Roche Holding AG

SIX:ROG

Earnings Call Transcript 2018-Q1

[Operator]

Ladies and gentlemen, good morning or good afternoon. Welcome to the Roche First Quarter Sales 2018 Conference Call and Live Webcast. I'm Sherry, the conference call operator.[Operator Instructions] The conference is being recorded. [Operator Instructions]At this time, it's my pleasure to hand over to Dr. Severin Schwan, CEO of Roche Group. Please go ahead, sir.

[Severin Schwan, CEO & Executive Director]

Thank you very much, and welcome, everybody, to our Q1 sales call. Actually, if you join us on the web you can follow the slides on the web and you can also submit questions on the web in addition, of course, to the questions by phone.So let's go to Slide No. 5. Sales are up by 6% on a group level, as you have seen from this morning's release, Pharma up 7%, driven by the new launches, and Diagnostics up 5%, actually with solid growth across all business areas.If we go straight to Slide 7 you can see different dynamics in Europe and the U.S., Europe in a decline of 5%, where we now see the impact of biosimilars for MabThera, and on the other hand the U.S. up by 14%, driven by the new launches, in particular Ocrevus and Perjeta and other medicines we launched recently. So as we go forward we will see these trends reverse as we, on the one hand, expect sales growth to moderate with the entry of biosimilars in the U.S., but on the other hand, Europe will increasingly, of course, benefit from the new products as we start to launch them.Page 8, innovation is at core of our strategy, also very much reflected in our portfolio in the number of breakthrough therapy designations. We stand now at 21 of those, with the latest edition for hemophilia in non-inhibitor patients, and that is important because it will certainly contribute to accelerate at the time line to make this important medicine available to patients also in the non-inhibitor population.Slide 9, again the increasing importance of our new medicines. And, as you can see, this is now already accounting for CHF 8 billion on an analyzed basis. 80% of our growth in the first quarter is actually driven by the new products, and obviously, as for many of these medicines we just entered, a lot of significant growth potential to come.On Page 10 you see this reflected in a somehow different format, where on the one hand you see the progress of replacing our existing franchises in hematology, cancer, but perhaps not to overlook also in ophthalmology or flu with the respective new medicines coming through the pipeline. And, of course, at the same time, as you know, we add new areas, we go into new franchises with multiple sclerosis, hemophilia, and also a number of compounds in CNS.Turning to Slide 11, overall the pipeline is now at a record level, with 15 new molecular entities in late stage.And to conclude with Slide 12, given the strong start we had in 2018 based on the successful launch of new medicines and also the strength of our portfolio, we did not only raise the guidance for the current year, but we are also confident that we can grow through this transition phase beyond 2018.And with this, I hand over to Dan O'Day for Pharma. Thanks,

[Daniel O'Day, Chief Executive Officer of Roche Pharmaceuticals]

Great. Thanks, Severin. Good morning, good afternoon, everybody, from my side.Let's go straight to Slide 15 just to speak a little bit about the regional growth. So, again, overall 7% growth for the quarter in constant exchange rates. The U.S. 15% in quarter 1. That's an acceleration from the full year last year. EU is minus 7% in quarter 1. That's a deceleration, as expected, from last year, with the new products starting to just be launched there, but offset by the biosimilars in Rituxan.Japan basically flat for the quarter, with some products accelerating the growth and some with some lower sales due to some price decreases there. On the international, plus 5% in quarter 1, a slight increase from the end of last year, growth driven predominantly by China and Brazil. Overall, the volume growth was very strong for the Pharma Division, 10% for the quarter. Prices declined by around 3% and a negative currency impact of 2%.It's important to note that the underlying pricing trends in the U.S. and EU were stable and in line with previous years. Of course, the exception to that was the MabThera pricing in the EU due to biosimilars, and I'll return to that later in the presentation. We do expect the different growth dynamics seen between the U.S. and Europe to narrow a bit in the coming quarters, as well.So moving to Slide 16, the new products slide, quarter 1 sales growth was, as you can see, more than largely driven by the recently launched products and by the immunology franchise. So the new products, including Ocrevus, Perjeta, Alecensa, Tecentriq, ESBRIET, Hemlibra and Gazyva together contributed CHF 743 million in additional sales for the quarter or 80% of the total sales growth. That's obviously exactly what we had hoped for, to have the new products driving the new growth through this period of time of transition of the portfolio.I'll just touch on a few of the products on this slide that aren't covered on the following. So Lucentis grew at 6% for the quarter, driven by volume due to the successful launch of the first prefilled syringe. Really a large conversion rate was achieved there, and slightly increasing market shares in all approved indications.Just to give you a little foretelling for Lucentis, we do expect growth for Lucentis this year, but as we saw at the end of last year due to the channel fills, we expect some fluctuation on the quarter-to-quarter basis this year as for last year. Phase II data from our Lucentis Port Delivery System study, the LADDER study, is scheduled to read out in the second half of this year. We look forward to that.Let me move now to Hemlibra. Had a good launch for Hemlibra in the inhibitor patient population, with CHF 18 million for the quarter. The approval for, as you know, the large population, the non-inhibitor, is expected in the second half of this year as a result of receiving the second breakthrough therapy designation for the product in the non-inhibitor setting.In Europe, following the early approval on February 27, it's already off to a good start in Germany with sales of around CHF 5 million. And of course, we expect Hemlibra sales to accelerate towards the year-end due to both the further penetration in the inhibitor setting and then the first launches in the non-inhibitor setting.And the last product I'll just touch on here is Tamiflu, plus 11%. This was really a very positive one-time surprise in quarter 1 driven by a very heavy flu season, predominantly in the United States but also a bit in Japan, where generic competitors struggle to supply the market demand. I'll get back, of course, to the life-cycle management for Tamiflu with some of our new medicines in the near future.So let's go to Slide 17, the oncology sales overall stable. Growth of the new products and from Herceptin was offset by predominantly MabThera biosimilars and a bit with Tarceva and Avastin. I'm going to cover the HER2 and hematology franchises in the following slide, so let me just touch base on a couple of medicines here.Avastin sales declined minus 2% in the quarter, which is roughly the same as 2017. This is predominantly due to lower sales in France, where we had a mandatory price discount, and a bit in Germany and the U.S., and this was only -- it couldn't be fully offset, although we had very good growth in China relative to the National Reimbursement Drug Listing, and in general a broader penetration in both colon and lung cancer in China and in other markets around the world.In the U.S. and in Europe the first-line lung cancer shares remained stable for a third quarter after we saw some erosion there from the entrant of the immunotherapy medicines. And I just remind you that the first-line ovarian cancer in U.S. and EU approval is expected in 2018, which will add some momentum in that indication to the medicine.Tarceva continued decline, as we know, due to the in-class competition.Let me comment on Tecentriq here, plus 29% for the quarter, driven by the European launch in the second- and third-line lung cancer setting and in the bladder cancer setting. U.S. sales grew 5%, driven by lung cancer in the United States. We still have a 40/60 bladder/lung cancer split in the first quarter. The exciting news is in the positive Phase III readouts that we've had so far. I'll get back to this, but IMpower150, IMmotion151, and we will have additional U.S. and European filings for Tecentriq and Avastin in 2018. More to come on that.Maybe just a quick comment on Cotellic and Zelboraf. Cotellic is growing. Zelboraf is declining. The focus for this combination is really now towards the future in melanoma. It remains on the IMspire170, which is the Tecentriq plus Cotellic in the BRAF wild-type patients and the IMspire 150 Trilogy. That's a triple combination, Cotellic, Zelboraf, Tecentriq, in BRAF-mutant patients. And, importantly, for Cotellic alone in combination with Tecentriq, in the first half of this year, we still expect the Phase III readout for the IMblaze370, which is in the second- and third-line colorectal cancer space.So moving on to Slide 18 with the HER2 franchise growth, plus 6%. 18% growth for Perjeta, really strong demand in all the regions. Strong growth in the United States of 18%, driven predominantly by the post-APHINITY approval in quarter 4. In Europe, of course, we don't have the adjuvant label yet, so that growth, that 13% growth, is driven by the neoadjuvant standing still and further penetration into the first-line metastatic setting with longer treatment durations.Important to note is that Perjeta in early breast cancer is now included in several treatment guidelines, so, as we know, NCCN, but also in Europe St. Gallen and, importantly, AGO in Germany. And all of these seem to harmonize around the recommendation in the node-positive/hormone receptor-negative patients, and encouragement for the [technical difficulty] cycles, which is exactly how we're progressing now in the United States. So I think this is a clear understanding when we see these multiple guidelines of the understanding and positive perception of the APHINITY data, and looking forward to continuing that penetration both in the United States and throughout the world.So the outlook for 2018, growth in the U.S. will continue, obviously, with the APHINITY approval. We expect the EU approval of APHINITY in 2018, and equally for Herceptin we expect the first Herceptin biosimilars, as we have communicated, in the first half, so in the second quarter. And in Japan, we've had the first launch of a Celltrion biosimilar in gastric cancer only in May.So let's go to the hematology franchise on Slide 19. This is a franchise where we have lots of medicines now under development. Let me just try to touch base first on the sales for the hematology franchise. Minus 7%, including MabThera, Rituxan and Gazyva sales. I'd just point out and remind you that for the Venclexta sales, they're not shown on this graph but they're commented on the right because they don't book sales. AbbVie books the sales for these.I think the story for the hematology franchise overall is that we're in a rejuvenation phase. We expect the continued early and late-stage pipeline news flow for new molecules like Venclexta, Polatuzumab and our bio-specific antibodies, the CD20, CD3.To drill a little bit more into the MabThera/Rituxan sales in oncology, they declined overall globally by 9% from quarter 1. In the U.S. there was a slight increase, a plus 2% growth. And in the EU, where we have now the 2 biosimilars on for some time in the market, we saw a sales decline of minus 43%. Just to point out that around 5% of that 43% decline is what we would consider kind of routine mandatory price reductions in Europe. So the biosimilar impact was around 38% for the quarter, and around 25% of that impact was price and 75% volume.Gazyva sales increased 27% in the quarter. The United States had 19% increase following the first-line follicular approval last year. EU had a 64% increase, which showed accelerated growth due to the follicular uptake in the early launch countries, especially in Germany.Venclexta is really turning into an important medicine. Its sales increased more than 150% in quarter 1, sales now reaching CHF 59 million. Strong new patient share in the United States for the second-line relapsed/refractory CLL with 17p deletion. That's around 40% now, and it keeps increasing.We're looking forward to an expected approval in the relapsed/refractory CLL setting. That's MURANO data that you saw at ASH. We expect this to broaden the label and further accelerate the sales growth into the second half. And we'll also, just to highlight for ASCO, we'll also have additional early Venclexta data in the front-line ANL setting in relapsed/refractory multiple myeloma, as well, so a broad development program for Venclexta.So, broadly speaking, in 2018 for the hematology franchise, we, of course, expect the first Rituxan biosimilar in the second half of the U.S. of this year. We expect U.S./EU approval for Venclexta and Rituxan in relapsed/refractory CLL. And we'll be sharing our Phase II data for Polatuzumab in relapsed/refractory DLBCL, where we have now both the breakthrough therapy designation and the PRIME designation with health authorities looking for a path forward for registration of that medicine as quickly as possible.So let me transition now to Alecensa on Slide 20. Very strong growth, 81%, driven by demand really in all regions following the accelerated approval of the first-line setting in U.S. and EU. U.S. 66% growth, really fast market leadership in a first-line setting. We achieved a greater than 50% new patient share already, and our second-line new patient share remains stable at around 65%.Important to note here, particularly when we're identifying these rarer mutations that in addition to our own diagnostic assay the approval of the FMI's FoundationOne assay by the FDA, which is the first pan tumor comprehensive genomic profiling assay that's incorporating more than 324 oncogenes, that approval will support us in expanding identification of patients without positive mutations.In the EU our sales reached CHF 17 million in the first quarter 1, again predominantly driven by the early-launch countries and Germany. So, we expect continued momentum for Alecensa as we go into additional launch countries. Another highlight for ASCO, we plan to present new data -- a new data cut from the ALEX study in the first-line setting, which we're excited to show you. In addition, we've also initiated a study in the adjuvant setting, as well.So moving to the immunology franchise on Slide 21 shows the increase of 4%. Just it's important to flag here that the year-on-year slowdown for the immunology franchise is really predominantly due to 2 factors. One is the MabThera biosimilars in the EU, which was expected. The second one is a one-time impact on Xolair sales, which I'll come back to in just a second.Esbriet growing nicely, 13% in the quarter, driven in no small part to the new tablet formulation that was launched in '18. We continue to maintain our market leadership position in the U.S. and in Europe, and our growth continues to be driven by the mild-to-moderate patients. We're in about a 30% penetration into the mild patients. So we continue to have significant growth opportunities for Esbriet as we move forward. Still, only 50% of all patients are receiving one of the approved IPF therapies in the U.S. and Europe for this devastating disease.Xolair, I think that's really the callout here, the plus 7%, down from double-digit growth from last year. I just want to highlight that, in fact, this is really due to a shortage of sterile injection water as a result of the hurricanes in Puerto Rico. But we do not expect this -- sorry, we expect this issue to be resolved as we go into the second quarter. And it's important to note that the underlying performance of Xolair at the patient level is essentially unchanged. So this is more of a channel issue that we're needing to manage, and we expect to be managing this well by the half year. Growth for Xolair remains driven in the pediatric asthma setting and continued good halo effect [indiscernible] the allergic asthma and CIU growth.Actemra, with 13% growth, good growth in all regions. The giant cell arteritis launch is ongoing now in 21 markets. Strong unaided awareness. So that launch is out the doors. The auto-injector got approved in EU in the first quarter, which will help us with our leading position there in monotherapy, rheumatoid arthritis. And in the U.S. plus 15% growth. It remains driven by the subcu formulation in the United States.So, overall the outlook, the key products mentioned here are expected to continue to grow double digit, with the exception of MabThera and Rituxan, which will, as expected, be affected by the biosimilars.On Slide 22, we're really pleased with the progress of the Ocrevus launch, and just the uptake with patients and physicians and their experience with the medicine. Quarter 1 sales reached CHF 479 million. Clearly, this is among the best ever launches in the MS space, reaching now a 7% market share after only 3 quarters on the market.EU is really just getting out the door, so CHF 28 million and international CHF 8 million. We have regulatory approval now in 56 countries around the world. Very successful early signals and launches in Germany, Israel, Australia, Switzerland following national reimbursement, and many more markets to follow. And what we saw in the United States from [InSites] is essentially playing out also in other countries, as well, which is helping us anticipate the needs of patients and physicians in those markets.Obviously, the big story is the United States. In quarter 1 we saw a strong -- patients were returning for their second treatments at an extremely high rate and remains unchanged versus the previous quarters. At the end of December that 7% overall market share was essentially the same split as we've seen in the past, so 60% RMS. PPMS was around 40%. We now have 40,000 patients that have been infused that continuously increase our safety database, very important for the long-term safety and efficacy in driving Ocrevus use also in the earlier settings.And in RMS we see a movement towards earlier use. We see inroads in all treatment lines in RMS, with around 70% of patients being switches from one or another approved therapy and 30% in RMS being from new or discontinued patients. And those figures in PPMS, around 55% patients are naive or discontinued, whereas 45% are switches from other medications.So we estimate that greater than 70% of U.S. neurologists have already prescribed Ocrevus and had an experience with the medicine. So, moving forward, we're going to see continued good growth in the United States, growth accelerating, obviously, in Europe, with the launches, and look forward to keeping you in touch on the success of that launch in MS.Now, moving to Slide 23, this really summarizes, I think, the progress we made in rejuvenating the Pharma product portfolio over the last few years. Our 10 new products accounted for more than CHF 8 billion in the first quarter on an annualized basis, accounting for 19% of the overall total Pharma revenues. And these products contributed 80% of our new sales growth.For future, I mean, we expect -- I mean, these products are clearly on their growth trajectory, so we expect continued growth of these medicines, continued line extensions in the coming quarters, and we, of course, will be adding new NMEs to these launches to strengthen and solidify our growth rates.So with that, I will turn to the innovation section, please turn to Slide 25, updating you on our cancer immunotherapy first-line lung cancer program first. We've had some readouts so far, and they're progressing as expected, and we have many readouts to come. So let me just summarize what happened in the first quarter.So on March 26, we announced that IMpower150 met its co-primary OS endpoint at the interim analysis. And it's important to note that the OS benefit was also observed in the key subgroups, including EGFR or ALK-positive patients, after appropriate TKI treatment, and also in the patients with liver mets, and across PD-L1 expression levels, included PD-L1 negative. You'll see, obviously, more of this OS data coming up at ASCO.On March 20 we also announced the IMpower131 in squamous non-cell lung cancer met its co-primary PFS endpoint. But the OS benefit was not yet statistically significant, so that study will continue.Maybe just a quick point -- we've got 3 additional studies in the first-line lung that we expect to read out during the first half of the year. That's IMpower130, IMpower132, both in the non-squamous setting, and then IMpower133 in the small cell lung cancer setting. It's important to note that the IMpower132 is a regimen that is most comparable to Merck's KEYNOTE-189, and we expect to get that coming up in the middle of this year.As you see, we still have the potential to be first to market with Tecentriq chemo combos in the first-line small cell and first-line squamous cell. Both indications account for a relatively large portion of the first-line lung cancer setting, with 45%. And we've also updated the pie chart from the previous quarters where we've spoken to you about with some of the details around the market segments, in particular the fact that the EGFR ALK-positive patients are around 14% of the patients, and this is a population that has not been included in the other key competitor trials, as it was seen as a challenging subset to go after. And we've also broken out the first-line patients with liver mets, which, as you know, have a more damaging prognosis. And this could be up to 20% of the first-line patients.So let me just transition quickly to IMpower150, on Slide 26. It shows the PFS results. The PFS results were first presented at ESMO last year, ESMO IO last year, and then we had a closer look at these subgroups at the recent AACR meeting.A couple of things to point out about the AACR presentation was that the PFS benefit was observed and consistent regardless of the PD-L1 assay. This was a question, whether it would make a difference whether we used the SP142 or SP263, and essentially we had very, very comparable PFS hazard ratios there. And then I would just point your attention to the subgroup PFSs, So the EGFR-positive hazard ratio is 0.41, ALK-positive 0.65, and patients with liver mets was 0.4.Right. So I think it's particularly in these subgroups, we still believe there's a strong scientific rationale to support the combination of Avastin in these more challenging-to-treat patients for a variety of reasons. Of course, the anti-angiogenic effects that Avastin normally has, but we continue to believe that Avastin can enhance Tecentriq's ability to restore anticancer immunotherapy immunity. And it can happen from a variety of mechanisms, like inhibiting the VEGF-related immunosuppression which we think exists, promoting T-cell tumor infiltration where that is not prevalent, and, importantly, enabling the priming and activation of the T-cell response against the tumor antigens.So, overall, we feel the results, and we look forward to continuing to present these to you, have the potential to be a new standard of care for patients in the first line, non-squamous lung cancer setting, and we look forward to seeing the remainder of the data readouts from us and competition to inform physicians on the different types of standards of care that we could see for different patient subgroups in the first-line lung cancer setting.Moving to Slide 27, very, very positive news flow, and it was an intense first quarter for Hemlibra. I mean, first of all, we got the approval in Europe in the inhibitor patient setting on February 27. As a note, on March 28 the Japanese court ruled in favor of Chugai, recognizing that Hemlibra does not infringe the Japanese patent held by Shire's Baxalta subsidiary. And then on April 17, we obtained a second breakthrough therapy designation for prophylaxis treatment in non-inhibitor patients based on the HAVEN 3 results.The results from HAVEN 3 and HAVEN 4, and HAVEN 4 was the monthly, dosing will be presented at the WFH meeting in May in Glasgow, and we'll also have an IR conference call during that week to review the data with all of you. And, finally, CMS has designated Hemlibra as a Part B drug, consistent with other approved hemophilia treatments. This reads as a very positive sign for coverage for patients in the U.S., and Medicare patients in particular. So, bottom line is we expect a good, continued progress of Hemlibra throughout 2018, and we expect with the breakthrough therapy designation to receive the non-inhibitor approval still in the second half of this year, with the less frequent dosing, as well.Moving on to Slide 28, a new molecule that has to be filed already in 2018 which has the potential to become a full replacement for Tamiflu. This is the old CAP endo, as we referred to it before, and now it's Baloxavir in influenza A and B. It's a small molecule. It's a cap-dependent endonuclease inhibitor, and it blocks transcription of the influenza viral mRNA needed for viral replication.It's particularly noted because of the convenience of a one-time dosing and improved tolerability. Developed by Shionogi, Roche has co-development agreements since 2016 and holds a license outside of Japan and Taiwan. So we believe this is first in class, potentially best in class treatment for influenza based upon significant antiviral activity that you see in the chart here and reduced time to cessation of viral shedding, which could also significantly help with reduced transmission rates, which can help in the public health setting, as well.It's already been approved in Japan in 2018, and, based on the CAPSTONE-1 study we will seek FDA approval for otherwise healthy adults and adolescents in 2018. Ongoing developments we have for populations in high-risk and in pediatrics.I'm also pleased to say that after the closing of the announced transition with Ignyta for entrectinib at the end of the last year, we're progressing well with that. And as a part of our broad overall personalized healthcare strategy we signed an agreement and closed the acquisition of Flatiron Health, which is really a leading player in research grade quality real-world data in oncology, a really strong network in oncology, as you see on Slide 29, seen as a standard by pharma companies for the quality of their data.We will accelerate the mission of Flatiron. We think this is extremely important. It's already been valuable for us for seeking reimbursement support for Alecensa in more than 20 countries around the globe. We've seen it replicate control arms of randomized clinical controlled trials. This happened in our own trial base. And we think this really has the ability to both accelerate and transform the way we do drug development and certainly access to patients.Now, pivotal to that is keeping the Flatiron autonomous, allowing them to produce the standard of care and be available to all companies. Clearly, as a market leader in oncology, we stand to benefit as well, and we think they can really drive new paths forward for regulatory patterns and potentially reimbursement patterns for our oncology medicines around the globe. So we're excited about that and looking forward to accelerating their mission.Finally, the last slide I have before the outlook is Slide 30 on ASCO. We'll again have a busy ASCO. I already talked about the IMpower150, the Alecensa updates, other updates on Tecentriq, Ipatasertib. Importantly, I would just highlight the oral presentations on the efforts around tumor mutation burden as a future CIT market, particularly the importance of blood tumor mutation burden. As we know, tissue samples are often difficult to get in lung cancer. And then, finally, continued progression of our hematology franchise at ASCO, as well.And then, finally, closing on 32, it's been a good first quarter, some strong green ticks there. But I point your attention to, again, the filing for the IMpower150 trial here, for Hemlibra, the non-inhibitors, and every 4-week dosing, the CAP endo, influenza A and B, and then the Tecentriq trial readouts beyond lung -- in addition to lung but also beyond lung in triple-negative breast and in colon cancer.With that, I thank you very much for your attention, and I turn it over to Roland for Diagnostics.

[Roland Diggelmann, Chief Executive Officer of Roche Diagnostics]

Thank you, Dan. Let me dive right into the results and the numbers for Diagnostics.It's been a good quarter, with sales up by 5%, growth across all the business areas, and if we take together the clinical diagnostics, also up 5%. That's centralized molecular tissues, so everything that's being sold into the clinics or the laboratories. Diabetes care up 5% based on the good result in the U.S. and Asia Pacific and some launches, but I'll provide some more color to that on some of the next slides.Actually moving on to the next slide right away and the geographic distribution, starting with Japan, minus 8%, which is essentially due to the oncoming HCV drugs and our boluses testing in '17, so we were very well aware of this, so within the expectations. We should see the numbers for Japan grow through the year, though.Asia Pacific up 10%, according to our expectations. A slower quarter in China; however, largely due to a high number of cash sales, our investments in the Tier 2 segments starting in '17, and here, too, we should see a pickup of the growth in China through the year.Latin America up 1%, good, solid, underlying growth, however, with a one-time sale in the first quarter '17 in Brazil, a very, very large customer, and a very large lab fit-out, so here, too, Latin America will increase its growth rate over the course of the year.Then moving to Europe, Middle East and Africa, with solid growth in the large European markets. And then North America with a very good growth, up 7% based on the molecular diagnostics point of care -- here, too, I'll speak to a subsequent slide -- and some good growth in the immunodiagnostics franchise overall.Then also the emerging markets, these 7 countries was a good, balanced growth. Notably, countries like Turkey up 20%, India up 22%, Russia up 40%. So, we'll get a good balance here in the emerging markets, as well.Then turning to the next page and some of the drivers on the sales side, in centralized and point of care, immunodiagnostics up 5%, as mentioned. We should see that number increase through the course of the year. We've had, as mentioned, the China and the Brazil impact, but we continue to invest for growth here through the course of not just this year but the following years, as well.Diabetes care, very good growth in the U.S. Here I call your attention, of course, to a very slow growth in the first quarter of '17, so there is a sort of base effect here. Sales for the year we do not expect to be in the same range, but lower than the 5%.Moving to molecular, virology doing very well, up 5%, and here it's HIV with a 20% growth. That's leading in this segment. HPV up 5% with the onset of the Australian training program, so here continued growth, as well. And the cobas Liat, which is our point-of-care PCR solution in molecular, we were able to benefit from the strong flu season with an increasing cell base and good cells.And, finally then, tissue diagnostics, advanced staining up 8%, primary staining up 20%. The more seasonal project-based companion diagnostics with some lower growth, but overall franchise doing very well.And then let me pick some highlights by segment on the next page, Page 37. What you can see here is the number of installations of our high-throughput cobas 8000 solution, so this is for the large labs where we continue to support lab efficiency, we invest in future growth, and we also support the consolidation of sites, and you can see here the growth over the many years, up to 5,000 installations now, and notably, also, the e801, which is the module for immunodiagnostics, which is part of the system which is now above 1,100 systems placed in the market. Here, too, we're very optimistic with our launching the system, the e801 in China, later this year. We should see further pickup.Page 38, molecular diagnostics here on the point-of-care site. This is the Liat system, so really a point-of-care small system. We've had, as I mentioned earlier, a very strong flu season in the Western Hemisphere. We've been able to capitalize on this. And you can see we have in excess of 1,500 systems placed in the U.S., largely on the respiratory panels. We'll continue to expand on that menu. This is a very seasonable approach, but great to see the growth during the flu season.Then moving to Page 39, this is just a small part of a big play in virology, looking into HIV testing, very much involved in the so-called GAP program. This is the Global Access Program for underprivileged markets. It is largely focusing on mother-to-child transmission of HI virus and early infant diagnosis. So this Plasma Separation Card is a really nice addition to the franchise, the first one that [indiscernible] in plasma, which is the gold standard, the only card that meets WHO sensitivity requirements, and it allows transportation without refrigeration, no electricity needed for up to 3 weeks, and will allow us to support this GAP program in the years to come. We've just launched this cart, and looking forward to the contribution in the future months and years.And then moving on to the tissue diagnostics segment, we have launched the VENTANA Digital Pathology 200 slide scanner. This is an important foundation for future menu in the area of image analysis and then also moving into algorithms. So, moving further into clinical decision support, expanding the business model, and also contributing to the continuous diagnosis in oncology. So, this will nicely complement our advanced staining portfolio.And with that, I'm coming to the last slide, which is an overview of the key launches. You see a number of launches here, both on the instruments and on the assays test side. I would just want to point out maybe the infectious disease, the assay for the detection of Zika in serology. So this is complementing the DNA detection on the molecular side, which is used through blood screening. Here we're talking about clinical diagnosis, so antibody-based assay when this viral load is no longer detectable. This is an important small assay, but it complements our leading franchise in immunodiagnostics.So with that, we are confident that we'll continue to grow through the year, and I'll turn it over to Alan Hippe for financial.

[Alan Hippe, Chief Financial & IT Officer]

Thanks, Roland. Yes, it's Alan speaking. Welcome to everybody. Let's cover quickly a couple of topics and let's jump to Slide 43.I think sales my colleagues have talked about. I think very good momentum that we're seeing in Q1 that we're confident about that we will go on with that. M&A, I think the 2 deals, the Ignyta deal is closed, Flatiron Health, as Dan said, is closed, as well, but it also means it will be a cash impact as the cash will go out the door. What I can say here is that so far I think the cash generation looks encouraging with the start we have had in 2018.But currency impact on sales, overall slightly negative currency impact, and I think that's a good segue into the next slide on 44. We'll see really how it looks like. What you are seeing is when you go to the group, just they already mentioned 6% growth on the group level. Then you see the currency impact of negatively CHF 180 million. That leads you to a group sales growth in Swiss francs of plus 5%.To explain that even in more detail we go to 45, and on 45 you see really where it comes from. You see more precise the impact is 1.4 percentage points. You see on the left-hand side the sales growth in constant currency. It's year-to-date March 2018 compared to year-to-date March 2017 of 6.4%. And you compare that to the right-hand sidebar in light blue, so really the growth rate in Swiss francs year-to-date March 2018 to year-to-date March 2017 is plus 5%.I think the 2 major impacts are really, on one hand, the euro and on the other hand the U.S. dollar. And as you see it's quite a nice balancing effect that we're seeing here. The euro has been strengthened against the Swiss franc and the U.S. dollar got weaker, and so far I think we are pretty balanced here.With that, let's go to the usual exercise. So what would happen if we keep all the currency rates end of March 2018 stable and what would that mean for half year, Q3, and full year? And you see here on the table, I think for half year we wouldn't expect basically no impacts or very minimal. You see for sales, September year-to-date it would be zero as well. And then for the full year, you would see an impact of zero for sales, of minus 1 percentage point for the cooperating profit, and of minus 1 percentage point on the core EPS growth.Generally, I think the currencies are pretty volatile and we're pretty early in the year, so the question could be what would happen if we were applying today's exchange rate. And if you were doing so, I think the impact would change slightly, so we would go really to a slight positive, so a plus 1% at full year, plus 1 percentage point. The cooperating profit I think we would expect around zero impact, and the same would apply to the core EPS growth, zero impact, if you were applying today's currency rate that would keep them stable until the year-end.My last slide is once again the guide that I think Severin has talked about on Slide 47, and you see we've changed from stable to low single-digit to low single-digit group sales growth, and certainly that has an impact on the core EPS growth. Thanks for your attention. Happy to take your questions.

[Severin Schwan, CEO & Executive Director]

Very good. So let's switch to our questions, and let's start with one question from the telephone, and we will also look at the questions which are submitted by the web. Can we have the first telephone question, please?

[Operator]

[Operator Instructions]The first question is from Richard Vosser, JP Morgan.

[Richard Vosser, Senior Analyst]

Firstly, on the tax rate for the year, now you've had more time to [indiscernible] about the benefit from the U.S. tax reform. Are we looking at a group tax rate at 20, 21 or 22? I think it was previously said sort of in the low 20s. Some help there would be great. Then on Tecentriq, we saw some positive TMB data [indiscernible] around trends on the duration of response and overall survival in a few patients. And just thinking ahead to IMpassion, what's your thoughts on what this data shows and when should we think more precisely IMpassion data will come? And then also on Tecentriq, obviously we've seen the KEYNOTE-189 data. So just thinking about the potential of IMpower150 overall survival, is the potential that you see for the drug to take significant market share beyond the subgroups that you've highlighted in liver mets, EGFR and ALK-positive patients?

[Severin Schwan, CEO & Executive Director]

Thank you. Alan, do you want to take the tax rate question?

[Alan Hippe, Chief Financial & IT Officer]

Yes, I'll take it. And, basically, Richard, you answered the question yourself. Definitely I think we speak to the guidance that we have given for the corporate tax rate is expected to be in the lower 20s, and that's really what we're seeing coming through the numbers for the time being. Everything else we will be clearer and will be clarified at half year.

[Richard Vosser, Senior Analyst]

Okay. And for Tecentriq?

[Daniel O'Day, Chief Executive Officer of Roche Pharmaceuticals]

All right, thank you very much for the questions. I mean, maybe starting with the IMpassion130, so that's the triple-negative breast cancer study that we have going on, and we expect to read out I think towards the end of this year, if I'm not mistaken. Your comment on the triple-negative -- sorry, on the TMB is a good one, and obviously something with all of our studies we're now going back to look at, including the IMpower 150 in lung cancer, as well, and digging into that data in a little bit more detail. We will have some interesting data in general on TMB at ASCO that I would just point out, and some early information on our BPAS trial. So I think it's very clear that TMB, I think, will play a role in identifying subsets of patients, but it may not be the only answer. There could be other diagnostic enrichment strategies that will come as we further interrogate and investigate the wealth of data that's involved in the trials. Let's turn our attention to the 189. Yes, I think what's really -- what we've seen many, many times now in cancer immunotherapy is that it's important to be, I think, thoughtful about the different data readouts and make sure we have all the data in our hands before we jump to conclusions. And, as we know both from ourselves and the competition, there's a lot of data still to read out this year and a lot of data to see in context, and by context I mean the high-level data readouts, but also what's behind those clinical trial designs and the recruitment and enrollment strategies. So all of this I think needs to be appropriately discussed in a professional forum. I think we've seen a little bit of that at AACR, we'll see more of that at ASCO, we'll see more at ESMO this year. And to your question around how do we see the potential of IMpower150, again, I think, I'd just remind you, overall a positive study from PFS and [indiscernible]. As we've articulated, I think this will be a scenario where we have multiple options for patients, depending on PD-L1 status, depending on the types of tumor mutations they have, and depending on the progression of their disease. Has it progressed to the liver, to the brain, in terms of its progression, and therefore what's the appropriate therapeutic context for those patients? So we believe that IMpower150 has a role in the ITT population, yes, that was studied, but obviously we're pointing your attention to the areas where we've seen the data be strongest, and that is in so far the EGFR ALK-positive patients and liver mets patients. I would just remind you that those patients account for around up to 35% or so of first-line lung cancer patients, so not a small percentage, as well. And then, finally, IMpower132, which is probably the closest analysis and comparison to 189, as I said, we still expect to read out at the middle of this year. And I think really looking at those 2 trials in detail to determine the difference between these 2 medicines and how they might be used is also going to be an important piece of the puzzle. So hopefully we'll continue the dialog enhanced and improved by more data as the year goes on.

[Severin Schwan, CEO & Executive Director]

Thank you, Dan. Let's take one question from the web. Perhaps, Karl, if you can read it out for everybody.

[Karl Mahler]

Yes, it's a question from Marietta Miemietz. She asks a question about biosimilars, because she asks what percent of European markets is currently supplied, first question. What is your expectation how this will evolve over the rest of the year. Dan, I think this is one for you.

[Daniel O'Day, Chief Executive Officer of Roche Pharmaceuticals]

Yes, exactly. So, basically the European market is supplied now. So all the major countries have had either extensive or first biosimilar erosion from MabThera. It is not a one size fits all, as we've talked about before, UK with the most aggressive introduction of biosimilars. But interestingly in the UK also the subcutaneous portion, although a smaller percentage of MabThera than we have with Herceptin, remains stable. And then you have countries like France and Germany, which are in the middle of the erosion, as expected. And then you have countries like Spain and Italy, which, because of the regional nature of their tendering, a slightly slower rate of adoption and expectation. And then the remaining smaller countries in Europe have all had different scenarios that have played out. So it's really -- MabThera is fully engaged and fully implemented across Europe, and, as I said, we expect now Herceptin to begin to become available in the second quarter by the half year. And the Herceptin dynamics I think, or we feel will be broadly similar to what we saw with MabThera. The 2 dynamics that are slightly different that could potentially offset each other are the higher percentage of subcutaneous with Herceptin. It's a much higher percentage penetration of subcutaneous than we have with MabThera. At the same time, we expect more entrants from Herceptin in terms of biosimilar competition than we have with MabThera. So we're broadly expecting, again, a significant erosion in Europe. That's all built into our plans. And with that, with the confidence that we have behind the new product launches and the momentum, the early signals of momentum, the trajectories, feel comfortable on a global basis to offset those entrants in Europe and also in the United States as we look at '18 and '19.

[Severin Schwan, CEO & Executive Director]

Thank you, Dan. If we can switch back to the telephone for the next question, please.

[Operator]

Next question is from Jo Walton, Credit Suisse.

[Matthew Weston, Managing Director and Co]

It's actually Matthew Weston for Jo. One, I had a Hemlibra question, if I can. We saw overnight that you reported the patient was neutralizing antibodies. Can you just give us any color around that patient's case? How long had they been on Hemlibra, and was the decision to then take them off therapy as a consequence of those neutralizing antibodies? And apologies, Dan, certainly my line went fuzzy during the answer to your last question. Did you make a comment with respect to subcutaneous rituximab in Europe and how much that was holding up in the face of the volume and price dynamics that you gave us? And if you -- would you mind repeating the question, or repeating the answer, and if you didn't, address the question?

[Severin Schwan, CEO & Executive Director]

Thank you. Dan?

[Daniel O'Day, Chief Executive Officer of Roche Pharmaceuticals]

Yes, thanks, Matthew. So let me just finish with the subcutaneous in Europe. Yes, I think, Matthew, the clear answer to your question is subcutaneous continues to hold up in Europe so far. We've always said there's a certain price differential point where you'd probably get conversion from subcu back to the IV. But now for 3 quarters, 4 quarters, it's been holding up given the level of price difference between the branded product and the biosimilar. So we think it's an important treatment option for patients, and we think it slows the biosimilar erosion, and therefore those are my comments. Those are the facts around Rituxan, and that's why we also think it'll be a bit sticky from a Herceptin standpoint, as well. So back to Hemlibra, yes, so we've had one patient out of 600 treated so far. The answer to your question on timing is it occurs -- I mean, neutralized antibodies, in general, for antibodies, occur usually relatively quickly after the initiation of dosing, so within the first several weeks. I just remind you that this is -- this has always, and every antibody has usually a very small percentage of neutralizing antibodies, and we expect this to be less than 1% of patients, as it has been with other antibodies that we have experience with in our hands. This patient was able to return back to previous treatment. And I think that's a really important point, because this is different than developing an inhibitor to Factor 8. But let me complete. With a neutralizing antibody to something like Hemlibra, you develop a resistance to the medicine, but the underlying course and evolution of your disease is not altered. So you can return back to the medicine this patient was on, and that's exactly what's happened. And this should be discriminated from Factor 8. Factor 8 from a variety of sources, and certainly the SIPID study that was most recently published, you've got inhibitor rates of 25% to 30%. And the difference here is that you're actually developing inhibitors to Factor 8, both that that's administered and any Factor 8 that you may have in your body. So what that does, essentially, and that's why this is very different than a neutralizing antibody to Hemlibra, is it changes the underlying course of the disease and progresses the disease in terms of symptoms and prognosis. So it's a very different scenario, and everything that we've seen so far with this one case out of 600 is as we would've expected.

[Severin Schwan, CEO & Executive Director]

Let's switch back to the web. Karl, do we have another question?

[Karl Mahler]

No.

[Operator]

Next question is from Sachin Jain, Bank of America Merrill Lynch.

[Sachin Jain, Managing Director]

Firstly, just to clarify a comment to an earlier question on 189 versus 132, you seem to be pointing down to detail this presentation to allow full comparison. So I just wanted to check my understanding. Have you seen something in the baseline characteristics of 189 that you believe derives some of that data, and do you think that there is potential for 132 to be better than 189? I guess what I'm just trying to understand is what do you think the detailed data comparison between those 2 studies will offer to offset Merck's clear first mover advantage? Second question on European biosimilar erosion, clearly we've seen the Rituxan at sort of minus 40% plus in the quarter, and if you exclude the subcut portion it's proceeding not too dissimilar to small molecules. Given that, I wonder if you could give us any color as to how we should think about U.S. erosion for the various assets into next year and whether a different [indiscernible] structure offers any protection in the U.S. relative to Europe. And then the final question is on Hemlibra again, just following on. For the data at WFH, will it include additional color on the 5 patient deaths that you disclosed recently, or is there anything incrementally you can add at this stage?

[Severin Schwan, CEO & Executive Director]

Dan?

[Daniel O'Day, Chief Executive Officer of Roche Pharmaceuticals]

Great. Thanks, Sachin. So let me be clear. I wasn't inferring any particular expectation around 132 versus 189. I was simply pointing out that that is the most comparable study to read out, and we'll have to look at those studies in detail to interrogate and determine if there are any differences because they have broadly the same chemo backbone. I do feel that we need to look carefully at all these trials, both in terms of the active arm and the control arm and patient characteristics that are in each of those arms. I mean, physicians will do this, and I think we as a community need to do that, as well. I don't have any expectation yet at this stage. I think we've seen the results of 189 to some extent. I'm sure we'll see more of those. I just would encourage that we continue to interrogate the data from all aspects to determine what are the best choices for patients as this first-line lung cancer market and the therapy options are broadly articulated over the next 6 to 9 months. I think we're going to see a variety of different guidelines come up that could triage patients to different care patterns, depending on the nature, the personalized nature of the disease, and we'll see how that plays out. But no, I wasn't implying that I knew something about 132. It's a blinded trial. I don't know anything. But I'm looking forward to seeing the data and doing those comparisons. On the biosimilar erosion, I'd just remind, yes, it was 43% overall for the decline in MabThera for the quarter. Again, maybe different from what you would have with small molecules, in a large biologic you do have constant price pressure on these medicines. So if you exclude the 5% reduction rather on the 30% -- 38%, excuse me, reduction in MabThera, I guess I would take a bit of issue to say I think that's not as steep as what we see with small molecules. We see a much steeper erosion with small molecules. But clearly it's an aggressive erosion, and as we expected. As countries get familiar with how to convert a biologic to small molecules, and they've had some experience with other classes of medicines, they get better at it. And we see that. And I just want to point out that that is incorporated into our guidance and into our expectations. And at the end of the day, in a way, that helps create oxygen for the growth of our new medicines that need to be funded by those same healthcare systems. So obviously we want to patients to have choice and physicians to have choice. We want high standards. But at the end of the day this is a natural evolution of a product that goes off patent. On the U.S. erosion side, I would say that we expect significant erosion in the United States, as well. It's got very different dynamics than you have in Europe in terms of the complexity, heterogeneity of the system. But having said that, there's a lot of focus on this in the U.S. healthcare system, and built into our plans is a significant erosion. We don't expect much erosion in 2018. You have the first biosimilar to ever come on the market only in the second half of the year. The more significant erosion will be expected in '19, at a time when the new product launches are also accelerating in the U.S. So I'll just point that out, with both Ocrevus, Hemlibra going into the inhibitor setting, Cap endo possibly being approved, hematology franchise, Perjeta, a wealth of other products to continue to work to offset any erosion also in the United States. And then, finally, I would just make sure we're clear on the Hemlibra cases, those patients that have passed away. There are 5. Three of the cases were discussed already last year to the investment community. All 5 of these cases, and this is important, have been deemed unrelated to Hemlibra by the treating physicians or investigators. So there is, in our opinion, no benefit/risk profile change to Hemlibra at this time. I would just point out that 3 of these 5 cases occurred in patients receiving Hemlibra for compassionate use. These are patients that have essentially run out of any other treatment options and are by definition in a critical situation. We're happy to support the physician and patient community to attempt to support those patients as much as possible, but this is, if you like, a very severe self-selected patient population when we're talking about compassionate use. Finally, the preliminary assessment shows that no other deaths were related to TMA or TE, which is also an important fact to point out. So I hope that helps give some color to the cases.

[Operator]

Next question is from Andrew Baum, from Citi.

[Andrew Simon Baum]

Two questions, please. Firstly, on the case of Tecentriq in patients with EGFR mutations, look, I understand patients need treatment options, but given the strength of the [indiscernible] data in [indiscernible] with a 0.46 hazard ratio, unless the patient is intolerant it seems difficult to argue for where Tecentriq fits in in that perspective. Interested in your thoughts, especially when it wasn't part of the preplanned primary analysis. Second, in relation to neutralizing antibodies, I was just looking at the profile of Humira, which is also fully humanized, and there the time line seems to be much more protracted, with the emergence much later on with continued therapy. So can we really certain we're not going to see more here? And then, finally, just on the issue of biosimilars in the U.S., already some commercial insurers have elected to pass on rebates for patients for the pharmacy benefit of a drug knowing that the administration is thinking about mandating it under CMS. Do you think there's a risk here that similarly U.S. insurers may elect to adopt a biosimilar first strategy to gain [indiscernible] goodwill ahead of any direct administrative intervention here and therefore posing additional risk to the erosion rate for your at-market biologic?

[Severin Schwan, CEO & Executive Director]

Dan, please.

[Daniel O'Day, Chief Executive Officer of Roche Pharmaceuticals]

Yes, thanks. Thanks, Andrew, as usual. So, you raise an important clarification, if it's needed, on the EGFR and/or ALK subset of the lung cancer patient population. I mean, the full expectation there is that, and we can point to our own Alecensa data and the ALEX trial that [indiscernible] updated at ASCO, is that of course they would first go on targeted medicines. And at basically the progression from that, then cancer immunotherapies, and, in particular, at least the data we've seen with Avastin presents a very realistic treatment option for those patients, with hazard ratios in the 0.4 to 0.5 ratio that present opportunities for further life extension for those patients that have mutated forms of the disease. So I would say that that is an assumption on our part that they would be progressed patients, as they were in the trial, by the way. In the trial patients had received previous therapy and then progressed. And then likewise a patient with liver mets is by definition progressed in their metastatic disease, and so the same, if you like, logic could apply relative to options. Back to Hemlibra, no, we don't expect there to be a higher rate of neutralizing antibodies. We've had other experience with fully humanized antibodies, and they all fall into the range of 1% or less than 1%. So we certainly don't -- there's nothing in the data that we've seen so far with a relatively large patient experience now and knowing that antibodies are almost always presented in the first -- in the early part of treatment, over 600 patients treated. I mean, it's quite a number to understand so far what we would expect to see with neutralized antibodies, and, frankly, it's what we expect to see, right? 0.54%, if you like, of patients with neutralizing antibodies with those patients treated. Finally, I don't want to speculate too much on biosimilars in the U.S. and whether or not insurers or the government could do. As I've said before, our assumptions assume a significant erosion for MabThera, Herceptin, and, later in the decade, for Avastin in the United States. So this is what we expect. And at this stage the guidance, I think, has been published, and it's in the guidance today, accordingly. So I would just remind you it's a very heterogeneous healthcare system. You're not going to see everybody act the same way in the United States. There will be aggressive players and aggressive movers and there will be less aggressive players and less aggressive movers. Having said that, the entirety of the mix we expect to be significant and built into our plans. We'll see how the details work out.

[Operator]

Next question is from Tim Race, Deutsche Bank.

[Timothy Michael Race, Research Analyst]

Mostly for Dan and then one for Severin. So, first of all, on Ocrevus, obviously stunning launch of this product, particularly, well, obviously in the U.S. Just curious to see your thoughts about what you expect for the rest of the world, and when you look to consensus sales forecasts of CHF 5 million to CHF 6 million or so in 2022-'23, how comfortable are you with that or whether you think it's conservative. Moving to just general strategy and M&A, you just bought Flatiron. It's a company that obviously doesn't [indiscernible] get very much confidence today. You want to keep at arms' length. Your competitors already use it and you use it. Could you help us understand what you see in this company that brings in a return for Roche? Is it that you're blocking competitors from using this technology going forward? Is it because somehow you just identified a company that's going to have rapid evolution in profits? Or what really does it bring in for the CHF 2 billion? And then lastly just a quick one on the Shionogi flu product. Could you talk about the economics of that product for you?

[Severin Schwan, CEO & Executive Director]

Thank you, Tim. Perhaps I'll start off with the M&A question and then hand over to Dan. That's also Dan. You want him to comment on some of the specific programs we're doing with Flatiron. But what is true is that in this space of digital health the vast majority of our engagement with third parties are really partnerships, and acquisitions are an exception. But in the case of Flatiron we felt that we can drive the synergies as the market leader in oncology on the one hand and the market leader in oncology EMR space with Flatiron on the other hand, we can drive these synergies even better and make even faster progress, including funding, frankly, to then eventually also benefit from that. And this benefit is also available for competitors. We put a lot of emphasis on keeping the Flatiron operations separate because only if it's separate they will be credible as a neutral partner for other stakeholders, including our competitors. So it's not about blocking out competitors at all. On the contrary, we want to make the offering by leveraging our synergies even more attractive so that other stakeholders, including other pharma companies, can even benefit more from the offering, and we naturally as the market leader have a special interest here to be at the very forefront. Right. Dan, over to you.

[Daniel O'Day, Chief Executive Officer of Roche Pharmaceuticals]

Yes, thanks, Severin. Well stated. Maybe I'll just add a couple of things on Flatiron then go to Ocrevus and Shionogi, but, yes, I think it's been well captured by Severin. When we sat down with Flatiron last year -- we've had a relationship with them, as you know, for many years, and I've had an insight into their strategies from a board perspective -- basically what we said is both companies can continue to be successful independently, but with an acquisition by Roche, assuming that we create this independence and this autonomy, we can accelerate significantly the mission of Flatiron. Now, why is that acceleration important? I mean, as a private company they could invest a certain amount. Under the Roche Group, given the objectives and synergies, not only us, but life sciences and providers can gain, we felt the acceleration was really important. So what are we expecting in this business? First of all, we're expecting this business to be successful on its own. We think it very much has the potential to be. It was on that track as an independent company. We only want to encourage and accelerate that as a standalone business that provides services to oncology customers, providers, and to life sciences companies. So that's number one. But number 2, what we get out of it and what the industry gets out of it is a world-leading, real-world data database that allows us to do things very differently than we do today in oncology, so everything from looking at different treatment regimens to get reimbursement approval in markets. I mean, you can't possibly in a Phase III clinical trial have every different treatment regimen that might be appropriate for a reimbursement authority around the world. By using the robustness of this data we've been able to get reimbursement faster. And I think some of the real benefit will also be in accelerating both clinical trial hypothesis, clinical trial design by bringing the trials to the patients more in the community oncology setting, and then potentially either supplementing or replacing or speeding up clinical trials by using a real-world data control arm instead of necessarily having to enroll -- every time a sponsor company has a new medicine they have to replicate a standard-of-care control arm. We, and I think the FDA to a large extent in our discussions with them, think there's a better way out there. And the only way, of course, that we can be successful in leveraging this is if all companies are successful in leveraging this, because you have to have an unbiased and a standard created out there with the regulatory authorities. So we are accelerating. We are not -- contrary to blocking companies we're creating firewalls that allow providers and other life sciences companies to be very confident in the privacy of their data and to make sure that this business model continues. And we have good experience with that, by the way. I mean, with FMI we've had these firewalls in place for years, and they've had only improved relationships with their life sciences counterparts over the years. So we know that this can work overall. And then, finally, shifting to Ocrevus, I always like your words, Tim. I think stunning is a good adjective. It's really a reflection, I think, on the value that the patients and physicians are experiencing with this medicine. We see continued very good new patient starts in the U.S., good return rates in the U.S. for patients, which is indicative of the type of experience we're having. We had a very, very strong start in Germany. Okay, the numbers may be small compared to the U.S., but relative to our initial launch trajectory and expectations that's going very well, and we think that because of the way that -- the clinical data but also the way we've priced this medicine and created access programs for this medicine, we expect a similar uptake as we've seen in the U.S. around the world. So the potential for this medicine is clearly very, very high as we continue to look at the impact. 7% market share after 3 quarters, with acceleration happening. Finally, on Shionogi, yes, just to clarify again what we've said, we have had a co-development with them. We have commercial rights outside of Japan and Taiwan. We book sales in those territories and Shionogi gets royalties, the details of which haven't been disclosed.

[Operator]

The next question is from Emmanuel Papadakis, Barclays.

[Emmanuel Papadakis, Managing Director]

Maybe a quick one Gazyva, the [indiscernible] not taking the first line in the lymphoma setting has been a little slow, perhaps. Maybe you could just give us some thoughts there. I know it represents a pretty substantial chunk of current MabThera sales, but you don't seem to be superseding it there rapidly. Do you expect that to change, and where could we get to? And then maybe a question for Roland on diagnostics just in terms of, I know this is a sales call, but thoughts in terms of margin given you've had a better quarter in diabetes and indeed it seems it might be sustainable, whether you're confident in this or whether it's early in the year for the Diagnostics Division margins would be great. Thank you.

[Severin Schwan, CEO & Executive Director]

Okay, Dan, if you'll start with Gazyva.

[Daniel O'Day, Chief Executive Officer of Roche Pharmaceuticals]

Sure, sure. So thanks for the question. I think we're still at the very early stages of the [indiscernible] launch. We have very encouraging signs in the U.S. We've seen a real uptake in the unaided awareness of the product, from 31% to 75% now. Overall the sales increased 27% in the first quarter, U.S. 19%, and Europe 64%. Really good uptake in the follicular launch in Europe and also in Germany. And we're seeing utilization across different chemo partners. The anecdotal feedback mostly in younger and fitter patients, and then we have high-risk patients, as well. So all in line with expectations so far. It's a gradual but steady build, and obviously we look forward to continued readouts on Gazyva coming up here, as well. But good, encouraging signals on the Gazyva follicular launch. Over to you, Roland.

[Roland Diggelmann, Chief Executive Officer of Roche Diagnostics]

Thanks, Dan. Thanks, Emmanuel. Thanks for the question. You know and you will appreciate that we don't guide on the margins on this call, nor do we actually guide on diagnostics. Just a couple of words on diabetes care. The first quarter was actually strong, was a plus 5%. I did mention, though, that it came on the back of a very slow first quarter in particular in the U.S. in 2017, so you should not expect those sales growths to continue through the year. Diabetes care continues to be a difficult market in terms of the pricing in particular in the U.S. And we see large swings from quarter to quarter based on that. Maybe more generally, you have also heard me mention that we continue to invest in the instrument base, which is supporting future growth. I think we've done that very consciously. And of course we're doing this of course not just to grow sales but of course then to leverage the installed base.

[Severin Schwan, CEO & Executive Director]

Thank you. And we have one more question. We are coming slowly to the end of our call. Let's have the next question, please.

[Operator]

The next question is from Luisa Hector from Exane.

[Luisa Caroline Hector, Pharma Research Analyst]

On Hemlibra, I wonder if you could just explain the importance of achieving that Part B designation through Medicare. What percentage of the market is through Part B versus commercial channels and Medicaid, for example? And then secondly on Baloxavir, could you highlight the advantages that this would offer over Tamiflu? It looks to be more about stopping the spread of the disease, perhaps something around safety, as well.

[Severin Schwan, CEO & Executive Director]

Dan, please?

[Daniel O'Day, Chief Executive Officer of Roche Pharmaceuticals]

Yes, Luisa, thank you very much for the question. So, I mean, the importance of Part B is, as usual, I think we've got around 20% of patients or so that would fall into this category, Medicare-related. However, I mean, as we also know, oftentimes CMS decisions have an impact upon how other insurers may look to reimburse the medicine overall. So, it hasn't been -- I would say that it hasn't been a major hurdle in the launch of Hemlibra in the United States. It's done very well. But what this allows us to do is get to the entirety of the patients and kind of set a precedent on how CMS, as obviously a very important payer in the United States, sees the value of this medicine and wants to make sure that even if it is a minority of the patient population that takes advantage of this Part B, that the hurdles, if you like, from a patient perspective, out-of-pocket pay, are lowered and therefore those patients can also benefit from the new standard of care as it progresses. So that's the color I would give on Part B. On Baloxavir, I think probably -- you saw this slide in the presentation -- I think the biggest emphasis that I would make on this medicine is twofold. One is the one-time dosing, which you can imagine compliance when you're not feeling well with a regimen that goes for 5 days may not be perfect. So the concept of being able to take one pill and have a long half-life and have a good tolerability, I would say, and the tolerability seems to be good, certainly from the CAPSTONE-1 study, perhaps improved to Tamiflu, as you point out. But the second big point that I would really emphasize is the time to cessation of viral shedding. As you saw in the table on the slide, I mean, it's 24 hours to time of cessation of viral shedding versus 72 hours for Tamiflu. I mean, obviously it's 48 hours quicker than Tamiflu. Now, I mean, along with viral shedding we know there's a link between viral shedding and transmission rates. So when you can bring down viral shedding into influenza patients in 24 hours, or 1 day, versus 3 days, that has a big impact upon the carrier or the ill person and their transmission rates to people around them. So I think this is important from a seasonal influenza standpoint. It's a public health standpoint. It's potentially important in a pandemic situation. So all of these things, I think, make it an attractive product profile and we feel a meaningful difference for patients with influenza.

[Severin Schwan, CEO & Executive Director]

Okay, Dan. Thank you very much. We are coming to the end of our call today.Thanks for your continued interest, and we look forward to catching up next time. Have a good day. Bye-bye.

[Operator]

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