Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the DiaSorin First Quarter 2018 Results Conference Call. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Mr. Carlo Rosa, CEO of DiaSorin. Please go ahead, sir.
Thank you, operator. Ladies and gentlemen, good afternoon, and welcome to our Quarter One 2018 conference call. As usual, I will give you some top-level comments on revenues and geographies and main events and programs for the company. Then I will turn the microphone to our CFO, Mr. Pedron, who will take you through the financials. Let me start as a general comment saying that this has been a good quarter for the company. Certainly, since we are exposed in different geographies to currency, there has been a very strong impact due to exchange rates, mainly against the US dollar and the Chinese currency. I will make all my comments on revenues based on constant exchange rates. At constant exchange rates, the company in Q1 grew by 11%, which is in line with company expectations.
I would like then to divide my comments, as usual, in our immunoassay franchise, and then I'll talk about the molecular diagnostic products. As far as the immunoassay, we had very strong growth in CLIA ex-Vitamin D revenues. The set of products grew worldwide by almost 14%. As usual, growth has been led by product mix, launch of some of new products which happened in the previous years, and success in certain geographies, mainly Europe and the Asia Pacific. As far as Vitamin D is concerned, as said, our company expectation with Vitamin D is that this franchise should decline between 1%-5% per year. Last year, it was a little bit better. This year, in quarter one, the Vitamin D is down by 2.6% at constant exchange rates.
Certainly, this is a combination of still growth in certain geographies for Vitamin D and decline in other geographies like the U.S., where the company is particularly exposed with this product. We certainly do suffer from increased competition, and the price now of Vitamin D is really becoming a commodity price. Overall, I think it's well-balanced, and again, -2.6% is on the low end of the decline that the company is expecting. As far as the different geographies, I would start from Europe. When it comes to Europe, which today, thanks to the acquisition of the Siemens Healthineers franchise for the ELISA business, it does represent roughly 50% of our business. Notwithstanding the fact that the different countries in Europe are declining as a consequence, markets are declining as a consequence of consolidation in price and certainly price decline. For us, Europe overall is performing very well.
If we do not account for the Siemens contribution, we maintain the same perimeter as last year, the growth of our European business is between 6%-7%, which is extremely strong. This is actually happening in all the main countries, including Italy, which continues after some difficult year in 2016, continues its recovery. Certainly for us, Italy is a very important geography. It does represent worldwide a little bit over 10% of our revenues. A good contribution by this country certainly helps the performance of Europe. When we discuss about Europe, I think it's very important then to discuss updates on the Siemens acquisition of the ELISA product line. I think that the business is developing as we have expected. The ELISA franchise per se is relatively flat year-on-year. However, we have initiated a conversion program for the European customers.
To date, we have actively converted 18 accounts, and the funnel for the next quarter includes 60 accounts. Conversion is going well. On average, we get a strong, solid contribution coming from additional business that we get to these accounts when we place our LIAISON XL systems to replace the ELISA. The program is going as expected. The collaboration with Siemens handing out the business has been extremely good. In the interest of the customers, which will continue to be Siemens accounts for all the other products that Siemens will offer. So far, so good. It has been very satisfactory. Now let's move to a different geography. Let's move to the U.S. In the U.S., as said, we need to distinguish between the Vitamin D and the non-Vitamin D business.
The non-Vitamin D business continues to show strong growth, close to 20% year-on-year, mainly driven by the infectious disease franchise and fundamentally, a strategy in the U.S., which is the conversion between a still existing Bartels ELISA business to the DiaSorin infectious disease specialty assays. Certainly, this program also does benefit from the fact that we have been very successful in locking up the two largest labs in the United States when it comes to the full infectious disease menu. That certainly helps in promoting our brand into the hospital market and smaller laboratories, which is what the company is going after these days. Overall, our U.S. business grew 5% year-on-year, which we consider on target to what we expect to generate from this very rich but very competitive market. Now, if we move to South America.
South America was flat, but was actually a combination of two different dynamics. Brazil continues to grow in a very healthy way, 7% year-on-year, with a business that, as we have discussed a few times, was actually moved to more private hospitals, private commercial labs, and leaving to the side the public, which is extremely complicated. That resulted in healthy growth, very good profitability, and a DSO which is fully under control. We're very satisfied from our Brazilian business. Conversely, and I believe this is mainly a problem of timing, we had a decline in the quarter of our export business. Export means all the other countries that we cover through distributors. We expect by year-end, this portion of the business to become positive, so to turn into growth.
Therefore, I see this in Q1 simply as a phasing effect, also related to the fact that there are certain tenders of a certain size that we expect to get in the following quarters. Let's move to Asia Pacific. Overall, Asia Pacific provided very good results, roughly 15% growth year-on-year. I think what we need to help the financial community to interpret is the result in China. In China, our company, the growth was very low in quarter one. The truth of the matter is that our reagent revenues, so the LIAISON revenues, grew by almost 17%. Whereas in quarter one, instrument sales declined by 25%.
This is the result of something that we have actually already discussed in quarter four last year, which is the fact that we expect in the first two quarters, growth in revenues coming from reagent due to the fact that in certain segments where we have invested in the previous years, we continue to see growth mainly in our install base in the class 2. By the same token, we're redirecting our distribution network of the distributors away from the class 3 to the class 2. That means that we need to enroll new distributors, that is the reason why in quarter one and quarter two, we expect to sell less instruments than last year, then to start again selling systems to the distributors in Q3, Q4, when all the new distributors are going to be lined up.
Overall, flat China doesn't really mean flat China. It means strong double-digit growth in reagents, and just momentarily, a slowdown in the instrument sales. I would like then to move last, before we get to molecular, to discuss the QuantiFERON program. As you know, with QIAGEN, we have announced this strategic relationship around the QuantiFERON technology. As we speak, we are finalizing validations of the manufacturing lots for the QuantiFERON product, and we expect the launch to happen on time in September, and subsequently filing with the FDA for the U.S. approval. We have already agreed upon with the FDA agency the clinical study, which is necessary to be conducted, we're organizing clinical sites. Overall, the QuantiFERON program is going well, and we expect to commercialize this product again starting from September of this year.
Let's briefly move to molecular before turning the microphone to Piergiorgio. As far as molecular is concerned, from a strategic point of view, we have increased our commercial sales force in the U.S. by 50%. We made an investment to enlarge the commercial reach of the company. All positions have been filled, territory have been reassigned, we did that because we really believe that the opportunity provided by molecular in the U.S. is far behind what was done under the previous owner. By the same token, as other players in this industry, we have enjoyed a very good influenza season, even if influenza for us does not have the same weight as it carries in other operators. Notwithstanding that, it certainly was a good season. Our molecular effort outside the U.S. continues in organizing our commercial subsidiaries.
We have hired now molecular specialists in all the different European countries, we are proceeding with commercialization. Overall, the franchise provided a 20% growth year-over-year with very satisfactory profitability. You have noticed that notwithstanding the addition of this technology, our EBITDA margins have certainly not been diluted, that tells you that this is a very good business. To the contrary of other companies I've seen, where the molecular technology per se requires a lot of investment. At the beginning, it does not carry the same result as a more mature technology as the immunoassay does. Well, in this particular case, with this franchise and this positioning, we are getting from the get-go, positive contribution to our margin. Extremely satisfied vis-a-vis the way the molecular effort is going.
By the same token, we are insourcing manufacturing of certain component of this technology that previously was done by 3M suppliers, that will lead us to have full control over this technology by the end of 2018. Now I'm going to turn the microphone to Piergiorgio, who's going to take you through the numbers, then we're going to open up the session for Q&A.
Thank you, Carlo. Good afternoon, everybody. In the next few minutes, I'm going to walk you through the financial performance of DiaSorin during the first quarter of 2018. Before we start, let me please remind you once again that we began reporting the Siemens Healthineers business from Q4 2017, the perimeter of consolidation is different from the one of last year. Said that, as usual, I would like to start with what I believe are the main highlights of the period. The strengthening of the euro against all the currencies in which we operate has generated some notable FX headwinds during the first quarter of the year.
In order to gauge the impact of these fluctuations on our financials, let me please remind you that for every $0.01 movement of the US dollar against the euro, DiaSorin revenues move by about EUR 2 million on a yearly basis. Considering the USD trend in 2017 and where we are now, I think it is fair to say that we will likely experience some more FX headwind force in Q2, even though at a lower extent than Q1. Whereas the effect should materially decrease in Q3 and Q4. Moving to the second point, we closed the quarter with an increase in revenues at constant exchange rate of 11.2%, or almost EUR 18 million, with a solid contribution of the like-for-like business, which grew by about 6%-7%.
Quarter one EBITDA at EUR 63.3 million, or 38.5% of revenues, grew compared to last year at constant exchange rate by almost 9.5%, with a ratio of revenues of 39%. This confirms the ability of DiaSorin to deliver consistently strong EBITDA margins quarter after quarter. Lastly, the group generated about EUR 28 million free cash flow in the period and closed March 2018 with a positive net financial position of almost EUR 170 million, thus reaffirming a strong cash generation and a very, very healthy balance sheet. Let's now go through the main items of the P&L. Q1 revenues at EUR 164.5 million grew by 4.4%, or EUR 7 million compared to last year. As we said, constant exchange rate, the growth is 11.2%, including the contribution of the Siemens Healthineers franchise.
Gross profit at EUR 111.2 million grew by 3%, or EUR 3.3 million compared to last year, closing the first quarter with a ratio of revenues of 67.6%. The difference with 2017, which closed at 68.5% of revenues, is mainly driven by the contribution of the Siemens Healthineers business, which, as expected and as discussed in the previous calls, is dilutive at gross margin level, but again, not at EBITDA level, which is exactly the opposite. It's accretive at EBITDA level. And by some price pressure on CLIA me-too products and mainly Vitamin D, as just discussed by Carlo. Total operating expenses at EUR 58.5 million, or 35.5% of revenues, have increased by 4.4% compared to last year.
Please remember that about EUR 3.6 million of Q1 OpEx have been driven by the depreciation of the intangible assets, mainly knowhow and customer lists, coming from the Siemens ELISA and the Focus business acquisitions. Net of these elements, Q1 OpEx ratio on revenues at constant exchange rate would have been 32.9% against 33.5% of 2017. I think it is also useful to remember that Q1 2017 was particularly soft in terms of OpEx, as discussed during last year's call, since some expenses slipped in 2017 from Q1 to the following quarters. Q1 other operating expenses at EUR 2 million are substantially in line with last year. As said that during 2017 course, the quarter has been affected by some expenses related to a legal action in the U.S. concerning the future introduction of certain products into that market.
Beside, the impact of the [inaudible] has not been particularly material and is in line with our expectation, which is EUR 2 million for the whole 2018. As a result of what just described, Q1 2018 EBIT at EUR 50.7 million or 30.9% of revenues, has increased compared to 2017 by 1.5% or almost EUR 1 million. The growth at constant exchange rate is positive for about 10%. The tax rate at 23% is nine percentage points better than 2017, which closed at 32%, and is in line with what we anticipated and discussed during Q4 2017 call. This variance is mainly driven by the positive impact of the Italian patent box and the U.S. tax reform. This latter, effective starting from 2018. Net result at EUR 38.3 million or 23.3% of revenues, is higher than previous year by EUR 5.5 million or 16.7%.
The growth at constant exchange rate would have been just short of 30%. Lastly, Q1 EBITDA at EUR 63.3 million is better than last year by about EUR 1 million or 1.3%. The variance at constant exchange rate is positive for EUR 9.3 million. Q1 2018 EBITDA ratio on revenues is 38.5% at current exchange rate and 39% at constant exchange rate, thus confirming the strong profitability recorded in the last quarters and in line with the guidance. Moreover, when comparing Q1 2018 with Q1 2017, I believe it is useful to remind, as I just said, that last year we did particularly good also because of some favorable phasing in OpEx, which moved during the following quarters. During Q1 2017 call, I quantified this positive effect at about EUR 2 million. Let me now move to the net financial position and the free cash flow.
We closed the period with a net financial position just short of EUR 170 million and about EUR 193 million in cash. The group generated almost EUR 28 million free cash flow in the first three months of the year. The difference vis-a-vis last year is mainly driven by two elements. On one side, Q1 2017, which closed at EUR 44 million, was a kind of outlier and by far the best quarter of 2017. On the other side, Q1 2018 has been affected by some unfavorable phasing in working capital, particularly driven by the collection of some accounts receivable, which were due at the end of March and slipped to April. Let me please remind you that the positive cash impact of the Patent Box and the US tax reform will start to kick in from Q2 2018.
Lastly, in view of the group's operating performance, the management confirms the 2018 guidance for both revenues and EBITDA, with a growth at constant exchange rate of around 11% and 13% respectively. Let me please turn the line to the operator to open the Q&A session. Thank you.
Excuse me. This is the Chorus Call Conference Operator. We will now begin the question-and-answer session. The first question is from Maja Pataki of Kepler Cheuvreux. Please go ahead.
Good afternoon, gentlemen. Thanks for taking my questions. I have actually a couple of clarifications because the line was really bad, and then a couple of questions with regards to your results. First of all, can I just quickly confirm, did you say that the conversion of the ELISA franchise, that you've already converted 18 accounts or 80 and that 60 or 16 are remaining? I couldn't get that. The second one relates to the organic growth for the group in Q1. Did I get it correctly that you said it's somewhere between 6% and 7%? If we look at the number for Q1 growth, I guess that Q1 should have been a really strong quarter for you, given the flu season, but probably it was negatively impacted by China, and that this was kind of moderating everything.
Can you tell us how well your visibility is on instrument sales for China in H2? My last question will be, and I'm sorry for all the questions, can you please decompose again your full-year guidance? How are the top-line growth or the 11% local currency growth that you're guiding for, how is it breaking up between organic and Siemens impact? Thank you very much.
Okay, Maja, I will take the first three questions and Giorgio will take the last one. Yes, conversion from Siemens ELISA, we said 18 done, 60 are the ones that the offer is in front of the customer, and we expect to convert in the next quarters. Let me remind you that the original plan counted for an overall number of 300 accounts that will have to be converted from ELISA to LIAISON as a combination of LIAISON XL and LIAISON XS. This should happen within three years. I think that we are well on plan vis-à-vis conversion. As far as the growth in Europe, yes, the growth in Europe without Siemens is between six and 7%, which we consider solid growth in this geography, considering that most of the markets are flat, if not declining. Now, flu season.
Yes, you're right, we did benefit from flu season, as I said before, our molecular franchise, the one that was actually acquired from Quest, was not so heavily skewed toward flu. Flu does not represent a majority of these revenues. This, as you can imagine, was more central laboratory business, was heavily driven by the fact that Quest was a customer, certainly flu is not tested within the Quest facilities, is more decentralized. Yes, we did benefit from flu, I agree with you. By the same token, the growth that you see is an organic growth throughout the different products that were either there or they've been developed and launched under the DiaSorin ownership. Now, last, the number of systems that you said.
Look, on average, as a combination of LIAISON and LIAISON XL, China was representing for us between 150-200 systems per year that we were selling or placing in the country. Again, that's the range, 150-200. I expect that since we are missing some of the opportunities as previous years in this quarter and probably in quarter two, I believe that we may end the year around 120-150 systems. Again, this is just a guesstimate I can give you. We'll confirm later on once we will have better visibility on the new network of distributors that we are lining up, again, as we have discussed a few times, to transition between 70% of the business today, which is in Class III hospitals, into more Class II.
I will take the one regarding the guidance. Hello, Maja. This is Giorgio speaking. We never gave a breakdown of the guidance, the 11% between the like-for-like and the Siemens ELISA contribution. To give you some numbers. We are expecting, as Carlo said, the Vitamin D to go down around 3%-5%, CLIA ex-D to grow between 12% and 14%, which means the overall CLIA franchise plus 8%, 9-ish percent year-on-year. ELISA is a different story because you have the contribution of the Siemens Healthineers business again, and for the molecular reagents, what we expect is between 15% and 20%. That will made up together with instruments and direct the 11% guidance that we gave, and we are reaffirming in this quarter.
Thank you very much for all the answers. Much appreciated. Just to double-check, did you say also that organic growth for the group as a total was 6%-7% in the quarter?
Yes.
Okay.
Yes.
I'm just trying to understand. I understand that you don't want to give us a clear breakdown of organic or an acquisition impact of the 11%. What I'm trying to understand is whether we're actually seeing some sort of acceleration of your underlying organic growth based on all the acquisitions we've done in the past. That's what I'm trying to understand. Is there an acceleration from the typical 6%-7% that DiaSorin was reporting, or is that also the number that's what the base business is growing?
Look, Maja. I think that in this environment, 6%-7% of the base business is a decent, if not top growth in the immunoassay. Of an immunoassay franchise, which today is starting to become significant in size, even compared to some of the much, much larger competitors. I think, to be honest with you, that this company, through all these, the acquisition that we did, conversion, access to new customers, has a good chance to maintain this growth. This is notwithstanding the fact, let me remind you, that around 15%-16% of our overall business is vitamin D, and that's declining. You also need to look at the 6%-7% as a combination of a chunk of your business declining and the CLIA ex-T actually growing, as I said, around 14%.
I strongly believe that there is this, let me say, dynamics can be positively affected by a successful collaboration with QIAGEN in the QuantiFERON because, as you know from the QIAGEN numbers, QuantiFERON is a significant, sizable opportunity, and the franchise per se is growing by 20%. This is my midterm view about this immunoassay business. I consider 6%-7% as a combination of positive and negative elements, like vitamin D, a good, solid growth even for the foreseeable future.
Thank you very much for that.
The next question is from Peter Welford of Jefferies. Please go ahead.
Wondered if you could remind us the FX impact on EBITDA. I think you alluded to the impact on the revenue line. Wondered if you could give us the EBITDA impact again. On the phasing of costs. In the first quarter, clearly a lot of the costs were perhaps lighter than we envisaged. I appreciate some of this was phasing. On the sales and marketing, now that you have, I guess, got the sort of transition that you are doing in Europe underway. You have also obviously got the changes that are going on in China. The Siemens acquisition now has been bedded down. Can you give us a sort of idea on where you see the sales and marketing trending in the future and what areas you perhaps could look to put more investment in future?
On the revenue line, I wanted to come back to the flu testing. I appreciate it is not a significant impact on the positive. I guess, could you talk about both the positive and negative side? I guess if you are not seeing any benefit from flu insofar as you do not think you are necessarily exposed to the flu testing part. Conversely, do you think there was any adverse impact from potentially missed appointments and missings due to the flu season that was relatively severe this year? Thank you.
I will let PG take the Forex later. Let me comment on sales and marketing costs, which I think is your question, and the molecular. When it comes to sales and marketing, look, we do have today, to give you a rough number, for the Siemens acquisition and to take ownership of that business, we had in plan to hire around 30 people, mainly in Germany and Austria and Switzerland. Those geographies that really had the bulk of the business. Two-thirds of the hires are already done, and they are in the current cost structure. When it comes to the U.S. molecular team, we have hired all the reps that we needed, and we have the marketing people that we need. On that side as well, the current running rate, you see that the sales and marketing cost is actually there.
What you read in Q1 on a cost baseline, I think is fairly representative. However, I have to say that this is a very competitive market, as you know, and especially in certain geographies like the U.S., Germany, where today there is full employment. The level of attrition that this business has is becoming certainly more important than previous years. Yes, we do. We have hired what we needed in sales and marketing. By the same token, we have a level of vacancies in certain positions or other areas of the company, which is still heavy in quarter one. Certainly we will continue to hire and replace. It would be mainly replacement, but the attrition level is becoming very relevant. Again, especially U.S. and Germany.
Yeah.
The Forex.
Yeah. The impact of the foreign exchange on EBITDA. It is about EUR 5 million. EUR 5 million is the negative impact of FX on our EBITDA line. Usually, as a rule of thumb, I said, $0.01, EUR 2 million in terms of sales. Again, rule of thumb is more or less EUR 1 million worth of EBITDA.
That is great. Thank you.
Welcome.
The next question is from Luigi De Bellis of Equita SIM. Please go ahead.
Yes, good afternoon. Two quick questions for me. The first one, could you quantify the contribution in CLIA ex-Vitamin D business of Siemens acquisition in Q1, if any, and the expected contribution for the full year in this division? Second question, just a clarification on the free cash flow. Do you confirm the target to achieve a higher free cash flow in 2018 compared to 2017 despite the Q1? Thank you.
Hello, Luigi. I will just start with the free cash flow. Yes, I do confirm that the free cash flow, the estimate, even though it's not part of the formal guidance, I do confirm that my projection for the free cash flow of 2018 is going to be higher, materially higher than 2017. If I well remember, in 2017, we closed with EUR 130 million free cash flow. I believe that we will make in 2018 around EUR 150 million of free cash flow. I'm expecting a very strong Q2 also, because we will not pay taxes in Italy, basically because of the Italian patent box tax regime that we just got. Regarding the contribution of Siemens conversion to CLIA business, I believe that Carlo gave enough information telling you guys the number of customers that we switched and we're going to switch.
You know the revenue per customer that we usually make, so you should be able to work out your math very easily.
Thank you.
The next question is from Scott Bardo of Berenberg. Please go ahead.
Thank you very much for taking my questions. First question, please. There's been a lot of talk about QuantiFERON TB, and I can understand why this is something you're excited about. Can you give us a feeling actually for the commercial sensitivity of this product for DiaSorin? Does this have the potential to be as big as Vitamin D for you? Just some sort of sense as to the magnitude of this opportunity. Following on from that question, it seems that there has been some quite fruitful collaborations from DiaSorin, both the QIAGEN and the Roche collaboration and others. It's my understanding that all of those collaborators have approached DiaSorin rather than the other way around. I just wonder, has there been any learnings or any change in structure such that you can better target those opportunities for the future?
Perhaps you can talk a little bit about that. Lastly, I think this is the first quarter that you have under the full implementation of PAMA in the U.S. Doesn't appear to have affected your group organic growth this quarter, but North America was a little bit soft, and you're talking about price pressure in Vitamin D. Can we just have some feeling actually as to how the reality of PAMA is impacting or not your business? Thank you.
Yes, Scott. Okay. Let's go one by one. Let me start from the last one, PAMA. As I think I mentioned a few times before, I think that when it comes to the DiaSorin business, and the products that we sell in the U.S., I don't expect honestly PAMA to be a significant contributor to the development of our revenues in the U.S. I think that vitamin D, which is the one most exposed to PAMA, if you think about it is one that was singled out in terms of number of tests run and reimbursed in the U.S., is the one that actually got a very nice, well, does have a very nice reimbursement, $42, I remind you, that will become 30 some within the next four years.
The truth of the matter is that single assay, the value of that assay was actually significantly decreased, and I would say destroyed, not by PAMA, but by our own industry, because it was not properly valued by our competitors. Therefore, competition more than PAMA did what it did to vitamin D pricing. Long story short, to say, vitamin D is already rock bottom and continuing to decline in a manageable way, but certainly continues to decline. You said a soft quarter for vitamin D, if I understood correctly. I say minus 2.6% is exactly where we expect this overall franchise to be. Actually, it's on the positive side because we said expectation is to decline more on the 5%.
PAMA doesn't really worry me for the time being. It worries me more what sometimes some of the large competitors can do to ourselves when it comes to destroying value for specialty assays. The second question was, if I can translate it, you look pretty and people come and talk to you. Can you go and talk to other people? Yes, we could, but by the same token, as you understand, we have a lot of things to do and many programs that we are managing today. I think that to keep the size of this organization reasonable, cost under control, we have a lot of strategic partnership that we are managing today. Let me remind you that we have the Siemens conversions, which was actually just concluded in October last year. We have the QuantiFERON and strategic relationship with QIAGEN, which I will comment about.
We do have the alliance with Beckman in preparing ourselves for the launch of a full menu of Hepatitis A, B, C, and HIV in the U.S., which implies for DiaSorin, the establishment of a brand-new manufacturing site in England, which we just completed, and we are filing the first six products to the FDA by July of this year. Not to mention Roche, not to mention then the regular course of business. All said and done, we look pretty, and I'm very thankful that people come and talk to us. For the time being, I think we have enough to do strategically with the current programs. Last but not least, is the QuantiFERON. Look, it's very difficult for me to tell you if the QuantiFERON will be the next vitamin D for DiaSorin.
I can just comment to the fact that QIAGEN did a phenomenal job in taking this neglected assay because all of us have been tested with the skin test Mantoux for decades and turning it into a phenomenal franchise. QIAGEN continues to do, I think, a phenomenal job in promoting the conversion of this assay from skin to blood. I think that certainly, and we discussed this, and I know Piergiorgio has indeed comment this a few times. Certainly true that to move to the next step of usage, because of this very successful franchise, they had to move away from manual tubes and ELISA into full automation. To make a long story short, we collectively with QIAGEN, see this as a tremendous opportunity. We see this QuantiFERON technology as a technology that could develop certainly into technology used for more than just one product.
I have to say and have to report that the relationship between the two companies has been fantastic on this. We had many collaboration with very large companies, but on this specific one, I think that it's going very well. As said, we are launching on time, and we are filing on time in the U.S., and this can only happen if things with QIAGEN goes well. So stay tuned. You're going to see the results of this. But certainly, we do have great expectations from this franchise.
All right. Thank you very much for the extensive answer. Perhaps one follow-up. If I understand correctly, you're coming close to the European launch of LIAISON XS, I think targeted for at the end of this year, and then into North America in 2019. When will you likely communicate to the capital markets your commercialization strategy for LIAISON XS in North America? Will you require a distributor, a partner, or will you invest greenfield to maximize the opportunity? What can we expect with respect to the North American launch infrastructure? Thank you.
Scott, look, to me, this is more agenda. Let me say, I would like to open up this question differently, if you don't mind. I believe that today the capital market was exposed to a plan which ends in 2019. It was very clear that all the good stories, good story meaning prospective strategic elements of growth, do happen after 2019. You mentioned the LIAISON XS. We need to add to this certainly the QuantiFERON. We need to add the launch of hepatitis in the U.S. So it's very clear to me that what we owe to the market is as soon as possible, and a plan which now covers a period of time behind 2019, which will depict all these terms for the strategy of the company, and this we expect to do early next year. Okay.
We are debating when, but certainly between Q1 and Q2, we're going to come back to the market explaining how do we see this. Just to make a remark on distribution. Today, we are working with a very large consulting firm in order to map in the U.S. the strategy. Because in my opinion, the strategy in the U.S. is not only the launch of the XS when it comes to this market, but actually a portfolio of products that can really be grouped together and go to this new growing segment in the U.S. Which is a combination of molecular, which we have, immunoassay, which we have, but we feel also that we should also package other products that would really make this offering extremely interesting for this business.
We are working with this consultant to understand what the package should be, and I expect that when we will have the full disclosure of the following 3 years, we will clearly tell you, indicate to the market what the strategy is and which product we want to line up to distribute to the segment.
Just quick clarification, Carlo, sorry. Did you say that in H1 2019, we're likely to get some sort of midterm plan update or extension on your existing timeframe? Sorry, just to clarify that point.
The clarification is that, yes, by first half of 2019, it is our intention to go back to the market with vision, providing a vision of the following 3 years.
Perfect. Thanks very much indeed.
Mr. Rosa, there are no more questions registered at this time.
Thank you, operator. Take care.