Ladies and gentlemen, welcome to Roche's Full Year Results 2021 Webinar. My name is Marco, and I'm the technical operator for today's call. Kindly note that the webinar is being recorded. [Operator Instructions] One last remark.

If you would like to follow the presented slides on your end as well, please feel free to go roche.com/investors to download the presentation. At this time, it is my pleasure to introduce you to Bruno Eschli, Head of Investor Relations. Bruno, the stage is yours..

Thanks, Marco, and welcome. My name is Bruno Eschli. I'm the new Head of Investor Relations, and I wanted to use this occasion also for a special thanks to my predecessor, Karl Mahler. Karl has been dedicated every single day. And I think probably also a few nights over the last 20 years in telling Roche's innovation and investment story to the world.

He managed communication on many pipeline ups and downs. And I think everybody who knows him knows that there is -- he kept an eagle eye on one particular number, and this number actually is our share price. So when Karl joined back in 2002, Roche shares traded at around CHF 120.

And since then, the share price and the market cap also has nearly tripled, so today's market cap being just above CHF 300 billion. And basically, we will believe that we will continue to have exciting times just in front of us with a record number of Phase III studies to read out in 2022.

And with that, actually, I would like to hand over to Severin Schwan, CEO of Roche, for providing us with a full year '21 business update..

Yes. Welcome, everybody, to our year-end briefing. Thanks for joining. And let me also take this opportunity, Karl, to thank you for your many contributions over the last 20 years. You've been a fantastic ambassador of Roche for our financial community. Thank you very much for that. So let's get into 2021. Here's the summary. You've seen the numbers.

Sales are up by 9%, very much driven, of course, by COVID-19 sales, but also a very strong development of the base business in Diagnostics and Pharma growing in spite of the very significant impact of biosimilars last year. Profit and cash, up.

Free cash flow up actually in the high double digits, which is helpful given that we just did the repurchase of the Novartis Holding in Roche. But what I'd really like to focus in my opening is the pipeline. I mean it's really been developing well in the last year. And we have, as you will see later, an enormous series of readouts in the current year.

So 16 Phase III trials have been initiated. We have now 14 new molecular entities in late stage. And also on the Diagnostics side, we saw a number of significant launches such as, for example, cobas 5800 in the Molecular Diagnostics segments and many more. What I'm really, really excited about is the strong news flow in 2022.

I cannot personally remember that we had so many very material and significant readouts in a single year. That's pretty amazing. We'll speak about that later on, Tecentriq in the adjuvant setting, tiragolumab, giredestrant you name it. This is an extraordinary year in terms of Phase III readouts on top of the ongoing launches of important medicines.

And likewise, also on the Diagnostics side, we have some important innovations to come to the market soon. If we can have the next slide, please. Yes, here again, a high-level summary. You've seen the numbers, basically hitting our original expectations we have set ourselves at the beginning of last year. Next slide, please.

A bit more of granularity both on the sales and on the operating profit side. So I'll start with sales on the left-hand side of this slide. And what is really good to see is that in a year where the biosimilar erosion peaked with CHF 4.5 billion, we were able to not only compensate, but actually outgrow this erosion with new medicines.

So that's really exciting to see. And having in mind that as of now the biosimilar exposure is, of course, decreasing sharply, we expect actually CHF 2.5 billion for the current year. You can immediately see the momentum we get here from the newly launched medicines. Diagnostics, up by CHF 4 billion. Now part of that is COVID.

But don't forget, we also had significant COVID sales back in 2020. So a big part of that increase versus the previous year is also because of the recovery of the base business and good growth in the underlying business. So very strong besides on the Diagnostics side. If we move on to the sales by -- let's just go quickly to core operating profit.

Here, basically, what you can see is the significant investments into research and development, in total CHF 1.7 billion. CHF 1.5 billion in Pharma and another CHF 200 million in Diagnostics, of course, very much a reflection of the rich pipeline we want to further push forward.

And I think that is good investments for the mid and long-term of the company. You do see that, at the same time, we are working on our efficiency across the board. You see on the Pharma side, a big part of that additional spend has been financed by efficiency gains across the P&L, if you like.

And of course, we also benefit from the fantastic growth in Diagnostics, which also falls through to the bottom line. If we move on, so again, here, 3% Pharma, 29% growth in Diagnostics, overall 9%. Next slide, please. That's a look back over the last 7 years.

And really, the message here is now that we have peaked on the biosimilar impact and as that starts to significantly decline, I guess, it's worthwhile to look back over the last years. And I'm pretty proud of the team of how we managed through that period of biosimilar erosion.

If you think of how dependent we were only a couple of years ago on the 3 big cancer medicines, Avastin, MabThera and Herceptin and how different the portfolio looks today, that's really good to see. And we also managed through this COVID-19 pandemic quite well. If we can go to the next slide, please.

Yes, I think that's an interesting slide actually because it shows you 2 things. On the one hand, and I start with Pharma here, you can see the impact of biosimilars versus the overall portfolio. And you can also see it on a quarterly basis. And what you see is the very strong -- continued strong growth of the new medicines, which is 35%.

And even if you strip out Ronapreve, which had significant impact last year, we are still at a level of 23%. So that's really good to see. And then you see that on a quarterly basis, Pharma is returning to growth. So that's a reflection of the declining effect of the biosimilar.

And that gives you a bit of a flavor of how we see things to develop into '22 and the years to come. On the Diagnostics side, interesting, of course, also to see this enormous impact due to COVID-19, you see the blue line, which is all inclusive. But then if you strip that out, you can also see a solid growth on the base business.

Now part of it in '21 was a bounce back, right? So you see a recovery of the business because we were hit, in particular, in the second quarter 2020. So you see a recovery on the one hand. But now as we get back to a more stable rhythm, we see a good growth of the underlying business, and that should continue into next year. Next slide, please.

Right, profitability. There is more details we'll present during that session. Alan will go into more details. So in absolute terms, profit is up by 4%. Margins have declined. That's partly driven by COVID-19 business, partly driven by the investments in research and development. We'll talk more about that in a moment.

Otherwise, good development on the earnings side. And also the free cash flow actually developed very nicely. Next slide, please. Yes, if we turn to the outlook, a lot, of course, depends on COVID-19. And I'm -- I don't tell you that I would know what is going to happen in '22 and beyond. And frankly, I was pretty wrong last year.

We started out the year and I thought that this pandemic would soon be over. Remember, we guided for low single digit, and we ended up with 9% sales growth. And a lot of that, of course, was due to COVID-19. So again, we predict a very moderate growth, and we'll see where we end up. But basically, there are 2 potential scenarios.

One is the blue one, and that's the base assumption for our guidance that with Omicron, we will now move into a more endemic situation, and the pandemic actually will slow down as of the second quarter.

There is, of course, another scenario, a more steady-state scenario, where we have another outbreak or perhaps another wave, in particular, in the winter season, end of the year. That, of course, would result in a very different situation also as far as our business and our sales are concerned. But that's not what we assume.

So we are more optimistic, if you like, in terms of leaving this pandemic behind us. And we base our guidance on a scenario where it slows down in the second quarter. And I should say, at the very moment, as we speak, the demand for our Diagnostics is incredibly high.

So we have the numbers, of course, for January already in-house, and we expect a strong first quarter on the COVID-19 testing. But again, our assumption is that, that will markedly slow down in the second quarter. So if we go on next slide, please. Yes, I mean that's my absolute favorite slide, and I could spend hours here. I'll keep it very short.

I mean basically, every month, we have an important readout here on top of important launches in Ophthalmology with Susvimo and Vabysmo. And also, we're going to launch Polivy in the first-line setting of DLBCL. So a lot to come this year, a very, very important year, in particular, on the Pharma side.

But you can see that on top of the launches we had last year in Diagnostics, there's also more to come on the Diagnostic side. Next slide, please. Right, so let's just spend a minute on the outlook, and I start with sales.

And there are really 2 numbers where we thought we give you a more precise information of what our underlying assumptions are so that you can better model what the underlying business is doing. And first, that concerns the biosimilar entry for Avastin, Herceptin and Rituxan. And we estimate that to be CHF 2.5 billion sales.

And yes, really comfortable about that estimate. I mean if you look at what we estimated for last year, we had CHF 4.6 billion. We ended up with CHF 4.5 billion. So this was pretty much a spot landing, right? So I think there is quite some certainty around the CHF 2.5 billion.

We'll see how it evolves, but that should be pretty predictable because we now better understand the evolution curves of the respective medicines. Now on the COVID side, of course, that depends on how the virus evolves and who really knows. But our assumption is CHF 5 billion of sales. So that's a decline versus previous year of CHF 2 billion.

So if you add that up, the -- sorry, the CHF 2.5 billion and the CHF 2 billion, in total, CHF 4.5 billion. And if you strip that out, and you see the real underlying growth of the respective businesses, and that's in the high single digits. And that's exactly what you expect if you look at the development over the second half last year.

So if we move on to profitability. Again, stable to low single-digit sales growth, including those 2 effects. And on the core EPS side, we expect a higher growth above sales. And that is really a technical effect with the accretion of the share repurchase. I mean Alan will spend much more time on that and go through the details.

But I think partly what you can say is that overall, the profitability is growing in line with sales and, I should say, already now in spite of the fact that we assume a higher tax rate in 2022, you know that we had special tax releases in 2021.

And as those are not expected to return and we will get back to a more normalized tax rate, there is, of course, the need to do better on the operations to keep overall earnings in line with sales if you exclude the accretion effect. Okay, and on that basis, we should also be able to again increase our dividend for the current year.

That's what it was from my side. And with this, I hand over to Bill. Bill, over to you..

adjuvant cancer with Tecentriq and Alecensa; tiragolumab with 4 pivotal studies reading out and hopefully really setting a new standard in cancer immunotherapy; giredestrant, which we hope can be a best-in-class molecule as a SERD in hormone receptor positive breast cancer; and then at the end of the year, the biggest one of all, gantenerumab in 2 large Phase III studies.

So we're super excited about this and look forward to bringing the results for every one to see. And with that, I'll turn it over to my friend and colleague, Thomas Schinecker..

Thank you so much, Bill. And good morning, good afternoon, everyone, also from my side. And I'm very happy to present the full year Diagnostics division results. And with sales of CHF 17.8 billion, we really had an excellent growth of 29%.

As Severin mentioned, the growth was driven by both the COVID-19 testing, but also strong base business growth really across all of the customer areas that you can see on the slide. Actually, if you look at it, the about CHF 4 billion in absolute growth last year, it was actually CHF 1.85 billion that came from the base business.

And that's really amazing. It's almost half. In a typical year, we would have added CHF 600 million, CHF 700 million. But really to add CHF 1.5 billion on the base business, that's really significant. Now let me point out one more thing that I think is important also for your planning for this year.

In our Diabetes Care business, we had a resolution of a dispute of a rebate in North America in Q1. And without this impact, our sales would have grown by 1%, not by 3%. And obviously, that will impact also Q1 2022. Now let's go to the next slide, and let me give you a bit more detail.

So our base business is growing very strong at 16% for the full year also but not only due to the base effect. COVID testing sales were CHF 4.7 billion in 2021. And we really expect this to continue strongly in Q1. In fact, we had an extremely strong start both in the base but also the COVID-19-related testing sales.

Now since the beginning of the pandemic, we actually delivered more than 1.2 billion tests, so since 2020. Now the question that you will all ask me is how will this continue? And I mean there's future demands, and there are multiple scenarios, and as Severin mentioned, the 2 main scenarios.

This demand will really depend on now the length of the Omicron variant wave, the emergence of new variants or previous variants like Delta and also how effective are these vaccines going to be against those variants. Will we see waning of this immunity, et cetera? So really, this will impact very much than the second half of the year.

So as Severin mentioned, we risk-adjusted the second half of the year. And we have the majority of our COVID-19 testing sales expectations really in the beginning of the year. Now going to the next slide, looking at the regions. You can see the growth is really driven by all regions.

And I'm very happy that with the FDA Emergency Use Authorization of the rapid antigen test, this will open up a great opportunity for us in the U.S. in 2022. Please go in to the next slide. Now taking you through the businesses a bit more in detail. Sales in the core lab increased by 21%, which is very strong.

This is due to a strong base business growth in all regions. Molecular also had a good year on the basis of a very, very strong year in 2020 with a full year growth of 29%, again, driven a lot by SARS-CoV-2 testing, but not only.

And actually, in Q4 alone, our molecular business continued to grow at 15% despite some price erosion and a high base in 2020. And point-of-care molecular actually grew much faster with 271%. Point-of-care overall was 138%, and this was driven by rapid antigen test sales. And pathology grew 12%. Now taking a look at the P&L on the next slide.

Core operating profit grew faster than sales, almost twice as fast and increased to 54%, thereby increasing our margins. Royalties and other operating income increased by 30%, and this was a onetime income from an out-licensing agreement of CHF 18 million in Diabetes Care. You see the cost of sales is growing faster than sales.

This is due to higher COVID-19-related sales, on the one hand, a certain distribution costs booked here, but also just the increased volumes of SARS-CoV-2 rapid antigen test, where we have lower margins. M&D, you see the increase of 8%.

This was really due to higher spending on local distribution costs, also very much linked to higher volumes of SARS-CoV-2 rapid antigen tests. R&D growing double digits, in line with our strategy. And this is really to advance our strong innovation of pipeline of new technologies, medical value and digital solutions.

G&A was 7%, and again, this is really driven through the acquisition of GenMark and other onetime costs. So this should normalize out, and we should see some reverse effect going into 2022. So overall, I'm very pleased with the financials, but even more with our portfolio progress in the time of pandemic. And so let me share some of the highlights.

On the next slide, you see that we received emergency use authorization of our COVID-19 at-home test in the U.S.A. on December 24. So there was no impact yet on sales in '21. You will see that in Q1 '22. And there was an independent clinical trial done by the NIH of our test and another test from another company.

And this really showed the excellent results of our test with a sensitivity of 95.3% and a specificity of 100%. There was another company that got the approval a couple of days after us. They had 10% less sensitivity than ours. So this really shows the quality of this test.

Now on the next slide, you see that we also received a CE Mark for the combination of rapid antigen tests between SARS-CoV-2 and influenza A and influenza B. This test, just as the test I showed you in the previous slide, works together with our Digital Solution, NAVIFY Pass.

And with this, you can immediately store, display and share your COVID-19 results. We're also here working with the FDA to get this test approved for the U.S. market, specifically as we may have a flu season end of this year. It will be very important to have this available also for U.S. citizens. Many of the COVID tests run on molecular systems.

And one of the systems on the next slide that we just launched at the very end of last year is the cobas 5800. And cobas 5800 is again a fully-automated PCR-based system for more of the lower volume segment. And it offers the broadest menu of assets in the industry. And when I call it lower volume, it's in light of the 6800, 8800.

Because actually most of the other molecular players, they actually have a system more like the 5800, maybe not as automated as ours, but in terms of throughputs. And 6800, 8800 just deliver much more. And they were so essential now with Omicron. And we see that in January because, first of all, we could do more and more with less people.

Because the limits that many labs had were not the PCR test, at least not from our side, but the limit what they had was really the labor, the personnel to do these tests. And because we have such a high level of automation, they could scale up much easier.

And just to highlight that, if they put the samples onto the machine, they can go home, sleep, the next morning, they're done, actually in 3.5 hours, but most people sleep longer than 3.5 hours. But the point is you don't need people for it.

And in a phase where actually the people are the bottleneck because you don't have enough trained staff, this is really our competitive edge here. And as I mentioned, 5800 is really part of a family of systems with 6800 and 8800, and they share the same menu, the same reagent cassettes, the same user interface.

On the top right, you see that we also launched in 2020 the cobas Prime. And it's unique because no one else offers that. It's a molecular pre-analytical system. So basically, when the samples come in, you can put them all on to this machine.

And it sorts, it allocates, it decaps, it does everything that otherwise people would have to do, which is really tedious manual labor and where you can also make errors. And this does it automatically staying connected with a line to the 1600, 1800. Everything is automatic.

And since no one else has it, it really further extends our market leadership position in terms of automation in molecular. And with the acquisition of GenMark in April in 2021, we also entered the syndromic panel market. And this market is the fastest-growing molecular segment. So really excited about that.

And we also see very high demand for these solutions. And here, you can multiplex more than 30 pathogens, and so that you can treat for the right pathogen very quickly. On December 1, we closed the acquisition of TIB Molbiol. You see that in the lower row, in the middle.

And through this partnership, we have access to more than 45 IVD assays and 100 research assays available on our LightCycler platform. And in 2022, we'll also be launching our digital LightCycler. So I mean if you look at this portfolio, this is world-class. And I'm really excited to see how this is developing.

Now let me show you on the next slide something else that I'm really excited about because it shows the direction that we're taking in terms of clinical decision support and really digitalization of health care.

And this is cobas pulse and is the first professional blood glucose system that combines best-in-class performance and expanded digital capabilities that are very similar to that of an iPhone. It actually runs an Android system on this platform.

And together with cobas infinity edge, which is an open ecosystem, we can provide our own clinical decision support apps, but also third-party apps via the Roche Digital Marketplace. It's kind of an app store. You can download it. At launch, we already have 6 clinical decision support apps available on this platform.

One, for example, where you take the cobas pulse, you put it on the chest of the patient, and you can detect atrial fibrillation. Another one where you can take the glucose results and make an insulin dosage requirement, which is obviously a regulated product, on a regulated device.

And a third example would be in wound management where you can take pictures of the wound, and it calculates the wound healing and if you have to take measures. And all of that is directly connected to the EMR.

So I would call it like the window from the clinician and the patient into the EMR, where you can keep the quality standards high and make decisions right at the patient that are then also recorded in the system. So this is really an important milestone for point-of-care and I'm super excited about it. Now going into oncology.

On the next slide, we've also launched the AVENIO tumor tissue comprehensive genomic profiling kits. And this is the first jointly developed product between Roche and Foundation Medicine. And the development of this decentralized version of the FMI assay is really a step towards giving customers broad access to testing.

And this test detects 4 classes of genomic alterations and 3 classes of genomic signatures. With the FMI analytics platform that it leverages, you can have insights to more than 500,000 clinical samples to support clinical decision-making. So another great progress in terms of clinical decision support.

Staying with that and with digitalization of health care, let's talk about oncology. And in this case, NAVIFY Oncology Hub. Now this system enables much more efficient and effective clinical decisions. Currently, in hospitals, and I've seen their infrastructure, sometimes you believe some of the hospital IT infrastructure dates back 20 or 30 years.

Actually, it's dispersed all over the place, fragmented in multiple systems, not very easily accessible and not very shareable. Now with the Oncology Hub, we integrate and aggregate all of the patient data across the many different systems in 1 central workspace.

And along the patient journey from the very beginning, when the patient is first diagnosed and until hopefully, there's a positive outcome for the patient. And thereby, by having all the data ready to be able to make the right decisions, you can improve outcomes for these patients.

Now on the next slide, you see that we have had really an excellent year in terms of new launches, and this is just a selection. And I'm really proud of the progress the team made in this time of a pandemic. And in 2022, which is on the next slide, we'll again have a number of very, very important launches.

On the instrument side, BenchMark ULTRA PLUS and VENTANA DP600, which is a slide scanner for pathologists, again, to provide more clinical decision support. And in the molecular space, I talked about Digital LightCycler. Among the test launches, we'll have the pTau/Abeta 42 ratio Gen 2 in the U.S.

where we received breakthrough device designation by the FDA, and this is to help the diagnosis of Alzheimer's disease. And as you know, Alzheimer's is a big topic in 2022. So we really hope that we can support it with a much better and earlier diagnosis because using PET scans that are very expensive, it takes you months to actually get on the list.

To do that much earlier will be very essential so that people can get the best possible treatment. With that, I'm really excited again about 2022. And with that, I hand over to Alan to take you through the financials. Thank you..

Thomas, thanks, and congratulations for a fantastic year. Same goes certainly to Bill, really great. So hello, everybody. Thanks for joining. I hope everybody is safe and healthy. I think we had a really good year with lots of justified investment. But before I start, let me thank Karl. Karl, really a big, big, big thank you from my side as well.

I think you have given Investor Relations, what should I say, a new benchmark, a new standard, if you like, for 20 years, which is amazing. So you joined in 2002. The share price was at CHF 120, as was mentioned already. And you were completely focused on that, which I always admired, and certainly, that helped me quite a bit. So thanks for that.

But mostly, I would like to thank you for your great humor, was always great to be with you on the road and quite some fun. And it's really sad to see you leave. But okay, life goes on. Good. I have a lot of details. And that's why I think we should jump into it.

The highlights, I think, the basic highlights you've heard, and I will anyway refer to them in a second. So let's go through to Slide 52, the next one. And there, you see really what Severin has mentioned already, the sales volatility, if you like, that we went through with the biosimilar hit, but both divisions contributed fantastically really.

So we were able to come up with significant growth despite the fact that we lost really significant sales due to biosimilar impact. It was a bit less compared to 2020. But now already, you see the number coming down. And I'll come to that when I speak about the guidance. Then really, the point about the core operating profit, which moved up by 4%.

And there, you see really our commitment to innovation, but also our commitment to the pipeline where we invested CHF 1.7 billion in addition, in R&D. And I will come back to that as well. So let's get to the overview on the next slide, the overview when it comes to the group performance.

So let me lead you through this, and we will get to more details. I think sales, plus 9%, I think well described by Bill and Thomas, core operating profit up 4%. I will talk about the P&L in a second. Two points to mention here. Cost of sales went up significantly. I will talk about that. R&D went up, as mentioned as well.

Then the core net income went up with 6%. And you know I talked about the blue bar and the numbers in the blue bar, really the growth rates and concentrates. You see now plus 6%. So you ask yourself, okay, core operating profit up 4%, core net income up 6%. What happened? Taxes.

We really benefited from the resolution of tax disputes even more than we benefited in 2020. I will explain that as well. You see then from the core income to the core EPS, plus 6%. There's a small accretion effect in it in 2021 already from the repurchase of the Novartis stake of 0.4 percentage points.

So even when you exclude it, round it, we stick to the 6%. But I want to bring that in. I will talk about it later on. And then the IFRS net income, which has grown by 2%, we brought more charges in, and you will see that on a specific slide later on. You see IFRS net income even declined in Swiss francs.

Operating free cash flow, up 34%, fantastic and timely as we have loaded the balance sheet with debt from the repurchase of the stake, of the Novartis stake. CHF 19.4 billion is an impressive number. And you see even the free cash flow went up with 46%, so really timely and helps us out quite a bit. Good. Let's go to the core EPS development.

And why do I put that forward? Because I think really it describes the performance of the company quite well. And let me show you the bridge and the ingredients, what drove the core EPS growth in 2021. You see on the left-hand side, the core EPS in 2020.

You see operations, operations helped us quite a bit, yes, with an increase of 4.4 percentage points. And you see really what worked against us were losses on equity securities. And we have a participation in a company called Allakos. Share price really went down significantly before year-end.

Because they announced the outcome of 2 studies, the ENIGMA Phase III trial and the KRYPTOS Phase II/Phase III trial, and both studies did not achieve statistical significance on the patient-reported symptomatic co-primary endpoints. The data was not completely conclusive, but it tended to be on the negative side, and that certainly gave us a hit.

Let me mention here that, in fact, I think we have sold quite a stake on Allakos already, and we have a significant cash return with that participation. So far, so good. We will see how it further develops. But it worked against us. And then you see really the effective tax rate change. In fact, it was not really a tax rate change.

It was really impacts from the resolution of tax disputes, but that gave us a boost of plus 3.3 percentage points, with certainly a bold return in 2022, at least is not expected to return in 2022. So these were the major drivers, and we will come back to them again and again. Let's go to the P&L. And the P&L is on 55.

Bill and Thomas gave you quite some ingredients already. I don't have to talk about the sales. Royalties and other operating income, up CHF 1.075 billion. I think Bill brought it in well, and I will have a specific slide on that very much driven by Ronapreve U.S. and higher divestment gains. We have the cost of sales, up CHF 3.7 billion.

I have a slide on that. M&D, a bit driven by Diagnostics with the increase in distribution costs that Thomas mentioned. Pharma basically flat, but very much driven by, let's say, the newer members of Pharma like Spark, Flatiron and so on. Then you have R&D, CHF 1.7 billion, as mentioned.

And here, CHF 1.5 billion going to Pharma for oncology, CNS, PHC, COVID-19. And as mentioned, we have started 16 Phase III trials in addition in 2021. So evidently, I think that triggers quite some investment. On the Diagnostics side, I think Thomas mentioned it, Core Lab molecular, digital COVID played into this.

And G&A, you see we even came up with a savings. So really, all what we have said that we want to really find funds and put them into other cost lines, especially into R&D. I think that comes across here. Good. With that, let's go into more of the details. Of the P&L and sales, I don't want to spend a lot of time here. You see Pharma has grown by 3%.

Bill explained what happened in the U.S., where we still have a significant -- had a significant biosimilar impact in 2021. I think all the other markets have grown well. And then Diagnostics was 29% growth, leads us to 9%, and the currency impact of minus 1 percentage point, which leaves us with an 8% growth in Swiss francs.

I think more interesting is royalties and other operating income. And I know everybody is behind that point. What is Ronapreve really doing in our numbers and how does it show? So let me lead you through this, and you see here on that slide, casirivimab+imdevimab, and that's Ronapreve.

2020, you see we had roughly CHF 2.020 billion in royalties and other operating income, and that increased to CHF 3.049 billion in the year 2021. Let's go through the bridge. First one is the royalty income-driven by Venclexta. I think Venclexta does really, really well. We have an additional readout in 2022. You know we don't report the sales.

But we report here, the royalties that we get and we enjoy this, as you can see. Outlicensing income, that's a base effect from last year from Chugai. That's why you see here a drop. And then we get to the very interesting point, other operating income, including the profit share from Ronapreve, and you see here a number of CHF 754 million.

So let me explain that. CHF 654 million of the CHF 754 million are coming from Ronapreve U.S. This is basically, we don't report the sales for Ronapreve in the U.S. All we get is, if you like, a profit share for sales in the U.S., and this is mirrored here. Certainly, I think we don't expect to have significant sales in Ronapreve in the U.S. in 2022.

At this stage, we will see what happens. But I would argue, it's pretty likely that we don't see that CHF 654 million again in 2022.

What remains is other operating income from other products like Venclexta U.S., where we had also a profit share or [indiscernible] ex-U.S., I think that will come through certainly in the royalties and other operating income. Then we have the income from the disposal of products. When we have tail-end products, we sell them, and that's pretty steady.

We had here a slight uptick compared to previous years of plus CHF 257 million. Good. With that, let's go to the cost of sales. and the cost of sales have certainly the largest deviation of all the cost lines or the expense lines in the P&L. It's also the largest deviation to consensus when I remember it well.

And what you see it, really, you see the cost of sales full year 2020 and then the bridge to the cost of sales full year 2021. Let me lead you through the differences. And the first bar, red bar is really the volume increase, which is pretty intuitive, 15% volume increase. That is Pharma with 11% and Diagnostics was 30%.

So that accounts for the 15%, so CHF 2.2 billion coming from that. Then we have incremental production costs for COVID. And this is Ronapreve and Atea. Let me clarify that. I'm aware of the fact that we have in the finance report on Page 22 said for incremental production costs, it's CHF 575 million.

What brings, let's say, this number to CHF 615 million that we have on the slide is impairments for Atea for PP&E. They are included here. And that really, in total, gives you the CHF 615 million. Then we have the Ronapreve profit share expense. Well, you've seen the sales of Ronapreve in our numbers, roughly CHF 1.6 billion for 2021.

You see now the related profit share expense to the sales. And as you might have heard that Chugai has announced already that they expect to have sales of Ronapreve of around CHF 1.6 billion in 2022, so this is a number which is pretty likely to reoccur in 2022.

You see really then, let's say, the year-on-year change in Rituxan/MabThera profit share expenses, which went down as the sales went down. And then a very important point is certainly the Pharma/Diagnostic sales mix, which has changed. And whenever you project for 2022, that's definitely something you have to take into account. Good.

With that, let's go to the margins. That's 59. And you see a margin decline in 2021 on the group side. I would argue nothing dramatic here. Nevertheless, I think if you understand the guidance for 2022 well, and I will come back to that.

I think it's pretty clear that we further will work on the margin and on productivity and efficiencies and is justified that we will see quite a good momentum in 2022. On that front, you see also where it came from. I think really there is a decline in the Pharma margin. Well, I think on one hand, we invested into R&D.

On the other hand, we had COVID-related impacts like in the cost of sales that I've explained before. And then you see on the right-hand side, Diagnostics. And let me say that, I think a fantastic margin was 22.1%. But we don't know what's going to happen with the COVID sales for Diagnostics.

If they were declining on the diagnostic side, there would be certainly a little bit of a weakening here because, well, very clearly, I think COVID sales certainly contribute to the gross profit margin, and that certainly helps to cover the fixed cost. Good. With that, let's go to the core net financial result.

And you see really, there was a negative impact, which increased in 2020 a minus CHF 564 million, in 2021 on the right-hand side in blue, a minus CHF 751 million. And equity securities, I've explained already with the impact from Allakos and the minus CHF 257 million.

You see, interest expenses, we were able to decrease them again by CHF 95 million, so quite a significant saving for us. So it helped us to mitigate the negative effects that I've described before. But I have to say in 2022, certainly, we expect additional financing costs for the repurchase of the Novartis stake of roughly CHF 330 million.

I'll come back to that. But very, very clearly, it is clearly to expect that this green bar that you see here will turn into a red bar in the course of 2021. Good. With that, let's go on to the tax rate. And that's, I think, another story to mention. Well, in the middle of this slide, you see the blue bars.

And the blue bars are the adjusted, if you like, the underlying group core tax rates for 2020 and 2021. And I would argue they are both very comparable, so 18.6% compared to 17.8% in 2021.

But what we're also seeing is in 2020 and in 2021, we experienced positive and even enjoyed positive impacts from the resolution of tax disputes, which certainly led to the release of provisions. And the extend in 2020 was CHF 317 million positive, if you like, which helped us on the profit side. And in 2021, that was even higher at CHF 697 million.

And as you can imagine, as the tax disputes are all related to authorities, well, it's not like that we expect something like this to happen in 2022, which means that I expect that the group core tax rate will go to around 18% in 2022, so another effect which will certainly mitigate the growth of core EPS.

With that, let's go to the noncore items and the IFRS income. I want to cut that short. Core operating profit growth of 4%, you have seen. I'm talking about constant rates here. Let's say, the global restructuring plans, we have booked additional charges, which certainly lead to additional savings moving forward.

Amortization of intangible assets, you see here a saving of CHF 200 million, CHF 194 million to be precise, compared to last year. I can say that the Esbriet amortization came to an end, end of September, so there will be a positive impact in 2021 -- 2022 from that.

Then you see really a minor impact on the impairment of intangible assets and on M&A and alliance transactions. And you see a larger impact in legal and environmental. It was positive in 2020. That was the release of the Accutane provisions, was roughly CHF 300 million positive.

And then you see in 2021, these are additional environmental provisions that we have taken for certain sites.

You see the IFRS operating profit basically flat with that, and you bring the financial effects and the tax effect based on what you've seen before in and you end up with an IFRS net income with an increase of 2% in constant rates and minus 1% in Swiss francs. Good. With that, I think really to Slide 63, which is just summarizing what I've explained.

And I would like to go straight to the cash flow on 65. First of all, I think it was a strong year. You can see all divisions ramped up their cash generation quite significantly, which is certainly very pleasing. As I said, it comes at the right time. So I think a good thing here. Let's go a little bit to the ingredients on the next slide.

Here, you see really where it came from. You see the first green bar, the operating profit net of cash adjustments. And you would argue, well, it's on one hand, really operations, so the operational profit, and on top of that, provisions that we have taken.

Then you see really the net working capital movement, and that is very much driven by the accounts receivable -- the accounts payable, sorry. And then you see the investments in PP&E.

And here, Chugai and Diagnostics have driven that number up and then you see the investments in intangible assets, which came down compared to last year, which could trigger the question, well, did you invest enough into innovation? Well, you've seen the ramp-up in R&D.

But if you just look at the balance sheet and M&A and equity investments and all of that, the difference to last year is not very big. Good. With this, let's go to the net debt development. Yes, and we started into the year, you see on the left-hand side, with net debt of CHF 1.9 billion. And the question was very justified.

Would you get net cash positive? And we did. And the sole reason why that is, is that we did the share repurchase. But let me lead you through the bridge. CHF 1.9 billion net debt at the beginning of the year, then the operating free cash flow was CHF 19.4 billion.

You see really the net operating free cash flow with taxes and treasury that we have paid. And then you see that large red bar, the minus CHF 32 billion, and this is driven by the dividends paid really for the year 2020.

And then you see the share repurchase of CHF 19 billion, which comes in here, which leaves us with a net debt position of CHF 18.2 billion. Below, you see really the comparison, the investments in innovation with intangible assets, equity, M&A in total, and you see the difference is CHF 1.2 billion. With that, let's go to the balance sheet.

And I don't want to go through every detail here. You see on the left-hand side really the assets. Cash and marketable security is pretty stable. And that's a good cash generation, I can say. Then the other current assets. Inventories went up by CHF 521 million, accounts receivables, up by CHF 652 million, other current assets up by CHF 648 million.

You see the noncurrent assets, that's basically PP&E, so investment in plant, property and equipment of CHF 1 billion ramp-up. And then the goodwill, which increased by CHF 1.56 billion, certainly driven by the acquisitions of GenMark and TIB Molbiol. And then I think which is much more interesting is the right-hand side, the liabilities and equity.

And the short term, the current liabilities really went up by short-term debt, CHF 11.1 billion, which is the bridge for doing the Novartis stake repurchase. And then the long-term debt went up by roughly USD 6 billion, CHF 5.8 billion.

This were USD 6 billion bonds that we've issued and that we brought in already, I think, at a very attractive rate, which is good. You see the equity has reduced to 31%. That's the equity ratio now. We feel comfortable with that.

But it's the consequence of terminating the shares of the repurchase, which has happened, I think, a couple of days ago now also legally. We had to account for it already last year. But legally, it was not done yet, so that's done now. And now we have a much lower share base, if you like, at least from a number point of view than before.

And I'll come to this. Good. Let's get to the outlook. Outlook first on currencies. And I want to cut that short. You see really what the currency impact has been for the full year, minus 1 percentage point on sales, minus 2 percentage points on the core operating profit, minus 3 percentage points on core EPS.

And you see what it was driven by on the left-hand side, I think the negative impact of the U.S. dollar got smaller in the course of 2021. And the positive impact of the euro got smaller as well, if you like. So I think really these 2 mitigating things really came together. I think really you see our projection here on the right-hand side of the slide.

If we expect that all the currency rates that we have had at the end of the year 2021 remain stable in the course of 2022, which is certainly completely unlikely, but if that were the case, I think the currency impact would be between minus 2 percentage points to minus 4 percentage points on sales, core operating profit and core EPS. Good.

And when I say core EPS, it's a perfect segue into the slide 71. And that's now really for everybody who wants to come up with proper projections for 2022, and I want to set the stage well that you can do that.

You know the core EPS projections are really operating with a constant rate in a constant rate environment, and I want to deliver you now really that one. Really, you see really the starting point on the left-hand side. It's the core EPS 2021 as reported, excluding the accretion effect from the repurchase.

The share repurchase impact is CHF 0.07 and leads you to the core EPS of 2021 as reported of CHF 19.81. Now when you go on Page 60 of the financial report, you will see a currency loss of CHF 232 million incorporated into that number. When you deduct the taxes, you get to exactly CHF 200 million.

And this is what you add to the net income for Roche shareholders of CHF 17.40 billion. Furthermore, you have to deduct CHF 1 million for the interest of noncontrolling interest shares of the group net income. And that leaves you a net income for Roche shareholders used to calculate in a constant rate environment for 2022 for -- of CHF 17.239 billion.

You deduct this through 860 million shares, to be very precise, 859,867,000 shares, and that leaves you then with the 20.05 which is outlined here on that slide. Good. Now let me clarify on the next slide the accretion effect and how we got to the accretion effect for 2022.

You see on the left-hand side of the slide what I've explained already, the accretion effect for 2021, with plus 0.4 percentage points that you see in that pink arrow. Now let's get to the rest -- to the left-hand side -- the right-hand side with the 4.4 percentage points.

First of all, I think there's the number of shares which go down, and they go down to 810 million shares. Don't forget, there's also an LTI impact incorporated into this. And you find that on the Pages 167 of our finance report where it is outlined. So you get to 810 million.

When you do just use the 810 million and you take the profits that you would project and you just put it really on this 810 million, you have automatically an accretion impact of 6% roughly. What comes certainly in addition is the cost of financing assumption.

And the cost of financing assmption I've mentioned already, we expect to have CHF 330 million more financing costs in the course of 2022. This number can vary. We're happy to update you during the year where we are.

When you take that into account and the number of shares that I've mentioned, you get to a counter effect, the mitigating effect of 0.34, which then leads you to a core EPS 2021 after the repurchase impact in 2022 of 20.69 Certainly, I think if you're going to adjust well, you have to bring the currency impact in as well.

That leads to me now to the outlook. And the outlook, Severin went through this. But let me make a couple of points, which just to get it completely straight. This outlook contains the assumptions that our COVID sales from 2021 of roughly CHF 7 billion decline to CHF 5 billion in 2022.

So we lose roughly CHF 2 billion COVID sales baked in into that guidance. We will lose furthermore around CHF 2.5 billion in sales due to the biosimilar competition in 2022. So really on the sales side, we expect to lose roughly CHF 4.5 billion, and this is incorporated into that guidance.

On the core EPS growth side, well, what we have included, and that's on that slide here, the accretion effect of 4.4 percentage points. But in addition, we assume that the group core tax rate goes to around 18%, which is a significant step upwards. And in addition, we also expect that the financing costs go up by CHF 330 million.

Therefore, and I don't have to say anything about the dividend outlook. Good. I think that leads me to the end of my part, and we are happy to take your questions..

Thanks, Alan. [Operator Instructions] I would open now the line for Wimal Kapadia from Bernstein..

For first-line DLBCL, filing is now expected in the middle of the year. So it seems that the U.S. is the regulator which requires an additional 6 months of data.

So can I just ask what was the regulator's hesitation? And does that really change your view of the potential label and uptake in the U.S.? And just tied to that, could we see good momentum in the OUS markets without OS data? And then my second question, please, is just to come back to prior comments on TIGIT in small cell lung cancer.

So we are yet to see any clinical data in the setting for the combination. But given we're approaching the pivotal readout, I just wanted to get a sense from you today, your level of confidence into this first tiragolumab readout, given that PDX alone in this indication only drives a modest benefit.

What exactly have you seen from the internal data? And just how important is the chemotherapy component to demonstrating success here?.

Great. I guess I'll take those. Yes. So in terms of Polarix, I think you all are followers of what's going on in terms of various regulators and things. And I think the FDA is setting a very high bar these days in terms of approvals and things. And they wanted to see some more data in terms of the duration of data.

And -- but the primary endpoint in discussion with the FDA and all the other regulators has been the PFS, which is the standard approval for first-line therapy in DLBCL. Because the point is you're trying to, basically, you're trying to limit the percent of patients who recur.

This isn't like metastatic cancer where, at least historically, in metastatic cancer, 100% of patients recur. It's just a question of timing. And so then the focus becomes OS. In DLBCL, patients who don't recur within a few years, often are cured for life or typically are cured for life.

And so the primary endpoint of the study, which was the primary endpoint for previous studies, including the R-CHOP regimen, was PFS. And that remains the approval standard in the U.S. and rest of world. And I think that probably partly answers your question about whether we need OS ex-U.S. Again, I think we have good confidence that we will see OS.

But it may take a while because, again, that's -- it does typically follow later. But the point is, if you recur with -- in the first-line setting, your options today are things like CAR-T therapy. And so people understand that having an agent that substantially decreases the proportion of people who recur, that is the goal.

And that's why we're very confident in POLARIX becoming the standard of care and in getting approval in all the major geographies. And then in terms of what's our confidence level in tiragolumab in small cell lung cancer, I would say it's measured by the fact that we don't have randomized controlled data in small cell lung cancer with tiragolumab.

So we took a calculated risk based on the strong data we saw in non-small cell lung cancer that maybe it would behave in a way that's similar to what we've seen with the checkpoint inhibitors. But we don't know that, and we'll find out when the data comes in.

But I think we definitely see small cell lung cancer historically has been a hard one to hit with many different agents. And I think if that result comes in first, and it was negative, I don't think it undermines our confidence in the total program. But obviously, we'd love to have a positive result..

The next one in the row would be Simon Baker from Redburn..

Great. Two if I may, please. And I think probably both for Bill. Just on gantenerumab. You said that that's the biggest readout at the end of the year. The previous 2 quarters, you said second half. I just wanted to check whether that was semantics or whether that is a slight delay from effectively second half to fourth quarter.

And also on gantenerumab, we had the Aduhelm Q4 sales out this morning, which were almost negligible. I just wonder how this has influenced your thoughts on what you need to demonstrate in that study? Clearly, Biogen has not succeeded in persuading.

What do you need to do in with the profile of gantenerumab? And also what lessons can be learned commercially, assuming you do from what Biogen have done. And then secondly, on glofitamab. Bill, you mentioned the combination with GemOx.

I just wonder if you could give us a bit more color on the combo potential of glofitamab in light of the Phase I study that you posted yesterday.

What else do you think is the potential combination partner with glofitamab?.

Thanks for the question, Simon. So first off, in terms of gantenerumab, there's definitely no delay. It's just in out years, we typically talk about first half, second half. And now that we're in the year and we can zoom in a little more on it. And so that the -- we're projecting Q4. But that's our best guess.

But we're quite confident that we'll have it in Q4. Let's see, you asked about the Alzheimer's space and how we're looking at competitor molecules and things.

I think the fundamental issue here is belief in efficacy and safety of a medicine, right? And people are getting -- analyzing with a fine tooth comb the CMS, draft, payment guidance, this sort of thing. I think what it comes down to is that physicians, patients, payers, they want compelling evidence.

And in this particular case, for various reasons, they're -- yes, they seem to be voting with their feet that they don't have that yet. I mean we're really -- and we've been compelled since we started the GRADUATE program with gantenerumab that we need to deliver 2 large, robust studies run to the end.

I remember when we were having the discussion about the trial design and potential for futility analysis, this is back before any results from Aduhelm.

And we said, look, the last thing we want to do is stop early because we know that we have a titration period, and then we're going to have a sort of a treatment period with patients on the high dose and then -- and so we want to have the basically the longest reasonable study we can run with 100% of patients at the maximum dose, and that's what we're going to be delivering in Q4 this year.

And I think that that's the best anyone can do. And we're quite hopeful that, that's going to deliver a very clear, unequivocal result on safety and efficacy that will encourage people to use it and adopt it. And so I hope that makes sense. And then you asked about potential combo partners for glofi.

It's interesting because of the 2:1 format, we can combine it with other anti-CD20 molecules like Rituxan, which is unique. And the safety profile, the main thing that we have to deal with is the cytokine release syndrome, which means that some of the toxicities of other typical agents in hematology aren't really overlapping with it.

So we think it's got a bright future in combinations. It's so efficacious. We're not sure how much combinations are going to be important. So let's see what we decide in terms of, for example, the frontline study in DLBCL.

If we do a combination with Polivy, that could be obviously a very interesting setup in terms of efficacy, side effect profile, and obviously, it would be -- we would hope to deliver something big for patients. But more science to come on that. Thanks, Simon..

Thanks. The next one would be Richard Vosser from JPMorgan..

A couple of Diagnostics questions, please. So just thinking about the demand that you highlighted in the first quarter and early parts of the year, maybe an idea of where your capacity is now for antigen testing. How you see the PCR demand holding up? Obviously, very high in Q1, but some idea of that would be very helpful.

And then maybe you alluded to having limited or risk-adjusted sales in the second half. Is what you're seeing something like Denmark where testing is just abandoned because no one isolates anymore? Just some thoughts there. And then allied to that, the second question.

The margins in Diagnostics, clearly, Alan hinted to being somewhat down if you have down sales. But just some color about how to think about that on the gross margin side to get us to a level of what's in the guidance would help..

Yes. Thank you so much for your question. So first, yes, let me talk about antigen tests here, we have capacities of more than 100 million per month. And I would say that, yes, I would say the beginning of the year is strong. And I would very much expect that specifically on antigen test, probably as we go into the summer, they're going to drop sharply.

I think that there will be more demand on PCR testing. Because really antigen test, most of the orders come from governments. And they are big orders. And when the things are not dramatic anymore, they usually don't buy. And then suddenly, they buy again. And so it fluctuates a lot more. And it's always like big orders every time.

So I think in summer, it will be a drastic drop. When it comes to PCR, we have really significantly increased our production capacities by, at least, I would say, 10x from the beginning of the pandemic, so we are like 50 million, 60 million tests a month right now in terms of capacities.

And we actually have some safety stocks as well because as we went in the winter, we kept producing. In the summer, it was a bit lower, but we didn't stop. So and this is really helping that right now, because right now, the demand is much higher than we've ever seen it in the entire pandemic, I can say that.

And so it's really good that we never stopped. And our high level of automation, also right now, with no staff available, people dropping out because of Omicron in the labs, they really see this as the preferred choice. Then you were asking how is this going to continue? I think it's very hard to say.

But as Severin showed 2 scenarios, there's 1 scenario that as we enter into the summer, things are going to drop. I think PCR is going to be more stable than antigen, but it will drop. And then the key question is how will the next winter look like? And I think that we will enter a new respiratory season.

The question is, will there be COVIDs, and I would say the likelihood is not small. And then it's a question, is it going to be a descendent -- is it going to be like Omicron or a descendant of Omicron? Or is it going to be a reemergence of Delta? Things are going to look very different if it's going to be a reemergence of Delta.

And some virologists are speculating that, that could be a possibility or a descendant of Delta, right? So it's very hard to predict how things are going to play out. But I would say what governments can afford is that they get caught offguard in the third winter in a row. I mean that would not show very good planning on their end.

And so financials is one thing, but we are going to be ready for both scenarios. I want our organization to be ready for both scenarios because I don't want it to be because Roche cannot deliver. I mean that's -- that would not be good.

Now with regards to the margins, I think Alan showed 1 slide where you see the development of the margins over the last 3 years, which is more than 7 percentage points up.

What you don't see, it's like all the work that we've done actually to improve our operating expenses underneath, right? So as we move out of the pandemic, we do expect to be a couple of percentage points better than where we were prior to the pandemic.

But there still will be a drop because all of the gross profit that we generated is dropping through all the way through or most of it all the way through right now. So there will be a drop.

So -- but it's not going to be a small drop either, right? I just want to say it's going to be better than prepandemic, a couple of points, but not that much more, not yet. So give us time to continue to work on our operating expenses, and I'm very committed to do that..

The next 2 questions will come from Sachin Jain from Bank of America..

Sachin Jain, just a couple of topics for me, please. Just start off with the margin. Make it bigger picture.

So is it fair to assume that group margins are stable in '22 within the guide? And is that Pharma margin up offset by the Diagnostic down? If that's correct, I wonder if you could just detail what's the main driver of the Pharma margin in '22? And on your Diagnostics comment, Thomas, I wonder if I could just push you further.

I think on prior calls, you've talked about defending 20% EBIT margin in a post-pandemic period. Is that possible in '22? So that's margin question. Second question on Tecentriq adjuvant lung adoption. Bill, you made some very brief comments on some early indicators.

I wonder if you could provide a bit more color on your markers beyond 70% testing you've seen. And I think you've talked about this as a CHF 2 billion opportunity before. Does that still stand? And then my final question, I just wonder if you could give some details on this.

The CHF 5 billion COVID, just very simply, any color on 1H versus 2H split and a Pharma versus Diagnostic split..

Perhaps I can take the margin question. And let me start on a group level, Sachin. I think that's the most important thing because what you see is that, of course, we have the accretion effect. But take the accretion effect out, then you see that earnings are growing in line with sales.

Now what you also see is the tax rate is expected to be around 18%, so markedly up versus what it has been last year with the specific releases we had to -- as we had some settlements, right? So by definition, you can do the maths. As there are no other major additional effects, as a result, operating margins have to go up.

Otherwise, it is not possible that you keep earnings up, excluding the accretion effect, right? So I just kind of let's get back to the group level because that is the starting point, and that is actually a very specific guidance we are giving you here. And now I wouldn't go so far to give specific margins for the divisions.

But directionally, you're absolutely right. Because as we expect less COVID sales on the Diagnostics side, that leads to a loss in gross profit, where you have only limited operating expenses associated with so that will be a burden on the margin in Diagnostics. And consequently, of course, there must be even more upside on the Pharma side.

And I guess a very important part of the explanation is in the reconciliation slide, which you have seen by Alan, right, where he explains the gross profit. So here you see the major items and you can see that some of those items are very much related to our COVID sales, Ronapreve in particular.

So I think the short answer is really on a group level, you need operating margin improvement to achieve that guidance. And more specifically, I would refer you to the details of Alan's slides because that is very telling in terms of where the margin improvement comes from.

Now on the CHF 5 billion COVID sales, the majority is expected in the first half versus the second half. That is particularly true for Diagnostics, where we expect in our scenario, in our base assumption, the majority to occur in the first half. Now there is a scenario, as Thomas has alluded to, where we see another wave in the winter season.

That, of course, will change the picture, but that's something we have not incorporated in our guidance. In Pharma, it's a bit more spread over the year. But overall, the majority is in the first half. There was a specific Pharma question.

Sorry, Thomas, you wanted to add in here?.

Yes, I just wanted to quickly add on the Diagnostics side, because I get this question every now and then on this 20%. I always say it's definitely a long-term goal. We have certain major investments right now in R&D ongoing that we want to see through because these are very important projects for us.

And it's clear that if sales are going to go down, as mentioned, with maybe a less operating profit -- sorry, gross profit than the rest of the portfolio, but it drops through all the way, it will impact also the operating profit.

And so my guidance is we will be a couple of percent better after the pandemic than prior to the pandemic but don't expect 20%. Now all can change if there's more COVID sales, right? I mean there's this uncertainty of these 2 scenarios, but I would say that's like kind of giving you some frame..

It puts even more pressure on Pharma, I guess. Over to you, Bill..

Yes. Yes. Sorry, Sachin, you asked about the Tecentriq adjuvant launch. And honestly, I don't have much to tell you because the tracking data is all on delay, and we just got approval in October. And then we went right into a kind of craziness of Omicron in December, January. So I think the signs are positive.

The things we're hearing from doctors are positive, but we just don't have data at this point..

Thanks. Then I would open the line for Richard Parkes from Exane. Two questions, please..

Hopefully, you can hear me okay. Just first question, just to push a little bit more on the margin expectation. If I pass out the tax rate normalization and the increased finance costs, I do see that guidance implies a margin improvement. But it still seems to leave you sort of 100 basis points or so below where you were last year.

So I wondered if you could comment about longer-term margins. Should we expect a further improvement when we look into 2023 when maybe some of the unapproved sort of margin dilution effect washes out? And I say that because consensus has obviously got margins moving towards the sort of high 30s in the longer term.

So I wonder if that's still achievable. Second question is on Vabysmo. As you mentioned, you've had a very strong label. I just wondered if you could share some of the prescriber feedback and your thoughts on the initial trajectory.

Obviously, it's been a very dynamic market in the past, but wondering to what degree physician experience with the safety concerns with Beovu might temper that initial launch trajectory?.

Yes. Richard, on the longer-term outlook for margins, I think really this depends on the development of the pipeline. That's really the answer if we are -- I mean, especially this year, right? I mean there is so much coming through. And if a good number of those are positive, not all will be positive. I think that's not realistic.

But if a good number of those are positive, don't worry about margins. And we are in a really good journey. If everything goes down the drain, start worrying about the margins.

So in the longer term, it all depends on our ability to rejuvenate the portfolio with truly differentiated medicines because that's basically the essence of the pricing power we have in the market. So in this respect, really, if you look at the sensitivities, it's all about the pipeline.

And this year is a particularly critical year in this respect as we have such a quantity of important readouts. So that's really the answer to that question. Bill, there was a question Vabysmo as well..

Yes, yes. And let me take this opportunity since it's a new medicine to try to get us all saying the name the same way. So it's Vabysmo. And the reason -- the easy way to remember that it's bispecific, so there we go. The label, I mentioned, you asked what the feedback was. So I was actually just digging through my text messages.

So this is a text from a physician involved in treating a lot of patients. They said, "Wow!! Amazing label! You worked day and night to get this. Monthly dosing okay for both. No CST in the label. Huge win." So that's -- you want to know what they said. This is what we're hearing.

It's a big deal that they have flexibility because, as you know and as we've learned from the studies, what's important is that you get the right dose frequency for each patient. And the goal being to really maximize the efficacy, get the maximum gain in visual acuity and then to maintain it.

And unfortunately, this isn't -- this too often isn't happening in the real world.

And so the fact that we have the flexibility, while we think that the vast majority of patients are going to end up getting either 1 dose every 3 months or 1 dose every 4 months, but that there's no wrinkles with the payers in between, for example, with the baseline dosing.

And so yes, I think we're very encouraged, and we think we've got every prospect to have a very strong launch for Vabysmo.

Did I answer your question?.

Yes. Just in addition to that, obviously, physicians have had the experience with Beovu [indiscernible] them out in terms of safety concerns.

Just wonder to what degree that might temper kind of initial uptake until you generate more real world experience?.

Yes. I think that's fair that there could be some of that effect. But we're certainly not hearing any specific concerns about Vabysmo. The advisory boards and the conversations we've had and then the initial discussions we've had, people feel like we ran -- we have 4 Phase III studies, 2 in AMD, 2 in DME.

That data has been very thoroughly reviewed now for, gosh, from whenever we first presented, it's probably been 8 months. And physicians have had a good chance to examine it, and I think we should have a good launch..

Thanks. So next one in the row would be Emmanuel, 2 questions, Deutsche Bank..

Emmanuel Papadakis. Sorry to labor the point on Pharma margins. Just a follow up, particularly on the gross margin. I think you said you expect Ronapreve sales again in the region of CHF 1.5 billion, perhaps you could just confirm that. And then implications to gross margins, I mean assuming U.S.

sales are going to be minimal, the CGT ineffectiveness [indiscernible] Omicron, so therefore, you won't be getting a royalty stream in the U.S., you will have a pay away ex U.S. It seems hard, therefore, you're going to have much improvement on the gross margin within Pharma.

So is the improvement really coming from SG&A side of things? And a bit more color there would be extremely helpful. And then on the bispecifics, mosunetuzumab, I have to confess, I was a little surprised to recall Biogen had an opt-in their share profit for a princely sum of $30 million.

So does that affect how you think about prioritizing development plans between the 2 assets? For example, which one you do take forward in frontline DLBCL? You mentioned glofitamab earlier as a potential partner for Polivy. And on the latter, I know that came by pRED though, so it doesn't fall under the same agreement.

But can you just remind us to what extent Biogen has any potential claim on the economics of that molecule as well?.

Right. Yes, let's see. So it's everything -- your assumptions about Ronapreve are generally correct. The sales could be in the neighborhood of a similar level to this year. We think it's less likely that we would have U.S.

sales, not because there wouldn't be any sales in the U.S., but probably because Regeneron would be able to cover that in most scenarios just because they've had longer to produce.

And obviously, some of this is subject to what happens with the -- well, a lot of it is subject to what happens with the coronavirus, although we think some governments will want to have some amount of Ronapreve available because of the unknown nature of where the pandemic is going next. You asked about -- and effect on the gross margins.

I mean there's a number of other things at play. But in terms of product cost of sales, yes, we think there'll be a general improving and with the various ins and outs. And we also had some exceptional costs, as Alan and I mentioned, that were specific to 2021.

Like, for example, the AT527 program and the costs associated with that in cost of goods and some exceptional costs related to Ronapreve getting it going. So we're confident of improving margins. And you asked about mosun and prioritizing. So maybe just to explain to folks, we have this long-standing collaboration.

Originally, the collaboration was between Genentech and IDEC, and then it was inherited by Biogen Idec and Genentech and then Biogen and Roche eventually. So the way it works is for things that are developed in gRED, they fall under basically the original collaboration agreement, which was modified in -- what year was that, 2009 or 2010.

Based on the development of OCREVUS, there were some changes. OCREVUS fell outside of the original agreement and got a royalty. But basically mosun stays with Rituxan, or the profit share is in the 30s, and it drops when revenues get to certain milestones over time.

But and then with glofit, they have an opportunity to participate on a more limited basis, but the terms of that are to be determined. But we will definitely not be prioritizing based on the structure of the agreement. That's not in our DNA. We'll follow the science.

And whatever medicine looks like it's going to have the best shot at winning against cancer, that's where the priorities will go..

Maybe just as a little follow-on.

Alan, do you want to provide the numbers for the incremental production costs, which are nonrecurring?.

Yes. Well, that's the CHF 575 million that I've even mentioned. That's pretty clear, also the Atea impairment of PP&E of CHF 38 million. So the CHF 615 million that I've mentioned in my cost of sales slide, I think that's pretty clear that this won't reoccur. I think that's just 1 element.

And certainly, I think really we had also development costs for Ronapreve as well as for Atea. I think all of these things are elements, which won't reoccur in 2020..

Then we move on to the next participant. It would be Luisa Hector from Berenberg..

Maybe just another follow-up on the margin, though. And connecting to the Biogen payment because I know it's more than the CHF 30 million. There's an R&D reimbursement.

Is that something which will be taken into core earnings? Is there a significant amount that is included within your guidance for the core earnings? And then maybe to follow up again on Polivy. So you did mention, Bill, the potential for a Phase III start in the first-line setting with a bispecific.

I just wondered whether that is dependent on how things progress with the FDA or whether you would start that trial regardless..

Alan, I'm looking at you in terms of that question about core. I know the numbers aren't big..

That's the point, I would argue that's incorporated into what we have really as guidance. The numbers are not as big that. Yes, but the question, I was not really -- Luisa, I was not completely clear about the question itself, to be honest. My feel is what....

I think the question was whether any participation in R&D by Biogen would be part of the core earnings and the answer is, of course, yes. But it's....

The answer is yes.

And but the question would be, is that number of any significance, which we might doubt, Bill, correct?.

Yes. Sorry. And I thought the question was specific to the -- there's an opt-in payment and then there's some payment for past R&D. But I think that's -- I think it's I'm pretty sure it's core, and it's small. So it's not going to change anything significantly.

And then the question about Polivy Phase III or combo with a bispecific and Polivy, would that be dependent on something from the FDA? And no. The -- yes, we know there's no OS requirement. So we don't need to wait for that in terms of POLARIX. Although, again, we're confident that we will see an OS benefit over time.

But that's not the requirement from the regulators, and it's not something we're waiting for.

So really, what's going to determine the start is just the generation of the evidence of combining basically what happens when you combine those 2 and what's the evolving dosing and safety profile of glofi in particular because that one is less developed than mosun. So thanks for the questions, Luisa..

Did we answer all your questions, Luisa?.

Yes. That's great..

Okay. Thanks. Then we move on. The next one would be Tim Anderson from Wolfe Research. Two questions, please..

You're on mute, Tim..

Yes. Okay.

Can you hear me now hopefully?.

Yes..

Okay. A couple of questions, higher level. China, what's the long-term growth outlook for Roche in China, let's say, over the next 5 years over versus what it's been over the last few years? It seems like there's lots of different reasons why the market is slowing down in China.

And can you just talk about what sales growth was for Roche in China either Q4 or 2021? And then second question, I think, for Severin. The sales base at Roche is very large, one could argue almost too large, nearly CHF 70 billion in sales this year, probably pushes CHF 100 billion towards the end of the decade.

So even though you're launching lots of important drugs, it seems like it could be a challenge to ever have high above average growth.

So I'm wondering if Roche ever thinks about trying to shrink that base that could either occur by [indiscernible] businesses or splitting up somehow splitting out diagnostics? I know, Severin, in the last -- in the past when I've asked you about that, you said that would happen "over my dead body." Just how do you think about the size of this organization? And what needs to be done to achieve competitive or above average growth?.

Right. Yes. So let me get right to that question. And it's true if the animal grows, it needs more food. And part of the answer is that we really want to continue to invest into science, into innovation.

And we want to leverage also new technologies and we keep looking for innovation, which happens outside of Roche to bring this kind of innovation into the company. And then I do think it is [indiscernible] to make step changes. You know how it is, 2 or 3 medicines can make a huge difference.

And if you look at what has been driving our growth over the last 10, 20 years, really, it has been the end of the day, a limited number of medicines. We just need enough of those. So I don't think that size per se is a problem. What is important is that we keep an agile organization.

Size can get into a problem if we get [indiscernible] right, then it can slow down things. But as long as we are able to keep it a vibrant place and as long as we keep the units within the universe in a reasonable shape, I think size can be an advantage because we can leverage the synergies across the group.

And to your question regarding Diagnostics, I do believe that this combination of Pharma, Diagnostics and in future, increasingly what we refer to as insights, so this is data-driven businesses, that provides us with a very specific strategic positioning, which is very difficult to copy for other companies because you cannot simply build that up overnight.

So we have, I believe, a competitive advantage by being able to combine those specific businesses. And yes, let's see how it works out. And this year actually will be an important year on this journey given the many readouts we have. On China, I just keep it short. You asked for the 5 years outlook. I'm very bullish on China in the long term.

There's just no doubt that China has so much room to catch up economically. And eventually, that also means that more money is being spent in health care. At the same time, China is investing a lot into innovation, into the biotech sector. We want to be part of that. So long term, I'm bullish about China. But it can be bumpy along the road.

And if you look now, very specifically with the pandemic, for example, I mean, China, suddenly shuts down cities, which have the size of countries in other parts of the world, which means that you can have 20 million, 30 million, 40 million people having very limited access to health care because there was a couple of corona cases.

So it will be bumpy and there will be volatility. But long term, I'm very bullish on China, and we want to be part of that..

Yes. Quick comment on Q4. We don't give precise numbers on that. But I can say Pharma, pretty flattish in China. And Diagnostics, with solid growth, very solid growth..

Next question would come from Sarita Kapila from JPMorgan..

This is Sarita from Morgan Stanley. And 2 questions, please. The first on TIGIT. So you're starting head-to-head trials for tiragolumab in Stage III and first-line non-small cell lung cancer.

How have you designed these trials? So are you aiming for noninferiority? Or are you looking for superiority on efficacy supported by some improvements in tolerability? And then just second question on biosimilars. So our data suggests that the biosimilar pressure is stabilizing in Europe and lessening in the U.S.

And in Q4, Rituxan and Herceptin performed better than expectations.

So if the biosimilar pressure is easing, are you being conservative in your guidance for CHF 2.5 billion of erosion in 2022?.

Thanks, Kapila. Let me answer your second question first in terms of biosimilars. So what we're accounting for is the fact that while we've had major impact from biosimilars in Europe and the U.S., and now we have more stabilization in those areas, although continued significant impact in the U.S., but obviously, there's just less to decline.

But what we haven't had so much of yet is some of the international countries and Japan. So that we expect to see a little more biosimilar pressure there, and that's why we have the estimate of CHF 2.5 billion.

In terms of your question about the -- the TIGIT question, I think we might need to give you more details and a follow-up with IR because I don't have the details. But I believe it is a superiority design. That's our goal. It's not noninferiority, but with a better safety profile. And we like to have superiority and a better safety profile.

But I think it's going to be more of an add-on and head-to-head for superiority..

Next question will come from Keyur Parekh from Goldman Sachs..

Two comments and 2 questions. The first one is on behalf of all of us, Karl, thank you very much for your hard work. Obviously, your colleagues have already said that. But I'm sure as a community, we're all very thankful to you. Thank you very much.

Secondly, I should say, kind of the profile pictures of all of you gents look very sleek on the new presentation. Does that also mean kind of as we go forward, kind of we're going to get a much sleeker kind of presentation pack? But I think, Alan, your slides are incredibly helpful for this quarter.

But it is becoming kind of unmanageable for all of us, kind of. So just any help you guys can give us in making this sleeker would be great. Two questions, please.

The first one, Severin, you very kindly provided for us that if kind of if you were to ex-out the COVID impact next year and we had to ex-out biosimilars, then on an underlying basis, your revenue growth would be high single digit.

Any sense for what kind of the bottom line growth would be kind of on a similar basis because there's so many moving parts kind of across the COGS line, across kind of R&D reimbursement, et cetera. So just on an underlying basis, how do you see the operating margin kind of outlook going forward? That's question number one.

And then question number two, Bill, as we kind of look at the glofitamab data set that seems to be in-house, kind of how should we think about your confidence in being able to file on the basis of what you already have in-house versus kind of needing incremental data sets on that end?.

Right. So at least I can give you some general flavor on the profitability of COVID versus non-COVID. And it's -- I'd say, on a divisional level -- there is a divisional level answer to that, and there is a group level answer to that. So I start with the divisional level answer.

In the Diagnostics business, the COVID business actually is beneficial in the margins. And the reason is that even though gross profit is in line with the rest of the business, there's less operating expenses associated with the COVID business because typically, you have large orders from governments where you don't have a high cost base.

So in other words, if there is less COVID business, then that is a burden for the margin. In the Pharma business, you have seen in 2021, actually, there was a lot of costs associated to the COVID business, both on the manufacturing side, but also on the R&D side. So in this case, on the Pharma side, actually, it's dilutive to the margins.

And that means less of the business actually helps the margins going forward, which is in particular relevant as we get out of the pandemic. So that's the answer on a divisional level.

But what you also have to consider is the product mix on a group level because overall, Diagnostics is less profitable than Pharma, right? It's also less risky, but it's also less profitable.

So if you have an overproportional growth in Diagnostics as we had last year, then, of course, you have a divisional product mix with more Diagnostics versus Pharma business, and that again is dilutive.

So if you assume that we will have less of COVID sales going forward into 2022, which is our assumption, as we have explained, right, because we expect that COVID sales come down as of the second quarter in Diagnostics. And actually, out of that effect, you have an additional positive product mix effect on a group level.

I hope that gives you a bit more color without us having to now really go down product line by product line in terms of our margin development for the current year. And I think there was another question for you, Bill. You're still on mute..

Sorry about that. So Keyur, I appreciate the compliment, I think. I don't think I've been described as sleek before. So my 20-something children will get a kick out of that when I tell them. And we'll see what we can do with our slides to make them sleek also. Let's see, you asked about the glofit data.

So yes, we have -- so basically, glofit is like very much real time as we've been modifying the dose and running a number of different studies in combinations, but this is the relapsed/refractory DLBCL study. And we do have, so we shared one set of data. We have another cut that's in-house that we haven't presented yet.

We'll be presenting it at an upcoming conference. We're planning to wait for an additional cut of data to get a bigger in. And -- but we'll be sharing the cuts as we go with the regulatory authorities. But we are confident and we plan to file both in the EU and the U.S. in 2022..

Keyur, were we able to answer your questions?.

Yes, Bruno..

Yes. Next one would be Matthew Western.

I open the line, Matthew?.

It's coming now, I think. Alan, you've been a great help on guidance, but I do just want to dig back into it, particularly on the COVID impact, if I can, just to clarify. So you said in 2021, there is a total of CHF 7 billion COVID impact. But I think we know that's CHF 4.8 billion Diagnostics. We know Ronapreve is CHF 1.6 billion.

That only leaves CHF 0.6 billion or CHF 600 million for Actemra, which seems small. So I'd just love you to clarify what I'm doing there that's wrong. The second issue is around the CHF 2 billion top line impact that you've highlighted clearly in guidance. You also flagged the CHF 650 million of other operating income for U.S.

Ronapreve, which you suggested we should model going to 0. Can I just check, is that included in the CHF 2 billion or that's in addition to the CHF 2 billion when we're looking for the EPS impact? And finally, if I can just treat the third one on the same theme. Obviously, you've suggested you assumed a significant amount of Ronapreve ex U.S.

revenue in 2022, but we've also seen the U.S. essentially withdraw approval because of its efficacy on Omicron.

What gives you the confidence that you'll continue to see regulatory authorities in EU and Japan recommend the product?.

Yes, happy to take that. I think on your first statement really related to Actemra. I think you're basically okay, I would argue, because point is with Actemra, I think it's used in multiple indications. And it's a little bit hard for us to find exactly how what goes to COVID, what goes not to COVID.

But I think I would argue that your basic numbers that you've mentioned at the beginning that this is going in the right direction. The CHF 2 billion top line reduction, certainly, I think the CHF 600 million -- CHF 654 million, that will disappear. That's pretty clear. And that's in addition, let me say that.

And the other piece is about Ronapreve ex U.S., I think that goes a little bit more to Bill. But you know that Chugai has given a guidance. And they were outspoken about the sales they expect for Ronapreve, and that's what we build our guidance on here..

Yes. And I would just add that, for example, one of the other combinations and actually one of the other single antibodies that was approved in the U.S. originally then got knocked-out by the beta variant and was taken off the market in the U.S., and then it basically came back for Delta.

So it's basically the same rationale that the next wave of coronavirus might be a descendant of Omicron, but it could also be a descendant of one of the previous variants. And we really don't know and nor do governments.

And so some of those governments are interested in procuring some Ronapreve to make sure that they've got what they need if there is a major outbreak..

Perhaps I can also add on, Actemra, of course, the numbers we give are rough numbers. And then in this case, the rounding actually already makes a bit of a difference. I think Diagnostics to be exact was CHF 4.7 billion, if I'm not mistaken. The CHF 7 billion overall, roughly CHF 7 billion, I think the exact number is CHF 7.1 billion or something.

And of course, the CHF 5 billion next year are also rough numbers. So that already makes the residual number for Actemra go up a bit. But as Alan said, directionally, you're absolutely right..

Next 2 questions come from Michael Leuchten, UBS..

Karl, thank you so much for all the efforts and help over time. So 2 questions for Bill, please. Bill, just going back to your Tecentriq adjuvant question. The 70% of patients being tested in that setting.

Is that different from what you assumed in the past? So I think if I seem to remember right, you were talking about a market opportunity here of CHF 2 billion to CHF 3 billion....

Michael, we lost you..

Michael, are you still on the line?.

Shall we take the next question in the meantime, and then come back to Michael?.

Yes, we can do that one. Then let's quickly go to Eric Le Berrigaud. Eric, 2 questions, please, from Stifel..

Yes. And first of all, also from my side, a warm thank you to Karl before asking the 2 questions. So first of all, coming back to the CHF 5 billion from COVID that remain in 2022.

How should we think about this going over the next few years? And if COVID comes from pandemic into endemic, should we think about at least part of it staying for the long term? Or should we think about CHF 5 billion going and being at risk 2023 onwards? And the second question is about the biosimilar risk, the CHF 2.5 billion for 2022.

Does that relate only to AHR? Or do you include also Lucentis in particular into it? And in the guidance for '23, do you have also kind of half a year of Lucentis biosimilar impact? Or do you do differently with this drug?.

Yes, perhaps, Bill and Thomas, you want to comment on potential residual COVID sales. And on the biosimilars, just to be clear, this is only AHR. So there was a very specific situation why we -- because it was such a large part of our business, why we got more into the specifics.

But over time, of course, we hope that we get into a more normal stage where we continue to have patent [indiscernible] but that is not part of that similar guidance.

Bill and Thomas, any comments on the residual COVID business?.

Sure. I can start. That gives you a bit more time to think, Bill. No -- but yes, so I get the question a lot. So I mean it's clear that this virus is going to stay for the next decades. And it's clear also that the awareness in the public related to respiratory viruses has gone up significantly. So I think there probably will not be a COVID-only market.

It will be more like a respiratory market. And so what does that mean? I think it's going to eventually move into like low to maximum mid-single-digit billion market size. And -- but it's going to entail probably influenza, SARS-CoV-2 and potentially other respiratory viruses.

So I think there will be much more testing than in the past, and there will be some residual revenues that are not unsubstantial, but not at the level that we see right now obviously..

Yes. Really nothing to add. We'll know what the residual is when we know where the pandemic is going. But I think Severin's slide that sort of showed the figurative view, those are the 2 scenarios that we're trying to make sure we cover the range..

Just a follow-up on Lucentis. It's not in the 2.5, but it's in the general guidance, right? You assume an entry by midyear..

Yes..

Maybe we try again, Michael?.

I'm hoping you can hear me now..

Yes, we can hear you..

Sorry about that. So Bill, just one question to you on Tecentriq adjuvant. In the past, you sort of have spoken to the market potential here being limited due to the lack of treatment pathway and patient workup.

The 70% you spoke to earlier of patients being tested, is that a better market backdrop now such that the market opportunity can actually be bigger than the CHF 2 billion to CHF 3 billion that you talked to in the past? Or is it in line with what you would expect it to be?.

Yes, great question. First off, I think we were pleased to see that the testing rate is as high as in the 70s. We thought it might have started lower than that, and then we would have to get the word out of the importance.

So I think that's a good signal that people are, yes, they're intent on treating because you don't do a test if you're not planning to do something with the result. So I think that's good. In terms of the peak, I think the peak would still be the same. And I think we've talked about CHF 1 billion to CHF 2 billion. You could check me on that.

But I don't think we've said CHF 3 billion, although I'm all for it if you've got some intel we don't have. Thanks, Michael..

Okay. Then we will take 2 final questions from Peter Welford from Jefferies.

Peter?.

Just 2 quick questions. Firstly, just the Diagnostics in regards to GenMark. I'm curious that platform really hasn't had a lot of airtime today. I guess you've had sort of one of the most remarkable environment ever to launch a multiplex panel system for respiratory tests.

I wonder if you can give us your initial thoughts as this not yet sort of fully integrated into the Roche's marketing machine, have you been able to -- I hate to use the word capitalize, if you like, on the pandemic.

And can you just talk a little bit about your future thoughts on the panels that you could put on the GenMark system? And then secondly, a broader question on business development. Obviously, we've seen a lot of pressure in the biotech market.

Curious if Roche can only comment on what they're seeing with regards to sort of appetite at the moment in valuations, and in particular, gene therapy where clearly it's been a pretty bad year in 2021.

How do you now think about that space? I guess you're encouraged to receive more in there after Spark or would you prefer to be a bit more cautious and see how Spark with the Phase III starting pans out before perhaps making further investments in that area?.

So Peter, thank you for the question. So I would say we bought both GenMark and TIB at the right time. So we're definitely profiting from that in Q4, and I would say especially also in January. And I would say that definitely continues for the next couple of weeks and months.

So I haven't gone into the detail except that I mentioned when we acquired them, et cetera. But what I can say is that actually, the way the trajectory is, it's ahead of our business case. That was the basis of our acquisition. We have started the integration. And in GenMark, that means that we have integrated the sales team into the U.S. organization.

Rest of World actually was done by distributors. So over the last months, we've negotiated with distributors to take over that business. And so we are now sequentially launching in these markets outside of the U.S. But really, if you look at GenMark, it was more or less, just a U.S.-based company with a U.S. focus.

And this is really giving us the opportunity to roll it out more broadly outside of the U.S. where also, I have to say, most of the [indiscernible] panels are not yet as widely being used as it was in the U.S. So I think things are progressing well.

We also have integrated in the supply chain, supporting them in raw materials, et cetera, because we're one of the biggest producers of raw materials. In the Diagnostics industry, we do that for us ourselves, but we also do that for a lot of other players. So I would say things are progressing very well, more than in line with our expectations..

Thank you, Thomas. Sorry, Bill..

I was just going to say on gene therapy, I think we're really pleased with the developments at Spark. And we think this is a field where it really pays to go deep. I think there's something like 200 companies doing gene therapy.

And from my vantage point, I'm not sure that's a great thing because there's a lot of things you have to get right in gene therapy, including understanding the disease, the delivery, the target organ.

Often, for many target organs, you need a device, then you've got the conditioning, the things to prevent initial rejection, the antigenicity risk down the road. And I think so all that to say is I think we'll probably stay pretty focused with a limited number of partnerships beyond Spark and a big emphasis on Spark..

Yes. And to your wider question in terms of valuations in the biotech sector, I mean, valuations went through the roof, and I was not shy to also say this publicly. So even though valuations did indeed come down, they are still at a very high level. So we will remain very disciplined and cautious looking at external opportunities.

So yes, thank you very much for your great interest in Roche. Thank you for joining the session. And from my side, again, a big thank you to Karl. All the best for your future. And see you all soon. Bye, Karl..