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AstraZeneca PLC (AZN 1.06%)
Q4 2019 Earnings Call
Feb 14, 2020, 7:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good afternoon. Welcome, ladies and gentlemen, to AstraZeneca's presentation, conference call and webcast for investors and analysts.

Before I hand over to Pascal Soriot in the auditorium, I'd like to read the Safe Harbor statement. The company intends to utilize the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Participants on this call may make forward-looking statements with respect to the operations and financial performance of AstraZeneca. By their very nature, forward-looking statements involve risks and uncertainty and results may differ materially from those expressed or implied by these forward-looking statements. The company undertakes no obligation to update forward-looking statements.

[Operator Instructions]

I'll now hand you over to Chief Executive Officer at AstraZeneca, Pascal Soriot, as the meeting is about to start.

Pascal Soriot -- Executive Director and Chief Executive Officer

Good morning, good afternoon everybody. Hello, everyone. It's Pascal Soriot, the CEO of AstraZeneca. Welcome to the full year and fourth quarter 2019 presentation, conference call and our webcast for investors and analysts. We are live in London. As always, our presentation is available on Astrazeneca.com and we've also sent it to people on our distribution list.

Please turn to Slide 2, this is the safe harbor statement. We will be making comments on our performance using core financial numbers and at constant exchange rates or CER, which are both non-GAAP measures. We will also discuss other non-GAAP measures deemed helpful for investors and analysts. For a reconciliation between non-GAAP and GAAP measures, please see the results announcement issued this morning.

And finally, all numbers as always will refer to million US dollars and growth rates will be at CER and for full year 2019, until -- unless we state otherwise.

Please turn to Slide 3. We plan to spend about 40 minutes, 45 minutes on the presentation and stick to our time so that we don't go over the time. So we have enough time for Q&A.

For those on the phone, please join in the queue for questions by pressing star one. There is also an option to ask questions as part of the webcast. Because we would like to provide everybody with an opportunity to ask questions, we would like to ask you to please limit yourself to one question in the first one. I know I ask this every time and I'm never successful, but let me try again.

Today, I'm joined by the usual team Dave Fredrickson, our EVP for Oncology; Ruud Dobber, our EVP for BioPharmaceuticals business unit; Marc, our CFO; Jose Baselga, who is the VP in-charge of Oncology R&D and Mene Pangalos, our EVP in-charge of BioPharmaceuticals R&D. We also have with us from Shanghai, Leon Wang, who is our EVP for the Emerging Markets, including China, and we also have other members of the team here in the room to address some of the questions. Leon, will be with us via video conferencing, you can't see him, but I can see him and we'll call him in and you'll see him when I call him in, if you have questions for him.

Please turn to Slide 4. This is the agenda.

And if you don't mind. Please turn to Slide 5. So as we enter 2020 and a new decade for AstraZeneca, we remain firmly committed to our strategic priorities from last year. We are delivering growth and leadership in the three therapy areas that we have chosen to focus on. If you look at the numbers presented today and the continued growth in the guidance. We are pleased to be leading growth in oncology, cardiovascular, renal metabolic diseases and respiratory diseases. In the same therapy areas, we've launched a number of new medicines in the year and we also have an extensive pipeline in Phase 3, Phase 2 and in Phase 1. We'll talk more about this later today. And outside the main therapy areas, we are also advancing technology platforms and our data science.

Finally, and really consistent with our strategy -- described in 2013, we want to remain a great place to work for our 70,000 colleagues around the world. In recent surveys, we continue to improve on this goal. Lately, I'm very proud to have observed the resilience of our colleagues in China, they're doing a fantastic work and we all are with them, supporting them through this challenging times. And I'm sure we will be getting through this coronavirus outbreak, and I'm sure you will have a few questions for us.

So if you turn to Slide 6. 2019 really was a milestone for our return to growth. We have delivered six consecutive growth, a quarterly growth over the last period of time. And this really accelerate -- allowed us to accelerate our strategic transition with an increasing focus on sales and ongoing collaboration revenue. For example, core operating income was reduced by 26% in 2019. So we told you, we are returning to underlying growth of our core products.

Total revenue increased by 13%, collaboration revenue was down by 20%, including a lower level of option payments from Merck, but more revenue from sales milestones as Lynparza become a blockbuster medicine. In the quarter, sales growth moderated to 9% as we had anticipated and we had told you earlier in the year, last year and we ended up at 15% for the whole year. We saw a strong performance across the therapy areas and across individual medicines. New medicines grew by 62% and we added almost $4 billion, actually $3.8 billion precisely in 2019. The result was driven, as you know, mostly by oncology, up by 47% and by the emerging market that were up by 24%, but every therapy area did well.

During the course of 2019, we saw countries outside China that contributed more to the emerging markets, which increased the diversification of our sales performance. In the fourth quarter, respiratory ended the year on a high note and we anticipate this to continue in 2020, while oncology which has higher penetration rates in some countries like the US and Japan. This highlights the portfolio benefit of our therapy areas and our diversified strategy across the three main tiers.

Core operating costs increased by 7%, as we continue to invest in launches and in the emerging markets in particular. We continue to monitor our costs, while remaining opportunistic and entrepreneurial. As a result, we saw an underlying increase in operating leverage, including the impact of the Epanova inventory writedown of about 2 percentage points, core operating profit increased by 13%, core EPS came in at $3.50, with a tax rate of 20% as we had indicated at the last quarterly results.

For 2020, as Marc will describe to you, we anticipate another year of strong growth. However, we also need to take into account the situation with coronavirus in China. So we anticipate total revenue to increase by high single-digit to a low double-digit percentage. And when it comes to core EPS, we anticipate an increase of mid to high teens percentage.

As I mentioned last quarter, 2020 is a transition year. We'll continue to invest in R&D and our pipeline, but the organization is also supporting a number of ongoing launches actually quite a large number of launches and we are expanding in hematology and renal diseases, where we have limited presence or have limited presence until today. After this year, we anticipate a steadier state and we reiterate -- reconfirm our commitment to a core operating margin in excess of 30% from 2021. We continue to have the ambition of covering the dividend next year and this year, also excluding the payments linked to the Daiichi Sankyo transaction.

In short, I would say that all our financials are on track and our goals are unchanged and in line with what we've said in the past, so very much in line with previous communications. Finally, the pipeline delivered an unprecedented level of positive news during 2019, were confirmed in 2000 -- in the last quarter as you saw. This trend we expect to continue this year and next year based on what we know today and the pipeline update that we will share with you later.

So if turn to Slide 7. So if you look at the pipeline news flow since the results announcement last October, I'd like to pick only a few highlights. For Imfinzi, we moved forward with regulatory interactions, for the CASPIAN indication in small-cell lung cancer and as you know we got Priority Review in the United States, which reflects the strength of the data.

Lynparza achieved several milestones, including submissions in the US and elsewhere, but importantly a Priority Review in the United States for ovarian cancer in combination with Avastin. And also we filed as a monotherapy for prostate cancer. Together with our partner Daiichi Sankyo, we received approval in record time for HER2 -- in third-line HER2 positive breast -- metastatic breast cancer. And we've also received encouraging data in metastatic gastric cancer and we are now pursuing regulatory submissions wherever we can.

Calquence won US approval in CLL and is off to a strong launch. Interestingly, we got approval also in Australia and Canada at the same times for the Orbis process, which reflects not only on the product itself, but the great job that our regulatory teams are doing around the world.

If I move to BioPharmaceuticals, Farxiga made very good regulatory progress in heart failure, including another Priority Review in the United States, a really very strong data there. And we had a US regulatory submission acceptance that for roxadustat with our partner FibroGen in chronic kidney disease. So before I leave the pipeline I want to extend my thanks, my sincere thanks to all our colleagues around the world, in particular, our R&D colleagues globally who came together in 2019 into two R&D units oncology and BioPharmaceuticals. We should never underestimate the changes or the impact that a change like this has on peoples daily life and despite this, they delivered this absolutely outstanding results. So we are all very grateful for the continued innovative science and the progress that the team is making for patients.

Please turn to Slide 8. So, with 15% growth in 2019, 9% in the quarter, in the last quarter, we closed the year with six consecutive quarters of growth. We continue to see some variation from quarter-to-quarter, fourth quarter was impacted by an adverse price adjustment in Japan for Tagrisso. And also negative impact of US gross to net adjustment, but also -- but we had continued goals in total prescriptions. On the other hand, respiratory with Fasenra, Symbicort and Pulmicort delivered a strong finish in 2019, which really bodes well for 2020. In CVRM, we saw continued progress for Farxiga and Brilinta.

New medicines continued to make an impact on growth, as I said earlier, $3.8 billion of incremental sales in 2019 versus '18. Importantly, as we look forward, we definitely are expecting in the US slower growth rate for products like Tagrisso and Imfinzi in Stage III lung cancer, because we have high penetration, but we now will see larger contributions from products like Calquence in CLL, Lokelma in hyperkalemia and for many other launches as well.

So based on the performance in '19, we now have nine blockbuster medicines, more or less a doubling over the past few years, with Lynparza joining in the list after a strong year. And that really drives further diversification of our portfolio and a broad-based growth that should ensure sustainable future growth.

If you look -- if you turn to Slide 9. You will see here the growth, the sales by TA and by region. As we discussed in the past, we've achieved a more diversified and a more sustainable top line in the new company. Beyond the broader, our revenue base from therapy areas and medicines, the geographical spread of the business is really continuing to benefit us. All therapy areas grew by double-digit percentages in 2019. And all, but New CVRM achieved the same for the fourth quarter.

The Emerging Markets had a tremendous 2019, with 24% growth, including 35% in China and 12% in the other emerging markets outside China. This market showed great progress in 2019. And as we manage the situation around the coronavirus, this increased diversification is really truly a plus for our company. When we look at the company now, we operate in areas of high unmet need with an opportunity to address serious diseases that impact patients and the healthcare system around the world. From a business viewpoint, we're also in areas with growth opportunities as we improve patient outcomes. We're even more globally oriented than the past, but also -- through the business, but also through our colleagues and our presence in more than 100 countries around the world and very strong teams in each of those countries. And as we look ahead, the guidance for 2020 provides confidence for continued expansion. We see really clear opportunities for late-stage pipeline and our medicines under our registration to strengthen our continued growth. Please turn to Slide 10. Before ending my introduction, I wanted to reflect on the good progress we've made on our sustainability journey. As a sustainable company, our commitment to society, to people in the planet lies at the heart of everything we do, and we believe climate change is an urgent threat to public health, the environment and the sustainability of the global economy as you all heard Larry Fink described and many companies, including us have received letter recently reinforcing that message to us.

Since 2015, AstraZeneca has reduced our carbon emissions from operations by almost a third and our water consumption by almost a fifth. However, we recognize it is really not enough and we decided to step up our progress toward reducing our carbon footprint. Pharmaceutical companies, as you can see on this graph is relatively carbon intensive industry and we need to do more. We as a company, we as an industry together with the broader economy, we need to actually do more. At the World Economic Forum in Davos, there was a lot of talk about climate change. A lot of companies are really getting engaged in this and we announced our ambition zero carbon strategy to speed up our reduction -- the reduction of our impact on the environment. We want to be carbon zero by 2025 and for our own operations and carbon negative by 2030 for the entire value chain. Some people say, it's a very stretch goal that we may or may not achieve. But as you know, we are used to stretch goals, and so this is another stretch goal we've given ourselves, and we plan to invest up to $1 billion over the next 10 years to achieve these goals, and also as part of it develop the next generation of respiratory inhalers powered by propellants with near-zero global warming potential.

So it's really pleasing to see that our efforts to cut emissions mitigate climate risks and develop this low-carbon economy and sustainable management of resources are being recognized. CDP, a global environmental non-profit organization that measures environmental impact awarded AstraZeneca AA listing. We are one of just three companies worldwide to achieve AA listing for four consecutive years. Companies kind of solve issues of public health and the environment by themselves. So, there has to be a joint effort with government, companies, non-governmental organizations to get to a better place and help our planet. We're committed to playing our part. We joined Sustainable Markets Council established by the Prince of Wales and a number of other companies are part of this. We launched this at the World Economic Forum and we're looking forward to making progress for this team. Overall, I'm really proud of the progress we've made in 2019 against our three priorities to access -- our three priority areas of access to healthcare, environmental protection and ethics and transparency.

Thank you so much for your continued interest in our company and I will now hand over to Dave, who will cover our Oncology business. So please turn to Slide 11.

David Fredrickson -- Executive Vice-President, Oncology Business Unit

So Thomas and the IR guys really put a lot of effort into this podium. So I thought that I would use it. It would be a shame to leave it here all by itself. So on Oncology, as we report on sales for Oncology, we reached sales of $8.7 billion, and as Pascal said, that was growth of 47%. And our four new medicines really were the contributors of $2.9 billion of incremental growth for the year. As anticipated, we experienced some softness in the final quarter of the year with our mature portfolio. So we had Faslodex in generic competition enter into the United States. We also saw further competition for Iressa in cannibalization across the globe and then some one-time effects, especially within the US and within China, and we can talk more about that later. In the Lung Cancer franchise, the Tagrisso and Imfinzi launches in the approved indications have progressed as more countries outside of the US have granted approval and reimbursement based upon FLAURA and on PACIFIC. Lynparza continued to cement itself as the leading PARP inhibitor. It became a blockbuster in 2019 as Pascal had mentioned, and we saw more women with first-line ovarian cancer being treated across the globe as we establish a standard of care following on SOLO-1.

With our mature medicines, Faslodex had sales of $892 million for the year. This was a decline of 11%. The impact of generics as I mentioned really taking hold in the fourth quarter, particularly within the US. On the other hand, and I think importantly, we saw growth and strength in Zoladex, really on the heels of emerging markets. Sales were $813 million for the year, up by 13%. Lastly, on the overview slide, in terms of the new launches, we were incredibly pleased of course to launch both in HER2 and Calquence at the tail end of the year. Calquence is now in the CLL launch within the US and although early days, initial indicators are positive for both Calquence and in HER2. In HER2, our new medicine with Daiichi Sankyo for HER2-positive breast cancer, which was approved at the end of last year and which we then had commercially launched very immediately thereafter.

Please turn to Slide 13. So now talking about Tagrisso. It's the company's Number 1 selling medicine. Tagrisso demonstrated continued growth in 2019. Fueled by the first-line launches, sales were up 74%, reaching $3.2 billion for the year. With $1.3 billion in incremental sales, much of that coming from the US, Japan, in the second-line use within China. Out of the 80 first-line approvals though that have been granted to date, only 18 markets have first-line reimbursement, which actually speaks to the opportunities that are ahead of us with Tagrisso in terms of continuing to expand the opportunities with Florida, the rest of the globe. The US ended with sales of $1.3 billion in the year, up by 46%. Sequential sales were adversely impacted by previously mentioned one-offs in the third quarter of 2019, including inventory build and gross-to-net adjustments in the fourth quarter, though the underlying demand growth continued as we reached a high level of penetration in the front-line at the exit. Europe reported $474 million of sales with the growth of 59% on the heels of the first-line reimbursement decisions across the region. In Europe, Tagrisso is now the Number 1 prescribed tyrosine kinase inhibitor in new patients in the first-line setting. In emerging markets, Tagrisso had $762 million in sales. And as anticipated, China sales in the fourth quarter were impacted by the customary end-of-year destocking that we see in hospitals as they manage their annual funds. Nevertheless, underlying demand remained very healthy, and we now have a good level of penetration in the second-line indication, and as a result of the NRDL inclusion in the second-line within China, and we anticipate front-line NRDL this year in 2020. Japan had sales of $633 million as quarterly sequential sales growth was impacted by the previously mentioned 15% price reduction that we took in November in the fourth quarter. And in 2020, we continue to see significant growth opportunities for Tagrisso with the usual deviations that we'd see quarter-to-quarter, but we're confident that Tagrisso will take another step forward in 2020 as more reimbursements are granted.

Please turn to Slide 14. Turning to Imfinzi, but continuing within the lung cancer space, Imfinzi reported sales of $1.5 billion in the year. The majority of those sales coming from the US, which now represents 71% of the total sales that we saw for the year. Global approvals and reimbursements for the PACIFIC indication in unresectable stage 3 non-small cell lung cancer are continuing to take effect. Now the US showed strong sales of $1 billion just for the country itself and we continue to see all of the metrics for post-chemo radiotherapy increase as well as CRT rates are increasing within the US. US quarterly sequential growth was however impacted by some inventory movement in the quarter and we also do see ourselves getting to a natural place of really being standard of care within this stage 3 setting. Sales outside of the US now 29% of the total, continuing to ramp up as we launched and gained reimbursement in more countries. Japan delivered $211 million in sales; Europe $179 million. And in Europe, I think it's worth noting that with Imfinzi, still there are two of the five top European countries yet to get reimbursement, so there's further growth obviously that we've got as a result of getting those to come online, and those negotiations are on the way. We look to grow sales further in the PACIFIC indication by continuing to focus on increasing the number of patients, who might be eligible for Imfinzi by improving chemo radiation rates, further driving Imfinzi utilization post-chemo radiation and expanding the duration of treatment. More countries are anticipated to come online with further reimbursement decisions in the months to come. In China, very noteworthy PACIFIC gained approval in December 2019, so just at the very end of last year. We look for growth from that in the year ahead. And lastly, we are all anticipating further indications from lung cancer with small cell lung cancer throughout 2020 based upon the CASPIAN data.

Please turn to Slide 15. Turning to Lynparza, we demonstrated continued progress with sales of $1.2 billion in the year, up by 89%. This reflected growth across all regions as we continue to roll-out the breast and ovarian cancer indications in the major markets of the US, Europe and also within Japan. Lynparza saw total PARP inhibitor class share increase in the US and continued class-leading performance in all other major countries. US sales were $626 million, up by 81% with continued increase in demand, as we maintained leadership of Lynparza in the PARP inhibitor market both in ovarian cancer as well as in breast cancer. European sales were $287 million, up by 59%, driven primarily by first-line ovarian cancer launches in Germany, also in the UK, while Italy, Spain, France and other countries are still looking to gain reimbursement, but those discussions are ongoing for SOLO-1 in 2020. In the second-line ovarian cancer setting, Lynparza continues to hold strong penetration rates across all major countries. In China, Lynparza was the first PARP inhibitor launched and it's contributed $133 million in sales in the emerging markets in the year. The second-line indication was added to the NRDL last December in ovarian cancer and thus is expected to drive growth into 2020. Finally, Japan delivered $130 million in sales in the year following the launches in ovarian and breast cancer. We anticipate a further price cut though this April due to the market expansion, or pricing rules, those are similar rules as those that affected Tagrisso in November of last year. And then, as a reminder, Lynparza also generated significant value through collaboration revenue. And in the future, collaboration revenue for Lynparza for HER2 through our profit share with Daiichi Sankyo will become an increasingly sustainable source of value creation that we will start to include in our reporting by medicine.

If you can now turn the slide to 16, and we're going to talk for a minute about the new launches, Calquence in chronic lymphocytic leukemia and in HER2 and third-line HER2-positive metastatic breast cancer. I'm really pleased to announce and report that Calquence sales of $164 million in the year predominantly within the US with the new label in CLL taking effect at the end of November 2019. The launch feedback has been really quite encouraging, as the very promising Phase III data from ASCEND and ELEVATE-TN are really resonating very well with physicians and we've got good responsiveness to the benefit risk profile that we are able to offer to patients in this setting. We're also really encouraged to see expansion in our prescriber base beyond the prescriber base that we had seen utilizing the medicine in MCL with around 60% of all new patient starts in CLL coming from new Calquence prescribers. In HER2, following the approval at the very end of 2019, the first sales to wholesalers were achieved on the 31st of December and the first patient was infused two days later. We've seen multiple hospital and community customers coming on board as early adopters and initial feedback from physicians is strong as we bring the first new medicine to patients in this setting in many, many years, addressing a large unmet need. A safety monitoring program is also in place and early feedback suggests that the management of key safety aspects is also really well understood and we look forward to bringing in HER2 to more patients throughout the year as momentum builds following the positive gastric data that we just heard a few weeks ago. Before ending, I'd like to thank all of our oncology colleagues around the world for making a difference every single day to the benefit of patients into our company. I think the work that was done over the holiday break between December 20th and HER2 approval and in early January, first patient being treated demonstrates the commitment that our US colleagues during Christmas and New Year made to making sure that they put patients first in our lives. And I think that that's absolutely testimony to the mission at AstraZeneca.

And with that, I'll now turn over the podium to Ruud Dobber for an update on our BioPharmaceuticals business and Emerging Markets.

Ruud Dobber -- Executive Vice-President, BioPharmaceuticals Business Unit

Thank you so much, Dave. Today, I'm very pleased to talk to you about the BioPharmaceutical business. Total sales of BioPharma, comprising New Cardiovascular, Renal and Metabolism and Respiratory, were $9.8 billion in the year, growing at 13%. It has now been one year since the integration of the BioPharma business unit and we are pleased to have made strong progress across the board. We have achieved double-digit growth in New CVRM and Respiratory as our new medicines continued to thrive.

Please turn to Slide 18. As you see here, we are very pleased with the continued growth of Farxiga and Brilinta, the ongoing successful launch of Fasenra, and the recent launch of Breztri in Japan. In the established respiratory business, Symbicort and Pulmicort delivered encouraging performances and continued to grow. We look to build on this overall growth in 2020, including further launches of Lokelma and later in the year for roxadustat.

Please turn to Slide 19. Moving to New CVRM, sales were up by 12% despite intense competition in Diabetes, with total sales of $4.4 billion. Growth for both Farxiga and Brilinta continued with double-digit increases globally. Farxiga delivered sales of $1.5 billion with 14% growth, maintaining volume market leadership globally, while benefiting from the SGLT2 class growth. In the US, Farxiga saw a reduction of 9% as price declines took effect, though volumes continued to grow. Outside the US, which accounts for 65% of sales, we saw very encouraging performances with volume-driven growth increasing. European sales were up 25%, driven by the DECLARE cardiovascular outcomes data and Emerging Market sales were up by 48%. Bydureon sales were down by 5% at $549 million. We returned to growth in the last quarter following the impact of production constraints in the first half year for the Bydureon BCise device and declining volumes for the dual-chamber pen. Brilinta delivered sales of $1.6 billion with 23% growth driven by a strong performance in the emerging markets, up by 49%. We also had continuous growth in the US and Europe, up by 21% and 7% respectively. Brilinta continues our growth in market in all regions. And we also note the recent positive THALES trial in stroke.

Please turn to Slide 20. Turning to Respiratory, we saw our first year of growth since 2014 with 13% growth in the year, driven by Fasenra, Symbicort and Pulmicort. Symbicort was stable in the year at $2.5 billion and saw growth returning in the second half of the year. The fourth quarter was up by 13%. This was driven by easing of US pricing pressure, growth in Japan and in the emerging markets. The latter up by 17%. Many countries, such as Russia, South Korea, and Mexico saw double-digit growth in sales. Globally, Symbicort remained a leader in volume market share in the ICS/LABA class and became the value leader as well. Pulmicort was up by 18% with sales of $1.5 billion with emerging markets up by 24% as the driver of this growth, particularly in China.

Please turn to Slide 21. Now, I will focus on the new launch medicines. Fasenra contributed $704 million of sales, with the bulk continuing to come from the US, Germany and Japan. In the US, Fasenra is performing very well against new competitors with $482 million in sales. Europe and Japan sales were $118 million and $86 million respectively as Fasenra continued to be the leading novel biological medicine for severe uncontrolled asthma in several countries. The self-administration Fasenra Pen auto-injector device will become an additional opportunity for growth in the US and Europe. We are also currently launching PTO10, known as Breztri Aerosphere for COPD in Japan, which is going well and China is launching relatively soon as well. Regulatory reviews in the US and in the EU are progressing with anticipated decisions in the second half of 2020. Lokelma had sales of $14 million in the year as the US launch recently commenced and has already surpassed the competitor in new-to-brand prescriptions. Similar success has also been achieved in some of the other countries, especially in Europe. Now, move to the Emerging Markets.

Please turn to Slide 22. Emerging Markets, where sales grew by 24% in 2019, continued to track ahead of our long-term performance ambition, which is to grow sales on average by mid-to-high single-digit percentage. Outside China, overall sales were about 12%, with growth spread across all the regions. China delivered another very strong year with 35% growth and finished on strong fourth quarter with 28% growth and with the new launches continuing to take effect. As in previous years, there was a slowdown in the final quarter. The addition of Lynparza, Farxiga and roxadustat to the NRDL effective January 2020 will start to make a favorable impact on sales moving forward. New medicines grew by 84%, contributing 23% of total sales in the region with a strong performance spread across our main therapy areas. Overall, Oncology was up by 52% in emerging markets, driven by Tagrisso. New CVRM was up 41% with key contributions from both Farxiga and Brilinta. And finally Respiratory sales were up by 27% with Pulmicort and Symbicort leading.

Please turn to Slide 23. The potential of emerging markets is unchanged, and the markets continue to be of a large strategic importance. Despite the impact of the coronavirus right now in China, we generally anticipate to continue outperforming the long-term trends with average sales growth in the emerging markets to be as high as low-double digit percentage per year. As Pascal said earlier, we remain impressed by the resilience of the leadership and colleagues in China, given the coronavirus challenges in the country.

And with this, I will hand over to Mark.

Marc Dunoyer -- Executive Director and Chief Financial Officer

Thank you Ruud and hello everyone. I want to take you through our financial performance in the year and the fourth quarter as well as our financial priorities and our guidance for 2020. But before I do that, I would like to provide a summary of our 2019 Finance achievements. With the progress we are making, it is right to recognize the work of so many of our colleagues, who have achieved a great deal in this year. I've listed some examples on this slide. In Finance, we have gone through a transformation program the last three years. From a multiplicity of divisional financial systems, we consolidated everything into one planning and reporting tool. I think a better grasp of the single source of tools was the first objective. We have also built new functionalities, such as project accounting across the whole company. This new system enabled us to rapidly adjust to the organization changes, such as the one we put in place in our R&D. Overall the Finance team can dedicate more time to supporting the alliances that we have set up with Merck, Daiichi Sankyo, or FibroGen for instance. On the front of new technologies, we have now 100 robots in use, not only in Finance, but across the whole company, in HR, Medical, Commercial and R&D, and we are learning to generate more value added from each robot.

Please now turn to Slide 26. Turning now to financial performance, I will start with the reported P&L before reviewing our core results. As Pascal mentioned earlier, product sales grew by 15% in the year while around 75% of collaboration revenue comprise payments from Merck in respect of the success of Lynparza. In the future, a growing share of collaboration revenue will represent income from the sales of new medicines through our partners, including in HER2 and roxadustat, in addition to the milestone income resulting from progress of medicines, such as Lynparza. And therefore, we will now guide on total revenue rather than just on product sales to reflect these changes. We will continue to provide detailed financial information on our direct product sales as well as on the collaboration revenues. Looking further down the reported P&L, operating expenses increased by 14% in the year. On top of the increase of core operating expenses, that I will refer to in the following slide, part of the increase was due to an intangible asset impairment for Epanova.

Please turn to Slide 27. Moving to the core P&L, our gross margin was broadly stable at 80%, but was negatively impacted by around 0.5 percentage point from the impact of a provision regarding Epanova inventory. Core operating expenses grew by 7% in the year with core R&D expenses up 4% as we invested for the first time in HER2. Core SG&A expenses increased by 8%, driven by additional investment in the channel expansion and further support for new medicine. The sum of collaboration revenue and core other operating income fell by 25% to $2.4 billion from $3.2 billion in 2018. Other operating income will remain a significant part on our P&L in 2020 and beyond as we need to include, for example, the funding by Allergan of the development cost of brazikumab, IL-23 antibody that we recovered recently subject to regulatory approval in closing. With the core tax rate of 20%, a rise in net finance expenses reduced divestment activity and a higher number of shares, our core earnings per share ended at $3.50 for the year.

Please turn to Slide 28. Turning to net debt and cash generation. Our net debt, adjusted for IFRS 16, declined by $1.6 billion to $11.9 billion at the end of 2019. We had higher-than-average level of purchase of intangible asset, highlighted by the first upfront payment in respect of an HER2 as well as the final true-up payment of around $40 million to Merck. Capital expenditures remained stable at $979 million. I anticipate a broadly similar level for 2020. Looking at net cash from operations, we made encouraging progress in the year. Underlying business performance helped to deliver a cash from operating activities of around $3 billion in the year. This was despite an increase of $581 million in cash tax, reflecting the phasing of tax payment and the impact of tax refunds in 2018. Despite the higher core operating profit and lower restructuring costs in 2019, our reported EBITDA was much lower due to higher legal provisions in 2019.

Please turn to Slide 29. This familiar slide continues to demonstrate how we are progressing from the reconstitution of our pipeline to return to growth. We are now in the next phase, where we work on our operating leverage. We anticipate the cash flow generation to increase in the subsequent years, which will then help us deleverage our balance sheet further, and over time further revise the dividend policy. Our unchanged ambition is to cover the dividend next year with cash flows generated during the year.

Please turn to Slide 30. Finally, I will turn to the 2020 guidance, which as I mentioned a moment ago, is now on total revenue and core earnings per share at constant exchange rates. As Pascal mentioned, our guidance consider some impact of the coronavirus epidemic. We are presently taking into account an impact of up to few months and we will provide an update at our first [Phonetic] quarter 2020 results. In 2020, like in 2019, we will increase operating leverage thanks to high-single digit to low-double digit percentage increase in total revenue. This is anticipated to drive growth in core EPS of mid to high teens percentage increase. We remain focused on improving operating leverage in 2020. The core tax rate is anticipated to be between 18% and 22%. And as I said earlier, capital expenditure is expected to be broadly stable versus 2019.

With that, I will now hand over to Jose.

Jose Baselga -- Executive Vice-President, Oncology R&D

Thank you, Marc, and good afternoon everyone. I am happy to provide an update on the progress that we have made with our medicines in Oncology and pipeline since the results announcement last October. As usual, I'm joined by my counterpart Mene Pangalos, who will discuss biopharmaceuticals pipeline and upcoming news flows.

If we could turn to Slide 32, please. This is a busy slide, 2019 was a fantastic year for the company's pipeline progression. And as Pascal said earlier, we achieved a remarkable level of positive news from approvals to data readouts and regulatory designations. I would like now to highlight some of these achievements. Starting with our oncology medicines, Lynparza continue to build a solid base, a solid base of data in other tumor types outside of ovarian, including US approval in pancreatic and a positive readout in prostate cancer. Lynparza also secured further approvals in major markets in ovarian and breast cancers. In lung cancer, we gained approval for Tagrisso and Imfinzi in China. Building on the unprecedented data from the FLAURA trial in first-line EGFR mutated setting and the PACIFIC trial in unresectable Stage III patients respectively.

Kicking off our hematology franchise, we achieved first and second line approvals for Calquence in CLL in the US. In CVRM, Farxiga achieved approval in both the EU and the US for the cardiovascular outcomes claim in type 2 diabetes and landmark DAPA-HF data were presented in the early autumn. We also had roxadustat approval in China. Finally in respiratory, we had positive ETHOS data for PT010 and gained approval for both Bevespi and Breztri in Japan, all in the treatment of COPD.

Please turn to Slide 33. Our focus now in -- on recent oncology achievements. With Imfinzi, in addition to the regulatory approval for unresectable Stage III non-small cell lung cancer in China. We also completed regulatory submissions based on the positive CASPIAN trial looking at the treatment of extensive disease small cell lung cancer. Of note, like to let you know that we have already our first patient in China treated with Imfinzi based on this Stage III data.

Lynparza continues to expand lifecycle program, with US approval in the first-line maintenance treatment of BRCA-mutated pancreatic cancer and regulatory submission acceptance in the EU -- and in the EU and in the US, with a Priority Review in the later for previously treated prostate cancer with HRR genetic mutations. The first line ovarian cancer trial in all-comers with Avastin was submitted in Japan and the EU and gained US Priority Review. Selumetinib also gained US Priority Review for the treatment of Neurofibromatosis.

In hematology, we were delighted to see broad CLL approval and we subsequently launched Calquence in chronic lymphocytic leukaemia in the US through the real-time oncology review pilot program. We completed submission for Calquence in Japan and have received submission acceptance in the EU. As a reminder, at the ASH meeting in December, we showed data from the interim analysis of the Phase III ELEVATE TN trial. Calquence combined with obinutuzumab or as monotherapy, significantly improved PFS compared to chlorambucil plus obinutuzumab as standard chemoimmunotherapy treatment, in patients with previously untreated CLL. At a median of 28.3 months, Calquence, in combination with obinutuzumab or as a monotherapy, significantly reduced the risk of disease

Progression or death by 90% and 80%, respectively, versus chlorambucil plus obinutuzumab. The safety profile was consistent with prior trials.

Let's turn to Slide 34 please. And now to Enhertu, our breakthrough HER2 -- our breakthrough medicine in HER2 positive breast cancer that recently gained approval in the US, in collaboration with our partner, Daiichi Sankyo. We received US approval for Enhertu, four months ahead of its scheduled PDUFA date. Based on results from the DESTINY-Breast01 trial, were Enhertu monotherapy saw a confirmed objective respond rate of 60.9%, despite patients having had a median of six prior medicines. Patients achieved a median duration of response of 14.8 months and median progression-free survival of 16.4 months. The median overall survival is still to be reached, with an estimated survival rate of 86% at one year. Recently, we announced top line results for the DESTINY-Gastric01 trial and Enhertu achieved a significant and clinically meaningful improvement in objective response rate and overall survival in patients with third-line HER2-positive unresectable or

Metastatic gastric or gastroesophageal junction cancer. Regulatory submission is planned for the first half of this year.

Let's -- please turn to slide 35. Finally, I would like that you through a quick update on progress on just some of our exciting new oncology medicines in area of development, as we built our key oncology competencies. We have started Phase II trials for AZD9833, our oral SERD for the treatment of estrogen receptor positive breast cancer. We are about to start Phase II trials for our bispecific PD-1/CTLA-4 MED1517, sorry, 15752, which will be assessed for the treatment of variety of solid tumors.

In an expansion of our hematology franchise, we have started Phase I trials for AZD0466, our BCL2/xL inhibitor. We have other medicines in the clinic such as AZD5991, an intravenous MCL inhibitor and potentially differentiated medicine for using blood cancer. And ceralasertib, our ATR inhibitor, which can potentially aid in overcoming PARP resistance when added to Lynparza. We look forward to update you on the progress of these drugs in new due course.

And with this, I'd like to hand over to Mene. Thank you.

Menelas (Mene) Pangalos -- Executive Vice-President, BioPharmaceuticals R&D

Thank you. Every good afternoon everyone. Happy Valentine's Day, hope you enjoy your chocolate treats, again from our IR team.

I'd like to start by reflecting on the synergies in our cardiovascular, renal and metabolism portfolio and highlight the fact that our medicines often treat more than one aspect of a given disease. We continue to work on indications, including heart failure, chronic kidney disease, diabetes, myocardial infarction and NASH, across the CVRM spectrum. For example, patients with chronic kidney disease, often show deterioration in cardiac function resulting in heart failure. Furthermore, is that kidney function continues to decline, patients face an increased risk of developing other complications, including anemia and hyperkalemia, both associated with increased hospitalization and mortality. By understanding the co-morbidities across the CVRM spectrum, we can better position our molecules to improve both patient outcomes and quality of life, as well as supporting healthcare systems globally.

Please turn to Slide 37. I'll now update you on our recent R&D progress made in the CVRM space. We are pleased with Farxiga as it moves beyond diabetes and into heart failure treatment, with regulatory submissions for DAPA-HF completed in all major markets and Priority Review granted in the US. Brilinta saw the submission of the THEMIS data set in Japan and China in the period. And we also recently announced positive top line results for the THALES trial in stroke. In renal, Lokelma gained regulatory approval in China for the treatment of hyperkalemia and roxadustat, our HIF prolyl hydroxylase inhibitor for the treatment of anemia from CKD, received regulatory submission acceptance in the US by collaborator FibroGen. For roxadustat, following the positive high level Phase III pooled analysis that we presented in May, FibroGen and AstraZeneca presented that efficacy at the American Society of Nephrology Kidney Week in November. The analysis, which assess roxadustat as a potential new medicine for the treatment of patients with anemia from chronic kidney disease showed positive efficacy with cardiovascular safety demonstrated in all the studied populations. And as I've said this week, our collaboration partner FibroGen announced the regulatory acceptance for the new drug application to the FDA. And we anticipate a decision in the fourth quarter of this year.

Can we please turn to Slide 38. Turning to respiratory, we made good progress with our health franchises in China through regulatory submission of Symbicort for the treatment of mild asthma and the regulatory approval for our triple therapy medicine, Breztri for the treatment of COPD. At the American College of Rheumatology Annual Meeting last November, we presented the Phase III TULIP program for anifrolumab, a potential new medicine for the treatment of lupus. The second trial, TULIP 2, met its primary endpoint, achieving statistically significant and clinically meaningful reduction in disease activity as measured by an early, sustained BICLA response. The full data set will be part of our regulatory submission in the second half of this year.

Lastly, we announced the recovery of brazikumab in all 23 monoclonal antibody from Allergan. Brazikumab is currently in late stage development for the treatment of two inflammatory bowel diseases, Crohn's disease and ulcerative colitis as you know, Allergan, were paying for the R&D cost to commercialization. We will update you on future milestones for this potential new medicine. We are pleased to have added our 17th Phase III program, subject to regulatory approval and closing.

Please turn to Slide 39. And now for an update on progress on what's next in the pipeline for biopharmaceuticals. If I start in CVRM, we started Phase II trials for our dual-acting GLP-1-glucagon agonist, Cotadutide. It recently gained fast track designation in the US for the treatment of NASH. Also in NASH, our PNPLA3 inhibitors, our first precision medicine for NASH, AZD2693 presented Phase 1 clinical development. In respiratory, we now have positive data from Phase II study of our inhaled SGRM AZD7594 and we'll share that data in due course. We've started Phase II trials in atopic dermatitis and diabetic kidney disease for MEDI3506, IL33 monoclonal antibody, with trials in asthma and COPD also set to continue this year -- to start this year. And MEDI3506 -- sorry, is going to start in asthma and COPD.

Finally, in the second half of the year we'll have data for PT027, our anti-inflammatory reliever, aiming to replace SABA monotherapy for asthma patients. And throughout the year, we look forward to updating on the progress of these medicines and other exciting potential disease modifiers such as dual PI3kinase gamma delta inhibitor and our inhaled JAK1 inhibitor.

I'll now take you through our upcoming news flow across the pipeline. In the first half of this year in oncology, we are anticipating regulatory decisions for Imfinzi in small cell -- small cell lung cancer in the US, Lynparza PAOLA-1 and prostate in the US and for Enhertu in breast cancer in Japan. We would also have data in first line head and neck cancer and first line bladder cancer for Imfinzi and the combination of Lynparza and selumetinib, VEGF inhibitor. We announced positive gastric cancer for in Enhertu last month, with regulatory submission planned for the second half of the year, as I mentioned.

In biopharmaceuticals, we're expecting a regulatory decision for Forxiga's declared label update in China and a decision on the submission of heart failure data Farxiga in the US in the first half of this year and in the second half of the year in the EU, Japan and China. For Lokelma, we're expecting regulatory decision in Japan for hyperkalemia in the first half of the year and we anticipate a regulatory decision in the US for roxadustat for the treatment of anemia in CKD in the second half of the year.

In respiratory, in the second half of the year again we anticipate regulatory decisions for Bevespi in China and for PT010 in both the US and the EU, both for the treatment of COPD. And we anticipate Phase III readouts for tezepelumab in the second half of the year. With so much activity, I'd like to thank everyone here today on the call for their interest and heartfelt thank you to all of our colleagues across R&D for the excellent work they have done in 2019, and I know they will do in 2020.

If you can please turn to Slide 41. Finally, we've updated our epidemiology data pack, which I know many of you're interested in, which can be found in the results and presentation section on astrazeneca.com. This update includes epidemiological information for all relevant indications for our marketed medicines and our late-stage pipeline, which we hope will be useful for your modeling.

I'll now hand back to Pascal for his closing comments. And please turn to Slide 42.

Pascal Soriot -- Executive Director and Chief Executive Officer

Thank you Mene. So we have so much information to share, we are a bit over time. So, we will stop here and go straight to Q&A. So we dedicate enough time for your questions, because it's really very much what we are here for. So who wants to get started.

Questions and Answers:

Unidentified Participant

Thank you. First question for Jose. Your portfolio is very full, but perhaps some of the programs have not progressed as fast as one might have hoped. So when you're thinking through the rate limiting steps, obviously you need data, you need to have the right team, sometimes you have a partner, which can create complexity. Could you help us understand which of those or resourcing even explains why some of those drugs, and I guess I'm thinking historically of the AKT, the SERD, I mean although you're moving fast with the second generation, but it just seems the opportunities that exists to prosecute for some of these drugs are perhaps moving on a slower timeline than maybe ideally what might have hoped? That's the first question.

Second question, there is talk about the Grassley bill coming back, could you talk about the extent this is a negative in terms of intensifying pressure on pricing for drugs like Tagrisso as PBMs have more skin in the game in terms of catastrophic coverage and for Calquence?

And then finally on DAPA-HF, assuming you get approval it seems very likely, what you think would be the speed of uptake given the cardiologists are unfamiliar with this modality, how do you expect the growth rate of Farxiga to be transformed by DAPA? Thank you.

Pascal Soriot -- Executive Director and Chief Executive Officer

So maybe Jose you could cover the first one. And then, Ruud you will cover DAPA-HF ramp up. And I will say a few words on the Grassley bill as well. So go ahead.

Jose Baselga -- Executive Vice-President, Oncology R&D

Yeah, so let me answer to the first question. And these had five questions on it. So I think what you said is absolutely right. When you have a very diverse pipeline with many, many assets there you have -- you're facing a number of risks of perhaps moving things forward as quickly as you could. I think a big solution to these has been to have a unified oncology R&D organization. And since last year, what we have seen is that we have moved three of the Capiva programs all into Phase III. So Capiva now is into Phase III. We are moving this year the SERD program into the late oncology group, so that's already happening. And we are beginning to see some programs such as the PD1 CTLA4 that has been -- has been accelerated in which at the same time, the late oncology and early oncology groups are co-developing the product. So what we are anticipating and what we will do is to improve in our process of prioritization. We have stopped a number of programs last year, and by the way, some of them were absolutely probably fine, but they were not top priority, we decided to accelerate six programs fast and those are moving very quickly.

So I am very confident that this new R&D organization is enabling this kind of fast forward decision making process and you will see that happening. The SERD is a fantastic example of that.

Pascal Soriot -- Executive Director and Chief Executive Officer

Maybe the one thing I would add to this, I mean Jose is absolutely right and that's one of the reasons why we realigned our ourselves to be faster, but if Susan was here, Susan Galbraith, she would tell you on the SERD, we have a couple of other agents that didn't work, that didn't deliver what we were expecting. So, we are refining until we get to -- we got to the agent we have now, which we think is a good one. So that is also a factor, but it's clear we -- in some areas could have been faster.

One of the things we've done lately is, we have three priorities. One is, how do we deliver in the near term, this launches and improving our profitability and our cash flow. Two is, how do we accelerate, what are projects in mid-stage development that we are accelerating not only oncology, but outside oncology. And the third, is really 2025, and the big trends in the industry, digital and other technologies and where do we want to play to be a leader in '25.

So Ruud, do you want to cover DAPA and maybe say a few words about the Grassley initiative. I mean -- I suppose you're referring to the Senate bill, right?

Ruud Dobber -- Executive Vice-President, BioPharmaceuticals Business Unit

Yeah. So, first a few words about the HF opportunity. I think it's very substantial, you've all seen the results, we were granted Priority Review. So as an organization, we are very bullish about the potential. Equally, of course, it will take time for cardiologists in order as you refer, Andrew, in order to embrace this products for -- especially the non-diabetic patient population. What is helping us well at the moment is that guideline committees around the world are very progressive in order to include in the guidelines is a lot of initiatives ongoing in order to get that done. So all in all, we feel comfortable that this will be a very important growth driver, specifically in the United States, we have launched the DECLARE indication, which is the prevention of heart failure only a few months ago. And clearly at the level of the cardiologist, although the numbers -- the absolute numbers are small, we see quite an impressive growth of that segment. So time will tell, but of course, we are very committed in order to make this a great success because of the huge benefits for patients with heart failure.

And then finally the Senate bill in itself. And we spoke about that couple of times in the past, Andrew. Personally, I don't think a lot has changed, every week, every second week, there is a new level of speculation in the US around this Bill. There are a couple of elements of the bill we clearly support, the out of pocket -- capping of the out of pocket is of course clearly is something we can support. The impact, especially on our oncology products or Part D products like Calquence and Tagrisso can be to some extent a substantial equally. It has also a couple of advantage for the biopharma business. So as an organization, I think it's a balanced impact for us at this stage, but I'll close by saying, it's far too early to speculate what is really going to happen there.

Sachin Jain -- Bank of America -- Analyst

Sachin Jain, Bank of America. Question on guide and questions on launches. So '19 sales growth is very strong, some of the key product drivers missed and you've moved away from product sales growth. So there's obviously some level of nervousness. I wonder if you can give some color around the revenue guide, what's your level of comfort with product sales at roughly double-digit growth ex the China impact or is collaboration revenue disproportionate driver of that total revenue growth?

And then on China, have you seen any impact to date? And any color you can give us to what is assumed within the guidance from an EPS perspective, just to give some color.

And then on launches, David you mentioned positive early indicators for Calquence in first-line CLL and for in Enhertu, why don't you give some more color on that for both those products? Thanks.

Pascal Soriot -- Executive Director and Chief Executive Officer

Let me just ask Marc to comment on guidance, but I just want to make sure there is no doubt there is absolutely zero nervousness about product sales. The reason we've moved to total revenue is very simple, is we are -- I mean we went through a period when driving top lines new product sales was key, but we're moving into a period where essentially our long-term strategy of collaboration is starting to have an impact. So we have revenue coming from Enhertu, from roxadustat, from a number of Lynparza, number of collaborations and we need to make sure this revenue is recognized in our total revenue. On top of it, on the very practical front from a governance viewpoint, our Remuneration Committee wants to have a single number that governance and shareholders can recognize. So we said OK, we're going to pick one single number, which should it be. We picked up the revenue. So, but there is absolutely zero anxiety about product sales. Marc, do you want anything?

Marc Dunoyer -- Executive Director and Chief Financial Officer

No, I mean it is absolutely correct. I think the two -- the two lines will in fact grow in unison. The growth rate will be very similar whether you look at total revenue of product sales, but we had as Pascal said, we have to define one variable that we would consider for our guidance and we decided to take the most complete information on total revenues. But I mean, you will see the numbers, they are very, very similar.

Pascal Soriot -- Executive Director and Chief Executive Officer

I would also add that I mean personally, historically I thought revenues, like Enhertu and others will be recognized in product sales. But accounting guidelines are such that basically it is recognized in revenue, but at the end of day those are our product sales, right. And we want to -- we want those revenue to be a recognized. So it's pretty simple. Dave, do you want to cover on Enhertu?

David Fredrickson -- Executive Vice-President, Oncology Business Unit

Sure. So Sachin thanks for the question. Maybe a bit more depth on Calquence since we've had more time in the market on that one. With Calquence, we are really pleased with the launch, we look at the metric that's most relevant as BTKI class new starts, because that's really where we think we've got the most opportunity to make impact in -- BTKIs have been well established in CLL. So we really look at how we penetrated into that. December is the first full month where we've been able to see in 2019, the performance and I think you've got to look at the composition.

So first, we saw good growth in the new patient starts and you all have the IQVIA data and can see -- what you see out of that. I think the part that we see that's important as the composition of those starts. So, in December, the composition of that starts I would say is about 40% to 50% is late-line, which is good in a sense that we have an expectation that we are going to get ibrutinib intolerant patients that are going to be switching and moving over and that's predominantly what this patient population is and we expect that to be part of the business for the long term. The balance of it obviously would have been naive patients, new to BTKI. As we look at the January data and recognizing sort of an early view into it. We're seeing that the number of third-line patients within those new starts is coming down after a very significant increase in December. This is consistent also with what we saw in MCL. And that bolus or warehousing depending upon the language and that set of patients with latent dissatisfaction with the tolerability of their existing medicines switching over. And so I think that we're encouraged to see that the naive patient population is growing in terms of new patient starts on Calquence and we look forward to continuing to watch this trend, but all signs quite positive there.

In Enhertu, just very quickly we see early adoption taking place, early booking of sales coming through. Anecdotally, we are getting very good receptivity from physicians. We're getting into seeing accounts, we're getting listed in EMRs rapidly, we're seeing pharmacies open us up so that we sit on formulary. All of these things happen because physicians have interest in prescribing the drug and when that happens things start moving quickly. It's too early to know how much of the sales that you've seen is inventory build versus demand, but we think that we've got some good positive indicators.

Pascal Soriot -- Executive Director and Chief Executive Officer

Thanks. Your third question was China. Can you -- can you just --?

Sachin Jain -- Bank of America -- Analyst

Have you seen any impact to date and roughly [Indecipherable]

Pascal Soriot -- Executive Director and Chief Executive Officer

Right. I mean maybe what we could do is ask Leon to comment generally speaking. He is on the ground and I talked to him almost on the daily basis. But of course he is on the ground. So Leon, do you want to comment on coronavirus and the impact you've seen so far or you expect?

Leon Wang -- Executive Vice-President, International

Yeah, I think the -- of course a lot of media reports, but I think the situation outside of Hubei and Wuhan -- Hubei province is improving. I think we cannot speculate how long will this epidemic last. I think it will still be in next few months. Right now, the impact is mainly that our salespeople cannot easily visit the hospital and access to the healthcare professional because Doctors, especially some of the specialty are focusing on fighting the epidemic. So I think all these disruption are quite temporary and patients now really instead of visiting hospital they go to pharmacy to review prescription and also they go online to consult doctors and also to get their prescription reviewed, so that we see a trend of such.

And while the impact is temporary, but I still would like you to focus on the positive side. I think AstraZeneca is the most widely expanded coverage company by rural community hospital, retail we are number one in Emerging hospital and we have a lot of NRDL reimbursement inclusion last year. And new indication approval and we have also four new product approval in 2019. And AstraZeneca is also very strong in digital promotion and retail pharmacy promotion and also online pharmacy collaboration. And today, we started the first prescription of Imfinzi patients in China. So even during the epidemic everyone, logistic side, supply chain side, and the operation manufacturing and head office people and a lot of function are already working starting from beginning of last week. So I think AstraZeneca is a quite a resilient organization, the whole team is behind making sure employees are safe and also doctors are supported and the business interruption is minimized. Thank you.

Richard Parkes -- Deutsche Bank -- Analyst

Richard Parkes from Deutsche Bank. Firstly, just a follow-up on Sachin's question about some of the key products being slightly below expectations in the fourth quarter. I think if you look at consensus numbers a lot of that was slightly slower, your traction in Europe. So could you just talk about your level of confidence in driving uptake in those territories. Is it just a factor of timing in terms of reimbursement or have you been facing more challenging access than expected? And maybe you could talk about what -- why you are having to give more price than anticipated particularly for things like Tagrisso, where there is already a price in the second line setting?

Second question, one of your competitors has been very vocal about the preferential PK characteristics of its PARP inhibitor in mice. I just wondered if you could comment on your view on the clinical relevance of those findings?

And then third question, just on the Enhertu and the ILD incidents. Obviously, I think most of us view that the instance serious ILD cases is a key gating factor to earlier use of the drug and you've tightened up risk management. Can you talk about to what degree you can back test whether that's working by looking at the overall ILD rate and the ongoing clinical program. I know that's blinded, but I'm sure you can see unblinded incidence rates? Thanks.

Pascal Soriot -- Executive Director and Chief Executive Officer

That's good. So let me just suggest that Dave, you could cover the first question because probably I guess what people have in mind is Tagrisso and Imfinzi in Q4, outside of those two, I mean we had a one-off cost to net adjustment on Farxiga. But I think maybe the softness, if you want to call it this way related to Tagrisso and Imfinzi and nothing that we didn't expect before. So the key question is beyond the US, what happens out of the US. So, Dave you want to cover this one?

David Fredrickson -- Executive Vice-President, Oncology Business Unit

Yeah, sure. So maybe starting first with Tagrisso, and Richard you asked a bit about Europe, but I think it's worth starting on the US and I think that's an important starting point. So Tagrisso in the US, we have now established as standard of care with Tagrisso in the US and owing to that now we've got about two-thirds of all starts are on Tagrisso. So we really have now gotten to a point where the growth that we expect going forward on Tagrisso in US sequentially would be incremental growth. With that said, we did see incremental growth in the US in terms of demand in the fourth quarter. You'll recall in third quarter, I had talked about the growth between Q2 and Q3, which was $50 million on Tagrisso in the US, about half of that was inventory and gross to net. And we definitely saw that we -- saw a draw down in inventory and a readjustment to gross to net in Q4 that explain certainly some of that. But we had mid single-digit demand growth from TRxs and from duration of therapy in Q4 on Tagrisso and we expect that to continue on a fairly substantial base in the US and Japan into next year. Then we've got the other 62 markets that are progressing along quite nicely with Tagrisso in terms of the reimbursement discussions. And that includes places like Korea, Taiwan, still here in the UK, markets that have substantial sales that are behind it.

On Imfinzi, I think Imfinzi again as I mentioned in my comments, and I won't repeat, do think they were at a spot in the US where we've gotten ourselves pretty well penetrated into that Stage III setting. As I look at the growth drivers for Imfinzi in 2020, really it's ex-US continued opportunity to drive on PACIFIC, keep in mind that 70% of the sales on Imfinzi today are in the US. I would say that the composition that we might expect is more like 60/40 or 55/45, if you take a look at the other brands. So gives reason to believe that we have an opportunity to drive outside of the US. We just got approval in China. So -- and Leon mentioned the first patient infused there, so that's not even in the performance yet. And then of course in the US, CASPIAN, is the most near-term Priority Review. We're getting ready for launches on that in the first half and I think that with competition likely being limited to just the Roche molecule and not having three competitors in the space, I think that's also something that gives us some cause for optimism on our opportunity to grow there.

Pascal Soriot -- Executive Director and Chief Executive Officer

Thanks David. Jose, do you want to cover the PARP question, the preclinical data and also the ILD and Enhertu.

Jose Baselga -- Executive Vice-President, Oncology R&D

Well, I don't feel comfortable commenting on mice PK data published in Oncotarget, I don't, but I do feel comfortable discussing the clinical data and I think that's very important. If you look and again you need to be careful in comparing different trials, but if you look at the data that we achieved with PAOLA. In our PAOLA population, we achieved more than two years of progression free survival in the first-line setting and this is totally unprecedented. So I think that we can get -- we can bet tight on PKs and we can get tight on a number of measures such as HR, but at the end of the day, I think when a patient comes to your clinic what you're asking about is how long will I have disease without coming back. And I think when you look at the absolute number, which is what matters to any patient and to any physician, the PAOLA data set is the strongest of all. A point that you cannot compare different studies, is that for example, when you look at our population in PAOLA that these, each of the proficient and we looked at the same population that was part of the PRIMA study. So we basically we took our HRD-proficient patients that fulfill the criteria of the PRIMA of the population we observed also tremendous benefits. So the PFS in the Olaparib plus bevacizumab [Phonetic] arm was 22 months, and it was 16 months on the -- on the bevacizumab arm alone. And this is a data set that was presented at the recent ASCO Meeting. So I think we feel incredibly confident that Olaparib is the best-in-class. We have the lower rate of discontinuation. We have an unprecedented clinical benefit in terms of duration. So this is the best-in-class agent that there is and we feel very, very excited by it. And looking forward to be able to offer this to patients as soon as possible.

Pascal Soriot -- Executive Director and Chief Executive Officer

And we have Marc here as well, if anyone wants questions afterwards on -- [Indecipherable].

Jose Baselga -- Executive Vice-President, Oncology R&D

On the Enhertu ILD, since May we have not observed a single case, thank God, of ILD grade five in our studies of 5.4 milligrams. So, and we are enrolling a lot of patients into clinical trials. There is no question that the fact that physicians are aware and patients are aware of ILD and that we have instituted -- that we have instituted real-time guidance on how to treat ILD is making a progress. We don't have yet data on real-time. We don't have that, but we are looking at this. I think to me a very reassuring. piece of information is that we are enrolling successfully patients into our post-PCR study, which is an early study and enrollment is going well.

Pascal Soriot -- Executive Director and Chief Executive Officer

Thanks Jose. Let's take an online question. Tim Anderson, Tim, do you want to go ahead?

Tim Anderson -- Wolfe Research -- Analyst

Thank you. A couple of questions please. Tagrisso, just to clarify, I think in prepared remarks I heard you say that you expect NRDL for first line in China, which would imply approval of first line in China or I guess at least reimbursement opening well up for the product. I'm referring to the Asian patient subset of FLAURA were OS didn't hit. So are you saying that everything's all clear there and you expect there is not going to be any reimbursement hurdles?

Second question, not an exciting product necessarily but Pulmicort in China, we learned recently that that is the biggest single drug in China of all drug companies hitting $1 billion, still growing, yet it's off patent, you may have seen our research recently digging into how long this last for because a lot of generic companies are circling, it seems to us maybe you have a few years, where there is no generic threat, there is no VBP risk, hoping you can tell us your internal expectations on timing for this potentially happening in China, how long will it continue to grow for?

And then just last question, tezepelumab, only a brief mention today, we get Phase III data reading out this year. Phase II data looked solid, especially in the noneosinophilic asthma, your level of confidence in that program replicating what we've seen in Phase II?

Pascal Soriot -- Executive Director and Chief Executive Officer

Thanks, Tim. Yeah, tezepelumab we didn't talk much about but as you can see -- we had as you saw -- we have so much to share that we will have a bit over time anyway even [Indecipherable] let me call that out quickly. We've never said it would be easier, reimbursement is always a challenge and in China essentially we will start this process this year. And if we were successful reimbursement would be next year, but we've always said, moving into first line will be more challenging because of course you have more patients, more budget impact and that's a challenge. So that's basically all we could say about Tagrisso.

Pulmicort, maybe Leon, if you want to comment on it because one of the things in this, with this pandemic by the way, epidemic, sorry is that this is likely to push patients to use more home nebulization. So in that case, it sort of goes in our favor of diversifying the base of Pulmicort. Leon, do you want to say a few words about Pulmicort in China and your prospects there?

Leon Wang -- Executive Vice-President, International

Yeah, I think Tim, it is a very good question. I think Pulmicort is one of the biggest product in our China portfolio, it is around 20% of our total business, and I think I cannot speculate on when the generic will come. And I think it's a nebulized product and there is a special guidance being reviewed by China and NPA and CDE about the -- what kind of quality standard nebulized form of drug should reach before they can get approval as a generic. So I think we -- first, we will see generic coming and then is -- when you have enough generic, there will be VBP and then certainly generic needs to have enough capacity and continue consistent quality. So actually our quality standards is a quite a high and we'd be -- we are quite confident about our capacity and quality standard. I think even though it might come at some time point, I think we are now focusing a lot of Symbicort -- Symbicort penetration installation so Symbicort is still and having huge potential in China and we are launching a mild asthma indication for Symbicort and we now -- last December we get also approval for breast 3 [Phonetic], the triple, getting to the huge COPD untapped potential and the China government also include asthma in COPD recently into the -- into the chronic disease category together with high blood pressure and the diabetes. So I think there are a lot of positives and Symbicort also get into EDO category. And together with Pulmicort removing limitation.

So I think in the respiratory portfolio, we have also Bevespi getting approval in moderate COPD. So I think we have a lot of positives to push on the inhaled part of the business in order to mitigate this Pulmicort mid to long-term risk. And also we have a lot of other new excitement launch new -- new product launches like roxa, Lokelma also get approval. Roxa get not only approval, but also reimbursement inclusion. So I think we have many more cards in hand in order to mitigate this risk. So we are ready.

Pascal Soriot -- Executive Director and Chief Executive Officer

Thanks, Leon. Do you want to say a few words about teze, Mene?

Menelas (Mene) Pangalos -- Executive Vice-President, BioPharmaceuticals R&D

Just that I agree data was very strong in the Phase II study. And I think both internally and externally when you speak to opinion leaders, very excited about seeing the Phase III data and if positive and if we're able to repeat what we've seen Phase II have the opportunity to really broaden out beyond this disease in asthma, which I think is going to be tremendously exciting now the biologics is trying to take hold.

Pascal Soriot -- Executive Director and Chief Executive Officer

But we have to wait. One question in the room. Can we get another mic here so we don't spend too much time waiting for mic.

Keyur Parekh -- Goldman Sachs -- Analyst

Keyur Parekh at Goldman Sachs. Two questions please, First one, Pascal in 2019, about 45% to 50% of your growth top line product sales came from China. As you think about 2020 and geographic spread of breadth of growth, how much of that high-single low-double digit growth are you anticipating kind of coming from China? That's question number one.

And then secondly, Marc, in your prepared remarks, you spoke about the other operating income continuing to be a significant part of your income statement in 2020 and beyond. From a quantitative perspective, should we think of it as broadly being in line with 2019 above below 2019 any sense there would be helpful? Thank you.

Pascal Soriot -- Executive Director and Chief Executive Officer

So Marc, do you want to cover the second question?

Marc Dunoyer -- Executive Director and Chief Financial Officer

Yes, so I think the you saw in 2019, a very dramatic reduction in collaboration revenue into some of collaboration revenue and other income. I wanted to be very transparent on the trend for 2020 and not have people believe that this trend of minus 25% was going to continue. This is why I indicated that we would, we would still have other income in 2020 and also give you an one illustration, one example of why this is going to continue. For instance when we recover the rights, of brazikumab, which is a novel medicine that we had partnered out to Allergan. This product is coming back and we will have to -- we will receive basically complete funding for this development but we have to book it somewhere and we will book it as other income. So the line of other income is not only disposal, they will be increasing disposal, but also income on the deal for instance as the IL-23. Just to provide us some context on the some of collaboration revenue and other income, you were asking whether it would be in line. I think it's going to be in line not materially different from what you saw in 2019.

Pascal Soriot -- Executive Director and Chief Executive Officer

And in your first question, essentially we've guided on the top line growth being high single-digit to low double digit. We've said that emerging market will be low double-digit growth and China leads the pack typically. So it's going to be higher than this, I'll just let's leave it to you to do the math of how much China kind of represent of our total growth, but it will remain an important part of our sales growth.

Mark Purcell -- Morgan Stanley -- Analyst

Thank you Pascal. It is Mark Purcell from Morgan Stanley. Just sticking on that same subject, could you provide color and context behind the investment initiatives in non-China, emerging markets and acceleration of growth anticipated in these regions? You kind of highlighted Latin America, Russia in the press release. And the reason why I ask the question is in 2018 you increased marketing investment for mid-single digits to 10% and then we saw what happened in terms of the acceleration in China. So you can help us understand how much incremental investment you're putting into these markets? And how much inflection you're assuming? When I step back 60% of your EM sales are in China, 40% non-China. For most companies, it's 30/70, the other way around. So maybe comment in terms of your expectations if the balance going forward, your comments around diversification, OVM? And then we've talked about VBP and we've talked about NRDL, are other countries, in these regions considering similar schemes, which could accelerate the uptake of your new medicines and potentially accelerate kind of legacy medicines?

Pascal Soriot -- Executive Director and Chief Executive Officer

How many questions into one? The investment, I mean, we will continue to invest in the emerging markets. If you remember, I mean, years ago, number of years ago we guided for the emerging markets to grow at high single-digit. In fact, we've delivered low double-digit growth rate of course driven by China, but not only in China and in fact interestingly in the last year or maybe a little bit more than a year, we've seen an accelerated growth rate in China non-China emerging market. So we have to continue supporting this. The Russian team did an outstanding job last year and they go tremendously, but not only not only Russia many other countries. So I don't know, in term of investment we will continue supporting this growth and it's all included in the guidance we gave you for 2020. So I can't be more specific than this. And that's it.

No, outside of China. We haven't seen anything specific, it's just like governments are basically continuing to trying to save money out of all products and we work hard to get access for innovation. There are countries, were actually tracking faster than others. And again, Russia is a good example of a place where we have got access for innovation. And we're making good progress in -- it's not an emerging market, but it has tended to be a difficult market, Poland. Poland is a large countries, as you know, but it has been a country where access was difficult. We made very good progress in terms of getting access for innovative medicines, we're getting access in countries like Korea, Brazil, is also doing quite well. So, but nothing really as specific or dramatic as what we have in China.

We'll have to take one last question. Sorry about this. Yeah, go ahead.

Emmanuel Papadakis -- Barclays -- Analyst

Emmanuel Papadakis from Barclays [Indecipherable] there has been no further incidents is a Grade 5 out of the 5.4. I think in December, Daiichi was kind enough to say there had been no further case of Grade 4 or 5 and only one further case of grade 3. So could you just confirm that is still the case?

And then in terms of future clinical development plans, you also outlined essentially aggressive set of programs including adjuvant which you've yet to confirm they're meeting in December, so any further thoughts you can provide us there?

Quick follow-on Tagrisso first-line NRDL, are you expecting to take price hit when and if that approval comes at the end of this year? And then Lynparza, could you just talk about the potential speed of uptake assuming a prostate approval in the second half of this year in terms of the biomarker hurdle to utilization daily across therapies for setting? Thank you.

Pascal Soriot -- Executive Director and Chief Executive Officer

So let me go over Tagrisso China NRDL because there is not much we can add beyond what we've said in the past is really getting access to first line. We've said number of times it will be more challenging because of course the volume is so large, the budget impact is going to be substantial. So we expect that there will be difficult discussions around pricing. But beyond that I can't say much more.

I think the more critical question is relating to Enhertu actually or saying -- David can say a couple of words on Lynparza?

David Fredrickson -- Executive Vice-President, Oncology Business Unit

The question on Enhertu was about early clinical trials or --?

Pascal Soriot -- Executive Director and Chief Executive Officer

Basically Daiichi not seeing a number of new trials. And also can you confirm there hasn't been any new cases of ILD Stage 5?

David Fredrickson -- Executive Vice-President, Oncology Business Unit

I already commented on the ILD in my -- one of the answers to somebody from Deutsche Bank.

Pascal Soriot -- Executive Director and Chief Executive Officer

You said Stage 5.

David Fredrickson -- Executive Vice-President, Oncology Business Unit

I confirm that. I think Stage 4 and -- yeah, I confirm that. Daiichi has said, and we totally are as partners, we're going to be launching a number of clinical trials that is quite ambitious so and it's is very clearly in the direction of going early into disease, right. So we are launching in the near future the trials in the early disease setting, neo-adjuvant and adjuvant and also first line. Now I cannot comment on other lines because our policy is not to comment on time lines, sorry, until the clinical trials are announced. So they are coming, we'll give you more details as they become official.

Pascal Soriot -- Executive Director and Chief Executive Officer

Very good. Very sorry, but we will have to finish here, because we are already over time. Thank you so much for your interest and look forward to another great year in 2020. Thank you, bye.

Duration: 97 minutes

Call participants:

Pascal Soriot -- Executive Director and Chief Executive Officer

David Fredrickson -- Executive Vice-President, Oncology Business Unit

Ruud Dobber -- Executive Vice-President, BioPharmaceuticals Business Unit

Marc Dunoyer -- Executive Director and Chief Financial Officer

Jose Baselga -- Executive Vice-President, Oncology R&D

Menelas (Mene) Pangalos -- Executive Vice-President, BioPharmaceuticals R&D

Leon Wang -- Executive Vice-President, International

Unidentified Participant

Sachin Jain -- Bank of America -- Analyst

Richard Parkes -- Deutsche Bank -- Analyst

Tim Anderson -- Wolfe Research -- Analyst

Keyur Parekh -- Goldman Sachs -- Analyst

Mark Purcell -- Morgan Stanley -- Analyst

Emmanuel Papadakis -- Barclays -- Analyst

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