Takeda Pharmaceutical Co Ltd (TAK) 2017 Q4 法說會逐字稿

Good afternoon.

Thank you very much for joining us for FY 2016 earnings report meeting.

My name is Higuchi, Head of IR.

(Operator Instructions)

Now presenters to be introduced in the order of appearance: President and CEO, Christophe Weber; Chief Medical and Scientific Officer, Andrew Plump; Chief Financial Officer, James Kehoe.

Those 3 will be making presentations.

We will enter the questions when all the presentations are completed.

Christophe Weber will start.

(foreign language) Thank you very much for coming and joining us for this 2016 results.

I know it's a busy time for you, so again, thank you very much for taking the time.

I'm very pleased to have this session with you today, especially because you will see that our 2016 results, I think, are very good, so it's a better situation to be in, of course.

So what we will do is that I will speak about our result, our transformation, our intent.

Then we will have more detailed presentation about the R&D transformation of pipeline by Andy, and followed by James, a more detailed presentation on our financial result, and also the way we'll continue to improve our profitability and our margin in the future.

The first thing I would like to say is to remind everyone about the transformation that is ongoing at Takeda.

And this is really the 2016 result that we will share with you today are really the result of that transformation, and I think it's good to spend a few minutes to remind ourselves what is our intent and how we are proceeding.

First, it's a transformation which is really built on the foundation of the value of the company, which has been more than 200 years old, and for us, it's very important.

Everything we do focus on patient, reinforcing trust with society, improving the reputation of the company and developing our business.

So for us, it's really important, and this is really in the mind of all our team and employees across the world.

At the same times, we took many steps in the last 3 years to globalize the company in many areas.

But at the same times, having in mind that we want to be very patient-centric and local-centric.

And we allow a lot of empowerment locally, and by the different divisions in order to keep the agility and the speed of operations.

So as I said we are organizing a very specific way at Takeda, very differently from many companies, and this is, I believe, also part of the explanation of the result that I will share with you.

A big decision we took, and you know about it, is that we decided to be focused on a few therapy areas, big strategic decision.

This is driving also, I believe, our result but of course, it has a huge implication in our R&D organization, and Andy will develop further.

Last but not least, we focused a lot on talent development.

At the end of the day, we'll be successful if we have the best team and the best employees and the best talent in the company, so we have invested enormously (inaudible), so it's work in progress, but it's very critical.

And we have worked on our governance as well the company.

You have seen the broad change that we have made.

We believe this is also part of being a best-in-class company to have a best-in-class governance.

Everything we do has four objectives: to grow our portfolio, rebuild our pipeline, and have a competitive pipeline, and grow while increasing our profitability in the future.

We could spend hours really going through everything we have done in the last 3 years.

I took a few examples here.

Of course, we launched very different products than in the past with ENTYVIO and with NINLARO specialty product, highly scientific.

It required us to create new capability in the company, and I'm very pleased by these capabilities that we have built over time.

Medical affairs is a good example.

We are much stronger now in our medical capability than before.

We have been very active on the portfolio management.

You have seen our divestment, our acquisition.

On the pipeline, we took very strong steps to revitalize our R&D organization.

As I mentioned, we changed our strategy.

It's work in progress, but we are very pleased with the pace of the transformation.

At the same times, we did a lot of partnership, which shows that we are becoming a preferred partner in the therapy area that we have selected.

And of course, we -- in the process of globalizing the company, we created global capabilities.

For example, procurement.

We have a global procurement team which is very effective, which is actually a big reason why we can present the result in term of growing margin and profit margin that we will present today.

We have had some key initiatives to improve our profitability.

You remember Project Summit.

We have -- we are terminating Project Summit.

We have delivered Project Summit.

We have already started a new initiative called the Global Opex Initiative.

James will give you much more details about that.

And of course, this is very important because, again, we want to grow our top line, we want to grow our sales, but of course, we want to improve our profitability in the future.

So what are our result in 2016?

Our underlying revenue grew plus 6.9%.

In '16, every region grew, including Japan.

Japan has been declining for a long time, but now Japan is growing.

Our growth drivers grew plus 14.7% led by ENTYVIO, which reached JPY 146.5 billion of sales.

I mentioned about the pipeline and the partnership.

Andy will give much more details.

Our underlying core earning growth has been 24.2%, and we increased our margin by 180 basis points.

So again, we are very, very pleased with this result.

So if I zoom a bit more on the growth drivers, our GI grew 33%; Oncology, 7.5%; CNS, 26.7% led by TRINTELLIX in the U.S., our emerging market division 4.5%.

So our growth drivers grew by close to 15% in 2016, and they now represent 55% of our total sales worldwide.

So here, how we ended up the year in 2016?

As you know, we upgraded our guidance in February especially on the core earning, on core EPS, and we are delivering this guidance.

We are, in fact, slightly better, we believe.

Again, that reflects the strong momentum that we have seen, not only to grow our top line, but also to be very disciplined in the way we are investing for the short, mid and long-term.

So we are very pleased by this performance.

Here is our guidance for 2017: low single-digit growth on the revenue, mid- to high-teen core earning, low to mid-teen core EPS, and we maintain our dividend of JPY 480.

It's a slight deceleration of top line growth because of the loss of exclusivity of VELCADE in the U.S. But what we like is that we are able to offset that and continue to grow both the top line as well as the bottom line, because of the dynamic that we are seeing on our growth drivers and on the new products that we are launching.

So we believe that the momentum that we have created by our transformation, by our portfolio is continuing and is enabling us.

We are able to offset the loss of VELCADE in '17, which I think is very important.

So what are our priorities?

In fact, we are continuing in the same direction that we have now defined for the last few years.

We want to continue to grow our portfolio, especially the strategic, of course, portfolio.

We are reinforcing continuously our specialty capability.

Takeda used to be a primary care, mainly primary care company.

We are now a primary care and specialty care company very clearly.

We have very strong capability in medical and in all the functions that require to be successful in Oncology or IBD, for example.

We'll continue, of course, to invest in R&D in a very disciplined way.

We are looking for very innovative medicine.

We are focusing on the therapy area, I mentioned.

And we are both investing internally as well as doing external partnership with whatever company, early stage, mid-stage, Andy will talk more about it.

Our priority in the midterm is to continuously increase our profitability, so we had -- we want to increase our core earning margin by 100 to 200 basis points per year, in a continuous manner in the beginning of the year.

So we would be on the higher end of this range.

We have started already a Global Opex initiatives.

James will talk more about it.

In fact, it has helped us already to deliver the result in 2016.

And we will continue to look at improving our cash flow because, of course, it's a big part of what we need to do in order to be able to reinvest in the future.

So I'll give a bit more details on the portfolio.

And then again, Andy will discuss about the pipeline, and James will explain our programs to improve our profitability.

In fact, what is remarkable in our portfolio is that every single of these 6 products can become the leading product in its class.

I believe that ENTYVIO is already, in fact, the leading product in IBD.

I'd go back to that.

TAKECAB is really having a very strong dynamic in Japan.

NINLARO will become one of the backbone of multiple myeloma.

We have no doubt in that.

ADCETRIS is changing the treatment paradigm of lymphoma.

We believe that, that will bring -- could become the best ALK inhibitor and recognize eye search.

As you know, we got approval in the U.S. on April 28.

And TRINTELLIX is a very good antidepressant, if not the best.

We are still in discussion with the FDA for the commission data and the recognition of the commission data that we believe is very strong.

So if I look at ENTYVIO, we are on track to exceed $2 billion sales in 2018.

It's at [14] -- 57 countries.

If you look at the U.S. data, already in ulcerative colitis, 1 out of 5 biolife patient is treated by ENTYVIO.

And we see the same pattern developing in Europe and elsewhere.

So I think the data is very compelling, and ENTYVIO is delivering.

We have more and more data supporting the fact that ENTYVIO can really allow to obtain sustained remission for patients.

So it's a very strong set of data, both on the efficacy as well as the safety.

And we have now more than 100,000 patients who have exposure with ENTYVIO.

NINLARO.

We are, of course, launching NINLARO, preparing the launch everywhere.

So of course, it's already launched in the U.S. The trend is good, I'll come back to that.

We got approval in Japan, Mexico, Switzerland and in EU in '16.

Very importantly, and Andy will develop further, in '17, we will have big data read out on NINLARO to further strengthen the profile of NINLARO, not only in second and third line where we are positioned today, but also in earlier stage of the disease.

I want to highlight the fact that we believe that NINLARO has the unique characteristic due to potentially allow continuous therapy.

And you can see that continuous therapy is more -- create more better outcome for patients than 6-duration therapy, so it's quite logical.

You get more efficacy if you are allowed, if you can treat in a continuous way through patience.

The problem with existing therapy is that because of the toxicity of the product, because of the difficulty to administer this product, the duration of therapy is very short.

You take, for example, Bortezomib-based therapies, so VELCADE, the median duration of treatment is 6 months, 6.6 months.

The label indicate 12 months.

But after 20th of trying, we have never been able to increase the median therapy beyond 6 months.

Already now after a few months being used in second and third line patients, so not first line, the median duration of therapy of NINLARO is only 9 month.

And that for us is a surrogate of the potential of NINLARO is to allow this continuous therapy in long-term treatment, which will deliver better clinical outcome for the patient.

So of course, more data is needed.

We'll have a lot of readout in 2017.

What you see is really the promise of NINLARO and why we believe that NINLARO will be one of the backbone treatment of multiple myeloma, not the only one, but one of the backbone of the treatment of multiple myeloma.

ALUNBRIG.

We are very pleased to have received the approval by the FDA on April 28, and we have discussed already about ALUNBRIG.

It has very unique characteristic, and the clinical data is very strong.

Again, we are in the early stage of generating more data on the product.

We'll launch ALUNBRIG in the coming days in United States.

We have 5 in Europe.

We have an ongoing study in the first line ALK+ non-small cell lung cancer.

So we are at the beginning of a long story, but we believe that this product has a real potential to be the best-in-class ALK inhibitor, and one of the reason is that it is -- it has some efficacy against all mutation, resistant mutation, and other products we believe don't offer that characteristics.

So the -- we have progressed very well with the ARIAD integration.

We are ready to launch.

We have created a specific sales force and medical team for the launch.

Many of the people in this team came from ARIAD, but not only.

There has been a lot of synergy between Takeda and ARIAD, so we are very pleased with integration.

And again, we will launch in the coming days and weeks in the United States.

So that's what I wanted to highlight with you.

Again, I'm very pleased by our result in 2016.

And I will now let Andy to update you on our progress regarding the pipeline.

Thank you very much.

Thank you very much, Christophe, and hello, everybody.

It's a privilege to share with you briefly an update on the R&D organization.

2016 was a remarkable year for R&D as we've changed significantly in order to deliver innovation for patients and, ultimately, a value for Takeda.

So I'll remind you the transformation that we've been undergoing has 4 components to it, and we've made great progress on all 4 of those components over the last year.

The first is our therapeutic area of focus; the second, capability building; the third are the structural changes, the infrastructural changes that we've spoken about extensively; and the fourth, and perhaps most importantly, are the cultural changes that we've been undertaking.

So with respect to the therapeutic area focus change, I think, perhaps, the greatest indicator of the success that we've made there is the realignment of our pipeline with our TAs.

If you go back about 2.5 years ago, about 50% of our pipeline resources was focused in the 3 areas that today we call core.

Today, that number is north of 95%.

In terms of capability development, a large number of the partnerships that you've been reading about over the last year are to enhance our capabilities, particularly in modalities beyond small molecules.

In terms of the structural changes, I think you've heard quite extensively the amount of work that we've been undergoing over the past year to repivot, reorient our organization, so that it can deliver on our strategy.

And then finally, in terms of the cultural change to create an agile, innovative and externally facing R&D organization, we still have a long way to go, but we've made great progress over the past year.

So what can you expect in 2017?

I think the first thing will be the same word that I'll be giving you year-after-year and that's pipeline.

Pipeline, pipeline, pipeline.

That's where our focus will be now and into the future.

In addition, our core objectives are operational excellence.

We want to be a top-tier organization in terms of our operational efficiency and talent.

We are highly dedicated to recruiting and training our talent so that they can be the best R&D workforce in the world.

So just briefly in terms of our pipeline.

We spent a day here with you last year in June, and we reviewed our R&D strategy, and this is the pipeline that we showed you.

It actually was already quite advanced from the pipeline that you would have seen in the 2014-2015 range as it was already highly aligned with our therapeutic area strategy.

The last year has seen significant change in our pipeline, and I will speak to that change in 4 buckets.

The first, as Christophe mentioned earlier, we have a handful of highly innovative, best-in-class and truly differentiated mechanisms that we've recently launched.

We continue to focus extensively on those mechanisms.

The second, predominantly through our partnerships, we've added 7 programs to our pipeline.

The third is we've made tough decisions, and we've discontinued 12 programs.

And then, lastly, we've created 3, what we call, value-creation partnerships.

So these are not spinoffs in the way that you're used to hearing the word spinoff.

These are true value creations, where we see an opportunity to take one of our assets and put it in the hands of a partner so that we can leverage their expertise or where that asset may not make sense to us strategically until we put it into a better home.

Now I'll mention this is quite remarkable that if you look at the 7 programs that we've added to the pipeline over the last year, only 1 is a new first inhuman, and that's the XMT-1522, which is our partnership with Mersana.

So it doesn't matter where innovation comes from in our new model, but it's remarkable to see that nothing over the last year has entered humans from our own laboratory.

And I think that, that speaks to a couple of phenomena.

One is that when you go through a transformation this large, there is disruption, and we're experiencing that disruption.

Now we're compensating for that through our partnerships.

And the second is that the labs weren't productive at the level that they needed to be, and that's going to change in the future.

So this is the pipeline as it exists today.

Just a few comments.

The first is, again, if you look at the life cycle management activity, life cycle management is probably the wrong word.

It's really building out the science of these innovative programs.

Almost 75% of our external spend in development is focused on these programs, and it's entirely appropriate given the opportunity that we have to deliver for patients.

The second is that we still have a pipeline that needs to mature, right?

We have a very depleted NME Phase III pipeline.

We have a Phase I and Phase II pipeline that's starting to define itself, and over the next 2 to 3 years, will define itself further.

And then the last point I'll make is I'll tell you some news that has been evolving over the past 6 months that's quite exciting.

And that's about one of our Phase II programs that we haven't talked extensively about, and that's pevonedistat.

So pevonedistat has actually been in the clinic for almost 5 years.

It's a mechanism that's unique.

No one else in the industry has a molecule like this.

It's an inhibitor of a protein called NEDD8-Activating Enzyme.

And it's a protein in the -- it's an enzyme in the protein homeostasis pathway, the pathway that VELCADE and NINLARO hit.

It's a mechanism that comes out of our legacy Millennium group.

And as all of you know, that's a group with deep expertise and 2 decades of experience in this pathway.

It's been a difficult mechanism to study in the clinic because it's not targeted.

And so it's been difficult to understand, firstly, whether it would be efficacious and safe, and secondly, in which population.

Over the past 6 months, we have very exciting and encouraging data that are emerging.

The first I show you here is in AML, and the second that I'm not showing you is an ongoing open label Phase II study in patients who have high-risk myelodysplastic syndrome.

Now that study hasn't read out yet, so I can't give you all the results, but because it's open label, we have a chance to track in real time progress of that study.

And the data looks very exciting and also consistent with what we're seeing here.

So we haven't made the decision yet to start Phase III, but we are planning Phase III at risk because we believe that this mechanism will be an exciting one for patients.

So what are we doing?

2 things.

The first is that we actually are moving forward in AML with a consortia, so we just signed on to the Beat AML master clinical trial, that's a offshoot of the Moonshot Initiative in the United States, and we have one of the arms in that trial.

And what's really interesting about that is that, as you'll see in the slide, pevonedistat is effective across all types of AML.

Of course, we're still looking at relatively small patient numbers.

But one area that's particularly exciting is our patients that have mutations in P53.

This is, by far, the worst prognostic indicator in a patient with AML, and it looks like pevonedistat is effective in this population.

So in Beat AML, we will be targeting those very high-risk patients.

And the second thing that we're doing is we're starting to plan at risk our own Phase III program for pevonedistat in patients who have high-risk myelodysplastic syndrome.

High-risk myelodysplastic syndrome is a disease that's on the continuum.

It's slightly different, but also on the continuum with AML.

And it's a disease that is highly lethal and for which there are very few therapies.

So we're very excited about the recent emergence of data for pevonedistat.

So as Christophe mentioned, and as you've been reading on a weekly to bi-weekly basis, we've been very busy in the external landscape, and we've been very focused on trying to both rebuild our pipeline and rebuild our long-term innovation base and research through partnerships.

So there are 3 buckets of partnerships that I'll walk you through in this slide.

The first is we've been very disciplined in acquisition and in licensing.

And so you see examples like ARIAD or Cabozantinib or TiGenix, which are examples of this disciplined approach within our therapeutic areas.

The second, and this has represented the bulk of what we've been doing externally, is to build innovative research platform-based partnerships, particularly in modalities outside of small molecule to really drive our future.

And then the third, as you can see in the bottom, and as I alluded to earlier, are these value-creation partnerships, not spinoffs, but value-creation partnerships where we take our assets and put them in the hands of partners.

And in many cases, we have substantial equity interest in those organizations, as well as rights back to those programs.

So just a snapshot before I hand it over to James of some of the major milestones that we see coming in FY '17, and I'll just mention 4.

The first is we've discussed frequently and Christophe mentioned earlier that the results from NINLARO newly diagnosed front-line study are expected in 2017, so we're very excited about these results.

The second that I'll mention is the Adcetris front-line study in Hodgkin's lymphoma will be reading out this year.

Now this isn't a study that we've talked about that much, but it has huge potential for patients and value for Takeda.

It has the potential to quadruple the current market for Adcetris, firstly.

And secondly, to change the treatment paradigm for Hodgkin's lymphoma, a paradigm that would likely exist for decades to come in the future if this trial is expected, and we have high hopes for this trial.

I'll mention CX601, which is a mesenchymal stem-cell therapy for patients with fistulas, anal fistulas, Crohn's disease patients.

We're expecting a positive opinion from the [EPA] sometime this year.

And then the last program that I'll mention is a program that we're all very excited about.

It's our Phase III dengue program.

As you may have seen in a recent announcement, we've completed enrollment of a near 21,000 patient -- 21,000 volunteer study to test the benefits of this vaccine.

And we're very excited about this program, and we expect to see data in 2017.

So with that, I'll hand it over to our CFO, James Kehoe.

Thanks, James.

Thank you, Andy, and good afternoon, everyone.

Turning now to our third priority, which is boost profitability.

I want to say upfront that we are highly committed to driving profitable growth and delivering sustainable margin improvement.

We have set a clear goal to consistently improve our margin by 100 to 200 basis points every year for the foreseeable future.

Specifically, we have launched a Global Opex Initiative, and we are already making strong progress against fiscal.

And finally, we will continue to unlock cash, and that will give us the flexibility to continue to invest for profitable growth.

Let's turn first to our results in 2016.

The first key commentary is, we actually are -- we came in JPY 21 billion higher than our original forecast at the end of Q3.

Underlying profit was 5 to 6 percentage points better, and this upside came from 2 key factors.

One is our revenue continued to be very buoyant.

But the biggest single upside came from accelerated cost management programs.

We took a decision to accelerate the implementation of our new Global Opex Initiative, and this boosted our 2016 procurement savings to a historical high level.

The R&D team executed well, and this led to a JPY 17 billion reduction in the one-time costs associated with the R&D transformation, and this was slightly offset by higher impairment costs.

On a reported basis, revenue declined 4%, due to negative impacts from currency and divestitures.

Reported EPS increased 44%, reflecting 19% growth in operating profit and an unusually low tax rate, which fell to 19% on a full year basis.

On an underlying basis, revenue grew 6.9% and EPS grew 20%.

And more importantly, our core earnings margin expanded by 180 basis points to 13%.

This was entirely due to disciplined expense management throughout the entire year and early savings from the Global Opex Initiative.

Finally, we are exiting '16 in a sound financial position.

Our operating free cash flow remained higher than our dividend for the second consecutive year.

And our net debt to EBITDA ratio is already at 2.7x.

And you'll recall when we announced ARIAD, we expected to be up 2.6x by the end of fiscal year '17.

And 85% of the permanent financing is already in place at very attractive rates and approximately 3 months ahead of schedule.

Next, I will cover the reported income statement on Page 27.

As I mentioned, our reported revenue declined 4%, and this was due to a negative impact from currency of 6% and divestitures of 4.5%.

Operating profit increased 19% year-on-year, reflecting the Teva gain of JPY 103 billion, and strong underlying core earnings growth of 24%.

This allowed us to offset the negative impact of currencies, which was JPY 19.9 billion.

Divestitures, which are the lost income from businesses that were divestitures -- divested, JPY 71 billion, and higher restructuring costs of JPY 28.8 billion.

Reported EPS increased 44%.

The tax rate fell from 30.7% in 2015 to 19.4% in 2016.

This was mostly due to favorable statutory earnings mix, so a higher proportion of expenses in higher tax jurisdictions and a higher proportion of income in low tax jurisdictions.

As you model next year, however, you should assume a rate closer to 27%.

The 19% rate is unusually low.

Finally, we're happy to report that our return on equity increased by 2.1 percentage points to 6%.

Turning to our underlying P&L.

Our 6.9% revenue growth was driven by an impressive 15% growth rate from our growth drivers.

And you will recall that, in 2015, the growth drivers grew at 9.5%, so that's quite a significant acceleration in 2016.

Underlying core earnings increased 24%.

And this came from a nicely balanced combination of revenue growth and disciplined expense management.

And this led to an increase in the margin of 180 basis points.

Gross margin declined by 60 basis points to 68.2%.

However, this was due to one-time items in the early part of the year.

And if you recall from the last conference call, we did predict that our gross margin would increase in quarter 4. And in fact, our gross profit margin was up 30 basis points in the fourth quarter, and we do expect this trend to continue every quarter next year.

Operating expenses as a percentage of revenue were reduced by 2.4 percentage points to 55% of revenue.

We held OpEx growth at 2.4%, which is about 1/3 of the revenue growth rate.

And this was helped by the acceleration of the Global Opex Initiative, which boosted procurement savings, as I said, to a historical high.

Core EPS increased 21%.

And the slightly lower growth rate compared to the core earnings is due to higher financial expenses, so it's not due to tax rate.

The tax rate was flat year-on-year.

Turning to operating cash flow.

The key points here is net cash from operating activities of JPY 252 billion was JPY 62 billion below 2015 levels.

And this is mostly due to the businesses that we've divested over the last 12 months, and that has had an impact of almost JPY 50 billion.

And in addition, we have higher restructuring charges in '16 versus '15.

We continued to make significant progress on working capital, and we've shortened our cash conversion cycle by 31 days or 14%.

The improvements were in both payables and inventory management, and we expect continued upsides in 2017 in both of these areas.

And very encouraging was that our operating free cash flow was actually higher than our dividend for the second consecutive year.

As Christophe mentioned on underlying performance, our core earnings growth is projected at mid- to high teen and core EPS growth at low to mid-teen.

The variance between the two is due to higher financing costs because we acquired ARIAD and a 1 percentage point increase in the tax rate year-on-year.

The important one here is the JPY 180 dividend project forecast.

This is consistent with our strategy that the dividend is a key component of shareholder return.

We want to walk you through the projection on revenue and then we move on to the margins.

So we are -- as Christophe said, we are projecting low single-digit revenue growth.

But you can see from the bottom of the chart, we're facing a number of headwinds in 2017.

The most obvious of those is a 3.6 percentage point negative impact, because we lose a 4-month contribution from VELCADE, but we also have the return of licensed products that have a 2.7 percentage point impact in the year.

So we have total headwinds of about 6 percentage points, but we still are confident about delivering single-digit revenue growth in 2017.

The first contributor is ARIAD.

This will contribute approximately 1 percentage point to the growth rate.

But our growth rate drivers will continue to perform strongly, driven by ENTYVIO, TAKECAB and TRINTELLIX, and a rising contribution from NINLARO.

Moving to the operating margin projections.

And what we're putting here is a 3-year projection on where we see the sources of margin improvement.

And we're taking a strong commitment to improve our core earnings margin by 100 to 200 basis points per year.

And we expect to be closer to the high end of the range over the next number of years.

Approximately half of the growth will be driven by gross profit, with the remaining half coming from lower OpEx percentage.

But let me first cover gross margin.

The number one driver is product mix.

High-margin specialty products, such as ENTYVIO and NINLARO, continued to grow to reach their multibillion dollar sales potential.

These products have margins that are more than 20% -- 20 points higher than the company average.

The second key point is that the plans are not dependent on pricing.

And in fact, we have assumed flat to slightly reduced pricing on a global basis, so we're not counting on pricing to hit our revenue or our profit goals.

Finally, we continue to execute Agile, which is a program to optimize our production network.

Together with higher procurement savings, this will allow us to offset inflation, raw material inflation and make investments in the future to drive top line growth.

Turning to OpEx.

We have launched a new Global Opex Initiative to boost our margins and to create a new and sustainable cost culture at Takeda.

This will deliver short, medium and long-term savings.

The R&D transformation, which was launched in 2016, is also a significant contributor, while the savings of JPY 18 billion will be reinvested in pipeline.

It has generated enormous agility, and that is shown by the ability to integrate ARIAD research and development while holding our absolute R&D overheads flat while revenue was increasing.

Although we will continue to make investments to support new product launches, such as ALUNBRIG, and to further build our capabilities, disciplined and precise cost management will restrict OpEx growth to well below our revenue growth for the foreseeable future, thus driving significant margin improvement.

And now I'm going to spend the next couple of slides to explain where we are on the OpEx program.

We are very, very aware of the -- of our core earnings margin gap versus our global peer set, and we are quite determined to make significant improvement over time.

But the progress must be balanced, predictable and sustainable.

And for that to happen, we must place a lot of emphasis on change management and on sustaining the change.

We have set up a strong internal team back in December, and we engaged Accenture to get access to their proven [VBB] and cost management expertise.

We have already created huge transparency and visibility on our cost structure and how we spend our money.

And we have launched operational teams to uncover opportunities across the business.

Pay Less is to drive down the cost of all material services, everything we purchase in the company.

Pay Less is to drive down the cost of all material services, everything we purchase in the company.

Buy Less is to address consumption, which means cut the quantity of what we buy, especially on activities that are not customer-facing.

And Work Better is to address organizational optimization, in particular in support functions in G&A.

It is also important to ensure that these changes are sustainable and stand the test of time.

And for that to happen, we need to embed a culture of cost management in the DNA of the organization.

Finally, we are moving at pace, and this is evidenced by record-high procurement savings in 2016.

So on Pay less on Page 34, Takeda had already built a world-class procurement organization over the past few years, and it has already being delivering meaningful and increasing savings over time.

However, we are now greatly increasing the scope and the impact of procurement.

We have implemented a new procurement policy which extends the use of preferred suppliers and makes competitive bids mandatory.

More importantly, we have reduced the threshold at which procurement gets engaged.

And the penetration of the team will increase from 40% to approximately 80%, and this is on a cost base of JPY 900 billion.

We expect to hit the 80% penetration early in fiscal 2018.

So let's talk numbers.

Price savings resulted in annual savings averaging JPY 14 billion over the 3 years from 2013 to 2015.

In 2016, the saving level doubled to JPY 28.5 billion.

And to put it in perspective, our plan at the beginning of the year was JPY 20 billion.

So it's a significant change in the trajectory and the capability of what the procurement team is delivering.

Our medium-term target is to deliver at least JPY 35 billion annually, year in, year out.

This is not 1 year, it's not 2 years, it's over the foreseeable future.

And we believe our impressive 2016 savings are really good data point, and it makes us feel quite confident that we can hit these goals.

Buy Less is on Slide 35, and this is new to Takeda.

We will apply 0-based discipline to approximately JPY 185 billion of spending.

We are nearing completion of what we call the value targeting phase on 11 major cost packages that are in scope.

These include travel, consultants, facilities, events, IT cost.

And to date, the team has created, as I mentioned, unprecedented visibility and transparency into how much we're spending.

The top-down benchmarking versus peers is largely complete, and we are well advanced on developing bottom-up initiatives to close the gap versus our ambition.

The execution phase starts shortly.

And we will have a phase rollout initially focused on high-value, low-complexity cost packages.

And here, again, let's talk numbers.

It is premature to give hard numbers as we -- internally we haven't finished aligning across Phase I. However, similar co-programs across other pharmaceutical companies have yielded 15% to 25% cost savings.

Based on what we have seen to date, the opportunity at Takeda is sizable, and we will strive to be at the higher end of the 15% to 25% range.

However, a lot of work lies ahead, and our commitment is to keep you update as we tackle each spend area this year.

The third work stream is Work Better.

And this is to drive effectiveness and efficiency across all G&A functions.

And I will take this opportunity to say, our program is not a blunt instrument.

We will not reduce costs without improving effectiveness.

Otherwise, we're just damaging the company.

We are intently focused, however, on ensuring the optimal setup of our support functions to ensure the right balance between agility and leveraging our scale more effectively.

All G&A functions are in scope, and the cost base is approximately JPY 60 billion.

The project team has already prepared benchmarking for each function, and the function leaders have been charged to develop initiatives and cost levers to get their respective functions to the targeted ambition levels.

Concurrently, we have built a business case around the creation of more advanced global business services capabilities.

Over the past 2 years, we have also made considerable progress on our global SAP platform.

However, we are still only halfway through, and it will take time to shift the company thinking and abilities to implement end-to-end process excellence.

Regarding numbers, right now, we have high-level targets that still need to be validated and tested.

Our commitment is that we will update you over the coming months as we take decisions internally on the type of ambition level we want to go after.

Importantly though, we're not limiting ourselves to G&A.

We recently reduced our U.S. primary care sales force by approximately 480 positions as we strategically aligned our sales team with our portfolio priorities.

Moving to cash generation on Slide 37.

We will continue to generate cash through double-digit underlying core earnings growth and by reducing our working capital.

We will unlock cash through the disposal of noncore assets.

Within scope is around JPY 600 billion of real estate and JPY 700 billion of shareholdings that we intend to sell over the course of the next 18 months.

And for those of you who read Bloomberg, there was an article that we sold, one of the buildings in Shinigawa for approximately $300 million.

So we are already have achieved 50% of the first goal, which is on the real estate.

Importantly, our capital allocation priorities are shown on the right-hand side of the slide.

First up is internal investment in R&D and product launches.

Secondly, the dividend is a key component of shareholder returns, and it is very high on our list of priorities.

We will manage our debts to ensure that we remain investment grade.

And finally, our M&A will be disciplined and focused.

Moving to our reported forecast on Page 38.

We're consciously providing more detail on our key assumptions for 2017.

Firstly, as I mentioned before, low single-digit revenue growth is our underlying target.

However, we will be on a reported basis impacted from the lost revenue from divestitures as result of the sale of Wako and the transfer of LLPs to Taiyo.

This impact is approximately 6 percentage points.

Operating profit is forecast at JPY 180 billion, an increase of 15%.

Other income expense is forecast to increase slightly to JPY 75 billion from JPY 67 billion in 2015.

And the assumptions are shown on the right-hand side of the chart.

For example, in 2016, we booked a one-off gain from the Taiyo JV of JPY 103 billion.

And in 2017, we will book a gain relating to the Wako shares of JPY 106 billion.

We now expect R&D transformation costs of JPY 18 billion in 2017.

And the total cost of the transformation is now expected to be JPY 58 billion, a reduction from our total program spend of JPY 75 billion that we forecast when we announced the program last year.

So the return on investment of the program has increased significantly.

We have also included cost to execute the global OpEx initiative.

And we also include JPY 16 billion of after-tax -- pretax proceeds coming from real estate sales.

Profit before tax is projected to increase 32% to JPY 190 billion.

And this is aided by JPY 30 billion of pretax gains coming from the sale -- the planned sale of securities.

Reported EPS will not increase at the same pace as it will increase 20% to JPY 177.

We expect the tax rate to return to a normalized rate of 27%.

And this reduces our reported growth rate by approximately 12 percentage points.

In summary, we are projecting strong profit growth on both a reported and underlying basis.

And this is driven by both a balanced profile between revenue growth, favorable mix and OpEx initiative.

And it's encouraging to see that we will continue to drive profitable growth.

Let me now turn it back to Christophe for his closing remarks.

Thank you, James and Andy.

So I think -- I hope you have seen that, first, there is a continuity in our strategy.

So we are very determined to execute the transformation that we have decided to do.

And we are starting to see very strong results, which very encouraging for us in 2016.

In 2017, our focus will continue on the execution of our strategy, including R&D transformation, launching, of course, Alunbrig, executing the global OpEx initiative.

So we are really working both on the top line by being very focused on our core driver, but also leveraging our P&L and delivering our margin growth expansion -- margin expansion in '17 and beyond.

So of course, we are always focused on delivering our guidance.

Since 2014, we have always delivered our guidance.

So I intend to deliver our guidance again in '17.

In the midterm, really, it's about portfolio.

We have very strong growth momentum.

We have these 6 products that I mentioned earlier which will continue to grow and to deliver our growth in the future.

The pipeline will eventually materialize, I'm very confident about it.

Still early to demonstrate it, but you can really feel when you are inside your house that the level of expertise that we are starting to see in our therapy area and the attractiveness and the -- our ability to connect with partners who are experts in the field is really increasing significantly.

Otherwise, we'll not have been able to do so many partnership, because this company that are working in Oncology or GI, in CNS, they do want to partner with the best company in the field.

They don't want to partner with a big class company.

And the fact that we are able to deliver so many partnership, to me, the testimony that they are really seeing the right partner but the right, also, expertise in front of them.

And, of course, continuing to increase our profitability, 100 to 200 basis points per year, every year.

And you can easily calculate where it bring you and bring us in the coming years.

So that's really our focus for -- in the midterm.

We do it in that pace because we don't want to sacrifice the long-term.

We -- sometimes, I ask, could you go faster?

Well, we cannot go faster, we believe, if you respect the long-term investment that we want to make.

And that's why we are keeping our R&D investment flat.

Other company will have decided to reduce R&D, we believe we need this investment for the long-term future of the company.

So very exciting time because we are starting to see the results of the transformation.

And again, it's very exciting to see that we have this momentum.

Thank you very much.

We have a Q&A session now.

(Operator Instructions)

(Operator Instructions)

I am Yamaguchi from Citigroup.

I have 2 questions.

The first one is about core earnings.

Margins, you are going to improved by 100 to 200 basis point every year for next 3 years.

About this, Pay Less, Buy Less, Work Better, including all of these initiatives, current the 12.6 at maximum, 18 to 19 is the improvement plan?

Or Buy Less or Pay Less is outside of this?

And if you added those 2 -- or 3 initiatives, you can grow more?

And about the 2017 guidance -- management guidance, intangible asset amortization is increased year-on-year, but we understood that the VELCADE-rated amortization should be decreased.

So I'd like to understand the reason for the growth here.

And 300 is set or JPY 30 billion set for the global OpEx initiative.

And do you think that you need to incur implementation costs for this initiative first?

I will quickly answer the first question, James could complement my answer and then I think James could cover the amortization evolution.

The impact of the global OpEx initiative is embedded into our current guidance, a number of 100 to 200 basis points.

So we did already an assessment about the savings we could generate, both -- on all 3 work streams, if you like.

And we did already some modernization.

And we embedded these numbers into our own internal budget, but also into this guidance.

So that's included.

James, you want to cover -- complement my answer on the amortization?

Yes.

Maybe just to complement on the core margin.

Think about it that it is the vehicle that should make you feel you comfortable that we can hit the forecast.

So that's the idea.

We've had some comments in the past about Summit that it didn't fall to the bottom line.

The strong commitment we're taking is that the 100 to 200 falls to the bottom line because we're doing this initiative and it's a real one.

And in fact, we expect to be at the higher end of the 100 to 200 range.

So that's the way I think I would think about it, that the risk profile has reduced significantly in terms of the believability of the forecast.

And on the second one, on the intangibles and amortization, I think you have the Iclusig coming in and you have VELCADE going out.

And I will say that we are still projecting a similar level of impairments over the 2 years, and that's quite a conservative position.

So we have a placeholder in there for impairments we don't know about yet.

So if you think about it that way, so it's quite a conservative estimate from that point of view.

However, you can never plan in advance for impairments, so we have a placeholder.

Your last question was on the implementation costs for global OpEx.

We've put in a placeholder.

It's not the entire 300, it's about 70% of that.

And we do have a project team.

We have Accenture helping us.

We will, at some stage, have to -- we are setting up more capabilities in global business services.

That will incur quite sizable costs as we implement the capabilities.

And potentially, there may be impacts to personnel.

But for example, as we work through this and facilities, for example, when we try and save facilities cost, we may have to exit a facility, we may have to write off a lease.

So there's many costs we don't know, and I think it will be months before we get our arms around the cost.

I think what -- the way I would put it though is, you should assume that you won't get a surprise against the number we gave you.

We think it's a reasonable estimate.

There was [pull-through], there's backup behind it.

But it's still a large number, but it's -- we're not likely to spend more than that.

So think of it in terms of opportunities and risks, if you like.

Next question, please.

(inaudible) from Tokio Marine Asset Management.

In the GI therapeutic area CX601 hygienics products, what is the potential of this project?

How do you see it?

With ENTYVIO in Europe, how many medical institutions are you covering?

And with CX601, I think this is the only product for this indication.

So by having this, what would be the commercial synergy between this and ENTYVIO, for example?

And I'm sure you have rights outside of the U.S too.

So outside of the U.S. and Europe, what it would be the development policy?

That's my first question.

Second question.

In GI, you have done a lot of microbiome-related investments recently, but I don't think anything has been commercialized yet.

Why are you increasing the investment in this area?

Is there a scientific breakthrough happening?

I'll take the first question.

And Andy, you can take the second question.

So I will first say that we have the right in Europe for CX601, so not in U.S. So we are really working on the launch of the product in Europe.

And you're right, the synergy is very strong because it's an IBD product, so we are present in this field, so we'll be able to leverage our presence.

Having said that, it's a very innovative way of intervening.

The number of patient is much -- is very limited, but the medical need is very, very significant because there is very little alternative except surgery.

So I think for the moment, we are very much working on preparing the launch, working out the supply chain because it's a new field with stem cell therapy.

That's also what is very attractive in our mind is that this is potentially helping us to learn how to manage this type of product which will -- there will be more and more of this product in the future.

So I think that's very exciting.

And we'll continue to see whether we want to expand the partnership beyond Europe.

So maybe I can touch on the microbiome question.

So the question was, there are no marketed products in microbiome, has there been a breakthrough, that will make us interested.

And I would say that if you look at emerging technologies over the last few years, there is an immense amount of excitement.

The number of publications in microbiome is skyrocketing.

So there is a huge interest in this area.

Now -- well, how will it deliver for innovation and for patients?

I think at this point, the answer is we don't know.

And we're taking a bet given our excellence in GI and the emerging data that there will be therapeutics and opportunities that will emerge in the microbiome.

We've made 4 investments over the past year.

They're all relatively small research-based investments, and they all have slightly different intent.

I think our far intent is to really learn and to develop in this space, but at the same time, be working with outside parties and upgrade expertise.

One is ENTEROME, where it's a small molecule approach to go after the bacteria with small molecules to reduce inflammation by reducing genes that are expressed in bacteria.

Then there is synch, a new biota.

These are what we would call consortia-based approaches this is -- the idea here is to actually use the microbiome itself as a therapy.

And then the fourth is a company in Israel that we've made an investment in called MBcure, which is developing bacteriophage that can go in and attack and kill specific bacteria in your gut with the intent of treating a variety of diseases, the one that would be most obvious is disease it's called -- caused by C. Difficile.

Another one would be disease caused by H. pylori like peptic ulcer disease.

So there's a lot of -- we're very excited about it, but where it goes, it's a very new area.

So we think that we can be leaders given our expertise in GI.

From UBS, my name is Seki.

I have 2 questions.

Page 20, when I look at this later stage pipeline assets, a bit insufficient, it could have more.

But as I listened to Andy's explanation, early pipeline assets acquisition has been your focus and will be your focus.

Therefore, regarding large-scale M&A, we could not -- we don't need to expect, is that right?

That's my first question.

Second question is regarding underlying margin improvement of 100 and 200 basis point, why over 3 years?

James explained foreseeable future, in your presentation, after 3 years, 18 points, and that is still lower than the peers.

For example, beyond 3 years, if it continues to increase by 25%, was mentioned in the Project Summit, is that possible?

Those 2 questions, please.

I'll cover M&A, and -- but before I cover the M&A, it's 100 to 200 basis points per year during 3 years.

So it's per year during 3 years, so it's 300 to 600 basis points in 3 years.

So I think just -- but James can develop further.

On the M&A, I will just resay what I said after IL acquisition.

These opportunities are extremely rare.

We are very disciplined when we look at this type of acquisition.

We want to remain investment grade.

So don't expect a lot in the field because it's -- we don't want to overpay.

Everybody has a judgment on that, but we don't want to overpay, is that we'll never accept that.

So it's really rare to find the possibility where you can end up at paying the right price, fitting with our therapy area, et cetera, et cetera, et cetera.

And of course, one thing to remain investment grades, our financial capacity is more limited now after the IL acquisition than before.

James, you want to...

Yes.

And I think your question was, will the profit improvement continue beyond 2019?

And the answer is yes.

But will it be at the high end of the 100 to 200 basis points?

Probably not.

So -- but will it be -- well, that's what we want to stress.

It's a consistent long-term increase in profit margin towards the goal of getting closer to the global peer average.

That's the commitment.

The only reason we put 3 years is that there was just a tieback to our internal plan.

And if you look at our internal plan, it's quite similar in the sources of margin.

So that's what we had to hand, and that's why we put the 3 years.

Internally, just to -- internally, we do a 10-years plan, but it's not very detailed.

Our 3-year plan is very detailed, so that's why we are assuring that.

I am Hashiguchi from Daiwa Securities.

About the brigatinib, I have a question.

Recently, according to the Japanese researchers, P790 mutation inhibitor and (inaudible) was used the fastest and that there was [prostate re-cell] patients brigatinib may be efficacious, that reporting has been made.

About this, how do you view the kind of publications or the opinions?

And at Takeda, to such a patient population, what are your development strategy?

And my second question is, maybe I have missed the presentation, but Page 37 asset divestiture, real estate accounts for the JPY 60 billion and also security divestiture accounts for the JPY 70 billion.

And what are the duration do you expected to achieve this divestiture or selling?

For the T790 mutation, are you talking about an ALK?

The ALK gene?

Yes.

So I haven't seen the publication, so I'm sorry about that.

But what we know from the preclinical data for brigatinib is that it's effective against every mutation that's ever been seen -- every resistance mutation in ALK that's ever been seen in humans.

We also know that the exposure that you see with the 180-milligram dose is above the EC 90 for every mutation.

So the prediction is that brigatinib will be effective against ALK, Wild-type ALK, and every resistance mutation that can form within ALK.

Now you can actually start to understand this by doing next-generation sequencing and circulating tumor-free DNA.

And so we started to do some of this work, ARIAD had started to do some of this work to see if actually that plays out in humans, and we just don't have those data.

What we do know is that based on the Alpha 2L study, the progression-free survival that's seen in -- with brigatinib is -- and then, of course, we need to be careful to look at cross-study comparisons, but that progression-free survival of 15.6 months is better than any other agent in the front -- in the second line setting.

So I haven't seen the study, but we believe, which is why we made the acquisition, that brigatinib is the best ALK inhibitor profile known.

And then on the disposal of assets.

In general, our goal is do it over the next 18 months.

But I did say that, on the real estate, these are on a cash proceeds basis.

It's not an after-tax basis.

So it's the proceeds from the sale.

So we've effectively already completed half of the real estate goal.

So you should assume over the next 18 months, we'd complete the rest.

I'm Muraoka from Morgan Stanley.

First question.

CFO just mentioned that even after 2019, core earnings margin will continue to improve.

And I want to understand the background behind this thinking.

In the next 3 years, R&D expenses will not increase that much, but after 2020, I think you will enter a phase where R&D expense increases, or maybe I'm wrong.

So please share your thoughts with me.

And the second question is about NINLARO, duration of 9 month, treatment duration.

It's been 18 months since launch and duration is 9 month.

So that means very few patients die on this treatment.

Is that the correct understanding?

And is this going to be used longer than libromide for more than 1 year?

Is there a high possibility that this will happen?

So I'll cover this question on NINLARO.

So what we are seeing is that we are tracking the median duration of treatment.

Why?

Because this is -- our belief is that the NINLARO will be potentially used for -- in the long-term in a continuous way.

And that's why we have also some Phase III in the maintenance therapy.

So I think this median duration of 9 months is very promising because it's already 3 months more than the average of VELCADE.

But the majority of VELCADE is used in first-line, which are patients less sick, whereas NINLARO patient today are second, third-line patients who are very sick.

And in spite of that, we are seeing this longer duration.

So I think, unfortunately, patients are still dying from the disease, but it's very promising to see that we are able to have to this type of sustained efficacy, if you like.

I think for the first 19, I will let James conclude, but the top line is very important.

And, of course, in term of patent expiry exposure, VELCADE is a big item.

After that, the next one is AZILVA and ENTYVIO, but that's after 2025.

So we are not -- we don't have a huge -- we have our growth drivers.

We don't have a huge patent expiry as well -- until 2025 except VELCADE.

So that's an element of why we believe we can continue to grow because, of course, our top line will continue to evolve positively.

And my personal experience would suggest that when you create a global business services capability, you end up generating future demand almost automatically.

So you might start off in finance and then at a certain stage, people in R&D could say, hey, that could make sense in global shared services.

So the machine -- if you look at what competition have done and the most evolved global business services, they start going into data analytics, they start going into financial planning activities, and you start putting more high-value work in.

So the way I like to describe SGBS as a productivity engine that goes for 5 to 10 years in the future.

The other one is people who -- that's why I emphasized upfront the culture change.

We want the company to become more cost-focused internally.

And we don't want it to be a short-term cost reduction.

We want an ability created in the organization, that means being cost-conscious takes out cost every year.

And the people who do 0-based type approach as well may actually find that you automatically can eliminate inflation every year just by the way of working and the way that company's culture works.

And it doesn't mean you're cheap, it just means you're cost-conscious.

So I believe that the success should be determined by the sustainability of the long-term cost reductions, not the short-term, because the short-term are easy.

Anybody can go in and take out 10% of the cost structure, but the problem is it comes back within 2 years.

Our goal is to make it sustainable and make it a capability so that it almost becomes an automatic way of working in the company, that inflation is not accepted as a concept.

We're continually looking for ways to invest because the way we think about it is, we will aggressively challenge all noncustomer-facing activities.

And then some of those savings go to the bottom line and some of them get reinvested in research or in new product launches.

So it's a win-win because it generates a virtuous cycle.

So once you save cost and reinvest, you generate more top line, which improves the margin even more.

So I actually believe there is quite a bit of long-term potential, not at the high-end of the range, but consistently improvements over time.

Sakai from Crédit Suisse.

I'm not really digesting all those numbers yet.

Page 60 appendix, regarding this chart, I have a question.

Intangible asset amortization and impairment forecast, this is related to Mr. Yamaguchi's question.

Millennium depreciations, JPY 38 billion, and in 2018, it would be lower next year.

Then ARIAD first-line, brigatinib will come out, and that will push up the costs, so there would not be so much change or fluctuation regarding this item, is that right?

And regarding the impairment, JPY 32.5 billion.

Can you explain the profile of that, if possible?

And the second question.

Regarding Nycomed, you did not mention Nycomed at all this time.

Before, you said GI and Oncology will be the growth -- half of the growth of Nycomed, but when you look at the current situation, it would be rather challenging.

So Nycomed impairment risk may arise at some point.

Regarding risk of impairment of Nycomed, well, in Japan, impairment is raised as sensational in Japan.

What is your idea, James, please, regarding this point?

So first of all, the idea of the chart is to be more transparent and to help you do your long-range forecast.

I'll cover Nycomed first.

Just to clarify, this is a business that is actually quite close to the original acquisition plan.

So there is no real risk of impairment on Nycomed.

On Millennium, when we get to '18, the actual total amortization drops down to JPY 2 billion, right?

So that's a significant reduction.

But on the flip side is, once we get first-line for Alunbrig, it takes the total ARIAD up to -- above 30.

Now we're just trying to give you pieces of the puzzle, we can't give you the exact timing yet.

In impairment, you're right to highlight it as, in this, we have a placeholder, JPY 20 billion of this is not identified with any particular product.

We do have JPY 12.5 billion that is identified to items that may be at risk.

What we do is we probabilize our forecast and then we put in a placeholder because the issue with impairment is it's all or nothing.

If you probabilize it and it comes out at 12, it's never going to be 12.

It's either going to be 0 or it's going to be 30.

So we're inclined to be quite conservative on the impairment.

Exactly for the reason you said, people don't like it when it happens.

So what we're saying is there is the potential to have an impairment risk.

Right now, 20 of this is not identified to any particular product, so I would call it a quite safe estimate.

Is that okay or -- yes.

There was a business which was underperforming in the Nycomed portfolio, was the respiratory business that we had to impair in the past a couple of times.

And that's why we sold it as well because we felt that we could never be very competitive in this field.

And so that's greatly reduced the risk of impairment on the Nycomed when we sold the respiratory business to, by the way, a respiratory company which I'm sure will do better job than us in the field.

I have another question.

So in emerging market business, Oncology and GI and growth driver, if your idea is the same, when the new products will go into the new emerging markets?

What's the timing of growth driver items in emerging markets?

It's a very good question.

In 2016, 50% of the growth in emerging market was already generated by the new innovative product, ENTYVIO and this type of product, because we are really launching in a very systematic way in emerging market.

And we have developed a market-exit strategy with the right pricing point in order to get traction in the market.

So already in '16, 50% of the growth in emerging market was driven by the growth drivers.

It will accelerate in the future.

With this, we are reaching to the end time of this session.

So let us close today's session.

Thank you very much again for your participation despite your busy schedule.

Thank you.

Thank you for your time.

And that concludes today's conference call.

You may now disconnect your lines.