Earnings Call: Q4 2015

Feb 4, 2016

All right. Good morning, good afternoon, everybody. Thank you so much for joining us today. I'm Pascal Soria, I'm the CEO of ProZeneca. Welcome to the full year Q4 twenty fifteen results presentation for investors and analysts. We are here live in London, and I know that quite a number of you on the telephone, on the webcast. There is a webcast on arzonica.com, and the presentation is actually posted online for those who want to download it. I'm joined today by Luc Miff, who is here, our Executive Vice President, Global Portfolio and Product Strategy, Global Medical Affairs and Corporate Affairs. Sean Bohen is our EVP for Global Medicine Development and is our Chief Medical Officer. And he also is with me back in line with our CFO. In addition, we have Mondherme Rajuby in the room, Head of Oncology in Global Portfolio Strategy, who can also help us answer some of the questions that oncology may have. And we also have a number of key members of the Antoinexiga team here from IR and some others as well. It's really great to see so many of you here today despite a very busy reporting season. I'm sure that you've been extremely busy in the last few days. We look forward to taking you through the results and our achievements in 2015. If you may if I may ask you, if you could turn to Slide 2, please, this is our forward looking statement. And then please turn to Slide 3. The plan today is for me to provide a short introduction and then I hand over to Luc, who will give you an update on our growth platforms and the launch of new oncology as a new growth platform, the number 6. He will define what we call new oncology for you. Marc will cover the financials and the guidance, and I'm sure we have a lot of questions around 2016 overall. Sean will provide a pipeline and an update on our news flows for this year. And I will end with concluding remarks before we take your questions. We plan to have about 40 to 45 minutes for the presentation and a similar amount of time for the Q and A. So up to about an hour and a half in total. Please turn to Slide 4. Both are the highlights. Total revenue were up 1% to $24,700,000,000 in the year. We're pleased that we were able to achieve this steady performance and deliver on our upgraded guidance, marginally above our upgraded guidance. The achievement was, 1st and foremost, based on our growth platforms, they now represent about 57% of our total revenue and they grew by 11% last year. The performance of the growth platforms was supplemented by the external revenue, externalization revenue, as you know, that arise from the increasing R and D productivity and our decision to partner some of the projects that are not part of our focus. And essentially, what it enables us to do is to increase our focus on our main therapy areas. Core EPS was up 7%, and this is underpinned by the decline in SG and A costs. As we guided you, we will achieve. We delivered a 2% reduction in full year SG and A and 11 percent reduction for the quarter 4. Importantly, the pipeline continues to progress and we had positive news flow for the year with 2 approvals and 2 regulatory submission acceptances in Q4. If I stay on the pipeline, 2016 will be a very busy year, as you know, with lots of news flow that we're expecting really news every month, in fact, on average, almost every couple of weeks. On the financial side for 2016, at a constant rate, our total revenue is forecasted to decline by low to single digit percentage. As you know, we're still dealing with this massive parent expiry issue that we have to manage. And core EPS is expected to decline by low to single digit percentage as well. This guidance incorporates the dilution coming from the Acerta and the ZFarma transactions that we announced late last year. And as well as, again, these measures are at constant rate. Marc will give you more details later. So if you turn to Slide 5, this is the pipeline news flow and we delivered strong news flow in Q4 with 1st and foremost approval for Tagrisso in lung cancer in the United States. And as you know, we just got approval in the EU a couple of days ago. Tagrisso is really a cornerstone in our oncology pipeline and our lung cancer strategy, and we really try to bring this new medicine in a record time. I never stopped mentioning internally that it took us 32 months from First in Human to approval. This is a record development time for us as a company and we believe actually a record in the industry as well. On top of it, we also got approval for ZURANTIC in the U. S. We got a positive opinion for this product in European community. We got positive opinion also for Bredic based on the Pegasus study that support an indication in patients with a pharma carcinoid infection. And finally, we obtained regulatory submission acceptance for mordalumab in psoriasis in the U. S. And EU, and we are preparing to launch this product in U. S. Together with our partner. We actually submitted ZF9 in the U. S. For hyperkalemia. This development really concluded a successful year for our pipeline with a couple of setbacks, which we have to recognize, including selimatidemia in uveo melanoma that doesn't have an impact on our core program in lung cancer. That certainly is a setback from this indication. And also a setback that Sean will cover in more details a little bit later relating to tax ADAPA, and it's only a timing issue really we think we have a way forward. In 2016, we expect 4th of our regulatory submissions for new products. Please turn to Slide 6. From a financial viewpoint, as I said, revenue was up 1%, gross platform, 11% and the total revenue was up 2% for the quarter, again, 11% for the growth platform. So we had a benefit from externalization revenue, as I mentioned before. Core EPS in Q4 was up 22%, which really reflects our ability to deliver on our core SG and A cost reduction as we committed we would do minus 11% in the quarter. Core R and D investments and in the year are the point that will allow us to keep it at similar level going forward into 2016. We leveraged revenue down the P and L, and you see here, as I said, the core EPS results. So to sum up, we've been able to continue the core R and D investments, reduces G and A cost, and we'll continue doing this in 2016. Our cost discipline will be essential as we enter a year that is certainly challenging as we lose the patent protection on Crestor in the United States. But that, I would like to remind you, will start in May, the 1st generic introduction we expect in this guidance will take place in May. Over the medium term, the performance of our growth platforms and upcoming launches should, together with the increasing cost reduction, should help us offset the short term headwinds that come from those Panamax virus. With this, I'll hand over to Luc. Thanks, Doctor. Kahl. So it's a pleasure to present our product sales results today. Please turn to Slide 8. So I'm going to spend a few minutes just talking through the growth platforms which grew across all areas. This is encouraging naturally because it's on the back of strong performance across these platforms, and these platforms are critical to our long term goals. I'll review each of them individually and in more depth later, but broadly respiratory was driven by strength in emerging markets and by products in the U. S. And EU. Brilinta continued to enjoy a steady uptake following the positive PEGASUS data, and the strong diabetes performance was driven by the well executed product launches and the benefit of the global AstraZeneca footprint. Our emerging markets business showed notable strength in China and also in key markets outside China. And finally, Japan, you see at the bottom there, maintained growth in market share and product sales in what was a competitive environment. If you could just turn to the next slide, we've got an addition. You can see from our announcement that we issued this morning, new oncology has been added as our 6th growth platform to ensure clarity. New oncology is defined as worldwide sales of Lynparza, worldwide product sales of Tagrisso and also U. S. Product sales of ARESSA. And of course, naturally, as we launch products such as develimumab and tremelimumab, these naturally will be incorporated into this measure. So these medicines are instrumental in driving the next phase of the growth in the years to come. Next slide, thanks. So if we start on respiratory, the franchise grew by 7% 2015, and this was driven largely by a combination of emerging markets and also new products in the U. S. And EU. Supercore itself declined by 3% in the full year. And in the U. S, product sales were up 1%, with volume growth being offset by access and co pay assistance. In Europe, the business was impacted by analogs. We have 3 analogs in the U. S. In the EU right now, and these did place some pressure on price, as you would expect. In total, despite a highly competitive environment, Symbicort increased global market share, with emerging markets now accounting for nearly 12% of total product sales and representing the biggest element of absolute growth. Emerging markets continue to and you can see this in the middle the chart, we've put here the asthma cases, they continue to represent an opportunity for AstraZeneca with many untreated patients in both asthma and COPD. If we look at the new medicines, Tudorza and Aclara, these both delivered encouraging progress in the U. S. And also Europe. And they're also the fastest growing LAMA bronchodilators in some of the EU markets where it was launched. And if we look at that, ECLRIA is now available in 35 countries. And DuoClara, our LAMA, LAMA bronchodilator is now available in 21 countries, with planned rollouts in an additional 20 markets 2016. So we're at the start of a journey with these products. We're launched. We've had good success. This market has achieved around this medicine has achieved around 15% market share in the LABALABA market. In the Q4, we also entered into an agreement to acquire Takeda's Respiratory business. This was a very good, elegant deal. The transaction included the U. S. Rights, the non U. S. Rights called Dallas, called Daxus, outside of the U. S. And this provided a number of synergies in a number of markets and, of course, was immediately accretive. Next slide, please. So for Brilinta, we're pleased to report that sales were up 44% in the full year, with particular strength in the U. S. And emerging markets, led by China, in the case of emerging markets in the U. S. The continued growth was supported by the launch of the 60 milligram. And if we look at new to brand prescription, you can see we started out at 8% and ended the year at around 12% or close to 12%, which is a great result and one we're pleased with. Looking forward, we anticipate that as physicians are educated on the new label and they also see the progression of guidelines in the U. S. And ultimately Europe, that should support the product. In the EU, the CHMP's positive opinion on the 60 milligram dose is expected to deliver a label claim, which we're confident will support the ongoing usage of the product in a wide range of high risk patients. In the coming weeks, we're also on track to launch in a number of other markets with the Pegasus indication of the 60 milligram. If we look at the international region, just the international region is emerging markets combined with countries such as Canada and Australia. Our share gains have been reflected in volumes. And if we look at that numerically, the growth has been 7x the market growth rate for Volenta. And later on, Sean will take you through what promises to be a very busy and exciting year for Brilinta in terms of outcome studies in particular populations. Next slide, thanks. If we take some time to look at diabetes, I think it's very fair to say that the franchise delivered an impressive performance at 26% for the year. This was really driven by Farxiga and the Bydurean pen. In emerging markets, diabetes sales were up 76%. You can see that's the block from second to top. And the growth of the portfolio was encouraging as we faced what was an increasingly competitive marketplace, but we had new product launches and ongoing pricing pressures. In the EU and international markets, Forxiga and its family led the SGLT2 class share by volume, And we also led with dynamic market share in Japan. The U. S. Did experience some competitive pressure and market share pressure, but as we look into 2016, and for those who have seen the recent figures, we're off to a good start. We expect that improved pulmonary access and favorable changes in patient assistance programs will support the product. By DURIN, overall, we had growth of 35%, and this is actually growing if you look at globally faster than the global GLP-one market and actually reflects a lot of faith in the pen. And this is a pen which is now available in 18 countries. Again, it's a relatively narrow base that we're talking about here that will expand. And if we look at the revenue in those countries, the growth is driven by switches from other GLP-1s rather than being dominated by erosion of the tray. So all in all, I think this is a strong performance across the regions in what remains a very attractive but competitive market. Next slide, thanks. For emerging markets, the title says continued high growth, and it was another good year, double digit growth throughout last year. You can see China at the bottom of the chart there maintained growth at a slightly lower rate. But the underlying dynamics are positive, and our expectations are that we'll continue to deliver strong growth, and we remain deeply committed to furthering innovation in China. Interestingly, we now have 3 fast track or Class I programs in China. You know roxadustat. We've also announced a partnership in biologics with WuXi. And also, we have an EGFR inhibitor, which was discovered in China and Shanghai, which is progressing nicely in lung. And as you may recall, we recently announced a major long term investment program in China, which will cover the full biopharmaceutical value chain, and this ranges from research right through to manufacturing, which supports this commitment. Also, there was notable growth outside of China. You can see on the chart Brazil, 16% Russia, 21%. And with many other markets, we were able to maintain single high digit rates. The emerging markets growth was also, if you look at products, split across all therapeutic areas. So respiratory was up 25%, Brilinta was up 91% in emerging markets diabetes up 76% and finally, oncology up 18%. So I think that's fair to say that's a very strong balanced performance across the board in emerging markets. We're actually tracking above our long term target, as listed on the right hand corner of this slide. So next slide, thanks. So if we pivot to Japan, our business in Japan maintained solid growth. We had 8% in the quarter, 4% for full year. This growth in medicines in Japan was driven by Symbicort, Crestor and Nexium. And you can see in the middle of this slide, they all made very good progress in 2015 and actually maintained leading market share positions in what was, in each one of these categories, a very competitive segment. There were some fluctuations during the Q4, but we detailed these in our press release, and these actually have no impact on the good underlying trend, which is favoring our business in Japan. On top of a solid and established portfolio in Japan, we are now actually in the process of preparing for the next wave of launches. So during the first half of twenty sixteen, we hope to achieve approval of Brilinta. And also in the same time frame, we are very excited to target an approval of Tagritto, which is, I'm sure you realize, is just a few months after the FDA and EU approvals. And we actually expect that Tagrisso will benefit from our existing presence and infrastructure in lung. And naturally, it represents quite an opportunity because of the prevalence of EGFR mutations in Japanese patients. Next slide, thanks. I think that's a good segue to the final part of my presentation, which is new oncology. If we go through the products, Lynparza continued its strong trajectory 1 year after approval. Globally, we've been able to treat around 2,550 patients through commercial supply, And the medicine has actually been approved in 24 countries. We've launched in 15, and we've got reviews ongoing in 13 countries. So again, that's a cascade of numbers. I think the key thing to take out of this is we've actually started our regulatory journey with Lynparza, and there's a lot of activity to come with this product. Another thing that we follow very closely is actually BRCA testing rate. It's a good barometer in terms of enthusiasm around the product and intention to describe. If you look at the U. S, around 2 thirds of patients in 3rd or 4th line are aware of their BRCA status. If we look at Europe in second line, it's around 50% of patients already aware of their BRCA status. Now just to put that in context, if we went back 1 year in Europe, it was only 10% of patients were aware of the status with Lynparza. So also, things are not standing still. As Sean will explain later, 2016 will actually be a very exciting year for the news both for Lynparza. If we turn to Tagrisso, which launched on the 13th November in the U. S, we actually shipped and launched 6 months after that. And as you know, and as Doctor. Gail has referred to, we bought Terrissa to patients in record time, and now we're in a position to offer a very effective treatment for second line lung cancer patients. And we're also encouraged by the inclusion, and it was a rapid inclusion, in the NCCN guidelines for Tagrisso within 1 week of launch on the market. And we're going to be very excited and look forward to giving you an update on a regular basis on the progress we're making with LYNPARZA and Tagrisso. These naturally will form the initial backbone of our new Oncology portfolio. And these launches, along with the growth drivers I've just taken you through, ultimately underpin our performance, our positive performance in 2015. And with that, I'll thank you, and I will now hand over to Mark, who's going to take you through the financial highlights. Thanks, Luc, and hello, everyone. I'm going to spend the next few minutes taking you through our performance in 2015 as well as our guidance for 2016. If you could please turn to Slide 17. Total revenue grew by 1% in the year, marginally ahead of our revised guidance. Our investment in R and D was supported not only by the growth in the top line, but also by 1 percentage point improvement in the gross margin and a 2% reduction in core SG and A cost. As you may remember, in 2015, we committed to a reduction in core SG and A cost by absolute value and also as a proportion of total revenue. Our improved R and D productivity and the increased focus on the main therapy areas meant we could also deliver over $1,000,000,000 of external revenue and $1,500,000,000 of other operating income. Further down the P and L, core EPS was $4.26 up 7% on the year, which included a growth of 22% for the 4th quarter. The Board remain committed to a progressive dividend policy and have declared a secondary dividend of $1.90 per share, bringing the dividend per share to the full year to $2.80 for the full year, in line with previous year. As you know, we guide at constant exchange rates, and we anticipate a decline in total revenue in 2016 by a low to mid single digit percentage. We also anticipate a decline in core EPS by a lowtomidsingledigit percentage. The above guidance incorporates the dilutive effect arising from the Acerta Pharma and the S Pharma transaction announced late in 2015. Further, it is important to note that we may see greater fluctuations in the quarterly earnings performance this year as a result of the anticipated loss of Crestor's credibility for May. I'll take you through more details on our guidance as well as our future capital allocation priorities in a moment. If you could now turn to Slide 18. Looking at other highlights in the P and L. Encouraging progress was made in the year in the cost of sales. Our mix of sales is changing, and we're also making inroads into delivering manufacturing efficiencies. The increase in core R and D investment in the Q4 was outweighed by 11% reduction in core SG and A costs. We plan to further reduce core SG and A in 2016, and we have further opportunities to take out material levels of core SG and A costs. Our core tax rate was 16% in the year, in line with the comments I made a year ago, essentially 16% to 20% range. I anticipate a similar 16% to 20% range for 2016, depending on the eventual geographic mix of profits. This is to help you with the modeling. If you can now turn to Slide 19. I'm encouraged by the progress in improving both the core gross profit and the core gross margin. The data on the chart excludes any impact from external revenue and illustrates the strength of the underlying business. Our gross margin increased by 1 percentage points in 2015. And despite the increased investments in core R and D, the operating margin also increased by 1 percentage point to 28%. We are approaching high level of core R and D investments. And as you can see in the lower chart, oncology is now attracting the largest share of our R and D budget. In fact, we have doubled our absolute investment in oncology since 2013, in parallel with our focus on the other main therapy area. At this high level of investment we have reached, we'll give us to anticipate a similar level of core R and D spend in 2016. Please turn to Slide 20. Core SG and A cost reduction continues to be a key focus for the business. We have made good progress in 2015, and I'm pleased that we delivered on our commitment in 2015. Core SG and A cost declined by 2% as an absolute value and by 1 percentage point relative to total revenue. It was noting that core SG and A declined by 11% in the 4th quarter. In 2016, we are committed to materially reduce rates. We do this by continuing to focus on areas such as reducing third party spend, optimizing various function and processes and focusing on sales and marketing effectiveness. Please turn to Slide 21. I'd now like to turn to 2016, a year of challenges but also real opportunities. We know there are 2 clear pressures on the business when we think about guidance, namely the loss of exclusivity for Cresco in the U. S. From May plus the dilutive effect arising from the transaction we announced before the end of the year. This dilution will not only impact the financial expenses line. We will also incorporate 100% of the R and D cost of AFFO with only a minority of those costs falling back out through non controlling interest. We have, however, 4 very clear positive that we have baked into our guidance. Firstly, Luc has just talked to you about the strong and consistent impact of the growth platform. In a moment, Sean will take you through what will be a very busy year for the pipeline and our launch program. Thirdly, it's worth bearing in mind not only the milestone from our program on externalization, there will also be an increasing level of recurring milestone and royalty income arising from agreements signed in the past. This is in line with our long term business model. Lastly, the key message we take away today is the opportunity to take material level of core SG and A cost out of the business in 2016. All of these factors are within our control. This is why the adverse currency movements that we expect are not included within guidance as per our usual practice. Please turn to Slide 22. Looking at the specific guidance for 2016, which is at constant exchange rates, and we expect a low to mid single digit percentage decline in both total revenue and core EPS. Outside of guidance and using average January currency rates, the adverse impact on total revenue and core EPS from currency would be about 3% in 2016. We will update this number as the year progresses through a few models. Finally, I want to be clear about our capital allocation priorities. This year, we'll continue to strike a balance between the interest of the business, our financial creditors and our shareholders. After providing for investment in the business, supporting the progressive dividend policy and maintaining our strong investment grade credit ratings will keep under review any potential investment in earning of accretive opportunities. Thank you for listening, and I will now hand over to Sean. All right, great. Thank you, Mark, and hello, everyone. Please turn to Slide 24. 2015 was a good year for AstraZeneca. This slide highlights the key milestones, including Phase III readouts, regulatory submissions and regulatory approvals. The favorable outcomes are colored in green. The unfavorable ones are in gray. Clearly, the favorable events far outweigh the unfavorable ones. I will speak specifically to one of the gray boxes, which is Saxodapa and the complete response letter. In the first half of twenty sixteen, we now expect to make a new U. S. NDA regulatory submission for the fixed dose combination of saxitelixin and dabagliflozin. This decision is based on recent positive interactions with the FDA. In essence, we plan to submit additional clinical data for Saxodapa from a trial that is now completed. The key highlights were the 6 approvals, including 2 new medicines, Tagrisso and XERAMPIK. We look forward to continuing this momentum in 2016 to deliver on the pipeline and keep you updated on our progress. Please turn to Slide 25. Next, I would like to review some of the late stage highlights in the main therapy areas during the Q4 of 2015 and early into this year. Starting with Rhea, the SYMBOKORT Lava safety post marketing trial was positive. XERAMPIK received approval in the United States and a positive CHMP opinion in the EU. Bradalumab received regulatory submission acceptances in the U. S. And EU. And exciting anofrolumab Phase II results in lupus were presented at the ACR conference in November. In CVMD, Bralik received a positive CHMP opinion in the EU for the post MI indication and ZF9 received regulatory submission acceptance in the EU. Finally, for oncology. We received breakthrough therapy designation for LYNPARZA in particular forms of prostate cancer. Tagrisso was approved in the U. S. And just a couple of days ago, also approved in the EU. And the ADAURA adjuvant trial was also started. As for durvalumab, we do not plan any regulatory submission for monotherapy use in PD L1 positive 3rd line non small cell lung cancer, which is in line with our previous comments in December. During the quarter, we achieved 1st patient dosed in several durba plus tremi combination trials: NEPTUNE in first line non small cell lung cancer Eagle in second line head and neck cancer Castrol in first line head and neck cancer Danube in first line bladder cancer and ALT in second line pancreatic cancer. These trials are key programs for the successful development of our IO combination strategy. On to Slide 26. For 2016, we expect continued strong news flow from our advancing pipeline, including regulatory decisions, regulatory submissions and key data readouts. If we only focus on events through the first half of twenty sixteen, for regulatory approvals, we expect to hear back on Zirampic for gout in the EU, PT003 for COPD in the U. S, ZF9 for hyperkalemia in the U. S. And Tagrisso for lung cancer in Japan. As for key regulatory submissions, we expect to submit Brilinta in stroke and resubmit Faxadapa for type 2 diabetes in the U. S. As for key data readouts, we expect benralizumab data for severe asthma, Verlinta for stroke, Lynparza for gastric cancer and trimilimumab for mesothelioma. As you can see, there are many key news points expected in the coming months, and we look forward to updating you on our progress. Please turn to Slide 27. Finally, I would like to walk you through a few measures of R and D productivity. Starting with the number of publications as an indication of early science recognition, we had 3 97 publications in 2010, growing to 552 in 2015. As the number of publications has grown, so has the percentage of those considered to be medium and high impact. Next, looking at the number of programs either in Phase II or under registration, we had 7 in 2010, growing to 15 in 2015. Our late stage portfolio mix is shifting from primary care expected number of new molecular entities and major life cycle management submissions through 2018. As you can see, there will be a strong flow of anticipated submissions that will expedite unlocking the value of the pipeline. The goal for 2016 is to advance the pipeline, to bring more differentiated medicines to patients and to live up to our promise of what science can do. And with that, I would like to hand back to Pascal for his closing comments. Thank you, Sean. So please turn to Slide 20. I will quickly summarize the results today very quickly, so we move to the Q and A. Revenue was up 1%. Growth platforms, importantly, were up 11%. Our core EPS was up 7%, which reflects that we delivered on our commitment to reduce SG and A costs, and we were able to maintain the momentum in the R and D investment. So our guidance is low to mid single digit percent decline for both revenue and core EPS, and the dilution is of the acquisitions we made late last year included in this guidance as covered by Marc a minute ago. Sorry about this. This microphone is falling. So I think really what this reflects is that we are on track with what we told you we would do. In fact, by and large, we believe that we are ahead of what we think we thought we would do 2, 3 years ago from a pipeline viewpoint. The only new development that we certainly didn't expect, I don't think anybody would have expected quite frankly is the negative development in the last 15, 16 months on the currency front. And this really represents a massive headwind for us like for many other companies that report in U. S. Dollars compared to what the exchange rates were in 2013, for instance, we're losing more than $1,500,000,000 of profit in 2016. So the fact that we are able to still deliver the $4.20 at actual exchange rate in 2015 is a reflection of the strengths of our business. If we turn to Slide 30 before we end, just wanted to reflect on our journey. We just finished the first phase of this journey. We started early 2013. We're building our pipeline, 3 years ago, we had almost nothing in oncology. 3 years ago, we had almost nothing in oncology. Today, we believe we have one of the best oncology portfolios in the industry. We're also trying to build a very strong business in cardiovascular diabetes complemented with the acquisition of ZS Pharma in kidney disease. And finally, respiratory also 3 years ago, we only had Symbicort that was facing patent expiry, and now we believe we have a pipeline that certainly will take us forward over the next 2 to 3 years and position us well in this respiratory disease area. So we believe we have 3 very strong businesses and a strong pipeline. Now the consequence of this though is that it is certainly requiring us to focus very much on these 3 core business And so we have brought this laser like focus on those 3 businesses, which is accelerating, if you will, our process of partnering or divesting some of these non core businesses. And we've done that in 2015. And in fact, each time, we have been able to find very good partners that will turn some of those products into great successes. We believe it's certainly better than we could have done it ourselves and also save us having to build infrastructure. After this the next 2 years, where we're going to have to face very substantial headwinds coming from those talent expirings cost of next year on Seroquel, we still expect a very strong, very rapid period of growth in 2018 and beyond. So I think I wanted to leave you with this message here that we are still committed to our long term goals. We still believe we can achieve 2017 sales all in line with 2013, and our $45,000,000,000 goal is still very much part of everything we are targeting. So very good progress made across the pipeline. Of course, as I said, currency is a moving target very much. Who knows where they will be? We know that using January's currency rate, we have a minus 3% negative impact on our guidance, but we don't know what where those currency effects will go. They may improve, they may further decline. We suddenly will do our best to mitigate the currency impact and still very committed to achieving our EPS goals very much so. The point is we can't totally predict where these currencies will end at the end of the year. So thank you very much for your attention, and I'll now open for questions, both here and on the front for those. For those who ask a question, please, if you don't mind, ask one question at a time. Another question with 3 or 4 parts, but one question with maybe 1 part or 2 parts maximum. Please go ahead, Sachin. Maybe I'll kick off with where you left off. So the 420 floor has been sacrificed within reported guidance. Just wanted to understand what you felt that signals. Is it greater investment? Is it less certainty in 1 offs? Is it just FX? And given the lack of earnings flow, essentially, from Marketing Now, when do you see profit earnings? Yes. I mean, I don't think we've said that it's a good question actually, Sachin, but I don't think we've said there's no earning flow. I think we've guided to the range of outcomes that we see are possible, but we're still very much committed to the to delivering on this core equity as goals we have. And I think really we should completely separate guidance from what our goals might be from a compensation structure viewpoint. Those are separate issues. The guidance actually reflects what we see moving forward and includes the dilution from the acquisitions. As I said earlier, we still very much are committed to this EPS goal. The biggest issue for us is actually the currency. That's really the biggest thing we cannot predict. So at constant rate, we believe we are around the 4.20, and we certainly very much believe we are going to work hard to achieve it. The question for us is really currency. Hopefully, that answers your question. If not, you can come back to it and ask it differently. I'll ask it slightly differently. A similar theme, which is James Gordon from JPMorgan, which was just going below the 4.20 and below the 1.5 times cover, should we think of it as a one off factor for this year because it's part of the deal dilution? Or is it something that could be quite the same because it looks like 2017 is probably a tougher year than 2016. You got a full year of no Crestor, the full year of no Nexium. And I don't think the new launches are going to make that much difference by then. So is it something where you hope just to get a one dispensation for this year? Or could it be the new normal that we are below that level? We haven't said we have not talked about dispensation. We've given your guidance at constant rates and certainly, our goal is still to bottom up this EPS. 2017 is clearly still a challenging year. Having said that, we believe that some of those launches will rapidly generate additional profit. We also believe that as we move forward and as the sort of launches, if you will, of products like Brilinta, diabetes and all those natural, then the need for SG and A is going to be less as a percentage of sales. So we believe we can still manage the SG and A down. We think there is substantial reduction in SG and A for us to achieve. The question is at what speed do we achieve this. And to achieve it too fast may actually frighten the top line growth. But we believe over our 2 year, 2.5 year period, we certainly can achieve substantial reduction in our SG and A. And that's really what we're going to manage to try and protect the EPS. And the way we protect EPS will be a mixture of, as we've said before, a mixture of SG and A reduction and delivering on this externalization Basam Muni from Morgan Stanley. So another question on the guidance, I'm afraid. The credit rating, does that assume that you have reached the limit in terms of potential dilutive deals? And so now if you want to do something, it has to be creative and no more dilutive. And just back to the SG and A comment, you reduced by EUR 1,000,000,000 SG and A spending in 'fifteen. Is that ballpark level of EUR 1,000,000,000 achievable again in 'sixteen? So Marc, maybe you want to cover the credit rating. And I mean, the SG and A, as we've told you before, we're not going to give specific numbers. But you can see the SG and A as a percentage of sales, we do recognize it as relatively high relative to our peers. So the question is not so much can we reduce it because the answer to that is yes, we can reduce it. The question is at what speed do we achieve that without impacting the top line in the near term. And that's really what we we're on a gliding path in terms of managing this SG and A, but we suddenly will reduce it over the next 2 years at a substantial rate. Now do you want to cover the I think we positioned the credit rating and the dilutive impact of the acquisition announced at the end of last year. First of all, as you know very well, the credit rating agencies tend to have an horizon of planning, which is more short term than maybe equity investors. So what we need to understand the rationale behind those 2 acquisitions. And when I mentioned it to acquisition, I mean Acerpa and Verde Pharma. In the short term, and we have indicated there would be a moderate short term dilution, but we have also emphasized the very strong impact on the operating leverage in the longer term, and that's obviously rationally the reason why we made this acquisition. So should we are looking at the credit rating, you would probably look more short term, but we need to look at the also the long term perspective for equity investors. And then the more exact question on the rating. We you know that the credit rating agency is down by 1 notch for both the 2 main credit rating agencies. But this does not mean the reason why we look at accretive opportunities is not because of the rating. It's more because we also need to protect our cash flow and protect the other balance of the company. And also because we believe we finished with well, we finished. We have rebuilt our pipeline to a great extent. And really, the focus has to be on execution, progressing it, delivering it and also launching those new products. So this is really what our efforts are. Thomas reminds me that I should ask questions on the phone as well. So if you allow me, I'll ask one question on the phone and return to the room in a minute. Andrew Baum at Citi. Andrew, do you want to ask your question? Yes, good morning. A question for Mark on your tax rate outlook for next year. Obviously, the contribution from U. S. Based products will be diminishing function of Prestor. And I assume the product was impacted by the patent box probably increasing. So should we expect there's any downside to that current 21% forward tax rate in 2016? I don't know if it's at your end or our end, but it's hard to hear. I don't know, Marc, did you get the We didn't get it on all. Can you hear me now? Yes, it's a bit better, yes. Okay. Let me try again. The question was the core tax rate for 2016. Given you're losing the Crestor revenue in the U. S. With assuming a higher tax rate, given the patent the products impacted by the patent book should be larger for next year, should we expect there's further downward pressure on the 21% core tax rate that you posted for 2015? I'm not absolutely certain I understood the totality of the question, but I think you're asking the guidance or the indication I provided on the range of tax rate, corporate tax rate for 2016. And I think you're asking whether 16% to 20% is for which we provided in 2015 is the same for 2016. So I'll just repeat what I said in my talk, as we expect the rate the corporate the core tax rate to be between 16% 20% in the same manner as it is for 2015. Although it is correct that our new products, many of them are in the patent box and will derive a benefit from this from a tax viewpoint, but they are relatively small in the grand scheme of things for the time being. But certainly, over the next few years, maybe a little bit this year but mostly the years after will drive a benefit. But it's probably a little bit ambitious to expect the tax rate to drop in 2016 because of the PatentDocs. So I think 16 to 20 is probably the range that you should expect. And I think I mentioned a caveat in my presentation that obviously, the core tax rate depends on the geographic mix of where the profit is realized as we need to pay taxation in all the countries where the general profit, so within that range. Alex, on hand, do you want to add? A completely different question. On Slide 15, you did show some relatively steady uptake of Tagrisso. When I look at the IMS data, it looks a bit different. It looks like a very fast uptake in the first three weeks and a bit more steady then. So independent whether this data shows the right thing or not, the question I have is what do you find in the marketplace in terms of the challenge of having to rebiopulize patients? How widely is that done? Is there a long way to go? You mentioned the BRCA and status, how much there was to go? And can you tell us roughly where you think we are here in all the 3 key territories? Yes, sure. So this is a high degree of understanding the product, I think, particularly in the U. S. Because of the dynamics there. Around 10% is the testing rate for T790M mutations in the U. S. Right now. You're right. The key challenge is that second biopsy. But there is actually the feedback that we're getting, and again, it's early days, that there's a high enthusiasm and interest in doing that and that physicians can explain it to patients and make the case to do that because they themselves are convinced. Of course, if we look in the midterm, the promise of the ctDNA test is attractive because, of course, then you're really focused on resolving the false negatives, and you just lower the barrier to initiating the treatment, then ultimately, of course, if we can have data in first line, then it's a simpler discussion. So net net, very positive support for us. I think the reality is in the U. S, we have a much cleaner area to operate than we were expecting, and we really have the market to ourselves for some time. Yes. I mean, the thing that came to mind, of course, is that BRCA testing in the U. S. Is at a relatively high rate because, of course, there was a broader consequence of the test, which in terms of family members, so there's a higher expectation and demand for the test. Historically, with the T790N test, there was no clinical strategy that can be derived from that. Now we've supplied that. We have 3 labs in the U. S, which are Centers of Excellence, so that infrastructure is in place. Historically, we've had experience with EGFR testing. We'll now do that through Europe and also emerging markets. We're very actively involved in that infrastructure in Hong Kong and Macau. So sorry, Japan as well. And we've got a team in place right now, which is a very, very good team targeting lung physicians. And of course, remember, we had a team in place, which is really why we bought back ARRESSA in the U. S, which is to essentially have a running start for the product. Just trying to follow some other, but hopefully, I get it right. Thank you. It's Matthew Weston from Credit Suisse. Hopefully, the last guidance question. You were very kind in setting out expectations for externalization, and thank you for that. But in 2015, you generated about $1,300,000,000 from product divestitures included in other operating income. So if you could set out what's your expectation for product divestitures in 2016 that's baked into guidance? And within that, have you identified the product for sale? Have you started discussions? Or it's just an aspirational goal that, that will help you modulate the P and L this year? So I would like to bring you back to 2015. I believe that at the same in a different place, but at the same time last year, we were having the same level of discussion on how you're going to deliver your guidance for 2015. And I think I answered then that it would be a conjunction of 2 factors: the reduction of SG and A expenses, and I think you now see that we have delivered on this reduction, both in absolute terms but also in percentage. And I also said at that time that we would generate revenues through external revenues. And the question was right then that what percentage or both. And my answer then that it would be relatively 2 similar factors, not be a 10%, 90%. So I think we can use the elements of 2015 to project to some extent for 2016. One indication I can provide you that in 2016, there will be more of it. If you take the total revenue, the expansion revenue, the total of external revenues and other income. So we're going to be a more pronounced effect for this impact. Okay. So just to clarify, if I take the €1,000,000,000 of externalization income in 2015, add the 1 point 3,000,000,000 of onetime other operating income, it will be greater than that 2,300,000,000. However, it's made up of the 2 buckets. Absolutely. Absolutely. Thank you very much. And maybe the one thing I would add is that we're pursuing 2 strategies that are really all driven by focusing ourselves. And the big one is, of course, externalizing partnering some of our products. And I think the other one, of course, is divesting assets that are small. And if you actually look at it, we have generated a lot of income out of products that we're selling €40,000,000 to €50,000,000 and we're sort of not doing much in our hands because we are focusing elsewhere. But the one important point is people see this externalization revenue sometimes as one offs. Essentially, what we're doing here is sort of finding the pump, if I may. I mean, maybe it's not the right expression, but it's actually we're starting a process of introducing a new business model, but at some point, this will turn into recurring revenues. I mean, if the base inhibitor delivers, if it gets approved and is launched, the externalization revenue line would be enormous. And so there's quite a number of products that will actually be like this that will continue to deliver revenue on an ongoing basis. Essentially, what we do is we say those are products we don't want or cannot develop ourselves because we don't have the capabilities, we don't have the financial resources, we want to focus, but we want to retain some economic interest. We partner with someone who's going to do a good job operationally for us and then leave us with some of the economic value. It should not really be seen as one offs. There are, of course, one offs, but there's also long term recurring revenues that will develop. Thank you. It's Mark Fusch, Barclays. So just follow-up on that and then one off something totally different. So if you take externalization revenue, about €1,100,000,000 for 2016, can you help us understand the mix between recurring, which you'll say is going up, the milestones? We know of 1, obviously, €1,000,000 of rivolumab. And then the new stuff that we don't know anything about. And then something particularly different on rivolumab and the updates on the pipeline. Can you help us understand why you chose on the triple to do dervo plus or chemo plus or minus tremene? Why you didn't do dervablus tremmyplusorminuschemo? And then secondly, you changed the primary endpoint of Mystic as well. So was that done because you're concerned about patient crossover? And I'm sorry, the second line will be there. Sean, do you want to cover the last two questions? And Marc, you'll cover the first one. Yes. So the first question I'm going to do the second one first, and then I want some clarification on the first one, okay? So the second one was change of endpoints on this day. The change, just so everyone knows, is making a co primary progression free survival, the previous sole primary and combining it with overall survival. This really came from 2 things. One is as data emerges with immuno oncology, I think we are wondering about progression free survival as the best indication of the benefit that patients derive from this particular mechanism of action. Because we have seen, it's a mixed bag right now and it's early days, but we've seen some places where they seem not the progression free survival seems not to really predict very well an overall survival benefit that comes through. And so that led us to think we should move the overall survival up in the hierarchy. The first analysis will be progression free survival. The second aspect of it really is a pragmatic one. And it has to do with how quickly the trial is enrolling. So one concern when we do this is you have to add some patients to the trial because you want to power both your primaries. And we did that in the amendment. The thing is that what we had forecast, how long it would delay us, turns out to be a fraction because it's enrolling so quickly. So we were able to do this change without really impacting the time line. So those were the 2 of the major factors that went into it. Now the first question, can you clarify for me for a second? Yes, sure. Sorry. Obviously, there's a big focus on dervo plus tremene. That's right. But the triple trial is dervo plus chemo plus or minus chemo. That's right. So I would have thought it would have been dervo plus or minus chemo to put the sort of bonus on the chemo to change? Well, so let me talk about 2 things about our fundamental strategy. So I mean, you could do it either way. You're right. It depends on what your fundamental strategy But our emphasis is combination, combination immunotherapy, I should say rather. And there's a little bit of a pragmatic aspect of this. Some is pragmatic in practice patterns, doctors treating lung cancer, some is actually kind of pragmatic in the world, availability of therapies. We've heard very loud and clear from some fraction of It's well established. And if I can combine in, great. But I don't feel I can deprive them of the chemotherapy. And so what we're doing is we're trying to provide, 1, for the combination strategy and 2, a data set for that non insignificant group of physicians to be able to understand what's going to happen. The Sanchez study focused on the combo with chemo with the other dimension to test whether adding Tremy on top would have something that we really want to establish the overall chemo, the benefits of that combination. Should we move sorry, Markus. So I think I'm good to answer the previous question on do you have the list or do you have a concrete plan for these external revenues or divestment? The answer is yes. I'm not going to give you the list, but please do not ask. But I'm just going to explain why we have a list so we know which product, which activities and also which parties could be interested. What we don't know yet, although we have already ongoing discussions, what we don't know yet is what structure the deal will be like because obviously, it depends on the counterparty. And this is why it is not easy for us to tell you what part will be recurring, what part will be sort of one off, one part will be in exchange revenues and what part could be in other income. It's obviously depend on the structure of the transaction. But I think if you look at the totality of expansion revenues and other income and you see an expansion versus the level of 2015, I think you're in the right place. Should we move to the online questions again? Tim Anderson of Bernstein. Tim, go ahead. Thank you. Your first line lung development program was durvalumab. It's pretty apparent you're putting almost all of your eggs in the basket of combination therapy with tremulimimab. But I'm wondering what happens if combo data ends up looking lackluster. Your frontline monotherapy trials are in all comer lung patients, but your competitors seem to feel that in frontline lung, it's risky to look at unselected patients. So they're only looking at monotherapy frontline in biomarker positive patients. So can you clarify for us what happens to the derval in that franchise in frontline lung if the TREMI combo ends up not working? Sorry, Sean, do you want to go? Yes. So you added franchise in the end there, so I might absolutely get the end. But with regard to the outcome, let's go with the outcome of MYSTIC, which is really the lead frontline trial. So as you're alluding to, Tim, that has durbitramine, it has durbit as a single agent and then it's versus standard of care. So three arms, 1 to 1 to 1 randomization and now PFS and OS as endpoints. And we are taking all comers. Obviously, the data will be analyzed by biomarker positive versus biomarker negative. And our hope is, we've presented some data that we feel supports this, that durbitremi will be truly differentiating in the PD L1 negative patient population, which I will add is the majority of patients, okay, twothree to 3four patients depending upon what data set you look at. With regard to the PD L1 positive population, it is possible that dervatremi and dervat are both active and active in a way that can't be differentiated, in which case it is possible for us to file based on that data a single agent dervo for that PD L1 positive subset. So I guess what I'm saying in part is it depends upon the data. But as you point out, there are multiple opportunities or permutations that could arise depending upon what it shows. Does this cover your question? Yes. I think I mean, I guess the question was whether there's enough powering in that monotherapy arm of Mystic just in PDL and positive patients to use that as a registration subset. But you're saying that it is adequately powered to kind of carve that data out. And if I could just clarify, so your view also, and I think you've said this before, on the percent of patients in frontline that are PD L1 positive versus negative, that's a figure that differs from what Bristol Myers has said. And I guess I've always tried to figure out why that difference exists. Yes. So I'll tell you one challenge we have, and hopefully, this will be resolved. And I think some of what you're looking at is assay and assay cutoff effects. And now that the Bristol Myers and the Merck assays are out there and can be used for comparison, that presents an opportunity to really look at the same samples with the different assays and help to resolve this a little bit. But you're right, there is a range of variability. A PD L1 negative is the majority. But you're right, the exact numbers do vary. And I think it's probably dependent upon the assay and the assay cut off mostly. Thanks, Sean. Simas, Fernandes, maybe we could ask the other question online here at clearing. Simas, go ahead, and we'll return to the room in a second. Great. Thanks. So can you hear me okay? Yes. Great. So I just wanted to ask specifically, Pascal, as we take into context the opportunity that you're looking at, potential accretive acquisitions, would you be willing to kind of put some brackets around the type of acquisition that you would consider? There's an awful lot out there. And how long do you think it will take for some of those acquisitions that you might be considering for the owners of those businesses do you think to kind of come together with you given the rapid pace of decline that we've seen? I assume that you would be more looking at biotech type entities that are strategic. But maybe if you can just give us some brackets around the types of acquisitions that you would consider and maybe a relative size as well would be helpful. Okay. So thanks for the question. The first thing is that as we said, they have to be accretive because, again, we believe our pipeline is full now. So they have to be accretive. They have to be the right price. Importantly, they have to be strategically aligned with what we're trying to do. So they have to be in autoimmune respiratory, in cancer and cardiovascular diabetes, so that we keep building our presence in those key therapy areas. And finally, the size really depends very much on how big is the cash flow that is added for the direct acquisition and for the synergies. It depends on our ability to how much we can raise money as a result of all of this. So as I said before many times, we are agnostic as far as size, provided it's tragically aligned, the price is right, we can add value and we think we can execute. Executing on this acquisition is critical so that we don't distract the organization to an extent that what we gain through the acquisition, we lose for distraction in the pipeline. So that's really as specific as it can be. In terms of getting together, again, depends on the size. I mean, some of these acquisitions, we integrate very quickly. We can integrate quickly, and the bigger they are, the more complicated it is. But again, size is only one consideration. It's the geographical complexity, etcetera, etcetera. I mean, it's every case is different really. And may I ask just one quick follow-up on a clarifying piece of information on one of your pipeline products? Ruxadustat in China, will we do you anticipate that we'll actually see data in a public forum based on the data in China or in 2016? Or would you anticipate that sometime in 2017 because that trial will wrap up very late in the year? Thanks a lot. So that's something that, ironically, is probably something that's more sensitive for everyone in that group. But again, yes, a good start. And also the flip side of that, of course, is that we lost some access with Bydurean, and we took a defensive posture. And I think we'll come out of that quite well. Yes. I think it's an important point that Luke is making. I mean, if you look at the prescription share, the increase is very impressive actually. And it's kind of nice, but you should be careful to not extrapolate this too rapidly because you never know how things settle down. And certainly, it's very encouraging start of the year. There's no doubt about this. And the bigger issue is really the class. I mean, if you look at the total class, it's relatively flat essentially out of this ketoacidosis issue. It's starting to pick up. Now we have good hope that the class will pick up. In fact, if you look at Japan, the class was negatively impacted also initially for different reasons. It was really dehydration issues in Japan, but the class is starting to pick up quite nicely. This is a good class and many new agents face issues at the beginning. Just if you remember Christo, some of you may not remember Christo, but Christo faced a very challenging start. Again, for safety questions. And the company at the time was able to resolve those issues, and then the product did extremely well. So this is a good class. It's going to do well. There's no question. You just need to work through the issues in Japan and the U. S. But for us, in the short term, that's really the biggest question is how quickly will the class pick up. And then we'll come back to Matt in a second. Simon Baker from Exane. I'm afraid I am going to bore Matthew with a quick two part on the guidance. Firstly, you've included within the guidance the dilutive effect of Asserta and ZS Pharma. I was wondering if you could quantify that in aggregate. And secondly, to what extent is the Q4 SG and A performance guide 2016? So we no, we are not going to quantify the dilution. When we did the acquisition, the separate acquisition, we indicated the type of dilution. We said short term and minimal for ZF and we said moderate for ACERTA, and we also said short term. So I think with this sort of a compilation of adverse and objectives, I think you can probably derive the impact of these dilution. So I'm sorry that I'm not going to give you the number, give that number. Yes. The only thing I would add is the range of guidance concentrate gives you a sense of where we think we could land and also of how do we manage that dilution overall. So but we can't give you a specific number for sure. We mentioned I think I mentioned in my talk just to complement my answer that we will be taking 100% of the R and D of AFFIRTA, But as we own the own 55% of the equity of this company, it's very good loss because of products not yet sold, 45% would flow back. So the percent of the loss would flow back through the minorities. SG and A minus 11% in Q4, is it an indication for 2016? What I said the trend of 2015 on the whole year will increase, but probably not reach 11%. If I try to guide you, I mean, we've given you this guidance at constant rate for 2016. We actually I'm personally very committed to delivering what we said we would do before. And essentially, what we would do before in sort of roundabout ways that we are going to bottom out in 2016, 2017 and go from there. We're committed to this. I'm committed to this. The only thing I can't absolutely forecast is the currency. That's the one thing that is really out of our hands. And that currency impact, we will do our very best to compensate some, all of it. I mean, in fact, we are hoping that the currency impact will go the other way and help us. But if it doesn't help us, we'll do our best to try and compensate this. We can't be sure we will be able to totally compensate for it. But we are very committed to delivering I'm committed to delivering what we said we would do before, which is sort of bottom out over the next, what, 2 years, this year or next year. It's no longer the next 2 years. It's this year or next year, and then grow from there. Matt? Thank you. Luke, can I ask a roxadustat question? Clearly, we get the Chinese data this year, and it could prove to be a very exciting start for the whole class. But can you just remind us on timing of the current approval time in China in terms of how long it's actually taking on average for a drug to get filed to approval? So we think of it as 12 months in Europe and the U. S, but I recall it potentially significantly longer than that. When should we think of the commercial opportunity for OXA? Sure. So I mean just in terms of tracking approval time frames in China, I've seen so many reports on this, and I've tracked it myself. And it's almost impossible to do the analysis because the key thing for roxadustat is it's actually treated as a local product. So it's produced, the material is in China. It's actually a different formulation than the global supply. So we said the correct terminology for Chinese submission for roxa is rolling out admission. So to that end, what we said is that the submission would initiate this year. We did not say there would be clinical data available this year. Yes. The thing to take home, it's very difficult to plan on Chinese regulatory timeframes. However, clearly, it's a product which because we constructed the file there, there's a dedicated program there in China, you would I think you could expect that I mean, obviously, the profile of the product has to hold up, but it should move relatively quickly versus a program which is coming in from the outside. The opportunity in China is enormous, both in terms of just the straight out dialysis population. Also peritoneal dialysis is quite common in China as well. So again, this is an attraction there. And then if you look at the pre dialysis population, that's directly correlated with the disease burden overall with such things like diabetes. And that population in China is unfortunately quite large. So it remains an attractive product. The process is not as qualified as they are rolling some mission in the United States. But it's still the product is still part of the new process called the green pass. And clearly, the authorities have put it in this process because it is a local product, as Luc was explaining, and it's really addressing an enormous need in China. Diabetes is exploding. Kidney disease is rapidly growing. They don't have enough dialysis centers. They need new medicines to help those patients. So clearly, they have a lot of reasons to fast track this project, but it's not very codified. And so it's hard to predict how long it will take. Just a very quick follow-up to Sean. When will we see clinical data if it's not this year? I don't recall what we've done this year. Committed. Yes, I think it was half 1 next year was what we can do. Let me look that up for you. Once you do that, maybe we can move to another question and return to that. Sorry, a little bit from this side. Thank you. It's Kerry O'Lough from Exane. I have some questions on the territory, please. So firstly on the Symbicort. Clearly, the pressure stepping up in Europe. So your thoughts on how that will evolve from here, but also your expectation in the U. S. Market potentially generic and beverage and debate, but how you think about that and what you put into your guidance or expectations there for Simba Court? And then secondly on PT-three, is there anything that you can learn from GSK's experience with Onoro? And clearly now they struggle to take share with the Riva and they appear to be reverting back to pushing their single agent lineup in combination with BRIO to offer the open triple, which you won't have the opportunity to do until you hatch your closed triple. So what can you do with PT-three in the meantime? Thank you. Yes. So I'll break that into chunks. So with Europe, we've got 3 analogs there, but we've kept 90% of the volume. So it depends on the market. Some of these markets, you have an automatic mechanical drop in the price. So you're out of that control. So really, then you're arguing over volume, and we've maintained that volume effectively. So I don't I mean, we're certainly we don't guide by product levels, but there's been some figures floating around out there. I think it's fair to say that we have we're quite confident about that market. There will be pressure on Symbicort in Europe. But again, I don't again, we're quite comfortable with where it's going as a trajectory and where it's holding and our ability to hold that. Remember, we've been able to grow share with Symbicort globally. We've actually grown share in the U. S. So if we look at the U. S, there's price pressure that again, volume that's compensated for that again, we've picked up NBRx. We've picked up TRx. So in sort of a marketing battle, I think we can keep share and hold it. So there will be price pressure but not catastrophic price pressure. In terms of generics in the U. S, what's being disclosed publicly is exactly in line with what we had in our own internal forecast and what we built the long range plan on. So and that's filing, of course. We have to see if they get approved. And we know there's quite a complex history with inhaled molecules in the U. S. In terms of changes in the dynamics of the market, I think in some levels, there's a time frame there for the payers. So they've left us on the horizon. So it actually changes the dynamics in terms of the trade off the companies are prepared to make. Again, we look at each negotiation in terms of that balance between supporting value and not destroying value and then also market share and trying to make an intelligent decision out of each one of those events. In terms of PT-three, maybe I'll just focus on I mean, I've said this before with Faxadat, it was a little bit longer than I was hoping for, but there is an advantage in coming second. Sometimes you can learn. I think there's broader dynamics, which now that BI has entered the marketplace with their LAMALABA, that's starting to change things before with SPEELTA that may shake things up a bit more and dislodge some of these patients who are on a LAMALA and quite sticky. But there's lots of things that we can learn in terms of preparing the market, doing some work there, and we've shown in Europe with our other Llama Llama that we can take share and compete. So with 3, I think we're confident. It depends on the label you get, but we're optimistic, and we think there'll be a high demand for this product in that formulation. It's one of those classes that takes time to develop, but it's a very dynamic market. And the problem is that the share of dynamic patients is actually limited in the total prescription volume. But if you look at the dynamic market itself, there's a certain number of countries, 40% to 50% of new scripts, new initiations are for La Bellema away from Spirit River. So it's actually starting to pick up in quite a number of markets. The problem is that it really takes time for new initiations to come into a large volume of total prescriptions. Should we go back to Yes. Okay. Sorry, yes, if you have the answer. Let me go back to the Roxapin. So it's 2017. It's a but again, the submission is rolling. It's ongoing. And then we don't as Luke said, we're not 100% sure what the review time is. It's not codified. 2017, there will be data from other trials outside of China as well. I mean, it's Just wanted to make sure I understand your SG and A comments correctly. So presumably, most of the costs that you're looking to take out over the next couple of years, that's actually primary care infrastructure, which you can basically take out as soon as the loss of lucidity occurs and not a minute earlier. And then you just have, let's say, a 3 to 6 month lag effect before it actually comes out of your core P and L because it just takes some time to get down to brass backs with the employee representatives. I mean, is that the right way of looking at it in terms of modeling? Or do you actually think that you can make any significant improvements to marketing effectiveness in emerging markets or specialty care? And if so, how would that come about? And then just a very quick question on the Tagrisa Japanese label you're expecting, given that the Japanese are really known for granting quite broad labels in oncology and not so much dissecting between different segments? Maybe you can close the second question. Let me just close the first one very quickly. I mean, the SG and A savings, they will be coming and they will come from a wide range of sources. We work a lot on admin costs, our IT costs. We reduced I mean, our goal was to reduce by 30% from 'fourteen to 'sixteen. We've gone quite a bit quite a long way. We still have more to go this year. We're working on-site costs. We're working on a variety of G and A costs. When it comes to pure commercial costs, you're right that there is quite a bit of cost reductions that can come out of reducing our effort in primary care over time. But we also have a program to improve productivity and efficiency in our commercial teams. In all the emerging markets, We have an entire program that is focused on that. We've increased a lot the size of our teams in China and a number of countries through the acquisition of the diabetes business, but also through expansion of our teams, we're now focusing really hard on improving the productivity teams. So there's a whole range of sources of cost savings and productivity improvement. We'll come back. Can we have 1 or 2 more questions? So it's a little hard to speculate on the label, but regulators do what they want based on what they see in the data. The observation I will make is that the EU label is different than the United States label. In the United States, we have the T790M, but then you have to have failed the 1st generation EGFR molecule. In the EU, the T790M is in there, but this 1st generation having previously been treated is not in there. Japan does tend not to make little cutouts in its labels. So we'll see what happens, but can't really be sure. Sachin, maybe that would be the last question, Thomas. Okay. Sorry. Thanks for taking my follow on. Just wondering cash flow. Given the vagaries of the P and L, I wanted to just comment on cash flow. So operating free cash flow was roughly £2,500,000,000 and didn't cover the dividend this year, and that included €1,000,000,000 of externalization. So just any color on whether free cash flow will cover dividend in 2016? And how we should think about it on a 2, 3 year view given the progressive dividend policy? And then one for Lidocompromlinta. You mentioned in your intro comments that an inflection might be seen post guidelines update. So just any color on when we could expect that? On the Brevita side, we have actually seen already an inflection in the DDDs in hospitals, and that reflects a pickup in initiation. But do you want to cover this and Marc can cover the second one? And right now, if we look at the volumes on the 60 year, I mean, it's still relatively early days, but the DVD, yes, really did jump. And if we look at the data in terms of who's being put on 60, we're pleased to say that 70% of those patients are actually beyond 12 months or around 12 months for Brilinta. In terms of guidelines, I mean, it's difficult to speculate. I mean, we hear certain things. We have asked questions. You've got the ACC, of course, and the coming up. So it's around key congresses like that where alignment seems to be there. I would just direct you back to the label in the U. S. With the statements around clopidogrel and just the broad nature of the label, which again gave us some confidence. We'll see what we get. We asked lots of questions about it. So turning to the cash flow. Basically, you can the level of net cash flow will be similar in 2016 as they are in 2015. We need to understand the contributory nature of the externalization revenues, but also on the other income. It does contribute to obviously to our cash flows and it helps us sustain a relatively high level of R and D. So one needs to understand that the external revenues is not only to sustain the cash flow, but the cash flow can be reinvested in R and D. I think all cycle needs to be understood. The cash flow will be the same in 2016, more or less the same as in 2015. But I think Mark is raising another point, which is an important one. Externalization revenue is helping us to create long term value by partnering with someone who will turn a product that we probably would not do so well ourselves with because it's not part of our core strengths. So long term value, but also short term value because some of that money we are investing immediately in building a strong pipeline. We could save money and still deliver the same EPS with less externalization, less cost. Would we create a better business long term? Probably not. I think your remark is true for the year 2016, it would be very similar to 2016. But we also need to see that and we have provided in early 2014 the same goes for 2017 where we said that basically the revenues would be more or less broadly in line with 2013 at constant exchange rate. I think you can just extrapolate from this in many, many positions in the P and A. What we are doing is increasing our pressure, our cost discipline and our pressure in SG and A, but we have conversely also increased the R and D spend. So maybe with that one, I could call this meeting to a close. And then thank you for joining us. But in parting, just let me wrap up, leaving you with a few messages. First of all, we're very much committed to the dividend. Nobody should ever doubt our commitment to a dividend. 2 is we're very committed. I'm committed, as I said, to delivering what we told you we would deliver on bottom out in 2016, 2017 go after this. So our guidance is sort of in is in the range of this. And hopefully, the question is not whether we deliver plus, minus 3% or 5% on the score EPS in 'six and 'seventeen, but what kind of long term value creating for the pipeline. We are very committed to this bottoming out. Again, the thing that we don't totally control is currencies, currency movements. And we'll do our best to compensate some of those movements. If they are negative, if they are positive, we'll just welcome them, of course. But we cannot guarantee that we'll be able to manage those. But certainly, very committed again to managing the 'sixteen, 'seventeen period of time. Again, I think we're making great progress to the pipeline. We're launching our new products. Tagrisso is doing very well. So really, hopefully, we can focus ourselves on the post twenty 17 period of time. In the meantime, through this externalization and cost savings, we really are defending our EPS. And hopefully, at some point, everybody would agree that externalization did work and we created long term value. So with this, thank you so much for joining us today. Press 1 to listen again or 2 to leave a recorded message. If you wish to exit, please hang up.