Good morning, good afternoon. Thank you for joining our half-year briefing. A strong set of results, entirely driven by the demand for our new medicines. Based on that, we are even more confident on the continued momentum for the future. We have raised, as you know, the outlook for the current year. We expect to grow in 2020 and beyond through this transition when biosimilars enter also the U.S. market. Let's get right into the figures. You have seen overall sales up by 9% at constant currencies. Pharma up by 10%, again, driven by the strong demand for new medicines. Ocrevus continues to deliver strong results. HEMLIBRA, very good start. PERJETA in the adjuvant setting. KADCYLA. TECENTRIQ now in new indications offsetting the decline we are already experiencing, as expected, from the entry of biosimilars in Europe. Diagnostics, 2%, and actually an acceleration in the second quarter.
You remember in the first quarter, we had no growth due to some specific factors. We have now seen 4% growth, so coming back to our continued growth rate in this business. Let me turn to slide number eight, where you can see that growth very much driven by the U.S., 14% up in pharma, and actually by the international region, mainly driven by China. In Europe, we can see the impact of the biosimilars, but in spite of the full impact now for MabThera and Herceptin, only a 4% decline. Again, what we already see here is a strong offsetting effect of the newly launched medicines. Here in absolute numbers, slide nine, you see that we added, just in the first six months, another CHF 2.5 billion sales for the newly launched medicines, which account now for 28% of our total portfolio.
You see a significant impact from the biosimilars with about CHF 800 million outside of the U.S. and the respective net increase on a group level of 9% in sales. Continued strong operating results. Core operating profit up by 11%, earnings even up by 13%. There is some one-off effects, positive and negative ones, but if you look at the underlying growth, very strong and actually ahead of sales. The pipeline continues to deliver. We add additional breakthrough therapy designations. We are entering, on the one hand, new franchises with multiple sclerosis, haemophilia A, more and more opportunities in CNS, SMA most imminent. We have recently launched two new cancer medicines, POLIVY in the U.S. and Rozlytrek, actually, the first country here is Japan. Now turning to the outlook.
Really it's a lot, of course, about the many medicines we have more recently launched where we see continued growth and continued momentum. I'd just like to highlight that there is a lot coming through in the pipeline as well. risdiplam, for example, in SMA, the filing in the U.S. will occur in the second half of this year. We have seen promising data in GAZYVA in lupus nephritis, where so many attempts have failed, not only within Roche, but across the industry. That would be really exciting to see the first medicine actually working in this very difficult to treat disease. There's a lot coming through on the oncology side. Perhaps just to highlight TECENTRIQ, where we now expect phase III results in liver cancer, which in itself would be a huge opportunity.
It's not only about the success of the already launched medicines, it's very much also about the progress we have in our product pipeline, which gives us this confidence to continue to build our business and grow in spite of the impact of the biosimilars. You've seen the increase of our guidance, mid to high single-digit sales growth, core EPS to be in line with sales, and on that basis, a further increase of our dividends for the current year. Thank you very much. With this, over to you, Bill.
Thanks, Severin. Yeah, I'm really pleased to have the opportunity to provide more information about the results that Severin highlighted. It's, I think, remarkable financial results, but I think what's more profound yet is the considerable progress in just a six-month period that we've made with the pipeline, and I'm very proud on behalf of the tens of thousands of talented and dedicated women and men around the world who are working on this on behalf of patients to share these results with you. Let's start with the financials. 10% growth overall. U.S., another very strong showing, again, based on launches primarily. In Europe, I think it is quite remarkable that despite MabThera and Herceptin essentially sort of going away, that they're able to deliver 96% of the level of sales as a year ago.
I think that's indicative of the strength of the pipeline and the power of these new products, and the demand they're generating, to basically offset the biosimilar losses. In Japan, another strong showing from the team there. Avastin is the number one product in Japan now, number one medicine in Japan. Again, I think a testament to their skill. In the international region, led by China with 17% growth. If you look at it from a P&L standpoint, I think it's a well-managed P&L with a 10% sales growth, and delivering 11% on core operating profit despite the loss of CHF 280 million in Cabilly royalty revenues. That's in that royalty and other operating income line. Cost of sales going up 10%, that's with volume growth of 14% and also increased cost of sales on royalties and profit sharing.
A very tight control of manufacturing costs. This is the investments we've made in lean production really paying off now. We're about two and a half years into implementation, and I think there's more gains to come there. In marketing and distribution, an 8% increase, but that's not indicative of what the year will look like. We just had a particular lot of launch activities in the first half, but we expect growth for the full year will be lower in that category. R&D, 5% increase, and that's on top of basically productivity gains, considerable productivity gains. I'd say the actual pace of work in R&D is accelerating faster than 5%. Good control on G&A as well. This is the product viewpoint, and again, no surprises because this looks similar to what we've seen in prior quarters with Ocrevus leading out.
You can see the blue reflecting the U.S., Europe now with Ocrevus adding a large contribution, international starting to kick in. HEMLIBRA, again, it's a strong showing. TECENTRIQ in that number 3 position in terms of growth drivers with 141% increase and a broad geographical based impact for TECENTRIQ, PERJETA, and so on. I think if you look at the bottom, what's impressive is you see products like HERCEPTIN, MabThera with large losses, and nevertheless, we're able to deliver 10% growth. Here's a little deeper look in oncology. I won't go through the individual products here, but I think you can see even products like ALECENSA continuing to grow at 50%, TECENTRIQ starting to figure more, and I think there's a lot more where that has come from.
The HER2 franchise, a little bit of change in dynamic here because now with the approval of KADCYLA in early breast cancer, in adjuvant breast cancer with the KATHERINE study, we're starting to see an acceleration of KADCYLA sales in adjuvant. That'll take a little bit away from the growth of PERJETA in adjuvant. I think that's a welcome development for patients and it's good for our franchise in the long term because we anticipate patients will see H+P or KADCYLA, and in some cases, on multiple lines of therapy. In hematology, this is not the total picture because it doesn't show VENCLEXTA, where AbbVie books sales worldwide for VENCLEXTA, and we have a profit share. Strong progress here with anti-CD20. We'll talk a little bit more about some of the approvals. The first one being POLIVY. POLIVY's now been approved in the U.S.
You all know we've been talking about potential agents in our pipeline that have a chance to go beyond where CAR T has gone, principally to go beyond by delivering a combination of a high efficacy, but something you can put in a vial and that patients have immediate access to, rather than having to wait to see whether they're eligible and waiting for their cells to be manipulated. As a reminder, this molecule, it targets the CD79B protein on the surface of malignant B cells, but it brings a very potent toxic payload along. This is the really fantastic OS data we saw, 0.42 hazard ratio. We've been saying molecules like this can go where CAR T doesn't because of patient eligibility, because of immediacy, and I guess here's our first results to show that.
POLIVY was approved just a couple of months ago. Just for the historical perspective, CAR T's, when they were launched in the first five months, we estimate about 150 patients were treated with CAR T in five months. We treated 150 patients with POLIVY in the first five weeks, and I think that's a real testament to the potential of a product like this, both for efficacy and sort of usability. I think you could look for much more from POLIVY in the years ahead as we pursue first-line indications and go into other settings. Another one in the hematology franchise that's very important, this is the VENCLEXTA plus GAZYVA combination in first-line CLL, the CLL14 study. What's unique about this is you have a chemo-free combination, which is attractive for a lot of patients.
In this case, we studied patients who were not seen as good candidates for stronger therapies. We studied VENCLEXTA plus GAZYVA versus GAZYVA plus chlorambucil. You can see the PFS chart, and essentially you get 12 months of therapy in either case, and then you can see a wide separation in the response. You have really long durable responses with this chemo-free combination. The best thing about it is the patients have 12 months of therapy, and then they're done. We just received approval in Q2 in the U.S. Approvals will be coming around the world, and we think this is going to be a very potent combination in first-line CLL. TECENTRIQ, a lot of news to share here, but the growth is really widespread, both geographically as well as by indication.
We've seen sources of growth in things like first-line non-small cell lung cancer. The big use here is in patients with liver metastases. A lot of non-small cell lung cancers, they present with liver metastases, and that's a critical issue because if the liver's not functioning, the patients don't survive. Doctors are seeing that the combination of Avastin plus TECENTRIQ plus chemo has a remarkable effect on response in liver metastases in particular. Based on that, there's a broad use. We're also seeing use increasingly in second-line in many geographies. In small cell lung cancer, where we were first approved in Q1 in the U.S., and we anticipate further approvals around the world on small cell lung cancer.
We're now getting about 25% of the total business from small cell lung cancer, 50% from non-small cell lung cancer, and then 20% from bladder cancer, and 5% from triple-negative breast cancer, which is the newest indication. Here, there's sort of two elements to penetrating use. First is that patients need to be tested, and we're increasing the rate of testing. We're up above 70% now in the U.S. Then once they're tested, if they're PD-L1 positive, then they're eligible for TECENTRIQ. We'll be basically going around the world with both the testing and the therapy, and we're very pleased at the progress. Moving on to immunology. Really quite strong growth across a variety of products, including Esbriet in IPF, and ACTEMRA, which is approved now in I think seven indications. XOLAIR is hanging in there strong despite a lot of new competition.
The growth on XOLAIR is primarily driven by use in chronic urticaria. Again, we're pleased to see just the continued delivery for patients from these products, and we think they'll continue to grow for some time. I wanted to mention a little more, Severin referenced it. We decided to do a phase II study of GAZYVA in lupus nephritis. Those of you who've been around the biotech industry for many years know lupus nephritis has really been a graveyard for molecules. In fact, I started in the field about 23 years ago, and the first program team I was assigned to was studying a product in lupus nephritis, and it failed. In fact, there is no therapy approved specifically for lupus nephritis. We ran large phase III programs with RITUXAN and then with Ocrevus, and those showed no benefit.
Our scientists, they were adamant, like there's one more try here, which is a molecule, GAZYVA, which has the same target as Ocrevus and same target as RITUXAN, but has a different type of cell-killing ability. Based on this, we decided to take GAZYVA into a phase II study in lupus. We announced recently that we had positive results. We'll be sharing those at a major medical meeting later this year. We are encouraged that we may have the world's first lupus nephritis drug. More to come on that. Moving on to the neuroscience franchise. Ocrevus is continuing, I think, to impress patients and their families and to impress physicians. I think this is quite a remarkable chart because what this shows is the new-to-brand patient share, which is actually increasing.
I think many folks thought that 30% would be quite remarkable given that there's about 15 products approved in MS, and the next best product is in the teens in terms of this figure. We've actually gone from about 33% 18 months ago, up to now almost 40 patients out of 100 receiving Ocrevus when they are either new or changing therapies. Over 100,000 patients treated globally. Again, the experience continues to build, and the stories of remarkable results for patients both with primary progressive, with relapsing disease, and with secondary progressive disease with active MS is, again, it's inspiring, and we think we'll see continued growth from Ocrevus for many quarters to come. Here's the results in terms of sales. Again, you can see U.S. obviously very strong with the earliest launch, but Europe and international beginning to kick in.
Just a note that the U.S. label has now been updated to include active SPMS and clinically isolated syndromes. The FDA had looked at all our data in its totality and agreed that this was warranted. Now let me just say a few words about the hemophilia A area with HEMLIBRA. As I think you know, we've been approved in inhibitor patients for some time now and have been receiving the approvals in non-inhibitor. We have very high levels of penetration in the inhibitor patients. They're only about 5% of the total, but now we have more than half of those patients in most of the major markets. Now really the growth you see, and you can see it accelerating on this curve, is driven by growth in non-inhibitor patients. Again, the data continues to build.
We recently shared at ISTH, a major hemophilia meeting, this pooled data on the HAVEN. What it showed is that 87% of patients have no treated joint bleeds in the second six months of therapy. A way to think about this is, hemophilia patients, when they have a bleed or when they have an incident, let's say they have a small cut or they bang their elbow or do something to cause injury, they're used to having bleeds. They're used to treating them with factor VIII. What's a novel concept is they're on HEMLIBRA and they have an incident that they don't have a bleed.
In the first six months, they tend to treat themselves, and then they realize, "Hmm, maybe I don't need to treat myself." What we're seeing is as patients stay on HEMLIBRA longer, they're treating less because they're realizing, "Hey, I'm not going to have a bleed. I don't need to intervene." And again, I think it's just a remarkable testament to the power of this product. Worth noting now, many patients are choosing the once-a-month approach. They're moving from multiple infusions per week and having bleeds to having basically one subQ injection per month, and it's quite a change for them in terms of their lifestyle. Ophthalmology, really pleased to have some things to say about ophthalmology both in the U.S. but globally.
In the U.S., LUCENTIS had 10% growth in the first half, another strong showing for the product that really pioneered the area of treatment of AMD and other VEGF-related optical disorders. Now actually, we've got a couple things that are new and I think very significant. First, our Port Delivery System, and you can see it pictured there. It looks almost like a grain of rice that's sort of inserted into the vitreous of the eye. Essentially, it's a reservoir that the physician refills every six months or every 12 months and then basically you have a continuous diffusion of anti-VEGF of LUCENTIS into the eye to really preserve that visual function.
Just to recall from the phase II study, we showed that 50% of patients went out to 15 months between refills, which was really a remarkable result considering that typically patients need injections either once a month or every other month. What's new on this is twofold. First off, we had been co-developing this with Novartis, but they've decided to go a different path, and so we've secured the rights to the Port Delivery System for LUCENTIS around the world, and we will be preparing, we hope to be launching it in every country in the world when the phase III is done. In terms of the phase III, we commenced the phase III accruals in Q4 of last year.
We thought it would take us about 18 months to accrue, but this device has been extremely popular with retinal surgeons, retinal specialists, and we have now accrued the whole phase III study about 1 year early. By middle of next year, we should have a phase III result and be preparing to go to regulators for filings. Very exciting I think for patients around the world who are looking for a better option. Recall that the issue is not only that patients need frequent injections, it's also that they don't get the injections frequently enough, and they lose their vision. They get a gain when they first start therapy, and then over time, their vision is going away. We hope with the Port Delivery System that we can really fix that and help these patients maintain their vision.
I'll just say briefly, we also have a VEGF/Ang-2 bispecific antibody that's now in phase III. It's also accruing very rapidly. This is probably our best shot at something that could bring superior efficacy above and beyond what's been seen with LUCENTIS and other anti-VEGF therapies. We had promising phase II results. We look forward to bringing the world results in phase III. Just bringing it back to sort of the summary of the portfolio impact. Here's a slide that just shows by quarters over years the growth in sales of the new products. These are products launched in the last seven years. You can see in Q2, we were up to 29%. You can see that rate is accelerating. This is really the slide and the information that gives us that confidence that we will continue to grow through the period of biosimilars.
I think we're very well prepared and excited to take on that future. I just also wanted to give a quick summary on the pipeline, and this is one way to look at it. We took a look at what are the most significant molecules and new indications in terms of patient benefit, in terms of potential for the company and for growth. This is actually a list of 19, and what really is amazing to me is that 16 of these will be either approved or filed in the next 18 months. For example, if you look in the orange columns, this is all the oncology sort of either molecules and indications or new molecules. If you add up the patients, this is up to 800,000 patients that could benefit from these indications and molecules.
I think the story for Roche Pharmaceuticals is very much an and story. We are pioneering and we are changing the world for patients with hemophilia, patients with MS and other serious neurological diseases, people with ophthalmology conditions, with lupus on the one hand, but we're definitely on track to maintain our leadership in oncology, both scientific and medical leadership, and ultimately in the business. I'll just close by inviting all of you that can make it to London in mid-September. It'll be on September 16th, we're having Pharma Day, and we will be going deeper into a lot of what I've shared today, both in terms of commercial activities around the world, but especially on the pipeline and the science and how we see the future. Again, thanks for your attention, and I'll now pass it over to Michael Heuer.
Good afternoon, good morning, everybody. I'm really happy to present to you the first half year results of diagnostics. As Severin already mentioned at the beginning, we had a start, which was rather slow in the first quarter. In the second quarter, experienced significant acceleration, resulting in 4% growth in the second quarter. All in all, sales was CHF 6.3. Let me just move to the next slide. Sales was just CHF 6.3 billion in the second half, grew at 2%, especially increasing sales in the Centralized and Point of Care Solutions part of our business, the major part of our business with 3% growth, and molecular diagnostics maintaining the growth rate of 5%-6% also in the second quarter and in the first half year. Diabetes Care stabilized with 1% growth as indicated already in last year and also in the first quarter.
We have seen for this stabilization major reasons. For example, in diabetes care, the continuous good adoption of the new products like Accu-Chek Guide, and as well as in the centralized and point of care solutions, the great adoption of our immunodiagnostics products. It's worth mentioning that for the rest of the year, we expect a normal growth going forward and an acceleration of growth in the second half. With this, I would like to move to the countries and the regions. As you can see, we have experienced further growth in line with the first quarter in EMEA, also Latin America, and Asia Pacific, which used to grow at 0% in the first quarter, grew now together in the first half 5%, which indicates that the second quarter had a rather high growth rate of close to 10% in Asia Pacific, mainly driven by China.
China has experienced growth of 10% in the second quarter, which is basically derived from this resolution and the clarification basically of the situation with the distributors in the first quarter, which I had indicated already. The patterns of sales into the market in China have resulted back to double digit growth, which is a good sign for the further development of this business in the second half. Which also at the end results in 6% growth for the E7 countries, a major area of focus of our division, where we have improved growth from zero in the first quarter to 6%, basically supported by great adoption of our products in China, also in Turkey and South Africa in general, and also other major emerging markets.
North America, the sales were impacted still by the effects of what I had indicated in the first quarter with the coagulation monitoring recall we had, and the results then with the build up of inventories in the distributor channel in the U.S., as well as the effect of the tissue diagnostics, where we are now in the process of after having resolved and found out the root cause, as I had indicated in the first quarter, that was planned for the second quarter. We have now resolved the issue, and we are now ready to rework those instruments. We are in the process of filling up again the demand that we have accumulated over the year, and we expect for tissue diagnostics to be back to normal, resulting in a major completion of the demand that we have by the end of this year.
We see that from a division business area perspective, centralized and point of care solutions will continue to grow. Immunodiagnostics with 7% in the first half, already double digit in the second quarter. We will continue the development of double-digit growth for immunodiagnostics in our business for the 21st consecutive year. This gives us a lot of confidence that the guidance that we have given for the second half will be met. Molecular diagnostics continues to grow rapidly, especially with big successes in blood screening. For example, the win of major blood screening tenders in Thailand, in Turkey, Middle East, this will also provide further growth going forward. Microbiology, you see also tremendous growth. Molecular diagnostics point of care, our ViaLine, also being adopted very well in the markets.
With glucose monitoring, we won major deals with big distributors in the U.S., which is contributing to the positive stabilized development in diabetes care. In tissue diagnostics, already I mentioned that before. Well, what is important now is what that means in the bottom line. We see that the growth of sales is 2% in the first half, results in an operating profit increase higher than sales growth, as we have given the guidance in the past, were 4%. We have been able to diligently work on the efficiencies, the productivity that is required to achieve these results, also going forward. In research and development, you will look at this 4% decline, which is basically only due to the successful completion of two major projects, one in diabetes care, the other one in microbiology.
Other than that, we continue to spend more in innovation in R&D than all three competitors together in absolute terms. In marketing and distribution, we are flat, but this is a shift from the more established markets and efficiencies we increase in the established market to more the investments into the emerging markets, as we have also indicated before, for example, also in China. Well, the basis for our business, as I always mention, is the installed base. The installed base has continuously increased. We have now cobas 8000 as one of our largest analyzers in the serum work area, integrated core lab with now 21% growth of the installed base in the first quarter in last year. This is continuously achieved also in this year.
We have a growth also in placements of our bread and butter serum work area system, cobas 6000, where in fact with the launch of cobas e 801, where we have now achieved two and a half placements already in this year. We expect, since we are placing this instrument by the hundreds every month, to reach more than 3,000 by the end of the year. As well as the very successful launch of cobas pro in the markets and the extreme positive adoption also with our customers, that this development of our installed base will continue positively. Well, now moving into molecular diagnostics. As you know, we have one of the most automated and easier to use platforms in molecular diagnostics for cobas 6800 and 8800.
We were able now to add two important sexually transmitted diseases test, TV and MG, which is in this sense extremely important because what in the past the customers were asking for was, can you do Chlamydia trachomatis, Neisseria gonorrhoeae, and these two TV and G tests out of one sample? This is now possible on a fully automated system only with our Roche systems. This was recently launched. We expect this to further continue the positive development of the cobas 6800, 8800 molecular business. You see already more than 700 placements. The basis for this is we need to further expand our menu to have the broadest menu available also in our molecular integrated solutions.
As you can see with these launches of cobas 6800 and cobas 8800 and the five additional launches that we plan for this year, again, we will have the broadest menu in the marketplace on fully automated molecular diagnostic systems. Now I want to move to VENTANA and our tissue diagnostics business. We have launched the VENTANA HER2 Dual ISH DNA Probe Cocktail, which is the first assay for HER2 that allows to use wide field microscopes. A microscope that every pathology has in their lab instead of having to use a fluorescence immunochemistry microscope, which is much more complicated and also takes more time. With this device, you can now run an HER2 test in just one day. This is especially for our business with Herceptin, also the emerging markets, extremely important.
With this, I think we contribute also to the companion diagnostic PHC strategy of our organization, of our company. To come to an end, NAVIFY Tumor Board, we have indicated that we have this collaboration with GE Healthcare on the area of NAVIFY and also on clinical decision support systems in the market. With a new launch of NAVIFY Tumor Board 2.0, which is the version that now integrates also imaging into the tumor board for the clinicians. This will now enable the radiologist to have the patient records uploaded into the same dashboard as the patient files are already available from other disciplines. A major improvement in how the tumor boards can be run in the future.
With this, the launch of the tissue diagnostics HER2 test, the TVMG microbiology test, and as well as the NAVIFY version 2.0, we can tick three more key launches that we have announced for 2019. We are very confident that also in the second half of this year, we will complete our portfolio as we have announced before. With this, I want to hand over then to Alan for the financials.
Thanks.
Please.
Thank you. Hello, everybody from hot Switzerland. Thanks for joining. Very confident about that we grow through the period of biosimilar penetration. I think you see a very well-managed first half, sales up. I think costs are in check as well as the biosimilar impact. I think I have to highlight a couple of developments in the second half, and I will do so. Right at the beginning, a couple of highlights. I think my colleagues have done a great job in explaining the sales growth. I think results in an operating profit growth of 11%. Core EPS was a higher momentum. I will talk about that. We had a tax impact there. You look at cash flow. Cash flow down. Don't be worried about that. I'm confident. I think that we can deliver really on the full year base, a pretty good number.
Why is that? I think, CHF 1.2 billion higher accounts receivable on the pharma side, really in the U.S. I think really here's an opportunity to turn that into cash quite quickly. The other piece is really higher inventories on the diagnostic side of roughly CHF 270 million. I think that will turn into cash as well because we have high demand there. The net financial result, I will come to that and explain it, and the same applies to the IFRS net income, which has even a higher momentum than the core EPS growth. Good. Here's the set of numbers, and let me lead you through this. I think sales, as said, explained. The core operating profit up 11%. I will have on the next slide the opportunity to go through the P&L and explain that. Then you see really the increase to the core net income.
The core net income has a higher dynamic than the core operating profit growth. Why is that? Major point here is really coming from a tax impact, and that's a tax dispute which results from long ago, 15 years ago. It's really not related to our current business. That gave us a positive CHF 242 million here and boosted a little bit the core net income. Certainly won't reoccur in the second half. Core EPS up 13%. You might ask yourself, how can the core EPS growth be lower than the core net income growth? There are two elements to mention. One is, well, Chugai is quite successful, so the minorities. They have evidently a higher dynamics than we have in their profit growth. That's one element. That's basically half.
We have, at the time when we finalize the figures, all the stock options have been in the money. We have a dilution effect coming in here as well, which accounts for the second half of that difference. The IFRS net income up 19%, you see the difference between the core net income and the IFRS net income. There was another boost here, this is another tax effect that I would like to mention. This is something which is related to the Swiss tax reform. Whenever such a reform happens, you have seen that as well with the U.S. tax reform, what you have to do is a remeasurement of your deferred tax positions. That's what we have done.
You might remember when we had the U.S. tax reform, we had an impact in the non-core area, and that's the same which is happening now based on the Swiss tax reform. To avoid misunderstandings, we are not going to pay less taxes in Switzerland from now on. Either we pay the same or a little bit higher. That doesn't mean that the effective tax rate is really impacted by that. It's a pure accounting move for related to our deferred tax assets. Cash flow, I will come back on a later slide. Yeah. Here is the promised explanation on slide 51 about what has really happened in that first half. Yeah. What is the underlying momentum that you're really seeing here? Let me lead you through this. You see the core EPS development, yeah, and you see half-year 2018 on the left-hand side.
On the right-hand side, you see the half-year 2019 result, and then you see in between the 13.1% that we have reported. Let me lead you through this, and it starts with the gains on product disposals. You see that there has been a positive compared to the first half 2018. Why is that? Really here to say is that we had higher gains, roughly CHF 130 million more higher gains, yeah, compared to the first half 2018. That gave us a positive here. When you look at the royalty income and the other operating income, that's the red one beside with a minus 2.6 percentage points. Here is Cabilly. That's Cabilly. That's Cabilly with a minus CHF 280 million, and Bill has talked about that. That's the next impact here.
We have the gains on equity securities. There are two elements to mention. One element is AveXis. We had a CHF 100 million gain last year in the first half. You know that AveXis has been acquired by a company not so far away from here, and that gave us a positive gain of CHF 100 million, which we certainly miss now in the first half of 2019. The other piece to mention is Allakos. Allakos is a company we have a minority stake in. Certainly based on the new IFRS accounting rules, that has to be a market-to-market accounting that we have to do here. We have fluctuation. That was a negative of minus CHF 42 million. We have the resolution of the tax dispute that I've outlined already.
A tax dispute which resulted of a conflict 15 years ago, which has been resolved now. The tax department, as you can see, I think with a lot of persistence, drove that to the right decision at the very end. That gave us a positive of CHF 242 million. Certainly, I think that's not going to reoccur. Let me go through these effects now, and let me give you a little bit of a hint for the second half about them. I think the gains on product disposals, nothing significant to expect in the second half. The royalty income and other operating income, while we've always said the Cabilly impact for the full year should be between CHF 600 million and CHF 700 million net negative on the operating profit.
I think really now we went through a CHF 280 million negative, so there's a little bit to come in the second half. Gains on equity securities. Okay. We won't have the CHF 100 million from AveXis. We will see what's going to happen to Allakos. Certainly, the resolution of the tax disputes is another one which is not coming back. What I would like to mention, though, is when you take the four effects together in the first half, this is a plus of 0.7 percentage points. You see really then, that's the large green bar, how we have performed in the first half with an underlying momentum of 12.4 percentage points. I think really that puts everything into perspective and will certainly help you to get to the right perspective when it comes to full year. With that, let me go through the P&L very quickly.
I think my colleagues have given you a lot of color already. I think royalties other operating income story is told. Higher gains on our product disposals. Cabilly with a CHF 280 million against that's the minus CHF 159. You see the cost of sales, huge momentum for the group, 12% volume growth. For pharma alone, 14%. MND, +6%. The launches, I think, drove that. R&D, very reasonable, 4% increase. G&A, very reasonable cost management here, supported by a very small business tax effect. When you look at it, 9% sales growth, 11% core operating profit growth. When you look at the margins, don't want to give you a long story here. I think margins really develop into the right direction. You see really in core an increase also on the diagnostic side. Really things are going here in the right direction.
Core net financial result. I think the TTR ratio is clear. I reflected on that already. Equity securities, that's once again AveXis and Allakos. Interest expenses. I didn't create a lot of hope here. I think we've done a lot of debt restructuring. We said now we will go through a period where interest expenses will go up. You see it's really a slight increase. We're very happy about that. All the rest is pretty small impacts. Good. Group core tax rate. What you see here is on the left-hand side, we had 20.1% in half-year 2018. We have a decrease, and now we are at 16.7%. The decrease is 3.4 percentage points. Two percentage points of that is the result and the resolution of the tax dispute that I've mentioned before, which resulted from this 15-year-ago conflict.
The other piece is really, well, I think our tax rate is trending a little bit lower. Really for the full year, I expect a tax rate to be slightly below 20%. Good. Non-core items. As said, when you really look at the global restructuring plans, when you look at the amortization of intangible assets, impairment of intangible assets, you see slight increases here. We have a positive on M&A and alliance transaction, which results from the release of contingent considerations. A relatively small difference compared to last year. No difference when it comes to legal and environmental. You see really when you look at the core operating profit momentum of 11%, the IFRS operating profit has the same momentum with 11%. Certainly, I think the two tax cases come here together and bring us a difference of CHF 359 million positive.
As said, one is the resolution from this 15-year-ago case, and the other one is related to the deferred tax positions that we have looked into related to the Swiss tax reform. Brings us to an IFRS net income of CHF 8.9 billion, increase of CHF 1.4 billion, and an increase in constant rates of 19%. Good. Quick points on cash. I think really when you look at group asset, I think you see Pharma does well despite the fact that the accounts receivables have increased quite significantly on the Pharma side. When you look at Diagnostics, a couple of points to mention here. I think I talked about the inventory increase already of CHF 270 million, which certainly is reflected there in the cash development. As said, I think here I expect a soon turn into cash, so that should help us in the second half.
On PP&E investments, an increase of CHF 140 million, basically driven by because we bought a location in the U.S. In intangible assets, an increase of CHF 240 million. We're active, and that's a positive for diagnostics. Broadening the technologies that we can provide there. A couple of outflows for transformations here. Certainly expectation is in the second half, that we have better momentum here as for the business in total. Good. You see the group development here. You see really the CHF 8 billion, that we had at half year 2018. You see really we do well when it comes really to the underlying business and the operating profit net of cash adjustments, CHF 1.4 billion up. You see really the net working capital, and as said, two major effects here, the accounts receivables and the diagnostics inventories.
Small point on investments in PP&E, are well less in pharma, a little bit more on the DIA side. The lease liabilities paid. It's quite interesting that IFRS 16 now realized, if you like. That's the numbers that we had in our cash flow in the past as well, but now we have to outline it, and I think here it is. You see really the investments into intangible assets, and that is basically half on the pharma side, half on the diagnostic side. I said, that is really investments into new opportunities moving forward. Leaves us with CHF 7.5 billion for half year 2019. As said, I think we expect a better momentum in the second half. Good. Group net debt slightly up compared to the end of 2018.
This is really our normal development because the first half we pay the dividend, and we have increased the dividend, and I hope you like that. I think really you see the momentum here. What you also see is when you look really at net debt at 30th of June, that we're down compared to last year. We had, last year, half year 2018, CHF 11.7 billion. Now we're down to CHF 8.4 billion. I would say the sole reason for that is really that we didn't do significant M&A in the first half. We will close Spark in the second half, and that will bring us back to the same level playing field compared to last year. Good. When you look at the balance sheet, very quick comments on that one. Cash and marketable securities, I would say we paid the dividend.
Other current assets, it's clear, accounts receivable up for the company as a whole by roughly CHF 2 billion. The non-current assets, here IFRS 16 kicks in. Those are right of use of assets, CHF 1.1 billion here adding to that's pretty much the difference compared to last year. You go to the liability side, current liability is pretty stable. The non-current liabilities, here the pension liabilities moved a little bit up by CHF 700 million. That explains the difference. Why that? Because discount rates went down, that leaves us with a pretty healthy equity ratio of 39% that we are certainly eager to increase further. Good. Outlook, I think the major point, certainly the currencies, what you see is that half-year, dream situation, no impact here from the currencies. Why is that? It's pretty simple.
You see that the US dollar, and you see it on the left-hand side, the US dollar contributed positively, +3%, if you like. You really look at the EUR, and there's a -3%, and that balance out. The currencies from Latin America gave a little bit of momentum to that as well. I think we're pretty balanced at half year. When you look at full year, you see really on the left-hand side that the impact from the US dollar goes a little bit down, goes from +3% to +1%. I think that's one element here. Basically the impact from the EUR stays the same with the -3%. This is certainly just true if all the interest rates that we have had at 30th of June remains the same until year-end 2019, which won't happen.
That's very clear. That's a very much assumption-driven base here, as you all know. You see, based on that assumption, the impacts for full year would be rather small. Good. I think Severin talked about the outlook already. Very happy that we were able to increase the outlook. I hope you like that as well. We're looking forward to your questions. Thanks a lot.
Thank you, Alan. Great. Let's go into Q&A. Can we have the first question, please?
We will now begin a question and answer session. Anyone who wishes to ask a question now press star and one on the touchtone telephone. The first question from the phone comes from the line of Sachin Jain. Please go ahead.
Hi. Sachin Jain from Bank of America. Just a couple of questions, please. Firstly, on TECENTRIQ. Any color on penetration in triple negative and small cell? I think your comments were what percentage of the franchise those were, but what are the penetrations into those individual indications? Secondly, on biosimilars. Wonder if you can give any color on the biosimilar burden we should expect into 2020. I mean, I could frame it as follows. I think the pressure was roughly CHF 1 billion in 2018. We're expecting just over CHF 1 billion in 2019, consensus model is roughly CHF 3.5 billion for 2020, obviously a significant step up. Any color on that and how to think about U.S. erosion rates? Final question is on attempts to remove the Amgen approved biosimilars from market. Just any color there on your level of confidence. Thank you.
Right.
Well, on TECENTRIQ, and I'll just talk about the U.S. because the approvals of small cell lung cancer and TNBC in Europe are too current to draw any conclusions about penetration. In the U.S., there was actually some significant uptake in small cell lung cancer actually before the approval came in Q1. I think we're relatively more penetrated there, probably somewhat over 50%. In triple negative breast cancer, the testing rate is just now reaching sort of low 70%. Obviously you can't get treated if you don't get tested. It's really a two-step thing. We think that today we might be at about 70% testing and 70% use. Call that 50% or a little less than 50% penetrated.
On the small cell lung cancer, I think there is probably some considerable room to go because there's some question around eligible population, and we think that may be expanding. I think we still have quite a ways to go. On the other questions about biosimilar, I guess in terms of the legal activities, I don't think we're going to say much about that. I think we have some remaining IP and we're appealing the court's decision where they didn't accept our request for an injunction, but we're appealing that and also asking for a temporary halt on commercial activities in the meantime. In terms of the magnitude of the impact, I don't know, Alan, do you want to comment on that?
Yeah, happy to do so. Well, certainly, I think we give our full year guidance at the end of this year. It's very clear. I think we've said we're confident to grow through the biosimilar impact. I think it's pretty clear. I think the penetration in the U.S. has started now. I think that's the fact. We will see momentum in 2020. We will still have Europe in the games, no question about that. Having said that, I think very clear. I think we intend to grow in 2020, and I think that looks very promising.
Thank you, Alan. Thank you, Bill. Sachin, you have a follow-on question?
No.
Okay. Sorry, I misunderstood. I actually got in a question here by email from Luisa Hector, which is related to the biosimilar ones. I just read it. Did Amgen launch earlier than expected? Can companies with whom you have settled now launch? Of course, we have tried to agree on a settlement with Amgen, and Amgen decided to launch at risk. Now the courts have to decide on the further course. With the other companies with whom we have settled, we have settled, and therefore they would not launch earlier based on Amgen's decision to launch on risk. Can we have the next question, please?
Next question from the phone comes from the line of Richard Parkes, Deutsche Bank. Please go ahead.
Hi. Thanks very much for taking my questions. Firstly, on HEMLIBRA, I wondered if you could give us an update on where you are in terms of reimbursement access discussions in Europe in the non-inhibited setting and when you might start seeing sales in that setting. Secondly, on PERJETA, you highlighted the sort of slowing trend in the U.S. in the second quarter given switching to KADCYLA, but could you help us with some modeling? Can you walk us through where you are in terms of penetration rates for PERJETA in the adjuvant setting in the U.S., and where you might hope to get to? Third, final question, just on Ocrevus. Given there is a potential competitor with a monthly product in development, could you talk broadly about how you might go about defending the franchise in the situation where competition materializes?
I noted you've initiated a study of a subcut formulation, so maybe you could discuss how that might fit into that?
Bill.
Yeah. Sorry. Could you clarify that last question? Just the last part of it. I just didn't understand what you said.
I noted that you've initiated a clinical study of a subcut formulation of ocrelizumab and just wondered how that might fit into your strategy should competition emerge?
Great. Yeah, thanks. Okay. First on HEMLIBRA, we're very early on the non-inhibitor reimbursement discussions because, well, the wheels of reimbursement grind slowly in most of the European countries. I don't think we have any particular concerns there, but in particular, because as you know, I think the indication statement was for severe hemophilia, and we think there's a high unmet need there as well. In terms of PERJETA penetration in the U.S., you asked about with the advent of the KATHERINE study being approved with KADCYLA. Yeah. Now basically patients who don't get a complete pathological response in neoadjuvant setting are now eligible to receive KADCYLA, where some of those patients might have received a continuation with PERJETA or PERJETA and HERCEPTIN. We are seeing some basically movement in the patient flow from patients who would have gone on H+P now getting KADCYLA instead.
The growth in PERJETA in the U.S. is still ongoing. We think there's a continued penetration, but it's definitely going to be slowing down because of KADCYLA getting the uptake. From a business standpoint, that's fine because it's a high-value product. We expect to see continued growth in HER2. Now we'll see more of the growth happening on KADCYLA, and a little less on PERJETA. In terms of Ocrevus, I think maybe you can say the best defense is a good offense. Ocrevus is just an amazing molecule. Part of the thing that's very attractive is that it's dosed twice a year. Patients would typically see their neurologist about twice a year. Now they get to go in, have a checkup, have their dose, and they're done for another six months.
We actually showed data at AAN, I think it was quite compelling, about the importance of the dose, the importance of a complete depletion of B-cells, and that the dose actually matters. I think also, though, the dose can have important implications for safety. The fact that we have 100,000 patients now who've been on therapy, the fact that we've had some thousands of patients for significantly longer than two years. We have the early trial patients. Some of those patients have been on for five or six years. I think a really large safety database is certainly an important advantage for physicians and patients. Then you mentioned a subQ program. We are looking at a subQ route of administration.
I think, again, it's pretty hard to beat the IV with a short infusion time, well-tolerated, a very good side effect profile, and we'll look forward to additional competition.
Thank you, Bill. I got here by email, again, follow-up questions on HEMLIBRA. One is from Luisa Hector, a split between the inhibitor and the non-inhibitor settings on a global level, and then additional questions from Marietta Mimietz on HEMLIBRA who is interested on the dynamics specifically in the U.S. non-inhibitor space. Namely, do we mainly get severe patients, that is more than six bleeds per annum? Secondly, what is the number of HEMLIBRA patients which were previously prophylaxed?
Okay. Let me start with the split and I can simplify. Outside of the U.S., most of the business is inhibitor patients because the non-inhibitor population is more recent approval. I don't think it's Yeah, you can assume most of the business is there. The growth outside the U.S. will be almost entirely in non-inhibitor patients. In the U.S., we have 14% total share of hemophilia A, and we have about 60% of inhibitor patients. Inhibitor patients are about 5% of the total. If you have 60% of 5%, that's 3%. Basically three percentage points of the 14 is inhibitor, and the other 11 percentage points, approximately, is non-inhibitor. I'd say at this point in time, probably by July, August, it'll be about a four to one ratio, and that's just going to continue over time to be more and more non-inhibitor patients.
Probably something like 20% inhibitor, 80% non-inhibitor, and again, growing in the non-inhibitor side. In terms of the dynamics, it's quite a mix. We don't have a lot of insights into the exact sources of business because recall that the inhibitor population has only been approved for less than a year, and most of the detailed information on share and uptake is sort of lagging. The anecdotal reports is that It's a higher than average proportion of prophylactic patients because patients that are already motivated to have prophylaxis are the same ones who would be very motivated to switch therapies and to go on a product with the clinical profile of HEMLIBRA with a really strong prophylactic effect. That probably something like three out of four patients are severe and 25% might be moderate. That's probably the best we have right now.
Thank you, Bill. Can we have the next question on the phone, please?
Next question comes from the line of Richard Vosser, JP Morgan. Please go ahead.
Hi, thanks for taking my questions. First question, just clarifying on the 2020 growth and beyond. We've obviously seen this year your ability with biosimilars to preserve the margin despite the erosion. Can you just confirm that we should think about the future growth as top line growth and EPS moving in tandem going forward, or how else should we think about it? Second question, just on healthcare reform. Obviously, we've seen some steps in the last few weeks around U.S. healthcare reform. Perhaps you could give us maybe some idea of an impact from favored nations proposals and maybe the proposal by Chuck Grassley on the bipartisan proposal, how you see those in the context of Roche. The final question, just to go on to TECENTRIQ and think about one of the readouts, the adjuvant lung cancer readouts.
How should we think about the timing of that readout? I know it's in the next 18 months, but when about should we think about it, and how do you see that coming relative to the competition? Thanks very much.
Thank you, Richard. I suggest I take the easy question on the margins for next year, and then Bill, you can take the healthcare reforms in the U.S., right? Adjuvant lung. Yeah. We don't see a structural change due to the biosimilars. It is true that if you come to the end of the life cycle, that you don't have marketing and distribution investments to the degree you would have if you launch a product. If you look into gross profit margins, they are on a very similar level for our new medicines. You're seeing that we keep M&D under control. You have seen a bit more of M&D investment in the first half of this year with 8%. We expect this to come down in the second half.
Without preempting the guidance for next year, but on the basis that we grow sales also in 2020 due to the strong momentum we have with our new launches, you should expect that we can also grow profitability. With this, Bill, if you can take over for the U.S.
Sure. Let's see. Okay. On healthcare reform, it's obviously a situation that's very much in flux. I guess what we would say is on the question of most favored nation, or frankly, foreign reference pricing at all, we think it's quite bad policy. The U.S. has had a long track record at being willing to support innovation, pay for innovative new therapies. In many ways, that's led to a lot of the progress that we're seeing in the whole world of medicines. It's also been a huge economic factor for the U.S. and there's a reason why the majority of the innovative biotech industry is headquartered in the U.S., and I think that's also not lost on policymakers and politicians.
While it's popular to bash medicines companies, there is a reality and a known reality that this is actually a very important enterprise for the health of the nation. I think we remain positive and confident that the ultimate landing place for healthcare reform or changes around prices will be one that does continue to support innovation. I think that brings us to things like the Senate finance proposals, which are actually being debated today in Washington in terms of amendments and such. We think that there's some parts of it that are reasonable and some good ideas. Probably the hardest thing is that there's a lot of so-called pay-fors that are being asked of the pharmaceutical industry that are not actually going to solve the basic problem. The basic problem is high out-of-pocket costs for patients.
I think it's already been pretty broadly demonstrated that while list prices can be quite high in the U.S., the net prices result in basically going back into insurance pools or paying middlemen. Patients suffer while the healthy people actually have maybe lower premiums. This really does need to get fixed. We've spent a lot of time in Washington, continue to do so to say, "Hey, how can we work together to solve this issue of cost for the patients in need?" I would just say that Roche, Genentech in the U.S., the pharmaceutical industry, is signaling a willingness to be a big part of that solution.
We need to see the packages coming out of Congress or from the administration are really going to solve patient issues and not just end up as sort of solving government budgets or paying for other things beyond medicines. I think, again, stay tuned in this issue, but I think the proposals, again, they're not something that's catastrophic for the industry, but we'd rather see them going more towards paying for patients and lowering patients' out-of-pocket costs. Let's see. The other question was around TECENTRIQ adjuvant and in lung cancer in particular. We moved very rapidly into the adjuvant setting. We hope to see data in 2021 or 2022. It's very much driven by events and event rates. We do believe we have a chance to be first because of the early studies we ran and the things that allowed us to move in very rapidly.
Again, I think it's another area where we feel really strong about our immuno-oncology portfolio and TECENTRIQ.
Thank you, Bill. I have two follow-on questions on products. One from Manasi Agrawal. Have you seen any impact on the number of patients on Ocrevus post-launch of MAVENCLAD and Mayzent? Another one on risdiplam, in particular, when we will see the filings for risdiplam?
Risdiplam. The first one, the impact on Ocrevus of the launches of competitor drugs. We have seen an impact. The impact is that Ocrevus share goes up. We hope there are more competitive launches like that. In terms of risdiplam, the filing for risdiplam will be based on basically four data sets. There's part 1 of the SUNFISH program, part 2 of SUNFISH, and then part 1 and part 2 of FIREFISH. The discussions we've had with the FDA, we believe that we'll be able to put together a package that would allow for an initial approval based on part 1 of each. In the EU, we think that they're probably going to prefer that we wait until we have part 1 and part 2 to file.
The timelines for those respectively are, we think we'll file with the FDA in the second half of 2019, and then we'll follow on shortly thereafter with EMA in the first half of 2020.
Thank you, Bill. A question here from Luisa Hector on the tax side. Alan, tax benefited by CHF 242 million in the first half of the year. More specifically, what tax disputes were settled? Secondly, was this included in the original guidance at the start of the year?
Look, I don't want to go into that because it's really an old case, and it was more related to diagnostics than really to pharma at the very end. Honestly, 15 years ago, I think there's no relevance of that case to our operation of business anymore, you could argue. As said, I think it's really a persistence. Just to be very clear, nothing to do with biosimilars or whatsoever. It's really something, a very old case. Has it been related, or let's say included, in our guidance beginning of the year? Look, I think we have so many impacts during the year that I would say our guidance is the guidance. That's what we have in here. I think we have given a clear outlook, certainly that effect is not coming back in the second half.
I think we have increased our guidance, and not just on the sales side, because implicitly, as you all know, also on the core EPS growth side, if you like, we have still the broadly in here. I would say we have a great momentum. The other effect is not coming back in the second half, so a little bit of a dilution of that effect. We have a great one.
Thank you. Before we go on the questions on the telephone, a diagnostics question from Charles Pitman, actually Redburn. That's for you, Michael. You mentioned you have resolved the tissue diagnostic shipping delays. Are you confident that this is a one-off negative? By when will we catch up again?
Yeah. Very good question. We have been very transparent about this topic. We have found the multifactorial root cause for the problems. It's resolved. We are now refurbishing a huge number of instruments that we have not shipped to customers due to this issue. We do this at maximum speed, and we are confident that during the second half of the year, we will be coming back to normal in the shipments of these instruments. No further comments on this that I need to share with you. We are back to normal in the second half.
Good. Can we have the next question on the phone, please?
Next question comes from the line of Caio Barek, Goldman Sachs. Please go ahead.
Thank you. One question for Alan on tax longer term, then two on the pipeline. First, for Alan, how should we think about the longer term tax rate? You are clearly guiding to something below 20% for 2019. As you see the mix of business changing going forward, what should we think? Should we think of it as a continual downward pressure on our models from the 2019 rate, or should we think of it as being flattish below 20%? On the pipeline, two questions, please. First, slide number 33 talks about the Huntington's assets latest filing as being 2022. What should we assume as a more realistic filing date rather than the latest, and what are the various scenarios under which you can do a filing either before 2022 or in 2022?
Secondly, on the fixed-dose combination for Herceptin/PERJETA, can you just help us think about how we should think about the commercial opportunity for this molecule or for this combination in the context of biosimilars for trastuzumab, both in the U.S. and in Europe? Thank you.
Thank you, Caio. On the tax, Alan, if you start off?
Yeah, sure. Caio, my assumption is that you talk about the core tax rate for the group, because there is still the effective tax rate. We've seen that going down to 14% due to the tax effects that I've described before. I think when it comes to the group core tax rate, as I've said, I think slightly below 20%, and that I think that's the flattish development also moving forward to what I know from today. I think we went now through the reforms in the U.S., and I think that has an impact, and I think it's showing now. I think we are on a good platform now, moving forward.
Thank you. Bill.
Right. Let's see. On Huntington's, I'll just try to lay out the facts, and then we can talk about what's realistic in terms of assumptions or filing timelines. Basically, we've got a phase II study that we have already published the results on 46 patients from an open-label extension of that study. I think those were 9-month results. Later this year, we'll have 15-month results from the same study. In parallel to that, we are doing two other things. We have a natural history study where we have basically patients that are matched in the relevant characteristics to the patients who are in the phase II study. These are being followed to see what is the progression of their disease.
We'll have results from that study in the first part of 2020. The other thing that's happening is we have a phase III study that's accruing, looking at dosing every 2 months and every 4 months. That's the full phase III that would read out in time for us to file in 2022. 2022 is sort of the latest date, and that's based on filing with the full phase III data. The discussions we're having with regulators in both the U.S. and Europe is what might be fileable based on the open label or the phase II data, the open label extension, the natural history study, and then also the data that we're collecting on suppression of mutant huntingtin protein. Those have been positive conversations.
As I said, we'll have both the longer-term data, open label data from the phase II, as well as the natural history study. We'll have all that information in early 2020. There could be a filing in the first half of 2020. That, again, depends on the willingness and continued progress in those discussions. I hope that gives you at least the range of filing timelines, and I think it remains to be seen exactly when it'll occur. Let's see. In terms of the other question you had was about the fixed dose combination for H+P. We will finish our study of that study in the second half of this year, and we would hope to file in the first half of 2020. You asked about the potential, and I think, a couple ways to think about it.
For example, Herceptin subQ has had limited uptake in the U.S., but part of the reason Herceptin subQ has had limited uptake in the U.S. is because most physicians are using Herceptin plus PERJETA. If they have to infuse PERJETA with an IV, then it's not that useful to have a subQ Herceptin and an IV PERJETA. The fact that we would have the combination, there's an immediate benefit in terms of convenience. It also affords opportunities to consider the value proposition of the two combined and what the right price is for that. That's actually true both in the U.S. and Europe. I think there's interesting potential for the fixed dose combination and we look forward to getting the results later this year and hopefully having a product approval in the quarters ahead.
Thank you, Bill. Let's have the next question from the line.
Next question comes from the line of Jo Walton, Credit Suisse. Please go ahead.
Thank you. I've got three quick questions. Firstly, I wonder if you can help us on how much biosimilar Amgen may have released into the market. Sometimes with these launches you see several months' worth of potential sales released, so just some help there would be useful. Secondly, for Alan, once again we've seen quite a substantial restructuring set of charges. Wonder whether you could help us on what you think the full year restructuring charge will be and what sort of payback you're expecting and which line items we might be able to see benefit from that restructuring. On a similar theme, but just a longer term one on costs. You've told us very helpfully that you're expecting to see both sales growth next year and continuing development in profitability.
As you transition from a generation of Avastin, Herceptin, and RITUXAN to a newer generation of products, just wondering where we should see that leverage. Is it that the gross margin of this new portfolio will be better than the old portfolio or that the SG&A demand from this new portfolio will be less than the old portfolio? One assumes that you'll continue to spend R&D at more than 20% of sales. Thank you.
Thank you, Jo. Perhaps I can just qualify a bit on the last question, and perhaps I was not precise enough. What I really wanted to say beforehand is that, first of all, we expect to grow next year, and that structurally, I don't see a difference in the profile of biosimilars versus the new products, really because our new launches are equally specialized with a comparable structure. I was not necessarily talking about increasing profitability. I was talking about growing earnings also for next year. We'll see how things develop for the end of the year and then give as usual, a more precise guidance when we come into the beginning of next year. I was explicitly not suggesting that, for example, the gross profit margin or other line items would necessarily improve versus the biosimilars.
Also versus the mature portfolio, having in mind that those medicines are actually medicines with a high gross profit margin. Now, Alan, there was a question on restructuring expenses.
Yeah, sure.
Bill, if you could comment on the biosimilars, and how much stock Amgen has released.
Yeah. Jo, let me comment on your justified question on the restructuring costs that we have in, and especially certainly in the non-core section, which is not differing too much compared to what we had last year. It's a CHF 52 million difference. I would say we have a constant stream of things that we do in the company. Certainly, we always work on our productivity. There's no question about that. I think we have to do that. I think we're going through a period of digitalization where we're really using digital to streamline our processes and where you see transformations ongoing and where we want to be a better organization serving patients moving forward. I think that's really the underlying task that we're having.
Having said so, I think really even when you look at the 477 and you go back a couple of years, we always have around CHF 1 billion. That's the ballpark figure. That does not mean that I expect that figure to happen the second half, because it's a little bit opportunistic. We will see. It's not like that we guide these programs from the top. I think that's really something which is emerging bottom up. I think the experience tells us roughly, the figure that we're basically having in our accounts for the last couple of years. When we have a program in, let me emphasize that, I think we don't want that people just dump PR costs into the non-core section. We have complete governance around that.
We have a clear policy around that because it's very important to us that you can compare our results over time. That the ingredients of our accounts are not really changing, so that we are straight on that. What I can say is what we require from these programs is basically a payback period of about 2-3 years. That's really what we're expecting from these programs, or that's what we're checking it against. I think that really shapes the expectations, I guess, from the things moving forward. When it comes to margin, let me say that very openly. I think we are a company which is investing on a high level, and we will keep that. We have always used the term that we want to defend the margins. That's what we have said, and sometimes we succeed.
I think most times we succeed, and we do very well in the last years. What I see certainly, it also gives us room to invest. Because when you look really at what we have done for FMI, what we do for Flatiron Health, I think all these things certainly need support, and also from a financial point of view. To provide that, I think we do these things, which increases the productivity but also gives us opportunity to invest into new things.
Jo, I'm afraid in terms of your question about stock released into the market, I really don't have any information on that. We haven't seen any major disruptions at this point. So I think you better have to ask them.
Thank you. Yeah, perhaps from my side, just to add on the margins and the longer-term outlook. My experience is, at the end of the day, in this industry, it all depends on the pipeline. As long as you are able to rejuvenate your portfolio, as long as you're able to come out with really, really differentiated medicines, you will be able to defend the premium, you will be able to defend your margins. The moment your pipeline doesn't progress, the moment you are not able to launch differentiated medicines, you see the impact on the P&L. On a higher level, if you like, I'm therefore so pleased about the good momentum we have seen with this wave of new medicines coming through the pipeline and with the opportunities which are still ahead. On that note, can we have the next question, please?
The next question comes from the line of Eric Le Berrigaud. Bryan, Garnier & Co, please go ahead.
Yes. Good afternoon. Three questions, two products related and one more general. First is on the Ocrevus. Could you maybe comment on the dynamics between the two main indications on PPMS and RMS? The data in PPMS were more questions. Do you see with time difference in use in terms of market share, penetration, length of stay of patients, and so on and so forth between the two main indications or not? Second, among the very, very few trains that are not arriving on time among products, maybe one is GAZYVA. We see more and more evidence about GAZYVA being a strong drug, more and more indications, more and more use in combinations, also in clinical trials, and sales are quite disappointing sequentially. Could you share with us maybe your confidence in seeing GAZYVA still becoming a very significant product in the context of the CD20 franchise?
Last question, more general one. We've seen in the past and maybe also right now, some companies either facing patent expiry and then using more capital gains through product disposal to offset profit decline. Also companies having a lot of innovative products coming through and less attention to pay to small drugs, also using product divestment to focus the portfolio. You are facing both, i.e., patent expiries and rejuvenation. How should we think of product disposal and small product in, let's say, 2019, 2020, 2021, as a way to maybe mitigate the profit loss from all the products, but also to change the structure of the portfolio?
Okay. Perhaps I can just comment on your last question in terms of how we look at the portfolio, what we add and what we dispose. Really, this is decisions which we take product by product. When it comes to the disposals. Really, if we feel that somebody outside of Roche can put more focus on it, can generate more value with a tail-end product, then we would consider a disposal. We would offer it, and if the economics work out, we would actually do disposals on a regular basis. You have seen again, we did some disposals in the first half of this year. It is really product by product, and it's unrelated to the overall development of the company, and frankly, also the amounts we are talking.
If you look back in terms of the relative magnitude of the product disposals we have seen in the past, it's literally marginally compared to our overall operating profitability and cash flows. That is really looked at asset by asset. In terms of small products, it creates a reaction because we don't look at small or big products. We look at the level of differentiation we potentially have and the value we can bring to the healthcare system. We are agnostic about whether it is more for a rare disease like SMA, for example, or also HEMLIBRA, or whether it is a disease where many patients are impacted, let's say for Ocrevus, for example. What really matters in our portfolio decisions is what is the medical differentiation, what is the competitive positioning, and how much value can we provide to the patients concerned.
size of a product or the number of patients is not a primary criteria for us.
Can I support that?
Please.
We had last year gained some product disposals, CHF 320, and we have outlined that in the finance report. You see that also now in the half year report on page 20. As said, in the first half, we had CHF 436 now. We don't expect major moves now in the second half. I would say that underlines the point. These are not very significant numbers. I would say the numbers we're seeing this year and also last year were not unusual.
Right. Absolutely. You have one new product performing well, and you can just forget about potential product disposals. One of the products performing well, Ocrevus, there was a question here on the split PPMS and RMS. Bill?
At the end of 2018, we think we had roughly 30% of our business was coming from PPMS and 70% from RMS. Primary progressive MS, we believe, is something just shy of 15% of the total patients, and we think we have a very high share of that, we don't have figures on it. Basically, what it means is, sorry, we're at 17% of the overall market, of the total market. The last piece of the dynamic is we're getting 39 out of 100 new or switching patients, we think the vast majority of those are RMS patients. I think what you're going to see is over time, more and more of the share of our business will be coming from relapsing MS. We're getting 39 out of 100 patients.
I can't think of another large chronic therapy area that has a single product with that sort of commanding of a lead, and I think that's clearly the dynamic that we hope to maintain as we move forward. Then you asked about GAZYVA and whether we're disappointed with GAZYVA, and I would just say, since we started developing GAZYVA in lymphoma and leukemia, a lot of other things have also entered that space, and I think that's part of the reason we've had less uptake than we might have originally hoped. With indications for GAZYVA like CLL14, where again, we have really deep complete responses in these patients, first line patients, fixed duration of therapy, no chemo, and the alternatives really are chronic therapy that goes on and on. We think we've got a really good shot at growth.
As I mentioned, lupus is another really promising area, that frankly, wasn't on our radar screen. We thought it was very much a long shot, and now it's going to become part of our formulation or our plans going forward. I think some of things like that are the largest reasons why we're so confident that we can grow and continue to grow through the biosimilar penetration.
Thank you, Bill. Can we have the next question from the line, please?
Next question comes from the line of Mark Purcell, Morgan Stanley. Please go ahead.
Yeah, thank you for taking my questions. I have three. The first one on biosimilars. I wondered if you could help us understand what proportion of RITUXAN, Avastin, and Herceptin in the U.S. go through 340B from a volume perspective. Just on the same theme, Amgen are not launching the market form of biosimilar Herceptin in 150 mg dose form. How much do you think that actually matters? The second one on the Port Delivery System, interesting to see such rapid development given this has largely been probably overlooked by myself and others. Is this now a platform opportunity through which you can introduce the bispecific and possibly other treatments to augment your ophthalmology portfolio? Thirdly, just returning to Bill, I guess in terms of moon shots. Could you help us size the opportunity and the likelihood of file acceptance for GAZYVA in lupus?
The subset of patients in multiple myeloma with VENCLEXTA, where I think you've suggested there's a tremendous benefit.
Bill?
Okay. Yeah, could you just clarify your question about the dose or formulation launch on the biosimilar?
Sure. Roche, in the second half of 2017, converted the Herceptin market to the 150 mg dose vial. Amgen have only filed on the 420.
Got it. Okay.
That's their approval. They haven't got a filing on 150.
Yep. Okay. Let's see, first on your question about the rate of use in 340B centers, we think it's about 25%. That's important for the fact that those centers might be more apt to continue to use an innovator product. We'll see. In terms of the dosing, the vial configuration on Herceptin, that's pretty hard to say. We did switch over, for several reasons, to the smaller vials. That was basically something that was driven by a combination of market preference and regulatory preference. I don't know. I think we'll have to see how that plays out in the market. In terms of the Port Delivery System for ophthalmology, we definitely see this as a platform opportunity. We've felt that since we started investing in these alternate delivery approaches over 10 years ago.
In terms of the bispecific, the Ang-2 VEGF antibody will not fit in the Port Delivery System, nor will other antibodies. For example, other anti-VEGF programs will also not fit in it. LUCENTIS is an antibody fragment, that's why we're able to concentrate it to a level that allows it to be delivered through the PDS. We also have an antibody fragment in development that is Ang-2 VEGF. If it turns out that Ang-2 VEGF delivers superior efficacy, we had promising data in phase II, if this is backed up by the phase III, we have a program in the works that would allow us to put that also in the Port Delivery System. Very excited about it. GAZYVA lupus, I think you asked about potential for an early regulatory approval.
We haven't had a formal discussion with regulators about that. We've shared the data. There's a lot of excitement. It's a disease that's very critical, but it's also chronic. I think it's really hard to call. I think we just have to stay tuned on that. We will do everything possible to make GAZYVA available to these lupus nephritis patients with all speed. Then you asked about VENCLEXTA and multiple myeloma subset of patients in the studies, a certain biomarker subset that seemed to get quite a profound benefit. Again, we're going to be working through this with regulators and experts in the field. So we'll come back with more on that in subsequent months. Thank you.
Thank you, Bill. We are running a bit over on the time. We can perhaps take one last question, and then we are going to close. Can we have the next question, please?
The last question is from Peter Welford from Jefferies. Please go ahead.
Hi, thanks for squeezing me in. I promise I'll be quick. Firstly, on the COGS, Bill made a comment, I think the fact it's tightly controlled, you're about two and a half years into an integration that's ongoing. I just wonder if Alan can give any sort of visibility as how much further can we go on this. Should we think about this as being halfway done or perhaps even just at the start? Just thinking about how much further we have the efficiency within the manufacturing footprint. Secondly, just very quickly on the Spark acquisition. I think the comment was made, you expect to close it in the second half with regards to the net debt. I'm just curious separately if you can update on that. I think recently, obviously, the timelines have pushed back on that quite a bit, potentially into 2020.
I guess what leads the confidence in the second half of this year? If can you give any visibility at all on what is leading to the delay? Thank you.
Right. Perhaps I can quickly comment on Spark. We would not comment on any specifics as this review is ongoing. Again, I'd like to reiterate that we are very confident to close the transaction by the end of this year. On the manufacturing costs, Bill, Alan, you want to quickly comment?
Yeah, I can take that very quickly. Point is, certainly these programs are running, and I think we're still benefiting from them. I see they're still part of the restructuring costs, as you can see. At the same time, I have to say, well, we're also benefiting from the fact that we're filling up capacity that we have built for in the last years. We're filling it up quite quickly, I have to admit, which I think is great, certainly with all the volume growth that we're seeing. Honestly, I think now to come up and say, "Hey, something significant will happen upwards or downwards for the gross margin," honestly, I have to say I'm not in a position to say that. We said we want to defend the margin. I think the gross margin is hovering around 80%.
Sometimes a little bit more, sometimes it's less at 79 or whatever. I have to say, I think that's a pretty comfortable number to move forward, and I hope we can defend that, yeah.
I would just add that in terms of productivity, I think we will continue to see gains in manufacturing productivity, but also in marketing and sales, in G&A, in R&D. There's a huge amount of momentum right now in the company, I'm sorry to say this for the financial community, it's not based mostly on cost savings. It's mostly based on all of our people wanting to make a bigger contribution to changing the world for patients. This is really a powerful rallying cry within the company, and we're seeing this in really every part of the company, global functions, in countries around the world. I think you should expect to see us continuing to deliver more and more with a given resource investment, and I'm very confident that's going to happen.
Bill, thank you very much. Thank you for your interest. Look forward to catching up next time. Thank you.