Hello everyone, welcome to today's presentation of ALK's Q2 results, together with the updated outlook for the full year. Could you please turn to slide number two where I will introduce you to today's presenters and our agenda. My name is Per Plotnikof. I'm Head of Investor Relations, and with me today are ALK's CEO, Carsten Hellmann, and our CFO, Søren Jelert. Today we will look at our Q2 performance, sales trends across our regions and portfolio, and the six month financials. I will give you an update on our four 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&A session. If you would please turn to slide number three, I'll hand over to Carsten, and we'll get started. Thank you.
Thanks Per, thank you everyone for joining us today. First, let me give you some highlights. During second quarter, 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 were 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 DKK 48 million, influenced by savings and an improved gross margin, but also a planned increase of DKK 36 million in R&D spend. We also continued to execute strongly on our long-term strategy and took significant steps through our new Jext partnership for China, which provides an opportunity to launch the first adrenaline pen in the country with the leading adrenaline supplier, Grandpharma. We also saw a number of new approvals for the tablets, mainly in Eastern Europe and in U.K. We continue to progress at the further on clinical development of 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 Søren now, our CFO, who will take a look at the Q2 financials in more detail.
Please turn now to slide number four.
Thanks Carsten. As said, quarter two was yet another good quarter for ALK, 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, the 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 ITULAZAX perform well, but we also continue to see a clear uplift in GRAZAX sales in markets where ITULAZAX has been launched. Sales of legacy products, particularly SCIT, 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%, 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 ITULATEK 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 second quarter, and we continue to see Torii doing a fantastic job, especially with MITICURE, 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 five.
As I mentioned earlier, the tablet portfolio continues to be the growth engine of ALK. Combined SCIT and SLIT drop sales saw a recovery and were up 4%, reflecting increased SCIT sales. As planned, we only see a minor immaterial effect from past product discontinuations in Europe. During COVID, SCIT 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 2nd quarter and were up 13% as COVID eased its grip on sales and diagnostics and other life science products and PRE-PEN. This brings us to slide six and the P&L. Profitability was better than expected. Half-year revenue was up 11% in local currencies. The lower US dollar in particular had a negative currency impact so that reported growth was 9%.
The gross margin improved by 1 percentage point 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 million, despite a planned but sharp increase in R&D spend of DKK 89 million. Disregarding R&D, EBITDA saw an underlying improvement. Capacity cost increased 15% in local currencies, which was mainly caused by an increase in R&D in support of increasing activities related to clinical trials. Sales and marketing also increased on more normalized activity levels. We also continue to see operational leverage on ALK's commercial activities. Free cash flow improved by DKK 128 million, mainly driven by the phasing of investments and changes to working capital.
Finally, it's worth mentioning that we have refinanced our loan facilities, expanding and extending the lines so that we now have DKK 1.2 billion in unused credit facilities running until 2024. Let's move to a brief strategy status on slide seven and over to Carsten again.
Thank you, Søren. 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 their success by becoming relevant to ever and ever more allergy sufferers. 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, 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 2025, or as we call it, 25 in 2025. In Q2, we took further steps towards achieving all of this. Let's take a look at our progress in the first two priority areas on slide eight. 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 while also illustrating the challenge with the tablets 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, klarify was launched in the U.S. last year. It's meeting its 2021 performance targets and more than that in that moment. In Q2, we also launched klarify 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 healthcare professional who will consider tablets as a treatment options, all digitally. We are also working to build a position in other specialties. In Q2, we acquired OTIPRIO, a treatment for swimmer's ear from Otonomy, enhancing our access to ENTs and pediatric specialists in the U.S.
Moving to the right-hand side now and our global process on completing and commercializing tablet portfolio, we see that ITULAZAX continues to be the flag carrier for growth, and in a number of markets, is having a halo effect that is also benefiting other tablets. In Q2, we continued to work to add new registrations and expand the use of the tablets, resulting in approval for ACARIZAX and ITULAZAX in the U.K. and many more approvals across our markets for ACARIZAX, GRAZAX, and RAGWIZAX. We also completed the U.S. adolescent trial of ODACTRA, paving the way for an application to the FDA for adolescent use in the U.S. Our other clinical activities are moving forward according to plan with patient recruitment for the house dust mite and the tree allergic rhinitis pediatric trials progressing well.
Let's move on now and to our other two priorities on slide nine. On the left here, you can see our third focus area, Consumer Engagement and New Horizons. On Consumer Engagement, we are well on the way to meet our full-year target of 250,000 new consumers mobilized via our digital channels with the year-to-date figure standing at 160,000. 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 a new Jext 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 Windgap.
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 fast-dissolving tablet technology in the first planned product. This is the same proven technology that we used in our respiratory allergy tablets. Our fourth priority is to optimize for excellence, 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 all have seen the headlines about challenges in the labor market 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 showed that engagement levels at ALK are 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 house dust mite allergy, and the HDM AIT market there is already the second largest in the world but has the potential to become even larger. This is why we are working towards a market instruction of ACARIZAX. However, we have also other stepping stones for growth in such a large allergy market.
The partnership with the leading supplier of adrenaline, Grandpharma, will see our adrenaline pen, Jext, registered and launched in China. Jext is expected to be the first auto-injector in the country, potentially giving Grandpharma a major first-to-market advantage. As a first step and prior to registration in mainland China, Grandpharma will start selling Jext in southern China on a special license. ALK will receive upfront and registration milestone payments totaling approximately DKK 90 million in return for granting Grandpharma the exclusive rights to Jext. ALK will also manufacture and supply Jext and, importantly, will receive income from the supply of products to Grandpharma. With that, I'll hand back to Søren, who will talk you through our upgraded 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%-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 SCIT and SLIT-drops. EBITDA is now increased to between DKK 450 million-DKK 500 million. R&D is now expected to be slightly lower than DKK 650 million. 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 -DKK 100 million, reflecting higher earnings, CapEx at around DKK 250 million-DKK 300 million and the upfront payment received from Grandpharma. We still assume that free cash flow will be impacted by a one-off working capital payment of DKK 175 million that were postponed from 2020 into 2021, of which relates to accrued rebates. With this, I'll hand you back to Per and the Q&A session on slide 12.
Thank you, Søren, and thank you, Carsten. This concludes the main part of our presentation. We are now moving to the usual Q&A session, where we would be happy to take any of your questions. Operator, please go ahead.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad and you'll enter a queue. After you are announced, please ask your question. Please hold until we have the first question. Our first question comes from Thomas Bowers from Danske Bank. Please go ahead.
Yes, great. Thank you very much. A couple of questions from me here. Just to kick off with the Jext. I understand that Grandpharma are already starting to sell in Guangdong next year. Given the Hong Kong registration. Can you maybe just update us on the capacity constraints? 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? Just on the MT-11 asthma trial, assuming the number of hospital asthma exacerbations normalize 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 2022 readout?
Just on the diagnostic sale uptake, it's always sort of an indication that you do see a higher demand of allergy products. Does it even indicate sort of a pent-up demand in potentially in the U.S. or do you expect this return to around 10% growth to be rather stable going forward? Anything here in the second half assuming that the Delta variant is not going to give any new lockdowns or anything in the U.S., that would be very helpful. Maybe just a last question just on the food allergies. The phase I timing, I sort of had the impression that you plan for phase I start here in the later part of this fiscal year. Any color on the feasibility data, given that you clearly are advancing as hoped with the Catalent technology agreement.
Any color here would be very helpful. Thank you.
Thank you, Thomas. Four questions. Know we've been working a lot and you know well to double the sale on Jext the last three years. We will not have any capacity constraints supporting Grandpharma. Let me just clarify exactly how it works. We have a registration in Hong Kong that they can sell in Southwest China, Grandpharma, 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. It's an area of about 80 million people. We'll be fine to support that and also grow that significantly should that be the upside we do have. No, there will not be any capacity constraints. I think we are and have cleaned up a lot in Jext and it's running as it should.
Regarding the MT-11, we don't really know whether we need a cohort yet. We need to see the data. They're not opened yet. 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 exacerbations and that's just the way it is. We don't know. Honestly, we don't know. Diagnostic U.S., 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. We thought that things were going very well in many areas just a few weeks ago. The new Delta version of the virus hit. New York are closing down again. 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 aligned at about 17%, 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. I think actually we will be okay for the U.S. this year. It's not going to be going back to what we saw last year. For food allergy, we're working hard as you just heard that we now got the deal completely done with Catalent, you can maybe also guess that our vehicle will be food tablets that are working exactly the same way as our current respiratory tablets. When we're ready to go in phase I, 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 yet.
It's not that we have faced any issues yet, and the team is working hard on this one, and this one is going to succeed. We're very confident about that. That was the questions you had. Next question, please.
That's great. Thank you very much.
Thank you. The next question comes from Peter Sehested from Handelsbanken. Please go ahead. Your line is now open.
Thank you. It's Peter Sehested. Have two questions, if I may. On the R&D expenses for next year, consensus could look a bit too low given that the current level of this year and also that you are facing some costs into next year as well. Some guidance or whatever. We should probably not use the word guidance, but some whatever about next year's level or what we should be out for there would be very welcome. Secondly, on Grandpharma, the mechanics here in terms of the P&L impact, you write that you will receive or you will deliver the product, but what kind of model is this? Is this cost plus same as the tablets for Japan? Just to get some indication on potential margin or gross margin that we should be looking out for here.
Just finally, the usual question to Søren 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, Søren, but are we now at the stage where we can say that the gross margins are really ahead of your expectations, not just for this year, but also into the future?
Yeah, I will start with Grandpharma and Søren, he will take the R&D and the other question, yeah. Regarding Grandpharma, for competitive reasons, we have said that our sales price to Grandpharma is at European level, our sales price in Europe or more. Then we get an upfront payment. 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 +50%, we have EBIT on Jext more than 25%, every sale we get here, we didn't encounter before in the plan. The way you should sort of face the thinking is that let's see how it goes through the first couple of years when we launch in southern China, how well Grandpharma performs. They will be working hard on getting the registrations.
In 2024, 2025, that's when we have the full Main China registration as the only pen on the Chinese market. It's a very big market today. It's a DKK 1+ billion market. Grandpharma has more than 50% market share, which is just prefilled vials or just vials you put into a syringe. When this pen come, they will be launching that and let's see how that goes. That's post 2025. This is very much like we said before, that we are building a business that should grow organically this 10%+ , getting to 15% EBIT in 2023 and 2025, with upsides beyond 2025. This is just one of the upsides we talked about. We just didn't mention this one. We have these upsides being the food, being the anaphylaxis, and being this one.
These are things that are going to kick in after 2025 for us sort of to sustain and accelerate the growth. Can we do something that are helping us earlier, we will do that. Right now, this is the mechanism of Grandpharma. Accretive to sales, profits, and absolute money. With that, Søren can talk to the R&D and the next one.
Yes. Thank you for your questions, Peter. You're absolutely right on the R&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&D spend. At that point in time, we said some costs will move into 2021, and others will move into 2022. There we took a push into 2022, probably increasing your estimates, or you could have done your estimates a little higher. What we see now here in 2021 with, you could say before we said around DKK 650, now we say a little south of DKK 650, and let's say we move DKK 25 million into 2022. Then with the backing of what we had from 2020, I think it's fair to assume that we are above DKK 650.
Whether where we are between DKK 650 and DKK 700 right now in that particular year, I think it's too early. 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 to that the R&D cost is expected to come down within the time horizon that Carsten has set, where we deliver 25 in 2025. 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 reasonably low amount. I think in total over the years, it will be the same expenditure pattern. In that sense, cost burn for R&D is going up. Overall, seen over years in combination, there's no change.
I think to your question, yes, your estimates ought to come up a little bit when it comes to R&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. I hope that answered that one. Then when it comes to gross margin, 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. Actually, you can say here for the quarter two alone, we are 1.8% percentage points up on gross margin. It remains to be the story about the tablets driving our gross profit up.
As you can see, when we report out that our tablets is now at 25% or above, it actually yields also some more margin points. 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 in the SCIT that will still take 2022 before it reads out. If you ask me, is this a positive step? Yes, it is, and it definitely demonstrates that also on this parameter, we're moving in the right direction in effect.
Great. Thank you very much. Appreciate it.
Thank you. The next question comes from Benjamin Silverstone from ABG. Please go ahead.
Thank you. Hi, Carsten and Søren, hope you're well, and congratulations on the quarter. I have three 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.
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. 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? The last question is for Søren 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 two parallel projects. One is the WindG ap, and one is our own development. What we are committing to and talking about is that we in 2024, 2025, 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. They're working according to plan. We haven't any stop-go things that we're envisioning right now, and we will come back to you if we have any negative or very positive decisions to make about these AAIs. There really isn't any flesh on that one. International market, the reason for the quarter result of minus DKK 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%. That 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 dropping at all. For the credit facilities, I'll let you do that, Søren.
Yeah, I think it's a good question. I'm always of the opinion that you probably do the best deals when it's peace. In this case, we definitely consider it just to be a safety buffer. Basically also, you could say have the capacity if we need to use it. 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 framing the business. That's a clear statement from my side.
Thank you very much, Carsten, Søren.
Thank you. This question comes from Michael Novod from Nordea. Please go ahead. Your line is open.
Thanks a lot. It's Michael Novod from Nordea. Three questions. First, you mentioned that you still see ITULAZAX pulling up GRAZAX as well, but you're not mentioning ACARIZAX and giving your guidance. Have we seen sort of a smaller slowdown in ACARIZAX? I recall you also mentioned a bit about that in Q1. To that as well, going into next year, do you sort of buffer into your own internal expectations that there will be competition from Stallergenes Greer in the market when they're launching their house dust mite tablet? Or is that something that is not really of any concern to you guys? Lastly, just want to challenge a bit on the Windgap Medical, because it seems like at least communication wise, it sort of seems to suffer a silent death since it was announced.
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 ACARIZAX or ITULAZAX 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 GRAZAX. No, 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. That also talks a little bit into the second question about competition. We just have to remind ourselves that it's less than 1% of the people with respiratory allergies that are actually under treatment, and about 40% of that is tablets. 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 either Europe or any other countries. Stallergenes is, of course, a good competitor, and the more people who talks about tablet will be better. I had hoped they had pushed much harder in the U.S. with the tablet so we could have more voice out there, but this is going to be a European play, and I think we are well positioned to take our fair share. Wind Gap 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 now sort of just letting it die and not talking about it. The thing is that right now we're still getting the pilot plant-produced devices, and we're doing all the stability testing.
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. That work is going on. 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. Has it taken longer than we thought? Yes. I think one of the things that surprised us the most was actually the batch variation between the devices we got from the different pilot productions they did when we got those. These are the things we are facing right now.
We want to be with an AAI pen in the U.S., and if it's not going to be a Windgap Medical, it's going to be our own device. No matter what, either we are registering two or we are registering one of them, we don't know yet. Your next question will be, when do you know? I'll just say, I don't know, I think I will know more by the end of the year when we have the last stability test done.
Super. Thanks a lot.
Thank you. As a reminder, if you do wish to ask a question, please press zero one on your telephone keypad. The next question comes from Jesper Ilsøe 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 Grandpharma and this Jext deal. We can just take one at a time. Tablet traction in Europe. Perhaps you could just put some more color on sort of the slowing growth that you see here in Q2. It has been slowing a bit more versus recent quarters, and I know it's small numbers and there could be quality 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 Grandpharma question.
There is absolutely no change in the tablet dynamics. Even though we had 0% growth second quarter last year, tablets were still growing 25% second quarter last year, and now we grow on top of that again. We don't see anything. You're absolutely right. In one month, it's slowing down because clinics are closing down, then they're opening up again, and then we have higher. 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. Just on Grandpharma, perhaps you could just comment on how you actually see this opportunity with Jext in China versus or compared with the Torii partnership, as you also mentioned, that is the biggest deal in 10 years. Perhaps you can put some words on the deviation between the two market opportunities. Could it actually end up being as big a sales driver as the Torii partnership has ended up being? Just some proportions. Secondly, also, perhaps you can put some words on the competitive landscape in China on adrenaline. You mentioned in the announcement that the current market is supplied with ampoules, so I guess it's not with auto-injectors, simply injections. I'm just trying to understand why is Mylan and other generics not seeing the same market potential that ALK and Grandpharma is actually seeing in China.
I'm trying to understand why now with Jext and are other competitors lining up in this market as well? Thank you.
No, I think that you should assume that both Grandpharma tried to develop their own pen. You should assume that EpiPen, Mylan, and all others had tried as well. What is driving this one and Jext is that we managed to get a license to sell and approval in Hong Kong. That sort of opened the door to Grandpharma, where we could be the first and only pen on the Chinese market. That led to the discussions, and actually, because of the license in Hong Kong, we can now sell in southwest China, an area of about 80 million people, and we now get a hospital by hospital approval to sell there. We'll see how successful they do that. There will be some years until 2024, 2025, where they will file for a mainland registration of a pen in China.
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. Remember, Grandpharma is the adrenaline company in China. It's not like we are having a small opportunity player. They are sitting for more than 50% of the adrenaline market already. They now see an opportunity, both for first-mover effect and then when you get the registration after 2025, 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.
If Grandpharma's plan works out, we sell a lot in southwest China now, and learn from that, we market the product, we get it registered, and we launch it in all of China in 2024, 2025, then the sales potential is very high. The ampoule market today is more than DKK 1 billion. Already today, Grandpharma sits on more than 50% of that. That's just the low end, you can say legacy adrenaline ampoules. How does it work? How would the pricing work? How much would be out of pocket? After 2025, 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 2024, 2025, when it's fully registered in China and fully reimbursed. I understand your questions, but I think sometimes that's just the way it is.
We managed together with Grandpharma to seize this opportunity, make a deal, and move on it. There isn't anybody just behind us. Now it's just up to us and Grandpharma to leverage that first-mover effect.
Sounds good. If I can just put in another question. Just on this peanut allergy program. You mentioned yourself that we could probably read into the fact that you have this deal with Catalent, i.e., that you will pursue the peanut allergy and food allergy space with a tablet. Perhaps you can add some color on what you have 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 our technology. Thank you.
Yeah. With the buffer that I don't know what I don't know happens in clinical trials for the future, as I said just before, we just made an exclusive deal with Catalent and proved that we can actually, and we have already the tablets with peanuts inside. 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 I is how does that work with the dosing and how do we do that? 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.
I think I can confirm that when we hit the market, it will be with a tablet regimen, most likely like the one you see today, which we believe will be a huge competitive advantage.
Okay. Makes sense. Perhaps just the last one, what risks do you see into this formulation feasibility study that I expect to read out later this year, right? 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 or a year later or earlier? I don't know. We don't see a technical risk as remember we have done a number of tablets already. We have had 21,000 patients through phase III trials on tablets. We know how to set up the trials, both phase I, II, and III. We know how to get products approved. We have strong pricing and reimbursement organization and market access organization now globally. We will get there. 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. Don't expect that ALK will be an aborting mission. Maybe we can do it faster.
That's also an opportunity. Maybe it will take a little longer. If you take the risk here, it's just to learn here in phase I what works and does not work, and how can you do it, what type of dosing regimens. 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. That's what we're working on right now. It's not the technology platform, it's not how to do it. 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 Sehested from Handelsbanken. Please go ahead.
Yes. Thank you. It's Peter again. I actually have two. One relates to the legacy business. It appears that it's out of the woods with 4% CR growth this quarter. How should we look at this going forward? Should we still be a little bit conservative or should we see this as a 2%-4% growing business looking ahead? Secondly, I believe that you have your annual review with the board before summer. Any interesting topics that you want to share with us today? Thank you.
I can start on the legacy part. Remember we have said all along that first of all, we want to stop the leakage. We'll clean up, we'll do the Path to Fit for Growth projects, we wanted to have a stable returning to growth legacy business in the low one digit range. That's what we are getting at right now. Can I promise you that it will be 5% also fourth quarter and then 10%? No. Could it be? Yes. There's a little in and out, in particular due to COVID, because a lot of these are SCIT products where you have to go to a clinic, it just open and closes all over the world. I think, in essence, low range of one 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 they've done in manufacturing and these projects. This is not a risk any longer. It's going to be a contributor to growth. Of course, you will see a mix also with the drops maybe declining in France and SCIT increasing in Germany because we had this open window there. Yeah, small 1% is what we expect. Will you add to that, Søren, or?
No. I think here 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 ALK, 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. That's also part of the story.
Yeah, it's true we had the two day strategy session with the board just before summer vacation, 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. 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 15 and 23 and 25 and 25 with upsides. Now they just saw an upside in Grandpharma. Then we showed some of the other upsides we are working on. As soon as we have more tangible things like we have with the Grandpharma and we had last year with the food, we'll tell you about it.
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. This is our focus, and then we just want to make sure all of you believe what we're saying by delivering what we said. 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 to the speakers for any closing remarks.
Thank you. 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 activities scheduled. In any case, do not hesitate to reach out to us if you have additional follow-ups or if you would like to meet with us and discuss the case. With that, thank you very much for today and have a great day. Goodbye.