Earnings Call: Q3 2026

Oct 28, 2026

Summary

Q3 sales grew 5%, or 7% excluding anti-infectives B2B, as biosimilars advanced 17%. FY26 sales guidance narrowed to 5%-6%, while core EBITDA margin guidance rose to 23.0%-23.5% amid temporary German market and supply pressures.

Good morning, ladies and gentlemen, and welcome to the Sandoz call today. I will now pass on to Craig Marks, Head of Investor Relations, for his opening remarks. Thank you, and welcome to the Sandoz 9 months 2026 sales update call. Earlier today, we published our sales update together with the accompanying presentation that we will follow on today's call. You can find these documents at sandoz.com/investors. Joining me today are Richard Saynor, Chief Executive Officer, and Remco Steenbergen, Chief Financial Officer. Please turn to slide 2. Our sales update announcement, presentation, and discussion include forward-looking statements. Please see our disclaimer here. Please turn to slide 3. Richard will begin with the highlights of our sales performance and an update on the business, including the continued expansion of our pipeline and further enhancements of our biosimilar capabilities. Remco will then take you through our sales performance in more detail, as well as our guidance for 2026. Richard will conclude the presentation before we go to your questions. With that, I'll hand over to Richard. Please turn to slide 4. Thank you, Craig, and hello, everybody. It is a pleasure to welcome you to today's sales update. Since we spoke to you at our Capital Markets Day last month, we've continued to make good progress across the business, and I'm delighted to say we've continued to strengthen our position as the global leader in affordable medicines whilst achieving our 20th consecutive quarter of net sales growth. Please turn to slide 5. Let's turn first to the key highlights of our progress. We've again expanded our biosimilar pipeline, this time through collaborations with Henlius and mAbxience, taking the pipeline to 40 assets, including our first hemophilia biosimilar. We've also made the first GLP-1 shipments to our partner in Brazil, and we achieved GLP-1 regulatory approval in Canada. It's been a very strong year so far in generic filings. We have already launched around 270 generic medicines this year. At the same time, we've continued to invest in our future. At the CMD, we introduced our Bio100 ambition. Since then, we've opened our advanced high-volume drug substance manufacturing center in Lendava and announced further investments in Ljubljana in disposable fed-batch technology. Together, these excellent developments will further strengthen our in-house capabilities and support our long-term growth ambitions. Looking at our top-line performance, net sales grew by 5% in the quarter, but at an underlying level by 7% when excluding the anti-infectives B2B business. It is worth noting that we don't expect to see a material B2B headwind in Q4 or for next year. Biosimilars continue to be our growth engine, delivering another double-digit performance in the period whilst representing 34% of net sales. We're delighted with the underlying performance of the business. Demand is strong, our launches are performing well, and we recently strengthened our balance sheet, and we're delivering in line with our Bio100. Today, we have narrowed our 2026 net sales guidance to 5%-6% and upgraded our core EBITDA margin guidance for the year to 23%-23.5%. Importantly, today's update to guidance doesn't change our previously communicated outlook to 2028 or our recently announced outlook to 2030. Remco will take you through the full year guidance later. We will enter 2027 with strong momentum as we capture more market share, launch more medicines for more patients around the world, and expand our pipeline further and deliver more growth. Now, let's look at the sales performance in more detail, starting with slide 6. Q3 was another period of strong underlying growth for Sandoz, with net sales of $2.9 billion. Once again, biosimilars were the standout performer, growing by 17%. This reflects continued momentum from the established portfolio as well as the excellent contributions from our recent launches. Excluding the B2B impact, generic sales grew by 2%, in line with our long-term trend. From the regions, North America was the standout in the quarter, with growth of 20%. Please turn to slide 7. I am so pleased to see the progress that we're making in generics. We now have the leading global market share in generics, accompanying our number 1 position in biosimilars. This is a true milestone for our business. We continue to see strong execution across our portfolio. In GLP-1s, we made our first shipments to our partner in Brazil whilst we achieved regulatory approval for Sandoz semaglutide in Canada, our generic version of Ozempic. Our pipeline contains more than 300 generics, and our disciplined portfolio strategy is focused on the most attractive LOEs, particularly in oral solids and injectables. We are targeting around 70% of generic LOE opportunities by value, and we continue to convert our huge pipeline into new medicines. We've launched around 270 medicines alone so far this year. Overall, this demonstrates the continued strength of our generics engine, combining excellent market share progress, disciplined portfolio management, and a deep pipeline and consistent launch execution. Challenging conditions in the B2B market for penicillin API sales still remain. We continue to urge the European Commission to investigate alleged dumping and consider anti-dumping duties or tariffs to safeguard European antibiotic supply. We also continue to advocate structural reforms that ensure a level playing field for European producers. Now, let's turn to biosimilars on slide 8. Our industry-leading biosimilar pipeline continues to expand. It includes 6 assets in regulatory review or yet to launch, 7 in clinical development, 14 in technical development, and 9 in early development. We also reached another milestone with the recent EU regulatory submission of our pertuzumab biosimilar. As I said at the CMD, building the next generation of biosimilars requires both strong in-house capabilities and selective partnerships. The continued expansion of this pipeline demonstrates how we're combining these two approaches. Another important point is that we're building a broad and diversified pipeline of future opportunities across multiple therapeutic areas. Now, let's look at how some of the biosimilars in our portfolio are performing. Starting with Hyrimoz, we continue to see strong performance. Our global biosimilar market share has increased now to 23%, supported by broad preferred payer access in the U.S. and continued volume momentum in Europe. Turning to Pyzchiva, we continue to hold the number 1 position across the European markets. Our biosimilar market share now stands at 25%, while overall biosimilar penetration of the ustekinumab market has increased significantly beyond 50%. Together, these performances demonstrate both the strength of our established biosimilar portfolio and our ability to grow alongside increasing biosimilar adoption. Please turn to slide 10. Moving to Tyruko, our European market share remains stable at 17%. We continue to see opportunities for further geographic expansion, including our recent launch in Saudi Arabia. Omnitrope continues to demonstrate the durability of our established biosimilar portfolio, maintaining a strong global market position with a 36% market share. Its established daily treatment profile remains resilient, and a more sustainable U.S. distribution model provides a stronger foundation for future growth opportunities. Now, please turn to slide 11. Let's now look at some of our more recent launches. Starting with Wyost and Jubbonti, we continue to see very strong commercial momentum in the U.S. Jubbonti has already achieved a 56% biosimilar share, and Wyost a 49%. The European launch continues to advance, whilst the international rollout is also progressing well, including in Brazil and Australia. Turning to Afqlir, the European launch is progressing very well, supported by strong execution and favorable competitive dynamics. Afqlir is now available in 22 European markets with a 73% biosimilar market share, and has become an important contributor to our European biosimilar growth. The launch of Enzeevu in the U.S. is exactly in line with our expectations, providing an additional opportunity to build on our strong European start. These launches illustrate what we discussed at the CMD, the ability to move successfully from pipeline development into launch execution and global commercial scale. Please turn to slide 12. As we build towards Bio100, partnerships will be an important complement to our in-house development and manufacturing capabilities. Our collaboration with Henlius includes 4 initial programs covering numerous assets. Henlius will lead development and manufacturing, whilst we will leverage our global commercial reach. Our partnership with mAbxience adds our first hemophilia biosimilar. Again, mAbxience brings development and manufacturing capabilities, whilst Sandoz holds exclusive global commercialization rights. These partnerships increase the breadth and opportunity of our pipeline whilst allowing us to concentrate our own resources where we believe they can create the greatest value. Please turn to slide 13. Alongside the expansion of our pipeline, we are building the manufacturing capabilities needed to support the next phase of biosimilar growth. In Lendava, we've opened our advanced biosimilar drug substance manufacturing center, adding 120,000 liters of large-scale fed-batch capacity. In Ljubljana, we are investing in new drug substance facility, focused on disposable fed-batch technology. This will add 8,000 liters of biologic drug substance capacity by 2029 and give us an additional in-house capability for low to medium volume production, complementing our continuous and high-volume technologies. Together, these investments provide greater flexibility and control of our capacity and further strengthen our vertically integrated biosimilar network. This is an important practical element of Bio100. As the portfolio grows, we will have plenty of capacity to support it. With that, I will hand over to Remco on slide 14. Thank you, Richard, and hello, everyone. Let me start with our nine months net sales performance on slide 15. Net sales increased by 8% in USD and with 5% at constant currencies. Excluding the B2B impact Richard mentioned before, underlying net sales growth was 6% at constant currencies. The major driver was volume, while price erosion reflected portfolio mix and market dynamics. Most importantly, biosimilars continue to drive growth, supported by both successful recent launches and strong demand across the whole established portfolio. Please turn to slide 16. Now, let's have a look at the performance by business. Our underlying momentum continues to be strong, but we did face some temporary headwinds in the quarter. German market dynamics were a bit more challenging than we originally expected, while the additional biosimilar volume that we had anticipated could not be fully matched by supply. In the quarter, the 5% growth included biosimilars with up to 20% growth. They now represent 34% of total net sales. Underlying net sales growth in the quarter was +7% when excluding the AI B2B impact. Underlying generic sales in the quarter were up by 2%. While we ended up facing the same B2B impact we saw in Q1, we do not expect further impacts from Q4 onwards. Please turn to slide 17. Let's turn to the regions. North America was again the strongest contributor to growth in Q3, driven by an excellent biosimilars performance. Europe continued to deliver increased market share, including significant gains within biosimilars. As already mentioned, performance in Germany in the quarter was more challenging than we expected. Stronger volume in the third quarter also resulted in short-term biosimilar supply constraints. In international, underlying growth was 5%, despite impact from active portfolio rationalization, divestment activity, and supply constraints. Now, let's have a look at the debt maturity profile on slide 18. Our balance sheet remains strong and continues to provide financial flexibility. We recently issued a €500 million bond with a 12-year maturity, extending the average maturity of our debt profile. Importantly, we continue to maintain attractive funding costs with expected average interest rate on long-term debt remaining below 4%. We continue to enjoy investment-grade ratings with positive outlooks from both Moody's and Standard & Poor's. This framework gives us a strong foundation as we continue to invest in our pipeline, manufacturing network, and future growth opportunities. Please turn to slide 19. Finally, let me turn to our guidance for 2026. We have narrowed our expectations for net sales growth to 5%-6% at constant currencies, compared with our previous guidance of mid to high single-digit growth. This primarily reflects the constraints in biosimilar supply from strong volume demand, as I mentioned earlier, as well as the stronger than expected adverse market dynamics in Germany. As Richard mentioned before, our confidence in 2027 is very strong. Importantly, the net picture for 2026 is also positive, as we have upgraded today our expectations for the core EBITDA margin for 2026, which we now anticipate being in the range of 23.0%-23.5%. This compares with our previous expectation of around 100 basis points year-on-year expansion. If you remember, our margin last year was 21.7%. This new guidance has increased our expectations for core earnings per share this year. Our assumption for pricing remains a mid-single-digit decline. Based on recent spot rates and assuming these prevail for the remainder of the year, we continue to anticipate an approximate two percentage points FX tailwind to net sales, with no material impact on the core EBITDA margin. With that, I hand back to Richard. Please turn to slide 20. Thank you so much, Remco. Now, please turn to slide 21. Let me conclude with the bigger picture. Last month, we set out our ambition for the next decade and introduced Bio 100. By 2035, our goal is to more than double our net sales compared with 2025 before any additional upside from GLP-1s, whilst delivering a core EBITDA margin of more than 30%. Today, you can already see the progress that we are making here. Through Bio 100, our ambition is to build a portfolio of more than 100 biosimilars by 2040. Our biosimilar pipeline continues to expand, and we're investing in the manufacturing capabilities required for the next wave of growth. Recent launches are building strong positions in their respective markets, and we continue to broaden our opportunities through both in-house development and partnerships. At the same time, our generics business provides a strong foundation while we continue to advance near-term growth opportunities, including GLP-1s. Together this reinforces our confidence in our long-term growth prospects and our ability to continue delivering on our purpose on pioneering access for patients. Please turn to slide 22. Before I move to questions, we look forward to welcoming many of you to our Slovenia sites next month for a firsthand look at our new biosimilar capabilities. We will visit our recently opened development center in Ljubljana and our drug substance manufacturing facility in Lendava. The visit will demonstrate how our investments are bringing about Bio 100 to life through an integrated network spanning development and manufacturing. We look forward to seeing you there. Thank you for listening. Please turn to slide 23 and I will ask the operator to open the lines for questions. Ladies and gentlemen, we will now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen, or if you have dialed in, please press star 9 to enter the queue. Once your name has been announced, please unmute and ask your question. If you want to withdraw your question, please lower your hand using the raise hand function in the Zoom app or via telephone, press star 9. Thank you, and a moment for the first question, please. Our first question comes from Sophia Graeff Buhl-Nielsen from JPMorgan. Please unmute your line and ask your question. Good morning. Thanks for taking my questions. One on the guidance. Given you don't anticipate any further headwinds from the B2B API business in Q4, and you should also see the benefit of the launch of Enzeevu in the U.S. and GLP-1s, how should we think about the lower end of your top line guidance? Why would that be in the range of the 5% performance that we've seen year to date? In terms of the recent supply constraints that we've seen, will this have any implications for the upcoming Enzeevu launch in the U.S.? How can you ensure that this won't become a recurrent issue for Sandoz ahead of the ramp-up of the Slovenia facilities? Could these provide you any flexibility in terms of supply before the end of the decade? Thank you. Thank you so much for the question, Sophia. If I comment on the second two questions, then I'll get Remco to comment on the guidance comment. First of all, we see no issues or constraints with the Enzeevu launch, but really that will be pretty soft this side of the year, but we see quite a very attractive opportunity as we go into 2027. Again, our confidence around that and we're quite excited about that opportunity, in the U.S., but really that impact flows through mainly into 2027. The same with the GLP-1s. We always said in 2026, it was never really significant to the overall performance of the business. Delighted that we've now launched in Brazil, and again, we would look to launch in Canada later this year, but don't see a significant impact. I think you make a really good point. I mean, in a sense, part of our core Bio100 strategy was building our own internal capacity in the medium and long term so we got greater control. The issue around supply is more a demand question than a supply question. What we saw was, and you see that partly why it flows through to the bottom line, is an acceleration in demand, particularly in markets like Germany where the pricing frameworks have changed. We're now working to catch up that volume. We don't see an impact flowing into 2027. We're working with our partners to increase capacity. In a sense, some of that demand was perhaps a little ahead of where we thought it was, but some of that was lower pricing, which I guess in terms of market share is actually a positive. But, in the short term, could cause some frustration in terms of the overall supply capacity available to meet that demand. Remco, do you want to talk about guidance? Yeah. Thank you. Thank you, Sophie. Yeah, indeed. Excluding B2B, we had a 7% growth in Q3 and underlying that's also the direction you should assume going forward in Q4 and also for next year. We're looking very positive at the growth outlook. Yeah, always when you give out guidance, correct, you have to give some kind of range. So that's why we ended up with the 5%-6%. The 7% growth in Q4, would that be applicable? It ends on an average of slightly above the 5.5. So that would be more around at six. But it's so precise, so we give a rounded range of 5%-6% as give you the best indication we have at this point in time. We have still 2 months to go. But overall, we expect to step up in Q4 versus Q3. That's very clear. And we look very positively as well in the overall mix of the portfolio. And also the upgrade we did on the EBITDA margin. Thank you. Our next question comes from James Gordon with Barclays. Please unmute your line and ask your question. Morning. James Gordon from Barclays. Thanks for taking the questions. Two questions, please. The first one was extrapolating the top line growth. I think I heard that effectively implied in the guidance it would be that you would grow at something like 7% for Q4, and that we could extrapolate that for 2027. For that bit, what does that assume in terms of biosimilar Eylea in the U.S. and generic semaglutide? I think for generic semaglutide, it is technically not in the full year guide for this year, but is that 7% assuming you do get a bit of a boost from generic semaglutide in Q4 this year and into next year that is material? What are you seeing so far on biosimilar Eylea? The second question was on the EBITDA margin and the upgrade there. You have taken the margin up by 30 to 80 basis points for the full year, so twice that in the second half, so more than a percentage point. How sticky will that benefit be, and where does the benefit come from? Is it more some cost avoidance in the second half of this year, which then comes back or is even more of it into 2027? Are some of these things that are going to mean the margin is materially higher in the second half of this year going to apply to 2027 and beyond, please? Thank you. Good morning, James. I think both of those questions are great for Remco, so I am going to let him have his breakfast this morning. Thank you, James, for allowing me to have breakfast this morning. Yes, as I said before with the prior question from Sophia, we currently expect to step up in Q4 versus Q3, and indeed the underlying Q3 was around 7%. That is not a strange number from our perspective. The consensus for next year currently stands at around 5.5% growth currency comparable, and that is something we fully support. At this point in time, it is too early to give a guidance for next year. We will cover that next year. We would encourage anyone to change their position with regards to their outlook for 2027. As Richard said before, we are looking very positive to this. For this year, with regards to the margin upgrade, as the biosimilar growth is going very well, we benefit really from the mix improvement. In terms of cost on the SG&A, as we said before, we try to keep that as flat as possible. We are doing that. With regard to R&D, we are actually investing more than we originally planned, also in line with we said in the CMD. There is nothing we are holding back on the investment of growth. On the contrary, we have only accelerated this. The underlying improvement purely comes from the mix and all the cost constraints with regard to SG&A, fully in line with our plan. So very positive and nothing special to be mentioned here. Again, just to reiterate, I think to Sophia's question, in Q4, really the Eylea launch and the clips really do not make any material difference to the outlook of the business, but set us up extremely well for 2027. We are very optimistic around that. But do not see that as really a significant driver in this quarter. Thank you, James. Thank you. Thank you. Our next question comes from Shyam Kotadia with Goldman Sachs. Please unmute your line and ask your question. Hi, thank you for taking my questions. First one was on Germany. You flagged stronger than expected headwind in the quarter for both generics and biosimilars. How much of a drag was this to the group? Could you remind us what your expectations are for this impact? As I believe you flagged, this is only being a 2026 impact. Is this still the case, or could we see this going into 2027 also? My second question is on the anti-infectives impact. You mentioned the impact will be immaterial in full Q4 2026 and next year, but just wanted to get a sense check on the visibility regarding that. Because I recall prior commentary that 1Q 2026 was going to be the largest impact, and it was going to probably taper from there as it was in the base for second half 2026. Just wanted to get a sense check there on the visibility going forwards, given the release also mentioned there is no imminent return to pre-dumping conditions being expected. Thank you. No, thank you, Shyam. I will start with anti-infectives. I think that clearly we have taken quite a big hit this year. It has been a bit lumpy, Q1, Q3. But really now as we get into Q4, we do not see. In a sense, we have already taken that hit, and it is pretty much washed out. So our visibility to that is pretty good. So we do not see any impact really as we go into 2027. So that headwind will wash out. Again, I am trying to use this call, both with the commentators, but also the media to put pressure on European governments. Super frustrated that we have spent so much time to try and protect a European asset, and yet we are still facing quite heavy dumping from Chinese suppliers. Germany. Yeah, I think it has been an interesting story. Germany, we talked about at the beginning of the year that the government changed the sick fund contracts potentially to open house contracts. We started that. That triggered an expansion of the market, which I think in the medium and long term is very good for us, but also some price declines, particularly in biologics. The government then changed its mind and changed the rules, but then clearly the sick funds still were behaving in that way. So you had this very unsettled dynamic in the German market. When we look at our internal data, we are encouraged because we see we are winning share. I think it is also worth noting that we became the world's largest generics company this quarter. So again, building on that momentum. I think the bulk of that impact will wash through into 2027. Again, I think this was structural opportunities to better position our business as we go through in 2027. Again, it supported the margin expansion. But in a sense, this was probably the main driver in terms of the acceleration of the volume, which then put tension in terms of the overall supply network. So these things always become a little bit interlinked. But Germany has been not a straightforward journey, but I think clearly in the medium and long term, it is an attractive place because given our scale and given the Bio100 positioning, I think the adoption of biologics will accelerate. Anything Remco you would add? No, I think when you say, where is the difference coming and how much is Germany out of the total? The consensus for the full year was around 6.5%. Now we guided now between 5% and 6%. So let us say we talk about EUR 100 million. That will be a combination of supply in Germany, 50/50 roughly of impact of both to that EUR 100 million. Thank you, Shyam. Thank you. Thank you. Our next question comes from Harry Sephton with RBC. Please unmute your line and ask your question. Brilliant. Thank you very much for taking my questions. First one on the U.S. Enzeevu launch. Just want to get your thoughts on how you see this market evolving given the very strong biosimilar incumbent, and then also the buy and bill model, which creates certain pricing incentives, which you will have familiarity with Cimerli on the market where you had to withdraw it. Then my second question, there are a number of clinical stage biosimilars that are going off patent in 2027. Can you give us some indication as to what timeframe we should expect some of these to come to market? Thank you. Well, thank you, Harry. I guess which anything specific, because again, there is quite a long list. Clearly we have disclosed or we have tried to be incredibly transparent in terms of our pipeline and where we would anticipate our first launches. So I guess if there is anything new, we would update you. So nothing has really changed. Obviously in a sense, Novartis biologics, we were always going to necessarily be there given the nature of the separation. So I think we have been quite consistent with that. On the U.S. Enzeevu, I think having Cimerli, it has certainly informed us on our position. I think you're going to have to forgive me here because I don't particularly want to disclose our strategy and our positioning to the market, other than I think this is a really exciting opportunity and I think we're extremely well positioned, and I think something we can comment on a little bit later. But I don't particularly want to disclose much more at this point, given that we're really just in the very launch phase of this product. I don't want to signal to our competitors what we intend to do. Thank you. Our next question comes from Charlie Haywood with Bank of America. Please unmute your line and ask your question. Morning, Charlie Haywood, Bank of America. Thanks for taking the question. I just wanted to dig into the supply chain issues, which sounded like they came as somewhat of a surprise, and I think a bit more color on that would be appreciated by us and the market. So first part is could you just help us understand specifically what happened. Is it a manufacturing, is it a delivery issue, a timing issue, et cetera. Part two, just sort of more hypothetically on volumes, I imagine the volume demand change on a group level from something like this must have been a low single digit change at most. So I'm surprised your ability to supply is operating at that narrow of a bandwidth. Then into sort of next year and the following year, biosimilar volumes would likely be growing at greater than 20% per year. So what's the confidence on delivering that. Even if there is some sort of surge in demand on another price cut, how confident are you to supply that going forward. Thank you. No, thank you. I think this is a demand question, not a supply question in its root. Clearly, if you look at our business, today 34% of our business is now biosimilars. That is like 4 points ahead in value. In volume terms, that is significantly where we thought we would be even a few years ago. You have got to appreciate with a biologic, you need to forecast normally a year, 18 months in advance to build capacity. It is not a small molecule generic. I think part of the challenge fundamentally is we never have 100% of any market. If a competitor has challenge or whatever, how that flows through assets, it is naturally a constrained market. Demand has accelerated, particularly in markets like Germany, so pricing has come down, but then we have seen a corresponding increase in volume. As we see that then flowing through, we are working very closely with our partners. We are adding capacity. I do not see that as an impact going into 2027, and we are working extremely closely. But the nature of this business is that clearly it is demand sensitive. But really the root of this is we have seen an acceleration of our volume demand rather than necessarily a constraint of our supply, and it is now just matching those two things. Thank you so much. Thank you. Our next question comes from Urban Fritsche with ZKB. Please unmute your line and ask your question. Yes, thank you very much. Good morning, everybody. Just coming back to the supply constraint discussion and to understand a bit the market dynamics in general. What did happen when you were a bit short in supply? Were there some other competitors which were stepping in immediately so that in the end you would lose some market share? Or is it product specific and that it is really demand for your specific products? Then the second question- Sorry. Please carry on. Sorry. Then maybe the second question. Sorry for that. The second question on the B2B penicillin impact. Is there in general, is there a risk for spillover effect on other generics, as these players know now how they have to play the game? Okay. Thank you for your question. Supply constraints, if anything, it is the opposite. If you look at our market share data, we are winning share. Our evolution index is accelerating ahead of all our major competitors. So I do not see that we have necessarily lost anything here. As I said, this has always been a. This is a dynamic market. There are very few products where we have sole supply or only one other competitor. So I think it always ebbs and flows between markets. But when you look at it as a whole, and also in Germany from our internal data, we are winning share, we are not losing share. So this is, as I say, very much a demand question rather than really a supply question. The B2B, and I think there are two different things here. Do not confuse B2B supply with generic supply. What has happened is Chinese API sources have been supplying directly, but predominantly through Indian manufacturers who then have been blockaded. Prime Minister Modi has effectively put a tariff on B2B imports into India, but allowing exports. Then Indian manufacturers have particularly then had a very low cost API and are then dumping. Both the. There is an indirect link through India. So it has not changed the generics dynamics. I do not think there is a winning formula here, and certainly not a winning formula when a government is heavily subsidizing a key strategic asset. So I think this is a very different dynamic, but clearly something that I find incredibly important and incredibly frustrating that we call this out and challenge European governments to make sure that this critical business, whilst it still exists, is protected. But thank you for raising the point, Evan. Thanks a lot. Thank you. Our next question comes from Simon Baker with Rothschild & Co Redburn. Please unmute your line and ask your question. Thank you for taking my questions. Some quick ones, please. Just on the anti-dumping issue, if the European Commission does act to sort this out, is there a potential upside going forward if this problem is resolved? Or it cannot get any worse, but it cannot get any better? A quick question also following on from Germany. Can you just give us any points you would flag on any other markets in Europe where there is potential structural changes that we should be aware of, be they positive or negative? Then just a very quick one on Sema in Canada and Brazil. We get a huge amount of interest, obviously, in this as to when this will become impactful. It is early days in both markets. Any idea you could give us on when we should start to see the trajectory emerging in these two markets would be really helpful. Thanks so much. Yeah. Look, first of all, good morning, Simon. I guess I can always dream. I think you're absolutely right. It's one of those things now pretty much, and this is why, unfortunately, our confidence that it can't be much more of a drag because I don't think it can get much worse. Clearly there is an opportunity if we can convince Europe to keep this product on the critical medicines list. It's a modest impact, but I think the ability to add probably add EUR 1 a pack to maintain these products across Europe makes this basically a difference between a particularly unattractive portfolio to being a critical but sustainable franchise. It's not just in Europe. We're having similar conversations with the U.S. administration about how we supply anti-infectives to the U.S. government, given that at the moment, they're predominantly buying from Asia as well. I think clearly, I don't think it's a downside, and I think the way you articulate it quite well, could be an upside. Germany, I think we've talked about. France, I think potentially moving, but again, I think there's an opportunity to expand our market share and penetration rates. Other markets, again, the conversation we're now having with governments is, look, we're part of the solution and we're not part of the problem. We did a back-of-the-envelope calculation for the North America markets. We could save about $1 trillion a year in healthcare costs over the next 10 years if we accelerate and adopt the Bio100 we propose. Really those are the conversations about how do we get better market reform, how do we then drive better access and penetration of biosimilars. I think, again, positioning Sandoz in a very nice place over the next few years. GLP-1. Very fair question. I think the time to have this conversation probably when we close the year in Q1 when we do the full year earnings. Clearly, I think it's going to be an attractive contributor to 2027. Clearly, we'll have launched in Brazil, Canada, Saudi, Turkey, a number of other markets, and we'll have a much better sense of how that's going to evolve. But certainly, I think it will have an impact next year and certainly it's not going to be negative. How big a positive? I think that's the time to have that conversation. But thank you for the question. If I may add on- Excellent just a technicality which is probably not always well understood. Biosimilars is more profitable than generics on average, even when the price erosion is a little bit higher, what you see in Germany. So with volume going up and a little bit more price erosion, and that you see also coming back in our updated guidance and upgrade of the guidance. It is not negative, correct? When we gain market share and biosimilars much faster, it is net positive for us. Yeah. That is very clear. Thanks so much. Thanks, Simon. Thank you. Our next question comes from Thibault Boutherin with Morgan Stanley. Please unmute your line and ask your question. Thank you very much. Just a quick follow-up on the previous question. Can you tell us if there are specific products that are being impacted by a supply constraint? Is it more Humira, Stelara? Is that across the portfolio? Just a second question on the margin. You are already guiding for 23%-23.5% on core EBITDA this year. The midterm guidance was, what, 24%-26%, 28%. Just if you could help us how we should think about the margin progression over the next couple of years. Could it be a bit back-end loaded, or do you expect margin improvement next year, basically, without giving a guidance, just the shape. Just last quick one. GLP-1 Brazil. If I understand correctly, you have a commercial partner there. I think you previously said that you were sourcing API and finished elsewhere. Just if you could explain what role you are playing in Brazil GLP-1 and what are your margins on that country. Thank you. Okay. Thank you Thibault. Specifically for GLP-1 Brazil. No problem at all. Thank you, Thibault, and good to hear a few questions. Thank you so much. Look, you've got to forgive me. I'm not going to disclose individual products, partly for competitive reasons. But again, there isn't any specific one. I think it's more about the general sentiment. But again, we talked enough, I think about this morning, about the supply and the demand side, but I'm not going to disclose individual products. I'll let Remco talk about margin in a moment. On GLP-1s, we have a two-product launch strategy. The first wave through a partner will access certain channels of the market. Then in early in quarter one next year, we will launch a Sandoz semaglutide in addition. In a sense, it's a two-product strategy that we intend to adopt, which we think is the right way for us to penetrate and access the market, have played both to our strengths and our relative partners' strengths in various sectors of the market. We don't disclose the margin mix of individual products. But again, it's an interesting market. It's an out-of-pocket market. I think we'll have better insights, really to Simon's question earlier on, as we get into the earnings call early next year. Remco, do you want to talk about margin? Yeah. Thibault, thank you for the question. Yeah, indeed, in 2028, we have given an outlook for in between 24% and 26% EBITDA margin, and then in 2030, 25% to 27%. If you would indeed enter between the 23% and 23.5% for this year. With the outlook that always we try around 100 basis points improvement year on year, we are ahead of the outlook at this point in time. It would mean that in 2027, we would already be in the range for 2028. In that sense, we are looking very positive at the numbers we currently see. It's too early to give a guidance for 2027. But on balance, clearly, we are ahead of our plans. Thank you. Our next question comes from James Vane-Tempest with Jefferies. Please press star six to unmute and ask your question. James Vane-Tempest, please unmute your line and ask your question by pressing star six. Hi. Thanks for taking my questions. James Vane-Tempest from Jefferies. I have two if I can. If I could just come back to the biosimilar temporary supply again. I understand your point, which is it's a demand question which you mentioned. But if supply can't keep pace with demand, I'm trying to understand why this isn't a supply question, because if there's 12- to 18-month timeline to build capacity, I guess looking today through the end of 2027, how should we think about the timing of the ramp in Slovenia to help mitigate any future supply issues if there is excess demand above your contracted supply agreements? Or do you have enough potential excess capacity secured for next year? My second question is just on margin guidance and I guess the cadence longer term. Is any of this, just to clarify, temporary due to mix? Or with a regular cadence, do you simply have increasing confidence at the midterm margin range, or are some of the benefits more one-off in nature this year? Thank you. Thank you, James, and I'll let Remco take the margin question. Look, we don't see the Slovenia impact in terms of supply really coming till late 2029, early 2030. But certainly, as we go into 2027, we will be working with our partners to free up more capacity. As I said, we're putting more packing capacity, more fill finish capacity. So we have certainly, as far as we see it, more than enough capacity to meet the demands that we see for 2027. And we're confident in terms of how we will build that momentum. But again, I think it highlights the importance of our mid to long-term strategy to bring more and more of our capacity in-house to give us the flexibility and also the cost leadership that we want in this business. Remco? Yeah. James, thank you. Again, also there was a previous question in this regard on the cost. There are no one-offs we currently see in 2026 bringing this margin increase. There's also no additional cost savings or something we pull back on investments. There's nothing in this. This purely comes from a better mix in the operational performance going in line. If you now think for the years after, correct, the baseline reset. So if the mix of bio and generics is better this year than we originally estimated. From there, you just move into next year. So there's not a headwind coming negatively suddenly that's reversing in next year. We don't see that. It's just a baseline which reset, and from there we move onwards. So nothing special to be said here. Thank you, James. Thank you. Our next question comes from Victor Floc'h with BNP Paribas. Please unmute your line and ask your question. Hi. Thanks so much for taking my question. Maybe just two on my end. Maybe just looking a bit further out. You seem very confident in delivering mid-single digits gross next year. But maybe just beyond L.A. in the U.S., can you walk us through the key launch drivers for 2027 and 2028? We have relatively few major biosimilars launches on our radar for this year. So I was wondering whether there are any opportunities that we might be overlooking. And the second one is just on CapEx and maybe coming back a little bit to the CMD. With CapEx now expected to remain around $1.1 billion annually over the medium term, how should we think about the trajectory of free cash flow over the next couple of years? Thank you very much. Thank you, Victor. And I think the second question, great question for Remco, so I'll let him deal with that. I get more breakfast. Okay, you get more breakfast and coffee. I think, again, there is momentum in a lot of products, and I know we talked about this at the Capital Markets Day. As you get into late 2028 or 2029, you have your etanercept launch in the U.S. 13 years after our first launch. We have insulins launching in Europe. We have aflibercept launching in the U.S. deno is doing great. Afqlir is great in Europe. We have also launched 270 generics so far this year. No one talks about that. They all deliver growth. We have some interesting generic launches potentially coming up in the U.S. in the small molecules case. Again, we do not break those out. I think as you go into 2027, everything is in place for the 2027 growth. We are not waiting for any approvals. Now it is about execution and continuing to build on the strength that we have. Then as we flow into 2028, let us get into 2028 when we get closer. I think let us focus on closing 2026 and talking about 2027. I think we have disclosed a lot of our pipeline, particularly in biologics. I would look at some of the legacy assets particularly. There are some very attractive growth opportunities. Another example, I think we could see some nice growth coming out of things like the estrogen patches. I was with a lot of the U.S. government last week. We are going to serve another 300,000 American women next year. That is all a growth opportunity, and I think there is still a significant untapped potential in that space as well. Again, this is not just a bio story, it is also the scale of our generics business as well. Let me take the one on the CapEx, Victor. We have settled some Capital Markets Day, correctly. The CapEx slightly above EUR 1 billion, and that amount will stay about the same for the coming 5 years through 2030. Then as a percentage of sales, it will grow further grow. That is what we have said. Now over the coming years with the top line growing and the EBITDA margin growing, of course, the EBITDA amount will go up and therefore the free cash flow would also corresponding go up. With regard to the working capital, we try to keep it as flat as possible. There might be a very modest increase, but we have to think about the end of this decade is when also the site in Slovenia up and running. We would need some more inventory, of course, in the working capital with being vertical integrated, which now sits with our partners. That is also manageable. We would expect a further increase in the free cash flow and also our Capital Markets Day. We have given some indication of what the free cash flow could be by 2030. I hope that answers your question. Thank you. Our next question comes from Florent Cespedes with ODDO BHF. Please unmute your line and ask your question. Good morning. Florent Cespedes from ODDO BHF. Thank you very much for taking my question. A quick one on the haemophilia portfolio strategy. Do you intend to launch different products on this field or the focus will be on emicizumab? Could we have a little bit more color about the timelines if you have an idea of when you could launch this product on the market? Thank you. Okay. Good morning, Flora. Other than what we have disclosed and the partnership with mAbxience, I cannot really say very much more. I think that is a very detailed question. Thank you for the question. I need to reflect on that, but I will let Craig pick that up with you separately. Other than what we have publicly disclosed, I am not going to disclose anything else. Okay. Thank you. Thank you. Thank you. Our next question comes from Urban Fritsche with ZKB. Please unmute your line and ask your question. Yes. Thank you very much for this follow-up. Two more on product. For the sema launch in Canada, what is holding you back from launching in Canada? Is this Canada specific or is there some learnings we should apply for other sema launches in other markets as well? Then maybe a second question on building up on the Jubbonti success. In terms of other biosimilars, what could be a next Jubbonti like opportunity? Which of all the biosimilars in the pipeline are you most excited about? Thanks. Thank you so much, Urban. Asking which of my most biosimilars, like saying, which of my children do I love the most? It is very difficult. Again, some of this sort of falls into sort of competitive intelligence. I would look backwards rather than forwards. I think again, we have a track record, whether it is Afqlir in Europe, adalimumab, when we did the first own label in the U.S. The excellent work the team have done now with Wyost in the U.S. and how we have managed that strategy. I think what it shows is consistently our commercial capability as the leading player in this industry to be the partner of choice, not just in terms of inflow of product, but in terms of commercial execution. I think there is a number of products. Clearly, I am excited about the potential or the upcoming aflibercept launch in the U.S. I think that is a very interesting opportunity. Then we will just look at it asset by asset. I think again, it plays to that strength. You make a good point on semaglutide. I think, A, semaglutide is not a straightforward product. If you look at the Canadian market, the two companies that have already technically launched, both of them have had challenges. One, in terms of their API, and then now working with the regulators. I will tell you one of those partners we will work with in the short term, but then we have an additional partner that we will launch later, earlier into Q1 next year. Then the other company that has launched has had problems with its device and is working with the regulators. This is not a straightforward product. It is technically not a straightforward product. It is cold chain. It is not necessarily easy. I think it plays to Sandoz's strength, our ability to manage partners, to manage cold chain. We are a strong biologics player in Canada. I think we are the number one player in Canada. I think we are well positioned. We have always said this was a very small launch, not a material launch in Canada this year. We would still anticipate to launch this year. This is now a question of supply being available and bringing it to the market. Then we would launch with additional partners as we go into 2027. I think that puts us in an extremely strong position to take a nice position in Canada during the year. But we have always kept this away from guidance. We have always said this is where we are going to learn and experience. I would still stand by that. But it is an interesting opportunity, and it also partly goes back to, I think, one of the earlier questions about an additional growth driver next year. Clearly, I think has the potential to certainly be attractive and accretive to our growth next year as well. So nice position to be in. I think that is probably pretty much where we are at. I think that is all of the questions. I look forward to seeing, hopefully many of you in Ljubljana in a few weeks time. I would bring a rain jacket because it is obviously November in Ljubljana, but I look forward to seeing you then. Thank you so much for your questions, and thank you so much for your support. Have a great rest of your day. This concludes today's call. 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