諾和諾德 (NVO) 2011 Q4 法說會逐字稿

I think we're ready to start.

Well, good afternoon, everybody, and welcome to Barclays Capital.

My name is Brian Bourdot.

I'm one of the equity research analysts on the pharmaceuticals team.

We're very pleased this afternoon to host the senior management team from Novo Nordisk, the world leader in diabetes care, whose therapeutic proteins benefit millions of patients worldwide.

They are led by the Chief Executive, Mr.

Lars Rebien Sorensen.

So, Lars, congratulations on yet another set of strong financial results, and welcome back to a rather icy London.

Yes, indeed.

Thank you very much.

It reminds me of Copenhagen.

We also had a bit of snow, but we don't have that many flights so they usually don't cancel them.

So we managed to get here in time for the Super Bowl, so if people are nodding off a little bit, it maybe because they've been watching the Super Bowl.

We're going run quite hastily through the presentation to allow enough time for the Q&A, so please bear with us.

If we're going too fast, tell us to stop and repeat what we said or elaborate slightly.

This is the presentation that we're going to go through; just a short introduction by me, and then Kare Schultz, a sales update; Mads Krogsgaard, R&D; Jesper Brandgaard with the financials; and then hopefully quickly to the Q&A.

The forward-looking statement; as we all know, the future may hold something which we cannot expect and predict, so be aware of that.

These are the statements from the front of the release.

2011, a difficult year where we had to consume healthcare reforms basically all over the world, adverse political and economic situations, natural catastrophes in Japan and a nuclear meltdown very close to our factory.

But in spite of all of this, we managed to get reasonably well through the year, as you can see on the numbers in terms of sales.

Research and Development perhaps the most noteworthy thing in 2011, the finalization and filing for a drug application of a new set of insulins, Degludec and DegludecPlus; and Mads will talk a little bit more about that, I'm sure.

Financials, strong sales leading to a strong operating profit and even stronger growth in earnings per share.

Outlook for this year, that's quite wide range.

7% to 11% in local currencies; operating profit growth around 10% due to 2012 being an investment year, an investment year in the preparation of the launch of Degludec in the global market.

So with that, over to Kare, quickly.

Thank you, Lars, and here you see the sales and you can see that three-quarters of the sales are now in diabetes.

And it's also quite evident that the key drivers of the growth is modern Insulins and Victoza and that we had a relatively weak year on human insulins, which was primarily due to some tough price competition from Lilly where we've answered back and you will see a reversal of that this year.

NovoSeven, modest growth; same thing with Norditropin, but maintaining the leading market position and having a very nice margin for these products.

If we do this slide which is made to look us good, or made us to look good, we exclude here the old products.

So we've only got the new products.

And then, of course, you can always make even big pharma look nice.

Here, we have 21% compound growth, and that's based on our three blockbuster insulins, the three modern insulins.

It's based on Victoza, growing strongly, and it's of course based on Norditropin, our growth hormone and NovoSeven, our Factor XIIa, all growing very nicely.

And what's common about all this is it's biotech, large-scale manufacturing, complicated drugs, chronic therapy.

That's what they all have in common and that's what we know most about.

If we look at the insulin market and the diabetes market, then you can see that there's been strong growth in insulin lately and in GLP-1; and we maintain a level where the insulin market's growing in volume more than 5%.

If you look at the total market share then, of course, due to a combination of the good penetration of our modern insulins and the success of Victoza, we are now at 24% of total worldwide value in the diabetes care market.

You also see that Avandia and Actos has really left the marketplace, left it completely; Actos is about to leave.

And you see the DPP-4s coming in here with Merck having a good success with Januvia.

In terms of global volume growth, we basically have a scenario where we have some, you could say old markets with a very low dynamic.

That's Europe and Japan for demographic and economic reasons.

Then we have two emerging market sectors that are growing very fast.

That's China and what we call International Operations, so that's Latin America, Africa, Middle East, South East Asia, and so on, both areas growing around the 20% level; and then we have the US which is a bit in between, growing close to the market growth which is currently 6.5%.

Why is it growing so steadily for so many years?

Basically, it's demographics; nothing magical about it.

And here, you see some numbers and the assessment that in 10 years from 2000 to 2010, we had nearly a doubling of the number of people with diabetes from 150 million to 300 million roughly.

And we basically expect that these kinds of growth rates will continue going forward.

Victoza reached blockbuster status, passing $1 billion in sales in 2011.

The majority of sales are coming from North America.

Europe is also doing fine, and right now, we start to see the first action from International Operations because we launched in a number of countries last year.

This year we're going to launch in a long number of countries, and we expect of course the growth pattern for Victoza to continue.

Don't get too excited or depressed about a very strong quarter, very weak quarter.

This is chronic therapy, so straight line projections on a moving annual total is the best way to think about it.

And if we look at the US, then we can see here how we're now the market leaders in GLP-1 segment.

We've squeezed down by it a little bit, but we've primarily expanded the marketplace.

It's now up to 6% of the market which is GLP-1 out of total value.

It's not a lot of patients actually.

Our patient share of scripts in volume is less than 1%.

So the Victoza sales you see Novo Nordisk having in the US right now is based on just below 1% of total scripts every week.

So a lot of potential there, and we are happy about the fact that we get the patients early, and we are happy about the fact that a lot of them choose to take the high dose of 1.8 milligram where you also have the biggest effect on weight.

In Europe, a mixed picture like always country by country.

Overall, we can say we are very happy about the development.

In Germany, we have really pushed down Byetta and good start with Victoza.

In UK, we didn't push down Byetta so much, but we really penetrated well with Victoza.

And France is the optimal combination where we both pushed down Victoza and got a very good expansion of the market -- pushed down Exenatide and got a very good expansion of the market with Victoza all the way up to 10% of the value now being in GLP-1.

So what to come in the future?

Well, let's hear what Mads says about that.

Thank you, Kare, and I think we're all aware of the notion that Degludec and DegludecPlus have been submitted in the last three months preceding Christmas last year in both Europe, Japan and United States.

Moreover, we continue, and will also do that this year, to submit Degludec and DegludecPlus in multiple markets all over the world.

The regulatory process is ongoing.

We've received the Day 80 draft assessment reports from both the Rapporteur and the Co-Rapporteur in Europe; and, obviously, the FDA review is ongoing and things at this point appear to be pretty much on track.

In terms of research and development broadly speaking, we provided the update that the excellent data we had after one years of treatment in the two major trials, or two of the major trials, the type 2 diabetes study in 1,000 patients and the basal-bolus type 1 diabetes study, that were extended for a further year so that we now have two-year data to announce.

That was on a very nice note that we were able to confirm and even extend, expand on the hypoglycemia benefits shown after one year such that it went from 36% to 43% in type 2 diabetes in terms of benefit nocturnally.

And there was indeed also a severe hypoglycemia benefit versus insulin glargine.

In terms of Levemir, it's approved in Europe during pregnancy.

We will continue to nurture also our existing portfolio, and as mentioned, there has been progress in the oral portfolio where both all GLP-1 and all basal insulin have completed with encouraging results the first phase 3 -- phase 1, sorry, if only it were phase 3 -- phase 1 trials.

Biopharmaceutically speaking, we've completed Turoctocog alfa, the first hemophilia A entry, and we'll submit based on robust efficacy and very promising safety data in the second half of this year.

Unfortunately, we received a complete response for the ultra [orphan] product Factor XIII for Factor XIII deficiency.

On a more positive note, we entered phase 1 with a long-acting growth hormone in the once-weekly regimen, so to speak.

And also very exciting, for the first time, we completed phase 2 for one of the immunomodulatory monoclonal antibodies known as Anti-IL-20 for the treatment of rheumatoid arthritis with encouraging data that is [gating] for entry into phase 2b later this year.

With that, over to you, Jesper, for a financial update.

Thanks, Mads.

The development in the financial results for the full year '11 is illustrated here.

Sales growth of 9% and having suffering from a 2% negative impact on sales from currency development, gross profit only slightly -- a slight expansion of 20 basis points.

We had 20 basis point negative currency impact, so underlying 40 basis point improvement in the gross margin.

And that improvement primarily in 2011 came from a benefit from moving from human insulin towards the modern insulins.

We have greater hopes for the expansion of our gross profit going into 2012, as we will in 2012 see a more profound impact from the continued part of our overall turnover that consists of Victoza, which has a positive impact on the gross margin.

So we're guiding in local currency terms to the tune of 50 to 100 basis point improvement in 2012 over '11, and as it looked using the rates we used for this guidance, an approximate additional 40 basis points of improvement coming from currency development.

So a very significant improvement to continue on gross margin looking forward.

Sales and distribution costs growing a modest 4% in the triad market launches in 2011.

Sales force expansions have been undertaken in final quarter of 2010 in the US and a modest sales force expansion in China in 2011 as the key cost drivers.

Research and development costs are reflecting the fact that we completed the 10,000 patient Degludec, DegludecPlus trials in January of 2011, and hence a relative lower comparison for the Degludec activities in 2011.

And we're starting off a number of 3b activities for Degludec which will hopefully -- which will mean the impact 2012 onwards.

And also, a portfolio of pivotal trials have been initiated in the second half of 2011 which would leave our research and development costs in the ballpark of 14% to 15% for 2012.

Admin cost growing, say, higher than the other two cost ratios, which is a little bit of a nuisance from a CFO perspective.

It is really reflecting that there has been a few non-recurring items occurring in the final quarter relating to evaluation of employee costs, and then also some one-time costs in 2011 in relation to preparing for a new headquarter at our corporate site in Denmark.

Operating profit growing 18%, as you can see.

Net financials a slight improvement over last year.

Last year was also benefiting from the DKK1 billion gain that we had from the divestment of ZymoGenetics to Bristol-Myers Squibb.

In terms of pre-tax profit growing 20% and then having a 22% tax rate occurring for the full year, we had a successful settlement of a number of tax issues abroad that has left the rate slightly lower than the 23% we initially anticipated.

Net profit then growing 19%, noting that the tax rate in 2010 was impacted by the sale of ZymoGenetics which was tax exempt from a Danish tax perspective.

EPS growing 22%, really reflecting continued effect from share repurchases.

If we look at the currency rate, I think it's important that you are aware of the current rates we used for guidance, and they're fairly similar to the rates we see as of today.

And hence, we're going into 2012 with a significant tailwind on the currency side; and also that the duration of hedging that we have applied is somewhat shorter than what you've seen historically.

So none of the major currencies being hedged more than a year ahead.

If we look at how we've spent our cash generation, you can see that we have now recommended to the annual general meeting a DKK14 dividend or equivalent to DKK7.8 billion to be used on dividend, giving us a payout ratio of 45%, which is resembling the payout ratio we see for the pharmaceutical industry in general.

And we have at the same time also recommended that we do a DKK12 billion repurchase program running from now until January 2013.

The outlook is then an indication of a growth in the ballpark of 7% to 11%.

And with the 4% positive impact of currencies that I've just alluded to before, operating profit has at the midpoint of sales growth at around 10% in local currency; and then having a significant leverage from the higher sales growth in reported terms to giving a 17% expected growth at current rates in reported terms.

There's an offsetting effect there on financials, but you should note that the impact we have expected on operating profit from currencies of 7 percentage points is significantly higher than the negative effect we're going to have on net financials.

Tax rate similar to the level we saw in 2011, and the rest of the items are pretty familiar to you and no significant changes there.

So closing off, I think we have demonstrated also with the performance in 2011 that Novo Nordisk's been driven by a diabetes care market which is able to deliver at least a 10% annual growth, driven by the prevalence of diabetes around the world.

We have an expanding market hare in diabetes care of around 25%.

Half of the world's market in insulin volume is Novo Nordisk, 46% of the modern insulins, and now more than 50% of the value of the GLP-1 segment.

We're the only company who has two new insulins in final stage approval, and we have a very comprehensive portfolio within GLP-1s too, which hopefully should enable Novo Nordisk not only to expand broader into type 2 diabetes, but also with Liraglutide having the opportunity of expanding into obesity treatment.

And then in the longer term also an expanding pipeline within the area of hemophilia, building on the chronic treatment capabilities of Novo Nordisk; and likewise, although more early stage, in inflammation where we have just completed the first Phase 2a project, basically gradually maturing our pipeline.

With that, I will hand over to Lars who will deal with the Q&A.

Yes, thank you very much, Jesper.

Are these microphones on?

Good.

So, yes, why don't you get the privilege of starting?

I know the main driver of your business is diabetes, but I just had a couple of questions on the hemostasis side perhaps.

Firstly, a question on your Factor XIII, which received a complete response from the FDA.

I was wondering if you could possibly give us a little more color there whether you see it as being just procedural, or whether it is something that perhaps has implications for your other compounds in development, particularly your Factor VIII and Factor IX drugs.

Secondly, one of your I guess indirect competitors talked about perhaps a smaller opportunity in the Factor VIII and Factor IX markets as there had been price cuts in Europe.

I was just wondering for NovoSeven whether you had seen price cuts, particularly in Europe; and whether you had the expectation of the same this year.

Thank you.

Thank you very much.

Mads, I guess it's you first; and then, Kare, perhaps you could talk about pricing.

Well, Brian, I think as regards Factor XIII, this is the [CBER] Biologics Center, rather than the [CDER].

So obviously, it's the first time for more than a decade that we've submitted a biologics license application to CBER.

When that is said, there is the peculiarity around the recombinant process for Factor XIII that it is probably the most sophisticated and complicated we've ever been involved in.

It's not an mammalian cell, unlike Factors VII, VIII and IX.

So these are not CHO cells that are behaving the way CHO cells should, and that means that the whole process of making sure that you don't get too much activated Factor XIII while at the same time making sure that you don't get too many impurities, and so on and so forth, has been a rather humongous task.

And they are operating with very low tolerance levels as regulators should do, so to speak.

So that means there will now be a dialog with them and meetings have been set up to look at what is it exactly that we can and shall do before we submit the [amendment].

The important question here is maybe not so much the product per se, but whether there are knock-on effects or repercussions as to the remainder of the hemophilia portfolio.

And in that regard, I don't see anything, apart from the fact that we need, of course, whenever we need to act with FDA, to learn as we move into the next project, but not above that.

Yes, and with regard to NovoSeven pricing in Europe, we have not seen any price cuts on NovoSeven.

The same goes for the United States.

The only negative development we've seen is that we have seen a generic version of NovoSeven being launched in Russia where it is taken with [Tindamarin].

This is not based on international clinical trials, but based on a local bio-copy, biosimilar, whatever you want to call it, way of getting the approval.

Pete Verdult, Morgan Stanley; two questions, maybe Jesper first just on CapEx and production capacity.

If we paint a scenario where Degludec is a success, Victoza continues to be in diabetes, it gets an indication in obesity, your hemophilia projects come through; and then finally, the prospect of an oral GLP-1 and insulin becomes maybe a reality, can you just help us to understand at what point Novo have to significantly increase CapEx or become production and capacity constrained?

And then secondly and more simplistically, maybe to Jesper as well again on healthcare reform in 2012, is there anything incremental we need to be aware of?

Thanks.

Thank you very much.

Jesper, a scenario where we will all be rich, I guess.

(Laughter).

I kind of like your scenario, Peter.

I thought it was a beautifully painted one.

I think the key trigger here in that portfolio would probably be the success of the oral portfolio, the insulins and the GLP-1.

Bearing in mind that the bio availability that we have seen so far would probably be in the ballpark of 5% bio availability and consequently you would use 20 times the proteins that you would use for the subcutaneous administration; and hence, that would certainly in the commercialization figures require additional investments.

However, I think even in a very positive scenario with all the painting that Mads has at his hands, I still think that we're probably more than four/five years out before such significant investment would require initiation.

And until then, I think we're reasonably comfortable with the approximately 5% of investments to sales ratio that we've given as guidance.

But of course, I don't think we would have any problems whatsoever, and we certainly have the capital structure and the liquidity to support an early investment if unexpected success should require that.

But that would be the key trigger.

In terms of healthcare reforms, the guidance that we've given for 7% to 11% growth local currency in 2012 is assuming that we'll have an impact from healthcare reforms in the area of 1% to 2%.

The 1% you could say we largely know about already now, and it's basically a full-year effect into 2012 of things already implemented, or the last bit of the US healthcare reform which have an impact in '12.

So that's the first percent.

And then the second percent is an anticipated impact from measures being initiated in both Europe, International Operations markets, and potentially also provincial [biddings] in China that could impact us; and our current estimate is that that could go to 2%.

If it's more than that, then we may be in the very low end of the range; if it's less than that, the high end.

That's some of the swing factors we have there.

And then, of course, within the guided range, we also have uncertainties around the level of sales we're going to have for Prandin in the US.

Thank you, Jesper.

Yes, over here.

Tim Race, Deutsche Bank.

First question is on Victoza the fourth quarter; a big step up.

Is this a clean number?

Any stocking ahead of price increases, etc., in that?

And also on Victoza, slide 11, it seems to show uptick of the Exenatide towards the last few months.

And can't really tell from the chart, but any flattening of Victoza there; and is this the effect of Bydureon?

And just any comments on the German market particularly which you can give.

And then a question for Mads on the severe hypo rates and the extension studies.

Could you just comment on the actual rates that we're seeing in terms of absolute numbers?

Are we still talking about single-digit rates/events here?

And is there anything that -- can this data be used to get a label claim further down the line perhaps?

Thank you very much.

Kare, any comments to the Q4 numbers on Victoza and any comments to the potential competitive impact from Bydureon on certain European markets in the UK and Germany?

Yes, you have to always keep in mind that both insulin and GLP-1 is chronic therapy.

That means that the underlying actual consumption in the marketplace [at the end] customer is pretty linear when you have your market penetration.

So whenever you see one quarter being a little higher, being a little lower, I would suggest don't pay too much attention to it but look at the MAT numbers and expect that we will be [tuned] for a straight line MAT progression of total sales.

There is, of course, the element that we add in more markets as we go along, but we have not seen any major movements in the pipeline in the form of big stocking up, big stocking down.

But when you analyze it in details the number of trading days, where holidays are, all this kind of thing, then you can get these swings from quarter to quarter, which I suggest you don't give too much importance neither when they're up or down, but just analyze [where they're moving] on a total basis.

The same thing goes for Europe.

Nothing dramatic has happened in Germany.

There's some small swings up and down that are random.

We see that the prescriptions of Bydureon in both UK and Germany where it has been launched are very modest; a fraction of Victoza scripts when Victoza was launched.

So most likely, there will be a place, but a niche place for Bydureon in the marketplace.

And in the US where it has not been launched, we are optimistic based on the fact that they themselves did a big clinical trial that proved the superiority not of Bydureon but of Victoza in a head-to-head on both glucose regulation and weight loss.

Yes, Mads, take [the question on] hypo?

Yes, well, we haven't revealed the exact rates of [statis] or severe hypoglycemic events.

When that is said, there was statistically significant difference in favor of Degludec.

And if you asked me the question was there more or less than 1% of the patients who experienced severe hypos, the answer is there was clearly more than 1%, in particular in the comparator group.

Yes, in the back?

It's Keyur Parekh, Goldman Sachs.

I have two questions.

First, if you can just give us a sense of what the new patient market share is looking like in Germany between Bydureon and Victoza since the launch and how that has changed.

And then secondly, Mads, if you can give us a flavor for the [R-VIII] component and of how you see it potentially differentiating, either with the TNF-alphas or potentially new oral competition that may enter the market.

Thank you.

In R-VIIIs, Victoza versus Bydureon in Germany.

It's of course still early days, but so far, Bydureon, as I said, is a fraction of the Victoza share.

So it's a very low number and, therefore, it's a bit too early to say exactly where it's going to end up.

But it will definitely not be a major share; it will be a minor fraction of the whole market, but there will be a place for it, I think.

Yes, and then I think this calls for celebration.

Thank you very much for asking the first question ever on autoimmune disease within Novo Nordisk.

I'm extremely happy about that one, so I will respond.

HL-20 has completed phase 2a and, obviously, what we're looking to vis-a-vis the [TNF-alphas], which are the ones that we know the best.

I think the JAK kinase inhibitors, and so on, we don't know the overall benefit-risk until the agency have given their verdict.

But versus the TNF-alphas, what can you go for?

Well, you can first of all go for patients who don't respond to those, but on top of that, they are -- and as you know, long term, that's actually more than 50%.

When that is said, you can also go for greater efficacy in a subset of patients.

So if you by some biomarker are able to select out that stratified population that will respond best to your product as better than a TNF-alpha blocker would have done, that's one way of doing it; and the other is to have even faster onset of action.

A third one would obviously be to have a cleaner safety profile.

And what we are seeing today, even though it's very early days, the safety profile looks very benign.

So in phase 2b, we're going to kook at all of those elements, plus a few others to hopefully dissect out something that both Kare, I and management can agree upon as reasonably differentiated versus the existing biologics classes on the market.

Thank you very much, Mads.

If I could interject here that if you have any questions in the finance area, Jesper will have to leave for Los Angeles relatively shortly, so if you could move up any questions you have on the finance area.

Should you get another one after Jesper has left, we can deal with it, but if you want the authorized answer, then within the next 10 minutes.

Next question, please; and, please, you can ask other questions than finance questions.

Gavin McGregor, Credit Suisse.

Not finance; first question's on hemophilia, your Factor VIII.

So assuming it gets to market second half of next year, what are your expectations?

What are your plans on launch in terms --?

Are you satisfied to put that as a placeholder until you get your next wave coming in?

And what data have you got in younger children?

I'm not fully up to speed on that.

And then in terms of your oral portfolio, both GLP-1 and insulin, how confident --?

I know it's early days, but how confident are you that you guys are in the lead in terms of that?

Are you aware of others looking at different mechanisms?

Thank you.

Kare, will you talk a little bit about the strategy surrounding Factor VIII?

Then Mads will talk about the results in children; and then you can carry on with the oral portfolio, Mads.

Yes, we plan to do a fully professional launch of Factor VIII.

It is what I would call a best-in-class me-too, you could call it, which means that it will be competitive.

And my expectation is that we will be trying to do our best and hopefully get something like 10%/20% market share.

We know the marketplace from our marketing of Factor VII.

We know all the centers, all the specialists.

And we think we have a very good clinical development program for Factor VIII and a very good profile so far, so that we think we can believe that we are a best-in-class me-too.

Mads, what are the results in children?

And in terms of kids, we did a -- between 60 and 70 kids in the pediatric trial that Europe demands before licensing the product, and there was not a single inhibitor, as expected and hoped for.

There was 100% efficacy in surgery in the kids, and very strong efficacy, above 80%, in the treatment of bleeds.

So that, I think, covers Turoctocog.

In terms of oral, they are pretty convinced because the only oral -- if you ask about leadership, the only oral approach you can take to insulin has got to be a basal one, because we've got some very nice data on our stabilized version.

We had an analog known as 106 that was actually stabilized against both acid and enzymatic degradation in the GI tract, and then had a carrier system to facilitate the transmucosal passage into the circulation.

And that got some beautiful curves in the early phase 1 trials.

However, then we did the critical trial that we all knew we should do, namely, we looked at timing versus the meal.

And you're not going to escape the conclusion that you cannot use an oral insulin for prandial purposes, because you simply cannot get close enough to the food intake to avoid massive food-drug interaction; massive, close to 100%.

So forget everything about short-acting insulins and short-acting GLP-1s.

It's not going to work, at least with the technology that we have, which I think is by far in excess of what we've seen competition.

What we do, as you know, and why we think we are leading is that to make an oral basal insulin succeed you have to do three things.

You have to cheat Mother Nature, because she will normally deal with insulin in the circulation within a matter of a few minutes, right?

So even Degludec when it enters the circulation has a short half-life.

So does Lantus; so does Levemir.

The trick is you have to redefine pharmacology in such a way that you get a long circulation half-life, and that has been enigmatic in its own right, but we succeeded there, at least on the human data.

B, you have to make sure that you get into the circulation, and that means that you need a stable analog that has at least tenfold increased viability compared to human insulin.

Moreover, you also need another tenfold increase; the uptake of those molecules that make it all the way to the gut intact into the circulation, and that we've also done.

So I'm not saying this is a home run, but we are clearly in a leadership position as regards oral long-acting insulins and GLP-1s for oral use.

And it's very exciting, but it's, as Lars alluded to, still [some way] to go.

Thank you, Mads.

That was the short answer.

Yes, in the middle?

Sachin Jain, Merrill Lynch.

One follow-on on Factor VIII.

You'd previously described it as being a potential biosimilar price-reduced product.

Is that still the thought process, or does the data make you more confident to launch at parity pricing?

And then another one on price; Bydureon, just pricing in the US.

Consistent feedback seems to have been Victoza pricing is an element of headwind to faster adoption.

What sensitivity are you seeing around the Bydureon price which is at a slight discount, obviously, to your [top dose]?

Thanks.

Thank you very much.

[That's in], Kare, on Factor VIII first.

On Factor VIII, our strategy would be to launch at mostly likely price parity to current best-in-class Factor VIII.

And then, of course, we will be competing in the different segments of the market.

The retail segment, that will be the classical service, scientific information, and so on, where you'll battle for market share that way.

And then we will also, of course, be going into the emerging markets and part of the business there is tender-based.

And of course, in the tender-based part of the business, we will be as always competing on price.

So it will be a mixed bag, but it will not be a classical you could say generic strategy of going in and [low bowling] the retail market price.

With regards to Bydureon, then the assumption right now is that we will price it similar in the US to Europe, basically taking the Byetta price and multiplying that by 7 for 1 dose of Bydureon; and hopefully, in between 1.2 and 1.8 in the US.

And that we expect not to have any major effect in the marketplace, just a relative pricing difference depending on the dose mix between Byetta and Victoza.

It doesn't have any major impact in the marketplace in the US.

Thank you.

Yes, in the front again.

I've been given that financials question.

Just with regard to the tax rate.

Do you see 22% as a reasonable guide going forwards?

Or do you think that changes in headline corporate tax rate will shift and expected mix of geographies will have some impact in the future?

Thank you.

Thanks, Brian.

I think the guidance we've given for 2012 is 22% to 23%.

I think that's the clearest we can get at this point in time.

We have a lower corporate tax applied to the biopharm franchise relative to the diabetes care franchise, and we are anticipating that we'll have the highest level of growth in 2012 and in the near years to come in the diabetes care.

And that is having a negative impact on the longer-term growth rate in the tax rate.

So I think currently 22%/23% is applicable for '12, and I don't have any knowledge about any significant changes that would make us move way out of that in the next one to two years.

And if you successfully commercialize your hemostasis portfolio, should we also expect that a lower tax rate would apply to that as well?

Yes.

Longer term, yes.

Thank you.

Yes.

Next question, please, if there aren't any, and then we wish you safe travel, Jesper, to the West Coast.

Now we get all the financial questions.

Okay.

Well, if that is not the case, then we will adjourn the meeting and thank you very much for your attention.

We're always pleased to come back to London, even though it's snowing or freezing, or whatever it is, especially if you have nice numbers.

That's always nice to come back.

We hope to be able to do the same for the first quarter and onwards.

So thank you very much for joining us today.