Rajesh Kumar

Rajesh Kumar questioned AstraZeneca's capital allocation strategy for growth beyond 2030, balancing organic growth with M&A, given current debt levels, the $80 billion target, and upcoming patent expiries, particularly in the context of the obesity market strategy.

Answer

Pascal Soriot, CEO, reiterated the strategic importance of the cardiometabolic market and the potential of GLP-1/SGLT2 combinations. Aradhana Sarin, CFO, confirmed the $80 billion target is organic, highlighted substantial M&A firepower with a disciplined approach, and emphasized R&D investment for post-2030 growth, focusing BD on earlier assets to add value.

Rajesh Kumar inquired about AstraZeneca's capital allocation strategy for growth beyond 2030, specifically whether the company favors organic growth or plans to deploy significant firepower for acquisitions, given current debt levels and increasing competition in new segments like obesity.

Answer

Pascal Soriot, CEO, AstraZeneca, emphasized that the $80 billion ambition is organic and does not assume M&A. Aradhana Sarin, CFO, AstraZeneca, confirmed substantial firepower with comfortable leverage at 1.2x net debt-to-EBITDA, but stressed disciplined asset acquisition focused on value creation and R&D investment. She noted significant R&D spending is already allocated to assets with substantial revenue potential beyond 2030. Pascal added that the strategy focuses on earlier BD investments to add value over time, leveraging existing R&D, commercial, and manufacturing strengths.

Rajesh Kumar requested updates on development and filing timelines for the oral PCSK9 inhibitor and SERENA-6, and asked for the broader strategic view on the total potential for Datroway across all its indications.

Answer

EVP, BioPharma R&D, Sharon Barr said the pivotal PCSK9 study will start by year-end, with an outcomes trial running in parallel to speed uptake. EVP, Oncology R&D, Susan Galbraith noted SERENA-6 regulatory discussions are ongoing. EVP, Oncology, David Fredrickson positioned Datroway as a broad platform opportunity beyond lung cancer, with combinations and biomarker-driven strategies, highlighting encouraging early uptake in breast cancer as proof of concept.

Rajesh Kumar sought clarification on the margin outlook, considering increased depreciation from CAPEX and headcount reductions. He also questioned the timing of the guidance release, asking why it was issued the night before the call despite knowing it would be significantly below consensus.

Answer

CFO Karsten Munk Knudsen explained that while lower prices hurt margins, offsets include reduced CAPEX flow-through and rationalized resourcing, emphasizing a focus on top-line growth and shareholder value over a fixed margin target. Regarding the guidance timing, he stated that the board approved it after a thorough assessment of scenarios and latest data, and immediate release was necessary due to being materially away from market expectations, as per customary practice.

Rajesh Kumar sought clarification on the mid-term margin outlook, considering increasing depreciation from CapEx and budget reductions, and whether this trend would hold for 2027. He also questioned the timing of the guidance release, asking why it was issued the night before when it was significantly below consensus.

Answer

CFO Karsten Munk Knudsen explained that while price declines hurt margins, lower absolute CapEx in future years would offer a benefit, and the company maintains rational resourcing focused on top-line growth. Regarding guidance timing, he stated that after thorough assessment of scenarios and latest data, the board approved the guidance. Since it was materially away from market expectations, immediate release was legally required, preventing a customary morning announcement.

Rajesh Kumar inquired about future clinical trial design, asking whether next-generation products would be tested against a placebo or an active comparator like semaglutide in cardiovascular outcome trials.

Answer

Martin Lange, Head of R&D, explained the regulatory complexity. Once a 'gold standard' of care is established, new trials must compare against it. Showing superiority to semaglutide would be a 'taller order' requiring larger or redesigned trials. He noted that CagriSema's trial uses a placebo control because a gold standard was not established at the time of its initiation.

Rajesh Kumar asked about Pfizer's additional balance sheet capacity for deal-making in 2026, assuming some capacity is reserved from the MedSera situation. He also inquired about the expected data news flow from the 3SBio deal, asking if interim readouts or updates could be expected in 2026 or if it was more of a 2027 event.

Answer

Dave Denton, CFO, stated that Pfizer had approximately $13 billion in business development capacity as of the third quarter. Chris Boshoff, Chief Scientific Officer and President of Research and Development, detailed the 3SBio data flow, mentioning ASCO 2025 (phase 2 monotherapy NSCLC), ESMO (phase 2 combo mCRC), and upcoming SITC (additional combo lung cancer data). He confirmed two phase 3 programs started this year (NSCLC, CRC) and that a full development plan for 707 would be provided in the coming weeks.

Rajesh Kumar asked about Pfizer's additional balance sheet capacity for deal-making in 2026, assuming some capacity is reserved from Metsera, and inquired about the expected data news flow from the 3SBio deal, specifically if interim readouts or updates are expected in 2026 or if it's more of a 2027 event.

Answer

Dave Denton, CFO, Pfizer, stated that Pfizer had approximately $13 billion of business development capacity entering the third quarter. Chris Boshoff, Chief Scientific Officer and President of Research and Development, Pfizer, detailed recent 3SBio data presentations at ASCO 2025, ESMO, and SITC, confirming two phase III programs starting this year in non-small cell lung cancer and colorectal cancer, with a full development plan to be provided soon. Albert Bourla, Chairman and CEO, Pfizer, also contributed.

Rajesh Kumar of HSBC asked if Pfizer could absorb potential tariff impacts in future years, how balance sheet capacity would be deployed across therapeutic areas, and if the company would exceed its new leverage target for a deal.

Answer

EVP & CFO Dave Denton stated they are not commenting on future year impacts yet and confirmed they would exceed the 2.7x leverage target for the right deal. EVP and Chief Strategy & Innovation Officer Andrew Baum added that while active in oncology, Pfizer has significant strength in internal medicine and I&I and will pursue value-driven opportunities in those areas.

Rajesh Kumar of HSBC asked if Pfizer is prepared to absorb potential tariff impacts in 2026 and whether the company would exceed its new leverage target for a major oncology deal versus deploying capital in other areas like obesity.

Answer

CFO Dave Denton stated they are not commenting on 2026 impacts yet and clarified the new 2.7x leverage target reflects current reality, but they would exceed it for the right deal. EVP and Chief Strategy & Innovation Officer Andrew Baum added that while active in oncology, Pfizer has a strong heritage in other areas and will pursue value-driven opportunities where they have a right to win.

Rajesh Kumar asked for the numerical impact of the IRA on Pfizer's business for the upcoming year and what catalysts are needed for the company to increase its long-term guidance for the Seagen assets.

Answer

CFO David Denton stated that the net financial impact of the IRA for 2025 would be provided along with full-year guidance. EVP and Chief Oncology Officer Chris Boshoff explained that releasing more positive clinical data from the Seagen pipeline at medical conferences next year will be key to building external confidence in the assets' long-term value.

Rajesh Kumar sought to understand the margin cadence for 2026, particularly the first half versus second half, considering generic entries, Medicare Part D, and the impact of operational gearing and self-help actions.

Answer

Vasant Narasimhan, CEO of Novartis, and Harry Kirsch, CFO of Novartis, explained that 2026 would be a year of two halves, with the first half depressed by generic impacts and a high prior-year base. Harry Kirsch clarified that underlying quarterly dynamics are not typically affected by Medicare-related growth-to-net levels, except for significant true-ups. He noted that Q1 2026 would have a high base from Q1 2025's positive true-ups, and Q3 2026 a relatively low base from Q3 2025's negative true-ups, with overall dynamics driven by launch uptake and generic erosion.

Rajesh Kumar asked for insights into the margin cadence for 2026, particularly the first half versus second half, considering Medicare Part D, generic entries, operational gearing, and the impact of Novartis's actions to offset these pressures.

Answer

CFO Harry Kirsch explained that 2026 will be a year of two halves, with the first half depressed by generic impacts and a high prior-year base, and a stronger second half. He noted that underlying quarterly dynamics are not usually affected by Medicare Part D unless there are significant true-ups. He highlighted that Q1 2026 will have a high base due to a positive Q1 2025 true-up, while Q3 2026 will have a relatively low base due to the negative Q3 2025 true-up, with overall performance driven by launch uptake and generic erosion.

Rajesh Kumar from HSBC asked about Novartis's capital allocation strategy, questioning the rationale for prioritizing a share buyback over M&A, especially given potentially attractive asset valuations.

Answer

CFO Harry Kirsch clarified that Novartis is not prioritizing share buybacks over M&A. He stressed that the company has significant balance sheet flexibility and is actively seeking value-creating bolt-on acquisitions. The new buyback program does not constrain their ability to execute deals; the primary challenge is finding the right assets.

Rajesh Kumar from HSBC asked about Novartis's capital allocation discipline in competitive M&A situations and what tools the company uses if competitors are not behaving similarly.

Answer

CEO Vasant Narasimhan emphasized a disciplined, long-game approach, stating the company avoids overstretching and will walk away from deals if outbid beyond its valuation. He noted a shift towards smaller, sub-billion dollar deals where Novartis has a differentiated scientific view. If a deal doesn't meet their financial criteria, the capital is instead returned to shareholders via buybacks, like the ongoing $15 billion program.

Rajesh Kumar requested an update on Zepbound's access and coverage, asking how it compares to a year ago and what the next steps are, particularly in light of actions against compounding pharmacies.

Answer

Patrik Jonsson, President of Cardiometabolic Health, reported significant progress on employer opt-ins, moving from approximately 50% at the start of 2024 to the mid-to-high 50s by year-end. He also noted Medicaid coverage expanded from 11 to 14 states and expects progress in Medicare Part D for OSA in the second half of the year. Regarding compounding, he stated the market size is hard to assess but believes Lilly's self-pay price point is competitive.

Rajesh Kumar from HSBC Bank Plc asked if current provision levels are normalized or still elevated, whether customers are shifting to own-brands to combat inflation, and how a switch from temporary to permanent labor would impact the overall cost base.

Answer

CEO Frank Andre van Zanten confirmed that customers are indeed requesting own-brand alternatives in response to inflation, creating an opportunity for Bunzl. CFO Richard Howes stated that provision levels remain high but should decline over time. He also explained that moving from temporary to permanent staff could ultimately lower costs due to increased efficiency and training, despite the flexibility of temps.

Rajesh Kumar from HSBC asked about discussions with suppliers regarding cost prices and rebate accruals amid the core business decline. He also requested color on any pattern changes in the core business across geographies and sectors from Q2 to Q3.

Answer

CEO & Executive Director Frank van Zanten explained that most supplier rebate schemes are based on a fixed percentage, so lower volumes naturally result in lower rebates, which is already factored into results. He reiterated that all sectors saw improvement in Q3, particularly foodservice and retail, due to reopenings. However, he cautioned that the situation remains uncertain, citing new lockdowns in Europe as a risk.