Ladies and gentlemen, welcome to Roche Full Year 2020 Presentation Investor and Analyst Webinar. My name is Marco, and I am the technical operator for today’s call. Kindly note that the webinar is being recorded. I would like to inform you that all participants are in listen-only mode during the call. After the presentation, there is a question-and-answer session planned. You are invited to send in questions throughout the entire session using the Q&A functionality of Zoom. In addition to that, you may also raise your virtual hands to address your questions verbally. [Operator Instructions]. At this time, it is my pleasure to introduce you to Karl Mahler, Head of Investor Relations and Group Planning. Karl, the stage is yours.

Thank you, Marco. Welcome to our full year 2020 analyst call. Personally, I hope that you're all well, safe and in a good condition. I trust in that. And we have basically -- you have two hours booked with Roche; one hour presentation and one hour that will be Q&A. Most of you are familiar with the Zoom functionalities. Marco already highlighted that, so you can raise the hand if you have any kind of questions. You can also use the telephone line. We'll organize this one. And you also can send me an email. And then I can read those things to you. In these unstable times, so we wanted to give you some stability. So actually we have the same set up as always, so that is good news. And with this one, I want to hand over to Severin. Severin, the floor is yours. Thank you.

Thank you, Karl, and welcome everybody to our year-end briefing. Let's go right into the numbers, if I can have the next slide please. Next slide. Good. We have seen overall results; 1% growth on the sales side, EPS growing over proportionally with 4% and the dividend increase in Swiss francs. If we move on please. That, I feel an interesting slide because even though slides might look a little bit boring at first sight, there was happening a lot below the surface. On the one hand, what you can see is continued good growth on the pharma side, which actually would have compensated for the biosimilar’s impact if we wouldn't have suffered from COVID-19. Patients delayed appointments and as a result of it, there was less prescriptions for four medicines. The impact of biosimilars was significant, somewhat higher than we originally expected. And then, of course, we have seen a very good momentum, in particular in the second half of last year with diagnostics. Now, on the cost side, I think it's really remarkable that we could increase R&D spend for pharma, with over 800 million. That is an 8% increase versus a sales decline of 2%. It's investments into our pipeline. We have really fantastic opportunities we want to fund and we could do that with all the savings in other areas; manufacturing, M&D, et cetera. So I’d say, yes, a pretty good story in terms of protecting our margins, but at the same time, investing into the future. If we move on. That's an overview of all our contributions over the last year in the fight against COVID-19, and all of that happened on top of the ongoing business. Diagnostics, really fantastic to see the build-up of the portfolio literally out of nothing, 15 new solutions and you might have seen just this week, we announced a nasal antigen test. So we hope that that will be yet another opportunity to broaden testing for more people because it's more convenient and you don't need a healthcare professional to assist for the testing. Likewise, on the pharma side, important collaborations with Regeneron, with Atea. We’ll come back to that in a moment. If you go to the next slide. That's another angle to look at our various efforts in COVID-19. And really the point that I'd like to make here is COVID-19, in some form or another, will stay with us. We all hope that we will overcome the pandemic, but COVID-19 will continue to stay with mankind like the flu virus. And that's the reason why we are investing in particular into the development of a small molecule in this collaboration with Atea if clinical trial results should readout positively, that would be a very important contribution potentially during the pandemic, but certainly also beyond. If we go to the next slide please. Right. Here the numbers, again, you have seen that already; minus 2% on the pharma side and plus 14% on the diagnostics side. Next slide. The quarterly picture. Next slide. Right. That's an interesting slide, because you can see how the business was impacted by the lockdowns. First time in the second quarter with really a significant impact on the pharma portfolio. And you see here in orange, the newly launched products where we started off extremely well in the first quarter. And then you see the impact where the patients just simply didn't go to their doctor or to the hospital anymore, and growth came down. That somewhat recovered in the third quarter. And then again, you see a decline in the fourth quarter. So partly this is due because a number of countries were going into lockdown mode again. And partly this is also due to this carryover effect of Ocrevus which patients are supposed to take every six months. And then on the diagnostics side, you see the contrary effect, because we have been ramping up our production capacities and as such, could increasingly meet the demand. If we move on. Right. So that's good to see. On the pharma side, an increasing portion of our business is now from the newly launched medicines. On the group level, it's over 40%. And as we see continued good growth with the new products, that should really make us confident for the growth over the coming years. Next slide please. Profitability, we could keep the margin with all the efficiency gains we had throughout the organization. Next slide. That's again an important one. And as we discussed so much about COVID-19 and the pandemic, and when it is over and the kind of contributions we make here, we forget that the vast majority of our work is on our other portfolio, and today still many more people die from other severe diseases other than COVID-19. So we keep investing in our portfolio. And 2020 was a really good year in terms of portfolio progress. You see that we transferred a number of new molecular entities into the late stage in our pipeline. And as a result of this, we have now a record of 19 new molecular entities in our listed portfolio, and that is not counting for the indications. So this is just new molecular entities only in late stage, Phase 3 registrational drugs. We've never had a stronger pipeline than today, and we intend to move additional molecules into late stage in the current year. So that's really nice. Understandably, everybody focused on COVID-19. But I think that's the real story of 2020 when it comes to our mid and longer term prospects. And likewise, on the diagnostics side, whilst we have been heavily investing into COVID-19, we did not stop working on our new platforms and on our menu of essays. And again, there is a number of very important launches to come already starting in 2021, and again, that should provide us with growth for the years to come. Next slide please. Bill will cover this in much more detail. You have probably seen the more recent data on Faricimab, also PDS. So ophthalmology is really increasingly a tremendous opportunity for us. If we move on. So in terms of our guidance, in terms of our outlook, good continued momentum with our new medicines in pharma. We expect very good growth in the first half of the year, in particular, and then it will depend on how the COVID-19 pandemic develops. And that is offset by still a significant impact from the entry of biosimilars. Parallel, we’ll work, of course, on our efficiency across the organization. And if we move on to the next slide. That gives us the confidence for an acceleration of growth in 2021. So our guidance is mid-single digit growth on the sales slide, EPS in line with sales and that should again allow us to increase dividends in Swiss francs for the next year. So who is next? Bill, Thomas? Bill, over to you. Thanks.

Thanks, Severin. Thanks everyone for joining us. And yes, obviously a very eventful year. I'd like to just underscore a couple of comments that Severin made about the nature of what was 2020. While there was a tremendous flurry of activity regarding COVID, and that hasn't stopped and we're very involved in a lot of aspects of fighting COVID, however, if you go back three years ago, we were talking about our industry leading pipeline with 10 exciting molecules in Phase 3 of registration. And now we have 19 molecules in Phase 3 of registration. In fact, we added six in the course of 2020. One of those was related to COVID, but five are in other areas. For example, we doubled our late stage oncology portfolio in one year in 2020. And I think between the massive shift of resources from operations, from SG&A over into R&D, between that and the progress on actual molecules, I think the real story of 2020 for at least the pharmaceutical division was one of progress in the pipeline, despite all the obstacles posed by COVID. So I'm really proud of the work that everyone's done. We've spoken in the past about our bold ambition to deliver 3x to 5x as much patient benefit as we have in the past, but at half the cost to society. And I think we've laid a very strong foundation for that over these last two years. And in particular, in 2020, big advances both with the science, the molecules, and the investment profile. So we're looking forward to more of that in 2021, and some really exciting results ahead. Let's put up the first slide. Thanks. Yes, so again, here you can see the geographic breakdown, minus 2% overall. And obviously the biggest hits were in the U.S. and Japan where we had the most biosimilar impact with AH&R all exposed in those markets. Next slide please. So the P&L is actually I would say a pretty interesting story to follow, because despite that 2% loss on the top line, we were able to offset that, deliver basically a stable operating profit, but also to invest 800 million incremental in pharmaceutical R&D in the year. And I'm really proud of the efforts that we've made over multiple years now, but a lot of those really paid off in a big way. We did have lower write-offs in the operations area in manufacturing than we had in 2019, but also strong gains on efficiencies and big gains in terms of our effectiveness and our focus in SGAA as well, so good progress. Next slide. And this is what it adds up to. And again, you can see our ambition at the top. And we're talking about doubling of medical advances, I’ll explain. What we want to do is have twice as many entities, twice as many new products and we want each of those products to have a bigger impact. So that's what we get from doubling medical advances to 3x to 5x the patient benefit. And we're going to do that at half the cost to society. Again, those costs can be in the price of medicines, but they also can be in terms of like early cures, things that avoid future healthcare costs or avoid current healthcare costs. And I think we've made some good gains and some good examples of that already. But if you look, this requires a lot of internal innovation and we're investing there, but also a lot of collaboration. We had 92 new agreements in the pharmaceutical realm, five new agreements in late stage alone, and you can see the modalities and we really have the waterfront covered. You see on the left is small molecules. We have 12 of those in clinical development across the enterprise. And when I say the enterprise, I'm talking about gRED, pRED, Chugai, Spark and the late stage organization. So 12 small molecules all the way over to personalized mRNA vaccines to a personalized T cell therapy one. The grand total of molecules in clinical development is just over 90, and I'm super excited about that. I’m by background a science nerd, so the opportunity to work with over 90 new molecules is a dream come true. And we're going to take it up from there. Next slide please. So this is really the revenue picture. And obviously the big blue bars at the bottom is the U.S. impact of biosimilars. I think we've seen the worst that it can get. The impact was bigger certainly than our base case with a total impact in the U.S., Europe and Japan of about 5.1 billion declines on those three products. The worldwide impact was about 5.7 for the year. And again, I think that's -- we forecast that's probably the worst that it will get. We think this year in 2021, the number will probably be closer, roughly 4.6 billion, so about 1 billion less impact from biosimilars. But we do expect to have continued strong growth from products at the top, including Tecentriq, which has continued progress in penetrating a number of indications, especially in the international realm; in Europe, in Japan, outside the U.S. The reason being is we're already highly penetrated in the U.S. with Tecentriq. Hemlibra, which continues to rapidly penetrate markets around the world, but a lot of growth left there. Ocrevus, we'll come back to. But again, good progress there. And so I think in this year ahead, yes, we feel really good about the lineup we have and more to come. Next slide. So this is the Q4 numbers on the left and you can see we're now up to 47%. It's interesting if you look at the percentages versus the heights of the bar, the bars get squashed a little bit on the right side because of the appreciation in Swiss francs. So the bars are actually in actual rates. And so we see a bit of an impact towards the end, but it's really an impressive performance of these new products. And we added four more new products to the portfolio this year. And we’ll either be filing or getting approval for four more in '21. So again, I think the pipeline investment over many years is continuing to realize benefits for patients and for Roche. Next slide. So in oncology, overall, minus 10% really combined impact of biosimilars and COVID. Mostly in this case, most of the biosimilars has an impact. But I think what I’d point out here is if you look now at Herceptin and Perjeta, Perjeta has surpassed Herceptin. In fact, Perjeta is now our number three medicine. Ocrevus is now number one and AH&R and numbers two, four and seven in the lineup. So it's quite a big change in a year. Next slide. In hematology, I think this is one to watch. I would just point out here that what's not in shown is Venclexta. And as you know, Venclexta is now a blockbuster. We book approximately half of the profits for Venclexta, but not the revenues. And so you don't really see that on the bar chart. But we've had good progress with our portfolio in hematology and including a couple things I'll come back to. So next slide. Yes, so this is some of the latest data from Mosun and from Glofit, and these are our two anti-CD20/CD3 antibodies. These biospecific antibodies recruit CD3 positive T cells and take them to the tumor. And we've been really encouraged by both the tolerability and the progress on that of these regimens as well as the clinical benefit. And you can see most went in highly refractory patients with follicular lymphoma. This is a breakthrough designation from the FDA. And again, if you look at different patient groups, you can see between 65% and 76% overall response, which is a really great result and a great option for these patients with more indolent disease. In DLBCL, on the right, this is Glofit and I think what was really impressive about this is the dosing is providing for response rates up in the 60s, which you might expect from a CAR T therapy, but this is an off the shelf therapy. And so again, we're quite optimistic about our prospects for approval of both of these medicines in the next 12 to 18 months. And we're -- also by the way, we're examining a subq dosing for most on that could even further improve the dosing profile. So good progress here. Next slide. So here's Tecentriq. And again, I would remind you that the bar chart is affected by currency, because the bars are in CHF. And over the last 12 months, there's been about a 6% to 10% increase of the Swiss franc against the major currencies that we’re realizing our sales in. But you can see in Q4, we had 35% year-over-year growth. And looking forward, again, I think a lot of the growth we will see is outside the U.S. because we have a relatively high level of penetration already in the U.S. I think the other thing I would mention here is just the high potential for the TIGIT combination, because there really hasn't been a big step forward in cancer immunotherapy in terms of the MoA since the advent of the checkpoint inhibitors. We have a number of Phase 3 studies that could show that type of step forward. That will have obviously an effect on tiragolumab, our TIGIT targeted molecule. But because these studies are being run in combination with Tecentriq, then there's the potential for quite a big effect of pulling Tecentriq with that. On the outlook for Tecentriq, I would highlight a couple of things. The adjuvant studies in non-small cell lung cancer and in squamous cell head neck cancer, those studies have been long anticipated. We believe they will both read out in 2021. I want to mention that earlier we talked about the neoadjuvant study for lung cancer also reading out in 2021. We now think that's more likely to be 2022. And the reason being is that study will look at the pathologic response, but also event-free survival. And in our ongoing discussions with regulators, we believe that event-free survival is probably going to be seen as more of the gold standard. And so the event-free survival endpoint was always going to be after the pathologic response endpoint, and that result we anticipate in 2022. But we do anticipate the adjuvant studies in lung and head and neck cancers to readout in 2021. Next slide please. So just a brief note. You can see Alecensa continuing good progress. It's a very much the standard of care now in our positive lung cancer and we're really pleased with the continued growth of Alecensa. And you can see in Q4, we were up over 300 million, so well into the blockbuster category and again really pleased with the durable benefit of Alecensa for these patients. Next slide. So Hemlibra, I think this is a really good illustration of the effect of the pandemic. So you saw very strong growth really across countries up through Q1 of 2020. And then in Q2, basically, almost no new patients going on, and some existing patients having disruptions. Then Q3, actually a very strong rebound and Q4, again, healthy growth and so we have every expectation that Hemlibra will continue to have strong growth as it penetrates in the inhibitor markets in the international area, but increasingly in Europe and the U.S. penetrating outside inhibitor. So look for continued growth here. Next slide. All right. Immunology, was a little surprising on immunology and in 2020 is that we weren't surprised by the reduction in Rituxan sales due to biosimilars, but obviously Actemra upside there, based on the use of Actemra in many countries for treating critical patients with COVID. And those studies continue to readout. I'll say a little more about that in a bit. But you can see the overall immunology franchise at plus 2% in constant exchange rates. Next slide please. So, Ocrevus. So basically -- here's what's going on in the MS market from what we can see is that people with MS, especially relapsing MS, are dealing with the disease for 30, 40 years and there was a high level of switching to Ocrevus up through Q1 of 2020. We were up in the high 30s to 40s in terms of our percent of new and switch patients, and there were a lot of those patients switching. Beginning with late March of last year, the switching slowed dramatically. And in addition to that, there were a lot of existing Ocrevus patients who were nervous about whether or not to get a dose, who delayed their doses, because of either concerns about safety or -- concerns about the therapy itself or concerns about going into a hospital or infusion center. So in Q3 of 2020, we saw those returning patients who delayed their doses in Q2, they all came back in Q3. So we got a bounce in Q3, and you can see that reflected here. In Q4, essentially what happened was that the patients whose doses got delayed out of Q2, that meant they were also delayed out of Q4, right. So if you were supposed to get dosed in May and you didn't get dosed in May, but instead on July, then you also didn't get dosed again in 2020 at all. Your next dose shows up in January of 2021. In addition, the rate of switching is still lower than pre-pandemic, for sure. It's hard to estimate exactly how low. But when we've done our market share survey, and it's a monthly market share survey, we have the data through October and we follow a three-month moving average. And that number was about 40% for October. So we don't see any reduction in or significant impact on people's interest in Ocrevus or their choosing of Ocrevus versus the other 17 alternatives in the market. It still remains very high, but the rate of switching is still lower I think as people are kind of writing up the pandemic and waiting to see what to do next. But overall, we have strong confidence in the future of Ocrevus. And we expect that we will have good growth in 2021, and that we will continue to see this cycle, because that actually could last for years where we'll have every other quarter up and down. Next slide please. All right. So Evrysdi. So this has been very well received. There's no other way to put it. We have more than 350 doctors in the U.S. that are prescribing Evrysdi, which is quite remarkable, because there's not so many doctors who treat SMA. Virtually all the specialty centers are now using Evrysdi broadly. We've got about 1,000 patients treated and that was after less than five months in the market. And this is a launch in the middle of a pandemic, which I probably don't have to tell you is a bit more of a challenging exercise. So, frankly, the reception has been overwhelming. We're getting quite a few naive patients, about a third of the patients are new to therapy. Those tend to be older patients, children or adults. About two thirds though, the patients are previously treated with one of the existing therapies. And again, it's a broad range of ages from two months old up to 70 plus years, and about half the patients are adults. So again, we think this is going to be a very important therapy for a long time in the future. It's very well tolerated. It's a convenient once a day dosage, oral dosage and doesn't require contact with a healthcare provider. And again, it's been a really good start. And we'll have more data coming this year in the previously treated patients. We’ll have the two-year data from the pivotal studies. And we have ongoing study in newborns. So really excited what we see. Next slide. And I should mention, Evrysdi, we are still looking forward to approval in EMA in the first half of this year and in many other countries around the world. Let me make a few comments about ophthalmology. So you've noticed since our last quarterly call that we've actually had four Phase 3 studies with Faricimab have readout, so two in DME and two in AMD. And we were again very pleased with what we're seeing. About 50% of the patients with DME were able to achieve 16-week dosing, about 45% of patients with AMD achieving 16-week dosing. This has really never been seen before in trials of molecules targeting angiogenesis in retina. It's a $12 billion global market and we think that Faricimab is going to be a really important new choice for physicians and patients. Some people might ask, well, how does that relate to the port delivery system? Again, in May, we showed data that we had about 98% of patients getting six-month dosing intervals with the port delivery system, and how do these things all fit? I think one way to think about it would be Faricimab is a very well understood route of administration, right. So it can be given the same way that Lucentis and other therapies are given in a simple dose, but with a 16-week interval. The port delivery system -- sorry, and let me say, and that will be really great for the half of patients that are able to get a 16-week dosing interval. But other patients may need 12-week, eight-week, even four-week dosing interval on Faricimab, those patients would be great candidates for the port delivery system. They have the implant done and then they can have basically twice a year dosing. We've also announced a study of the port delivery system on a 36-week dosing, which would extend the time out to nine months for the PDS. So we just think that more choices are going to be really important. This is a really large therapy area. And there's a high unmet need for continued efficacy over time. Next slide. All right. Let me just touch on the infectious disease area. And obviously, this is something that's on everybody's mind these days. I'll start with Actemra maybe because that was the first thing that we studied. And as you know, we've run a number of randomized controlled studies that we've had mixed results. And I would say, we think a good part of that has been due to different endpoints and different patient populations. And we think we're sort of zooming in on both the most relevant endpoints and relevant patient population. It seems like the ideal candidates are patients who are really in that acute phase of inflammatory attack. They're characterized by needing high flow oxygen or some ventilation support, but not yet requiring organ support and then not too early. And so the REMAP-CAP study readout in January that was announced in England, we don't have the full data on that. That's actually a study being run by the NHS. But based on that study and what they reported was a 10-day lower time of hospitalization, also lower need for mechanical ventilation and other important endpoints. So based on that they've authorized Actemra on the NHS, which I'd say is a fairly high bar. And we have two more Phase 3 studies reading out for Actemra in COVID over the next six weeks or so, and so those should really confirm what we have. Also, the Regeneron cocktail with casi and imdev and you may have seen the news, but there was some studies published in the last week that looked at the ability of these molecules to overcome the resistant variants. And so far, at least the cocktail is holding up. And so I think that validates their decision and ours in working with them to really focus on having two or more molecules to target COVID so that we can overcome resistant variants in the future. Next slide. So in terms of the final say on 2020, we were able to add a couple more green checks. We were pleased on the key outputs, including those two Phase 3 studies for Faricimab, but it was a year where we had some big wins and then some challenges and some setbacks. But we know that if we're not taking big risks, then we're not going to drive medicine forward. And that's really what it's all about for Roche. I think you know that we have a real passion for innovation in medicine. And some years, we're going to have some more red Xs. But we have a lot of excitement about what's in the pipeline and our prospects. And I'd say we ended the year in a reasonable place. If you go to the next slide, this is some of what's coming up. And I think, again, the additional studies that are going to readout an outpatient and prophylaxis of the cocktail, that's significant. I mentioned already the adjuvant studies of Tecentriq. I didn't talk about POLARIX, which is Polivy plus R-CHP in DLBCL. This is a big deal. It's been 20 years since Rituxan was established as the standard of care in frontline diffuse large B-cell lymphoma. And now we have an opportunity to best Rituxan. And so that's what we want to do with Polivy and looking forward to that readout midyear. Also, mosun and glofit, some important data readouts there that will enable filings. And then continued, as I mentioned, the switching date on Evrysdi. So I think quite a good year for news flow. And we think it's going to leave us in an even stronger position at the end of the year than we're starting. And with that, I think I’m going to turn it over to Thomas.

Thank you, Bill. Hello also from my side and I hope that you had a good start to the year despite this terrible pandemic and all the personal consequences that everyone has to deal with due to this pandemic. Now, if we go to the next slide, I'm happy to present the full year diagnostics division performance. With sales of 13.8 billion, we had more than 14% growth for the year. This growth was driven predominantly by molecular diagnostics with 90% growth and point of care which is part of the centralized and point of care business area, which grew 212%. This was driven by antigen testing. And really we only had the antigen test available the last two months of last year. So on that regard, then having 212% growth for the year is really significant. Now, Severin already showed the growth by quarters. Q4, we had more than 28% growth. And we do expect further acceleration of this growth, particularly in Q1 and Q2 of this year. Now centralized and point of care declined by 1%, and this was due to a decline in the routine testing due to the pandemic and the lockdowns. And if we go back during the quarters, in Q2, we had minus 17% in this business, and this was really the hard lockdowns all over the world with 30%, 40% volume drop in the months of April and May. June was much better. So you can see how well this business recovered. But obviously also the antigen testing did play a role. And by the way, we already saw a Q1 impact at the time, because in China, we had the first impact. And here we had specifically in March a significant impact in volumes in this business. Sales in tissue diagnostics grew 5%. Also here, we had fantastic Q1, Q3 and Q4. Q2 was really impacted by the lockdowns. Otherwise, the other quarters much higher growth even. So this business did extremely well. Diabetes care sales declined, partly due to COVID, but also because of a continued adoption of competing technologies to BGM. So overall, we do expect the COVID-19 portfolio to grow significantly also in 2021, and particularly in the first half year. But we also expect that the non-COVID business, the kind of core business will grow very well in 2021, because we did have certain impacts this year and we will get a certain tailwind out of that. Now going to the next slide here, this is the regional split. Sales growth was driven strongly by North America, EMEA and Latin America. In these regions, we did have a lot of COVID testing sales business. At the same time, we did have an impact in our routine business, but it was definitely positive. And we did see a recovery of that routine business, particularly in Q3 and Q4 over the time. Asia Pacific is the only region that actually had a decline, again, due to this preventative measures, particularly in China, which was minus 11% for the year. And China was the first impacted and really didn't have much of the upside in terms of COVID testing sales beyond the MagNA Pure and LightCycler. And if I take China out, actually APAC also grew double digits. And one other specific information on China is that we actually did also take the opportunity to further lower inventories from 80 days inventories to 45 days inventories, which is approximately CHF 200 million, and most of that was happening in Q4. And with 45 days, we're at the lower end of what we need in terms of inventories in China. Going to the next slide, here just focusing two areas, centralized and point of care, which decreased by 1%, mainly due to immunodiagnostics and clinical chemistry, again, largely impacted by China and also by this inventory reduction. And then if you look at point of care immunodiagnostics, two months of sales in antigen. And for the entire year with that, we grew 667%. So really strong impact here. Molecular grew 90%, mainly due to the PCR testing. Within the virology line, we report the tests for the high throughput 6800 to 8800, which in Q4 grew 250%. In the LightMix Systems, this is where we report on the MagNA Pure and LightCycler and this grew almost 200% in Q4. Going to the next slide on core operating profit, here we had substantial growth in core operating profit of 50%, and thereby we grew operating profit faster than sales. And this was one hand a favorable product mix, but also as you can see we had very good and tight cost management across the organization. Cost of sales you see with a 10%. This on the one hand is of course higher volumes, but also we sold more instruments than we normally do. And the margins on instruments are lower. And the third piece is really higher costs in terms of global supply chain. To really bring this product faster to different places, also flights and containers were more expensive than they normally are. And we really needed to bring the products where they were needed as quickly as possible. M&D was flat, but here again if you look at marketing and sales, it was actually down. Here also the local distribution cost was rising significantly. So again, superb cost control. R&D, this is what we want to do. We want to invest in new products. And this was really driven on one hand by all the COVID products that we launched, but also -- we didn't neglect the rest of our portfolio. So we really pushed forward on that. And you will see 2021 will be a fantastic launch year. And so this is really paying off. G&A is slightly above zero, and this is due to legal expenses in the U.S. So also here really going in the right direction. So overall, very happy with this development. Now going to the next slide. Here you can see our portfolio on what we have launched. And the virus was not in sequence and the sequence was not known in the beginning of the year. So it was only in the very couple of first weeks of January when this sequence was published. And to develop this many products in such a short period of time and at that quality was really a huge effort by our organization working day and night. Also the ramp up in production I have to say, the team really did everything they could to help the world fighting this pandemic. Now, we have developed our solutions on the molecular side, so PCR, and on the immunology side, which is antibody testing, and antigen testing; antigen to detect the disease, antibody to detect previous infections, but also in clinical labs and point of care. So really a comprehensive solution for everyone and they can pick the options that they need in order to fight the pandemic the best way in their country. Now let me highlight just three things on this slide. Two of them I'll get back to it on a later slide. One is the anti-SARS-CoV-2 S antibody test, which got Emergency Use approval in the U.S. This is very much needed, specifically in conjunction with vaccines that also targets the spike protein. And then the second piece is the authorization for the Elecsys antigen test, so being able to detect the antigen on these lab machines that are basically present in every hospital around the world very quickly, very precise. Again, another weapon to diagnose people quickly, specifically healthcare workers, et cetera, a very important one. And just beginning of the week, we also announced that we received CE Mark for our rapid nasal antigen test, again, very important weapon specifically because it allows for much easier collection of the sample. And obviously with that, it's more convenient and people will be more willing to do it on a more regular basis. And then this is a great opportunity to then open up more of society and more of the industry as well, because you can control infections much better. Going to the next slide. This is something that we didn't talk about that much last year. We always said that we're working on a ramp up. But we want to take this opportunity now because now it's happening, because normally it takes 18 months to really do this. We took a risk back in March, April, invested more than CHF 600 million, hired more than 1,200 people and really focused on, first of all, buying 90 manufacturing lines from our suppliers, then building buildings and validating those lines. And the first of those lines now came in end of last year and beginning of this year. What we could do in the beginning of this pandemic is really maximize the usage of our existing lines, which means people worked day and night, not only in our organization, but also with our partners. People were not taking vacation. They were working weekends. They were working during holidays, between Christmas and New Year. There was only one day where people didn't work. So really, they are giving everything to make sure that we can do the best for the world. And they're doing it with pride. And they're doing it out of freewill because they know it's important right now. Now this was really a huge effort. And when you talk about the test, often people think it's only one test that you have to ramp up. That is not correct. We actually need 17 different products that we need to ramp up. There are multiple different consumables, pipette tips, different plates, et cetera. There are raw materials that you have to ramp up. So there is a lot that you have to do. And in a typical test on its own, only the test itself, there are 600 components. So this is really complicated. And to do this in such a quick time was extremely important. And again, these are very specialized clean room automated manufacturing processes, and this would only take much longer. Now what would that mean now? Well, our wrap up will actually result in a doubling of our PCR capacity at the end of Q1, and then again a doubling approximately by half year. And I just want to say that we didn't -- we obviously did a mathematical theoretical calculation what that would mean in sales, and these are obviously mind-boggling numbers. But there are other factors that make it a bit unclear on how things are going to develop. So we did not include all of the sales in our outlook, because we know that testing sales can be impacted by the rollout of vaccines, can be also impacted by the different variants and mute mutations that are coming and can be impacted by pricing. Now there are things why I think we are well positioned. One of them around pricing, we are charging less than the average other company out there. So we have a certain buffer in there that our prices -- others will have to go down significantly to match the price. That's one end. But also, a lot of the testing that's being done as well is very manual. And with that also very cost intensive. And the quality, if it's a manual, is then also not at the same level, when you have such high level of automation that we have with our systems. With our systems, you can take the sample, put it on the machine, you can go home, you don't even have to do any other manual intervention. So I believe as potentially volumes will go down, people will switch mostly to our systems, because it's just a lot, lot easier. So there are certain things where I see as a potential. But for my outlook, we really mostly included sales of COVID testing the first half of the year, and then Q3 and Q4 would then be a potential upside. Now going into the next slide, some of the portfolio that I wanted to highlight around COVID. One is the Elecsys SARS-CoV-2 antigen test. And here, this is a new solution. It's an immunoassay for the qualitative detection of the nucleocapsid antigen of SARS-CoV-2. And as you can see, the performance is truly excellent with almost 3,000 patients in our clinical trials. And what I think is also special about it is the virus inactivation time. Right now, there are not many players that have such a solution on the market. And most have virus inactivation time that's more than an hour. We have a virus inactivation time of two minutes. And this solution can work in all the hospitals. They can screen healthcare workers on a regular basis, if they see the virus, and the results are available in 18 minutes and you can do up to 300 tests an hour. So that is really significant and another important contribution to fight this pandemic. Next slide please. Here, we launched in December our Elecsys SARS-CoV-2 anti-S antibody test, which received Emergency Use Authorization. Now this antibody, compared to the nucleocapsid one that we launched in May, targets the receptor binding domain of the spike protein. So it's anti-S. And our nucleocapsid essay was already used, for example, in Moderna trials, to baseline the start of the trial. So they use that. But now they're also using this essay to monitor the level of antibodies and also the duration on how long this vaccine is going to work. So we're working very much with the vaccine companies on this. And you can also see the results on the performance, which is confirmed also by these companies is really excellent. Now we develop this assay before there was an international WHO standard in terms of quantification, because this is a fully quantitative assay. The good thing is WHO came out with a standard in last month, and it's a perfect correlation to our assay. So this is really good news. Because everyone that will develop something like this will have to standardize against this international standard. Now moving outside of COVID into oncology, we recently also launched PIK3CA mutation test to enable fast decision making for targeted treatment decisions. In advanced or metastatic breast cancer, PIK3CA mutations are often associated with tumor growth and resistance to endocrine treatments. This test that detects 17 different mutations in the PIK3CA gene and can also help identify then patients who can benefit from a PI3 kinase inhibitor target therapy. As you may know it, PIK3CA is one of the most commonly mutated genes in advanced or metastatic breast cancer. 40% of the patients do have mutations in this gene. And studies have shown high analytical sensitivity and clinical reproducibility. Going to the next slide, with nearly 2.1 million cases of breast cancer that are diagnosed every year and 15% to 20% of those being HER2 positive, it's obviously important that people get very good and fast diagnosis. And if you look at those slides, there may be some very good pathologists that can read that very accurately. But clearly, with the rising amount of cases, it's important that we digitalize this and standardize this. And with these algorithms that use the latest advances in artificial intelligence, we can do that. And we have launched three this year. We're going to launch more next year. And this can be used in conjunction with our scanner, the DP 200, but also is run on the uPath software and can then be -- the information can be transmitted into the NAVIFY Tumor Board. Going to the next slide and giving you a bit more of an outlook. I believe 2021 will be an amazing year in terms of launches for us. Here you have three system launches. We in addition will also launch another system called cobas pulse [ph]. But beyond even the system launches, we have really a fantastic pipeline of medical value assays and solutions that we are going to launch. Now, we did this exercise looking at how much we launched, not in 2020 but because we launched more in 2020, but the years before. We launched an average five of these medical value assays. 2021 is going to be 17. So this is really fantastic to see this progress. Now, what I also think is labs need great systems that are easy to use to be able to run those. And on the serum work [ph] area side, we had the cobas pro which was the next generation system. But now we are launching a system for the high throughput with the cobas pro ultrahigh throughput and the cobas pure for the lower end. And this is unique because many of our peers, they play maybe in one of the segments mostly, but really have a family approach across all is really what our customers need, because they think in networks. And the same we did on the molecular side. We had the 6800 and the 8800, which have been proven to be perfect for a situation of a pandemic. And I would say there's no peer out there that has systems in that throughput range. And most were playing more in the area where we're going to play on the 5800. So we had I would say somewhat of a gap here, because we had with the cobas 4800 not such an automated system. To now launch this, we will have again the full family approach and really something that is extremely competitive in this space. And again, all of these systems have identical user experience, identical reagent concept, the same performance, same quality allowing standardization across, so really excited about this. Next slide please. And here, I would really like to invite you to our Diagnostics Investors Day, which is going to be on the 23rd of March, and will be taking place virtually in our new customer experience building in Mannheim [ph]. So you will get the feeling that you're actually in that building. In 2020, we did launch our new diagnostic strategy. And with my leadership team, I would like to give you the opportunity to see that, but also give you a look into really our exciting pipeline. And yes, I can just invite you to that. Next slide please. Now the team did a tremendous effort to not only deliver the 15 COVID solutions, we also were very productive in the rest of our pipeline. And this will definitely ensure our continued success of our business. Last slide please. And I'm also very excited on how 2021 is going to look like. You can see that the font is getting smaller and that's because we have a lot of launches. And I believe 2021 will be huge. And also this will drive our growth in the following years. So really looking forward to your questions later. And I hand over to Alan.

Thanks, Thomas. Great to see the excitement and great to see how diagnostics is flourishing and what you have really done in case of contributions really to testing and to society, I would even argue, so really great. So welcome from my side. I hope everybody is safe and healthy. I think you can imagine I'm excited about the contributions that Roche made in 2020, and certainly about all the contributions to come really to create more safety and health in our society. With that, let's go to Slide 55. So you've seen the agenda very quickly, nothing unusual. And the highlights, I will tap on all of them. So let's move on to the next slide. And here you see really what Severin has alluded to already. I think the major shuffle, reshuffle, if you like, of resources in our company I think on the sales side, as you mentioned, a minus 1.2 billion sales reduction on the pharma side. Nevertheless, I think extreme growth from the new products, you've seen that. And then certainly the diagnostics division was 1.8 billion, up 2.6 billion of COVID related sales, which I think also shows that there was really an impact on the underlying business on the routine tests. On the right-hand side, you see the profits. And really I think what is amazing is on one hand, I think the momentum that you're seeing in the profit grows, but the other piece is really here that from a loss of sales, that I've mentioned already, invested 803 million more into R&D, and then really balanced that out with pharma efficiencies and other gains in that area to stay basically flat on the core operating profit. And then you see the diagnostics coming in with a significant growth in core operating profit of 981 million, which then really resulted in the 4% growth, as mentioned. With that, let's go to the next slide. And this is the comprehensive view. Let me very quickly lead you through this. I’m seeing sales in constant rate up 1%. I think my colleagues did a great deal in explaining that already. Then the core operating profit up by 4 percentage points, good cost management. I will explain that a little more into detail. Then the core net income by even a higher dynamic with plus 5%. And here, the financial result plays a role. We'll dig into that as well. And then you see the core EPS loses a little bit of dynamic in constant rate by up plus 4%. And here, the point is that certainly you take the minorities out for Chugai, and I think we all know that Chugai had a great year in 2020. The IFRS net income of 17% in constant rate, and this is certainly due to a base effect and are coming from 2019 where we wrote off the goodwill for the diabetes care business, and you will see that later on. Operating free cash flow, down by 21% in constant rate. I will dig into that. In my opinion, not a major worry, because very well explainable, and you will see an increase on the net working capital side, which I think really we can benefit from in the outer years when that really turns into cash. So with that, yes, let's go to the sales pitch here. Nothing I think unusual. You see really pharma now in little more detail from a regional point of view and you see the impact in the United States, certainly driven by the biosimilar impact. You see Europe which could overcompensate the biosimilar impact international with solid growth. I would argue especially in China, Chugai also impacted by biosimilar competition, and then the diagnostics growth that I've mentioned. You see really the group growth of 620 million. Then you see the significant currency impact of 3.8 billion, which I will allude to later on as well, which gives us a minus 5% in Swiss francs. With that, let's go to the core EPS development, a bridge over here. And let me start really with the point that I think overall core EPS has grown by 4.2% from CHF 20.35 to CHF 21.20. And you know that when you look at half year, I think we had a momentum of 1.9%. So we even increased the momentum in the second half. And let me lead you through this. I think the first bar is about income from disposal of products. And we had less disposals compared to last year by roughly 250 million. And at half year, we had a large and negative impact here of roughly 300 million. So we did some smaller things in the second half. But still, let's say a gap of 250 million to last year. You see other royalties and operating income, that's basically flat. Same applies to the gains in equity securities, completely different composition, but basically flat. And then the bond redemption that we did in December of 2019 had an impact of minus CHF 202 million. And you see really that gave us a base effect in the second half when it comes to core EPS. Resolution on tax disputes, I have a slide on that. I think we have positive impacts from resolution of tax disputes in 2020 as well, like in 2019, but a little bit lower, a little bit lower admittedly and that took a little bit of momentum away, but look at really what we contributed on the operation side to bring the core EPS up, an increase of plus 4.9 percentage points. With that, let's go to the P&L and let's jump right away to the royalties and other operating income. Gave the explanation already, really lower income from the disposal of older products, the 250 million. I think that explains that line. You see the cost of sales and on the cost of sales really I think you see a reduction here of 1 billion, so a saving of 1 billion. And there is an impact from the pharma side of roughly 1.6 billion. And on the dia side, an increase of 600 million and that really nets to a saving of 1 billion. I will explain that because it deserves a little bit of explanation on one of the next slides. M&D in pharma down by 600 million flat when it comes to diagnostics. R&D, an increase of roughly 1 billion, 953 million; 803 million on the pharma side and the rest upon diagnostics, which I think is amazing because you really see how we reinvested the money I think in a time where we faced a lot of challenges. And then you see G&A, and that is how should I say that could be boring, it isn't, because the 157 million is driven by Spark. We consolidate Spark relatively late in the year 2019 in the second half of December, so basically no effect here. But then in 2012, we had the full base effect of Spark, which really explains 100 million of that increase of 157 million. And the rest is really in FMI and Flatiron as they build their organizations. And the core operating profit I've mentioned a couple of times already, up by 981 million, which represents an increase of 4%. So let's dig a little bit into things I think on royalties and other operating income, I can be quick. You see royalty income, out-licensing income and other operating income is balancing out, as you can see. The other operating income is driven by Venclexta, as Bill made a comment about that product. I think that product is becoming really meaningful when it comes to profits and has contributed significantly on the profit line for Roche and for pharma. And then you see really the income from the disposal of products, which I've mentioned already, which was roughly 250 million lower compared to last year. With that, let's go to the cost of sales. As said, I think that deserves a little bit of explanation. Because you see overall and I've mentioned that in the last line here, in both group you see the saving of 1,015 million. When you go to the pharma division, you see a saving in constant rates even of 1.6 billion, 1.7 billion if you round precisely. And certainly, you will say, wow, that's a big figure. So let me explain that a bit. I think really, first of all, you see the manufacturing costs went down by 800 million roughly, that's the plus 787 million. I think we had a couple of bass effective and great efficiencies. So I think really -- this is really what matters here. The rest, so over 800 million, basically half of the overall effect is really driven by the fact that we paid lower collaboration and profit sharing. I think that was one element, which came down. That is around 400 million. And the other point is lower royalty expenses. Cabilly came down -- Ocrevus came up a little bit with royalty expenses, which is understandable. But I think overall, that gave us a saving of around 200 million here. So I think just to put that into perspective, but as Bill said, I think a major improvement in efficiencies. And in dia, it's a pretty straight increase of 637 million, which is also represented in the manufacturing costs. With that, let's go to the core operating profit and the margins. And you see really the margins went up in all divisions. And not just in constant rate, also in Swiss francs. And let me point here on the pharma side. I think that's amazing, because as I said, with lower sales and higher investment into R&D of 803 million and still defending the margin I think is quite an achievement when I look at diagnostics and look at the group overall. With that, let's go to the core net financial results. And the core net financial results has improved quite significantly as you can see by CHF 339 million. And let me lead you through the bridge. You see the net interest income has deteriorated while we had lower cash on hand in 2020, and interest rates went lower. Equity securities basically flat, currency no impact. And then you see with the debt redemption as mentioned already, which we didn't do again in 2020, but did it in 2019, so the base effect of '20. And then you see where the interest expense is, which is certainly to a major portion, also the result of the debt reduction that we have done, so an improvement of 182 million. And then you see the position of that, which is a nice mixture of a lot of things. So with that, let's go to the group tax rate. And the group tax rate in the middle you see that when you look really at the underlying group core tax rate, not a lot of move from 18.4% to 18.6%. But what you also see in green is that in both years, we had quite some help from positive impacts from the resolution of tax disputes. You see really in 2019, we came out with 16.3%. The resolution of tax disputes meant a reduction of the tax rate of plus 2.1 percentage points, representing an absolute amount of 454 million. And you also see in 2020 where the reported rate is 17.1% that we had some help here from the resolution of tax disputes coming in here by a reduction of minus 1.5 percentage points, representing a positive impact of 317 million. When I look at 2021, let me say here, I expect the group core tax rate of about 19%, I see a little bit of an increase in Japan in Chugai that plays into this, but roughly 19% should be in the cards. With that, let's go to Slide 67 and this is about the non-core items. You see the core operating profit increase, which I've mentioned, plus 4% in constant rates. And then you see the global restructuring plans basically comparable to what we have seen in the past years. Amortization of intangible assets, a little bit up driven by Rozlytrek. And then the impairment of intangible assets, which went down significantly by over 1 billion and here the major driver is that we have written down the diabetes care goodwill in 2019. M&A and alliance transactions flat basically. And then legal and environmental with quite some swing of 800 million. And you see we had the negative impact in 2019 of minus 480 million, very much driven by one legal case we reserved for Meso [ph] on the dia side. And then I think within 2020, we released the Accutane provision of roughly 300 million, so 347 million here positive. I see that all adds up to quite a positive here of roughly 2 billion from the non-core item, which brings the IFRS of our core operating -- the IFRS operating profit up by roughly 1 billion, so plus 16% in constant rate, which is then reflected in the IFRS net income, which goes up by 17% in constant rates. With that, let's go to cash on Slide 69. And as I said, I think a significant impact from CHF 20.9 billion in 2019, operating free cash flow went to CHF 14.8 billion in 2020. And you see the first point to make is foreign exchange of 1.7 billion. And that leaves us with two major impacts. One is investments into intangible assets. And I think that's a good thing, because this is what supports our pipeline, especially on the pharma side. So when you think about Sarepta, Blueprint, Bio, Atea, I think this is all investments which are reflected here. And if you see where the increase in net working capital, the major driver here is inventories up by 1.4 billion in both divisions; in pharma and basically equally in diagnostics. And on the pharma side, it is really about the new launches. And on the diagnostics side is that we have good inventories for all the COVID tests and what we're seeing over there -- what we're doing over there, and I think that's justified. So no doubt that this will turn into cash over time. Another piece here I should mention is that we have taken lower provisions in 2020. And with that, let's go to the group net debt level. I think we are not net cash positive. We still have net debt on hand, with a minus 1.9 billion. Started the year with a minus 2.5 billion, you see the bridge here. And I'm not going through all of that. Because I think that's pretty obvious. Let me make a point about the bar on the lower part of the slide. And because what we have seen in 2020 is that we had quite a tradeoff between investments into intangible assets and M&A, and perhaps there was a reflection of all the high valuation in the market that we did more in-licensing deals and agreed on more milestones and more sharing of opportunities and risks moving forward. But you see really when you look in total at our investments into innovation, there is not a huge difference to what we have invested, at least for a balance sheet point of view in 2019 compared to 2020. With that, a quick look at the balance sheet. Balance sheet, nothing really extraordinary. Cash and marketable securities pretty flat. Other current assets, up by 1 billion roughly and that is basically inventories. The non-current assets, this is the increase in intangible assets of more than 1 billion. And then you look at the liabilities, the current liabilities went up by short-term debt of plus 2.3 billion. The non-current liabilities went down by long-term debt by minus 2.4 billion. And then you see where the equity portion now at 46% and roughly 40 billion when you look at the absolute number, which I think is a nice improvement compared to how equity looked like when I joined the company 10 years ago. Net debt to total assets at 2%. With that, quickly to currency on Slide 73. And when you look at currency, well, we've taken quite a hit in 2020. But let me emphasize once again that we have a pretty good natural hedge, which means we have our major sales in currencies where we also have our major costs. When you look at the U.S., we have a full supply chain, a full value chain in the U.S. We have a full value chain in China. We have a full value chain when it comes to Europe. So I think that’s for me at least a little bit more of a reporting point. But when you look at the impact in 2020, and you see that on the right-hand side with a minus 6 percentage points on sales, with a minus 8 percentage points on core operating profit and a minus 9% on core EPS. And if we assume that all currency rates stay flat from year end 2020, we would expect impacts between 3 percentage points to 5 percentage points on sales, core operating profit and core EPS in 2021. Good. Core EPS, Slide 74. Let me set the stage for your assumptions and for the others assumptions for core EPS in 2021. And to do that, I think we have to get the basis right for 2020. So core EPS 2020 as reported is CHF 19.16. You see now that you need to take an adjustment for the foreign exchange losses, as we apply and all apply to constant exchange rate concept to be precise. And to fight to get to this point CHF 0.19 to eliminate that, you take the currency losses of minus 206 million. You find them on Page 65 of the finance report and you take the taxes away from them, that's roughly 38.31 million. And you get to that when you multiply the minus 206, to be precise, with the underlying tax rate of 18.6%. So when you do so, you get to a 167.68 million and you divide that by 865 million shares. That means voting and non-voting shares. And you will find that number on Page 171 in the finance report. So once you do that, you get to CHF 0.194 and that is exactly the number that we have highlighted here in the slide. And you have to add that up to get to the CHF 19.35, which then represents the basis for the projections for 2021. Good. And with that, I think the last slide is the outlook. I think Severin has alluded to that. It looks a bit boring. But I think given all the uncertainties and the momentum and all the challenges we have seen in 2021, we're very happy to provide that guidance. And I think we all look forward to your questions now. Thanks.

Yes. Thank you. Could we get again the administrative illustration here on how we can ask questions and participate in the call, operator, please?

Yes, of course. You're invited to send in questions throughout using the Q&A functionality of Zoom. In addition to that, you may also raise your virtual hands to address your questions verbally. [Operator Instructions]. And with that, back to you, Karl.

Yes. Thanks a lot, Marco. So just for the record, we had at peak about 870 people joining. So it's still above 830. So that is really an excellent participation. So I just want to thank you for your interest in Roche. Maybe for -- that we get through the questions, if you could kindly maybe limit your questions to two. We will try to keep our answers short so that we make best use of the remaining time and get through all your questions. And the first one I got via the Web here and also via the chat from Michael Leuchten from UBS and Sam Fazeli [ph]. They had basically the same question. So I’ll just try to summarize it, and it's going to you, Bill. They were wondering about the impact on Avastin, Herceptin and Rituxan during the year, but in particular in Q4. So if you could maybe illustrate a bit what happened in Q4? Also, maybe if you could give it a try, what happened to COVID, what happened to foreign exchange, what happened really to the biosimilar? I know it is a bit of a difficult. So that is basically the line of questions which we got from these two gentlemen.

Sure. Thanks, Karl. And I'm not sure I can -- there's too much color I can add to it. Essentially, the impact that we saw in the U.S., which was obviously the biggest country impacted last year, was I would say rather linear over time. As the year evolved, we weren't sure we thought, oh, maybe it's leveling off a little and then it would accelerate again, and then it would level off a little and then it would accelerate again. But if you step back and look at the whole year, it was pretty linear. And the reason Q4 was such a large impact was just -- the impact in 2019 was rather small and the monthly impact was just growing over the course of the year following down that curve. So Q4 just had a big number. But I don't know that there was anything really special there to point out. I saw another question that was sort of related. And maybe I’ll answer it, which is just why was the number bigger than we had projected? I think we started the year saying that we thought the number for the U.S., Japan and Europe would be about 4 billion. And it ended up being about 5 billion for those territories. And honestly, I think the reason that it was bigger than we expected was that we thought that may be the U.S. -- and I think this was very consistent with what we said. We always said the U.S. would be like Europe, but maybe a little less steep. And in fact, it ended up being pretty much like Europe. So we gave the erosion a little bit of a haircut thinking that maybe in the U.S. it would be a little slower, and largely just because of systemic factors in the U.S. healthcare system and some of the incentives and things as you're aware. There were a lot of other biosimilars that had very poor uptake in the U.S. We always said that you shouldn't expect that with AH&R, because some of the reasons those other biosimilars weren't used were kind of historic reasons. In the end, yes, the uptake was quite large, consistent with what we saw in Europe. And I think it's a new chapter. But fortunate for us, we got a strong pipeline and enable to continue growing those new products right through.

Yes, thank you. I wanted to take a call here via the telephone line, Matthew Weston. So Matthew, I opened your line now. Matthew?

Can you hear me, Karl?

Yes. We can hear you.

Perfect. Thank you. I've got two questions please, one for Bill and one for Thomas. So Bill, on Ocrevus, two comments please. Your suggestions around the six monthly cycle and the weakness in Q2, therefore, having an impact on 4Q would suggest that the very strong bolus we saw in 3Q '20 should lead to a very strong recovery of Ocrevus in 1Q '21. So can you give us some indication as to whether what you've seen in January to date supports that? But also, I'd be very interested in your thoughts. You've said previously, you're following data around COVID survival rates on patients who've had B-cell depletion and I'd love to understand now that we've had significantly longer and a deeper pandemic, whether you remain confident that doctors are committed to B-cell therapies during the pandemic? And then secondly, an easier question for Thomas. You've set out the uncertainties but also the opportunities of diagnostics in 2021. I'd be very interested if you could get your crystal ball out and let us know what proportion of profit you think will be booked in the first half versus the second half of the year?

Yes. Bill, before you answer, we had a similar question from Naresh from Intrinsic Health, only that we get everybody aligned here. So over to you, Bill.

Okay. Thanks for the questions, Matthew and Naresh. So let's see, in terms of the six-month cycle and that play out, I would just say from what we've seen so far this year, we don't see any reason to change our view on that. And if we did, I would have said something different. But yes, there's really been -- since April, May, there's really been no change in the dynamic on returning patients. We have a high level of returning patients and they come in about every six months. So we haven't seen any reason to change our view on that. In terms of confidence in B-cell related therapies, our latest data point was October where we had approximately 40% of new and switching. So that was pretty well into the pandemic. And again -- so I don't really have any reason to doubt that doctors are going to have confidence in this MoA that the safety profile has been unchanged since launch, which frankly in itself is a bit unusual, because I think every other MS therapy that I've followed the launches, usually over time some additional things got added to the safety profile and Ocrevus has held up really well. So again, we're very confident in the future. There was also this question about whether there's pent-up demand and that we only have a glut [ph] of new patients later this year? I don't know. We'll see. And Naresh, I think you also asked if there was a bolus. But now we're almost four years on the market. So I don't think you could really characterize the continued strong growth as a bolus. I think it's really just patients. The existing MS therapies have a lot to be desired in terms of preventing disease progression. And when patients’ MS worsens, they look for an alternative and Ocrevus is the number one choice.

I guess the other question was for me. Yes, having a crystal ball will definitely help in these very uncertain times. And there are a number of factors that really can impact the sales positively or negatively throughout 2021. But what is clear is that the growth we had in Q4 with 28%, and I mentioned that we had some, an opportunity to outgrow that in Q1 specifically, but also Q2 that we will have very strong growth in the first half year and that will translate also in strong profitability growth. What's going to happen in the second half year is a question mark. One is how quickly is the rollout of vaccines? Now, is this going to take longer? Then the question is really on the different variants, what kind of level of vaccine rate do you need to have to get really to herd immunity, et cetera? And as this may take longer, then there is an opportunity to have a stronger second half of the year, but always against a much higher base, because if you look at this year, we did have a very high base in Q3 and Q4. So for me, I think the first half year is very clear where we have most of our sales in terms of COVID sales for 2021. And then second half year, we'll see how certain things develop. And as the year progresses, we can inform you and update you on that.

Yes. Thank you. There is a question from the chat from Emily Hutchinson [ph]. She's asking for Andrew Baum. Bill, one for you. Your confidence in gantenerumab going forward. I guess this is on the mind of many investors.

Yes. Well, believe me it's on all of our minds. We have lots of reasons to believe and we have reasons to be concerned. Until there's a definitive, unassailable, pivotal result or pair of pivotal results, I think we have to handicap all these studies. And that's just how it is when you're pioneering in a new area. So, I can give you the five reasons we're excited. And then I would still say, I don't know. Is it 50-50? It's something like that. I don't think we need to get precise. But, yes, this is a difficult, difficult disease. We don't understand the pathophysiology of Alzheimer's disease and we're targeting something that is in a huge evidence that it's linked to Alzheimer's, but the causative role that it plays, we don't know. And the data that came out from another company, they did last quarter, people got really excited about and I want to be excited to. But again, that's a little bit of a slight tweak on the MoA. It's a novel endpoint. It's a small data set. And we haven't seen the data yet. So I'm not going to take that and run off to celebrate. The good news is that we're coming up on a readout. It's in our sights. This day has been waited for a long time and we've got a subq formulation, which is very exciting. Because if you can imagine hundreds of thousands or millions of elderly people going to get their monthly IV infusion, I struggle with that one. And so I'm pleased that we were able to get to a subq formulation, and we'll look forward to that readout. Thanks, Andrew.

Yes. Thank you, Bill. Next one would be Sachin Jain. I’ll allow you to talk.

Hi. It’s Sachin Jain here. Thanks for taking my questions. A few please. First one, let’s just kickoff with guidance. In '21, just comment on the balance of growth between pharma and diagnostics within group guide. So does pharma grow CER in '21 and is the majority of group growth coming from diagnostics just to get the shape of the divisional growth correct? Second question is on Faricimab. In the profile you delivered, Bill, you weren’t particularly excited by it on the 3Q call. I’m wondering if you could just clarify the change in whole process there and how you frame the dosing frequency advantage. Is this in your mind transformational to current practice or incremental and becoming a marketing battle? And I just had one on Tecentriq in adjuvant lung and you’ve given in your introductory comments timing for Polivy in midyear. It doesn’t seem like you’re giving timing for adjuvant lung anymore. But I wonder if you can just comment, do you still expect to be first and by a margin that's important enough to commercially as you'd commented before or not? Thank you.

Sachin, perhaps I can just comment on the first question around guidance and where the growth is coming from, before I hand over to Bill. Of course, with the pandemic, there are different scenarios and there’s uncertainty, but I think it's safe to say that we should see a very good growth for diagnostics in the first half of the year. And there are really two factors underlying that. One is that the pandemic, of course, still leads to big demand. But also we have a base effect. If you look at the sales development last year, diagnostics sales were really kicking in only in the second half of the year. So there's no doubt that in the first half of this year, we will have very strong growth in diagnostics. Then we will have a base effect kicking in, in Q3 and in Q4. And the uncertainty is around how big is demand and how does the pandemic develop? But I think it's fair to assume that the sales growth in the second half will be lower than the sales growth in the first half. Now for pharma, it might just be the other way around, right, because if we do see the pandemic getting under better control, patients will take up their medical appointments. And then, of course, we also have an increasing benefit of the growth of the new products on the one hand and the decreasing effect of the biosimilars on the other hand versus the previous year. So, I hope that gives you a bit of color how we see it evolving. But at the end of the day, there's a lot of uncertainty as well. Overall, we are confident to grow low to mid-single digit with this kind of reverse effect in the first and the second half. Now, Bill, over to you.

Yes. On the question about Faricimab, I've probably said most of what I can say without divulging data. So we look forward to that opportunity to present the data at the upcoming retinal meeting. And then I think we'll let the doctors decide what it means. But I would say that we have a high degree of confidence in what we're seeing that this does represent a meaningful step forward for patients and physicians. And it's certainly made a difference in the past, the dosing interval. And now we're talking about, for example, doubling or tripling the dosing interval for many patients between Faricimab and PDS. So in chronic therapy, those kinds of things can make a big difference. And I think there's a long history of that in some important medicines, including one that's been the largest therapy in the world was all about a dosing interval. So yes, I look forward to your view when you see the data. I think you had another one about --

Adjuvant lung --

Yes, adjuvant lung. There's no change on that. And we're confident in the timing. I think what have we been saying first half, Karl?

No. We have said that we have a chance to be first, ahead of the competitors but we didn't precise when exactly it is first half of second half. But we can confirm the readout in 2021 adjuvant that we can confirm. We know that.

Okay. Thank you. Can I just go back to Severin on -- so very kindly provided the phasing of growth, but 1H -- sorry, on [indiscernible], but the question was more around the divisional, such as pharma growing in '21? Thanks.

Severin, you’re on mute.

Sorry for that. No, that's certainly our ambition that we grow for pharma next year.

Thank you, Sachin. The next one would be Tim Anderson. Tim, I’ve opened your line now. Can you unmute?

Yes. Now can you hear me?

Yes. Now we can hear you.

Okay. Thank you. Two questions please. Evrysdi for SMA you mentioned sources of switching business, both Spinraza and Zolgensma. And I'm just trying to understand Zolgensma and how that would be a switch exactly? Are you saying patients forwent Zolgensma in favor of your product or there were patients who received Zolgensma and then went on to receive your product? And then a second question on a pipeline product, tominersen for Huntington's. Are we going to see any data related to this program in 2021? And what's your level of enthusiasm for this program relative to your level of enthusiasm for gantenerumab? Which excites you more?

Yes, let's see, just to clarify, and I think this is just -- maybe it's just a convention. But usually switching just means that there's naive patients who haven't had a therapy. And then there's patients who have had a therapy. And we don't differentiate between someone that had, let's say, Spinraza, last week and somebody who had Spinraza last year. And likewise, if someone's been treated with gene therapy and then they go on Evrysdi, then they would be counted as a switch. Although, I certainly see your point. But to be clear, we're not talking about people who forwent gene therapy. We're talking about people who receive gene therapy and subsequently at some point after that were put on Evrysdi. But the bulk of patients, as you might imagine, because many, many more patients have been treated with Spinraza than have been treated with Zolgensma, so the bulk of the switchers are patients coming in from Spinraza. But we've had a not insignificant number of patients that were treated with gene therapy coming on to Evrysdi. And on tominersen, again, I’d sort of repeat what I said about Alzheimer's. And unfortunately Huntington's, there's never been a therapy. It's a promising target we're pursuing and we know we have a biological effect. So we have a pharmacodynamic effect on the mutant Huntington's protein. We also have an effect on the wild type Huntington's protein. So we -- to translate that into clinical impact, it's going to require the Phase 3 data and we thought we might have some sort of an early look. This was, I don't know, 16 months ago or so, we thought, oh, maybe there will be an opportunity to see something early. But we now think we're just going to have to wait for the Phase 3. And so I don't believe there's going to be any sort of game changing data in 2021. I think the final outcome is going to be the one that matters in 2022.

Thank you, Bill. Thank you, Tim, for your question. Richard Parkes would be the next one. I've opened your line, Richard.

Hi. Hopefully, you can hear me?

Yes, just perfect.

A couple of questions. Firstly, on the biosimilar looking back now, it's obviously the impacts were a bit more than you expected. I wonder looking back, is there anything that you would do differently in terms of pricing or contracting strategy if you could look back? I'm just kind of thinking about when we modeled biosimilar impact for Actemra and Perjeta over the next few years. Is this a good example of what to expect or are there other things that maybe you could do differently to mitigate some of that impact? So that's the first question. The second question, and I understand you're probably frustrated because you've given the 2021 outlook and start to ask about 2022, but if you could help us to understand some of the trajectory of the headwinds that go into 2022. Obviously, you've got I think the Esbriet patent expiry and Lucentis biosimilars, maybe a continued tail of erosion of the legacy three. And I know some investors are concerned that diagnostics could then become a kind of headwind versus the tailwind currently. So could you just talk about the trajectory of those headwinds into 2022, and maybe your ability to maintain or improve the current momentum in terms of earnings growth? Thanks.

Perhaps I can start with the outlook beyond 2021. I think on a high level, what we have is a really huge impact of Avastin, MabThera and Herceptin this year as we had last year, right. So, of course, there will always be products losing exclusivity, but we will get out of this phase where we have such a huge effect in a very short period of time. And if we combine that with the dynamic we see with newly launched medicines, such as Evrysdi, if I now look at the upcoming opportunities with Faricimab, in particular or PDS where we have the data, this is not speculation anymore. We know what the clinical benefit is and we're very confident about the opportunity here. If I put all of that together, the dynamic of the newly launched medicines and how the portfolio is ramping up, then I think it's safe to say that we will see an acceleration of growth into 2022. The question then is really of whether some of the really kind of big opportunities and risky opportunities materialize, such as Huntington’s or gantenerumab. That, of course, would be transformative. But even if those do not work out, I think we have the worse behind us in 2021. And the worst is not so bad after all. Who would have thought a couple of years ago that we can grow through this biosimilars erosion phase? So yes, we are pretty confident beyond '21. Bill.

Yes, and I would just add to that on a couple of things you mentioned, for example, Lucentis biosimilars are becoming, but -- so we will also have the port delivery system with ranibizumab launching and we'll have the Faricimab launching shortly behind. And Lucentis is really quite a small product now. Esbriet is obviously much smaller than the things that we've lost. The Actemra biosimilars, our understanding is those have been delayed. And so that's out sometime. So I think -- when you look at the things that are coming, whether it's tiragolumab or a potential for gantenerumab, just go down the list, I think we feel quite good about our long-term growth prospects. And let's see. You asked about alternate actions or the things we would have done differently. It's not obvious. The main thing you could do as you can try to compete on price, and frankly what we see in the biosimilar realm is very, very deep discounts. So, for example, in Europe now, there are discounts; 85% discounts, 87% discounts. And you can imagine it's pretty hard to win in that kind of a race. So I think we feel good about the actions we've taken. And again, our real focus is on innovation and out innovating ourselves.

The next one would be Wimal from Bernstein. Wimal, I opened your line now.

Thanks, Karl. Wimal Kapadia from Bernstein. So, Bill, I just want to ask a little bit of the upcoming catalysts just to get a sense of your level of confidence. And in particular, Polivy in first-line DLBCL and Tecentriq in adjuvant. And particularly tied to the former, how quickly do you actually think the standard of care can change if we see success? Docs have been using R-CHOP for quite a while like you highlighted. So, how realistic if we see success could you see a relatively rapid transition? So just your level of enthusiasm for both of those two readouts? And then, can I just ask a little bit about the pharma in China, please. So you saw strong uptake of Perjeta and Alecensa now partly offset by impact from the MDRO. But can I just ask a little bit more about the dynamics of the biosimilar exposed assets and Tecentriq in the region? Then how are you really thinking about 2021 for pharma in China? Thank you.

Yes. Thanks for the questions. First, in terms of Polivy, we had some really exciting data in the preclinical models that led us to take this molecule forward in the first place. And the efficacy is really outstanding. So we really believe this is the best opportunity we've seen yet to advance on what Rituxan does in first-line DLBCL. Beyond that, again, that's why we do the Phase 3 study. There's not an opportunity to see it in this type of setting to see that kind of impact. So I think this is kind of like the CLEOPATRA data for Perjeta or something where you're going for the adjuvant when this is like that. We're going for cure, it's in first line and we'll know when we see it. But I believe that the standard of care would change relatively rapidly because -- and you may recall when CLEOPATRA was presented, people looked at that and said, well, how big of an increase is it and it's an extra medicine, and we were confident always that the standard of care would change. And it's really simple. We're going for cure and these are younger patients. And everybody can see the difference between curing 75% of people and curing 80% of people, that's five people who you're saving. And so I think the -- we won't have trouble convincing people if we have the data. Tecentriq in adjuvant, I think we're quite enthusiastic about that. It's true that in lung cancer, there's not as much adjuvant treatment as you have in, say, breast cancer, because unfortunately typically lung cancers, you don't catch them until they're metastatic. So the market size is not as large as say adjuvant breast, but it's definitely a blockbuster potential and a very meaningful market size. And we've run a really good study. I think we have a great opportunity to show a positive benefit, if cancer immunotherapy is going to matter. And there's a lot of reasons to believe it should, because you are looking for sort of micro tumors that are not detectable, and an ability to kind of control those or wipe those out. And there's a lot of reasons to believe that a cancer immunotherapy would aid in that. Let's see, you asked about China. And China is -- yes, there's a tremendous unmet need in China. There's a huge population to benefit. And we've had this dynamic where we had to reduce prices in order to get in the national distribution and really have all patients eligible. And that has an immediate effect on your sales, because if you cut price by 30%, your sales go down the next day by 30%. And so you've got to grow sales by 50% to make up for that. And it takes some time to do that. The pandemic hurt us this year, because we cut prices on some important products at the end of 2019 in order to get on the NRDL. And then there was a lockdown in Q1 across China. And as you know, and you've no doubt heard of it that that has left a lasting impact in the China health system in terms of their capacity. But that said, we saw a nice recovery by the end of the year. We had solid growth in China for the year. I think it was 8%, so solid. And that was despite the fact that there are local competitors to AH&R. But we still had very strong volume gains on those products, despite the local competitors. So I think China is going to be a different kind of market than, say, Europe or the U.S. I think there's still a lot of room to penetrate on volume. And we will have some price challenges. And I think you asked about – did you ask about Tecentriq?

Tecentriq, yes.

I think this is one where there's a number of local competitors for checkpoint inhibitors. The market has been really substantially deteriorated. And so I think we have to take that into account in our outlook.

Thank you. Thomas, can you also quickly comment on China for your business --

Yes. Thank you Wimal for your questions. Thomas, maybe you could kindly comment, because we've got a one online question here, which goes in that direction.

Yes, happy to do that. We did have a significant impact on our core business, particularly in March, April, May in China. But the sales in China did recover. And if I just look at in-market growth, so not what we sell to distributors, but what our distributors sell from our products into the market, it was already in the high single digit range. You don't see that because we also lowered inventory from 80 days to 45 days. And we'll see strong growth in China in this year, one, because we have wins in our baskets and tailwind because of the lowered inventories, but also because we see in-market growth. So, I do believe we will have good growth and we're seeing that already.

Yes. Thank you, Thomas. Next question would be from Emmanuel Papadakis from Deutsche Bank. Emmanuel, I’ve opened your line now.

Karl, thank you for squeezing me in and taking the questions. Maybe I'd take a couple -- take a follow-up to Thomas on the diagnostics side. Just trying to get a bit more of a sense to which the extent to which the growth may be durable there. So obviously, what we've seen so far is very much driven by molecular biology and the point of care antigen testing. What extent is that going to translate into a more durable expansion of the instrument footprint? So far, it looks like it's pretty much concentrated in those two segments, which really correlate with the prevalence of immediate COVID diagnostic testing. But is there going to be a consequent durable uplift in your view for – in particular, for example, a clinical centralized lab business? So that's question number one. Maybe I'll take one perhaps for Bill on the R&D side of things. It's nice to see some of the Spark assets coming through the pipeline. Perhaps you could talk a little bit about timelines intent on the enzyme replacement gene therapy side with the Phase 2 Pompe initiation? Thank you very much.

Happy to take the first question. So, we will definitely see very strong testing, particularly first half year, likely some testing also in the second half year and for the years to come simply because this virus is endemic. And so we will have to deal with it. It mutates frequently. So we will have to monitor this. With regards to the level of testing, that's very hard to predict, but definitely a lot more than what we would see today with influenza testing. And it may even have an impact on other tests like influenza testing because simply they want to know what kind of respiratory disease is it and just scan that. Now with regards to beyond that, in the outlook, first of all, we made extreme progress in expanding our menu on the 6800, 8800. There's still a number of tests that we can bring onto that platform. So that's fantastic. And also we are installing in one year what we have installed the prior five years. So, we are more than doubling our installed base out there of the systems. And there is a huge opportunity and I just want to pick three. One is around cervical cancer. There are more than 300,000 women that die every year of cervical cancer. Many countries still do Pap testing which has a sensitivity of 50% to 60%. Zur Hausen almost won like 20 to 30 years ago a Nobel Prize showing that HPV causes cervical cancer, and still many countries don't do it, while they can save 300,000 women's lives every year. And then, I don't understand, they do so much around COVID, which is great but they forget that a lot of people are dying of other diseases, and they should do this. Next is hepatitis C. 80 million people in the world have hepatitis C. Hepatitis C leads to liver cirrhosis, to liver cancer. Many people are dying every year. There is a cure for hepatitis C. If we screen all the people, how much suffering can we take out of the world just looking at these 80 million people that at the end will suffer, their families will suffer, and the healthcare system will suffer because they have a lot of money that they need to spend to help these patients later in their life? Tuberculosis, one fifth of the population has infection of the bacteria of tuberculosis worldwide. Look at how much we can do. We need to start to recognize what healthcare systems can do by intervening much earlier. And I have to say, there's such an opportunity and governments need to get going on this. I'm sorry to get a bit emotional on this, but I’ve been fighting for 10 years with governments to include HPV screening and all the clinical data is out there, and they need to get going and not just let it go like they have in the past.

Absolutely. And there are, let’s say, durable cases or use cases clearly beyond COVID. And I think Thomas made it very clear and illustrative that there is a lot to do in the healthcare system. So thank you so much. Bill, could you kindly --

I think from an economic point, of course, if you go into screening programs, part of the problem is the upfront cost, right, and then you only have the benefits in the longer term. And that typically is a political hurdle, because politicians, at least in our western democracies, are very linked to election cycles. And therefore, they hesitate to invest when they are not sure whether they will be reelected. And the benefit might only come in the next period. And what should help here and which should give a bit of momentum is that now the investments have been made, right, so these molecular diagnostic platforms are out there. And this is considerable investments, which are now done because of COVID-19, because the political pressure is also so high. And that should help to reduce the hurdle to now also use these platforms for other parameters, like HPV or HCV, or tuberculosis. Actually, these are all assets, which you can run on exactly the same platforms. And I think there's also an economic argument rather than having those platforms sitting idle in the cellar, use it. It's good for people. And actually, it's a lot of cost savings in the long term. And the data is so clear. So I think there is an opportunity to have a structural shift in the diagnostics business.

And there was a question about Pompe disease and gene therapy, and we're really pleased at the progress that Spark is making -- I think it's so far quite a good match, because we've been able to provide significant funding for their pipeline, and they're able to leverage some of the global resources. And so, for example, on Pompe disease, they've just had their first patient in the Phase 2. Now, in Pompe, because there's available therapies, the gene therapy will probably have a higher standard than you'd have in some of the monogenic disorder. So we do expect a full Phase 3 there. So it is going to be some time I think beyond 2023 for launch. I think the Phase 3 would be out in sometime after the Phase 2. And so it's going to be some time but yes, a lot of good progress in Philadelphia, and we're excited about our new colleagues.

Thank you.

Thank you Emmanuel for your questions. I suggest we give 10 more minutes because we are running over a bit with the presentation time if that is okay for you, Severin, Alan, Thomas and Bill. Okay. It needs a bit disciplined from both sides, from the investor side and from our side now with the queues and the answers, but the next one would be Luisa Hector. Luisa, please I opened your line.

Thank you, Karl. Can you hear me?

Yes, perfect. Thank you.

Thanks, everyone. So one was a point of clarity on the guidance for the biosimilar impact this year, the 4.6 billion. Is that still U.S., Europe and Japan? And if so, what's happening with the international markets for Herceptin and Rituxan? And then the second question, just to understand a bit more on Evrysdi, so it's off to a good start. So just wanted to know, can patients start this drug literally from home or do they have to come in for first dose kind of clinic appointment? And have you lowered your expectation for sales this year, given the COVID environment or is this more of a unique launch due to the high levels of awareness of the patients and the doctors? Thank you.

Thanks for the questions. Biosimilar guidance, the 4.6 billion, is the whole world. Before we were talking about a smaller set of territory or a specific set of territories, because those were the ones where the biosimilar impact was happening. But now, essentially, there are biosimilars in many places. So we just said, we'll handle them altogether henceforth. And so that's the 4.6 approximation. Let's see where it ends up. On Evrysdi, absolutely can be started from home. Yes, it's a simple oral formulation, liquid formulation. So that's not an issue. And we haven't lowered the sales forecasts based on COVID. We really don't see any need to with more than 1,000 patients starting in the first four and a half months and 350 physicians prescribing. These are motivated people. And for many -- well, you can imagine for the parents of young children, they're very motivated. And for people who are older, who haven't had good options, they're very motivated as well. So yes, I think it should be a good launch in the U.S. and our continued good launch in the U.S. and strong launches outside the U.S. as well.

Thank you.

Thank you Luisa for your questions. Mark Purcell. Mark, I opened your line now. Mark, you are on mute. Now you are unmute.

Thanks very much. I have a couple. So just following on from that last question on biosimilars, what would you recommend us to do when it comes to modeling the decline of revenues in international markets? So I guess we don't have much visibility there. We obviously have now high visibility what happens in Japan, in the U.S. in Europe, but whether you're going to see sort of flattish sales or slightly declining sales as prices come down, but volumes obviously go up in those markets? Secondly, biospecifics. Bill, could you talk to your confidence in terms of this modality where you have 15 assets being able to be delivered subcutaneously in an outpatient setting? I'll be interested in the comments around the CD20/CD3s, but also where you are with HER2 CD3 in terms of gaining share back through innovation in the breast cancer space. And then a very quick one, which is a clarification one for Thomas. Thomas, thanks for your presentation. It was really, really helpful. In terms of thinking about diagnostics through the course of 2021, without giving a growth rate for your own business specifically, are you assuming much in the way of pricing pressure, capacity utilization pressure in the second half? And are you playing a part in what could become new tests, depending on what the comments about potential of these COVID vaccines? So we may be shifting from neutralizing antibodies to total antibodies to T cells to all sorts of other things. And so I would have thought with your innovation focus, you may play a leading role there, which again could give you a little bit more longevity when it comes to the COVID revenues? Thank you.

So maybe I can start with the question about the biosimilars impact in international. Yes, Mark, it's definitely -- it's a little hard to call because there's definitely some growth potential. And so some of this will come down to what are pricing impacts in 2021 and future years. I think certainly the great bulk of the biosimilar erosion will occur in the U.S., Europe and Japan, because, again, China, for example, China's in international and we have every reason to believe that we would have some growth in China this year for AH&R. But I don't know that I can help you much beyond that. We're going to have to wait and see. On the biospecifics and the encouragement or the potential for subq dosing, yes, I think we're pretty impressed with the data that we showed at ASH in terms of the ability to administer medicine to basically be able to give a much higher dose with subq, but have it be well tolerated. So, I think this is something that could be quite useful for a number of these. Well, in this case, I think that's really more specific to the hematology indications where you have CRS as an issue. But it's something that we think could be an important phenomenon in hematology. And then with -- you asked about the HER2 CD3 biospecific, it's in Phase 1. We've had some delay on that one based on COVID. So, we look forward to further progress on it. But right now, it's moving a little bit slowly.

Then let me answer your second question with regards to pricing pressure, volume, et cetera. So, as I mentioned in the presentation, most of our outlook is really having COVID sales in Q1 and Q2, and then a reduction in Q3 and Q4. And this can either be pricing pressure or also difference in volumes, and it will all be dependent on the speed of the vaccine rollout, the variance. With more of the variance of South Africa and Brazil, most likely you have to get them to a much higher rate of vaccination in order to get to herd immunity, because higher infective virus, you need to have a higher level of vaccination. So there's a lot of uncertainties that are going to play in. And so we didn't really detail out what part of its price pressure, what part of it is volume. But we said, okay, the first half is pretty clear and the second half year is a bit more unclear. So, we take more of it in the first half year, and then we can give updates as the year proceeds. I also think that we are pretty well protected compared to some of the other players, both on price and on volume. Price, because we do have a lower price than most other players and significantly partly. So if there's a price erosion, others will be hitting first before we will be hit. And we did price in line with our other portfolio, right. So it's not like we priced higher. And then on the volume, I also think we are somewhat protected, because our machines and instruments are so highly automated that all these more manual procedures will go away, because people are just tired. They don't want to keep pipetting and work on these more manual instruments. So I think there's a certain level of protection. Now, with regards to more innovation in this case, we do have now an opportunity also on the MagNA Pure and LightCycler to be able to differentiate in this new variants already. And we are working on something on our 6800, 8800 that you can then take basically the samples that turned out positive and you can kind of look, is this a new variant or is this the previous virus? And that through PCR rather than sequencing, because sequencing just takes days versus hours of PCR, and you don't really want to wait that long. Then, of course, this question around T cell immunity, and there are possibilities to test that, and we are working on that as well. We do believe, however, that most of the testing will still remain on antibody testing, because that will show also correlation to the T cell immunity, because this T cell testing is quite more cumbersome, but we do look into that and are working on solutions as well. But I think if they're looking at this testing, they will do more of the antibody than the T cell testing simply because antibody tests -- antibodies presence will correlate to T cell and the T cell is just a lot of manual effort.

Thank you, Thomas. I can see that your crystal balls are, let's say, forecast here. Our guests are really in high demand. So we have a bit of a timing issue. We have Richard Vosser and Peter Welford as the last two identified, let's say, people in the queue. I would say, let's give it a try. Two quick questions from Richard and from Peter and we try to also keep ourselves in a good shape with the answers. So, Richard, you first please. Richard, I’ve opened your line.

Thanks, Karl. So one question on diagnostics. Just you mentioned the ramp up in capacity, but what is the demand level like? We've seen PCR selling out this year? But is there the demand to sell out of that ramped up capacity in the first half? And maybe an idea on the sustainability of margins, we could expect margins to go up? But would they be sustainable at sort of a 20% level going forward? How should we think of that? And then very quickly on Kadcyla, just adjuvant growth? I'll stop there, Karl. I heard the sigh.

Thank you. I already can hear my – it’s good. Now please go ahead.

Yes. So regarding the ramp up capacity, the numbers that I mentioned are always at end of quarter. So don't take kind of this as during the entire quarter. So this is doubling by end of quarter one and end of half year, another doubling. Now since there is so much demand out there and not enough supply, it's really hard to say what is the real demand. But based on all of our models, it's likely that the demand will be higher than what we can supply still, despite investing CHF 600 million. And then we'll see how second half year goes, right. And regarding sustainability of margin, yes, we've had a significant margin increase also driven through a COVID test in 2020. And as you've seen on the cost lines, we're working very hard on our efficiency in the organization. And we'll continue to do that to make sure that we protect our margins.

Thank you, Thomas. And the last one would be Peter. Thank you. Hope we could address your questions, Richard. Thanks for asking. And last one would be Peter Welford. I’ve opened your line. Thank you, Peter. You have the privilege of the last question.

Hi. Thanks so much for squeezing me in. I just have one question. I'd keep it short. Just to Thomas again though, just continuing on the same theme of the outlook actually, just want to check there. When you say you assume little testing in the second half relative to the first, is that both antigen and PCR tests? And also when we consider the PCR then, am I right in thinking, so you have 20 million tests per month at the moment, 40 million by the end of the first quarter, presuming then 80 million by midyear if I understand it right. And so when we think about the second half, you're saying your guidance assumes down from 20 million a month essentially. But actually the upside, if you like, could be as much as 80 million a month test. Is that the right way of thinking about it? Thank you.

Yes. So by half year, I would say, to be more accurate, it will be around 70 million in total. And it's a mix of our high throughput platforms, which is 60 million and the other 10 million come from the MagNA Pure and LightCycler platforms. And it is correct that we assume lower testing at the moment in our outlook for the second half of the year. But the other view that I would just like to bring in, we believe that PCR testing will be sustainably longer -- will be longer sustainable than, for example, antigen testing. I think one of the reasons for antigen testing also is because there was not enough of PCR testing. So I believe that the PCR volumes will remain longer than antigen.

Thank you. So I think we are coming to an end. I apologize with those who are still in the line. Keyur, sorry, I see that you just came in, in the last moment. I see that Ben had some questions on ESG. We had some other questions from Michael Leuchten and some on the TIGIT and so on. So we take note of it. We'll get back to you. I apologize again for those whom we couldn't address here. But I wanted to thank you from my side for your interest in Roche, wishing you health and success, health for you and your families, of course and wishing you a nice day. Thanks a lot for your interest.

Thanks, everyone. Bye-bye.

Thank you. Thanks for joining in.

Thank you.

Thank you.