Pascal, please go ahead.
Thank you. Welcome everyone, and thank you very much for joining us for today's webinar. My name is Pascal Soriot. I'm the CEO of AstraZeneca. I apologize we are taking you away from your weekend, but as you can imagine, this is a very material transaction for our company and for Alexion. As soon as the board of both companies agreed on this merger of the two companies, we of course, had to announce it. I guess the benefit of announcing today is that it gives investors and analysts the weekend to think about this transaction and the consequences and the implications and the importance of it. I'm joined today by Marc Dunoyer, the CFO of AstraZeneca, as well as Mene Pangalos, who is our EVP of BioPharmaceuticals R&D.
On the Alexion side, Ludwig Hantson, the Chief Executive Officer of Alexion, is with us, as well as Aradhana Sarin, who is the Chief Financial Officer of Alexion. We also have members of the AstraZeneca IR team and members of the Alexion team with us today. Let me get started with the presentation. The transaction we just announced today, we believe will accelerate the AstraZeneca strategy and financial development. We've been on a journey over the last number of years, and we believe this is a very important time point for us and a very important transaction that will further accelerate our development. If we move to the next slide. This is a forward-looking statement. Those of you who have followed us know very well that our strategy has been focused on a broad presence across specialty and primary care franchises that we've been building over the years.
From a history of primary care presence, we've developed the company in specialty care, in particular in oncology, but also other specialty care field. We have a large, very strong emerging markets presence. We are number one in China, number one pharmaceutical company, and we have large presence in many emerging markets around the world. We have a strong pipeline, we have been working on developing this pipeline over the last many years, following the science and looking for innovative medicines that make a difference to the life of patients. We have 17 phase III medicines in development and lifecycle projects, we are, of course, working very hard to advance our early- and mid-stage pipeline very quickly. Finally, after many years of rebuilding our pipeline and investing in our future growth, we are rapidly improving our financials. We have nine blockbuster medicines.
We've returned to sustainable revenue and earnings growth. As you know very well, our focus has been on improving our operating leverage and our cash flow so that we can cover our dividend by 2021 next year. Overall, throughout all these years, our focus has been on science and patients and developing innovative medicines in oncology and biopharmaceuticals that help treat difficult diseases. If we move to the next one. We've had a focus on oncology, cardiovascular, renal metabolism, and also respiratory disease. Over the last two to three years, we have increased our focus on immunology. As you know, we've always described the therapy area as R&I, respiratory immunology. First of all, with anifrolumab, which we filed for SLE, and we are, of course, working on life cycle management of this important product.
In the midterm, we have been working on further franchise developments in myositis and CLE, and we also have a number of indications that are smaller indications that we are developing Fasenra, and of course, the core indication of Fasenra is asthma, but there's a whole range of important but smaller indications that we are working on. We will be doing the same with tezepelumab. You also know that we have mepolizumab that we are developing and hoping to launch by 2025, 2026. In the long term, our goal is really to build a leadership position in the field of immunology across a range of indications. If we move to the next one. We have had a very clear criteria for business development and merger acquisitions, and I've described those criteria to a number of you over the past months and years.
Our external growth strategy has always been anchored in these principles. First of all, anything we do has to be aligned with our strategy, that is aligned with our therapy area of focus and definitely accelerating our innovative science. Secondly, we have to be able to add value, either through our expertise in a certain area or alternatively, through our geographical reach. Any business development for M&A has to support our top-line growth. Anything that would dilute our top-line growth is something we've never considered. Of course, the price has to be right, and the investment has to attract a reasonable return. It has to be accretive to our earnings. Finally, the integration has to be feasible, manageable from an organizational viewpoint, from a footprint viewpoint, but also very, very importantly, from a cultural viewpoint.
We believe here, Alexion is very much aligned with our strategy in meeting all of these criteria. The two companies share a common culture of belief in science, innovation, developing medicines that help patients. This, as you will see from the next few slides, this merger will address each of these criteria with a positive answer to each of those. Moving to the next one. Alexion, I'm sure many of you know Alexion. It is a global leader in immune-mediated rare diseases with a historically very important product, Soliris, that has been developed for PNH and a range of other indications. In the more recent past, Ultomiris has been developed as a second-generation medicine, which was launched in 2018, and has a long patent protection.
The Alexion team has done a spectacular job switching 70% of PNH patients from Soliris to Ultomiris within 18 months. There's more to come. That effort is continuing across other indications. As a result, the company has shown a pretty substantial CAGR over the last number of years and is getting close to $6 billion in sales for the last 12 months, until 2020. With a pipeline in development that is pretty robust, with 11 molecules and 20 clinical studies across a range of indications. If we move to the next slide. Alexion has been, again, some of you would know that, over time, developing from a history of a focus on ultra-rare in indications to indications that are less rare to relatively more common. Moving also from Soliris to Ultomiris to ALXN1720.
As you can see here on this graph, Ultomiris is now approved for PNH. It's approved for HUS. Then there's a whole range of indications that are in development, that are addressing a pool of 250,000 patients potentially. The next generation product, which we might talk about later if you want, is in early development, but also very, very promising compound. If we move to the next one. This is really, in a nutshell, why we believe this is such a valuable transaction. First of all, there's a compelling scientific complementarity and a synergy. We have, as I explained a minute ago, we have tried to increase our presence in the immunology field, and Alexion is bringing a tremendous expertise in the complement system and has very strong research platform that are currently applied to rare diseases, but we believe have applications outside rare diseases.
There's, of course, a strong pipeline, as I mentioned a minute ago. We also believe that we can leverage the AstraZeneca's precision medicine capabilities. We have invested a lot in genomics, in oligonucleotides, and other technologies over the last few years, which we believe can actually help us generate products that could then be developed and commercialized by the Alexion team. The two companies have a focus on science and are very patient-centric. We both believe in the value of science and innovation. Of course, if you are in the rare disease field, you have to be extremely patient-centric. We believe at AstraZeneca, patient is about everything we do every day, and our move has been from primary care to specialty care with very much a focus on patient, of course.
The next point is that the revenue growth of Alexion is very robust and very much aligned with our expected revenue growth. The two companies together will deliver a new co that we believe will have an industry-leading revenue growth, with double-digit revenue growth expected through 2025. There is potential additional sales that AstraZeneca can generate through our presence in emerging markets and in particular in China, and we believe we can accelerate the development of the Alexion portfolio and the pipeline in those emerging markets and definitely in China, where Alexion today has a very, very small presence. We see attractive growth, of course, in the specialty field and the highly specialized field. Essentially, tomorrow, we will have the ability to commercialize or bring medicines to physicians in primary care, from primary care all the way to specialty and hyper-specialty care or rare disease.
A very strong presence across a variety of field. Finally, importantly, the impact on our financials will be very substantial with an improvement of profitability and cash flow. Our core operating margin is expected to be significantly enhanced in the near term, and we'll of course have continued margin expansion that will be supported by synergies. The synergies that are listed here are partly sales synergies as we grow additional sales in some markets, as I said a minute ago, but of course, some elimination of duplications and some cost reduction. We see a very strong double-digit core EPS accretion for the first three years, an improved cash flow, and very rapid debt de-leveraging with an ambition to increase our dividend.
Finally, a strong investment credit rating that will give us a strategic and financial flexibility for the future and enable us to continue to fund the growth of the company. Moving to the next one. With this, I'll hand over to Marc, who is going to take us through the rest of the presentation. Over to you, Marc.
Marc, you're on mute, unfortunately.
Thank you, Pascal. Can you hear me now? Thank you.
Yeah.
Hello, everybody. Pascal has talked about the complementarity of our effort in immunology, and I thought I would try to classify the various types of immunity, immunology for you to understand how the various products position themselves in the portfolio. On the left, you have the innate immunity. This is the area where Alexion is very strong with the complement system biology, in the C5 inhibition, but also on the C3 inhibition with the Factor D. You have the various therapy area where they have been present. Historically, hematology and nephrology, more recently branching into neurology and also ophthalmology. At the bottom, you have the products that we know very well, Soliris, Ultomiris, the two Factor D products, the new C5 inhibitor, and the FcRn inhibitor.
If we look on the side of AstraZeneca, we have been involved in more type 2 cell-mediated type of immunity, interleukin-5, interleukin-13 we worked, TSLP. We are now also working on interleukin-33. We have mepolizumab for the interleukin-23. Both companies are doing some effort on the immune part of the adaptive immunity. Alexion with their FcRn inhibitor. Ourselves with anifrolumab, which is a type 1 interferon receptor, trying to address the issues linked to disease of the B cell or IgGs. With this sort of classification, let me turn to the next page. Next page, please. What we want to do today is to show how widely the complement system can apply to various set of disease, both in the rare disease but also in the common disease.
Obviously, the role of the complement platform is more well-known in the rare disease, and you have in dark font the indication that have already been approved. You have in italic the indications that are presently under development. You can see, for instance, on the common disease, ophthalmology, macular degeneration or geographic atrophy is being developed. In fact, if you look at all the scientific literature, it is conceivable that many other common disease could also have applications of this biology, and that's what is of interest to us, even in oncology, where we see potential applications of the complement biology. Maybe turn to the next page. I think the two companies have had a different legacy or different history. If you look at AstraZeneca, we have a legacy or history of chronic care and primary care.
Progressively, we have increased our presence in the specialty area, and today we are about 50/50, slightly above the 50%. On their side, Alexion comes from a history of ultra orphans, and progressively, they try to go toward the specialty care with slightly larger group of patients. What the two companies have in common, and this is listed as the combined strength, they are both involved in immunology. We have talked about it. They are both involved in biologics. What AstraZeneca can bring to the new company and benefit the rare disease research is genomics and genetics, also our technologies in oligonucleotide. At the bottom of the two, where AstraZeneca can help for the continuation of the effort of Alexion, this is genomics and oligonucleotides, and then we can share our common strength in immunology and biologics. Can I get the next slide?
Just to give you some vignette about the pipeline that we are growing. Obviously, the strongest part is the C5 franchise with Soliris and Ultomiris. Pascal mentioned earlier on the impressive product conversion, this expertise in transitioning from one product to another. They're also working on these innovative C5 formulations and also the 1720, which is at early stage of development. The expansion in neurology in the recent years has been very good, but they're also expanding in many other disease area where the unmet needs is quite high. We have listed those, ALS, TMA, and also a series of renal indications. They also have, in the complement franchise, an oral therapy, Factor D, which is being tested in PNH. It's also being tested in other indications, but PNH first.
There are several programs to test the oral Factor D in the renal area, IgA nephropathy as well as neuropathy. Alexion has also acquired recently from Portola a product called ANDEXXA, which is basically an antidote against the Factor Xa bleeding events. This product will be, I would say, very complementary to the presence of AstraZeneca in cardiovascular in the CVRM part of our company. In the near term, Wilson disease, which is basically the copper binding, this is a therapy where there have been no innovation for the last 30 years, and Alexion is coming with a very differentiated and competitive molecule. Lastly, we mentioned in the amyloidosis area, Alexion has two projects. We describe one of them here. This is where the cardio myopathy linked to the amyloidosis could also have a great opportunity. Can I get the next slide?
Talking about the sort of complementarity of science and complementarity of the portfolio, we also need to talk about the complementarity of the cultures and then the shared focus on patients. First of all, the two company have a very strong focus on delivery of innovation to serve patients better. We have listed here the various historical successes in being the first in certain categories and so on. I think it's important to see that this represents not only the past, the present, but potentially the future in terms of first introduction in different therapeutic categories. The other point to make is together we have a greater opportunity for continuing our investment in science to develop transformative medicines. This is what this new company can do and become. On the next page, I will try to explain this in a little bit more details.
What this company will be is a new pure-play biopharm innovator with strong profitability and industry-leading science and growth. Pascal Soriot has talked abundantly about the broad presence geographically, but also balance on primary care, specialty care, and rare disease. A strong pipeline, we just talked about it a minute ago. 28 phase III medicines and significant life cycle projects. On the financials, nine blockbusters growing to 12 by 2023. It shows that the company will have no dependency on one very large asset, so the concentration risk will be very low. A fast-growing global company. We talked about the double-digit growth through 2025. I will show you a slide in a moment talking about the growth of this new company versus the market. Sustainable revenue growth and robust earnings, that's important, and strong operating leverage and cash flow generation.
These two last points show that the growth of revenues will be linked to very substantial profitable growth. At the bottom, I think to summarize what this company will be, it's a combination of two science and patient-centric organization with an increased operating leverage, and this will underpin our strong financial flexibility. Can I get the next page? This, we have tried to classify the portfolio of the new company. On the left, you have the oncology products, and we have listed all the products that we have in our portfolio. It's about $11 billion with a growth rate of 17%. In the middle, you have the rare disease of Alexion, about $6 billion for a growth rate of 24%.
On the right, we have regrouped both CVRM and R&I, which we now regroup under the organ protection and immune-mediated disease, about $10 billion growing at 5%. Maybe a word on the organ protection, the way we consider it, protection of the heart with Farxiga, for instance, in CHF, Brilinta, ANDEXXA. The kidney, Farxiga again, LOKELMA, Evrenzo, which is the brand name of roxadustat. We have a pipeline in liver, in NASH. Our very strong presence in lung, in both asthma and COPD. Other immune-mediated diseases, which are coming from our adaptive immunology type of products in their line extensions. Again, the presence is across primary to specialized and branching out onto the highly specialized care. Can I get next slide? Next slide is just a comparison of the revenue growth. We have mentioned the double-digit revenue growth for 2025.
This slide compares this projected growth of the new AstraZeneca in comparison to its peers. You can see that the peers are growing at 3.6%, a double-digit revenue growth is more than double what the rest of the industry is going to do. Very substantial growth profile versus the market. Can I get the next slide? A few word about rare disease and how strong the rare disease category is going to grow. On the left you have basically a cartoon explaining that, in fact, the rare disease individually are obviously very rare, but collectively, if you aggregate them, they represent about 9% of the population. However, they are fragmented or distinguished in more than 7,000 distinct diseases. What's extremely interesting for the potential in the future is that only 5% of them have FDA-approved medicine.
In the center of the slide, you have basically the progression of this class of drugs. Today, $66 billion, but this is projected to grow at a low double-digit. On the right, you have a comparison of the projected growth in rare disease versus other therapeutic segments. You will see next to rare disease, you see the high growth also of oncology, but also dermatology. Rare disease is projected to be one of the fastest-growing categories. Can I get the next slide? The next slide talks about the complementarity, the geographic complementarity. You can see that Alexion on the right is very strong in the United States, with 59% of their revenues. Well-balanced in Europe or Japan with 19% and 9%.
If you look at the yellow part, the emerging market, this is where AstraZeneca has a much greater presence, where we have China and other emerging market, about 34%. Therefore, this is where we will be able to bring more support to the expansion of the Alexion products in the emerging markets. The combined company will be even more balanced than what we are today originally. Can I get the next slide? Next slide talks about, first of all, you have these little icons on the research centers. We have three research centers on the side of AstraZeneca and one research center and headquarter in the northeast of the U.S. AstraZeneca is present in every market of the world, where Alexion is present in about 20 countries of the world.
What is also very important is the decision that we have made to have a dedicated rare disease unit, headquartered in Boston, and that we believe this integration is going to be relatively easy because both companies share a strong patient-centric culture. Can I get the next slide, where I will talk a little bit about numbers? First of all, these numbers represent the last 12 months financials in a pro forma basis, apart from the $28 billion of debt, which is basically the debt of today plus the debt of the acquisition. It's more a sort of a prospective number. Let's look at the revenue first. 12 months pro forma, $32 billion, growing at 10%, with a core operating profit margin for the last 12 months at 32%, and an EBITDA of $11 billion.
If you compare the net debt to the EBITDA, you can see that the gearing ratio of the new company will be still very reasonable. Can I get the next slide? We have, over the years, explained our capital allocation priorities. What we want to say today is how much Alexion supports the value creation cycle that we've been working on. First of all, if I look at investment in the business, this is basically another investment in a new area of science to reach another group of patients. At the bottom right, supporting the progressive dividend policy. Obviously, this alliance will give us a strong capacity to improve the dividend. It is clearly a step up towards our dividend progression moving forward. If I go left, maintaining a strong investment grade credit rating.
Obviously credit rating is an important thing for us. This acquisition will enable us to reduce the debt that I just mentioned in the previous slide, thanks to the large cash flow of the new company. This opportunity is also immediately earnings accretive for us. Can I turn to the next one? To summarize what this transaction characteristics, the price is $175 per share of Alexion. It is paid in $60 in cash and 2.1243 American Depositary Shares for each Alexion shares. In total, it represents a consideration of $39.4 billion, which is paid $13.5 in cash and 25.9 in shares. In terms of timing, basically, the deal should close quarter three 2021. The shareholders of Alexion should own about 15% of the combined company.
Obviously, the transaction is subject to the normal regulatory approval, and we expect both set of shareholders to approve that transaction in quarter 2 2021. Obviously, until closing, both companies will continue to operate as separate entities. With this, I would like to hand over to Pascal, who is going to give us a conclusion slide.
Pascal, you're on mute, unfortunately.
Sorry about this. I was saying that, as you heard through this presentation, we see a very strong scientific synergy here, that will enable AstraZeneca to increase our presence in immunology and leverage this complement system research platform that Alexion has been developing over a number of years and applying it to a range of diseases beyond rare diseases. Of course, the pipeline is part of the attraction of this transaction, but also the other aspect that is going to create value in the long term is the fact that AstraZeneca's precision medicine capabilities will enable us to discover and develop products that we would not have developed in the past, because we didn't have a presence in the rare disease space. The two companies share a similar culture with a focus on science, innovation, and patients.
We believe that's a very important point because it should support a very good, a very smooth integration of the two organizations. Importantly, this acquisition will enable us to continue growing at a fast clip. There's no dilution of our top-line growth. We expect to experience double-digit revenue growth through 2025, with an increasing presence in the specialized field, which we have been moving towards over the last number of years. Importantly, we also believe we can generate sales synergies in the emerging markets, and most importantly, China. Finally, but very importantly also, there is an improvement, of course, of our profitability and cash flow that will enable us to deliver over the next few years, quite rapidly actually.
We see a double-digit accretion on the EPS front for the first three years. We see, as you could see here already, an immediate improvement of our operating margin with further improvement of that margin over the next few years, as was the case in our AZ standalone plan, of course. The new company will continue improving its operating margin. All in all, a very compelling transaction, we believe, from a science viewpoint, a commercial viewpoint, but of course, also a financial viewpoint. We stop here. If you move to the next slide. We'll move to the Q&A. If you don't mind, as a reminder, please be sure to type your question in the Q&A box that is on the side at the bottom of your screen.
If you want, you can also raise your hand, and then we can take the question live. If you are using a phone, if you're calling via phone today, please press star nine to raise your hand. As we can only see your number, please email IR team, IRteam, all in one word, @astrazeneca.com with your name and institution so we know who is behind the number. The first question is from Marietta Miemietz, and Marietta is asking, "How much of the consideration is for PNH and the in-line drug? What mid-term market share in the increasingly competitive complement space do you envisage?" Marietta, we don't guide specifically on how we valued individual part of the company. It's relatively hard to answer a question that is so very specific in terms of how much value we would allocate to a specific indication or a specific product, unfortunately.
We believe that definitely there will be competition, as you would expect in the PNH field over the number of years. We also believe that the lifecycle management that is ongoing, well, first of all, the transition from Soliris to Ultomiris and the lifecycle management around Ultomiris will enable this franchise to continue to grow over the next number of years and resist also the biosimilar threat that will affect Soliris. There's a question by Luisa Hector, Marc, that is probably more for you. Given Astra's return to growth and our margin expansion, why do this deal now? Was it a competitive process for you, Marc?
What this deal is going to do in terms of margin expansion, is going to be an immediate step up and will continue to promote a growing margin expansion over the years. You have an acceleration of our own margin expansion, which, of course, will continue, but it's a step up and an acceleration. Regarding the question of whether this deal was competitive, I'm not sure I'm the best person to answer that question. For what I could see and from my knowledge, I do not think this was a competitive build.
Thank you, Marc. There is another question coming from Luisa, which is also for you. When would you expect the shareholder vote to take place, and can you expand on the break fee on each side? Alexion board recommendation of the acquisition, and under what circumstances could Astra break?
We expect the shareholders' meeting to take place in the quarter two of 2021, following the normal regulatory processes. The break fees is well-described. There are different cases for it, but basically, this is customary. I think it's 3% roughly of the value of the deal. The circumstances is, if one company decides not to continue with the merger, the other party receive the other break fee. It's quite customary.
Okay, there's another question coming from Marietta Miemietz, which is about the dividend. What year do you expect to raise the dividends? Again, for you, Marc. Are you confident that you would have made your cash flow dividend cover target next year without the acquisition? Thank you.
Let me take this one first. Yes, we are very confident that without this acquisition, we were going to cover our dividend in 2021. When are we going to increase the dividend? I think we need to say in the year of the merger, 2021 may not be the best year, but I think soon after that, we should be able to expand the dividend.
Thank you, Marc. Another one for you again. Are there any other planned M&A? Is this the final one for some time? Are bolt-on acquisitions possible?
Well, yes, I think it is a very important acquisition for us and we need to, first of all, go through the closing next year. We need to finish the integration and make sure that this new company is very powerful and starts on the right foot. I think for some time, this is the last of the large acquisition.
Thank you, Marc. We'll take one hand raised here. James Gordon. James, do you want to ask your question?
I'm just asking-
I hope you can hear me okay.
We can, James.
Oh, yes. Go ahead.
Brilliant. Thanks a lot for taking the question. The question was about the post-2025 outlook. I can see strong accretion out to 2025 and comments about the double-digit accretion. In terms of the outlook longer term, because you also note two patent expiries for Alexion, do you think the deal would still be double-digit top line accretion further out beyond 2025, would be the question, and the longer term bottom line accretion profile? If I could just squeeze in one other just confirmation or clarity. In terms of the accretion assumptions, maybe for Marc, what are you thinking about the cost of debt for this deal, please?
Let me just make a general comment, and Marc, you could add more to this. We do forecast internally, but it's really hard to give any strong sense of direction post five years. We already have given you a sense of our top line growth for 2025. As we see today, we still would continue on a good growth rate post 2025. To a great extent, of course, it will depend on the success of our portfolio, of our pipeline. We have quite a number of products in our pipeline, as you know, that have tremendous potential, and we will have to unlock this potential through the clinical work we're doing today. It's really hard to forecast past 2025, but as it stands, we see a reasonable growth past 2025. Marc, over to you if you want to add anything to this, and also the cost of debt.
No, I think you've covered it, Pascal. On the cost of debt, basically, the rates today are very low. Even if we convert our bridging loan into a different maturity. If we have a maturity of about 10 years, on average, we believe that the rates will be between one and two%. It is a period where the rates are extremely low.
Thanks, Marc. There's another question here relating to debt or at least the bridge facility. The question is, "The bridge facility is $17.5 billion U.S." However, in the presentation, in the slide, there's a figure of $13.5 billion cash consideration. Can you clarify, please?
Yes. The reason why the $17.5 billion looks bigger than the $14 billion that we have said, because when we acquire Alexion, there are some change of control covenants for the debt that Alexion owns today. Therefore, we have to reimburse first the debt that Alexion has contracted, which is $2.5 billion, as well as a revolving credit facility of $1 billion. In total, $3.5 billion to reimburse that, and of course, on the same day, we have to borrow it. It's $14 billion plus the $3.5 billion, which is the anticipated reimbursement of the debt of Alexion.
Thanks, Marc. I'll go back to a hand raised. Andrew Baum. Andrew, go ahead.
Morning. Thank you. Could you comment on what are your pricing assumptions for Ultomiris post the introduction of Amgen's biosimilar post-2025? Second, proactively, how you may think about pricing as you take Ultomiris into higher prevalence patient populations. I'm assuming that maintaining the current pricing may be challenging. Second, could you just talk to the level of organizational disruption or not integrating Alexion may cause? I'm just thinking of the very high pace of activity of Astra, over the last 18 months to two years in terms of both re-engineering oncology, MedImmune, the vaccine efforts, and HER2 Daiichi. Just thinking about the stresses that that puts on the organization, despite the value that may be created as a result of many of those activities.
Thanks, Andrew. Let me try to address the second question, and then what I will do is that I'll ask Ludwig to comment on that second question as well from his viewpoint, and that would be a chance for Ludwig to say a few words. Also, Ludwig, if you want to address this question of price because you may have disclosed things in the past. We typically don't comment much on our pricing, but you may have disclosed things in the past, so you'll probably best answer this question. Yeah, in terms of the disruption, Andrew, our oncology organization now is working incredibly well. We have a tremendous oncology R&D team. We also have a very strong commercial team under the leadership of Dave and José, as you know. I personally believe we have one of the best teams in oncology in the industry.
There's no disruption there. This integration would not affect this team. I don't see any disruption that would be brought to this team or the BioPharma team. We will establish the Rare Disease Business Unit as a standard business unit headquartered in Boston. We see a lot of collaborations between the different teams and bridges to establish, but very limited, in my opinion, disruption. Of course, there'll be some disruption, as there is always in a deal like this. It's not like merging two very large pharmaceutical companies. The overlaps, as Marc explained earlier, as you know, are relatively limited. Capabilities that Alexion has in R&D and in commercial are capabilities we don't have. We clearly would protect this. We would expand the coverage of the world, and we would save in functions where there would be some disruption, but limited.
Ludwig, do you want to take this opportunity to say a few words about what you think of this for the potential transaction and also the pricing of Ultomiris as you see it?
Yeah, absolutely. Can you hear me okay?
Yeah.
Okay, perfect. First of all, I think it's an exciting new chapter for Alexion. As you said, Pascal and Marc, both companies share the same dedication to science and innovation. I think the big picture here is this is a great opportunity to bring more innovation to more patients globally. I think it makes a lot of sense. I have to say that I'm very proud of the Alexion team. I'm very proud of the significant progress the team has made over the last three years. I really want to thank all of our employees for their leadership and for their hard work. I do believe that this transaction could generate significant value. I think a greater scientific presence in immunology, as was discussed earlier this morning. Number two is enhancing the Alexion geographical presence.
As a matter of fact, as one example, we don't have really a footprint in China. The workforce that we have in Alexion is very strong. I'm very proud of who we are. With respect to pricing strategy, I'm not going to comment on pricing strategy moving forward, what AstraZeneca strategy is going to be. That is Pascal and Marc who will have to talk about. Let me take a step back and give a little bit of background on where we are in the conversion from first generation to second generation. Everything that I'm going to say, we've said so many times, several times in public already. The team has been doing an awesome job with converting our Soliris PNH and HUS business to Ultomiris. Ultomiris has a very strong clinical platform, it has a long IP till 2035.
When we talk about biosimilars, it's not about biosimilars for Ultomiris, it's a biosimilar of a first generation product. As was I think in the press release, we've seen a 70% conversion within 18 months, which is best-in-class conversion. That's driven by the product profile, the patient's view of what the molecule brings, as well as by a strong team. Our objective is that by 2025, the majority of our business is Ultomiris. We have the first two indications, PNH, HUS. We're planning with the phase III trials to get the MG indication by 2022, and the NMOSD indication by 2023. That means that our objective is to make sure that Soliris conversion, it will never be 100%. We cannot claim that. Our ambition is to be 90% plus for our entire business.
The pricing strategy that we have been taking as an organization, again, we're an independent company, I'm talking about the Alexion historical pricing strategy. That is, our growth has been driven by innovation. Our growth has been driven by access, by volume. We have a sustainable pricing ethos that we try to respect. We launched Ultomiris, the second generation, at a discount, 30% maintenance discount versus Soliris, versus first generation. That's what we have been talking about over the last quarter. I'm going to stop here, Pascal, and give it back to you.
Actually, Ludwig, if you don't mind, since you're covering this very important switch, there's a question here from Jo Walton about the differentiation between Soliris and Ultomiris, the clinical differentiation, that is.
When you take a step back on where we are, so we are on a journey with our C5, and our C5 franchise is our flagship franchise. Moving from Soliris to Ultomiris, from Ultomiris to 1720. What it means for the patients with Ultomiris, instead of going to the hospital every two weeks for an IV infusion, our Ultomiris patients can now go for their infusion every two months. That is a big deal. I don't need to tell you that this is a big deal from how you live your disease as a patient and also as a family. It also has some economic benefits, especially, as I said, there is a discount. On top of that, we save costs of not going to the hospital every two weeks.
In addition to that, we have a phase III program, a subcu Ultomiris phase III program that we finished earlier this year. We disclosed our data. The data is very strong. We believe that it supports a regulatory submission. We're waiting for the 12 months data before we submit. There's going to be further differentiation versus Soliris on the basis of formulations, but also indications, as Marc and Pascal were talking about. We have a total of 10 indications that we want to look at with our second generation as well as third generation C5.
Thank you, Ludwig. There's another question from Jo Walton that I will take quickly, which is about how will we raise the sales outside the U.S.? Jo, there's a number of markets where we believe we can raise sales, but the most important one is China. You just heard Ludwig say that the presence of Alexion in China is very small today. You know we are number one in China, we can definitely combine the expertise Alexion has globally and bring this expertise to China. Combine this with our size and our ability in China to invest and support launches, and also importantly, to gain access for these very important products. Marc, there's a question for you which is about cash flow. What is the level of cash flow conversion that we would expect?
For this cash flow conversion, not immediately, but relatively rapidly, will become one of the highest of the industry. After one, two, or three years, we expect this to be among the top of the industry and be among the top cash flow converter of the industry. Looking at revenues, but also looking at EBITDA. I'm not going to give you a precise number today, but you can watch us over the years. The cash flow conversion will improve significantly and very rapidly, and we will be ranking among the best cash flow converters of the industry.
Thanks, Marc. Let's go back to the hands raised. Emmanuel Papadakis. Emmanuel, go ahead.
Thanks for taking the question. It's Emmanuel Papadakis from Deutsche. Maybe I'll take one on the margin side. You highlighted pro forma, you're going to get a 200 basis points uplift on the core operating margin. You've got the synergies to come. Perhaps you could just give us some updated perspectives on the mid-term potential for the pro forma AstraZeneca group margin. Should we be now thinking about something more like the high 30s or beyond, instead of mid-30s as previously discussed? Perhaps a follow-up on the synergies of $500. You haven't given much more granularity. Could you just give us a bit more color on where that's coming from and the potential upside scope to that 10%? Alexion's cost base doesn't seem to be a particularly aggressive target. Is there potential for that to be expanded?
Just a final one, and this is one perhaps for Ludwig. I'm sure you've discussed it in the past, but for the benefit of the uninformed AstraZeneca analysts such as myself, you could just perhaps give us your perspectives. There's obviously a lot of competitive pressures potentially coming, but in particular, the head-to-head crovalimab studies. Thank you very much.
Marc, do you want to address that? Thanks, Emmanuel. You're on mute now.
I'm not going to give you a number. We have described for the operating margin, the medium term. We have described it in our announcement today as well, as precisely as we could, without being obligated to a profit forecast. Please understand that we try to help you with the sense of travel, but we can't give you an exact number. It's fair to say that, as I said earlier on, it will accelerate and step up the level of operating margin that AstraZeneca standalone would have been able to reach. Shall I take at the same time, Pascal, the synergies?
Yeah.
Do you want to comment on it?
No, go ahead.
Okay. Synergies. Basically, the level that we have announced is a number that's going to be mostly cost synergies, but there will also be sales synergies. This is a mix of the two. On the cost synergy side, there will be obviously reduction of common infrastructure. We don't need two offices in countries. We don't need two distribution centers. We will reorganize every potential infrastructure where the two companies can benefit from each other. For instance, on the manufacturing side, both companies rely heavily on outside contractors for biopharmaceutical production. Today, if we can organize ourselves differently, we can benefit from dual sourcing reciprocally, and therefore, we'll be able to reduce the commitment or the cost to outside contractors. There will be limited duplications, obviously, in various functions, more in the administrative side.
Just in summary, we should not regard this transaction as a synergy deal. In other words, it's not the usual merger of two large companies and people take a lot of synergies. This is more a strategic deal with an additional part of synergies. The synergies themselves are not the key objective.
Thank you, Marc. I've pushed it to extend to half past, and I know it is the weekend, and I apologize for it, but I can see we have lots of questions, a lot of interest, and it's of course, a very material transaction for both companies. I think it's worthwhile giving more time to the questions. The next one is Matt Weston. Matt, go ahead.
Hi, Pascal. Can you hear me?
Yep.
Two questions, please. One is on the cadence of synergies. I note that the $500 million target is by year three. Marc, can you help us as to how we're going to get there over years one and two? Secondly, a question around the timing of closing. Q3 seems like a relatively long period. Are there expected issues that you believe from a competition perspective that will get increased scrutiny? And if so, do you believe that certain divestitures may be required for the deal to close? Thank you.
Thanks, Matt. I think Marc, it is for you.
Let me take the synergies cadencing first. For cost synergies, we expect the integration over three years. They will gradually increase with a maximum the third year. For sales synergies, it depends, obviously, on the product, whether the products are registered in that specific geography or not. Overall, we expect the maximum synergies will be derived after five to seven years. Obviously, in some countries, if the product is just registered now and we are launching, let's say, next year, then the synergy will be immediate or very rapid. In other cases, a product has not been developed and need to be developed and approved, then of course, the synergies are delayed. It's a little bit of a mix depending on at what stage the product is in what jurisdiction.
By the year five, most, if not all, of the sales synergies will have been derived.
Thanks, Marc.
There was another question which I forgot. Where was it? What was your second question?
Hi. Can you hear me?
Yes.
The other question was regarding the closing in Q3 and whether there were any anticipated. Marc, could I also just jump in and ask a clarification on your comment on the cadence on synergies? To be clear, there's a $500 million number mentioned on the slides. In answer to your previous question, is that costs and sales synergies, or is the $500 million just the cost synergies and sales synergies are on top?
Most of the synergies are cost synergies. I was telling you what we imagine as our project as sales synergies also. What's going to come first are probably going to be the cost synergies, and this is the $500 we have committed to. Then we also have sales synergies. In some countries, it will come fast. In some other countries, it will take some time because we need to develop and get the product approved.
The cost synergies, Matt, we have said they will come within three years. Some sales synergies, some of them would come within three years, but there would be more that might take longer because we have to get the product registered and launched, of course. Marc, there was the other question.
Yes
The Q3.
Why is it Q3? I think, obviously, we need to file to various anti-competition regulatory authorities. We do not expect any major issues, but of course, we want to be cautious and prepare ourselves well. We think there is minimal issue with the regulatory authorities. Pascal said earlier on that it is possible that we can gain a little bit of time, but it should be around the summer of 2021.
Thanks, Marc. The next question is Tim Anderson. Go ahead, Tim. You must be on mute, Tim. We can't hear you.
Okay. Can you hear me?
Yep.
Okay. Question is, you say the combined company will have double-digit revenue growth through 2025. I pretty much already get that in my standalone Astra model. When I look at what consensus has for future revenue growth for Alexion across the coming years, it frankly looks low and lower than Astra as a standalone. My question is, do you think Alexion consensus is too low? If not, then the transaction would seem to be dilutive to your top-line growth. I note that on slide six, you say the deal supports top-line growth, but it's really only your comment on earnings where you say it's actually accretive. Just a second question. Why now with Alexion? Investors have been under the impression that this company has been for sale for a long time or could have been acquired a long time ago.
Astra looks very solidly positioned going forward. To me at least, it's not really apparent that you needed to do this transaction.
Thanks, Tim. Marc, do you want to cover this?
Yeah. Yes, if you look at the consensus for Alexion, I think I would also be with you. It's lower than our own expectations. We have modeled the product one by one, and we think that we see an upward potential, an upside potential versus the consensus for the Alexion in the coming years.
Sorry, are you saying this is accretive to revenue growth, or is it actually dilutive to your standalone revenue growth?
It is in line with our revenue growth.
Yes. It is in line, actually. Tim, by the time you see, we consider the upside we see in some products, but also the sales synergies we see in some parts of the world. Basically, it's more or less in line. You have a one-off uplift of sales, of course, and then you have a top-line growth that is in line with what we expected from our own top-line growth. You have, of course, a greater impact on profit and cash flow through the synergies and the top-line growth.
Okay. The question on why now, because Alexion's been out there at a nine multiple, which is low by biotech standards. You said it wasn't a competitive process. I'm just wondering what you see that others may have been missing on the acquisition front.
Well, the why now is. This kind of transaction take place at different times for different companies based on your circumstances. We believe it's the right time for us because we have a strong, and as you said it yourself, we're in a strong position. We do this transaction in a position of strength. We have strong businesses. Oncology, BioPharm are doing well. We are launching products. We see a strong synergy in immunology in particular, but also in leveraging the capabilities we have to develop new products and commercialize them in the rare disease field. We saw synergies geographically. We are always looking at how do we create more long-term value, short-term value through this accretion we're talking about, but also very much long-term values for the synergies we see in bringing the two businesses together.
As you know, we've been looking at options on a regular basis over the last number of years, and you decide to make those transactions at a time that you think is the best for you as a company. We believe it's the right time to do it. I don't know, as Marc said, we can only comment on what we know. We believe it was not a competitive process, but we cannot comment for Alexion on that one. Marc, anything you want to add?
No, I think it's just that there is a consensus, at least we have seen the number of the consensus for Alexion. Our own internal modeling is higher. That's all I can say. This has been done with our usual methodology of every indication, every molecule has been risk adjusted. We have done significant amount of work on each of them, looking at competition and everything. We are confident that this consensus can be delivered, and we hope to do better. I think the part that maybe the consensus is missing is the synergistic aspect of having AstraZeneca, with its global presence, handle some of the products of Alexion around the world. I think this part is certainly not covered by the consensus.
Thank you very much.
Yeah. To go back to this, because it's an important question Tim is asking. I mean, the commercial synergies, you can see them. In China, Alexion has no sales, so we can definitely develop the portfolio there. On the science front, maybe, Mene, do you want to give some comments in terms of some of the possibilities we see long term?
Thank you, Pascal. I think, the one thing we've been very interested in the complement pathway anyway for a number of our indications across nephrology and immunology. Obviously being able to access Alexion's expertise in this space is going to be phenomenal for us. Also when you look at the investments we've made around genomics, around CRISPR gene editing, and around oligonucleotides, quite often we're coming up with targets and genes that actually are more amenable to rare diseases than to our sort of more specialist areas, and we've not taken them forwards. I think there's an opportunity now for us to marry those up with Alexion's capabilities and actually transition some of those programs to Alexion's capability and actually enable us to operate in all of these spaces that we haven't been able to do before.
Thanks, Mene. Thomas is reminding me we should give short answers, so we'll try to do this and answer every question that is left here. Simon Baker. Go ahead, Simon.
Thank you for taking my questions. A couple of quick factual ones for Marc. Going back to Matt's question, could you give us any idea on the phasing of the cash costs associated with the deal? Tell us whether will they be included or excluded from the core numbers? On the tax rate, Alexion's tax rate's about 400 basis points lower than yours. Would it be reasonable to assume that there will be a proportionate decrease on your group tax rate? Then finally, on the Soliris selling practice and FCPA litigation, it looks like most of it's been settled, but could you just clarify if there are any outstanding cases in the U.S. or elsewhere related to that? Thanks so much.
Let me take the cost linked to the integration. I think we have indicated $650 million.
Yeah
cost of restructuring. It's probably going to be the totality in non-core over the next two to three years, I would imagine, of the integration. Your second question on the tax. We are aware that the tax base of Alexion is lower than ours. We need to see more details before we can, I would say, define any potential tax synergies for the long term. The two companies have organized differently. We need together to see what can be done once the closing is effective.
Thank you, Marc. There's no tax synergies in the number we communicated.
We're not counting anything.
If any tax synergy that could be identified would be an upside. Simon, did we cover your question?
The other one was just on Soliris, if there's any outstanding litigation. Thanks, Pascal.
Yes, sorry. Marc?
I don't think there's anything. I don't remember any significant litigations. There may be some, but nothing that I remember in the due diligence.
The next question is Jeff at Leerink. Go ahead, Jeff. You must be on mute. Go ahead.
Yes. I'm unmuted now. Thank you, congratulations on this very interesting transaction. First, for Mene, if there's anything in the Alexion pipeline outside the complement area, or at least outside the C5 antibody franchise that you thought was particularly noteworthy and worth including in your forecasts. Secondly, Pascal, to the extent that other interests might emerge or perhaps shareholders of Alexion feel that the asset is worth more, are you prepared to respond to those suggestions or questions over time? Thanks.
I'm afraid, Jeff, I don't think I'll be able to answer the second question. We'll keep this for a reaction in case the circumstances you are mentioning would develop. The first question, Marc or Mene, do you want to comment? I'm very excited about their complement Factor D program, which I think is very interesting and advanced. I also think their Wilson disease program with their copper chelator also looks very interesting. Obviously, as a neuroscience to fluoresce into neurology, complement biology is thought to be very important in synaptic pruning and degeneration. So I think those programs also are highly interesting.
Perfect. Thank you.
Thank you, Mene. Marc? Marc, anything you want to add to this?
No
Maybe-
If I add, it's going to make the answer longer, so I think Mene has said.
Okay, fair.
I would also mention maybe the two amyloidosis program. It's a very important clinical condition, and cardiac myopathy will be very interesting. There are studies ongoing. There is high risk, high reward work on ALS and another one on geographic atrophy. If one of these indication could be positive, this would be a tremendous upside.
Thanks, Marc. Sachin, Bank of America. Go ahead, Sachin.
Hi, it's Sachin here. Can you hear me?
Yep. Go ahead.
Yeah. Thanks for taking my questions. Just a couple, please. Firstly, Pascal, could you comment to your intended tenure post-deal completion? Obviously, succession planning has been a hot topic. I was wondering if you could just touch on that. Second question, I'd like to go back to your better revenues growth expectation for Alexion. Beyond geographic expansion, do you think your better revenue outlook is a better view of the life cycle management plans, or are you less concerned re: the competition? On the competition, there have been a couple of questions on various competitive assets, Amgen, Roche, et cetera. I wonder if you could just comment in a little bit more detail on your due diligence around that competition, your view of severity and timing of some of the key ones.
Finally, clearly, over the last number of years, there have been multiple media rumors of larger transactions. What feedback have you had, Pascal and Marc, from investors on doing a transaction of this nature? I'm guessing many may interpret this deal as predominantly around cash flow or U.S. infrastructure versus a pipeline that Alexion brings. I wonder if you could just rank those three factors as drivers of this deal for us. Thank you.
Lots of questions, Sachin. The first one, I'll address quickly. Everybody seems to be intent on reminding me that I'm aging, but I still feel energetic enough to stay long enough. I don't have any plan to retire soon. Of course, I would want to stay long enough to see the fruits of this transaction deliver, not only from a sales viewpoint, but also strategically. We believe that there is long-term value in this scientific synergy we are talking about, generating more products for rare disease, also leveraging the complement system expertise that Alexion has to apply to diseases outside of the rare disease field. The last question, I'll ask Marc to cover, and maybe Ludwig, do you want to comment on the middle question, which I think was about the impact of competition on the Soliris/Ultomiris franchise, Amgen and other products.
We can also give our take on this after Ludwig has commented.
Yeah. I'll start, and Aradhana can follow me. I think overall, from a competition perspective, we feel we're in a very good position in a.
The Alexion assessment is that from an aHUS, HPP, LAL-D, and Factor Xa perspectives, that there's not too much competition on the horizon, and these are four of the indications that we have marketed. With respect to neurology, MG and NMO, as you know, this is a two-year young franchise, and it's now the biggest franchise in the United States. What we have there is, yes, we do have competition coming in. We do have a very strong clinical profile, and I really invite you to look at our clinical data. For instance, the relapse rates, the Kaplan-Meier, the survival curve that we have in NMOSD is just as high as I've ever seen in my life, where we basically reduce the number of relapses by a factor of more than 95%.
I invite you just to take a look at our clinical data and what else is out there. With respect to MG, we have a very strong profile, but we also have a very strong market positioning. The MG market, it has about 80,000 patients. The way that we'll look at it is we're looking at the severe group of patients with Soliris, initially about 8,000 patients out of the 80. With Ultomiris, with our phase III program, we expect that we can expand the target population to maybe 20,000. When you look at the type of patients that we're focusing on, it's kind of our own sandbox within a larger MG population, where FcRns and some other potential molecules will look at more the mild, moderate stage of the disease. While we, with C5, are coming in from a completely different patient type perspective.
Aradhana, you want to add anything to it?
No, I think let's move on. I know we've gone on for a long time.
Yeah. That was a long answer story.
No, it's okay. It's an important question. I think the one thing people always forget is that they focus on biosimilar or Soliris, they focus on competition. Often those competitors are targeting one single indication, and everybody underestimates the whole series of new indications that are being developed to support the franchise. The evolution of the franchise from Soliris to Ultomiris to ALXN1720. Even though there will be competitors attacking different indications, overall, the franchise is very strong, we believe. Marc, do you want to cover the last question?
Yes
About the feedback we got?
Yes. Basically, I think in trying to characterize this acquisition, I think we need to look at several dimension. Often people try to say, "What type of acquisition is it?" I think it's an acquisition for its pipeline. It is an acquisition for cash flow. It is an acquisition for the complementarity in science, and we have described the immunology angle. It's also a rare opportunity for us to maintain the superior growth profile in terms of revenues. This is so important for us. There are not so many companies that can support the growth profile that we are projected to have in the coming years. This is not one-trick pony. It is, A, an acquisition that fits several criteria, several standards.
Thank you.
Thank you, Marc. I think it's really important to remember, as you saw from the pro forma, $11 billion EBITDA and an operating margin of 32%. That will increase over the next few years, as was expected, as our own operating margin, EBITDA, was expected to grow. You'll have a very formidable financial power there. What I could propose to do is take one or two last questions and then stop, so we respect your time on the weekend. Seamus at Guggenheim. Seamus, go ahead. You must be on mute, Seamus.
Okay, I'm unmuted. Thanks very much for the question. I just had a couple of questions here. Wanted to just get a quick sense of, as you look at the blend of growth opportunities, and we've heard talk of sales synergies before. It just sounds like the mix of the incremental growth opportunity is really going to be coming from outside the U.S. incrementally from here. Just wanted to get a sense of where you see the mix of OUS versus U.S. sales, given some of the dynamics of the growing franchises in the U.S. at lower prices or potentially lower prices, and then this very robust opportunity in some of the emerging markets and in other areas. In terms of just a final question here, as we look at the incremental potential biosimilar dynamics, where do you see the Ultomiris, Soliris dynamics in Europe?
Obviously, the U.S. switch has gone extraordinarily well. Just wanted to get a general sense of where you see the C5 franchise in 2024, 2025, in terms of that relative mix. Thanks.
Thanks, Timothy. Let me just very quickly cover the first question. We don't really comment on individual geographies and the percentages. Let me just give you an example. Again, China, you know that 20% of AstraZeneca sales come out of China. We are the number one pharmaceutical company in the country, and we've been growing a lot. Today, Alexion has zero sales in China. We'll, of course, work hard to register those products and launch them. China, of course, is not as developed as the U.S. or Europe or Japan in terms of rare diseases. As the market matures towards more sophisticated, more expensive products like we've seen happen in oncology, we believe the same will be true of the rare disease market, and the opportunity becomes very substantial over the next five years. That's one example.
There are many other emerging markets where we can certainly do better. The second question will be, Ludwig, do you want to comment on this one?
Yeah. As far as conversion is concerned, we've been talking with investors about conversions in our top three countries. That is the U.S., Japan, and Germany. What they all have in common is that they all achieved the goal of 70% conversion, as you laid out in the press release, in less than two years. As a matter of fact, your question on Europe, Germany had the fastest uptake of all of the countries. We see this conversion also on the European side. As I said, our objective is to have all four Soliris indications on the Ultomiris label, and launch by 2023, which gives us several years, before potential entry. Again, drive differentiation through the list of indications, 10 indications for Ultomiris, differentiation through a subcu formulation, which we hope to file again next year, as well as differentiation from a pricing perspective.
Thank you, Ludwig. We are at half past, so I really want to be respectful of your time on the weekend. We've already gone quite a bit over time. We'll close here, and Thomas has suggested that maybe we'll offer another hour at some later stage so we can address some of the questions that we haven't been able to address, if you are still interested. With this, let me close the discussion and then thank you very much for your interest and the great questions you've shared with us. Have a good weekend. Thank you very much.
Thank you, everybody.