Thank you. Thank you, everybody, for taking the time to listen and participate in our quarter 2 investor call. Before we start, I'll just read the Safe Harbor statement. The information presented today contains forward looking statements that involve known and unknown risks, uncertainties and other factors. These may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements.
Please refer to the company's Form 20 F on file with the U. S. Securities and Exchange Commission for a description of some of these factors. And with that, I'll hand across to Vas.
Thank you, Sameer, and thanks, everyone, for joining today's conference call. In the room with me today, I have Harry Kirsch, our CFO Shannon Klinger, our Chief Legal Officer Sudan Schaffert, our President of Novartis Oncology Mary Frantz Chudin, our President of Novartis Pharmaceuticals John Tsai, our Global Head of Drug Development and Richard Sainor, our new Head of Sandoz. So as you saw today in this morning's results, we really had an exceptional Q2 and a strong first half of the year, which we're very pleased with and very pleased to give you further details on over the course of this presentation. If we turn to Slide 4, we delivered a strong Q2 with margin expansion and continued to progress our agenda on transformative innovation. When you look at the operational performance, we had plus 8% on sales, plus 20% on core operating income with a margin expansion of 3.2%.
And Harry will go through in a bit more detail the numbers as well as some of the pushes and pulls that we see for the first half as well as for the second half. But based on the strong momentum that we've seen, we are increasing our sales and core operating income guidance for the full year. And Harry will go through the specifics of that in a few slides. Importantly, we also advanced our transformative innovation agenda with Zolgensma, Pickray and Mayzent all launched. Xiidra acquired in July is now fully integrated, and we're getting prepared to reenergize that brand.
SEG101 filed with a priority review. And we also had the positive overall survival data with Kisqali in premenopausal women presented at ASCO. So very strong progress on our innovation agenda as well. So moving to Slide 5. The sales performance was primarily driven by very strong performance in Innovative Medicines.
In particular, we are pleased with the performance in our growth drivers. So of course Entresto and Cosentyx continue their strong momentum, as you can see, with the growth rates in Q2 and in the first half. Across our oncology brands as well, very strong growth, Lutathera continuing to perform well. Kisqali beginning to accelerate. Kymriah also with very solid performance.
So we saw broad based growth across our Innovative Medicines portfolio, which gives us confidence as well for the remainder of this year and going into future years. So moving to Slide 6. When you look at Cosentyx specifically and particularly focusing on the U. S, we were pleased we could continue to grow the brand in what is increasingly competitive environment. Looking at the U.
S. Dermatology segment, you can see that for NBRx percent gains, q2222019versq222018cosentyxgain1.5 share points in a very competitive space. So we're very pleased by that strong performance by our U. S. Team.
When you look at TRxs, we're growing ahead of market at 28% versus a market growth of 10% and with 17% overall growth in NBRx. When you go to rheumatology, where again Cosentyx has truly unique data in psoriatic arthritis and ankylosing spondylitis, you can see our weekly TRxs are now approaching or exceeding Enbrel and Humira. When you think in terms of market growth, we're growing 38% versus a market growth of 14% on TRxs and also have solid NBRx share growth. So when you look across the U. S.
Business, we are very pleased with how Cosentyx is performing in this competitive environment, and we look to continue that momentum in the back half. Turning to Slide 7, I also wanted to highlight that we continue to generate additional data on Cosentyx in the existing indications in psoriasis and rheumatology as we prepare for data we plan to release later this year and in the coming years on new indications. In particular, when you look at psoriatic arthritis, most of these patients have so called axial manifestations. And Cosentyx has demonstrated in our recent MAXIMIZE study that we could impact these axial manifestations in a significant way. You can see the data here that we recently presented.
This further bolsters the case for Cosentyx use in these rheumatology patients. I think it's just one example of many as we continue to build out the data set to support Cosentyx broad use. So moving to Slide 8. When you look at Entresto, we are seeing a really strong performance from Entresto, continued acceleration for this important medicine for heart failure patients. You saw the revenue growth of 81% with solid growth both in the U.
S. And in the ex U. S. But importantly, we continue to get strong recommendations from key groups. So on the right hand side, you see the European Society of Cardiology Heart Failure Expert Consensus now supports Entresto's use as first line therapy for patients with half breath.
This will allow us to continue to accelerate the use of Entresto in the first line setting in ambulatory and in the hospital setting. I'll talk a little bit more about the PARAGON data set in a few slides. So moving to Slide 9, I'd like to spend a few slides giving you an update on Zolgensma. So we're very pleased with the launch of Zolgensma to date. We've seen very strong demand.
We're pleased with the launch and access progress we're making. And I want to give you a few details as proof points. First, when you look at the launch, we had an approval on May 24. Within 3 days, we were promoting in the market. Within roughly a week, we had our 1st commercial policy and product ready to ship.
We had our 1st U. S. Patient treated within approximately 2 weeks, and we already have had patients treated through the French ATU mechanism outside the United States. In some instances, we've even had patients approved for therapy from the time of receiving the Rx within 24 hours. So that kind of shows you the enthusiasm there is in the SMA community for this medicine.
Now for some of the details, the first thing I want to highlight is even in the absence of medical policies or specific approvals, We are able to use medical exceptions to manage many of these patients getting through the process. And that's the primary route right now we're doing when we don't have a policy in place. But we're having best in class, we believe, progress on getting medical policies in place. Over 20 commercial plans, representing 40% of commercial lives and 4 Medicaid plans have policies on coverage already. Not all of these have been posted on external websites.
The majority of these policies are in line or close to the label. The common limitations we're seeing are with patients with 4 SMN2 copies, which is about 10% of the overall SMN2 prevalent population in this age group and some limitations with combination use with nusinersen. When you look at the approval rates we're seeing so far, patients going through the Novartis hub, almost all patients going through our hub have been approved thus far when appropriate steps after appropriate steps have been taken. We have very high approval rates for the on label patients either via policy or medical exception, as I said. And I think the other important thing to note is we've had a wide range of patients already approved, including patients from age 1 to 23 months, weights up to 12 kilograms, 2 and 3 SMN2 copy numbers, treatment naive as well as those previously treated by the currently approved product.
In terms of contracting, to get any of the special contract terms that we've been promoting, we have 17 commercial plans, representing 40% of commercial lives having already signed a letter of intent on contracting terms, and we continue to try to progress across the relevant insurance community. So strong progress already in just what's the 1st few weeks after launching this medicine. So if you go to Slide 10 and you look at the news flow we have for the second half, we are planning to initiate discussions with the U. S. FDA on intrathecal dosing for the older populations based on our STRONG study.
We are on track to have the EU and Japan approval by Q4 2019. And we plan to have other country filings initiated in Q3 for our broad global rollout of the medicine. Later on this year, we'll show the data for updates on data from SPRINT, STRONG and STR1VE at various medical congresses, as you can see, over the course of the fall. So moving to Slide 11. One piece of data I wanted to highlight from our recent presentations at AAN is Zolgensma's performance in pre symptomatic patients, where patients are achieving age appropriate motor milestones.
Just to remind you, SPRINT is our pre symptomatic study. It's a study that has patients with both 2 copies and 3 copies of the SMN1 gene, patients who are presymptomatic. And what you can see on the right hand side is the progress these patients are making versus the WHO windows of normal achievement. So you can see the patients in green boxes are patients who are sitting without support and have 2 copies of the SMN2 gene. You can see patients standing with assistance.
And you can see how these patients are now progressing. And we're looking forward to providing you an update to show, we hope, that we can get these patients to progress normally after treatment early in their life after being identified by newborn screening or in the early months of their life. So very exciting data presented at AAN already on pre symptomatic patients and more updates to come in the fall. So now moving to PICRAY on Slide 12. PICRAY received FDA approval on May 24.
CHMP opinion is expected in the second half of this year. We're pleased with the progress we're already making with payers, covering over 80% of the target population in terms of the engagement we already had. We're also seeing good uptake of the PIK3CA mutation testing, which was really our focus for this year to really ensure high testing rates so that we can drive the launch for the years to come. The NCN CN guidelines currently recommend PIK3A CA mutation testing, and we've also entered into an agreement with Foundation Medicine to develop plasma and tissue testing. We're also pleased that we're now able to confirm we'll be exploring PIK ray and other tumor types in the second half of twenty nineteen.
We'll have trial starts for HER2 positive advanced breast cancer as well as triple negative breast cancer. And then based on data we already have in house, we will be moving to late stage studies in first half of twenty twenty in head and neck in ovarian cancers. So on Slide 13, we move to Mayzent. Now in Mayzent, we're also pleased with the progress we've made. This was a year where we wanted to focus on educating physician community, making sure we had strong access in place so that we could drive this brand's use in the SPMS setting for the long term.
Just to remind you, we have unique clinical data and a supportive label to start with, with the full range of RMS indications, but the only medicine that has SPMS data specifically in its label. And some of the interesting profile elements of the drug is high efficacy, reduces disease progression, no first dose observation for 70% of the patients. Thus far, our priorities for Mayzent are progressing well. We believe we're the 1st choice now for active SBMS for health care providers in the United States. We have 90% of neurologists willing to prescribe Mayzent based on the survey data that we see.
We currently have 70,000,000 lives with preferred access to Mayzent to date, and we continue to try to grow that access over time. And we're also working to use digital tools to help identify patients who truly are active SPMS patients and would benefit from Mayzent in the long term. So we'll look forward to providing detailed sales data in Q3 for both ZOLGENSMA and MASON. But I hope that gives you a sense of where we are in building the foundational building blocks for both of these launches. Now turning to ophthalmology.
With Beovu, our RTH258, we, as you know, developed a differentiated medicine that medicine that now is on track for launch upon approval later this year. Remind you, the Hawken Harrier clinical programs demonstrated uncompromised vision, less retinal fluid and fewer injections versus the comparator medicine. We've also launched a pretty expanded clinical program, including a study called Talen, which is a head to head study of rolacizumab versus flibercept in a treat to control regimen in kind of an apples to apples setting. So we look to continue to provide the data needed to support BOVU's use in a broad range of patients for the long term. We're prepared for the launch.
Approval expected in Q4 'nineteen CHMP in Q1 2020. We've already seen strong awareness of the clinical data. Both our U. S. And EU operations are preparing, and we plan to be ready for a strong day 1 launch of this medicine.
Also in ophthalmology, when you go to Slide 15, our plan is to accelerate Xiidra now that we've brought it fully in house, while laying the foundation to maximize its long term potential. Now just to remind you, dry eye is a significant patient unmet need that's generally underdiagnosed and undertreated. 34,000,000 patients with dry eye in the U. S. Alone, it's estimated.
Only 50% are accurately diagnosed and really only a fraction of that 10% is treated with an appropriate medicine. We're well aware that when you look at the TRx data for Xiidra over recent quarters, it has been very flat. We believe this is because of the uncertainty involved at Xiidra's ultimate ownership was not clear. Now that we've brought uncertainty to the sales organization and the marketing organization, our plan is to reinvest in the medicine. We'll reengage the sales force, focus on share of voice.
We have a plan to optimize our medical education with a plan to promote, including a DTC campaign starting in Q4 of 2019. Longer term, our plan to maximize Xiidra will depend on our ability to expand access for Part D patients beginning in 2021. So we'll continue to track, continue to push, and we'll look forward to keeping you up to date on our progress with Xiidra. Now lastly, on our near term portfolio, I wanted to give an update on SEG101, crizanlizumab, which has been submitted in both the U. S.
And EU. So just as a reminder, in the world of sickle cell disease, we have therapies which are to treat a sickle cell pain crisis. There are therapies to prevent a crisis from happening in the first place, such as the SEG101. And then there are, of course, cell and gene therapies that are looking in certain patients to try to definitively treat the underlying genetic cause of the disease. In the case of SEG101, we're really focused on preventing vaso occlusive crises, which are the primary reason for hospitalization, the primary cause of pain and long term sequelae for these patients, including some of the mortality outcomes and the long term cost to the system.
So as I think you may have seen, we've been granted priority review for SEG101 in the U. S, and we continue to advance our filings around the world. We're also gearing up for a successful launch in the U. S. With a commercial organization in place, access plans in place and an innovative disease awareness campaign that we've launched using digital technology, which we hope will truly mobilize the patient community behind this medicine.
As a reminder, there's about 60 percent of the patients we would expect within the sickle cell disease population who have 2 or more vaso occlusive crises and would be eligible for SEG101. So moving to Slide 17 and just to say a few words about upcoming readouts. We have a number of upcoming readouts in Q3, Q4 and Q1. And wanted to highlight a few of these in my closing comments. So if you move to Slide 18, I think as many of you are aware, the PARAGON heart failure study is the first confirmatory trial that's been trying to be conducted in preserved ejection fraction large scale study to be conducted in preserved ejection fraction heart failure using a novel endpoint with recurrent heart failure hospitalization.
Our next expected milestones for this are results and filing in the second half of twenty nineteen. And we also have a shell that's been posted for the ESC late breaker. I would note we have not seen the data yet for this study. This is really a shell for the late breaker presentation. The study was intentionally designed to assess Entresto's impact on the burden of disease, these repeat hospitalizations.
We believe the study design, looking at that primary endpoint as well as other elements, we've learned from past failures in preserved ejection heart fraction heart failure will give us the best possible chance of succeeding in a patient population that's never had an approved medicine. So we look forward to giving you updates as soon as we can, and hopefully, we'll have positive results to share later this year. So moving to Slide 19, I also wanted to say a word about ofatumumab, which is our subcutaneous B cell depletion agent targeting the CD20 target to provide it has the potential to provide access to higher efficacy B cell therapy for a broad RMS patient population. We believe taking a medicine that is highly efficacious, moving it subcutaneous to give patients full flexibility, the potential to avoid having to go regularly in for a lengthy intravenous infusion process will be welcomed by providers and by patients and could potentially allow the more broad use of B cell depleting agents in RMS. I also wanted to remind the group on the data profile that we have for ofatumumab, where we know that with the loading dose we've taken in to the Phase III program, 60 milligrams Q12 dosing to start, we see very rapid B cell depletion, and you can see that in the attached graph.
Then what we expect is with monthly dosing, we can maintain that B cell depletion and hopefully avoid some of the rebound that you might see in drugs that are dosed less frequently, especially towards the end of the therapy timing. So we wouldn't want to see that rebound, so we believe monthly dosing will hopefully keep those B cells down. On the flip side, we know that when we stop therapy, the B cell repletion will happen in case safety signals are seen. So we think it could be a positive, both from an efficacy and a safety standpoint. And ultimately, of course, the data will tell us.
So we'll look forward to provide that data to you later this year and hopefully bring something to patients that's flexible, self administered and provides an improved overall profile. So moving to Slide 20. Now I just wanted to say a word as well about fevipiprant, our oral DP2 agent to tackle severe asthma. Just as a reminder, on the left hand side, our goal here is to address the so called treatment gap in severe asthma. We know that there are 3,400,000 patients in GINA-three moderate patients who are inhaled therapies.
But these patients many of these patients progress and need something beyond their inhaled therapeutic. But we know there's only 120,000 patients on biologics, which leaves a significant gap of 3,000,000 patients, either with high EOs or all comers, that need a better option to enable them to be in control of their asthma before potentially needing a biologic or perhaps in lieu of a biologic. We have a sizable Phase III program of 5 separate studies. LUSTR 1 and 2 looked at exacerbations. We have endpoint there that tries to put us in line with the exacerbation reduction seen with biologics.
We have ZEAL-one and ZEAL-two that target lung function. And then we have the SPIRIT trial that's looking at safety. So we'll look forward to providing you additional data. ZeAL-one and 2, we would expect the data released in Q4 and LUSR-one and 2 in Q1 of 2020. So lastly, I wanted to just introduce, we have here in the room, Mary Franz Chudin, who's been appointed President of Novartis Pharmaceuticals.
She's, of course, a member of our executive committee. We're thrilled to have her. She's had 25 years of experience in pharma and biotech, including a lengthy period at Celgene. Most importantly for us, she's a purpose driven leader who lives the culture we're trying to build at the company every day, our unbossed inspired curious culture. She joined us in 2017 and held a few different roles, and we look forward to supporting her with great success here at Novartis Pharmaceuticals.
So thank you very much, and I'll hand it over to Harry for some more details on the financials.
Yes. Thank you, Vas. Good morning and good afternoon, everyone. My comments refer to the continued operations results and growth rates are in constant currencies unless otherwise noted. So Slide 23 shows the summary of our quarter 2 and first half continuing operations performance.
In quarter 2, sales grew 8%, mainly driven by continued momentum of Cosentyx and Entresto and our oncology growth drivers, including Nutathera, Tafnek, Promacta, Kisqali and Kymriah. Core operating income and core EPS both grew 20%, mainly driven by higher sales and productivity, partly offset by growth investments. On free cash flow, we had $3,600,000,000 up 11% in U. S. Dollars, mainly driven by the strong operating performance and divestment proceeds from the sale of our Klibec site here in Waldel.
These positive cash flows were partly offset by OTC joint venture dividends, which we received for the last time in quarter 2, 2018. Net income in the quarter for continuing operations was $2,100,000,000 $4,000,000,000 in the first half. The decline you see here on this reported net income numbers was prior year due to the $5,700,000,000 OTC joint venture divestment gain we recorded in quarter 2 of last year. On Slide 24, you see the quarter 2 core margin by division. Continuum operations margin improved by about 3% points in the quarter and the first half driven by Innovative Medicines division.
The Innovative Medicines' strong sales leverage and productivity were the key drivers of the margin expansion. While with sales growing 9%, we are expanding margin while still increasing investments in our key growth drivers and pre launches. There were also a couple of favorable one time items this quarter in the I'm core margin. Pre launch inventory provision releases after the regulatory approvals of Zolgensma and PIQRAY contributed about 1 margin point. The continued Diovan and X Force growth due to generics, valsartan supply shortages contributed about half a margin point.
So the total Innovative Medicines margin improved 370 basis points to 35.4 percent of sales. If we exclude the one time effect described earlier, the Innovative Medicines margin would have been around 34% of sales. Sandoz improved by 140 basis points to margin and this was driven by sales growth, positive product and geographic mix, productivity and cost discipline as we continue the Sandoz transformation. On to Slide 25. So in light of this very strong first half performance, we are revising upwards our 2019 full year guidance.
For the new focused medicines company, net sales are revised upwards, expected to grow mid to high single digit. Core operating income revised upwards expected to grow low double digit to mid teens And from a divisional perspective, we revised Innovative Medicine sales guidance upwards to grow mid to high single digit. And the Sandoz sales guidance is also revised upwards to broadly in line to a low single digit growth. We now also expect just a word on the tax rate. Our full year core tax rate to be in line with what you see on the half one core tax rate of 16.4%.
The increase both was the previous year as well as versus our original 16% is driven by some profit mix changes. On slide 26, I want to talk through some of the dynamics for the first and expected dynamics for the second half of twenty nineteen. Clearly, the half one performance was very strong with core operating income growing 19%. This was mainly driven by the continued sales momentum of our growth drivers as well as ongoing productivity programs. We of course expect these to continue in the second half.
In the first half, we also benefited as mentioned earlier, from Valsartan competitor supply shortages, which resulted in double digit growth for Diavan and XFORSH. Recall that this supply issue and Diavan X Force growth started in quarter 3 of 2018 and may stop at any time. Hence, also in quarter 3, we begin to lap the growth in the base from this Valsartan situation. As we look at the second half, we are expecting potential increased generics headwinds, particularly on Afinitor, XJADE and some older OFDA brands. Furthermore, we continue to monitor generic activities on Sandostatin LAR.
Now as discussed on the quarter one call, we were expecting these generic headwinds earlier in the year, basically in quarter 2. There is, of course, the potential that we continue to see less generic headwinds than expected also in quarter 3. In that case, if that situation would come up, I would assume that we end the year 2019 at the higher end of our full year core operating income guidance, but it's a bit too early to tell and I'm sure we will discuss this topic again at the quarter 3 call. On slide 27, you see how currencies would impact our results if mid July rates prevail for the remainder of 2019. The full year impact on sales would be a negative 3% and on core operating income would be a negative 4%.
And as you know, every month we update the expected currency impact on our website. And with that, I hand back to Vas.
Thank you, Harry.
So just
in conclusion, a very first half to twenty nineteen. And when you take a step back over the last 18 months as a company, we've been able to do over $60,000,000,000 of transactions to transform the company. We've set 5 priorities in place to truly drive performance, starting with culture and innovation. And it's starting to pay off, we believe, strong sales and margin expansion, double digit core operating income growth. The innovation pipeline is really kicking in, catalyst rich second half, and we'll look forward to continue to keep you updated in the second half of the year.
So with that, I'll open it up for questions.
Your first question comes from the line of Graham Parry of Bank of America. Please ask your question. Your line is open. Great.
Thanks for taking my questions. So the first one is on Zolgensma and the $100,000,000 inventory provision. Is that indicative of your expectations for a quarter or perhaps the second half of the year? Just trying to get a feel for what sort of inventory you would have built prior to launch. Secondly, on label expansion with the SPRINT data, could you just give us some time lines when you expect to meet with FDA and whether you think a 2H filing on the back of that still remains possible and similar for the strong data on the intrathecal filing as well?
And then thirdly, on both PARAGON and the ofatumumab data you submitted both for medical conferences, you flagged that you don't have the data in house yet on Paragon, but would you issue a headline press release on the data when it comes or do we have to wait for ESC? And a similar question for ofatumumab, I see adelepios is submitted for ETRIMS. And do you have data in house there or should we expect a headline press release somewhat imminently? And then final on Gilenya, just could you give us an update on where you are with your Mylan declaratory judgment and preliminary injunction and whether the PI win that you had you think strengthens your hand in settlement negotiations with generics now? Thank
you. Thanks, Graham. So on Zolgensma EUR 100,000,000 provision. Harry?
Yes. Thank you, Graham, for the question. So we basically from an IFRS standpoint, we basically expense or write down immediately any production of product that is not yet approved. It happens on every product. And then once approval is there, the inventory basically gets written up and there's inventory provision release.
Now in this quarter, we got 2 products approved, Zolgensma and Pick Ray and therefore had roughly €100,000,000 of inventory provisionally released in OIE where you see it. That happened last time I think. Usually this happens and you don't even notice as much. It's smaller numbers. Last time this was a large number was several years back with Atresto approval, but it's normal practice.
And basically, it represents on these products what has been produced over the since on AveXis, since we acquired and is, of course, also showing that production is going extremely well. And we are ready to supply many, many patients with it.
And does not necessarily indicate anything about sales expectations? I think that's it.
No. I mean, I would not. First of all, we were of course, this is a product that has long shelf life. So and production, of course, is important and we want to make sure that we are ready to supply any sales scenario.
Yes. And I would say also on Zolgensma production, it's going well. We have in addition to our Chicago, North Carolina facility, acquired a facility in Colorado. This year, we'll have ample capacity up to 1,000 patients plus and then we'll plan to expand capacity there going forward. Now with respect to the SPRINT and STRONG study, so SPRINT is now technically covered by our existing label, the treatment of patients in the pre symptomatic phase.
So we would plan to present updates on that data for the slide, I think at WMS. And but it wouldn't affect our filing. Now with respect to Strong, our plan is to go to the FDA in Q3 and hopefully come to an agreement on a filing strategy. If there was agreement, we would aspire to file before the end of this year. Now moving to Paragon and OFA, John?
Yes, Graham, thanks for the question. And we have a very rich second half of the year with data readouts in Entresto for Paragon, ofatumumab as well as Fevy. As Vas said earlier, we don't have any of the data in hand. We're obviously very excited about seeing the data in the very near future. We're going to look at these case by case and evaluate whether we will issue press releases moving forward.
But what I will say is that, we've had to submit some of the abstracts, for example, for Entresto and for Paragon to the ESC, so that we could hold the late breaking session at the at the at ESC. So moving forward, we'll be looking forward in evaluating these case by case basis.
And then lastly on Gilenya, we do not expect any launch of a generic Gilenya in 2019. And this is in part because, as you know, Novartis was granted a motion for preliminary injunction, which prohibits any generic manufacturers in that case from launching Gilenya until the decision on the patent, which at the earliest would be in March 2020. So we do we expect a potential appeal decision in early 2020. But right now, our focus is on vigorously defending the dosage patent and protecting Gilenya for as long as possible. So thanks, Graham.
Next question?
Thank you. Your next question comes from the line of Tim Anderson from Wolfe Research. Please ask your question.
Thank you. In my opinion, the 2 most important readouts for Novartis through the rest of the year are Paragon HF and the QAW trials. And there's reasons to be cautious with both of those. With Paragon, no one succeeded yet in getting a label for HFpEF and then for QAW, there's been lots of prior failed attempts at that class of drugs. So of those two programs, if you had to pick 1 with a higher odds of success on delivering Phase III results that are positive, which would it be?
And then second question is on Cosentyx. About a year ago or so, you guys had kind of repriced the brand in the U. S. To try to get more first line biologic usage in psoriasis ahead of TNS. And I'm wondering how that has evolved and played out.
And if you can just talk about the evolution of your first line biologic usage due to that repricing strategy?
Thanks, Tim. Well, I'll let John go on his pick and maybe I'll think about my pick. Go ahead, John.
Yes. Thanks, Tim. If I had to pick 1 versus the other, I would say there is a differential about a 0.01% difference perhaps, if I had to differentiate between the 2. But this is my own personal subjective opinion, which is, I would say Paragon perhaps has a 0.01% chance higher likelihood of success. As you know, there's been numerous trials that have failed in heart failure with preserved ejection fraction.
And currently, there is no treatment for this population of patients. We've learned from some of the trials have been conducted in the past and we've actually incorporated those learnings into our trial for Paragon. So success in Paragon really is based on what we have for a primary endpoint, combination of CV mortality with hospitalizations, whether that would be first time hospitalizations or recurrent hospitalizations. So we're excited about it and we're looking forward to seeing those results. Now in terms of Feve, I wouldn't say it's a lower likelihood of success.
It's just I think that asthma is such an unmet significant unmet medical need. And currently, we have the biologics and there's clinical program that we call extensive and comprehensive clinical program that we call Vibrant with close to 5,000 patients. But if I had to pick 1 of the 2, it might be slightly higher, but it would almost be on par on par. So I'll defer to Bas to
see if
you have any other comments. No, The only thing I'd add on QAW at tibuprefin is just to remind that the key insight here was to shift the DP2s into more severe patient population. So we saw positive result in Phase II presented at ERS a few years ago in patients with high eosinophils. The class has been explored in the past, but it has been explored in GEMA3 or less, so far less severe patients. And so we believe that with the profile of the medicine, it's good penetration of the relevant tissues as well as the eosinophil reductions we saw in that Phase II study.
That's what really gave us confidence. In terms of Cosentyx in first line biologic use in the U. S, Marie France?
So first of all, it's great to be back. It's a great time to be back in pharma. What I would say is that the performance for Cosentyx has played out as expected after last year's access wins. So we're very happy with that. We do remain confident that we will maintain our number 1 or number 2 position in our major markets.
We see very strong underlying demand and that is because of Cosentyx unique profile that does address manifestations beyond skin. We also believe we've got the most robust data and that will continue. We're also presenting further data later this year, example, PREVENT and non radiographic axial SpA. We're very confident in the future of Cosentyx in both derm and WIM indication.
Maybe if I would just add on the first line, we believe that it was the right strategy to get to the first line, because I think the data supported it, but also from a payer perspective, it put us in a strong position. I know there's a lot of focus on the entrants, some of the new entrants coming in. And I think at least what Q2 showed is we were able to hold our own on formulary positioning thus far, and that's going to have to be our focus going forward to ensure we keep growing share and beating the market in the years to come. But we're on it, and we believe it remain continue to believe that first line usage and keeping in the first line is critical. Thanks, Tim.
Next question?
The next question comes from the line of Kaya Parikh of Goldman Sachs. Please ask your question.
Thank you. Good afternoon. And two questions, please. The first one for Vas and then for Harry. Vas, you described the launch for Zolgensma as being very strong and good demand.
Can you give us some sense for how many patients have you actually treated so far? Is it kind of single digit? Is it double digits? How should we think about that? And then secondly, Harry, kind of in your remarks about the differences between the first half and the second half, you alluded to the fact that if there was going to be lower generic impact than you expect, you would get to the higher end of the range you have just issued.
Given you've delivered 19% core operating income growth in the first half, it would be difficult mathematically for you to get to anywhere other than the midpoint of the range, even if you were to get a lot of generic competition given the guidance you've given on Afinitor. So what would it take for you to go above the range and why isn't that more likely? Thank you.
Thanks, Kiir. So first on Zolgensma, we're not going to give any specific numbers. So what I would say is we're seeing strong demand in terms of Rx's coming into the hub, which is, I think, the first marker we were looking for in that steady week on week, and that's what we wanted to see, and it's in line with our plan. We're seeing good conversion of those Rxs through the system, whether it's in Medicaid or in private payers, ultimately into approvals, either through the medical exception process or getting policies in place, and then ultimately shipping the medicine and getting the patients treated, which is when we ultimately recognize sales. So we're looking at all three.
We have a great team on it. I think I personally am involved in many elements of this. So I think when we say it's on plan, I think it's exactly what we mean. It's where we wanted it to be. We have a lot of work to do, but we're happy with where we are.
Now with respect to the second half, Harry?
Yes. Georg, we have great momentum, no question. So the first half has been great. And we do expect that the key growth drivers continue to do well, productivity programs continue to go slightly or ahead of expectations. The generic impact, we start seeing some.
There's Zaslar coming in a couple of European countries. So we expect a bit higher generic impact. We see early signs. Now of course, you will rigorously defend all of our products, but that starts a bit. And of course, the inventory provision release will not to this magnitude happen again.
A second impact, I don't want to talk down second half here, but we saw the acceleration of our sales momentum in the second half of last year. And also when you compare half two margins last year versus half one already an increase of the margins last year. So we have also a bit of a base effect, but we expect continued good performance. And just mainly generics in addition to some of these base effects basically is the unknown.
Your next question comes from the line of Andrew Baum of Citi. Please ask your question.
Thank you. Given your Chief Legal Counsel is on the call, perhaps you might care to talk to any anticipated changes to your corporate integrity agreement in terms of the addition of any onerous impact for your marketing activities going forward? 2nd, on Zolgensma. Historically, Novartis has provided guidance for full year for their newly launched product. I'm thinking of Entresto and Cosentyx.
I wonder whether you might be careful to do so in this case. And then finally, I know you're not exposed to government plans anywhere near as much as some of your peers, but I also remember, Vas, that you enthusiastically embraced the proposed rebate reform as being good for patients and by inference, good for the industry. Now that's no longer in place, I'd be interested to hear your thoughts on how you assess the risks for U. S. Reimbursement and pricing given the pressures from both sides of the aisle.
Anything.
Thanks, Andrew. So first on the provision, that's all answer to the question. We've taken the legal provision of about $700,000,000 related to the Southern District case. We've taken the provision in the context of the ongoing settlement discussions. And I think you can understand, we can't comment further as the discussions are ongoing.
And once we have a further update, we'll, of course, provide it. But I don't want to pre speak against those negotiations. Now with respect to providing full year guidance, I can't recall what we did when. But I think with Zolgensma, we're focused on getting the fundamentals in place, getting a very strong launch and getting as many patients as possible in the, let's call it, the prevalent pool, patients who are not newly diagnosed and trying to get all of the patients that are newly diagnosed if we can. So we're not going to give any guidance.
But anyway, you'll see it all in Q3, and I can just say we're we feel very good with where we are. We feel good with the trajectory that we're seeing thus far. Lastly, on with respect to U. S. Government policy, certainly, the environment is very fluid.
You can imagine we need to stay very close to it. Very difficult for us to predict between the executive branch and between the various proposals between the committees and the Senate, which ones will ultimately prevail or if they come in the end to a full legislative vote. So hard to comment on specifics. Also hard to comment on specifics because we haven't actually seen on paper any of the proposed legislation, proposed rules or proposed bills. In broad strokes, we as a company remain supportive of many of the reforms, whether that's around transparency, whether that's around some of the elements addressed by the CREATES Act, enabling stronger access to biosimilars, reforming Part B, thinking about out of patient caps in Part D.
I mean, all of these things are things we're open and supportive of. But until we see something concretely on paper, it's difficult to say and difficult to really determine how any of this will progress. So we'll look forward with you to get more updates as the year progresses. I would want to highlight that we are very low exposure relative to our peer group. And we are amongst the leaders ex U.
S. In the world in medicines, depending on how you look at it, number 1 in Europe and amongst the leaders around the world. In the U. S, we're low exposed to these government programs relative to our peers. So that also, I think, creates a positive relative situation for us.
Next question, operator?
Your next question comes from the line of Peter Welkopf from Jefferies. Please ask your question.
Hi, thanks for taking my questions. Just got a few quick ones. Firstly, just for Harry on the margin. We all know obviously the Innovative Medicines margin long term, our gain is placed to go to around mid-thirty percent. Just curious as to whether or not we should think of that now as being conservative or should we think of that to be likely to be hit sooner?
I guess I'm asking, is it likely that potentially you could stack back is a conservative number where we can likely go ahead of that? Or is it more likely that that mid-thirty percent will just be achieved before the initial 2022 guidance? Just secondly then on Pickray, you mentioned that the sales for Zolgensma and Mayzent could be disclosed in the Q3, but there was no mention of PICRAY. Should we be taking that, I guess, to mean that PICRAY with the companion diagnostic is going to take longer for sales to build? Or should we also anticipate some further visibility on Pickray during the quarter?
Thank you.
So on the margin, Harry?
Yes, Peter. So I mean, as we all know, quarterly margins are also a bit volatile. So for example, last year, in quarter 3, we had a 34% margin. We ended the year at 32%. Percent and we made good progress in 2017, 31%, last year 32%.
Now if you take the one timers out, the first half we are in the range of 33% to 34%, so good progress. Now could we achieve on a full year basis a bit earlier? We have to see, right, a big 2 or 3 big components, I would say, that will determine that. 1 is the jalenia defense. That is, of course, a big piece.
We are confident. But of course from when we gave the mid-thirty percent guidance was not part of it. So that would certainly be helpful and a potential upside as it holds longer than that and we will do everything that it would, but too early to update our guidance. And the other element is, of course, how the launches are doing. And we have many of them, good progress overall.
And I think what I'm highly confident about is how our productivity efforts are progressing. That's fully in our own control and was part of our, I would say, over delivery in the first half already. But of course, the first two elements I described, we have to see how it develops over the next quarters.
And then on Pickering, Jan?
Yes. So Peter, I think as you saw on the other hand. Peter, at Mason and so, James, when there is no difference in terms of disclosure for PIKRAsva said, we are off to a very solid start. As you know, PIKRAsapproved together with companion diagnostic for PIK3CA mutation testing from QIAGEN. And both of that is already included in the NCNN guidelines.
We are engaging with payers covering 80% of the target population. And as you as we emphasized last time, obviously, focus is on testing because that's the condition for peak rate treating. And we have to say that testing is going up, and we expect this to continue.
Thank you, Susanna. Thanks, Peter. Next question?
Your next question comes from the line of Steve Scala from Cowen. Please ask your question. Your line is open.
Thank you. I have a few. First on ZOLGENSMA. Based on the strong reception in the market, it would seem an average of 5 to 10 patients could be put on the drug per week in Q3. Would you like to take this opportunity to suggest that expectation is too aggressive, too conservative or are you unsure?
All of your comments on the call so far have been plural, patients, Rxs, plans, contracts. So based on what you've said, it would seem like that would be a good range. 2nd, if Paragon is a clear success or a clear failure, wouldn't you have to issue a top line release before ESE? So no top line release implies fuzzy data at ESC. And then lastly, what are some reasons why Mayzent cannot duplicate Gilenya's 1st year sales, which were nearly $500,000,000 given a superior profile and label?
Thank you.
Thank you, Steve. Always well phrased questions from Steve. On Zolgensma, unfortunately, I can't provide specifics on patients per week. I think what we would say is we are in the plural range on all of the things you mentioned. And so we continue to see very solid uptake, and we are seeing that uptake every week.
And so I think it's been positive every week in terms of patients, every week in terms of plans, every week plans in terms of policies and every week as well in terms of contracting. So good momentum and we'll look forward to sharing the sales in quarter 3. In terms of the Paragon top line release, John?
Yes. Thanks, Steve. As I've had a chance to look at various clinical trials, especially the large ones in cardiovascular clinicals, we've seen that results are sometimes difficult to interpret because it takes longer for us to either look at subgroups or sometimes there are secondary endpoints that we need to understand. So it would be great if it were clear and it would be great if it were clearly positive. And I think that would be a very easy decision for us to move forward.
But obviously, it really depends on the results that we see and we do have some secondary endpoints as well as some sub studies. So we'll have to wait what those are.
And then lastly on Mayzent, Mary Frans, do you want to just take that?
Sure, Vas. Thanks. So the first thing I would say is that the physicians haven't identified patients so far with SPMS because there has been no medicine in the marketplace. So as we've said before, this year is all about education. I can give you some data on where we are with the launch.
As you know, it is the only product proven to delay disability in active SPMS patients. The awareness is high. We've got more than 90% of neurologists willing to prescribe. Even in my own personal conversations with physicians, there is a lot of appreciation for the EXPAND data. They need a treatment for this patient population.
We've also seen a lot of progress in access over 70,000,000 lives with preferred access, but we really need to focus on patient identification, creating a sense of urgency. At the end, we're very confident in the long term potential of nascent, but this year is all about education.
The next question comes from the line of Florent Svezed from Societe Generale. Please ask your question. Your line is open.
Good afternoon, gentlemen. Thank you very much for taking my questions. Three quick ones. First on Entresto, what is behind the sequential acceleration of the sales mainly in Europe? Is it the guidance, your recommendations?
And I'm just wondering what could be the trigger to see such acceleration on the U. S. Market? Second question on Beoview. Could you give us more color on your U.
S. Commercial operations as your competitors are quite strong and well established there? And if you have maybe some flexibility to even further expand your U. S. Operations on ophthalmology?
And my last question is on Sandoz. So the division growth is back in 2 positive territories. Do you see some improvement in some areas? Or is there any base effect? And is this better performance sustainable?
Thank you.
Great. Thanks. First on Entresto acceleration, my friends.
So we see very strong momentum overall, and this is really due to underlying demand. Obviously, the PIONEER data has opened up a new patient segment for us in the in hospital initiation, and we're very confident with the momentum we're seeing across geographies, not only in Europe and the U. S, but I can also say that China is off to a good start. Obviously, the ESC, Heart Failure Association consensus paper that positions us in first line on new onset and decompensated patients has been very useful for us and a real endorsement of the product. We're confident Entresto is becoming standard of care across the board.
So we'll continue to see strong momentum, as I said, worldwide.
Thank you. And then lastly on Beovu, we've having a really strong commercial team. We've been able to attract some excellent talent with deep experience in retinal disease and launching retinal medicines. We have a field force fully deployed and ready. We have an excellent MSL team that's been out now for some time educating physicians on the data.
We have good plans in place with respect to contracting, particularly given how the medicine is given in a and bill model. We've been working a lot on our patient hub to ensure that we are ready to go and make it seamless and easy for physicians to get patients onto the medicine. So we've got all, I think, the elements in place ready to go. Also ex U. S.
As well, we're gearing up well for the RTH, the Beovu launch. So overall, we feel like we're in a good place. I would say that for all our launches, is we have an executive level review with our leadership team and deep ownership at the executive team level to make sure that we're doing the best we can to get all the details right on these upcoming launches. Thanks, Laurence. The next question Sandoz, sorry Sandoz growth.
Yes, of course. So Sandoz, we were pleased by the Q2 performance. When you look at it, it was primarily driven by strong performance outside the U. S, a mix of mostly strong biosimilars performance, but also I would say our core generics business with some recent launches such as fulvestrant and a few others continues to do overall do well. So we're very, I think, proud with how Sandoz is performing ex U.
S. Within the U. S, our team continues to work hard in what is a challenging environment. If you take out one time certain one time effects, you would see that in the U. S, the base business continues to have declines in the mid teens, consistent with what we've seen in past quarters.
So we haven't seen yet a stabilization in that core GX business in the U. S. I think for U. S, in the U. S, the key will be our upcoming launches, which we hope will be of pegfilgrastim potentially as well, our inhaled generics as well as some of the injectable launches we have upcoming.
And if those go well, we hope to also have the U. S. Contribute. So going forward, we felt comfortable raising the guidance to in line to low single digit based on that momentum that we're seeing really outside the U. S.
Thank you. Next question. Thank you.
Your next question comes from the line of Jo Walton from Credit Suisse. Please ask your question. Your line is now open.
Thank you. Just a few quick ones, please. Harry, you said that you were looking at Sandostatin LAR Generics in Europe. I wonder if you could tell us which countries the product has been approved in and what you expect the time line for that to be moving into perhaps bigger, more important countries and potentially into the U. S?
On the Gilenya situation, could you tell us whether you're still accruing for royalties to Mitsubishi Tanabe? Their change in guidance earlier this year suggests that they're not being paid since February. So is that an extra benefit that this product is now even more profitable for you? On Zolgensma, I wonder if you could just tell us a little bit about how you're progressing ex U. S.
You say that you've treated somebody in France, but when do you think we'll actually be able to see paying mix effect to over 16%. Does that mix effect keep going? Should we now be looking at something above 15% for a medium term tax rate? Many thanks.
Thanks, Jo. So on tandostatin, Susanna?
Yes. On tandostatin, let me share the facts that we have. So there's one generic company that has recently received marketing authorization in the U. Via decentralized procedure and they are now start getting national ratifications for their local marketing authorizations. We know that there are several countries where they already achieved that like U.
K, Denmark, Germany And we see some first limited commercial activities. On the U. S, we are closely monitoring the situation and we will keep you updated of information in case we have.
And I think one reminder on sandostatin is this is a unique medicine, the setting it's given in. And so I think when you think about when and if a generic start to come in, one generic starts to come in, you would really have to model your erosion curves similar to what you see with biologics and with very limited competition. I mean, that's what our expectation at the moment in all geographies. Next on Gilenya Mitsubishi, Harry?
Yes, Joe. I can say, and I don't know where some of these statements come from, but we are still paying and accruing royalties for Jarena to Mitsubishi Tanabe in accordance to the contractual terms and agreement with them. So we keep paying and we keep growing.
And then in terms of Zolgensma ex U. S, first to clarify, the patients we reference from the French ATU or from the named patient program are fully paid patients. So these are not these are paid patients by the either by itself or by the relevant government in the case of France. In terms of when we would expect approval, as I said
in the presentation, we're targeting approval before the end of
this year. I think medicine. In terms of okay and be able to launch the medicine. In terms of tax rate, Eric? Yes.
No, it's thank you for
the question on
tax rate, Joe, because often a bit it's a complex topic and sometimes overlooked topic, but it's also hard to forecast. So we had a slight increase from 16% percent to 16.4%. That's where we are quite confident tax rate will be for this year. First of all, a couple of developments. As you know, the Swiss tax reform got approved on for us here on the Basel City, Continental level and federal level, which is excellent because that gives us very good planning security in a very large part of our operations.
We have a huge substance as you know here in Switzerland with our 10,000 plus associates, many manufacturing sites well as R and D in our headquarters, many of them are here. So very positive development there that takes away uncertainty. That's great. And we have overall a very attractive tax rate. Now of course, the tax environment is getting since years more and more difficult.
We have been able to maintain an attractive tax rate. And I also expect that we continue to maintain an attractive tax rate probably midterm in the range between 16% 17.5%. To be more precise than that, we usually do year by year, but I expect that over the years we continue to have a very attractive tax rate.
All right. Thanks, Terry. So thank you, Joe. Next question, operator?
Your next question comes from the line of Seamus Fernandes from Guggenheim. Please ask your question. Your line is now open.
Thanks very much for the question. So just a couple here. Can you guys talk a little bit about Cosentyx and the directional performance there? Just looks like you're coming in somewhat below in the U. S.
Relative to script trends. Just wanted to get a better sense of how the mix of impacts there were coming in, whether it be some inventory effects, price direct price negotiations impacts relative to formulary access or perhaps just the donut hole impact? The second question, just wanted to get a general sense of the performance of your HUMIRA generic or biosimilar in, I assume presumably most of that performance came in European markets. Can you just give us a general qualitative sense if you can't give us the exact sales? Just trying to get a sense of how the penetration is going for that product.
And then the last question, in terms of the expectations for Paragon, John, you mentioned that there are always things with regard to large clinical studies like this that we have to be careful about and think about. Maybe could you just give us a general sense of what you would characterize? You said a clean win. How would you characterize a clean win? And then what are some of the aspects that you think kind of complicate an evaluation of a large study like PARAGON, whether it be the different regional dynamics that we've seen become an issue in a number of studies or other factors?
Thanks a lot.
Thanks, Seamus. First on Cosentyx, maybe I'll just quickly take that one. In terms of what we saw, there was a small difference in terms of sales versus script trends. That was primarily driven by a small bit of inventory. Mostly, it's RDs, which were just related to formulary access.
But in general, right now, we're seeing sales volume trend with Rx scripts, and there's nothing that we would say is important to flag with respect to Cosentyx momentum in the U. S. Across indications. With respect to adalimumab in Europe, I think as you know, there's a number of generic entrants who've come to market in adalimumab, which means that it's a, of course, competitive marketplace. We have, to our experience, seen solid uptake of the adalimumab biosimilars, whether through tenders or in other ways.
When you look at our add up penetration in Europe overall versus the originator, it's around 22%. We estimate we're ranked number 3 amongst biosimilars players. That's probably the best data we can get. We're very proud of our performance, particularly in rituximab, where we face less competition as well as in etanercept, which is, I think, a little more favorable situation for us relative to the competition. With respect to Paragon endpoints, John?
Yes. Thanks, Seamus, for the question regarding Paragon. As you know, what I said earlier, the success would be really based on the primary endpoint and, the primary endpoint being CV mortality and hospitalization. What we know about heart failure with preserved ejection fraction is that the burden really is around hospitalizations and rehospitalizations for these patients. So for us, what we think would be success really is dependent on this hospitalizations or sometimes the subsequent readmission into the hospital.
So that's something that we're looking at very closely and knowing that this is a significant burden for that population of patients. Now regarding your second part of the question on what are some of the things we're looking at for perhaps secondary endpoints or sub studies. And you had specifically mentioned, are there regional differences? We have looked at some of the previous studies, looking at regional recruitment, particularly in the Eastern European countries, and we think we've factored that into our study. We have less than 5% from Russia and Georgia, where in one of the previous studies where there were some questions around that.
So we think we've taken that into consideration. But thinking about some of the other perhaps, sub studies we're looking at, we do have a cognitive substudy looking at cognitive impacts. What I will say is that, as we look at the overall adverse event reporting, we haven't seen and as well as the patient experience from spontaneous reports because Entresto is being used. We've not seen any signals in the current spontaneous adverse events. But obviously, we need to see the results of the cognitive sub study to be able to tell for sure.
So these are some of the things that we take into consideration for the trial.
Yes. I think overall with Paragon, I think the key thing to remember as we get to the final studies, we looked very closely at past history. We studied very closely how the past studies were conducted. We tried to manage as best we could. We tried to also ensure we use repeat hospitalizations as a composite endpoint along with CV death for the composite primary endpoint.
And then we tried to also leverage our Phase 2 study, which showed both significant decreases in NT proBNP as well as atrial remodeling. So all of that taken together makes us feel like we've conducted a study in the best possible way to give us a chance at success. But then in the end, the science will ultimately tell us. Okay, next question, operator?
Your next question comes from the line of Richard Tarrs from Deutsche Bank. Please ask your question. Your line is now open.
Hi, thanks for taking my questions. It's Richard Parks from Deutsche Bank. First question on gross margin within Innovative Medicines. I think you previously said that flat year on year gross margin for the full year would be a good guide, but you had a very strong second quarter. And I just wondered how we should think about that, if there's anything specific in Q2 gross margin?
And should the new launches be a positive to gross margin, offsetting maybe some of the impact from the generic launches? So that's the first question. The second question is on Lutathera. I think sequential quarter on quarter growth slowed a bit. So I just wondered if there were any special effects there and whether you could discuss the longer term growth prospects for that franchise.
So first on gross margin, Harry.
Yes. Gross margin is a bit hard to predict, as you know. Our gross margin started to increase quite significantly driven by the productivity programs and favorable mix in the second half of last year. So whilst continuously good gross margins for the second half, probably improvement versus prior year depends on some of the products with higher cost of goods progressing versus the ones that have either no royalty burn and very high gross margins. So hard to predict, but I think it just hopefully heads a bit with the modeling that probably was prior year half 2, I would not assume such a significant improvement.
Yes. And I would just want to add, I mean, overall, our transformation of our manufacturing is progressing really, really nicely, whether you look at our improvements in yields and improvement production performance in our facilities, the optimization of our plant footprint around the world, the use of new technologies we had set out to really transform our manufacturing engine at the company. I think you're seeing now the impacts of all of that work in the gross margin. Susanna, on Lutathera?
Yes. Thank you, Richard, for the question. So on Lutathera, we had another strong quarter reaching €109,000,000 And the majority of sales are still coming from the U. S. And you're right, Richard, that growth rates in the U.
S. Slightly declined in Q2. And the main reason is really that major Tier 1 centers have now worked through their prevalence pool, really patients on the waiting list that were mostly in late line. So what we are focusing now on is really positioning Lutathera as the preferred second line treatment, and we expect really further continued growth. We remain very confident on Lutathera.
And we also expect now sales coming in from ex U. S. We make nice progress in receiving reimbursement approvals, recently got approval for reimbursement in Spain and Italy. We got also regulatory approval in Switzerland and in Israel. So we remain very, very confident with Lutathera that it has potential for blockbuster sales and will continue to grow strongly.
Great. Thank you, Susanna. Next question, operator. And if the remaining people in the queue could try to limit themselves with one question and maybe not so many parts to the one question, we only have a limited amount of time left. So please, next question?
Next question comes from the line of Richard Vosser from JPMorgan. Please ask your question. Your line is now open.
Brilliant. Thanks. Thanks for taking my question. So one question on China and the impact from the 4+7 tenders, please. Just thinking about, I think Gleevec is mentioned and there have been some tenders there, but maybe thinking about the impact on Diavan and Exforge, how should we think about that?
And maybe if I can ask one second question, just on SEG101, how are you expecting that to be used? Do you see it being used primarily in patients who've had a vaso occlusive crisis? Or how should we think about that? Thanks very much.
Thank you, Richard. So on China in general, we are focused very much on our launch medicines. We're focused on moving out of the historical Established Medicines business. Given the number of recent approvals we have had, we've had double digit approvals, double digit reimbursements. Entresto is doing well.
Cosentyx is off to a strong start. Our new oncology medicines are off to a strong start. So our focus is very much on driving the new launches. We do expect in due course these tenders to impact our legacy established medicines business, primarily Gleevec and valsartan containing medicines. To date, these tenders have not started in So at So at the moment, it's not a significant impact.
Even when it comes, we expect that our launches should more than offset the impact of the 4+7 tenders. That's very much our focus on strategy. We also believe the government is doing the right thing in shifting resources from these older medicines and focusing on new innovation. It actually fits Novartis' strategy quite well. With respect to SEG101, Susanne?
Yes. In terms of positioning, what we would expect, really SEG101 has impressive effect on prevention and reduction of VOCs. We could show in our data that we could reduce VOCs by 50% and that's how we would expect it to position. So patient population is probably be patients with 2 or more VOCs per year, which is around 60% of the total patient population.
Great. Thank you. Next question, operator. Thank you, Richard. Next question.
Your next question comes from the line of Michael Leacock from MainFirst. Please ask your question. Your line is now open.
Thank you. Two very quick questions. On Entresto, any update in terms of reimbursement timing in China? And you mentioned on Xiidra that there was a lack of progress owing to uncertainty of its ownership. Could the same apply to Aimovig?
So I'll start with Xiidra and then come back on Entresto. So right now with respect to Aimovig, we think there's clarity in the field for us. And we've been working together with Amgen to ensure that any of our legal disputes do not impact the focus of the field force in the United States. I would also say we're pleased, even though it's not come up yet on the call, we're pleased with the uptake of Aimovig outside the United States. It's been very positive overall, and continue to drive that.
With respect to Entresto, we're working through now reimbursement at the regional level and are focused very much on getting an NRDL listing nationally for Entresto. We hope to achieve that in one of the upcoming cycles. We do have a number of regions where Entresto is already now on the listing at the regional level. So but the goal very much remains to get on the national NRDL schedule in the coming cycles. Next question, operator?
The next question comes from the line of Naresh Chouhan from Intran Health. Please ask your question. Your line is now open.
Hi there. Thanks for taking my questions. Just on Mayzent, could you update us how you're doing with setting up and implementing the CYP screening and is that adding to the inertia amongst doctors to, you've kind of mentioned the, trying to instill some urgency in doctors, is this kind of adding to the inertia in prescribing or switching patients to maintenance? Thank you. I'll actually also just quickly, if I can, just Entresto ex U.
S. Was very strong, just some insights, that would be helpful. Thank you.
Yes. So on Mayzent, Marie France?
So with Mayzent, we aren't using a hub system that does manage the start forms, the benefits verification and the genotyping as well as the other lab data. And then ultimately the delivery of the product. What we do see is that the numbers in the hub are encouraging, but it is a 60 day onboarding, plus 1 month free. So it's about 90 days. So we are now working to try and accelerate that, but our initial feedback is very positive on how that's looking.
And then on with respect to Entresto ex U. S. Acceleration, Marie France would be the right person to ask you oversaw Entresto.
Yes. So as I mentioned before in the call, I think just the momentum is really strong all over and the PIONEER data has just really boosted the in hospital initiation, which has really changed the dynamics. And so overall, we've seen great performance in Europe. We've seen great performance in the U. S.
We're starting to see very encouraging performance in China, and I just believe that momentum will continue as we go forward and we establish Entresto as standard of care.
You, Brad. Thanks, Brad. Next question, operator.
Your next question comes from the line of Kerry Holford from Exane BNP Paribas. Please ask your question. Your line is now open.
Thank you. Yes, Kerry Holford from Exane. A final one for me, please, on Xiidra. So I noticed on the slide in your pack and you highlighted it has that you're not expecting significant Part D access expansion until 2021. I wonder if you can just talk through why that couldn't come earlier, beginning of next year.
And so you're essentially saying that really we should expect limited growth in Xyder in 2020 will be primarily dependent on that commercial plan patient only? Thank you.
Thank you, Carrie. Mary France on Xiidra.
So first of all, let me just say that we're really excited to add Xiidra to our portfolio. We think it's a great complement to our front of the eye business and it does bridge to our pipeline. Xiidra has got a really strong clinical profile. It's really the only product proven to reduce signs and symptoms. Vas already mentioned the medical need and how under diagnosed dry eye disease is.
Currently, we see 1,600,000 prescriptions in a market that's 34,000,000. What I can say to you is that we've got excellent commercial coverage and expanding to Part D will happen over 2021 because we're pretty much locked in for 2020. However, we do believe that there is a lot of room to grow. It is dry eye disease is promotionally sensitive. We're starting a DTC campaign in Q4.
We think it's a strong strategic fit and there's clear blockbuster potential for us in the U. S. Alone.
Thanks, Brent. I think if you go back in time and you look at the early quarters when there was a heavy focus on Xiidra, you saw the strong performance of this medicine. So we want to rekindle that fire. Next question, operator?
Your next question comes from the line of Laura Suckley from UBS. Please ask your question. Your line is now open.
Hello, thank you. Just on Zolgensma and specifically on your Medicaid book of business, we know that reimbursement in Medicaid is going to take much longer than in the commercial setting. But I was just wondering if you could tell us whether your views on access and uptake in the Medicaid environment have evolved at all over the last few weeks since you got approval? Thank you.
Yes. So on Zolgensma and Medicaid, we have 4 policies now already up on Zolgensma in Medicaid, which I think is very encouraging. I would say in terms of medical exception requests thus far in Medicaid that Novartis at least are managing through our hub, we've also seen positive responses from Medicaid states. Our first patient actually was a Medicaid patient. And so when you look at those narratives in general, patients are able to navigate Medicaid through medical exception.
So that gives us encouragement that even in the time it will take us to get the medical policies fully set up, we can still work through the system and get patients treated given the demand from the parents, the children, the providers. We feel generally optimistic. We'd love to accelerate getting those policies in place, and our teams are working hard to do that. But as you rightly point out, it will be longer in Medicaid versus in the Private Insurance segment. Next question, operator?
The next question comes from the line of Mani Forooh from SVB Leerink. Please ask your question. Your line is now open.
Okay. Thanks for taking my call. A quick question on Zolzendimod. You talked about the attractive launch metrics you've seen thus far. When we think about modeling in future quarters, how should we think about time from dosage to realize reimbursement in the U.
S. Versus global markets where you're going to be launching? Do you expect that to be relatively swift or should we expect the payment over time dynamic you've talked in the past to come into play as you launch OUS across different markets?
So with respect to the payment over time, it's important to note we're doing this through a third party. So actually, what we do is we recognize revenue immediately and then take a provision for our estimate of whether or not we would need to have any sort of rebate at some time over the period that
we ultimately contract for. So you shouldn't
model any lag at dosing. To date, because it's very early days, we don't have any plans of dosing. To date, because it's very early days, we don't have any plans currently using these kinds of models that we continue to work with plans in terms of contracting. It would be a similar situation we expect outside the United States as far as we can tell. Once we get those launches moving, we'll, of course, keep you updated if you need to shift your modeling at all for ex U.
S. Patients. Thank you for the question. Next question?
The next question comes from the line of David Maris from Wells Fargo.
Thank you. Just a question, one of the proposals being floated is reference pricing. If you could just address in broad strokes what the average selling price difference of your lead products or the bulk of your pharma products are versus U. S. Versus Europe or the developed markets that they're thinking about benchmarking to?
Thank you.
Yes. When you look at the proposals, in our experience, we have very limited exposure in Part B. We don't have many Part B medicines. So I can't really give you a specific answer on Part B. Probably it's better to ask some of our competitors on Part B.
With respect to Part D, our analysis suggests when you take into account rebates, other government subsidies and things that we give, patient assistance programs, free drug, etcetera, that our net pricing for our major medicines within Part D really at least recently launched medicines in Part D approach those of what we see in top European countries. So we at least don't see a significant gap in Part D. I know from an industry wide perspective, there's certainly a high we finish the call. So last question, please.
The last question comes from the line of Emmanuel Papadakis from Barclays. Please ask your question. Your line is now open.
Thank you. I'll try and keep it to one semi brief question. It was just to push Harry and perhaps if there's a little bit of margins, you talked about potentially getting a bit earlier to that mid-30s target. You didn't mention the possibility of us actually getting through that target and beyond. And in particular, R and D, I mean, it's been perhaps one of the areas where you most actively talked in the past about something you can internally control in terms of reduction.
You're already at the 20%. To what extent in the world of big data could you take it below that figure? Thank you.
Thanks for the question, Emmanuel. In general, for the company, we're trying to make the company as productive as possible. So our goal, of course, is not to stop at one specific number, but certainly focus on areas where we can become as efficient and as competitive with anyone in our industry and if relevant in areas like business services or procurement competitive with anyone in any industry. Right now, our goal is to get to the 30 mid-30s by 2022. If we get there on a full year base sooner, then of course, we'll give you updated perspectives on where we want to head next on margins.
But I certainly want to set the expectation or aspirations are to be as productive as possible. Now with respect to R and D, we don't view R and D as the key lever to achieve this. R and D is fundamentals of the company. We always wanted to get to that 20% range. We're there now, But we don't use R and D as our driver for margin improvement.
What we want to do is ensure we fund every good program. And we do that and we ensure that we're and if we need to, of course, increase our R and D levels in order to fund an excellent project, we'll do that. And in the medium and longer term, if data science, digital technologies can help us transform not only our manufacturing and business services and sales areas, we hope that also will transform R and D. We hope that actually gives us capacity to do more programs, and we can continue to be at 20% and do even more programs to grow the company. So that's, I think, it for today's call.
Thank you again investing in Novartis or your interest in Novartis. We look forward to delivering a strong second half of the year. We appreciate your interest in the company, and we wish you a great summer. Thank you.