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Operator: Thank you for standing by, and welcome to the CSL Limited Full Year Financial Results. [Operator Instructions] I would now like to hand the conference over to Mr. Chris Cooper, Head of Investor Relations. Please go ahead.
Chris Cooper: Good morning, and welcome to CSL's Full Year Results Call for Fiscal 2025. It's Chris Cooper speaking, and I'm pleased to be joined by Paul McKenzie, CSL's Chief Executive Officer; and Joy Linton, CSL's Chief Financial Officer. As with past practice, Paul will provide an overview of the results, and then Joy will provide additional detail on the financials. We'll then move to Q&A. Please note, this briefing is being webcast. And before we start, I draw your attention to the forward statement disclaimer contained in the slide deck. I'll now hand over to CSL's Chief Executive Officer, Dr. Paul McKenzie.
Paul F. McKenzie: Thank you, Chris. Good morning. I am Paul McKenzie, CSL's Chief Executive Officer and Managing Director. Today, I will highlight our business performance for fiscal year '25 and provide some comments on our strategy to deliver enduring impact for our patients and shareholders. CSL's Chief Financial Officer, Joy Linton, will then take you through our financials. I will then provide more detail around our transformation initiatives and simplification announcements before closing with our outlook and guidance for financial year 2026. We will then take your questions. You have seen that CSL has made key announcements today that I believe will drive growth for the company into the future. Growth was once again a key feature of our results for fiscal year '25. On a constant currency basis, all 3 business units grew sales, resulting in 5% growth in the CSL Group revenue. NPATA grew 14%. NPAT increased by 17%. Leverage improved to 1.8x net debt-to-EBITDA basis. Free cash flow increased by 58%, and we increased our final dividend by 12% to USD 1.62 per share. We are pleased with this performance, but we know we must rapidly adapt to position ourselves well into the next decade given a constantly evolving operating environment. It is from this position of strength, and I am excited to announce major transformational changes today, significant operating model changes that will improve CSL's clinical and commercial pipeline execution while reducing cost and simplifying decision-making across the organization. The financial benefit is twofold. Firstly, we will target more than USD 0.5 billion in savings by the end of fiscal year '28. Secondly, we will look to balance the reinvestment of these savings in high-priority opportunities with the need to deliver sustainable, profitable growth. As always, we will be disciplined in allocating these funds with sustainable value creation as our guide, and we remain committed to delivering double-digit earnings growth over the medium term. We have also announced an intent to demerge CSL Seqirus as an independent ASX-listed entity in fiscal year 2026. CSL's management team and Board believe there is a clear strategic benefit to the demerger. Both ASX-listed entities will be able to focus on their core capabilities and realize simplification benefits, which will drive growth, and each will have a sustainable capital structure and access to funding to pursue distinct growth strategies. Finally, we are reintroducing a multiyear share buyback program starting this financial year. We continue to see attractive fundamentals in our key disease areas and are delivering on our strategy. These initiatives are designed to help us reliably drive our growth agenda and shareholder returns into the future. Joy and I will speak about these in more detail shortly, but now I will turn to our individual business performance highlights for the last financial year, starting with CSL Behring on Slide 8, where revenue increased by 6% at constant currency. Demand for our core products remain strong, with PRIVIGEN and HIZENTRA growing 8% and 6%, respectively. I would remind everyone that the second half of the year was impacted by the implementation of the IRA Part D reform. Importantly, though, we are seeing increasing demand from core indications such as CIDP, PID and SID, which reinforces our confidence that there is a significant growth path in the demand for our products. Our albumin portfolio grew by 7% driven by a strong performance in China. We are very proud that CSL's hemophilia franchise once again demonstrated market leadership with growth of 13% at constant currency. IDELVION remains to standard of care, achieving 10% growth for the year. The uptake of HEMGENIX continues to increase, and we remain positive on this therapy. In particular, the recent 4-year post-infusion data demonstrated durable efficacy and safety in adults with hemophilia B. Aligned with our new strategic focus on diseases, you will see the bottom of the slide looks different this year with HAE and perioperative bleeding products reported separately. The HAE franchise grew 4%, but our new ANDEMBRY product was only approved and launched in the U.S. in the closing weeks of the fiscal year. ANDEMBRY offers the promise of eliminating HAE attacks for the majority of patients, with a simple once-monthly dosing being an easy-to-use prefilled auto-injector. I look forward to updating you on our global launch progress in fiscal year '26 at Capital Markets Day. Finally, perioperative bleeding was impacted by a tender loss in the U.S. We are now past the first full year of this event and saw positive growth from the first half to the second half of the financial year. As market leader, we continue to view this as a highly attractive market with significant unmet need. During the period, we also made progress on our plans for label expansions for both KCENTRA and RiaSTAP. Now turning to CSL Seqirus on Slide 9. Revenue for CSL Seqirus was up 2%, which was a robust result, given the decline in vaccination rates for infill -- this weak market back drop has been disappointing, and we view the softness in the U.S. seasonal category as highly irrational based on the vaccine risk/reward profiles and the scale of disease burden which this year reached a 15- year high. I will talk more about the outlook for Seqirus later, but we do see cause for optimism in the global seasonal influenza market. In the U.S., for example, we are encouraged by the recent positive universal recommendation by ACIP, a clear sign that influenza is not going away, and it still has a severe impact on public health. During the year, we delivered on our exciting geographical expansion plans earlier than expected when we received preferential recommendations in Germany and France for our FLUAD product. We also launched this product in Taiwan and South Korea. Another positive was recognition of our pre-pandemic capability. The majority of avian flu contracts globally were awarded to CSL, which was strong recognition of our best-in-class differentiated platforms. Finally, fiscal year '25 result also included revenue from the supply of KOSTAIVE to our partner in Japan. On to CSL Vifor, where revenue was up 8% at constant currency, and we delivered global volume growth in iron. We maintained strong positions in EU markets, holding iron volumes despite generic entrants. Injectafer continues to be the leading branded high- dose IV iron product by market share and sales in the United States. Our Ferinject launch in China is progressing well with hospital listings and demand generation ahead of targets. The inclusion of the pediatric indication in the National Reimbursement Drug List that became effective on January 1 is expected to further drive hospital uptake and expand patient access. For nephrology, VELPHORO was the standout, with sales growing significantly in the U.S. as a result of its inclusion in the TDAPA scheme. TAVNEOS delivered significant growth across all launch markets, helping patients with a rare and serious autoimmune disorder called AAV. FILSPARI was successfully launched in Germany, Austria and Switzerland. It is the only therapy in Europe that has demonstrated clinically meaningful kidney function preservation in adults with IgAN, a rare and progressive renal disease that is the leading cause of kidney failure. Now I will hand over to Joy to take you through the financials in more detail.
Joy Carolyn Linton: Thank you, Paul, and good morning, everyone. It's great to be back in the CFO seat. And my thanks to John Levy for taking on the interim CFO role in my absence. John has recently retired from CSL after 36 years, and we wish him all the very best. As Paul said at the beginning, we've delivered a strong result for 2025. NPATA was $3.3 billion, up 14% after adjusting for a currency headwind of $84 million. Walking through the adjustments from NPATA to NPAT. Amortization of acquired intellectual property was $364 million, which was in line with our guidance. The net gain of $30 million primarily reflects the disposal of our China manufacturing business. After adjusting for tax and the noncontrolling interest, group NPAT grew 19% to $3.2 billion, while NPAT attributable to CSL shareholders grew 17% to $3.1 billion. And please note, we have once again provided forward guidance for these adjustments for financial year 2026 in the table on Slide 27 in the pack. Turning to the group highlights and the financials in more detail. On a constant currency basis, total revenue for the group was up 5% to $15.6 billion. Gross profit was $8.5 billion, up 6%. Group operating result was up 7% to $6.9 billion. Research and development costs were down 5% as we discontinue some clinical programs. We expect a similar level of expenditure for R&D in FY '26 with a focus on prioritizing growth opportunities. For FY '26, we expect G&A costs to be held flat, providing operating leverage through the P&L. Net interest expense was down 6% due to a reduction in the debt as our balance sheet continued to delever, and I will talk more to the balance sheet shortly. The reported effective tax rate was 15.9% due to favorable FX movements on our euro tax balances as well as the geographic profit mix. We expect the tax rate to be 18% to 20% in FY '26. Return on invested capital increased from 10.5% to 11.5% due to the growth in our profit. Cash flow from operations increased strongly by 29% to $3.6 billion, reflecting the growth in the business and working capital management initiatives. Free cash flow also increased strongly and was up 58% to $2.9 billion as our CapEx continued to reduce. And for FY '26, CapEx is expected to be around $800 million, plus or minus $100 million, and our future plans include expanding our Ig capacity in the U.S. over the medium term. NPATA EPS was up 10%, and the total dividend was up 11% to USD 2.92 per share. In Australian dollars, this is approximately AUD 4.57, which is up 15% on the previous year. Turning to the next slide, the results for CSL Behring where revenue was up 6%, gross profit up 8%, and the operating result was up 9%. Gross margin for CSL Behring improved 130 basis points over the prior year from 49.7% to 51% of constant currency, consistent with our guidance. We are confident that the gross margin will continue to show year-on-year improvement. However, we will no longer guide to a specific time frame. As Paul said, we remain committed to delivering double-digit earnings growth over the medium term. When we set the gross margin target, we shared the key factors that would drive the recovery, and you'll see these on the right-hand side of the slide. They remain the levers we are focused on to return Behring gross margin to its historical highs. However, a couple of uncontrollables are impacting timing. To begin with, as you will be aware, FX has not worked in our favor. And you also know we've taken deliberate action to reduce cost per liter with improved efficiencies and a gradual decline in donor fees. We are delighted with the successful rollout of the RIKA and iNomi platforms, and it is delivering as planned. However, we did make the decision to bolster labor costs in the centers to ensure that we could deliver this significant change. We now need to reduce those costs and have announced the closure of 22 centers as part of this. While we have been pleased to offer innovative new products to our patients, in some cases, this has been slower than our expectations. ANDEMBRY was impacted by the delayed approval in the U.S. and HEMGENIX take-up has been slower than anticipated despite the excellent 4-year data Paul mentioned earlier. The strength of our intravenous Ig product PRIVIGEN has been pleasing, but it is a lower-margin product compared with HIZENTRA. We are targeting double-digit growth in HIZENTRA in FY '26 driven by our convenient prefilled syringe formulation, which will drive margin improvement. Finally, we've made strong progress on yield, and we'll continue to focus on manufacturing efficiencies going forward, and these are very much progressing to plan. To reiterate, we are confident in consistent year-on-year improvements in the CSL Behring gross margin, and we believe that these are the levers that will get us there. On the next slide is CSL Seqirus and CSL Vifor. As Paul mentioned, CSL Seqirus delivered revenue growth of 2%, which was pleasing given the challenging market backdrop. CSL Seqirus' margin did come under pressure due to the competitive nature of the market. Sales and marketing costs for CSL Seqirus were up as the business prepares to launch into new markets of Germany, France and Korea. For CSL Vifor, revenue was up a solid 8%, demonstrating the resilience of the iron portfolio and the strong uptake of the new product launches in nephrology. CSL Vifor's operating result was up 14% as we continue to find ways to make the business more efficient. On the next slide, I'd like to talk about capital management. As you'll see on the chart, our balance sheet has delevered quite significantly due to our strong cash flow. For FY '25, our net debt-to-EBITDA finished the year at 1.8x. This gives us sufficient capacity and flexibility to support investment in growth initiatives. It also gives us the opportunity to return some capital to shareholders. And today, we have announced a multiyear, on-market share buyback program, which we anticipate will start with AUD 750 million in FY '26. We expect this will progressively increase over the medium term. We are targeting a leverage range of 1.5 to 2x net debt to EBITDA. And with that, I'll hand back to Paul to talk to the strategic initiatives that we are announcing today.
Paul F. McKenzie: Thank you, Joy. Now I would like to talk about the different strategic initiatives we announced today. So let's now turn to Slide 19. As an engineer, I spent my career dealing with complexity. CSL has a track record of succeeding in this type of environment, whether it be developing therapies in the lab or being a world-class manufacturer of plasma-derived products. However, in a constantly changing world, it is necessary to evolve our approach. Over the past few years, I observed several changes. Operational model complexity has increased as CSL has scaled. We have seen a more uncertain macro environment as demonstrated by the implementation of policies such as the IRA, then the threat of sector- specific tariffs and Most Favored Nation pricing. And our R&D output has not been where we had hoped it would be. So it is with -- wave of value creation. Firstly, we are making our organizational structure simpler and more effective. We will make significant changes to our R&D organization, removing fixed costs and redirecting that spend to important clinical portfolio work. We want to double-down on the pace and quality of our innovation and increase the productivity of our pipeline, both in the speed of translational research and maximizing life cycle management opportunities for our portfolio. To enhance clinical and commercial pipelines, a distinctive new portfolio development and commercialization operating model, we'll seamlessly integrate efforts across research and development, business development and commercial. CSL Behring and CSL Vifor will combine medical and commercial capabilities, delivering further synergies and additional revenue growth opportunities across our multiple commercial channels. And we have taken the hard but necessary decision to reduce head count across the entire organization. Efficiency has been a focus of mine since I joined CSL as Chief Operating Officer. Many of you know and will be aware of the emphasis I placed on that in our plasma and manufacturing networks in particular. With the rollout of the RIKA plasmapheresis system and I-Nomogram, our donor collection network has become more efficient with improving yields. So we are able to optimize our network and have closed 22 of our underperforming centers, representing 7% of our U.S. footprint. This does not signal an end to new center openings but a continued focus on reducing our collection costs. In aggregate, these changes will result in an annual pretax savings of over $0.5 billion by the end of financial year 2028. They will be delivered progressively over the next 3 years with the majority achieved by the end of financial year 2027 and full run rate savings by the end of financial year 2028. As I mentioned earlier, we will incur one-off restructuring cost of approximately $700 million to $770 million on a pretax basis and $560 million to $620 million on a post-tax basis, all to be recognized in financial year 2026. The cash flow impact in fiscal year '26 will be $400 million to $450 million. Importantly, I believe the changes we are making will enable CSL to refocus on what makes us successful. We will be a simpler organization deeply concentrated on providing enduring patient impact. The outlook for CSL is strong. We see positive fundamentals in our key therapeutic areas that show appealing growth opportunities for CSL. The initiatives I have announced today are designed to benefit us in continuing our growth journey. We have also today announced our intent to demerge CSL Seqirus as an independent ASX-listed entity. We strongly believe a demerger provides a compelling strategic rationale for both entities. Each company will have a renewed focus on their respective core differentiating capabilities, allowing for the acceleration of transformation and efficiency projects. A demerger will reduce complexity, making both businesses more agile and efficient to manage. Each business will have a dedicated management team and Board focused on independent strategies and decision-making as they strengthen their leadership positions in their respective sectors. As part of that, we are pleased to announce Mr. Gordon Naylor as the Chair-Elect of Seqirus. He is an excellent fit for the role, having played a key role in the operational and financial transformation of Seqirus when CSL acquired the Novartis business in 2015. The demerger will create 2 global leaders in health care and unlock meaningful simplification benefits. As we have described previously, Seqirus is a global leader in seasonal influenza vaccines and critical pandemic preparedness contracts. It has a highly differentiated and market-leading product portfolio centered around innovations in cell and adjuvant technologies in a $7 billion industry with attractive long-term fundamentals. As a stand-alone entity, Seqirus will have greater autonomy to set its own strategic direction, including capitalizing on potential opportunities that may arise in a highly dynamic market. The remaining CSL group will continue to have leading market positions in multiple rare and serious diseases. These franchises have a long track record of delivering value to shareholders, and our scalable platforms will continue to benefit from the positive long-term outlook and demand for their therapies. The simplification benefits of a demerger also enable an acceleration of the transformation and efficiency initiatives announced today. We are targeting completion of the demerger before the end of financial year 2026. It will be subject to third-party consents, regulatory approvals, and we will conduct a voluntary shareholder vote. Finally, to the outlook on Slide 24. In CSL Behring, we anticipate continued robust demand for our core therapies as well as the uptake of newer products such as ANDEMBRY and HEMGENIX. With the rollout of the RIKA and iNomi platforms now complete, gross margin is expected to continue to improve. This will also be helped by strengthening our growth profile for our higher-margin HIZENTRA product. In financial year 2026, CSL Seqirus expects seasonal influenza revenue to stabilize year-over-year driven by improved performance in both the U.S. and other key geographies. We expect a substantially lower contribution from avian influenza and COVID-19 in fiscal year '26. CSL Vifor is well positioned to maintain a strong market-leading position despite new entrants into the iron market. The nephrology franchise will continue to benefit from the ongoing launch excellence of therapy such as TAVNEOS and FILSPARI. At the group level, FY '26 revenue growth is anticipated to be approximately 4% to 5% over fiscal year '25 at constant currency. CSL's NPATA for fiscal year '26, excluding the nonrecurring restructuring costs, is anticipated to be in the range of approximately $3.45 billion to $3.55 billion at constant currency, representing growth over fiscal year '25 of approximately 7% to 10%. Please be aware that this guidance assumes no impact from pharmaceutical sector tariffs. It is our current expectation that any such policy would not impact our ability to deliver on the strategic initiatives outlined today. CSL has significant operations in the U.S. and the majority of our commercial portfolio is drug-sourced from there. I look forward to our teams implementing the transformational initiatives we have announced today, and we look forward to keeping the market updated on our progress as we deliver sustainable profitable growth. A key date to mark in your calendars is our Capital Markets Day and site tours, which will take place in the U.S. from the 4th to the 6th of November. We will be providing further information on the initiatives outlined today throughout that event. With that, I will now hand back to Chris Cooper to coordinate the Q&A.
Chris Cooper: Thank you, Paul. In addition to Paul and Joy, we are also joined for the Q&A session by several other representatives of CSL's leadership team. In the room with us are Andy Schmeltz, CSL's Chief Commercial Officer; Ken Lim, CSL's Chief Strategy Officer; and Herve Gisserot, SVP and General Manager of CSL Vifor. [Operator Instructions] The first question comes from Saul Hadassin at Barrenjoey.
Saul Hadassin: Paul, maybe a first question for you. Just on the Behring performance in second half fiscal '25 and particularly the Ig portfolio. Even with the impact of the Medicare changes, the revenue itself looked quite soft, certainly, versus consensus. Just wondering if you can talk to what the reason for that was. I know you called out some tender or contract losses, but just your expectations for Ig growth into '26 would be great.
Paul F. McKenzie: Great. Thanks, Saul. I hope you're doing well. Thanks for the question. Look, we continue to see great demand across all indications for our Ig portfolio. We did see the full year impact of some tender losses, low-margin tenders, that we chose not to participate in, and that is what you're seeing as a reflection in the second half. But I'll ask Andy to give some more perspectives.
Andy Schmeltz: Sure. Thanks. Look, our Ig business is up a healthy 7% over the year, and we're really proud of our sustained leadership in Ig, and we look forward to continued mid- to high single-digit growth over the next several years, and that accounts for emerging competition. That said, it's really more competitive than ever before, and we're being very purposeful in where we play and in how we play. We're in this for the long run, and we're not focused on individual periods, 6-month intervals. There are some unique dynamics in this year's result, particularly impacting the second half of the year. As you mentioned, some non-regrettable tender losses in select markets, we're not going to chase tenders where it doesn't make sense. There's some variability in purchasing patterns and then there's the impact of the U.S. Part D reform. So if you take that Part D reform into account, our Ig portfolio revenue grew 9% this year on a like-for-like basis. So underlying demand continues to be strong, and we're ready to compete to grow.
Saul Hadassin: And just another question, Paul. In the context of the reduction to operating costs, the focus on more efficient R&D, I guess, what is maybe missing from the presentation is expectations around an acceleration in top line, and it's arguably the top line that has been disappointing for the company over the last couple of years. I guess as you look out to fiscal '26 and '27 and '28, this commentary about, I guess, reinvigorating the portfolio developments and the commercialization model, as you're taking out cost, how much confidence do you have that you can actually start to accelerate that top line back to a level that I think investors are used to seeing within the broader CSL Group?
Paul F. McKenzie: Yes. Thanks, Saul, for the question. And look, our change in operating model is really important for our clinical and commercial portfolio success. And that change in operating model is really bringing together research and development, business development and commercial in lockstep. And it's really those 3 groups that have to work hand-in-hand to develop not only our clinical portfolio, but to maximize our commercial portfolio. And really, this is what we're going after. And we've had some disappointments in the last couple of years in R&D, and our footprint became quite dispersed and very fixed from an overall cost viewpoint, and it's those fixed costs are what we're trying to bring back down so that we can invest back in our clinical portfolio and commercial LCM progress. So our goal is to continue to source key clinical assets, both internally and externally, which will help us continue to grow the top line. But top line comes from both clinical progression as well as indication expansion and life cycle management. And I hope you see in our highlights, the indication expansion that we're targeting for KCENTRA and DOAC reversal and also RiaSTAP in the U.S., and important conversations that we had with the FDA to free those up, which are quite important to our journey.
Chris Cooper: Thank you, Saul. Our next question comes from Davin Thillainathan at Goldman Sachs.
Davinthra Thillainathan: Can I just touch on the Behring gross margin commentary? Clearly, the thinking there is there's perhaps lesser conviction you'll be able to get back to where you were pre-COVID by FY '27 and '28. I understand that you've touched on some factors, largely some slower rollouts of some products. But as I think about those time frames, there's still a far way to go to FY '28. Like, what else is happening do you feel within the business that gives you lesser conviction on that gross margin target?
Paul F. McKenzie: Yes. I'll ask Joy to make more detailed comments. But overall, if you look at the levers on the slide that Joy highlighted, all of those levers are executing to plan, albeit slightly off in time. And Joy will go through all the details for our progress. But I want to be clear, we remain confident to get back to the 57% gross margin.
Joy Carolyn Linton: Agreed. Davin, we have not lost conviction at all on returning our margins to historical highs. All we're doing today is saying we're not going to put a time line on it. We've put a couple of time lines on it to date. And there's things that invariably end up being a bit outside our control. The cumulative impact of the FX headwinds we've had to date is not insubstantial. There's been some headwinds in our product mix, which we talked through. And we're still on the cost per liter journey. The yield improvements are terrific and going actually probably ahead of plan, but they are creating some shorter-term fixed cost absorption in the centers, which is why we made the call to close some centers to keep getting that fixed cost down. So they're kind of like the 3 areas. We're absolutely committed to returning to historical highs. We can see our way there. All we're doing today is saying we're not putting a time line on it.
Davinthra Thillainathan: Okay. And my next question would be on the Ig part of the franchise. I understand you've seen some, I guess, tender losses and the intention there to not participate. But can you give us a sense of how you actually leverage your competitive advantage in this part of your franchise? Fractionation expansion was one factor that was previously attributed to perhaps how you differentiate. But any other factors that you can call out where you feel you can outperform, thinking into the '26, '27 and beyond period?
Paul F. McKenzie: Well, let me comment on a few, right? Productivity overall across every part of the business is critical for our success. So productivity in how we look at our yield and operations, from plasma collection and sourcing at the centers all the way through to how we isolate the actual grams and then present them to the patients, those journeys are executing to plan, and it's really critical that we deliver those. The next productivity is the commercial and medical affairs productivity. It's how we influence and understand how patients use the product in the marketplace. It's how we look for real-world evidence and differentiation of that real-world evidence, so that we can look for better ways to serve our patients around the globe. And then I'll ask Andy to comment on his approach on commercial productivity and how we're looking at focusing on different channels and how those channels should unleash growth across the next several years.
Andy Schmeltz: Yes. Thanks. Look, we are very proud of our leadership in Ig, and we have every expectation not only to sustain that leadership, but to expand it. We have many efforts underway to expand the diagnosis of primary immunodeficiency, not only in the U.S. but internationally as well. It's under-diagnosed. And of course, our Ig replacement indications, primary immunodeficiency, secondary immunodeficiency, that's all about Ig, not about any other mechanisms that are going to be viable there. We also are really investing in the U.S., expanding our immunology field force over the past year, and we have our first ever direct-to- patient omnichannel campaign for HIZENTRA that asks HIZENTRA patients with primary immunodeficiency to seek a doctor asking for HIZENTRA. So we're confident that those efforts are going to pay off, and we're going to expand our leadership over time.
Paul F. McKenzie: Great. Thanks, Andy. I'll just add one more comment on the efforts of our R&D team around SID, for instance, we're looking and working with the FDA in several indications where we can further leverage Ig against those cancers and their use for secondary immunodeficiency. So good work by the team on the real-world evidence and the conversations with the FDA. We have started a trial in several areas. Some are real-world evidence trials and some are actual physical clinical trials.
Chris Cooper: Thank you, Davin. Our next question comes from Andrew Paine at CLSA.
Andrew Paine: Just on the pretax savings from the strategic transformation. Just wanting to know how you think this will be reinvested into the business. What I mean is, what do you think the largest opportunities are that we should be looking at? And also, do you think the entire savings will be redeployed?
Paul F. McKenzie: Yes. Obviously, any savings, we'll look hard at in our capital allocation of what's the best use of those dollars. First, we need to execute the savings, and you see there are 3-year savings. A lot of the reason they're more towards the tail end of that 3-year period is our work, the appropriate work we need to do with European Works Councils and appropriate social plans. But when we really look at the savings, we want to look at opportunities to enhance our clinical and commercial portfolios, particularly our clinical portfolios in that Phase I and Phase II part of the business where we can ensure that, one, we can bring the right disease knowledge and insights; and two, we can move them rapidly from decision point to decision point in terms of how we invest. So right now, we're saying we look to reinvest about 50% of the savings. But again, we'll be disciplined in our approach to do that. I don't know, Joy, if you wanted to add anything?
Joy Carolyn Linton: No, I agree, Paul. I think what we're trying to do is balance short-, medium-, long-term revenue growth with also ensuring that we continue to deliver double-digit earnings growth along the way.
Andrew Paine: Okay. And just on the RIKA system, obviously, that's been rolled out and switched on. Just kind of timing of that, when do you think that's going to start to hit the P&L? I assume there's nothing for the FY '25, but when should we start to see those benefits flow through? And I guess, how is that assumed within your guidance that you've given?
Joy Carolyn Linton: Yes. So as you know, Andrew, it takes 12 months from when we collect the plasma to when you see it in the P&L. We turned the individual I-Nomogram on or around Christmas, and so it will be the second half of FY '26 before you see that in the P&L. Similarly, the plasma centers that we are closing now, you won't see that in the P&L until FY '27. It's another reason the savings tend to be a little more back-ended just because of the length of time it sits in inventory. Interestingly, you can start to see it in the cash because that's the inventory, but it will take a little while to come through the P&L.
Andrew Paine: Okay. So that's, I guess, fully accounted for in the guidance you've given today.
Joy Carolyn Linton: It is. The forward guidance, yes, it is. Correct.
Chris Cooper: Thanks, Andrew. The next question comes from David Bailey at Morgan Stanley.
David L Bailey: Yes. Just firstly, just maybe on the supply and demand fundamentals for both plasma and Ig, if we can. It looks like there's some fairly substantial yield initiatives coming through the system. So I just want to understand how you're seeing the supply and demand outlook for both of those factors at the moment. And then within that, just any observations around demand for Ig and CIDP, just noting there's been some reasonable growth from a new therapy in that space.
Paul F. McKenzie: Yes. No, thank you. Look, we look at the demand as robust, and I'll ask Andy to go through very specific details. And look, our whole plan is to balance the demand in the marketplace with appropriate supply. And now we just have more levers to do that. The yield increases in plasma, the yield increases in manufacturing, allow us to be a bit more picky in terms of how we execute, where we put our Ig across the globe and what kind of tenders we participate in. And that's really important for us as we move forward because we want to both drive top line revenue as well as margin in the business. But Andy, maybe you can give some perspectives on demand.
Andy Schmeltz: Yes, sure. So look, the Ig market and opportunity is very solid. We continue to see strong growth in primary immunodeficiency, secondary immunodeficiency and CIDP, all the indications that were being used. And that's why we're confident with our leadership role that we're going to continue to have mid- to high single-digit growth over the next several years. For the impact of this new entrants with FcRn specifically, look, this is good for patients in CIDP, of course. That said, the benefit risk profile of the FcRn class really isn't fully characterized, and it does appear to be quite different than that for Ig. the reality is, of course, that FcRns are not in the consideration mix for when Ig replacement is needed, so not for PID, not for SID, and that's more than half our current business. We're confident that Ig will remain the first-line leader in CIDP, and FcRns are going to be good for patients who are intolerant to or who don't respond to Ig. So we really look forward to continued CSL Ig portfolio growth with PRIVIGEN with HIZENTRA. And that kind of mid- to high single-digit growth profile over the midterm takes into account any possible impact from FcRns.
David L Bailey: Okay. If I look at your R&D guidance for '26 and I look at your top line guidance, it implies about 8.3% of revenue. Maybe just thinking about the $500 million, there's going to be some fixed cost reduction in R&D within that. But I suppose my questions are, can you give us a bit more of a sense as to the phasing of that $500 million? And then secondly, how should we be thinking about R&D as a proportion of revenue on a medium- to longer-term basis relative to your current 10% target?
Paul F. McKenzie: Yes. I just want to highlight in terms of the phasing of the savings just to make sure that's clear. So in these reductions, we have an active plan where we work through all parts of the organization of where we think we need to surgically apply these cost reductions, in fixed costs, site locations, capabilities that we built that were fit for purpose a few years ago when we were, say, executing a CSL112 trial, more operational skill sets, which aren't as appropriate from a capability as you're looking to rebuild your clinical portfolio overall. So these fixed cost savings, particularly the people side, it takes time given a lot of our footprint is in Europe, where you need to work through the appropriate works councils and social plans to be able to deliver the savings. So the tail ending of that is really a reflection of our best estimate for the timing of those as we work through them. And Joy, if you want to add some comments on that.
Joy Carolyn Linton: And on the R&D guidance, David, we haven't provided a percent of revenue number. That's quite intentional because as we go into our new product development and commercialization model, it is going to be as opportunities arise, and we need to kind of see what those opportunities look like and it's not like we're going to have the same R&D number every year. So it's why we've given you a number, kind of plus or minus, I think, what was it, $1.35 billion, plus or minus a bit. And so we'll try and guide to a dollar amount based on what we see in that near term in the R&D side because it will change versus the way it's been traditionally where we were spending to a percent of revenue number. So this is one of the demonstrated outputs of the new strategy going forward.
Chris Cooper: Thank you, David. Next question comes from Sacha Krien at Evans & Partners.
Sacha Krien: Look, I just want to follow on with David Bailey's questions on the Ig growth. I think previously, we were sort of talking to high single-digit volume growth. We now seem to be talking about mid- to high single digits. I'm just wondering, are you seeing any sort of price competition in the market that we should be aware of? I know you didn't participate in these tenders, but clearly, others have. Is that the reason why we've seen that growth rate come down a bit?
Paul F. McKenzie: I'll ask Andy to comment.
Andy Schmeltz: Sure. I mean, yes, look, the Ig category is increasingly competitive, and we are being very purposeful in where and how we play. And so just to kind of put it in context here, with fiscal year '26, we mentioned in the second half of fiscal year '25 that we had some non-regrettable tender losses. And in fiscal year '26, we'll see the impact from the tender in the U.K. that we chose not to go as low. So there are areas where price is coming down, and we're being purposeful where we want to compete and where we don't want to compete. But if you take into account the tenders that we did not win, and again, it's not regrettable, that's about 3% or 4% of Ig growth that we could have had in '26 that we chose not to get. And we're okay with that because we're in this for the long haul, and we're being very purposeful in where we play. So the bottom line is there are spots where there's price competition, and we're going to be purposeful in where and how we choose to engage.
Sacha Krien: I guess in the context of we're talking about MFN and other U.S. policy risks where there was potentially an expectation that you might need to lift prices to offset some of those pressures, I'm just wondering, maybe my question is, what do you foresee is the potential impacts of tariffs in your MFN? And if you do need to, can you lift offshore prices to mitigate that, to some extent?
Paul F. McKenzie: So again, for tariffs, I just wanted to reiterate that we don't see tariffs at this point, based on what we understand, to be impacting our fiscal year '26 and our ability to deliver on these guidances. And that's really because of our global footprint, but particularly our footprint in the U.S. where we have a significant infrastructure and that for plasma-derived products, the active pharmaceutical ingredient is sourced from U.S. plasma operations as required by regulatory. But I wanted to remind you, during COVID, we were one of the few companies that stayed true to our patients in Europe. And during that time, because we stayed true to those patients in Europe, we were able to achieve price increases across 22 countries during that COVID period, which we've been able to maintain. So as you know, we've never been a company that's chased price. We typically go CPI in general across the overall portfolio, particularly in our Ig portfolio, and we'll continue to do that. But if there's a tender that creates the opportunity to get price, we'll certainly be competitive. And that's what Andy is saying in terms of being very selective, in terms of where we choose to put our Ig moving forward. Price will certainly be competitive. And that's what Andy is saying in terms of being very selective, in terms of where we choose to put our Ig moving forward.
Sacha Krien: Okay. One quick clarification, if I can. So just in terms of tariffs, are you saying that it's your expectation that the country of origin of most of your Behring products will be deemed to be the U.S.
Paul F. McKenzie: For our plasma-derived proteins, the active pharmaceutical ingredient comes from the plasma, correct.
Chris Cooper: Thank you, Sacha. Our next question comes from David Low at JPMorgan.
David A. Low: Can I just start with a reasonably simple one just on the guidance. So just to be clear, FY '26 includes Seqirus? I mean I see that the demerger is planned this year. And could I also get you to talk to whether some of these savings will show up in '26? It sounds like they're generally more long dated.
Joy Carolyn Linton: David, Joy here. So yes, our guidance includes all of CSL as we know it today, and that's really for 2 reasons. One is we don't exactly know the timing of the demerge yet. And of course, you will know that the majority of Seqirus' earnings sit in the first half of the year, and there's really no expectation that the demerge would happen this side of Christmas. So I think that's primarily why we've gone there. And you'll have to just repeat the second part of your question, which I've temporarily forgotten.
David A. Low: On whether savings will show up in '26.
Joy Carolyn Linton: Yes, any savings are included in that guidance. As we've said already today, there's also some intentional reinvestment in '26 to drive future revenue growth. But a lot of those savings are coming in '27 for the reasons we've talked about before: extended works council negotiations in Europe and, of course, anything that goes into inventory is an FY '27 number. I mean the other comment I would make on the guidance, if you haven't got around to reading the footnotes yet, if you were to take out the Part D reform, that 7% to 10% becomes 10% to 13%. So FY '26, it is impacted by the second part of the first full year impact of Part D reform. And it's also reflective that the Seqirus business, while we're starting to see some positive signs in influenza, seasonal influenza, we're not going to get the benefit again of the pandemic business, which was largely a '25 story. So there's a couple of reasons there why that guidance at the low end is single digit.
David A. Low: My second question is sort of similar. So Paul, you've committed to double-digit growth in the medium term. You've got $500 million of savings pretax, $400 million post, and half of that is going to get reinvested. So effectively, when I look at my numbers over the next few years, I've got savings of $200 million to add back, which a starting point would lead to earnings upgrade. But it seems to me that what you're actually committing to is that double-digit earnings growth requires these savings. But Joy, you've just mentioned Medicare Part D. That's done by the end of the calendar. So are we saying that there is a double-digit growth story here without the savings and we can add that on top or the savings is part of it, please?
Joy Carolyn Linton: You should assume the savings are required. We need to extract the savings. We need to reinvest for the medium-term growth of the business, and all that is included in the double digit.
Chris Cooper: Thank you, David. The next question comes from Craig Wong-Pan at RBC.
Craig Wong-Pan: Just wanted to touch on Ferinject. The growth did soften in the second half. And I know in your slides, you called out generic competition in the EU. Could you just talk about what sort of, I guess, the landscape? Has competition intensified in the second half?
Paul F. McKenzie: Sure. I'll ask Herve to comment on that.
Herve Gisserot: Yes. Thanks for the question. So first, we are overall very pleased with our Ferinject performance in fiscal year '25. We are indeed facing generic competition in the EU and in certain markets ex U.S. In EU, in particular, we still see limited competition so far. Just to give you an example, Sandoz and Teva are commercially active in about 10 countries across the region despite the fact that they have been approved in 20 countries, which does suggest that they have some significant supply limitations. We have also seen an approval for Viatris, but so far, they are not commercially active. So our focus is really on tendering excellence. As Andy said, for Ig, we are very much focused on price preservation because we are here for the long run. Iron is really for us a critical franchise, and it's a long-term play. We are also leveraging non-pricing criteria. For example, we are clearly differentiated in terms of supply reliability versus generic competition. We have a longer shelf life. We are trying to optimize our carbon footprint, which is more and more a criteria in some of the tenders. Our administration time is shorter than generic competition. So we are leveraging all these things to try to differentiate ourselves, not just based on price, but based on some other factors. And in Europe, despite this increasing competition, we have been able to hold volume almost flat with targeted investments. In countries where we do not face generic competition, we are clearly investing and growing the business double digit in volume and value. And in countries where we do face generic competition, we invest when we win tenders, so to drive demand. So we try to be flexible, agile. And so far, I think the strategy has really paid off.
Craig Wong-Pan: Sorry, just to follow up on that, the second half numbers we saw for Ferinject, the decline there, that's mainly kind of lost volumes because you're holding price sort of pretty stable?
Herve Gisserot: We are not holding price, we are just smart, I guess, with our pricing strategy. So we are trying to strike the right balance between volume and price. But yes, we see generic competition intensifying, which was expected when we discussed the H1 results.
Joy Carolyn Linton: I might just add, it's not unlike Behring. We don't have to win every tender, and we're in it for the long run, and we're balancing growing volume in growing markets, but at making sure that we can maintain and grow margins along the way.
Herve Gisserot: And maybe if you allow me, I would like to add a comment, which is a comment about our intercontinental region. The ex EU, ex U.S. business, where we see extremely strong growth because a big part of our Ferinject strategy is market expansion worldwide. And here, we are extremely successful. Just to give you a sense, this region, ex U.S., ex EU in terms of volume, is bigger than EU and U.S. combined. And the revenue generated by this region is 3x higher than the U.S. revenue. So when you look at Ferinject and especially the outlook, you have to understand that, yes, we are facing more and more generic competition, but we have a huge opportunity in a number of geographies where Ferinject is still a very new product, like in China and Canada, where we are in the launch phase.
Craig Wong-Pan: And then just for my second question, I just want to touch on ANDEMBRY and how that's performed in rest of world markets. Could you elaborate if you see much switching from patients from HAEGARDA or your broader HAE franchise? Or is that sort of mainly winning new patients?
Paul F. McKenzie: Yes, I'll hand off to Andy for specifics on the launch progress, but I could say just in my recent travels to China -- and we just filed in China, which is a great achievement. And if you think about a product, got approved in the U.S., Japan, Europe and filed in China, all in the same year, which, in my 30-plus years in the industry, has never happened. So it is a great product. Obviously, it was worth the wait for us and worth the wait for patients. We're very excited by what it can do with its once-a-month dosing, auto-injector, patients are waiting for it, and we're seeing strong demand as we come out of the gate. But I'll let Andy give some specifics.
Andy Schmeltz: Yes. Totally agree with Paul's comments. We're really excited about the prospects for ANDEMBRY for hereditary angioedema patients. Outside the U.S., which launched first here given the delay by the FDA, we've seen strong uptake in the first 5 months out of the gate in both Germany and Japan. And in Germany, specifically, we have enough data that we know we have stronger performance in those first 5 months than either TAKHZYRO, ORLADEYO had during their launches, and so that bodes very well. In the U.S., really, approval was in mid-June. So we don't have that much performance data from fiscal year '25, but we're really pleased with the early signals we're seeing over the first month out there, very active participation in our quick start program, which enables patients to start therapy right away before the insurance approval process. And we have an integrated limited distribution specialty pharmacy network that will enable acceleration and a seamless patient experience. So we're very excited, and we need a few more months before we're able to share with you specifics. I think at Capital Markets Day, we'll have an update on the launch progress. You mentioned also HAEGARDA. And HAEGARDA, I think, will still have a very clear role for patients who need C1 inhibition. In the U.S., specifically, HAEGARDA has about a 25% share in the prophylaxis space. And so we would expect that ANDEMBRY would take no more than 1 in 4 patients who may switch from HAEGARDA. The focus for us are on, of course, the market-leading agents. And while HAEGARDA, there will be some impact, HAEGARDA, we believe, still will have a very strong and clear role in the HAE prophylaxis.
Chris Cooper: Thank you, Craig. Our next question comes from Andrew Goodsall at MST Marquee.
Andrew Goodsall: The first one, just if I could ask you to characterize what your U.S. Ig sales look like just in terms of where you set versus, say, market volumes and also maybe the impact of the IRA but just focusing on U.S.A.
Paul F. McKenzie: Sure. I'll ask Andy to give some specifics on that. But the demand across all PID, SID, CIDP remains very strong. But Andy, you can give some insight specifically to that region.
Andy Schmeltz: Yes. I mean our business for our Ig portfolio across PRIVIGEN and HIZENTRA is about 50-50 U.S. and international, and we're growing both in the U.S. and internationally. HIZENTRA has greater penetration already in the U.S. and is newer internationally. So it's a lower base. So HIZENTRA will grow a little bit more internationally. But we see with the portfolio, over time, HIZENTRA will catch up because we believe that's where we're investing in life cycle, that's we're investing in broader indications. And it just so happens that the margin is better on HIZENTRA as well. So I believe strong prospects both in U.S. and international markets.
Andrew Goodsall: And sorry, just in the U.S., if you compare yourself to say, the market data being TDAPA or peers, would you be growing volumes in line with those in the last 6 months, 12 months?
Andy Schmeltz: Yes. I mean we're holding our share. It's quite competitive now. We're holding our share in the U.S. I mean, look, with HIZENTRA, we were the first and only subcutaneous offering, and now there's competition. So share is being challenged a little bit, but that's what you would expect when you have new entrants into a marketplace. But with HIZENTRA, we still have approaching 60% share of the business. So we're growing well.
Andrew Goodsall: So I'm right in assuming most of the weakness was ex U.S.A., not your core market in the U.S.
Andy Schmeltz: Yes. The U.S. is going very well. And I think we've been very explicit about the tender losses where we've chosen that it doesn't make sense for us.
Paul F. McKenzie: And they were all ex U.S.
Andy Schmeltz: Those are all international, of course.
Andrew Goodsall: I'd probably slip a couple of questions there, but if I could just finish with tariffs and just your conversation around re-domiciling and if there was a grace period offered, how, just conceptually, that play out?
Paul F. McKenzie: Sorry, can you repeat the question, make sure I understand it.
Andrew Goodsall: Sure. If you've offered to re-domicile in the U.S. And so if tariffs were applied to pharmaceuticals and plasma, but a grace period offered, which is what the President has been talking about, how would that play out for you just conceptually?
Paul F. McKenzie: Yes. So I mean, I'm not quite sure I relate to the re-domicile point. But just in general for tariffs, if you look at our plasma-derived products, as required from regulatory, the plasma is sourced all in the U.S., and that's where our operations are for the plasma sourcing, and that provides the active pharmaceutical ingredient. That provides us the tariff conversation strength in our view.
Andrew Goodsall: Okay. But I guess re-domiciling just meant the finishing component, obviously, not the rest is already there.
Paul F. McKenzie: Correct. Yes. But the main thing from a tariff discussion is the active pharmaceutical ingredient, which comes from the plasma sourced in the U.S. I think you may be referring to we're talking about adding Ig capacity over the medium term in the U.S., but that was always part of our plan, independent of the current administration's activities. It was really about balancing Ig capacity around the world. And as you know, we're continuing to execute the plan to Horizon 2, and we will come to a point where we will decide on retrofitting existing modules and/or investing new. And that's part of what we're going through and the pros and cons of how we approach that, and that's why you see the potential for Ig capacity expansion in the U.S.
Chris Cooper: Thank you, Andrew. Our next question comes from Lyanne Harrison at Bank of America.
Lyanne Harrison: I might talk on Seqirus. You mentioned that you expect seasonal influenza revenue to stabilize over the next couple of years. But one of your peers at its recent results mentioned that for this year, it's expecting total flu sales to be down in the mid-teens and that they also expect to take market share. Can you comment on where your confidence with Seqirus lies given where you're thinking the revenue would be for this year?
Paul F. McKenzie: Yes. Thanks, Lyanne, for the question. I hope you're doing well. In terms of the seasonal stabilization, it's really about the channels that we compete in. So we've been investing over the last couple of years in the pediatric segment. So if you looked at our share of the pediatric segment a couple of years ago, it was a big shiny 0And since then, we've moved up into the double digits, and we're looking to end the year around circa 20% as we included in our fiscal year '26. So it's really about really how you look at the channels. For us, it's both pediatric and IDN as well as competing and faring well in the retail segment. So where we see the stabilization is our ability to compete actively across these channels. And in these channels, as you know, most of the vaccine fatigue is in that 18 to 64 category. So the pediatric channel, which represents about 35 million doses, is a pretty significant portion of growth for us. That said, we're also, for the first time, into Germany and France. Germany is a $300 million-plus market. We've had 0% opportunity there because we did not have the STIKO recommendation. We now have the STIKO recommendation and are looking to expand. So I think it's really our differentiated portfolio and our surgical precision around the channels that we're in.
Lyanne Harrison: Can you also comment on what the pricing competition has been like going into this '25, '26 flu season?
Paul F. McKenzie: Yes. I would say, as you have more capacity in the market, we did see for certain retail contracts, competitive pressures present themselves. And given the diversity of our portfolio, we're able to satisfy that and go after that in different ways. So we do not chase, as you know, we're transitioning out of egg. A lot of the price pressures that you saw were specifically in egg, some more limited price pressures in what I'll call the higher-value segment of flu. But we've been able, given our profile, to look at those price pressures less from an egg viewpoint, which I think has been the predominant push down of the prices.
Chris Cooper: Thank you, Lyanne. our next question comes from David Stanton at Jefferies.
David Andrew Stanton: Just a follow-up on Lyanne's question. I'll stick with Seqirus for my first one. I saw you had an operating segment result of 47.4% -- compared to '25 for '26, please.
Joy Carolyn Linton: David, thanks for the question. So it's early days, right? So we do think that we're seeing a stabilization of seasonal flu. That's good for us because, as Paul has already said, we're out of egg and egg is lower margin. So that is a net positive on the margin for us. However, just need to be thoughtful that the pandemic revenue that we saw in '25 doesn't repeat at the same level in '26, and that is particularly high margin. And the second timing factor is we're still moving from Parkville to Tullamarine production, and there's a bit of duplicated costs still sitting in those numbers in '26. So look, there's some ups and downs from Parkville to Tullamarine production, and there's a bit of duplicated costs still sitting in those numbers in '26. So look, there's some ups and downs. I would have thought if we could go out of '26 flat, that would be a good outcome.
David Andrew Stanton: Understood. Very clear. And second for me, final question, just more of a big picture question here. Given the refreshed focus on development and its impact on amortization, maybe for '27 plus, not for '26 because you've given us guidance there, but should '27 CSL potentially move back to focusing more on NPAT guidance instead of NPATA guidance? And if not, why not, please?
Joy Carolyn Linton: I'll take that one as well. We're really guiding for '26 today. Clearly, the transformational initiatives that we've announced today, everything from a change in our operating model through to the intention of demerge, will necessarily create a number of changes in the way in which we report our results in '27, and we'll update you when we've worked all of that out.
Chris Cooper: Thanks, David. Our next question comes from Steve Wheen at Jarden.
Steven David Wheen: Chris. I'm just a little confused on the gross margin messaging, particularly in light of the fact you're talking now also to the manufacturing cycle being 12 months where it's always been 9 months. But you mentioned that the fixed cost absorption is not going the right way. I would have thought if you're collecting more of the same amount of people, the fixed cost absorption is absolutely going move favorably for gross margin. You've got out of some gross margin sort of cheaper tenders and you're spending less on donor fees plus you've got an FX tailwind. I just don't see why you're changing the time horizon around when you'd get back to pre- COVID when all the drivers that you've been talking about are in play.
Joy Carolyn Linton: I'll take that. Thanks, Steve. Yes, you're right. We talked 9 to 12 months. I guess I've talked 12 today, but 9 to 12 is unchanged. FX, I'm not in the game of guessing what FX will do. Notwithstanding our comment today, all we're really saying today on the overall guidance is if the FX rate stayed the same as it was today, we would have a tailwind in '26 to the tune of, what have we said, $65 million. So that's not really trying to make a prediction on forward FX rates. That's just saying if things remain unchanged per today. To comment on fixed cost absorption, the yield benefits in the centers means, you're exactly right, we're collecting more plasma from the donors and then it's going into our Horizon 1 or into the manufacturing network, and we're extracting more Ig from every liter of plasma we're collecting. That then means we don't need to collect quite as much plasma as we otherwise did, all other things being equal. We have been sitting on underperforming centers, and you could say, "Well, why didn't you close them earlier?" So we needed the plasma whereas now we have a cheaper, more effective way to get that plasma, which is via the yield initiatives. But we're still sitting on the fixed cost of those centers, so that's why we've gone ahead and announced the closure of 22 centers. That will go a long way to getting rid of that sort of unfavorable absorption. And as I mentioned in the talking points, we've also got a bit of extra labor sitting in the centers that we put in to really make sure that RIKA worked well, which it did. But again, we need to take that labor out of those centers now. So it just enables us to do that next level of cost reduction going forward.
Steven David Wheen: Okay. That makes sense. And just quickly last question. The $500 million to $550 million of savings, how much of that are you seeing in the guidance that you're providing for R&D and G&A in FY '26? And therefore, just trying to work out what the potential upside is for '27 in terms of pure cost savings.
Paul F. McKenzie: Yes. So in the '26 guidance, there's a relatively small percentage of those overall savings, and they would be predominantly in R&D, not in G&A. So as we fine-tune our operating model across R&D, across Behring and Vifor, and across operations as we continue our CSL operating system, the enabling functions or the G&A functions will follow in terms of readjusting their operating model. So specifically to your question, it's a relatively small number and it's predominantly in R&D this year. And then as the savings accelerate into '27 and '28, they'll be more diversified across the whole portfolio.
Joy Carolyn Linton: Yes. And my one build would be, as we bring together the Behring and Vifor commercial and medical teams, that will start to deliver some savings in that commercial expense line, sales and marketing line as well. And again, then it will be how we choose to reinvest that because we need to keep driving for growth.
Steven David Wheen: So why is G&A going up in FY '25, but you're keeping flat...
Joy Carolyn Linton: Consulting costs in order to start delivering some of the savings.
Chris Cooper: Thank you, Steve. Our next question comes from Marcus Curley at UBS.
Marcus Curley: Just quickly following up on that. Could you talk a little bit about at what form the reinvestment comes in? I'm just thinking in terms of where it turns up, in the P&L or the cash flow.
Paul F. McKenzie: Yes. I'd say right now, we're evaluating what forms it will come in, but it can come in all shapes and sizes, right? It will come in acceleration of a clinical trial. So it would be an R&D expense. It would come in potentially an acquisition or licensing agreement for a new asset, right? It would come in perhaps a reinvestment in a particular commercial channel that we want to expand. So we're looking across the entire business. These savings, we want to put to beneficial use and things that are going to drive both the top line as well as our margin. So it will come in all shapes and sizes. And it's really about expanding that clinical and commercial portfolio to be successful. So it could come as a real-world evidence study for iron or real-world evidence study for Ig. Within IT are also certainly investment areas that people have raised. So we're very careful on how we think about those reinvestments because we want them to return value in a reasonable time period.
Joy Carolyn Linton: And I might just add, it's also part of the rationale of starting the share buyback now because the buyback provides another mechanism of returning funds to shareholders in the short term, and I think creates that discipline around the reinvestment programs that we have.
Marcus Curley: Okay. And then just secondly, could you talk about what potential mitigation strategies you may have to offset any tariffs on the non- plasma parts of the business?
Paul F. McKenzie: Yes. Again, I think for many other parts of our portfolio, the active pharmaceutical ingredient is actually sourced in the U.S. as well. So that would mitigate it. And then for other parts of the organization, we will look at our supply chain and how we balance that supply chain and where the products come from.
Marcus Curley: Do you think there's an opportunity to do a broader CSL deal? You obviously talked about you're looking at the investment in the U.S. from an Ig perspective. Do you think that it's capable of wrapping into a broad exemption for the whole overall business?
Paul F. McKenzie: I would say let's see how the overall tariff conversation goes before we jump to those of type arrangements.
Chris Cooper: We have one more question in the queue. And after that we'll draw the meeting [ to a close. Our last question comes from Sacha Krien at Evans & Partners ].
Sacha Krien: On the Most Favored Nation pricing, I'm just wondering if you can give some comments or general comments on potential impacts and mitigation strategies across the business.
Paul F. McKenzie: Yes, I'd say it's a bit too early. We're not really clear on where that policy will go. But again, in terms of our portfolio, we've been very disciplined in terms of our pricing approaches around the globe. But until we have the specifics, and we're monitoring it closely, there would be too much speculation to tell you anything concrete at this point. So let's see how it plays out.
Chris Cooper: Thank you, Sacha. We have no further questions in the queue. So I'd like to thank you for your interest in CSL, and we'll now draw the meeting to a close. Thank you, and goodbye.