“knowing that we have the royalty on global KEYTRUDA sales going from 6.5% to 2.5% at the start of next year and our royalty on GARDASIL going from 7% to zero percent on our global sales, again, at the start of next year will drive significant gross margin improvement.”

In context

“st trying to get a better sense of how we are tracking towards that target, particularly in the context of the substantial reduction in your royalty burden both for KEYTRUDA and GARDASIL. And if you wouldn’t mind, would you perhaps disclose what that cumulative royalty burden was in the third quarter of this year, just so that we can provide some context for the upside case or at least what we should be anticipating there? Thanks so much. Caroline Litchfield: Seamus, thank you for the question. We have seen really strong margin expansion in our company over the last several years, and as we look-forward, we expect continued margin expansion and that margin expansion really comes from the product mix on the revenue line, it also comes from the roll-off of royalties, as you have just noted, knowing that we have the royalty on global KEYTRUDA sales going from 6.5% to 2.5% at the start of next year and our royalty on GARDASIL going from 7% to zero percent on our global sales, again, at the start of next year will drive significant gross margin improvement. At the same time, we will be investing in our business. We will be disciplined in that investment, but we are investing in the portfolio of products that we have in the market and that we will be launching, as well as investing in our robust and growing pipeline and that obviously includes the Daiichi collaboration, where we have noticed we expect about a $0.25 impact as a result of investing predominantly in the research and development of a wide range of programs, that Dean has partially outlined, as well as this financing costs. We also have made significant progress across our pipelines with many other collaborations, acquisition and the progress we are making with our own internal assets. So, altogether, we still do point to an operating margin of greater than 43% in the year 2025. H”