the deliveries to the U.S. and to the Chinese market, which was on the other side, a positive development that Evra portfolio strengthened as we could complete our tender deals in Mexico. Fertility business, important therapeutic area. It's get back and taking back its market position. However, it takes time. It's a bit slower. We have seen some supply chain challenges for Bemfola in the LatAm region. Uterine fibroids and endometriosis, this is one of the center -- in the center of the key women health care topics as we do see right now. Our patient-centric approach, it is important to see that how we are really improving the access for all innovative therapeutic options for women in this territory, which in the past did not have good solution. Ryeqo is flying on it, performs excellently, and it's providing an efficient and safety option for our patients. Menopause portfolio growth is mostly driven by a strong patient demand, which is completely understandable because that issue is hindering significantly the quality of life of the women. And this is a kind of trend change what we do see as well in the professional community because they are focusing more and more on this territory. We do see as well more and more investment coming back to this territory in menopause, which reflects as well the future potential of the women health care portfolio, and we have a really robust growth for Lenzetto. Going to the CNS business part, Vraylar, 6.7% growth, USD 934 million sales in Q3. Year-to-date growth is double digit. This we quote from the reports of AbbVie. We would love to focus to our own performance, which might look bad based on the figures you can see. However, we need to note that all markets, which is managed by Richter, still have a double-digit growth. So we are managing this product under all premises. Our partnering sales a bit slowed down, but this was mostly shipment issues, and we are absolutely confident in the performance because we do see that the market performance is not a high single digit, middle or low single-digit growth is provided throughout the years. So we do see that the Q4 numbers in the CNS portfolio will improve. General Medicine, this was the trouble child in business unit setup for the Q3 results declined. We suffered on quarter-by-quarter comparison in 17%. As I mentioned to you, we partly were prepared to have a weaker growth of this portfolio. It is mostly based on the issue that in the last year in September, we Hungary, we had a one-off positive impact, which increased our basis rather significantly. Together with Laszlo, we are working very heavily to manage the working capital on a better way. It's a high focus right now. With that one, we turned with managing our customers, especially in the traditional markets with a higher rigor, and it has an impact when and how we can supply them with products. And that caused another negative impact, and we calculated when we looked to the Q3 numbers in our results. There were some other element, many of the traditional market has a typical pattern of the quarterly sales. Q2 is regularly rather high, which is followed by a weaker Q3. In Q3, the wholesalers regularly destocking. This year, this magnitude was much higher than we anticipated. And there were another element that in September, we were already much better prepared how to handle the usual stockpiling of the wholesalers, we managed it with a much more financial rigor compared to the past years, and it had an impact. One of the most important impact is that the leading product of our affordable portfolio, Mydeton/Mydocalm tolperisone suffered the supply issue and a significant stockout problem, this was basically high value, especially in September. We've already seen some impact in August, but September was critically hindered by these supply issues. We do see that it will unfortunately hit October as well. We will stabilize the sales through in November. So from that perspective, we expect a gradual recovery from the supply to the markets of tolperisone through Q4. Another negative element was the Kazakh market where legislation change pushed down the market and the wholesalers, they were destocking from 4-month stock level. They went back basically to a 3-week stock level. This happened again in the third quarter. All of these impacts arrived to us basically parallel. And therefore, compared to the expectation, we finished the Q3 on a lower level and all of them, what we try to manage resulted a kind of an weaker performance. What we could see on the other side that the in-market sales did not suffer that much at all. We were basically throughout the year, stable. We suffered an 0.2% market share loss in the respective markets in the traditional markets, what I do see. And mostly, it comes this loss from the impact of the Mydeton sales. Therefore, we are confident that the base performance of the General Medicines business unit is kept on the market, and we do see that gradually, we will gain back and build back a position step-by-step in that portfolio. Business unit revenue, it's again 2 parts what we have to look for. One is the teriparatide sales. Altogether, the growth is 6.1% and teriparatide year-to-date growth is 9.5%. In the quarter, in Q3, we were able to grow still at 5.1%. So the teriparatide business altogether goes very well. We have seen some slowdown due to how we are managing the supply. We were deciding to move some of the supply to the partners in later into Q4. However, the markets we are managing to perform very well with teriparatide. On the other side, the CDMO, especially quarter-by-quarter, presented a different number, minus 12% drop. This was basically due to the factors that in the very beginning of the year, we had some technical issues. These technical issues actually delayed production for several months, few batches what we could manufacture in this time compared to what we originally planned. And all of these manufacturing had been shifted backwards to Q4. We are working very hard. We condensed production. We are looking for a significant improvement. And most of the deliveries, which already contracted will be managed to Q4. We have a very clear focus on how the company is performing from that perspective and looking or monitoring testing and release times. We are aware that there are some macro factors, which already have been mentioned by lots of tariff uncertainty, tighter capital availability from the U.S., which caused that some of the project has been postponed, customers looking to adjustments in the contracts. However, we manage it proactively. We already secured some new development service. And even more, we have a new European biotech company contracted recently. So we do see that the future is getting back for this portfolio as well. Looking ahead for Q4, we believe that the Q4 results will go back again. We aim to achieve around double-digit growth quarter-on-quarter year-by-year results in Q4. Basically, the above-mentioned factors, as you could have seen, were mostly one-off factors and issues what we already handled. Therefore, we will go back to the trajectory where we've been with biotech and GenMed. And we are absolutely trust that the Women Healthcare portfolio growth will fly in the last quarter as well.

Thank you. On the operation cost side, we finally see some of the effect of the efficiency programs we have initiated in the recent years. This was combined with some timing effect and some further cost controlling measures that we applied. Year-to-date COGS figures is relatively unchanged with Q3 showing some slight increase. This is a direct effect of the lower sales volumes because fixed costs were borne by fewer products in the end. And that short time horizon of 3 months, there's no real space for management intervention. I think what is the most important here is research and development costs. You can see a decline here, which is mainly due to the fact that our biosimilar portfolio reached some major crossroads now by releasing 4 products and 3 molecules over the course of the next 12 months. We can mark that an era of major investments into biotech R&D has now ended. You can see that the average quarterly spending of biotech decreased by about 20%, while CNS and GenMed is broadly unchanged in nominal terms. This is a well-planned and deliberate change to our R&D cost structure, which was created to have some space for Women's Healthcare's internal innovation, which is about 10% higher than in the past year. The third quarter, however, were below the normal run rate. This is a result of timing issues and some accounting-driven adjustments what we had in Q2. So we maybe not be able to appropriately foresee the quarterly speeds. But at the moment, we are very confident that in the year-end, the lending will be there where we want. So the Q3 figure will be at around or up to EUR 20 million for Women's Healthcare. And looking further ahead, the quarterly run rate could be at around EUR 20 million to EUR 22 million per quarter, which will provide us with a solid foundation for disciplined investment and sustainable innovation in Women's Healthcare. Both sales and marketing and G&A figures show a reasonable 8% year-to-date growth in nominal terms. The later is also boosted by the acquisition we had in the previous year. Now as a result of all of the above factors, if you turn the slide to clean EBIT, you can see that we have delivered a clean EBIT of HUF 66 billion in the third quarter, which is down by 7%, but the Q1, Q3 combined year-to-date number is 7% up, reaching HUF 213 billion altogether. Let me emphasize that our innovative business units were the main growth drivers, delivering a combined 10% increase in both quarter-on-quarter and year-to-date. This is a notable achievement given the significant U.S. dollar headwind in Q3. The Q3 decline reflects multiple top line headwinds in GenMed, as it was just explained by Tamas as well as CDMO businesses where we saw the 12% decline in top line and also having an effect on the bottom line. Looking ahead, we expect a substantially better performance in all business units, except for CNS, which was remarkable as well. So in Q4, we expect the substantially better performance and the full year constant exchange rate clean EBIT is projected to grow between 8% to 10% compared to 2025. Maybe to -- one more thing to highlight here is that the in-market sales in all segments were in line with the market trends. This gives us further encouragement that we will achieve what we expected. If you look a bit below the line, then you can see the difference between clean EBIT to EBIT and then to net profit. There are 2 notable points here. One is the massive FX losses that we suffered, especially in the last 2 quarters, which is provide us with accumulated HUF 24.7 billion of losses compared to HUF 5.8 billion of gains 1 year before. And taxes, we pay more than HUF 33 billion. This is the second year with the global minimum tax regime. Now this year, we have some additional deferred tax expenses as a result of the acquisition. Only good news with deferred taxes, this is something you don't need to pay, but still it erodates our profit. If we're taking a look on our cash flow, you can see that free cash flows reached the all-time high HUF 200 billion. This is for the first time in 9 months, and this is 22% higher than a year before. This is a very strong performance that was driven by higher operating profit, lower CapEx and a much smaller build in working capital compared to the previous year, which is, to some extent, a result of our actions and to some extent, to the missing top line what we had in Q3. Beyond the regular annual dividend of HUF 93 billion, which we paid in Q2, there were only minor transactions that required cash, meaning that most of the free cash flows added directly to our net cash position. Let me highlight that recently, we were close to finalizing 2 sizable potential acquisitions in Women's Healthcare, having been shortlisted at the last round of the bidding. Unfortunately, none of them went through. But we will remain very much disciplined here. So we will follow our M&A strategy and approach pursuing only assets and businesses that clearly align with our strategy and adds value. So we will not make any acquisition just sake of spending additional money. One more slide I would like to discuss is research and development. First of all, there is no major changes in the pipeline. With AbbVie and in CNS, we are absolutely on track. 932 is in Phase II clinical trials with 2 indications, and the expectation remains the same that by the end of next year, we expect the [ RGH ABBV ] to start the first Phase III clinical trial. So this is extremely good news. We have one Phase I project, which is our own project 202 and nothing to report here. We expect that we can go through to Phase II trials later on. I would like to highlight that denosumab, our molecule in biosimilars is being launched as we speak in some of the Eastern European countries. And we expect further blood and cardio launches in the CEE region in GenMed. And I think altogether, that is what we wanted to share with you in a nutshell, and we are here and ready to receive some questions from you. I'm handing back over to Robbie.

Thank you very much, Laszlo and Tamas. And ladies and gentlemen, we are now open to take your questions. [Operator Instructions] So first question is coming from Gabor Bukta.

This is Gabor. First of all, I'd like to ask a question about the GenMed business because you mentioned during the call that regular recovery in supply to the Eastern European markets or Russia is expected for Q4. And I'm just wondering when it will normalize. So at the end of Q4 or in Q1 next year? And another question regarding GenMed that do you face any production issues, which have already resulted in a significant impairment in Q2? Or what we can see here in the future? And -- going to another topic. Frankly speaking, when I looked at the cost of goods sales trajectory, I was very disappointed. And you mentioned that it was around flat, and you see some positive improvements on the cost side also, but excluding the CNS segment, the gross margin stood at around 36% in our calculation compared to 43% in the first half of 2025. And where do you see the gross margin in the fourth quarter of this year? If I can touch on the R&D side. You mentioned that EUR 20 million, EUR 22 million run rate on a quarterly basis is expected in the women's healthcare. But can you give more color on where the 2026 R&D spending will land? And the final question, if I may ask about the M&A strategy. And I'm just wondering if you want to acquire a product or a small company with any kind of original platform in the future.

Okay. Thank you, Gabor. Good bunch of questions. We will try to answer them. So let me start with GenMed. So we expect that Q4 will be stronger than Q3, but will not be on the normal run rate. So we maybe need an additional quarter. But here, Tamas, please make some further comments as you feel appropriate.

Yes. Laszlo, I just would add one part that the major stockout issue will be handled throughout Q4. Q1 will be already normalized. Q4 is impacted mostly by October, somewhat by November. December is always a different month we all know. But by Q1, from that perspective, we will be fine with the major Mydeton stockout issue.

You also asked for production issues. I would call out Mydeton in this respect, which was -- we mentioned back in August that we had an issue with the starting material, which affected production. So that was one major issue that went through. Parallel to this one, but I would somehow separate CDMO because -- and this is also linked somehow to your COGS question because in CDMO, in Germany, we had some technical issues in the ramp-up. It's a very, very complex production. If you have anything with those cell lines, it's not something that you just fix the screw and it will be fine. It takes months. So that is a separate problem that we face. But except for this, we don't see any production issues. Maybe on the other hand, we increased some of the internal efficiencies here in Budapest. On the COGS questions, maybe I will also ask for because I was not able to fully follow through all the numbers you shared. But here, there's one very important thing. So if you just take out CNS and Vraylar in itself has like 99% COGS rate. Still, you need to make some further distinction between biosimilars and CDMO because the CDMO business reports a low gross margin rate. But basically, there's nothing more than gross margin, only some G&A costs. So the gross margin almost equals to the net clean EBIT profit. So besides that, I also see some slight decline was Women's Healthcare, partially due to the production mix. And it was around 1.5 percentage points, what I saw. It was partially because of Postinor, one of our products sold in the Chinese market, which has a very high gross profit rate, really extremely high. And now Tamas mentioned the financial rigor. It's not a secret that we changed one of the distributors and a major shipment was due this -- at the end of October. So this has an effect. And some of the growing products like Drovelis, it's normal that in this rate or in this life cycle, it has a bit lower margin rates than its full scale. On R&D, the EUR 20 million to EUR 22 million I mentioned, with the 2026 expectation, let us come back at the end of February when we have the year-end figures, and we will provide you with the full year guidance. If you just -- but to give you a hint, if I give you the normal run rate and what we had in German and CNS, you can pretty much figure out, but we'll discuss it in more details in early 2026. With M&A and M&A strategy, I can highlight what we had here. So first of all, it could be either assets or businesses. But in the past, we were more successful with assets. It's easier to find because it's not that easy, but it's still easier to find assets that fits into our portfolio. And we have a very good track record in acquiring assets and embedding them to our daily operations. And it's easier to find similarities because our strategy is based on therapeutical areas. If you buy a company, there's no guarantee that it will be only focusing on the same therapeutical area. For buying anything more like a company for having R&D expertise, I don't see that happening because we just did it a year ago, we acquired the old Mithra part. This is called Estetra, this company. We hired some further really, really black belt R&D people there. So we feel that we have enough muscles to do the exercises.

I hope we answered most of your questions. So basically, in terms of cost of goods sold and gross margin, definitely going into Q4 based on what Laszlo and Tamas commented, we expect COGS to decline and gross margin to improve basically across all 3 segments, excluding CNS as you asked. The next question comes from Bram Buring, Wood.

I'd like to touch on the cost efficiency point that you had made earlier. Probably not seeing -- you said you're seeing some improvements there. And I assume that they will continue into 2026. I guess my question is where are we really going to see -- which lines are we going to see these efficiency measures move strongly? That would be the first question. And then the second question with the bio, you mentioned the technical issues. And these technical issues are to do with the CDMO or to do with your own production or both? If you could go into a little bit more about that. And finally, you also flagged less than successful launches of some new GenMed drugs. If you can add anything there and if anything has changed in the fourth quarter or you expect it to improve in 2026?

Thank you very much. Yes, for the cost efficiency programs, we try to give you some hints back at the Capital Markets Day that where we would like to improve. And this was namely sales and marketing efficiency, absolutely admin costs, typically G&A, but we have admin costs in other buckets as well and the normal run rate of R&D. So these are the areas that will be affected. Sales and marketing, we just would like to sell more with the same level of cost basically. Tamas, if you would like to add any comments on sales and marketing, please?

Yes. Happily, actually, let's say, due to the fact that we are focusing very much on the sales force effectiveness right now, building a new approach where we run the sales forces in the countries, how we work together from that perspective with the countries, how we can improve the performance of the sales forces, attached certainly to the marketing strategy, what they have to implement. And if you don't mind, Laszlo jump back to the last question with that perspective. Where we suffered most in GenMed, this is the blood and metabolic therapeutic area. We had recent launches there. And for different reasons in different countries, not on an even way, we suffered kind of lack of performance with these launches. It was in some countries due to the local generic competition, which proved to be much stronger than our capabilities, especially in Russia. In other cases, in Romania, in Poland, we realized that we need to do a better job how we are preparing for our launches, how we are deploying the sales force out in the markets, how we are preparing ourselves for the straight channel management in line with the sales force promotion. So these are territories where we recognize improvement opportunities. This is already in place if implementation. And from these steps, we basically expect a further improvement of our return on investment into all marketing and sales activities. And I hand back to you, if you want to answer the biotech.

Yes, absolutely. Thank you. And maybe just one more comment on cost efficiency. So if you just take a look on the P&L, it's mainly it's going to be sales and marketing and G&A with R&D, it's a bit more difficult because when we speed up some of our spendings, then you will not be able to clearly distinguish what is efficiency and what is really some increase of actions. With biotechnology, yes, let me be clear here. It's CDMO, it's Germany, it's one site and one line. So it's a very, very separated issue. Nothing to do with the operations here in Hungary, in Debrecen. There, we need to be very proud of, and maybe I just missed the opportunity to highlight that we are the very first company in country and region to get the first FDA approval of our site. We went through 9 different examinations. You all know the drill, and we did it, and we are very happy and very proud. So scientifically and technically, we are good. We had this extension project in CDMO in Germany, in Bovenau, and we expected more revenues coming in. But due to these issues, we will record most of those revenues in Q4. Hopefully, next year will be about really expanding not just the capacities, but the revenues. This is my expectation as a CFO.

Can I have a follow-up on the CDMO question? So -- right. You flagged before, issues with U.S. customers. You say that you proactively made adjustments to the value of those contracts. You have a new customer. So just generally for 2026, if you will go that far, should we expect CDMO to improve on the 2025 run rate? Or is it going to be at a lower run rate because of changes in contracts with U.S. customers?

Okay. I would -- so let's -- with next year's guidance, let's wait until the year-end numbers. But altogether, what we see now, hopefully, is a turning of trends. So we are positive about Q4, and let's see what we can put confidentially -- or confidently, sorry, into our guidance for next year.

Next question comes from Dawid Górzynski.

I actually also have 3 questions. So maybe just take them one by one. And the first one is a follow-up on efficiency gains that you achieved. And when I look at sales and marketing costs this year -- sorry, this quarter, it was generally flattish year-on-year. And I wonder like what part of that was related to just lower revenue in some units, especially in general medicines? And what part was this cost efficiencies?

Thank you for the questions. Of course, some of the variable cost was definitely attached to the lower top line numbers. On the other hand, as we do the promotions and the field for the activities, sometimes you need to make these investments before and then you see -- or not sometimes always, then you see the potential returns. I'm not able to provide you with an exact number on this, but it's an identifiable difference from the internal management accounts that is related to the first round of efficiency programs, and we hope that more will come in the course of the next quarters 2026.

But it's fair to assume that sales is picking up again, then partially S&M expenses will be picking up too?

We won't be able to have higher revenues with flat sales and marketing, but the ratio needs to improve. And this is what we see internally -- some improvement is there already.

Yes, Robbie, this is kind of a system when you expect always your sales is growing much faster than your investment basically. And this is what we are working for, that's where we look to efficiency improvement on this territory.

And second question on R&D costs. I just wanted to confirm if I understood correctly that the run rate for Women Healthcare segment in terms of R&D cost is EUR 20 million, EUR 22 million?

Exactly. That's what we expect.

Next year.

Next year. Last quarter, it's up to EUR 20 million. This is how we see it currently. So it's hopefully lower than EUR 20 million in Q4, up to EUR 20 million and EUR 20 million to EUR 22 million in quarters after that.

Okay. The third one on Vraylar-02 project. I also just wanted to confirm that you expect Phase III to be started in like next year because I'm just a bit confused because I thought that AbbVie just guided on the recent call that the results of Phase II may be delivered only in 2027.

No. That's the second indication what they commented that may slip into '27. So the GAD, which was launched in May this year as the second indication where Phase II trials are running. AbbVie still, as far as I know, still expect the first indication, bipolar depression to -- if the results are as we and AbbVie expect justify them to start Phase III by the end of next year in BD, bipolar depression. Next question comes from [ Sophie Thumfart ].

I suppose could I just come back to R&D, please? Are you able to give us some kind of guidance at the group level perhaps as a percentage of sales? I appreciate what you've given us for women's healthcare, but it would be helpful to understand how it will trend going forward in the other segments. And then just really briefly, how confident are you in receiving a patent extension for pediatrics for Vraylar?

Okay. So with regards to any pediatric issues, AbbVie is leading the discussions around the topic. So I have to refer to them to respond on that one. With the run rate, one answer that we are very, very strict with is to make sure that all combined R&D spending cannot exceed 13% of revenues ever. That is our commitment, what we did with the strategy. What you could see here or what you could expect that biosimilars will be on a lower run rate. So definitely, this year was the turning point. And next year, we don't expect to have an increase. We are really focusing on the market now. So 2026 is the year when we have altogether with teriparatide, we have 5 products in the market. So it's going to be more about trying to bear the fruits of that investment. With GenMed, when we declared our strategy, we also remain committed. If needed, we put some further money into R&D. Now you couldn't see that big increase in 2025. So there might be some further increase, but it's always a question if we are doing our own developments or we are teaming up with someone else, you could see some examples on that one. Women's Healthcare, we commented. And in terms of CNS, definitely, our cooperation with AbbVie is running the line. So if we can start Phase III next year, definitely, there's going to be some increase, but that is an increase to the good. I'll be very happy if we can spend money on Phase III examinations partner with AbbVie on a molecule that has a good chance to be realized to the toe.

So for any given year, I think the level of R&D is very much going to be -- always going to be project driven. So in CNS, depending on the progress of the molecules, in particular, 932, but also 202. And in Women Healthcare, depending on our ability to bring in projects externally and to develop our own very early-stage molecules in the coming years.

And maybe just one addition to give you some hint on that, that we also started an efficiency program on fixed costs. So you will always see the combined figures. So that is what we would like to gain efficiency with the fixed cost, keeping them as tight as possible and having the room for the program. That's why at the very moment, it's very difficult to give you an exact run rate for all business units for next year. But definitely, we will come up with the guidance early next year.

Fair enough. But you will not exceed 13% of sales. Is that what you said?

Absolutely. That's the level.

I don't see any further questions at this point. So if there is no one else wanting to ask a question, then we shall, thank you for your participation and for your questions. If there's anything else which we can help you with, then please reach out to Investor Relations. And otherwise, we will see you in 3 months' time with the full year results. Thank you very much. Have a nice day. Bye-bye.

Thank you very much. Goodbye.