You've really been spoiling the markets over the last 10 quarters. You've always beat expectations and then subsequently you were able to raise your guidance. You beat this time around even though it was a very narrow beat, but you didn't quite manage to raise your guidance. Talk to us about what you saw this quarter and why you're a little more cautious than in previous quarters maybe.
Well, I think this is the first time in many quarters where we've had some generic expiries hit us. You know, when you actually look at the underlying performance of the business, I think what's really exciting is our growth drivers are beating quite significantly. So on the one hand, we had Entresto, our large heart failure drug, go off patent, so that I think made us a little more cautious on the outlook for the remainder of the year. But Kisqali, our breast cancer medicine, beat significantly; Pluvicto, our prostate cancer medicine, beat significantly; Kesimpta, our multiple sclerosis medicine, beats; our cancer medicine beat. So those beats are what matter. I think that will really drive our growth going into 2026 and beyond.
A loss of exclusivity, something that your company, the pharma sector overall deals with all the time. This is a fact of life. However, where do we see the brunt of the erosion when it comes to the sales when it comes to Entresto, which has been one of your blockbuster drugs?
Yeah, I think we'll see the first full effect of Entresto in quarter 4. I mean, that's been the full quarter without Entresto exclusivity in the US, and we'll see those impacts going into quarter 1 and quarter 2 of next year. But as those growth drivers continue to perform really strongly, we'll come out of that, I think, coming back to that strong growth profile that investors have gotten used to. And I think that's what we're really focused on. And Entresto is a fact of life in our industry. What really matters are those launches and also getting the next wave of pipeline assets into the registration and ultimately to launch.
The pipeline. A lot of catalysts are not until 2026. What should investors at this point in time be most excited about?
Well, we just got an approval of Rapsido, which is a drug for chronic spontaneous urticaria, a dermatological condition, which we think will be the first of many approvals for this medicine that could be a multi-billion dollar asset that drives us into the next decade. Similarly, we're going to have the approval in prostate cancer of another indication for Pluvicto that will be really exciting. And I think those two will be big drivers. And then actually later this week we'll be announcing the full data set for the first medicine ever to show efficacy in Sjögren's disease, one of the most common conditions in rheumatology. That will be another important growth driver that we expect to get approval on next year. So three big approvals next year to then drive growth into the future.
Mhm. So, it seems as though you're pretty excited about what's to come, about what has been launched and your ability to offset the generics competition, but still you felt the need to do a massive M&A deal over the weekend. $12 billion is something that you shelled out for Aidity in the US. That is your biggest deal in more than a decade. Talk to us about the rationale here.
Look, when I saw Aidity, I saw the opportunity. I think we saw the opportunity to bolster our neuromuscular pipeline. I mean, we really believe these are diseases that don't have approved medicines. They are debilitating conditions and they affect 50,000, 80,000, 100,000 patients depending on the geography plus. And so the opportunity here to bring first-in-class breakthrough medicines for three different diseases, two of which have multi-billion dollar potential. This has really nothing to do with our near-term patent expiries. What I think this does is bolsters our growth profile 2030 to 2040. These are medicines that have patent protection to 2042, 2043. They're not susceptible to the US IRA, which gives us a big advantage there. And we have a huge footprint already in neuromuscular disease. So it's a great strategic fit, three late-stage assets, and so we're quite excited about the opportunity.
You've been super active when it comes to M&A. You've done, I believe, more than 35 deals over the last 12 months or so. Many of them though bolt-on, smaller than $5 billion a piece. Now this one obviously was the big one. Do you feel like you're done now?
Look, I think in our sector we can never be done. We always have to look for great assets. But I think for us it's all driven by the science and the technology. If it's a fit with our strategic areas of focus, if it's a fit with our technology areas, and in this case neuroscience, RNA therapeutics, this was a perfect fit for us, then we'll of course keep doing the right deals. When you look at our free cash flow, I mean it's approaching $20 billion a year. So we have adequate firepower to do deals like this to bolster the growth profile of the company.
