Hello, everyone, and welcome to today's presentation of ALK's Q2 results, together with the updated outlook for the full year. And could you please turn to Slide number 2, where I will introduce you to today's presenters and our agenda. My name is Peplanikov. I'm Head of Investor Relations. And with me today are ALK's CEO, Carsten Hellman and our CFO, Soren Jelord.
And today, we will look at our Q2 performance, sales trends across our regions and portfolio and the 6 months financials. Then I will give you an update on our 4 strategic priorities, including the newly established partnership for JEXT in China before talking you through our improved full year outlook. Finally, we will end today's call with the usual Q and A session. So if you would please turn to Slide 3, I'll hand over to Carsten, and we'll get started. Thank you.
Thanks, Peer, and thank you, everyone, for joining us today. First, let me give you some highlights. During the Q2, we delivered revenue growth of 13%, resulting in 11% growth for first half, combined with a better sales outlook, means that we now are at the high end of our guidance range and foresee double digit growth for the full year. Taken together with an improved earnings outlook, our performance and forecast led us to upgrade our full year outlook earlier this week. Q2 growth was driven by an increase in tablet sales of 23%, along with the recovery in sales of legacy products up 4% as markets saw a further easing of COVID measures, increasing the ability and willingness of patients to visit allergy healthcare professionals.
Sales of other products also increased by 13%. Overall operating profit, EBITDA, was better than expected at DKK48 1,000,000, influenced by savings and an improved gross margin, but also a planned Increase of DKK36 1,000,000 in R and D spend. We also continued to execute Strongly on our long term strategy and took significant steps through our new JEGS partnership for China, which provides an opportunity to launch the 1st adrenaline pen in the country with the leading adrenaline supplier, Grand Pharma. We also saw a number of new approvals for the tablets mainly in Eastern Europe and in U. K.
And we continue to progress further on clinical development The tablets and a few other things, all of which we'll come to later. With that quick look at the highlights, I'll hand over to Soren now, our CFO, We will take a look at the Q2 financials in more detail. So please turn now to Slide 4.
Thanks, Carsten. As said, quarter 2 was yet another good quarter for LK, delivering double digit growth In Europe and North America, while international markets were impacted by phasing of product shipments to Japan and China. Even so, In market sales growth in these markets are really good. Sales were up 14% in Europe and were particularly strong in the Nordics and Central Europe, driven by tablets, which were up 27%. Once again, we saw Etulisax perform well, but we also continue to see a clear uplift in Krasax Sales in markets where Tulezacs has been launched.
Sales of legacy products, particularly skid, showed a positive momentum, And they have started to recover some of the lost ground from previous years due to the discontinuations and the COVID. As in previous quarters, Germany delivered double digit growth, and we saw a shift towards Registered evidence based AIT treatment continue. National reimbursement guidelines recommending that AIT patients should be initiated onto registered products have been implemented in the majority of local regions, and we continue to see this translating into more patients being initiated onto registered products. In North America, revenue was up 33% As we saw, our sales continue to recover from the impact of COVID, especially in the U. S, where sales of legacy products increased sharply as doctors focused on bringing patients back into their clinics and hospitals.
Tablet sales increased 59 percent, although this is from a low base. In general, tablets continue to be challenged by the higher Financial incentive for prescribing legacy products in the U. S. Even so, sales levels are now above pre COVID levels and things are progressing in the right direction. We continue to see increasing acceptance of tablets in Canada on the back of the TULATEK launch in late 2020.
Sales in international markets were affected by quarterly fluctuations in phasing of product shipments, which means that sales were down 15%. What is much more significant is the in market sales development. In Japan, the in market tablet sales grew by 49% in the Q2. And we continue to see Thore doing a fantastic job, especially with Mighty Cure, which grew an impressive 71%. Meanwhile, in China, we also see good in market sales trends with growth exceeding 30%.
All in all, we expect international markets to grow full year at more than 10%, which is higher than we originally anticipated at the beginning of the year due to the development in China and Japan. Now let's take a closer look at the product categories on Slide 5. As I mentioned earlier, the tablet portfolio continues to be the growth engine of ELK. Combined skid and slip drop sales saw a recovery and were up 4%, reflecting increased skid sales. As planned, we only now only we only see a minor immaterial effect from past product discontinuations in Europe.
During COVID, skip treatments were disproportionately impacted by the pandemic since some patients were either unable or unwilling to visit clinics. Sales of other products recovered further in Q2 and were up 13% as COVID eased its grip on sales and diagnostics and other Life Science products and pre pin. This brings us to Slide 6 and the P and L. Profitability was better than expected. Half year revenue was up 11% in local currencies.
The lower U. S. Dollar, in particular, had a negative currency impact so that reported growth was 9%. The gross margin improved by 1 percentage points to 60%, reflecting an increased sales of tablets in Europe, somewhat reduced by shipments to Torii in Japan with lower gross margins. EBITDA was almost unchanged at DKK 274,000,000 despite a planned but sharp increase in R and D spend of DKK 89,000,000.
Disregarding R and D, EBITDA saw an underlying improvement. Capacity cost increased 15% in local currencies, which was mainly caused by an increase in R and D in support of increasing activities related to clinical trials. Sales and marketing also increased on more normalized activity levels. However, we also continue to see operational leverage on ALK's commercial activities. Free cash flow improved by DKK 128,000,000 mainly driven by the phasing of investments and changes to working Finally, it's worth mentioning that we have refinanced our loan facilities, expanding and extending the lines so that we now have DKK1.2 billion in unused credit facilities running until 2024.
Now let's move to a brief strategy status on Slide 7 and over to Carsten Aggen.
Thank you, Soren. As you all know, earlier this year, we updated our strategy to support our pursuit of a sustained high growth and to continuously improve our profitability towards 2025. Tablets will continue to be the primary drivers of growth, and we will support the success by becoming relevant Eva and Evermore allergy suffers. The four priorities are still to succeed in North America, To complete and commercialize the tablet portfolio, to improve and enhance the digital consumer engagement and new horizons and also optimize our business for excellence. By executing on these, we seek to extend our leadership in Respiratory Allergy leading to a strong Sustainable growth, but we also seek to accelerate our long term growth by entering Food Allergy and expanding our presence in anaphylaxis and other activities that I will not talk about right now.
Again, the goal is an ALK capable of delivering sustainable high revenue growth of 10% or more annually And earnings growth towards an EBIT margin of 25% in 'twenty five or as we call it, 25% in 'twenty five. In Q2, we took further steps towards achieving all of this. So let's take a look at our progress in the first two priorities on Slide 8. Let's start with North America. On the left of this slide, as mentioned, the easing of COVID restrictions in the U.
S. Has had a clear impact on the ability and willingness of patients to visit allergy specialists once more. Tablet sales have bounced back and were now higher than They were before the COVID, growing 59% in Q2. Legacy products are also up strongly. The higher margin serving as an incentive to prescribers by also illustrating the challenge with the tapest we still face in the U.
S. Nevertheless, we continue to execute on our initiatives to bring us closer to patients. Our digital engagement platform, Clarify, was launched in the U. S. Last year and is meeting its 2021 performance targets And more than that in that moment.
In Q2, we also launched Clarify in Canada. We have also expanded our telehealth partnership with Cleared into more cities, leveraging our digital relationship to connect potential patients With an allergy health care professional, we'll consider Tappus as a treatment options all digitally. We're also working to build a position in other specialties. And in Q2, we acquired OTIPRIO, a treatment for swimmers air from autonomy, enhancing our access to ENTs And pediatric specialists in the U. S.
Moving to the right hand side now and our global process and completing and commercializing tablet portfolio. We see that Etulosacx continues to be the flag carrier for growth and in a number of market is having a halo effect that is also benefiting other tablets. In Q2, we continue to work to add new registrations and expand the use of the tablets, resulting in approval for Kaesachs and EtulSachs in the U. K. And many more approvals across our markets for Kaesachs, gysax and rakvivax.
We also completed the U. S. Adolescent trial of ADOCTRA, Paving the way for an application to the FDA for Adalasand use in the U. S. Our other clinical activities are moving forward According to plan, with patient recruitment for the Haustad smite and the 3 allergic gonitas pediatric trials progressing well.
Let's move on now into our other two priorities on Slide 9. On the left here, you can see our 3rd focus area, consumer engagement and new horizons. On consumer engagement, we are well underway To meet our full year target of 250,000 new consumers mobilized via our digital channels, with the year to date figure standing at 100 and 60,000. A moment ago, I mentioned the U. S.
Where the number stands at 10,000 out of a full year target of 20,000. On the New Horizons, we announced the new DICKS partnership for China, which is the biggest deal we have agreed in the past decade and is a major opportunity for ALK. I'll come back to this in a moment. We are making good progress with our own internal next generation adrenaline pen And there's no news on the program at wind gap. Early development of the peanut allergy product continued according to plan in Q2 With us finalizing a license with Catalent for the use of their faster solvent tablet technology in the first plant product, This is the same proven technology that we use in our respiratory allergy tablets.
Our 4th priority is to optimize for excellent, Covering the work to rationalize our portfolio, simplify our manufacturing processes and upgrade the regulatory documentation for core legacy products. On that last point, so far this year, we have submitted more than 1,000 regulatory changes to 36 different regulatory authorities around the world. Very impressive from the team. One final point before moving on. You will have You will all have seen the headlines about challenges in the labor markets since COVID.
At ALK, we've been working hard on a number of initiatives to retain talent And to increase employees engagement. And I'm happy to report that a Q2 employment survey show that engagement levels at ALK above the benchmark for the pharmaceutical industry, which is very encouraging. Let me go back to China and talk about that on Slide 10. As you know, we've been working for some time on our strategy for unlocking the significant opportunity that the Chinese allergy market represents. China has among the world's highest prevalence for Halsted Mite allergy and the HGM AIT market There is already the 2nd largest in the world, but has the potential to become even larger.
This is why we are working towards a market instruction of Akaiasax. However, we are also stepping we have also other stepping stone for growth in such a large allergy market. The partnership with the leading supplier of Adrenaline Gran Pharma will see our Adrenaline Pen next Adrenaline pen JAKS registered and launched in China. JAKS is expected to be the 1st auto injector in the country, potentially giving Grand Pharma a major first to market advantage. As a first step and prior to registration in Mainland China, Grand Pharma will start selling Jigs in Southern China on a special license.
LK will receive upfront and registration milestone payments Totaling approximately DKK 90,000,000 in return for granting Grand Pharma the exclusive rights to Jext. LK will auto manufacture and supply Jigs and importantly, we'll receive income from the supply of products to Conferme. With that, I'll hand back to who will talk you through our operating outlook for 2021 on Slide 11.
Thank you, Carsten. Our full year outlook has been upgraded to reflect the first half year performance and an improved sales forecast, cost savings and minor changes to the timing of clinical development activities. The improved full year outlook is as follows: We now expect double digit revenue growth of 10% to 12%. This is driven by an improved tablet outlook from approximately 25% last time to now 25% or above, which is further supported by an improved outlook for sales of R and D is now expected to be slightly lower than DKK 650,000,000. These are mainly delayed activities And the cost will likely be pushed into 2022.
We will still foresee a gradual normalization of sales and marketing compared to last year, which was impacted by COVID. Free cash flow has been improved and is now expected to be around minus DKK 100,000,000, reflecting higher earnings, CapEx at around DKK 250,000,000 to DKK 300,000,000 and the upfront payment received from Grand Pharma. We still assume that free cash flow will be impacted by a one off working capital payment of DKK 175,000,000 that were postponed from 2020 into 2021, of which relates to accrued rebates. With this, I'll hand you back to Peer and the Q and A session on Slide 12.
Thank you, Soren, and thank you, Carsten. And this concludes the main part of our presentation. So we are now moving to the usual Q and A session where we would be happy to take any of your questions. And operator, please go ahead.
And our first question comes from Thomas Parce from Danske Bank. Please go ahead. Your line is now open.
Yes, Craig. Thank you very much. A couple of questions from me here. So just to kick off with the JEXT. So I understand the Grand Pharma already starting to Sell in Guangdong next year, given the Hong Kong registration.
So can you maybe just update us on your The capacity constraints, is this I know it's gradually improving, but is this still an issue That sort of limits the initial opportunity in China, assuming that you, of course, Can keep the momentum in Europe as well. And then just on the MT11 asthma trial. So assuming the number of hospital Asthma exacerbations normalized during the winter, as you're right, will this still be enough to avoid Any additional cohorts and then leading to a delay of the expected mid-twenty 22 readout? And then just On the Diagnostics sale uptake, you sort of it's always sort of an indication that you To see a higher demand of added products. So does it even indicate sort of a pent up demand in the potentially in the U.
S. Or do you expect this return to around 10% growth to be rather stable going forward? So anything here in second half assuming that Delta variant is not going to give any new close downs or anything in the U. S. That would be very helpful.
And then maybe just a last question, just On the Food Allergy, so the Phase 1 timing, so I sort of had the impression that You plan for Phase 1 start here in later the later part of this fiscal year. So any color on the feasibility data given that you Clearly advancing, as I hope, with the Catalent technology agreement. So any color here would be very helpful. Thank you.
Thank you, Thomas. Four questions. Let me start with the first one about JEKS. I know we have been working a lot And Unova to double the sale and takes the last 3 years. We will not have any capacity constraints supporting to Con Farmer.
Let me just clarify exactly how it works. We have a registration in Hong Kong. That they can sell in Southwest China, Grand Pharma. And we get the registration per hospital. We have a couple of hospitals right now and they expand that to 20, 30 hospitals in that region.
Is an area of about 80,000,000 people. And we'll be fine to support that and also grow that significantly should that be the upside we do have. So no, there will not be Any capacity constraints, I think we are and have cleaned up a lot in JAKs and is running as it should. Regarding The MT11, we don't really know whether we need a cohort yet. We need to see the data.
They're not opened yet. So We'll see. If we do, it's only because of that. It's only because that the children has not been out and has not been hospitalized with expectations and That's just the way it is. So we don't know.
Honestly, we don't know. Diagnostic U. S, it that I would have to say, I don't really know Either we can see that we didn't lose the customers during the pandemic and we thought that things were going very well in many areas Just a few weeks ago and then the new Delta version of the virus hit and then New York are closing down again. So it's a little bit up and down. We believe that we will have strong double digit growth in the U.
S. For 2021. I think we are totally allowed at about 17%. And we don't really see That any of the momentum we do have right now should slow down because it's a little bit all over the place and it's up and down and in and out. So I think actually we will be okay for the U.
S. This year. So it's not going to be going back to what we saw last year. For Foodality, we're working hard as you just heard that we now got the deal completely done with Catalent. So you can Maybe you ought to guess that our vehicle will be food tablets that are working exactly the same way as our current respiratory tablets.
And when we're ready to go in Phase 1, we'll know more throughout this autumn. Whether it's going to be late this year or beginning of next year, we don't know that So but it's not that we have faced any issues yet. And the team is working hard on this one and this 1 is going to succeed. We're very confident about that. So that was the questions you had.
So next question, please.
That's great. Thank you very much.
Thank you. The next question comes from Peter Silkegaard from Handelsbanken. Please go ahead. Your line is now open. Thank you.
It's Peter Sjafo. I have a couple of questions, if I may. On the R and D expenses for next year, consensus could look a bit too low given that At the current level of this year and also that you are facing some costs into next year as well. So some guidance or whatever now. We should probably not use the word guidance, That's on whatever about next year's level or what we should be out for there would be very welcome.
Secondly, on Grand Pharma, the mechanics here in terms of the P and L impact, You're right that you will receive a or you will deliver the product, but what kind of model is this? Is this cost plus Same as the tablets for Japan. So just to get some indication on potential margin Our gross margin that we should be looking out for here. And then just finally, the usual question to Soren on the gross margin was again at The top end of what we're expecting. You usually try to talk us down a little bit here, Soren, but Are we now at the stage where we can say that gross margins are really ahead of your expectations, not just for this year, but also Into the future.
Thank you.
Yes. I will start with Grand Pharma and then Soren he will take the R and D and the other question. Regarding Cranfarma, for competitive reasons, we have said that our sales price to Cranfarma is at European level, Our sales price in Europe or more. And then we get an upfront payment. So if you look at it In an overall perspective, it will both be accretive to our margins, to our sales and to our net profits, Because we have a gross margin plus 50%.
We have EBIT on JAKKS more than 25% And every sales we get here we didn't encounter before in the plan. So and the way you should sort of face the thinking is that, let's see how it goes the first Couple of years when we launched in Southern China how well Grand Pharma performs, they will be working hard on getting the registrations. So in 'twenty four, 'twenty five, that's when we had the full main China registration as the only pen on the Chinese market. It's a very big market today. It's a $1,000,000,000 plus market.
Grand Farm has more than 50% market share, which is just prefilled vials Or just VIAL to put into a Syringe. And when this pen come, they will be launching that and let's see how that goes. But that's post 'twenty Efnan, this is very much like we said before that we are Building a business that should grow organically this 10% plus, getting to 15% EBIT in 'twenty three percent and 'twenty five percent and 'twenty five percent with upsides beyond 'twenty five This is just one of the upsides we talked about. We just didn't mention this one. But we have these upsides being the food, being the enaflaxes and being this one.
These are things that are going to kick in after 'twenty five for us sort of to sustain and accelerate the growth. And can we do something that are helping us Earlier, we will do that. But right now, this is the mechanism of Granfarma, accretive to sales, profits and absolute money. With that, I can Yvesant can talk to the R and D in the next one.
Yes. Thank you for your questions, Peter. And you're absolutely right on the R and D spend. I'll take the liberty to take us a little step back in time. And that's actually all the way back to 2020, where we saw a lower than anticipated R and D spend.
And at that point in time, we said some costs will move into 2021 and others will move into 2022. And I think so there, we took a push into 2022, probably actually increasing your Estimates or you could have done your estimates a little higher. And what we see now here in 2021 With you could say, before we said around CHF 650,000,000 Now we say a little south of CHF 650,000,000 And let's say we move CHF 25,000,000 Into 2022. And then with the backing of what we had from 2020, I think it's fair to assume that we are above 650, Where we are between €650,000,000 €700,000,000 right now in that particular year, I think it's too early. But please also remember That although small numbers, we are actually embarking on the food.
Having said that, I think it's extremely important to understand we are completely committed True, that the R and D cost is expected to come down within the time horizon that Carsten has set where we delivered 25% in 25%. So in that sense, it is the same story. We are just hit by some cost Postponed from 2020 actually and 2021 into 2022, it's still at a reasonable low amount. And I think in total over the years, it will be the same expenditure pattern. So in that sense, Cost burn for R and D is going up.
Overall, seen over years in combination, There's no change. But I think to your question, yes, your estimates ought to come up a little bit when it comes to R and D in 2022 isolated. After that, I still believe that we will come down, as we have said, and are definitely adhering to in the plans. So I hope that answered that one. And then when it comes to gross margin, it is actually some of you picked it up Also as part of why we have also raised our underlying outlook of earnings this year Because we think we are in the better end of where we were before on gross profit.
And actually, you can say here for the quarter 2 alone, we are 1.8 percentage points up on gross margin. And it remains to be the story about the tablets driving our gross profit up. And as you can see, when we report out that our tablet is now above 25% or above, It actually yields also some more margin points. So yes, we are positive influenced. I'm not promising you that we are suddenly seeing a Steep increase in 2022 because this is not the plan that we have set.
And we are still, you can say, investing in quality And the efficiency on the skid that will still take 2022 before it reach out. But if you ask me, is this a positive step? Yes, it is. And it definitely demonstrates that also in this parameter, we're moving in the right direction, in fact.
The next question comes from Benjamin Silverstone from ABG. Please go ahead. Your line is now open.
Thank you. Hi, Carsten, Sonnepia. I hope you're well and Congratulations on the quarter. I have the 3 questions to start with, if I may. The first one is in regards to the development of your in house next generation AAI.
It says in the report that there is positive progress according to plan. But I was wondering if you could give us some more nuances As to when we would expect to see something more tangible in this regard? And my second question is in terms of international markets Where you mentioned that China and Japan actually saw growth despite the phasing of shipments. Could you give some indication as to which markets was Driving the negative sales decline of 15% in this region, just to give some clarification in terms of these markets These markets, sorry. And the last question is for Soren in terms of the credit facility.
Just to make it brief, this new credit facility, should we see that as a safety buffer? Or is this Because you are planning on having some negative cash flows in the next couple of years, how should we view this? Thank you so much.
Thank you. For the AAI, remember, we have 2 parallel projects. 1 is the wind gap and 1 is our own development. And what we are committing to and talking about is that we in 'twenty four, 'twenty five will apply for FDA approval for a pen in the U. S.
It will be one of them or both of them, we'll see. So they're working according to plan. We haven't any stop go things that we are envisioning right now. And we will come back to you when we have if we have any negative or very positive decisions To make about these AIs, but there isn't any there really isn't any flesh on that one. International market, it was not The reason for the quarter result of minus 15% was only and only a postponement of shipments to China and Japan.
That's it. In market sales in Japan and China is 30%, 40%, 50%. There isn't an issue. You should expect maybe to see 60%, 70% growth in international markets in Q3. It's simply a shift Between the quarters, there isn't any markets that are driving at all.
And for the credit facilities, I'll let you do that, Soren.
Yes. I think it's a good question. I'm always of the opinion that you probably do the best deals in the when it's peace. And in this case, we definitely consider it just to be a safety buffer. And so that we don't And basically also, you could say have the capacity if we need to use it.
So there's nothing whatsoever reading into a negative Aspect of that, it's basically just to create a safety buffer at very competitive terms, given how we are fairing the business. So that's a clear statement from my side.
Thank you. Next question comes from Michael Novak from Nordea. Please go ahead. Your line is now open.
Thanks a lot. It's Mikael Norwood from Nordea. So three questions. First, you mentioned that you still see Itulisax pulling up Grass Sacks as well, but mentioning a carry Sachs and giving your guidance, have we seen sort of a All the slowdown in the Carisax. I recall you also mentioned a bit about that in Q1.
And then to that as well, going into next year, Do you sort of offer into your own internal expectations that there will be competition from Dals in Korea in the market And they're launching there, how does my tablet, is that something that is not really of any concern to you guys? And then lastly, just want to challenge a bit on the wind gap because it seems like at least communication wise, it sort of Seems to solve a silent death since sort of it was announced. So maybe you could just talk a bit about what kind of challenges that you are seeing Given that we have not seen any stop go decision yet on this project? Thanks a lot.
Thank you. We are in COVID times. We do not see any fluctuations and slowing down of CAI SAX or Itulis SAX Taking out any new terms except that the halo effect we talked about where you saw the 10%, 20%, 30% growth rates suddenly happening on Kaas Thanks. No, it's it go well on all tablets and we believe that is going to continue as the market potential is still there and our penetration is low. And that also talks a little bit into the second question about competition.
We just have to remind ourselves that it It's less than 1% of the people with respiratory allergies that are actually under treatment and about 40% of that is tablets. So this we don't really see that it's definitely not going to be cannibalization for us. And we don't really see that It should slow down our growth. I haven't heard that from any of the business reviews I participated in, in neither Europe Or any other countries. Stellagens is of course a good competitor and the more people who talks about Tablet will be better.
I had hoped they have pushed much harder in the U. S. With the tablet, so we can have more voice out there. But this is going to be a European play and I think we are well positions to take our fair share. Win GAAP is not planning to or we do not plan it should die a silent death and we don't dare talk.
You're implying that we are not just letting it die and not talking about it. The thing is that right now, we're still getting the pilot plant and produced devices. And we're doing all the stability testing. And then we have to figure out and prove and secure that There isn't any leakage that when we dissolve the powder into the fluid that there isn't any clotting and all that stuff. And that work is going on.
And yes, we face some challenges from time to time and we're still working on it. It's still our expectation that we can conclude this project, But we can't confirm that it's 100% sure. It's still work in progress. And has it taken longer than we thought? Yes.
And And I think one of the things that surprised us the most was actually the best variation between the devices we got from the different pilot productions they did when we got those. And these are the things we are facing right now. But we want to be with an AI pen in the U. S. And if it's not going to be a win gap, it's going to be our own device.
So we no matter what, either we are registering 2 or be a registering 1 of them, we don't know yet. And then your next question would be, but when do you know? I'll just say I don't know, but I think I will know more by the end of the year when we had the last ability to test on.
Sure. Thanks a lot.
Thank you. And the next question comes from Jesper Oser from Carnegie. Please go ahead. Your line is now open.
Thank you so much. Two questions from my side. First one on tablet traction in Europe and in Germany and another one on Grens Pharma, and this is Jek Steels. We can just take one at a time. So tablet traction in Europe.
So perhaps you could just put some more color on sort of Slowing growth that you see here in Q2. So it has been slowing a bit more versus recent quarters. I know it's small numbers and There could be, call it, fluctuation, COVID and what have you. But anything you're seeing in the markets that could explain this Slowing, growth. Anything which you actually read into it?
Or is it basically just quality fluctuation? That's just the first question. Then I can follow-up with the Graham Simon question.
There is absolutely no change in the tablet dynamics. And even though we had 0% growth 2nd quarter last year, TAP is still growing 25% Q2 last year. And now we grow on top of that again. We don't see anything. But you're absolutely right.
In 1 month, it's slowing down because clings are closing down, then they're opening up again and then we have higher. So it's simply just fluctuations. We have no dynamics whatsoever seeing that our penetration into this market is changing, not at all.
Perfect. Thank you. Then just on Graeme Pharma, perhaps you can just comment on how you actually see this opportunity with checks in China versus or compared with The 2 RE partnership, as you also mentioned, that is the biggest deal in 10 years. So perhaps it will put some words on the deviation between the two market opportunities. Could it actually end up being as big a sales driver as the jewelry partnership has end up being, so just some proportions?
Then secondly also, pleasure to put some words on the competitive landscape in China on ADRENALIN. So you mentioned in the announcement that The current market is supplied with ampoules. So I guess it's not with auto injectors, simply injections. So but I'm just trying to understand Why is Mylan and other generics not seeing the same market potential that ALK and Grand Pharma has actually seen in China? So I'm trying to understand why now with Jext and other competitors lining up in this market as well?
Thank you.
No, I think that you should Assume that both Confirma try to develop their own pen, you should assume that EpiPen, Mylan and all others have tried as well. What is driving this one and JEXT is that we managed to get a license to sell an approval in Hong Kong. And that sort of opened the door to Grand Pharma where we could be the 1st and only pen on the Chinese market. And that led to the discussions. And actually because of the license in Hong Kong, we can now sell in Southwest China, an area about 80,000,000 people.
And And we now get a hospital by hospital approval to sell there. And then we'll see how successful they do that. Then there will be Some years until 'twenty four, 'twenty five, where they will file for a mainland registration of APEN in China. And we don't know what we don't know, but there isn't definitely any foreign competitors out there and we haven't seen any traction on any local ones. And remember, Gran Pharma is the adrenaline company in China.
So it's not like we are having a small opportunity player. They are sitting for more than 50% of the adrenaline market already. And they now see opportunity both for first mover effect And then when you get the registration after 'twenty five, then the sales numbers, if they're successful and if nothing happens, this is China, Would be very big for ALK, simply because of the product, the size, our transfer pricing and the way the deal works. So if Grand Pharma's plan works out, we sell a lot in Southwest China now I learned from that. We market the product.
We get it registered and we launch it in Old China in 'twenty four, 'twenty five. Then the sales potential is very high. Just the ample Market today is more than $1,000,000,000 And already today, current pharmacists are more than 50% of And that's just the low end, you can say, legacy Adrenaline ampoules. So How does it work? How would the pricing work?
How much would be out of pocket? But after 'twenty five, that's where we expect the reimbursement to kick in. And that's also why When I say that the big potential most likely will come after 'twenty four, 'twenty five when it's fully registered in China and fully reimbursed. So I understand your questions, but I think sometimes that's just the way it is. And we managed together with Grand Pharma to seize this opportunity, make a deal and move on it.
And there isn't anybody just behind us. So now it's just up to us and Granthammer to leverage that first mover
Pekt. Sounds good. If I can just put in another question. So just on this peanut allergy program. So You mentioned yourself that we could probably read into the fact that you have this deal with Cattellan, I.
E, that you will To the peanut allergy and food allergy space with a tablet. Perhaps you can add some color on what you've seen since, say, the full year report and Q1 report that makes you more Certain that it is actually possible to treat peanut allergy and other food allergies with your tablets and technology? Thank you.
With the buffer that I don't know what I don't know happens in clinical trials for the future. But As I said just before, we just made an exclusive deal with Catalent And proof that we can actually and we have already the tablets with PINGOS inside. So technology wise, we can develop a regimen with food allergies delivered like our tablets, dissolving quickly under the tongue with this proprietary technology and we have now that in our bag. Now what we need to test right now in Phase 1 is how does that work with the dosing and how do we do that. And there's a lot of different types And formulations of adrenaline we are working on right now and testing in the tablets to find out how that works.
But I think I can confirm that when we hit the market, It will be with that tablet regime most likely like the one you see today, which we believe will be a huge competitive advantage.
Okay. Makes sense. Perhaps just last one. What risks do you see into this formulation feasibility study that I expect to read out later this year, right? So what are the risks given what you've already seen up to now?
The only risk I see could be timing. Will it be half year, a year later or earlier? I don't know. We don't see a technical risk. As remember, we have done a number of TAPs already.
We have had 20 1,000 patients through Phase III trials on tablets. We know how to set up the trials, Both Phase 1, 2 and 3, we know how to get products approved. We have strong pricing, a reimbursement organization, a market action organization now globally. We will get there. As any projects would be that the way we wanted to do it Just turned out not to be the right way.
We need to adjust some things. If you ask me if I think it's not going to happen, I would say absolutely no. I don't expect that ALK will be a boarding mission. Maybe we can do it faster. There's also an opportunity.
Maybe it will take a little longer. So if you take the risk here It's just to learn here in Phase 1 what works and does not work and how can you do it, what type of dosing, measurements do we do up and down dosing, How fast can you do it and so forth. That's the only thing we need to test to make sure we have a safe and good product. And that's what we're working on right now. So it's not the technology platform, it's not how to do it.
But that's that we're working on right now. That's just how exactly do we formulate it to make sure it's an excellent product that beats the market.
Okay. Thank you so much, Carsten. Thank you.
Thank you. We have a follow-up question from Peter Ciester from Handelsbanken. Please go ahead. Your line is now open. Yes.
Thank you. It's Peter again. I actually have 2. One relates to the legacy business. It appears that it's out of the woods with 4% EI growth this quarter.
Should we how should we look at this going forward? Should we still be a little bit Conservative or should we see this as a 2% to 4% growing business Looking ahead. And secondly, I believe that you have your annual review with the board for summer. Any interesting topics that you want to share with us today? Thank you.
I can start on the legacy problem. Remember, we have said all along that, first of all, we want to stop the leakage. We'll clean up. We'll do the pass and fit for growth projects. And then we wanted to have a stable returning to growth legacy business in the low one digit range.
And that's what we are getting at right now. Can I promise you that it will be 5% also 4th quarter and then 10%? No. But could it be? Yes.
There's a little in and out, in particular due to COVID, because a lot of these are skid products where you have to go to a clinic And it does open and closes all over the world. But I think in essence, low range, 1 digit legacy growth is what we are planning for. We have pruned a lot. We have stabilized the production. I think We should be very proud of the work that's done in manufacturing in these projects.
So this is not a risk any longer. It's going to be contributed to growth. Of course, you will see a mix also with the drops maybe declining in France and skid increasing in Germany because we had this open window there. But yes, small one percentage is what we expect. And will you add to that, Soren?
Or
No. I think no, and I think, yes, it's And it definitely reads into our commitment also to bring up the margins over time on these products. We definitely see they have a role to play in LK. And it's still sizable. It's not the growth vehicle, but it's still a good cash generator where we can add more over time with improved efficiencies.
So that's also part of the story.
Yes. And it's true we had the 2 day strategy session with the Board just Before summer vacation. And we also, of course, had a lot of external people in both from the digital space and telehealthcare and U. S. And everywhere else To get more inspired.
But what we are telling the Board is that we are planning to have a company growing more than 10% per year with 23% profit For the next 10 years in 'twenty three and 'twenty sorry, 'fifteen in 'twenty three and 'twenty five and 'twenty five with upsides. And now they just saw an upside in Granfarma. And then we showed some of the other upsides we are working on. And as soon as we have more tangible things like we have the Grand Pharma and we had last year with the food, We'll tell you about it. But please bear in mind that our ambition is not to jump from quarter to quarter with a happy Stock market.
This is building a company that has sustainable strong growth for many years. So this is our focus. And then we just want to make Make sure all of you believe what we're saying by delivering what we said. And so that's where we also connotated with the Board and they sort of like that and applause that.
Thank you.
Thank you. As there appears to
be no further questions, I return the conference Speakers for any closing remarks.
Thank you, and thank you all for your good questions. We hope to begin being able to see some of you again in person during the coming quarters. You can see from the slide here that we have several Activity is scheduled. In any case, do not hesitate to reach out to us if you have additional follow ups or if you like to meet with us and discuss the case. With that, thank you very much for today and have a great day.
Goodbye.