WEBVTT - Eli Lilly CFO Lucas Montarce Talks Weight Loss Pill, Business Outlook

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>We release our guide for twenty twenty six. Twenty five

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<v Speaker 2>percent is the midpoint of the growth that we expect

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<v Speaker 2>to see in twenty twenty six is industry leading growth,

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<v Speaker 2>and that's a continuation of the momentum that we see

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<v Speaker 2>as well in twenty twenty five. By the way, thinking

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<v Speaker 2>about the Q four that we also release, the revenue

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<v Speaker 2>that we deliver in the fourth quarter, we deliver forty

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<v Speaker 2>three percent growth, so it's a continuation of that strong

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<v Speaker 2>momentum getting into twenty twenty six. What is driving that

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<v Speaker 2>is the similar drivers, the key growth products that we have.

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<v Speaker 2>Of course, the Increding is getting all the attention, but

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<v Speaker 2>we have a breadth of our portfolio across all over

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<v Speaker 2>therapeutic areas that will continue to drive that growth into

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<v Speaker 2>twenty twenty six. Thinking about the drivers that you mentioned,

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<v Speaker 2>we talk about the Increding portfolio both in the US

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<v Speaker 2>and or US. You see that the market in the

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<v Speaker 2>fourth quarter on the antiobesity space grew eighty five percent,

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<v Speaker 2>and we actually outpaced that growth in the fourth quarter,

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<v Speaker 2>and very strong growth as well in type two diabetes

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<v Speaker 2>seventeen percent. So we continue to drive that growth into

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<v Speaker 2>twenty twenty six. You mentioned as well the introduction of

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<v Speaker 2>our four ripon. Very excited. We submitted for regulatory approval

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<v Speaker 2>in the fourth quarter and we expect to have regulatory

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<v Speaker 2>reaction as early as Q two, so we expect to

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<v Speaker 2>see as well our oral pill coming into the market,

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<v Speaker 2>a very exciting opportunity to expand the market. In addition

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<v Speaker 2>to that, we are expanding through access as well with

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<v Speaker 2>the agreement that we have with signing with the administration

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<v Speaker 2>in Medicare that we expect not later than July, will

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<v Speaker 2>provide access to Medicare patients more than forty million patients

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<v Speaker 2>that could benefit to have access to antiobesity medications as well.

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<v Speaker 2>So very exciting time, very exciting opportunity ahead of us.

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<v Speaker 1>So, Lucas, there's a lot to dig into there, and

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<v Speaker 1>you mentioned, of course the breath of your portfolio, but

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<v Speaker 1>investors really really care about the pill at this moment,

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<v Speaker 1>so I have to ask a little bit more about that.

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<v Speaker 1>You mentioned that potential two Q launch. Is there a

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<v Speaker 1>possibility that this outlook that you gave this morning gets

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<v Speaker 1>upgraded as we start to see some of the uptake there.

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<v Speaker 2>Yeah, it's early days at this time, we just put

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<v Speaker 2>the guide out there. We have a very thorough process,

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<v Speaker 2>and we feel good about the guy that we have

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<v Speaker 2>in place for twenty twenty six is still very compelling.

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<v Speaker 2>By the way, twenty five percent there is no single

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<v Speaker 2>pharmat company growing at this space, So we feel about good.

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<v Speaker 2>We can see throughout the year if we see that

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<v Speaker 2>continue to trend in the positive direction. But at this time,

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<v Speaker 2>given all the variables that we have, we feel good

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<v Speaker 2>about the guy that we have in place.

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<v Speaker 1>And so let's talk about the timeline a little bit

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<v Speaker 1>more here. You and I spoke a few weeks ago

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<v Speaker 1>at the JP Morgan Healthcare Conference. You said that you're

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<v Speaker 1>on track for that second quarter approval. You reiterated that

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<v Speaker 1>timeline today, of course, pending FDA approval. Let's talk a

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<v Speaker 1>little bit about the f There's been some challenges there.

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<v Speaker 1>There's been some turnover. Do you see that potentially impacting

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<v Speaker 1>the timeline and all.

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<v Speaker 2>At this time, we are engaging with the fdaight and

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<v Speaker 2>we feel good about the progress. And so the time

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<v Speaker 2>that I cover in JP Morgan that you alluded is

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<v Speaker 2>still consistent with our expectation that we expect to see

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<v Speaker 2>regulator reaction as early as Q two.

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<v Speaker 1>All right, well, we're almost in the second quarter, so

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<v Speaker 1>we'll keep looking for updates there. I want to talk

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<v Speaker 1>about pricing as well, because you take a look at

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<v Speaker 1>this headline, you see global pricing declines in the low

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<v Speaker 1>to mid teens. This caught my eye because of course

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<v Speaker 1>Novo Nordis came out with that early release yesterday and

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<v Speaker 1>then they said on their earnings call this morning that

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<v Speaker 1>they're facing unprecedented pricing pressure this year. So talk us

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<v Speaker 1>through that, what that means for Eli Lilly and how

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<v Speaker 1>you plan to make that up.

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<v Speaker 2>Yeah, well, actually the guy twenty five percent is encompassing

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<v Speaker 2>as well. The price step was set down that we

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<v Speaker 2>have in twenty twenty six, so that's included in our

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<v Speaker 2>guide for twenty twenty six. Already. When you think about

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<v Speaker 2>the variables, they are all actually out there. We talk

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<v Speaker 2>about the agreement with the administration, those prices are public.

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<v Speaker 2>We talk about direct to patients that we adjust the

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<v Speaker 2>price by fifty dollars across all our presentations. That's actually

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<v Speaker 2>already implemented in the marketplaces of last December. And then

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<v Speaker 2>we have the Medicare access that again we have a

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<v Speaker 2>price of two forty five. That's also public price public

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<v Speaker 2>information out there as well, So those variables are out there.

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<v Speaker 2>There is no news from my perspective in terms of

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<v Speaker 2>the pricing dynamics. Is still going to be a price

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<v Speaker 2>erosion versus last year. That's included in our guide. Very

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<v Speaker 2>strong volume growth that we expect to see that will

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<v Speaker 2>more than upset that to get to that twenty five

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<v Speaker 2>percent that we have in our guide.

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<v Speaker 1>Well, the dynamic is really interesting between pricing and volume.

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<v Speaker 1>Another line and you're earnings release that caught my eye

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<v Speaker 1>was that you take a look at US revenue increased

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<v Speaker 1>forty three percent. That was driven by a fifty percent

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<v Speaker 1>increase in volume, but it was partially offset by that

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<v Speaker 1>seven percent decrease due to those lower realized prices. So

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<v Speaker 1>is the hope that you know, you think about some

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<v Speaker 1>of the things in the pipeline, the pill being one

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<v Speaker 1>of them, is the hope that that's going to help

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<v Speaker 1>expand the market and thus expand volume as you see

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<v Speaker 1>that price erosion.

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<v Speaker 2>Yeah, that's very important. As you mentioned again, when you

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<v Speaker 2>think about the volume growth and the volume opportunity. In particular,

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<v Speaker 2>studying with both obesity and tie two diabetes, we have

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<v Speaker 2>a large opportunity. Both segments are really large, in particular

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<v Speaker 2>anti bysidium medications. You're talking about more than one hundred

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<v Speaker 2>million patients in the US that we can serve, and

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<v Speaker 2>then globally there is another nine hundred million patients that

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<v Speaker 2>we can serve as well. Nowadays we are serving low

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<v Speaker 2>single digits, so the penetration is low, so there is

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<v Speaker 2>a big opportunity to continue to drive that growth. The

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<v Speaker 2>fourth quarter, I mentioned that the market in the US

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<v Speaker 2>grew eighty five five percent, so there is a very

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<v Speaker 2>big runway to continue to drive growth into the future.

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<v Speaker 2>That that's reflected on our volume growth expectation for twenty

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<v Speaker 2>twenty six.

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<v Speaker 1>And you touched on this a little bit, Lucas, but

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<v Speaker 1>I do want to talk a little bit more about

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<v Speaker 1>MFN pricing there what would impact would you expect that

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<v Speaker 1>to have on your way laws sales this year?

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<v Speaker 2>So the impact is included in that guy that I

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<v Speaker 2>talk about again, the load to meetings in price erosion

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<v Speaker 2>that that's reflected in that price is in that price

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<v Speaker 2>a guy that we have for the year, and the prices,

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<v Speaker 2>as I mentioned, are public the two forty five for

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<v Speaker 2>the government segment and the public prices that we have

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<v Speaker 2>in direct to patients, including the adjustment that we did

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<v Speaker 2>for fifty dollars. So all these public prices, we have

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<v Speaker 2>been very disciplined on our pricing strategy. You can look

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<v Speaker 2>at the results quarter on quarter that we maintained that

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<v Speaker 2>discipline throughout twenty twenty five, and my covenment is to

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<v Speaker 2>maintain that price discipline getting into twenty twenty six as well.

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<v Speaker 1>All right, fair enough, and I do I should bring

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<v Speaker 1>up Medicare access as well, because expanding Medicare access that

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<v Speaker 1>is certainly top of mind for investors. And I'd love

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<v Speaker 1>to hear from your perspective, how do you see that

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<v Speaker 1>wider access impacting the market? And again when it comes

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<v Speaker 1>to the pill, would you expect that to be available

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<v Speaker 1>to Medicare patients at launch.

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<v Speaker 2>That's a great point of course, again not only to

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<v Speaker 2>repartite again set Bound, but also or Fotillipon will be

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<v Speaker 2>available in the Medicare segment once that access is provided,

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<v Speaker 2>so both molecules will have access to Medicare patients and

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<v Speaker 2>the patients will pay actually fifty dollars will be the

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<v Speaker 2>copy that the patients will be paying for both medicines,

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<v Speaker 2>So great opportunity to drive access. I mentioned forty million patients.

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<v Speaker 2>As always, penetrations will built over time, so studying off July,

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<v Speaker 2>hopefully we will see that penetration growing over time, so

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<v Speaker 2>that will build not only in twenty twenty six, but

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<v Speaker 2>also getting into twenty twenty seven as well.

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<v Speaker 1>And Lucas, before I let you go, one thing that

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<v Speaker 1>has changed since you and I spoke a couple of

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<v Speaker 1>weeks ago back in January is that your ZEP bound

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<v Speaker 1>QuickPen and actually one approval last month. As I understand it,

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<v Speaker 1>that product is tied to your deal that you have

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<v Speaker 1>with the Trump administration. So talk us through the role

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<v Speaker 1>out here. Do you plan to make QuickPen available to

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<v Speaker 1>all patients or would it only be an option for

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<v Speaker 1>those Medicare patients.

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<v Speaker 2>Yeah, it's great news. By the way, I'm glad that

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<v Speaker 2>you brought it up because you asked me about the

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<v Speaker 2>quick pen approval. And again it has been three weeks

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<v Speaker 2>and now we have the quick pen approval and we're

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<v Speaker 2>planning to bring it to the market within the next

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<v Speaker 2>thirty days, so that will bring another option. Of course,

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<v Speaker 2>again we will are discussing about the channel segments you mentioned,

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<v Speaker 2>Medicare being one of them, but also we will bring

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<v Speaker 2>it in direct to patients so that we would have

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<v Speaker 2>more broad access. Is another opportunity, another option for patients

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<v Speaker 2>that will have the opportunity to get to the QuickPen device.

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<v Speaker 2>By the way, the quickpent device is one that we

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<v Speaker 2>have available in many countries Gloali with a great acceptance

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<v Speaker 2>as well.

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<v Speaker 1>All right, Lucas, thank you so much. I know it's

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<v Speaker 1>a busy morning, so really appreciate you taking the time

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<v Speaker 1>for us.