Hello, everyone. It's Pascal Soriot, CEO of AstraZeneca. Welcome to the year-to-date and the third quarter 2020 conference call and our webcast for investors and analysts. As usual, the presentation was posted to astrazeneca.com earlier today, and we have also sent it to people on our distribution list. If you can please turn to slide two. This is the usual safe harbor statement. We'll be making comments on our performance using constant exchange rates or CER, core financial numbers, and other non-GAAP measures. A reconciliation between non-GAAP and GAAP data is contained in the results announcement. All numbers used are in $ million and refer to year-to-date September 2020, unless we state otherwise. Turning to slide three, we plan to review the presentation first and then do the Q&A until 1:15 P.M. UK time. If you keep questions short, we will try to keep answers short, too.
For those on the phone, please join in the queue for questions by pressing star one. There's also an option to ask questions as part of the webcast. We ask you to please ask one question only. Thanks for the help here. In speaking order, I'm joined by Dave Fredrickson, EVP of the Oncology Business Unit, Ruud Dobber, EVP of the BioPharmaceuticals Business Unit, Marc Dunoyer, Executive Director and Chief Financial Officer, Mene Pangalos, who is EVP of the BioPharmaceuticals R&D group, and José Baselga, who is the EVP of Oncology R&D. For the questions later, we also have Pam Cheng, EVP of Operations and IT, and Leon Wang, who is the EVP for the China and emerging markets. Please turn to slide four. This is the agenda where we plan to cover all key aspects of our results today. If we now start with slide five.
In the first nine months of 2020, our performance remained strong and resilient despite some impact from the COVID-19 pandemic, and our business performed in line with our expectations. Our total revenue advanced 10% in the year to date, despite some headwinds from the pandemic. New medicines were up 36%, and we saw continued performance across all therapy areas and in emerging markets. We had a substantial negative impact from PULMICORT that affected respiratory immunology sales, in particular in China. In China, it was negative by around 15% in each case. One can see strong growth excluding this. Core operating profit grew by 13%, despite 15% lower other operating income. With a tax rate of 21%, core EPS ended at $2.95, and it is up by 16%, more than revenue, delivering operating leverage. As a result, guidance remains unchanged today.
We continue to see strong progress in the pipeline, mostly on approvals, supporting sales today and tomorrow. Next year, we are back with many phase III trials readouts after the regulatory focus this year, following extensive data readout in 2019. The efforts against the COVID-19 pandemic include advancing the vaccine candidate and now importantly, initiating phase III trials for our long-acting antibody combination, which is incredibly promising. It's a potential new medicine called AZD7442. Please turn to slide six. Looking at the pipeline news flow since the result announcement in July, a few new highlights. There were a number of approvals for the key cancer medicines across users and geographies. We made regulatory submissions for a number of new users for our leading medicines, and we obtained several priority reviews.
As I mentioned earlier, 2020 has seen a lot of regulatory news flow, while we anticipate more new phase III data readouts as we enter 2021. José will detail this news flow a little later. All in all, another great period for the pipeline. Only this week and including this morning, we received additional approvals for some of our new indications. Very exciting pipeline progression. We turn to slide seven. After the financial headline in the pipeline, we now take a deeper dive into our revenue. Total revenue advanced by 3% in the third quarter, with growth reduced by LYNPARZA milestones in the comparative period. In the quarter, if you exclude the milestones, our sales growth was 7%. In fact, as I mentioned earlier, PULMICORT was the most affected product by this COVID, especially in China.
That affected the number of asthma exacerbation, sorry, and therefore, the sales were substantially impacted. If you exclude the effect of PULMICORT, our sales growth was about 10%. The message is the underlying sales growth is still very, very strong across the portfolio, and it actually reflects the strength of our model, the diversified portfolio, and the diversified geographical footprint. We have ups and downs, and we will cover across this presentation. Some products are up, some others are down, but we have a very resilient portfolio across. As I mentioned earlier, there was some impact from COVID-19, in particular PULMICORT China, of course, but also BRILINTA in all regions. We've seen an impact of COVID on the number of hospitalizations for heart attacks, and BRILINTA is initiated in hospitals, so we see an impact there.
It has also affected infusion or injectable medicines like IMFINZI and FASENRA. Despite this, new medicines are the $2.6 billion of additional revenue year to date, with Tagrisso, IMFINZI, and Lynparza as the biggest contributors, followed by Farxiga, Calquence, and FASENRA. In particular, Calquence is making very rapid progress. We now have 13 new medicines contributing growth and adding further diversification to the revenue as we look ahead. If we turn to slide eight, if we aggregate the medicines into therapy areas, we had solid double-digit growth for oncology and new CVRM, with respiratory and immunology seeing the impact from Pulmicort. Excluding Pulmicort, there was, as I said earlier, an absolute double-digit growth there of about 10%, so very strong.
From a regional viewpoint, there was growth everywhere, with Europe impacted by the timing of Lynparza milestones, which I mentioned earlier, but strong sales growth excluding the milestone, which we expect to come in Q4. In summary, the results year to date support the guidance and also a future of sustainable growth across medicines and geographical markets. With our global revenue base and our diversified portfolio of new medicines, AstraZeneca is well strategically positioned in the current environment, and we are ready to be entrepreneurial when needed, as we have shown with the effort against COVID-19. We want to remain a trusted collaborator for global healthcare system.
Before I hand over today to go into details on our oncology business, I would like to say how grateful I am for the support and hard work from the more than 75,000 colleagues around the world, and I would like to thank everyone for their efforts in the current situation, fighting the virus. As I said earlier, we've had some impact from COVID on some of our medicines. The biggest impact is PULMICORT, but we see strong resilience across the portfolio and importantly, as you will hear during the call, we see a return to normality for PULMICORT in China. It's a slow but steady return to normality. For Q4, we still expect challenges, headwinds, but going into next year, the picture looks suddenly better.
We also hope, and the trend we see in terms of cancer diagnosis that is improving, will also play well for us into next year. With this, please, Dave, go ahead and please turn to slide nine.
Thank you, Pascal. We are pleased to report a strong growth in total revenue of 24% for oncology to $8.2 billion year to date. While we did see continued impact in the quarter from fewer patients diagnosed due to COVID, we are seeing nice robustness of our business as sales grew across all of our oncology new brands. This came from regional expansions and new launches. Please turn to slide 10. Starting with our lung cancer franchise, we are pleased to report that both TAGRISSO and IMFINZI showed strong growth in the quarter year to date at 39% and 43% respectively, with revenue of $3.2 billion and $1.5 billion respectively. TAGRISSO continues its global rollout and is now approved in 87 countries in the first-line setting. We saw continued expansion in countries with national reimbursement, which now totals 32.
U.S. TAGRISSO revenue was up 22%, where we saw continued single-digit demand growth and also benefited from a one-off gross to net adjustment in the quarter. The majority of IMFINZI revenue continued to come from the U.S. as the launch of the CASPIAN indication in extensive stage small cell lung cancer has really begun to take effect, despite headwinds from COVID-19 on patient diagnoses. Outside of the U.S., we're starting to see the revenue of IMFINZI pick up, particularly in Europe and the emerging markets, as we continue the rollout with more approvals granted. We await the CASPIAN indication to drive further growth outside of the U.S., where the ability to combine with both cisplatin and carboplatin represents further benefit for patients.
For both medicines, we anticipate that if the China NRDL negotiations are reached, we could have the usual sales impact towards the end of the year, as we would then look to provide access to a greater proportion of patients. Right now, we can't say what that outcome will be. Please turn now to slide 11. On Lynparza. Lynparza showed continued progress with product sales up by 53%, with about half of sales coming from outside the U.S. This reflected growth across all regions as we continued to roll out the breast and ovarian cancer indications in the major markets of the U.S., in Europe, and Japan. Total revenue was impacted by the phasing of milestone payments from Merck, with further milestones anticipated in quarter four of this year.
U.S. sales continued to grow by 46%, with continued increase in demand as LYNPARZA maintained its leadership in the PARP inhibitor market in both ovarian and breast cancer, as we launched the PAOLA-1 indication in first-line HRD positive ovarian cancer and the PROfound prostate cancer indication. Europe sales were up by 51%, driven primarily by first-line ovarian cancer launches, as we now look forward to the ovarian PAOLA and prostate launches in Europe following the approvals that we announced earlier this morning. Emerging market sales were up by 105%, driven by the China launch and the recent inclusion on the NRDL. Japan sales amounted to $119 million, with growth of 30% driven by uptake in ovarian and breast cancers. Please turn to slide 12.
Turning now to our more recent launches, CALQUENCE in chronic lymphocytic leukemia and ENHERTU in third-line HER2-positive metastatic breast cancer. I am very pleased to report CALQUENCE revenue of $340 million in the year to date, predominantly coming from the U.S., where the new approval in CLL took effect at the end of 2019. The launch feedback is very encouraging, as the very impressive phase III data are resonating well with physicians. We are encouraged to see expansion in our prescriber base, with CALQUENCE now achieving over 35% of new patient starts across all lines in CLL. We await the EU regulatory decision imminently following the positive CHMP recommendation earlier this year. Following the ENHERTU launch at the beginning of the year, we are pleased to have reported $63 million in collaboration revenue based on $136 million of U.S. sales booked by Daiichi Sankyo in the year to date.
ENHERTU is now the most prescribed medicine in the third-line and fourth-line settings of HER2-positive metastatic breast cancer. Before I end, I want to thank all of our oncology colleagues for what they do every day to the benefit of patients and to our company, especially during the ongoing global pandemic. I'll now turn it over to Ruud for an update on our BioPharmaceuticals business and emerging markets. Please turn to slide 13.
Many thanks, Dave. Today, I am very pleased to talk to you about the BioPharmaceuticals business. Total revenue of BioPharmaceuticals, comprising new cardiovascular, renal, metabolism, and respiratory and immunology, was $7.3 billion in the year to date, growing at 5% despite the COVID pandemic. Starting with new CVRM, revenue was up by 10% despite intense competition in diabetes, with total revenue at $3.5 billion. Growth for both Farxiga and BRILINTA continued. Farxiga maintained volume market share globally with strong volume growth across all regions while benefiting from the SGLT2 class growth. In the U.S., Farxiga saw a reduction of 3% as price declines took effect, though volumes continued to grow due to the heart failure launch, and in the quarter, sales were up by 18%. Outside the U.S., which accounts for 72% of revenue, we saw strong performances with volume-driven growth increasing and China benefiting from the NRDL listing.
BRILINTA delivered revenue of $1.2 billion with 9% growth driven by a resilient performance in emerging markets up by 18%, while China volume-based procurement impacts took effect. We also had continuous growth in the U.S. up by 7%, but Europe experiencing COVID headwinds down by 1%. The majority of use is still in the acute setting, and BRILINTA continues to outgrow the market in all regions. Please turn to slide 14. Turning to respiratory and immunology, we reported revenue of $3.8 billion with a 1% growth in the year to date, mainly due to the negative impact from Pulmicort, notably in China. The impact of Pulmicort on our overall respiratory and immunology revenue was 15% in the quarter and the year to date. Symbicort sales were strong at $2 billion, with a growth of 16% in the year to date.
U.S. saw particularly strong growth, up 29% to $755 million due to the demand growth following the launch of the authorized generic and a resilient ICS/LABA market. Globally, SYMBICORT remained the leader in value and volume market share in the ICS/LABA class. PULMICORT was down 39% in the year to date with revenue of $628 million, which continues to be impacted by COVID-19 in China, especially the pediatrics nebulizing segment. We continue to focus on growing revenue of SYMBICORT as the maintenance therapy. Please turn to slide 15. Now I will focus on our new launch medicines. FASENRA contributed $660 million of revenue in the year to date, with good growth despite COVID-19, with the majority continuing to come from the U.S., Germany, and Japan. In the U.S., FASENRA is performing very well against new competitors, up by 23%, with $423 million in revenue.
Europe and Japan revenue were $140 million and $72 million respectively, as FASENRA continued to be the leading novel biological medicine for severe uncontrolled asthma. The launch of BREZTRI for COPD is progressing well, with revenue of $21 million in the year to date, with launches taking place in Japan, China, and more recently, the U.S. as we await for the EU regulatory review with an anticipated decision before the year ends following the positive CHMP recommendation. As we look to kidney disease, we plan to further build our franchise on top of the Farxiga data with LOKELMA and roxadustat. LOKELMA had revenue of $48 million in the year to date, mostly from the U.S. at $37 million as we maintain leadership in the new-to-brand prescriptions. China and Japan launches are progressing well. On roxadustat, we reported collaboration revenue of $90 million in the year to date coming from China.
However, the quarter declined versus the previous quarter reflecting an accounting adjustment. Demand remains very strong with more than 90,000 patients being treated for anemia and CKD with roxadustat. We continue to anticipate the U.S. regulatory decision by late December. Please turn to slide 16. Now let's take a closer look to the positive momentum we are seeing with FASENRA. Across the world, FASENRA continues to be the leading novel biological medicine for severe uncontrolled asthma in new-to-brand prescriptions, as you can see on the left side of the slide. Equally, from a total prescription perspective, we have made very positive progress from 2019 to 2020, as shown on the right slide. We are confident that FASENRA is on track to blockbuster status and, more importantly, helping millions of severe asthmatics around the world. Please turn to Slide 17.
Emerging markets, where total revenue grew by 11% in the year to date, continue to track ahead of our long-term performance ambition, which is to grow sales on average by a mid- to high single-digit percentage, despite a slight negative effect from divestments. Outside China, total revenue was up by 10%, with growth spread across the regions. China delivered a resilient growth of 11% and continued to see some impact from the COVID-19 pandemic, notably with PULMICORT, as previously mentioned, and continued volume-based procurement impact. We anticipate the typical quarter impact in China as we approach the NRDL negotiations. New medicines grew by 68%, now contributing just over a third of total revenue in the region, with the strong performance driven by oncology and new CVRM. With this, I will hand over to Marc. Please turn to Slide 18.
Thank you, Ruud, and hello, everyone. I want to take you through our financial performance in the year to date, as well as a reminder to our guidance for the full year. Please turn to Slide 19. As always, I will start with the reported P&L before commenting on our core results. As Pascal mentioned earlier, total revenue grew by 10% in the first nine months of the year, despite the impact of the COVID-19 pandemic. Within total revenue, product sales were up by 11%, driven by the success of the new medicine, while the fall in collaboration revenue in the third quarter primarily reflected the phasing impact of substantial milestone receipt booked in the third quarter of last year in respect to LYNPARZA. I do expect significant LYNPARZA milestone receipt in the final quarter of 2020. Please turn to Slide 20. Turning now to the core P&L.
This slide shows the progression in our operating leverage, and now we are performing in line with our full-year guidance. Our gross margin ratio was 80.5% in the first nine months, and I continue to expect a ratio of around 80%-81% over the full year versus 80% in 2019. Core R&D expenses increased by 9%, partly a result of the focused investment in the pipeline, including the development of ENHERTU and now DS-1062. Merck's upfront contribution in 2017 to the development of LYNPARZA, recorded at that time in our balance sheet, was gradually released to the P&L until last year. This impacted the comparative performance. The R&D line also includes the development of brazikumab, though we have refunded those costs through the other income line.
Core SG&A expenses increased by 3% in the year to date, driven by additional investment in the China expansion and further support for global launches of the new medicine. There was, however, a decline of 1% in core SG&A expenses in the third quarter, helped by savings in travel and expense cost. Core other operating income declined by 15% in the first nine months to $889 million, and anticipate a slightly lower combined level of collaboration revenue and other operating income over the full year versus 2019. Our core tax rate so far this year in the first nine months was 21%, in line with the indicated range of 18%-22% for the full year. Finally, our core earnings per share ended at $2.95, up by 16%, demonstrating the sustained progress we are making. Please turn to Slide 21.
Before we look at net debt and cash generation, I want to take a moment to highlight the changing shape of our P&L. While we expect collaboration revenue to increase over time and anticipate that income from divestment will remain a material part of our P&L, the left of this slide highlights the change in sources of profit and the growing contribution from product sales that are being made from our new medicine. I expect this long-term trend to continue. Turning now to net debt, it increased by $1.9 billion in the year to date. The generation of $6 billion of EBITDA was offset by a number of factors, including dividend payments totaling $3.6 billion, while we also made the second of two $675 million upfront payments to Daiichi Sankyo in respect to ENHERTU.
We also paid the first non-contingent payment of $350 million in the third quarter as part of the agreement on DS-1062. It is worth noting that net debt remains stable since the end of June, a date after which the second interim payment was paid. I was pleased to see that our constantly evolving underlying business performance drove a year-on-year increase of $1.4 billion in net cash flows from operating activities. These results bode well for our ambition to cover dividend payment next year through cash flows before financing activities. Please turn to slide 22. This familiar slide continues to demonstrate the progress we are making. As I mentioned, the 10% growth in total revenue so far this year was converted into a 16% increase in core earnings per share.
Our core operating margin rose by one percentage point to 28%, even with a significant reduction in collaboration revenue in other operating income. The progress of our operating leverage was also demonstrated by the fact that core operating expenses represented 57% of total revenue versus 59% a year ago. This increasing level of profitability will convert into more cash that will help us de-leverage our balance sheet and help us to remain focused on the capital allocation priorities of reinvestment, the progressive dividend policy, and our strong investment-grade credit rating. Please turn to slide 23. I will turn to guidance for 2020, which as I mentioned a moment ago, is on total revenue and core earnings per share at constant exchange rates. I am confident in the retention of our guidance for the year, despite the uncertainties arising from the pandemic.
A high single-digit to low-double-digit % increase in total revenue is anticipated to drive growth in core EPS of a mid to high teen %. With that, I now hand you over to Mene.
Thank you, Marc. If we can go to the next slide, please. Hello, everyone. I'll provide an update on our COVID-19 efforts and our biopharmaceuticals medicines since last quarter, and I'm also joined by José Baselga, who will discuss oncology movements and upcoming news flow across the company. Please turn to slide 25. We've continued to lead across multiple fronts in the global response to the COVID-19 pandemic. Progress has been made with our vaccine, AZD1222, and we have now resumed dosing in all our trials globally, alongside entering a rolling regulatory review in Europe. We are fully recruited in the U.K., Brazilian, and South Africa trials with around 23,000 patients now enrolled, and we continue to anticipate data readouts for these studies from our vaccine program within the next two months.
Our long-acting antibody combination, AZD7442, is starting several phase III trials to evaluate its potential role in the inpatient, in the outpatient, and in the prophylaxis treatment setting. The trials will look at a range of doses from 300 mg to 900 mg across both intramuscular and intravenous routes of administration. We're optimistic based on the data we've seen so far from our early clinical studies, that we can deliver protection for between 6 and 12 months. Finally, we continue to look across our pipeline for medicines that may address different symptoms of COVID-19 disease, such as acute respiratory distress syndrome and organ damage. Please turn to slide 26. We recently showcased two key pillars of our growing renal portfolio at medical congresses as we start to focus on specialty care in CVRM.
At the ESC, we presented the DAPA-CKD trial, where results showed a 39% reduction in the composite measure of worsening of renal function or risk of cardiovascular or renal death. Farxiga truly has the opportunity to redefine a new standard of care for kidney protection as the first medicine to significantly prolong survival in patients with CKD, either with or without type 2 diabetes. With our partner, FibroGen, we presented over 40 roxadustat abstracts at ASN. Two late-breaking posters examined the association between hemoglobin levels and cardiovascular outcomes. Roxadustat also showed a reduced risk of hospitalization for heart failure and the risk of red blood cell transfusions while not being associated with an increased risk of cancer. These abstracts all highlight the potential of roxadustat to transform the standard of care in patients with anemia of CKD. We anticipate a U.S. regulatory decision before the end of this year.
Please turn to slide 27. As we prepare for the readout of tezepelumab in severe asthma this quarter, I'll now focus on new data in respiratory and our expanding immunology pipeline. On the left-hand side, I wanted to highlight another practice-changing data set, this time in COPD with BREZTRI III from our ETHOS phase III program. In addition to meeting the primary endpoint in exacerbation reduction, BREZTRI III at a 320-milligram dose saw a 46% reduction in the risk of all-cause mortality, a key secondary endpoint when compared with glycopyrrolate/formoterol fumarate therapy. Really transformative data for COPD patients. Switching to immunology. FASENRA's extensive life cycle program in immune-driven diseases continue to expand, this month we announced positive data from the phase III nasal polyps trial, OSTRO.
Nirsevimab, in collaboration with Sanofi, is the first potential passive immunization for infants to demonstrate a sustained protection across the entire respiratory syncytial virus season with just one dose, using the same technology, as it happens, as our monoclonal antibodies for SARS-CoV-2, YTE technology. For Crohn's disease and ulcerative colitis, our IL-23 antibody, brazikumab, seeks to address the large unmet need. Anifrolumab, our interferon one therapy, has demonstrated consistent clinical benefits across all measured SLE patient subgroups, as presented at this year's EULAR conference, with additional analysis presented at ACR 2020. Regulatory submissions for anifrolumab have been accepted both in the U.S. and the E.U., with regulatory decisions expected in the second half of next year. Please turn to slide 28. To end, I'll quickly update you on the progress made in biopharmaceuticals and what's next in our pipeline.
Our GLP-1 glucagon dual peptide, cotadutide, has started phase II trials now also in diabetic kidney disease. Building upon the success with Farxiga in CKD and heart failure, we have two Farxiga combinations moving into phase II across heart failure and chronic kidney disease indications. The first is our mineralocorticoid receptor modulator, AZD9977, and the second is a selective endothelin A antagonist, zibotentan, otherwise known as AZD4054. These are the first of several Farxiga combinations moving into mid-stage development across CVRM indications with the aim of extending the life cycle and life of Farxiga. Having demonstrated robust proof of mechanism for our subcutaneous PCSK9 antisense oligonucleotide, we'll be starting phase II-B trials in the next few weeks with the ambition of rapidly moving into pivotal studies in the coming year. We look forward to updating you on the progress of all our medicines in our biopharmaceuticals pipeline.
Now, I'll now hand over to José, and please turn to slide 29.
Thank you, Mene. Hello, everyone. We had a strong presence at this year's virtual ESMO 2020 meeting that was held this quarter. If you look at the left, exploratory analysis from TAGRISSO ADAURA phase III trial showed that TAGRISSO reduced the risk of central nervous system disease recurrence by 82% in stage 1B to a stage 3A eGFR-mutated non-small cell lung cancer patients. This data underlies the capability of TAGRISSO to reshape clinical practice in the months and years ahead in this patient population. If we now focus on the middle panel, we presented overall survival data from LYNPARZA's PROfound trial in biomarker-selected men with metastatic castration-resistant prostate cancer. The study demonstrated the potential that this drug has to transform the therapy landscape. In addition to the main data, in a pre-specified adjustment for crossover, we saw a hazard ratio of 0.42, further supporting the transformational potential of this medicine.
We are happy to let you know that today we announce that we have received regulatory approval for both PROfound and PAOLA-1 in the EU. Additionally, if you look at the right, we showcased data from our pipeline, including ENHERTU, an ENHERTU subgroup analysis in patients with HER2-low gastric cancer. This was the DESTINY-Gastric01 study. Of note, we were recently granted a priority review in the U.S. alongside with regulatory submission acceptance. We also presented four-year overall survival data for IMFINZI in stage III unresectable lung cancer, and a five-year follow-up data from LYNPARZA's SOLO-1 trial, illustrating our vision to transform the cancer treatment landscape and advance clinical practice. Please turn to slide 30. Next, I would like to update you on our progress on what's next for oncology.
New this quarter, we now have included datopotamab deruxtecan, our TROP2 ADC licensed from Daiichi Sankyo as a potential new medicine. Based on very strong phase I clinical data in lung cancer, it is now advancing straight to phase III trials in this indication. In non-small cell lung cancer, our bispecific PD-1/CTLA-4 MEDI5752 antibody will commence phase II trials. In multiple myeloma, we've started phase II trials with MEDI2228, our BCMA ADC. We continue to move forward aggressively to launch our initial phase III study for the oral SERD. If you look at the right now, as for progress on what's now, we are launching a number of exciting phase III trials, including capivasertib in prostate cancer, ENHERTU's DESTINY-Breast06 trial in HER2-low breast cancer, and CALQUENCE in diffuse large B-cell lymphoma.
I look forward to updating you on the progress of these medicines and others in the near future. If you could please turn to slide 31. As Pascal highlighted earlier, 2020 hasn't been a great year for regulatory news flow, with some key submissions and regulatory decisions still to come in the last quarter. In terms of data, we still have our anti-TSLP, tezepelumab, due to read out in severe asthma this quarter. Now, as we look into 2021, there is a lot to look forward to. We will see phase III data readouts from LYNPARZA's OlympiA trial in adjuvant breast cancer and the PROPEL trial in the first-line metastatic prostate cancer. For IMFINZI, we will report on the PACIFIC-2 trial in stage 3 unresectable non-small cell lung cancer and in early bladder cancer in the NIAGARA trial.
We'll also have the highly anticipated head-to-head data for ENHERTU versus T-DM1 in second-line breast cancer, as well as Farxiga data in heart failure with preserved ejection fraction and PT027 in asthma. As you can see, these pipeline events provide further evidence of our diversified portfolio, both in biopharma and in oncology. With that, I'll now hand back to Pascal for closing comments. Please turn to slide 32.
Thank you, José. If you want to turn to slide 33. Before the Q&A session, I will leave this slide for a few moments. As a summary of the strategic achievements and summarize today's results as follows. First of all, revenue advanced by 10%, in line with our expectations and despite the impact from COVID-19. The global business continued to deliver with strong performance in the emerging markets, excluding PULMICORT. A performance also supported by the U.S., Europe, and Japan that are helping to further diversify the revenue base. In addition, there are eight medicines with annual sales in excess of $1 billion . We've also made solid progress on operating leverage, profit, and profit contribution from sales, as well as cash flow. I would like just to highlight that these results, financial results, strong results, are actually achieved in the context of two challenges or two headwinds.
The first one is we have lower operating income and collaboration revenue, as Marc highlighted, in great part due to the timing of a milestone. The second is we are operating in a relatively hostile environment with COVID headwinds. The impact is mostly on PULMICORT, of course, with the most modest impact on some other products. Despite those challenges, the business is able to deliver this kind of growth rate and profit improvements and cash flow improvement. It really bodes well for the future as the world hopefully will return to more normality as we find solutions to this terrible pandemic. Our pipeline continued to advance in 2020, mostly in the form of approvals and other regulatory milestones, and that is supporting our aspirations for continued strong revenue growth. We now have 20 medicines in the late-stage pipeline across new medicines and life cycle opportunities.
With that, there is optionality in the fight against COVID-19 with the vaccine and, most importantly, the long-acting antibody combination, which, as you heard from Mene, looking quite exciting and promising. Early days, of course, but they're quite exciting. In 2021, we anticipate more new phase III data, which, if positive, will help sustain the current momentum as we continue to transform and transition our business, increase our profitability and our cash flow. We will now go to Q&A. For those on the phone, please remember to press star one to ask a question. We will also take written questions from the webcast. Can I please remind everyone to limit questions to one to be fair to all of our callers? Thank you in advance, and perhaps now we can take the first question from the conference call. The first question is from Andrew Baum at Citi.
Andrew, go ahead.
Thank you, Pascal. It would be remiss for me to ask not on COVID, given where the world is at. I see you have Pam Cheng on the call. Perhaps Pam and Mene, you could comment on the exact nature of the roadblocks in the supply chain that have led to some downscaling of the volumes that you intend to supply the U.K. government, just so we can think through the ramifications for volumes to the U.S. and other markets in the next year. One question on Mene, could you add to that for your antibody cocktail 7442, the volumes that you could hope to attain given the potency that you seem to be able to generate through the engineering with this biologic?
Thank you, Andrew. Let me make a couple of comments before I hand over to Pam for your first question. The first thing is that we are a little bit delayed in our initial timing because of the drop in infection rate during the summer period in the U.K. If you remember back in April, May, when we started, the infection rate was very high. It dropped in the summer, which of course, was good news for the community, but impacted the timing of the trial. It has picked up now quite a bit. Of course, we have also accumulated events in Brazil. We are blinded to the event, the number of infections that have been accumulating. As you know, in a study like this, only a couple of statisticians know.
We expect now with this pickup, and based on what we are told, we expect, as Mene said earlier, to have results before the end of the year. As it relates to supply, again, I'll hand over in a minute to Pam to give you more details. What we have done is we have aligned the timing of delivery of vials to the timing of the clinical trial readout. Remember, when we keep the drug in drug substance, in vaccine bulk format, this is kept in a frozen state, and therefore delivers a very long shelf life. As soon as you turn this vaccine into vials, the shelf life starts ticking, and of course, the vaccine being new and recent, we have limited shelf life data so far. It looks good, but it will improve over time, hopefully, but so far we have limited data.
We've kept this vaccine in bulk formats, and we will turn this into vials as soon as we feel confident, as soon as we get clinical data. We also know in the U.K. what the timing of the vaccination schedule looks like, and of course, you can't vaccinate 20, 30 million people in a week. We will be able to deliver our vaccine, if we get approval before the end of the year, we'll be able to time the delivery of our vaccine in vial form to the U.K. government to align these deliveries to the vaccination schedule they have put in place with population priorities and weekly targets per week. Net is, on a global basis, we'll be ready to supply hundreds of millions of doses of vaccine around the world by January.
Hopefully by January, if the vaccine works, fingers crossed, we would hopefully have approval and start vaccinations. Pam, do you want to give a little bit more details as to the supply chain process we follow?
Absolutely. Thank you, Andrew, for the question. This is Pam Cheng speaking here. I have to say, given the enormity of what we are undertaking here, challenge is normal, and I'm happy to report that we've been able to deal with the challenges. Since we've last reported on our capacity, there has not been any meaningful changes in the target capacity on the supply chains that we have set up. As Pascal spoke about, what's really important is really to make sure that our supply chain's all ready across our supply chain nodes, including drug substance, which is the active formulation, filling, and packaging, as well as analytical testing and release steps. It's really important to note that many of our sites in the global network have begun process validation and commercial manufacturing. In other words, we are ready as we speak to produce finished products.
As Pascal mentioned, we must be thoughtful in terms of how much and when we convert what we call the drug substance, which is the active, into formulated vials, for example, because of shelf life issues. Our aim is, upon regulatory approval, if and when we get the regulatory approval, we will be able to release product on a rolling basis, and begin supplying hundreds of millions of doses upon approval. With that in mind, we are placing significant amount of effort into planning in terms of when we convert the drug substance, and we are holding majority of our inventory in drug substance form, which is in frozen state, which is obviously more stable.
Thank you, Pam. Mene, do you want to cover the second question?
Yes. As you know, Andrew, we've got commitment already from the U.S. and U.K. governments, which are in the public domain, for 2 million doses , which we'll be able to supply next year. We have additional capacity beyond that. I think as we say, we're aiming to be between 2 billion and 4 billion doses next year, obviously depending on the ultimate dose. Obviously going into 2022, we want to increase that as much as we can. We're in the several billion doses next year, and then growing into 2022.
Thank you, Mene. Luisa Hector at Berenberg has the next question. Luisa, go ahead.
Oh, hello. Thank you. I have a couple of follow-ups still on the vaccine and the antibody. In terms of the vaccine, should we be expecting early data from the two-dose regime, and to what extent is there likely to be data on elderly patients? I'm just wondering if they were recruited slightly later into the study, and the early data might just be in slightly younger cohort. On the antibody, I'm just interested to understand with the phase III, in terms of the prophylaxis, how long you expect to have follow-up to really demonstrate that six-month longevity. Will those studies take longer to read out, or can you take the cut at two months and then keep the follow-up going? Thank you.
Yeah. Okay.
Thank you, Luisa. Two important questions, Mene, if you want to cover those two.
Yeah.
The antibody, we like to call it the long-acting antibody, Luisa, because we hope to deliver six to 12 months protection depending on the dose used. With that, Mene, go ahead.
In terms of the readout, as Pascal said, we're expecting to get a readout before the end of the year. Andrew Pollard has just presented a few weeks ago, you may have missed it at an infection conference, actually, data from elderly adults where we show that the immune response in the 56 to 69-year-olds and 69 and 70 and above looks very similar to the response of the 18 to 55-year-olds. In that regard, we're feeling good about the immunogenicity in all the age groups that we're testing, and we think we will have data from those age groups for the readout. With regards to the antibody study, it's a great question.
We'll be following patients out for 12 months, who will obviously be having interim looks that will enable us to understand the efficacy of the antibody sooner than that while we continue to complete the studies to the final analysis.
Thanks, Mene. Do you want to say an additional couple of words on the antibody, explaining the long-acting, but also the lack of effector function?
Yeah
potential benefit of it?
There's maybe a few different things to it. There's a number of different studies that we're taking. We have a prophylaxis study that's hopefully starting next week called PROVENT. This is going to be using a relatively low dose, 300 milligrams intramuscular. Obviously, intramuscular is a very easy route of administration for a general population. The population we're going after here is immune-compromised patients, vulnerable patients that maybe will not respond well to a vaccine. Just to give you an indication, there's about 500,000 patients just in the U.K. that are immune-compromised that would be available for such a therapy. We have another study called STORM CHASER, which is looking at post-exposure prophylaxis. That's also going to be using 300 milligrams IM. In that particular study, we're going to add 300 milligrams or 600 milligrams, sorry, as well.
In that study, what we're doing is going into a site that's had an infection and immunizing everybody with the antibody. Whether you're positive or negative, it doesn't matter, everyone gets infected. You can imagine a care home having an infection. You go and immunize everyone in the care home and give them immediate protection. We have our TACKLE study, which is our outpatient treatment study. That's looking at 600 mg IM. We have two studies that are going to be sponsored by the NIH. One is the ACTIV-2, which is also an outpatient study. They're looking at both an IV and IM dose route of administration. The ACTIV-3 study is the inpatient treatment study, we haven't decided what the dose is, but they'll be looking at an IV infusion as well.
As I said, the YTE extension gives us what we feel pretty confident about will give us 6-12 months of protection with a single dose. The Fc inactivation that we've done, we think potentially could be important in those severe patients. As you know, the Lilly and the general antibodies are both stopped because of a poor risk-benefit in the more severe population. The fact that we've inactivated the Fc domain in terms of Fc receptor binding, and the fact that we're going with much lower doses, I think means that we may have a better chance of seeing some activity or some efficacy in that more severe patient population as well. We think overall, the half-life, the route of administration, the dose give us a real competitive advantage relative to the other antibodies.
Thank you, Mene. The next question is from Richard Parkes at Exane. Go ahead, Richard.
Hi. Thanks for taking my question. Hopefully, you can hear me okay.
Yeah.
I just wanted to ask a big picture one maybe for you, Pascal, on U.S. drug pricing reform. It looks like it's likely we'll have a Democrat president and a Republican-controlled Senate, and I just wonder, do you think the outlook is for further stalemate on this issue, or does that really provide the ideal backdrop for maybe the industry to support a compromised solution that might finally remove the industry from the political crosshairs? Just your thoughts on bigger picture for U.S. drug pricing. Thank you.
Thanks, Richard. I could ask maybe Ruud to answer. Ruud leads our whole pharma business, but also is the head of the U.S. organization. Ruud, do you want to go ahead?
Yeah, absolutely, Pascal. First of all, it's clear that it is still unknown, of course, who's going to win. Regardless of who's going to win, we are a little bit neutral, to be very honest. We have a clear statement that we try to work with every government, irrespective the political backgrounds. We are very committed to be a very constructive partner. We also hope that some of, let's say, the policies we are supporting will get traction. Policies like value-based agreements, lower copays for patients, a better affordability for medicines, innovative medicines are crucial elements. Whether the current president will remain in office or if we have President Biden, once again, we are a little bit ambivalent, and we will do our best. Having said that, linking it also to the vaccine and antibody, we are working in a very constructive way with the U.S. governments.
They are highly supportive, as you know, of our vaccine efforts, as well as our long-acting antibodies, and hopefully that will continue if there is a change.
Thank you, Ruud. The only thing I would add, Richard, is I'm sure you've seen that the balance of the Senate tends to favor Republicans. The Speaker, Leader McConnell, has been reelected, as you know. They've always been very vocal in terms of their opposition to any form of price control. Of course, that will have an impact on the ability of any administration to implement changes. We hope to see constructive discussion around value-based pricing, as Ruud said, and not so much discussion about government-driven price controls. The next question is from Steve Scala. Steve, go ahead.
Thank you. I have two product-related questions. On IMFINZI in neo-adjuvant non-small cell lung cancer, when should we expect to see the MPR and pCR readouts, and would you file on them? What led to the decision to make MPR rather than pCR the co-primary endpoint? That's the first question. Second question is regarding the collaboration with Arcus for the TIGIT. Have you seen data, and why did you pick the Arcus agent as opposed to that of competitors? Thank you very much.
Thanks, Steve. José, do you want to cover both questions? Maybe on the Arcus collaboration, Dave could add anything he wants. José, go ahead.
Yeah. On the Arcus collaboration we studied very well the antibody properties, and we feel that is a fantastic antibody, that's why we were so happy to seek a collaboration with them. To be asked, most important at all, was the enthusiasm that was shared with Arcus and ourselves in developing this in what we think is the best indication, which is in the Pacific indication. I think that for us was very important because we feel that there we can make a true difference. As for the first question, would you mind repeating this briefly to me?
Neo-adjuvant IMFINZI, José, on the change from MPR to pCR, the endpoints modification.
Yeah. We have been following the endpoints, and we just changed them because we think that we're trying to find an endpoint that is more robust, and that's why we just did it. We have kept the old endpoint as a co-primary endpoint.
Thank you. Next question is Sachin Jain at Bank of America. Sachin, over to you.
Hi. Thanks. My question's two, please. On China outlook into 2021. You've highlighted there's lots of moving parts, VBP pressure, PULMICORT base effect, NRDL additions, which will have price and volume. I wonder if you could try and put all of that together for us, and give us some idea of how growth will look into next year versus the 26% growth ex-PULMICORT in the third quarter. The second question, just big picture capital allocation. You've mentioned unchanged priorities, each of the last two years have seen product deals even though they're officially low on your capital allocation list. How do we think about exceptions to the rule into 2021 for product-specific deals, which the markets generally like, both ENHERTU and 1062, or even larger deals, if they are on the radar at all? Thank you.
Thank you, Sachin. Leon, do you want to cover the first question about China?
Yeah. I think VBP is definitely will be coming the fourth batch, fifth batch sometime next year. Some of AstraZeneca products will definitely get in. Right now, we actually have been trying very hard on Crestor and now on BRILINTA. By channeling patients, loyal users, to the outside hospital channel, like retail pharmacy, online pharmacy, in order to maintain a loyal user as much as possible for branded off-patent products. I think we definitely have a way, and by expanding to more outlets, hospital and pharmacy and clinics, we will be able to slow down the decline or erosion for VBP. PULMICORT, I think this year, like Pascal said, in September, we already see a good sign of rebounding of PULMICORT because of schooling and the people are less wearing mask in China.
We want to also see the same trend happening in quarter four. Also next year, 2021, PULMICORT will be comparing very low PULMICORT this year as a very low base. We believe next year PULMICORT will be a better year. NRDL this time we are applying for 6 to 7 new products and also some new indication. Definitely there will be also quite price cuts because of the budget pressure in China. AstraZeneca has very good coverage and a solid number 1 position in China. We will definitely be able to scale up volume much faster than the other companies in China. We will be definitely benefit from NRDL, one after another, like Farxiga, LYNPARZA, and TAGRISSO and IMFINZI you saw in the past.
With all these three moving pieces, we expect China will not grow 30%-40% like what we did last year. I think China will still continue grow a low double-digit or low mid-teen digit, I think. In that range.
Thank you, Leon. Let me just add two things that Leon has said, but I'd like to reemphasize is, I think our number one position in China and the strength of our organization are really bringing two specific benefits that we can leverage. One is, Leon talked about Crestor. Because the prices of those products is declining after VBP and the drug themselves in the end are affordable, there is this market that is developing that you can supply for retail pharmacies, online pharmacies, and we've been very active in that segment. Essentially, the story is people can decide to pay out of pocket the cost of Crestor, they are loyal supporters. Instead of going to the hospital and queuing there to get their medicines for free, they just have to pay a limited amount out of pocket, and they can even get the drug delivered to their home.
In Shanghai, the big cities, you get things delivered to your home for $1 or $2. There is this special market that exists and has enabled us to maintain Crestor through enormous volume growth despite the price drop. The second phenomenon that is really important is an NRDL drives access to many patients, but it also drives price decreases. To gain advantage of the volume growth, you have to have a broad coverage of the entire country. We are one of the few companies that have this broad coverage, reaching out to clinics, small county hospitals, et cetera. We are very well positioned. We have a strategic advantage leveraging this existing network to grow volume across the country and take advantage of an NRDL listing. Otherwise, you get the price cut, but you cannot benefit from the volume growth.
With this, the second question is capital allocation. I'll ask Marc to answer this, but I will not say, Sachin, that you should see the deals we've done as exceptions. We've always said that we will remain open to doing deals that are strategically making sense for us and products we can add value to. With that, over to you, Marc.
Thank you, Pascal, and thank you, Sachin, for the question. For capital allocation, priorities are not changed. I think what you refer to is probably the immediately accretive condition that we have. If we look at the two ADCs that we have partnered with Daiichi Sankyo, they were, in a way, not meeting that criteria, and therefore one could term them as exception to our general rule. Apart from the accretion of these two deals is not very deep and not very long. They are exceptions, but they are not major exceptions. Basically, there is no change in our capital allocation priorities.
Thank you, Marc. The next question is from Keyur Parekh at Goldman. Keyur, over to you.
Good afternoon, and thank you, Pascal. My questions are two, if I may please, on the vaccines. The first one is, I think on the media call this morning, Astra was quoted as saying that we should expect the data from the vaccines in November. Just wondering if you can clarify, is that timeline based on an interim analysis of the ongoing Brazilian, South African, and the U.K. studies? If so, what is the number of events that would be needed to trigger this interim analysis? Secondly, continuing with vaccines, I was wondering if you can just help us think through the powering you need on the first interim analysis versus the second and the final interim analysis there. Thank you.
Thank you, Keyur. I'll ask Mene to cover this. Let me just correct one thing quickly, is we didn't say November, we said before the end of the year, which of course you could read as November or December. The truth is we don't know because we are blinded, and the projections are such that we know it should happen before the end of the year. With this, Mene, over to you.
Thanks, Keyur. Unfortunately, I'm not going to be able to shed a lot of light on this because, as you know, we don't talk about interims and on giving details about this. This is an Oxford-sponsored study. I think what I can say is that we're confident that we'll get results before the end of the year, but we're not disclosing whether that's interim or final. We do hope we'll get results by the end of the year that will tell us one way or the other whether this vaccine is effective.
That is based, of course, on the non-U.S. studies. U.S. study has restarted and is recruiting fast, but of course, initial results will be based on the non-U.S. program.
Pascal, maybe you want to go to the webcast question, and then back to Tim.
We give Tim a few minutes to connect. The next question online is a question from Marietta Miemietz at Primavenue . The question from Marietta is, "In China, for BRILINTA, does the in-class price cut after VBP round affect the hospital market only or also the retail market? Is there a spill-over into retail? Is the price cut always 30%, or does it vary?" Leon, it's for you, this one.
Actually, in China is a universal price. There's no public or private or hospital-retail difference on pricing. It's a universal cut. If you lose tender or if you win the tender, it's all same cut. The spillover definitely, the percentage of business in pharmacy will go up because in hospital, they first need to use tender winners drugs instead of losers. Loser all go to retail pharmacy and still selling to the low user. It's not always 30%. 30% is the maximum cut. If your price gap against the similar generic is very small, this can also go down to 20%.
Thank you, Leon. What we could do is move to the next question, Mark Purcell at Morgan Stanley. Mark, over to you.
For both Ruud and Mene. Clearly tremendous growth in Q3. The heart failure indication hasn't really kicked in, and obviously CKD is yet to come. Could you talk to maximize the opportunity over the medium to long term, obviously, the competition pattern going in about 5 years' time, but will you get additional IP, you believe, which can stand the test of time in heart failure and CKD? When it comes to the combination approaches, you talked to there, Mene, with mCRPC and the ERA. Is there any evidence to suggest that the fixed combination could generate some synergism which may be more elusive to find in a free combination? Pascal, could I just ask one clarification question on the vaccine questions?
Maybe it's for Pam, but you were due to deliver 700 million doses of the vaccine through the government and regional agreements by the end of the year. Should we just assume that you've reached that level, or you will reach that level in terms of the API frozen product? Can you just help us understand how quickly you can go from API to product in a vial that's being distributed. Will you be at 700 by the end of the year, will it take, for example, four to six weeks to then deliver that to the final customers?
Thanks, Mark. A few questions here. The first one is heart failure, CKD, Farxiga, and the comments on the IP and the potential, importantly, of heart failure, CKD. I could ask Ruud to cover this one, the combinations, Mene, and maybe the vaccine supply question could go to Pam. Just on this last one, the 700 million doses will start in January. Essentially, we are accumulating the drug substance, and we'll turn this into vials and start delivering really substantial quantities January forward to enable mass vaccinations. We start delivering in December if we get approval, of course, but I guess really the big ramp-up would be early January. With that, Ruud, over to you for the Farxiga questions.
Yeah, thank you so much, Mark. First of all, we remain extremely bullish on the potential for Farxiga. We had a very strong quarter across all geographies. The heart failure opportunity is very substantial. In the U.S., we have now the indication for a couple of months, and we are very pleased to see that in this specific segment, already Farxiga is becoming the market leader in the SGLT2 class. Clearly, there is traction, and there's no reason to believe that will not continue. Equally, we just saw the approval in Europe for heart failure. All geographies are well-poised in order to capitalize on this huge opportunity. CKD, I will not dwell on the phenomenal results, but I can tell you is that the opportunity is very substantial. There are roughly 700 million chronic kidney disease patients in the world.
If you zoom in for the U.S., there are an enormous amount, roughly 34 million patients in CKD 3. The big-ticket item is that diagnosis rate are still limited. Roughly 12% is diagnosed. We will do a huge effort in order to increase that. That will continue, and we are very bullish that Farxiga will show double-digit growth in the next five, six years. Your IP question specifically, it's in the public domain. We have protection till 2025, 2026, depending on the geography you are in. Of course, Mene and the research and development groups are doing everything in order to come up with sensible combinations. Perhaps, Mene, you can give a little bit of flavor of what we're doing there.
Mene, before you comment, let me just add one quick one on the CKD. Ruud just gave you the very large number of patients around the world, 700 million who suffer from CKD. The one thing that is important to remember with CKD is, heart failure is a sophisticated diagnosis, but CKD is very simple as you know. You measure GFR as part of your blood checkup, or you look at protein in urine. Very simple diagnosis that can be conducted by primary care physicians. The hope here is that we can really drive diagnosis and initiation of treatment in those patients who will benefit from Farxiga. Mene, sorry, over to you.
Thanks, Pascal. First of all, just say that the combinations, and I'm only showing you two, we have several combination programs in the works, but I wanted to highlight those two. We're aiming to launch them and to get data in time for the loss of exclusivity of the monotherapy. In answer to the synergy question, the hope is that there'll be synergy, and it's actually the combination of mechanisms that make sense. For example, endothelin antagonists traditionally have suffered from edema, but are highly effective. Because of the low dose that we think we can use with our particular endothelin antagonist, but also combining with SGLT2.
We minimize the risk of any edema but maximize the efficacy or the addition of the endothelin antagonist in the patient population. With the mineralocorticoid receptor modulator, our chemists have done a remarkable job of finding a set of molecules that we can profile against all the other MR antagonists, and we have very little evidence of any impact on electrolytes and potassium, which is one of the major reasons why MR antagonists aren't used, particularly in heart failure patients with impaired eGFR function or kidney function. Again, combining dapagliflozin with an MRM, we think is going to be a really valuable tool across heart failure and CKD.
Thank you, Mene. Pam, the last question.
Yes. Thank you, Pascal. As mentioned, we are in commercial manufacturing for the drug substance as we speak, which is the active material. You can assume that drug substance will be available upon approval as planned. The time to convert drug substance to package vial is only a few days, followed by a sterility test. As Pascal mentioned, upon approval, we will have the capability and readiness to convert into vials in a very short amount of time and release the material on a rolling basis in terms of the number of doses that we've been planning on.
Thanks, Pam. As a quick reminder, we all get excited about deliveries, but we have to remember, we have to first show the vaccine works. We all hope it does, but we still have to show that. Maybe Tim Anderson, if, Tim, you're back online, if it works.
A high-level question. What can we expect for revenue and earnings growth in 2021, even if only directionally ahead of official guidance? What are the tailwinds, what are the headwinds, and the greatest sources of uncertainty? You can ignore any of the impact of COVID-19 in that question. I'm really thinking about individual brand and geography performance. Pulmicort, just a simple question. When will that likely go under VBP in China?
Maybe, Leon, you can cover the second question, but the first one, as you'd expect, Tim, we don't give guidance at this stage in the year. I can sort of give you the ups and downs. First of all, we have strong momentum across our pipeline, and we have more news flow coming that will further fuel growth across oncology. I think also Farxiga is going to be a pretty strong driver. In respiratory, we expect BREZTRI, Trixeo in Europe, and also FASENRA to continue growing. We have new launches. roxadustat is doing very well in China. We have quite a number of launches that will support this growth. The headwinds, it depends how COVID-19 continues to impact Pulmicort. You heard Leon say a bit earlier that we see demand sales slowly recover in China.
If things continue to improve that way, we should have a better Pulmicort next year. In terms of the headwinds, I would say really, what is COVID going to impact Pulmicort again, also we'll have VBP and NRDL price listings. The NRDL price listing, they drive price reductions, but again, with our strong coverage footprint in China, we can benefit. We're able to benefit from the upside in volume, which not every company can do. Very few companies can do that. I'm sorry, we can't give much more guidance at this point in time. The second question, Leon, go ahead.
Yeah. I think the Pulmicort, right now we have one or two generics already approved with different SKU dosage. I think sometime next year, there will be more completed with a minimum of another two generic Pulmicort. Pulmicort will be included in the VBP. Our assumption is sometime next year, but will not impact demand sales next year. We will definitely have impact on sales of Pulmicort in 2022. We believe Pulmicort, with half of the business still will be coming from normalized and will come from pediatric. Pediatric usually is self-pay. We have a good chance to direct patients to outside hospital pharmacy and purchase online. It's for acute short-term usage, so it's very convenient to do it, to buy nebulizer and Pulmicort in the pharmacy.
Just to be aware, Pulmicort business impact is quite obvious, but the underlying business of China, if you exclude Pulmicort, the business in China is doing actually very well. It's very much on track on the 20% growth, above 20% growth. I think it's a very good business. We will continue pushing the other new products and the new NRDL-included products.
Thanks, Leon. Tim, I was thinking in terms of the ups and downs of the trend in 2021. I should have mentioned the optionality coming from the long-lasting antibody. If this works, we are going to be ready to supply a few million doses, and that definitely would be an upside also. Next question is from Seamus Fernandez at Guggenheim. Go ahead, Seamus.
Okay, thanks for the question. Just, I wanted to ask one question specific to
Your building presence in the nephrology space and hematology. You had a big presence at ASN. Right now, your commercial presence there seems a little bit under-resourced. Just wondering, in terms of your commitment to that space, and growing that space, really where you see your vision for that area and growing there, how committed are you to that? How core is roxadustat to that presence, or do you see opportunities to move beyond that? Just a very follow-up question on roxa. Mene, you seem extremely confident in your commentary in that regard heading into the FDA's decision on December 20th. Can you just give us a little bit of incremental color in terms of what you think are the key questions that would be an area of focus for the label in particular? Thanks so much.
Thanks, Seamus. Let me ask Ruud to comment on the first one, Mene on the second one. Second one, I don't think you heard us being very confident. I mean, the outcomes of these FDA discussions as far as the label could, there's still several potential outcomes that Mene can explain. On the nephrology side, I don't know where you get this impression we are not very strong commercially. We started this focus on nephrology many years ago. We acquired LOKELMA, knowing that we had roxadustat. The positive surprise was Farxiga in kidney disease. We've had a nephrology team for quite some time, and it's a very good nephrology team. We have a presence in nephrologists, offices, and of course, we have the diabetes team, and all these teams will complement each other. Ruud, over to you.
Yeah, no. Exactly, Pascal. We are extremely bullish about the renal opportunity. There's an incredible high unmet medical need, the fact that we have now, hopefully very soon, dapagliflozin in the CKD indication. LOKELMA is doing very well in the United States, the next stage will be to expand the market. Assuming that we will get a positive readout from the FDA regarding the approval, roxadustat is a major opportunity for so many patients facing anemia. China, I think, is doing an outstanding job so far with roxadustat. Roughly 90,000 patients are already on roxadustat, both in dialysis-dependent situation as well as in the non-dialysis. All the lights are green, to be very honest. We are very committed to this space because we really believe that we have a portfolio which is making a huge impact on so many of those patients.
With regard to, obviously the big question is black box or no black box. Obviously, the regulators are going to make their decision on that. I think the important thing for us is to make sure that we get the data across the various subtypes for roxa, whether it's in the non-dialysis dependent population, the incident dialysis population, or the DD population. Within, we have a very competitive profile. We'll be aware of the Akebia data, where I think it's really opened up the space for us in the non-dialysis dependent population, given their CV data. We think we're in a very good position. I know hopefully with a positive outcome from the regulators in terms of the label.
Thanks, Mene. Seamus, I think you were also referring to hematology. In nephrology, we are very well-equipped, including people who treat anemia of kidney disease. As it relates to the more hematology-driven conditions, we have a hematology sales force, and we're looking at how the CALQUENCE sales force could potentially help where appropriate, could potentially help roxadustat. We have synergies across our various sales forces. We move to Matthew Weston at Credit Suisse.
Thank you very much. Can I ask a finance question for Marc, please? You flagged operating leverage as a key driver on slide 22 with the two percentage point improvement in cost ratio over 2019. That includes a significant SG&A benefit from COVID-19. Are you confident that we can still see margin leverage next year as SG&A presumably bounce back and you also have a significant launch commitment? If I can, a second one for Mene on COVID-19 vaccines. We saw some delays in the U.S. with extended requirements from FDA on median safety follow-up. Can you just remind us what the requirement is for safety follow-up from EMA in terms of time on the product? Thank you.
Thanks, Matt. Marc, do you want to start, and then Mene can cover the other question?
Yes. Thank you, Matt, for the question. First of all, operating leverage, which we simplistically define as growth of product sales minus growth of operating expenses. We need to also remember that in the operating expenses, a large part is occupied by the R&D, and the R&D ratio is increasing in 2020. It is year to date about 22%. There will be an improvement, and we'll continue to work on the improvement of the operating leverage. This year it is at the end of September of about 5%. It's a sort of a rate of improvement that we are satisfied with. It will continue in the year 2021 and following 2021. Yes, we will continue to work on the operating leverage, but please remember that the operating leverage also includes the large investment we do on R&D.
Matt, in terms of the question around vaccine safety, bear in mind again that we started dosing with this vaccine in April of this year, so we've actually got now over 20,000 patients dosed, and there's nothing from the interactions that we've had with either the EMA or the MHRA that has given us pause that if we demonstrate efficacy and safety in the dataset that we have in the studies that are ongoing across Brazil, U.K., and Africa, that we won't be able to get an approval.
Thanks. Two quick adds, if I may. Remember that operating leverage is also after other income, and R&D is influenced by the brazikumab costs, which Matt mentioned earlier, and we get refunded in the other income line. I know it's not always easy. There are many moving parts with all these collaborations, but you always need to remember this when you look at all the costs. As far as the safety, I know you know that, but it's important to remember there is an independent safety committee that constantly reviews or regularly reviews the data, of course, as you would imagine, and monitors the safety in the two arms. Important to remember this as we consider the overall safety profile. So far, of course, we know that they have been satisfied with the safety and as well as the regulators.
Next question is James Gordon at JPMorgan. James, over to you.
Hello. Thanks for taking the questions. It's James Gordon at JPMorgan. A question on the pipeline. The first question is on the AKT inhibitor. I saw today you've announced a phase II initiation in prostate, and you've got phase IIs going I think in hormonal breast cancer and triple-negative. Using the same AKT mechanism, Roche recently had negative data in their breast cancer studies and limited benefit in prostate. I don't know if it's the therapeutic window or tolerability. The question is, can you remind us or update us why you think capivasertib is going to look different to ipatasertib? Should we now be a bit more cautious on this class, or reason that this is going to be a lot more successful? also a clarification on capivasertib, please.
the head-to-head study versus IMBRUVICA, that's come forward about a year over the last two quarters. I think it was 2022, and then it was H2 '21, and now it's H1 '21. what's made that move around? Is it just more events occurring, and is that good or bad for the chances of it actually being successful? what's given the confidence also to move this product forward into a phase III for DLBCL as well, please?
Thank you, James. Two questions for José. </edited_transcript
Yeah. Thank you very much. Let me address first the question on capivasertib. We are gathering different data. When it comes to triple-negative breast cancer, we have positive data in our randomized phase II study, which is basically reaffirming that we believe that our triple-negative breast cancer study, CAPItello-290, is likely to do well. We have different, as you know, populations. At Roche, on the recently failed phase III study, they had chosen a biomarker group predefined, and basically we are not doing that. We are going on overall population. In prostate also, the difference is that we are going into an earlier line. We are not going in post-failure of hormonal therapy, but rather we are going early. We think that has a major advantage. Also, in ER positive, we're going at full speed. We'll see.
The data will arrive, but we're very confident that what we have is the best in class.
Thanks, José. We are out of time, but we'll keep going for another eight minutes or 10 minutes max. We'll take the last three questions, and then please stick to one question per person. Over to you, Naresh at Intron Health .
Hi. Thanks for taking my question. Just one on FASENRA. Can you give the sense of how you're doing, in terms of market share across all biologics, not just against the other IL-5s, and how is pricing evolving in that space? Thanks.
I can take it, Pascal.
Yeah.
Of course, that's a good question, but also difficult to answer because some of the competing products have multiple indications. Of course, Dupixent has the atopic dermatitis indication, which is very large. Equally, Nucala has a couple of other indications, EGPA and others. All in all, I think if you look at the total volume perspective, if you include all the indications, it's clear that we are not the market leader because we're not competing in that. Equally, it's very important that if you assess the performance of the different biologics, that you adjust the market shares for the number of injections. I think FASENRA is very unique that it is only dosed every second month, while some of the competitors are either dosed every month or every two weeks. I think that for yourself, for your own background, it's very important to make that distinction.
Thank you, Ruud. The next question is Peter Welford at Jefferies. Go ahead, Peter.
Thanks. I'll be brief. Just quickly onto José, I wonder if you could comment on DESTINY-Breast05 versus KADCYLA in the adjuvant setting, and just give us some idea perhaps of how it can be done to expedite that study, given obviously the length of time it took for KATHERINE to read out. Just quickly a clarification if I can to Marc on SG&A, is it possible to give us at all any idea of the savings you think that COVID-19 has had for SG&A this year, to perhaps give us some sort of feeling going into next year? Thank you.
Thanks, Peter. We'll cover the first question with José, and then the SG&A question, we'll come back to it at the end if we still have a few minutes. Go ahead, José.
No, thank you very much. I think we are in a very different situation than KATHERINE in the past because at that time, the concept that was being explored was very interesting, but was not proven. I think that we are going now into a situation in which everybody accepts that is perhaps the last opportunity that you have in breast cancer to rescue these patients with early disease. The field has moved into embrace the concept. Now, having said this, Daiichi Sankyo and ourselves, we're putting everything we can to expedite enrollment. The advantage of Daiichi Sankyo and ourselves by being together we have a phenomenal machinery. We'll be vigilant, but I am positive.
Thanks, José. The last question is from Simon Baker at Redburn.
Thank you for taking my question. It's on respiratory, and I wonder if you could give us an update on the various trends you're seeing. There are a lot of pushes and pulls within the category. The disruption to new patient starts for FASENRA on one hand, and the weaker seasonal flu that we've seen this year in the southern hemisphere, and appears to be the case in the northern hemisphere. Pulling all that together, I wonder if you could update us on the trends that you're seeing in terms of demand across the respiratory portfolio. Thanks so much.
Thanks, Simon. Ruud, this is for you, this one.
Yeah. Again, a very good question, and thanks, Simon. first of all, for FASENRA, in the current COVID-19 environment, we see roughly across all the geographies, a drop of 20% to 30% of new patients. Let's not forget that those patients are getting treatment, those severe asthmatics with inhaled corticosteroids. of course, we firmly believe there are better treatment options. in some cases, clinics are closed or getting closed again, like in Europe and in some states in the U.S. Of course, in the post-COVID periods, we firmly believe that those new patients will come back very quickly. regarding your other questions about other dynamics regarding a low flu season, you are correct. Flu is a very important initiator of asthma attacks. far, the flu season is relatively mild.
Equally, of course, a large proportion of our business is coming from the COPD segments, both for Symbicort as well as our recently launched Breztri. We think that that underlying demand will remain strong. Early in the year, we have also clearly seen a high level of demand off of Symbicort because asthmatics and COPD patients simply don't want to get infected with COVID-19. Their lung function is already relatively bad, and a COVID-19 infection is certainly not helping it. We see that overall, the persistency of our therapies has increased during the COVID period.
Thank you, Ruud, and we have a couple of minutes left, so we could return to Peter's question about SG&A. Marc?
Yes. Thank you for the question. It's not an easy question to answer. If you look at the progression of our SG&A growth rate over the first quarter, it was 5% to 6%, 3% on the second quarter, minus 1% on the third quarter. I would say an approximation would probably be a low single-digit impact of the reduction of activities due to COVID, marketing activities and sales activities and so on. I think it's hard to pinpoint a precise number, and obviously it depends where the COVID pandemic is more or less intense, at what speed you are recovering, and so on. I would say a low single-digit impact over the course of the year would probably be a good approximation.
Thank you, Marc. Just as a reminder, our focus is on continuing improving our operating margin, getting to 30% next year, and then carrying on improving over time. With this, I think it's probably time to close. Just want to remind you, a few closing comments is, our revenue advanced by 10%, despite the impact of COVID, and it's in line with our expectations. We had strong performance in the U.S., Europe, Japan, and also growth and strong performance in emerging markets, especially if you exclude PULMICORT, 25% growth in China, excluding PULMICORT, so very strong underlying business growth. In addition, we have eight medicines with annual sales in excess of a billion dollars now, so we continue improving. We improved our operating leverage, our profit, our cash flow, despite this changing environment, with COVID, of course, creating headwinds.
Finally, I would say that we continue to improve the pipeline, and we've had pretty good news so far, and there's more news to come later this year, but importantly also next year, and this will continue to fuel our growth as the late-stage pipeline continues to deliver. We now have 20 medicines in late-stage pipeline and life cycle opportunities. With this, I would like to thank you very much for your interest and your attention, and wish you a good rest of the day.