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On Today's Bloomberg Intelligence Show, we dig inside the big business stories impacting Wall Street and the global markets.
Each and every week, we provide in depth research and data on some of the two thousand companies and one hundred and thirty industries our analysts cover worldwide.
Today, we'll discuss why UPS suffered its worst stock decline in twenty five years.
Last, we break down Astrazeneco's quarterly earnings in a conversation with its chief financial officer.
But first we dive into politics and the aftermath of President Joe Biden dropping out of the presidential race.
Many people are now wondering whether Vice President Kamala Harris could defeat Republican nominee and former President Donald Trump in November.
And this week Bloomberg Intelligence took a deep dive into how a potential Harris presidency could impact different sectors and policies in the US.
For more, we are joined by Nathan Dean, Bloomberg Intelligence senior policy analyst, and we first asked Nathan what life would look like if Kamala Harris were to win in November.
It's a lot of status quo for banks, evs, big tech and so forth like that. The one caveat is on taxes, and Kamala Harris's record in her tax aspect of it has been a little bit more, you know, i'd say progressive than what President Biden has said. But ultimately we've viewed President Biden as moving more towards Kamala Harris's policies when he became president, rather than Kamala Harris moving towards Biden's policies. So a lot of this if she becomes president will be status quo.
Oh that's really interesting. So I was going to ask, where is Vice President Harris farther left than President Biden. Where is that biggest daylight?
So the one thing that we actually hung down on was her record as Attorney General, and you know, just indicative of one of her actions as she joined about forty seven other states, including the District of Columbia, on a twenty five billion dollar settlement on home foreclosure practices, and a lot of her campaign speeches when she was running president in twenty twenty was talking about how she
took on big banks. Now, you know, to us, that means there's a lot more consumer protection coming in the cards, whether it's the Consumer for Financial Protection Bureau, or whether it comes through acts of Congress, or maybe it's even executive orders like continuing President Biden's student debt relief pans. But I think there's going to be a lot of focus on this idea of load to middle income consumers, protections against big corporations, and a lot more in terms
of disclosures and so forth like that. Now, is this a material impact on big tech or on the big banks. Probably not. A lot of it has to get passed through Congress, but ultimately it certainly headline risk that I would keep in mind for those sectors is in particular, is just to keep in mind, you know that if she were to focus on this and specifically it's just
pick on anti trust. If she were to focus on anti trust, there's a lot of you know, intense scrutiny, more scrutiny than she could put there than a Biden administration could.
All right, a lot of my M and A banker buddies are wondering what would a Harris administration mean for antitrust because Biden's been nobody into the M and A world. What's the is a feeling statisquo there as well?
You know, this is one of those situations where I think, whoever wins as president's probably not going to be helpful to your M and A banker buddies, because on one hand, you have the continuation of the Biden presidency with Lena Khan at the FTC and taking a very skeptical look at mergers. I mean just in the financial space alone. You know, some of these merger reviews go over a year, if not longer, and you know we saw it certainly with the TD Financial merger they pulled out as a
result of this. But then on the flip side, you have Senator Advance and President Trump. And remember this idea of economic popularism is rampted through that. You know that RNC agenda at the moment, So you know, Senator Vance even came down to a Bloomberg event here in Washington and called Lena Kahan, the FTC chairwoman Biden's best picked
and insinuated that President Trump should even keep around. Now, I don't think that's going to happen, but for unfortunately, Paul, for your M and A banker buddies, I don't think any other way this gets around, whether it's Harris or Trump, it's going to be a very skeptical world for anti trust in M and A.
So Paul's talking to his MENA buddies, I'm thinking about my energy buddies, because one area where it feels like President Harris could be farther left, of course, his energy. I was telling Paul earlier that she's been kind of anti fracking, she's been anti offshore. California is notoriously not loving any fossil fuels. How much of that do you think we have to really start considering.
I think it's important to consider it. In fact, our colleague Rob Barnett put out a note talking about this in the importance it has on the renewable sector. So Vice President Harris, you know, certainly has pursued a clean energy agenda, and one of the things we see in you know, her presidency is a boosting of the Inflation Reduction Act. I don't want to say going back to the build back Better three point zero, you know, some
of the ideas that will float around. She'll have her own ideas here, but this idea of the Inflation Reduction Act needs to be protected and enhanced. So if you're in the renewable sector, a solar sector, it certainly could
be a boon idea. If Vice President Harris wins, you know, I would also just offer this that a lot of it also depends on who takes up Congress, because if Vice President Harris wins and the Republicans take one, if not two, chambers of the House, then a lot of those initiatives are going to be scaled down and actually dramatically lowered and so forth like that.
All Right, we know Elon Musk is a big supporter of Trump, But what would a democratic Harris administration mean for the Elon Mussel of the world and the evs.
So, you know, for the EV side, I think it's actually a continuation of the Inflation Reduction Act tax credit, if not an enhancement of that. You know, look, tax reform is going to have to happen next year no matter what, because the Trump era tax cuts for individuals expires at the tail end of twenty twenty five. And whether it's Vice President Harris or Trump, neither of them are going to want to increase taxes for low and
middle and income you know, Americans. So for the EV's of the world, I would say, under a Harris presidency, you'll certainly have protection from that tax credit in the IRA, You potentially could have an enhancement of that. You certainly will have regulatory policies trying to boost EV usage and so forth like that. Comparing it against the President Trump presidency, where you know, he has said that he doesn't like
electric vehicles. Obviously he has the Elon Musk whispering in his ear and providing forty five million dollars a month in PAC funding. But ultimately I think the Republicans you probably would see a scaling back of those tax credits.
Uh maybe you.
Know, just additional you know, restrictions on EV's and so forth like that. But you know, with the Trump presidency, we'll have to see if he wins and also if the Elon Musk is whispering in his ear income January and February taxes.
If former President Trump were to get a second term, is there any consensus in Washington given the makeup of Congress. I guess we have to see how Congress shakes out. But what if anything, could Trump ad been tration get done on taxes?
Yeah.
So, you know, the way I think about the tax debate with my colleague Andrew Silverman is really print some timing.
So the first thing you'll note is the election.
If the Republicans take the House and the Senate and the presidency, then they have this opportunity for a reconciliation. This is how they got the Trump Ara tax cuts through in twenty seventeen. It allows them to actually move forth and enhance or you know, essentially conduct tax reform
and they can bypass the Democrats. So if the Republicans win the House and the Senate and the presidency, then this President Trump's idea of lowering corporate tax rates is certainly in the carts now I have seen statements from House Republicans saying, eh, maybe we don't want to do that so much, but I do think that this would
be President Trump driving this. Now, if you get more of a gridlock Congress, well, then the power of Congress is going to come out, and the House in ways and means Committee, whoever controls it, is certainly going to want to play here and tell the Presidency this is what we think. And so if you get a gridlock Congress, a lot of the tax reform or tax relief ideas that are out there are going to be scaled down or narrowed, but with one objective not to increase the
individual tax relief or tax cuts for that individual. If you get President Harris, you may see tax increases for individuals who make greater than four hundred thousand dollars, but I think most individuals in the United States at the end of twenty twenty five probably won't have their taxes.
Altered all that much. Our thanks to Nathan Dean Bloomberg Intelligence senior policy analyst.
We moved out of corporate earnings and begin with the ev giant Tesla. Tesla reporting another quarter of disappointing profit and postponed a highly anticipated unveiling of autonomous taxis.
For more and all this, we were joined by Steve Mann, Bloomberg Intelligence, Global Autos and Industrials Research Channels.
We first asked for his key takeaways from Tesla's results.
I still like their long term medium term outlook on AI in our view, were not including eight billion optimist robots. I think that's a little bit out there. But AI will continue to drive the stock. But I think people are focused on their auto business. It's a little bit worrying.
I think investors were expecting their automotive gross margin to flatten out in the second quarter versus the first, but it did decline about one hundred and fifty basis points to thirteen point nine percent, which is in line with you know, the legacy automaker's automotive growth marginal fourteen percent. So there is some concerns with the investors. Is you know, are there any more upside on margin? Are they you know, are they really that good with cost?
But I guess the question is how do we value the stock? So I hear you that the auto part of their business is very much maybe in line with what other auto companies are talking about but they trade an estimated pe of like ninety times, Like is it worth it for that if it's also being valued as an AI company.
I think there's a couple of things that the investors are focused on beyond this second quarter. You know, they did pull ahead the start of production for a more affordable EV from like the second half of next year to the first half, which is critical. I think the EV market today globally is actually consumers in the EV market actually looking for a more affordable EV, something that's you know, less than fifty thousand US dollars. You know,
most of the EV's offered today are above fifty thousand dollars. So, you know, I think the investors are hoping that, you know, into twenty twenty five and into twenty twenty six, we're going to get a rebound in EV sales because there's going to be more affordable EV's, budget friendly EV's for the mass market.
Steve Tesla right now is an auto company and it's an other company. Elon wants you to focus on the other Can you define what's in that other bucket and when investors believe it will be material to their revenution profits?
Yeah, you know, He talks about AI quite a bit, you know, robo taxi, optimist robot. But if you think of AI, I think there's you know, potentially even more ways to generate revenues from AI. One of the things that I think the market is also focused on other than robotaxi, taking a passenger from point A to point
B is for example. You know, these cars have huge battery storage capacity, right, and these things, if they can move about on its own, you can really help out the utilities in terms of, you know, redistributing power across the grid.
Well to that point, I mean, their energy business was actually quite impressive. It had its highest installation of batteries and revenue ever, and energy accounted for just twelve percent and sixteen percent of Tesla's revenue and gross profit respectively. I mean, yeah, it's going to fluctuate, but that's pretty strong.
Yeah, it's a good, good sign. I think those tend to be a little bit lumpy because the orders are big, and so whenever they deliver the order and when they ever they book it, that tends to be lumpy. I think we'll have to see if it's going to be consistent. But I think the investors are very focused on business. Are they going to be on time in rolling out the new EV, the affordable EV? And then longer term, it's really you know AI. Is he going to deliver What is he going to say in October the AI
event that he's hosting. There were a lot of questions about that during the call, but they were pretty tight lip.
Our thanks to Steve Man. Bloomberg Intelligence, Global, Autos and Industrials research channels.
Coming up, We're going to break down how demand for cloud computing services and advertising impacted Alphabet's quarterly earnings.
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We move next to earning. It's from Logistic company UPS.
This week, YOUPS suffered it's worst stock decline it's twenty five years after reporting profit than missed Anamal's estimates for the quarter.
The company also trimmed its forecast for the year, and this comes as UPS has failed to deliver fast enough on a turnaround plan to cut costs and increase volumes.
For more on this, we were joined by Lee Classical Bloomberg Intelligence Senior Transport, Logistics and Shipping Antals.
We first asked Lee why it was another tough quarter for UPS.
I think it's a lot of things. You know, they are seeing vuyume growth, which is good, but that mix of growth is not good. What they're seeing is their shippers trading down. So if you were going to maybe send something via air, maybe you decide you go on the ground, which is you know, cheaper and lower margin. And then if you're using ground, maybe you're going to use one of their products like sure Posts, which is like an economy product which is cheaper and again lower
margin business. So you're also seeing the mix of B two C outpacing growth of B to B. B two C growth was around four percent and B to B growth was down four percent and B to B. So think like a lawyer sending documents to another lawyer's office. That business tends to have better margins because of the inherent density that follows that business, and density is really good for acid intensive networks like ups is. And then you also, you know, have another negative mixed impact you
had too. You know, they called out on their call to large e commerce companies. I'm assuming that you know, these are companies out of China that are you know, are kind of using more economy services, so you're seeing a surge in that demand from from there as well.
Is this the trough? Is this sort of the worst it's going to get?
It's a great question. I mean, you know, I think so, you know, I think it feels like it's this is the worst. I mean, you know, the company has done pretty well in terms of eating expectations or beating expectations. This is the first miss since I believe the first quarter of twenty twenty, so you know, Carol to May and her team have been on quite a role. They also have some easier comparisons going into the second half.
You know, some of your listeners might have remembered they had a new contract that was really you know, heavily weighted in the first year that gets anniversaried in August first, So therefore, you know, those higher labor costs, the comparables will ease significantly, you know, after August first, so that should provide a better cost for them in a third
quarter and going forward. Also, you know peak seasons here, right, You know, a lot of the companies that we cover are talking about we you know, most of them are expecting a real peak season and we're not talking about, you know, the peak seasons that maybe we've seen the nineteen nineties or early two thousand, but you're definitely going to see seasonal increase in demand. And that peak season
is one of the shortest on record. You know, it's around seventeen days between Thanksgiving and Christmas, and that will allow ups to implement surve charges because they're going to have to you know, get those resources in a short amount of time or a short amount of time to make sure that you know, they're able to deliver at high service levels. So you should see probably some good revenue growth in the fourth quarter from those sur charges.
So you know, that coupled with a lot of their cost cutting measurements, they've they've they've reduced a lot of heads. You know, I think a lot of things are going to turn for this company once you're going to see you know that B two B volume return and the company is doing a lot of things I think to position itself longer term, you know, whether that's you know,
focusing on the healthcare logistics. Healthcare logistics obviously there's a lot of value add there and those margins are pretty high relative to you know, someone throwing a package on your porch, and so you know, they're really looking to grow that business and they want to be a leader in that business. Uh And and to be frank, it's it's it's a fantastic uh business to be in if
you're a logistics provider. And then you know they're also trying to do new things with or more things, I should say, with with what we call SMBs, which are small and medium sized businesses. You know that tends to have better margins than you know, dealing with these super large companies like Amazon, which you know the business is good, but the margins could be better.
I have actually no loyalty between these two services, I mean the FedEx store and the UPS store kind of right next to each other in my little strip malls. So whichever's got the shorter line, that's kind of where I go. But from an investment perspective, you know, you got thirty seconds here. What's the difference between these two companies From an investor perspective.
Well, it's interesting. So like on FedEx, I think they're dealing with more structural issues because that was a company that I would say was extremely bloated, you know, over the last decade, and they're kind of right sizing there network. They're both making changes to their networks to kind of meet the new demands, you know, that change of increase in the home delivery versus you know, delivering to lawyers or doctors' offices or corporations.
You know.
I think the biggest difference is, you know, there might be more margin expansion opportunity at FedEx, just because they're starting from a lower base than new ps.
You know.
But you know, these are two what I would consider blue chip companies that are you know, should benefit with the economy and they should probably be able to grow top line well passed Global GDP just given some of the self help things that they have in front of them.
Are thanks to Lee Clasicow, Bloomberg Intelligence, Senior Transport, Logistics and Shipping Annals.
We moved now to big tech and Google parent Alphabet, the company reporting second quarter revenue that beat analyst expectations.
Alphabet's results for boosted by demand for cloud, computing services and advertising on a search engine.
Despite this, investors weren't pleased the capital spending rows more than expected to support Google's AI programs and computing power needs.
For more, we were joined by man Deep Singh, Bloomberg Intelligence Senior Tech industry analysts.
We first asked man Deep for his take on Alphabet's results this quarter.
Companies are not getting a pass on boosting capex. That wasn't the case last quarter. But clearly, I think investors vary about how much CAPEX these companies are going to throw on AI. And look, in the case of Alphabet, there is revenue in the cloud segment, so they quantified the AI impact on cloud, which was high single digit contribution to cloud segment, and cloud segment actually saw on
acceleration in top line growth. But YouTube miss, I think I attribute that more to software spending outside of financial services and retail sectors like automotive. They're not spending on digital ads right now because the sector is going through a cyclical downturn. So there is that cyclical element to YouTube's business. But I think there are a lot of positives. Course search growing at fourteen percent. I mean, think about the scale of search and the fact that they are
able to grow double digits. That's quite impressive, and that too at a very healthy margin. I mean, the biggest fear for this company was margins are going to get degraded because of you know, AI and whatnot. That we haven't seen that. So a lot of positives, but clearly kapex was an overhang.
All right, I've been making a point if any team deserves benefit of the doubt of higher CAPEX, it's Sundarprinchai and all the folks at Google. Stop whining about capex. Have they ever not generated to return on their spending?
I mean, the problem with Google's management team is they say very little on their earnings call Like even when you answer them like ask a question, they would answer it with as little words as possible, So you know, it sounded like they are bullish on their AI opportunity and it's actually monetized Uh, some of that capex is
going towards Wemo. If you think about you know, robotaxis and what Tesla had to go through there called Wemo actually did two million rides here to date and these are all autonomous rides and they're expanding to other cities. So think about, you know, the scale in that business if they're able to do actually autonomous driving successfully. So I do think their capex as well spent, but they just don't explain it that well to the street, you know, to get the credit.
So when it comes to then the AI spend, what other companies are going to get judged in the same harsh light and what's Google's wan up on them?
If any Meta I mean you saw a negative reaction with Alphabet, I mean think about what happened to be worse. Meta is going to be worse. Even last quarter when they raise their capex, Meta had a negative stock reaction simply because investors are concerned about how much this company is going to spend on metaverse versus AI. And so in the case of Meta, they're losing eighteen billion dollars
a year on reality labs. They're spending capex in addition to the AI Capex, which they launched a new large anglid model, And to my mind, any company right now with their own large anglid model, whether it's Alphabet, Meta or a Microsoft Open AI, they have an advantage. They have the best reasoning capability when it comes to the AI spend and it's actually a future driver of revenue.
So it all comes down to how they are going to monetize it, and I think with Microsoft and Google they have an advantage because it shows up in the cloud revenue. In the case of Meta, they have to monetize the AI spend through ad revenue or a subscription based you know, chat pot offering, which nobody knows when that will come.
What is Gemini that should I be using it?
Well, it's a better way to search for certain type of queries. So whenever you want you know something with a detailed answer as opposed to going through ten blue links to find that answer, Gemini is great. The one good thing about Gemini is when you search for a query, it's going to show you the relevant YouTube link, whereas if you search that on Chatchypt or Claude, it's not
going to have that YouTube link. So it's going to generate the text, it's going to generate a summary, it's going to answer your query, but it won't have that appropriate YouTube link. And that's Google's biggest advantage with the large anglid models.
It's going to have to pay for that.
Yeah, it's a twenty dollars subscription for the advanced version.
But some people will that that's kind of.
And that's where I mean you are, you don't think it's a big deal, But I think Google owning maps and YouTube is such a big deal in this arena of large anglid models, because it's one thing to generate a text based response, it's another thing to have a blue link with the you know, YouTube video that they want you to see or the map link that they want you to click on inside that response. And other large anguid models can't do it because they don't own these assets.
So well, before we go, if these companies, though, don't spend, then at some point when all this is monetizable in a big, big way, all of a sudden, them's gonna complain that then metas super far behind. So what's the chicken in the egg here?
I mean, I still think nobody wants to be the first one to pull back on capex. So it really is a question of when do we have sufficient supply of GPUs. And because the market is supply constrained when it comes to the chip side of the equation, nobody wants to come across and say, oh, I have enough
and I don't need to spend on capex anymore. And I think right now, these companies generate so much cash every year, like Alphabet will generate over one hundred billion in free cash flow, so they can afford to spend sixty billion in capex. And they're looking to make our twenty three billion dollar acquisition that fell through, but clearly they want to spend their free cash flow.
Thanks to Mandeep singeing Bloomberg Intelligence, senior tech industry analysts.
Coming up on the program, I'll look at why the audio streaming giant Spotify reported record profit last quarter.
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We move next to corporate earnings from Comcast and Spotify. This week, Comcast reported second quarter revenue that missed analysts expectations. The global media and tech company was dragged down by a slower season and its movie studio and theme parks.
On the other hand, Spotify reported a record profit in the second quarter and strong growth in paying subscribers. This comes as Spotify has significantly trim costs over the last year to boost profitability for more.
We were joined by Githa rong Ganathan, Bloomberg Intelligence analyst on US Media.
First ask Etha for her takeaways from Spotify's results.
Really, the number here for Spotify and the main story has not just been great subscriber growth. So they've been adding a solid five six seven million premium subscribers every quarter. But for them, what it really has been over the past few quarters has been this inflection and profitability. Remember what we're now looking for streamers across the board, and this goes to Netflix and everybody else in video streaming, as well as Spotify, which is, you know, the main
audio streamer with a thirty five percent market share. The narrative has really shifted now to profitability, and they absolutely blew it out of the park. So the gross margin guidance that they had given was twenty eight percent. They came in at twenty nine percent. But even better was the outlook. So for the longest time Spotify was stuck at like a twenty five percent gross margin. They were
pointing to like longer term margins of thirty percent. But looks like they're going to be able to hit it right in the third quarter.
So did it take anyone else's lunch or this was just a really good sort of management cost issue.
Yeah, it's excellent management. More importantly, it's also price increases. They hadn't taken any price increase alex for more than ten years, and then in a span of two years, they've raised prices by twenty percent. And that's just because they know that people love Spotify. Nobody's going to churn from Spotify to let's say Apple Music or YouTube Music.
They have a thirty six thirty seven percent share of the global audio market, and they're just adding so many features and so many new verticals that they're able to take those price increases. But of course, apart from that, you know, it's also been a very good story when it comes to cost cuts. So they were investing heavily in their podcasting business, you know, like with the Joe
Rogan Show and adding all these other exclusive podcasts. They're being much more prudent now on that front, and those again have really driven profitability.
How much of their revenue is subscription versus advertising versus other These days.
Almost all of their revenue, Paul, is subscriptions, so it's a very Yeah, it's a very very heavy subscription based business. They are trying to build the advertising business, but as you know, again that takes time. You know, that will drive the longer term margin story. But as of right now, the mixshift is really subscriptions.
That's pretty impressive. Hey, can I ask you about Comcast and what you made of their earnings that came out earlier reported second quarter revenue that misdanalyst estimates they had. It was the movie season, you got theme parks, the whole thing.
Yeah, So Comcast is an interesting story. So Comcast is actually, you know, your typical media conglomerate. They own both video distribution broadband connectivity as well as the media side of the business with NBC. Eighty percent of their EBITDA actually is related to just broadband subscriptions. And so what happened this quarter. We were expecting a little bit of softness
in broadband and as expected, yes, they did lou subscribers. Remember, the whole cable industry is really in a slump because of a very very intense competition from some of the telecom offerings, both with fiber and fixed wireless access. So we're kind of seeing that slump and it looks like Comcast is really not going to be able to get
out of that slump. More interestingly, however, for both Comcasts as well as Disney, is that the theme park attendance is actually flailing and you know, a twenty four percent decline in their theme park ibadah. Yeah, and that's really because huge pull forward, or what they're saying was a huge pull forward post COVID and now we're kind of
seeing normalization. So that was a little bit of a disappointment, but I think overall the business is fine, but we are going to see some extended softness over the next few quarters.
And when you look at Comcasts, you know, great collection of assets, but they're all facing serious headwinds. What's the feeling among analysts and investors you talk to, like, what can a Comcast actually do to become, you know, an attractive stock.
So of course, Paul, as you well know, it's always kind of been saddled by this conglomerate discount, I mean, the big question. And we know Brian Roberts has always been hungry for some kind of deals, so they're obviously a wildcard when it comes to M and A. I guess once if the administration changes and if it's more favorable for deals, I think Comcast will be a major player. I mean, we don't know whether they'll look to do some kind of joint venture with Warner Brothers or Fox.
It remains to be seen, but of course they will be a major player in the space. You know, again, in terms of what would move their stock, maybe they spin off their NBC business. I mean, Brian Roberts has not indicated any such thing, but I think over the near term. What really needs to happen to kind of move the sentiment on the stock is they have to show positive broadband subscriber growth.
All right, Thanks to gith Rongganathan, Bloomberg Intelligence analyst on US Media.
We move next to earnings from the pharmaceutical company. Asked for Zeneca. The company raised its profit and sales forecast for the year.
The results were boosted by demand for blockbuster cancer drugs and for more. Joined by AstraZeneca chief financial officer Radna Sarin.
Your first asker for her take on this week's earnings.
All the upgrade is being driven by product revenue. This quarter was actually a record quarter twelve point nine billion in revenue, and it was driven across the board with record revenues in all our therapeutic areas. So oncology which is about forty one percent of our business five point three billion in revenue, growing nineteen percent, cardiovascular medicines growing twenty two percent, Respiratory and immunology growing twenty six percent, and a rare disease business which is about a two
point one billion dollar business growing fourteen percent. And same geographically, you know, we're seeing very strong growth in the US double digital growth also in emerging markets and in China both growing around eighteen percent, Europe twenty four percent. So it's really demand for all our innovative medicines across different
geography and across different therapeutic areas. So we raised our guidance for the year both on revenue and EPs to now mid teams and it's almost in some ways you could consider a double raise because we also said that we would meet these guidance without any increase in collaboration revenue that we were anticipating.
Earlier in the year.
So it's really driven by fundamental underlying growth.
So doctor, I know, I'm just looking at the Bloomberg terminal here. So you have a run right revenue of about fifty billion right now. You guys have said that you're targeting eighty billion in sales in twenty thirty. What's going to bridge the gap? What's going to get you there? What should we be keeping an eye on?
You know, there's a lot going on in the pipeline. What's the ambition that we set for twenty thirty of eighty billion is driven by I would say three different elements. The first element is the products that we have today and the indications we have today and growth in those, and that's sort of what you see in the quarterly performance.
The second element is the current products that are on the market, but what we call life cycle extension, so entering into for example, additional indications or expanding indications and other tumor types, etc. That's a second element. And then the third element is new molecular entities. So these are brand new molecules which we've discovered, we're working on that are in phase two or phase three clinical studies and hope that will be successful in them and will launch
them by twenty thirty. We have set an ambition of achieving this revenue but also launching twenty new molecular entities by twenty thirty, having twenty five blockbusters, so that's products over a billion dollars in revenues in the year by twenty three. And you know what's going to bridge the gap.
If you look at the studies we have ongoing, we will have probably about forty studies in the next eighteen months, so I end up twenty twenty five that we hope to read out and that will give us more confidence or the trajectory that we're on on achieving that twenty thirty ambition. So you know, this is a it's a risk business. Obviously, we take risk every day. We invest twenty two percent of our R and D of our revenue in R and D, so it's a very R
and D heavy business. And you know, we hope that you know, our studies are successful to achieve those goals.
Our governments your friend or foe right now in terms of the UK being an unfavorable or favorable environment. There's also the threats of IRA potentially being rolled back under President Trump. How do you guys sort of think about government interaction with your company?
You know, governments are a very important state colder for us. You know, in the US as well as outside the US, many systems healthcare systems are single payer systems, so we do work very closely with governments.
You know.
The most important thing for us is, you know, once we've spent the money and developed innovative medicines, whether it's for cardiovastlar disease or oncology, that patients actually get access to those medicines, you know, and we can make an impact in their lives, and you know from from diseases they're suffering from and in that way, we need to be able to demonstrate that these drugs have value and are bringing value to the patients and to the healthcare system.
And we work very closely with governments and with systems to make sure we get access to those medicines.
Doctor Saron, you know, I always joke on the show that when I come back in the next life, I want to be a healthcare m and a banker, because it seems every Monday we come in and there's another deal out there. How do you and your company think about M and A to kind of drive top line growth versus the R and D that you've already talked about.
So the ambition that we set for twenty thirty, the eighty billion does not include any major M and A. You know, we are always looking from a scientific standpoint, not only within our own labs and identifying what could be the next most promising molecule, but also looking outside and science that is happening in universities and biotech companies
and so forth. Over the last year and a half, we've invested close to seven billion in doing licensing transactions and partnerships and smaller M and A transactions that help to build our pipeline and really fit very well strategically with us in terms of the ambition that we have and particularly in new therapy areas where you know we've made some investment, but it can help us leap frog into the field, for example in the case of cell
therapies or in the case of radio pharmaceuticals and accelerate the investments that we're already making. So you know, we're always looking for those types of partnerships.
So this is a really uncfo question to ask you what's the coolest drug that you guys are working on right now, the one thing that you're most excited about and a potential breakthrough there.
I don't know if it's an un pool or maybe it's unfair. You know, it's hard to pick from brick from your children, right so there are just so many exciting things happening. You know, every few weeks we get some new data that makes us excited. So it's really
hard to pick a favorite child. But you know, there's a there's a lot going on, and and you know, we live in very exciting times where not only is you know, what we do in astrosenca is important, and but science is evolving so quickly, and technology is evolving quickly, and you know we're we're sort of at the forefront of that innovation.
Thanks to ask Resenika chief financial officer Radna Saran, they see.
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