Thank you, . Good morning, and good afternoon everyone.

And thank you for attending the Recordati conference call today. I am pleased to be here with our CEO, Andrea Recordati; and our CFO, Luigi La Corte, that we will be presenting the 2021 first nine months results.

They will be running you through the presentation. As usual, the is available on our Web site under the Investors section.

After that, we will open up for Q&A. I will now leave the floor to Andrea.

Please go ahead.

Good afternoon or good morning, ladies and gentlemen, having joined us for Recordati 2021 first nine months investor presentation. If you could please move to the first slide of the presentation with the key highlights.

So, I am pleased to have the opportunity to announce another quarter of very solid results for the group. Q3 confirmed the trends recording during the second quarter, with a progressive recovery in the main reference market, and operating conditions starting to return to near normal.

It involved limited access to medical personnel in many countries, and social distancing measures continue to impact certain product categories. The recovery of several therapeutic areas in SPC, combined with contribution for the new product, Eligard, and the continued growth in the rare disease segment resulted in a net revenue increase in the quarter of 15.5% or 17% across the exchange rates in Q3, compared to the same period previously in 2020, which had, let me remind you, being the most significantly impacted by the COVID-19 restriction measures.

If we look at EBITDA or quarter-on-quarter, we grew 15.4% year-on-year. Net revenue in the first nine months of 2021 closed at €1.156 billion, with a growth of 5.7% versus pervious year, reflecting an adverse currency exchange rate effective around €31.6 million, and the contribution from Eligard was €59.4 million.

Net of this effect, growth was at 3.2%, with good momentum in recent months more than offsetting the full-year impact of the 2020 LOEs of Silodosin and pitavastatin, which show a decrease of €23.8 million, and the impact of the pandemic, especially on seasonal flu medications in the first part of 2021. The growth of our rare disease portfolio was significant in first nine months of 2021, at 20.2%, thanks especially to the increase in Signifor and Isturisa, which basically closed at €90.5 million versus €53.8 million in the same period last year, but also through a solid performance of our portfolio products.

And as a result, they're in linen with expectations, with EBITDA at €447.9 million, up 2.1% compared to the first nine months of 2020, and with margin of 38.7 of revenue. Growth was driven by the very solid revenue performance, partially offset by planned increases in investments to support the Endo portfolio growth, the costs related to integrating Eligard, as well as the gradual recovery in operations in the territory with face-to-face promotion across markets now tracking at 75% to 80% of the normal .

It should be reiterated that margins in the first nine months of 2020 benefited from the sharp drop in commercial operations in the territories following the introduction of lockdowns and of social distancing measures over most of this period. Net income, at €296.4 million, increased by 8.1% compared to the first nine months of 2020, reflecting the greater impact of net financial expenses due to losses of €6.8 million and the non-recurring tax benefits of -- for €26.2 million recognized in Q2.

As you would see later in more detail, the first nine months of 2021, we delivered roughly €352.9 million of free cash flow, and increase of around versus the same period last year, thanks to the increase in operating results and careful management of working capital. Just a few words on sustainability rating, I am pleased to say that our continued focus on the ESG agenda results in MSCI rating improvement and inclusion in the Euronext MIB ESG Index.

Consistent with our dividend policy, the Board has approved an interim 2021 dividend of , to be distributed in November. Lastly, the Board, today, approved a share buyback program to serve as a stock option plan.

Before handing over to Luigi La Corte, who will provide you more details on our financial performance in the first nine months, let me provide some more updates on the Eligard and the endocrinology portfolio. You can move to the next slide, please.

So, Eligard, the integration of Eligard is progressing well, with close to €59.4 million of revenue in the first nine months of the year, which is slightly ahead of the plan, and was just under half of direct sales of our organization. As of 30 of September 2021, the of sales licenses for Recordati in most countries subject to the license agreement of Tolmar, except for Russia and Ukraine.

We have 30 marketing authorization transfers already completed, and 24 countries directly, plus six countries directly selling, where Eligard is now being promoted with encouraging feedback from our -- from HCPs. It is very early days, but we're pleased to see, where promotion has started since a few months, the encouraging signs of changes in the sales trend market sales returning to growth in Spain and Germany, and improvements in other markets, including France and Italy.

The development of the new device by Tolmar is progressing. The new device variation filing is now expected in the first quarter of 2022.

Thanks to the early transition to direct selling, we focus full-year revenue just over €80 million transition to direct sales. If you can move to the next slide, please, with regards to the Endo franchise, the commercialization of Signifor and Signifor LAR is on track, recording net revenue in the first nine months of around €58.5 million.

We have strong new patient acquisitions in all regions and across all approved indications. And Signifor grew around 10% and in market terms compared to 2020.

We are also still very much on track with Isturisa launch, and new patient acquisitions are progressing in line with our expectations, contributing to net revenue of around €32 million as of September -- 31 of September, 2021, mainly in the U.S., France, and other key E.U. markets.

We continue to have strong support from top KOLs and patient organizations. The reimbursement was agreed -- the reimbursement price was agreed in Germany, in line with expectations, and discussions are ongoing in other European markets.

Also importantly, we have launched now in Japan, where we're performing according to plan. Furthermore, as economic conditions continue to improve, we are starting to see improvement also in the gross-to-net in the U.S.

We remain on track to deliver on the targets that we have set for the franchise this year, which is between €120 million and €140 million. So, at this point, I will leave the floor to Luigi to take you through in more detail on the first nine-month results.

Thank you.

Thank you, Andrea, and good morning/good afternoon everyone. I am pleased to, as always, take you through in more detail the financial results for the quarter.

On the back of another quarter of solid growth, much in line with the trends that we saw in the second quarter of this year, with the continued recovery of Specialty and Primary Care portfolio, a good contribution of Eligard, and strong growth of our rare disease franchise. Starting with main product sales on slide five, and with what is still our key franchise, lercanidipine, you will see that lercanidipine sales at roughly €107 million was slightly up versus prior year, plus 1%, with good volume growth across markets, and initial sales to our distributor in China offsetting a slight decline in Italy, and the FX impact on the Turkish business.

Turkey accounting for roughly half of the decline on the combination product, Zanipress, which is also continues to see some level of volume erosion due to generic competition and competition from other combination products. In the franchise of €73 million, is down by 6%.

Now, this is on the back of, you'll recall, from growth in 2020 where metoprolol grew 7%, also in part due to temporary lack of availability of competitive products in some markets seeing as a result a slight decline in some geographies, in particular in Germany and Poland this year. As Andrea said, Eligard is continuing to progress very well, the integration is on track, and in fact has been running ahead of plan.

Revenue in the first nine months, of €59.4 million, include €26 million, roughly, of revenue that was recognized by , and €33 million of direct sales by our own organization, with all of our key markets now selling directly. And then Andrea said, the earlier transition to direct sale has allowed us to slightly increase the guidance for Eligard for the full-year to now just over €80 million.

Silodosin and pitavastatin clearly continue to reflect the full-year impact of the loss of exclusivity in 2020. We do expect both products now to start stabilizing.

You'll see the erosion on Silodosin just slightly higher than the one we had forecast at the beginning of the year, due mainly to somewhat higher decline in Turkey, once again in part due to the headwind from a foreign exchange perspective in that market. I would add it's great to see pitavastatin still growing in markets where generic have not entered, namely Turkey and Switzerland.

Other corporate products at €198 million, broadly flat versus pervious year, and starting to recover, you'll recall these are products that bore the brunt of the COVID pandemic, and the decline, both last year and in the first quarter of this year, it's great to see the first signs of recovery of the cough and cold portfolio, particularly in Russia, which remains, however, still below the levels of last year, and significantly below the levels of 2019. But in this portfolio, we're also continuing to see very strong growth of the GI portfolio.

You'll recall significant impacts in 2020 on products like and other GI products and ones related to elective hospital procedures, all of those have started to rebound and grow high double digits. And equally starting to see and continuing to see double-digit growth of key products in our OTC portfolio in our in Center Easter Europe and Turkey, and good growth also of Reagila, all of these growing double-digit year-to-date.

And finally, drugs for rare diseases growing by 20% at €279.4 million, with very broad-based growth, yet a significant contribution from the growth of the Endo franchise, both , but also in our legacy metabolic portfolio, which is also growing, and I'll callout here actually Panhematin, which following decline in 2020 at the start of the pandemic, has actually returned to growth in the nine months of this year. And on slide six, you will see that with those results, rare disease now represents just over 24% of our total revenue, well on track to achieve over 25% target that we set out in the three-year plan.

On slide seven, moving to looking at revenue by geography, and I'll try and go through this and call out the highlights for each market. But, overall, and consistent with the picture that we described at the end of Q2, thanks to Eligard and thanks to the growth of great to see most of our geographies this year starting to show growth, with the markets which have greater exposure to cough and cold, and facing greater FX headwinds being the ones which are still showing a decline.

So starting with Italy, to our major market, €195.8 million of revenue in the nine months, a decline of 3.5%, and again here, cough and cold and continued erosion on Urorec being the main drivers, which more than offset the contribution of Eligard, the growth of rare disease, and good growth also of Reagila and the OTC portfolio. Somewhat similar dynamics in France, with a decline in the Hexa spray OTC line being more than offset in this case by the growth of rare disease.

You'll recall France being the market where our launch of Isturisa is more advanced, and good performance of and, again here good first contribution from Eligard. Both Specialty Primary Care and Rare Disease are growing in Germany, which at €111.7 million of revenue, is up 11% versus last year, lercanidipine and Eligard driving the growth from the SPC side, combined with good growth of the rare disease portfolio, offsetting a slight decline of metoprolol, as I said earlier.

Spain, a significant contributor to growth year-to-date, at 36%, just under €86 million of revenue, and here, as I said earlier, Spain saw a significant impact, in 2020, on the GI portfolio, which is rebounding very strongly, and offsetting the full-year impact of a generic erosion on silodosin and pitavastatin, with additional contribution both of Eligard and initial sales of to the tune of €2 million. Portugal, sales of €33.5 million, once again with good growth of Reagila and a contribution of Eligard, which offset the LOE impact from 2020.

Turkey, a decline at 14.3% in euro terms, but you will see it's growing by 6.3% in local currency, Turkey facing significant FX winds this year, and which are likely to get even slightly worse in Q4, giving recent trends. But nonetheless, in local currency terms, growth driven by the rare disease portfolio, good growth of pitavastatin and Procto-Glyvenol, offset by generic pressure and local competition on some of our local product portfolio and on the lercanidipine franchise, together with a decline also in the flu portfolio and in other markets.

Going to Russia, and CIS, and Ukraine, you'll recall we commented a Russia decline of 50% in Q1. It's great to see the business starting to recover, and now down only by 5.5% in the nine months in local currency terms, reflecting the combination of impact on the cough and cold portfolio, which makes up a significant portion of the business in Russia, and also de-stocking which we saw in the first part of the year, CIS and Ukraine slightly growing on the back of the rare disease portfolio.

U.S., which as you know, is focused on the rare disease, continuing to grow significantly, at 42.6%, achieving revenue of €127.5 million, a growth of 51.6% in local currency, and as I said earlier, growth here really broad-based, with the Endo portfolio clearly contributing significantly a very strong growth of Cystadrops, Panhematin, and Carbaglu as well. Other Central Eastern Europe and other Western European countries, which combined make up for roughly 15% of our revenue, you will see are both growing by strong double digits, and this is on the back of the ongoing rebound in Specialty and Primary Care, and I'll call out the good performance of Procto-Glyvenol in Central Eastern Europe, together with the initial sales from Eligard, and the continued growth of the rare disease portfolio here as well.

In North Africa, a minus 18.1%, as revenue of €27 million, and here, really, it's a combination of factors -- the ongoing growth of our local business in Tunisia , which is growing by close to 6% or 8% in local currency terms. But that is more than offset by restrictions in Algeria, which have held back our export sales due to the lack of renewal of import licenses, which do not allow us to sell Vitamin D3 in Hexa line to that market this year.

And finally, other international sales, so sales that we achieved through our distributors, of €153.7 million, down slightly by 3.5% versus last year, mostly reflecting the year-on-year impact of silodosin and pitavastatin, plus minor product discontinuation of , again, to the tune of around €2 million. And you'll see from slide eight, the business is becoming growingly diversified or I'll say growingly international, with our legacy market Italy now accounting for less than 18% of revenue; France, Germany, and U.S., growth roughly 10% of total pharmaceutical sales.

Moving to the P&L, on slide nine, you will see that -- I'm sorry, growth of both revenue, at 5.7% or 8.6% at constant exchange rate, and in gross profit, as planned, is partially offset by the growth of operating expenses, SG&A expenses of €347.1 million, growing by 11.8% versus 2020, with selling cost at 24.8% of sales, reflecting both transition costs on Eligard and royalties that are paid to Tolmar on the product, which account for roughly €18 million of increase. And also, with growth in spend driven by the additional support behind the Endo franchise and, gradually, a return to activities in the field, which however on a year-to-date basis still remain below pre-COVID-19 levels.

R&D expenses, at around 10.4% of sales, are up 12.6%. This reflects the continuation of studies which we've inherited from Novartis on the Endo franchise, and also additional resources market access and regulatory cost behind both Endo and Eligard.

And increase also reflects roughly €2 million incremental amortization costs related to new . Other income and expenses of €3.5 million mostly reflect €2 million -- just under €2 million of nonrecurring cost related to COVID, significantly down versus last year, and hopefully due to down in the near future.

This leads to operating income of €372.9 million, a margin of 32.3%, and EBITDA of just under €448 million, a margin of 38.7%, both growing by just over two percentage points versus last year, and with margins remaining very healthy, but, of course, not at the levels of 2020. And we've always said and recognize that margins in 2020 were enhanced by the impact of COVID had on both the revenue, but also on operating expenses.

And we do expect that as activities in the field continue to resume, EBITDA margin will trend towards the target that we set in the guidance, at the beginning of the year, of just over 38% for 2021. Looking, finally, briefly at the non-operating lines, you will see a significant increase in financial expenses, to €22.2 million.

As Andrea mentioned, this reflects FX losses of €6.8 million, in part due to just consolidation adjustments due to the in exchange rates, and couple of million due to FX losses on hedging of inter-company transactions. This compares to a period in the first nine months of 2020, where we actually recorded €2.6 million of exceptional gains, if you like, on two currency swaps which we closed, and which were no longer treated as hedges.

These addition FX losses are more than offset, obviously, by the nonrecurring tax benefits of €26 million, which we incurred -- which we recorded in Q2, and which reflects in a net income of €296.4 million, which has grown by 8% -- just over 8% versus 2020. Adjusted net income, which reflects the impact of the FX losses, but strips out the nonrecurring tax benefit, is down by 1.3% versus last year.

And moving over to slide 10, you will again -- once again margins on both our businesses remain very strong, with rare disease now representing close to 30% of EBITDA. And finally, on slide 11, as we've done in the previous two quarters, we've included a summary and breakup of our cash flow performance which, hopefully, you will see was very strong in the first nine months of 2021, with free cash flow of just under €353 million, up by close to €70 million versus the first nine months of 2020, and over 100% of net income in the period.

This, and the improvement versus last year being really driven by working capital, where 2020 was impacted by combination of increases in inventory, both due to the start of sales of the Endo franchise, but also as we work to sort of build additional safety stocks at the beginning of the COVID crisis, and also reflected the timing of supplier payments, with both of those contributing to the positive performance in the first nine months of this year. I will point out you will see that, actually, on a cash basis, interest paid is broadly in line with last year, and income tax paid slightly higher due to the benefits in 2020 of both the 2019 significant nonrecurring that we -- were recorded in Italy, and also lower payment on accounts which many governments allowed companies to make in the midst of the COVID pandemic.

That free cash flow was -- went into dividends of €109.4 million in the first nine months, we paid €35 million to Tolmar, €15 million to Almirall, and a net -- we had net purchases of shares to the tune of €29 million net of receipts from proceeds from exercises of stock options. And, finally, from my side, on slide 12, that strong cash flow contributes to a very solid net financial position, at the end of September, with net debt of just under €715 million being roughly 1.24 times trailing 12-months EBITDA.

And with that, I will hand back over to Andrea to talk about the outlook for the remainder of the year. Thank you.

Okay, thank you, Luigi. Please turn to slide 13 of the presentation.

So, with respect to our full-year outlook, we confirm, like we said in the press release, our guidance range expecting the full-year results at the lower end of the range. And remember, the guidance range was giving net revenues between and €1,620 million, EBITDA was between €600 million and €620 million, and adjusted net income between €420 million and €440 million.

The underpinning assumptions behind this lower end of the range guidance are based that the recent trends show SPC returning to growth with good momentum and progressive recovery in market conditions post Q1. However, a rebound in the cough and cold market portfolio is unlikely to fully offset the higher impact in the first part of the year, coupled with, obviously, the market headwinds that we've seen in Central Eastern Europe and Turkey.

Also, we assume no significant new waves of COVID restrictions in the latter part of the year. FX headwinds are what we actually planned at the beginning of the year, and expect between minus 2, an impact between 2% and 3% negative impact, but on a positive note, as already mentioned, Eligard continues to be on track ahead of plan, and also we continue to see robust growth of our rare disease franchise across all regions, clearly driven primarily by the Endo, but not only, also in metabolic portfolio is actually performing very well, for example, also pandemic, and like mentioned by Luigi before.

EBITDA margin is on track to be above 38% on revenues. The second-half reflects seasonality as well as a return to higher level of activity in the field.

Financing costs of around €28 million are expected, with -- reflecting clearly what we mentioned already, but between €6 million to €7 million of FX losses. And finally, we expect the tax rate to be around 17%, reflecting the planned benefit from the reverse merger, and additional Q2 nonrecurring benefit of €13 million from the Magnesio Supremo setup.

So, that brings us to the end of our presentation. And I think we can move to the Q&A.

Thank you.

Hi, thanks for taking my questions, I just got two. First, I was hoping to gauge your confidence levels in achieving your 2023 endocrinology targets just given an expected increase in penetration as in E.U.

in 2022? And the second one was just if you could give us an update on timing the approval of and then if we should still be expecting data for your neurotrophic keratitis asset second-half of '22?

?

Yes, so, thank you, Brian. And starting with the first one, level of confidence on the 2023 guidance on Endo, we see no reason to change that, frankly, and we think we're on track, we're growing well, and we're continuing to see growth of Signifor, whilst increasing penetration of Isturisa, while we said we've started achieving reimbursement in key European markets just about now, we're doing that.

So, from our perspective, on Endo, we are on track. In terms of our ARS-1--

ARS-1, I mean probably just comes at, as you know, it's currently under regulatory review by the European authorities, and we working with to kind of answer some of the questions that came up from the . So, the process is going with some delays in comparison to the original plan.

But based on the current planning, we expect the regulatory decision to be in late 2022. Regarding for neurotrophic keratitis, as you know, it is Phase 2.

It has, obviously, suffered some delay in recruitment due to the COVID restrictions that impacted a lot of the centers where we're actually recruiting patients for the study, but the study is ongoing, we are recruiting patients, and we're an increase in the patients. So we expect the last patients in around November of 2022 and the clinical study report out by the second quarter of 2023.

Great, thanks so much.

Hello. James Gordon, JPMorgan.

Thanks for taking the questions and two please. The first one, which deal-making, and to an extent as COVID-19 slow things down a bit and as we -- hopefully things get better there, to what extent do we see an acceleration in licensing and what do you see in terms of ability to do in-person diligence, if that made a difference, and could that change?

And the second question, which is heading into '22, and not looking for specific guidance at this time, but the key puts and takes for us to think about? How much rebound in field activity could we see, and how much of a headwind could that be?

And is something like a flat EBITDA margin still the most likely outcome?

So, look, I mean deal-making -- and the connection was not very good, I apologize. But if I understood correctly, you were asking me if there were any kind of impact on deal-making due to -- in recent times.

I mean, as you know, the ambition remains, we keep on working on different doses both for opportunities in SPC, but also in rare diseases, including also the whole M&A part of our strategy is still valid, and is, obviously being -- it remains very ambitious. So, we are, like I said, in , we have a lot of potential deals under review and evaluation.

We feel that the pattern is reaching opportunities at the moment, but giving to be definitive on timeline, and at this moment in time, honestly, I cannot give you any more information or cannot say anything else at this state. But, believe me, we are very busy and assessing many, many opportunities.

And, James, on your second question in terms of -- and Andrea I think mentioned, we're now already sort of running at 75%-80% in terms of field activity. And, clearly, we're still seeing -- the kind of things we're still not seeing is sort of large-scale events and sort of group gathering.

We will look to -- I think as many organizations, we have learned to leverage even more digital over the pandemic, we're not going to give out today a sort of margin guidance for 2022, and you'll have to stay tuned for that. We did -- we're very clear in terms of where we set the guidance for the three-year plan being around 38% of EBITDA, and we'll stick with that.

And again, we'll provide a sort of a more crisp view for 2022, presumably, in February, when we set out the target for the year.

Thank you.

Thank you. Good afternoon, everybody.

Sorry to bother you on the same question on M&A, but you were particularly vocal in the last call, and you are today. So, I'm just wondering if you can provide us just a qualitative perception of some step ahead, if any, I don't know, on the very busy pipeline that you mentioned.

This is my first question.

Martino, I -- obviously, I cannot give you a lot of color on something that has not been finalized yet, and then we are a listed company, as you know. So, I reiterate what I said.

Yes, I was vocal, in July, when we had the last call, and I'm still vocal now. But it depends, deals are very different in shape, there's a lot of variable to be taken account.

So, I can tell you we are working on various fronts, and when the time will come to communicate something we will do so. But at this moment in time I cannot give you more color around this, for obvious reasons, thank you.

Yes. And obvious reason, yes.

The second question is on the Endo franchise. If I look at -- I know very well profitability on a quarterly basis doesn't make a lot of sense.

But if I look at the last four quarters, since you start sales of Isturisa, profitability of rare diseases is a little bit lower than what it used to be in the last couple of years. Is it due to the launch costs or just temporary effect of some variables or probably just there is no particular reason justifying it?

So, hi, Martino. No, I mean it's a combination of -- obviously, I mean we are in launch phase on the Endo portfolio.

So, as you would expect, we have additional additional resources on the ground to support that. And we do have sort of the costs that we are taking on of additional, both market access and regulatory resources to support that, particularly where we're going into sort of new markets.

I would say, and I think we may have touched this on the previous call, that if you are comparing the evolution to last year, the Endo -- the rare disease margin would have been slightly flatter, particularly in the first part of 2020 by the accounting of the Signifor revenue during the transition from Novartis, where we accounted for it on a sort of gross margin level at the level of net revenue. So, there is a little bit of that, which is similar to what we have this year on Eligard for the SPC side.

If you look at it on aggregate, the two kind of balance each other out. But if you're looking at rare disease particularly, there is a little bit of an effect of that.

But it's a combination of these factors rather than there being any sort of particularly other type of reason.

Okay, just to check if there is no -- nothing structural due to the Endo franchise development.

No. And the Endo franchise, of course, you know Isturisa , but on the other hand, the U.S.

is a significant growth market. And as is often the case, margins in the U.S.

tend to be higher than in rest of world. And so, I don't think -- there's nothing structural to that.

I think it's really a timing, again, which is -- I think I've often commented when asked around the margin guidance, we have to bear in mind when we take a launch asset, the first years of a launch you will see a bit of additional investment going into the business.

Okay. And last on the Endo franchisee, you guided for sales this year.

Looking at the trend, you are perfectly in line with your guidance. But I see quite hard to achieve the high-end of this range.

I totally ignore what could be the contribution of Japan.

Yes, I won't give specifics in terms of where we expect to land on the range. Again, particularly in the case of the Endo portfolio, where there's a significant contribution from the U.S.

And you may recall U.S. faced quite some headwinds in terms of FX at the beginning of this year.

And still, if you will consider year-to-date basis, I think it's around sort of 8% negative from a FX rate perspective if you isolate the U.S. So, again, obviously, there's a little bit of that in there.

But as we said, we're very happy with the progress so far with how the launch is tracking, and confident we will hit the range that we set out at the start of the year.

Thank you. And very last, on the free cash flow, it is mainly driven by working capital change.

As I understand, it's just one-off, so there is nothing structural on the working capital that could last for a longer period?

I think I would ask the question -- I think I had a question on the call, at Q2, where someone was asking whether we'd start seeing working capital sort of trend back to more historical level. Again, we did increase the level of stocks a bit last year, and just to be on the safe side during COVID.

And you're starting to see a little bit the re-absorption of that as supply chain improves. And again, and there is a little bit of, yes, one-time event where many of our suppliers, in 2020, did ask to work with a slightly shorter payment terms in our side to provide some support during COVID, which we were happy to do given the flexibility that the group has.

Okay, thank you. Thank you very much.

Thank you. A few questions, a simple one to start with is to why is the new device for Eligard isn't filing until next year?

I think we originally thought that would be happening by September-October time. More broadly, I wonder if you could tell us just a little bit about your view of the background to the markets.

And awful lot of the European markets that you're in are effectively government funded, governments are increasingly strapped for cash. Are you seeing any signs of any constraints, any issues in pricing new products?

Some of the companies have said that it's getting tougher to get new product pricing through. And I know you've been looking for reimbursement of Isturisa.

Perhaps you could talk particularly as Turkey as an example, because that seems to have had some problems. I know some of that was foreign exchange-related.

Do you think that that foreign exchange problem will ultimately mean that the Turkish government becomes less generous? Could this become a longer-term issue?

My next question would just be a quick on your comment about stabilizing Livazo and Urorec. We've seen declining rates of sort of 30% or so.

When do we think we could go back down to maybe only naught to 5% decline? Is that reasonable for next year, or do you think that the decline will continue for longer?

And my final question on Isturisa, at the Capital Markets Day, you indicated that you thought you might have 145 patient starts on Isturisa, in 2021. Are you still on track for that number?

Thank you.

Okay, Jo, thank you for the questions. I might take them in just slightly order, if that's okay.

So, in terms of challenges from government-funded systems, again, I'll probably repeat what I said in other instances. At the moment, we're certainly not seeing a sort of broad-based sort of landscape change across payers markets particularly in Europe, nor in U.S.

for that matter. Pricing is still very much decided on a country-by-country level, which provides a natural hedge in the sense that it would take all market -- all countries coordinate to suddenly lead to a significant impact.

I know that Turkey, on the backdrop of -- usually the Turkey does allow, and we did see it last year, I mean in the face of significant devaluation already last year, Turkey did allow a generous -- well, generous -- it did allow a level of price increase to the industry, which didn't quite fully recover the FX devaluation, but recovered quite a chunk. We'll find out in the next month if they'll do that again this next -- for next year.

But we don't have reasons to believe they wouldn't. I think they may have put in place some limitation on prescriptions of certain , but they only impact certain product classes.

So, again, it's difficult to generalize. Negotiating prices for new products has always been difficult in Europe, frankly, unless you come forward with very strong innovation and significantly better clinical proposition relative to existing funding up there.

We believe on the case in point, that Isturisa does that, and we think that was recognized in Germany. But again, it'll be a country-by-country negotiation.

On the LOEs, we really -- well, actually, I think if you look at the numbers you would see that, I think what you see there in a year-to-date erosion, if you look at quarter-on-quarter, you should start -- you should see that on silodosin and pitavastatin, it's starting to significantly reduce the decline. Silodosin has now fully lapped the year.

It did have a little bit of FX headwind in Turkey and slightly higher erosion in Italy but, by and large, is stabilizing, as is -- as we expect pitavastatin will be. So, to your question, yes, absolutely, we do expect those to start stabilizing now and certainly for 2022 on the basis of current environment.

I think -- I don't recognize the but I'll maybe answer in a different way. We believe to be on track in terms of patient acquisitions in the U.S.

And, obviously, we were aware of competitor products in pipelines when the guidance was given out. And so, of course, we will prepare for the potential launch of new competition in the U.S.

But we're quite confident that the clinical profile of Isturisa, and very happy that we will have had at least a two-year advantage to penetrate the market, which is always good. On new device, don't know what I can say.

I guess I think, as we said, very happy with the Eligard transition, there multiple dosages that are undergoing all the due process to prepare the file. And it just looks like it's going to take us and Tolmar a little bit longer to be ready for that.

But we don't anticipate it being an issue, frankly. It's just going to take a little bit more than anticipated.

Hope I've addressed all your question, Jo.

Yes. Just one final one, if I could, just to go back, push you a little bit on marketing.

You said that you were 75% to 85% of the way back in terms of field force activity. Do we expect that that will go back to 100% or are there things that you've learnt in the COVID world that mean that some things that you now do, perhaps digitally, that you did in person before you'll continue to do digitally?

So, just wondering whether there will be a full rebound back or whether there's some permanent cost savings?

No, I think, as I mentioned, Jo, we don't expect things will go 100% back to normal. And we're all -- we're sort of looking at that also as we think about 2022, but the reality is that we've seen that the business, and particularly mature products, can be supported with a slightly lower level of in-field effort, and compliment that with digital.

And we will be looking at that, and certainly will continue -- will look at the opportunity that that provides. So, things will not go back to fully 100%, just like, and again, I think I've made the example before.

I wouldn't expect as much spend on things like international conferences, really national conferences and events, as once was the case. I imagine a lot of that will be digital going forward.

Thank you.

Hi, good evening, everyone. And I have tree question on my side.

During the presentation, you were mentioning that the Panhematin in the U.S. I was wondering if you can provide more color on the legacy metabolic products, Panhematin in the U.S., Carbaglu in Europe.

The second is on the for the next year. So, are you considering the option to extent the patent box for next years according to the new regime introduced by the Italian government that allows revaluation of the brand costs up to 90% for tax purposes?

And the third one is on cough and cold impact, you expect a €40 million on impact on sales for this year in the business plan presentation. What was the impact to date, and what are your expectations on Q4 in terms of flu market products?

Thanks.

So, on the first two questions, as you know, Giorgio, we don't give out specific revenue by product on rare diseases for commercial reasons. But on Panhematin in U.S., I would say we're very happy that whilst the product -- you recall the comment in 2020, we had the plan for a very gradual erosion because we believed, and we still believe, that Panhematin will continue to be an important treatment option for patients, even in the face of competitor launch in U.S., and unfortunately, where we saw erosion in the first part of 2020 higher than expected due to the impact that COVID had, that which penalized an infusion product, like Panhematin, relative -- a bit more significantly than expected.

And we're very happy that we've seen that bounce back. We already saw that stabilize in the backend of 2020, and very happy that we've actually that return to a level of sales which is actually ahead of last year, in the nine months.

And actually, on this, a big credit to our team in the U.S. that's been doing a fantastic job in really revitalizing the metabolic franchise.

Carbaglu, and you -- I mean it's a product that has been, as you know, is a very mature product. It's faced competition now since years, and has continued to perform well.

But again, I think we have said in the -- in our three-year plan presentation, not expecting significant growth for that.

And we're seeing a stabilization.

Yes, absolutely, yes. Yes.

, so…

On the patent box in Italy, a short answer. Yes, we will be looking at the option, and we have kind of secured our options around that.

We're looking to sort of continue taking benefit. And as you know, we think it's a little bit up in the air in terms of right now what exactly that means.

But the short answer is, yes, that we believe, at this stage, we should continue to benefit from that, but we're going to have to see how the recent decree sort of whether or not it gets confirmed in the same format as published a few days ago. On the impact of flu, we're still running, even though we've seen a nice recovery in Q3, unfortunately our flu business is overweight in markets which where wearing of mask is still prevalent.

It's still down versus 2020, and still running at around 60% of the 2019 levels. But we're seeing good signs, certainly seeing good signs of recovery in Russia.

I hope I've addressed your questions, Giorgio.

Yes, thanks a lot for your answers. Thanks.

Yes, hi, thanks for taking my questions, just one actually. Luigi, can you remind me the sensitivity of the business to foreign exchange?

I mean you mentioned currency is a little bit worse and sort of you said around 2% to 3%. And, from memory, I think it was roughly 1.5% per year planned in your business plan.

So, if we just say, for example, there it's an incremental 1%, if there's, say, a €15 million impact to the top line, is that sort of half of EBITDA level, so that's -- so, like an €8 million impact to the EBITDA level, just to help us kind of understand, as more the low end, how much of that impact has been due to FX versus underlying reasons? Thank you.

Hi, James. So, first of all, just to be clear in terms of the FX impact this year, a lot of that has been due to the evolution of FX particularly over the course of 2020, and then the sort of full effect that that has over the course of 2021.

The way things are looking at the moment, it's certainly going to be higher than the sort of two percentage points that we foresaw at the beginning of this year. Probably not as high as 3%, with the big driver delta being the Turkish lira relative to the expectations that we had, which were effectively the one that sort of consensus FX rates at the beginning of 2021.

In terms of modeling the impact of a one percentage point on revenue on the bottom line, I think the honest answer on that is going to have to be I'll get back to you. I don't have a sort of precise number in mind.

There is a level of hedge, obviously, particularly when it impacts in places like Turkey because, as you know, a significant part of our portfolio in Turkey is also locally produced, but it's not all of the portfolio. So, whether it's a half or a bit less than a half, I'll have to get back to you, but it's certainly not 100%.

That's great, thank you.

Hi. So, can you give me a guidance of to what extent you are seeing any inflationary pressures from labor, raw materials or logistics that other industries are seeing?

If you could just give us an idea of how much of your cost base is each one of these, the labor, the logistics, and the raw materials, if they are significant at all? And we've heard from CDMOs talking about some packaging material, significant inflation because of foils and because of wood-based materials that they're planning to pass on to pharma companies.

So I was wondering how -- to what extent are you affected by that, and also, can you -- talk a little bit about negotiating prices for new products. But to the extent you see massive inflation, what is the mechanism for you to pass that on to these countries with whom you have a negotiating price or a reference price?

So, thank you, Catherina. To be honest, so, I can point you -- we can point you to the relevant pages of our earnings release for detailed points around the sort of breakout of our cost base between labor, materials, and other.

The short answer though is, for this -- you can't compare us to a CMO, frankly, our P&L structure is completely different. Do we see inflationary pressures?

Yes, we see a little bit, but, frankly, it doesn't impact a pharmaceutical company as significantly as a CMO certainly, and other sectors. And so, being , I mean, pricing in the industry is certainly not comparable to other industries either.

I mean you have flexibility on OTC; we have flexibilities in some markets there, Russia, in Turkey, a little bit in the U.S. But we've always taken also a prudent approach with pricing, it being a sensitive topic in the industry.

So yes, there is a little bit of pricing power. But at the same time, we don't really see -- I don't think we are as subject to inflationary pressures as other sectors, if you're comparing us to very different ones.

But we see a little bit of a pinch on that in cost of goods next year, yes. But if you look at our level of stocks relative to purchases and raw materials, it's north of six months.

So, that will provide some buffer as well, and we do tend fix energy contracts for a relatively long period of time, and that's where you've seen a lot of inflation. So, long answer to say, I'm not sure it's going to be as relevant for us as other sectors you may be following.

I hope that gives you at least some flavor. And again, to the extent that we published it externally, we can point you to the numbers in the financial report.

Okay, thank you.

Hi, good evening, everybody. A couple of questions from my side, the first one is on Eligard.

It looks like the integration is proceeding very well. Did you assign a figure of the trend in in-market sales for Eligard, such as you have been doing for Signifor over the last year?

And also, a qualitative comment on how it is comparing with the underlying trend of the reference therapeutic area? And the second question is on the M&A arena.

I appreciate you cannot disclose much on your intense M&A pipeline, but how are multiples evolving in the industry? And are you observing any kind of pressure on acquisition multiples due to the presence of new players interesting in consolidating or acquiring assets in the industry?

Thanks.

So, in terms of your first question, and I'm not sure I caught all of it. But on Eligard, relative to its reference market and like-for-like, I think as we shared in our three-year plan presentation, Eligard, due to the lack of support, was a product that was gradually declining in a market that was sort of broadly stable, so losing a little bit of share.

It is very, very, very early days, so we're not going to get overexcited quite yet, but as Andrea said, that we're very pleased there with the early signals of what we see in markets where the promotion has already started since the early months of this year in terms of either stabilizing or actually seeing some growth of the product. And as we've always said, we expect the new news of the new device, next year, to act as a further catalyst to that.

But it's, as I said, very early days. I mean, the trend overall is still broadly in line with the trend of the last few years, with the product slightly underperforming its relevant market.

But where we started promoting, we're starting to see that picture change. But again, it's very, very early days, and so to be taken with caution for the time being.

And sorry, I didn't make -- on the BD, maybe I'll add my voice to Andreas, so that you hear it also from me. I don't know what else we can say other than say that we're actively in due diligence on a number of opportunities.

But the beauty of the game is that until you find the deal you don't know if and when you will have a deal. And there's no point trying to speculate on timelines, frankly, or if and when things will happen.

When they do you'll hear it. Before then, you'll continue to hearing this kind of response.

And on the multiple side, and so forth, honestly, we've always had competition on assets in the past, and we haven't seen any drastic change on this competitive aspect. So, yes, I mean there's always been competition.

Some people are willing to pay a bit higher multiples, others are not. But nothing has changed from , honestly.

And also, fresh with some banks, suggesting that when you look at multiples in the sector they've come down a little bit in the last few months, so it always be very specific to the asset.

Okay, very clear. Many thanks.

Okay, thank you, everybody for participating in this call. And have a good day, evening or rest of the day.

Thank you. Bye-bye.