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Edited Transcript of CSL.AX earnings conference call or presentation 12-Feb-20 12:00am GMT

Half Year 2020 CSL Ltd Earnings Presentation

Victoria Feb 14, 2020 (Thomson StreetEvents) -- Edited Transcript of CSL Ltd earnings conference call or presentation Wednesday, February 12, 2020 at 12:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* David Mark Lamont

CSL Limited - CFO

* Mark Dehring

CSL Limited - Head of IR

* Paul R. Perreault

CSL Limited - MD, CEO & Executive Director

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Conference Call Participants

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* Andrew Goodsall

MST Marquee - Healthcare analyst

* Chris Cooper

Goldman Sachs Group Inc., Research Division - Research Analyst

* David A. Low

JP Morgan Chase & Co, Research Division - Research Analyst

* David Andrew Stanton

Jefferies LLC, Research Division - Equity Analyst

* David Bailey

Macquarie Research - Research Analyst

* Gretel Janu

Crédit Suisse AG, Research Division - Research Analyst

* John Deakin-Bell

Citigroup Inc, Research Division - Director & Head of Healthcare in Australia and New Zealand

* Lyanne Harrison

BofA Merrill Lynch, Research Division - VP

* Saul Hadassin

UBS Investment Bank, Research Division - Executive Director & Research Analyst

* Sean M. Laaman

Morgan Stanley, Research Division - Australian Healthcare Analyst

* Steven David Wheen

Evans & Partners Pty. Ltd., Research Division - Executive Director of Healthcare

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Presentation

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Mark Dehring, CSL Limited - Head of IR [1]

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Ladies and gentlemen, good morning and welcome to CSL's Half Year Results Call for Fiscal 2020. It's Mark Dehring speaking, and I have with me here in the room, Paul Perreault, CSL's Chief Executive Officer; and David Lamont, CSL's Chief Financial Officer.

And as with past practice, Paul will be providing an overview of the results and operations, and David will provide some additional detail on the financials. We'll then move into question and answer.

Please note, this briefing is being webcast. And lastly, before we start, I do draw your attention to the forward statement disclaimer contained in your packs. And I will now pass you over to Paul Perreault. Paul?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [2]

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Thank you, Mark, and good morning, everyone. Thank you for joining us today to review CSL's half year results for this year. First, I'll take you through, as Mark said, an overview of the results and some of the highlights we have achieved, and then I will hand over to David to provide more details on the financials. And I'll finish with an update on the outlook for this year. And as Mark also said, we do have questions at the end. And I can see people are already queuing up. So that's good.

Just before I go into the results, I would like to take this opportunity to reflect on the devastating bushfires in Australia. Certainly, our thoughts here at CSL are with those people who have been affected by these catastrophic events. And we acknowledge the people who have been working tirelessly in support of the relief efforts. CSL has contributed a donation towards the bushfire relief efforts with the hope it will provide urgently needed aid to people affected by the situation. I have to say the outpouring from employees as well, which CSL matched, has come from around the globe. So truly a global company with global concern for all of the people here in Australia.

So moving on, I'm pleased to report that CSL delivered a strong first half result for the first 6 months to 31st December. Our revenue was up 11% at constant currency, and net profit after tax was also up 11% at constant currency. This includes the one-off financial effect on our albumin sales in China, which we will discuss further in the presentation.

It's an excellent start to the 2020 financial year, and it does reflect the focused execution of our strategy, robust demand for our differentiated medicines and the deep passion for meeting patients' needs. So some of the highlights include our largest franchise, immunoglobulins, which has performed exceptionally well, with PRIVIGEN up 28% and HIZENTRA up 37%, which is outstanding growth. This is a testament to CSL's ability to consistently deliver our therapies to meet the growing demand and to fulfill our promise to the patients.

In China, the transition to a direct distribution model is progressing quite well. And the successful evolution of our hemophilia portfolio has continued with AFSTYLA sales up 30% and IDELVION up 21%. And Seqirus has also delivered another strong performance.

Turning to the next slide, and here we have CSL Behring sales by therapeutic area. The Behring portfolio recorded growth for the first half, up 10% at constant currency over the prior comparative period. The clear standout, as you can see, is the growth in the immunoglobulins, which was up 26%. Now this is for normal IG, and I'll just call out that the hyperimmunes are in the other category. So that's about $100 million in revenue that is pulled out of what we call the normal immunoglobulins, just to be clear.

Hemophilia was up 4%, and specialty products were up 7%. Albumin was down 33%, and this was due to the change in the distribution model in China, and this was in line with our guidance. And I'll go into more detail on each of these shortly. In terms of our geographic split, the pie chart on the right shows the broad global reach of CSL Behring sales, with our 2 key markets being North America and Europe. All regions recorded strong growth, except for Asia Pacific, which was impacted by the decline of the albumin sales in China. The rest of the world was up 26%, and this included growth in Latin America and Africa.

Moving on to Slide 5 and immunoglobulins. As I said at the beginning, our IG portfolio has been a standout performer over the first half for CSL Behring and achieving substantial above-market growth. The performance of our 2 leading products, PRIVIGEN and HIZENTRA, was exceptionally strong with growth of 28% and 37%, respectively. Underpinning this growth has been our continued strong patient demand, together with the CIDP label that we received for both PRIVIGEN and HIZENTRA in the U.S., and the demand continues to build there. Patient demand is being driven by the increased usage for these chronic conditions. And that includes continued actual increased usage in primary immune deficiency with expansion of awareness and diagnosis as well as some improved dosing regimens and the expanding utilization of IG for the treatment of secondary immunodeficiencies. The fastest-growing area of the IG market is the subcutaneous segment, and HIZENTRA continues to build its leadership position, capturing more than 60% of all subcu patient starts. And this has further accelerated with HIZENTRA being the only subcu product with a CIDP label, having been granted orphan exclusivity for this indication in the United States. HIZENTRA offers patients the convenience of self administration, which allows them to better control their disease and also has a lower rate of adverse reactions than intravenous IG.

As you know, we stopped manufacturing lyophilized IG some time ago, and this half has seen the last of any sales revenue from these products, which has benefited our mix.

Turning to Slide 6 and albumin. Albumin sales grew in all of our key markets with the exception of China, where we're transitioning to our own distribution model. We saw double-digit growth in albumin in Europe, and we classify -- in what we classify as intercontinental and our emerging markets. And in the U.S., our sales grew 5%. The transition in China saw overall albumin sales decrease 33% over the first half, which is in line with what we had in guidance. Demand for albumin in China, however, continues to be strong.

Excluding this one-off effect on the sales of albumin, the underlying growth for the half would have been in the high single digits. The transition in China is progressing well, and we have commenced distribution via our own distribution model. Throughout this transition, there will be no impact on patient -- on supply to patients, and sales are expected to return to a more normalized level in fiscal year '21.

During the period, we also received Chinese regulatory approval for AlbuRx manufactured at Kankakee, which will increase our capacity to service this market and give us more flexibility in our supply chain.

On Slide 7, we talk now about hemophilia and the portfolio continues to evolve with strong growth in our recombinant products. IDELVION performed quite well with sales up 21%. And as I have mentioned before, IDELVION really is a transformational product for patients due to its compelling clinical profile. It's been achieving the highest rates of patient switches on a global basis. Patients are switching to IDELVION from other recombinant products, plasma-derived products and also converting from on-demand therapy to prophylaxis therapy. And the prophylaxis market has become the standard of care and the market leader in all markets where we have launched IDELVION.

In the hemophilia A market, our recombinant factor VIII product, AFSTYLA, continues to grow well despite the competition and is now exceeding the economic contribution that we received from HELIXATE at its peak. Our plasma drive coagulation products declined 5%, where competitive pressures and tender variability remains. However, we have seen some modest growth in our von Willebrand product, Humate, in the U.S.

On Slide 8 and specialty products. Specialty products sales were up 7%. Perioperative bleeding was up 11%, led by good growth in KCENTRA and our fibrinogen concentrate products that are used for the treatment of acute bleeding. On the other side of the chart, we had growth of 3% in other specialty products. This was held back by a decline in wound healing following the return of a competitor in the Japanese market. And HAEGARDA, which grew modestly, but as we had flagged, had been somewhat supply constrained. Since launching over 2 years ago, demand for HAEGARDA has been very strong. And when a patient takes up on HAEGARDA, we want to ensure they have access to consistent supply with no disruptions. Unfortunately, with demand being so strong, we haven't been able to grow our patient numbers as much as we have liked in the first half. However, the new capacity for additional HAEGARDA supply that I talked about at the full year has now been approved, as expected, and will be available in the second half of FY '20. This will help underpin new launches and to support our future growth for HAEGARDA.

You may recall our Alpha-1 product, Zemaira, had supply issues last year. This is now also resolved, and that's why you saw such strong growth at 31% for Zemaira in the first half, and was up over 15% on the trailing period. So this is all as we work to regain patients in the marketplace. So overall, I'm confident that the growth trajectory of specialty products will improve, and these are products that are nondiscretionary in many of these cases.

Moving on to Slide 9 and Seqirus, our influenza vaccine business. Seqirus sales continue to shift towards the higher value and differentiated products, the quadrivalent vaccines and FLUAD, our adjuvanted vaccine that's aimed at the elderly market. This has led to growth of 16% in seasonal influenza vaccines and overall revenue growth of 9% for the first half. The decline in other product sales relates to the phasing out of pre-pandemic contracts in the U.S. The pandemic business continues to perform well, with reservation fees up 14%, which include new contracts in the EU and Canada. But the bulk of the Seqirus sales come in the first half of our financial year, as you know, from the Northern Hemisphere, which is reflected in the pie chart on the right.

Continuing with Seqirus on Slide 10 and the operating highlights for FLUCELVAX, the cell-based vaccine produced out of Holly Springs. All of our strains are now manufactured using cell-specific seed and, following approval earlier last year, FLUCELVAX was launched in the EU for the season just finishing. Looking forward, we're also looking to launch FLUCELVAX in Australia in the 2021 Southern Hemisphere season.

And for FLUAD, we've retained the preferred recommendation for the over-65 market in both the U.K. and Australia, and the quadrivalent or QIV version of FLUAD was approved in Australia and will be launched later this year.

Finishing up with Seqirus on Slide 11. There's a real growing body of real-world evidence that demonstrates the enhanced effectiveness for both FLUCELVAX and FLUAD. On the pandemic side, we recently received FDA approval for AUDENZ, which is for protection for those aged 6 months and above, from aged 5 and 1 in the event of a pandemic. This is the world's first approval of an adjuvanted cell-based H5N1 vaccine and quite another exciting milestone in the Seqirus story.

Finally, the Executive Order from the U.S. government released late last year calling for better protection against seasonal and pandemic influenza, Seqirus is well-placed to assist with this vision and accelerate access to influenza vaccine technology through our cell-based platform.

And before I finish up on Seqirus, a word on coronavirus, which is gaining a lot of attention around the world. As you have probably heard and know in the news, coronavirus, or COVID-19 as it's now being described by the WHO, is quite different to the influenza virus, so it's not a core area of focus for CSL. However, we have been closely watching developments and have agreed to support our long-standing partners at the University of Queensland in their coronavirus vaccine program. We'll provide scientific and biotech production expertise as well as a donation of Seqirus' proprietary adjuvant technology, MF59, to their preclinical development program. The University of Queensland's research program is just starting. It will be some months before the success of the program will be known. It's in the preclinical development stage, and we see this as a humanitarian effort, not really a commercial effort. But we're here to assist. And so anything we can do to add expertise that we have in this area is going to be offered to help with this crisis.

Changing gears to R&D and the highlights on Slide 12. I hope that most of you had the opportunity to listen in to our R&D briefing in December. Bill Mezzanotte, CSL's Head of R&D, and his team gave you an update on our pipeline. And to recap some of the highlights, in immunology and neurology, we've had great success with HIZENTRA, gaining orphan drug exclusivity for CIDP; and we're starting new trials for HIZENTRA in dermatomyositis. You may have also seen this morning's announcements regarding the FDA granting orphan drug designation for PRIVIGEN as an investigational therapy in the treatment of systemic sclerosis.

In hematology and thrombosis, we have commenced 2 programs for sickle cell disease, one a plasma product, the other in gene therapy. And in cardiovascular, the Phase III program for CSL112 continues to progress well across the globe, and we now have more than 8,000 patients recruited and over 900 medical centers up and running.

In transplant, CSL964 has moved into Phase III, evaluating the efficacy of Alpha-1 antitrypsin for the prevention of acute graft-versus-host disease in patients receiving hematopoietic cell transplants. It's also actively recruiting and on track with the recruitment that we had expected.

And in influenza, we have commenced development of an adjuvanted quadrivalent cell vaccine, combining the best of Seqirus' new and differentiated technologies.

So with that, I'm now going to hand over to David, and he'll take you through the financials and give you more detail on the numbers.

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David Mark Lamont, CSL Limited - CFO [3]

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Thanks, Paul, and good morning, everyone. As Paul said at the outset, CSL has delivered a strong result for the first half of 2020.

On Slide 14, you will see that our reported net profit after tax has increased by -- from $1.161 billion to $1.248 billion, an increase of 8%. On a constant currency basis, the net profit after tax was $1.292 billion, an increase of 11% after adjusting for a foreign currency headwind of some $44 million. As previously foreshadowed, we expect the transition to our own distributor in China to impact OEM sales by approximately $340 million to $370 million for the full year. This impact was fairly evenly split between the first and second halves.

Included in the result within other income is a one-off benefit of $30 million arising from a legal settlement that settled in our favor. From the 1st of July 2019, we adopted the new accounting standard AASB 16 relating to leases. This affects multiple items in the financial statements. However, the net effect to the profit and loss is immaterial.

On the balance sheet, right-of-use assets of some $926 million have been recognized and a lease liability of $1.004 billion has also been recognized. Now these do affect some of our metrics, such as net tangible assets and some of our gearing ratios.

Within the profit and loss statement, the right-of-use assets gave rise to a depreciation charge of $34 million, and an amount of $13 million was charged to interest expense. And this is all compared to the prior period, whereby the full amount was largely taken as a lease expense as a single item.

Looking at the financials in more detail on Slide 15. Revenue was up 11% on a constant currency basis to $4.98 billion. This flowed down to the net profit after tax, which was up 11% at a constant currency to $1.3 billion. And earnings per share was up 11% at constant currency. The interim dividend declared is USD 0.95, which is up some 12%; and for Australian shareholders, this translates to AUD 1.42, which is up some 18%.

A couple of other things to point out on this slide. Firstly, the cash flow from operations was up strongly to $1.245 billion, and this was largely due to 2 main factors. One being the cash flow in the previous period was low due to higher taxes that were paid. And secondly, there hasn't been an improvement in our trade receivables, the main component arising from the transition to our direct distribution arrangements in China.

The other one is capital expenditure. This increased 27% and is in line with our expectation for a full year amount of some $1.3 billion. This is a function of the organization's growth and our capital projects that we have underway at our manufacturing sites are designed to increase capacity and support our future growth.

Included in the CapEx for the period is the opening of some 20 new plasma collection centers, exactly halfway through our target of 40 for the year.

Turning to our segment results on Slide 16. For CSL Behring, total revenue was up 10%. And this was the same for the gross profit, which was also up 10%. The gross profit margin, you will note, was slightly down, and that is largely contributed to -- by a modest increase in plasma costs of around about 2%, arising largely from donor fee increases. But importantly, at a constant currency basis, the gross margin for Behring is a little bit higher at 59.1%. Earnings before interest and tax grew 7%, due to higher expenses such as research and development, and I will go into these in a bit more detail on the next slide.

For Seqirus, total revenue was up 9%, with earnings before interest and tax up 13%, reflecting the shift towards higher value vaccines, which was also reflected in the gross margin uptick. I think everyone is now familiar with the seasonal pattern of this business. The majority of the sales are into the Northern Hemisphere and are reflected in the first half financials, whereas the costs are spread more evenly throughout the year. The upshot is that Seqirus will be loss-making in the second half.

Having said that, the business is well on track to hit the long-range target that was set when Seqirus was first formed.

Turning now to Slide 17 and expenses. Just going down at each line in turn. Firstly, research and development was up 16%, predominantly driven by the Phase III trial for CSL112, and is well in line with the guidance that we have given of 10% to 11% of sales. Sales and marketing expenses were up modestly by 4%. And for general and administration costs, whilst they are up 24% on prior corresponding period, it is worth noting that on a trailing period, they were down 1% at constant currency. As the business continues to grow, we are investing in new facilities and new technology and also expanding our workforce. From December 2018 to December 2019, staff numbers have grown by 10%, and we now have over 26,000 employees worldwide.

Finance costs were down $24 million to $71 million for the half. This was due to the unfavorable $35 million unrealized FX loss that was reported in the previous half, was partly offset by the increase in the financing cost arising from the adoption as AASB 16 that I referenced earlier.

Finally, the effective tax rate was relatively steady at some 20%.

With that, I will now pass back to Paul.

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [4]

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Thanks, David. And now we'll turn to the outlook for this year. We expect continued strong demand for our therapies to continue, and we do expect, again, to outpace the market in expanding our plasma collections for the year. As David mentioned, we're on track with our objective to open 40 new plasma collection centers this financial year. Seqirus will be loss-making in the second half, as David pointed out, but is on track to deliver in line with plan, and this is accounted for in guidance.

So in terms of the guidance, CSL's net profit after tax for fiscal year '20 is now anticipated to be in the range of approximately $2.110 billion to $2.170 billion, representing a 10% to 13% growth over fiscal year '19. This takes into account the one-off financial effect impact of the transition to the new distribution model in China.

Looking at the second half for fiscal year '20, sequentially, profit will decline in line with the seasonality of the Seqirus business. Again, David pointed that out. However, comparing second half '20 with second half of '19, we anticipate a growth of around 8% to 16%, as you can see on the slide. And of course, our forward-looking statements are subject to all the usual disclaimers, as we mentioned at the start of the presentation.

Now just before I finish and invite questions, I would like to share with you our strategy and how we'll continue to deliver on our promise to patients as we head into the next decade. Our strategy is critical. It's critical because it provides a framework for us to innovate for the future, advance CSL's sustainable growth and continue saving people's lives and protecting public health across our businesses. Our people and our culture are critical to this strategy. And for CSL to continue to grow, make a difference in people's lives and be a highly desirable workplace, we need to ensure that the values of our organization remain part of how we do things and guide our work, which is why the people and culture underpin the mission that we have for patients and protection of public health.

So the 5 other strategic areas that make up CSL strategies are certainly focus. We spent a lot of time thinking about where to focus. We'll be targeting those areas where we have strong assets, expertise and opportunities to create sustainable franchises. That focus is also about maintaining insight. So we want to really add value where we can add insight into what we're doing. That really plays into the innovation piece, that CSL will leverage the platforms and capabilities in plasma fractionation, our recombinant technology and cell and gene therapy. We have to continue driving innovation across our company, including product delivery, services and technologies, and we have to create an environment that enables innovation to thrive, where we can think and act progressively in our future.

Efficiency and supply is something that we all talk a lot about when we get together and discuss CSL. But I can tell you that, without investing ahead of the projected demand, we wouldn't see the growth we saw today or be seeing upgrades like we saw today. So we will invest in capacity ahead of projected demand to ensure that we can supply the needs of patients. We'll also invest in technology and process improvements because efficiency remains a core focus area at CSL. We have to keep cost in line.

Sustainable growth and the growth platforms will include plasma, recombinant cell and gene therapy and influenza vaccines. So the focus will maintain.

And in terms of digital transformation, we have to really build and transform the business model over the next decade to drive efficiency and support innovation throughout our business, including R&D, manufacturing and commercial.

Just coming back from a large meeting in this space at JPMorgan in the U.S. about a month ago, the amount of effort and resources being pushed against the digital transformation piece of health care is expanding significantly. So we all need to make sure that we're paying attention and utilizing the -- not only the data, but the analytics and the information that comes out of data through a digital strategy.

So with our robust pipeline and R&D; our commercial operations excellence, which is really delivered across the globe, I can't thank the commercial colleagues enough; the passionate people; and the growing reputation as a global biotech leader, we're well positioned to bring our strategy for the future really to life.

And with that, I'll end and be happy to take questions.

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Questions and Answers

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Mark Dehring, CSL Limited - Head of IR [1]

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Thanks, Paul. (Operator Instructions) This morning, our first question comes from Lyanne Harrison at Bank of America.

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Lyanne Harrison, BofA Merrill Lynch, Research Division - VP [2]

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Can we talk a little bit more about IG? Obviously, very strong growth there. But can you add a little bit more color as to what sort of price increase you've been able to get in PRIVIGEN and HIZENTRA? What's the volume trend, both in the United States and non-U. S. market? And do you also get a sense of how much CIPD has contributed to that growth?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [3]

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Thanks, Lyanne. Yes. Look, there's all the moving parts that you just mentioned, clearly, but it's basically a volume story. So the majority of the growth has come on the back of volume. There is price and mix in the 2. So moving from more mix of subcu, which is at a higher price point than the [IB], and that's where we've seen a lot more growth in HIZENTRA and CIDP. So the growth in CIDP is not just volume, but it's also the mix that affects CIDP. So I'd say it's growing. But look, neurology, you have to get to these physicians. It's a -- it's not an easy call point. So it is contributing to the growth. That's probably more through the mix, but remembering that the CIDP patients also have higher dosing than, say, primary immune deficiency. So there's volume there as well as mix that's coming through. We've seen sort of CPI-type increases in terms of price in the U.S. and higher than that in Europe. And I think this is a reflection of the European tenders and the value of IG that's being recognized and needed in -- around the globe. We've seen an increase in the awareness and diagnosis of primary immune deficiency. I think that continues to grow as it becomes more well known in various countries and how to diagnose and that you actually have to look at the number of infections that people have had through the course of their life and that there's probably something else going on besides just continuing to give bouts of antibiotics.

And then the last piece is really secondary immunodeficiency. So we see a continued increase in the secondary immunodeficiency space where the new CAR-T and B-cell depleting therapies, where you have to immunosuppress the patients to get targeted organ effect by these receptor sites with these new therapies, requires that the immune system be turned down so that they don't get rejected. And at the same time, then you have to rapidly rebuild the immune system in these patients. And the way to do that is with a polyclonal IG. So there's multiple levers here, a little bit of price, some mix, but a lot of volume.

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Lyanne Harrison, BofA Merrill Lynch, Research Division - VP [4]

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Right. And just as a follow-up on that with the volume being the main driver. 26% growth is quite significant. Do you think that, that is maintainable for the remainder of 2020 and going into 2021, given the relative supply that you'd be able to put into the market?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [5]

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I can't put a percentage. I would have to go back and look at the half-on-half. But certainly, it's all in the guidance. So I'm projecting that we're going to continue to grow through the year, which is why we've upgraded the guidance. And it'll be driven a lot by the IG portfolio. So I think that what we see and why I've invested through the years in plasma collection ahead of what we saw demand coming, that's why we continue to invest. That's why I'm still opening the new plasma centers. So the upshot of that is I wouldn't be opening more plasma centers if I didn't think the growth in demand was going to continue.

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Mark Dehring, CSL Limited - Head of IR [6]

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Our next question comes from Chris Cooper at Goldman Sachs.

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Chris Cooper, Goldman Sachs Group Inc., Research Division - Research Analyst [7]

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Firstly, I didn't hear any mention of the sales guidance today. Can I just quickly confirm, you're still sticking to the 6% constant currency for the year?

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Mark Dehring, CSL Limited - Head of IR [8]

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Sorry, Chris. Say that again. We didn't catch it here.

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Chris Cooper, Goldman Sachs Group Inc., Research Division - Research Analyst [9]

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Sorry. I didn't hear any mention of the sales guidance this morning. Can I just confirm you're still sticking to the same level that you were guiding to previously?

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David Mark Lamont, CSL Limited - CFO [10]

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So Chris, it's David. We didn't give an update to the guidance specifically on revenue. But you should take that there is growth in that, given that we've upgraded the net profit after tax guidance. So the top line helps drive the bottom line.

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Chris Cooper, Goldman Sachs Group Inc., Research Division - Research Analyst [11]

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Got it. So there is an implicit upgrade to your previous sales guidance. Okay. Can you help us with the quantum then? I mean you're guiding here to 8% to 16% increase in earnings in the second half over second half. Assuming you've notched up sales. I mean, it still looks like you're going to be delivering a lot of additional operating leverage in the second half in contrast to what you've done in the first half, really. Can I just kind of push you a little bit on how you expect to deliver that? Is that going to be more gross margins? Or should we be thinking about a tapering of SG&A again?

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David Mark Lamont, CSL Limited - CFO [12]

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Well, Chris, you're always entitled to push (inaudible). But what I would say to you is we don't look at this half-on-half. I think you've heard us say that numerous times. The guidance that we have given in relation to expenses, as you should [exhume], that you've got something like 10% to 11% on R&D flowing through. As I mentioned earlier, that if you look at trailing period in relation to G&A, it's relatively flat, and you would expect that they -- we continue to expand the number of employees and some of those costs flow through more to the second half as we take the annualized effect of salary increases and new staff coming on. And certainly, in relation to our sales, costs, they are driven largely by the top line as well, acknowledging that some of those costs are also through agents and distributors that we have. So as the top line grows there, the expenses continue to get added as well. So from that side of things, we haven't broken down the P&L by each individual component for you. But as you should be able to factor in is, obviously, Seqirus will make a loss in the second half and that the same sort of numbers sit there on an effective tax rate, I'd guide you to around about 20% there as well. So I think you have the components.

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Chris Cooper, Goldman Sachs Group Inc., Research Division - Research Analyst [13]

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Got it. And second question, just on cost per liter. You alluded to it in the prepared comments there. Clearly, it's having a diluted impact on gross margins this year. Can I ask this slightly sort of longer-term question about how we expect this to trend over the next year or 2, beyond fiscal '20? You're on track here for your 40 new centers this year. Some of your competitors have increased the amount of capacity they're bringing onstream on the production side, and certainly the fractionation side as well. I mean, going forward, from fiscal '21, do you expect to see some relief in the cost per liter? Or should we be thinking about this current level as the new normal?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [14]

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Well, look, I'd say that we're looking to be as efficient as possible, Chris. So we're continuing to put pressure on the business to make sure that we're the most efficient producer. We are already, by a long margin, compared to our competitors, and we need to continue to improve. So look, the economy is going quite well, costs are up on the donor fee side, but we're looking at -- by our expansion, don't assume that all 40 centers are all just for volume. It's also for getting efficiencies and getting the right model of collections across our fleet. So there is pressure downward in some areas and pressures upwards in others, and our expectation is that we'll continue to look for leverage there.

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Mark Dehring, CSL Limited - Head of IR [15]

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Our next question comes from Steve Wheen at Evans & Partners.

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Steven David Wheen, Evans & Partners Pty. Ltd., Research Division - Executive Director of Healthcare [16]

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My question is just on albumin. And I'm just curious as to whether or not that first half impact from China starts to moderate a bit in the second half, especially as the GSP license comes on and the margin that, that might bring to those -- to that albumin sales. And as part of that, has the coronavirus created or has the potential to create any disruption around getting albumin out into the various regions of China? And then finally, if you could just talk to the growth rate sort of, I think was guided as being in the high single digits, if you remove the China license effect. Just any comments around it coming out of lockstep with the IG growth.

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [17]

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Thanks, Steve. So look, I would say that first half versus second half, I mean, we guided to the $340 million to $370 million. If you look at the numbers, you'll see about $170 million, about half in the half. So it's pretty evenly split between what we had guided to originally for the GSP license. So I'd say it's on track. I wouldn't expect to see it moderate too much. I think it's in the range that we've guided to previously. So I think that's fine. We haven't seen any impact to our supply lines. We've -- our imports and our distribution is going okay in China. And we do have a global supply chain with flexible -- more than 1 production site, which gives us flexibility in our supply chain as well. So we expect to see that continuing. The single-digit growth, high single digit, when you look at the amount of IG and albumin, we're still producing albumin. So it's just the ability for us to move the albumin out of our system into China and as we wind down some of the inventory in the distributor side, which is where it is. So the growth is on the sales line, but we're still producing and making sure that there's outlets, which is why it was interesting to see double-digit growth in Europe and emerging markets and even a 5% growth in the U.S., which had previously been a bit more flat. And that's a big market as well. So the pricing in China, as we -- as it comes back and we sell our own product in there and the margins should be okay, but it's competitive, but it's still in high demand in China. So I don't expect to see a decline there. And I think as we transition, it will all flow through as predicted. I don't see anything changing that at the moment. The coronavirus, obviously, is difficult. But it's not, as I said, impacting that from this perspective. And yes, you're correct. There has been a margin impact with the absence of the albumin sales. So yes.

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Steven David Wheen, Evans & Partners Pty. Ltd., Research Division - Executive Director of Healthcare [18]

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Great. And just my second question on the one-off items. There was 2 that I could see so far. Firstly, other income of $30 million, if you just talk to that. But also, you've got an inventory provision of $87 million. And is there -- has that got anything to do with the flu shot provision?

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David Mark Lamont, CSL Limited - CFO [19]

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So just on the inventory provision, if I take that one first, Steve. So as you said rightly, we did have $87 million in the half. I will just guide you to the fact that last year, for the full year, was $191 million. So again, some of these inventory aspects are -- we are running pretty large manufacturing sites, and sometimes we do have things that go bump in the night. So I would guide you to -- the number last year is probably a pretty good indication for the full year. It does -- again, it's not something that we manage half-on-half as such. Included in that is clearly what we need to do across both businesses, both on the Behring side of things and Seqirus. In the second half, as you are well aware, we start to manufacture for the coming Northern Hemisphere season. We obviously do produce, at risk, alongside it what we think the likely strains are to be. And certainly, sometimes we get that right, sometimes we get it wrong. Our expectation, though, is consistent with -- is built into the guidance that we've given and is in line with previous practices as such. So I don't think there's much else on that one. The other one-off item, as you said, it was a favorable legal settlement that we received. Again, we have a range of legal litigation matters, given the size of the organization at various different times. This one fell our way, and we've obviously recognized that in other income.

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Mark Dehring, CSL Limited - Head of IR [20]

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Our next question comes from David Low at JPMorgan.

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David A. Low, JP Morgan Chase & Co, Research Division - Research Analyst [21]

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(inaudible) that the comment there that competitor supply challenges were some of the explanation. Just wondering whether we should be thinking about that as a short-term issue or one that plays out over a little longer.

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Mark Dehring, CSL Limited - Head of IR [22]

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Sorry, Dave. We missed the first half of your question. Could you say it again?

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David A. Low, JP Morgan Chase & Co, Research Division - Research Analyst [23]

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Sure. So I'm just looking at the slide deck. Says that competitor supply challenges were part of the reason for the very strong immunoglobulin growth. Just wondering whether that's a short-term issue or one that's [likely] to go on for longer?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [24]

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No. Look, I think -- as you know, David, I mean, it's a complex supply chain. And the competitors are trying to keep up, and I think they're doing a good job at trying to come back into the marketplace. I think when we look at half-on-half, again, it's -- there's timing in all of these things. So that was part of the impact. But I guess it's -- I just try to focus on our strategy that if we see the demand, we try to prepare for it and prepare ahead of time. And that's what we've done. And so we were able to, again, take advantage of that to supply the market for these patients who needed it. So I don't think it -- there's always questions around it because I don't know what the others do. All I can tell you is that we're putting ourselves in the best possible position to continue to supply and grow.

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David A. Low, JP Morgan Chase & Co, Research Division - Research Analyst [25]

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Great. And just my other question, you've commented on HAEGARDA and the second [train's] now available. Just wondering how your -- if you could talk to the timing, I presume we've got a full half with sufficient supply to grow share. What are you expecting in the face of, obviously, a fairly competitive market there as well?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [26]

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Look, I'd say HAEGARDA continues to grow patients. And we have, even though half-on-half, it was lower than it has been in the past, we continue to grow patients with HAEGARDA. It's just we couldn't grow at the rate we'd like to. It's a very, very competitive product. And I would say that, as you look at the second half, I wouldn't expect it for the full half. I mean we just got the approval. And so I'd say, in the second or the fourth quarter of our fiscal year is when we'll start to see the supply flow through at a more regular rate. In between, we're trying to get as much out as possible, but it does take a month or 2 to -- once you get the approval, to actually get it through the supply chain. So I'd say towards the second half of the second half is when you'll see more of an impact, and then it will continue into next year. But I think we have a very strong position. We still have a lot of patients wanting to get on to HAEGARDA. We've launched -- this allows us also the ability to launch in new countries. So I'm feeling pretty positive about our ability to continue to grow that franchise.

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Mark Dehring, CSL Limited - Head of IR [27]

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Our next question comes from Sean Laaman at Morgan Stanley.

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Sean M. Laaman, Morgan Stanley, Research Division - Australian Healthcare Analyst [28]

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My question relates to the growth in the 2 immunoglobulin franchises. Now granted, both were very strong, just the delta in HIZENTRA over PRIVIGEN. I'm wondering if the tightness in the market is really sort of facilitating that excess growth in HIZENTRA, i.e., patients might be teetering on switching, that they have to take what they can get. And therefore, if you did end up at a point in the future where growth is more -- sorry, supply is more adequate than the growth rates in those 2 products, might be a little more closely aligned than what we've seen today.

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [29]

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Look, Sean, I mean, possibly, but it really depends on the patient and the indication, right? So in secondary immunodeficiency, which is growing quite a bit, you'd tend to see more IV because they're typically in hospital patients who are in clinic, and that's where you'd see it. On the CIDP and the more chronic side, PID, CIDP, this is where you'll see the HIZENTRA continuing to grow. And remembering that we launched the first subcutaneous IG in the United States in 2005 with Vivaglobin, and it's taken us from then until now. So you're talking 15 years to really grow the primary immune deficiency patient population with subcu to maybe half the population for PID. So it's not like this happens overnight. I mean these are serious medicines and not every patient is a subcu patient. So we think we have -- clearly, we are the market leader in subcu. We have a great product for patients. But it has to be the right patient, and it has to be more of a chronic disease where they can administer at home versus some of the acute uses of IV. So taking what they can get is an interesting comment because you can't just switch from IV to subcu just because it's available. There's training involved, there's distribution involved. It's not the same by any stretch. So it really is a demand issue for the subcu because patients want to take control of their infusion as opposed to an availability issue.

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Sean M. Laaman, Morgan Stanley, Research Division - Australian Healthcare Analyst [30]

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And my second question, there was some description around plasma collection cost. But I'm wondering if there's any updated thoughts on the [next system]. Any additional feedback on training system feedback, pushbacks? Anything you could provide us there would be really helpful.

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [31]

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Nothing I can update you on at the moment. We continue to have a good partner in Haemonetics, and we'll continue to see where we go. But I can't really make any comments at this point.

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Mark Dehring, CSL Limited - Head of IR [32]

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Our next question comes from Dave Stanton at Jefferies.

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David Andrew Stanton, Jefferies LLC, Research Division - Equity Analyst [33]

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Yes. Firstly, I wonder if you could give us a little bit more color given the AASB impact on what you expect in terms of F '20 depreciation and interest rate -- interest expense. I know that you still -- as I think I heard, you're still maintaining a tax rate guidance of around 20%?

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David Mark Lamont, CSL Limited - CFO [34]

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Yes, David. So you should take the half as being pretty reflective of what it would be also in the second half. So most of that adjustment, as I said earlier, on the [right to you asset] we had to book from the first of July. So you would expect, and I should say the depreciation follows effectively the lease term that we have in place. So you would expect that to be reasonably consistent, acknowledging that as we open new centers, we enter into new leases as part of that. But -- so there would be some tick up as we move forward, just in line with the growth that we see in the collection centers.

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David Andrew Stanton, Jefferies LLC, Research Division - Equity Analyst [35]

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Very good. And then any comments on Momenta's MS -- M254? Is that a competing product with CSL730? And how should we think about the JV partnership on that basis?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [36]

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Look, I mean, we have a partnership on 730, and I think that's going really well. We have a very good relationship with Momenta, and we continue to keep track of everything that's happening in that space. I really can't comment much more on it other than to say that the cultures fit very nicely. We work well with them and they with us. So we keep abreast of all the developments, not just at Momenta, but in all of the other development areas with the kind of disruptive-type approaches to some of the IG indications.

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Mark Dehring, CSL Limited - Head of IR [37]

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Next question comes from Saul Hadassin at UBS.

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Saul Hadassin, UBS Investment Bank, Research Division - Executive Director & Research Analyst [38]

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First question, just looking at the Behring division, it looks like COGS growth for the half grew about 12% constant currency. Just trying to reconcile that with the comments around the majority of IG growth being volume. Can you just confirm what was plasma volume growth 6 to 9 months ago, if you're able to give us that figure?

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David Mark Lamont, CSL Limited - CFO [39]

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I don't actually have that, Saul, off the top of my head. Looking at Mark and he's shaking his head as well. So how about we take that one, and we'll come back to you?

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Saul Hadassin, UBS Investment Bank, Research Division - Executive Director & Research Analyst [40]

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Yes, that's fine. I guess the point being that, David, you mentioned sort of 2% plasma cost inflation. If you sort of remove that from the COGS growth of Behring, it suggests volumes grew maybe 10%. So to do IG growth at 26% suggests that the majority of it was maybe mix and price? I'm just wondering if that's a better reflection of the contribution to IG revenue growth. Or would the volumes actually grow 15% and we just got that -- number is just not right?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [41]

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Yes, I'd say you probably -- the volume growth is a bit more than the mix in price. So slightly above where maybe you're thinking.

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Saul Hadassin, UBS Investment Bank, Research Division - Executive Director & Research Analyst [42]

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Okay, Paul. And then just the second question, Paul. I just noticed over the weekend, there was a study actually going on in Peking Union Medical College Hospital looking at the use of IVIG for severe pneumonia in coronavirus patients. Have you had any engagement with any clinical agencies to assess the potential use of IG (inaudible)

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [43]

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Not yet, Saul. I mean there is some work being done in different parts of the world around things like hyperimmunes and whether that could be a solution. We're not sure that, that will be the case. But there is still a lot to learn about this. It's early days. Clearly, we have had some requests in China for additional IG. But of course, there's very little available from our facility because it's up and coming. And so we don't really have supply to impact the market there since you can't import IG. But I think people are grasping at this point to see what they can do. I mean, clearly, it's a horrible crisis. And so people are looking for these things. Certainly, you would hope that with pneumonias and some of these other secondary parts of the virus, that maybe you can treat and keep people's immune system rolling. But we haven't engaged. We're engaged in China because of the Ruide facility in Wuhan. Our first concern is the safety of our employees and the people there at Wuhan. To date, we haven't had any transmission of disease from our employee -- in our employee base, which is great. And we're working closely with the local authorities and taking their guidance in terms of what they'd like us to do. So no direct engagement in Peking as of yet. And certainly, we're here. If people are asking for assistance, we're happy to do what we can.

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Mark Dehring, CSL Limited - Head of IR [44]

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The next question comes from Andrew Goodsall at MST Marquee.

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Andrew Goodsall, MST Marquee - Healthcare analyst [45]

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Just on Seqirus. Your major competitor had an early stumble. So just trying to sort of understand if the sequencing of those sales gives you greater confidence that you'll have lower than historic returns because I think you're still using sort of historic as your factor to guide sort of return level?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [46]

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Thanks, Andrew. Yes, absolutely not. So I guess the point is, is that, yes, we did have more sales, but that doesn't necessarily mean less returns because a lot of the sales, as you know, with the change in the strain at the end of the season, it did delay manufacturers delivering. We were able to sell the product that we had in inventory, so that's great. It still has to get into the arms. And so you make the sale, that's true, but it still has to get used. And so because the sales were made in the first half, we're still waiting to see how much of that actually got distributed into the general public and how much actually gets used. So potentially, it could be less than historic returns, but it's so uncertain with the way flu is distributed and infused in the U.S. as to what that rate of return will be. I wish I could give you a number and tell you, absolutely, I feel like it's going to be a lot less. But I think that would be inappropriate at this point. We handle returns over the course of a long period of time in the second half and sometimes into the following year because of contracts and people trying to leverage things. So I'd say let's stay tuned, but I wouldn't get overzealous on that particular point.

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Andrew Goodsall, MST Marquee - Healthcare analyst [47]

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Okay. No problem. That's great. And just keeping on the China theme. We've been told that collection centers haven't reopened -- China-based collection centers haven't reopened since Chinese New Year. I guess just want to confirm that's still the case. And I guess, on a sort of 6-month basis, if they close for extended period, would you see that sort of as a little bit of a -- ultimately a market opportunity for imported albumin?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [48]

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Look, I think potentially, over the short term, Andrew, the government had put in place that the businesses could not reopen until Feb 13. But I don't know whether they have updated that as of yet. We had plans on reopening our facility on the 17th of Feb. And we're still waiting to hear from local authorities whether that's moved or shifted as of yet. So those were the original time lines that the government had put out, so businesses to reopen around the 13th, and then we did our internal look and said 17th. But again, this is a moving target. And so we're getting updates daily to see if that's going to be the case or whether the shutdowns will be extended.

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Andrew Goodsall, MST Marquee - Healthcare analyst [49]

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And my understanding is that's China-wide, those shutdowns. Or sorry, not the -- the closures of the collection centers.

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [50]

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That's my understanding, as well.

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Mark Dehring, CSL Limited - Head of IR [51]

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Our next question comes from David Bailey at Macquarie.

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David Bailey, Macquarie Research - Research Analyst [52]

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Paul, you talked to your HAE population or number delivery earlier. I'm just curious as to what you are seeing in terms of your patient population just in the context of your competitor talking about a high proportion of their patients being new. I'm just wondering if you've seen a switching out of HAEGARDA. Just any comments in relation to what you're seeing would be helpful.

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [53]

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Yes, sure. Look -- thanks, David. As I look at our HAEGARDA sales, we look half-on-half, remembering that Takhzyro launched last year really fully. There was a slight impact when they launched, but we haven't seen a degradation of our patient population. So we have done a very good job of maintaining our patients because these patients have had attacks for years, and on HAEGARDA, they weren't having attacks. So for them to change just because of dosing was not really the driver for them. Having said that, there is -- there was a lot of opportunity that we couldn't fulfill because of our capacity. And so I'd say that Takeda's done a good job at filling some of that gap. But from a HAEGARDA perspective, I'm very bullish on our future, not only in the U.S., but in multiple countries as we now have eliminated some of the bottlenecks in the supply chain.

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David Bailey, Macquarie Research - Research Analyst [54]

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That's helpful. And just one for David. Had a look at the financials, depreciation for the first half looks to be about $168 million. Just wondering if that does include the $34 million of the AASB change? And if so, I mean, just any commentary in relation to why it's relatively flat given the increase in PP&E over -- relative to the prior year.

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David Mark Lamont, CSL Limited - CFO [55]

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Yes. So firstly, it does include it, David. So that's -- the $34 million that I mentioned is in the depreciation line, and so is factored into that overall growth. As you are well aware, a lot of the capital expenditure that we're building at the moment is still in flight. So the amortization and depreciation of that doesn't actually flow through until we obviously have the plants up and running as such. The bulk of the capital expenditure is down, our base fractionation, sub fractionation processes. We did see in the previous half, second half of the year that, obviously, we completed a lot of our IT development, and that's coming through as amortization expense. So hopefully that addresses your question.

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David Bailey, Macquarie Research - Research Analyst [56]

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Just more around if you strip out AASB, why PP&E -- or why the depreciation charges would be flat relative year-on-year? Like (inaudible)

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David Mark Lamont, CSL Limited - CFO [57]

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Again, yes, part of that is linked to the reported numbers. So there is a little bit in there around FX. Clearly we're -- we get a benefit sometimes alongside where that expenditure's actually originally incurred.

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Mark Dehring, CSL Limited - Head of IR [58]

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The next question comes from Gretel Janu at Crédit Suisse.

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Gretel Janu, Crédit Suisse AG, Research Division - Research Analyst [59]

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So firstly, just on capacity. Are you able to give us an update on your fractionation and manufacturing capacity, particularly in relation to IG? I guess I'm just trying to work out whether you have any constraints at this point in time that potentially could be restricting your ability to grow at an even faster rate?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [60]

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I wouldn't say it's a pretty quick rate that we've grown at, Gretel. I don't think we have the capacity to grow any faster. But I would say that, in the guidance, it tells you that we still have room. So -- and that'll move into next year. We also do have a site tour the 12th of March this year at our facility in Bern, and it might be something that if you're not aware or you want to join, please get in touch with Mark. But I think that will give you some idea of the new capacity that's coming on line in Bern as well. We've got 2 new modules in our project there, and it will give you some look at the future. And again, not only plasma collections, but then you look at our CapEx and our capacity that we've been investing in, it tells you we still expect some future growth here.

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Gretel Janu, Crédit Suisse AG, Research Division - Research Analyst [61]

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So just to confirm that, in the short term, there aren't any capacity constraints for IG?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [62]

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Well, look, I mean, could I -- would I like to make more? Sure. But are there constraints? There will be constraints, but not in terms of our ability to grow.

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Gretel Janu, Crédit Suisse AG, Research Division - Research Analyst [63]

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Yes. That makes sense. And then second question, just on KCENTRA. So from memory, I think you had 14% growth in FY '19 sales. So are you able to give us any kind of color in terms of the growth that you've seen in the first half of '20? And then how you're particularly viewing the demand sort of versus NOAC?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [64]

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Yes. So my calculations '19 and '18 were about 19% growth on KCENTRA. But I think in terms of our ability to continue to grow, it's been a great story. It's been growing in the high double digits, over 20% and then the high teens for quite a number of years. Much longer than some people expected, actually. And so 11% for that -- that grouping of products in the perioperative bleeding, a lot of that was driven by, obviously, KCENTRA. And we still see an increasing demand and an increasing utilization across the hospital system. So we don't have any capacity constraints in that area of our business, and I think there is still room for growth. Now whether it's going to be at high-single digits or mid-double digits in the teens really depends on the demand that we see in the hospitals. But I can tell you that I still expect it's going to continue to grow.

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Mark Dehring, CSL Limited - Head of IR [65]

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Our next question comes from John Deakin-Bell at -- where are you these days, John? Citigroup. Sorry.

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John Deakin-Bell, Citigroup Inc, Research Division - Director & Head of Healthcare in Australia and New Zealand [66]

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[Indeed.] I've got a quick question on albumin. I know you've called out that the U.S. is growing at 5%, which seems like quite a strong growth rate. And your key competitor had negative growth in the last period. Is the market growing at 5%? Or are you taking market share?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [67]

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I think we probably took a little bit of share in the first half. And yes, some of it is around the supply chain and some of the things we're doing, but I would say that there is a small underlying growth in the U.S., but it's in the low-single digits.

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John Deakin-Bell, Citigroup Inc, Research Division - Director & Head of Healthcare in Australia and New Zealand [68]

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Okay. And just maybe a longer-dated question on the IG business. You have sort of invested upfront and some of the competitors haven't done that, and you've taken quite a bit of share. At some point, they probably will catch up. How do you capitalize on the investments you've made and some of the goodwill that you've created with the customers to maintain that market share when, ultimately, there's probably more supply in the next 3 to 5 years?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [69]

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Yes. Look -- thank you. I think that it's not just goodwill, it's consistency and reliability as a supplier of these life-saving -- life-extending meds. And so that means a lot. When we don't move markets based on pricing and we continue to supply markets because of the patient demand, that creates more than just goodwill. It creates that reliability and consistency of supply, which is highly needed. We've been called in by different governments when they've had shortages to supply. And when we can, we respond to those, and that is well received by the folks that we deal with. Our growth in France, for instance, has been well recognized. And I think that, that is something that we think about in terms of can we reliably supply. If it's a tender market, countries that are just tendering for product and only care about price, that's one thing. When it's something that we can get embedded into the local medical community and patient community, that's a different way of approaching things. And I think we've established our reputation as a -- not just the words as patient-focused, but actually behave as a patient-focused organization. So that's more than just goodwill. That's culture. And I think that, that's really what makes a difference.

In terms of the competitors and the supply, the demand continues to grow. And so there is room. I can't supply the whole market ourselves. It's just -- it's impossible based on the growth rates and based on the demand that we have across the globe. So we need to work together as an industry to make sure that patients are being served. And I can remember when there were real, real bad shortages of these products, and you have to really understand that it makes a difference and that we need to make sure that these products are available.

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Mark Dehring, CSL Limited - Head of IR [70]

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Ladies and gents, we're drawing soon to a close. But we do have one last remaining question from David Low at JPMorgan.

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David A. Low, JP Morgan Chase & Co, Research Division - Research Analyst [71]

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You can hear me?

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Mark Dehring, CSL Limited - Head of IR [72]

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We can.

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [73]

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Yes.

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David A. Low, JP Morgan Chase & Co, Research Division - Research Analyst [74]

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Yes. Just one quick follow-up. I mean you commented on Momenta's hypersialylated Immunoglobulin and with those, you have a number of anti-FcRn therapies in trial. Just, Paul, wondering how you think about that. I mean is this, in your view, likely to be a competitor for some of these autoimmune conditions?

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Paul R. Perreault, CSL Limited - MD, CEO & Executive Director [75]

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Possibly, David. I mean I think from -- for some of the smaller conditions, it's going to be hard to see the CIDP breakthrough just based on the clinical trials and how they're run and the availability of products that currently treat CIDP. But some of the others? Yes. I mean, when people are looking at ITP and some of the smaller indications, certainly, there could be effect. The [hypersialylater] I think is interesting, of course. And we have to understand what it all means and where we are in that process. But certainly not having to collect additional plasma is always helpful because it's a lot of work and a high cost. But to get to lab scale and then pass that and into full production would be an interesting dynamic. So look, I think there's opportunity, not just threat, in terms of some of these areas because, again, if you -- even if you knock off a few smaller indications, that leaves more IG for the growing populations for things like SID and CIDP. So with the way that IG supply is today, that actually can take a little bit of pressure off some of the demand that's there for other countries and other patients.

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Mark Dehring, CSL Limited - Head of IR [76]

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Thanks, David. And ladies and gentlemen, we'll need to now draw the briefing to a close.

Thank you very much for your interest in CSL, and good afternoon.