“We continue to expect approximately $700 million in savings from our Phase I of our manufacturing optimization program this year with approximately $175 million realized in this quarter.”

In context

“stment strategies. We continue to invest behind these product groups to support their growth, which we expect will enable the company to partially offset upcoming LOE headwinds over the next several years. Adjusted gross margin for the first quarter was approximately 76%, primarily the result of product mix during the quarter and ongoing cost control measures. I do want to note, accrued royalty expense was higher this quarter and dampened gross margin compared to the first quarter of last year. With that said, strong cost management across our manufacturing footprint remains a top priority. As a reminder, over the past several years, our adjusted gross margins have generally remained in the mid-to-upper 70s when excluding Comirnaty, which is a 50-50 profit split with our partner BioNTech. We continue to expect approximately $700 million in savings from our Phase I of our manufacturing optimization program this year with approximately $175 million realized in this quarter. Total adjusted operating expenses were $5.5 billion for the first quarter of '26, an increase of 4% operationally versus the first quarter of last year. And now looking at the components. Adjusted SI&A expenses decreased 5% operationally, primarily reflecting lower marketing and promotional spending on various products from more targeted investments and ongoing productivity improvements, as well as lower spending in corporate enabling functions. Adjusted R&D expenses increased 11% operationally, primarily driven by an increase in spending in certain oncology and obesity product candidates. First quarter 2026 adjusted operating margin was strong at 38% and above pre-pandemic levels, demonstrating effective cost management as well as revenue performance. We have already made meaningful prog”