Good afternoon. Great to be back in London for our full year briefing. Let me get right into the numbers, which we shared with you already. This morning, you have seen group sales are up by 9%, in local currencies, 8% at constant rates. Core EPS growing at a stronger rate at 13%, and on that basis, we propose to increase the dividend to CHF 9. On a divisional basis, a very strong result on the pharma side, entirely driven by the newly launched medicines. I will come back to that in a moment. On the diagnostic side, a solid, more moderate growth at 3%. I'll get back to that in a moment as well. If you look here on the quarterly sales development, you see a 6% sales growth after a very strong third quarter.
There are really two reasons why sales growth has come down in the fourth quarter. On the one hand, we do feel the impact of the biosimilars now in the U.S. Finally, they have entered. On the other hand, we took a decision to take down inventories in China, actually, for both divisions, for diagnostics and for pharma, even more so for diagnostics. That also explains why you have seen negative growth rates in China in the fourth quarter. That has also affected, of course, the results of diagnostics. If you look at the underlying development, diagnostics continues to grow in the mid-single digit, and also the demand in China from the end customer remains very strong. That's really on a high level, the summary and the story about 2019.
You see on the one hand, as expected, a significant impact from biosimilars, in total CHF 1.5 billion, the majority in Europe, also Japan. You see the first impact now in the U.S. with CHF 300 million. On the other hand, you see the strong as expected growth and demand for the new medicines with over CHF 5 billion. It's this balance which has been responsible for the growth last year. Bill will comment on the various franchises in more detail. If we look at it from a regional perspective, of course, very strong growth in the U.S. What I'd like to point out here is that we are back to growth in Europe. We have seen negative growth over the last two years. Now the new products start to overcompensate for the decline due to the entry of biosimilars. International, also very strong, primarily driven by China.
That's also reflected on the operating profit level. You see slightly improving margins and actually a very strong free cash flow this year. If I just turn to the portfolio, one of the leading portfolios in the industry from a quantity point of view. At the end of the day, it's a lot about the quality of the portfolio. One of the indicators here is the breakthrough therapy designation we get from the FDA, where we have a leading position in the industry. That, of course, speaks for the differentiation, but importantly also about the speed of the approval process, reimbursement, and how quickly we can bring those new medicines to patients. We've had quite some news flow. Last year, we brought two new medicine, Rozlytrek and Polivy, to the market.
We have seen important readouts, also late-stage readouts, and we've brought a number of new tests and platforms to the market on the diagnostic side. We keep looking for external innovation. We invest a lot in our internal research and development, but a lot of good things are happening outside of Roche. You see here a number of transactions in both divisions. Just to highlight Spark, which we finally could close towards the end of last year. It took actually longer than we would have thought, but now we are very happy that we could close the transaction, and we have already started with the integration. That provides us with a new platform, an important platform, initially for rare diseases, longer term, potentially beyond rare diseases. We're very excited about this. Let me close with the outlook. First of all, really extraordinary strong clinical news flow in 2020.
This is really a year where we have a lot of readouts. We'll see how many are positive. Not all will be positive, there is a lot of optionality here. We know for sure that, for sure, I mean, given the data, we are extremely confident that we will launch two new medicines in neurology with risdiplam and satralizumab. We have some very interesting opportunities in autoimmune diseases, in particular with etrolizumab, and also in ophthalmology, and there's a number of readouts in oncology. Just to highlight one, with Tecentriq in liver cancer, the growth last year was very much driven by the new indications where we have been first to the market, which was small cell and triple-negative breast cancer.
With liver cancer, we have yet another opportunity to be the first on the market, and many of you have probably seen the results which we recently presented. This is really a big step forward for those patients concerned. A very prevalent type of cancer, in particular in emerging countries such as China, and a type of cancer where there is still enormous unmet medical need. Good. With this, let me close. We expect low to mid-single-digit sales growth for the current year. We expect again to grow the earnings roughly in line with sales, and on that basis, we should be able to again increase the dividend next year. Thank you very much. With this, I think Alan? No, Bill. That makes me realize that this time, for the first time, we have Thomas Schinecker with us. I'm already so used to working together with him.
He took over in August last year. I believe it's the first time that you're in front of this audience. Welcome, and for the time being, over to you, Bill.
Thanks, Severin. Welcome, everyone. It's very nice to be here and talk about the results we have. I think we have a duty to disclose our financial results, but the thing that we get really excited about is talking about our pipeline progress, and it continues to really amaze us to see the power of science brought to patients with many really serious diseases. I'm very excited to say that just in the month of January, we've approved eight new pivotal studies for three novel molecules. This is a pace of progress that every year we think it can't get any faster, and there can't be any more breakthroughs at the pace that we have, and every year it seems to get faster.
I think you'll see that the people of Roche are going to be very busy in 2020, but that's going to pay off in rich rewards for patients in the years ahead. Back to the numbers. We were very pleased to bring in a full-year result above 10%, or 11% growth. The U.S., obviously, a really stellar result, again, fueled by the new medicines. Europe with a return to growth, which is encouraging considering that there was still a significant loss for MabThera, and then the bulk of the Herceptin losses in biosimilars happened in 2019. If you think about we could lose the majority of our Herceptin sales in one year and still grow in Europe with all the price pressures and everything else, that's, I think, quite a remarkable result. Japan with 9% growth.
Japanese pharmaceutical market is shrinking, so delivering 9% growth is no mean feat. Overall international with 15% growth driven by China, quite an excellent result as well. This is what the P&L looked like. I think the notable things here, royalties and other operating income, substantially down due to the loss of Cabilly primarily. That's sort of a shock we weathered and managed to still deliver 11% sales growth and 12% core operating profit growth. I think we felt quite good about that. Cost of sales up about 7%. Our COGS and period costs in manufacturing were up 3% while our volume went up 16%.
I think this is further evidence of the work we've been doing with the transformation and new ways of working in manufacturing, that this is really the third year in a row we've had similar types of productivity gains. Really a substantial feat. You might wonder, with a 16% volume increase and all these productivity enhancements, are we missing anything? I'm pleased to say we had the highest level of on-time and in-full deliveries, the highest percentage that we've recorded in a decade, in 2019. I think the transformation is delivering not only productivity, but it's also delivering quality. That's part of the mindset is really building that quality in rather than inspecting it at the end.
M&D you see was up 10%, which was actually more than we originally intended to do. Essentially what happened as we got further into the year, we realized we had some good opportunities to invest in things that would continue to enhance the growth of some of our new products. We thought that was an investment in patient access and in our future, so we took that. R&D, you can see up 6%, G&A 8%. The core administrative cost is not such a big increase. This mostly reflects the incorporation of the Flatiron G&A and full FMI G&A on a full-year basis. That was sort of the overall P&L.
This, I think, is a very nice chart because it exemplifies the growth and the strong and broad base of growth we have now with three molecules with over CHF 1 billion growth in a single year, as well as Perjeta and Kadcyla with big contributions. Again, as you look down the list, a lot of new products on the list and a really strong base. I'll say a few things about some of the oncology products. I guess I would just say overall, again, some good features here, like for example, Alecensa with 38% growth nearing CHF 1 billion. We should get there this year. Tecentriq, 143% growth and nearing CHF 2 billion. Then I'll comment a little bit more on some of the other franchises as we move forward. HER2 franchise, take a look at Q4.
I think this is particularly interesting because for those of us who've been working on new products in HER2 space for over a decade, it's really encouraging. Q4 was the first quarter where our sales of Kadcyla and Perjeta exceeded our sales of Herceptin globally. I think that's a pretty big milestone, and that's really driven by the uptake of Kadcyla and Perjeta in early breast cancer treatment around the world. I think a great milestone. If you look forward and what else is coming in HER2 positive space, we announced the positive study of the FeDeriCa study, which is looking at the fixed-dose combination of Herceptin plus Perjeta in a subcutaneous form. We haven't had a tremendous uptake of SubQ Herceptin, in part because the preferred regimen for Herceptin now is with Perjeta, whether it's in metastatic disease or in early breast cancer.
If you have a SubQ and an IV, that's not that helpful if you're already going to have to give someone an IV. With this, you have the opportunity, once a patient's come through the chemo part of the therapy for the adjuvant continuation, they can come in and instead of having infusions lasting from two and a half to seven and a half hours, we're talking 20 to 40 minutes. We think that's a pretty big advantage for patients, and it could be an important factor for converting patients to the fixed-dose combination. We're excited about it. We expect to launch in the U.S. in 2020. Switching over to the hematology franchise, as you know, we don't include VENCLEXTA sales.
While this sort of looks like it's going down, if you include our part of the VENCLEXTA sales, it's actually a positive trend. I think broadening the base, you still see a large portion of MabThera, but growing parts for Gazyva, which is doing well in first-line CLL, for Polivy, which launched in the middle of the year in the U.S. and is launching in Europe. Then I think we're going to continue to see growth on both those products. Pretty good outlook in hematology. Going to switch over, talk about immunology for a moment. We continue to serve a number of different types of diseases and patients ranging from rheumatoid arthritis, IPF, to ophthalmology with XOLAIR. Sorry, Lucentis isn't in here right now, but with XOLAIR. I think we've held up well in the face of a lot of competition.
I think that's really the main message here is that we have some pretty robust brands. If you look at a product like XOLAIR, has had numerous competitors coming into XOLAIR's key allergic asthma area, and through areas like urticaria and other indications, XOLAIR's held in there really quite strong. Neuroscience, it's really about Ocrevus and continued growth. Again, we've really seen no letup in this. The U.S., the share of new and switching patients has remained around 40%, and that's really held up over, I don't know, eight or nine quarters now. I think that's really remarkable if you consider, I think there's 16 therapies in MS now, and Ocrevus gets 40%, and the other 16 split the other 60%.
It's really proving through the twice-a-year infusion, through the strong dosing profile with the unsurpassed efficacy on disability progression, whether you're in primary progressive disease or relapsing. It's a really good choice for patients. We're seeing, again, increasing share in early patients, but really use across the whole spectrum. Again, more to come on that, and we like what we see. I think we're excited to have two new molecules coming now, medicines in SMA and satralizumab. We announced just in January the positive results of FIREFISH Part 2, which is the second part of the Type 1 study. We're glad to see the first part results sort of reaffirmed. I think particularly because, again, the FIREFISH patients tend to be significantly older than the patients on the other therapy studies. We're really encouraged by the efficacy we see given the older setting.
We've filed now based on FIREFISH and SUNFISH. We're expecting approval in the first half of the year in the U.S. We'll be filing later in Europe because the EMA wanted us to file with both FIREFISH and SUNFISH, so Type 1 and Type 2 and 3. They wanted us to wait until we had all the data available before we filed. I think we have a strong package here and I think both a compelling product profile, but a lot of patients who are not currently served, whether they're older and they have weight kind of limitations, or whether they have limitations due to the need for intrathecal injections. I think risdiplam is going to be a great addition to the arsenal against SMA. Satralizumab in NMO, which we filed, and we're looking forward to launching later this year. All right.
Let me come back to Tecentriq. Again, excellent growth curve here. You can see we're well over the CHF 2 billion run rate, and this has really been driven, again, through 2019, primarily by the small cell lung cancer indication, continued use in non-small cell, in first line growth there, as well as the triple negative breast cancer. We're very pleased to add the results from Tecentriq plus Avastin in liver cancer. Some of you may have seen these curves. This is what we presented at the ESMO Asia conference in Q4. I think for those of you who are used to looking at oncology overall survival and PFS curves, you'd agree this is really a beautiful sight in what it represents for progress for patients.
I think particularly what you see on the progressive free survival curves, often you see the curves coming together at the end, and here you see quite a large number of patients that seem to be getting a prolonged benefit. You see that also playing out in the overall survival curve, where the standard of care, sorafenib, was about 13 months overall survival median, and you see how we seem to be getting the tail. What the final analysis will look like exactly, I couldn't say, but I think what's clear is you get an early and prolonged benefit, and this is in a chemo-free regimen. This is going to bring new hope to a lot of patients, including about 900 a day who are diagnosed with metastatic liver cancer in China alone. It's a tremendous unmet need.
The regulatory authorities, when we provided this data, they literally are ringing our phones saying, "Hey, how can we make this available to liver cancer patients in our areas?" FDA put this in the real-time filing protocol, which allows us to continually submit data, and we look forward to very speedy approval in the U.S., but we're also working very closely with EMA and China on rapid approvals. We hope to launch in the first half in the U.S., but hopefully in the second half, we have a chance to launch both in Europe and China. We'll be following that really closely. This is a slide that just kind of demonstrates the breadth and the depth of our oncology pipeline, 45 studies ongoing. We've had a number of positive readouts. There's a few things that I think are pretty interesting to highlight.
These ones that are highlighted in this sort of yellow color are all adjuvant or neoadjuvant studies. Obviously, if we can make an impact in the curative setting, it's a tremendous benefit for patients, but it's also something that's very popular with payers and gives us a chance at a better reimbursement outlook. I think what's interesting, you can see lung adjuvant, head and neck, renal, and a number of important areas in addition to breast cancer, where I think we're typically have been focused in the past. Another way to look at this is through new molecular entities. These are studies with novel agents, and these are all late-stage studies.
For example, in lung cancer, small cell lung cancer, there's a study with Tecentriq plus an anti-TIGIT molecule we call tiragolumab, plus chemo, and that study will be starting very soon, a phase III study. If you look over under breast cancer, there are novel studies with a number of agents, including a SERD, a PI3K inhibitor, and let's see, what else is in there? Oh, and ipatasertib, which is a phase III molecule with three pivotal studies reading out this year. That's one that we hope to be launching next year. So on. I think it's exciting to see the number of new targets that we're pursuing and what that can mean for patients as well. Now I'm just going to finish out a few comments on the hemophilia franchise. This is basically Hemlibra.
We're excited now that we have Spark, we have an opportunity to bring gene therapy. Today, patients are increasingly benefiting from Hemlibra, and essentially you see more and more patients making that choice. We had tremendous growth throughout the course of 2019. We really don't see any sign of this slowing down in 2020. If anything, we see sort of a momentum effect, where once patients have been on a while, and they start to tell their friends in the hemophilia community, there's a growing confidence in what this medicine can mean to patients and their families. Okay. In terms of the things to look forward to this year, and this is a sampling because there were really too many to list.
I wanted to highlight a couple that are in ophthalmology because this is an area where we pioneered with anti-VEGF therapy with Lucentis back in 2006, and now we're really looking forward to two opportunities to go worldwide. The first is the port delivery system with Lucentis, and just as a reminder, we have several phase III studies going on. We're in wet AMD. We hope to have readouts there around the middle of the year. We also are in diabetic macular edema, which is a large unmet need, especially because you have younger patients, this idea of getting frequent injections in the eye for 10, 20 years, they really need a better solution. The opportunity to have a high sustained efficacy with twice-a-year refills of the device we think is really compelling.
We think this is a bit of a sleeper because it's not a new molecule, it's a device, and so it's something that maybe people have been sitting on the sidelines a little, but we're really looking forward to having the phase III data and going to regulators and bringing this to physicians around the world. Finally faricimab, which is Ang-2 and VEGF, so two targets, and the goal here really is to get higher efficacy levels than we've seen with an anti-VEGF alone. We had promising phase II data that we shared. We'll have the first phase IIIs reading out in Q4 in DME, and in Q1 of next year in AMD, and so we're going to have really concrete answers on this.
I think you'll agree that if we're able to show a substantial benefit over an anti-VEGF, this could be a really important medicine for the future. So in summary, you can see a really excellent progress of the medicines that we've delivered in the past decade. I think we're really impressed to see 35% of sales in Q4 coming from the new medicines. That number will be over 40% by midyear of this year. Three new molecules or three new launches with satralizumab, risdiplam, and the fixed dose combination of Perjeta and Herceptin on track for this year. This was the news flow in 2019.
I think many of you have been following it as it came, but I think it's worth just looking back and seeing the progress we made, how many new approvals, and frankly, a lot of really important advances in pivotal studies, so a great chart. How does this year's look? It's a long list, I guess that's one of the disadvantages of following Roche, is you have to put up with long pipeline presentations. We'll keep that problem, hopefully for a long time. We've got a number of really important approvals that we're looking forward to. I think probably the one that's maybe the most symbolically important is the Tecentriq plus Avastin, just in terms of its impact and the thousands and thousands of patients who are dying every year, and the opportunity to have really a prolonged, sustained effect there is super exciting.
In terms of phase III readouts, you'll notice this list is even longer than last year's, and there's some really important things in here. Three, ipatasertib pivotal readouts. Most of you may not be tracking ipatasertib, and so you might want to take a deeper look into what we're doing there. I think the etrolizumab product, which is the second one from the bottom, we've had in phase III for a number of years. These are massive studies. We have phase III head-to-head studies with Humira, with Remicade. We have in Crohn's disease and ulcerative colitis, and those studies are all going to be reading out over about a 12-month period, beginning in the middle of the year.
This could be a major important advance in IBD. We think also another molecule in the line of Ocrevus, Hemlibra, Tecentriq, that could be a really large medicine for Roche. Anyway, a lot of exciting things. We are looking forward to it. There is no treatment without a diagnosis, right, Thomas? I am pleased to invite my friend and colleague, Thomas Schinecker, up to cover diagnostics.
Thank you very much, Bill. Thank you very much, Bill. Very excited to be here today. As Severin mentioned, I'm fairly new in the role, but not new to the company. I've been with the company for the last 17 years in different roles and different parts of the regions, both in commercial roles and also product development organizations. Really excited because I see the great potential that diagnostics has. As Bill mentioned, diagnostics plays an important role. They create opportunities to continue to develop our pipeline. If you look at the sales, in 2019, we had a 3% growth, as Severin mentioned, and this was impacted, of course, by the inventory reduction that we did also at the end of last year.
If I look at the different business areas, and I'll get into more detail on a later slide, growth has been strongly driven by the centralized and point-of-care business area and the molecular diagnostics business area. If I look at the different regions, strongly the growth is coming from the emerging markets, so Latin America and also Asia Pacific. You may have seen that growth last year in China was only about 5%. The growth is lower in Asia Pacific because of the China situation. In all other markets, I have to say the growth was fantastic, also in 2019. If we look at in-market growth, in-market growth is still strong. We see a much higher growth in market when it comes to the sales growth in China.
EMEA LATAM, EMEA with 2%, specifically on the diagnostic side, we had very strong growth with 4% in a very mature market where the market growth is actually very low. North America with 0%, I'll get to it, the growth has been impacted by low growth in tissue diagnostics in the coagulation monitoring business. As promised, I'm going to go a level deeper looking into the different business areas. The centralized and point-of-care business area, which is our biggest one, growth, again, driven by the immune diagnostics business. This is exactly the area where we reduced inventories. Without that, growth is still in a very good double-digit range. We have a decline in coagulation monitoring. This is predominantly driven by the new drugs that are available where there's no more testing needed. This will continue to decline.
In molecular diagnostics, we have a good growth with 6%, strongly driven by the blood screening business and molecular point-of-care business. Here, we also report the sequencing business, which had a double-digit growth last year. Diabetes care in a more difficult market environment has kept the sales stable with 1% growth. As you know, here we have continuous glucose monitoring taking over the strip area. Here we managed to actually compete very well in a highly competitive market. Of course, if you look at the overall diabetes care market, it's growing higher because of continuous glucose monitoring.
The tissue diagnostics business you see with 0%. Looking at the reagents, we have a solid growth. Here we expect much higher growth going into 2020 with more system placements and system sales going forward. Looking at the P&L, we were talking about the top line with 3% and the bottom line with 1%. Here, again, looking at the situation that we had with the inventory reduction, our growth on top line would be in the middle single digit range. The same in the operating profit line. How did we do this? Well, if you look at M&D, R&D, and G&A, we had very good cost control. A lot of productivity measures were happening in last year. We did have a higher increase in cost of sales. This was driven predominantly by two things.
First of all, the high instrument placements that we had last year. This is great news because this will drive future growth. I'll have a slide on that very soon as well, on the next slide, I believe. The second part was the IVD Regulation, and you may have heard about that. With the IVD Regulation that is going to take effect in Europe, we have to re-register all of our products into that market. That, of course, drives some of the regulatory costs, which we book into cost of sales. Let me also point out the R&D line, because we're spending CHF 1.5 billion in R&D. We are a company that strongly believes in innovation and the innovation potential in the diagnostic space.
Looking at that and looking at all of our competitors, we significantly are spending in that area, which is an investment into the future. Where are we investing in? We're investing in developing new systems. Here you can see a typical large lab with pre-analytics on the bottom left side. You see on the right side here, you see the molecular diagnostics area. Here, clinical chemistry, immunochemistry, hematology, and here are the fridges. The sample, after it's been worked on in the different systems, can then go back to the fridge, wait. If there's another request, it can go back out. There's no human intervention. This increases quality, and this also makes this more scalable because as the volumes go up significantly, the hospitals cannot afford to hire more and more people to do manual labor.
The people can actually focus on what's needed, and it's the patients. They can focus on the patient. You can see the instrument placements. We are significantly increasing the instrument placements, and this is driving the cost of sales, but this is an investment into the future. We have more than 100,000 of the large instruments placed in the world. We have more than 1.5 million point of care instruments placed in the world. This is very important for us because this is where our innovative reagents run on. This is the infrastructure. We have new systems in the pipeline, both on the pre-analytical side, which is the cobas prime , which can handle all kinds of sample types, also for cervical cancer screening. Also in mass spectrometry, molecular diagnostics, and the immunochemistry area, we have new products in the pipeline.
Now, what is running on those different systems? Today, we already have the broadest menu in the industry. We have more than 500 assays available across the different platforms. We have them available across many different disease areas, from infectious disease, oncology, women's health, cardiology, critical care, and so on. The key is to have the broadest menu available on single platforms because the labs don't have space for multiple machines. They need to consolidate everything on as few machines as possible. This is exactly our strength. This is the strength that we're building on also in the future, because we're investing a lot of money into developing new assays that can really differentiate us going forward, even more than today. You can see some of the areas where we're doing research in. One example is in oncology.
We have a marker in the pipeline for early detection of hepatocellular carcinoma. That's something that Bill was mentioning earlier. Also in other areas, like in critical care, new markers to detect sepsis earlier. 50 million people die every year of sepsis. That means every 2.8 seconds, someone dies of sepsis. Sepsis is a disease. It's not a disease per se, but it's a situation that a patient is in that can be detected much earlier so that the doctor can react. We have a number of different assays in the pipeline that can really change the standard of care and differentiate our menu. Same in the neurology area. We got Breakthrough Designation for Alzheimer's assays. We have assays in the pipeline for Parkinson's, but also for skeletal muscle disease. Very key to drive that expansion.
Let me give you a couple of examples of recent launches. One is the Elecsys HIV Duo launch in China. This is a combination of antigen and antibody. With that, you can close the window significantly from the time that someone is infectious until the time that it's actually, you can detect in blood. That's the medical value behind it. None of the large players, except us, actually has this assay. Specifically, we're launching this in China. China is, in the future, still going to contribute 40% of our absolute growth. This is important for the Chinese market, and there are no local players also that can offer that test. Furthermore, we expand a lot in the blood screening area, another area of infectious diseases. You can see that we have launched in 2019, Zika. We've launched Babesia.
We have launched cobas pro. All systems and assays in that market that help differentiate us. We have won a number of tenders across different countries around the world. At the moment, we have about 80 million blood donations worldwide that get tested by our systems. With these wins, we have additionally 11 million donations that will be tested in 2020. Why are we winning these tenders? We're the only player that can combine serology and nucleic acid testing from one company, and we can combine it with pre-analytics because no other company can connect a molecular system to a pre-analytic system. Really excited about this because with that, we keep blood safe in the world. How else do we keep blood safe? Zika, I mentioned that.
You may have remembered a couple of years ago, this was a real crisis, with babies having really a difficult situation because their mothers were infected with this virus. This infection came by a mosquito, but also it could come by a blood transfusion. We have launched it in the U.S. In the U.S., in blood screening centers, they are screening for Zika, but also now we have launched in Europe. We reacted very quickly. We reacted quickly, not only with Zika, we reacted quickly with MERS, we reacted quickly with Ebola and also SARS. I think that's something that we're known for, to react quickly. This is also what we have done in this situation with the coronavirus. This is, of course, all over the news at the moment.
It's key that you can identify the patients quickly, that you can isolate the patients, so that they can be kept away from the healthy patients, so they don't infect more people. We have a combination of assays that help do this. Also in China, we, of course, working very closely with everyone to support those efforts, to make sure that everyone gets the support that's needed. Finally, we have also launched a digital solution in the diabetes care space. We have these different glucose meters, and these glucose meters can then be used in combination with strips. With these apps that you can have nowadays on your iPhone and with a camera, you can actually read the strips without using a meter.
This is specifically important for more emerging markets where the penetration of iPhones or smartphones is actually very high, but maybe not so much the rest of the infrastructure. Very excited that we have launched this at the end of the last year as well. In 2019, we had a number of very key launches. Very excited about that. Even more excited, of course, also about the launches that we have in 2020. Let me just give you one example in infectious disease with EBV. We have received Breakthrough Designation for EBV and BKV, and this is for transplantation patients. Why? Because many of us carry these viruses in us. However, these viruses are harmless as long as we're not immunocompromised.
It's very important that in such situations, like with transplantation patients, you actually measure those viruses if they're in the body, so you can avoid complications. We have many other systems and assays that we're going to launch next year. That's just an excerpt. I'm really excited about the possibility that we have, both on our portfolio and pipeline in the systems, but also in our biomarkers, because we really can change the standard of care with diagnostics. With that, I hand over to Alan. Thank you.
Thanks, Thomas. Thank you. Welcome. Great to see you. It's really been a solid year here for Roche. Let me lead you through a couple of figures now. Let me start with the overview. When you look at it, sales growth 9%, as said, we had an impact of CHF 1.5 billion negatively from biosimilar competition, CHF 1.3 billion in Japan and Europe, then roughly CHF 300 million, sorry, CHF 1.2 in Europe and Japan, and CHF 300 million in the U.S. You know we have given guidance basically on the impact in Europe and Japan, and we came out really on spot. Very happy with that. The core operating profit up with 11%, you know really there was a major headwind on the royalty side from the loss of Cabilly patent, CHF 708 million, CHF 705 million constant rates. I think we mastered that and overcompensated.
I will come back to that. The core EPS growth at +13%. What really gave us additional dynamic in the core EPS compared to the core operating profit taxes. We had two tax cases that we resolved, very old ones, 15 years old, and they gave us a little bit of a boost here. Dividend in Swiss francs, I think Severin mentioned that. The cash flow, very happy with the cash flow, CHF 20.9 billion. I will show the development later on. Brought net debt to CHF -2.5 billion, so a CHF 3.1 billion reduction in spite of doing the Spark transaction.
Then, which I think is pretty outstanding compared to the previous years, is that we brought gross debt down. Now from CHF 18.8 billion to CHF 14.4 billion. You might remember in the last years we were always hovering around CHF 20 billion and then CHF 18 billion, but there was never a major step.
I think this year we made a major step. I will come back to a point called the bond redemption. The net financial result, we'll explain that. Two elements, on one hand, lower income from equity securities, and we'll tell you a story about it, and then the early bond redemption, CHF 202 million, that we brought into the core results. The net income up 32%, major impact is certainly the operations and how much we have improved there. The other piece is lower impairments compared to last year. Here's the overview. I think 9% I've mentioned. My colleagues did a great deal, Thomas and Bill, to explain that. The 11% core operating profit, I will go through the P&L. You see core net income has a higher dynamic. That's basically taxes. You see the core EPS losing a little bit dynamic, just growing with 13%. That's Chugai.
Chugai had a tremendous year. They had even more dynamic in their profits compared to the dynamics that we have. We have to take the 40% out. We own 60% on Chugai. We take that out and that brings the dynamic in the core EPS a little bit down. Good. IFRS net income. I made a comment on that one. I will come to the question later on. Look at the CHF 20.9 billion. I'm pretty proud about that number, and the free cash flow at CHF 16.7 billion. Here's the bridge, I think the bridge is quite important because it tells a little bit the story of the year. I will even give you the impacts first half and second half. So we went from CHF 18.3 to CHF 20.64 at the end of 2019.
The first point to make is the gains on the product disposals. You might remember in the first half, we had a little bit of an uplift coming from that. We had CHF 437 million in gains in. In the second half, we had CHF 62 million. In total, roughly CHF 490 million, which is a little bit of a boost compared to last year. You see really the impact here of +1.3 percentage points. Royalty and other operating income, that's certainly excluding the gains of the product disposals. This has been Cabilly. Cabilly is the major point here, and Cabilly is a bit of a reversal. We had an impact of CHF -271 million in the first half, and then lost more, roughly CHF 430 million in the second half.
I think really, you see we had an acceleration of that, and that has cost us - 2.8 percentage points dynamic. The gains of the equity securities. It's a bit of a funny story. We have a minority in a company called Allakos. Allakos from end of 2018 to end of 2019 has basically doubled the share price. It was a bit of a volatile ride. I think it came down in the first half and then came up again the second half. The real difference maker here is the - 0.6 percentage points is of Access. The company we held a minority in, and then Novartis came and bought it, and we had a nice gain. Our numbers, unfortunately, in 2018 and not in 2019. We're missing CHF 100 million here, which explains the minus 0.6 percentage points.
The bond redemption happened the second half. CHF 202 million gave us a -1.1 percentage point impact. The resolution on the tax disputes. You know we had an impact in the first half. In the first half, that was the very old case, 15 years old, impact CHF +242 million. In the second half, we had another impact from another tax case, CHF +213. These two together, CHF +454, they gave us a positive impact of +2.9 percentage points, and the rest is operations. Good. Quickly through the P&L. 9% is explained. Royalties, other operating income is a CHF -375. That's Cabilly. You might ask yourself, "Okay, where's the positive impact coming from?" This is on one hand, the product dispose that I've explained already, and was larger than last year. CHF 170 million more. The other piece is really about VENCLEXTA.
VENCLEXTA really gave us quite something, and some of you even had in the papers. I think we had CHF 176 million increase 2018 to 2019 from VENCLEXTA alone in that line positively. Cost of sales, CHF 1 billion up, CHF 1,0 50,000,000 to be precise. It's tremendous how the volume has increased. Pharma had a volume increase of 16%. Diagnostics had an increase of 4%. I think really having a cost increase of 7%, I think really shows how well we have dealt with the cost in that line. M&D, I think Bill made the point. You have seen basically no increase in Thomas' numbers. That's driven by pharma, where we really used the opportunity to invest into the pipeline in launching the new products. R&D up CHF 633 million. Basically same here, driven by pharma. G&A, an increase of CHF 151 million.
A little bit with some service costs from last year. We had a positive impact in 2018, which we didn't have in 2019. The vast majority is really coming from administration. It's really coming from the acquisitions, Flatiron Health FMI, et cetera, that we have done. Leads me to the royalties, and really that explains Cabilly. I've mentioned that already. You see royalty income and others, outlicensing income pretty stable. Other operating income, that is really the profit share with VENCLEXTA, which is driving that for the U.S. We have the gains and losses of the product dispose, the CHF 170 million that I've explained already. Margins look pretty good. I think we had a slight increase in the group. We have a slight increase on the pharma division.
I think if we didn't have done the reduction of inventories in China, I think Thomas would have had the same margin than the year before. I think we look pretty good here. When you then look really at the core net financial result, a CHF 300 million deterioration, if you like. Well, the bond redemption. That's certainly something which will help us in the future, and I come to that on my next slide. Equity securities, nothing else than of Access that I've explained before. Net interest income is a nice anecdote because, as we've waited for the closure of the Spark transaction, certainly we held all these billions of US dollars available and reinvested it in short-term assets, so assets with short-term returns, and that gave us a plus $68 million.
I admit it's not our core business, but we take it, so that's a positive here. A small impact from currency, and some other points. You see really the deterioration here a little bit by design. Good. The bond redemption itself, don't want to dig too much into it. We bought back CHF 2.9 billion, which is a very significant number, helped us to bring the gross debt down. I think it's fair to assume, steady state certainly, that we will have a reduction for interest expenses in 2020. That will be another help in this year. Good. Group tax rate. Went from 19.7% to 16.3%, so really a significant reduction. Certainly the two old tax cases that we have resolved, one 15 years old. We can argue whether this will come back again or not. I don't expect that to happen in 2020.
I think really the 18.4%, this is really what we should have on our mind. I think really a tax rate around 18%, this is what I would guide for, yeah, for the future. Non-core and IFRS income. Let me lead you through that. The core operating profit up CHF 2 billion, as you can see, to CHF 22.5 billion. I think quite an impressive EBIT. When you look really at the global restructuring plans, they came up with roughly CHF 300 million, and these are really projects that are going really across the company. With a lot of transformation efforts, so we are constantly working on our financial flexibility, and that allows us to make all the investments that we're doing. You see really, I indicated to you, I think whenever the charge is around CHF 1 billion, I feel pretty good with that.
I think we achieved this. Amortization of intangible assets went up CHF 238 million. I think the major point here is really the revaluation of Esbriet. We brought Esbriet in the valuation a little bit up, as we brought the goodwill down last year of InterMune. I think that's a point here. Impairment of intangible assets, a reduction of CHF 1.6 billion. In fact, a positive impact in the comparison. That's really InterMune, which accounted for CHF 1.8 billion last year. M&A and alliance transactions, a CHF +43 million. You might be surprised why is that a positive. This is the release of contingent considerations or provisions, therefore contingent considerations for companies and goodwills that we've impaired. That comes in positively. We have legal and environmental with a CHF -480 million, an increase of CHF 300 million. I would call out one case here.
That's the Meso case. It's page 89 in the finance report. Old case about an ECL technology. We went for that case for quite a long time. We lost the core case. We will appeal. We made a provision of roughly CHF 200 million. All in, you can see an improvement at CHF 800 million compared to last year, and that brings the IFRS operating profit up by roughly CHF 2.8 billion. You see the total financial result in taxes with an improvement of CHF 464 million. Here, we have even three tax topics in. The two that I've mentioned before, with the plus CHF 445 million. We have an additional one, which we had at half year already, the change of the Swiss tax reform. Where we reevaluated our deferred tax assets related to this.
It does not mean that we pay less taxes in Switzerland. It just mean we had to look once again at our tax assets, the deferred tax assets, that gave us a positive here of CHF 232 million. Certainly, the bond redemption went against that. You end up then with the CHF 464, that means the IFRS net income goes up CHF 3.2 billion, which is a 32% in constant rates. Good. Cash. As said, I think a great year here. Look at the CHF 20.9 billion. Look at the CHF 20.5 billion coming from the pharma side. You really see the diagnostics division. It looks like a little bit weaker with the CHF 963 million, they did two deals. The first one, the in-licensing deal, will definitely help Thomas in the future. That's a good thing, we will see that positively in the P&L.
The Santa Clara, we bought a site in the U.S. I think if we didn't have done these two, I think, well, we would be on the level of last year. Well explained off. Good. I think when you look at the cash flow overall, I think what is exciting to me is how well we did on the networking capital side. Because what you could have expected with all the growth that we have had, yeah, that we have very high inventories, accounts receivable go through the roof. I think that was not the case. I think on group level, the inventories went even down. I think really we did good, and we're pretty good structurally on inventory. I think the supply chain did a great deal here. Accounts receivables went up, as you would expect, yeah, with the high sales growth.
At the same time, accounts payable went up and compensated for that. Very happy with that. We had a little bit less investment in PP&E. You know that's IFRS 15 that we now have to show the lease liabilities paid that was formerly in the core operating profit. We have more investments in intangible assets, yeah. You might have seen that. We have roughly invested into intangible assets CHF 1.5 billion, CHF 1.6 billion, I think when you really look at the balance sheet. In the cash it's CHF 1.5 billion, difference is what we have not paid yet. That's the right spot, yeah, to put our money. No doubt about this. Still, I think we end up with CHF 20.9 billion in operating free cash flow. That's the track record, which I really appreciate, and that's determining our strategic flexibility moving forward.
I would say the stage is set. What happened to net debt? As mentioned at the beginning, we went from CHF -5.7 billion to CHF -2.5 billion. We still have net debt. We're not net cash positive. Operating free cash flow explained, we paid taxes CHF 3.5 billion. A little bit of outflow, certainly, for interest expenses on the treasury side. The dividend, certainly the dividend for 2018 paid in 2019. Certainly Spark is in that number. Good. Balance sheet, very quickly. On one hand you see cash and marketable securities goes down from CHF 13.1 billion to CHF 11.9 billion. Certainly, that's the monies that we have put into that bond transaction, buying back bonds. You see on the other side, when you look at the non-current liabilities, they go down, and this is really why we have reduced our long-term debt.
The non-current assets, that's a bit special because we closed Spark at December 17th. Right in the range that we gave in our guidance. What we did is, it was not enough time to really come up with a great purchase allocation. Basically what we have done, we put that whole thing into the non-current assets, and now we have to look at it. What are the intangible assets, whatever, we expect to finalize the purchase accounting until half year 2020. Formally, we have to finalize it at the end of 2020. I think we can do it until half year. The numbers will shift a little bit here. Equity went significantly up, and the equity ratio is now at 43%. As I've said, the stage is set. Outlook. Currency. We came from half year, and it's quite interesting when you look at it.
Here is the Swiss frac to US Dollar ratio. Here is the Swiss frac to Euro ratio. When you look at half year, so June, yeah, +3%, -3%, impact zero. What happened is, the US Dollar remained strong but just a +2%. You see the -4% here, you see the negative impact which came. I think the US Dollar is still going strong, but the Euro went even weaker. That gave us then the negative impact on sales, core operating profit, and core EPS. You know our modeling. If we remain all currency stable at year end 2020, how would 2020 look like? It would be a -3 percentage points FX impact on sales, core operating profit, and core EPS. A very unlikely case, as we all know. Good.
Let me set the stage for 2020 and for your predictions by giving you the adjusted number for the core EPS 2019. The core EPS, as reported, is CHF 20.16. You know what we've taken out is the FX losses. You find the FX losses in the finance report on page 59. Page 59, you find the CHF 205 million. We have an 864 million shares, you divide that. Before you do that, you first take the taxes away. That's a good thing. 18.4%, I think we agreed on that. You take the 18.4% away, it's a CHF 37.7 million charge, you end up with CHF 167 million. This is the number. You divide through the 864 million shares, you end up really with the adjustment of CHF +0.19, that leads you to CHF 20.35.
That's the basis for your projections. Good. Here's the guidance. Let me make one point about the guidance right away. I think this guidance looks even more ambitious when you take into account that we expect a biosimilar impact in 2020 of roughly CHF 4 billion negatively. That's really the number that we have on mind. I think really when you take that into account, I think that's a great guidance to have, and quite an opportunity for our company. As said, the stage is set. Thanks. Now we are, I think, expecting the questions. Correct?
Yeah.
Very good. Thanks for your attention.
Yeah, there will be these tables.
All right. Can just continue, yeah?
Yeah.
Shall we directly continue or do we want to make a break? Is it fine to continue? Okay, good. Excellent. Can I ask my colleagues come up to the table, and can we take the first question here? Do we have a mic?
Thanks very much. Richard Vosser from J.P. Morgan. Two questions, please. First question. Thanks for the biosimilar impact. Thinking about some of the international operations on some of the products, obviously weakness in China because of the destocking. How should we think about the outlook of Perjeta, Herceptin, Avastin, Rituxan in the international operations, specifically Perjeta on the NRDL? Should we think of the bolus growth like Herceptin did? How should we think of the others? Herceptin, Avastin, Rituxan. Second question, just going back to the net debt to total assets, it's now considerably below, I think, the original target range, whether that was 10% or 15%. How should we think about you putting to work the capital to restore the balance? Thanks so much.
You want to start?
Yeah, sure. International operations you said Perjeta, Avastin, Herceptin, MabThera? Okay. I'm going to add Alecensa, because Alecensa and Perjeta were both added to the NRDL in Q4. Although the prevalence of ALK positivity is not necessarily higher in China, there's a tremendous amount of lung cancer in China, the number of patients that can benefit is really quite large. We think we'll have some underlying growth, although most of the growth in MabThera and Avastin and Herceptin in China has probably already happened. Perjeta and Alecensa should be good growth drivers since they just received the listing, that does dramatically expand the number of patients who are eligible and can receive it. Otherwise, in the rest of international, there's some gains and losses. There's some biosimilars or non-comparable biologics in some markets.
We have some negative markets, and then we have other markets where it's really more of the effect of Perjeta and Tecentriq getting into the adjuvant therapy. Also products like Alecensa and other products that we've launched in the last decade that are really just starting to penetrate some of those international markets. We think it should be a reasonably good year in international. 15% is hard to replicate, but we feel good about it overall.
Net debt to total assets?
We're now at 3%. A justified point. Well, I think we have set discussions since I joined the company nine years ago. Every year, I think there was this concern, how we would become net cash positive. I think so far we've put our money to work, and really found solid acquisitions, good acquisitions, I would even say, even in some cases, which gave us good returns. I think really in a period where we have a good growth, I think, well, we will find opportunities to move forward here.
It's a good problem to have.
Correct.
Really cross the bridge when we have to bridge it, right.
Good. Please.
Sachin Jain, Bank of America. Couple of questions, please. On the CHF 4 billion, just another part of it, what portion of that is the U.S., and what's your level of visibility on the erosion rate you've assumed there and level of confidence around that, given there's not a lot of precedent as it sits? Second question, you've referenced a couple of launches through this year, risdiplam, satralizumab, Tecentriq and Hemlibra across all regions. To what extent are those launches reflected in guidance versus offering upside? Background to the question obviously is your prior launches, Ocrevus, Tecentriq, Hemlibra, drove upgrades through the last couple of years. The final question is on gene therapy. No mention of Sarepta, so I wonder if you could talk about that licensing deal towards the end of the year, your level of excitement and broader gene therapy intentions beyond that deal. Thanks.
Okay.
Can I make a point? It's important to us that you say roughly CHF 4 billion.
Yeah. That's what we're guiding for.
Yeah. I think the point is we really nailed it in 2019. We said the impact would be about CHF 1.3 billion. It was CHF 1.3 billion. We're not always that good.
Roughly.
Yeah, we think it's roughly CHF 4 billion. Of which, I think as Alan said, we think the impact ex-U.S. will probably be similar this year as last year, which was about CHF 1.2 billion. The rest is roughly the U.S. In terms of the visibility on that and how confident are we, I think there's a fairly decent range on it because it's still early days. Keep in mind that there were two products launched, one biosimilar to Herceptin and one to Avastin in late July. They didn't really get momentum with contracts and all that sort of thing really until the fourth quarter. There have been several other launches since that time, just in November, December. There's additional launches happening in Q1. It's still pretty early. I think what we would say is it's consistent with what we've said all along.
We expect the impact in the U.S. to be similar to Europe, maybe a little better, maybe a little slower. That's still our outlook. Yeah, so far that's been it. You asked about whether the launches are in the guidance. Is there potential upside? We always like to think there's upside. I think if you consider the launches we're talking about, Risdiplam is likely late first half. I think we've said May PDUFA date. If we launch in May, its ability to drive a massive upside in the year, given that it's not given up front. Ocrevus, one of the effects we had there is that as soon as a patient's dosed, they just got six months of therapy. Risdiplam is dosed daily.
I think with risdiplam, with satralizumab coming later in the year, with the HCC is a big indication, but the biggest demand for that will likely be outside of the U.S. because liver cancer is relatively less common in the U.S., and the first approval is likely to be in the U.S. All that to say is while there is a range around those launches, I don't think they're going to be a big variance driver in 2020. I think it's really more the underlying strength of the ongoing launches like Tecentriq, Ocrevus, Hemlibra continuing. Does that answer? Sarepta, we're super excited about. I think the timing, that's going to depend a little bit on what the further development program looks like. There's been very promising data. I mean, remarkable results in just a few patients.
The kind of results that you just wouldn't expect to see in Duchenne muscular dystrophy. That's what made us so excited about it. We remain incredibly excited about bringing that to patients around the world. We don't think that's a 2020 phenomenon. Finally, our intentions in gene therapy are, we have big intentions. In fact, I've spent a significant amount of time, several of us have, with leadership at Spark already this year, sort of helping plan how do we use the resources, the worldwide resources of Roche to help accelerate the programs they have ongoing, additional investment for Spark and Philadelphia to extend into new disease areas. I think we expect big things from Spark in the future. The majority of those things are new concepts that we're investing in, and so they won't have impacts in 2020.
Can we just bring it over here?
Thank you. It's Mike Leuchten from UBS. One question on the inventory reductions in China, timing and rationale, both for diagnostics and pharma. Bill, in your commentary around hematology, you didn't mention Polivy, the POLARIX trial for 2020. Is that still a data point for this year or not?
You want to talk about inventory?
Yeah, sure. We decided in Q4 also to reduce the inventories in China. We see a lot of pressures in China in terms of the two-invoice policy. You may have heard about that. Most of our business in China goes through distributors. The Chinese government has implemented this two-invoice policy, which means that between us and the end customer, there can only be one distributor. This used to be very different in the past. What we did, we did the prudent step, and we said, "Okay, let's reduce inventories, rather than get into negotiations with our distributors." I think that's the best thing for the future.
Yeah. In the pharma area, we went from, I think, 26 days to 16 days. Largely what created that was our volumes increased substantially. We had a 38% sales growth. Our volumes were even significantly more than that, and we reevaluated how much safety stock we needed in the channel, because when you have higher volumes, you don't need as many days. We thought about it, and we said, "We might as well take that as we come to the end of the year and go ahead and line it up in a place where we'd like to be." The Polivy study you mentioned, this is the study of Polivy with R-CHP, which instead of R-CHOP, which is the standard of care in diffuse large B-cell lymphoma. It's in the curative setting.
It's a big deal if we can replace the vincristine with Polivy and drive what we hope will be better tolerability and a higher cure rate. This is really the big study for Polivy, and the reason I didn't mention it is because we'll only get the results at, I think it's like end of the year, maybe Q1 of 2021. It's possible it'll happen in 2020, but maybe more likely we'll be talking about it around this time next year or shortly after. Thanks for the question.
Good. I suggest we go over to this side. Yeah. Very good. Please. Thank you.
Thank you very much. Mark Purcell from Morgan Stanley. A couple of questions just in terms of, firstly, risdiplam, the opportunity and what we should think about from an uptake perspective. We understand that about 40% of patients diagnosed with SMA in the adult setting don't like to take the drug because of the intrathecal delivery. I think, Bill, you mentioned that. Is there a sort of big unmet demand here? How do you see diagnostics playing a role in growing that market? The second thing is on Ocrevus. Obviously, there's incoming competition, but you have plans to reduce the infusion times. You also have your own subcut program as well. Could you help us understand the plans and timing behind defending and building the Ocrevus franchise? The third one is on the bispecific, the CD20xCD3 .
You said in a press release there's a decision to be made soon. The two to one may be a better refractory option, fast route to market. The one to one may be safer, better for earlier stage patients. It's obviously a competitive environment. You're currently ahead. You may not stay ahead. Just what's going on there, and how should we think about that opportunity? And the last one is just a quick one. Liver cancer, Tecentriq in combination with cabozantinib, the data come out in Q3, the COSMIC-312 trial. How do you think about having Avastin and cabozantinib as partners on top of Tecentriq in this setting? Will there be patients or countries or opportunities where one might be an advantage versus the other?
Great. That's quite a list. Let's start with risdiplam. Yeah, it's a fascinating field like spinal muscular atrophy, where essentially there were no products, what, four years ago? There was no medicines, now we're actually in the wonderful position that there's actually three choices, or soon will be three choices. They couldn't have more different modalities with an intrathecal administration several times a year versus a gene therapy, which is one time, but has certain limitations in terms of age, in terms of viral antibody positive, et cetera. An oral daily. It seems like each of the medicines is very efficacious, they have that in common. That there's very different patient populations. Type 2 patients, often, they don't present with symptoms until they're toddlers or older. Type 3 patients sometimes don't present until later yet.
There's also this complication around what benefit can you provide? In other words, if neurological damage has happened, can you repair that, or are you really just preventing further damage? We, and the other companies, have been trying to figure out as much of this stuff as fast as possible in Types 1, 2, and 3, all at the same time. I would say that I think it's going to take another decade or two before all of this is worked out, and which types of patients should get which medicines in which setting. I think there's a large opportunity for risdiplam today because there are many patients who aren't going to be eligible for one of the other therapies. There's the fact that with an oral therapy, you have an opportunity from a payer standpoint, you've got an immediate ability to have a therapy.
You don't have a big price tag up front. There's the fact that we will have data. We'll have more Type 2 and Type 3 data than the other therapies. We've got patients out, even including patients in their 20s in the SUNFISH studies. I think overall, we're going to have a really good regulatory package and a great medicine to bring. I haven't been very good at predicting the uptake of. I knew Ocrevus was going to be really big, but I'd say Hemlibra has surpassed all the market research we did. Normally you do market research and then you adjust it down because market research is sort of a bias. You're asking about this thing and then they sort of. With Hemlibra, the actual uptake has far surpassed the market research.
On risdiplam, I think it's a difficult one to call, and I'm glad we have a lot of really excellent analysts here who will help us with that. I think it's going to be very meaningful. Ocrevus, we have completed a faster infusion study. We know it can be dosed about twice as fast with an IV infusion. Right now, it's usually three and a half to four hours. Can be more for first infusion. We think we'll be able to deliver that dose in two hours. If you think about it, a two-hour infusion twice a year, which is about as often as an MS patient sees their physician. It's a pretty good way to deliver a very efficacious and well-tolerated therapy. We're not going to be competing per se.
We're going to be going out and talking to people about the benefits of Ocrevus and what it's doing for primary progressive patients, relapsing patients. The impact it has on the long term with disability progression, with the well-characterized dosing, we think that Ocrevus is going to continue to grow for a long time. CD20x CD3. I'm not going to say very much about it because it's still very much in the works. It's a very exciting field. We have looks like two really excellent molecules, and they have different sorts of attributes so far, what we're seeing. I don't think we've maxed out yet on the efficacy of mosunetuzumab, and we're continuing to work with the dosing profile of the 2:1 and continuing to get gains on tolerability.
It's hard to call and say, "Oh, mosunetuzumab's going to be the frontline, and the 2:1's going to be refractory" because that's a plausible hypothesis, but I think it would be pre-judging. We'll follow the science, and we expect to maintain our lead, though. Liver cancer. You asked about Tecentriq plus cabo. It's all going to be about the data. Let's see it. We welcome it. Tecentriq's an excellent cancer immunotherapy. Cabo is a really compelling medicine with several applications, and we can't wait to see the combo.
If you just continue in this role, perhaps. Just hand over. Good.
Yeah. Richard Parkes from Deutsche Bank. Thanks for taking my questions. Firstly, obviously, thanks again for quantifying the biosimilar impact this year. I wonder if you could commit to whether you think this is definitively going to be the year of maximum pressure from biosimilars. I know you obviously got European Avastin biosimilars launch this year. I just wonder how you think about that erosion, and maybe you can give us a number of what that number would be in 2021, or maybe that's too cheeky. The second question is just on Tecentriq in adjuvant lung cancer. I think at the Pharma Day in September, you had those two trials potentially reading out this year, but they haven't been mentioned in the presentation. Could you just talk about where we are in terms of interim analysis there and where you think you are versus the competition in adjuvant lung?
Final question on Hemlibra. You've highlighted the strong initial uptake in the initial European markets and the non-inhibitors setting, but the sales at the moment look quite modest. Could you talk about the reception and compare and contrast the uptake in the reception from physicians to the U.S. experience? Thanks.
Yes. The first question on biosimilar impact. I think it's been evident in our modeling for some time that the year of maximum impact would likely be 2020 or 2021. I haven't answered anything because you sort of had that in your Honestly, I'm going to give you an answer that might seem sort of obvious, but it sort of depends on what the ultimate impact is in 2020, whether 2020 is the maximum. If it's bigger in 2020, then it's going to be less in 2021. The roughly, I would heartily agree with. Let's wait and see.
Maybe by mid-year we'll have a better idea of whether it's In either case, I think what's most exciting is with the trajectories from the products we've already launched and the additional ones we're adding, I think we get increased optimism that we can continue to grow through it. Tecentriq and adjuvant lung. Yeah. The trials are all on track. There's a potential, depending on the level of efficacy, that we could hit an early readout in 2020. We've been anchoring on the base case with the final analysis in 2021. It's possible, and we think we're at least equal or ahead of competition. We look forward to the results there. These things are somewhat unpredictable, but we hope we'll have a good benefit there. Hemlibra EU uptake. Yeah.
In non-inhibitors, because the unmet need is not as high, obviously, as the inhibitor patients, I think the system, the healthcare system in Europe, has been a little slower to respond to it. We see all the same dynamic in Europe as the U.S. in terms of the attractiveness for patients. We don't see any fundamental reason why it won't do as well in Europe as the U.S. ultimately. There's been just maybe a little slower start in some major markets. Germany's one. We think there's some ways about how the factor is reimbursed that gives pretty big economic incentives to the hemophilia centers. We think that the compelling profile of Hemlibra will ultimately prevail in that.
We just move on.
Thank you. Sam Fazeli from Bloomberg Intelligence. Just three questions. One following on from Richard's on Tecentriq in adjuvant. Obviously, we have the failure of the monotherapy in bladder cancer. Is there anything you want to comment on in terms of what that might mean for Obviously, we all hope that the lung and renal monotherapies will read out positive. Obviously it raised the question about whether the right test is being conducted there. On the biosimilars, just for some of us who cover some of the other companies that are launching the competitors, could you give us a feel for what your expectation are between volume and price impact? No specifics, but if there is a split, 50/50, what are you thinking in terms of the reduction? Lastly, I saw a headline pass with risdiplam pricing.
I'm not sure, I'm not going to attribute the word aggressive to anyone, because I didn't actually hear it. What does that mean?
I thought it was.
Right. What does that mean? We know what the prices of the current drugs are, roughly, per annum, under lifetime, et cetera. Give us some color, if you might, please.
Yeah. Just to clarify, so when I was asked about that, I talked about what we've done in other medicine launches, and somehow it ended up that we're going to be aggressive there. We don't typically comment on the pricing of a medicine before we launch it. I think the only thing I would say is that we will stay true to our values, which is we want to make sure that it's perceived as a good value, not just by us. That's easier for us to perhaps perceive it. It's really important for us to talk with the patient families, the insurance companies, and see what they believe is a value, and we'll make a good decision on that. Biosimilar, the impact will be primarily on a volume impact, not price, because we don't have major changes on our prices. The main impact is that we lose the business.
Tecentriq.
Oh, yeah, sorry. You started with that, didn't you?
Yeah.
Yeah.
You're talking U.S., I assume?
Yeah. There are some countries where statutorily they force a price cut when a biosimilar launches or when the patent expires. Some of that has already happened. Once the biosimilars enter, then it tends to be more of they come in with big discounts and yeah, we lose the volume.
I think the number, when we can provide the number roughly for the half year in Europe, after two and a half years in the market, we have a making impact on one-third maybe is price and two-thirds is volume.
Yeah.
For Europe.
For Europe.
Okay. You asked about the muscle-invasive adjuvant study for bladder cancer with Tecentriq. We recently announced that we didn't hit the primary endpoint. Of course, we have that same question, what does this mean about? Is this a good prognostic, an accurate prognostic for the opportunity to do good in other adjuvant forms? We also asked that question beforehand because it's always important to get the answer before the result's in.
Basically what we were told is, "Hey, wouldn't put too much weight on the bladder cancer study, because bladder cancer, even in the metastatic setting, there's a lot of patients who don't benefit." I think that lung and melanoma, those may be more of, I guess, the bellwethers for the impact of cancer immunotherapy and adjuvant, and that's why we're very anxious to get the lung result.
There's also one question over the phone.
Okay, perhaps we can take a question from the phone in between. Can you connect us?
The first question from the phone comes from Tim Anderson from Wolfe Research. Please go ahead.
Hi. A couple of questions. Just on Alzheimer's, you have gantenerumab and the DIAN-TU trial. I'm wondering if you can give us your perspective on that as something that should be reading out very near term. Do you view that as a trial that's extraordinarily high risk or a medium level of risk, or what exactly? Another question on etrolizumab. Bill, I think I heard you draw parallels between that and some big recent launches like Hemlibra and Ocrevus. Does that signify that you're highly confident in the outcome of those results? Is that simply just a reflection of what the theoretical market opportunity is for a product like that, without necessarily meaning that you're highly confident in the outcome of the phase III trials?
Alzheimer's. This DIAN study is an independent third-party group that's running a study in familial Alzheimer's. It's a rare inherited form. It includes a medicine from Eli Lilly as well as gantenerumab. I think there's, I want to say, 87 gantenerumab patients in the study. By definition, it's an exploratory study. In fact, most of these patients, they started on the low dose, which is about, I think, one-quarter of the current dose. I think based on a number of those factors, we think it's quite a high risk that it would read out with a positive result. It might yield something interesting, to hit statistical significance with a small n would be, I think, unusual. As such, we haven't really factored it into our main plans. We hope it'll offer some clues and some useful information.
In terms of etrolizumab, we think it's very likely that the mechanism works because there's another program, I think it's Entyvio, that has an anti-integrin in IBD. That molecule, I think, is closing in on $4 billion in annual sales. Entyvio addresses α4β7 , and etrolizumab hits α4β7 and another integrin called α4βE . We don't know yet what the significance of that dual mechanism is. In fact, the phase III will kind of answer that question. We had good phase II data, and that makes it something that we think is very promising. We're pretty confident it's going to work. The question in ulcerative colitis and Crohn's disease is how well does it work? These diseases have been really tough over the years.
There have been a lot of good molecules that have gone in, had phase II data, and then missed on phase III or disappointed on phase III. We hope that the clinical trials will be positive and strongly positive. We've done everything possible to make this a really important medicine in terms of the formulation. We'll have a once-a-month SubQ with an auto-injector. We're setting it up for success, and now we've got to wait for the phase III results. Thanks. Thanks, Tim.
There was maybe one question via the web.
Can we have a mic here so that everybody hears?
Yeah, there was one question via the web on Ocrevus from Manasi Agarwal, and he was asking about the future of Ocrevus. He said you reached CHF 3.7 billion sales in 2019. Do you think this has reached now the peak sales? How do you see the ongoing competition from MAVENCLAD, Mayzent, and any other kind of competitors going forward?
Sure. No, we don't think it's reached peak sales. We think. In fact, outside the U.S., Ocrevus is really just getting started in a number of places. I think there's still something close to a dozen countries in Europe that don't have full reimbursement for relapsing and primary progressive. We think ex-U.S., there's a lot of growth continuing. Inside the U.S., we have 40% of new and switching patients, and we only have 20% total market share. As we continue to get a large number of switchers and new patients, the market share will continue to grow. We really don't see any impact on Ocrevus from any of the recent launches. The 40% number has I think we vary between sort of 37 and 41 for seven or eight quarters. Obviously, there's now will be competition probably sometime in 2020 from another B-cell-directed therapy.
We think it's good for patients to have more choices, and we think B-cell therapy that we pioneered is clearly a leading approach in MS. We don't think that's going to stop the growth of Ocrevus.
Okay. If we move on with the mic in the same hall. Over there, Ryan.
Thank you. It's Keyur Parekh from Goldman. Three questions, please. Two for you, Severin, one for you, Bill. Severin, for you've spoken for multiple years about the direction of travel, which is growing through biosimilars. Can you talk a bit about the momentum of travel? On an underlying basis, what you're guiding to today, assuming around CHF 4 billion in biosimilar headwind is underlying growth of 8%-9% in 2020. You've just done 9% in 2019. You're sitting on eculizumab, risdiplam, Tecentriq in adjuvant. As we think beyond 2020, can you talk a bit about the momentum of that growth exiting 2020? That's first.
Secondly, on this mythical bridge that you will get to at the end of this year on kind of zero-15% net debt to assets, of course, just philosophically, can you help us think about your preferences between returning money to your shareholders versus paying it to somebody else's shareholders? I'm not asking for modalities in which way you do it, just help us think about one versus the other. Bill, lastly for you, Herceptin, Perjeta fixed dose combination, help us think about the ambition there. Is it to protect what you've got there? Is it to recapture some of the volume share you've lost to the biosimilars? In that context, how should we think about kind of broad picture pricing for that combination? Thank you.
Let's start with your question on the longer-term growth perspective. As Bill has alluded to, we have another two years, 2020 and 2021, where we have significant impact now from the U.S., right? We still have Avastin in Europe, but we have Herceptin and MabThera basically behind us. Our experience has shown with MabThera and Herceptin, it takes about two years to wash it through, right? That's our best estimate at this point, considering a significant impact from the U.S. in the short term. On a very high level, I'd say 2020 and 2021 is the peak for the biosimilars, and then you'll have a tail, of course. The other side of the equation, of course, is the new products. Bill, you have alluded to the continued growth of the medicines we have already launched.
The big question, of course, is how many of the other medicines will actually make it to the market. I would say that's the most uncertain component. I think that's really special now also in 2020. We have a very rich news flow. You can play through all the scenarios. You mentioned etrolizumab, Alzheimer was discussed.
PDS.
PDS, faricimab. I mean, you go on and on. Now all of those actually have a huge potential. These are not small franchises if it works. The question is, does it work? You can play through the scenarios. If I look at the success rate of our phase III trials over the more recent past, it's about 66%, 67%. That would suggest that some of those will work out and some will fail. You can have a scenario where everything fails. I've gone through that as well. I remember very well back in 2010. I will not forget this year. We had lots of stuff coming through, those of you who were around in metabolism, in diabetes, and I mean, one after another kind of failed. All our growth expectations turned into actually a decline of sales.
You can have a scenario like that, and then you can have times when kind of everything works. I've seen these phases as well. That's the biggest piece of uncertainty. Of course, what you always hope is that one of those big one makes it. Etrolizumab would be a blockbuster. I mean, without any doubt. Imagine you have something in UC and Crohn's. If you have something really differentiated in this field, your question gets obsolete, right? If indeed Alzheimer's works, that's a shift which kind of puts the growth on a completely pattern. I would put it like this: there's a lot of headwind still in 2020 and 2021, which is compensated for now with what we have already on the market. Beyond that, I would hope for an acceleration of growth because the headwind goes away.
Then there is this kind of nagging thought in the back of my mind where I say, "Perhaps one or the other hits," and that could put us on an even different growth pattern. I just don't know. You know better than me how binary it is. Look at the growth which we had in 2019. At the end of the day, it's basically three medicines which have made the difference, right? Just imagine all three of them would have failed. We would be in a very different space. We can't get rid of this binary kind of situation in our industry. It remains high risk, and high opportunity, of course. I hope for the latter.
One perspective, though.
Yeah. Give me hope.
Well, no. Here's the thing. The worst year, the year you refer to, again, in hindsight, we sort of had a lot riding on three things. One was Avastin adjuvant. The second was some cardiovascular metabolism mechanisms that I don't think we or anybody really understood very well. Now we understand that. The third was we had a whole bunch of antibody drug conjugates. We had a relatively narrow base of things. It turns out Avastin adjuvant, that didn't work. A lot of those antibody drug conjugates had toxicities, and the cardiovascular mechanism we were targeting. If I look at things like etrolizumab, Lucentis PDS, polatuzumab, I think these are areas we understand pretty well, and the question may be how powerful are those results? I don't think we have the potential for an all red X's slide.
I think some of these are going to hit, and some of them are going to be big, and it's just a question of how many.
Thanks for the encouragement. I feel much better now. On the capital allocation question. Yes. Just go back a bit in time. Remember when we gave this guidance of 0%-15% net debt relative to assets? That was actually at the time after the Genentech acquisition. We gave this guidance for very different reasons. At that time, the bondholders were concerned that we were over-leveraged, right? They were interested that we reduce our debt, and we gave a guidance where we want to land, and that was the 0.02%-15% relative to assets. Now, of course, the situation has turned the other way around, and now the people are worried that we have not enough leverage over time. Just to put that into perspective. I should also say that there is no science around that.
What we did at that time is we looked at the industry, as we said, what is reasonable? What provides us with the necessary strategic flexibility? It's also not like if you get over this line, then suddenly the world looks very different. This is kind of a high-level range which we gave at the time, but it's still valid and we have to see how things develop. Now, what are the various components? As far as dividends are concerned, we have committed ourselves to an attractive dividend policy. We'll certainly keep that going after now, what is it? 33 years of consecutive increases. I don't want to end up as the CEO who first kind of even reduced the dividend. What that tells you is we look at it very long term, right?
We want to increase the dividend, but we want to do it in a very sustainable way. That will not change in essence. The other question is around M&A, right? That's what you, Alan, alluded to. That's, of course, very opportunity driven. I don't see a fundamental shift here at this very stage. We do see that late-stage assets remain very pricey. There's scarcity around those. In most of those transactions, we actually step out for economic reasons. The focus continues to be on earlier stage deals. That's typically where we can bring in other capabilities and assets and are an interesting partner for those companies because it's not only about price, it's a lot about bringing it to the next inflection point and generating value for the partner this way rather than just the plain exit.
If there are opportunities, we would seize them. We would be very willing to take external innovation into the company. That's opportunistic, and we'll see how it develops, and I don't see, however, a major change in the dynamics here. Really, what I'm going to tell you here is really We take it step by step. We don't have scenarios, what we do, depending on those opportunities. It's what I said beforehand, we cross the bridge when we have to cross it, and then we will cross it.
Accepting fixed dose?
Yes. The fixed dose combination, and you asked about the pricing. I think, for starters, we've been actually pursuing combination-based pricing in a number of countries around the world for some time. In other words, we don't necessarily think if we have two molecules that the price should be one plus one equals two. We like to bring better value than that. I think it's almost certain that we'll do that in the case of the fixed dose combination, but it'll differ by country. Our goal really is to offer both convenience, and I think the difference between hours and 20 to 40 minutes is going to be significant, but also to bring value to the healthcare systems. We'll be taking those matters very seriously.
Good. Let's move on a little bit to the back, if we can go to the next row, we'll come forward again. We still have 15 minutes?
10 more.
10 minutes. Okay.
Simon Baker from Redburn. three questions, if I can. Firstly, Bill, you mentioned that you've signed off eight new pivotals in January. I'm assuming that's not the run rate for the year, but perhaps you could give us some of the pushes and pulls on the R&D line for 2020. Moving on to gene therapy. I know it's early stages post the Spark closure, but could you give us any thoughts on the requirements for manufacturing capacity investment within gene therapy? I'm guessing that at the moment, Spark's relatively limited capacity is fine for an ophthalmic indication, but if you move to more systemic administration, you're going to need more capacity there. Finally, for Thomas, given you're relatively new in the job of diabetes, the two classical questions. Firstly, is diabetes care core to Roche Diagnostics?
Also, could you give us your rationale for why Roche Diagnostics is part of the Roche Group? Thank you.
Yeah. The eight pivotal studies, I hope it is indicative of the pace for the year, because that would mean we have a lot of really important studies to run, but I don't know if I would take three weeks and multiply by, what would that be? 17 times eight. Probably not. That would be a great problem to have. I do expect the R&D line to grow disproportionately to sales and marketing, G&A, cost of goods. That's a major call to action for everyone in the company right now, is we just believe that more and more in the future, society's going to be demanding and needing breakthrough medicines, but also that we can deliver those at an affordable cost.
Our vision for the future is very much that we're really maximizing our investment in R&D, improving R&D productivity also, but both the investment and the productivity, but then really emphasizing new ways of working to drive productivity across the organization. I think it's really encouraging to see the gains we've made already and the fact that that's not been a result of cost cutting. We haven't put out any guidance to people to say, "Hey, you got to go cut your costs." I think I've shared with most of you, we eliminated budgets in our commercial organization about two years ago in the U.S., and last year in international. We've seen tremendous gains in productivity in marketing and sales.
Similarly, in manufacturing, I think over the three-year period, we're up about 45% on volume. Our headcount's down about 18% over the same period. That's not based on cost cutting. It's really been based on, hey, how do we make everyone's job count for more and make sure that people have great jobs and that they're able to make a maximum impact? Yeah. We're going to take the gains from that and largely put them into R&D. I think that's really where we need to be as a company, and frankly, I think that's where the life science industry needs to be for the future.
Can I answer that, Bill?
Please.
That certainly doesn't mean we are not changing the guidance. The guidance is the guidance. What's really happening is there's a reallocation, that we really increase R&D on one hand and then take it from other cost lines. I think that's the idea here, just to put that very straight. This is not a contradiction to the guidance.
It's partly also driven by the acquisitions. We continue to invest into the digital space, for example, with the FMI and the Flatiron acquisition, and then we also have Spark now. Spark is really an investment case at that time. There is a need to find the money somewhere. It's a matter of reallocating resources accordingly. I think those are good investments for the future.
Yeah. Of course, when we're growing, we're growing the top line as well. That's a big part of it. Gene therapy requirements, capital requirements for manufacturing. It depends a lot on the dose, and in gene therapy, the doses, you start talking about in logs. The dose ranging can go from one to 1,000, and then the manufacturing requirement has a lot to do with whether you end up with the high end or the low end. I think on average, the manufacturing costs are going to be relatively low in gene therapy because you're providing generally one dose. Even if you end up at a higher viral load, it's going to tend to be rather low. I think it's basically on a P&L the size of ours, the gene therapy manufacturing capital is not going to be a point of discussion.
Right.
Yeah, no, please go ahead.
To add to that as well, I think we have CapEx in 2019 of CHF 3.5 billion. I think came down CHF 500 million, as I've presented before, from roughly four. Honestly, I don't expect that number majorly to change. As Bill said, I think really this gene therapy piece is not really moving the needle so much.
Thomas, you have the big question.
Let me start with diabetes care. We're very committed to that business. That area is extremely important because, A, this is one of the areas or diseases with the highest disease burden worldwide. If you look at the diabetic, usually they don't have just one disease. They have usually also cardiovascular diseases, neurological diseases, et cetera. We can combine our strength between diagnostics and diabetes care to really help the patients. From that angle, I'm very much convinced. Also, given that we've just launched the patch pump, the Accu-Chek Solo micropump. We have new products there in the pipeline. We just saw another app. Especially also there, we have a lot of digital capabilities also in the diabetes care area that we can leverage, not only for diagnostics, but actually across the whole group.
We have so many software installations out there that are regulated. Yeah. We think about some tools that we're looking at on the pharma side, specifically for neurological diseases.
Yeah
Yeah, on how you can monitor progress. We can do that in a regulated fashion in that pharma doesn't have the history, and so that helps definitely. Let me give you other examples that are key from my perspective. One is, we have a ton of joint development programs ongoing. In fact, we have a meeting set up in the very near future where we're going to go through all of these. I had this meeting also with our head of Pharma research and early development. We were both surprised by how many programs we actually have ongoing between the two groups. Let's not forget, when pharma launches a medicine, they would want that companion diagnostic to be available as broadly as possible across the world.
That's why it's powerful to work with the number one in the diagnostic industry, because we have the largest installed base of platforms around. You want to make sure that the hospitals don't have to start installing different systems. They don't have space. They need to work with that organization. From that perspective as well. Another key reason for me, and when I was leading the research and development on the centralized area, it really became evident for me. We're not only one of the largest, if not the largest antibody manufacturer in the world on the pharma side, we're also the same on the Dia side. On the research and production side, we leverage a lot of technologies across the two divisions to be more effective, make better antibodies that are more specific, so we can really leverage that.
I'm very excited, and I think, I want to even collaborate even more. Yeah.
I'm excited too, and I think what you didn't even share, and we talk about this a lot, more and more healthcare systems, when we show up, Roche Pharma or Roche Diagnostics, they want to talk about the whole picture. How are you guys going to come together to help us manage oncology care in our country? We actually have solutions we can bring, especially with the insights businesses like FMI and Flatiron and Dia and Pharma. We can come in and talk about how do we actually get patients having truly personalized care. We have these shining tower examples we are running now in a number of countries. We've already announced several of them, including Croatia and South Korea, where every patient diagnosed with metastatic cancer will get a full workup, including things like Foundation Medicine testing, the tissue testing from Roche Diagnostics.
Every patient will get a targeted therapy, and it might be one of our targeted therapies or someone else's, and that's fine because that's what leaders do in a field. We have a commanding lead in diagnostics in oncology and in therapeutics in oncology, and we can bring that together. I think really the costs of us being together, I'm not sure what those are. In other words, when you ask the question, like, well, why diagnostics and pharma together? It's not obvious to me why not? We do, I think, gain a lot of knowledge from each other about the other part of the patient journey, and it works great, I think.
Neuroscience, for example, we have about 15 markers that we have established with pharma, so they can do research in that area. It's very key also in early research to be able to work with someone who can then develop these assays so this research can be done on the pharma side.
We have to move on, yeah. Right.
One last one.
Andrew at the back.
I'm not sure it's on. Maybe it is. It's Andrew Baum, Citi. A couple of questions. Number 1, in reference to the administration's IPI proposal. I know Roche Genentech has historically great links with Washington, but this administration seems to have a way of forging its own path. I'd be interested in your anticipation of timing, impact, and the enactment and how of any IPI proposal, as we indeed hear is happening. Second, in reference to your adjuvant bladder trial, which failed to meet its primary endpoint. I'm less interested in bladder, but I am interested in the messages that we can take from that to other indications, despite the obvious differences in biology. Could you share with us, particularly when you're looking at the subgroups, any information on baseline PD-L1 status, baseline anti-drug antibodies to Tecentriq?
Were there any positive subgroups there which may have significance to how we think about future adjuvant trials, were the current trials not to be positive?
We will disclose the data at the data point in time.
Karl's reminding me that, honestly, some of the analysis you asked about we haven't even done yet, and we won't be disclosing it till we bring it to a major medical meeting, because I think it is important for the world to understand what we learned from that. Honestly, I don't even know the answer to the questions you're posing. I think they're very good questions. Regarding IPI and timing, all of that, look, I think what we have in common with the policymakers and really everyone else involved in the U.S. healthcare system is we think that patients deserve better. We think that patient out-of-pocket costs are too high. We think that there are reforms needed in the way that medicines are priced and sold. We've been driving for, on the pharmacy benefit side, rebate reform, lower out-of-pocket costs should be capped for patients.
It doesn't make sense that patients with serious diseases are paying a price for medicines that the insurance companies aren't paying. These discounts happen or rebates happen without the patient benefiting. Driving for that. On the hospital-acquired medicines in Part B, we've been in discussions with key policymakers on both sides of the aisle about market-based pricing reforms. We think that's really the way forward, and I think something like IPI would be difficult to implement, because it requires new channel partners that don't exist at this point. It would be very disruptive for the healthcare system, and we think that reference pricing is something that, frankly, it's a bad idea because the market-based pricing approach has led to this revolution in biotechnology that is bringing all these new medicines.
You've probably seen that the White House Council of Economic Advisers, so their internal group, has said that foreign reference pricing in the form of H.R. 3 would result in 100 new innovative medicines not being launched in the next decade. Something like IPI would have likely a similar effect. Yeah. We're working on better solutions, and we remain optimistic that in the end, better solutions will be found.
We should announce the Apéro.
Okay. We have to come to an end. Thank you very much for your interest. For those of you who are still around, we have the usual Apéro. However, I think you have to go to the U.S. You have to also go back to Switzerland. I will be around, and most importantly, Karl will be around. See you in a moment. Thank you very much.
Thank you.