00:00Start off with these earnings pictures. I mean this profit beat is pretty substantial. Just walk us through the numbers and how
00:06sustainable this profit beat is. Well we thank you so much for having me first of all. And you're right. We had a tremendous
00:15quarter both from a revenue growth viewpoint but also a profitability viewpoint. We grow 11 percent on the top line and the bottom line is
00:26going 15 percent. And you know we're making enormous progress across the world actually. Every region is driving growth. The
00:36fastest growing region is the international region. We're growing by more than 20 percent at constant rate. The U.S. is growing a lot.
00:44Europe is growing. So we we're experiencing really very substantial momentum driven by our pipeline of new products and of course the
00:52excellent work our teams are doing everywhere. We are managing our SG&A costs that are not growing very much. But we are
01:00increasing our investment in R&D and we will soon reach a annual R&D budget of 15 billion dollars which give you a sense of the
01:08momentum we have in the ability we have to develop products at scale. Pascal you mentioned the United States. I want to go to the
01:17other piece of your earnings. We'll start there. About 40 percent approximately of this quarter's revenue comes from the states. We
01:22know of course you've been in conversations with the White House. One that's been a real success story. We also know the
01:28Trump administration is trying to push drug costs lower and really put pressure on the entire pharmaceutical industry to do so. Just walk us through
01:35your conversations there. Is pushing pricing lower in the states something on the agenda for you. Yeah absolutely. I mean what is happening is
01:44something that to be honest was long coming over the last 15 20 years. Many wealthy countries around the world in Europe in
01:53particular have been shrinking the share of health care costs that is allocated to innovative pharmaceuticals used to be 13 14 15 percent of
02:02health care costs. And it's down to seven eight percent seven percent in the UK for instance. And the problem with this is that the
02:09patients cannot access the medicines that could save their lives. The other problem is that it doesn't create an environment that
02:17attracts investment from large pharma companies. And finally the U.S. have been really covering the risk and the cost associated to
02:26pharmaceutical innovation. So that had to come. And then this administration led by President Trump decided we needed the rebalancing and
02:34equalization of health care of the funding of innovative pharmaceuticals. A little bit like defense budgets need to be
02:43reinforced in Europe. It's interesting. We had the U.S. ambassador to the United Kingdom yesterday talking about this very issue talking about the
02:52idea that if if investments does not come to the UK or investment leaves the UK it won't come back. That's a permanent state of
03:00affairs. Do you agree with that view. Well first of all let me say it's not a specific UK issue. I mean it's true across many
03:09countries in Europe. But if you look at the UK specifically which of course is our home market and we care very much about the UK's you have a
03:16fantastic academic science in the UK across Cambridge Oxford London. And then basically you could leverage that science to turn it into products
03:28reality for patients but also economic value. But it can only work if the UK attracts investments from biotech but also large
03:37companies to create what is called this ecosystem this life sciences ecosystem that you see in Boston or San Francisco. And that drives
03:45economic growth. And but to do this the UK needs to create an environment that attracts this investment. And right now the opposite is
03:53true companies are reducing investment and have been doing this for many years. I was talking to Mike Duster yesterday the Nova Nordisk CEO
04:01in Copenhagen. He was saying you know what we're actually more American than a lot of American companies out there. Everybody in the
04:08pharma space seems to want to be American. But you're actually doing something about it at the moment. You've just converted your ADRs into
04:14ordinary shares in the United States. That process going through over the last couple of days. Pascal is that the end of that process or is that the
04:22beginning of that process. Do you take it further or are you finished. So first of all you know companies tend to follow
04:34science technologies and also they tend to follow in our case pharmaceutical industry where patients are where you can actually
04:41deliver your medicines to patients. And the U.S. is the environment where science flourishes. You have lots of innovation and of course
04:50success is much easier. Patients benefit almost immediately from our new medicines when they are launched. So everybody tends to of
04:58course follow this and invest in the U.S. In our case what we also want to do is step into the large capital markets that exist in the U.S.
05:07business and we wanted to have this so called harmonized listing and have a share listed in New York because we want to be able to access this
05:15liquidity. But you know we are very happy with our head office in the U.K. We have historical presence in the U.K. and Sweden and there's no reason to change this.
05:25OK. But there's no reason to change it. But you're not telling me that that's the end of it. You're you're leaving that risk out there.
05:35Could you ever see is it possible that AstraZeneca could be a U.S. listed company with a primary listing in the United States.
05:43Well the only thing I can tell you guy today is really what we are doing. We are accessing the capital markets in the U.S.
05:53We have our domicile attacks domicile but also our headquarters are in the U.K. and we are very satisfied with this. Now what happens in 10 years.
06:05I don't know I probably won't be the CEO anyway. So so you know I think it's really hard to make definitive statements.
06:13The world evolves things change. But I can tell you for today we are very very happy having our domicile headquarters in the U.K.
06:22which is a good base. But we also need to partner with the government to create an environment that attracts investment not only from
06:28AstraZeneca or JSK but also from global pharmaceutical companies. And it's not happening today.
06:34And it's a pity because we have so much great academic science in the country.
06:41Pascal. OK. So you're happy for today with the arrangements as they are. Let me linger on the U.K. for just a moment.
06:47You've suggested there that there is perhaps more that the government could do. We have a budget coming up in the U.K. at the end of this month.
06:54You pause your expansion in Cambridge. Is there anything that could be in that budget that would persuade you to do otherwise?
06:59Yeah. I mean I think and again we are focusing on the U.K. because it's a home country and because you you focus on the U.K.
07:08But the question is also true for many other European wealthy countries is how do we how do you create an environment that attracts investment.
07:17How do you create an environment that helps build a flourishing life sciences sector that will then create economic growth for life sciences.
07:26To do this you need to really make sure that the share of health care costs that goes to pharmaceutical innovation is at a reasonable level.
07:35As I said it used to be 12 13 15 percent. Today in the U.K. it's 7 percent. So it needs to change more funding needs to go to innovation so patients can benefit from this medicines that save their lives.
07:49But also we invest in the U.K. as as an industry.
07:53OK. And to try and fix that then Pascal would it would it be enough if in the U.K. example there was an increase to the threshold of cost effectiveness which would mean
08:01that that that more of those more expensive drugs perhaps get funded.
08:08Yeah absolutely. I mean there's this fundamental so-called cost effectiveness number of the cost per quality number that is used in valuing innovation and it has to change.
08:18You've got to realize this cost per quality and it's a bit technical but let's call it cost per quality hasn't changed for 20 25 years.
08:26There's been a lot of inflation in the last 20 years as we all know but this number hasn't changed.
08:32So we are using a 20 25 year old number to value innovation today that has to change.
08:38And if it doesn't change it's going to be almost impossible to give the appropriate cost effectiveness evaluation to those innovative pharmaceuticals.
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