Sanofi - Q3 2023
October 27, 2023
Transcript
Eva Schaefer-Jansen (Head of Investor Relations)
Thank you for joining us to review Sanofi's third quarter 2023 results, followed by a Q&A session. As usual, you can find the slides to this call on the Investors page of our website at sanofi.com. Moving to slide three, I would like to remind you that information presented in this call contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially. I refer you to our Form 20-F document on file with the SEC and also our Document d'Enregistrement Universel for a description of these risk factors. With this, please advance to slide four. Our speakers on the call today are Paul Hudson, Chief Executive Officer, Jean-Baptiste de Chatillon, Chief Financial Officer, Houman Ashrafian, Global Head of R&D, and Julie Van Ongevalle, Global Business Unit Head, Consumer Healthcare.
The Global Business Unit heads Brian Foard, Thomas Triomphe, and Olivier Charmeil will join for Q&A, to which you have two options to participate. Option one, click the Raise Hand icon at the bottom of your screen, or option two, submit your question by clicking the Q&A icon at the bottom of the screen. With that, I'd like to turn the call over to Paul.
Paul Hudson (CEO)
Well, thank you, Eva, and thanks to everyone for joining our call today. Before we discuss this quarter's highlights, I want to start by updating you on other announcements we made this morning. We've reached an exciting moment in the transformation of our company here at Sanofi. Our Play to Win strategy is working, and we've made significant progress over the past years to transform our R&D efforts with a sharp focus on best-in-class or first-in-class medicines and vaccines. These efforts are reflected in our results. We're driving solid performance, seeing strong market demand for our recent launches, and advancing our innovative pipeline. Sanofi has delivered an unprecedented cadence of positive news and data readouts this year. We see significant growth potential in our pipeline on increasing our R&D investment accordingly, to ensure we fully capitalize on the growth opportunities ahead of us.
Houman Ashrafian, our new head of R&D, will share his vision and first impressions in a few minutes. This morning, we're also announcing an important next step in our journey, our intention to separate the Sanofi Consumer Healthcare business at the earliest in Q4 2024, through the creation of a publicly listed entity headquartered here in Paris. This milestone is a win-win. It allows Sanofi to become a pure-play biopharma company. We'll be more agile, more focused on our key areas of strength. At the same time, it allows Sanofi CHC to be in a better position to pursue its own business strategy, resourcing, and capital allocation. You'll hear more from Julie Van Ongevalle later on the call.
We're excited by these new developments that will unlock value, coupled with the current strong business momentum, with increasing sales from our growth drivers in Specialty Care and Vaccines, no meaningful LOEs until the end of the decade, and expected benefits from accelerated investments in R&D. We will discuss these strategic announcements in more details later on the call, but let me now turn to a brief review of the quarter three results that exemplify our successful strategy execution towards sustainable growth from innovative medicines. We delivered another quarter of double-digit growth in Specialty Care, mainly driven by the outstanding success of Dupixent and our performance in rare diseases. In Vaccines, sales exceeded EUR 3 billion in the quarter, supported by the unprecedented demand for Beyfortus. We continue to lead the influenza vaccines market with our successful differentiation strategy around premium products, such as Fluzone High-Dose.
General Medicines sales were lower due to price erosion in most markets, including in the U.S., and we continued to divest non-strategic products. Our standalone Consumer Healthcare business continued its positive performance of past quarters. In summary, the underlying strength of our growth drivers more than offset the expected impact from Aubagio generic entries. As a result of our continued strategic execution, almost two-thirds of sales are now coming from Specialty Care and Vaccines. Moving to slide 8 on the impressive uptake of our key launches. ALTUVIIIO is capturing 40% of all the switches in the U.S. hemophilia A market at the end of Q3, and the number of total patients more than doubled versus Q2. During the quarter, ALTUVIIIO was also approved in Japan and Taiwan.
There is tremendous momentum for Beyfortus, which we believe to be one of the fastest uptake of any pediatric immunization ever, and it has resulted in unprecedented demand across the launch regions. Our teams are working around the clock in contact with all the stakeholders to secure supply to protect all infants against RSV. For TZIELD, we're making steady progress around patient screening and enrollment in our support program. This month, Phase 3 data from the PROTECT study was presented at ISPAD in Rotterdam, showing the potential to slow the progression of Stage 3 Type 1 diabetes. The full dataset was also simultaneously published in the New England Journal of Medicine. We are hopeful to be able to expand TZIELD's current label, leading also to a significant upside of TZIELD's commercial potential.
As a result of the successful sales ramp-up in the quarter, we're raising our sales expectations for these three innovative medicines to exceed EUR 500 million combined in the second half of 2023. With sales of more than EUR 2.8 billion in Q3, Dupixent reported another quarter of impressive growth. The strong brand performance continues to be fueled by demand across all geographies, newly approved indications, and demographics. Total sales are now annualizing at more than EUR 11 billion, and we remain very excited about the growth outlook for this unique medicine. As many as 750,000 patients are now benefiting from access to therapy with Dupixent. During more than six years since its initial launch in AD, Dupixent has set a very high bar for both efficacy and safety, including for patients as young as six months.
We continue to build on this remarkable body of evidence with the recent inclusion of five-year Atopic Dermatitis safety data in the U.S. and EU labels. We are persistent in our ambition to lead with science to address larger patient populations through label expansion into new indications, based on our deep understanding of the Type 2 inflammatory pathway with Dupixent. On slide 10, we continue to drive growth with our differentiated flu vaccines that now make up more than 70% of the total flu sales. As highlighted during our Q2 call, the flu vaccines market is increasingly competitive, especially for standard dose flu vaccines, coupled with vaccination rates that remain below the pre-pandemic level. Despite these unfavorable market dynamics, we expect to deliver flu sales in 2023 at a level that will be among the top three in Sanofi's history.
We remain confident in future sales dynamics driven by the demand for vaccines that offer protection against the severe consequences of flu. Moving to slide 11, we continue to leverage external innovation in building up our leadership in immunology. Earlier this month, we announced a major collaboration with Teva on a novel anti-TL1A therapy with a differentiated target profile. Phase 2B is currently ongoing, and while time will tell if we deliver on the target product profile, we believe this molecule has the potential to be best-in-class treatment to address unmet medical need in the large market of inflammatory bowel diseases. Similarly, in vaccines, we entered into an agreement with Janssen Pharmaceuticals early this month to develop and commercialize a potential first-in-class candidate against extraintestinal pathogenic E. coli, also known as ExPEC. A large Phase 3 trial is already ongoing.
E. coli is a significant cause of sepsis, mortality, and antimicrobial resistance in older adults. As the number of cases is rising in an aging population, a novel ExPEC vaccine represents an excellent strategic fit with our portfolio of marketed products and pipeline candidates. We aim to leverage our expertise in vaccines to make this solution available to protect a broad population of seniors above 60 in the future, comparable to the protection of adults against shingles or PCV, for example, today. I now hand over to Jean-Baptiste for a brief look at the Q3 financials.
Jean-Baptiste Chasseloup de Chatillon (CFO)
Yes, thank you, Paul. Moving to slide 13 on looking at our year-to-date performance, sales grew 3.9%, driven by the strong performance of Dupixent, Sarclisa, strong recovery of the booster vaccine franchise, and by our six recent launches. R&D expenses grew 1.6% at constant exchange rate, and benefited from a favorable comparison, as we booked some provisions following the termination of our amcenestrant program last year. The BOI margin decreased 0.6 percentage points to 31.4 due to the significant impact from the Aubagio LOE, our last significant LOE till the end of the decade. We are also analyzing the Libtayo agreement, including a faster repayment of the antibody alliance development balance, now at 20% of the Regeneron profit.
EPS was up 4.9% during the first nine months, helped also by the financial income due to higher interest rates on investments. On slide 14, we are providing an updated H2 business outlook. We expect Dupixent to continue to grow, driven by demand, while Aubagio sales are expected to be impacted by the entrance of generic players in Europe in Q4, on top of U.S. and Canada. Our expectations regarding the split of flu sales between Q3 and Q4 are now 70% and 30%, compared to previously two-thirds and one-third. Total GenMed sales are expected to decline in the mid-single-digit range. Importantly, as mentioned by Paul earlier, we have raised our expectation for sales from our three new launches combined to exceed EUR 500 million.
On the P&L, we expect the final COVID revenues of EUR 400 million in Q4 to be booked in the Vaccines other revenues line. OpEx should continue to grow at constant exchange rate, driven by investments behind our key launches, increase R&D spend, as well as costs related to CHC standalone. Unchanged are our expectations on capital gains on annual tax rate. In Q3, we recorded around EUR 100 million of capital gains. Based on the ongoing strong performance of Dupixent and supported by the recent launches, more than offsetting the Aubagio LOE of the pricing headwinds, especially in GenMed, we are reaffirming our full year 2023 guidance, with EPS to grow mid-single digit at constant exchange rate. On a reported basis, we continue to experience headwinds from currency, approximately -6% to -7% for the full year, based on October average exchange rates.
I now hand back the call to Paul.
Paul Hudson (CEO)
Well, thank you, JB. Now let's turn to our next chapter of Play to Win. Since we outlined our Play to Win strategy in late 2019, we have delivered everything we said we would do. With Dupixent, we created a mega brand. In R&D, we lead in innovation based on our commitment to first or best-in-class medicines, and we're building on our core key area of strength around an industry-leading immunology pipeline. Our vaccines business has delivered the mid- to high single-digit growth as per our guidance, and we have streamlined the GenMed portfolio, adjusted the geographic setup and go-to-market model, and we've transformed the CHC business with the consumer at the center.
Following this tremendous progress, we've now reached a point where we must accelerate our investments in R&D, and with the proposed separation of consumer healthcare, have an opportunity to take further steps toward becoming an R&D-driven pure-play biopharma company. It's with great pleasure that I now hand over to Houman, Head of R&D, who will share more insights into our R&D journey and our pipeline's potential. Houman and I have been working closely together, and the team and I value the unique and certainly fresh perspective he is already bringing to the company. Houman?
Houman Ashrafian (Global Head of R&D)
Thank you, Paul. I'm thrilled to join Sanofi, and I'm looking forward to working closely with our teams, building on the significant progress that's been made over the last four years, and actively reshaping the discovery and development portfolio. It's been just over four weeks that I've been working at Sanofi. I'd like to use this opportunity to share some of my early observations on both the organization and the rich and diverse pipeline, using amlitelimab's recent differentiating data presented at EADV a couple of weeks ago as an illustration of how we're poised to embrace the next chapter of our accelerating growth journey. My focus as the new head of R&D is to ensure that we continue developing breakthrough medicines and vaccines to improve people's lives, while sustaining growth in our key therapeutic areas, driving shareholder value.
I also want to continue to position the company and further focus it as a scientific and innovation leader, offering meaningful therapeutic and innovative options to patients globally, adding value to society. Our pipeline today is centered around six major therapeutic areas, benefiting from a broad range of proven mechanisms of action and technology platforms. We're building on an industry-leading immunology pipeline with the ambition to be leader for the next 25 years, but I'm equally excited about our presence in neurology, rare diseases, and vaccines. This commitment is reachable thanks to our talented and dedicated international team, many of whom I've had the pleasure of meeting at various R&D sites and town halls globally during my first few weeks on the job.
Sanofi is strongly deploying AI, data science, and computational expertise throughout the R&D engine to further accelerate our efforts and deliver better and faster options to patients. As part of these efforts, leveraging my recent background, tapping external innovation, especially for the early to mid-stage assets, will be thoughtfully considered while ensuring strategic, scientific, and financial rationale remains stacked up. As you'll see on slide 19, as we transform and modernize the company for the long term, the teams also keep delivering clinical performance and creating value in the short term. We're extremely proud of the progress we've made in immunology with the success of Dupixent and the leadership we've built in type 2 inflammatory disease. We're determined to expand our immunology portfolio beyond type 2 and to drive innovation by deploying disruptive technologies for the development of first- and best-in-class medicines.
We continue to reinforce our development organization to drive these programs relentlessly through executional efficiency. As you can see on slide 20, I'm happy to share with you some of the recent positive data that were delivered at the time that I just arrived. Amlitelimab's positive Phase 2B data were recently presented at the EADV Congress, where the scientific community has been impressed by both the strong efficacy and safety data. Amlitelimab has a unique non-depleting mechanism of action targeting OX40 ligand, with a potential to restore immune homeostasis with a sustained effect and with infrequent dosing.
In this Phase 2b study, amlitelimab showed statistically significant improvements in the primary endpoint of percentage change in Eczema Area and Severity Index, otherwise known as EASI, score at weeks 16 and 24, as well as clinically meaningful and nominally significant improvement across all key secondary endpoints at week 16, and notably maintained at 24 weeks. As indicated in this slide, 45% of patients treated with amlitelimab, 250 mg with a loading dose achieved IGA 0/1 at 24 weeks. These strong efficacy results, combined with a reassuring safety profile, improve our confidence in amlitelimab's potentially best-in-class profile for the treatment of AD, provide a signal to pursue a differentiated dosing regimen that could be very meaningful to patients with moderate to severe atopic dermatitis. These data from the –
Form the basis for our advancement into Phase 3 clinical development, which we expect to begin in the first half of 2024. Slide 21. As you can see, the company has made tremendous progress with its R&D transformation over the past two years, over the past few years. Clearly, we have now arrived at the point where our innovative pipeline requires increased funding to fully exploit the potential of these transformative assets and to make them available to patients as soon as possible. We look forward to sharing more of our excitement about the recent flow of positive pipeline advancements at the upcoming R&D Day on December 7th. With that, back to you, Paul.
Paul Hudson (CEO)
Thank you, Houman. As I mentioned earlier, I want to say a bit more about our intention to separate our Consumer Healthcare business. CHC was set up as a business unit in 2014, followed by the integration of the Boehringer Ingelheim brands. Until 2019, it remained fully integrated into the pharma organization. You could say lacked prioritization, consumer centricity, and kept performing below the market. Our decision to create a standalone unit four years ago enabled CHC to set the right priorities and accelerate growth. Today, we've completed the standalone setup around a highly competitive portfolio and built a future-ready organization, consumer-focused and brand-led. As the logical next step to fully unlock the value of the CHC business, we believe that the intended separation would equip it best to pursue its own business strategy, resourcing, and capital allocation for sustainable growth.
We are reviewing potential separation scenarios and believe that the path most likely to maximize shareholder value will be through a capital markets transaction to create a publicly listed company and headquartered in Paris, subject to market conditions. The separation could be achieved at the earliest in quarter four, 2024. We're very excited about this announcement and the future prospects of both Sanofi and CHC. With this, I hand the call over to Julie to add her perspective.
Julie Van Ongevalle (Global Business Unit Head of Consumer Healthcare)
Thank you, Paul. I'm very proud of what the team has achieved since we embarked on our standalone journey, cutting and embracing our complexity, elevating our consumer centricity, and building our data and digital edge, all while creating our standalone, and today, we're ready for the next chapter. We are a global leading player with a strong focus on our 15 priority brands, all with global or local top three positions, of which most are holding number one positions in their respective markets. These 15 priority brands now represent two-thirds of our business and have generated 85% of our growth in the past three years. Important to note is that we're successfully operating in the attractive EUR 200 billion OTC and VMS market, growing both in value and in volume year-after-year.
Compared to other consumer markets, the VMS and OTC market enjoys attractive margins and rather high predictability. We have built a pure-play leader with over 90% of our revenues from OTC and VMS, fully leveraging our diversified footprint across categories and geographies. With our clear strategy and consumer-focused brand-led organization in place, we believe the intended separation comes at the right time to further increase our focus, agility, and speed, and effectively leverage our industry trends. With that, I hand the call over to Jean-Baptiste for the financial update.
Jean-Baptiste Chasseloup de Chatillon (CFO)
Thank you, Julie. On slide 26, let me remind you of our success in delivering on our financial objectives during the first chapter of Play to Win, 10 consecutive quarters of growth, 540 bps BOI margin improvement on EUR 2.7 billion of cost efficiencies, which we reinvested behind growth drivers on our pipeline. We also deployed cash in more than 25 value-creating transactions, securing access to external innovation in R&D. The digital transformation is a key area to enable further productivity, and we are today employing insight from AI and predictive analytics across the organization. Today, Sanofi also benefits from a greatly improved cash flow generation. In December 2019, we outlined our capital allocation policy and have demonstrated discipline in executing on those priorities.
Investment into organic growth through our pipeline on growth drivers remains our number one priority, followed by M&A on business development, focusing on bolt-on, value-enhancing opportunities to drive leadership in core therapeutic areas. We continue to grow our dividend and expect to maintain that policy, including in 2024, and regardless of the proposed CHC separation. In summary, I'm confirming that our capital allocation policy remains unchanged. On slide 28, as Paul already mentioned, given the potential we see in our pipeline, we plan to grow our R&D spend in 2024, up from around EUR 6.8 billion expected in 2023. The spending level is already higher compared to EUR 5.5 billion in 2020 and is mainly driven by the investment in vaccines, R&D, and the mRNA Center of Excellence. In pharma, we also benefited from reallocating investments, first from cardiometabolic and lately from oncology.
We expect a further step up in R&D spend in 2024 as we start a number of exciting mid- to late-stage programs in immunology, MS, and vaccines. In 2025, we expect to be able to reallocate spending from completed Phase 3 programs, such as tolebrutinib on the COPD programs, to new programs, either internally derived or from business development. The simplification and streamlining of the GenMed portfolio continue at pace. We reached the target number of around 100 branded product families this year, two years earlier than initially guided at our Capital Markets Day in December 2019. More than EUR 1.9 billion of cash proceeds were generated.
Due to continued pricing headwinds across the portfolio of older products on increased competition in the heparin market, we will no longer aim to stabilize GenMed sales in 2025 at the 2020 level, but instead, we'll continue to reduce the portfolio to around 85 branded product families, thus allowing for further efficiencies. On slide 30, we are launching efficiency initiative, targeting up to EUR 2 billion savings across Sanofi to free up operational resources and support the accelerated R&D investments. We will be prioritizing our oncology R&D program and focus on those with first or best-in-class potential, reallocating resources on growth drivers and strategic TAs. We will also leverage procurement to generate additional savings. Lastly, we will modernize the commercial delivery by optimizing our country setup, expanding the hub strategy to increase centralization, while refocusing R&D on most critical sites on technology platforms.
On slide 31, we are providing a first outlook for 2024 and 2025. For 2024 and 2025, we expect continued sales growth, supported by our leading franchise on launches. For Dupixent, based on the strong double-digit growth rate that we report again today, we expect sales to reach close to EUR 13 billion in 2024. Vaccine sales are expected to grow mid- to high-single-digit in both years, as per our prior guidance. On the P&L side, OpEx is expected to grow in 2024 due to a step up in R&D investments. Capital gains from product divestments are expected at a similar level as in 2023. Due to changes to global tax regulation, the company's effective tax rate is expected to increase to 21%.
Looking further out into 2025, we expect to see the full benefit from the reallocation of our planned efficiencies initiative on a relatively stable R&D expenses year on year, as several large Phase 3 trials in MS, on COPD, will mature over the period. As a result, business EPS in 2024 is expected to decline low single digits at constant exchange rate or remain roughly stable, excluding the impact of the expected tax rate change, followed by a strong business EPS rebound in 2025. So, Paul, back to you to conclude.
Paul Hudson (CEO)
Thank you, JB. I want to conclude by stressing again the impressive progress we've made since the launch of our Play to Win strategy in 2019. We said we would deliver, and we did. Today, we are reconfirming our 2030 goal to make Sanofi a modern, science-driven healthcare company, an industry leader in immunology and in vaccines, with greater than EUR 22 billion and EUR 10 billion of sales by 2030, respectively. We are confident in our improved R&D productivity, driving a pipeline made up of at least 70% biologics, and the vast majority of products being best-in-class or first-in-class. This lays a promising foundation to bring 3-5 products to market, with EUR 2 billion-EUR 5 billion peak sales potential each in the second half of the decade.
We're in a unique position compared to our competitors, with a portfolio uncompromised by meaningful loss of exclusivity for the remainder of the decade. We are looking forward to the long-term growth prospects opened by our decision to increase our R&D investments. With that, let's open up the call for Q&A.
Eva Schaefer-Jansen (Head of Investor Relations)
As a reminder, we would like to ask you to limit your questions to two each. You have the two options to participate. Option one, click the Raise Hand icon at the bottom of your screen. You will be notified when your line is open to ask your question, and at that time, please make sure you unmute your microphone. Or option two, submit your question by clicking the Q&A icon at the bottom of the screen, and your question will be read out by our panelists.
Operator (participant)
The first question will be from Louisa Hector from Berenberg. Louisa?
Luisa Hector (Head of Global Pharma Equity Research)
Oh, hi there. Thank you for taking my questions. So on the increased R&D investment, could you comment on essentially why now? So why has it now become clear that you need to make this step up in your R&D spend? And can you give us any sort of internal indicators, reasons why we should be positive in this increased spend, just sort of help us understand that the transformation is happening and that these dollars will be invested wisely? So that's the first question on the R&D investment. And then, maybe on Dupixent, just you've got your guidance there for EUR 13 billion for next year. So could you comment on how the formulary negotiations have gone to date, and you know, your level of confidence in that EUR 13 billion? Clearly, Dupixent is performing very well. Thank you.
Paul Hudson (CEO)
Okay, Louisa. Thank you. JB, maybe you make a comment on the R&D investments first.
Jean-Baptiste Chasseloup de Chatillon (CFO)
Yeah, I guess the question is, is why now? It's quite clear for us. We were committed to our 2025 ROI margin target since we announced it, and you have seen our journey towards it. As our successful readouts of the past few months continued to come in, we worked on various options on how to develop them without wanting to take investments off our launches, and bearing in mind that the headwinds to GenMed from GenMed were not being reversed. Those options included R&D phasing, selection, potential partnering, but we discussed various strategic options. At our board meeting yesterday, we decided to take on the option to accelerate and fund the full potential of our promising pipeline.
We believe this is the best option for the long-term value of Sanofi, our shareholders, and also for the patients who we serve.
Paul Hudson (CEO)
And, I'll come to you, Houman, in a second. And, of course, we come off the back of things like amlitelimab EADV, the EADV Houman mentioned. We, as you know, a lot of our development work is happening, and discovery work is happening in immunology, and you know our probabilities of success is higher. Plus, the importance to bring everything forward with some urgency is also there. So coupled with what JB said, I think the timing is good to say it now. Houman, maybe something on confidence as well. Why, why do we believe we'll be more successful?
Houman Ashrafian (Global Head of R&D)
Thanks, Paul, and thank you, Louisa, for your question. Coming into this with relatively fresh eyes and an objective perspective on the portfolio, we've really had the opportunity to figure out exactly how we were gonna move forward. And having evaluated, especially our leading products, I personally felt with the support of the Ex Comm and the broader group, that it was important that we should double down on many assets which we really wholly own and which could be transformational. Importantly, moving these assets forward in the service of patients and our shareholders, across a broad front was critically important at this point, for many reasons, including the macro and some of the legislative changes that are coming in in the future and have already come in.
One thing I should reassure you, to the second limb of your sentence, was about how you can be reassured that we're thinking about spending any, every dollar wisely. Much of the expenditure will come through thoughtful reallocation towards the first and best-in-class assets. And we will ensure that every dollar is spent both in the service of our shareholders and importantly, in our patients, really very carefully, and you'll see that throughout—peppered throughout the conversation thus far.
Paul Hudson (CEO)
Yeah, and of course, at R&D Day, we can really put our cards on the table. I think that's going to be important.
Houman Ashrafian (Global Head of R&D)
Yeah, Paul, thanks for pointing to that. I invite you all at this point to our December 7th R&D Day, and we look forward to sharing the details with you in greater detail then.
Paul Hudson (CEO)
Yeah, and I think, I think before I come, I'll throw it to Brian on Dupixent in a second. But, also, I think it's maybe worth recognizing, although you know it, we have a new head of R&D that has a more unique profile. Both, if you like, skilled in science, but also in capital allocation, given his background. And, you know, it's unique, and I think that's already being put to work for us because there's a great awareness for how we spend and how we create a return, firstly, for patients and then for those investors. Brian, EUR 13 billion and, how confident are you, and what's the formulary status?
Brian Foard (Head of Global Business Unit)
Thank you, Louisa, so much for the question. We've always had very good formulary status, and we've worked very closely from the very beginning with a strategy with the payers. And as we've said before, today even, we have more than 70% of our coverage is actually commercial coverage, and so we feel very good about the negotiations going into 2024. But I would start by saying, actually, as we talk about the confidence, not only with the payers, but the confidence we have in EUR 13 billion, it begins with the profile. You know, we've got a profile that is quite unique, targeting IL-4, IL-13. You know, we have five indications now. In atopic dermatitis, we have five years' worth of data now in our label, both in the EU and in the U.S.
We're down to the age of six months of age for young babies. So we have quite an incredible profile, and you look at the growth that we continue to generate year on year, it's quite impressive. And so, you know, it'd be hard not to be confident in a brand like this. And so I think as we shared with you before, we shared with you, I think back in 2019, the waypoint of EUR 10 billion first. We went back, it wasn't that long ago, in 2022, the beginning of 2022, just over a year ago, we gave a new waypoint of a little bit greater than EUR 13 billion, and now here we are talking about reaching close to EUR 13 billion next year. It's quite impressive.
So we feel very confident, I think, in the continued growth of this brand and a leading profile across all the indications that we compete in.
Paul Hudson (CEO)
Thank you. Thank you, Brian. Maybe just add then finally to that, that, you know, with our, with our delivery on Beyfortus, and ALTUVIIIO, the great work that's been done to prepare ourselves for TZIELD and the delivery on Dupixent, there's a, there's a sort of operational alpha about this company, and it makes you feel very confident about, about money well spent, bringing great medicines through, can get launched really well in this company. And I think it's important not to lose sight of that. Next question?
Operator (participant)
Yes, next question is from Emily Field, from Barclays. Emily?
Emily Field (Analyst)
Hi. Thank you for taking my questions. Maybe just to piggyback on one of the last answers, you talked about doubling down on some of the programs that you're advancing. I was just wondering if we could get some more granularity on that, because I think, you know, at half year results, we talked about amlitelimab and frexalimab going into Phase three. So are these studies going to be larger than initially planned? And then second question, just on GenMed, if you could provide some color. I know you gave a number of products that you're targeting for 25, just maybe more on the sales expectation and just the impact of that sales expectation to overall BOI margin. Are those, you know, higher margin products that are coming off, just so we can think about the moving parts getting to 2025 BOI margin?
Thank you.
Paul Hudson (CEO)
Okay. Maybe, just a quick response from me. You know, there's... We'll go through this at R&D Day. I understand that, why you asked the question. Going more broadly with amlitelimab, potentially going more broadly with tolebrutinib. Potentially, you know, when we look at the oral small molecule, TNF, you know, we have only shared one piece of data, I think, in psoriasis from recollection, with an intent to go to a couple of indications. You know, when you look at the IRA, you look at a small molecule, you go, "You know what? If we like the data, we're going to have to run parallel studies to bring this thing through to fully prosecute it." They're the sort of things that we're starting to say to ourselves, you know, that frexalimab beyond MS.
You know, these are the things we'll talk with you about at R&D Day in December. But these, these are not inexpensive things to do, but are two good opportunities to miss, particularly with our ability to deliver and to, and to launch. So, you know, again, December the seventh, we have a few hours on this, and it'll be up to us to demonstrate that to you, but I think you'll see it. I, I think, you know, when you may be asking the question, "Okay, why now? What's different?" It's urgency, it's confidence, it's breadth, and it's a, a, a sheer intent to go all in to create massive future value. And we can perhaps do it in an optimized fashion. It just is not worth it at this point. The win is too big over the longer term.
I think, Olivier, there was a question around GenMed?
Olivier Charmeil (Global Business Unit Head of Medicines)
Yeah. So thank you, Emily, for your question. So we are going to continue to simplify our portfolio. We are a little bit in advance versus our plan. We are now aiming at 85, you know, product families for 2025, when initially we were aiming at 100 in 2025, coming more than 350. It's very much directed by profile and gross margin. We want to focus our resource on the drivers that are going to drive profitability and brands that are going to drive growth. What does it lead to in terms of sales profile? As Jean-Baptiste mentioned, we are no longer aiming to maintain GenMed's sales in 2025 at the level of 2020.
But we remain very, very committed to our guidance in terms of, BOI margin, between 2020 and 2025, and we are well on track here. Due to, of course, the pressure we put on OpEx, the effort that are done by our colleagues from, manufacturing to improve the cost of goods.
Paul Hudson (CEO)
Thank you.
Olivier Charmeil (Global Business Unit Head of Medicines)
Next question is from Peter Verdult from Jefferies. Peter?
Peter Welford (Research Analyst)
Hi. Yes, thanks for taking my question. The first question, I, I guess it, it's coming back to, to a point you've to some extent already covered, but I guess just curious why the decision now to, to get to talk about 2024, 2025 EPS and highlight the increasing R&D? I, I guess, we would never in the outside world have known the increasing R&D plans until potentially the seventh of December R&D day. So if I could just outline, you know, why disclose that, the spending sort of now, but then give the details on the seventh of December, and what was the urgency, I guess, in this sort of six-week, if you like, pre-preview rather than necessarily giving us all the information together then at the peak at the capital markets event?
And then just secondly, if I just come back to GenMed, obviously, you've done the TZIELD deal, and you've actually upgraded the sales outlook for that portfolio of newly launched brands. We've also seen Rezurock launch as well. Can we just ask then with regards to the change in the product families, and I appreciate that obviously you're pruning the portfolio, but equally obviously, there's a lot of growth assets within that. So can you just perhaps give us some sort of clarity in terms of what sort of growth we should profile, or I think we should be looking for that business? Appreciate you're no longer stabilizing.
But is this a business where you think the current trend is gonna continue, or, or is it likely to accelerate, given the commentary in the outlook section about more aggressive pricing dynamics that you're seeing for that business? Thank you.
Paul Hudson (CEO)
Okay, Peter, thank you very much. Jean-Baptiste, a little comment on 2024, perhaps even a comment on 2025, and a little bit around, you know, why not, why not wait until R&D Day?
Jean-Baptiste Chasseloup de Chatillon (CFO)
Yeah. Well, that's a great question, but I think I tried to answer it just before. That's once you've made a decision through the governance, and we had our board meeting yesterday, we had different options, but we opted for this doubling down in R&D on science. So it's good practice to communicate without deferring. Then on 2025, it's there are pulls and pushes, as I said, and it's difficult to understand why the R&D would plateau in 2025 versus 2024. But you have to keep in mind that reallocation exercise we are doing now with Zumen at great speed, I must say, but it will still deliver the bulk of it in 2025, not in 2024.
So that will come to give more leeway to the development of our I&I pipeline and vaccine pipeline. You have also to think that the studies on COPD on tolebrutinib will be dwindling, and these costs will disappear, giving more room also to embark the spend for our I&I pipeline or vaccine pipeline, as I said. So this is one point. On COGS, on Dupixent, remember that we will have the full impact of the improvement of COGS in 2025. On globally, the other elements of our saving plan will also mainly deliver in 2025. So that's why we are concluding that we will have a strong rebound in 2025.
Paul Hudson (CEO)
Thank you, JB. Okay, to GenMed, I'll throw it to you, Olivier, for a second, but just the general context, I think you know this, I think you said it, you know. We have pricing headwinds that are simply too strong to be offset by volume, even though our volume performance is pretty phenomenal. You know, and that's an industry phenomenon, by the way. That's not as... That's a post-pandemic sort of physical deficit, you know, attention. I think we've coped very well, but it won't offset. For TZIELD and Rezurock and the sort of growth profile of the segment, the core, the core, if you like, of GenMed, Olivier.
Olivier Charmeil (Global Business Unit Head of Medicines)
Thank you for your question, Peter. Our growth is going to be continued to be driven by the growth of the core assets. We are very happy with the performance of Rezurock. We are well ahead of our plan. We think that it will continue, and we'll talk more about extension of indication during the R&D meeting in December. We continue to be happy with the very strong growth in the international region, including China, by Toujeo. Of course, Praluent is doing extremely well in Europe, where in a very growing market, we are able, in some countries, to continue to grow our market share. Just to give a little bit of color, I'm just back from ISPAD.
I've met a lot of key opinion leaders on TZIELD, that was with Paul, and we are really happy. We are in line now with what we had initially planned in the U.S., and we knew that it would be a slow ramp-up. We know that feedback from key opinion leaders on the product is extremely high. We are working through a very focused approach on a limited number of centers. It's about screening, it's about ways of working, it's about getting organized.
We now have a little bit more than 110, you know, patient, and we have done a lot of progress since we took over Provention Bio in terms of, you know, making much shorter the period of time between when patient enter into the funnel and when they get infused. And so everything that we see, yeah, and the action plans that we have put in place makes us comfortable that TZIELD will be a multibillion asset.
Paul Hudson (CEO)
Yeah. Great. Thank you, Olivier. Next question.
Operator (participant)
Next question is from Graham Parry from BofA. Graham?
Graham Parry (Senior European Pharmaceuticals and Healthcare Equity Analyst)
Great, thanks for taking my questions. So first was just, I think, you know, clearly the series of announcements this morning caught the market off guard. We see that in the share price reaction. And I think what would help is if you can help people, kind with narrowing of the scenarios for the 2025 earnings recovery. So you said flat, absolute, R&D, could that even actually fall just based on the savings you're talking about, and as your cost savings come through as well? And given that you have this big step up into 2024, that's clearly going to see earnings down. But is it fair to assume, therefore, that the cut to earnings that people will be putting through their models is going to be less in 2025 than 2024 because you've got revenue growth in these, these other savings coming through?
And then secondly, just what sort of aspirational growth are you targeting post-2025 through these investments? Again, I think that some sort of communication of growth to the end of the decade would be helpful for investors as well. And then lastly, on consumer, you know, clearly the argument for value creation here would be that your peers and consumer trade on much higher multiples than Sanofi, but that rationale goes out of the window if you sell it for cash and then reallocate that capital into another deal. So perhaps some comfort for investors here would be, you know, what the preference on options is. Is a spin-off preferred here? Or if not, what are the return hurdles for a transaction on the other side? Would it be EPS accretion, or would it be NPV positivity? Just help us with understanding that as well. Thank you.
Paul Hudson (CEO)
Okay, JB, this looks like a few for you and I from Graham Perry. So why don't we start with a little bit of 2024 and the shape?
Jean-Baptiste Chasseloup de Chatillon (CFO)
Well, I think Graham is hitting a very important point, is that there's something we have not reminded enough, is that we enjoy an incredible and pretty unique growth profile of our top line. And that's for the years to come. What we are doing today is having in mind that we want to deliver for 2026 onwards, 3-5 launches of assets with EUR 2 billion-EUR 5 billion peak sales potential. And that's very important today to remind us this play to value creation, to a greater value creation in the midterm. The top line growth is untouched in the years to come, and I think it's pretty easy to read, and will even be bolstered with success like the one you see on Beyfortus.
Paul Hudson (CEO)
On the –
Jean-Baptiste Chasseloup de Chatillon (CFO)
You want to add something like on that, or should I say something about CHC?
Paul Hudson (CEO)
Yeah, 25. A little bit more color on 25.
Jean-Baptiste Chasseloup de Chatillon (CFO)
Well, I think I give the that was a missing piece. That was that we will be growing in 2025. So there's a strong rebound, fueled by a flat R&D, savings, reallocation, improvement on COGS, deep transformation of the company, a second step in this transformation. All of this is really leading to a strong rebound as soon as 2025, with a growth profile which is untouched, untouched. CHE, I think it's really too early to be more precise. We said we had a preferred route, but whatever the route we take, we'll keep in mind the best interest of the of investors.
Thank you.
Paul Hudson (CEO)
Okay, next question.
Operator (participant)
All right. Sorry, next question is from Tim Anderson, from Wolfe.
Tim Anderson (Managing Director and Senior Equity Research Analyst)
Thank you. I just wanna again stay on the guidance. How much of the pressure to earnings in 2024 and 2025 is from below the line items versus on the revenue side? You're talking about GenMed guidance, you know, no longer being the same as what it was. That would suggest there's some portion of revenue shortfall on the top, well, you know, on the revenue side, that drives the earnings reduction as you're suggesting the Street build in for 2024 and 2025. So can you kind of apportion the lowering to revenue reduction versus things that are below the line? And then on the below the line stuff, it sounds like it's not just R&D, it's not just tax, but it's also stepped up promo of certain brands.
I'm wondering if you have specifics to share there.
Paul Hudson (CEO)
Okay, JB, on the pressure on earnings from below the line.
Jean-Baptiste Chasseloup de Chatillon (CFO)
I think below the line is everything which is below the top line.
Tim Anderson (Managing Director and Senior Equity Research Analyst)
Yes
Jean-Baptiste Chasseloup de Chatillon (CFO)
If I understood well. Okay. Okay, got it. Yeah, well, yeah, because top line is pretty clear, you're right, on it growing steadily. So I tried to give a view that this step up... The main difference is really R&D. Of course, it's altered by the shape of the decrease in GenMed. But mainly it's really this decision of going all in in developing the pipeline. And you've seen that we, we've not been shy or mainly we went just recently, you've seen two BD deals appearing, the one on TL1A, which is a great complement to our immunology story, and also in vaccine, the colleague Paul just presented. There are big potential.
In this endeavor to look for EUR 3 billion-EUR 5, EUR 2 billion-EUR 5 billion peak sales, that's where we are. It's R&D, the main driver of the change.
Eva Schaefer-Jansen (Head of Investor Relations)
Tax regulation changes.
Jean-Baptiste Chasseloup de Chatillon (CFO)
Well, tax regulation changes, thank you, Eva, it's Pillar Two. As you know, we have a tax setup which had really improved a lot in the past five years, very steadily, decreasing the effective tax rate. Well, with this minimum 15% taxation, some of the players, and we are one of them, are hit by this change in regulation. Yeah, that's the way it is. Thank you. Next question?
Operator (participant)
Next question from Peter Verdult from Citi. Peter?
Peter Verdult (Managing Director)
Yeah, thanks. Pete Verdult, Citi. I wanted to talk more about the pipeline, but that will probably have to wait till December, given today's share price reaction. So apologies, team, it's two on financial and commercial. Just again, just to go back to the guidance, I know Sanofi doesn't guide on revenues, but in your prepared remarks, you did call out revenue growth expectations in 2024. Can I push my luck and explore your comfort or the upside potential to where market expectations are currently, which is around mid-single-digit growth in 2024? And then secondly, Paul, just on... or, or JB, Beyfortus in September at the launch, you know, the, the message was, "Capacities are great. The demand has been phenomenal."
Shortages are now being reported, so I just want to gauge how quickly you can ramp the capacities further near term, given that, you know, the analog benchmarks you were using are clearly, you know, sort of undercooking what's happening in reality. Thank you.
Paul Hudson (CEO)
Thank you, Pete. Look forward to your questions in R&D day. JB, I'm not sure there's much to add, frankly, on beyond 2024 on revenue growth.
Jean-Baptiste Chasseloup de Chatillon (CFO)
Oh, we're not growing, but our confidence, I see you can feel it through the team. We are growing a growing story and a growth story, and that's such will happen. No, I don't think we can be much more precise at that stage, but I think maybe on Beyfortus?
Paul Hudson (CEO)
Thomas, maybe give you a little bit of time to talk about the incredible launch.
Thomas Triomphe (Global Business Unit Head of Vaccines)
Thank you very much, Pete. Great question. Yes, absolutely, we are very happy about the launch of Beyfortus. Extremely excited by the reception of the product by the whole community, be it the providers, the payers, the public or private stakeholders, have all played their part to make sure that there could be an accelerated uptake for the product. What does it mean concretely? It means that it's the unprecedented level of demand for any pediatric launch over the past 20 years. So what does that mean? That means that all infant protection strategy works, and that's what people want, which is not the same that some other product can provide. It also means that it fits exactly what we have said in term of the ability to be at the right price to make sure that it's accessible for everybody.
Now, we're working for 2023 with the different stakeholders to make sure that the Beyfortus doses that are provided to market are used, and that the maximum number of babies is protected. And as you pointed out, this unprecedented level of demand has created a challenge to be able to cope with the supply, which is manufactured by our partner, AstraZeneca, for the partnership. So right now, we're working with CDC and with the different countries like France and Spain to make sure that all the doses get allocated and used as fast as possible. And of course, we are working with our partner, AstraZeneca, to make sure that we can extend the industrial network, identify further solutions to meet this exceptional demand, not just now, but for the future.
Tim Anderson (Managing Director and Senior Equity Research Analyst)
Thank you.
Paul Hudson (CEO)
Thank you. Thank you, Thomas. Yeah, I mean, incredible launch, and we prepared well. We developed the market, prepared well. Appetite is phenomenal, and, you know, we'll keep bringing more doses online. That's the plan. Okay, next question.
Operator (participant)
Next question from David Risinger from Leerink. David?
David Risinger (Senior Managing Director and Senior Research Analyst)
Yes, thanks very much. I have, two questions, please, one on, revenue and one on biopharma margins. So first, could you please frame late-decade revenue growth prospects from the 2025 base? Should we be anticipating low single-digit revenue growth or mid-single-digit revenue growth? And then second, excluding consumer, in light of the company's biopharma operating margin as it stands today, and also 2025 prospects, has management and the board reconsidered operating its biopharma business in such a wide range of therapeutic areas, products, pipeline candidates, and geographies, and concentrating in more profitable biopharma franchises like, biopharma peers? Thanks very much.
Paul Hudson (CEO)
Okay. I mean, in terms of revenue growth, you know, I can hear your excitement, but there's nothing for us to share on that at all. You know, certainly not at this stage. And then discussions around, if I, if I've interpreted this correctly, around just focusing further by geography and TA?
Jean-Baptiste Chasseloup de Chatillon (CFO)
Well,
Paul Hudson (CEO)
And I think being a-
Jean-Baptiste Chasseloup de Chatillon (CFO)
Well-
Paul Hudson (CEO)
Pure play in biopharma
Jean-Baptiste Chasseloup de Chatillon (CFO)
Yeah, to step back, to clarify, the company's biopharma operating margin is at the bottom end of peers globally, and so it seems like, you know, that's a business mix issue. And the company has a very wide range of, you know, activities in various therapeutic areas, various drugs, a wide range of pipeline candidates, a wide range of geographies. I'm just wondering if greater concentration would enhance shareholder value in the biopharma business.
Paul Hudson (CEO)
All right, David, thank you for the clarification. Then just a quick comment on this. You know, we are focusing to be a pure-play biopharma. The first thing we did, as you'll appreciate, is we doubled down on the R&D in the areas where we're already deployed. So the marginal cost to launch incremental vaccines, incremental beyond dulaglutide, incremental biologics, of course, Dupixent is kept separate. You know, we have a moment to be able to have a low marginal cost to launch these assets over the future. That is how we intend to play. And we, so we made sure in R&D that we're laddering up behind infrastructure that we already have or can develop that are, you know, efficiently.
In the business itself, and I think Olivier touched a little bit on this, you know, he's, he's got the launches and the core assets, and then the, if you like, the legacy portfolio. Because we have a wide portfolio, if you like, given the history of the company, between divestments and moving to digital and putting on carryover, we're making sure that we're actually focusing our efforts on where the growth opportunities are. So we may look wide, but in terms of if you follow the U.S. dollar against where the opportunities are, it's a much narrower list. I understand it's hard for you to see from where you are.
I think it's one of the incredible things that the GenMed team have done, of more than or close to 9,000 people have left GenMed over the past two or three years, as we've gone in pursuit of making sure that we are laser-guided on the growth opportunities. So that's a continuous process. We like that because that closes the operating margin gap over time and gets us to a good place. We'll see how much progress we make. All right, next question?
Operator (participant)
Yes, next question is from Gary Stevenson from BNP Exane. Gary? Okay.
Paul Hudson (CEO)
We lost Gary.
Operator (participant)
He's with the phone, so maybe... Okay, let's go to the next for now. Next question is from Florent Cespedes from Société Générale. Florent?
Florent Cespedes (Senior Equity Analyst)
Yeah. Good afternoon. Can you hear me?
Jean-Baptiste Chasseloup de Chatillon (CFO)
Yeah, we got you.
Florent Cespedes (Senior Equity Analyst)
Good. Thank you very much for taking my questions. First, a question on 2025 and onwards. How confident are you to resume sustainable growth beyond 2025? In other words, any risk to see another massive increase of the R&D budget? And also, could you give us a little bit color on the operating profit margin profile? We understand that you no longer anticipate the target of 32% in 2025, but do you envision to see some margin improvement in 2025 versus 2024, or even really versus 2023? My second question for Julie.
Could you please remind us where you stand regarding the erectile to OTC, OTC switch, the two projects on Tamiflu and Cialis, if you will be ready to, let's say, file next year or in 2025? Where are the ongoing clinical trials, please? Thank you.
Paul Hudson (CEO)
JB, a question about 2025 and then also onwards. Do you think we'll improve our operating efficiency? I think that was the question-
Jean-Baptiste Chasseloup de Chatillon (CFO)
Yeah
Paul Hudson (CEO)
In 2025 and beyond.
Jean-Baptiste Chasseloup de Chatillon (CFO)
Yeah, I think you have seen in our deck on our presentation that we have released three buckets. And it's a second major step in the simplification and restructuring of the company to make it leaner. You know, we have things where we were late on developing, like, core process modeling through hubs. We have set up a specific position in our ExCom to develop this at speed, and that will bring a new wave of efficiency. We have also decided to significantly restructure our commercial operations in country to avoid duplication and be much more efficient.
So those steps are very meaningful, Florent, and they will, of course, participate not just on improving short-term profitability, but they will stay with us for the long term to be a more efficient company.
Florent Cespedes (Senior Equity Analyst)
Thank you.
Paul Hudson (CEO)
And Julie, on the switches.
Julie Van Ongevalle (Global Business Unit Head of Consumer Healthcare)
So thank you, Florent, for your question. On the switches, first, maybe on Cialis, I mean, the update remains consistent with what I shared previously. The necessary studies are underway, and we plan to discuss them with the FDA when they're complete, and the data has been analyzed. For Tamiflu, we had several engagements with the FDA, where they provided important feedback on the required studies and the overall program. And we're working collaboratively to incorporate that feedback and determine any impact, but so far, I cannot give you any specific update, but it's, it continues. It remains a priority.
Paul Hudson (CEO)
Yeah, I think that there's still a great path forward.
Julie Van Ongevalle (Global Business Unit Head of Consumer Healthcare)
Yes
Paul Hudson (CEO)
For both. Perhaps Cialis, we're a bit more, can be more transparent about because we can see it clearly up to the latest conversations, and the market opportunity for both is significant. So as and when we get the updates, we'll share. But I think also they're, they're very important value-created moments in the future of CHC. So I think perhaps that's why you asked it, but they're still very real. Okay, next question.
Florent Cespedes (Senior Equity Analyst)
Thank you.
Operator (participant)
Yes. Next question is from Simon Baker, from Redburn. Simon?
Simon Baker (Head of Global Biopharma Research)
Thank you for taking my questions. Two, if I may, which revisit some earlier topics. On the issue of 2024 and the reduced expectations versus what we were looking for, you said that R&D was the major element, but I wonder if you could quantify or give us some idea of the split between the three areas of developing the pipeline, commercialization and the GenMed pricing headwinds. And within that R&D piece, are we really looking purely at increased spend on R&D, or are you but convinced that you have the right research infrastructure for continued innovation within R&D? And then secondly, on consumer, going back to Florent's question.
In the past, some people have speculated that the timing of those Rx-to-OTC switches would impact the timing of the consumer spin. Is that true? Has that changed? And if there is a question of capturing the upside from those switches, does that impact the pathway that you will take for the divestment of the consumer business? So potentially, would you consider keeping a stake beyond an initial spin? Thanks so much.
Paul Hudson (CEO)
Thanks, Simon. JB, the relative weight of the components on the 2024 performance of R&D, commercial investments, GenMed pricing, and perhaps even tax, which wasn't mentioned?
Jean-Baptiste Chasseloup de Chatillon (CFO)
Well, tax is 200 basis points, so that's well-publicized. I would say on a repeat, the bulk of it is a pipeline. Of course, we have also some other topics around GenMed, around as a standalone cost of Consumer Healthcare backing our launches, which are successful. So all of these play a part. But remember, top line growth is untouched. Strong rebound from 25 onwards. On the D versus R, I would say that that's an important point, and of course, it's maybe more an answer for Houman, but from a quantitative from a financial point of view, in terms of risk appraisal, you've noticed that the bulk of our I&I pipeline is in its D Phase, and we are going to double down on investing in a pretty high POS portfolio versus just increasing massively just the R.
So that's an important thing to keep in mind when you look at our risk profile. Regarding the switches, it's not so much a binary piece, but we'll keep in mind everything you've said today, and it's interesting feedback, but it's too early to say which route we would take.
Simon Baker (Head of Global Biopharma Research)
Thanks so much.
Paul Hudson (CEO)
Thank you. Houman, did you have anything to add?
Houman Ashrafian (Global Head of R&D)
Yeah, quickly, Simon, thank you for the question. So there's no doubt that we're going to double down on D. Internally, we're excited about D, including molecules like amlitelimab and small molecule TNF that Paul has already referred to. But I just want to double underline that actually we have huge confidence in our early pipeline, both internally, but also our external, BD activity that will feed the pipeline. You'll have seen today at 7:00 A.M. EST, announcement from Kymera, one of our partners, that the Kymera 474 molecule has just gone into Phase 2, IRAK4 inhibition for hidradenitis suppurativa. So the short answer to your question is, while we are confident about our late-stage development pipeline, we remain excited about our own internal and partnered activity.
But we will be mindful through the reallocation of spending every dollar wisely, and that's the opportunity I've had when I started this. Thank you.
Paul Hudson (CEO)
Yeah. Thank you. I think, yeah, with the RX4, they've just announced –
Correct
Today, Kymera. So that's great news. That's another shot on goal we've got, as we go into humans in HS. Okay, any other questions?
Operator (participant)
Yes. Next question is from Seamus Fernandez, from Guggenheim. Seamus?
Seamus Fernandez (Senior Managing Director)
Thanks for the question. So, just two quick ones. You know, should we basically signal today's announcements as suggesting that you have enough in-house and that you're really investing on the internal side of the business going forward, you know, via the recently acquired pipeline? You know, or do you have further interest in going externally for deals? We've seen a lot of speculation that Sanofi has been extremely active in potential business development. And I guess the concern here is, is that that could also contribute meaningfully to R&D spend, should you move towards especially high-cost I&I acquisitions that are you know, potentially dilutive to the business.
So should we be thinking about that as, you know, R&D-oriented deals or, potentially accretive deals, if that's where Sanofi is playing? And then the second question is just really, I think there's, this assumption that you've basically kind of taken the consensus number, for earnings down 13%-15% in 2025. So I think a lot of the questions that folks are fielding right now are trying to get a sense of the magnitude of that earnings rebound and, you know, just how deep the BOI change is actually going. So if, if there's any color that you can offer, on that, you know, removing 32% doesn't necessarily mean, that we're also guaranteeing above 31% or, hopeful to achieve better than 30%. So any help there would be fantastic. Thanks.
Paul Hudson (CEO)
Okay, well, I think, firstly, on the question on the R&D spend, I think you sort of say is it, is it internal programs or, are we made provision, if you like, for, to do M&A? I think it's just worth clarifying for everybody that we have a significantly increasing confidence in our own pipeline. We don't carry placeholders for, just in case. We are very, very comfortable that we have a lot in our own pipeline that can deliver transformational value creation in the company, period. But that said, you know, we have to work very hard, like we did with the recent Teva deal on the, on the TL1A or the, E. coli deal with Janssen, that we have to, where we want to tuck something in, we have to make a little space for that to get it done. That's discipline.
So I think it's also worth being clear, because we haven't given a number for 2025, yes, we've increased some flexibility for us, but it would be a mistake for people to think that we're not maintaining or increasing discipline. The discipline and to continue to improve the operational efficiency of the company is an absolute priority. Absolute priority. But what we didn't do was dimensionalize it, because we want to get on with the work and create the value. So, and I think you'll see that reveal itself over time, but today is not the day for that. So, JB, is there anything to add on 2025?
Jean-Baptiste Chasseloup de Chatillon (CFO)
No, I think it's important to repeat that we are keeping intact our capital allocation, of course, progressive dividend and so on and so forth, but on the organic growth. But I think we've demonstrated on the last two years that if we are looking at something opportunistic, it will not be highly dilutive, and it has to be very well priced on the value generated for shareholders as of day one. So that's pretty clear. Now, on the margin, I think it's with a small decline, sorry, in 2024, with on a flattish without effective tax rate impact.
It gives a very clear view what that from that base, 2025 will be a meaningful on a very strong rebound.
Paul Hudson (CEO)
Yeah, and that strong rebound, I know everybody is, you know, would like to see us put a number on it and dimensionalize it, and it's already been mentioned on the call, the 32%, which we guided back in 2019. If you think how far we've come, you know, I think what management is saying, fully supported by our board, is that we've earned the right for some flexibility, but it doesn't change our desire to run a more profitable, more valuable company. That simply hasn't changed. What we've done is given ourselves... We've widened the bookends to create more value. So I think if you think it's freestyle, I just want to correct any misunderstanding about that, because that is just simply not the case.
If anything, for our leaders in the company, there is an acute awareness of our ability to demonstrate year on year and a more interesting, compelling operational story. So that is simply not going away. I recognize in your world, you can't put that in a model, but you have to understand, in my world, I need to create the most value for shareholders and patients I possibly can. And that's why we find ourselves probably saying the same thing without being able to give you a number to reassure you. But we have to know that we're betting on ourselves in this moment. We have a lot of confidence in that. I think maybe we go to the last question.
Operator (participant)
Last question from Richard Vosser, from JPMorgan. Richard?
Richard Vosser (Managing Director and Senior Analyst)
Hi, thanks for taking my questions. Two, please. Just on the EUR 500 million target, maybe you could give us a little bit of color on the breakdown between Beyfortus, ALTUVIIIO, and TZIELD. Clearly, mostly Beyfortus, but some idea there. And then just on Beyfortus, I think in the past you've talked about a three-year ramp to peak sales. Is that still intact with the supply? Or can we accelerate it if you can get CDMOs to make more of the product? Just some thoughts there. Thanks very much.
Paul Hudson (CEO)
So yeah, we moved the number of, on sales from EUR 400 million-EUR 500 million. I think you've seen the... Pardon?
Eva Schaefer-Jansen (Head of Investor Relations)
Greater than. Greater than.
Paul Hudson (CEO)
Oh, greater than. Thank you, Eva. Greater than. You can't see this, but this is why she sits next to me, to remind me of the things that I miss. Greater than EUR 500 million, and I think I'm glad you reminded me of that. But you've seen the three, you've seen the individual asset sales in Q3, and you can see the weight of them. And this is the magic about these three assets. The Beyfortus number, you know, could be very significant, but you go all the way through to TZIELD, which at some point over the next year, two years, three years, when screening and everything is done, will start to become a big deal for this company. So their trajectories, I think you alluded in the second part of the question, are not the same shape.
So we've not said how we mix it up, but we just want you to know, I said a bit earlier on about how good we are operationally, that, you know, we're doing that. That's H2 new sales of greater than EUR 500 million. This company knows how to launch. I think there was some question mark about the other than Dupixent, whether there was some rust on the launch machine. There is no rust on the launch machine, just to be clear. So we know, we know exactly where we stand. Thomas, I think the second part was really around, there's time to the ramp to peak, and because vaccines is very specific as well, and will you be impacted by the unprecedented demand?
Thomas Triomphe (Global Business Unit Head of Vaccines)
No, no, great question, Richard, and you're rightfully pointing out the fact that we said roughly three years or slightly more is about the peak sales ramp up for vaccines with the right uptake. I totally keep that in line. I think we are on a three-year trajectory for peak sales, so that's definitely confirmed. What's new with this level of unprecedented demand and our launching capabilities is that maybe the way we were looking at peak sales in the past is now to be updated. So definitely three years in terms of ramp up, but maybe with a bigger potential in terms of peak sales.
Paul Hudson (CEO)
Yeah, it's interesting you say that, because I think what we've learned, of course, you'd rather have perfect supply, but what we learned from all the dialogue is the number of parents and even pediatricians recommending or choosing is more than you could possibly have expected, which tells us that the total is going to be very significant indeed, and the shape may have a little bit of give and take in it, but we'll get to a very different number than we imagined at the beginning. I think that's fair, right?
I mean, listen, by way of just closing this out, for us, you know, I think it's very important to be clear, and I said this to the board just a day or two ago, that we have reached the point where we believe we can create more value by taking this approach, and we understand there's some short-term disappointment. You want to be able to model, you want to have a certainty. The price for certainty for us is not maximizing the long-term value of the company.
So we take it, and we carry it, and, you know, I have to look at that, and I look at the share price reaction and, you know, while disappointing on the day, I have to fully understand our work is to get it done, to get to R&D Day, to show you why we're excited, to show you why we bet. Because if you asked me, would I take this situation back in 2019 when JB and I were rolling the strategy out, the answer is we would, but we've come a long way, but we still have a long way to go. And so while we have a lot to prove, and we'll take it now, we have cost discipline.
We believe in the long-term sales growth potential, and those two things together with an improving probability of success in R&D and operational alpha on launches, means that we can really do something very special here. So I accept that people have said it's a lot of news, a lot to take in, but doubling down to become a pure-play biopharma and respectfully exiting consumer, separating rather at some point, is an important part of the sort of obsessive focus on creating value in pharma. That's where we are. It's the first time this company will be able to be in that situation. So look, we take it what it is today, and we'll show you why it was the right decision. So thank you, everybody, for joining the call. Thank you.