Good morning and good afternoon, and welcome to the Novartis Q2 2015 Results Conference Call and Live Audio Webcast. Please note that during the presentation, all participants will be in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] A recording of the conference call including the Q&A session are available on our website shortly after the call ends. [Operator Instructions] With that, I would like to hand over to Mr. Joe Jimenez, CEO of Novartis. Please go ahead, sir.

Thank you and welcome to our second quarter results presentation. Joining me on the Novartis end are Harry Kirsch, CFO; David Epstein, the Head of Pharma; Jeff George is here Head of Alcon; and Richard Francis, the Head of Sandoz Division. Now, before we start, I’d like to ask Samir to read the Safe Harbor statement.

Thank you very much, Joe. The information presented in this conference call contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors. These may cause actual results to be materially different from any future results, performance, or achievements expressed or implied by such statements. Please refer to the company’s Form 20-F on file with the Securities and Exchange Commission for a description of some of these factors.

Thank you, Samir. Okay, starting on Slide number 4. We had a solid quarter in Q2 for our continuing operations, our net sales were up 6% to $12.7 billion in core operating income was also up 6%, both in constant currencies. You saw that Pharmaceuticals and Sandoz had very strong quarters. Alcon had a weaker quarter and we’ll talk about that in a minute. But innovation across the company was strong in Q2 with the early launch of Entresto in July and Glatopa the generic of Copaxone for multiple sclerosis. Slide number 5 shows the results in a little bit more detail, you can see sales and core operating income. Net income of $1.9 was down 18% in constant currencies due to a couple of one-offs and a high year – year-ago base that Harry will explain. You can see core EPS up 7% on a constant currency basis. Now we have five priorities for the year and we made progress on all of them this quarter starting with the first quarter which is to deliver strong financial results. In Pharmaceuticals, we had strong sales growth and margin expansion. So you can see 6% and 9% good leverage. We also continue to rejuvenate this portfolio. Our growth products were up 38% they now account for 44% of the divisions total sales and also emerging markets growth helped to offset the loss of exclusivity on Diovan and Exforge. Sandoz delivered very strong financial results with sales and profit up double-digit as you can see this is driven by the divisions increased focus on core markets particularly the U.S. which is up 23%. Biopharmaceuticals also up over 50% to a run-rate that’s approaching $900 million. And at the same time margin was improved 260 basis points. Alcon had a weak quarter, sales…

Thank you, Joe. Good morning and good afternoon, everyone. As mentioned in our first quarter release unless otherwise noted, my comments refer to our continuing operations which include of course Pharma, Alcon, Sandoz and Corporate activities and starting from March to contribution of the new oncology assets acquired from GSK and the 36.5% stake in GSK consumer healthcare joint venture. My comments also refer to growth rates and constant currencies unless I noted otherwise. Slide 18, shows the summary of our performance. In quarter two, net sales were up 6% as strong performance at Sandoz and Pharma more than compensated for a weak quarter at Alcon. Core operating income was up 6% and we generated 0.3 percentage points of core margin improvement in the quarter. Core EPS was $1.27 up 7%, reported operating income and net income were down mainly due to the amortization of the new oncology assets and a significant prior year IT settlement income. In the first half, we were up 4% in the top line and 8% on the bottom line versus prior year generating strong core operating income leverage and core EPS was up 9%. Free cash flow in the first half was $3.5 billion, but more than later in my presentation. On Slide 19, you can see that our sales growth was driven by double-digit underlying volume growth, which more than offset the impact of generic competition. In the quarter, we achieved strong volume growth of 12% driven by our growth products including the new oncology assets we acquired from GSK. This more than offset the generic impact of negative 5% or about $0.7 billion mainly from Diovan and Exforge. Pricing had a negative impact of 1%, bringing us to a net sales growth of 6% in constant currency. Inline with our expectations is…

Thank you, Harry. Our Pharmaceuticals Division delivered solid constant currency sales growth up 6% and nice core operating income leverage up 9% through the quarter. The plus 9% was helped by the bringing in of the new oncology assets, as well as our ongoing productivity efforts. As a reminder – I’ll remind you that the comps for the first half of this year were challenging compared to last year as we were facing generic expiration on Diovan in both the U.S. and Japan. Having now lapped those periods, going into the second half we will be less impacted by Diovan and we should fully benefit from the new oncology assets as well as an initial contributions from Cosentyx and Entresto. Of course we will have to invest in those launches, but they will then improve our sales momentum going into the second half. On the next page, you see that our growth products now represent 44% of total division sales up 38% from the same period last year. Next page Slide 30, you see that our emerging markets now represent 26% of our total business in both the mature as well as emerging markets posted nice sales growth. Of note in the emerging markets about half of that 10% growth came from the addition of the new oncology assets. And we will face going forward challenges as we predicted at the beginning of the year as emerging markets begin to slowdown in places like China, Russia as well as in the Middle East and North Africa. Turning now to Page 31, you see a familiar slide this is our unparalleled growth platform with exclusivity to 2019 and beyond. All products did very nicely during the quarter, the only negative on the chart is Galvus and you recall that we submitted…

Thanks, David. So to conclude, we had a solid second quarter and we remain on track to deliver our full year guidance. Importantly we made good progress on the pipeline and are delivering against our key launches on Entresto, Cosentyx and Glatopa. So now I would like to open the line to questions.

Thank you [Operator Instructions] Now we will take our first question from Richard Vosser of JPMorgan. Please go ahead. Your line is open.

Thanks so much. And a few questions Phase III please. Firstly on Alcon, just asking how many quarters you would expect the weakness in IOLs to continue. How long will it takes for new launches to recapture the share. And on the solutions business is the minus 11% and you sort of run rate that we should be thinking about, what could say that down. Secondly on the associated income from GSK, it appears that you might have had to readjust your expectations based on GSK's guidance for the business in May. So just thinking whether its fair to think about sort of run rate for this year at a sort of $190 million or should we think of any seasonality in the business that could help this profitability in the second half? And then finally, just on BKM120, wondering whether you could give us some more color behind the modest efficacy whether some dropouts for example could we expect maybe a better results with a more specific PI3-kinase, BYL719 and I’ll leave with that. Thanks very much.

Thanks, Richard. Starting with Jeff.

Richard, with respect to your two questions on Alcon in IOLs, we did see a 2% decline in IOL sales in Q2 and 1% down for the year-to-date and that was as Joe said driven by mix and competitive pricing pressures. We did see 6% unit growth. So I think the unit shares are rebounding particularly led by the U.S., we’re seeing strong shares there. The big factor has been a decline in the restore multifocal IOLs, which is a class of IOLs that’s lost favor with surgeons as they've moved away from it to due to the visual side effects and splitting light. And as Joe mentioned also I think we’ve got some exciting new IOL innovation that’s coming down the pike it’s not going to happen overnight. But it will impact both pricing and mix mainly our trifocal and preloaded in Europe, which I’m optimistic about. With respect to the contact lens care solutions declined. We did rollout in June and improved product segmentation coupled with refined pricing and new packaging. Fundamentally this is a pretty solid high margin business where there has historically not been all that much focus and I think we shouldn’t be looking at minus 11% going forward clearly a crappy result in Q2 that did not meet expectations. And we expect that the new initiatives that we’re pursuing coupled with better share comps in the second half of this year will help us for the year to go, but clearly an area focus for us.

Okay. Harry, associated income.

Thanks, Richard for the question. I have to step back for a minute just explain a bit, how we’re doing the quarterly income recognition from associated companies. As you know, a basic principle is that we have to taken outside in estimate for a given quarter as Roche and GSK report after us. Then we true up or down the next quarter after we have seen the actual results from the respective associates company. In the case of Roche which reports financials every six months, we have reflected a negative true up for 2014 in our quarter one financials and somewhat lower, endless consensus for Q2 in 2015. The larger impact was for the ODC JV, but here you have to recognize that quarter two includes a negative true up from quarter one after we got March results from GSK and we had to correct from our March estimate for that in Q2. When you step back and look at March to June, core net income is about $75 million from the JV, but again this includes an estimate for quarter to results which we have to true up in quarter three once we get the actuals from GSK. So it sounds a bit complicated and yes, this is difficult to forecast, but should become easier when the JV is fully integrated. Overall we continue to believe the strong upside potential and value creation of this 10 billion consumer company driven by anticipated synergies.

And David, on BKM120.

So BKM we had a positive Phase III in breast cancer measuring progression-free survival. That's very important because with the positive outcome on that primary endpoint, we can then take the product forward and discuss it with the regulatory authorities. The reason we've been more cautious is that while we've seen an overall improvement of progression-free survival it's relatively modest from a clinical perspective. But when you start to look at subgroups in particularly those with PIK3CA mutation, you start to see a much more robust and more in our opinion clinically meaningful results. So we want to have discussions with the regulators about what a filing could look like. The other thing you need to know is that we will not see overall survival data until the second half of 2016 so usually progression-free survival data first and then overall survival takes time. You also mentioned the other PI3-kinase inhibitor BYL. As a reminder, BYL looks to have an even better tolerability profile being more targeted. That's part of the reasons that we advanced it. BYL is just started its Phase III trial in metastatic breast cancer. Thank you.

Okay, next question please. Operator, next question please.

Thank you. We take our next question from Matthew Weston of Credit Suisse. Please go ahead. Your line is open.

Thank you very much. Three questions if I can following on from a number of Richard’s themes. The first on Alcon, what I'd like is to really understand what's happening overall in the marketplace. Jeff, I remember your enthusiasm when you took over the role at Alcon. In particular many of your competitors were going to be in disarray with a lot of the M&A that was taking place in the industry. And particularly around cost cutting there. It seems that what we're in is a very, very competitive and accelerating the competitive environment so what's different from what you expected? And is there any way that with SG&A or price that you can try and mitigate some of the threats that are coming from the competition? The second focusing also on the bill to data for the PI3-kinase, David can you just let us know what it means for the combination of PI3-kinase and LEE011 and whether or not you think there is any role for a kind of pan patient combination approach? To counter Pfizer with palbo or whether we can only really think of the PI3-kinase in small subgroups of patients. And then finally, another pipeline question it looks like BYM in hip fracture has been delayed a while. Can you explain what's happening in that study that means the data readout has been pushed back?

Okay. Thanks, Matthew. Jeff, start with you maybe your take on the overall situation at Alcon.

Hi, Matthew, so I think you know look there is an accelerating competitive environment within eye care because its fundamentally a very attractive area of healthcare with the aging demographics and the expansion in emerging markets. I think Q2 was definitely disappointing quarter for us and reflected the slowdown in emerging markets that Joe had referenced earlier. I think at the end of the day, this is really about innovation for us. And we’re going to need to really significantly accelerate our innovation in order to strengthen our growth profile and prospects going forward. I think we had a number of factors in the quarters that hit us all at once in a negative sense. And when I look at the innovation efforts that we have, its not going to happen overnight and it will take time, but I feel like we made progress on the surgical front, particularly within IOLs and the work that we’ve done in the past year to accelerate innovation there. On the pharmaceutical front we start work to do I think we have an exciting early stage pipeline with respect to dry eye and glaucoma with LME636 and MGV354, but those are relatively early stage in RTH and whether MD is out of couple of years and very positive about the Phase II data there and the Phase III recruitments progressing well. But given the loss of exclusivity that we face, we do have work to do to accelerate our growth.

Okay, David on bill two.

So I don’t think this would materially change what we’re doing with LEE and the two different PI3-kinase inhibitors. So you recall we have programs we can get combining LEE with BKM but also LEE with BYL. If in the event that BKM became a drug only for the PI3K mutations then you might anticipate that would be also the greater focus for the triplet combination. And the different data sets on the size of – or the relevant prevalence of that particular mutation, but it’s between 30% and 45% depending upon the literature. And when we show the clinical data for BKM, which will be in the fall or in the fourth quarter depending on which medical meeting it goes to. You will get to see what the actual prevalence of the mutation was during our study. But it’s actually a fairly common mutation.

And BYM and hip?

So BYM, just as a reminder, we are doing a pivotal trial in inclusion body myositis which is a rare orphan indication. And then the idea is to then – if the data is positive then to expand into other indications like hip, sarcopenia, and other uses. I think the reality is while there is no material change on our charts. The reality is the enthusiasm level will rise once we see the positive data from the orphan indication. Until then, it’s hard to know the exact timelines for occurring the other studies.

Okay, next question please.

Thank you. Our next question comes from Andrew Baum of Citigroup. Please go ahead. Your line is open.

Yes, good afternoon, three questions please. First David, would you agree that Lucentis from here on in a declining asset? Second to Jeff, perhaps you could just talk more broadly about the impacts of capitation on CapEx investment within asset including ophthalmology so what extent are you seeing just unwillingness to upgrade the CapEx cycle impacts your surgical business just simply because we are seeing more and more capitation within provider payors? And then finally on BKM120, given what sounds like a marginal benefit for the overall patient population, and adverse CNS profile and the fact that I don't think the PI 3-kinase population with a predefined secondary release not listed on PubMed to what extent does that jeopardize your ability to either get regulatory approval or translates to meaningful commercial efforts? Thank you.

Yeah, thanks Andrew. First, unfortunately you were very – not very loud the first question I couldn’t hear, we heard the other two questions. Can you just repeat the first one?

Yes, sure. Sure, David. The first question was, would you agree the Lucentis from here on any other declining asset given the multiple pressures on it?

Yes, so for Lucentis we were happy to see growth, although modest growth now for the first two quarters of this year. The market for VEGF inhibitors continues to surprise in terms of demand. So as patients are aging, as these products get increased use in the emerging world, we’re seeing demand continue to increase, that’s the positive. On the other side, we see continued pressure from buyer. In addition, we see price pressure because payors trying to leverage off label of Avastin which is the negative. So I wouldn’t characterize it exactly the way that you spoke to. I'm going to take into BKM question and then Jeff, you can take that next one. So for BKM, I just want to say again, the PFS data was statistically, significantly positive, which allows us to have the conversation about the subgroups where we saw a very meaningful clinical data. And it’s our belief in today, we’re all now that there are diagnostic tests that if you can treat select the population to treat that is the right way to go and the drug like this could find very, very good use. So I think until we have those conversations with the regulators it’s hard to really speak about where to go with that, did you have more BKM question is that really what you needed.

No. I think David, you've answered it.

Okay, thank you.

Andrew, with respect to your question on surgical equipment and the impact of capitation there. I really don’t think it’s a capitation issue, what that it may have a modest impact what – if I can just explain a little bit about the surgical equipment business in the dynamics there I think there is a couple of segments. The first is on phacoemulsification technology. We had a very successful launch on Centurion. It’s been the fastest uptake in phaco history last couple decades, but we’re up against a high watermark last year from Q2 to Q4. And so there was a negative comp on phaco equipment in Q2. Secondly on LenSx, this is really a source of the gap and we do see more of a capitation impact there. The U.S. is reaching saturation it’s been a very strong uptake of femtosecond laser in U.S., but in Europe and some of the other public paid markets, we don’t have as much of the clinical outcomes data that we would need to justify in some cases the expenditure which can range up to $400,000 for these equipment. So our diagnostic platforms Verion and ORA are tracking really well, nicely ahead of last year. The one other factor is on the refractive side, we have Lasik procedures have fallen off in the last few years, as there is a vocal 2%, 3% that are unsatisfied with our outcomes. Although, we have been gaining share in the refractive market and that will help out the latter part of the year. The one factor I would say because there's a lot of focus on equipment and IOLs is actually the biggest category within cataract for us is our consumables business and this business is up high single-digit both in Q2 and year-to-date, which is offsetting the double-digit decline we had in equipment and the low-single digit decline in IOLs.

And the only thing I would add is Centurion launch continues to go well, so we’ve reached penetration of about 20% globally and that number keeps going up every month. So that’s an important piece on equipment.

Next question please?

Thank you. Our next question comes from Alexandra Hauber of UBS. Please go ahead. Your line is open.

Thank you for taking my question. Congratulation to a great result in Pharma and Sandoz. But I still have a few follow-up questions on Alcon as I’ve try to put the piece together. And just follow-up on the previous question. I mean for me really the big surprise negative surprise was cataract surgical equipment performance, equipment and consumables which is Delta of the total cataract surgery in the IOLs. That has been growing at double-digit for about six quarters and now was down 5%. So the consumables part is actually grown in high single-digits, I think the historical part and here – I do hear that LenSx is hitting a wall of decoration in the U.S. and in Europe, there was just no acceptance. Would that be right and was if anything can change that and on – I’m confused about Centurion because on the one side you’re saying it’s growing, it’s growing nicely but on the other side it’s negative because of the comparable. So that means you still selling but you’re selling less than prior quarters. Would that be the right way of looking at it? And then moving on to COGS. So just look at the dollar figure, you have dollar sales that are down 9% your COGS are actually flat so have you got most – I think that cannot really spot anything in your mix – in your product, in your portfolio that’s growing stronger which could cause a big negative mix. Have you got most of your manufacturing in dollar terms and if so what can you address to do that. And then certainly in Alcon really how – what does – what you need for the medium-term outlook. I mean I appreciate everything you saying about innovation kind of change sales trends but…

Okay, thanks Alexandra, we’ll start with Jeff on the series of questions that you have on Alcon.

Alexandra, thanks for your questions and clearly this was a disappointing quarter for us. Three primary factors are at work just to reiterate those as Joe mentioned the challenges on the IOL front due mix and to a secondary effect pricing the CLC challenge and then the slow down in emerging markets, which was really driven by surgical equipment. Taking the equipment questions that you had first half, I think that we are approaching saturation still growth though from the LenSx perspective in the number of patient interfaces that is the disposable or consumable piece that goes along with LenSx. So right now, in the U.S. it’s about 35 per machine per month, if we can work that to get that up above 40, 45 that’s a nice revenue source for us because that’s mid-90s gross margins for us, we’ll ultimately have a positive mix effect, I think it’s not fair to say there is no acceptance of LenSx in Europe we are seeing good uptake of LenSx in a number of European markets, Italy, Germany have been stronger than say France or Spain and we’ve got work to do there with clear plans in place. In terms of Centurion it’s typical that in the first year or two of the launch you see a very big increase as the low hanging fruit the early adopters are quick to adopt the technology. So we reached we'll probably do in total in the U.S. around 900 Centurions this year, which is comparable of what we did last year. The challenges of course last year there was nothing in the prior-year base and so it was a big growth driver versus this year it’s going to be more of a wash, but we are as Joe mentioned very excited about the pull…

So Alexandra the best thing to do is to model low single-digit to the rest of this year and then Jeff and I are going to work in terms of what we can do to jump start innovation and we’ll give clear mid-term guidance once we get to January at the end of the year.

Afinitor for David.

Okay. So just some background for the diseases – metastatic neuroendocrine tumors, these patients unfortunately typically don’t live very long with current available therapy four, five, six months at best. In this trial, where I can’t give you the exact numbers yet because it will be presented in a major medical meeting I can tell you there is a substantial improvement in progression-free survival. These patients will likely be on the therapy for a good period of time. Addition there about 25,000 to 30,000 patients we estimate in the top seven markets. So if you run the math, you end up with a sales potential in the ballpark range of $250 million to $350 million of peak just for this indication.

And Harry, can you just comment on the ability to do a bridge for GSK.

Yes, and thanks, Alexandra for the request. And we will look in that we improve the disclosure so it's easier for you to find the relevant data on the GSK income from associated companies. I’m glad to see the Roche way we do it basically as a good model. So we will try hard to make it easy for you in the next time.

Thank you.

Okay. Next question please.

Thank you. Our next question comes from Amy Walker of Morgan Stanley. Please go ahead. Your line is open.

Good afternoon team. I have a couple of questions to ask please. The first on Sandoz this might be a naïve question but I noticed that the contribution from biopharmaceuticals leapt up to nearly 10% from about 5% last quarter. And yes, the pricing year-over-year was down more in quarter two than it was down in quarter one so that went against my expectations from a mix perspective if Richard could explain how that work continue please? The second question, I’m just following up post discussion on Alcon and margins, I understand Jeff you don’t want to give margin guidance as such, but just for the next few courses given the difference in the margins in Q1 versus Q2. And the comment that you’ve all made around the triggers that you can use with preloaded IOLs and the trifocal launch. Would you expect that to have a margin impact in the positive direction those specific levers in the immediate term or will that take longer to come through? And very lastly if I may please Gilenya 26% constant exchange rate growth, David can you just give us bit of color there. Are you taking market share, is the market growing very strongly. And I just what's driving that 26% constant exchange rate growth. Thank you.

Okay. Richard on the price question.

I didn’t quite clearly get a question so could you please…

I think quite hear the question not clearly. So if you could repeat it for me that would be helpful.

Sorry Richard, I was just saying that the contribution from the biopharmaceuticals which is almost twice in the second quarter was – what it was in the third quarter. And yet the pricing impact seems have been more negative in the second quarter and the first quarter. So I was just a bit confused about while we think at – negative price of both evolution given the biopharmaceutical seems to be a bigger contribution in fact to this quarter.

Thank you. So if I can talk more sort of let’s to give at it maybe I’ll answer the question. So as we sort of move into the second quarter, we’ve had a obviously a product mix change with regard to the launch of Glatopa and some other products come through as well as continued growth of our base line business. So that was one fact to that effect to the profitability we also obviously continue to invest in the launches as we have coming up. So that obviously impacts contribution. So overall, the growth we’ve seen in the biopharmaceuticals of 57% versus quarter two last year was driven by good growth in the base business that we already having obviously the launch of Glatopa. And seeing us move the portfolio towards that newer pipeline, which obviously have higher margins. So I hope that will answer the question.

Thanks.

Alcon margin.

Yes, so Amy on the margin question that you ask, as we mentioned we don’t give divisional guidance on margins, but I’ll hit on pluses and minuses looking at the second half of the year since margins really largely are going to flow from the sales and mix that we are seeing I think on the challenges side. As I mentioned we face the loss of exclusivity on Patanol which is one of our largest U.S. products in the U.S. since September and we also have the full year impact of the first quarter loss of patent in these patent protection. I think the surgical equipment as I mentioned the Alexandra to her question, we’ve had a high watermark in Q2 to Q4 of last year. I think on the positive side, we have good momentum in our cataract consumables and vitreoretinal business, which were both growing high single-digit year to-date both of which are sizable and good bigger than equipment. I think that in CLC we have positive share comps toward the back half of the year and we’ll see the impact of the new segmentation and packaging and pricing that we’ve rolled out in June. In terms of the impact on trifocal, I think that it remains to be seen the uptake of launches that we see here fairly there is a positive from trifocal uptake, but it’s a smaller number of patients that are getting trifocal treatment the initial pieces look good there is a little bit of a positive pricing on monofocal from the preloaded, but as Joe mentioned that you have yet to launch but should be Q3. And then I think on the cost side in terms of managing margins when I look at Q2 marketing and sales cost were a little bit higher than usual since they included some provisions for bad debt, particularly in Asia. On the R&D side and we’re also investing – continuing to invest behind accelerated growth. On the R&D side we’ve seen in positive Phase II results in RTH. And so as we can move now into Phase III there will be – good amount of spend there.

And David on Gilenya?

Yes, so thanks for pointing out. Gilenya during the quarter it’s doing well, as he said 26% up overall worldwide, 34% in the U.S. and 18% ex-U.S. I guess what’s happening if the market continues to move to high efficacy and Gilenya has positioned as the highest efficacy of overall chronic or multiple sclerosis. So we’re seeing as – when it comes to new patient starts we’re getting incrementally more share. In addition we’re seeing increasing numbers of patients, still relatively small numbers. But increasing number of patients coming up Tecfidera as the product – patients of side effects or perhaps they’ve had a relapse and we’re picking up a bigger percentage of the patients coming up Tecfidera so that’s contributing to the nice Gilenya dynamic.

Thanks very much.

Next question please?

Thank you. Our next question comes from Seamus Fernandez of Leerink. Please go ahead. Your line is open.

Great, thanks very much for the question. So just quickly on the Sandoz business, you know the dermatology, the strengthen dermatology. Can you highlight the pieces of dermatology that are particularly successful, have you interested to know how they carried in launches is going as well on the Sandoz side. Incremental to that as we look forward, can you talk a little bit about where you’re capturing share with Cosentyx, particularly in the U.S. I know you mentioned overseas you’re getting more first line use because of fair dynamics. But just wondering where you see yourself capturing share with Cosentyx now and then going forward and how much the dynamic within psoriatic arthritis and ankylosing spondylitis how those labels could actually benefit the business. And then the last question – just in terms of the strong performance on gross margins in the Pharma business and then also in Sandoz. Could you just walk us through a little bit – how much did Glatopa actually contribute from a stocking perspective on the Sandoz side of the business, particularly as it relates to the gross margins and then similar type question on the Pharma business. How do you see gross margins progressing through the back half of this year with the uptake of Entresto? Thanks.

Okay Richard, dermatology.

Okay. Thank you for the question. So and first on dermatology as you know one of our strategies is to productize certain geographies as well as certain therapeutic areas, and dermatology is one of those areas we focus on. And as you quite rightly pointed out, we are getting good traction and good growth there. What is behind that? Well, firstly across the whole portfolio we have in dermatology we are seeing volume growth. So it’s actually across in the majority of the portfolio, as well as we are seeing been able to hold price. Specifically though you mentioned keratin so talking about that launch we are obviously very pleased with that launch that’s been tracking very well. We’re continuing to see upside in both new prescriptions and total prescriptions. So pleased with the performance, and looking for that to continue. On the margin side of the business, if I can touch on that question as well, so the margin is about the strategy. Again, it focus on that the product mix and the sales mix there Glatopa does play a part but as Harry mentioned in his opening remarks, if you takeaway Glatopa from our business, we still have high single-digit top line growth as well as a double-digit bottom line growth. So the base business in performing well, and that’s down to the product mix which once again goes to that strategy of focusing on the key markets which have good margins and good growth opportunities. As well as working on the products and the therapy areas, which we also see good margin, and that strategy allow early on, it seems to be paying dividends with the margin. Thank you.

So with Cosentyx as I pointed out, in the U.S. market most of these patients have been on previous biologics at least two and quite a number of them three we showed you initially. The doctors are getting through some of the early access hurdles, but arguing the patients didn’t have a good alternative of it. We are seeing over time that’s moving to a little bit earlier stage and we will predict over time as physicians get more comfortable, they see the responses in the sickest patients. And have the access, hurdles become overcome, you will see earlier stages. The business is coming largely from Stelara and from Humira as you would expect that these are products that are usually used for these patients particularly in the second line. Once we get the psoriatic arthritis indication, you would expect some halo effect on psoriasis as well. In fact in Japan, we already have the psoriatic arthritis indication, and we are getting lots of positive feedback from Japanese patients who are making statements about how their arthritis is for the first time their life, it’s now manageable or it’s actually gone after just a few injections. Ankylosing spondylitis is the entirely different market, it goes to the – totally to the rheumatologist and I think the connection with psoriasis will be thoroughly remedied.

Next question please.

Thank you. Our next question comes from Graham Parry of Bank of America. Please go ahead. Your line is open.

Okay. Thanks for taking my questions. Firstly, one on Entresto and early reinvestment discussions. I'm just wondering if you've had any positive surprises in relation to NDC blocks, or if your expectation is still for a measured rollout and initial fiscal reimbursement in Medicare Part D? And secondly, if you could perhaps just talk us through all the moving parts you're thinking for the remainder of the year on margin phasing, particularly second half margins versus first half, and particularly with respect to launch expectations and funding? And then thirdly on Glatopa, any comments on initial launch experience? We've had some feedback from the market of docs actually marking scripts for Copaxone as dispense as written or deliberately switching patients to three times weekly to avoid them getting generic, due to bio prevalence concerns being stoked by Tever. Have you seen any of that resistance widely? And how do you deal with it when you see it? Thank you.

I was to stress that we launched July 7, so at this point I have no feedback from payors. Their processes take weeks, or we talked about in the past, sometimes months. We would still anticipate that since this population is highly Medicare, about 65% that those Medicare plans will take the six plus months to make their decision and then as we move into 2016, then some of the access hurdles would begin to come off. Having said that, I can tell you that the tone of the conversations is positive, it's supportive. Certainly, the conversions with doctors is, what I would describe is enthusiastic, our sales reps are coming back with good stories about doctors calling them and really excited about the therapy. So you're just going to have to give us time. I know everybody is paying attention and they trying to really model what the back half of 2015, will look like for Entresto, but it’s really too early to say.

No, no margin phasing after some expectations?

So you will get, we’re not going to lots of detail about phasing, for pharma margin I mean the good news is like I said, from a sales perspective, since we have now lapped Diovan, this is going to help our sales growth which would then provide us additional bottom line. Having said that, we have launch clocks particularly now in Q3 for Cosentyx where we’re giving up a bit less for Entresto which is probably less material this year. And that of course is a counterweight to the positive that will come through from the higher sales. Overall, we're looking forward to a good relative second half compared to the previous year.

I’m Graham, on a group level, obviously in the first half of the year, we’re up slightly almost a full point actually in terms of our core operating income margin on a constant currency basis and because of the outlook of sales mid single-digit and operating income high single-digit, you could expect that to continue at the group level. Glatopa?

Thank you, Graham. Thank you for the questions. So to talk about Glatopa launch, starting with we’re very pleased with the launched. But I would also say that it’s very early days we’re talking only of few weeks. We’re pleased that we got product shift within the first 24 hours and that was in response to very strong demand from the wholesalers. We had already patients go through our patient hub and our own therapy. So, so far the response we're getting from the stakeholders within the market, both patients, physicians, and payors, has been extremely positive. So I haven’t actually experienced any of the challenges that you face. So, so far so good. But as I said, a launch is over months and years not just the first few weeks. Thank you.

Thank you.

Okay. Next question please.

Thank you. Our next question comes from Kerry Holford of Exane. Please, go ahead. Your line is open.

Thank you guys. Kerry Holford at Exane BNP. Going back to Glatopa, just quickly, when I look at the NRX data, the gains look impressive. But I also know that there seems to be some decrease in the market share for Gilenya, albeit small. I just wonder if you can talk about how you’re positioning these two drugs. Are they sold by the same sales force in the US market, and how are those reps incentivized? It's coming from the angle as a new product launch, is there a risk that Glatopa gets a harder push than Gilenya in this stage, and what risks could that lead to longer term? Secondly, on tax, it was a little higher than I anticipated in Q2. Harry, I wonder if you could talk about what an appropriate tax rate would be going forward. And then David, lastly on respiratory, in the pipeline update, I see you plan to start Phase III for QVM and QMS this year. I wonder if you might talk about the plans that would you look for global program? Or given there's still some uncertainty on the US respiratory priorities for Novartis, could you consider just looking at ex-US regions for study program there? Thank you.

Yes, thank you. Question was more about from a Glatopa standpoint on Gilenya's share why doesn’t, David why don’t you start and talk about Gilenya's share and also respiratory?

Yes. So yes, the first to give you background, so there are separate commercial efforts around Glatopa and for Gilenya in the two different divisions. We do work together where there are synergies. So just to give you one example, in multiple sclerosis it's important to have a patient support hub. Since we’ve built that with Gilenya, then Sandoz, of course, would also access and use that hub so that they can avoid those redundant costs. So there's no risk of any kind of cross contamination or distracting of field forces. In terms of Gilenya, I would advise you don’t look at the NRSs right now. So if you – if you take a look back what happened is we had a huge spike up. And then it looks like we’ve come partially back down. And it’s absolutely nothing to do with the other products in the market, but we’ve moved from – from a blister pack to a 30 day bottle and that distorts all the IMS data from new Rx, so it’s not relevant. I would say overall for Gilenya, as I said earlier, we’re actually capturing a bit of share in terms of new patient start. So we’re in good shape there. In terms of respiratory, we did indeed make a decision to develop in Phase III QVM as well in the triple for asthma only. And we’re going to take this program for – as an ex-U.S. program, so there is no U.S. development plan. And filing is roughly 2018 for this particular opportunity, thanks.

And Harry, tax rate?

Yes, thanks Kerry for tax question. So we have in quarter two the same as in quarter one, which is a 14.7 core tax rate. And this is also our mid-point estimate at this moment for the full year of 2015 as you know tax rates are always a bit complex to forecast and guide on as our mid-point and we have kept it in quarter one and quarter two to that. It is an increase of 0.8 points versus last year quarter two and that is Q2 shift of some of our profit mix through jurisdictions with higher tax rate. So but used for the full year of 14.7, if there would be any update of course we would tell you over the next quarter.

Thank you.

Next question please.

Thank you. Our next question comes from Tim Anderson of Bernstein. Please go ahead. Your line is open.

Thank you, a few questions. Receptos, which Celgene is buying, has a product that’s a direct competitor to Gilenya, the [indiscernible] programs with their compound, multiple sclerosis and inflammatory bowel disease. When I look at your development program for Gilenya, I don't really see much happening in inflammatory bowel disease. So my question to you is, why are they going headlong into this area and you guys don't seem to be doing too much? Is this a missed opportunity for Novartis, or do you think they're simply barking up the wrong tree? Second question is on Afinitor, kind of like the Lucentis question about the future growth prospects, can you say that Afinitor is going to continue to be a growth product? Not only are you going to face pressure in renal, but even in hormone receptor perhaps, you've got [indiscernible] just moving into that second-line setting. And it seems like the product could contract overall as we look out over the years. And then the last question is Entresto, pricing in Europe, I'm hoping you can give us some direction. My understanding is that – it may be priced at half or less of what it is in the U.S.?

Okay. So I won’t comment specifically on the other company’s product or development strategy. We do have as you know – Gilenya in the market for relapsing, remitting MS. We also have our product that I believe is similar to other brand that you mentioned, BAF312 which is – in a Phase III trials or secondary progressive MS – that would be interesting to see what that data shows when we combine the data. We often – companies often choose different indications of which to develop their drugs. In terms of Afinitor indeed, the growth has – was very good in the first half of this year. I would anticipate I think all things considered which is the negative pressure – the CDK4/6 is which we’re already seeing some impact from them. As well as the positive we’re going to get from use for example and neuroendocrine tumors, net you would expect Afinitor growth to slow going forward and that’s build into our model already. And in terms of Entresto, first let us get the recommendation for approval. And then we’ll be able to talk a little bit more about pricing strategy. Thanks.

Next question please?

Thank you. Our next question comes from Tim Race of Deutsche Bank. Please go ahead. Your line is open.

Hello gentlemen, thank you for taking my question. Just one simple question on China. Could you go into a little bit more detail of what you're seeing across the different business segments, specifically on China? We're seeing obviously across many different segments sort of the capital equipment, people sort of rising and a bit of a slowdown. You seem to be suggesting that in Alcon. But could you talk about how patterns are changing in Pharma and Sandoz as well and what to expect going forward please? Thank you.

Yes, I’ll start and then division heads can jump in. We have seen a slowing of growth in China specifically across I think everyone of the segments. So what happened is – healthcare because the Chinese Government has increased the coverage in terms of ensuring that every citizen in China has at least some level of medical coverage. You can imagine that the expense from a healthcare standpoint has been growing – just in Pharma it’s been in the mid teens and I think there is a conscious effort to slowdown a bit and on top of that you have – what’s happening from an economy standpoint in the stated shift towards what they’re calling sustainable economic growth which is leading to lower overall growth rates. So we’re starting to feel it – at the same time we’re a diversion of company where those growth rates are still at a level that are accretive to the global growth rates and I don’t see that changing, because that you still got high demand, just probably not at the rates that we’ve been seeing. Anybody?

Okay. Next question please.

Thank you. Our next question comes from Florent Cespedes of Societe Generale. Please, go ahead. Your line is open.

Good afternoon, gentlemen. Thank you very much for taking my questions. Three quick ones. First one for David, on Exjade Jadenu [indiscernible] could you share with us how do you see the trend going forward? And don't you think it could be a bigger product versus your initial expectations, given the new formulation? My second question is for Richard. On Sandoz respiratory, could you share with us the performance of the respiratory product result in Europe? And could we have an idea of the contribution to the division? And my last question is for Jeff. Is it fair to assume that it is the right timing to think about some possible new adjustments at Alcon, such as bringing Lucentis from the pharma or maybe the contact lens care that could go to the GV with Glaxo on consumer? Some thoughts on that would be welcome. Thank you.

So we are excited about the Jadenu launch as I pointed out I think you are alluding to the Exjade it was not a particularly difficult – it was not a particularly easy product to take. You had to dissolve it in water and they got stuck to the glass et cetera, et cetera, so the new dosage form is a big step forward. If one would begin to model in increased compliance, then you would expect that the franchise will get accelerate and we’re seeing some of that already in the U.S. So for the quarter, we did about, if I recall $262 million in net sales that makes this product a blockbuster run-rate today and then as you continue to grow from there. So we’re already well ahead of what our initial projections were. And I think that product should continue to show a nice growth.

Richard on AirFluSal.

Yes, thank you for the question. So I think the question was around respiratory in Europe and then I’ll bring it down to AirFluSal. So respiratory as a franchise and Sandoz is at its early stages, but growing very quickly, a big part of that is our pipeline and AirFluSal is one of our big products that has come out of that. And currently, we’re – we’ve launched in 16 countries across Europe, but it’s very early in launches in many of those markets some only recently. Progression is good and we’re very pleased with the feedback we’re getting from the customers both the patients and physicians and we look forward to expanding the pipeline and expanding the areas where we market AirFluSal going forward. Thank you.

Jeff.

So Florent, first on contact lens care. As I said before, I think there is a fundamentally good high margin business. There are strong synergies with our dry eye franchise and the palliative of OTC segment, which is one of our biggest segments that closed round $0.5 billion, which is really our sustained franchise, that’s been growing upwards of 20% looking back to last three, four years and we’ve accelerated that growth. We have the opportunity really to be the category captain and really are the category captain inside of Walgreens and CVS and so bringing to bear more FMCG like capabilities. I think it’s going to be important here. The biggest opportunity for us is an emerging markets to accelerate our growth there given that most people are still on monthly and weekly contact lens where contact lens solutions are needed whereas in dailies they are really not needed as much. And we will see the fruits of the new segmentation, pricing and packaging that we rolled out in June. So want to see how that evolves before we speculate on questions such as the portfolio one that you asked. I don’t really have any comments on Lucentis question.

Look I think, we got a clear path in terms of how to accelerate the growth on Alcon and know how to execute. We need to fill that pipeline. We need to jump start some of the programs. We’re going to have to in-license in the three segments. And so there is – there is a huge amount of activity that we have to do to get Alcon’s growth rate from 2% in this quarter up to a decent level.

Thank you very much.

Okay, next question please.

Thank you. Our next question comes from Michael Leuchten of Barclays. Please go ahead. Your line is open.

Thank you. It’s Michael Leuchten from Barclays. Just a clarification question on Glatopa for Richard please. Taking everything into consideration, the inventory moves to milestone payments and the pay ways. Did I hear you saying that net, net that didn’t actually contribute to the EBIT of the division such that we can take that number as an underlying number or did it actually have a positive effect. And then staying with Sandoz, there is a comment in your press release about restructuring of the reorientation of the business in France. I just wondered if you could elaborate what that means. And then he decided to sell a manufacturing site in India and I think you’re moving that to Poland, again I was wondering if you could share some – some thoughts around that. Thank you.

Okay, Michael, thank you for your question. So going back to Glatopa, apologies if I tease you, but Glatopa has added to the business both top and bottom line. What I was trying to highlight is that it wasn’t about Glatopa and the base business to Harry's point earlier had actually grown high single-single digit in sales and had actually grown leveraged on the bottom line as well. So it has impacted yes, but – I am trying to highlight that the bast business is performing well also. Talking about the restructuring that you’ve mentioned there, we – as we look to making sure we have a highly productive and efficient business moving forward, we have been looking at our network – network obviously production and generics manufacturing is incredibly important and making sure we have highly efficient cost effective production. Because of that as we’ve reviewed our network, we’ve decided to close two sites – three sites, two in Germany and one in India, which I think you’re referring to. A difficult decision we have to make, but one that we believe that’s right for the business moving forward to ensure that we’re competitive and continue to drive profitability in this very competitive segment. Thank you.

Okay, next question please.

Thank you. Our next question comes from Keyur Parekh of Goldman Sachs. Please go ahead. Your line is open.

Good afternoon, three separate questions please. First, Joe, if you could just give your – give us your thoughts on the upcoming litigation, I believe is the whistleblower lawsuit that goes through a jury trial in November, if you would help us to think about how these should monitor that or think about that in the context of the existing CIA that Novartis already has? Secondly, in context for David, David, if you can just help us to think about what is the market share that you are getting in the frontline setting today for the BRAF/MEK combination versus the various IO agents and kind of how you see that playing out? And then thirdly, in the context of Farydak, how should we think about the potential here given the depending kind of [indiscernible] launch in a similar indication? Thank you.

Okay, starting with the litigation, the upcoming litigation, and you know, you’re seeing a lot of press about this and potential fine. We strongly dispute the allegations by the Southern District of New York in this specialty pharmacy case. This is a case about patient adherence. And the facts when you – when you look at the facts, we believe that we’ve got a very strong case. So I won’t go into what our legal strategy is, but in the context of the CIA, it’s relevant because we really – we believe we have a very strong case. And as we go to court, the trial is scheduled for November. But when you look at the facts as they are presented. We’re in quite a strong position. So David market share.

So, you know, MEK BRAF the combination is just now starting to get momentum in U.S., now that the data has been made public with the COMBI-d data. And you have to remember that outside the U.S., we don’t have approval yet in Europe or in Japan for the combinations, so there is virtually no use there yet. So we’re in very early – very, very early days at this point. Regarding Farydak, Farydak was approved for a – what I would describe as a third-ish kind of what – kind of line population in myeloma, so it’s going to be used really when patients have used up other options. As a result that would be a relatively modest sized product. I would measure it, a couple of hundred millions as a big sales estimate. Thanks.

Thanks. Joe, if I could just follow up on your comments. If I heard you correctly, you said the CIA is irrelevant to this case. In the instance that for whatever reason the jury finds against you, can you help us understand why the CIA is irrelevant? And secondly, can you confirm if you've already taken any provisions against this? Thank you.

You know the provisions – legal provisions for the company are shown in the Annul Report, so you can go there and identify that. But my point is that the factor on our side in this case and we’re going to fight this because when you look at what this is about, its about patient adherence and making sure that these transplant patients get their medicine and making sure that that the refills of those prescriptions are made. So this isn’t about any physician that is writing prescriptions. It’s about a specialty pharmacy hiring a nurse to call patients, who have transplant. They have a new kidney and ensuring that they’re taking their medicine. So I’ll just leave it at that.

Thank you.

Next question please.

Thank you. Our next question comes from Odile Rundquist of Helvea Baader. Please go ahead. Your line is open.

Yes, good afternoon, three questions. Started on pharma with Tasigna, you reported some positive data from [indiscernible]. I was just wondering where you stand with [indiscernible], if you're still expecting results in early 2016. And with that – how you switched Tasigna patient even when Gleevec will lose patent protection. So what's your maybe view on that? Moving to Alcon again, so in emerging markets and the slowdown of equipment – surgical equipment sales, so I'm trying again to understand why is that? And if it's related also to the penetration of cataract surgery in countries like China, you related to the changing coverage or also penetration in Brazil and in the 32 country in which the penetration is very low. So maybe if you can give me some thoughts? And also, I noticed that there is this impairment, intangible impairment. Is it related to Jetrea, and why is that? Is it because it's so low sales that you finally book an impairment? And maybe just last question on BKM120 and the respective mutation in which it seems to be very efficacious, I was just wondering if this PK3CA mutation could also be sounding hardest segment of the breast cancer population, like the triple negative population, or is it really only for the hormone receptor positive? Thank you very much.

So to take Tasigna you’re correct the – the treatment-free studies which were designed based upon finding the patients who had very deep molecular responses on Tasigna a portion of them can actually go off therapy and experience a treatment-free remission we initiated those trials and there will indeed be data during 2016. I think your question is bigger about Gleevec versus Tasigna I think the patients that are on Tasigna with all the evidence we have so far from other markets where Gleevec has gone generic as the patients that are on Tasigna tend to stay on Tasigna and at the market opportunity for Tasigna continues to grow despite the Gleevec generics. Regarding other indications in breast cancer you know like I think it’s something I have to get back to you on – for those other products.

And Jeff, Alcon?

Odile, first to your question on the $119 million impairment. Yes that is reflective of the impairment on Jetrea. Which is due to the lower peak sales assumptions when it was originally assume when this products was in license back in 2012. With respect to your question on emerging markets. We did see a flat quarter in emerging markets versus the fairly consistent double-digit growth that we’ve seen in the past few quarters. Asia in particular had a poor Q2 on the back of weaker performance in China and South East Asia which was driven by lower equipment sales as well as bits of softness in Pharma as Joe alluded to in China. The one factor that I think is notable here in emerging market is Russia which we haven’t addressed the market did decline significantly that we continue to gain share in most segments of Pharma and surgical. Latin America was a great spot with much stronger growth and very good growth in Brazil. We had bit of phasing in Middle East and Africa. I think, in terms of reimbursement I see strong opportunity for increased penetration in Brazil and across Asia, across Latin America, I think that we just had a number of challenges in the same quarter in emerging markets in Q2.

Next question please.

Thank you. Our next question comes from Steve Scala of Cowen. Please go ahead. Your line is open.

Thank you. I have a couple for David. First, the Afinitor slide on Page 35 implies breast cancer sales annualizing at just over $900 million. I think previously the guidance for breast cancer was $1.5 billion to $1.7 billion. I realize that probably now has changed. All things considered, what should that guidance be now? And then, secondly, you noted Promacta has blockbuster potential. Is that a new view now that you have the asset? I don't you recall you saying that before. Where will the growth come from and over what timeframe? Are these new opportunities, or is this GSK missteps in the support of the product? Thank you.

So you’re correct, in terms of the outlook for breast cancer given some of the use of the CDK 4/6 it will be difficult to achieve what we hope it would be the $1.5 billion forecast, I don’t have a new number for you. Suffice to say, we do think Afinitor however will continue to grow in the quite significant brand for the company. In terms of Promacta we’ve been excited about it, and we are increasingly excited about it. It is one of the products that we set from the GSK transaction could become one of the blockbuster products for us. Q2 sales are about $116 million, so you could argue we’re almost halfway there. We just got a pediatric approval in chronic idiopathic thrombocytopenic purpura, we expect EU approvals and SAA in the second half of 2015. There are other indications that are being worked on and the reality is particularly outside the U.S. GSK had virtually no meaningful oncology footprint. So there is an opportunity to accelerate the use outside the U.S. so we’re pretty happy about it. Some of the trial there are just that might make a difference in the future, so just as a reminder there is something called the Aspire trial that’s a Phase II study in patients with MDS. So I have to study is positive is of course regulatory approval that will allow us to reach a much broader range of patients than we currently have in the label there is also something called the support trial; it's a combination trials of Phase III study in a subset of MDA patients comparing our Promacta to AZA I'm sorry, plus AZA versus AZA alone. That would be an earlier patient population than the Aspire trial. And the secondary endpoint that we can get overall survival. So also these could be a meaningful addition to the opportunity for the drug.

Okay. Next question please.

Thank you. Our next question comes from Marietta Miemietz of Prime Avenue. Please go ahead. Your line is open.

Thank you very much, a quick question on RTH258 positioning if eye drop versus something like efficacy were to become available, that can either replace Lucentis or significantly reduce the injection frequency. What proportion of the current VEGF market patients would still be interested in an RTH258 injection? And how does that depend on a potential efficacy advantage? I was just wondering if you had done any market research on that. And then, Jeff, I was just wondering if I could drill down a little bit more deeply into specifically the advanced technology IOLs. Could you give us the reported and constant-currency sales growth, specifically for the AT-IOLs that used to be included in the press release? And can you tell us roughly how your volume market share in the AT-IOL space has developed in percentage terms in the first half of 2015, and whether you think the EU approval of PanOptix will be sufficient to reverse that trend in the second half of 2015? And then just quickly on the margin impact, given the very high premium price of the AT IOLs, is it fair to assume that the Alcon margin in the coming years would not exceed 35%, unless the AT IOL franchise resumes significant growth? Thank you very much.

So Marietta, maybe first on AT-IOLs, I don’t believe that we’ve given guidance recently on the breakdown of growth, but let me kind of walk you through holistically what we're looking at. On the toric side, we continue which is price that about three times the price of monofocal, we continue to see very strong in a performance in a number of markets there we have had competitive eventually in the last year. We still hold over an 80% I think about 80%, 81% share in the U.S. and good performance in Europe. Restoril is really to pinpoint, as I mentioned, that's on the multi-focal side. And I think the trifocal lens PanOptix will be very important to regaining shares in this market where we have lost share to trifocal from Zeiss in Europe. There is no trifocal on the U.S. I think it certainly too early to right off AT-IOLs I think you have a class effect on multifocals, but I’m fundamentally very positive on astigmatic correction with toric, positive on the potential for trifocals are going forward and provided we can really drive stronger growth and premium IOLs we’ll see the margin impact of that. On RTH258 I really don’t think we’ve done any consumer research and I can go back and check regarding the top is a drop form of anti-VEGFs. I think a lot of it would really depend on efficacy I think if there were a drop that people could take that had similar or better efficacy to Lucentis, Eylea and RTH than people would take it. Harder for me to estimate how much the market would go that way, but I can’t say is that we’re excited not only about the Phase II and primary endpoints being met versus Eylea, Lucentis in terms of efficacy, but also the durability of action that we see where there is the potential for about two-thirds of patient have quarterly dosing.

Okay. I think we have time for one further question.

Thank you. Our final question comes from Matthew Weston of Credit Suisse. Please go ahead. Your line is open.

Thank you, Joe. It's a follow-up please. All the debate, no one's asked the question around how the current negotiating discussions are going with payors for the 2016 season. I understand that it's relatively early in the discussions, but I'd love some overhead comments from either you or David in terms of how you see the outlook for pricing in a number of your key categories going into next year.

Okay, David, why don’t you start it?

So Matthew you’re right that is early I can tell you that our relationship with the payers are sound, the dialogues are open. We do not anticipate anything significantly different then what we’ve seen in the past. And obviously, we’re also working through the discussions around making sure, we can open up the formularies for Cosentyx and Entresto which are our main efforts given the growth potential those products and the number of patient in the U.S. market that are waiting to get access to each drugs. There is really not much else to say at this point. Thanks for the question.

Yes. I think the same. If you think about the payer environment in the U.S. there are pockets of some pretty aggressive behavior, but we have not been at the brunt of that. And I think part of it is because of the time and attention that we spend with those customers and understanding trying to find win wins for both and we expect that to continue. So I don’t think across any of the divisions we’re going to early so we don’t anticipate any major problem. So thank you very much. I would like to thank you everybody for listening and we look forward to updating you on Q3.

Thank you. That will conclude today’s conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.