My name is Henry, and I'm the technical operator for today's call. Kindly know that the webinar is being recorded. I would like to inform you that all participants are in listen-only mode during the call. After the presentation, there will be a question-and-answer session. You are invited to send in questions for this throughout the entire session using the Q&A functionality of Zoom. In addition to that, you may also raise your virtual hand to address your questions verbally. For participants joining via phone, to raise your hand, cue star nine on your phone's dial pad. When you then get selected to ask your questions, please follow the instructions from the phone and press star six to unmute yourself.
One last remark, if you would like to follow the presented slides on your end as well, please feel free to go to roche.com/investors to download the presentation. At this time, it's my pleasure to introduce you to Severin Schwan, CEO, Roche Group. Mr. Schwan, the stage is yours.
Thank you very much, and a warm welcome from my side. Thank you for joining us for our briefing on the 2022 group results. Let's get right into the numbers. Overall, we delivered a good performance in both divisions, very much driven by the newer medicines on the one hand and a strong base business in diagnostics. This was partly offset by the starting decline of our COVID-19 related sales, which amounted to roughly CHF 1 billion last year. As far as the pipeline is concerned, on the one hand, as you know, we did have some setbacks last year, but we also made good progress in our portfolio. We launched, in particular, Vabysmo, off to a very good start. We also launched Lunsumio.
We'll talk about those opportunities later. There's a lot more to come for the current year. Just to remind us again, we did deliver on the guidance both in terms of sales and core earnings per share. On that basis, the board is proposing to the AGM to increase the dividend to CHF 9 and CHF 50 rappen. If we look on the divisional results, you see a 2% growth on the pharma side. If we would correct here for the COVID sales, actually, the underlying growth is 4%. On the diagnostic side, again, if we would correct for the COVID-19 testing, then the underlying growth of the base business is 7%.
On that slide, actually, you can see the impact of COVID-19 also on a quarterly basis. It's quite interesting to look at that. If you focus into the kind of last four quarters on that slide on the right-hand side, you see in the first quarter last year, we still had double-digit growth from COVID. That came then sharply down to flat growth in the second quarter. You saw a declining business, as expected, I should say, in the third quarter of 6%. What you also see is in the fourth quarter, we have again a positive growth, it's really driven by one single order we got at the very end of the year from Japan.
An order which has been placed already for some time for Ronapreve, that brought us up to 4%. If you look at the underlying business, we clearly see that impact of the declining COVID-19 business. That is going to accelerate for 2023. We'll come back to the guidance in a moment. Here again, on that slide on the left-hand side, you see a bit more granularity in terms of what is happening with the underlying business. Diabetes business up CHF 900 million, this is the 7% I referred to. If you include the CHF half a million COVID-19 testing sales, which we ordered last year, you come to the overall 3%, which I showed on the initial slide.
On the Pharma side, for the purpose of this slide, we excluded two parts. On the one hand, COVID-19 related sales, which is Ronapreve, that was positive because of this Japan order. If we wouldn't have had that Japan order, it would have been negative as well. You also see this impact, the negative impact of Actemra, which is also driven by less demand for COVID-19. On top of it, we have continued erosion on Avastin, Herceptin, and Rituxan, AHR, of CHF 1.9 million. If you correct for those two effects, the underlying growth has been CHF 3.4 billion.
You see the business, the underlying growing business is growing in the high single digits, very much driven by the newer medicines. I find the right-hand part of that slide quite interesting as well. If you look back over the last five years in 2017, we still had the full sales for AHR. You can see this was about half of our sales for the Pharma division. You can really see two things here. One is, we were not only to compensate for that decline, but actually we grew the business overall from about CHF 50 billion back then to over CHF 60 billion today. What you also see is how much the portfolio has diversified.
We have a less prominent position in oncology, even though this remains our most important segment. We have entered other areas, in particular, neuroscience, of course, with Ocrevus, with Evrysdi, with Enspryng. We are the leader in hemophilia A with Hemlibra. You see this kind of small part here, this slice in light blue, which is Vabysmo. And for sure, that part of the pie chart will enlarge over time as we see a very strong growth for Vabysmo, and an area where we want to take a leading position. Again here, you know, a slide which shows the rejuvenation of our pharma portfolio.
Last year, in addition to the launch of Vabysmo, we also launched Lunsumio, the second new molecular entity, as you know, in blood cancer, there's more to come in this field also this year. We expect hopefully three NME launches this year. Glofitamab in aggressive lymphoma. We have the collaboration with Sarepta in Duchenne. We actually wait for data for crovalimab, which should come in very soon. Here again, a look at the underlying business, excluding COVID-related sales. I guess the message here is we have a good uptake in the fourth quarter, actually, both in pharma and in diagnostics, with a 5% growth on the pharma side and 8% growth in diagnostics.
A good momentum as we ended the year. Now, stable margins in terms of cooperating results. And I'm sure Alan will later dive a bit more into the overall financial results, including the non-operating items. Good. As we announced this morning, the board is suggesting a dividend increase to CHF 9.50. Let me conclude with the outlook for the current year. We have a number of readouts. Thomas will cover that in more detail. Let me just make a comment on tiragolumab in non-small cell lung cancer. As you know, we didn't reach a positive result for progression-free survival.
As you also know, we are waiting for the overall survival results this year. just let me again talk about, you know, the timelines during this year. First of all, I should say we have no data in-house. that we have no additional information. We have no data in-house. we expect an interim readout still in February. from all what we know today, the most likely scenario is that the study will continue until the final readout in the second half of this year. we think this is about six months later. It's event-driven study, but it will only read out in the second half of the year. Again, this is by far the most likely scenario.
There is, of course, as always with an interim study, a possibility that we either get a positive or a negative result. If that should be the case, then we would immediately communicate that result to the outside, because that would clearly be material. If, however, the study just continues until the final readout, then we are not going to make a specific announcement. In other words, if you don't hear back in February, then you know that the study will continue until the final readout in the second half of this year. Good. Just a word on the sales outlook.
We've guided, as you have seen, for low single-digit decline. That's really entirely driven by the expected decline in our COVID-related sales of roughly CHF 5 billion. That is about 8% of our overall business, we will largely compensate for that. We've also given you a guidance here of what we expect on the HF front. Expect a further erosion, but of course, in the meantime, this is on a much lower level at CHF 1.6 billion. What that means is for the underlying business, as an implied conclusion, that there is a strong growth on the pharma side, of course, and a strong momentum from our ongoing launches and existing portfolio.
We also expect that our base business in diagnostics is going to keep a strong momentum. Overall, low single digit decline on the sales side, core EPS to develop in line with sales. On that basis, we should again be able to further increase the dividend in Swiss francs. Thank you very much. With this, I hand over to Thomas. I guess the last time that you present pharma before you take over from me in March. Over to you.
Thank you very much, Severin, and good morning and good afternoon to everyone. Now, before I go into the presentation, let me just comment on the changes that were announced this morning. First, Teresa Graham, who has been announced as the CEO of Pharma. The second change is that in the future, Levi Garraway, our Chief Medical Officer and Head of Product Development, will also have a seat at the Corporate Executive Committee. With that, I'm very happy that we have a complete team in the CEC, and also happy with those two people because they're great leaders. They both have an extremely good track record, and they're known for the good expertise in this area. Now let me take you through the numbers for Pharma.
Now, with sales of CHF 45.6 billion, we had a strong growth of 2% in constant exchange rates. You see that what Severin has said, he said Actemra and Ronapreve had a certain effect on these sales. Underlying, the pharma business was actually growing with a good 4%. Looking at the different regions, let me just give you a bit more insight into that. In the United States, as you know, we never had access to Ronapreve, but here we had the impact of Actemra, which was used to fight COVID-19. Without this effect underlying, the U.S. was growing 2%. In the EU, we had both Ronapreve and Actemra effect. Without this, the EU was growing 7%.
Without Ronapreve orders to the Japanese government in Japan, we were growing 3%, and international was 5%. You see an underlying good growth and dynamic in the pharma division. Let me take you through the P&L. I mentioned already the sales, the core increased by 5%, so ahead of sales, and with that, we increased margins to 42.1%. Taking you to the next line, the royalties and other operating income, which grew slightly faster than sales. Here we have two different effects. On one hand, we had the income from the Ultomiris patent settlement. On the other hand, last year we had $0.6 billion impact from the Ronapreve profit share in the US.
These two things basically equaled each other out. These were the underlying effects in that line. Cost of sales decreased 2% while volumes increased 7%. Here, we also had some special effects underlying, where we had higher costs last year, due to cost related to COVID-19. M&E line, I would say again, we had some one-time effects last year related to COVID-19. Without that, we would be growing more in 4%-5% range. Overall, a good looking P&L. From a portfolio diversification perspective, you see the acceleration of the newer products. At the same time, you see impact of biosimilars in the lower half.
If I would add together the top six growth drivers, Ocrevus, Hemlibra, Vabysmo, Evrysdi, Tecentriq, and Phesgo, these all add about CHF 3.6 billion in new sales. We have 16 products now with more than CHF 1 billion in sales. Two that are emerging, Vabysmo and Phesgo, in the coming year. On the bottom half, again, Avastin up there and Herceptin, it declined CHF 1.9 billion, less than what we had expected. We do expect that in the coming year, it will be around CHF 1.6 billion, the erosion is declining further. We did have impacts on Lucentis and Esbriet. Esbriet here, this being a small molecule, we had generic erosion in the US. As it is with small molecules, this is pretty fast event.
In Lucentis, we had minor part of this being switches to Vabysmo, I'll talk about that later. Also, we had some biosimilar effects here. Now let me take you through more details on the different parts of our portfolio. First, starting with the oncology portfolio. Kadcyla, growing 7%, this growth is really driven ex-U.S. in early breast cancer, this is overcompensating declines in the U.S. Perjeta growing 5%. This is driven on one hand by international, in specifically China, as we got onto the NRDL last year. Also, we do see a decline in the EU. This decline is due to the fact that we actually have a switch to Phesgo.
You see that Phesgo is growing extremely well, with 121%, now making CHF 740 million. About 33% of all patients on Perjeta were now already switched to Phesgo, and we see this conversion ongoing. The outlook is for this coming year that we will continue to see a strong conversion and also a growth for the Perjeta and Phesgo combination for the switch from Perjeta to Phesgo. For Kadcyla, we see the sales to be stable in the coming years. On the hematology side, with Bingelxta, we have two pivotal phase III studies that will be read out in 2023.
Polivy, I have a special slide on that, but the growth and uptake is really strong with 85%, and this is driven by first line DLBCL. The uptake in already more than 50 countries where this has been approved as the new standard of care. Not much on the sales side yet because we've only launched in the EU recently, and the US got approval just in December, so we do expect this to have an impact in this year. One thing to note is that Lunsumio was now added to the NCCN guidelines in the US as a category II-A treatment, so with a very high level of evidence. This is good to see and will certainly help our uptake.
Finally, Uplizna, a fantastic medicine, coming from our Chugai partner. Here growth of 15% in the first line market share is more than 70%, and we do expect more data coming this year in an evidence setting, which will fuel further growth. I promised a slide on Polivy in first line diffuse large B-cell lymphoma. This is a disease with a very high unmet need. More than 40% of the patients are not cured with R-CHOP. For those patients, the prognosis is very poor with a median overall survival of less than two years.
We have presented updated data on phase III results with a median follow-up of almost 40 months with a PFS benefit of a hazard ratio of 0.76. We have really exciting data here, and this is really recognized. PFS is recognized as a good endpoint for most health authorities. In fact, we have more than 50 countries now that have approved this Polivy plus R-CHP combination. We have now a funding recommendation from NICE, which is fantastic, that we received end of January. On January 25th, we also received or we were included in the NCCN guidelines as category one, the highest level that you can get in the U.S. This is, I think, a very good signal for us.
You may have seen that there is an ODAC coming up, so an Oncology Advisory Committee on March 9th, and the prefer date is for April 2nd. We'll see how this goes, and obviously we'll present our case at the ODAC, and then we'll see how the FDA decides, given that we have the approval in more than 50 countries, we do hope that the FDA then supports this at the end. Let me talk a bit about the two CD20, CD3 bispecifics. We have Lunsumio, which comes from the gRED organization, glofitamab, which is out of the pRED organization. Lunsumio has been launched in 3rd line follicular lymphoma, and glofitamab is being filed in the U.S. and E.U. in 3rd line DLBCL.
These are two first-in-class and potentially best-in-class CD20, CD3 bispecific antibodies, but they also address different patient needs. They're off-the-shelf fixed-duration treatments with durable response and manageable safety. Lunsumio is good for outpatient and community settings for indolent follicular lymphoma and also for elderly or unfit patients. Glofitamab has the best-in-class efficacy potential and is can be used in more aggressive disease. On the right-hand side, you see that we have a number of ongoing trials that will read out in the next couple of years. In the next slide, let me take you through Tecentriq. We have first-in-class indications in first-line hepatocellular carcinoma, first-line small cell lung cancer, and also in adjuvant non-small cell lung cancer. These are the main drivers for this growth.
We've had positive readouts for subcutaneous U.S. with the PDUFA date set for September 15th. Subcutaneous is much more convenient for patients and physicians, and in fact, it will reduce treatment time to seven minutes. Here we have the opportunity to be first in market for PD-L1 subcutaneous formulation with likely a lead time of over one year. As you have seen, we had the first positive read out phase III, the IMbrave050 for Tecentriq and Avastin in adjuvant hepatocellular carcinoma, which met the primary endpoint, which was relapse-free survival. The OS data, as communicated, is still immature. We'll share this data at an upcoming conference. The IMpower013 analysis, and we will continue to 2024. Let me say we have not seen any data in-house.
It was the recommendation of the IVC to continue to study. In terms of outlook, we have, this year, you know, exciting, hopefully, data that will come in phase III, for adjuvant head and neck cancer and triple-negative breast cancer. We will have what Severin also mentioned, the final data of phase III, the SKYSCRAPER-01, Tecentriq and tiragolumab in PD-L1 positive first line non-small cell lung cancer. As Severin mentioned, we have not seen any additional data. The interim OS analysis has not yet occurred. As Severin also mentioned, the most likely outcome is that we will continue anyway the study until later this year, because also most of the alpha in the statistical analysis is spent on the final analysis, so this is the most likely outcome.
Let me talk about Hemlibra, growing extremely well. We have now CHF 3.6 billion in sales. The growth was 24%. Growth was driven both in the U.S. and EU, beating consensus by CHF 32 million. We do expect this momentum continue into 2023. This is now the new global standard of care. We have a patient share of 36% in the EU and the U.S. In the EU, we have the label extension to include moderate patients. What's also exciting is that we've now moved our Gene Therapy into phase III. This is based on five-year follow-up data with the majority of patients with more than one year follow-up, showing no decrease in factor VIII activity, very stable expression of factor VIII.
Based on these results, we initiated the phase III in this year. Next, let me come to immunology. Here we have a decline of 17%. This decline was driven by two factors. One is Actemra and the use of less use of Actemra in COVID-19 and also the generic erosion of Esbriet of -48%. Actemra is the leading RA monotherapy, and we are still shifting IV to subcutaneous formulations now. Subcutaneous formulation accounts for about 60% of our sales. Xolair is doing well with 6% for the full year. Now, here we are the market leader in asthma biologics, and we will also have news this coming year for the Xolair auto-injector and also the phase III in food allergy.
Moving to multiple sclerosis, where we're the global market leader. Ocrevus is now more than CHF 6 billion in sales. We have a good momentum in Q4, and we do expect this momentum to continue into 2023. We're the number one MS treatment in the U.S. and E.U., and we're the first and only therapy in RMS and PPMS, and it's a six-month I.V. and with very high retention rates. Now, in the meantime, we have nine-year follow-up data, so the data in the back is very solid from that perspective. We have exciting news to come in the future. We have phase III ongoing for a six-month subcutaneous home administration.
This will come in the middle of the year. This will open yet another market for us because the IV and the sub-Q markets are two different markets. We really have a differentiated product with the six months subcutaneous home administration. Further, we have completed our recruitment for the high-dose Ocrevus study, so with even higher efficacy. Again, we're continuing to develop this franchise. Now let me talk about spinal muscular atrophy. Here this is a small molecule, a splicing modifier, where we have children that have less expression of SMN1, and now with this alternative splicing, we get an increase of by using the SMN2 gene. We have sustained efficacy now for up to three years with over 7,000 patients. This treatment is tolerated well.
We have very high retention rate. Evrysdi has now achieved CHF 1.1 billion in sales and market leadership in several key markets, such as the U.S. and Japan and many other major markets. The U.S. growth is driven by switching and naive patients, including patients that are less than two months old, following that label extension. The outlook for 2023 is that we will have growth from treatment-naive patients and switches as well as babies of less than two months old. At the end of this year, we will have hopefully a readout for the pivotal phase III study in Duchenne muscular dystrophy. This is an X chromosome-linked genetic disorder, so impacting mostly boys, not only, but mostly boys, where the dystrophin gene is not properly expressed.
These children usually are sitting in a wheelchair by the age of 10 or 12, and usually they die in their 20s. This is a 100% fatal disease. There are no treatments available today, this would be a real relief for these children and these parents. This is a potential first-in-class and best-in-class Gene Therapy. We have positive functional and clinically meaningful results at multiple time points for more than 80 patients with a good safety profile. Based on that, we have also the phase III, and we expect this readout in Q4. In the U.S., Zolgensma is in priority review with the FDA, with the PDUFA date set for May 29th.
We have two additional studies that will run, one for zero to three-year-olds and then the other one for the older boys as well from eight to 18. Coming to ophthalmology. Vabysmo had an excellent start in the first 11 months. We've achieved CHF 577 million in sales. If we just take the last quarter, in the last quarter, we had CHF 300 million of sales. If we multiply that with times four, we would already in a linear run rate be at CHF 1.2 billion. We definitely had a strong acceleration in the US after we received the J-code on October 1st. About 70% of the new patients are from switches from a competitor product.
50% - 20% of the switches are from the centers, or the 50% - 20% of patients are from the centers, and the rest is from new patients. We've received rapid uptake for us the NICE reimbursement also in the U.K. In, on the phase III side, we also had very positive results in ophthalmology franchise. First, getting a third new indication, RVO retinal vein occlusion for Vabysmo, but also two positive readouts for Susvimo, both in DME and diabetic retinopathy. As you know, we had a voluntary recall for Susvimo. The device that is implanted in the eye in the U.S., we do expect to be on the market in a year or so with this device. We have a very strong momentum with Vabysmo.
We do believe that with bispecific, the two arms, VEGF and Ang2, we are highly differentiated. The clinicians are giving us the feedback as well that they see strong anatomical improvement. With that, we are well positioned for further growth. Furthermore, we have also another phase III, which is going to be started, which is NPR6. This is another pathway that's upregulated and involved in inflammations, also in the eye, but many other inflammations. We really look forward to this reading out in the future. Now, this is a slide that I or we have shown in the past in the Q3. We just wanted to show it once again. This is a post-hoc analysis of our data applied to the study protocol of another company's study.
Let me first say again that we have dual inhibition, VEGF and Ang2, so dual mechanisms. We have a clear anatomical benefit, drying of the eye and longer treatment intervals. Our studies actually reflect real-world practice. We're not putting patients at risk. That means we start the patients at more frequent dosing and only in patients fulfill all these five criteria, and they have to fulfill all the five criteria. Then, if they miss one, we already move them to a more frequent interval. Whereas in the other study, the less stringent criteria was used. Here, all patients, irrespective of disease state, were actually put on the extended treatment. There were only two criteria, and the patient had to fail both criteria in order for that criteria to be changed.
What we have done is we have actually applied our raw data to this study protocol. With that, you can see on the bottom right side that, you know, 96% of the patients would be Q12 or more, and only 4% of the patients are Q8. I've mentioned the different phase III readouts that you see here. We're very excited to present all of this data at the Angiogenesis conference in Miami in just a couple of days. Good to see how our ophthalmology franchise is developing. Finally, let me finish with the key late-stage news flow slide. On the regulatory side, we've had approvals already for Hemlibra in moderate hemophilia A and also Xofluza in young children. On the late-stage pipeline, we will have 19 approvals, so readouts that are expected.
Three of them have been achieved in January. Tecentriq in adjuvant HCC, Susvimo DME, and diabetic retinopathy, as mentioned before. We have three potential new NMEs this year that are reading out. Crovolumab, we mentioned that. We have Gene Therapy. Really excited to see that. We also have a number of very important line extensions that will potentially read out this year for Tecentriq, Venclexta, Phesgo, Vesco, the CD20-CD3 bispecifics, and Ocrevus. Perfect. With that, I hand over to Matt to take us through diagnostics.
Thanks, Thomas. Thank you. Good morning. Good afternoon, everyone. It's my pleasure to present the full year 2022 Roche Diagnostics results. With sales of CHF 17.7 billion, we had good growth of 3% for full year 2022. This was driven by strong base business growth of +7% and offset partly by decline in COVID-19 testing, which contributed CHF 4.2 billion at constant exchange rate and is no longer a driver of growth for the division going forward. If we go into the different product categories, what you'll see is our immunodiagnostics business core lab growing at +6%. However, excluding custom biotech, this was growing at 9%. Our point of care business growing at +17%, and this is mainly driven by our COVID-19 rapid antigen sales.
Strong base business growth of +13%, driven by the strong flu season in the northern hemisphere. Our molecular lab business, you see -15%, and this is driven by a decline in COVID-19 PCR testing. There was strong underlying base business growth again of 8%. Our diabetes care business declined by 2%. Excluding the settlement in 2021, this business was flat and stable. Our pathology lab, you see strong 11% growth, and this is driven by our advanced staining immunohistochemistry business as well as our companion diagnostics business. If you look at the regional drivers of performance, what you see is strong base business growth across all of our regions. Starting with North America, you see +13% overall sales driven by COVID-19. Base business grew at +7%. EMEA, you see -16%.
However, this again, related to COVID-19, the base business growth was 5%. Asia Pacific +23%, mainly again, driven by the COVID-19 testing sales. However, underlying base growth was 6%. Latin America, -1%. However, base business growth +18%. Across all the regions we had really good performance on our base business. If you look at the development of the Roche Diagnostics sales by quarter over the last three years, what I'd like to point out is the strong base business growth of Q4 2022 of +8%. In fact, if you look over the last 8 quarters, what you'll see is strong mid to high single-digit growth in every quarter for base business with the exception of Q2 2022, we were heavily impacted by the lockdowns in China.
If you look at the blue line, which is our overall sales, you'll see a -9% for Q4 2022, and this reflects again the decline in COVID-19 testing, where year-over-year for the fourth quarter, we saw a 58% decline in our COVID-19 testing. Looking forward, we expect to continue to see good performance from our base business and continual decline of COVID-19 testing as the disease moves to an endemic state. When we look at the P&L, you know, for diagnostics, core operating profit declined at 5%. This is mostly driven by our COVID-19 portfolio, where we have lower overall sales with lower PCR and higher rapid antigen. However, overall, we managed to maintain our core operating profit margin above 20%.
Our improvement in our base business productivity, where we had a decline in M&S of -2%, it enabled us to offset impacts such as inflation and fund additional R&D spending, which will drive the future growth of our business in areas such as mass spec and digital solutions. Now I'd like to talk about some of the innovation that this R&D is fueling, and specifically, some FDA approvals we received in 2022. In Q3 of 2022, we received FDA approval for our mid-to-low throughput system, the cobas pure, which completes our family of serum work area automation for the United States. In Q4 of 2022, we received FDA approval for our cobas 5800 molecular diagnostics system. Again, this rounds out the full family of molecular diagnostics automation for the US.
This is important as it allows us to effectively compete in large integrated healthcare network tenders, where you may have a large core laboratory as well as satellite labs, which makes us more competitive in that space. Additionally, to the throughput analyzers are enable us to continue to grow our market share in mid-to-low income countries where this level of automation fits the local market need. I'd also like to talk about the diagnostics response to the mpox outbreak in 2022. In May, shortly after the WHO flagged the spread of mpox outside of the countries where it is normally endemic, we very quickly launched a modular virus test on our LightCycler instrumentation. In September of 2022, the FDA opened an emergency use pathway for FDA authorization of mpox tests.
Within two months, we had received an Emergency Use Authorization for fully automated 8800 mpox tests. Why this is important is it shows our commitment to public health globally and the speed with which to the need. I'd like to highlight an example of innovation with our existing portfolio, and I'll talk about our STRONG-HF trial in acute heart failure. The STRONG-HF study was a prospective study where we had patients who were discharged with acute heart failure from the hospital. In the experimental arm, these patients had their dose of titrated and also were serially tested with our NT-proBNP diagnostic. The results of this study, 34% decrease in hospitalization and death.
In fact, the study was terminated early due to the superior efficacy of the experimental arm. This shows the power of diagnostics to change clinical practice, and again, our ability to medically differentiate our existing cardiac portfolio with additional approvals. Now I'd like to turn to the topic of neuroscience, which I know figured as well into the pharmaceutical overview. Roche Diagnostics also has a commitment to deliver innovation along the patient journey for Alzheimer's disease. What we're very happy about is our approval in Q4 of 2022 for our confirmatory test for cerebral spinal fluid for Alzheimer's disease. I would also point out that in 2022, we received FDA Breakthrough Designation for our blood-based Alzheimer's triage test, which is currently under development.
As you all know, there's a significant global disease burden for Alzheimer's disease, where by the year 2030, we expect over 80 million people worldwide to be suffering from this illness. It's our commitment to develop diagnostic solutions that help them live a better life. With that, looking at 2023, we have some, you know, exciting launches this year. One of those is gonna be the launch of our point of care instrument, the Cobas Pulse, for hospital blood glucose in the United States. We also expect to launch three tests into our hepatitis portfolio and as well as expand our offering around digital solutions. For example, adding medical value algorithms in the oncology field to our algorithm suite solution. Thank you very much, I'll pass it to Alan.
Matt, thank you. Thanks a lot. Yeah, I have a little bit of a package today that I have to bring together, and I come to that. Let me first welcome you from my side as well. I hope everybody is safe and healthy, and happy to show you a couple of solid financials for 2022. Yeah, that's why I'm saying, I think it's not just about the results, cash flow and outlook. We will come up for next year with a new income statement representation, and I would like to guide you through what we're gonna change and how that looks like. Good. With that, I think the highlights, I will touch on all of them. I skip that one for the sake of time, and we'll go to the group performance right away.
I think my colleagues have done a fantastic job on explaining the sales, so +2% in constant rates, as you can see. You see really the core operating profit +3%. I think really good cost containment. I will explain that later on. Pretty good here. You see really the move from core operating profit with +3% to the core net income with -1%. The question is, what's going on here? There are two explanations for it. One is the taxes. You might have seen that the effective tax rate went from 14.5% in 2021 to 16.4% in 2022. That's one element.
The other element is higher interest expenses and a worse in financial result, which I will come to, but I think well explainable and shouldn't be a surprise. The core net income from a -1% to a core EPS growth of +5%. This is the accretion effect from buying back our shares, if you like, from Novartis and terminating them. We terminated 53.3 million shares. As you can imagine, I think now the share base is lower, and we have a higher profit distributed this, so it gives you a higher momentum with +5%. Good core EPS and +5% to an IFRS net income of a -6%. What we've done here, we've looked at our balance sheet. You know, we have intangible assets on the balance sheet.
We looked really at the outlook for these assets came up with corrections and impairments. I think we had higher impairments compared to last year that brought the IFRS net income down with a - 6%. You see the operating free cash flow with a - 8%. We'll talk about this, nothing concerning here. We had sales with Chugai with CHF 1.2 billion. We booked them at the 27th of December, I think it is absolutely understandable, you know, that this was not converted into cash right away. That's something which will convert into cash really at the beginning of this year, we'll have a jump start. Certainly, we're missing this CHF 1.2 billion, if you like, in the operating free cash flow.
The free cash flow down by -16%. Well, as said, which explains why. We had pretty good sales and profit impact coming from Japan, where we have a higher tax rate. We paid higher taxes for Japan and partially for the U.S. as well. Let's get now to the details. I think Severin has made a great job on that slide. Let me make the comment about the COVID sales. You see that on the left-hand side. I think in 2021, we had roughly CHF 7.4 billion COVID sales. In 2022, that dropped to CHF 6.4 billion. That's the billion.
I think as said for 2023, we expect that this will come down by roughly CHF 5 billion. I think there will be a little bit of a tail end then, of the COVID sales in 2023. That's what I wanted to add to that slide. Let me get to the P&L and give a little bit on light here, and also here my colleagues have made comments already. Don't wanna repeat the 2% on the sales side. You see royalties and other operating income. I have a slide on that one. I have a slide on the cost of sales. That's going to come. Let me make a comment on M&D.
M&D, I think a modest increase of 2% on the diagnostic side, really investments in digital and higher distribution costs. When you look at pharma, certainly we had the launches predominantly by Vabysmo, which trigger a little bit of an increase here. You look at R&D, and that's a pretty modest increase with +3%. When you look at pharma, it's even +1%. Here are a couple of base effects. On one hand, we had higher R&D expenses in 2021 due to Ronapreve and AT-527. In 2022, we had even a release of a couple of provisions.
When you add that together, it's a CHF 420 million, which worked for us, if you like, coming from the base effect as well as from the release of the accruals in 2022. If you were adjusting for that, I think at least pharma would have grown by 4%-5%. What I wanna make is the statement we're definitely investing into R&D, and we're committed to innovation. I think really then when you look at GNA, I think really good cost containment, good management here, which then brings us to the cooperating profit growth of +3%. Good. With that, let's get to the royalties and other operating income. Thomas made a comment here. We had a couple of impacts.
You see really here the increase of 3%, which I had outlined before in constant rates. The royalty income came down by CHF 122 million. That is predominantly due to Lucentis. We had lower Lucentis sales, as you know. Then we have the out-licensing income increased by CHF 713 million, that's the settlement of Chugai due to Ultomiris. Patent settlement that we have had was a one-time payment, which came in positively. At the same time, certainly, that's something which goes back to 2021, we missed really the Ronapreve profit share in the U.S.. We just got a profit share. We didn't show the sales. We just had, if you like, a part of the profits, and that declined by CHF 670 million. The explanations are pretty straightforward.
As you've seen, I think we had a relatively modest growth and an underlying volume growth of 6%. You ask yourself, "How is that?" It was the $18 point billion. You had incremental production costs for Ronapreve and AT-527 in 2021 of $630 million, so kind of a base effect. I think we need to get to the normalized number for 2021. When you put a 5% increase on top, you get to the 2022 number. The 5% matches very well the 6% volume increase. I would argue, nothing unusual here.
When you look at the margins, let me say here, I think in the morning I received a couple of messages about how about profitability. Honestly, I think what you see is we defended the margin quite well in 2022. Pharma even brought the margin up as promised and as hoped for and as expected, to 42%. Diagnostics, I think, gave the explanations basically on R&D, whilst they have seen a decline here. When we go to the core net financial results, which worsened by CHF 475 million in constant rates, let me go through the explanations. Equity securities, that's the Roche Venture Fund. I think the market is declining. We all know that.
I think for that, I think we've done pretty okay-ish. Net interest income, I think interest rates have risen, CHF 37 million+ here. Currency is predominantly hedging, that comes predominantly from Russia. You have the interest expenses, with a major increase of CHF 269 million. Well, that's pretty clear. That's the additional debt from the share buyback, yeah, related to Novartis. We bought the shares back for roughly CHF 19 million. I think we have seen that debt then on the balance sheet at the end of 2021, we just had it in the end of 2021, in 2021. Certainly we had it for the full year of 2022, that triggered the increase here.
Other is really hyperinflation expenses and some losses from associated companies. Good. With that, let's go to the tax rate. Let me say here, I think we ended up with an effective tax rate, group Core tax rate, I should say, of 16.4%, which I think is not a bad achievement. We guided for 18%, around 18%, as you know. Underlying 17.9%. We had a couple of releases of tax provisions in 2022 as well, but to a lower extent compared to 2021. I think really, pretty okay, with what we've achieved here on the tax side. Let me summarize then when we go to the Core EPS development.
When you look at it, and the +4.8%, which you see on the bracket above, that's the rounded 5% Core EPS increase. You see operations up by 3.1 percentage points. You see then the Ultomiris settlement really then was basically offset and more than offset by the loss of the Ronapreve profit share, which didn't reoccur in 2022, was a -1.5%. You might ask yourself, "Okay, when we look at the cooperating profit, then the Ronapreve profit share is a lower number compared to the Ultomiris settlement. Why is it now overcompensating this in the Core EPS?" The explanation is relatively simple.
Ultomiris comes from Japan. Japan means a high tax rate. It means we have a minority in play for Chugai. Yeah. That reduces that impact and makes, I think, that movement explainable. We have the net accretion of the Novartis share buyback with the +4.8 percentage points. Other is taxes. Good. With that, let's go to the non-core section and the IFRS income. You see the cooperating profit +3%, as mentioned before in constant rates. You see the IFRS net income with a -6%. You see what happened here in between. I think really you see the global restructurings plans, which are, let's say, a little bit lower than last year. You see the amortization of intangible assets.
Well, that's ASRIAT, yeah, which I think is amortized now, so we don't have that anymore impacting this number. Impairment of intangible assets, which has increased compared to last year. Nothing extraordinary here. We just went through our assets. There was not a lot of activity on the M&A side, and the same basic lies to legal and environmental year. I think when you then take the financial factors on top of this, you get to the IFRS net income development of -6%. Good. Let's talk about cash a little bit. Cash came down, as I've said, but very explainable. I would even say, well, I think a good indications for 2023. You see really basically every number stands out.
It's the net working capital movement, and let me say net trade working capital here even. Chugai is once again expansion here with the Ronapreve sales that I've explained before. The CHF 1.2 billion brought the accounts receivable up. We'll convert into cash soon, I'm sure. We have the inventories, which went up by roughly CHF 1 billion in both divisions by roughly CHF 500 million. That's also something we can work against and which will materialize when it comes to cash in 2023. Good. I think really don't wanna go through the margins here. Let's go straight to the group net debt development. When you look at this, I think we ended up 2021 with net debt of CHF -18.2 billion.
End of 2022, a -CHF 15.6, an improvement or reduction, if you like, of CHF 2.6 billion. Well, let me explain that quickly. I think you see the operating free cash flow, which I've given a couple of explanations about, of CHF 17.7. We paid the taxes with a higher number compared to the previous years and the treasury. Certainly the dividend payment, you know, of CHF 7.8 billion. The dividend we paid in 2022 for 2021 is another factor here. Certainly I think this reduction could have been larger with the CHF 1.2 billion from Chugai and Ronapreve, which will come in 2023. Quick comment on the balance sheet, just for the sake of completeness.
Cash and marketable securities went down a little bit. This is because we repaid debt, if you like, so we used our liquidity to do this. The other current assets comes to receivables by a certain number. We have the current liabilities, and they have decreased significantly, and that's short-term debt. We have converted short-term debt into long-term debt as a team did really great, because basically, when you look at the average interest rates that we're paying, I think this is pretty balanced what we had last year. I think really a great timing here. The non-current liabilities, very clearly that's from that now kicking in, and that leaves us with an equity ratio of 36%, which I perceive a pretty solid balance sheet. Good. With that, let's go to the outlook and start.
Let me start with the currencies here. I don't wanna go back and say, what happened in 2022? You know, the major effect was that the US dollar basically got stronger, the euro got weaker against the Swiss franc, I think that balanced out quite a little bit. I think we were okay in 2022 despite quite some volatility. I think what is striking, you know our model. I think we're always assuming that the year-end rates from 2022 remain stable over the course of the year. If you do that this year or let's say at the end of 2022 and project it on 2023, you get two heavy impacts as outlined on the slide on the right-hand side.
Impacts of around minus four percentage points to minus six percentage points on sales, cooperating profit, and Core EPS. Honestly, you know, this is a pretty wild assumption that this is gonna happen, that everything stays constant. This is surely not the case for the course of 2023. Stay tuned and we will update you on a quarterly basis, and you will see what's gonna happen. Yeah. My basic argumentation certainly would be, we have a natural hedge in all the countries, in all the regions. Yeah, we have also major sales. I'm not really concerned here. Let me set the stage as well for your projections on 2023. You know with the Core EPS, I think this is now the Core EPS 2022 as reported.
You'll find it on page three in the finance report. You know you have to correct that number for the foreign exchange losses. Good habit every year. That number is an 0.32 Swiss franc, so it's 32 rappen. How do you get to that number? Well, you go to page 59 in the finance report. You find an foreign exchange loss of a CHF 278 million. You take that CHF 278 million, you put a tax rate on it, yeah, that reduces the impact. Then you divide that by roughly 808 million shares and Genussrechte, if you like. You find that number on page 116 of the finance report.
That brings you then to the basis for 2023, which is a 20.62. Good. With that on the outlook, I think, well, pretty reasonable outlook that we bring in here for 2023. Don't forget, I think really, we expect to lose roughly CHF 5 billion in COVID sales, which is a very significant number. Represents roughly 8% of our sales. We work against that. Don't forget, on top we lose on the pharma side roughly CHF 1.6 billion due to AHNR biosimilar competition. I think really, we close the gap quite well.
We wanna maintain the margin, and defend the margin with the Core EPS growth broadly in line with the sales decline, and we stay on track with the dividend. Good. That leads me to my last section, and this is really about, the income statement, presentation. We would like to change that for a couple of reasons, and there will be a couple of changes. Let me lead you through this, really step-by-step. The first one is really that we would like to, apply more to what our peers do, and we would like to go to SG&A, to selling general and administration. That's a relatively simple step because we just have to add marketing and distribution and G&A, and that's what we're gonna do in the future. We will introduce a line of other revenues.
Yeah, that's another point here. Really, we had before revenue, but now we use other revenues instead of royalties and other operating income. I think that is very important because there is a little bit, let's say, when you look at IFRS, the discussion about what is revenue, and we wanna project that well. You will see there will be now a line other operating income and expense in the P&L, and that will be very much characterized by the disposal, yeah, of products, yeah. That will come in there, where you can debate is it revenue or not, and I think we project here, evidently that this needs to be in another line. The other piece is really about removing allocations.
That is certainly something we do on, if you like, because we wanna do it, we wanna simplify and standardize what we're doing internally. We had quite a hefty allocation system in Roche, and we wanna get rid of that. Certainly I think what that means is that we really reduce, yeah, costs that we allocate to the divisions, and that will have an impact certainly on their margins. What's not gonna change is certainly the key metric sales, group operating profit and EPS. All of that remains unchanged. Let me now lead you through this.
I think the first step is certainly, and you see a small number one on that slide here right in the middle, and this is just adding up M&D and G&A, and that all is then summarized on the right-hand side into SG&A. We have now an SG&A line in Roche, and you see on the right-hand side how that would look for 2022. That's the first step. You have the second arrow and the number two. We move CHF 612 million income from disposal of products and CHF 184 million other income from within G&A to the new line other operating income and expense. You see that. As a third step, we rename the line royalties and other operating income into other revenue.
I think that's more the IFRS move that I've mentioned before. Good. The last step is really about the allocations. We are removing allocations from various reporting lines, and that leads to a CHF 660 million lower cost of sales and a CHF 788 million lower R&D costs. The major driver here is informatics cost, by the way. I think it's other group functions as well, but the major driver's informatics. The sum of the two, which accounts for, and it's mentioned on the slide, CHF 1.458 billion is moved to SG&A, as you can see.
You see it, yeah, on the far right, how the restated P&L looks like and of course still with the same core operating profit of 22.173 billion CHF. Good. I think that's what we wanted to bring to your attention. I think let me close that section by saying, well, very clearly, I think when you look really at core operating profit in absolute terms, I think nothing's gonna change. What will change, though, is how the results look like in the divisions and for corporate. When you look at the margins, and that's really on the right-hand side, on the lower part of the slide, you see for the Roche Group, the core operating profit margin remains the same with 35%.
It's gonna change for Pharma, which then really goes up from 42.1% - 46.4%, and then for Diagnostics from 20.1% - 24.7%. Yeah. This is just due to the fact that we are allocating less, yeah, from Corporate as we did in the past. Good. With that, I think, wanna close my section as well, and I think we are happy to receive your questions. Okay, you're sorry that it took quite a while.
Thanks, Alan, and we will open up the line. Actually, the first question comes from Emmanuel Papadakis, Deutsche Bank. Emmanuel, please.
Thank you for taking the question. Perhaps I could kick off with a question around the breast franchise outlook. Kadcyla saw a decline in key for the first time. Is that now likely to continue? We're anticipating some head-to-head neoadjuvant data from the same competitive product that's pressuring you in metastatic. What's your confidence around sustainability of the franchise in the midterm as well? On Perjeta and Phesgo seems to have slightly plateaued in the last couple of quarters. Just give us a sense of what % of the franchise you believe you can convert by the time Perjeta faces biosimilars, and perhaps you could also remind us when you expect that actually to be. Then perhaps, since I'm amongst the first, it may be premature, but a question on broader strategy.
It may be a little early to comment, but is there an intent to use the forthcoming management change as an opportunity to review current group strategy, for example, as it pertains to the group perimeter M&A intent to indeed the R&D structure of the company? Should we really be looking for continuity of approach? Thank you.
Okay. Thank you very much for your question. Thomas, just go on, yeah.
Good. as I mentioned, in the presentation, we do believe that for the next couple of years, Kadcyla can remain stable, and that this is due to the fact that, already, I think more than 60% of.
Of our sales with Kadcyla are in the adjuvant setting. As you mentioned, there is certain competitive pressure, especially in the metastatic setting. These trials will probably read out in a couple of years. We'll see how these trials are then going to read out. Depending on that, we will potentially see an impact. At the same time, we know that that's about the same time when we also have our patent life ending on Kadcyla. Now, you asked the question on Phesgo. The conversion. We don't really see a slowing down of the conversion. For Phesgo, we have a patent life which is much longer. This is a triple combination and very difficult to manufacture.
We do believe that Vesco has a longer life. The question was around reviewing of group strategy. I do believe that as biology will be more and more better understood, that, you know, diagnosis will become more accurate, it will become earlier. This combination of diagnosis and medicines is going to be really essential. At the same time, we know that, you know, data and artificial intelligence, digitalization in healthcare is still a huge opportunity. It's something in healthcare that's lagging behind. Here we can also have an impact. I think this combination of these three fields is absolutely critical. With that, I do believe that we have the right.
Hi, thank you for taking my questions. I have two. The first being, how big of a benefit really do you see from the IMbrave adjuvant liver cancer indication for Tecentriq, both in China and ex-China? How do you view the reimbursement in China versus the local players? My second question is around defending the margins in 2023. Really kind of what sort of level of product disposal income have you assumed in your guidance, given we saw about CHF 600 million in 2022? Should we assume a continued streamlining of the portfolio? Just trying to get a feel of how much cost savings will be needed to defend the margin and kind of where they'll be coming from.
Right. Alan, you want to take the margin question of the guidance?
I think we have a significant question. I think that's the statement we want to extend here. Honestly, I think all the ingredients together to then have the PNL have to play out. I think we will see. What that means for price controls in 2022, Because we have a period comments on IMbrave, we've only communicated at the top line with ourselves, regulators, and they're going to be presented at the next conference. Obviously, HCC is a big disease burden in China, but I would say it's still too early to comment on China.
You know, it is an opportunity both outside of China and in China, in my perspective.
Next question, please.
Next question would come from Matthew Weston, Credit Suisse.
Thank you very much. A number of questions, please. I'm gonna start with a big picture one. I don't know whether it's for Thomas as incoming CEO or whether it's for Severin as incoming Chair. You've lost a number of late-stage products over the course of the last few months. Gantenerumab, Zinpentraxin has gone out to phase III, and TIGIT is uncertain. You still have a very strong balance sheet. M&A has not really been a feature of Roche previously, is now the time for you to act to bolster the late-stage pipeline? Also, I'm aware that the family ownership is now much less of an issue such that a share buyback is much more possible. Is there any way that we can see improved capital allocation or changed capital allocation, perhaps I should say, at Roche?
Just a couple of quick product questions. Vabysmo, the strong demand. Can you confirm that you have no concerns about manufacturing capacity and ability to supply? The second issue is around Tecentriq. Adjuvant lung has been a key driver. You have a competitor with now a broader label. Is there a risk to growth?
Okay. Let me have a first go on the overall big picture question in terms of our strategy and capital allocation. First of all, the overall capital structure with the ownership of the founding families, I mean, this has absolutely no influence on how we run our operations, and there's also no impact or change in our strategy following the share buy of Novartis. As far as M&A is concerned, yes, it's always interesting to bring in opportunities from the outside, and we keep looking for opportunities.
which potentially arise, but there's also a price to be paid. What we have seen in the past is in particular for late-stage opportunities, it was difficult to justify it from a business case point of view. We'll see in the future. Thomas, I guess, you would agree that we keep looking, right, for opportunities as we did in the past, but I don't see any fundamental change in our overall strategy.
Yeah. I can confirm that. I mean, we always do our due diligence. So whenever anything is on the market, we are usually aware of that. We look at it, and we make decisions, based on the science and based on financials. We'll continue to do that as we go forward, as we have done in that. Then, you had a question around Vabysmo, if you have any concerns, if we can manufacture enough. We don't see that that will be an issue. Yeah, we are excited about the strong uptake and the clinical benefit the patients are seeing with the dual action of the two arms of the bispecific antibody.
You were mentioning a study that was just reading out or got approval lately in adjuvant non-small cell lung cancer, the KEYNOTE-091 study. I would say, I mean, we have looked at data. Some of the data is a bit counterintuitive, I think it will be a bit of a discussion also among oncologists, because actually the hazard ratio was better in PD-L1 negative than in PD-L1 positive population. It's a broader label, as you mentioned. Yeah, I think that would be a bit of a discussion. That's the first point. The second point is that we have the label in PD-L1 positive. We have first mover advantage, and we have a significant better hazard ratio.
In fact, our hazard ratio in the PD-L1 positive population is 0.43 versus 0.82 in this KEYNOTE-091 study, which is a significant benefit to patients.
Did we answer all your questions or you have any additional questions?
That's perfect. Thank you, Bruno.
Okay. We move on. Next questions would come from Emily Field from Barclays. Emily, please.
Hi. Thank you for taking my questions. Two, please. The first one just on the competitive landscape for Ocrevus. A lot of attention being paid to the recent launch of Briumvi, ublituximab, at a lower price point. Could you just give some thoughts on how you know, expect to continue to take share with Ocrevus given that development? Also just a clarification on tiragolumab on SKYSCRAPER-01. You know, I appreciate the commentary that you haven't seen any of the data, but I was just, you know, going through some of the comments the company made at the ASH conference recently that talked about the interim LS data being expected in the first quarter of 2023, and then the final analysis, you know, being in the earlier part of the second half of the year.
I just wanted a confirmation that, you know, nothing from a timing perspective has changed since ASH. Thank you.
Right. I just would like to clarify on the timing because we gave a more narrow window here. The interim readout will actually be in February, not only in the first quarter. The final readout will be six months after the interim readout, but it's event-driven, so therefore you can't be so precise when exactly it will happen. We have confirmed that, so that timing is confirmed. Perhaps Thomas, if you can add also on the Ocrevus.
Sure. Thank you, Emily, for the question. There are, as you mentioned, there are three in-class competitors, Ocrevus, then Kesimpta and obinutuzumab. We have the longest data with more than nine years of data. We're the only company that's approved in PPMS and RMS. What we also see is that the market is kind of there are two different markets. One is the IV market and one is the subQ market. You know, we have the six months, you know, dosing, IV on the one hand, but we will be also hopefully on the market with subQ version, where the trial will read out in the middle of the year. We can play in both markets.
Right now, I would say these are more, two separate markets. With regards to obinutuzumab, I think from a data perspective, from a, you know, where we approve PPMS with RMS and also in terms of the dosing frequency, et cetera, we see ourselves as significantly differentiated, plus also from a commercial presence. I mean, we are much more present in the different markets than the company that's selling obinutuzumab. I believe Severin answered the question on TIGIT for SKYSCRAPER-01. We don't have more information on any data, nothing has changed. It's still consistent to what we said in the past. Yeah, we're hopeful that this will be positive in the final readout for sure.
Emily, did we answer all your questions or you have any additional questions?
That was great. Thank you.
Okay. The next questions would come from Luisa Hector from Bloomberg. Luisa, please.
Thank you, Bruno. Thanks for the call. Excluding COVID as we think about 2023 and sales, are there any particular moving parts that would lead to a range within your numbers? I mean, we've touched a little bit on HER2, Kadcyla. Anything unusual for the sensitive Actemra, potential biosimilar at the end of the year, or you feel everything's on a fairly stable trajectory? Maybe to follow up on those impairments Alan mentioned, but just some explanation about what went wrong. I noticed the hemophilia A, the Spark, there was the impairment, yet you are still planning to start the phase III this year. Perhaps a bit of an update there and the plans for the phase III as well. Thanks.
Right. Perhaps just a word on the impairments. For Spark, it's primarily a matter of delays. You know, timelines have moved out actually for the whole field, but we are impacted as well. Spark is part of that. We also took an impairment on Gavreto. You have seen that sales have been very slow and we have adjusted our projections, as a result of it, we took the respective impairment. Gavreto alone, just to put it into perspective, was about CHF 700 million. Yep, there was some more granularity asked on the guidance on a product level.
Sure. As you've said, I think, seen both in Severin's presentation and Alan's presentation, is that the biggest impact for us in this coming year is the decrease in COVID-19 related sales of CHF 5 billion. When you calculate that on our total sales, that's about 8%. That's definitely the most significant effect. We also had on one slide the effect of HNR, which is roughly CHF 1.6 billion. With regards to other moving parts, we do believe that the Esbriet erosion will continue as well as on Lucentis side. We don't see any impact of Actemra in 2023 because biosimilar will not be on the market yet more towards the end of the year.
Thank you. Can we have the next question, please?
Yeah. Luisa, did we answer all your questions or you have a follow-on question?
No, that's fine. Thanks. Thanks very much.
Okay. We move on. Next one would be Andrew Baum from Citi.
Hi. Many thanks. Couple of questions. Firstly, on SKY-01 , just going back to the alpha spending in relation to the interim analysis, and apologies for the somewhat nerdy question, but my understanding is you're using O'Brien Fleming, which, I'm sure that your team would know is a sort of exponential fund spending, which means that there will be an exponential increase in the alpha spend, meaning the probability of hitting at the interim, if it is positive, is materially greater than at the initial analysis. It wouldn't actually improve that much by the time you get to the final. I'm just somewhat confused why you're downplaying the relative importance of the interim, assuming you are using O'Brien Fleming. That's the first question. The second question is more big picture.
The, the organizational changes which you and Thomas announced this morning, bring Thomas into greater proximity with development decisions through the direct line report, leaving Teresa focusing on the commercial. Could you talk to what you hope to achieve beyond the obvious with this? Is about prioritization of portfolio? Is it decision-making and clinical trial design? How should I think about the key function or underpinning the key drive underpinning this decision? Thank you.
Thank you for the questions, Andrew. Well, on the first one, I'm not the expert here, but talking to the scientists, what they tell us is that the most, the far the most likely scenario is that it only reads out for the final analysis. Perhaps we can make some follow-up on the specific question. I can just reflect what I hear from our scientists. Again, that's what they have been saying throughout that process, because we don't have any new data. I just wanted to put that into perspective. There is no change in our assumptions. We just wanted to make clear what our internal expectations are.
Perhaps Thomas, you can give even more color to that and then also talk to the organizational changes.
Yes. We've never disclosed statistical plan regarding the, you know, the mode of analysis. We've used O'Brien-Fleming as you've mentioned, it does increase over time the alpha. The highest likelihood is at the end. You know, we just ask you to be patient on that one. Again, we have zero view on the data. There's no change in what we are communicating, I think that's important for you to know. Regarding the organizational change, whenever you have a management change, this is an opportunity when you also look at how you organize the team. As you know, in the Corporate Executive Committee, we have already pREDs and gRED with
We've added and Hans Clevers represent those two organizations. Yeah, we felt it was a good moment in time to then also add the late stage into the CEC. There have been committees like the late stage cohort of the committees where, you know, they have been talking about the R&D portfolio as a whole. Nevertheless, you know, given that there was now this kind of opportunity, we thought it would make a lot of sense to have the holistic end-to-end R&D discussion also in the Corporate Executive Committee.
Yeah. Any additional questions, Andrew from your side?
No. Perfect. Many thanks. Appreciate it.
Okay. We would move on. The next question would come from Sarita Kapila. Sarita, please.
Hello. Thanks for taking my question. Sarita from Morgan Stanley. Just the first one on Vabysmo, please. Some physician feedback has suggested that switching Eylea refractory patients has led to mixed outcomes, with some patients doing worse in terms of drying when switching to Vabysmo. Is there a risk that the launch of Eylea high dose will lead to physicians first exhausting the dosing window with Eylea before switching the remaining refractory patients to Vabysmo? Secondly, just to follow up on Tecentriq/Avastin in liver cancer, can you update us on the approval timelines? Will the immature OS data lead to any delays in approval? Thank you.
Yeah. Let me just answer the second one first with Tecentriq, Avastin in HCC. We just recently released the data. We will then show the data in the next conference. We're in discussions with authorities. At this stage we can't comment on exactly when we will get the approval. We are in discussion. Regarding Vabysmo, I mean, I have to say I've had a lot of interactions lately with our people, who, you know, get a lot of positive feedback from clinicians. In fact, especially on this anatomical improvement of drying the of the eye, where the dual mechanism plays a very big role. Increasing the dose of VEGF doesn't impact that from that stage.
When you compare the two trials and you do a fair comparison, you see a significant benefit using Vabysmo versus the product that you just mentioned. Yeah. I would say I've not heard that. In fact, we see a very high switching rate from this other product to our product. We are confident that the growth of Vabysmo will continue beyond the mid of this year, into the future.
Sarita, did we answer your question or you have any additional questions?
No. That was it. Thank you.
Let me maybe pick a question here from the chat. It comes from Simon Baker, and it goes to you, Matt. That Dyer also gets a question finally. Can you give us a bit more color on the solid growth ex COVID? The question is also referring to here, what evidence and trends are you seeing for the non-COVID use of the machines which were installed during the pandemic? Maybe you can provide an update here.
Sure. I can maybe start with the second part first. We expanded our install base of our, you know, automated molecular diagnostics instruments significantly during the course of the COVID pandemic. You see that as well in the 8% growth in our base business in molecular diagnostics. What we see is those instruments which are placed in a lot of hospitals and laboratories across the world are contributing to future growth of our, of our non-COVID diagnostics base. That's the second part of the question. The first part, if you look at the general growth of the diagnostics market, it's, you know, mid-single digits, we expect to outcompete that.
Our expectation is that our performance should be somewhere in the mid to high single digit range, as we head into 2023.
Thanks for the answer, Matt. We'll take the next question here from the queue. It's from Peter Welford. Peter, please. Peter, the line is open. Okay, maybe we move on and can try again later. We would go to Matthew Weston. Matthew, please.
Thank you. The fastest follow-up ever. It's a finance question. Alan, tax. There are a number of moving parts. You set out a whole series of moving parts, 21 versus 22. There's also a lot of debate globally about what will happen to tax rates in terms of OECD minima and everything else. Can you give us some help in pointing where your best guess is for the tax rate for 2023?
Yeah, as said, I think I'm pretty clear here. I think about 18% is what we're heading to. I think I expect really the minimum tax being applied. I think, well, the earliest, 2024. I think twelve, perhaps 2025 is a more realistic date if, you know, we can really agree, increase can agree on the right pieces. Today I think even if, I think, that scenario comes into play, I think that it appears to us rather manageable. Certainly it wouldn't be a positive, but I think rather manageable. I think from today's point of view, I feel okay about that. To answer your question, by the way, once again, I think 2023 should be around 18%.
Thanks, Alan. We have another follow-on question, this time from, by the way, Matthew, any other questions?
I'm good, thank you.
Okay. We have another follow-on question coming from Emmanuel Papadakis. Will open the line. Maybe Emmanuel also comment from our side because you asked before about the Phesgo and the conversion and how this will proceed. I think we have animation on Phesgo, so it's a significant conversion needed to take place in the next two to three years. We, in the more difficult countries, for example, the U.S., certainly we are approaching 20% conversion rate already. Clearly, when Thomas mentioned it, I think as well, that we will have blockbuster centers reached as of 2023, and there is I think even more to come afterwards. It's a decent opportunity.
Thank you very much, Bruno. That was very helpful. A few minor follow-ups if I may. One more on financials. Perhaps, Alan, if you could give us a little assistance with the outlook for financial expenses given the step-up in 22 in terms of 23 and beyond. That would be very helpful. An R&D question. You've initiated the second-line lung phase III trial with your KRAS G12C. As in monotherapy, if you could just help us think about what's the clinical strategy here? How are you hoping to differentiate versus competitors that are already well ahead in that setting? Perhaps I could take a follow-up on Tecentriq.
On the couple of days, could you just give us your perspective on the IP timelines in place and indeed whether that will have any impact on its potential conclusion in due course in price negotiation. Thank you.
Thank you. Alan, you start on the finance.
Yeah. Well, on the financial result, I think first of all, I think on the interest expenses, what I can say is I rather expect in the absence, yeah, of major M&A, if we do rather smaller stuff which we have done also in the course of 2022. I think I can even see that it's a certain reduction, nothing of major significance. But I think that's a certain reduction compared to 2022, because I expect certainly I think that we pay back debt, especially in the current environment. I think that's quite an incentive to it. When you look really at the financial result in total, I think we have a couple of moving parts, certainly.
I think really the income from equity securities, I've mentioned that with the Roche Venture Fund. I don't know where you think the biotech market is, I think if the biotech market were taking off, I think that there might be even an opportunity in the field. I'm a little bit skeptical here given the environment and what I see currently. Let's see what that means. I think we don't expect a major uplift in the net foreign exchange losses. I think that's really something we have to deal with. I've said a couple of these things come from very volatile currencies. I think the spending is really justified here.
I think really, I think, if interest rates really were further going up, I think there might be a little bit of a higher interest rate or interest income. I think really the major point is certainly the financing costs and the interest expenses. I think here, it's not like that I have the feel that we put at the moment more debt on the balance sheet in the absence of major M&A transactions.
Let me first comment on the KRAS small molecule. We have initial clinical data in second line, non-small cell lung cancer and colorectal cancer. We've received breakthrough device or therapy designations in this case for non-small cell lung cancer. In terms of differentiation, it's about the best in class potential with respect to potency. There is also an opportunity to do combinations going forward. Now regarding your question around Tecentriq sub-Q. So we did have the positive readouts. We do hope that we have regulatory approval soon. With that, we have at least one year head start. As we know from immunotherapies, head start and being the first is a big thing.
We will be able to reduce infusion time to less than seven minutes. We see a big differentiation here for sure. Regarding the patent situation linked to this. I would say there are two elements that, you know, we are probably in a range beyond 2030, but also it's around the manufacturing piece. Manufacturing, it becomes a lot more complicated. We do have an opportunity there. For sure in some markets, sub Q will help even faster uptake of Tecentriq.
Thank you. Emmanuel, did we answer your questions or anything else?
Just to follow up about, whether it impacts, potential inclusion in price negotiation was the only additional. If you can comment on that?
I think we would not really portray it that way, that we would believe, this is necessarily the case. I think we have to wait and see how this develops. Yeah, would not be our base case.
Very helpful. Thank you.
Okay. We have another follow-up, this time from Emily, from Barclays. Emily, please.
Hi. Thanks. A couple of pipeline questions. One on the ASL Factor B starting phase III and IgAN. Just wondering if you could give any sense of differentiation versus the other Factor, oral Factor B that's already in phase III there. Obviously, you'd be coming later to market. Then on crovalimab, across Factor B and Factor D in addition to C5. It's just, it feels like there's a lot of assets going after the PNH space. Just any thoughts on, you know, how you feel crovalimab will be differentiated? Thanks.
Yeah. Let me start with crovalimab, it's a C5 inhibitor. It's a antibody that's using the recycling technology of you guys as a proprietary technology. With that, we have a much higher level of activity because the antibody can be in the body reused multiple times. That's, you know, why we believe in terms of efficacy, we have a differentiation. That's one element. The second element it is that it's subcutaneous, one, once a month. Yeah, there are, as you said, you know, others that have oral administration or longer administration. Regarding oral administration, the problem is that this is a fatal disease, so if you kind of miss it, so in terms of compliance, it's almost becoming a little bit more, more difficult.
We do see this as being sub-Q home, you know, as being actually an advantage in this case, as well as the very high efficacy because of this recycling technology.
Yeah, I think, Bruno you want to answer that one?
We just provided an update here, Emily, last time, and it's globally IgAN is still the most common primary glomerulonephritis that will progress to renal failure in the end. I think there is still a high unmet need. We have the phase II data, and based on what we've seen, we have initiated here the phase III. I think Yes, on all these areas which we are referring to, where complement plays a role, these are diseases, a lot of diseases, spanning immunology, but also neurology, for example. I think it's here, to some extent, also about establishing a molecule and then seeking opportunities. Also, I think the next step is looking for combination development.
I think, this is the progress in general. Yes, I think clearly, we see there is a high level of competition in the space and different MOA currently in late-stage development.
Yeah. I mean, that's a good point. I mean, also for crovalimab, we go in PNH first. You know, as Bruno mentioned, the complement pathway is involved in many other diseases, so you have an opportunity to expand also into other areas, sickle cell, being one of them. Yeah.
Okay. I think with that, actually, we are at the end of our call. If there are any remaining questions, then yeah, please reach out to the IR team. I think I hand back to Severin for our final word.
Yeah. Thank you very much. I realize this is my final investor call in the CEO role. Thank you for all your support over the years. Thank you for the good interaction, and have a good day. Bye-bye.
Thank you.
Thank you.
Great day.