Roche Holding AG

SIX:ROG

Earnings Call Transcript 2020-Q3

[Operator]

Ladies and gentlemen, welcome to the Roche Third Quarter 2020 Investor and Analyst Webinar. My name is Henrik, and I'm the technical operator for today's call. Kindly note that the webinar is being recorded. [Operator Instructions] At this time, it's my pleasure to introduce you to Karl Mahler, Head of Investor Relations and Group Planning. Karl, the stage is yours.

[Karl Mahler, Head of Investor Relations]

Yes. Thanks a lot, Henrik, for the nice introduction. Just to -- for those who join us here over the video, this is all COVID-approved here. With our masks aside, I just wanted to make sure that you don't get the wrong impression, that we have here the meters counted. My first comment.The second one is if you have -- we've got some questions, how you can ask questions, so one part Henrik was alluding to. Of course, I mean, if you have another way or want to have another way, you can also have my e-mail address. You can drop me an e-mail, and then I will read it to the people here.With this one, I would say, over to you, Severin.

[Severin Schwan, CEO & Executive Director]

Thank you, Karl. Thank you. Thank you, Karl. Also a warm welcome from my side for our Q3 Sales Briefing. If we can go right to Slide 6, please.So overall, if we look at the third quarter, it's good to see that the business has recovered. You remember, in the second quarter, we had a decline, very much driven by the lockdown, which led to delays in doctor visits and hospital stays. That has improved, and it's very much reflected in our business.On the Pharma side, actually, a very strong quarter in terms of our pipeline progress with 3 new medicines being launched in 1 quarter in the United States. That's pretty remarkable. Also a number of pivotal trial starts in Q3, so good progress on that front.On the Diagnostics side, of course, all about increasing manufacturing capacities for COVID-19. You know that demand is still outstripping by far the industry supply. And as we ramp up production, you see this now reflected in the sales dynamics as well.If we can go to the next slide, please. Pharma down 1% in local currencies for the 9 months; Diagnostics up 9%; Group with, again, 1% growth in local currencies.If we can go to the next slide, please. Here, the quarterly development. Again, as I mentioned, let's have a deeper look into this on the next slide. So what you really see is 2 main factors, which have driven the recovery. On the one hand, continued strong demand for our newly launched medicines, up by 32%, actually compensating for the decline due to the entry of biosimilars. And then on the other hand, the increased dynamics on the Diagnostics side with actually an 18% growth.If we go to the next slide. Now this is something that I'd like to just spend a moment on, that's the development in China. And what you see here is, overall, on the group level, a minus 7% decline in China versus previous year. And what you can see is that the business is growing quarter-over-quarter, but it is declining versus last year.So where is this coming from? One of the main reasons here is really capacity constraints in the hospitals. I mean, any one of you who has been to a Chinese hospital knows how crowded typically those hospitals are. I mean, patients very often kind of being next to each other, even in the corridor. And with COVID-19 obviously and social distancing, et cetera, capacity in the so-called Tier 1 hospitals, where most of our business is, has been constrained. And that, of course, has directly an impact both on our Pharmaceutical business and on our Diagnostics business. So it's really a lot about constraints, we have just from a capacity point of view. And we are facing -- we and actually the industry overall.Now what I'd also like to point out here, because this is important in terms of our outlook for the full year, is fourth quarter sales last year which were relatively lower. And the reason, as you remember is we had these inventory adjustments in China. So I would argue that we should see a good development in China into the fourth quarter partly because the country is adapting and the health care system is getting back to normal, but partly also because simply we have a base effect here versus previous year.So if we go to the next slide. Here, you see again the different elements of the growth, very much of what I just said, driven by the new medicines and diagnostics. And you see the offsetting effect with the entry of biosimilars. But also here, as we would have indicated to you at the beginning of the year, even though the impact from the entry of biosimilars, of course, is really significant, as you can see, we over -- I mean, we more than compensate that decline by the launch -- by the newly launched medicines.If we can go to the next slide, please. Right. As a consequence of that portfolio shift, we have now 40% of our Pharma sales coming from the new medicines. And of course, that will quickly go up as we see this continued growth of the new medicines on the one hand and the further erosion of our mature products, Avastin, Herceptin and MabThera, specifically, right?If we go on. As I mentioned, a really strong quarter in terms of pipeline progress. So beyond the approvals of the new medicines here, you can see a long list of new pivotal study starts. And I think this is -- I mean, this is pretty remarkable in itself, but it's even more remarkable if you think about all the COVID-19 constraints. So in spite of the pressure in the health care system, we have been able to keep those programs running and move them forward. And they are really, really important programs here, as you can see with tiragolumab, for example, our anti-TIGIT or SERD, potentially big opportunities we want to drive forward.If we can go to the next slide. Thomas will spend much more time, obviously, on the testing side. Let me just highlight here that we recently launched a rapid antigen test. We only launched it towards the end of the quarter. So that's one of the reasons why we are very confident for the fourth quarter because demand for that is higher than the supply for the industry overall and certainly for us. So it's only a matter of how much can we produce. And of course, we have a good line of sight of what we can produce in the fourth quarter. And that will, of course, add to the sales dynamics in Diagnostics.Beyond the point-of-care antigen test, I'd just like to highlight that as well. We will also bring an antigen test to the market for the clinical lab. That is -- we have announced it now that we will do this by the end of the year. And that is very meaningful because we have, as you know, constraints on the PCR tests. We will never be able to provide -- I mean, we, as an industry, will never be able to provide a PCR test for the masses. It's just not possible. But antigen tests can be scaled up. And by bringing those antigen tests also to the central lab, to the high-throughput systems on our established platforms, that will be a big relief for the overall health care system.We move on. Yes, to close with the outlook. We have recovered in the third quarter, but I think even more important, we are very confident about the dynamics into the fourth quarter. And it has a lot to do, of course, with the good progress with the newly launched medicines and new, just newly launched, medicines on the Pharma side, on the one hand; with the COVID-19 testing, of course, as we further ramp up manufacturing capacities; and some base effects we will benefit from, in particular in China.Good. And with this, I hand over to Bill. Over to you, Bill.

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Thanks, Severin. Thanks, everyone, for joining us, and look forward to sharing our results. So first slide, please. So this is the geographic breakdown. And you can see essentially that the story is one of, as Severin mentioned, the new products offsetting the impact of biosimilars. And where we had the biggest impact of biosimilars in the U.S. and Japan, that wasn't enough to offset the losses. But significantly, in Europe and international, we saw significant growth in the quarter and so far this year.Next slide. So this is the view from a product standpoint. And you can see at the top of the list, Tecentriq, Ocrevus, Hemlibra. You see Actemra up there, where we've continued to grow in new indications, but also this year in treating patients with COVID-19 around the world. And we've had 2 Phase III studies read out, and a third, which was a large randomized controlled study in underserved populations called IMPACT that just recently read out, was positive. So that continues to play a role in treatment in various centers around the world. And then Perjeta continuing to add strong growth.Down at the bottom, you can see the impact of the biosimilars on Avastin and MabThera and Herceptin. And essentially, this is a bit more impact than we thought we would see at the beginning of the year, sort of similar or maybe slightly at the high end of what we expected at the half year. But you also see Lucentis there, and that's basically a COVID impact, largely, that happened in Q2. Now we've seen sales of Lucentis significantly recovering since Q2.Next slide, please. Yes. So I think very importantly, we now have the new products accounting for 43% of the total. And just to put that in, in stark terms, we've launched 18 products since 2012. And this tally doesn't include Venclexta since Venclexta is sold and the sales are booked by AbbVie, but we have a profit share with AbbVie. But the Venclexta sales are just over $1 billion run rate. And the other sales here that are represented is about a $19 billion run rate.So if you add that together, we've launched products that are now contributing a $20 billion annual run rate just since 2012. And I think that would rank us in some of the top pharma companies in the world if we were only selling the new products. So I think it's a remarkable achievement, and I think it just attests to the power of following the science and continuing to deliver breakthrough therapies at the pace we have.Speaking of breakthrough therapies. We've been really pleased to launch in the U.S. in Q3, 3 new molecular entities, and then also Phesgo, the fixed-dose combination of Herceptin and Perjeta that we launched in Q2. So basically 4 new products in the year of 2020, which is, I think, all the more remarkable given the pandemic situation.Next slide, please. So in oncology, overall sales down about 8%. I think I'll say more about the HER2 franchise in a moment, but you can see Avastin sales down 22%. This is essentially the combination of biosimilar impact in the U.S. that we already had in the first half and then beginning to feel biosimilar impact in Europe. And I think on -- yes, I think otherwise, let's cover the other ones on the dedicated slides.Next slide, please. So in the HER2 franchise, really pleased to see that continued strong growth of Perjeta as it continues to be used for the treatment of early breast cancer, and the uptake continues around the world. Now the annual run rate for Perjeta is up over $4 billion, which is, I think, a pretty significant milestone. Also, Kadcyla with very strong growth, 33% growth in the adjuvant setting primarily driving this. And so I think we're really pleased with the way that Perjeta and Kadcyla have made up for the losses of Herceptin. And you can see basically, very soon, are supplanting Herceptin on the list in HER2 products.Next slide, please. So in hematology, as I mentioned, so this slide is sort of missing Venclexta because the sales are booked by AbbVie. But again, you can see the impact of MabThera biosimilars. Now we have biosimilar competition for MabThera in most markets in the world, and -- but continued strong growth from the other products.Gazyva had some challenge with the pandemic in Q2 because Gazyva is mostly treating CLL and NHL, and these are -- or sorry, indolent lymphoma, indolent NHL. And these are more slower-moving diseases and tend to be more in the elderly. And so those are the patients who sort of didn't get in and didn't get their infusions in Q2. But we've seen a nice rebound for Gazyva since that time.Next slide. Tecentriq. Now this slide kind of tells the story with the pandemic. You can see we had very strong growth through Q1, and Q2 was flat, and then actually a really nice strong growth again in Q3. All the early indicators are that, that should continue. We now have the approval in liver cancer in the U.S., which is driving strong uptake in the U.S. and then continued penetration in NSCLC and small cell lung cancer in Europe and in the international markets. So look forward to more growth for Tecentriq.Next slide. We've also added a new product, Gavreto. This is a partnership that we announced in July, partnership with Blueprint Medicines. We co-commercialize in the U.S. and then we have responsibility outside the U.S. with the exception of China, which had -- was subject to a previous license agreement. But the data here, I think, is very impressive. So this is Phase I/II data of the ARROW study in RET fusion-positive NSCLC. We think it's about 1% to 2% of lung cancer, but also a number of other tumor types, including thyroid cancer, where we have a Phase III that's starting up now. But again, you can see very deep responses and very durable responses and a very strong result. And we're really pleased with what we see so far from the launch in the U.S.Next slide. Okay. So Hemlibra, again, you can see the impact of the pandemic in Q2. And here, what we have is we're -- we've largely penetrated -- in the major markets, we've largely penetrated the inhibitor patients. So the new patients that are driving growth are almost entirely from the non-inhibitor patients. And these are patients who are achieving okay control with Factor VIIIs. And so the main reason to switch to hemophilia is to get a much more convenient approach. We're basically -- these patients have once-a-week or a once-a-month subcu administration versus multiple times per week with infusions of Factor VIII. And essentially, what happened in the pandemic time is that patients weren't going in, they weren't choosing to switch therapies in the midst of the pandemic. But again, you see in Q3 a very strong return to growth, one of the best quarter-over-quarter changes that we've seen. And this is really widespread across the U.S., Europe and increasingly in other international markets.Next slide. All right. Again, new products have been a really important part of our story for a number of years. And we're really pleased to now have Evrysdi on the market for spinal muscular atrophy. We've seen a really positive response from the community in the U.S. We've basically been treating patients with type 1 SMA, but also 75% of patients with types 2 and 3 SMA. These range from kids to adults over 70 years old even. So it's really a broad range of patients.Similarly, we've had about 2/3 of patients are switching from either Spinraza or Zolgensma and about 1/3 of patients are new to treatment. And so we'll see how that evolves as time goes on. We've only been available in the U.S. for about 2 months, so it's still early days. But again, very positive response, and we think this is going to be a very important medicine in the future. And we're hoping to have approval in Europe and begin to make the medicine available across Europe as early as April of 2021.Next slide. So in immunology, the main stories here, I think, continued strong results from products like Esbriet and Xolair where they've held up well despite competition, despite the pandemic. Actemra, as I mentioned, there's been some uplift in sales because of use for treating people with COVID-19. And then Rituxan, the impact of biosimilars, especially in the U.S., has been the major sort of drag on the immunology business. Importantly, we started our Phase III study of Gazyva in lupus nephritis. And we had our first patient in. And we're looking forward to first patient. And in fact, it says in Q4, but I can say that's already happened, the first patient in for Pentraxin-2 in IPF. So a really important milestone for us.Next slide. MS. This -- your eyes aren't deceiving you, and this isn't a duplicate of the Hemlibra slide. You basically see the same thing. These are medicines where almost 100% of patients are switching from something else, and switching just didn't happen in Q2. And so in the case of Ocrevus, we also had some patients where their infusions were deferred because of the situation in health care facilities in April and May. We saw a very strong return to growth in Q3. We've -- there's a new competitor that's launched in the U.S. in the meantime, but we still see very strong activity in terms of new patient starts. And all indications are that Ocrevus will continue to grow well in the quarters ahead.Significantly, we also began the study of Ocrevus in -- well, 2 Phase IIIs of an Ocrevus high dose. We're really interested to see that on the most difficult measure to impact, which is disability progression, whether a higher dose of Ocrevus might yield a yet higher result. Ocrevus really has some of the best data that's ever been seen, certainly the best in primary progressive. And we're really excited to see what a high dose can bring. Also fenebrutinib, which is our non-covalently binding BTK inhibitor. We announced the Phase III programs in relapsing MS and PPMS and are starting those now.Next slide. Okay. Ophthalmology, very exciting times there. The Port Delivery System, we announced positive results on the Phase III study in May. And we've been working really hard to get that filed. We will begin the filing, the filing will commence with FDA in Q4. And we're also looking forward to launching it, ultimately, the Port Delivery System, beginning as early as late next year in the U.S. and shortly thereafter in Europe and other international markets.Also, faricimab, which is an investigational molecule that combines Ang-2 and VEGF, so 2 different pathways targeting the angiogenesis that occurs around the retina. And we're really excited to have results coming very soon in DME already in Q4 of 2020 and in AMD shortly thereafter. We also plan to start a Phase III study of faricimab in retinal vein occlusion in 2021. So we have big hopes for this molecule, and we're looking forward to bringing a lot of good things to people with loss of vision.Next slide. Okay. Well, we've been very busy, as you've heard from Thomas, across Roche in dealing with the pandemic. And certainly, in the Pharma division, with Actemra and also investigational studies of a number of other agents. But we were also really pleased to form this partnership with Regeneron to bring a lot more neutralizing antibody combination to the world. This is a really nice program. I want to actually go to the next slide and consider the data.What we found to be really compelling, and I think Regeneron did an excellent job with this Phase II study, is they looked and they saw -- they measured the viral load in all the patients at baseline, and they also measured the antibodies in patients at baseline. So these are the antibodies -- the patient's own antibodies. And what they found is, and not surprisingly, there was a very high correlation between a high viral load and an absence of antibodies in the patient. They also found that when they treated the patients that were lacking antibodies, which were the patients with the high viral load, they had about a 99% reduction in viral load versus placebo.So a really well-done study, a very important and impressive result. Obviously, there's been other sort of notoriety of this therapy with the President of the United States receiving treatment with it. But what we're really excited about is the possibility to -- again, to bring this to many more patients. It's just a part of what the world needs for fighting COVID.Next slide. So just to wrap it up, this is sort of a summary of pipeline progress this year. And you can see there are some red Xs at the bottom. I think that's -- that kind of goes with the territory with Roche. We do a lot of first-in-class experiments. And when you are constantly pioneering science, and you will have failures. We recognize that's part of the journey that we accept. But I think it's worth it for all the breakthroughs that we're making. And I think Evrysdi is an excellent reminder of that.One that I wanted to mention that hasn't been on this list before, a red X on ipatasertib plus chemo in triple-negative breast cancer. This is a relatively small indication because it's a subset of patients with the diagnostic positive in triple-negative breast cancer. But we were very hopeful that we might see a positive result, and we didn't achieve that. So there will be more data presented at a medical conference shortly. But did want to mention that. And unfortunately, it doesn't look like ipatasertib is likely to play a role in triple-negative breast cancer.But otherwise, again, we're very pleased with the progress we have with our 3 new molecular entities with Phesgo, with many other new indications launching in the U.S. and around the world. And we look forward to continuing to benefit patients and grow in the future. So with that, I'll hand things over to Thomas.

[Thomas Schinecker, Chief Executive Officer of Roche Diagnostics]

Thank you very much, Bill, and good morning, good afternoon, everybody. I'm very happy to present the results for the Diagnostics Division for Q3 2019 -- 2020.So first, let me say that we had a fantastic Q3 with 18% growth, and you've seen that on the previous slide. And this was driven primarily by 2 reasons compared to Q2. One, our core business has started to come back. Although it's not back 100% to normal, it has come back significantly. The second reason is, of course, our uptake of the COVID-19 tests.So now if I take the Q2 and Q3 together, we probably had a negative impact of about CHF 1.1 billion due to the COVID crisis and less patients going to doctors, which is late -- in the future, going to have a negative impact because these patients are not diagnosed early enough, but we were able to more than compensate that through our COVID testing portfolio.And let me highlight just 2 lines. The first one here is the Molecular Diagnostics line with a 77% growth. Now if I take Q3 alone, we grew 124% in the Molecular Diagnostics portfolio. And we'll see this accelerating in Q4.Now centralized and point of care, this is really where we see the significant impact, negative impact due to COVID-19 and the fact that patients are not going to the hospitals anymore. We'll see this number recovering in Q4 as we see more patients coming back.And also here in this line, we'll see the sales of the antigen test both in point of care, in the central lab, which were launched -- or the point-of-care test was launched at the end of Q3, so hardly had any impact yet on those numbers. So overall, we're very confident going into Q4, that we will see a further acceleration of the growth rates that you see here.Now looking on the next slide, breaking down the growth in the different regions. We see that all regions are contributing to growth, except Asia Pacific. In Asia Pacific, specifically China has declined year-to-date by 12%. Here, we had the most significant impact very early in the year with this pandemic in mostly our core business.Now if I look at the underlying growth in just the molecular business across all regions, actually, the growth is pretty much the same. So the difference in growth rates actually comes from other businesses. In Asia Pacific, it's mostly our centralized and point-of-care business that has significantly declined. And in EMEA, we have lower sales in diabetes care versus North America. But the underlying molecular business is growing about the same in all regions.Now if we go to the next slide and to take a bit of a deep dive into the different business areas. We see that, again, centralized and point of care. Here, our Immunodiagnostics business, including chemistry business, is declining due to less patient visits. But within the point-of-care Immunodiagnostics business, we see a significant increase already with 120% growth despite the fact that we only had 1 week of sales of antigen tests in that business in Q3.The Molecular Diagnostics area, we are reporting our tests in the virology and LightMix System portfolio. And here, you see the significant growth of 156% and 188%. Now if we just look at Q3 only, our royalty grew 233%; and LightMix, 218%. Again, we expect acceleration of that into Q4.I believe that Roche significantly contributed to managing this pandemic that the world is suffering from. And we continue to work on a number of products to help the world even more. We have solutions in Molecular Diagnostics, and these are our PCR assays on lab platforms. That's the TIB Molbiol and the SARS-CoV-2. And we recently launched a multiplex assay between SARS-CoV and influenza. Again, this has not yet impacted our Q3 numbers, so we'll see an impact in Q4. The same for our near-patient platform, the Liat, where we also have launched an assay in the end of Q3, and we should also see a positive impact going into Q4.Within immunology, already in May, we launched our first antibody assay. We now launched a quant antibody assay that is used in vaccine trials. But we will also, as Severin mentioned earlier, launch an antigen test on our Elecsys platform. Here, we can do 300 tests an hour with more than 70,000 instruments placed around the world. And each test result is available within 80 minutes.If you look at the near-patient side in immunology, we've launched a rapid antibody test and the rapid antigen test just in the last week in September. And we'll continue to work here that we will be able to provide additional solutions: One, using saliva as a sample type but also a combined SARS-CoV-2 and influenza A/B rapid engine test that will be aim to launch in Q4.Now if we go to the next slide, I'm going to take a short deep dive on our near-patient selling solutions, both for PCR and for the antigen. On the left side, you see the antigen test. Now what's important here is this is instrument-free. And it says that results are available in 15 minutes. In fact, if you look at it, most of the results are actually available already in less than 10 minutes. So really something that's very fast and can be done in a decentral setting. We've used both symptomatic and asymptomatic patients in this clinical trial. And we are now at 40 million tests per month, and we aim to go higher to support the world and patients.On the right side, you see the cobas Liat. Here, we have lab-like clinical performance, less than 25 copies per ml. So really comparable to the best we have. In the laboratory setting, we have more than 5,000 installed. Yes, just in terms of volume will be definitely less than 1 million per month. So it's not going to impact as much as the rapid antigen test, but again, another important weapon to fight the pandemic. And again, here, hardly any sales yet in Q3. We'll see more of that in Q4.Beyond COVID-19 and the completions we have delivered there with more than 13 solutions already launched and innovation continuing. We've also delivered well in the rest of our portfolio. Here, you can see the cobas 6800/8800 menu and the expansion that we have driven throughout this year with a total of 5 launches. HIV-1/2 Qual, I will mention on the next slide as well as EBV and BKVs, I'm not going to go into that very much. But let me highlight one more assay here that I think is important, and that's the multiplex respiratory panel. So with this, we will have a panel per well, where you can run 15 different respiratory viruses and will include the SARS-CoV virus in there as well. And this is a technology that our scientists have invented, and it is fully patented.Now as we have installed already 1,000, we have significantly increased the installed base of these highly automated platforms. We will double this installed base most likely within the next 12 months even. And given that we have additional menu, we will be able to supply the world not only with instruments, but also additional tests to run on these systems when they are out in the market.Now let me highlight 2 more examples of what we're doing. One is around improving care for transplant patients and really along the patient journey. In Q4, we are going to launch a panel of assays on our Elecsys, so our immunoassay platform to identify the existing virus stage -- infection stage. And this will be done on donors and recipients of transplant organs. And this is important to really make sure that these people are treated the right way so that there are no complications.Once these patients are identified and the organ is transplanted, these patients then need to be monitored on a constant basis. And here, you see, again, the EBV test, the Epstein-Barr virus test, but also the BK virus test. If this is not done, there's a risk for a number of diseases, for example, also cancer. And you see that we had received FDA breakthrough device designation for both these tests. There is no other company in the molecular space that has these tests available on their platform.We are also improving diagnostic for HIV and AIDS. Again, along the patient journey, we have a number of assays already on the market. With cobas HIV 1/2 Qual on 6800/8800, we had the first of its kind test on the U.S. market that can differentiate between the 2 different viruses. And this has just been recently launched in the U.S.With the HIV Duo, we also help diagnose. And also in markets outside of the U.S., this is used in blood screening setting. We are able to diagnose people with HIV. Here, the window between PCR and this test is only 5 days. So this is really best in class. And this is a combination of an antigen and immunoassay test.So overall, Dia has not only delivered on the COVID-19 portfolio, but on our overall R&D pipeline. And you see this on the slide. And I assume, and there is only 1 product on here, this is the mySugr app. This is the only 1 where we currently have a risk if we're going to make it in Q4. But if it's not in Q4, it will be early Q1. But all the others will be delivered on time, as promised to our customers.With that, thank you very much. And I hand over to Alan.

[Alan Hippe, CFO & Information Officer]

Yes. Thomas, thanks a lot. Great to see Dia flourishing and now sharing really the limelight with Pharma. And then basically, I can say that Severin, Bill and Thomas have done their job already. So from my side, just a couple of remarks on the currency side.And let's go to Slide 46 with that. What you're seeing here is the consistency of the sales growth. And you see really Europe, international and then Dia really took us over the finish line to get to growth in constant rates with flat -- were plus 1%, and you see that in that small blue bar. And then you see really in the middle here, this scary red bar was minus CHF 2.6 billion, which then leads us to the reported growth in Swiss francs of minus 5%. And this minus 6 percentage points impact is really driven by the U.S. dollar, which contributed roughly minus 2 percentage points. The euro contributed roughly minus 1 percentage point. And the rest, the minus 3 percentage points, are coming from APAC, LatAm and other currencies.With that, let's go to Slide 47, which gives a little bit of a feel where we could land from a currency impact point of view at year-end 2020.And let me start with the left-hand side because when you compare that to half year, you would see that the impact from the euro is relatively stable. Has not improved, but also has not deteriorated significantly. The major impact change is coming from the U.S. dollar, which has weakened further compared to what we have seen at half year.So what you see on the right-hand side, based on a weakening U.S. dollar and the assumption that the exchange rates end of September 30 remains stable until the end of 2020, you see the following impact that we expect for the full year. And you see here on the sales side, minus 6 percentage points; on the core operating profit, minus 9 percentage points; and on core EPS, minus 9 percentage points.Let me emphasize once again, this is a reporting topic. When you look really at cash flow, and I think that's where it counts from a finance point of view, I think we have a pretty good natural hedge around the globe. We have a full value chain in the U.S., we have a full value chain in China as well as in Europe. So I think overall, we can manage these risks quite well.Let me go now to the last slide, which is the outlook. And then Severin confirmed that already, and I think that's one of the major messages today. And we are proud that we can do so. But let me also really emphasize once again the biosimilar impact here that we adjusted at half year. And we started into the year with a projection of minus CHF 4 billion in constant rates, negative sales impact coming from biosimilars. We adjusted that number at half year to roughly minus CHF 4.7 billion in constant rates, including the COVID impacts for Europe, U.S. and Japan. I think that's very important. I think what Bill highlighted a little bit is, we think, and these things are changing. I think we feel very comfortable with the roughly minus CHF 4.7 billion in constant rates. As Bill mentioned, it could be a little bit more, but we feel good with the roughly overall.Good. With that, I think we're happy to take your questions.

[Karl Mahler, Head of Investor Relations]

Okay. So thanks for your presentations. Attendance, we have 800 -- close to 850 people on the call, so that is a lot. And I can see that we already have an organizational issue simply because I have about 14 people which want to have a -- wish to raise a question. We have in the Q&A 9 people which have a question, and I can already know that it is impossible to do that in the next 0.5 hour to 3/4 of an hour. So what we could do in order to manage it somehow, if you could -- if you have a question, maybe limit your questions to maybe 2 maximum. And not, sub questions, really 2 questions. So we try to keep ourselves also short in our answers.And maybe, Henrik, you could kind of remind us on how the people on the phone and on the webcast can ask their questions, as a reminder.

[Operator]

Yes, thank you, Karl. [Operator Instructions]

[Karl Mahler, Head of Investor Relations]

Very good. I would say let's get start with the phone question first. Wimal, you are the first one. I saw that you dialed in, in time, so you should also have the privilege here to ask the first 2 questions. Thank you. I allow you to talk.

[Wimal Kapadia, Research Analyst]

Great. Wimal Kapadia from Bernstein. So if I could just start actually with faricimab ahead of the data. So just what level of confidence do you have of demonstrating superiority in a DME trial? And is there anything specific to the DME population versus AMD that gives you more confidence that the Ang-2 MoA will actually provide incremental efficacy?And then just tied to that, in a scenario with superior durability or similar efficacy, how would Roche approach marketing the asset?And then my second question, just a quick one just for the COVID PCR testing. At what stage could we see a step-up in capacity in 2021? And to what extent will that 20 million capacity change? And based on your current incoming, will that be enough to meet your demand?

[Severin Schwan, CEO & Executive Director]

I would say, Bill, would you like to start?

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Yes. Yes. Thanks for the question. So okay, faricimab, you asked, I think, first, what level of confidence do we have that it will be superior in DME? And I would say we have a medium level of confidence. And what I mean by that is we have some programs where we've seen a Phase II result that's so strong that we would be shocked if we didn't see the same thing in Phase III. And then we have other ones that are really long shots.I would say in this case, we had some well-done Phase II study but the magnitude of the clinical benefit was measured. And so it just means that it's not a sure thing. We're hopeful. We had good, I think, animal models. We saw a good result in Phase II. I think we saw approximately a 4-letter difference on the eye chart. Put it in perspective, the original Lucentis result was between 10 and 15 letters on the eye chart. So the additional incremental benefit of adding the second MoA might be approximately 3 to 5 letters, which is obviously harder to demonstrate in the study. So I think we're confident in the study design. We think if the molecule is offering a benefit, that we'll pick it up. And yes, let's see what the result is.You asked about the reasons to believe that maybe we would see a benefit in DME and whether that's greater than the potential benefit in AMD. I think our scientists think that there are some characteristics with macular edema -- with diabetic macular edema that might lend itself, it might hint that there's more potential for the dual mechanism. But again, I think it's -- until we see the data, it's somewhat scientific. Scientific, but scientific speculation. And I think we'll know the answers to these things within about 6 months' time when we have both studies read out.And then you asked the question about how we would look at this if we saw a better result on durability, but not on efficacy, I think let's wait and see the data, and we'll know. I think -- yes, we'll know if we have a good result when we see it. And I say that because we know that there is an unmet need for longer durability. But on the other hand, we have the PDS, the Port Delivery System, that's going to deliver twice-a-year dosing, and that's going to be, I think, pretty unbeatable for some time to come. So -- but let's see what the results are.

[Karl Mahler, Head of Investor Relations]

Thomas?

[Thomas Schinecker, Chief Executive Officer of Roche Diagnostics]

So the first question was around co-PCR test development in terms of supply. As soon as we knew how this pandemic was going to develop, we started to use some of our backup tools, to automate them in order to improve and increase manufacturing capacity. So we've done that. Some of those manufacturing lines came in, in the June, July, August time frame. And already at that time, we ordered new manufacturing lines. Normally takes somewhere around 12 to 18 months to bring those into routine, and we have shortened that significantly. So we'll see them coming in, in the next months to come. So we will continuously see an increase in PCR supply.Now with regards to demand, I would say it's pretty clear that at least until middle of next year, that the demand is still going to be significantly higher than supply. And this is not only a Roche-specific phenomenon, but this is an industry-wide phenomenon.However then, we will start to see a consolidation in the market to those players that have really highly automated solutions, high-throughput solutions. And I think there, we are better positioned than anyone else out there in the market. And then you will see a consolidation because what currently is being done in some countries is that, really, research instruments are being used for PCR testing with some students. And I don't think that, that's something that can be done in the long term. But still, I mean, for certain, for the first half year next year, we will not see any consolidation yet. This will still be that as much PCR testing as is being put out there will be used.That's why also we believe that antigen tests has extremely important because they can complement the PCR testing. And I mean, first of all, if a person is positive on -- and the specificity is really high, then it's clear that this person is positive. Second of all, you will definitely identify the people that are having a high viral load and are really infectious, so you need to really use the combination. And this is what a lot of governments are going for at the moment.

[Karl Mahler, Head of Investor Relations]

Next one would be Matthew Weston over the phone. Matthew?

[Severin Schwan, CEO & Executive Director]

Perhaps we take somebody else in...

[Karl Mahler, Head of Investor Relations]

Yes. Then the next one would be Simon Baker.

[Simon P. Baker, Head of Pharmaceutical Research]

Great. Two for me. Firstly, one for Thomas. Could you give us an update on the uptake of the COVID antibody test? I think what you said before that when it first came out, governments were not entirely sure what to do with the results of that. I just wonder how that situation has changed.And also another COVID question. Could you give us an update on the issues you've had with the U.K. distribution center?And then one for Bill. Perhaps you could give us a few more details on the rationale for the Dyno Therapeutics deal earlier in this week. Does this add to or replace the capsid capabilities that you've got with Spark? And are there any early stage projects that will be redefined as a result of this acquisition?

[Thomas Schinecker, Chief Executive Officer of Roche Diagnostics]

So I should start. So first with the antibody test. So we see a constant kind of 10 million a month in terms of demand for the antibody test. So that's the first one that we launched in May. And this is pretty constant over the last couple of months. And I think it's really there are a number of use cases for this antibody. That one is around really understanding the prevalence, so how many people have been infected, but also to understand immunity. I mean, if you want to understand immunity, you have to follow these people and you have to measure them on a regular basis in terms of the antibody levels.And by the way, because I always see that, I mean, if we believe in vaccines, we also need to believe a little bit that antibodies are actually helping you.And then there are other use cases that, specifically for the quant spike antibody assay is key, and that is to measure the antibody levels from convalescent plasma, so plasma that's donated to people that are sick, and also in the vaccine development. Now we believe that once vaccines will come to the market, antibody testing will become definitely a lot more relevant going forward.Then the second question was around the U.K. distribution center. So first, let me say there was no problem ever with delivery of COVID tests. So this had nothing to do with that. We always prioritize the COVID tests. What happened is that in the U.K., we moved warehouse from one to another warehouse. We had a contingency plan for 2 weeks to run both warehouses at the same time. But then there was a breakdown with one of the robots, so they couldn't get enough product out of the warehouse. So the product was there, it just didn't get fast enough out of the warehouse.So this problem is fixed. And what we are now doing is we're supplementing, in order to clear the backlog, shipments also out of Germany, out of our center in Mannheim. And I think we have, and we're going to ship more than 80 tons of diagnostics products into the U.K. And the last of that will arrive in the U.K. at the end of this week, in the weekend, so that this should be completely cleared out.

[Karl Mahler, Head of Investor Relations]

Thank you. Now I have a question via the chat.

[Severin Schwan, CEO & Executive Director]

Sorry, you had a question...

[Thomas Schinecker, Chief Executive Officer of Roche Diagnostics]

Yes. Yes, thanks for the question, Simon. So we're really excited about the potential for treating patients with monogenic disorders. But also, we'd like to expand over time, the impact of gene therapy, to many new diseases. And as you know, this is still a relatively new field. So we think that Dyno has some really interesting technologies around improving the in vivo gene therapy transfer, for example having more specific and improved transductions to target tissues, also potential technologies for escaping pre-existing immunity, which is obviously a big factor for gene therapies. It's one of the reasons why the bar is so high in areas like hemophilia A because patients don't want to get a gene therapy if they have a risk at sort of being permanently unable to take a different gene therapy in the future. So we think, again, some really nice technology developed by Dyno and look forward to the collaboration.

[Karl Mahler, Head of Investor Relations]

Yes. The next question, I'll read to you, from Michael Leuchten from UBS. He was asking about China in 2021. So not specifically this year. I think that the message was brought across by Severin. But how should we expect the revenues to come back next year? I guess this is to you, maybe a bit also to Diagnostics, but more to Pharma.

[Severin Schwan, CEO & Executive Director]

Bill.

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Yes, okay. Yes. So let's see. There's a couple of factors that were difficult for 2020 that should improve for 2021. For example, we reduced the prices of Avastin, Herceptin and MabThera, all 3 of those in -- at the end of last year in order to requalify for the national reimbursement list. And those prices were reduced by approximately 25%. And of course, if you reduce the price by 25%, you have to have volume increase by 33% just to get back to even. And so we have these price reductions. And what we've had is double-digit volume gains by all 3 products this year, but unfortunately, not big enough.In the case of Herceptin, our volume is up over 40%, but our sales are only up 11%. And in the case of the other 2, volumes up double digit, but our sales are down. In 2021, we won't have an additional price cut, so there's no anticipated price cut between now and, let's say, at the end of 2020. So we should have a strong start. And we look forward to a good quarter in Q4 and hopefully a much better year in China in 2021.There is -- I mean, at some point, there's some risk because we have some biosimilar competition in China. So there's the potential for a different pricing regimen in the future, but we don't know when that could happen. And so we -- for the, at least, immediate outlook, we look forward to growing [ A, H and O ] as well as Alecensa, Perjeta, Tecentriq and other products.

[Severin Schwan, CEO & Executive Director]

Do you want to comment on...

[Atul Dandekar]

So for Diagnostics, we'll definitely a positive base effect for next year. So that's one element. And -- but we do also believe that for the time of the pandemic, we will not get back to the amount of people in the hospital that we have had pre-pandemic. But the point is that the base effect will be positive. So we see -- we'll see good growth in China next year.

[Karl Mahler, Head of Investor Relations]

Okay. I have one question from Richard Vosser, again, going to you. I promised you before that you will be in high demand.So on the Diagnostics profitability, will there be any impact on the diagnosis on these COVID test and the test launches which you have? Is there any impact on the profitability? So how should we think about the profitability of those tests?

[Thomas Schinecker, Chief Executive Officer of Roche Diagnostics]

So first, let me say pricing philosophy that we have taken is that we have taken average pricing from our portfolio, and we've applied this pricing on these COVID tests. And Roche sees that we have a social responsibility, and we also want to make sure that there's access to everyone in the world equally because we have an equal price everywhere in the world. So we apply our average pricing. So from that regard, we will not see like that our prices have gone up. And with that, we see a profitability increase.But we see a profitability increase then for 2 reasons. One is volume. And second, and that's something that I mentioned earlier, is that we're committed to work on our profitability as a Diagnostics Division and make -- to make sure that our cost lines are in good shape so that we can improve profitability for the division.So from that angle, we see a positive development in profitability for this year. You saw the first trend already in half year, and we continue this trend.

[Karl Mahler, Head of Investor Relations]

Thank you. Next question would be from Mark Purcell over the phone. Mark, it's -- to you, please.

[Mark Douglas Purcell, Equity Analyst]

Two questions. So first one on -- going back to sort of COVID-related diagnostics sales and trying to think about demand and price comments there. If I take a look back to Q2, you did roughly CHF 700 million in sales. And then, it looks like there's a similar amount in Q3 as well. So it appears if you sort of do the math, PCR has maybe declined by around about 10% to 15% or so. So if we take sort of Slide 14, we can kind of get to maybe CHF 1.2 billion of total COVID testing sales in Q4, and then it can move up to CHF 2 billion a quarter for next year. But clearly, that depends on demand as well as on price. And so can you sort of help us understand how you feel the price might develop alongside the consolidation that you mentioned? And how long, how far into the future you think the demand is going to continue? And then this one is for Bill. Just sort of thinking ahead, again, on a COVID solution question. When it comes to Regeneron COV2, can you help us understand, for the 2 million dose capacity, is there potential to include [indiscernible]. In terms of pricing, I sort of think on remdesivir suggested that a price as low as $2,300 could be cost-effective. So how maybe you're thinking about pricing here?And then lastly, to confirm what the -- how the economics are split, both in the U.S. and ex-U.S., because your partner has commented on ex-U.S., but it's not clear how you participate in U.S. sales when it comes to economics.

[Severin Schwan, CEO & Executive Director]

Yes. So I hope that I will answer your question fully because there was 1 or 2 words that didn't come through very clearly.So yes, you're right. So in Q2, we had a significant negative impact on our routine business. That has improved significantly in Q3. But still in Q3, we do see a negative impact on our business, approximately 5% to 10% of our routine core business. And since we are the market leader in all of those segments, I mean, this is a lot of impact. Now we've been able to more than compensate that through the launches of different tests and volume increases in production. Now with Q4, we will see a number of new tests coming in that will accelerate growth.Now if I look into 2021, you've asked a lot of questions on how the world is going to look like. I think there are many different answers to that. So it's very difficult to exactly predict. But I would say it's pretty safe to say that we will not see any downturn in testing until -- for certain, in middle of next year. Potentially, we'll see testing over the next years to come because -- but maybe at low amounts because this virus is now endemic. This virus is not going to go away anymore.With regards to price development, as there will be potentially more PCR testing available, of course, there could be an impact on pricing. I would say, given that we have always used an average price, even if there is a negative development on price, I think that we will not be as hard hit as some of our competitors who've definitely asked for much higher prices than we have. So we would not see as much of a negative impact as you might imagine in that regard.So that's all I can say for now, and we'll see how it develops. I'm optimistic going into next year, specifically for the first half year, but it's -- of course, a lot of things that are not 100% predictable in this pandemic.

[Karl Mahler, Head of Investor Relations]

Bill, on Regeneron.

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Yes. So let's see. I think the question was -- the first question -- sorry, you broke up a little bit, but I think you were asking about the potential ability to expand beyond the 2 million dose capacity. And I would say we'll do everything possible to try to increase titers and yields and such, but just to -- we won't be able to work the kind of miracles that the diagnostic group has done in terms of expanding diagnostic production because we can't just add a new line -- sorry, I made that sound easy, Thomas, but I know it was very hard work, and you guys continue to work really hard to expand. But the challenge is that this is very specialized equipment, it's fixed in place and you're limited by how much protein the cells can produce. And so we -- who knows, we might be able to get a bit more production out.Also, things like we've already taken on contracts for -- or taken out contracts to produce other products outside of our network so that we could free up more capacity for producing the COV2 cocktail. So -- but I think we're going to be working really hard to deliver, between Regeneron and Roche, deliver the 2 million doses and do everything possible to increase that if we can.You asked about the price. I think we're still working on that. We -- we're not certain about the dose. I mean, we have data from a 270-patient study. There's more data coming from another 800 or 900 patients in some weeks' time. They'll be -- in fact, there's a study with a subcu formulation that's half the dose, but it's for prophylaxis. So there's a lot of factors that weigh in, in terms of what the price could be. But again, I think we're going to be pricing very much with a mind to ensuring access for patients and doing as much good as we can for the world. So I think we want to cover our costs and have a fair return, but I think that's about all I can say right now.You asked about the economic participation of the 2 companies. So we have a global collaboration with responsibility -- geographic separation of responsibility on distribution. So Regeneron has the U.S. Roche has responsibility outside the U.S. And then the economic participation is shares based on the amount manufactured. So it's -- while we'll be responsible for sales outside the U.S., we'll -- in terms of our economic share will come from -- in accordance to how much we manufacture of the total.

[Karl Mahler, Head of Investor Relations]

Thank you. We take a question over the phone. And here, I don't have a name. So the line ends with 7774. So I open the line now.Hello? It's 777 -- a U.K. number with 7774.

[Severin Schwan, CEO & Executive Director]

Let's take the next one.

[Karl Mahler, Head of Investor Relations]

Yes. So the next is a line which ends -- also U.K. number, which ends with 4100.

[Thomas Schinecker, Chief Executive Officer of Roche Diagnostics]

Yes. I don't think the phone thing is working, Karl, because we have Matthew Weston was trying to get one in on the phone before now. I got his message. Do you see it?

[Karl Mahler, Head of Investor Relations]

Operator, can you help us? Does this work? Does something work?

[Severin Schwan, CEO & Executive Director]

Let's take the other questions for the mean time.

[Thomas Schinecker, Chief Executive Officer of Roche Diagnostics]

Yes. Do you want me to read the one from Matthew Weston?

[Karl Mahler, Head of Investor Relations]

Yes, please.

[Severin Schwan, CEO & Executive Director]

Go ahead.

[Thomas Schinecker, Chief Executive Officer of Roche Diagnostics]

Let's see. So he says, a key message for Q4 seems to be a rebound in growth. What gives you confident that a move to more regional lockdowns will not lead to a further slowdown in your business? Is there anything you can point to that shows the hospital system is better prepared to continue normal treatment during resurgence of the pandemic?

[Severin Schwan, CEO & Executive Director]

Right. I mean, I can give it a try. When we talk with hospitals, when we talk with physicians, they would tell us that we know much more about the virus. We know much better how to treat patients. There are now certain treatments which help patients. Actemra, for example, is one of those who keeps people off the ventilator, for example, and therefore, provides a lot of relief to hospital capacities.And in terms of hard data, what we see is that compared to the second quarter, hospitals are not even close to the capacity limits at this stage. So if you look at Switzerland, for example here, reportedly, there are now as many new infections as they were back in Q2, which also is due to the fact that probably there are more people who have been tested now than this was the case in Q2.But having said that, I mean, capacity usage is still extremely low, and there is plenty of room in intensive care units. And that gives the hospitals now the opportunity to keep taking care of all the other patients who suffer from other severe diseases. So from all the conversations I have with our customers, it's very difficult to imagine that we will run into a lockdown of the health care system over the coming months. I personally don't see that.Anything you want to add, Bill or Thomas?

[Thomas Schinecker, Chief Executive Officer of Roche Diagnostics]

So from my side, I would like to add. And I mean, I had some discussions with some people in different hospitals around the world. I mean, when the lockdown came and actually postponed surgeries, et cetera, what actually happened is that a lot of those hospitals were then empty. So they actually didn't have anything to do. So they acted, but maybe they acted a bit too harsh at that point in time, and they have learned to deal with it much more. And I don't think that we will have a situation that we will lockdown the hospitals that quickly because we just didn't see that the capacity was used at all in Q2.

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

And when those decisions were made, we really didn't know exactly how the disease spread nor exactly how contagious it is. And what we've learned is that, for example, it might -- it's mostly spread by aerosol and close contact, and if you have masks and you avoid certain behaviors and things that you can deal with it. And so I think we're in a very different position.

[Severin Schwan, CEO & Executive Director]

And it's really not -- I mean, the one question is, what are the lockdown measures in the first place, right? Do we have complete lockdowns or partial lockdowns, et cetera? But really, from our business point of view, for the health care business what is really decisive, is there a lockdown of hospitals because that was the problem in the second quarter. I mean, hospitals were shut down. I mean, there was policies on country levels.Take Germany, for example. There was a policy going out to the hospital which told the hospital directors you are not accepting any nonurgent cases. You have to focus everything on COVID-19. Remember, this was under the impression of Bergamo in Italy and the situation in New York, et cetera. So there were literally policies in place to tell people to shut down hospitals, except for very urgent cases and COVID-19.So even if we see now an increased level of measures because infection rates are coming up again, that doesn't mean that hospitals will be shut down, and that's really the decisive point if you look at it from a health care industry point of view and certainly, for our portfolio, because, as you know, our medicines are very specialized medicines typically administered in the hospital.

[Karl Mahler, Head of Investor Relations]

Thank you. So I got the question now, which was supposed to be asked over the phone, but I'll read it to you. Thomas, it goes to you. It's from Keyur Parekh from Goldman Sachs. He was wondering about the absolute opportunity which you can offer to the business case. I warned you that this question is going to come. Is it now a CHF 1 billion to CHF 3 billion opportunity, a CHF 3 billion to CHF 5 billion opportunity or is it more? So I leave the question to you,

[Thomas Schinecker, Chief Executive Officer of Roche Diagnostics]

Yes. Keyur, I would say that what we have heard before, that we probably had about CHF 700 million sales in the second quarter. That was a right assumption. And now we have had better growth in Q3, and we'll see another acceleration in Q4. That's what we can see in the short term, right? I think we can project somewhat into what Q1 and Q2 is going to look like. But then, with vaccines coming potentially, other treatments coming, it's a bit harder to project what's going to happen in the second half of next year, also when it comes to price, et cetera.So I would say there are a lot of models on how this is going to look like. But I can say one thing is clear, that none of them are right. So let's see how things are going to develop. I think we'll see a strong start -- strong finish in Q4. We'll see a strong start into next year. But then really, we'll see how vaccines will impact testing, et cetera. But what's also clear is there will be testing continuously in the future, even when everyone is vaccinated, et cetera, simply because this virus is here to stay, sadly.

[Severin Schwan, CEO & Executive Director]

I mean, perhaps another element here in terms of how sustainable is this opportunity in virology in the longer term. And I think one big strategic advantage we have is we are the leader in the high throughput systems, right? And what we are doing in parallel, and Thomas, you have shown a slide today, we are expanding the menu on our high-throughput platform.So what is going to happen -- and I mean, at some point, COVID-19 testing, of course, will come down. We don't know when, but at some point, it will come down. But what we would hope for from a business point of view is, first of all, we gain market share because we have the high-throughput systems, right? I mean, currently, a hospital or a lab has to use everything they have, right? But if at some point, there are overcapacities, then, of course, they will go for the high-throughput systems where there is less labor need and where there is higher automation. So that should help us.And secondly, with those systems then in place, actually, it makes much more sense for governments to do certain screenings. I'll give you an example, HPV screening. One of the hurdles to do HPV screening is because many countries didn't have high-throughput screening in place. Now this is exactly the countries which had most of the issues with COVID-19 testing now, right? Now what is happening, those countries want to be prepared for the next pandemic, and they have installed this high-throughput virology systems. Now if COVID-19 comes down, which it will at some point, it will be exactly those countries which will seriously consider to introduce some screening, which they never did because they never wanted to install this -- or never wanted to go for the upfront investments. Now they are doing the upfront investments anyway because of COVID-19. And as soon as the automated systems are then available, that's exactly the basis for introducing some tests, which they should have introduced actually for health care reasons anyway. There was just budgetarian hurdles to get it introduced. But now there is less of a hurdle, of course, to get it introduced because the platform is already in the system.So I think in the mid and longer term, the market will just be bigger. And the market will be bigger, in particular, in the segment of high-throughput systems where it's less labor-intensive. And as we are so well positioned exactly in this segment, I think that should benefit us probably more than any other player in the industry.

[Karl Mahler, Head of Investor Relations]

Thank you. So I'll give it another try here with the system. Well, just to be -- next one would be Andrew Baum. Andrew, over the phone, please.

[Andrew Simon Baum]

A couple of questions, please. Your neighbors are suggesting that managed care is contracting the number of infusion centers, which it covers for patients receiving Ocrevus, potentially helping their business. I'd be interested if you comment whether that's consistent with your own observations.And then second, speaking about China, inventory comparisons aside for the fourth quarter, it would seem that the volume growth for NDRL hospital-based drugs in China is not bouncing back anytime soon. How are you thinking about what that means for price concessions you're willing to offer in terms of Tecentriq, assuming that you get hepatocellular approval at the end of this year?

[Karl Mahler, Head of Investor Relations]

There was a question also, just to complement here and don't forget it, from Sam Fazeli from Bloomberg, who is basically going to the same direction. Ocrevus uptake or overwhelm -- managed care competitive situation. So just to cover this one also.

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Great. And Andrew, pardon me, but you were breaking up a little bit just at the beginning of your question. And I -- could you just repeat the...

[Karl Mahler, Head of Investor Relations]

The competitor was suggesting that...

[Severin Schwan, CEO & Executive Director]

Yes. What the -- what Andrew heard is that there is one competitor of us, which is close here in Basel, who claims that the infusion centers will be limited in the United States somehow...

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

I kind of got the gist. But what was it that -- how are the infusion centers being limited?

[Andrew Simon Baum]

Yes. I guess it was managed care is only allowing certain infusion centers, which may be less convenient for the patient's homes, providing them some competitive advantage given their offering is obviously self-administered. That was -- that's the basic gist of it. And so I was trying to get a sense from you, given, obviously, it's your drug,

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Sure, sure.

[Andrew Simon Baum]

What are you seeing similar from patients?

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Okay, okay. Yes, yes. I don't think there's a new dynamic there. I mean, it's true that some payers have requirements that you visit certain providers and not other providers. For example, a patient might be required to get an infusion at an infusion center that they have -- that the payer has a contract with or, for example, they may not like to get an infusion at a large academic medical center that charges a high markup. But I don't think that's a significant issue we're facing. And we certainly don't see it in terms of demand. And I don't think there's a new dynamic in play there. We have very broad coverage for Ocrevus across payers, across RMS and PPMS, and we don't -- we haven't seen any change in that.And then the question about -- sorry. And I guess you said there was another question about just general. Yes. New patient starts is very healthy. We saw -- in terms of market share, our market share have been consistently running between 40% and 45% of new and switch patients before COVID. In April, May, we saw it drop into the low 30s. And then after that, in sort of June, July, we saw it bounce up actually the highest it's ever been, up in the high 40s. So yes, so far, things look quite good, and we remain optimistic about the future for Ocrevus.I think I -- competitive discussion aside, I think the fact is that the anti-CD20 pathway is an excellent choice for treating MS. And so I wouldn't be surprised to see Ocrevus growing at the same time that another anti-CD20 therapy could grow. But again, we see good demand for Ocrevus.And the other question was around the national reimbursement list in China. And if we don't see demand bouncing back, what does that make us think about Tecentriq and price concessions? So first off, I would say, I think we have reason to believe that demand will come back rather strongly because patients need medicine. And I think this has been a response to a pandemic. But there's not fewer people with diseases, and they're going to need treatment. So I think we remain hopeful that we'll see a strong return of demand in China. And as to Tecentriq, yes, I wouldn't really get into speculating about our price moves there as that's not particularly helpful to our commercial interest.

[Karl Mahler, Head of Investor Relations]

To close the circle -- close -- similar 2 questions were from Sachin Jain. So I want to complete the picture here because, obviously, he was also wondering about any kind of earlier signs of the competitor news versus Ocrevus in the United States, and he was also wondering about the outlook in 2021 in China, so just to frame that there.So I guess we have maybe time in for 2 more questions. And I try it again now here with the system. One from Richard Parkes. Richard, over to you via the phone. Richard?

[Richard J. Parkes, Head of Pharmaceutical and Biotechnology Team]

Great. So first question, just again on the legacy 3 oncology drugs in the international market. So can I confirm that you'd expect those sales to return to growth next year as pricing impacting China washes out? And are you already seeing biosimilar impact in China and international markets? So that's the first question.The second one is, could you talk about your confidence in being first to market in adjuvant, neoadjuvant lung cancer, given outcome of BMS' CheckMate-816 trial? I just wonder if you could talk about whether you believe that PCR or a major pathological response will be an acceptable endpoint by the FDA in lung cancer.

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Great. Yes. Let's see, the overall question about whether the legacy products would return to growth in international. I mean, I don't think we've done a lot of math on 2021. I think for -- as far as China goes, I think we would hope to have growth next year because, as I said, we had large price cuts at the end of 2019. We don't anticipate such price cuts between now and 2021. So -- and we have strong volume growth. So we think we should grow there.In terms of the biosimilar impact in China, this is where it gets a little complicated because there are biosimilars in the market and our sales are growing. So it's different. That's not happened in any other country. And I think it's because there's still a high unmet need in China. The capacity of the biosimilars companies is somewhat limited. There is a preference for the branded products, and our prices in China are quite reasonable in keeping with our long-running policy of differentiating our pricing according to the economic purchasing power per capita in the countries. So yes, I think we have a hopeful outlook for continued growth there.The question about our confidence in being first to market in neoadjuvant and/or adjuvant lung and PCR as an endpoint. First off, I would say pathologic complete response as an endpoint in neoadjuvant is certainly untested in lung. And I -- if it follows the route that it followed in breast cancer, it would tend to require that we demonstrate -- we, the industry, demonstrate that it makes a difference in the long-term outcome.In breast cancer, the first studies that showed an increase in pathologic complete response in the neoadjuvant setting did not result in approvals. But after there were studies that showed that patients who got a pathologic complete response in the neoadjuvant setting had a better long-term outcome, disease-free survival, that's when the regulators changed their view and started to approve things based on PCR.So I guess, we'll see whether that previous experience in breast cancer influences the regulators to move faster, but I think we like our lineup in terms of the studies we have. We have a number of studies in neoadjuvant and adjuvant with different chemo combinations, and we look forward to seeing data as early as next year.

[Karl Mahler, Head of Investor Relations]

Tim Anderson, over the phone. Tim? Tim, are you on? Yes. Okay. So...

[Timothy Minton Anderson, Managing Director of Equity Research]

Can you hear me? This is Tim.

[Karl Mahler, Head of Investor Relations]

Yes. Now we hear you.

[Timothy Minton Anderson, Managing Director of Equity Research]

Okay. Two questions on the pipeline affected. Kind of [indiscernible] fenebrutinib in primary progressive, you're doing a head-to-head versus Ocrevus. And that stands out because Sanofi is only doing primary progressive against placebo, and I'm wondering why you chose an active comparator. There's obviously some risk of cannibalization and going up in the history of medicine.And then second question, just on the Tauriel results with semorinemab, your tau for Alzheimer's. A short top line press release or comment by your -- but was there anything interesting in that data? Was there any cognitive trend at least for a supportive craniographic findings versus the end of the [indiscernible] for Alzheimer's?

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Okay. Sure. Thanks, Tim. So in terms of fenebrutinib and you're asking about why are we doing a head-to-head versus Ocrevus in PPMS versus a placebo-controlled study. I think part of this was we just felt like from an ethical standpoint, there's an approved therapy now for primary progressive MS. It's kind of demonstrated strong impact on disability progression, and it really wasn't our -- yes, we didn't think it was appropriate to run a placebo-controlled study. And hopefully, we'll be rewarded in that by a better patient accrual because patients will know that they're getting an active drug or at least an active drug or an experimental drug as opposed to potentially, yes, being on placebo.And I think we are looking for breakthroughs. I mean, we have a therapy in Ocrevus that is very well tolerated. It's dosed twice a year. And it has a good effect, but it's certainly not a complete effect. We're also doing a high dose study of Ocrevus. So we have really 2 opportunities to improve the standard of care for primary progressive MS patients. And one of them is with Ocrevus and another one's with fenebrutinib. And maybe we'll be fortunate and see some benefit with both. And maybe we'll have an opportunity to combine them at some point in the future, but we think that's the right way to go.As to the anti-tau, I don't really want to sort of speculate. I think it'd be more appropriate that the full results will be made known at a medical conference. But I think you could see from our press release that we're not -- yes.

[Severin Schwan, CEO & Executive Director]

Failed?

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Yes. It's a failed study. It's a failed study. So yes, yes.

[Severin Schwan, CEO & Executive Director]

So very clear with that.

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Yes, yes.

[Karl Mahler, Head of Investor Relations]

One final comment on there from Eric Le Berrigaud, on the near to close on the early launch signs for Evrysdi, a risky plan. I mean, we touched on it before, but maybe we can close with this one.

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Sure, sure. I would say we have a lot of really great anecdotal data, a lot of interest. One of the things we were concerned about in the U.S. is that we had done very few studies of Evrysdi in the U.S. This is a medicine that was almost entirely developed outside the U.S. And so one concern we had is, well, if U.S. physicians don't have experience with it, will they be anxious to try it? And what we found is a very warm reception so far from the physician community, also from patients. We have a lot of really amazing stories, especially of older patients who either were ineligible for Spinraza because of curvature of the spine that made the intrathecal injections infeasible. They're not eligible for gene therapy, and so really a first option for them. And I think it's worth noting, while there's a lot of attention on the dramatic cases of the newborns, the vast majority of people with SMA are kids and adults. And we've had a really broad interest in that.So I can't wait to give you more details on the Evrysdi launch at the full year report early in 2021, and then we'll have almost 2 whole quarters of results at that point and get to share a lot more.

[Karl Mahler, Head of Investor Relations]

Thanks a lot for your interest in Roche. If there are any further questions, please phone us. We will go back to the office now and, yes, follow up on anything you need from our side.Wish you a nice day and all the best to you. Thanks to the presenters, and thanks to the IR team also who prepared the slides and the whole setup here. Thank you. Bye-bye.

[Severin Schwan, CEO & Executive Director]

Thank you. Bye.

[Thomas Schinecker, Chief Executive Officer of Roche Diagnostics]

Bye.

[William N. Anderson, Chief Executive Officer of Roche Pharmaceuticals]

Bye.