Earnings Call: Q4 2020

Mar 1, 2021

Good morning. Welcome to Hypera Pharma's Fourth Quarter twenty twenty Results Conference Call. Today with us, we have Mr. Bruno Oliveira, CEO and Mr. Adomario Cotto, CFO and IRO. We would like to inform you that this event is being recorded and all participants will be in a listen only mode during the company's presentation. After the closing remarks, there will be a question and answer session for investors and analysts when further instructions will be given. We would like to inform that questions can only be asked by telephone. So if you are connected through the webcast, you should e mail your questions directly to the IR team at rihypera dot com. Br. Today's live webcast may be accessed through the company's Investor Relations website at epara.com.brir. We would like to inform that statements during this conference may constitute forward looking statements. Such statements are subject to known and unknown risks and uncertainties that could cause the company's actual results to differ materially from those set forwards in the forward looking statements. Now I'll turn the floor to Mr. Bruno Oliveira, who will begin the presentation. Mr. Bruno, you may begin your conference. Good morning, everyone, and welcome to our results conference call for 2020. Last year was very challenging for all companies in Brazil because of the COVID-nineteen pandemic, and this was not different for Ipira. We increased our discipline in managing costs and expenses over the year. And by doing that, we were able to mitigate the negative short term impacts of the pandemic. But we preserved our investments in innovation, digital transformation and increased production capacity, which are essential pillars for our long term sustainable growth. We had double digit growth in sellout, net revenue, EBITDA and net income, which led to a record operational cash generation, a growth of over 40% in 2020. Our net revenue grew 24% in 2020 and reached BRL 4,100,000,000.0, in line with the guidance for this year. This is a consequence of our sellout performance, our gradual recovery in the economy over the second quarter, as seen on Slide three. Sellout grew 8.2% this year with a lower performance than what was expected for the year before the pandemic, but above the estimates we had after the guidance was updated in mid-twenty twenty. In the fourth quarter, sell out grew by 14.6%, 1.6% higher than the average for the market. And this is the highest growth ever recorded by the company in a single quarter ever since we started concentrating our operations exclusively in the pharma market. Similars and generics were the main highlight this year with double digit sellout. Here, we were boosted by our capillary, which allowed us to capture growth in sales in this category across all of Brazil in large retailers and independent stores. Besides that, we also were boosted by new initiatives to increase brand awareness for Neokimu especially the naming rights agreement with Arena Queringcans, which now became Neokimica Arena. This is only the beginning. We have other opportunities with physicians, with pharmacists, with clients and patients so that we can leverage our sales even more. In Consumer Health, this year's highlights were vitamins, supplements and nutritional products, which were favored by the new recent launches and by the increase in health care concerns with the population. For prescription products, we were also boosted by market share gains in chronic medication, and we are increasing our share with important launches. Some of the relevant categories for the company such as pediatric products, orthopedics and respiratory system were impacted by negatively impacted by a lower amount of doctors' consultations in 2020, especially in the early part of the pandemic. But these categories had a strong recovery during the last quarter. This led to double digit growth in sell out and gains in market share for the fourth quarter in prescription products. Our recent recovery in sell out growth, which went from minus 1.6% in the second quarter to a growth of 14.6% in the fourth quarter and also the performance we're seeing in January and February 2021 show that the most significant negative impact of the pandemic are now behind us. In 2020, despite the uncertainties, we maintained our investments in innovation and also our strategy to launch new products. Our innovation index reached 38% in the fourth quarter, the highest level ever recorded by the company in a single quarter. Over the year, the innovation level was 33%. This is another record for Ipera, as we see on Slide four. We also move forward on the main topics related to digital transformation, which I mentioned on Slide five. We launched our e commerce platform in the second quarter for direct sales to consumers, and it had over 8,000 orders in 2020. Over last year, we created an exclusive team focused on digital trade marketing to work on exposure and promotions for our products on clients' digital platforms. And this led to a growth of 120% in digital sales in the fourth quarter. We also started developing our new omnichannel B2B platform, which will be launched in March. With this platform, we'll start having a direct relationship with more clients, especially independent drugstores and pharmacies, and this will boost our sales even more for these clients. We also increased the number of remote doctors' visits over the year. And now with physical visits, we've increased by 12% in the hybrid model versus what we did before the pandemic. We also increased our investments in digital media, which will be even further increased in 2021. We are connected to the digital transformations in our industry, especially those that were accelerated by the pandemic, and we want to be at the forefront ready to take the opportunities generated in these main fronts. Moving on to Slide six. We've made important acquisitions recently to reinforce our brands and products portfolio and find new growth avenues for the company. We made our first corporate venture capital investment in the fourth quarter with the acquisition of a majority share of Simple Organic, a digitally native brand in the natural beauty industry. We see enormous potential for Simple Organic, and it will strengthen our position in the cosmetics market in the next years. During the fourth quarter, we also have the first full quarter with results from the Buscopan family. Sellout grew by 14.4% in this family in the fourth quarter, which was a higher performance than brands had presented before the acquisition was concluded. This acceleration is already a result of the integration of our brands in the marketing and sales platform. We also concluded the acquisition of the Takeda brands this month. We're selling and integrating their operations now. I was impressed by the initial results that they brought and the people that are being brought to Ipera. I'm sure that with this team and with this brand portfolio, we're going to be the leaders in the pharma industry of Brazil in 2021. I'd also like to talk about BioNoviz, which is a joint venture of four biopharmaceutical companies from Brazil, where we have a 25% share. It was created in 2020, and it works in the biotech market. In 2020, it grew 86% and reached a net revenue of $945,000,000. We see a lot of opportunity for BioNoviz in the biosimilars market in Brazil and abroad for the next years. Finally, I'd like to talk about the investments to increase production capacity on Slide 7. In 2020, we strengthened our investments in expanding our production capacity for solids and vitamins, which are essential for our sustainable middle and long term growth. Our new vitamins plant is already running at full steam, and we've already started ramping up production in the new solids department so that we can increase our capacity by 75% by the end of the third quarter of this year. Besides that, we also joined the Global Compact, a UN initiative to encourage companies to adopt social responsibility principles and also work with sustainability. This initiative reinforces our ESG practices, not only in the continuous improvement we've been implementing in the last years concerning the company's governance, but also our commitment to environmental aspects. Over the last year, we were able to move forward on our social responsibility agenda, focusing on welfare and health for our employees and also for the communities around our operations. This includes the donations we made to the state of Goias and the city of Annapolis. We also reinforce our responsibility to our consumers by maintaining production and accessibility levels. This has become even more important during the pandemic. We've moved forward, but we there's still a lot to do in the ESG agenda, which is a core pillar in our medium and long term strategy. Finally, even despite all of the challenges that the pandemic brought and even with the investments we made in the business, we have continued our payout policies with $740,000,000 being dispersed in 2020, BRL one point seven per share, a growth of 10% versus 2019. I'll now pass the floor to Adomaru, who will tell us about our results for the quarter and for the year in further detail. Thank you, Preno. Good morning, everyone. As Preno has said, 2020 was marked by several records, operational and financial records. Even despite the pandemic that brought several challenges to our business, we were able to see robust growth in our net revenue, which grew by over 24. We managed to meet the guidance that we had issued and reviewed over 2020. The Buscopan family, which has been integrated to our business as of September 2020, has contributed BRL 100,000,000 towards this figure. Even despite the exchange depreciation, which had an impact of 2% on our gross margins. The growth has been led especially by the positive impact in the mix of products sold in 2020. Since in 2019, we adjusted our commercial policies with the reduction of sales in our brands portfolio, especially over the counter and prescription products. During the quarter, margins were also higher than the 2020 excuse me, 2019. Historically, our gross margin in the fourth quarter is lower than the previous quarters because of the idleness we have in our plants during this period. This gross margin level, which has dropped over the year, translates the short term reality in our business, which has a higher impact from foreign exchange, from costs and our higher growth in similars and generics, which have a lower gross margin but a comparable EBITDA margin. For 2021, we still see a negative impact from the exchange rate, but it's a positive contribution from the acquisitions of Buscopan, the Takeda brands, price adjustments we had and the expansion we're carrying out in Annapolis. This should increase or excuse me, this should decrease our marginal costs. In terms of the exchange, we've hedged most of our expenses by five, which is an increase of about 5% versus the foreign exchange in 2020. Last year, we also invested in our more in R and D, which went up by 44%, a total of BRL 150,000,000. A part of this investment will also be in intangible expenses. For the 2020, we the we got a tax benefit of about BRL 28,000,000. So the company continues to invest in our innovation pipeline. And also over the year, we invested to include new raw material suppliers on our list. This should give us some more flexibility for future negotiations, and it should also reduce a risk of not having enough raw materials. Commercial expenses went down by 2% this year because we had a low we had lower expenses in with travel and sales teams transportations. Regarding marketing expenses, we optimized it on several fronts in 2020 and also in the fourth quarter. Marketing expenses went from 20% to 19% in 2020. We had a reduction in expenses and campaigns when we compare with 2019, especially because of the better contract conditions that were negotiated over the last year. We also had more medical visits and medical events in remote platforms and in digital channels and also a reduction in sales expenses, promotional material, events and conferences and also a reduction in the number of free samples given. For 2021, we still have some more efficiency to be captured on the marketing bracket, especially after the integration of Buscopa and Takeda brands. With our media online having a greater share of our investments, we have become more productive in conversions. In terms of general and administrative expenses, the share of the net revenue went down by more than 1% in 2020. And this is due to our initiatives to preserve the operations we had and also the reduction in the number of trips and administrative teams working from home. Operational revenues reached about $237,000,000 this year. And this had a positive impact of some tax credits received during the period and also some costs related to acquisitions and consultancies. With that, our EBITDA reached 1,400,000,000.0 in 2020, a growth of 19% versus twenty nineteen and a margin of 35%. So to summarize, we had a lot of discipline in managing operational expenses and for 2021. The next slide shows our cash flow. It shows a strong operating cash flow generated of nearly BRL 1,200,000,000.0, the highest ever recorded by the company, a growth of 43% versus 2019. This cash generation has been more than enough to cover our CapEx investments, a part of our R and D investments and also reinforce our return on capital for shareholders through GCP here listed in the others category. We had to pay 1,300,000,000.0 in the Buscopan acquisition and also the medication portfolio of Renmark of 45,000,000. Considering the acquisitions, the company's free cash flow would have been positive. But we conclude did last year with a total indebtedness of BRL five point five billion on the long term and the middle term excuse me, with an average term of four years and a very attractive average cost. The pro form a results for the Takeda acquisition, which took place this year, led us to a cash position of about BRL 1,300,000,000.0, which should take our leverage ratio to around two times the EBITDA by the 2021, with the potential of fast deleveraging considering the company's fast cash generation expected for the next years. Considering the main variations of the working capital lines, we had an increase of more than 20% in accounts receivable, inventories, especially raw materials, which have been more than offset by an increase of 50% in suppliers due to a negotiation and extended terms. So that led to an improvement over the year in reducing our cash conversion cycle, which went from EUR $274,000,000 to 149,000,000 in 2020, a positive impact in the company's cash flow generation. Despite the lower profitability this year because of foreign exchange, I'm sure that we can recover in the middle and long term through continuous investments on our brands, differentiating our portfolio through our pipeline, innovating not only in terms of products, but also in our channels and digital platforms. We want to be closer and closer to our clients. With that, I'm sure we'll be better prepared this year than we were in 2020, and the year has already started off very well. I will now turn it over to Bruno for his closing remarks. Thank you, Adelmario. 2020 has not been an easy year. So I'd like to thank all of our 8,000 employees for their effort and dedication. It was due to you that we managed to reach these results in such a challenging year. The Brazilian pharma industry in 2020 and its performance shows the resilience and high potential that the market has, especially how the population is aging, which leads to a higher consumption of medication. Although we have uncertainties about 2020, we did not move back in our on our investments in R and D and increased production capacity. I'm sure that we will reap the fruits of this decision in the next years. So our performance in the fourth quarter and a growth of about 15% that we're seeing this year considering January and February is placing us in a very favorable position to reach our goals for 2021. This year, we'll continue to invest in increasing our production capacity, especially in the sterile drugs plant, which will allow us to go into a market where we're not very present in. We continue to believe in the pharma industry's potential for growth, and we're very optimistic about our performance for 2021 and the next years. Thank you. And we'll now move on to the questions and answer session. The floor is now open for questions from investors and analysts. Our first question is from Robert Ford from Bank of America. You may continue, sir. Mr. Robert, you may ask your question. Excuse me. Good morning, everyone, and congratulations for your results. So Bruno, what are you thinking about sustainability for your sales, especially when you look at your vitamins and nutrients segment? As you integrate Buscopan and the Takeda portfolio, how do you believe innovation will work on the power brands that you have? Thank you. Hi, Bob. About profitability, you asked about the vitamins market. We have been seeing accelerated growth in this market. As I said, anything related to preventive medicine, the population is much more concerned about their health during the pandemic. So we believe that this will continue in the middle term. And our portfolio has a profitability that's very close to what we have with the rest of our portfolio. So we have basically three major brands in the vitamins segment. Avera, which has very good margins. Vitasai also, we're investing on marketing, but the gross margins there are very good. And Neokimica vitamins, which has been relaunched recently in the beginning of this year. So we see a lot of potential for this segment and the profitability level is very close to what we have with our the rest of our portfolio. Your second question, Bob, had been about Buskopan and Takeda, right? So here we see innovation for power brands. There's a lot of opportunity here, Bob, especially with line extensions. As you know, these brands had already been sold, that is the decision to sell that portfolio had already been made by the previous owners. And they did not receive a lot of investments in innovation. Now we have a lot of products in our pipeline so that we can switch. I don't want to go into many details, but there were products in our pipeline that were going to be launched with other brands that we were able to launch under the Buscopan, Buscopane, Nosaldina and other brands, which have a lot more potential to grow than the previous brands. So this is already something that we wanted to do before we began developing products. We had several products on our pipeline that we decided to launch under a new brand name just to potentialize their power. Finally, about injectables, does ePara play any roles in COVID vaccines? Bob, we're looking at that. I think when the sterile plant is ready, but this is not for the short term. Then we'll be able to make vaccines. This could be an area for the company. And another option could be through, BioNovus, our joint venture that I mentioned before, which also has, vaccine production capacity, and this is being studied in the company. Thank you and congratulations once again. Thanks, Bob. Josef Giordano from JPMorgan will ask the next question. Good morning, everyone. Good morning, Bruno, Anato, Mario. Thank you for taking my question. I actually have a couple. We see that Buscopan has become stronger, Takeda products are So I'd just like to understand how you've been seeing the market for more acquisitions. We know that big pharma companies are becoming more integrated. So maybe you have some portfolios. So how are you seeing these opportunities considering the potential ECM activity in this industry? Also, mentioned BioNovus, which already has a good level of revenue. So does it make sense for Ipera to start going into this segment more directly, especially considering the number of patents that have been broken or will be broken in the next years? Thank you. Good morning. To answer your first question on acquisitions, as you know, this is a part of Ipera's DNA to have acquisitions. Our company was built on acquisitions. We have the potential to capture synergies. We're very strong at that given our platform, and we're always looking at opportunities. On the very short term, we're focusing on integrating the two acquisitions we have. We want to extract all the synergies that we are getting geared up for and everything is going according to plan or better. Our initial focus is to maintain our leverage. So reduce our leverage on the short term, but we're looking at opportunities. We see new opportunities for that just as with Takeda and Buscopal. Since they were acquisitions from multinationals who are looking at their core business, we see other opportunities also in the Brazilian market, which we're looking at. And if it makes sense from the strategic point of view for the company, then we'll continue on that front too. So we're not ruling out any new acquisitions for Ipera. So to answer your question on BioNovus, the biosimilars market, we have a shareholders agreement where all of these opportunities with biosimilars will be taken to BioNovus. So that company focuses on these opportunities. We have no plans of going into this market directly through Ipera, but rather through BioNoviz. Gustavo Oliveira from UBS will ask the next question. Good morning, Bruno and Adomayo. I have a couple of questions. First, considering influenza medication, which suffered an impact last year because of the pandemic. Right? There was a reduction. And it seems like you're still lower than last year. So what are you considering for this category this year? Are we expecting it to remain stable from now on? My second question is about your gross margins, which have been impacted this last quarter and last year. If you could tell us a bit about your gross margin expectations for 2021, your hedge for the year and if you continue to see input cost pressure in your business or things are normalized now? And also if you could give us an update on your CapEx plans, building new plants, what is in the pipeline, not only for this year, but for the next years? Thank you. Cesar, I'm going to answer your first question and then Adomario will talk about gross margins. So Influenza medication, we see that it took a hit, especially in the second quarter, which is one of the most relevant ones, right, the beginning of winter. And it still had an impact during the third quarter, but for the fourth quarter, the market seems to have found stability. In January, it was actually relatively good. But for the winter season now in the second quarter, we believe the market will improve as people are going back to school and so on. But I don't think it will go to the normal levels. I still believe it will be lower than the pre pandemic levels from 2019. So this is our assumption, and that's what we're working with. If it is better, we have the inventory for it. And if the demand increases, we can supply for it. But in our budget, we're still looking at an intermediate scenario. Adomari will tell you about gross margins. Hi, Gustavo. As you know, we don't have a guidance for gross margins. So we don't supply excuse me, we don't give that guidance, but we're definitely working for it to be higher than it was in 2020. But as you know, there are several factors involved. And I think the main one is probably foreign exchange rates. This year, in the beginning of the year or rather from the end of last year, we have already decided to hedge a good share of our exposure for the year. So our hedge is about 5,300,000,000.0. But this level is quite higher than the average we had for 2020, which was about EUR 4.5. There are some other factors that will have a positive impact on this margin over the year. Price readjustments from April, which should probably be around mid to high single digits. A part of our portfolio has some prices already set. So we'll see how our competition behaves to see how much of the price increase we can pass on. There's also a mix factor. It should continue to be higher and more favorable to generics. Since this is a growing category, it grows above the industry average. And this is a category in which we're gaining market share as new products become more available since the end of last year. And I think besides this, there's also integration for Buscopan and Takeda, which is providing a positive contribution for this gross margin gain. But given the exchange impact that we have in the higher mix of generics, it should not be much higher than it was in 2020. But I do think it's important to reinforce something that we always mention in the conversations we have with you and other analysts. We're focusing on EBITDA margins. When we look at EBITDA margins, there is a lot that is under our control. When we look at the business units we have, their EBITDA margins are very similar. So the generics and similars business with a lower gross margin than the other units. When we look at the EBITDA margin, they're very close since you don't have any additional marketing investments in this category. At the end of the day, what we're seeking this year is to keep our expenses under control and try to optimize our infrastructure to the most. So we want to continue investing in marketing and media so that we can have a better average EBITDA than we did last year and also a strong cash generation. At the end of the day, this is what we're looking most at, and this is what we can influence a lot. Just to add something here to Adel Mario's answer. We see this level of gross margins around 25%, very cohesive with the EBITDA margins that we see in the rest of the industry. As Adomayo said, although we have challenges with gross margins, in the last years, we also saw a lot of opportunity to optimize marketing costs, especially media, which is our main line. So with digital marketing, with digital channels, and we're investing more and more there, we're seeing more competition and we are having a better cost in the old offline channels and also the online channels. So these expenses in marketing have become much more efficient than in the past. So with that, we were able to generate this equation of about 65% in gross margins and an EBITDA of about 85%. So this does make sense for the middle to long terms. Regarding CapEx, Gustavo, we should see a greater investment this year. We don't provide guidances, but last year was about $450,000,000. This year, it should be higher than that. I'm talking about our CapEx, and this will be the highest investment the company will make. We're still concluding this plan. We're bringing in equipment for the last expansions for vitamins and solids. We're building this new sterile plant. But we understand that the peak of that investment will be this year and then it will drop down to a good maintenance level that we had before, million, BRL300 million. Okay. Thank you. Mauricio Sepeda from Credit Suisse will ask the next question. Mauricio, you may continue. Thank you, Preno and Ador Mario. Thank you for your time. And I have a couple of questions here. First, congratulations on your result. Your sellout increase above the market average was very positive. And related to that, with this higher sellout, do you intend to reduce your terms with receivables still above twenty days? So your inventory seems to be a bit higher than average. And my second question is, now talking about the COVID pandemic and the reduction in marketing expenses, will you have any impact on your traditional media expenses for the next months? I'm just wondering if you'll go back to the traditional marketing channels. And also, you intend to increase your sellout and even the discounts that you provide? Good morning, Mauricio. So your sound was not so good. We understood your first question about inventory levels, and we'll confirm the other one soon. Let me start by answering your first question. We have this target here. Receivables went down significantly with our adjustment and are around one hundred and ten days before sales. This doesn't mean that our inventory is at that level. Clients, as you know, usually the industry provides credit for retail and there is some working capital, which is usually positive with retailers. But yes, we've been doing that, Moni Issu, since 2018. Our investments were concentrated in media in the past. And we did not invest a lot in commercial discounts, basically promotions at the point of sale and also the exposure to endpoints of sales. So this has been growing significantly in the last years. We're being more active in point of sale promotions and sales, also in exposure, shelves, checkout lines. We've been much more active in doing that. So we're better directing our marketing resources and having a better balance between media points and trade marketing. In media, we're also going to digital channels, Facebook, Instagram versus traditional media. With traditional media, we have a package from Globo, which is very good. We have a very good cost, and this is much better than it was last year. But we have migrated our resources to digital. And as I said, we're going to continue in 2021. And do you intend to sell out on products that your competitors have? Would you intend to open that up to your investors? Volume price, yes, we usually say that during the opening. I think Adomario mentioned our volumes and prices. We usually discuss sell in more, right? Yes, we can think about factory prices, but there's not a lot of variation in our cost. It doesn't vary a lot from quarter to quarter, But we can look at it. We don't see a lot of importance, but we can talk offline and understand what the advantage would be of communicating that. Okay. Thank you. Tobias Jingling from Citibank will ask the next question. Good morning, Bruno and Adomario. You innovated the market with guidance even for your profit levels. And why are you not providing a guidance this year? What is still unclear for you? Is it the pandemic, integrations? Last year, you had many benefits from marketing, from promotions. And what do you imagine this will continue like? Of course, this is still in your margin expectations. But since you had relevant savings last year, how do you believe this will continue in 2021? Thank you. Tobias, no. Regarding our guidance, we're going to give that in our hype day, which is will be now on the twelfth. So the idea is to provide the guidance during that event. It's not that we're not giving it anymore. It will be given in a couple of weeks. Regarding expenses, especially travel expenses and so on. We believe that this will probably go up in 2021, especially when we get closer to the second half of the year. But some of the savings will be permanent, especially traveling in the company with better productivity for medical reps as we move to this hybrid model. So we went back to the field with our reps. They went back to the field, but we're working on a hybrid model where about 10% to 15% of the visits are being conducted remotely. And so we're getting productivity with that. We're at a higher level of medical visits than we had in the past with a slightly lower cost than before. So these gains, we believe, are here to stay. Just to add something Tobias, we are also having gains in scale and synergy with the new acquisitions, and they will contribute with the first quarter with two months of Takeda. And the second quarter, we'll have the full integration from Takeda and Buscopan. And this will generate synergies not only in the fiscal side, but also OpEx. With the contracts that we have with media, with our visiting team, merchandising and trade, we were able to get a much better exposure for these brands and that leverages sales for this portfolio. Okay. One last question. I'm sorry if you mentioned this in the beginning of the call. Do you have any updates on leniency? What can we expect from that? Tobias, we don't have a lot of news on that. On how the independent committee investigations have been developing. But what we can say is that we are doing everything the company can to solve this issue completely as soon as we can. This is what we can say, you know, and whatever depends on the company, we want to get this out of our way as soon as we can. Unfortunately, we don't have anything to share on that right now. Thank you. Thank you, Tobias. Felipe Hebureto from SafraBank will ask the next question. Good morning, everyone. Thank you for taking my question. Just a quick question. You mentioned Buscopan and Takeda and made it very clear. I know that you're not going to give the guidance for 2021 yet, but I'd just like to see how you see it growing in 2021. Do you think it's going to be pulled by the new acquisitions? Are we expecting organic growth closer to 2019 levels in terms of sellout? That's all. Thank you. Felipe, as I said here, we saw fourth quarter growth around 15%. For the first months of the year, it's also at that level. And our target and our budget is a growth of that amount, considering our full portfolio, this is the level we expect to continue working on. And we believe it's very feasible to grow that much given that our portfolio really suffered last year. So as activities are recovering, unless there's a third wave, unless there's a problem with vaccinations. We believe that in the third quarter where we had a 1.5% reduction last year will be significantly offset during the 2021. So this is what we're working on right now. That's the expectation we have. About 15% is a good level for sellout growth in the same comparison comparative basis as 2021. Thank you. Gustavo Cicil from Bradesco will ask the next question. Good morning, everyone. I have a couple of questions here on our side. First, about capturing new suppliers, it seems like you've gained some space there to capture them. So can we expect any benefits from that? Will it be in the middle term? Will that affect your margins? Does that make sense? Also, you might have mentioned this before, but we'd like to ask some more about, complete products or complex products, excuse me. I know that that's not your, focus. I'd just like to understand your point of view on that, if you could tell us. Did the Takeda portfolio give you some more complexity? That's all. No. So to answer your first question on including new suppliers, I think the main point here was really to reduce the risk of missing or lack of raw materials. So when we include a new supplier, it's almost like developing new products. It's very complex. There's a lot of testing to be done, a lot of protocols to follow. And given the COVID pandemic, the regulatory agency has made it more flexible in order not to have any shortages in the market. I think that's the main benefit. So as we include new suppliers, our bargaining power to negotiate a better cost, a better term will also go up. But this is almost like a side effect. This is something that we are going to be working on over some time. You had asked about complexity. Do you mean our portfolio complexity? Yes, exactly. If you're going to have more complex products in your portfolio or if you'll continue following the line that you currently are? I'd just like to understand the company's long term vision. Yes. Well, we look at our portfolio in the following way. It's very diverse. With this portfolio, we can be in all categories in Brazilian pharmaceutical retail. So during the pandemic, we saw the benefit of having a diverse portfolio. We saw that some categories grew by much less than others, but this was offset by other categories, vitamins, drugs for chronic conditions, cosmetic products. So it's relevant that we have all of the categories. And at the end of the day, this will be much more of a benefit than a problem. So we're going to try to have a bigger presence in these categories where we're already very strong and also look at other categories that we believe to be interesting and that will have great growth in margins. So that's the company's strategy. When we look at innovation here, it's also important to remember that our main focus is to have incremental innovation. We're not investing on our pipeline to develop new molecules, but rather to bring in molecules that already exist outside of Brazil that haven't been brought in so far or new combinations of existing molecules. So we're going to use the strength of our brand to introduce new concepts. And whenever we extend our line, our brands are already very strong, they perform much better than if we created a new brand from scratch. So I think that will remain our focus. This concludes our questions and answer session. We'd now like to give the floor to Mr. Bruno Oliveira for his closing remarks. Well, I'd like to thank you all for participating in today's call. And I'd like to reinforce our invitation to the Investor Day, the Hype Day, which will take place on March 12 at two Brazilian time online. I'd also like to make myself available as well as all of the investor relations team to answer your questions and help show all the value and potential that we see for the company to grow in the next years. Thank you and have a good day. This concludes the company's call. Thank you for listening and have a good