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On Today's Bloomberg Intelligence Show. We dig inside the big business stories impacty 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 are analysts cover worldwide.
Today, we'll look at how the seven three seven Max crisis impacted Boeings quarterly earnings.
Plus we'll discuss how cost cuts impacted earnings at UPS.
For first, we kick off a big week of corporate earnings with the electric vehicle maker Tesla. Tesla report a quarterly profit that fell forty eight percent. Sales also fell nine percent.
And this comes as the company has spent more than a year slashing prices across the lineup in an effort to boost sales, and after Tesla reported results, CEO Elon musk vowed to launch a less expensive vehicle as soon as later this year.
For more, we were joined by Steven Mann Bloomberg Intelligence, Global Autos and Industrials Research Channels. We first asked first reaction to musk comments.
I think the affordable EV is the real thing ROBOTAXI. I think there's still needs time for development. But if you look at the affordable EV actually kills two birds in one stone. You know it actually increases a scale for Tesla. We're going to see revenue growth, we potentially see profit growth from that affordable EV. And that's what exactly what the market needs. It's more affordable vehicles to
increase penetration UH of evs. The other thing that's really important with this UH affordable EV launches, it actually ink helps UH Tesla increases reach globally because you know you have a lot of emerging markets that you know, a lot of people, a lot of consumers there cannot afford an expensive fifty thousand dollars vehicle, forty thousand dollars vehicles, So a sub thirty thousand vehicle is p is is the right product for them to expand geographically.
Steve, what do we know about the economics of such a a new or lower cost vehicle? Can they produce that at a profitable basis on a per unit basis?
Yeah, there's there's a couple of ways they can approach this. I think they can develop a totally new platform. But you know, in the other segments that I've done with you, we've talked about vertical integration, and vertical integration has actually reduced the cost of you know, car production. So for them, you know, for TESTA, it's the only company that's profitable
in producing evs. So the other option is actually think about, you know, what they can do with the three and the Y. You know, can they offer you know, lower trims, maybe even you know, a smaller battery that's going to allow them to cut costs and also make that available to the consumer at a lower price.
So this obviously was the best part of the report, but you still had elsewhere in the earnings report. We had falling vehicle sales. We had worse than expected revenue and profit, and a pretty significant cash burn figure. So I mean, Steve, are you totally optimistic here? What kind of concerns do you still have here?
I I've always said, you know, I think this year and even into next year, there's there's some bumps on the road. You know, cyber truck is still ramping up. It's a very difficult vehicle to build. They're still working on those issue shoes.
You know.
We don't think the EV market actually, especially in the US, will pick back up until twenty twenty five, late twenty twenty five into twenty twenty six, because the market really needs a lower cost, more affordable EV to entice kind of more new buyers into the market. I'm very positive. I think this company has done everything right in terms of looking at AI, looking at AV. I still believe
the EV, you know, shift has actually sailed. We're going to have EV's and I think that subscription based software based vehicle that they're trying to build is the right move right strategy for the industry.
Steve, what did the Elon say or to what extent did he address just kind of the developments in China, how things are developing there from a competitive standpoint, a sales standpoint and all that.
Yeah, it's I actually see that we'll continue to be bumpy. They probably likely to lose market share, continue to lose some market share there. But I think you know, Tesla is leveraging China, not just for sales, but it's a low cost manufacturing base for the company. The Shanghai factory still pumps out a million vehicles, close to a million vehicles a year at a very low cost. They still are able to source battery from companies like c at L, the largest EV battery maker in the world, at a
very attractive price given their volume. So, you know, China sales will probably slow. There's it's a hyper combetitive market. Shao Me which is a you know, a major cell phone maker in China, they're launching on vehicles that's also very affordable, so they're gonna see more competition in China. So but again, China is not just for sales, it's a manufacturing, low cost manufacturing.
Base for them.
Elon had took a dig at the car makers that are pairing back on the EV production plans and going more to the gas electric hybrids instead. He didn't call them out, but DM and Forward are among those ones. And but isn't that really where consumers are going more proportionally right now, more into the plug in hybrid space or maybe non plug in hybrid, but just hybrids in general versus full on evs.
Yeah, I think the consumer I think, you know, we did a survey not so long ago. I think what we got from that survey was that I think the consumer needs to trial evs. They actually need to be educated on, you know, how to make EV work in their daily life. So, you know, PHVs, plug in hybrids, hybrids is actually good transition into full evs. They alleviate some of the concerns in terms of range, in terms of the lack of infrastructure that's for the EV market
right now. So PHIV and EV are a good transitional product, but it's not a long term product because if you look at some of the emission standards, it's continued to continue to be tighter and tighter. Eventually hybrids and phgvs are probably won't even meet the more stringent emission standards down, you know, in the next decade.
Our thanks to Steve Man, Bloomberg Intelligence, Global Autos and Industrials research analysts.
All right now, we're going to move to the software space. This week we heard that software giants Salesforce's talks to acquire the data management company Informatica have fallen through. We were told that Informatica said it's not engaged in takeover talks.
The deal would have ranked among the largest ever by Salesforce.
For more.
In this I was joined by Anna Rock, Rana Bloomberg Intelligence technology analysts and so Neil Rojokopal, Bloomberg Intelligence, Senior software Analysts. I first asked Ana Rock for his reaction to the news.
Yeah, it was just a big head scratch for us too, almost because last March, Bennihoff comes and says, I've disbanded the mn committee, no more m and A. I'm going to focus on margins and organic growth. And in less than a year, you know, just around that one year mark, he's like, oh, we're going to go back and you know, buy something now. He didn't say that, the company didn't say that, but that was the rumor on the street
that they're looking to buy Informatica. For us, that was a bit of a surprise because Informatica grows six to seven percent compared to Salesforce, which is growing north of ten percent. So why would anybody buy something that is slow growth? I get the data angle of it, but you know it was it was not something that we really liked.
So Neil tell us about Informatica. I don't know a lot about it. I don't think a lot of investors know a lot about it. And that was one of the reasons that they're saying, what is Salesforce buying here or maybe thinking about buying? What tell us about this company?
Sure, Informatica is all about data management, which is about cleaning all the data that comes from different sources and aligning it with the applications and getting all things sorted out. For data, so data comes in various shapes, forms and different sources, so all of that needs to be cleaned up to be used in a proper shape. So I think Informatica is that layer that acts as a cleanser of data and gets you to that right usage. So that's where it comes in as a player.
So if they're not going to tie up with Salesforce. What's the call on this company? What's the call on the stock? Either you know, bullsh or bears.
Look strategically. For Informatica, such an alliance would have been a great move that would have helped fuel its cloud journey, and that now accounts for roughly one third of its revenues. With the deal not happening, Informatica now has to focus on fueling its cloud growth organically. The company is boosting its partnership and rolling out new AI powered features, but
this space is highly fragmented and competitive. The company has continued to lose market share, especially with the challengers that
have risen substantially over the last few years. There are other big players like SAP and IBM that also compete, So I think going forward the market will definitely look a lot more challenging because now Salesforce are not having to go through with this tale will put more resources into MuleSoft, which I think will raise the competitive intensity and I think that is a big challenge for informatical going forward.
An rag on your side from the Salesforce side, I mean, is it just steady as she goes? I mean, it's just such a great company. What's the call for the next twelve to eighteen months for Salesforce dot com?
So, Paul, what we're thinking. You know, hopefully by the end of this year we get a little more clarity on technology spending, and perhaps from next year onwards we can see that lower doubleg growth in sales coupled with some margin expansion getting you to that mid to high teens earnings growth. That's what we want from Salesforce, organic growth, organic earnings, not so much driven by M and A, and I'm hoping that that's what the company delivers.
On the software side, what are the most exciting areas for you that you're looking at here?
Look for me. In the overall enterprise software space, I still like names in the observability sector. The name yeah, all right. So the observability is they act as a layer that monitors all of your systems applications. So be it any kind of an application that you're running your enterprise, everything needs to be monitored if there are like any bugs,
if there are like system downtimes, et cetera. So observability vendors typically monitor all your applications and the infrastructure, so they play a very critical role in the overall enterprise software space, and I think players such as the Data Dog, diner Trace are very well positioned here.
Public recently like recently as a couple of years.
Yeah, yes, that's right.
So what is I mean? I love the name. Looking at the stock here and bringing up the stock Data Dog. The symbol is ddog. This is kind of forty billion dollar market cap. It's kind of flat stock price on the year, but up to seventy five percent over the trailing twelve months. What's the call on Data Dog here?
Look, it's a very I would say it has been a fast growing company. And of course last year we've seen a slow down in the overall enterprise software space, and Data Dog of course has been impacted with that
slow it spending trends. But overall, if you look at the observability space as we see, I think that is a space that will continue to grow because the number of applications and the infrastructure that enterprises are deploying, especially with what is supposed to come with Jenny AI and others, we will continue to see a massive rise in the infrastructure and applications and that should all bode well for Data Dog and a players such as a Dina Trace and others in the observaty space.
Our thanks to Sigeo, Roger Paul, Bloomberg Intelligence software analysts, and anaack runa Bloomberg Intelligence technology analyst.
Coming up will break down why pessimism about the US economy may be impacting President Biden standing with voters.
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I'm Paul Sweeney and I'm Molly Smith, hilling in for Alex Ziel. We move next to earnings from the logistics company UPS. This week, UPS reported first quarter profit that was higher than analyst expectations. This comes as the courier's headcount management and restructuring of its Delivery Roots begins to bear fruit for more.
Guest host Emily Graffeo and I were joined by Lee Clascow, Bloomberg Intelligence Senior Transport, Logistics and Shipping Analysts. We first asked Lee for his take on UPS earnings.
I think it's really about what they're doing on the cost side. I think that's really the driver of the outperformance in EPs, because revenue did come in slightly lower than expectations on lower volumes. You know, they're dealing with lower volumes from last share last year when they you know, were negotiating their labor contract and a lot of shippers kind of try to find other alternatives in case there was an issue with their network, you know, from a strike,
but obviously that didn't happen. Now they're being pretty busy trying to win back that share, so, you know, I think what they're all in all, it was a good quarter. I think if UPS is you know, meeting or beating expectations, that's a good thing because they've had a rough year, driven a lot by that labor negotiation, which increased costs considerably and resulted in a lost amount of volume, which you know, for a company like UPS, the deleveraging effect
on margins is quite substantial. But there are definitely some good news in the report that you know, we remain optimistic that they might be even looking to possibly increase, you know, their full year guidance for twenty twenty four, especially as the US postal service contract which they recently won from FedEx starts hitting their p and L.
When you talk about average daily package volume down, your over year revenue down year over year, how much of the softer demand for UPS is related to macro economic factors and maybe coming out of the pandemic consumers shipping less.
Is that a factor here?
Yeah, I think it's a you know, probably a trieffective things. It's probably a softer great outlook all together, that coupled with tougher comparisons and the fact that they are, you know, are still trying to win back the share that they lost from their labor contract negotiation. So I think those three things are kind of weighing on their volumes, probably more than maybe their competitors like a FedEx or a DHL.
Hayley. I know labor is a big deal with UPS and these companies here. I know UPS they had a new labor contract that really pushed up wages and benefits starting I guess this year. But then on the other side, they also cut twelve hundred or twelve thousand white collar jobs. That's like fourteen percent of the workforce here. So talk to us about the labor and component they're in the cost structure.
Yeah, I mean that they're they're doing the right things. You know, the contract might have a you know, with the team serves, might have had a negative impact to margins, but you know we are going to anniversary those in the second half of the year, so those comparisons won't
be as bad. And also, you know, does provide them with a steady labor force, because you know, if your labor is happy, you're gonna have less turnover, you have less turnover, you probably have better service and better safety, and that usually yields better profits. So I think, like when if you look longer term, beyond the initial shock of that new contract, which is very front loaded, you know, the increases aren't as bad. As we get to year two,
it's not going to be as bad. And listen, you know UPS and FedEx and a lot of these companies, you know, they did get a little on the fat side, if you will, on their corporate ranks, and I think they're both doing the right things in terms of trimming it for the new normal of what their operating environment is today.
How should investors be thinking about UPS?
You know, I think what they need to do is they need to execute. They do not only need to execute on their twenty twenty four plans, but their twenty twenty six plans. And I do as I said earlier, I think there is some opportunity for some upside surprise. Given their US postal service contract. It didn't really make that much money for FedEx, But I think UPS's network
is very different than FedEx's. It's more integrated, it's not a hub and spoke network, and that will provide them with some profitability and management pretty confident, at least it peers confident that this business is going to be not only creative to earnings, but a creative to margins. And that's kind of what you know, we as we look at the company, really want to see. We really want to see those domestic margins start to improve.
Haylee, what are the companies saying about kind of normalized growth rates in terms of I guess unit volume. Where's this US economy in terms of just packages? Is it a GDP kind of number? Is that kind of the story.
Yeah, it's a GDP kind of number. But you know UPS wants to grow beyond GDP and how they're going to do that is they've made some pretty significant not in size necessarily, but in terms of you know, capabilities acquisitions. You know, they bought a company Roadie, which you know it's not a drink on the road ball, but it's
it is. What they do is they deliver heavy stuff to people's doors, so think furniture, think workout equipment, fitness equipment, and that is done through more or less an asset light model where you know, they're arranging the delivery. So
that's that's a very good business. They're also invested or acquired a company that does returns without having it to box it, so it's a lot easier for consumers to you know, either go to a UPS stoor one of the other drop points that UPS provides to return something.
And that's good for UPS because that stuff goes into their system and it becomes a B to B delivery where when we say B to B business business and meeting that there's more density, so it's you know, they're they're shipping you know, they're consolidating and shipping twenty boxes versus just one envelope, and that tends to be more profitable. U. And then their investments in the healthcare space, you know, their goal is to be the largest healthcare logistics provider.
Healthcare has above average margins for transportation companies given the high level of service that's involved there. I think temperature control, think the fact that it has to get somewhere at a very specific time. So you know, those are higher margin business. So, you know, I think that those growth areas that I just mentioned will help them grow their overall volumes beyond you know, just GDP numbers.
All thanks to Lead Glasgow, Bloomberg Intelligence Senior Transport, Logistics and Shipping Analyst.
Now we're going to move to politics. President Joe Biden's recent polling bump and key battleground states has mostly evaporated.
Biden is now trailing Donald Trump in six of seven swing states. That's according to the April Bloomberg News Morning Console poll. For more on this poll, we were joined by Gregory Corti, Bloomberg News White House and Political correspondent. We first asked Gregory for his takeaways from the latest poll.
We've been doing this every month. This is the seventh iteration of this poll in seven key battleground states, and for the first five months it was a pretty stable race with former President Trump with a slight lead over President Biden. Then after the State of Union address, we got a little bit of good economic news, and we saw last month President Biden pretty much bring it even he was winning or even in the russ Belt states, the blue Wall states we call them of Michigan, Pennsylvania,
and Wisconsin made it, gave him a fighting chance. But now we're seeing in this month, in the April poll sort of reversion back to the mean what we had been seeing all along, with former President Trump having across these seven battleground states as six point lead, and that's significant. Biden can't win this without getting at least those Blue Wall states and probably another one. And he's now down in Pennsylvania within the margin of error, but significantly down
in Wisconsin. Michigan. Interestingly, is this bright spot And who would have known, because there are a lot of concerns there about a large population of Muslim voters. Union workers, but he seems to be holding his own there.
Gregory, what are the key drivers are key influencers in his poll? What kind of moves the numbers around?
It's really the economy And with that you see that with any incumbent president, their numbers move up and down with the economy. And what we're seeing in this poll is deep pessimism about where we're going to be by the end of the year. You see here the numbers of majorities think that the inflation rate is going to be higher by the end of the year, that the economy overall is going to be worse, and also that interest rates are going to be higher by the end
of the year. Now, these are these are voters talking, and they're they're sort of giving us their perspective within this political framework where this this might differ a little bit from the University of Michigan survey when we're talking to consumers and people making different kinds of decisions. But the fact that President Biden is so tied to the state of this economy and that people are pessimistic about the economy is not a good sign for the president.
This is so fascinating to me, is somebody who covers the economy just like, I mean, this is something wait, you know, Gregory, we're no stranger to this, but just like the mismatch and like where the economy is actually performing and how people actually perceive it to be performing. And it's so interesting to me that like this mismatch, I guess when you say to me that you know that majority of swing state voters see the economy worsening,
I just wonder what metric are they referring to? And I know that they're not looking at the economy based on like, oh, well, we think manufacturings is but like what what what are they looking at? Is it really just inflation?
Yeah, voters look at the economy differently than economists. And one of the interesting things even in this poll, there's an inconsistency and it's a little inscrutable, but when you ask people about the national economy, two thirds of them to say it's bad. When you ask people about their local economy, a majority say it's actually pretty good. And so people are differentiating between their own personal economic situation
and what they see in the economy. Writ large. Why is that It may be because of their king off of negative political coverage. It might be because we have this political polarization where when they're saying the economy is bad, they're really trying to make a statement about the president who they don't like. It may just be that they view inflation as a national issue and inflation is high.
On one pointed, they might see as a local issue because they have a job and their neighbor has a job, and so they might see as local issue and so therefore their local economy is doing well. There's a lot to parse out there, but certainly people are giving us mixed signals about the state of this economy.
What do you think the Biden administration needs to do? Perhaps differently, going to Molly's point about saying, hey, the economy is in pretty darn good shape. Here's what we've done. How do you think they should be messaging this.
They have been trying with that message for months now, and it's been a tough message to get across. At one point, they tried to take this pejorative label of the economy that Republicans try to brand it with of Bidenomics, and turn that into a positive. That did not work. They did not change the public perception of Bidenomics. They
moved a little bit away from that messaging. Right now, they can talk all they want about the Infrastructure Bill, the Inflation Reduction Act, the Chips Act, all these things that we know we've been tracking is starting to make a difference, and we'll make a difference in manufacturing on sharing a lot of technology. But those aren't really resonating with people. People don't really connect with bills being passed. They want to see actual stuff getting done, and some
of that is on a longer time ramps. So maybe it's just giving it time. We have six months now, But the problem for Biden is that now the second quarter of an election year is really when people start to make up their minds about the economy, really sort of solidify how they think the economy is, and they're going to carry that with them into November.
Thanks to Gregory Corti, Bloomberg News White House and Political Correspondent.
Coming up on the program, a conversation with Astra Zenega CEO Pascal Sorio on quarterly earnings.
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Paul Sweeney and I'm Mollie Smith filling in for Alex Steele. Now we're going to move to the aerospace industry and Boeing, the planemaker, said had burned through nearly four billion dollars in cash in the first quarter, and its cash use also wasn't as bad as the four point four billion dollar outflow that analysts had expected.
But Boeing is still seeking to resolve concerns around the quality of its manufacturing following a near catastrophic accident on January fifth. For more on all of this, we were joined by George ferguson Bloomberg Intelligence, senior Aerospace, Defense and Airlines analyst.
We first asked George for his key takeaways from Boeing's quarterly report.
We did see cash burn for one que, you know, combined with capex free cash flow usage, well a three point nine billion CFO had sort of told us that we would see something between four and four and a half billion. That came in light of that. But you can't live here long, right. I guess the big takeaway here too, is that there's about seven billion dollars in cash and equivalents on the balance sheet. That's dwindling pretty quickly.
They paid four point four billion I think it was in debt during the quarter, so something has to happen, right, They want to buy Spirit erow Systems. Out here, all kinds of conflicting reports, but essentially I think it's you know, there's a lot of challenges around negotiating getting airbust out of Spirit Aerosystems, so Boeing can buy it. They've talked about using cash to buy Spirit or I guess debt.
Maybe.
I think it's a company doesn't want to add a lot more debt to their balance sheet. Spirits market cap around four billion, you only have seven billion left in the balance sheet. Something's got to happen. You got to raise some capital here. You can't do this all cash or you got to use Boeing stock and just the numbers they're getting small, right, the cash numbers are getting small.
You're running out a runway here. They need to come up with this plan with the FAA and how they're going to staybleize production, start building airplanes, start generating cash because you can't do this many quarters.
So, George Lyne, do you think that there's a risk that we could be hearing about some kind of financing activity from Boeing coming up? I mean, like you just said, I mean, it's I think it'd be kind of hard to envision them doing a debt sale right now. That sounds like a little bit of maybe a red flag to me. But if they would do, I don't know, the equity is not worth a whole lot, Like what do you do from here?
Yeah? So agreed. I think you know what I heard from you is that could be hard to do a debt deal here. I think so. I mean, I think they wouldn't let four point four billion get repaid without sort of plumbing the markets and thinking about whether they would do an issuance here. But you wouldn't want to raise equity here. I feel like it'd be hard to raise debt. You got a lot of money wrapped up
at inventory on the balance sheet. Airplanes that have already been built haven't been delivered to customers that they've done. They've shipped some of those in the last quarter, which is free up some cash. But I think you really got to get the manufacturing, you know, process going again and genering cash that way. I think that would get folks more comfortable about giving more debt or equity.
I don't know, I could get a debt feel done in this marketplace. You personally, Paul, I could go sell some bowing debt back the day if I had my seat back, maybe some investment debt, sure, no problem, all right, Hey, George, Boeing's customers, the big airlines, what are their needs these days? Do they need more aircraft? Like if Boeing was it fifty or sixty percent production, would there be demand there for that?
They need more faster as soon as possible. I guess. Look, I think if you take United as as you know, one of the core customers, you know there's sort of a there's a demand to fleet refresh around the world.
Right.
The new Max is fifteen twenty percent more efficient, than the old seven thirty seven or the A three twenty. Airlines want that efficiency as soon as possible in their fleets. The market I think is is going to is looking fairly competitive. It may not, you know, this summer may be a little bit less competitive than we expected, given Boeing's problems and some of the geared turbofan problems at raytheon that knocks on airplanes out of service. But fuels rising,
airlines want to be very competitive. They need the most fuel efficient aircraft, so they want them as soon as possible. And like in the United's case, almost everybody is increasing size. Right. Size of aircraft are rising because pilot's got twenty percent plus wage increases, you got to find a way to drive down costs. One of the things you always do is increase aircraft size, and therefore you're flying more passengers for the same cost of that pilot up front. That
helps you improve efficiencies. They all want it, so they're all trying to find bigger aircraft to fly with more seats. And so yes, airlines want airplanes as soon as possible. If you're a Boeing customer, what also really ticks you off is you look across the street at the folks flying the Airbus airplane, and they probably have little to
know in eruption this summer. In their schedules, you're worried about what deliveries you're going to get and your ability to fly your schedule, and that hurts if you're the bowing custom Right, the airbus customers are smiling.
Our Thanks to George Ferguson Bloomberg Intelligence Senior Aerospace, Defense and Airlines analyst.
We moved next to the pharmaceutical industry in Astrazenica, the company reported profit that beat analysts expectations. This was due to demand for its blockbuster cancer.
Drugs, from where we were joined by astro Zenica CEO Pascal Sorio. We first asked for his take on the quarterly results.
We had a tremendous start of the year. Actually I said it's our revenue. I should say glu by nineteen percent. But the exciting piece was that every portfolio of products Golovia is strongly oncology plus twenty six percent to five billions for the quota, cardiovascular twenty three percent, rare disease sixteen percent, goals, geo geographies gu nineteen percent. In the US and Europe. The most remarkable was forty percent goals in the emerging markets outside of China, and China itself
is returning to growth. So really a very very strong start of the year. And beyond the financials, our portfolio, our pipeline is making a tremendous progress and we start a new face rituals and we announced very positive results in particular in oncology, which we present to the ASCO in Chicago very soon.
Yeah, you've got an investor day coming up next month, and it seems like like you just said you're going to discuss the pipeline, including the timing of future treatment and their revenue potential. So can you give us a little seat peak now for some of us who can't wait.
Yes, exactly. Actually, Marti, thank you for that question. What we're going to try and show to investors is that we can be a strong growth company not only for the next seven HS to twenty thirty, but even beyond that. And so the growth over the next period of time to twenty and thirty is going to be driven by what we have in our hands today and what is going to come out of our Face three pipeline very soon. So We're going to add pact attention to investors of
investors to the major growth drivers. We're going to show them where consensus is actually underestimating some of our products and the opportunities we have in our pipeline. We have a very large pipeline of new projects and some of those are underestimated. Beyond that, we will also want we also want to show investors what our strategies and what
our plans are for the long term. We've been investing in new platforms, new technologies which we believe will shave the future of medicine in cancer, immune diseases, and beyond, for instance, sales therapies, gins therapies, antibody drug conjugates, radio conjugates. So really this is our goal show people that when we are focused on today, but also tomorrow to twenty thirty and the long term.
Pascal I always joke to people and I say, in my next life, I want to come back as a healthcare m and a banker, because it seems like every Monday we come in and pharmaceutical company A is buying pharmaceutical company B or biotechnology company C. How does MNA growth via acquisition fit in with your growth strategy vis a v organic growth that comes from your own in house R and D.
We identified a number of years ago the technology platforms of the future, as I said a minute ago. So if you look at Seales Therapy, for instance, we have our own internal efforts and we've been complimenting this with acquisitions or licensing agreements. Particular, we bought a cell therapy company and that is bringing us technologies but also products, and we've been putting all of this together to actually build a portfolio of products in cell therapy, engine therapy,
in ultiboty, drug conjugates, and beyond. So we target small to mid size Barton acquisitions. That really has been our strategy, so we can integrate them much better and then we can add value along the way.
Before we launch Pascal. What can you tell us about drug prices right now? I mean, this is such a sensitive topic here in the US, especially in an election year, something that's really close to the heart of so many consumers and voters. I mean, how can can you tell us a little bit about the pricing strategy? And you know, are people able to afford a lot of these medications?
You know, it's important for us of all to remember that in the United States. Of course, you know, price is an issue like everywhere in the world, but in the United States, patients have access to innovative medicines that can save their lives much faster than in Europe or in other parts of the world. Innovation is reywilded and access is much faster now. Price is definitely a consideration.
Of course. The IRA, of course has some challenges and some issues we are trying to work to addrese but there is also a big benefit for patients, which is that starting in twenty twenty five, there will be a copy cup. Patients will not pay more than two thousand dollars a year. We are on Medicare path deep products and this year it's two three sizand five hundred and
six hundred dollars as of max. So ultimately, if your MEDICA patient, you will not pay more than two thousand dollars a year for your medicines, regardless of how many medicines you have and how much the cost. So that will be really an enormous progress for patients. And of course some of these rebates that are discounts that are
required to compensate for this, we will be paying. But suddenly we see that as a big improvement for patients and hopefully also an incremental revenue for us because patients will be able to afford their medicines and take them and stay on them longer. So you know, win win, really better for patients and hopefully better for the industry as well.
The PASCAL I'm looking at the on the Bloomberg terminal, the PGeo function which shows me kind of your revenue by segment, and I see that oncology is your biggest revenue line there about thirty seven percent of total revenue. What are the opportunities there in your oncology is I know it's a competitive business, but what do you have in the pipeline? What do you have to bring to market? How do you think about that business?
Yeah, ourcology portfolio of products go by twenty six percent in the first quarter to five billion dollars in the quarter. So we are on a very strong trajectory, driven by a number of products that we have in a portfolio for lung cancer, breast cancer, prostate cancer, or variant cancer.
And there's more to come. And the future of oncology really is about combination therapy, combination of antibody drug conjugates, as I said before, those products that target the tumor cells and deliver a toxin at the site of the tumor cell and essentially kill the tumor cells without affecting the helcy cells around, and combining this with immuno oncology products, and then in long run, adding cell therapy to this. So there's an enormous amount of innovation that's going on
in cancer. The bilogy of cancer is being improved very rapidly, and as a result, new medicines are coming up. There are still cancers, unfortunately, that are difficult to treat, but one of the other aspects of cancer that is very important is diagnosing patients early so you can intercept the disease early. If you look at breast cancer, mamographies have really helped diagnose breast cancer very early and survival right at five years is ninety nine percent when patients are
diagnosed early. Lung cancer is the opposite, diagnos too late, So there are no technologies that will enable to patients and doctors to diagnose cancer very early and treat it only. So the combination of these plus new treatments gives us hope that there is a possibility that in the near future we could actually cure cancer or turn it to a chronic condition that people can live with our.
Thanks to Astrozenica CEO Pascal Sorry.
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