Sandoz Group AG (SDZ.SW) Q3 FY2025 Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Sandoz call today. I will now pass on to Craig Marks, Head of Investor Relations, for his opening remarks.

Thank you, and welcome to the Sandoz 9 Months 2025 Update Call, which focuses on sales. We plan to publish our full financial results for the year on the 25th of February. Earlier today, we published a press release and an accompanying presentation on our website, which will follow on today's call. You can find these documents at sandoz.com/investors. Joining me on today's call are Richard Saynor, Chief Executive Officer; and Remco Steenbergen, Chief Financial Officer. Please turn to Slide 2. Our sales announcement presentation and discussion include forward-looking statements. Please see our disclaimer here. Please turn to Slide 3. Richard will begin today's presentation with a summary of the highlights from the first 9 months of the year, followed by an update on the business. Remco will cover the sales performance as well as full year guidance. Following the wrap-up of the presentation, we'll be happy to take your questions. With that, I will now hand over to Richard. Please turn to Slide 4.

Thank you, Craig, and hello, everyone. It is a pleasure to welcome you all to today's call, and I'm looking forward to taking you through another strong Sandoz performance. Please now turn to Slide 5. I am pleased that the momentum in our business has continued. We are making excellent progress on our biosimilar launches and the pipeline as well as delivering strong ongoing commercial execution. In the first 9 months, we achieved 5% net sales growth at constant currencies, though the underlying result amounted to 6%. In quarter 3 alone, growth further accelerated to 6% at constant currencies and 7% on an underlying basis, with biosimilars growing by 13% at constant currencies. We also saw good performance across all geographies, including a significantly improved result in North America. In line with our commitments, we successfully introduced several key medicines this year, including Pyzchiva, Wyost, Jubbonti in the U.S. Looking ahead, we are preparing for additional launches, notably Wyost, Jubbonti and Afqlir in Europe as well as Tyruko in the U.S. These launches will further strengthen our commercial footprint and long-term growth potential. This momentum supports our confidence in upgrading our full year core EBITDA margin guidance today. We continue to expect net sales to grow at constant currencies by mid-single-digit percentages and while we anticipate that the core EBITDA margin will be in the range of 21% to 22%. Now let's move to more details of the business performance, starting with Slide 6. This was our 16th straight quarter of growth, primarily driven by biosimilars that represented a record 31% of net sales. The effect of this positive mix of sales as well as the momentum in the business was a key driver in the decision to upgrade our core EBITDA margin guidance today. Please turn to Slide 7. Before we deep dive into biosimilars, let's take a look at generics. In the first 9 months of the year, we've delivered a full launch program with 115 medicines launched and around 280 total launches around global markets. Notable launches include Lisdex and iron sucrose in the U.S. Our pipeline is strong with over 400 assets currently in development, targeting around $220 billion in originator sales, covering approximately 65% of LOE opportunities. It is worth noting that our generics growth of 2% this year has been materially impacted by a shortfall in our penicillin B2B business. This began with the imposition of U.S. tariffs that led to reduced associated exports from China to the U.S. In turn, this then prompted Chinese suppliers to very significantly lower prices for key penicillin APIs, including some that we sell to other businesses. As the last remaining fully vertically integrated producer in Europe, we are pleased to see a growing recognition by policymakers for the need for sustainable European supply of penicillins, but more action is required. And we call on the European Union and national governments to implement measures that reduce geopolitical exposure and safeguard the long-term sustainability of European-produced penicillins. Please turn to Slide 8. Turning now to biosimilars. We achieved half of our 2025 biosimilar launch milestones so far this year, and we are fully on track to deliver the balance by the end of the year. In the first half, we launched Pyzchiva in the U.S., followed by the successful rollout of the first ustekinumab biosimilar auto-injector in Europe. Our quarter 2 launch of Wyost and Jubbonti in the U.S. have also gone extremely well. These were the first and only interchangeable denosumab biosimilars in the U.S., providing new affordable treatment options for over 10 million patients. I'm looking forward to the remaining biosimilar launches before the end of the year, namely Wyost, Jubbonti and Afqlir in Europe as well as Tyruko in the U.S. Please turn to Slide 9. Biosimilars continue to be a powerful growth engine for Sandoz, delivering constant double-digit performances and enhancing our margin. Our biosimilar portfolio is not only growing, but evolving through strategic launches, geographic expansion and innovation. Let me now dive into the performance of our biosimilars, starting with Pyzchiva on Slide 10. It is encouraging to see the overall biosimilar ustekinumab participation in Europe increasing, outpacing the adoption rates we saw with adalimumab. This signals a growing confidence in biosimilars among health care providers and payers. We've seen strong momentum in Europe, where Pyzchiva has quickly gained traction following its launch last year. This has been supported earlier this year by the successful European launch of the first biosimilar ustekinumab auto-injector. Our European market share has been broadly stable in a market experiencing strong growth. Finally, we're planning for additional Pyzchiva launches next year, including entry into exciting markets like Brazil. Please now turn to Slide 11. Switching to Hyrimoz, now our largest selling medicine. It continues to demonstrate strong and consistent performance globally with stable market share amid rising biosimilar participation. As shown in the chart, our global market share has been maintained. And at the same time, biosimilar participation has steadily increased, climbing from 55% to around 65% in 18 months, a clear indication of growing acceptance and adoption. In Europe, Hyrimoz remains a strong foothold, while international sales growth has been exceptional this year. In the U.S., we lead the market through a dual strategy, namely private label and own brand. Together, they offer the broadest payer coverage, enabling us to capture originator share and reinforce our leadership position. This performance reflects the strength of our portfolio, the effectiveness of our commercial strategy and our commitment to improving access to high-quality biosimilars worldwide. Now please turn to Slide 12. Let me now move to Tyruko, our biosimilar natalizumab, which continues to deliver encouraging progress in Europe. We are proud to be the first and only biosimilar approved in Europe for relapsing, remitting multiple sclerosis, a major step forward in expanding treatment options for patients. Looking ahead, we have additional launches planned in the U.S. and across various European and international markets, reinforcing our commitment to leadership in neuroimmunology and biosimilars. Please turn to Slide 13. Omnitrope continues to deliver strong performance as the market-leading biosimilar for growth hormone-related disorders with a global market share reaching 37%. This steady upward trajectory from 24% in 2022 reflects our ability to consistently grow share in a competitive landscape, supported by good sales growth and rapidly expanding markets. The international region has been a key driver of our performance this year, even as we navigate increasing levels of competitor activity in the region. Our commercial execution, trusted brand and global reach position Omnitrope to continue being a leader in this space. Please turn to Slide 14. Let's now look at the recent U.S. launch of Wyost and Jubbonti, which marked a major milestone in our biosimilar strategy with both medicines achieving first-to-market status and demonstrating strong early momentum. We rapidly established commercial footprint covering over 80% of denosumab volumes, ensuring broad access across key provider networks. We led with an interchangeable product exclusively and in addition, Q-code exclusivity drove an important early advantage in market positioning. We're seeing early wins with major players and recognition by the NCCN as a substitute for reference denosumab further validates our clinical and commercial approach. This launch not only reinforces our leadership in biosimilars, but also sets the stage for continued growth and patient impact in osteoporosis and the oncology space. Now please turn to Slide 15. Sandoz continues to advance one of the industry's most comprehensive biosimilar pipeline with 27 assets spanning all stages of development. We have 5 near-term launches and assets in clinical development, 5 assets in regulatory review and have 9 additional assets in early development, targeting $50 billion of originator sales. Now let's turn to Slide 16. Finally, as we continue to lead in biosimilars, regulatory streamline is emerging as a powerful enabler of growth and innovation with 27 assets currently in development. Our pipeline targets approximately $200 billion in originator sales, covering 64% of expected loss of exclusivity events over the next decade. Recent regulatory shifts are helping reduce complexity and cost across clinical development, ultimately accelerating access for patients and easing pressure on health care systems. These changes not only strengthen our pipeline, but also open up additional opportunities to expand our leadership position in biosimilars. By embracing regulatory innovation, we are well positioned to deliver more medicines more effectively to more patients worldwide. And with that, I'll hand over to Remco. Please turn to Slide 17.

Thank you, Richard, and hello, everyone. Please move to Slide 18. I'm very pleased to expand on our sales performance, which reflected strong momentum and execution across our business. Our mid-single-digit growth in the first 9 months has comprised progressively improving results as we have moved through the year, with biosimilars again growing by a double-digit percentage. At the regional level, the launches of Tyruko in 2023 and Pyzchiva in 2024 are continuing to drive European growth, while the international results reflected the ongoing success of Omnitrope and Hyrimoz. In North America, the success of the rollouts of Wyost and Jubbonti has been accompanied by the standout launch of paclitaxel at the end of last year. Finally, I'm pleased that we have upgraded our full year core EBITDA margin guidance today, a direct result of the favorable mix of sales driven by the contribution of biosimilars. Please turn to Slide 19. I'm breaking down our sales performance this year. You can see that volumes contributed 8 percentage points to growth, while price erosion returned to a more familiar 3 percentage points. Let's now dive into the business and regional mix on Slide 20. Biosimilars increased as a proportion of total net sales to 29% this year compared to 27% in the first 9 months of 2024. When looking at the Q3 performance, biosimilars comprised a record 31% of net sales, driving the upgrade to our core EBITDA margin guidance. Our regional sales mix has remained broadly unchanged with over half of our business in Europe, where we hold a strong leading position. International represents a quarter of net sales with 22% coming from North America. Please turn to Slide 21. Biosimilars delivered strong underlying growth of 17% in both Q3 and in the year-to-date with launches in the last 12 months having a key impact. Generic sales increased by 3% in Q3 and by 2% in the first 9 months despite the effect of the B2B performance that Richard mentioned earlier. The overall generics result primarily reflected the impact of launches in 2024. Now let's have a look at the performance of our 3 regions on Slide 22. So far this year, our geographic performance has been nicely balanced with the regions having delivered similar levels of underlying growth. European sales grew by 6% in both Q3 and in the first 9 months of the year. Strong growth in biosimilars continued, led by demand by Binocrit and the contribution from the launches of Pyzchiva and Tyruko. International sales grew by 4% in the quarter and by 6% for the first 9 months due to strong contributions from Hyrimoz and Omnitrope. North America sales grew by an underlying 7% in the first 9 months and by a full 12% in Q3 with the ongoing benefit of the 2024 paclitaxel launch accompanied by this year's Lisdex, iron sucrose and Wyost and Jubbonti rollouts. Please turn to Slide 23. Now let's look at our guidance for the year. After achieving a mid-single-digit growth in net sales in the first 9 months, we expect a similar result over the full year. The higher mix of sales in favor of biosimilars means that we now expect a 21% to 22% core EBITDA margin this year. This represents an upgrade from the prior guidance. Outside of guidance, our foreign exchange expectations are unchanged for 2025. We anticipate that if the latest spot rates were to prevail for the rest of the year, we would continue to anticipate 2 percentage points tailwind to net sales over the full year. The core EBITDA margin would continue to face a limited adverse impact of less than 50 basis points, which will be in line with what we had in 2024. If you look at currency movements based on average rates in the first 9 months, we would anticipate an immaterial impact on net sales and on the core EBITDA margin. And with this, I hand back to Richard. Please turn to Slide 24.

Thank you so much, Remco. I'd now like to take a moment to wrap up the presentation on Slide 25. The key takeaway from today's update is another strong performance supported by excellent progress in our biosimilar platform. Our performance is exactly in line with our plans and strategic road map, including the launch program and the pipeline. Looking ahead to the rest of the year, we're preparing for several exciting launches that will support our strong momentum and keep us on track to meet our ambitious midterm outlook. This is more than just performance. It's progress with purpose, positioning us well for sustained and attractive growth. I'm grateful to my colleagues around the world for delivering another excellent quarter, and I thank you all for your continued support and confidence in Sandoz. With this, please turn to Slide 26, and I will ask the operator to open the lines for Q&A. Thank you.

[Operator Instructions] Our first question comes from Harry Sephton with UBS.

So the first one, following the HHS briefing yesterday, there's clearly an intent to meaningfully increase competition in the U.S. biosimilar market. So Richard, I just wanted to get your high-level thoughts on whether you see this as an initial step to potentially commoditize the U.S. biosimilar market? You talked previously about how the U.S. small molecule generics market isn't an attractive market for Sandoz. Just want to get your high-level thoughts on what the implications from this could mean? And then my second question, just on the 2026 launches. Can you confirm your expected timing for the sema Canada launch and whether you're expecting that you'll be in the first wave of generic launches there? And then also just on the relaunched the relaunch of Cimerli, what your expectations are there in terms of timing and also the market environment, given that it will be quite different now that there is an aflibercept biosimilar available as well?

Thank you very much for your questions, Harry. Look, I'm super pleased with the HHS now. We've been working very closely with the AAM and Keren, our U.S. President, to position this. So I think this is a really good move. I'm very excited about that. I also encouraged to see similar moves with other regulators, particularly Canada and Europe. Look, to be brutally honest, if you looked at the number of biosimilars for things like adalimumab, denosumab, I would argue that a lot of the commoditization happens already. So I don't think that it will fundamentally change the framework. This is still an expensive hobby. It's still probably $80 million to $100 million. You still need manufacturing. We always look at this as a global market, not just a U.S. market. You still have the patent challenges. This is just a step in the right direction. If you look, there's something like 150 biologics that either come off patent or will come off patent in the next 10 years. That is a significant opportunity. And clearly, the vast majority of those, we don't see anybody developing a biosimilar. So this move means that we can expand our pipeline over the next few years. We can bring more products to patients. And I'm really, really excited. And then if you think even further out, you then get into ADCs, bispecifics and other more complex biologic products. So this is a huge opportunity, and I'm really thrilled about this moving in this direction. On sema, I've got nothing really more to add than from previous calls. Clearly, our aspiration will be to launch amongst the first wave. As I said, this was outside any guidance we've given for the business. We see this very much as an experiment. I have no idea how this market is going to evolve, how this product will evolve. It's a unique set of circumstances. And it's also noting that nobody has yet has got an approval. So it's way too early to give any more details in terms of timing. But clearly, we would aspire to be amongst the first wave. And similarly, again, we would look to return that to the market in Q1. I've also given the guidance that our intention to be settled on the aflibercept launch. So again, we'd look to launch that in next year. I think the combination of the 2. And so we're pleased that we bring that back for patients sometime in Q1 and then launch aflibercept later in 2026.

Our next question comes from Florent Cespedes with Bernstein.

Florent Cespedes from Bernstein. A quick question on 2026. Could you share with us which are the next biosimilar products that you expect to launch on the different markets? Some color on this would be great. And my second question, on the penicillin situation, what is the next step? What do you anticipate in terms of decision from the European authorities and some color on the time frame?

Sure. Well, I got a lot of the launches that will show material growth in '26 are being launched as we speak, both in Europe. Clearly, we're excited to be launching denosumab for both the major indications in Europe. We're seeing great traction in the U.S., which will clearly flow into next year. We're looking to launch natalizumab in the final quarter, Tyruko this year, which again will flow very strongly and also bring that to a number of the European market -- additional European markets. We're about to launch aflibercept across many of the European markets in the final quarter. And again, launching aflibercept and reintroducing Cimerli in 2026 as well as numerous other launches in many of our international markets. And also assuming that the base business will continue to grow as we're seeing strong growth in the adalimumab market globally and also the Omnitrope market globally. So I think a mixture. But clearly, everything now is in play, everything is approved, and I think we're well positioned to set ourselves up for 2026. Penicillin, I mean, partly, look, it had an impact. I wanted to use this platform to really highlight the critical nature of this product. We're the only vertical manufacturer of penicillins left in the Western world. You've heard my frustration in the past that we sell this product more cheaply than a packet of M&Ms. We're working with regulators and governments, both in the U.S. and in Europe. We recently got the [ Alpha ] memorandum, which was requesting European governments acquire at least 23% of all their antibiotics from vertical suppliers. Our challenge now is we turn that into law, and we execute that. These are critical assets, and it's important that governments understand the role that they play and move that forward. I'm pleased about the memorandum, but now we need to turn that into action. And I wanted to use this platform to highlight the importance of that. It's not material to the overall business. It had an impact in quarter 3, but I think it was important that I use this opportunity to talk about it.

Our next question comes from Simon Baker with Rothschild & Co.

Just continuing on the HHS announcement, a couple of things, if I may. Firstly, Richard, with that lower development cost level that these regulations envisage, what could that do to that $200 billion pipeline size that you have? And on this point about commoditization, I mean, if this were a commoditized market, then each of you would have a 10% market share of adalimumab. And that's obviously not the case. Your share is way, way above that. So I think -- could you just give us your thoughts on the sustainability of -- and also just remind us of your advantages within the biosimilars market in terms of commercial skills and the sustainability of that? And then just moving on to a couple of product questions. I wonder if you could give us a bit more color on Tyruko penetration in the EU. It looks like it's kind of going sideways at the moment. Is that a function of where it's launched? And will that change as more markets come on stream? Or are there any other dynamics there? And for Pyzchiva, you pointed out that the rate of biosimilar participation is faster than HUMIRA. I just wonder if you could remind us by how much, just to sort of quantify that impact.

Okay. Well, thank you, Simon, for really great questions. Yes, I mean, I think the size of the opportunity is still about $200 billion in total absolute. It doesn't really change that. Again, I think let's take a step back. We select our pipeline from a European lens, and we see the U.S. as an opportunity. I know we tend to over-index the U.S. a little bit because of the visibility of the data. So we would never develop a biologic specifically for the U.S., we would develop it for Europe and then clearly file it in the U.S. Otherwise, if you look at the situation with Enbrel, we wouldn't have a business because somebody thinks that a 30-year patent life is somehow acceptable. So you still have all of those challenges. So I think, first and foremost, it's focusing on that. Yes, I think it reduces potentially the cost of development, but there are many other components. We talk about legal. You talk about the commercialization. I mean I'm delighted with our denosumab performance. We're by far the strongest performer of denosumab in the market. We launched first. We had the only Q code. We really knew how to work and position this product. Similarly with adalimumab, we're by far the largest player with by far the best coverage in that market. So I think our commercial capabilities, coupled with our clinical, legal and manufacturing platforms. And then similarly, we see these as global assets. We don't see this as U.S. assets. We're the #1 biosimilar player in Europe. We're very strong. We're seeing strong growth in international. So all of those things. And it's a little bit when you look back, I have a lot of respect for some of the Indian players in small molecule generics. Yet the reality is they're nowhere in Europe because they struggle to build scale. And I think you see a very similar pattern in biosimilars. So I think we're extremely well positioned. We've launched more biosimilars than anybody else. We have a stronger pipeline than anybody else. And clearly, we would see this as an opportunity to further invest and expand and really leverage that strength. Tyruko, yes, I mean, we would look to see growth as we launch this product. A lot of this product is tendered. So you tend to get a rapid conversion and then it tends to stabilize. We will see growth as we both introduce that into North America, and we continue to launch it in other European and international markets as we go into 2026. Pyzchiva, yes, I think it's more of a reflection of clinicians and payers now rapidly accepting biosimilars. I think the days of debate around the acceptability of biosimilars really has gone. And clearly, we see a nice performance with Pyzchiva, and now in a nice position that we're the only company launching an auto-injector across Europe. So I think, again, well positioned to deliver growth as we go into 2026. So pleased with where we are. And as I said, we've been lobbying this from HHS and similar from the European regulators for a while. So I think common sense has prevailed.

If I may add to what Richard has said and particularly on the HHS, I think when we take a step back and we look at the size of the pie, indeed, the $200 billion on biologics and generics is unchanged. But what it, of course, does is that a lot of the biological medication for which no biosimilar has been developed or will be developed because the size is too small, become suddenly accessible. So we think that in the large -- with the large molecule also from a competitive perspective, not much changed. And as we said, we are very well positioned, but we can grab a larger part of that pie. And the competitive barrier is still very high. It takes a long time. So we look very, very enthusiastically because if you then fast forward 10 years from now and you look what part of the pie we can go after, it's incredible. The second part is that the pie once a biosimilar is in the market, has often grown because a lot of medication cannot be used because it's too expensive. When we come in a market, that pie grows. So if you're coming more, we can go after more molecules and the market will grow. It's a gigantic growth opportunity and to put so much effort behind it. I think the additional point versus generics, generics is still with APIs coming from China. With biosimilars, it's a vertically integrated manufacturing process. It's much more difficult. We can produce in Europe. Scale is an incredible benefit, and we have the scale on the commercial, but we also have that on the development and manufacturing. And if I listen to your questions, this part, I just wanted to add because that's why we are so excited, and we think it's just an incredible opportunity.

Our next question comes from Charlie Haywood at BofA.

Charlie Haywood with Bank of America. I have 2, please, for Remco. So the first one, on your initial 24% to 26% midterm margin outlook, you've obviously added 1 biosimilar, 2 private label biosimilar contracts and your biosimilars mix has already reached your 2028 target of 30%, which drove -- partly drove your margin upgrade today. So given that momentum, how are you feeling about this midterm margin target? And is it fair to assume you're trending towards the upper half? And then second one, just on 2026. I think the potential upside from the biosimilar launches, sema, ustekinumab private label and some early relaunch into '26 are well known. But I wanted to ask if there are any headwinds or potential moving parts outside of that, that you would flag into next year? Or is this really a very clean year on paper?

Charlie, thank you for that question. At this point in time, not surprised, I would say that the midterm guidance stays, right? So we expect a mid-single-digit growth in between '24 to '26. And for '26 versus this year, we -- you can expect a continual progressive growth in direction also for the margin. Of course, we are looking also the prior discussions which were asked, right, with the enormous amount of opportunities which are there over the coming years, we, of course, also have a look, how can we capitalize on this. If you have to think about next year's and the one-offs depending on how Just-Evotec develops, if that would come to a conclusion, we will have some additional costs next year related to Just-Evotec. You have to take that in consideration because that was not there before. But we are very happy because on balance, we progressively want to move on. And we want to find the right balance between the short and the long term. As I said before, there's so much opportunity and so much more we can grasp and we find the right balance. And we want this company in 10 years from now to be even more formidable than it is now. And that's what we're working on in the short and the long term. And yes, for the moment, the midterm guidance stands, right, but with lots of opportunities.

Our next question comes from Thibault Boutherin.

Just a question on Eylea in Europe and the launch in Q4. Eight biosimilars approved and ready to launch, it looks very competitive. Bayer is also saying they seem very confident they can hold off to some extent, biosimilars with the switch to high dose. So just if you could comment on your expectations here and how you differentiate in that context? Second question, just on biosimilar HUMIRA. Is it fair to expect another price cut in private label next year? And could it be the same extent as this year? Just if you could comment on the pricing here? And then just a clarification or sort of on Tysabri U.S., you seem quite confident. I think it was not the case to that extent before. So if you could just help us understand the degree of confidence for the approval by the end of the year would be helpful.

Okay. Thank you, Thibault. So Eylea, yes, look, we're very confident of the launch. Look, we're used to competition. Denosumab 8 competitors in the U.S. In Europe, we used to have a significant number of competitors. If you look at ustekinumab, I think it's 11 or 12, and we still took a leadership position. Every originator always says that they're in a unique position to maintain share. Let's see. I think we have an amazing commercial platform and some great colleagues in Europe who I know will execute, and I've seen some of the plans, and I'm very excited about them. So I think we're well positioned to capture a significant share of the market given the strength that we have and the footprint that we have. I think your question on HUMIRA, yes, clearly, look, it's a competitive market. We've always been extremely open about that. And I would anticipate that we -- as we continue to maintain our relationship as an own label or an own label product that clearly pricing would come down next year as we continue to renew our contracts with that provider. So I think probably a similar range to this year. And Tysabri, Tyruko, yes, very confident that we will launch. We've aligned in terms of the JCV assay. And now we're just positioning for the prelaunch phase. And then we -- as again, we're now committed to launch this specifically this quarter.

Our next question comes from Sidhartha Modi at Barclays.

The first one is on your Jubbonti. Like you have had a very, very good launch in the U.S. and obviously, you're on track launching in the Europe. But just wanted to know like have you kind of signed any long-term contracts in Europe and so that you can lock in low single-digit selling price declines or the pricing would still remain under pressure every cycle? The second question is slightly different on competition. Like obviously, on Monday, we saw Cigna releasing a press release and they have spoken about rebate-free PBMs and full rebates to patients being passed on to the patients at the time of drug dispensing and also linking patient cost to lowest available amongst co-pay, DTC and PBM negotiated prices. I just wanted to understand the implication of this change and probably other PBMs would follow suit. So what are the changes that you kind of anticipate from this change? And does this mean anything for volume growth and margins?

So thank you very much for 2 good questions, Sidhartha. Look, Jubbonti and Wyost, I'm pretty delighted with the performance we saw in the U.S., really running really well on to our expectations, maybe a little bit ahead. And again, Europe, it's really market by market. Again, Europe for us is nearly 40 markets. Each one works in a different way, whether it's physician-led and a branded market or tender-driven. But I think, again, we're well positioned to leverage this both in oncology. You've got to remember that we're the largest oncology company in Europe. And I'm also excited in the long term to open up for this product for patients, particularly female patients for osteoporosis. This is an excellent drug, but I think it was prohibitively expensive again, looking to open up that access over the coming years with this. So I think it's got quite a lot of long-term growth in it as well, particularly for the osteoporosis indication. Your question about Cigna, it's a [ fascinating ] I think somebody have to ask direct to Cigna. When you dig into the details, it only affects about 2 million patients. So it's a tiny proportion of patients. Now I think it's a positive move. I think the more clarity that people see in terms of the level of rebating around the market, I think, is a positive sign. So I think directionally positive. In the short term, I think it's immaterial. And certainly, in terms of the number of patients being offered this, it's tiny. I think it's only about 2 million patients in total. So it's a very small step. I'm encouraged about the direction, and I'm always have been encouraged to see more transparency. I don't think it will have any material change to our business, certainly in the short to midterm. But again, what you are seeing is some nice reforms starting to come through. We talked about HHS. You're starting to see price transparency. I think we're being listened to about with tariffs. So I'm actually more optimistic about the mid- to long term. I think we need to see more on patent reform. And again, those things are being discussed. And it was never going to be one thing that fundamentally changes the U.S. market. It's several bits, but I'm encouraged that this administration does seem to be starting to address them.

Our next question comes from Beatrice Fairbairn at Berenberg.

Just on your H1 '25 results presentation, I noticed that there was a target for about 180 new generics launches in full year '25. I suppose could you possibly elaborate on where you are tracking relative to that and kind of what your expectations are for the full year?

Yes, I guess -- sorry, well on track. I think I said in my presentation, I think we launched about 115 of those. It nets out to about 280 absolute launches globally with the vast majority. We don't break them out normally because it's sort of relatively modest launches. I mean there were a couple of standout ones in the U.S., particularly iron sucrose and Lisdex which are having a nice impact, and we're very pleased. But again, I think -- but it also -- we spent a lot of time talking about biologics. When you look at the forward landscape, just about half of the LOE landscape, about $200-odd billion is technically small molecules already. It does include GLP-1s. But there's still a significant opportunity. And so we would continue to want to deliver on that space as well as growing and expanding the biologics opportunity that we see.

Our next question comes from Sophia Graeff Buhl Nielsen at JPMorgan.

Firstly, just how are you thinking about the contribution of additional biosimilar launches to the top line in Q4? Should we anticipate another sequential step-up in local currency growth? And if so, how are you thinking about the growth profile as we head into next year? And then just on denosumab in the U.S., you've mentioned you're delighted with the initial launch. Could you give any more detail on how market share is developing there? What do you expect as we see additional new entrants? And you mentioned an addressable patient population of around 10 million. How much of the volume opportunity do you see is coming from switches from the originator relative to growth expansion in the market from biosimilar entry?

Okay. I think Remco, do you want to take the first one?

Yes. Thank you, Sophia. Overall, we expect Q4 to be in a similar place as Q3 is. If you look at the consensus, correct, which is around 5% for the full year, the consensus sits around 7% for Q4. We did 6% in Q3. So that's something like that you have to take into account, correctly in line with our guidance. The second question, I'll give it to Richard.

Yes. Thank you. So denosumab, yes, I think as I said, I'm delighted with the launch. And I think clearly, launching with a Q code and launching first to market allowed us to work very closely with payers and providers. And we've really seen a strong uptake. Actually, particularly perhaps a little more than we expected in the osteoporosis side of the equation, which actually stands well for the long-term use of this product. And again, I think we're acquiring both new patients, but also switching patients as well. So very, very pleased with the uptake. And also, look, let's also not forget, we launched it in Canada. And there, we took a market share of 65% at launch. So I think really strong execution, well-accepted product and certainly also excited that we're launching it in Europe. So I think some nice growth there that we can see and also as we expand the use, as I said earlier, particularly in osteoporosis.

Our next question comes from Joris Zimmermann at Octavian.

This is Joris from Octavian in Switzerland. I have 2 related to the midterm and also the longer-term opportunities in biosimilars. So first, on the midterm, you mentioned that you have 5 assets in regulatory review currently. So could you maybe give us a bit more detail what about the time lines you see here and how that could shape the midterm biosimilars opportunity for Sandoz? And then related to the HHS press release and the whole discussion ongoing about access for biosimilars in the U.S. Is there specific like indications or biologics that you currently haven't looked at and that you would say are white spots in the Sandoz pipeline that you might take a look again now?

Thank you so much, Joris. I'll answer your second question first, and then I'll come to you. I mean, yes, but I can't really disclose it because I don't want to make my life any harder than it already is with the competition. I think what Remco highlighted is there's a lot of assets maybe in the $1 billion to $2 billion range that economically people deprioritize given the, I guess, the relatively newness of the biosimilar market. I'm super excited that we can really target those, particularly in immunology and oncology because we have a strong platform. We can launch in that space. It's highly accretive. And in many ways, I'd much rather have 10, $1 billion products than 1, $10 billion asset. So I think that's our opportunity. Also looking back, there's something like 40 biologics that no one -- that have come off patent that no one has yet ever developed a biosimilar. So there is way more opportunity than there is financial firepower for any company to develop. So I think we're almost a kid in the candy store in terms of where do we want to go and how do we extract that. So super, super excited about the direction of trial. In terms of short-term assets, I mean, clearly, in the U.S., we're talking about aflibercept, a little bit further out in '29, Ocrevus, ocrelizumab, you've got pembrolizumab, nivolumumab and ipilimumab, all sort of coming in sort of the latter part of this decade. And clearly, on top of that, we're constantly looking at potential BD and strategic partners. So we would -- I would assume, don't be too surprised if we then come back with other products that we would launch in that space as well. So -- but also, you got to remember that '27, '28 is quite a low period in terms of LOE -- so this isn't necessarily a function of Sandoz. This is a function of the market that we don't see many big LOEs coming in that period. So -- but excited about our pipeline. Also we're really excited as we look to expand and leverage that further.

Our next question comes from Natalia Webster with RBC.

Natalia, if you're there, we cannot hear you.

Can you hear me okay now?

Yes, we can.

Perfect. Sorry about that. Firstly, just on Just-Evotec on Slide 34, you lay out the biosimilars under development with them. Are you able to comment a bit more on what the improved yields and cost savings from the continuous manufacturing could mean for margins over the longer term, sort of appreciating some nearer-term costs there? And then secondly, on the Slovenia expansion, are you able to provide a bit more color on how that's going and also around the phasing of anticipated investment that you've announced there?

Perhaps if I take Evotec, do you want to take Slovenia, Remco?

Yes.

Okay. So I mean, look, we talked about -- I mean, we were always excited about this as a technology. We've never been specific about the potential cost effectiveness. But certainly, we see a significant opportunity in terms of speed of development, but then also using the J.POD as a manufacturing platform. Clearly, by bringing it in-house means that it also further improves the margins because clearly, the royalty mixture and everything else that's associated with that and our ability to use and expand the technology for further assets without additional payments also makes it highly attractive as a platform. And then we also then have optionality both to leverage the facility in Toulouse, but then if we so wish, put that technology into other locations around the world. So I think it gives us a lot more flexibility. I'm super excited about the technology. And hopefully, we can give you an update in the not-too-distant future in terms of what our position is there. Slovenia?

Yes. Slovenia, very exciting for us. As you know, overall, we have 3 projects ongoing in Slovenia, one for development, one for the API and one for the fill/finish. All 3 are clearly on track versus the progress. We're also very happy with all the capabilities in Slovenia. As many of you know, from the prior, say, owner of us, there's a lot of activities in Slovenia. So we have been able to get a very capable group of people in Slovenia to handle activities. So everything is on track. We still expect as of '28 to start with the production, so fully up to speed. And clearly, there are clearly also benefits, correct, because it will be fully integrated. Also from cost, it will be state-of-the-art, correct, hopefully, on a later point in time, as Richard said before, the Just-Evotec manufacturing abilities can be taken on board. So we're very, very excited, particularly then looking in the years 2030, 2035 with everything which comes then online that we can, with our scale, very cost efficiently produce the biosimilars going forward. And in that sense, have a very competitive base. So all on track. And yes, more to come in the coming years.

Our final question comes from Urban Fritsche at ZKB.

This is Urban Fritsche from ZKB. Three questions, please. First on HHS, we talked quite a bit about what you might expect. But still, I mean, you know what it takes to develop biosimilars. So would you expect that the existing players predominantly will expand their pipeline? Or would you also expect that quite a number of completely new players, specifically from Asia would also enter the market now? Then second question, also a bit more on the market. We talked a bit about the growth expansion of market. So the addressable penetration or the penetration for addressable population. So can you put some numbers behind that, maybe on historic experience, maybe for biosimilar HUMIRA or Omnitrope, which has been growing for years now? That would be question number two. And question number three, could you talk a bit about the pricing dynamics in the U.S. for generics and then also for biosimilars?

Thank you, Urban. And three great questions to finish on. I mean, look, who knows what our competitors will do in a sense, that's a question for them, not so much for us. We're clear about we see this as a great opportunity. Again, this is a world market. It's not just the U.S. So again, I'd take a step back. We see our pipeline very euro-centric. Of course, we want to launch and bring those products to the market. Clearly, a feature of the U.S. generally -- but I think having a strong commercial footprint, as you can see from denosumab is important. But traditionally, players tend to see this market as a more simplistic market and then they struggle to commercialize those assets in the rest of the world. I think we're uniquely positioned both to perform extremely well in the U.S., but then really leverage and grow our business and pipeline globally. So super, super excited. And I think the exciting thing is, I say, seeing the European regulators, Canadian, Australian regulators all moving into a much more sensible space in terms of data expectations. So then that does present us a significant opportunity. And I think then linked to your second question, which is a nice follow-on. I think the days of when we first launched biologics like Omnitrope, which was the first biosimilar 20-odd years ago, I think the world has moved on. I think we've established ourselves as a credible high-quality supplier. The concerns that physicians and payers have had are really evaporating. And so really, the point there is already on ustekinumab is pretty much in a similar penetration rate to adalimumab, even though ada has been on the market for, I think, 6, 7 years in Europe. So you're seeing a much faster adoption and a much greater exception. And then clearly, what's so cool about these drugs, I mean, Omnitrope is still one of our largest products, 20 years old, and it's still growing. We're great performance of international. There aren't many products in the generics industry where you can say that 20 years on, you're still getting leverage and growth. Similarly, adalimumab, strong growth as we really offer patient treatments. At launch, it was 5 years from diagnosis to treatment for RA. Now it's months. So we're transforming patients' lives, opening up and really saving a significant health care system. And I think that's true to many of the products that we will bring to market over the coming years. The opportunity to democratize and access to these medicines is really, really exciting. We've not discussed price erosion at GX and biologics. I mean, certainly, we've seen, I guess, a more normalization of price erosion. I think roughly around about 3% this year. We always assume 3% to 5% in our planning assumptions. And I think as the market sort of stabilizes in terms of supply, I would expect that trend to broadly continue. So I think our assumption as we go into next year, probably price erosion, 3% to 5%. And I think it's one of the potential headwinds as you think about your models for next year for the business. But nothing dramatic, but certainly, I guess, nothing remarkably one way or the other, but I guess more of a return to normal in terms of pricing dynamics. And then actual specific pricing depends on the market, depends on the level of competition. Obviously, on a drug like natalizumab, we see very little price erosion because we're a sole player in that market. There are others clearly like adalimumab, we have to compete in a sense, economics 101. So really depends on the market and depends on the product. So thank you so much for your final question. And with that, thank you so much for your interest and support in Sandoz. Really delighted to take you through our results and look forward to connecting with you over the coming weeks and months.