WEBVTT - US GDP Rises, Airline Earnings 0:00:02.920 --> 0:00:10.799 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.840 --> 0:00:15.040 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:15.040 --> 0:00:18.040 Eastern on Apple, Cardplay and Android Auto with the Bloomberg 0:00:18.079 --> 0:00:21.400 Business App. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.000 or watch us live on YouTube. 0:00:25.040 --> 0:00:27.040 All right, let's get to the bond market for a moment. 0:00:27.080 --> 0:00:28.880 It's been a really interesting a couple of days. So 0:00:28.960 --> 0:00:30.800 yesterday you had a lot of buying on the front end, 0:00:30.800 --> 0:00:32.640 and you had some selling on the back end. Today 0:00:33.159 --> 0:00:37.120 buying pretty much across the board. It's really that Bull 0:00:37.320 --> 0:00:40.120 Flattner that we're seeing joining us now as Ira Jersey. 0:00:40.280 --> 0:00:43.920 He's chief US interest rate strategist over at Bloomberg Intelligence. 0:00:44.120 --> 0:00:47.199 First question goes back to yesterday. Was the long end 0:00:47.240 --> 0:00:50.920 selling a reaction to like needing to liquidate to cover 0:00:51.040 --> 0:00:51.879 shorts in the end? 0:00:53.320 --> 0:00:55.160 Well, I don't know if it was only the en 0:00:55.240 --> 0:00:56.920 it was also that a lot of people wanted to 0:00:56.960 --> 0:00:59.440 get into the front end because of the idea that 0:01:00.160 --> 0:01:03.240 you know, we'd see deeper interest rate cuts and and 0:01:03.280 --> 0:01:05.240 because of that, you have to if you're a real 0:01:05.240 --> 0:01:07.280 money investor, you have to raise that money from somewhere 0:01:07.360 --> 0:01:09.920 because you might not have all of the all of 0:01:09.920 --> 0:01:11.880 that in cash, so you have to sell something to 0:01:12.360 --> 0:01:16.160 to fund your your purchases in the front end. I 0:01:16.160 --> 0:01:18.280 think part of it too was you had a decent, 0:01:18.800 --> 0:01:22.080 a decent five year auction, and so you had some 0:01:22.120 --> 0:01:25.400 people who were saying, you know, again buying the belly 0:01:25.400 --> 0:01:27.679 and the front end and you know, selling the back end. 0:01:27.720 --> 0:01:30.280 And then secondly, and this was really interesting, is that 0:01:30.319 --> 0:01:32.679 there were some people who maybe were hoping and dealers 0:01:32.720 --> 0:01:36.199 who were hoping to get rid of some inventory into 0:01:36.400 --> 0:01:40.600 the a treasury buyback that occurred yesterday, and the Treasury 0:01:40.600 --> 0:01:43.200 didn't buy anything. They were you know, people were expecting 0:01:43.200 --> 0:01:46.480 them maybe to buy about a billion dollars worth of 0:01:46.680 --> 0:01:49.040 seven to ten year notes and they didn't buy any 0:01:49.120 --> 0:01:52.600 because I guess that sector was rich. So when you 0:01:52.640 --> 0:01:55.640 didn't have that, dealers have more more inventory than they 0:01:55.680 --> 0:01:58.880 thought and basically had to you know, back up their 0:01:58.880 --> 0:02:00.480 prices and that means higher yields. 0:02:01.280 --> 0:02:04.080 I right, we had that really strong GDP print this morning. 0:02:04.480 --> 0:02:06.960 Tom Kane was making the point earlier this morning that 0:02:07.000 --> 0:02:10.120 how can a FED cut into something like that? Economy 0:02:10.120 --> 0:02:11.400 doesn't need it right now? What do you think? 0:02:12.440 --> 0:02:15.040 Yeah, Well, it's it's a momentum issue, right, because keep 0:02:15.120 --> 0:02:18.160 in mind that that the third quarter, the second quarter 0:02:18.200 --> 0:02:21.560 GDP report was for April, May and June. So April 0:02:21.560 --> 0:02:24.240 and May, we know were reasonably strong, and and you know, 0:02:24.320 --> 0:02:27.120 clearly you know June wasn't terrible by any stretch of 0:02:27.120 --> 0:02:30.919 the imagination. Economic momentum is slowing, so at some point 0:02:31.360 --> 0:02:34.040 the Federal Reserve might cut interest rates. But I agree 0:02:34.080 --> 0:02:36.080 with the idea that you know that, And we've always 0:02:36.120 --> 0:02:40.240 been skeptical about the about a September cut being the 0:02:40.280 --> 0:02:42.720 first one, And again I don't really care. I think, 0:02:42.760 --> 0:02:45.440 big picture, if it's the September's the first cut, in 0:02:45.520 --> 0:02:48.600 November's the first cut, doesn't really matter at least unless 0:02:48.600 --> 0:02:52.800 you're trading instruments that it happened to mature in those months. 0:02:53.040 --> 0:02:55.400 So yeah, I think I think it is difficult, and 0:02:55.480 --> 0:02:58.200 it just shows and what this report shows is that 0:02:58.280 --> 0:03:01.320 the economy, while it's not where it was a year ago, 0:03:01.560 --> 0:03:04.360 it's still not weak. And and that's the that's the 0:03:04.440 --> 0:03:06.880 challenge that the Fed has is how can they cut 0:03:07.000 --> 0:03:10.040 while the until the economy is actually weak, And you 0:03:10.160 --> 0:03:12.160 just don't see that very much, even with four point 0:03:12.160 --> 0:03:15.160 one percent unemployment that's not crazy high end employment by 0:03:15.200 --> 0:03:16.320 any stretch of the imagination. 0:03:16.480 --> 0:03:18.480 So based on that, what what kind of curve do 0:03:18.520 --> 0:03:20.680 we expect, as in, is it going to be buying 0:03:20.680 --> 0:03:22.120 the front end or is it going to be selling 0:03:22.200 --> 0:03:22.680 the long end? 0:03:23.720 --> 0:03:27.079 Well, eventually it's going to be I think a bull steepener. 0:03:27.160 --> 0:03:29.000 So that means that front end yields are going to 0:03:29.040 --> 0:03:33.239 go down much faster than longer term yields. But it's 0:03:33.400 --> 0:03:35.040 you know, that's it that's going to come and fits 0:03:35.080 --> 0:03:37.560 and starts because of the same reason that we've seen 0:03:37.600 --> 0:03:40.360 it the last couple of quarters quite frankly, and that's 0:03:40.360 --> 0:03:42.440 what we don't know when the fed's going to start. 0:03:42.520 --> 0:03:44.840 And once the FED starts, then the question is how 0:03:45.120 --> 0:03:47.440 how fast do they go? And we've been on the 0:03:47.480 --> 0:03:52.520 opinion at at b I rates that we're that the 0:03:52.600 --> 0:03:55.040 longer the FED waits to cut, the deeper. 0:03:54.760 --> 0:03:55.760 It's going to have to cut. 0:03:55.800 --> 0:03:58.200 And and and we do think that you know, they 0:03:58.200 --> 0:04:01.440 are going to cut probably once this year, maybe twice. 0:04:01.840 --> 0:04:04.240 Once they do, they'll keep on going and keep cutting 0:04:04.280 --> 0:04:06.480 at least one hundred and fifty or two hundred basis 0:04:06.520 --> 0:04:10.320 points in a pont over over the course of a year, 0:04:10.680 --> 0:04:13.040 and as that occurs, that's when you see the front 0:04:13.120 --> 0:04:15.839 end really start to gain some traction. But keep in mind, 0:04:15.880 --> 0:04:18.679 you know, we yesterday was interesting because the curves steepened 0:04:18.760 --> 0:04:22.159 ten basis points. It only had steepened eighteen basis points 0:04:22.160 --> 0:04:25.240 the whole year, right, So you're talking about a massive 0:04:25.279 --> 0:04:28.680 move in terms of of you know, just this relative 0:04:28.760 --> 0:04:30.719 to how much we'd moved this year in terms of 0:04:30.760 --> 0:04:32.640 the two versus ten year curve. 0:04:33.360 --> 0:04:36.040 All right, looking at that two year word four forty, 0:04:36.080 --> 0:04:38.600 we weren't you know, five percent just recently. Is that 0:04:38.680 --> 0:04:41.719 sixty basis point moved? Is that a reasonable kind of 0:04:41.720 --> 0:04:43.680 move in that timeframe or is this a market? But 0:04:43.720 --> 0:04:44.839 that's been moving pretty quickly. 0:04:46.360 --> 0:04:49.720 It's not that unusual. If you go back in time 0:04:49.920 --> 0:04:53.839 and you don't include the twenty twelve to twenty eighteen period, 0:04:53.960 --> 0:04:58.480 it's usually the range of ten year treasury yields is 0:04:58.480 --> 0:05:01.520 is somewhere around one hundred basis point a year. So yeah, 0:05:01.520 --> 0:05:04.599 you know, seeing moves of forty to sixty basis points 0:05:04.600 --> 0:05:07.400 over six month period is not that unusual. In fact, 0:05:07.400 --> 0:05:09.599 we've had three of them just in the last two years. 0:05:10.200 --> 0:05:12.680 You know, you go back to the last October. You know, 0:05:12.720 --> 0:05:16.120 we went from in August we were you know, near 0:05:16.160 --> 0:05:18.800 four percent. In October we were near five percent, and 0:05:18.839 --> 0:05:21.320 then we've rallied all the way back down to under 0:05:21.360 --> 0:05:23.640 four percent. Right, So so you're talking about one hundred 0:05:23.680 --> 0:05:25.240 bases point range that we're in, an now we're headed 0:05:25.279 --> 0:05:28.599 towards the lower end of that. I think ultimately we 0:05:28.680 --> 0:05:31.160 will see by the end of the year a more 0:05:31.240 --> 0:05:35.120 substantial and obvious slowdown in the economy. So that's where 0:05:35.360 --> 0:05:37.600 you can see ten year yields actually fall below four 0:05:37.680 --> 0:05:40.080 percent once again. But it's not what It's going to 0:05:40.120 --> 0:05:41.799 be choppy, it's not going to be one way straight. 0:05:41.960 --> 0:05:43.200 It's not one trade that's going to. 0:05:43.200 --> 0:05:47.440 Bring us there, all right, Ira, The men's Olympic soccer 0:05:47.480 --> 0:05:50.000 team lost three nil, See what I did there? Three 0:05:50.200 --> 0:05:52.760 nil to France. What do you make of that game? 0:05:52.800 --> 0:05:55.440 And what are your expectations for the US team? 0:05:56.040 --> 0:05:58.680 Well, I have to so keep in mind on the 0:05:58.720 --> 0:06:01.680 men's side, this is it. The the Olympic team is 0:06:01.720 --> 0:06:04.280 the under twenty threes and we don't And a lot 0:06:04.279 --> 0:06:06.400 of our best players are actually under twenty three and 0:06:06.480 --> 0:06:08.600 not at the Olympics because they play in the first 0:06:08.600 --> 0:06:11.360 team and they played in Copa America earlier this year. 0:06:12.200 --> 0:06:14.640 So it just shows you that the depth of talent 0:06:14.760 --> 0:06:17.000 in the US versus some of the other big countries 0:06:17.040 --> 0:06:20.360 like France. You know, France has very deep talent pool 0:06:20.440 --> 0:06:22.080 that and they have a lot of under twenty threes 0:06:22.080 --> 0:06:24.719 who are who are outstanding players. And for US, we 0:06:24.800 --> 0:06:27.720 have some players that are outstanding at under twenty three. 0:06:27.760 --> 0:06:30.920 But the talent that that there's a talent. 0:06:30.680 --> 0:06:33.240 Gap there from the top to the bottom in the 0:06:33.320 --> 0:06:35.039 US clearly in that age group. 0:06:35.279 --> 0:06:38.760 And how and again why do they play before the 0:06:38.800 --> 0:06:41.680 Olympic opening games? They're just too many? 0:06:41.760 --> 0:06:41.919 Is that? 0:06:42.080 --> 0:06:43.960 Is that the thing? And like if you play earlier, 0:06:44.080 --> 0:06:45.920 do you not get to go to the Olympic opening 0:06:45.960 --> 0:06:46.720 ceremony or not? 0:06:47.560 --> 0:06:49.240 World I mean the. 0:06:51.240 --> 0:06:53.480 No, no, they used to be until the World Cup 0:06:53.520 --> 0:06:55.800 came around in uh, you know, one hundred or so 0:06:55.880 --> 0:06:57.400 years ago, just about one hundred years ago. 0:06:58.240 --> 0:06:59.719 The one of the. 0:06:59.760 --> 0:07:03.440 Reasons that the Olympics soccer starts early is because you 0:07:03.440 --> 0:07:06.080 can only only have two games a week, so and 0:07:06.360 --> 0:07:08.680 the Olympics itself is only two weeks. So unless you want, 0:07:08.720 --> 0:07:11.840 unless you had eight teams only going to the Olympics 0:07:12.000 --> 0:07:14.640 it'd be hard to finish the tournament before that, So 0:07:14.680 --> 0:07:17.320 that's why you have you know, if you have sixteen 0:07:17.360 --> 0:07:18.240 teams like they do. 0:07:18.400 --> 0:07:19.120 I think it's sixteen. 0:07:19.120 --> 0:07:21.800 If memory serves you know, you basically have to start 0:07:21.840 --> 0:07:24.520 a week before or a couple of days before the 0:07:24.560 --> 0:07:26.000 actual opening. 0:07:25.760 --> 0:07:28.960 Ceremony, adding more more value every day. Irid Jersey with 0:07:29.000 --> 0:07:32.640 a soccer talk. He's also has a side gig chief 0:07:32.760 --> 0:07:35.600 US indust rate strategist for a Bloomberg Intelligence. 0:07:37.240 --> 0:07:41.119 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:07:41.200 --> 0:07:44.720 weekdays at ten am Eastern on applecard Play and Android 0:07:44.760 --> 0:07:47.520 Auto with the Bloomberg Business app. You can also listen 0:07:47.640 --> 0:07:50.720 live on Amazon Alexa from our flagship New York station. 0:07:51.120 --> 0:07:53.880 Just say Alexa play Bloomberg eleven thirty. 0:07:55.240 --> 0:07:57.920 Let's stay on earnings and things for a moment. Southwest 0:07:57.920 --> 0:08:01.640 airlines up by over three percent and they are changing 0:08:01.680 --> 0:08:06.400 their open seat is huge. This is huge. 0:08:06.520 --> 0:08:09.760 I never really flew Southwest that much, and I don't 0:08:09.800 --> 0:08:12.640 know the reason behind the open seating, but I know 0:08:12.680 --> 0:08:13.560 that people like it. 0:08:13.880 --> 0:08:15.600 Yeah yeah, and also then you can pay for like 0:08:15.640 --> 0:08:18.440 where you stand online and stuff right right. 0:08:18.560 --> 0:08:20.920 Lets like the fact that you can get on an airplane, 0:08:20.920 --> 0:08:21.800 then you have to scramble. 0:08:22.400 --> 0:08:26.880 I don't I don't know budgeting then yeah, maybe that 0:08:26.880 --> 0:08:29.000 would be something. But they are keeping their bags for 0:08:29.040 --> 0:08:32.560 fly for free policy. But George Ferguson is Boomberg Intelligence 0:08:32.559 --> 0:08:35.400 and your aerospace defense and airlines analysts and joining us. Now, 0:08:36.000 --> 0:08:39.800 what did you make of them scrapping this open seating policy. 0:08:40.720 --> 0:08:44.240 Yeah, it's all about revenue generation, right, So I think 0:08:44.280 --> 0:08:47.400 they're trying to put a little more distance on themselves 0:08:48.000 --> 0:08:51.200 and the low cost and ultra low cost carriers, you know, 0:08:51.280 --> 0:08:53.760 Frontier and Spirit. I agree with you. I don't know 0:08:53.800 --> 0:08:55.600 that all of us enjoy sort of scrambling for a 0:08:55.640 --> 0:08:59.520 seat when we jump on an airplane. So customers maybe 0:09:00.040 --> 0:09:03.880 will take this better than scrapping bags fly free or 0:09:03.880 --> 0:09:07.600 no change fees, you know. So to me, it seems 0:09:07.600 --> 0:09:11.200 like could be a good evolution in the strategy. Makes 0:09:11.240 --> 0:09:16.960 them look more like their full service competitor, you know, Brethren, 0:09:17.480 --> 0:09:21.760 United American and Delta. And again they need to generate 0:09:21.760 --> 0:09:24.760 some more revenue, so they're going to sell you aisle seats, 0:09:24.840 --> 0:09:30.079 window seats, exit row seats, premium seats. Yeah, they're starting 0:09:30.120 --> 0:09:31.959 to look like their big airlines are starting to look 0:09:31.960 --> 0:09:33.640 more like the other big airlines. 0:09:33.960 --> 0:09:37.360 And Alex I note from the YouTube video that George 0:09:37.440 --> 0:09:40.960 is in our Queen Victoria Street offices which are just spectaculum, 0:09:40.960 --> 0:09:45.000 because he was at the Farnborough air Show slash boondoggle 0:09:45.120 --> 0:09:48.079 in London this week. So good for George. Hey George, 0:09:48.920 --> 0:09:50.400 every plane I got on, I don't worry. I won't 0:09:50.400 --> 0:09:53.000 tell them because they're not in the office your management team. 0:09:53.559 --> 0:09:57.680 The reason I go onto a plane every seat is full. 0:09:58.240 --> 0:10:00.200 So that implies to me that demand is there. That 0:10:00.240 --> 0:10:02.640 implies to me that the airlines would have pricing power. 0:10:03.040 --> 0:10:06.480 But I keep reading that they're not getting good yields 0:10:06.600 --> 0:10:08.400 and that the fact that the fares are coming down. 0:10:08.480 --> 0:10:10.120 Can you explain how this economics works? 0:10:11.080 --> 0:10:14.480 Yeah, well, so I think this economics is the airlines 0:10:14.520 --> 0:10:18.840 put too much capacity in the marketplace, and this business 0:10:18.880 --> 0:10:21.760 is one where you don't let an airplane roll down 0:10:21.760 --> 0:10:26.400 the runway without it being eighty five percent or more full. Nowadays, 0:10:26.600 --> 0:10:29.960 the revenue generation officers, they just keep selling tickets as 0:10:30.000 --> 0:10:32.880 long as it's covering the marginal costs. Right, And so 0:10:33.440 --> 0:10:36.320 just because you saw all that volume didn't mean you 0:10:36.360 --> 0:10:40.040 were seeing all that You know, revenue is as good 0:10:40.080 --> 0:10:42.040 as it should have been. Now, look, they're all at 0:10:42.080 --> 0:10:44.880 record levels of revenue, and that's because they got to 0:10:44.920 --> 0:10:48.480 find a way to pay for higher pilot wages. They're 0:10:48.559 --> 0:10:52.719 not anywhere near record levels of profit. So again, I think, 0:10:52.760 --> 0:10:54.160 you know, they were kind of counting on an even 0:10:54.280 --> 0:10:59.680 stronger revenue environment, you know, as they might say. We 0:10:59.760 --> 0:11:03.160 saw yields at American down six percent, you know, which 0:11:03.200 --> 0:11:05.360 is that's pretty so, I mean, yields look like they're 0:11:05.600 --> 0:11:07.960 nosing over and that's a lot about the concern here. 0:11:08.000 --> 0:11:10.640 Right We're seeing negative yields at all the airlines, and 0:11:10.679 --> 0:11:14.120 that's the concern that there's just too much supply. Consumers 0:11:14.240 --> 0:11:18.440 kind of is tighter and not willing to pay anything 0:11:18.440 --> 0:11:20.920 to go to, you know, go on vacation, and that's 0:11:20.920 --> 0:11:21.600 a challenge here. 0:11:21.679 --> 0:11:23.440 You got to hop in like thirty seconds. But American 0:11:23.480 --> 0:11:25.560 Airlines stock is now up over two percent. So what 0:11:25.640 --> 0:11:26.600 led that to the upside? 0:11:26.600 --> 0:11:29.200 Now, Yeah, so some of the guides I'm seeing is 0:11:29.360 --> 0:11:33.800 increases of two to three percent of capacity in three Q. 0:11:34.320 --> 0:11:37.760 This could be the beginning of getting the capacity growth 0:11:38.200 --> 0:11:39.480 in the right area. I don't think it's going to 0:11:39.480 --> 0:11:41.360 be a great quarter three Q but it could be 0:11:41.360 --> 0:11:42.439 better than we all expect. 0:11:42.840 --> 0:11:45.480 All right, thanks so much, George, appreciate you. George Fergus 0:11:45.480 --> 0:11:48.920 and Boomerg Intelligence Senior Aerospace, Defense and Airlines analyst joining 0:11:48.960 --> 0:11:51.199 us on Southwest as well as American. 0:11:52.720 --> 0:11:56.600 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:11:56.679 --> 0:11:59.720 weekdays at ten am Eastern on Focarplay and then Broyd 0:11:59.720 --> 0:12:02.880 Auto with the Bloomberg Business app. Listen on demand wherever 0:12:02.920 --> 0:12:06.760 you get your podcasts, or watch us live on YouTube. 0:12:08.000 --> 0:12:11.000 Let's get back to earnings here Astrosenica. That stock over 0:12:11.080 --> 0:12:13.400 in London is now down by almost two percent. The 0:12:13.440 --> 0:12:16.959 company did report earnings that were pretty solid. The company 0:12:16.960 --> 0:12:19.440 came in with core earnings per share at one point 0:12:19.520 --> 0:12:22.720 nine to eight cents one dollar ninety eight cents. Let's 0:12:22.720 --> 0:12:25.280 say it that way. Operating profit coming in about four 0:12:25.720 --> 0:12:28.480 point ten billion dollars. So we want to check in 0:12:28.520 --> 0:12:32.520 with the chief financial officer, Aradna Saran over at Astrosenica 0:12:32.679 --> 0:12:35.120 on this. It's great to get your perspective. We always 0:12:35.120 --> 0:12:37.280 appreciate the busy day that you have on earnings. Thank 0:12:37.280 --> 0:12:40.199 you very much for joining us. Give us some clarity 0:12:40.280 --> 0:12:43.000 on that top line growth and the upgrade that you had, 0:12:43.040 --> 0:12:45.920 you're raising that revenue, what is driving it in terms 0:12:45.960 --> 0:12:49.120 of product sales and how much of that's collaboration income, 0:12:51.200 --> 0:12:52.320 So actually all. 0:12:52.200 --> 0:12:56.560 The upgrade is being driven by product revenue. This year 0:12:56.640 --> 0:13:00.319 we had this quarter was actually a record quarter twelve 0:13:00.360 --> 0:13:04.000 point nine billion in revenue, and it was driven across 0:13:04.000 --> 0:13:08.640 the board with record revenues in all our therapeutic areas. 0:13:08.640 --> 0:13:11.400 So oncology, which is about forty one percent of our 0:13:11.440 --> 0:13:16.280 business five point three billion in revenue, growing nineteen percent, 0:13:17.040 --> 0:13:22.400 cardiovascular medicines growing twenty two percent, Respiratory and immunology growing 0:13:22.440 --> 0:13:25.320 twenty six percent, and our rare disease business, which is 0:13:25.320 --> 0:13:28.800 about a two point one billion dollar business, growing fourteen percent. 0:13:29.520 --> 0:13:33.400 And same geographically, you know, we're seeing very strong growth 0:13:33.520 --> 0:13:38.000 in the US, double digital growth, also in emerging markets 0:13:38.040 --> 0:13:42.200 and in China both growing around eighteen percent, Europe twenty 0:13:42.240 --> 0:13:46.599 four percent. So it's really demand for all our innovative 0:13:46.640 --> 0:13:51.720 medicines across different geographies and across different therapeutic areas. So 0:13:51.800 --> 0:13:55.800 we raised our guidance for the year both on revenue 0:13:55.840 --> 0:14:02.080 and EPs to now mid teens and it's almost in 0:14:02.120 --> 0:14:05.360 some ways you could consider a double raise, because we 0:14:05.559 --> 0:14:09.559 also said that we would meet these guidance without any 0:14:09.559 --> 0:14:13.640 increase in collaboration revenue that we were anticipating earlier in 0:14:13.640 --> 0:14:17.679 the year. So it's really driven by fundamental underlying growth. 0:14:18.200 --> 0:14:20.440 So doctor, I know, I'm just looking at the Bloomberg 0:14:20.520 --> 0:14:22.160 terminal here. So you have a run rate revenue of 0:14:22.160 --> 0:14:25.880 about fifty billion right now, and you guys have said 0:14:25.880 --> 0:14:29.400 that you're targeting eighty billion in sales in twenty thirty. 0:14:29.840 --> 0:14:31.600 What's going to bridge the gap, what's going to get 0:14:31.640 --> 0:14:32.800 you there? What should we be keeping an. 0:14:32.760 --> 0:14:37.800 Eye on, So you know, there's a lot going on 0:14:38.080 --> 0:14:42.880 in the pipeline. What's the ambition that we set for 0:14:43.280 --> 0:14:47.520 twenty thirty of eighty billion is driven by I would 0:14:47.520 --> 0:14:52.040 say three different elements. The first element is the products 0:14:52.040 --> 0:14:54.760 that we have today and the indications we have today 0:14:54.840 --> 0:14:57.160 and growth in those and that's sort of sort of 0:14:57.160 --> 0:15:00.600 what you see in the quarterly performance today. The second 0:15:00.600 --> 0:15:04.480 element is the current products that are on the market, 0:15:04.560 --> 0:15:08.480 but what we call life cycle extension, so entering into 0:15:08.600 --> 0:15:13.400 for example, additional indications or expanding indications and other tumer 0:15:13.480 --> 0:15:17.040 types c that's a second element. And then the third 0:15:17.040 --> 0:15:21.160 element is new molecular entities. So these are brand new 0:15:21.200 --> 0:15:26.080 molecules which you know we've discovered we're working on that 0:15:26.160 --> 0:15:29.440 are in phase two or phase three clinical studies and 0:15:30.160 --> 0:15:33.320 hope that will be successful in them and will launch 0:15:33.360 --> 0:15:37.280 them by twenty thirty. We have set an ambition of 0:15:37.840 --> 0:15:42.400 achieving this revenue but also launching twenty new molecular entities 0:15:42.440 --> 0:15:48.359 by twenty thirty, having twenty five blockbusters, so that's products 0:15:48.400 --> 0:15:52.560 over a billion dollars in revenues in the year by 0:15:52.640 --> 0:15:56.320 twenty thirty. And you know what's going to bridge the gap. 0:15:56.360 --> 0:15:59.560 If you look at the studies we have ongoing, we 0:15:59.600 --> 0:16:03.440 will have probably about forty studies in the next eighteen months, 0:16:03.440 --> 0:16:06.520 so I end up twenty twenty five that we hope 0:16:06.560 --> 0:16:10.600 to read out and that will give us more confidence 0:16:11.200 --> 0:16:14.360 with the trajectory that we're on on achieving that twenty 0:16:14.480 --> 0:16:17.800 thirty ambition. So you know, this is a it's a 0:16:17.880 --> 0:16:21.400 risk business. Obviously, we take risk every day. We invest 0:16:21.760 --> 0:16:24.480 twenty two percent of our R and D of our 0:16:24.520 --> 0:16:26.640 revenue in R and D, so it's a very R 0:16:26.640 --> 0:16:31.200 and D heavy business. And you know, we hope that 0:16:31.960 --> 0:16:34.760 you know, our studies are successful to achieve those goals. 0:16:35.320 --> 0:16:38.880 Our governments your friend or foe right now in terms 0:16:38.960 --> 0:16:43.560 of the UK being an unfavorable or favorable environment. There's 0:16:43.640 --> 0:16:46.960 also the threats of IRA potentially being rolled back under 0:16:47.000 --> 0:16:49.600 President Trump. How do you guys sort of think about 0:16:49.880 --> 0:16:52.000 government interaction with your company? 0:16:54.400 --> 0:16:57.280 You know, governments are a very important stakeholder for us, 0:16:58.320 --> 0:17:01.840 you know, in the US as well as outside the US. 0:17:02.760 --> 0:17:06.600 You know, many many systems, healthcare systems are single payer systems, 0:17:06.640 --> 0:17:10.000 so we do work very closely with governments. You know, 0:17:10.040 --> 0:17:12.640 the most important thing for US is to make sure 0:17:12.720 --> 0:17:16.159 that we have you know, once we've spent the money 0:17:16.200 --> 0:17:20.400 and developed innovative medicines, whether it's for cardiovastlar disease or oncology, 0:17:20.920 --> 0:17:25.320 that patients actually get access to those medicines, you know, 0:17:25.359 --> 0:17:28.560 and we can make an impact in their lives and 0:17:29.119 --> 0:17:33.320 you know, from from diseases they're suffering from. And in 0:17:33.359 --> 0:17:35.920 that way, we need to be able to demonstrate that 0:17:36.119 --> 0:17:39.720 these drugs have value and are bringing value to the 0:17:39.760 --> 0:17:42.560 patients and to the healthcare system. And we work very 0:17:42.560 --> 0:17:47.040 closely with with governments and with systems to make sure 0:17:47.080 --> 0:17:49.160 we get access to those medicines. 0:17:49.880 --> 0:17:51.840 Doctor Saron, you know, I always joke on the show 0:17:51.840 --> 0:17:53.200 that when I come back in the next life, I 0:17:53.240 --> 0:17:55.280 want to be a healthcare M and a banker, because 0:17:55.280 --> 0:17:57.320 it seems every Monday we come in and there's another 0:17:57.960 --> 0:18:00.000 deal out there. How does how do you and your 0:18:00.160 --> 0:18:02.960 company think about M and A to kind of drive 0:18:03.040 --> 0:18:05.640 top line growth versus the R and D that you've 0:18:05.640 --> 0:18:06.560 already talked about. 0:18:08.600 --> 0:18:12.560 So the ambition that we set for twenty thirty, the 0:18:12.640 --> 0:18:15.439 eighty billion does not include any major M and A. 0:18:16.480 --> 0:18:19.760 You know, we are always looking from a scientific standpoint, 0:18:20.280 --> 0:18:24.320 not only within our own labs and identifying what could 0:18:24.320 --> 0:18:28.199 be the next most promising molecule, but also looking outside 0:18:28.359 --> 0:18:33.120 and science that is happening in universities and biotech companies 0:18:33.400 --> 0:18:36.840 and so forth. Over the last year and a half, 0:18:36.880 --> 0:18:42.600 we've invested close to seven billion in doing licensing transactions 0:18:42.600 --> 0:18:48.439 and partnerships and smaller M and A transactions that you know, 0:18:48.600 --> 0:18:52.119 keep help to build our pipeline and really you know, 0:18:52.160 --> 0:18:55.760 fit very well strategically with us in terms of the 0:18:55.800 --> 0:18:59.560 ambition that we have, and particularly in new therapy areas 0:18:59.640 --> 0:19:02.640 where you know we've made some investment, but it can 0:19:02.720 --> 0:19:07.159 help us leap frog into the field. For example, in 0:19:07.240 --> 0:19:10.080 the case of cell therapies or in the case of 0:19:10.280 --> 0:19:15.639 radio pharmaceuticals, and accelerate the investments that we're already making. 0:19:15.720 --> 0:19:19.080 So you know, we're always looking for those types of partnerships. 0:19:19.280 --> 0:19:21.679 So this is a really uncfo question to ask you, 0:19:22.200 --> 0:19:24.840 what's the coolest drug that you guys are working on 0:19:24.920 --> 0:19:27.560 right now, the one thing that you're most excited about 0:19:28.359 --> 0:19:30.080 and a potential breakthrough there. 0:19:32.640 --> 0:19:34.760 That's a I don't know if it's an un pool 0:19:34.840 --> 0:19:36.960 or maybe it's unfair. You know, it's hard to pick 0:19:37.000 --> 0:19:39.679 from pick from your children, right, so there are just 0:19:39.720 --> 0:19:43.280 so many exciting things happening and every you know, every 0:19:43.320 --> 0:19:45.920 few weeks, we we get some new data that makes 0:19:46.000 --> 0:19:49.720 us excited. So it's really hard to pick a favorite child. 0:19:51.040 --> 0:19:53.199 But you know, there's a there's a lot going on, 0:19:53.320 --> 0:19:56.600 and you know, we live in very exciting times where 0:19:57.200 --> 0:19:59.960 not only is you know, what we do in astrosenic 0:20:00.800 --> 0:20:05.679 is important, but science is evolving so quickly and technology 0:20:05.720 --> 0:20:08.720 is evolving quickly, and you know we're we're sort of 0:20:08.800 --> 0:20:10.360 at the forefront of that innovation. 0:20:11.359 --> 0:20:13.560 All right, Thank you so much. We truly appreciate it. 0:20:14.040 --> 0:20:17.040 A Radne Sarah and chief financial officer over at AstraZeneca, 0:20:17.600 --> 0:20:20.280 joining us on earnings. Really appreciate that. Now I'm an 0:20:20.280 --> 0:20:22.160 only child and I only have one daughter. 0:20:22.240 --> 0:20:23.600 Okay, but I'm always. 0:20:23.359 --> 0:20:26.240 Assuming that as a parent you have a favorite. Where 0:20:26.280 --> 0:20:27.200 does that not work like that? 0:20:27.359 --> 0:20:29.560 Well, you have multiple kids. My kid, my four kids 0:20:29.640 --> 0:20:32.040 are youngest has always told us that he is the favorite. 0:20:32.080 --> 0:20:33.720 And this is when he's a little little boy, because 0:20:33.720 --> 0:20:35.800 he gives the best presence in the best hugs. So 0:20:35.840 --> 0:20:37.680 I'll stick with He's now twenty years old, but I'm 0:20:37.680 --> 0:20:38.400 gonna stick with that. 0:20:38.800 --> 0:20:39.400 It's amazing. 0:20:39.400 --> 0:20:42.800 I still get a grief from the two saying, well, 0:20:42.920 --> 0:20:44.560 you have more pictures of him than me. 0:20:45.240 --> 0:20:48.480 Okay, so you may not actually pick a favorite, but 0:20:48.520 --> 0:20:49.199 they think you do. 0:20:49.800 --> 0:20:51.840 Yeah, I like the way you put that. 0:20:51.920 --> 0:20:55.280