Earnings Call: Q4 2012

Jan 31, 2013

Good afternoon, everybody. Welcome to AstraZeneca's Q4 and Full Year 2012 Results. Happy to take questions and support whatever questions we have through the day. And without further ado, I'll hand over to Pascal Suriott. Pascal? Thank you, Joao, and good afternoon, everyone. Really a pleasure to see you all again. Welcome to our 2012 full year results presentation. First, let me set the stage for today's agenda. I will make some opening remarks summarizing the key events for 2012, the headline numbers for the full year. I'll also review the commercial performance looking at our revenue trends in our key regions and for our key brands. Then Briggs, Briggs Morrison, who is our EVP for Global Medicines Development, will review our pipeline progress in 2012. Simon, you all know Simon very well, our CFO, will present our 2012 financial performance and provide you with our thinking for guidance on for 2013. And then I'll conclude with some observations from my 1st 90 days at AstraZeneca ahead of our Capital Markets Day that we are planning for March. I'm also pleased today to say that we have in the room Rod Dobber. Rod is our Commercial Head for the European region and he's also our interim leader for the global product strategy function. So we'll also share your questions. And Simon is committed he will actually take all your very hard questions and leave me with the easy one. So if I start with our performance in 2012, our results really reflect a period of significant plant expirations as you all know and overall challenging market conditions throughout the entire world. Our revenue was down by 15% in constant currency terms and reflects the loss of approximately $4,500,000,000 in revenue from the loss of exclusivity on several products with Cerro Quell IR being the biggest driver. Core EPS was down 9% for the year to 6 point $4.1 That is above the latest guidance we provided. We have to say core EPS benefited from favorable impact of 2 tax related matters and also from the sale of the next year Motissi rights, the second tax rate of matters took place in the last quarter. Reported EPS was $4.99 which is down 29% compared with last year. But as a reminder, last year included a large gain from the sale of the Astrotech assets. The full year dividend was maintained at $2.80 per share. We successfully drove the performance of many of our brands that retain market exclusivity. These 5 these 6 brands, sorry, together accounted for $600,000,000 in incremental revenue on a constant currency basis. We also made real progress on the pipeline this year. We achieved 3 important regulatory approvals for new medicines in Europe. 1st, for CIGA, which is a new first in class treatment for diabetes and SGLT2 inhibitor. And so far the feedback from our customers is very good, very early days, but good feedback. ZYNFORO, a new cephalosporin antibiotic and Caprelsa, a smaller new orphan treatment for advanced medullary cancer of the thyroid. In the U. S, I also want to point out that Flumist quadrivalent was the first 4th strain influenza vaccine to be approved by the FDA. Our portfolio in Japan was strengthened by 3 approvals for Symbicort, the smart dosing regimen and the approval of the COPD indication, but also the approval for next year for use in combination with low dose aspirin. You will hear all the details on the pipeline from Brink's in a few minutes. Finally, among the many transactions and alliances we forged in 2012, the big three, so to speak, are firstly, the collaboration with Amgen on 5 clinical projects in the field of inflammation, one of which is in late stage development. 2nd is the acquisition of AdeA Biosciences, which brought a Phase 3 molecule for the treatment of gout. And finally, our diabetes alliance, which was expanded with Bristol Myers Squibb acquisition of Ameline. And as you know our subsequent buy in of our share of that exciting portfolio. So we now have a full portfolio of products in diabetes. Moving to the next slide. The full year revenue performance, when I refer to growth rates will be on constant currency basis. So if you look at it by region, the U. S. Declined by 21%, driven by the loss of exclusivity for Seroquel IR. Revenue in Western Europe was down 19%. The loss of patent protection on 4 products, Cerro Qual IR, Atakan, Nexium, but also Merame accounted for more than 60% of the revenue decline in addition to continued headwinds from government interventions, which the whole industry is dealing with, as you know, in Europe. Revenue in established rest of the world was down 14%, largely due to a 31% decline in Canada as a result of generic competition for Crestor and Atacan. Revenue in Japan was down 5%. The biannual price reductions are a key factor of course. The underlying strength of our in market performance for Nxiom, Symbicort and Seroquel IR was not reflected in our reported sales, simply due to ordering patterns from our marketing partners in Japan. Revenue we never established was negatively impacted by the loss of exclusivity for CerroquelaIR and MAREEM as well as the challenging pricing environment for Crestor in Australia. We experienced a substantial price reduction there. So in total, Crestor sales were down 8% in Australia to around $350,000,000 Revenue in the emerging markets was up 6% in the 4th quarter, which allowed us to bring the full year growth rate to 4%. As you will remember, the first half of twenty twelve was impacted by the supply chain issues and we've been recovering progressively since then. We had good growth in China where revenue was up 17% for the year. Amongst our other large larger markets, we had good performance in Russia, in Romania, Saudi Arabia. Overall, our growth rate was really affected by weak performance in 4 markets: Turkey, which was heavily impacted by government pricing interventions Mexico, where we had generic competition and clearly a tough market environment Brazil, with the loss of exclusivity for Crestor and Cerro Coel IR and also India, where also India, where our revenue has been impacted by local supply issues. Together, those four markets accounted for more than $160,000,000 in constant currency revenue decline for the full year. If we look at it from a brand perspective now, this slide provides you with a of revenue for our key brands. And there are really some real bright spots amongst those products in our portfolio that are not impacted by loss of a patent protection. Cresta, of course, experienced loss of exclusivity in Canada. But excluding Canada, sales were up 2% for the year. Symbicort had a good year with sales reaching over $1,000,000,000 for the U. S. In the U. S. For the first time, very strong results for Symbicort. Despite the loss of exclusivity for Cerroco Alaya, we achieved 4% growth for Seroquelixa. And we also had a strong year, another strong year for our oncology products, IRESTA and Faslodex in particular. A good performance for the Onglyza family, which is developing very nicely. And the inclusion of Baieta and Badureon from Amylin added about $111,000,000 in revenue since the addition to of these products to our portfolio from the Q3. We achieved slow but steady progress on Brilinta and we'll come back to this. But as you can see on the bottom of the slide, loss of exclusivity took a large toll. We have substantial headwinds from those patent expiries on sale, Rockwell IR globally and regional losses on Nexium, Atacant and Merame. Detailed commentaries on our brand performance are in the press release. I just want to provide some additional color on 5 products in the portfolio: Crestor, an update on our Brilinta launch the performance of the Onglyza franchise also some color on Symbicort and finally a brief look at next year and its performance in Japan. So let me start with Crestor. The sales in the U. S. Were up 3%. Total prescriptions were down just 1.4% for the year, which truly is a very resilient performance in the face of multiple atorvastatin generics starting May 30 last year. If you look at the next slide that shows you the net volume net dynamic volume trend, The red area maps the number of patients who are newly starting their study therapy with Crestor. The blue represents the patients who have switched to Crestor from another statin. The gray line below the axis the number of patients who are switching from Crestor to anorvastatin. And finally, the important line is the yellow line, which is the net result of all those additions and losses. And as you can see, this yellow line on the chart, you can see the increase in net dynamic volume that occurred in the last 6 months of 2011. This was following the label changes for simvastatin and the removal of the 80 milligram dose from the market. The Crestor volume was already on the downward trend from this pack around the time of the limited launch of generic atorvastatin in November 2011. And we did lose a bit more ground following that launch. But overall, I think it is fair to say that the data on the right hand side of the graph tend to demonstrate that Crestor dynamic volumes have held up very well and are stabilizing even with the influx of multiple atorvastatin in May. And that is confirmed by this chart that shows you the total prescriptions for Cresta in the United States. And of course, it goes up and down as I described a minute ago. But importantly, you can see that in the last couple of quarters, we see signs of stabilization. Total prescription in the Q4 of 2012 are about 6% lower than last year, some of which is a function of the prior period ramp up. We also had a small decline in the second half of twenty twelve related to volume losses in the low margin Medicaid business. But overall, as I said, a very resilient performance in total prescriptions. In the rest of the world, sales were down 9%, but if you exclude Canada, they were unchanged. We continue to do well in Japan where Crestor is actually the number one step in by volume share of the market. As you can see here in the next slide, we continue to grow our share of new patients in Japan even after the launch of generic atorvastatin and certainly Cresto is the largest statin there. In the emerging markets, sales were up 4% were up 4%, 14% if you adjust for the loss of exclusivity for in Brazil and in Mexico. Now let me turn to Brilinta. We have actually now launched in 82 countries. Sales are still modest at about $89,000,000 for the year. But if you look at the next slides, in the U. S, we see steady progress in the growth in total prescriptions. In the Q4, scripts were 46% higher than in the 3rd quarter. As we start the New Year, we have seen a real boost to our managed market access. We now have unrestricted preferred access to more than 50% of covered lives in the commercial plans, but also in Medicare Part D. And we see a steady improvement in access in both Part D and commercial plans. That is up more than 20% point in commercial and 30 points in Part D compared to the Q3. We know that physicians' concerns are about plan reimbursement and affordability for patients and that has clearly hindered the product trial. This improved access should really help us move forward into the year. And we're doing a number of other things, which we could talk about later if you wanted to. Outside the United States, our good performance in Germany continues. If you look at this data from our survey panel, we've leveraged our strong protocol adoption to maintain our number one share of ACS initiation in the hospital. And this graph actually shows you the total IMS audit data where our share of the total prescriptions in the OAP market in the hospital is measured. And you see a clearly improving trend and a very encouraging development of our prescriptions here. This is a at 13%, this is a lower number than our ACS panel, but the panel measures new to new initiations. And these numbers also includes other indications, not on the ACS use, but using of antiplatelet products in other indications. But overall, a very nice progression. And our retail volume market share, again, all usage is also rising very quickly. Our second important country in Europe, and it's a very important one for Brilinta because it's the largest OAP market in Europe and the latest market for which we have some early launch tracking to report. Again, it's still very early days, but we've had a faster protocol uptake and share of ACS initiations than when we launched in Germany. And even on just 6 months of data, our penetration of the hospital and retail volume for all OAP usage is on par with the Prasugale launch uptake in its 1st 6 months despite our being third to market. So again, here in France, pretty encouraging market development. And if we move to the next slide, a final word on Brilinta. We received approval in China in the Q4. Of course, this is only a first step. We now must achieve listing on the RDLs before we can really drive revenue there. So let me now move on to the OnGlyza franchise. Our share of the Alliance revenue for the OnGlaza franchise was $323,000,000 for the year, which is up 53%. Much of this is still in the U. S. Where the Alliance revenue was a $200,000,000 was about $237,000,000 If you look at the scripts now for the Onliza franchise in the U. S, they were up 45% for the year, which is well ahead of the DP before market growth of about 22%, and our share is steadily improving. Our total franchise share was up 1.3 percentage points during the year with the growth coming from CombiGlise, XR on the background of a stable Onglyza market share. The sales in the rest of the world for Onglyza were up 56% to $86,000,000 We've now launched CombiGlyze Exa in Brazil and in Mexico. And in Europe, the first launches of CombiGlyze took place in the Q4 of 2012, which should really help performance in Europe, where the combination products are very important. Symbicort had another good year, very important product for us in the next few years. Sykes in the U. S. Reached the $1,000,000,000 milestone for the first time. We've achieved steady growth in total prescriptions and the market share is up 2 percentage points over the last 12 months. We are now at 22%. Importantly, our share of new patient starts is 28%, which gives you an idea of the upside that is still ahead of is still there for SYMBICORT in the United States in terms of our total prescription share. The sales in the rest of the world were unchanged for the year at about $2,200,000,000 And importantly, we continue to do very well in Japan, helped by the approvals of the SMART regimen, but also the COPD indication. The last product I would like to say I would like to talk about is Nxiom. We've achieved a steady financial performance in the U. S. In a highly generic PPI market. And our slowly declining volume is actually partially offset by higher realized selling prices, a mix effect which is due to the loss of low margin business in Medicaid. But really what I wanted to talk about is Japan. And as you will remember, next year sales in Japan were treading water for most of the year, essentially due to the provisions under the Ryotanki that limited prescriptions for new products in their 1st year on the market to just about 2 weeks supply. So that's certainly limited next year. The 2 week limit was lifted in October and the performance has really accelerated. And if you look at the next slide, it really shows the tremendous success we've experienced with Nexium, which is now the most successful launch ever in Japan. A great performance by our commercial team in Japan, which is really an outstanding team. I'd like to stop here and turn the presentation over to Briggs, who will review our 2012 pipeline progress. Thank you. Thank you very much, Pascal. Hello, everyone. My name is Briggs Morrison. I'm the Executive Vice President of Global Medicines Development. I've been with AZ about a year and held a similar position at Pfizer before that and multiple development positions at Merck before that. I'm a medical oncologist by training. So today, I want to give a brief update on the priorities for R and D at AstraZeneca on our portfolio, including the pipeline movement, some highlights from 2012 and the late stage update and the anticipated news flow for 2013. So we set some clear and focused priorities to achieve scientific leadership, progress the pipeline and rebuild the Phase 3 portfolio, enhance R and D productivity, strengthen our capabilities in translational science and personalized medicine, and foster a culture of high quality and innovative science. As you'll see, our Phase 1 and 2 pipeline is shaping up and our investments in large molecules are particularly taking effect. We've built good momentum in the portfolio and it's important that we now pull these through to patients. So let's look at our pipeline movement since 2011. Pipeline now includes 84 projects, of which 71 are in the clinical phase of development and 13 are either launched, approved or filed. There are 11 NME projects currently in late stage either in Phase 3 or undergoing regulatory review. And during 2012 across the portfolio, 39 projects have progressed to the next phase, 12 molecules entered human testing and 19 projects were discontinued. This slide shows a detailed view across our Phase 1, 2 and 3, both small and large molecules. There's a lot on it. It's hard to read, but you should have a copy. You can see that we now have a good balance of small and large molecules today with the large molecules making up about 45% of our portfolio. The work we've done in the last few years has injected real quality into our pipeline. This is reflected particularly in the Phase 1 and 2 portfolio. I think this bodes quite well for what we can expect to enter into Phase 3 in the coming years, and I'll touch more on that later in the presentation. So last year there was a lot of good activity in the pipeline as Pascal mentioned. We saw for example the launches of ZYNFORO, Forxiga and COMBOGLYZE in Europe, OXIS SYMBICORT SMART and SYMBICORT COPD in Japan and Phase 3 starts for berdalumab and Cazabi. In the Q4, we also had the approval of BRILINTA in China, And I'm going to start with Brilinta as I talk a little bit more about some of our late stage assets. So Brilinta continues to make great progress in terms of its availability around the world, now with approvals in 88 countries. It's under review in a further 18. Parthenon is our lifecycle management program for Brilinta, which we have continued to invest and now has over 50,000 patients enrolled in a number of large outcomes trials. We've completed FILO, our acute coronary syndrome trial in Asia and anticipate submitting for approval in Japan in the second quarter. Our PEGASIST TIMI54 study in patients who have had a previous myocardial infarction is also progressing well is on track for filing in 2015. We recruited our first patient for the EUCLID trial for patients with peripheral artery disease in December of last year. Peripheral artery disease or PAD affects about 27,000,000 people in Europe and North America and there's currently insufficient evidence on how best to medically manage these patients, resulting in substantial healthcare costs, we anticipate filing the EUCLID trial in 2016. We're also investing significantly in investigator sponsored trials. In the Q4, Brilinta was added to the ACCF guidelines for the management of patients with ST elevation myocardial infarction, so called STEMI patients. This brings to 11 the number of global guidelines in which Brilinta is considered standard of care. In November, the European Commission approved Forxiga for the treatment of type 2 diabetes in the European Union, the first STLT2 inhibitor to be approved, again regulatory approval anywhere in the world. And it provides physicians with a completely new option to improve glycemic control with the additional benefits of weight loss and blood pressure reduction. We've now launched Korxiga in the UK, Germany and Denmark and received therapeutic goods administration approval in Australia. We've had constructive discussions with the FDA about the Farxiga NDA in the United States. We will be providing additional data from ongoing studies and expect to resubmit in the middle of this year. Assuming a standard 6 month review, we think we will hear back from the FDA by the end of this calendar year. We're excited about the future of the davagliflozin franchise and have submitted a marketing authorization for a davagliflozin metformin immediate release fixed dose combination, did that in the Q4 of last year. And we begin to we expect to begin enrollment in DECLARE large cardiovascular outcomes trial by the end of this year. So for ONGlyza, the SABR TIMI-fifty three trial is fully recruited and the follow-up is ongoing. This study complies with the new FDA requirements for assessing cardiovascular risk for patients with type 2 diabetes. As the trial progressed, we recruited more patients we recruited more quickly than anticipated. We increased our enrollment numbers from 12,000 to 16,500. This increase in sample size allowed us to accrue the events more quickly than we had planned. We and our partner BMS expect to submit the data from SABR to regulatory authorities around the world in the second half of this year, which is 2 years ahead of our initially planned timeline. For Symbicort, in June Symbicort Smart was approved in Japan. The COPD indication was approved in August and launched in September. PATHOS is a real world evidence study on the impact of different COPD management strategies on outcomes for patients that was shared at ERS. 19,000 patient years of data, this is the largest and longest real world study to compare the effectiveness and safety of SYMBAKOORT compared to fluticasone somedol in patients with moderate to severe COPD. Specific to the U. S, the next step for SYMBICORT is the submission of the breast activated inhaler, which is on track for a 2014 filing. So also talk a little about the molecules that are in Phase 3. For naloxigol, the Phase 3 Kodiak studies are progressing well. Kodiak is designed to investigate the safety and efficacy of naloxigol as a We announced the top line results from Kodiak 4 and 5 and Kodiak 7 in patients with non cancer related pain who have opioid induced constipation. We released those results in November of last year. More Phase 3 data from both of those trials will be presented at DDW in May. Enrollment in CODIAC-eight, which is a long term safety trial is complete and those results are expected this quarter. We remain on track for regulatory submissions in the U. S, Europe and Canada in mid part of this year, of course, pending our full analysis of all the trial from all the data from all four trials and pre NDA meeting we have with the FDA. Cazavi is innovative combination of an established antibiotic, ceptazidine, with a novel inhibitor of bacterial resistance called cabibactam. CasAbi aims to treat hospitalized patients with complicated intra abdominal infections, complicated urinary tract infections and hospital acquired pneumonias, including ventilator assisted pneumonia. We enrolled our 1st patient in the Phase 3 study in 2012. Verdalumab is the anti IL-seventeen receptor monoclonal antibody that we are developing in collaboration with Amgen. This is being studied for the treatment of psoriasis and Phase 3 was initiated in the Q3 of last year. Psoriatic arthritis Phase 2 trial was also completed and we're in the middle of analyzing that data. Fostamatinib is the 1st oral kinase inhibitor with selectivity for the spleen tyrosine kinase, so called SYK kinase in development for rheumatoid arthritis. Our Phase III OSCARO program is on track to report in the Q2 of this year with anticipated filings in the U. S. And Europe at the end of this year in Q4. Our acquisition of Ardea last year brought in the Phase 3 asset Lisinurad. Lisinurad is a selective uric acid reabsorption inhibitor that primarily targets Urate 1 and 4 in the proximal renal tubular cells that regulate the excretion of uric acid from the body. Being developed as an oral once a day chronic treatment for gout and it's being studied in an ongoing Phase 3 program including as an add on to allopurinol in patients who do not reach their target serum uric acid concentrations with allopurinol alone. We think due to its complementary mechanism of action and its tolerability profile, it has the potential to fundamentally change the way that gout is treated by helping the majority of patients actually get to their goal of 6 milligrams per deciliter in serum uric acid. And we're targeting regulatory submissions in 2014. Now in 2013, there are 5 programs that could potentially progress to and start Phase 3. In 2014, there are an additional 11 programs. Now not all of these will make it, but this figure clearly reflects progress we've made in our Phase 1 and 2 pipeline that I mentioned earlier. And our consistent focus on quality, I think increases the chances that these molecules will progress and start Phase 3. This year as well as the upcoming Phase 3 starts, there are many milestones anticipated, further Phase 3 results for fostamatinib and naloxagol, several submissions including Brilinta in Japan and Forxiga in Japan and China and the launch of Flumus quadrivalent flu vaccine in the U. S, to just name a few. So I think as you can see, our focus on quality, the innovative science in our lab and the enhancements to our approaches are beginning to play out. Continuing this momentum over the next few years will, I believe, result in a significant increase in our FICC Phase 3 new molecular entity programs as we progress the pipeline. I'll speak more about additional opportunities we are creating with our pipeline at the Capital Markets Day in New York in March. And now I'd like to turn the microphone over to the man who answers all the hard questions, Simon Lauf. Thank you, Briggs. I'm going to cover 6 topics. I'll recap the headline numbers for the full year and the 4th quarter. I'll cover our core operating profit performance and I'll emphasize the key drivers of operating profit and margin. I'll update you on the progress of Phase 3 of our restructuring program. I'll describe our cash performance and our decisions on shareholder distributions. I will make the bridge from our core P and L on the old basis to our new definition of core financial measures and then using this new core as the baseline, I'll close with our thoughts on guidance for 2013. Now Pascal covered the overview of the full year performance in his opening remarks. To complete the picture, we bridge from core earnings per share of $6.41 to a reported earnings per share of $4.99 with the usual adjusting items for restructuring, amortization, impairments and legal provisions. While core earnings per share declined by 9%, reported earnings per share fell by 29%. The faster decline in reported EPS is due to higher restructuring and amortization costs in 2012 and of course the $1.08 benefit in 2011 from the sale of Astrotech. I don't intend to go into any detail on the 4th quarter accounts. The revenue picture is similar to the full year. Core EPS, however, benefited from the favorable adjustment to deferred tax balances related to the reduction in the Swedish corporation tax rate. So I'll now turn to the P and L for the full year. And I'll focus here on core margins and profit. The press release does, of course, contain the statutory numbers and a detailed reconciliation to the core measures. When I refer to growth rates, they will all be on a constant currency basis. Core gross margin was 81.2 percent of revenue. Now that is down 90 basis points compared with last year, which benefited from the settlement with the PDL BioPharma in the Q1. For 2012, there were benefits from the absence of Astrotech from Aptium, and there was also a small uplift in the second half from the accounting treatment of the Merck second option. Countering those upsides, there was an unfavorable impact from product mix. Core SG and A expense was down 12% compared with last year. Restructuring benefits and spending discipline were partially offset by increased investment, particularly in emerging markets and the inclusion of the amortization expense related to the amylin intangible assets acquired in the expansion of the diabetes alliance. The excise fee imposed by the enactment of U. S. Health care reform measures amounted to 2.8% of core SG and A expense for the year. Core other income for the year was up 24%, reflecting the $250,000,000 from the sale of Nexeum OTC rights. Core pre R and D operating margin was 53.2 percent of revenue, That is 90 basis points lower than last year as the benefit from higher core other income was more than offset by higher core cost of sales and core SG and A expense as a percent of revenue. Core R and D expenditures were down 11% to nearly $4,500,000,000 Now we did absorb significant new spending on in licensed, acquired or partnered projects during the year. However, these are more than offset by restructuring benefits and by significantly lower intangible impairments in 2012 compared with last year. The volatility related to impairments is one of the reasons we move to our new definition of core measures. Core operating profit was $10,400,000,000 at 18% lower than last year. Core operating margin was 37.3 percent of revenue, 160 basis points lower than last year. We turn to our productivity program. For the full year, we've incurred $1,600,000,000 of costs associated with the 3rd phase of restructuring that we announced back in February 2012. You add in the $261,000,000 that you'll recall was charged in the Q4 of 2011, It means we've around $300,000,000 left to go against the total program estimate of 2.1 $1,000,000,000 and most of this will be taken in 20 13. Actions involving around 6,000 300 of the estimated 7,300 positions that will ultimately be impacted have been completed. Total annual benefits of $1,600,000,000 by the end of 2014 are targeted from this phase, and we estimate that around $350,000,000 were achieved by the end of 2012. Now bringing together all three phases of restructuring, we have reduced gross headcount by around 27,000 positions. After reinvestments, we've achieved a net reduction of over 15,000 positions. Cash generated from operating activities was $6,900,000,000 for the year compared with $7,800,000,000 in 2011. Lower tax payments only partially offset the lowered EBITDA for the year. Cash outflows on externalization of activities were $5,100,000,000 chiefly related to the purchase of the Amelim intangibles and the $1,100,000,000 acquisition of Ardaya. We ended the year with a net debt position of $1,400,000,000 Now turning to cash distributions to shareholders. The 2nd interim dividend is $1.90 which brings the dividend for the full year to $2.80 maintaining the same dividend as last year. This is consistent with our progressive dividend policy by which we aim to maintain or grow the dividend each year. It's a policy that we're committed to going forward. We've revised the basis by which we assess dividend cover. Previously, you may recall the dividend cover target was 2 times based on reported earnings before restructuring costs. Now with the adoption of our new definition of core financial measures, the dividend cover target is now 2 times based on core earnings on the new definition. We believe that this new core earnings measure is a better indicator of the cash cover for the dividend. And when the Board adopted the progressive dividend policy, it recognized that some earnings fluctuations are to be expected as the company transitions through this period of exclusivity losses and new product launches. The Board view is that the annual dividend will not just reflect the financial performance of a single year taken in isolation, but it will reflect its view of the earnings prospects for the group over the entire growth of the investment cycle. And likewise, it recognizes the dividend cover in any given year is likely to vary from the 2 times cover target. Prior to suspending the 2012 share repurchase program, we executed net share repurchases of $2,200,000,000 The Board will continue to keep under review the opportunity to return excess cash to shareholders through periodic share repurchases. However, the Board has decided that no share repurchases will take place in 2013 in order to maintain flexibility to invest in our business. As we announced last quarter, beginning with the Q1 of 2013, we'll be updating our definition of core financial measures. The principal change is to exclude all intangible asset amortization and impairments with the exception of information systems related intangibles. Now we provided the reconciliations for the 4 quarters of 2011 and the 9 months of 2012 back in November. And in today's press release, we've included the reconciliations for the Q4 and the full year 2012. I know that many of you have already adjusted your 2013 models, but others may yet to do so. Now just to be absolutely clear, here is the core P and L for 2012 reconciled to the new basis. I'll not take the time to go all the way down all the accounts here. And I just point out the core gross margin against this new basis, I might expect to see some decline in 2013. And the other item I'll call out is, of course, that the new core EPS figure is $6.87 for 2012 versus $6.41 on the old basis. I'll now turn to our guidance for 2013 and it's in the context of this new core baseline. Now the financial performance for the full year of 2012 was defined by the significant revenue decline associated with the loss of exclusivity for several products. Seroquel IR alone declined by $3,000,000,000 Regional losses of exclusivity for Atacand, Nexium and Crestor combined for a further negative impact of more than $1,000,000,000 Against this revenue profile, spending discipline and restructuring benefits can only be expected to partially mitigate the impact on core profits and margins, particularly as investments to drive future growth and value are to be made. A larger decline in core EPS for 2012 was averted by the favorable impact of 2 tax related items, dollars 0.19 from the tax provision release in the Q2 and then $0.18 from the adjustment to deferred tax balances in the 4th quarter. 2012 also benefited from $0.16 from the sale of OTC rights to Nexium in the 3rd quarter. So together, those three items amount to $0.53 per share headwind as we move into 2013. So for 2013, we expect challenging market conditions will persist, including continued government interventions in price. The revenue impact from the loss of exclusivity will continue to affect the revenue performance with the Q1 particularly challenging since Seroquel IR and Crestor in Canada have not yet reached the 12 month anniversary since generics entered the market. For the full year of 2013, the company anticipates a mid to high single digit decline in revenue on a constant currency basis. Productivity and efficiency programs will continue to deliver their target level of savings. These will provide the necessary headroom to invest behind key growth platforms and in progressing the pipeline with the aim to hold core operating costs to combine core R and D and SG and A expense to hold core operating costs in 2013 to a slight increase compared with 2012 on a constant currency basis. Core other income is expected to be under $600,000,000 for the year. The reported tax rate for 2013 is anticipated to be around 23%. And with a revenue and operating cost profile in line with our guidance, core EPS will decline significantly more than revenue in 2013. Now in January 2010, the company outlined planning assumptions for revenue and margin evolution for the period 2010 to 2014. With 2013 guidance now in place and in the context of an updated corporate strategy, these planning assumptions for the remainder of the period have been withdrawn. Financial guidance for 2013 has been based on January 2013 average exchange rates for our principal currencies and takes no account of the likelihood that average exchange rates for the remainder of 2013 may differ materially from these rates. And I'll hand back to Pascal. Pascal? Thank you, Simon. I just wanted to close this session with a few thoughts on my 1st 3 months at AstraZeneca. And it's too early for us to share any views as to what our strategy will look like. We wanted to do this at the end of March as we had communicated to you earlier. We really want to do a thorough job of analyzing our options and looking at our business and developing priorities and strategies in detail. And also my priority for the 1st 3 months was really to get to know the people, understand the organization, understand the culture, understand how this company works, what it is we do very well and what we could do better. And as you can imagine, an organization of that size is not something you get to know very quickly. And fundamentally the most critical piece is to understand the people and in particular the critical leaders that are making this company. So I have gone around the world. I've visited about 15 sites in many countries. I've visited every single research and development site. I've gone to many of our commercial organizations. I've had many town halls. I must have interacted with more than 8,000 people. I've met many, many of our leaders. I have had many roundtables of 8 to 10 people, cross functional roundtables in various sites, must have run 35 or 40 of those, which enabled me to hear from 350 to 400 people. And I think I have now a good sense for the organization and what it is we do well and what we need to improve. And as I have shared with some of you in the last few weeks, one of the things that really struck me the most at AstraZeneca is that despite 2 or 3 years of waves of restructuring, the people are still very, very motivated, sometimes a little bit disoriented, of course, as you can imagine, because you saw the headcount reduction that the company has experienced in the last few years and you can't do this without impacting people. But incredibly engaged and committed passionate group of people and very committed to doing the right thing and committed to the success of the company. Second thing is the collaborative spirit is quite unique actually. Working for many companies have been in many different places and the level of collaboration in the organization is quite remarkable. I also believe we have tremendous science, got great scientists around the world. And it's not only me saying this. I have talked to, as you can imagine, many opinion leaders, many people I know from my past lives at the previous company or other companies in oncology and diabetes and cardiovascular medicine. We've also run a series of meetings, advisory boards, probably spent in total close to 2 weeks doing this with some of the top leaders in the world, top scientists in oncology, in metabolism, cardiovascular medicine, etcetera. And typically what I heard was that AstraZeneca and Science ranks in the top 3 companies in the industry, 3, 4 hundred companies in the industry. So fundamentally good fundamental science and fundamental scientists. Now so you might ask me what it is that what is it that you need to do then to leverage this and why is the pipeline not what you would what you could expect it to be. And I think really over the last few years, this we have as a company become a little bit complicated. And in many ways out of this complication is a bit conservative and complicated with quite a number of management layers, a great collaborative culture, but also as a result very consensus driven with sometimes lack of clarity of decision making that leads to many committees and not necessarily rapid decision making. So one of the things we need to do as it was a clear result ending message from many of those scientists is select the assets that can do well and commit to those and prioritize them. And we haven't been able to do this very well I must say in the past. And that is certainly something we will do better in the future. But fundamentally, many strengths and strong biology, strong understanding of biology, strong biologics unit, strong small molecule. And if I could have my first slide maybe, I wanted to share with you a few reasons why I believe this company can do well. And if you look at it, AstraZeneca has strength in biologics. It has strength in small molecules, of course, and that's the heritage of AstraZeneca. It has strengths in immunotherapeutics and also it has quite unique antibody engineering technologies. And these biologics immunotherapeutics and antibody technologies and they are part of the Menimmune organization today. But part of it is the cat heritage, the Cambridge antibody technology here in Cambridge, U. K. So we have quite a unique combination of capabilities. We're not the only ones having some of those, but to the extent we have them, I think we have a very special place. And if you look at the pipeline itself, if you look at the next slide, this is a complicated chart like many of those pipeline charts are. I just want to leave you with 2 messages here. 1 is, if you look at Phase 1, Phase 2 and Phase 3, you have 2 columns. The left one is the small molecules. The right one is the biologics, the large molecules. And what this tells you is that our pipeline is about fifty-fifty small and large molecules. It's not reflected in the Phase III development portfolio, of course. It's too early for this, but many of those products are progressing now through the development program. And so fifty-fifty is the first message I want to leave you with. The second is, if you look at the colors and if you look at the top color, the red color, you will see a lot of oncology programs there. And I guess the message to you is we are going to be rebuilding oncology. Cardiovascular medicine, diabetes close to my heart. Oncology is also close to my heart. And I'm very happy to have Briggs leading our development function because Briggs is an oncologist by training and oncology, of course, is very close to his heart. So this is clearly what one of the things we're going to do is rebuild our oncology pipeline. And finally, as you can see here, I know it's written in small letters and hard to read, but we have a very rich program of life cycle management extensions around Brilinta, around our diabetes franchise. So a very full program. The key for us is to pick the winners out of this pipeline and move them forward and commit and invest in those. So clearly, this is what we're going to do. We're going to invest in this pipeline and build it organically. And finally, it is sometimes hard to see because when you are faced with headwinds like we are faced, losing patent protection for Nexium, CEROQUEL, etcetera, the top line, of course, is very substantially negatively impacted by all of that. It's hard to see that there are underlying growth opportunities, but they are. And I've talked about those before. If I get the last slide, beyond the pipeline which will drive our future growth, Brilinta is still, I believe, a growth driver. Dollars 89,000,000 last year doesn't feel like it is a massive growth driver. But I believe we can through really hard work and clever work, we certainly can turn this product into a true growth driver. It will be a slow steady progress. I'm hoping I believe that by the second half of twenty thirteen, you will see a different trajectory for this product, and we have signs that we actually can do it. The second is diabetes and our alliance with BMS. The diabetes is a disease that is a progressive disease as you know. Patients tend to progress. They receive 1, 2, 3 treatments and receive combinations. And there is room for a variety of products. We have, of course, a GLP-one. We have a DPP-four with Zonglyza. We have combinations. And we have now for CIGAR, SGLT2 inhibitor, which was just launched in Germany and so far and this is very early days of course, but so far he's getting pretty good reception. The emerging markets have always been important to AstraZeneca, which is a company that was one of the first ones to identify the potential of those countries. We have tremendous presence in many of those markets, in particular in China, because when you talk about emerging markets, typically you really mean China. It's the biggest potential out there. We have 5,000 people about that's about the size of our presence in China. We have a very large sales force. We have a tremendous leadership team. And I believe that moving forward we can drive growth faster growth in China than we have in the recent past. The 4th one is our respiratory franchise. Simply, we'll face challenges in Europe even though the analogs are not generics or the market dynamics are different, suddenly they will impact us negatively. But in the U. S, we have tremendous potential. You heard what I said a bit earlier here, dollars 1,000,000,000 is what we achieved. We have 22% share, 28% new patients initiation, so a lot of potential. I'd like to remind you Advair was a $5,000,000,000 product, so there's a lot of room for growth in the U. S. And the emerging markets in China in particular. In Japan, we have growth potential for SYMDEKO and we will build our respiratory franchise. With our own portfolio, there's course. And the last one is Japan. And partnering, of course. And the last one is Japan. Japan is a market that has been stable for the last few years. It's starting to grow steadily 3%, 5% a year. Again, in Japan, we have a tremendous leadership team and a tremendous organization. We have a lot of products that still have growth potential, Symbicort for sure, Nexium, Cresta, many others. So Japan will be one of our growth platforms. So clearly beyond these patent expiries, we have potential for growth. So my conclusion is that there is a way forward for us organically through these final expiries by delivering better on what we have in our hands, the portfolio of course, but also the pipeline, but also what we have in the marketplace. Complement this with a string of pearls business development strategy, finding the right opportunities out there and doing the right thing developing and commercializing them. There is opportunities for us to partner further just like we've done with Amgen or we've done with BMS and bring our capabilities to bear to better market or develop products where we have expertise. And finally, we as I said before, we'll certainly be open to initiatives that are more transformative deals. But I also wanted to tell you that the probability the likelihood of this is lower because there are not so many. They have to make strategic sense. We have to be able to operationally deliver on something like this. Many of those large acquisitions are difficult to execute. And so they have to be operationally feasible. And finally and importantly they have to create value of course. But we're going to be open to all of this. And I really believe that our base plan, which is execute on what we have and complement it with business development, can actually take us through the patent expiry, the cliff we are facing and then start growing again at some point in time in the not too distant future. So that's really what I wanted to share today. The message is we are committed to science, we're committed to innovation, we are committed to our pipeline, we'll invest in growing our pipeline. We'll invest for long term growth. We will return to growth one way or another. And we will share with you more of our plans, not only our strategies and our plans, but also our pipeline and share all of this with you in March, invite you all to join us March 21, so you can get a sense for why we are so excited and why we believe we can actually turn this company back to growth. Thank you so much. And I'll open the floor for questions now. Amit Royce from Nomura. Thank you. Just a couple of questions around Crestor. Do you have any plans to have any dose discrimination on pricing? When simvastatin went generic against Lipitor, they end up dropping the lower dose by about 30 percent I believe. If you look at the prescriptions, you can see the 2 lower doses are now even the 20 milligram is going negative in the U. S. The 2 low doses make sense because they're similar to liposol. But would you be able to give some price away on the lower doses and keep the price higher on the higher doses, which are quite unique? And secondly, in terms of pricing Creso overall for next year, you've managed to in the U. S. Keep pricing quite high and realize some despite loss of volume. Will you better keep pricing high for next year in Creso in general? Many thanks. Amit, I'm not sure I got the first question. Let me just try and if I don't if I didn't get it, you can always ask again. In the United States in 2012, our price didn't decline much. In fact, what happened is that we lost the Medicaid business. So we lost volume out of the Medicaid business. Our net price was more or less stable because of the effect of the Medicaid losing the Medicaid business, which is at a lower price. For 2013, the price will show some decline. The good thing is we know what it is going to be, and we know that we have good coverage and good reimbursements for 2013 because we have completed our round of negotiations with Managed Care. So there will be some pressure on price in the United States in 2013. I won't tell you how much, but there will be some price pressure. Hello. Yes. Thank you. That was the answer to my second question. So the first question was around Crestor pricing by its different doses, the 4 different doses of Crestor. When one looks at the prescriptions, you can see that the 2 lower dose, the 5 milligram and the 10 milligram are the ones that are suffering the most 20 a little bit, which is to be expected considering as a physician myself, we tend to think that the 510 are similar to the 2040 lipidol. When Pfizer faced the same issue with generic simvastatin, we saw them drop the lower the price of lower dose Lipitor down to be able to compete with the generic simvastatin in that case. So do you have any plans on changing the price of Crestor by dose to essentially keep the higher doses at a high price, but keep but drop the price of a low dose to try to maintain some share in the face of generic atorvastatin 20, 40,000,000 ounces per week. Our focus is really to our focus is on the patients who need high dose because that's really where you can see the best clinical benefit. Our focus for Crestor is the process the SES patients in valiculae and those patients who need higher dose, where clearly we deliver better benefit than atorvastatin. And in that setting, we've been able to defend the use of Christophthora without having to adjust our price too dramatically. We're suddenly adjusting the price of the small dose. I can't tell you precisely whether we specific plans for the low dose. We could get back to you on this one unless, Simon, you know the answer. The one thing I can tell you is that the absolute commercial focus is the higher dose where really the benefit is. Sachin Jain, Bank of America. Three questions, please. Firstly, on cost growth, you've alluded to some growth in 2013. I wonder if you could give us any color 2014 2015. Is it fair to assume continued growth? And I guess that comment in the context of the savings program, I think you've got roughly $1,300,000,000 left. How does that phase 13, 14? And is there potential for greater cost growth once a saving program begins to slow or even come to an end? 2nd question just within your sales guidance, if you could give some color as to what emerging market growth is assumed given that your growth rate for the full year of quarter is still running around 6%, I think. And then the third question on R and D, just real top down question on the slide you put up on Phase 2 to 3 progression decisions this year and next year. I just wanted to give us any color on the average time those compounds have been in Phase 2. I guess an external perception is a lot of those compounds have been sitting there for a while. Is that perception correct or not? Thank you. Thanks, Sachin. So maybe Simon, you could take the first two and Briggs will take the part of the question. So if we start with let me start with your second one first, which was on emerging markets. So the I think Pascal described some of the press that's actually faced in 2012 in the emerging markets. I mean, we had good underlying growth in markets like China and Russia, but some specific issues he described in Turkey, India, Brazil and Mexico. In addition, of course, we had the drain in the first half really from the supply chain issues, which impacted emerging markets. As we move into 2013, we do expect the growth to recover in some of those drains on 2012 that are annualizing out. So we'd expect to see some stronger growth going into 2013 and continue good fundamentals in a number of those core markets and we're investing behind those. There's some acceleration. The first of your questions, on the costs, we do see costs, as you said, productivity improvement programs, restructuring continue to deliver benefits. The Phase 3 program, the remaining benefits, when we described the Fenovits, you're already familiar with this, we described it as the annual rate at the end of that year. I would expect sort of the remaining benefits those to be reasonably easily phased between sort of 2013 2014. Most of the costs coming into 2013, but the benefits flowing out in 2014. If you then come and look at the cost run rate in 2013, that's a combination of the restructuring, the productivity delivering. But as you saw actually from my headcount, that bridge, we're reinvesting where we can see growth potential. You saw that in the movement of headcount. And that's certainly a feature as we go into 2013. We're investing behind our growth platforms in sales and marketing in emerging markets but elsewhere. We're investing to progress the pipeline. And that certainly is leading to the guidance we provided for 2013, which is to hold the increase to a slight increase. 2014 2015, we'll update you when we get to those years. It's going to be shaped by the nature of the investment opportunities that we face. Hope that helps you on that. Let me just add on the as far as the emerging markets such in the if you look at China, we grew by 17% last year. I think we can grow faster than that in China. We have many products that really have pretty good potential there. I mean, Cresto is only $100,000,000 in China. It's growing fast, but it's only starting. The potential is still enormous. Next year, it's growing, can do very well. Eureka has tremendous potential in China. CEROQUET is growing. We can certainly do better than 17%. So the growth in those countries should overall accelerate, as Simon was saying. Briggs, do you want to? Yes. So the pipeline tells you when each of those molecules started the phase they're in, so you can go down and take a look. And I think it is fair to say that some of the ones that are in the potential may have been there longer than one would have liked. I think the sense of urgency that we as a leadership team are bringing to the portfolio is exactly that, to look at what we have and ask what are those molecules that Pascal said that we need to accelerate, get them into Phase 3 and get them out to patients. So what happened in the past is what happened in the past. What we're focused on is what do we have for substrate today and what can we move it quickly forward. Sorry, just a follow on. So for those ones that have been sitting there for a while, do you have additional data or just greater conviction that's driving the decision? Just to clarify that. So I can give you example. So olaparib was one that has we do have additional data. We've done additional studies and we have longer term follow-up on patients that were in trials that we've done. And from that data, which I think most of what we presented at ASCO in May or June, you'll see that there's new information that gives us greater confidence about the molecule. This is typically an example where I think one of the things as a company we knew to do better is identify biomarker and have a better personal health care approach because olaparib was developed in all comers. And in fact, we find now that BRCA mutations are really the population that is the most likely to respond to this drug. But sort of we are like 2 years behind the board a little bit. And so we have new data. Briggs was saying that it's very encouraging actually. So now what we need to do is move forward in late stage development. It's under Haldorf from JPMorgan. Four questions, please. Firstly, on the top line, you gave quite a range. Can you just roughly tell us where the key uncertainties are in your forecast? Secondly, on the gross margin, I think you said that may decline a little bit year on year and I was surprised about that given that you're going to have a full year benefit of the Option 2 accounting, plus also a large proportion of Alliance revenue, which has been come to you at 100% gross margin. Can you just explain where the negative mix effect is coming from and why it's so strong? 3rd question, Symbicort, obviously, being great success story in the U. S, and these market shares have been going up in a straight line, but at $1,000,000,000 23% market share, you're no longer the little guy who's playing catch up. So what is driving how certain are you that you can continue to drive further market share gains? Is it as simple as that as long as that new patient market share is staying significantly above the overall market share? Are you confident that you can get that additional 4% share in at the very least? And the last question is on moxetumumab, which you said you which I'm not actually can't remember, which whether the decision decisions yet to be taken, I think, whether it needs to be taken forward. Let's assume it is going to be taken forward. This is an anti CD22. So how widely applicable is that in hematological toxicities? And how aggressively would you bring this forward? Or would it be a very step by step going to the refractory population first? So Simon, do you want to take the first couple of questions? So, Exane are offered and maybe Ward, you would take the Symbicore front. So, Alessandro, on the gross margin, I indicated that we felt we'd see some downward pressure on gross margin in 2013. That's comparing on a new core versus new core. So we're looking through the Merck effect. So that isn't a driver of it. You are right as the alliance grows, particularly from Glaser, you'd think that would have a bit of a benefit. That is being offset though as the proportion of our sales in emerging markets grow that tends to put a bit of pressure on the relative mix of the geographic mix. And you've also got the unwind, the full year effect from Seroquel flowing through. So it's really a function of geographic and product mix, nothing very significant. I would also say, Alexandra, we're continuing to work very hard from a supply chain efficiency standpoint to mitigate that mix effect and of course the sort of wider pricing environment we face. In terms of the revenue, you asked I think what some of the uncertainties are. I think that they're familiar to all of us. There's government price interventions. I think I shared this with you before. Up until really the last 12, 18 months, we've been able to forecast pretty very accurately, as it turned out, the annual price effects, particularly in Europe and some of our key markets. What we found in the last 12, 18 months is we're getting less predicted price interventions of various forms and in some markets coming back several times with different types of programs. So I would say, first, uncertainty is price interventions, particularly in Europe but in some other markets. The second is that what has characterized our revenues in the last 12, 18 months has been some loss of exclusivity and some well followed, well appreciated markets where the patent has expired. We do also have a number of patents, particularly formulation patents, where we continue to defend our intellectual property, but we've had generic companies launching at risk. You may have followed, for example, Seroquel XR in Germany would be a good example of that. And if you also look at the notes to the accounts today, you will see where we've tabled out the various patent proceeding matters we're involved in. And clearly, some of those have some binary outcomes around them. So I would say government price intervention, loss of exclusivity. But actually, in some of the markets that may not be tracked as closely as in the past in the European markets, Australia, those are the two main uncertainties. And in providing you with a range in terms of our revenue decline, that builds in the range of outcomes that we could envisage. Hope that helps. Yes, absolutely. So if I get your question right about the Symbicoid performance in the U. S, let me first echo some of the words Pascal was using that we are very pleased that the growth is there. We believe we have a very strong team in place locally in order to further boost the performance moving forward. We are very strong in asthma historically. We feel that we are gaining market share in the COPD segment. But that all in all together gives us the confidence moving forward that Symbicore can gain substantial market share moving forward in the U. S. Marketplace. So your question about Moxi, I think was your last one. Yes. So I think what you'll see, as you know, probably quite well in oncology, it's not uncommon that a molecule can work for multiple indications. You'll see that with Olaparib, you'll see that with Soluimetinib, you'll see that with MOXIe. So it's the lead indication is actually a small orphan indication in hairy cell leukemia, the data is quite compelling and quite impressive. And so we feel compelled obviously to get that done and get that out. But as you correctly note, there's a broader envelope of opportunities there that we'll continue to explore. Does that answer your question, Exxon Hollow? Well, basically, it seems like you have seen the hairy cell data already. So the question is, does that make you confident enough that you can go for a really broad rollout? Will this more stay in need? Is there anything why the molecule will be more always in an easy application of immunology? Yes. So I think if you're asking about the larger sort of lymphoma indications, I don't think we have enough hard data yet. Theoretically, it makes sense, but I think getting the dosing schedule right and some of those other indications we're still working on. Sorry. And then maybe after that question, I will ask Tim or Joe who are on the phone to ask their question. That you can and I realize we'll get a greater update in March. Just give us some sense of how you're thinking between kind of mid term and the long term, whether how you're thinking about returning Astra to growth kind of between those two different time frames? Secondly, Simon, kind of from a dividend cover perspective, you mentioned you're looking at kind of a 2x the core EPS over an investment cycle. If you can just give us a sense for how long that investment cycle is, is it 3 years, is it 5 years, kind of how long should we think about that? And thirdly, just for housekeeping purposes, what are you assuming for the outstanding patent litigation for Crestor in Australia in your guidance for 2013? In terms of the first question, yes, I mean, you sort of will have to wait until March, I guess. I see the I see our story in sort of 3 phases really, the short term, the midterm and the long term. And the long term is clearly about rebuilding R and D and improving productivity in R and D, and we certainly have started working on developing plans and metrics for this. The short term is clearly accelerating the growth of the growth the platforms I talked about earlier, because we have to unlock the potential of products like Brilinta, like diabetes, etcetera. So it's clearly a short term priority. And the midterm is navigating through this patent expiry phase and returning to growth. And I know you'd like to know where we will bottom out and when we will start growing again. And we've removed our 2014 guidance and the intent is not to introduce a newer one. That's very clear. So I don't have a specific number I would give you, but the only thing I can tell you is that we're certainly working as hard as we can to return to growth as early as possible. Now I hope it's very helpful, but that's all I can say at this stage. I'm sorry. Simon? Yes. So two questions, okay. The first was about our assumptions, I think, on the proceedings on Crestor in Australia. You asked what we'd assumed in our outlook. And the answer to that is that we provide a range, as you're familiar with, in terms of, in this case, the revenue decline. And the range is there to cover a variety of outcomes on that matter, Cresta. In terms of the dividend cover, yes, we're targeting 2 times on a core earnings per share basis. We said that we look at that sort of over an investment cycle. I mean, our industry has long investment cycles. So we're looking at 5, 10 years because it's driven by pipeline renewal. We've obviously been running higher than that for recent years, but that's the target we have through that sort of time period, if that helps you. Yes. Let me just repeat something Simon said before, and it's really our commitment to our dividend policy. This we wanted to reaffirm and make sure there's no question around it. Maybe what I could do is ask Tim Anderson, who is on the phone, to ask questions. I know he and Joe have been waiting for quite some time actually. So Tim, do you want to go ahead? Sure. Thank you. Thank you very much. So a few generic questions if I can. On SYMBOKORT, in what future year should we realistically expect to see generics or quasi generic start to come to the market in Europe and U. S? Are you confident that this will not happen through at least the next 3 years? And then you have 2 products where there could be different salt formulations introduced in the U. S. By generic companies in the not so distant future. So with Crestor and Nexium, if those clear the necessary legal hurdles like they may, how do you view the potential share losses with those compounds in the U. S? And then kind of extending that question further, is there any chance of seeing different salt formulations against something like Crestor launch in Europe like we saw happen with Plavix a number of years ago, where even though it was a different salt, it actually took quite a bit of share? And then last question is on your anti PD L1. When will we see data on that compound? And is there any possibility of leapfrogging that from Phase 1 to Phase 3? So thank you so much, Tim. Ruth, I'll ask you to cover Tim because if you want, maybe just quickly, let me just make one comment on Questor. And that is I mean I can't offer much comment because we don't really comment on IP related matters. We will defend our patents, as you can imagine. The only comment maybe I would make is that just to remind you that a difference sold is actually not substitutable. So if any of those was to reach the market, which we certainly, as you can imagine, will do our best we will to avoid, and we believe we have a strong case. But if it happened, those products are not substitutable. And therefore, their impact is not the same as you would imagine from a pure generic product. Yes. A couple of comments, Tim, about the Symbicort situation. Let's not forget that the device market is a very special market. We still have we full patent protection of the device of the Turbihail up to 2019. So even if generic analogs were into the market, it will certainly not be in our device. It can have price implications, of course, if products are clustered in 1 Gymbo cluster. But so far, we haven't seen any, let's say, indication that generic analogs are entering the market. We are following it. And if they are entering, we will take the adequate action we can take from a commercial perspective if there is an infringement from a legal perspective. But so far, we feel relatively okay with that. Regarding the U. S, more or less the same situation. We have a patent protection of the device, which is still for a long period of time. So I cannot say that we are fully protected, but we feel that this device is clearly good enough in order to protect our business for a considerable period of time. When I commented a bit earlier that we expected Symbicort to face more challenges in Europe than elsewhere, I had in mind, of course, the impact of analogs, which again is not the impact you would expect from a pure generic, but certainly will distort the pricing. But that's the European situation in the U. S. We don't expect anything like this to happen in the near term. And in the rest of the world, in Japan, it's not that relevant. And in China, we are doing very well. And we also believe we can sustain the growth of SYMDEKO. Francis, PD L1? So as Pascal described, the 2 biotech units and then late tube developments. PD L1 is still in our biotech unit. Tim, it's in Phase 1 now. I think Pascal has pushed all of us to, particularly oncology, to think about ways we can go from Phase 1 to Phase 3. So as that data reads out, that's certainly a candidate to get that kind of acceleration. But it's a little further back than being able to do that immediately. One of the things maybe to track your attention is the fact that we have a PD L1, we also have a CTLA-four. And so we have the potential for combination of those two agents, which is quite an intriguing sort of a possibility for us. But of course, we have to see more data before we can formulate any combination strategy. Thank you. Thanks for taking my questions. Sabas Neopet from Panmure Gordon. Just to press on a little bit on the respiratory portfolio on what Tim Anderson has just asked. It's evident from your answer that you're making the fairly reasonable assumption that simply because generics in the U. S. Are unlikely. Nonetheless, if we it will kind of exclude some of the pipeline assets, which have been in Phase 2 since 2008 or certainly for more than 3 years, then your pipeline in respiratory looks relatively light. And 16% of your revenues in 2012 came from respiratory growing as a proportion going forward. Quite a significant concentration of risk there. And yet, you have respiratory as one of your key sort of engines there. So what is the plan there? Are you looking to broaden that pipeline there? Is that something that is a focus area? So that's one question on respiratory. This is a tough question, but since you joined on the 1st October, Pascal, you have often said in public forums that the launch of Brilinta Brilique was not optimal. And perhaps I haven't sort of heard that from you in person. And perhaps you can take this forum to just explain to us what the steps remedial steps that you have taken to rectify that and what we can look forward to with regards because that was number 1 on your growth engine. So that's obviously something that we need to understand. And I don't understand it probably through lack of understanding of that specific area. And a third question and that's more strategic, I guess. You've come from an organization which had a sort of a diagnostics platform. And obviously, companion diagnosis is a significant part of drug development going forward and that may impact R and D productivity going forward. And obviously, this organization that you've joined has suffered in the past 5 to 6 years from lack of companion diagnostics. Eressa is an example of those. If a right market was available, I'm sure it would have had higher revenues. Do you see that as a weakness? And can you address that sort of organically not having a sort of a diagnostics platform, specifically looking at markets for companion diagnostics? Yes. Thanks so much. Three questions, right? So let me start maybe with respiratory and then Briggs can also come back. I mean Symbicort, we've talked about. The management of respiratory would be certainly business development initiatives, but also our portfolio. And I'm not sure what you have exactly in mind when you said we have assets there that have been there for a long time. On the biologics side, we have assets that haven't been there for a long time. I mean, they've been there a long time because they were in research and then in early development. But products like tralukinumab, benralizumab, I mean those are products that are progressing nicely through the development pipeline, and they are new. And they will move into their, let's say, development over the next couple of years. And maybe Soren Ebrix can tell you more about this. But it is a priority for us because I think we have strength there both in development and commercial and also in research and we can leverage this and build that on the back of our Symbicorp presence. Brilinta, some of the things we are doing are things that AstraZeneca had started doing, but certainly we are expanding and doing more often, speeding up and some of the things we are doing are new additional, I would say. So what we're doing is making sure that we address the cast lab as a priority and in a specific way because the prescriptions start there, the physicians are there are different, the patient flow is different. So you have to have a sales force that is dedicated and understand that environment. We're working on hospital protocols, pharma relistings because essentially physicians follow protocols in that setting and you have to be on a protocol otherwise you don't get used. And we've made good progress in terms of protocols inclusions. In France, Germany, etcetera, we are 60% and above of inclusion on hospital protocols, at least for the key hospitals we are targeting. We're working on discharge, making sure we don't lose patients from the discharge to the primary care or physician or cardiologist. We have increased our commercial investment, suddenly increased the sales force effort, increased the number of commercial programs. We have increased substantially the investment in clinical programs. We've started we are about to start a program in stroke. We have other indications we are looking at. We have unlocked substantial budgets for grantinates specific studies that physicians are interested in addressing. We also are looking at large Phase IV studies. We've answered a number of good questions that are now on the label or issues clinical issues that are now addressed in our label. But physicians have lots and lots of questions that are not necessarily the regulatory questions, but they are clinical, daily practical clinical questions that they need suddenly lifting our effort there. So there's a wide series of things we are doing to accelerate the growth of Brilinta. But for sure, we have increased our investment in a number of areas. And finally, compliance diagnostics, personal and health care, I do believe that suddenly we suffered a little bit from a primary care mindset where every drug has to be given to as many patients as possible. And as we all know, the world has moved. And suddenly, many of our R and D colleagues at AstraZeneca knew that. But the question is sometimes in an organization some people know something, the organization doesn't know it or hasn't integrated it in the way it goes about developing and commercializing medicines. And so the capabilities, we are not always there to do this, understanding identification of biomarkers, diagnostic tests, etcetera. But also the mindset was not necessarily there and quite frankly, Olaparib is probably a good example of that, yes. So that's one of the things we're doing now. The biotech units have responsibility from research to proof of concept. So the idea is to go from the bench to the bedside and back as quickly as possible and build early development teams that will capitalize on biomarker, personalized health care and early and fast speedy early development work. So we can indeed identify products that have potential to move from Phase 1 to Phase 2, 3 or Phase 3 quickly. And all that work needs to be done. And a lot of work has been done already, started doing in the last couple of years. We need to do more of this, change the mindset of the organization and have the appropriate organizational model in place as well, which is really what we have done in this latest realignment. Briggs, do you want to talk about that? The only thing I'd say about the respiratory franchise is again, I think if you think about respiratory, there's asthma, there's COPD, there's interstitial lung diseases, a variety of things. Asthma, if you think about it today, we as an industry have and we as a company have done pretty well to address a lot of the medical needed asthma, but there is a unique population that I think biologically we understand better. And so the molecules that Gus Gopin talked about that are coming through from the medivatex unit, they're focused on the mechanisms that matter for those for the unmet need. And I think that's the right way to go after that part of that population. COPD, we're still using some of the same mechanisms that have been around for a while. And I think we're still looking for those key biologic insights that you can start to segment COPD the way we segment asthma. That's really, I think, where the respiratory franchise is going to head. Yes. Peter Phillips from Morgan Stanley. Just two high level questions, Pascal. Just firstly on the CNS division. You've made some comments about how you're thinking about respiratory. With the ongoing loss of Seroquel, how should we be thinking about this? Just dismantling of the infrastructure as CNS declines relying on your virtual R and D business model or BD and partnerships to complement the infrastructure you've got? And then just on the pipeline, I mean, you're a fresh pair of eyes at Astra. I'm sure you're going to tell us that you're excited by the whole pipeline, but it is just a couple of assets that really excite you in the early stage that I'll be excited to hear what they are. Yes. And maybe I'll ask also Briggs, because he's another pair of fresh eyes. Briggs joined the company, what, maybe a year ago now that much? Okay. So it was only 9 months ago. So you have a pair of fresh eyes too. CNS, I think you have to see it as we are testing a new model. And essentially, from a commercial viewpoint, our presence is shrinking. There's no question about it. And we'll have to rebuild it. So we have to start from the early pipeline and over time rebuild it. Our priority is clearly going to be cardiometabolism, oncology and respiratory inflammation and to a lesser degree, anti infective. So CNS is clearly one franchise where we start We're going to have to start from the beginning again and rebuild over the next few years. Do you want to say which products you are the most impressed with? Just to see whether we have the same I can go first. Okay. I mean, I think there's a we talked about tadalukinumab for instance in asthma, I think, is a compound that we can move into late stage development. Hopefully, we need more data, but that's a very intriguing one. I think Golaparib, even though I know some of you will be a little bit skeptical, even cynical about it, we have a chance to reposition it for the right patient population across the variety of tumor types and move it forward. I think that I'm intrigued personally by the possibilities we have to combine immunotherapies for instance CTLF4 PD L1 or combine some of our large molecule with small molecules or immunotherapies. So this probably would be some of the most in training products. Selimitimib, I have my doubts I must say, but we have good data that are shaping up. And a photo like this, it's always good to have internal debate. So we have the internal debate. And I'm also open minded. So certainly, we will progress this product and try it because there is a good opportunity for this product. If what we believe is right, it could actually be quite a very interesting product in combination with chemotherapy. That might be the Onimac inhibitor that can be combined with chemotherapy without intolerable side effects because of its short acting profile. So we'll have to see, of course. But those that are probably the most intriguing would be trilokinumab, benarizumab, I guess, combination of the immuno therapies. And maybe a little more of a question, slightly, maybe he is just because I think if you look at the data presented at ASCO last year, when you combine it with Taxotere, response rate goes from 0 to almost 40%. You get progression free survival and overall survival. I think there is we have to figure out exactly how to combine it with chemo and that has not been the trend in oncology these days. People try to move away from chemo. But if a drug works well in that combination and it works in combination with a number of different chemotherapies, it could actually be quite significant. We have a few tremendous people that I would trust personally who are really convinced or will give it a good shot. Maybe what I could do, I'm sorry I know that there are some more questions. I'll give one last question, if James, you allow me to do that. And I'll hand the microphone to Joe, who's been on the phone waiting for a long time. You promised me you don't ask a question about non core items, Joe. Otherwise, I don't give you the microphone, but go ahead. Hello, can you hear me? So I have a question. Hello, can you hear me? Yes, go ahead. I have two quick questions. Firstly, just looking at the marketing cost, it's about €2,200,000,000 in the 4th quarter, your SG and A on your new core basis. And of course, we haven't seen your company in the same structure as it is because that includes some spending on the Amylin products. Is that a reasonable guide of the sort of quarterly run rate or is there a heavy seasonal bias there? And how much more in terms of marketing support can we expect that you will need as you take on board the European business, which I understand hasn't yet transitioned to you? And secondly, on the price of assets, Chief Executive of difficult to get assets in the prices were just astronomically high for late stage assets. You had to do deals really early on to show where you could add value. Otherwise, it was just a basic bidding war. I wondered if you felt that there were any reasons why you might be able to show something other than just sheer money in bidding for late stage assets. Because I think we all understand you're going to do exciting things with your R and D, but they don't really probably bite until 20 15, 2016 and beyond. And investors might want to see something a bit sooner. Thanks, Georgi. Simon, do you want to address the first question? Yes. So, Joe, on the quarterly run rate, I mean, I think the guidance that we provided for our cost base, which is continued efforts to on efficiency and the benefits of our program, creating headroom that's going to redeploy that headroom and that holding our core costs to a slight increase as we go into 13, and that applies really across the SG and A and R and D line. So I think you'll see some increased investment sort of showing through in your quarterly run on SG and A, albeit a slight increase. And the quarterly pattern, Jody, another piece of that, I'd encourage you to sort of look at our quarterly patterns over the last couple of years. You generally do see a pattern of some higher spend in the 4th quarter and not a typically sort of constant rate. But I would say that our 10%, 11%, 12% quarterly rates probably are reasonably reflective of what we'd see going forward. And any extra costs, anything we haven't seen for the European bit of the Bygerio and Byetta? Or is that insignificant? Sorry, sorry, Joe, I beg your pardon. I was include I do beg your pardon. I was including that actually as one of the drivers of the investment that we're putting back in. So Ruud here has been working extraordinarily hard in Europe over the past couple of years and has adjusted his cost base to reflect loss of exclusivity in a number of markets and has done a great job in maintaining our margins in that period. Ruud, I think you'll be putting investment behind our diabetes franchise reflective of the opportunity that we see. Absolutely. And to add quickly on that, we are in the transition phase, as you probably know, with Lilly's burns and marketing authorization order. We hope to finalize that at the end of Q1, so we can start promoting the biopic, biliary portfolio in the European environment from quarter 2 onwards. Licensing opportunities, Joe, I mean, I would not certainly dispute the fact that I mean, first of all, there are not so many very late stage opportunities. And secondly, certainly, they are more expensive than early opportunities. So if they the point is that we need to license earlier for sure. You need to license as early as possible so you can add as much value as possible. I don't think though that it is totally impossible to find assets where you can add value if you have specific skills in an area or global scale. In terms of let's stage buying products is not the only way you can do it. The BMS alliance that we entered into is a good example of another way to do it where we suddenly are getting together and sharing our expertise to develop and commercialize a portfolio of products. And so far, we've done it quite well. And I really hope that Forxiga is actually going to be a nice product. The feedback so far is very encouraging. So that is an example. The Amgen 1 is another example. You don't necessarily need to buy products. You can also enter alliances and share risk and value doing it. So there's a variety of options that are open to us out there, not necessarily buying at full price. And that's certainly not something we will do. We'll not buy products if we don't believe we can add value and make it a financially attractive option. I don't think my CFO would allow me to do that anyway. That's probably not possible. Thank you so much for your great questions and see you next time. Thank you. Bye bye.