And apologies for delay, it looks like there was a problem with the transmission. So welcome to our Q2 earnings. I'm going to talk a little bit about the market, our performance, our strategic priorities, and then Michael will provide a more detailed financial view. So there are 3 key messages from this for this Q2 earnings. Number 1 is that the market continues to grow very rapidly.
And all the trends that we have discussed about, they continue to accelerate and thus driving the transition from reusable into single use. The second thing that against a high record comparable from last year, We were able to grow 6% in Q2 as a total company, driven by visualization growing 17%. That's a 17% on top of that 69% we grew last year, which basically means that we have grown in the first have 50% on top of the 50% that we grew last year. I'm going to talk a little bit about Platform by platform, what are the main highlights, where it is in terms of how we are competing or how our new launches are going and what does it mean in terms of the future growth of the company. And then what does it mean in terms of our ability to compete and what type of company we are becoming and what type of capabilities we have to make sure that we remain the leading player within single use category.
So let's start with the market. And we have discussed this in every call. This is a market that is going to go from $500,000,000 today to $2,500,000,000 in 20 20 There are very few new metech markets that grow this far and at this scale. And that's because The main driver for this transition are actually accelerating. There is more focus on contamination.
There is a higher focus on infection control. The technology advancements are making single use products become more powerful and improving their clinical performance. And finally, if they are priced correctly, they have an attractive economic offering and give significant operational flexibility. And that's basically what we are seeing. Now let me just give you an example on the first point around focus on contamination.
We said that urology and GI were important new markets for Ambu. So let me just show you What are some of the recent developments in that area? So first of all, I think Most of you might have seen that the FDA issue a letter to all healthcare systems in the U. S. Warning about the infection risk with reusable urology endoscopes on the back of 4.50 reports since 2017 and basically giving guidelines around reprocessing, but also asking all healthcare systems to start reporting and launching an investigation regarding this issue.
We also if we look at that's in urology basically. If we look at GI, which is a market that for more than half of the total procedure volume. If you look at the last 15 months, there have 35 peer review GI studies on contamination, 35. If I look at previous 4 years, it was less than 35%. It's a significant increase in terms of the focus.
And because of that, there was a GI task force that basically represented the most important GI Endoscopy Associations in the country, coming together and publishing a guideline supporting single use endoscopy as a new innovative solution to deal with these is around contamination. And we also have seen CMS filing for a new reimbursement code for single use to endoscopy using inpatient hospitals for that to be effective October 1 this year. Just to give you a sense what does It basically means that as of October 1, in close to 50% of all ERCP procedures, healthcare We see an economic advantage for using Ambu versus using a reducible duendoscope. And this is just example in terms of what we have seen quarter over quarter, a higher focus on contamination, a realization that single use can play an important role in terms of infection control and all of this is of course powering the creation of the market. Now with that as a context, let's talk about our performance.
And let me start with our core business. And as you have seen that our core business actually declined 5% in Q2. Our core business is mainly driven by elective procedures. So similar to all other hospital that I'll met the company's reporting. Our performance has been affected by elective procedure being depressed.
This is especially the case in Europe. And like most other hospital met companies, we have seen that as vaccines are being rolled out, the business is stabilized and we expect that when we emerge from this COVID-nineteen pandemic, we should be able to go back to a normal performance. Now putting our core business aside, let's talk about visualization. And in the case So visualization, again, we grew double digits on top of what was a very high comparable. Just to give you We have sold in volume in this quarter more than the entire our annual volume 4 years ago, just in 1 quarter basically.
And each day is reflecting the strong growth we are seen across all the regions. In terms of the key highlights, Europe growing 25% on top of 103% growth last year and then the U. S. Growing 20% quarter over quarter. Yes, a very good indications in terms of the level of momentum that we have.
Now let's look at each of our platforms. And let's start with what today represents the last portion of our visualization Lumenology. And today, we have our ASCO-four bronco, and we have about 30% penetration and within single use, we have 95% plus market share. And of course, we announced before the introduction of our new generation of monitors, our AVIFO Advanced. You have seen this morning that we and introduction of our VivaPhyto.
And this is a one line deletion technology that basically allowed to do that procedure while being able to see to make sure that the camera is placed in the right way. Now the important thing of this launch. It's not just that in the U. S. Alone, there are 500,000 procedures that will benefit from this type of technology.
The Important thing is that we are going to introduce our ESCO V into the Bronco suite, and that will take our addressable market from $3,000,000 in pulmonology to an incremental $2,000,000 It also means that Then we are going to introduce our video Lardinko scope, which we believe our total market potential is about 10,000,000 procedure. And All of this is integrated with our ABO to advance. It's a very good example in terms of what we mean by an ecosystem. It means that when we go into pulmonology department, we are able to offer the most comprehensive portfolio across multiple procedures with significant flexibility as they don't need to buy more capital to do this different type of procedure. So that's in terms of pulmonology.
And now let's look at our recent expansion. So the first expansion we did after pulmonology was in ENT. And it was very important because it's 11,000,000 procedures and because there is no real risk of contamination. That basically means that the only drivers of adoption in ENT is clinical performance, convenience and economics. And what you can see on the right hand side is the evolution of our ENT launch.
We have grown in quarter 50% in units versus last year, and we continue to expand our global customer base. We actually were able to surpass the record peak we saw when the COVID-nineteen pandemic Arpe. Now we decided to go from ENT into urology and into GI. So let's see how our urology bed is going. And of course, I'm referring to the launch of our ESCO system into what is a €6,000,000 procedure market.
And What you can see in the left hand side is basically our global unit sales since the launch. And the most important thing to say is that Sysco is the most rapidly adopted product ever that launched by Ambu Globally. This is driven not just by the U. S. Or the UK, but is driven by Germany, Italy, Spain, France, Australia.
It's a very good example in terms of what happened when you bring a technologically advanced single use product that is able to go head to head with a reducible and guarantee contamination and guarantee flexibility and of course is pricing in a way that ensure that Migration is neutral for a healthcare system. The other thing that is interesting for us is what has been rapid penetration in Europe. Typically, when you introduce a medical device product, you see that U. S. Being an earlier and faster adopter, and then you see a slower pace of penetration in But actually, in the case of SISTO, we are seeing a strong penetration in the U.
S. And even faster penetration in Europe. In the right side, you have a comparison of how we penetrated ESCOP 3 in Europe compared with our ESCO-four inches system. And these are the 1st 4 months of launch. And we are already at 3.
I think it's 3.3x bigger than what was ESCOB3. Now this is in terms of urology. Let's talk about duodenoscopy. And basically, We continue our commercialization. We have 55 ERCP accounts, 13 of them are within the top 100 in ERCP centers in the U.
S. This actually reflects our strategy to go against the highest volume Our objective is not actually to sell
Welcome to the Ambu Q2 2020 2021 Conference.
All right. My apologies for the delays since there are some problems with NASDAQ network. I'm going to assume that you were able to hear about our performance on the cystoscope, and then I'm going to start talking about our duenoscope. So what I was saying is we have continued progressing our commercial launch. And in terms of our commercial launch, the two main highlights are we have secured 55 ERCP accounts, 13 of them are within the top 100 ERCP centers in the U.
S. And this year reflect our strategy go against the highest volume ERCP centers in the country. Now there are a couple of things which are important to know. Number 1, we've seen 2 events in this market. 1 is CMS, as I mentioned before, expanding reimbursement to inpatient procedures.
And by that, basically doubling The number of procedures that will benefit from a special reimbursement is a single use to endoscopy, and that is about 50% of the entire volume. And we also have seen competitors announcing that they are going to bring a 1.5 generation for the single use to endoscope. So because of this, it is a priority for us to make sure that ahead of October 1st, We continue to have a product that is technically competitive and that it has the most attractive economic offering. So we have decided to bring forward our technology for 2.0 and introduce ASCO DUO 1.5. We are about 50% complete in terms of the improvements, and we should have everything in place by August September.
Now a year after we introduced our Aresco Duo 1.5, we are going to introduce our Aresco Duo 2.0. And you can assume that there is going to be a 3.0. It just reflect the fact that although In duodenoscopy, we believe that the penetration is going to be more gradual than in the case of SISTO or ENT because it's a more complicated procedure. We believe by 2025, When you look at this $2,500,000,000 market, a single ust endoscopy is going to be one of the biggest ones. And that's why it is a key priority for us.
And that's why we will always have an innovation edge against competitors. Now this is in terms of duodenoscopy. Now let's talk about the company and what type of company we are becoming. And there has been 2 important highlights. Number 1, we consolidated our R and D infrastructure into a dedicated GI R and D Center in Germany.
It's about an hour from Munich. And this dedicated R and D center is going to drive all of our GI innovation. And we also have officially started our the construction of our manufacturing plant in Mexico. And this reflects to since our expectations in terms of the volume potential of the company and also the importance of the U. S.
And have a dual sourcing network. Now a lot has been said regarding competitors coming into the market, And this is very important for the creation of the single use market. The penetration today is 1% to 2%. So for us, having Boston Scientific, welcoming officially Olympus into the single use market, having Pentax coming in, getting older commercial infrastructure, talking about the benefits of single use endoscopy and why single use endoscopy, it's an option for healthcare system as they do endoscopy is going to accelerate the penetration. And the number one objective for Ambu is that as this market is being created, that we continue to lead the creation and take significant share.
And the way we're going to do it is with our innovation. Our aspiration is to be the most innovative single use the next 3 players combined. If you look at the innovation, for example, we start to show the potential of single use endoscopy. We have an ENT fees, for example, that Helps to use our ENT product in vocal cord procedures, which have higher levels of reimbursement. It shows, for example, the fact that we are developing pediatric scopes, scopes that then have the potential to be used in surgery.
It shows really the flexibility that we have with this product. And as you can imagine, All the learnings and technology that we are incorporating in our ASCO Duo 1.5 are being incorporating all of our GI launches. That will ensure that when we launch, we'll be able to get a faster traction and more rapid penetration. So that's what I wanted to share with you. And now we move into the financial section with Michael.
Thank you, Ramon Se. As mentioned, we posted an organic growth of 6% in the quarter, and this quarter is therefore the same quarter in a row Where ample revenue surpasses the DKK1 billion mark. The growth for the half year ended at 20%. In the Q2, our growth is driven by visualization with 17% growth on top of 69% growth last year. This year, the growth was led by Europe posting 25% on the back of 100% last year, while core posted a negative growth of minus 5%.
The negative growth in core is led by Europe that has been significantly hit by the second and third waves of crude. In the Q2 and combined for all regions, we sold 379,000 units of the endoscope and 749,000 units for the half year. For anesthesia in the 2nd quarter, revenue declined by 4%, also driven by Europe, while anesthesia revenue in North America and rest of world picked up, Showing signs of post COVID recovery. PV revenue declined by 7%, and especially the markets in Europe We're negatively hit by the slowdown in elective procedures across the region. In North America and Rest of World, we saw positive Trends of revenue slightly recovering during the quarter.
And finally, our EBIT earnings ended at DKK100 1,000,000,000 for the quarter with a margin of 10% and almost DKK0.25 billion and 12.3 percent for the half year. On Slide 16, you can see the geographical distribution of this quarter's revenue and growth rates. North America accounted for 44% of revenue in the quarter based on an organic growth of 6%. Visualization grew by 9% with a growth from Q1 to Q2 this year of 19%. Anesthesia and PFD both posted organic growth of 4% over last year, reflecting improvements in elective procedures, but still not back at the pre COVID activity levels.
For the half year, North America posts an organic growth of 9%. Europe As well accounted for 44% of revenue with a growth of 2%. High demand for visualization products Continued leading to a growth of 25% on top of 103% last year. Our core business was significantly impacted by the lockdowns and cancellations Across Europe, resulting in negative growth rate of 33% in anesthesia and 15% in PMD. For the half year, Europe reported an organic growth rate of 34%.
Rest of World contributed a growth of 18% with visualization at 16%. Anesthesia grew 27% and PMD 9%. Overall, the markets in Rest of World has developed positively in the quarter despite the COVID environment. For the half year, rest of world posted a growth of 14%. Now let me go through the key numbers in our P and L.
Revenue for the quarter came in at DKK1 1,000,000,000 Equal to the mentioned 6% growth and a reported growth of 1%. For the half year, revenue was just above EKK2 billion, Corresponding to reported growth of 15% and an organic growth of 20%. The growth is driven by strong results in visualization, which grew 48 percent in the first half of the year on the back of 49% in Q2 last year. The 5% gap in reported versus organic growth It's mainly caused by the depreciation of the U. S.
Dollar versus the DKK. The gross margin for the quarter was 62.2%, slightly up over last year. As in previous quarters, negative effects from reduced average selling prices are minimal. Total capacity costs for the quarter were DKK523 1,000,000 corresponding to a 14% increase compared to Q2 last We continue to airfreight endoscopes caused by hand and disruptions in the global supply chain, And this has contributed to the higher level of cost and higher than expected inventory levels. For the second half, over the first half, we expect capacity cost to increase further, driven by the line selling and distribution as we have now completed our commercial expansion and the run rate going forward is going to reflect this.
EBIT ended at DKK100 1,000,000 in the quarter with an EBIT margin of 10% for the quarter. For the half year, EBIT came in at EUR 0.25 billion and with a margin of 12%. On Slide 18, I will just mention some of the highlights for our cash flow and balance sheet. Free cash flow before acquisitions for the half year were negative at minus €25,000,000 corresponding to roughly 1 percentage point of revenue. This reflects the high level of investments into innovation As well as the proportional increase in net working capital relative to the growth and including the effects from the disruption of the global supply chain, as previously mentioned, We aim to secure our delivered performance up to the customer.
Net working capital ends at DKK7 DKK98 1,000,000 corresponding to 19 percent of running 12 months revenue, which is a stable performance in line with previous quarters. Equity totaled DKK3.9 billion corresponding to a ratio of DKK73 1,000,000,000 of total assets. And lastly, net interest bearing debt Ended at DKK466 million with a gearing of 0.7x EBITDA. The decrease in debt It's driven by the capital increase and sale of treasury shares as we performed in connection with our Q1 back in January. And lastly, the outlook for 2021 financial year as announced in the 2019 2020 annual report is unchanged and remains as follows.
The organic growth will be in the range 17% to 20% EBIT margin in the range of 11% to 12% And lastly, sale of units of St. Jude's endoscopes in the range 1,300,000 to 1,400,000 units. As we said in previous quarters, the quarterly development of the growth will be impacted by high comparables from last year. The buildup of the margin across quarters will be sensitive to the scale that we will achieve from the product launches. These were my comments to how the year is expected to play out.
Thank you, and thank you, Francois.
Thank you very much, Michael. And let's just open for Achivanga.
Please hold until we have our first question. Our first question comes from the line of Christian Noren From Nordea Markets. Please go ahead. Your line is now open.
Hi, good morning and thank you for taking my questions. I have 3, please. So my first question is to how your bronchoscope sales have developed here over the last couple of months, so in March April, And whether you're seeing any slowdown in as we are fortunately seeing COVID Cases diminishing across the Western economies. My second question is To what explains the lower gross margin that we're seeing here in the second quarter relative To what we saw in Q1. And then my third question is whether you can elaborate a bit on what The main changes that you are implementing to the 1.5 version of the Duodinoscope and whether This update to the design has any bearing on the timing of the readout of the clinical trial on whether a new clinical Trial will be required.
Thank you.
Sure. Thank you very much, Christian. And so let's get Michael to comment on the bronchoscopy sales and the gross margin, and then I will talk about the DADU upgrade.
Thank you, Sachin. I think when you look into how our sale of products is evolving, It's here it's been fluctuating over the quarters, also impacted by the overall Demand resulting from the quarter. As we said on our walk through of the presentation, We see that the markets are opening up. That's a very positive. But of course, we also see fluctuations from As we talked about at the Q1, the demand from the U.
K. Market. So I would say Those two effects are the most important for you to understand. And going forward, the most important is that We see markets are slightly opening up. And I think that's a good intake into your second question about the margin because And I understand that it's a very significant change from the 1st to the 2nd quarter, but that also reflects the overall composition of our product mix I'm on core, but also the mix within our visualization products.
I think that is the best I can get to. There are no extraordinary items from Q1 to Q2 that you should really be aware of.
All right. Thank you. Thank you, Michael. And listen, let me just add, it's a very volatile environment. And of course, COVID-nineteen, As we discussed before, it has been a positive effect in Europe and it has been a negative effect in the U.
S. So as we move kind of out of the pandemic, we can see that, that will be a positive effect in the U. S. And of course, in the case of Europe, it's going to settle. Now I think it's important to step back from the volatility of quarter over quarter and look at our bronchoscopy franchise.
And basically, we are going to emerge from this COVID-nineteen pandemic with a much higher penetration, and we still basically are leading share position within that. And that's going to be important because As we move forward, as we introduce more new products and so forth, there is still a lot of penetration to go forward. Now in terms of the main changes, I mean, basically, iSCOPE has 3 main components. You are looking at the EMA resolution, You are looking at the maneuverability, you are looking at the functionality. And what we have done is we are looking at upgrading the 3 of them.
And as I mentioned before, 50% are already in market. And this is something which is different to some of our medical devices launches. In the case of single use, we have the ability to rapidly iterate, which basically means that as we are introducing the And looking at the technical performance, we can very quickly adapt and upgrade the product. And that's basically what we have done. For us, what is critical is to make sure that ahead of October 1, again, we have the most compelling economic value proposition which we have.
But we also have a competitive technical performance of the product. And our BESAR then to a year later introduce our BUGO 2.0. It continues to reflect the fact that we believe duodenoscopy is a key battleground for us to win. Now the implications in terms of clinical is very straightforward. We started a clinical.
We expanded a number of sites. We have learned Now that we have decided to introduce our ESCO Duo 1.5, we will continue the clinical with our technology, and you can assume that we are going to share the 60 patient data At that time, we are sharing our Q1 results. And you can assume that at the DDW conference, We are also going to have a presentation regarding the performance of our 1.5.
Thank you. Just to Make sure I understood you correct. You said the 60 patient trial will be presented with the 1st quarter results or the 3rd quarter results?
It's going to be presented with our Q1 results.
1st quarter results, okay. And you're talking about DDW next year then?
Exactly.
Okay. Thank you.
Thank you, Christian.
Our next question comes from the line of Thomas Bowers from Danske Bank. Please go ahead. Your line is now open.
Great. Thank you. I hope you
can hear me. I have a couple of questions on the duodenoscope. So first question, Have you had any hospitals or clinics that have actually terminated the commercial testing based on the first evaluation of, You can say version 1.0. And then last quarter, you had around 30 accounts testing, and I think it was Total of 370 lined up. So can you maybe just elaborate on what's the current status here?
And then I guess You must have seen some negative feedback on Version 1, given that you only now see a gradual uptick this year. So I guess, it's fair to assume that we should not have expected any guidance changes if you were just Doing an upgraded version in parallel with the launch. So maybe the question is, so is this Commercial loans here this year, is it basically on hold now until you have Version 1.5 or where are you here? I think I'll stop there, FX.
Yes. No, thank you for the question. I mean, let's maybe just to step back in terms of how our commercial launch looks like in a procedure like an ERCP procedure. You basically go, you meet with accounts. Some of them says, yes, We are comfortable with the pro.
Let's do it. Someone say, well, actually, I would love to see some different Reiteration, some say no, we prefer to get to stay with Raju Sabol. And that's basically what we have seen When we came with our ESCO 1 in pulmonology or with our ESCO for ENT and for Sisto. There are some 1st mover, some ones that actually want to wait for the next generations and then some ones that want to being produced, Apola. And that's why the penetration is what it is today.
The most important thing is that from a commercial point of view, We have secured 55 accounts and 13 of them are within the top 100 hospitals, which basically means that Some has said yes, some has said no. Now in terms of the current status of our commercialization, we continue to commercialize in the product. It's just that we are upgrading it much faster because of the size of opportunity that we see in front of us. What we did in 1 is actually find ourselves October 1 with a competitor bringing a new generation of products. We're seeding on more advanced technology and not having brought them into the market in time to make sure that we continue to be the best choice for any ERCP center wanting to do single use.
And that's basically it. And the last question in terms of the update, maybe let me just refer to the guidance because When you look at our performance, we have a very strong performance. And most people who have expected for us to raise our guidance. And the reason why we haven't done is for 2 things. 1 is, we have a very healthy guidance out there.
And although we are comfortable in terms of our performance, we see a lot of volatility. We see volatility in terms of our core business, and we see volatility in terms of the speed of the vaccine rollout. And of course, as we are more comfortable in terms of seeing how the market comes back, then of course, we will make a decision regarding our guidance. At this point, we are comfortable where we are.
Okay. And then maybe just a last question just on the bronchoscopy P area. So you're launching the A Scope 5 here in relative near term. And as you also said on in your prepared remarks That we're going to launch into the broad suite. I think that's well known.
But now also with all the competitors also moving into the I see you operating room. So should we see the A Scope 5 as a premium product going into the bronx suite? Or are you considering this to be just a next generation where you can enter the branch suite, but will also take over from Aesco 4, so Actually being launched in, you would say, all 2 free settings.
Sure. Yes, a couple of things. One is Most of the key competitors are actually not coming into the ICU. They are coming into the Bronco Suite. So the launch of Boston for the XLV and the launch of OLYMPUS.
I believe they are targeted for the Bronco Suite. The Bronco Suite single use market doesn't exist today. So actually, what we are going to have is 3 companies that together are going to create a single use bronco suite market, and all that is going to be incremental for us. Our ESCO V was designed specifically for the Bronco Suite. Now there will be hospitals and surgeons in the ICU that would like to upgrade to the ESCO V.
And we expect to see that as well, and that will be an additional benefit. But the primary purpose of the ESCO V is to create this new single use bronco suite market.
Okay. So but do you see this as a premium price product or in line with the ASCO 4?
I mean, we haven't talked about pricing yet. But if we go back to our pricing strategy, our pricing strategy is always to be at parity versus the reusable endoscopy calls in any conceal that we compete. So if you look at that, you can actually guess what pricing we're going to have.
Okay, great. Thank you very much.
Thank you. Thank you so much.
Our next question comes from the line of Benjamin Silverstone from ABG. Please go ahead. Your line is now open.
Thank you. And hi, Juan and Mikael. I hope you are both well.
Thank you, Benjamin.
Thank you. My question is in regards to the midterm market opportunities. So we know that with COVID-nineteen, There has been a push for regulatory recommendation towards eliminating cross contamination and also highlighting the benefits of single use endoscopes. And I think that the general perception is that COVID has accelerated the potential single use market. However, I note that in your presentation, you see an Expected single use market opportunity in 2025 of around US2.5 billion dollars But looking back to your Q1 in 2019, 2020, the quarter prior to COVID, You stated that you saw a similar market potential, but in 2024.
I was definitely wondering What the underlying reason for this, I would say, implied 0% market growth from 2024 to 2025 could cause?
No, I think it's mainly driven by the fact that we don't want to confuse the audience because We have yes, let's say, our fiscal year goes across 2 years. So we look at You should assume that is 2024twenty 25 for Ambu when we talk about $2,500,000,000 So that has not changed. And listen, in terms of the market, of course, we are creating the market. We enter into segments where the market doesn't exist. In some cases, we are going to do with competitors and that will make things easier.
In some cases, we are doing it alone. So there will always be uncertainty in terms of how the development of all these launches is going to go through. The critical thing is that Based on our experience today, based on what we know in terms of our technology and based on the innovation, we believe that, that market is going to be created. And the second thing is that we believe that as long as we bring our innovation, as long as we continue to upgrade rapidly into the next generations. We should be able to ensure that the market is created and that Ambu is successful on that.
But there is going to be, I would say, a lot of volatility quarter over quarter and year over year until the market is created.
Thank you, Juan. Just to clarify to make sure I understood correctly, the presentation from Q1 last year where it says market in 2024 Plus $2,500,000,000 versus the presentation today, which is market expected in 2025, around $2,500,000,000 Roughly the same estimates. They're based on the same estimates.
Yes. It's the same estimate and you can assume it's because our fiscal year is 2020 of 25. We start to cover and finish in September. Yes.
Thank you.
Thank you, Benjamin.
Our next question comes from the line of Niels Leht From Carnegie. Please go ahead. Your line is now open.
Hey, good morning. On the duodenoscope, as far as I understand your answer right before to Thomas, The 550 patient trials has effectively been halted. By why would you not begin all over when you have the 1.5 version ready, mixing the first Poor results with hopefully better results would kind of mix up the results in the trial. And also, Have you received confirmation from the 8 centers in the trial that they will stay in the trial When the 1.5 version is ready? Thank you.
Yes. I mean, I would say that that's a bit of a technical question. The 2 Cs that are important for you guys to know are the following. Number 1, We are going to present the clinical data with our ESCO-two hundred and one point five, and we will do that for our Q1 results, and we will do that at DDW. And the second thing is that basically the relationship that we have In terms of the clinical trials and so forth, we'll be the ones conducting it.
Now whether we stop or do it and how do we do it and so That's really not material, but you can count on the things I just said.
Okay. So the 550 patient trial will contain results from both the 1.0 version and the 1.5 version.
Yes. But basically, you have that that's why it's a bit more technical. Maybe you and I can talk separately in our Miguel, maybe you and I can talk separately in our analyst meeting, but it really doesn't matter basically.
And then just finally, it seems like you're delaying the launch of your colonoscope by 1 year. Is that solely related to the delay of the duodenoscope? Or is it A delay related to the colonoscope itself.
Yes. I think I have mentioned before that When we introduced our ESCO Duo, we are 70% in terms of the development of gastron column because a lot of the technology It's leveraged in terms of Agastron Colon. So this is actually not related with the development of Colon. It's just related with our VASAR to integrate ESCOB Duo 1.5 technology into our launch. And it's not really a 1 year delay.
It's just that we don't give quarterly targets because it's a competitive environment. But again, what you can assume is that we are going to entering into colonoscopy in that year.
Okay. Thank you.
Thank you, Neil.
Our next question comes from the line of Yuehua from Ibi, please go ahead. Your line is now open.
Thank you for taking my question. I have a couple of questions. I'll limit to 2 at a moment. So firstly, you said in the report, you had a meaningful revenue from Telenoscope in Q2. So how should we understand the meaningful revenue here?
And maybe comment a little bit on the contribution to the 17% organic growth. And secondly, you said 55 accounts order your product already. It's fair to assume those orders have not converged as a sales yet? And certainly, still on the duodenoscope. So would you please elaborate a bit on the what are the main sort of feedback you have heard from the physicians on the ASCOPE?
Do they know Version 1. And where do you see the need for further improvements with the new version? And it's fair to understand that there will be a redesigning of with certain components with the Version 1.1 1.5.
Sure. Thank you. So let me take the last two and then maybe Michael can comment in terms of the manageriality of the 2 and contribution to the growth in Q2. First of all, when you say 50 accounts, sort of basically means that we have sold to 50 accounts and 13 of them are within the top 100 hospitals. I would say that level of traction is a good direction Taking into account how complex is ERCP, and this is very important.
I believe our competitor talk about the adoption expectations in terms of duodenoscopy, saying that it's going to be gradual year over And we see it in a similar way basically. The procedure lasts longer, they are more complicated, there is more patient risk during the procedure. So surgeons want to be very confident before they adopt new technology. That's different to what we see in E and T and System. Now you can note launch in December And then in May, report that 50% of the upgrades are already in market and that you are going to have generation 1.5 by September, if you actually have to completely redesign the product.
That is basically telling you that the upgrades we are doing are minor, but the core of the performance of the product It's good and we are just basically refining it to make sure that we get to the performance that we want to get. Now in terms of the materiality, Michael?
Yes. No, and thank you for that question also. I think the reason why we chose to Language like we did was to follow-up on the comments that we shared with you at our Q1 where we said that we had started To invoice on the Rubino. So what we're seeing now is that we have continued and the size of the revenue We have invoiced is meaningful relative to the growth that we are reporting. I think that's the closest I can get.
But I think it's fair for you To get the information that we're actually reporting a meaningful revenue that is having impact on the growth that we see.
Okay. Thank you. And then can I just follow-up on the duodenoscope? So you're saying So I mean, could you be a little bit more specific on the new version? I mean, Major quality or maneuverability was the elevator system, a guidewear and where do you see the need here for a further improvement.
Yes. And again, we are in a competitive environment. So it's not good me to go into details regarding our next generation. But as I mentioned before, typically in single use endoscopy, you are looking at 3 things. You are looking at team effort solution, you are looking at maneuverability and you are looking at functionality.
And we are basically strengthening all three of them. And again, it really reflects 2 things. Our rapid R and D engine. It's very difficult for a company to iterate at this level of speed while advancing or the 20 launches to bring to market. And the second thing is the fact that within duoscopy, at any point of time, We are committed to make sure that we have our most advanced technology with the most attractive economic offer.
That's the basis that we have to be able to compete in the market and we want to have all of that in the case of duodenoscopy before the reimbursement is expanded, because we consider that's going to be an important event to drive adoption.
Okay. Thank you. I'll jump back to the queue.
Our next question comes from the line of David Adlington from JPMorgan. Please go ahead. Your line is now open.
Yes, good morning guys. Hope you're well. So just maybe first, actually, we've got your legacy business started, we've got a lot of focus there. As electives come back, Do you expect to see some benefit from pent up demand for procedures? I'm just wondering if you had any ideas in terms of what the inventory levels are like in the channel.
And therefore, could we see any restocking?
And then just on
the bronchoscope, obviously, Olympus launching a suite of products into the space. Just wondered if you had any thoughts Around pricing there and whether you turn it on how the pricing relative to your offering? Thanks.
Yes. Thank you, David. In terms of electives coming back, I think like most hospital met tech companies, we believe there is a pent up demand And we believe there will be a benefit from that pent up demand. Maybe what is different from Mambu to other companies is that we don't have a calendar year. Our year finished in September.
So we believe that the benefit of the penta demand for Ambu this year is going to be minimal. And of course, it depends on the COVID vaccine rollout, and There are different developments right now and that's basically kind of a source of uncertainty for Ambu. But we believe there is pent up demand. And outside of the United Kingdom. We don't believe there is a stock out there and therefore we should see a benefit from it.
In terms of Olympus and Pentax, let me first of all say that for the creation of a single use endoscopy market, having the largest reusable player, having their commercial infrastructure talk about the benefits of single use endoscopy and the occasions where we're seeing single use can play a role is very positive. That's really going to help us to create the segments where they are going to introduce products at a faster rate than what it would have been if they were to be on the other side trying to stop the creation of single use of a single use market. In terms of pricing, we don't have visibility in terms of the pricing. Of course, we have a significant volume advantage against any of those players in single use. I mean, we have probably 7 times more volume this year than the next competitor.
And because of the modularity, We have a cost structure that allow us to price competitively in pretty much every segment where we want to participate. Again, our pricing is not really relative to competitors. So even if they have higher pricing, we will still pricing based on how much it costs a hospital to use a reducible endoscopy to be able to facilitate the migration to single use. But that's how we are thinking in terms of pricing.
Perfect. And then maybe just a follow-up, your price per scope came down this quarter. Is that just a reflection of the mix? Or is there some pricing pressure out there?
David, this is Michael. Yes, It is entirely a reflection of the mix. So that's nothing that you should really pick up here. It's the bronchoscopes versus the other scopes.
Got it. Thank you.
Our next Question comes from the line of Annette Lykke from Handelsbanken. Please go ahead. Your line is now open.
Thank you so much. Most of them have been addressed, but I'd like to go back to the Dudenoscope and Thomas' question, Benjamin as well. Could you share some more color on Where you would see the benefit? And can you confirm that where you saw the focus there was resolution functionality? And then did you say viability or what did you say there, Juan?
That would be very nice to hear a little bit more about that. And also we can see on clinicaltri.gov that only 5 out of 8 sites are recruiting. Do you expect those to recruit soon, those lagging free? And then finally, a question on the scope sales. You are I mean, if we stick to your mid guidance of 1,350,000 scopes for the full year, Would that imply that we should see H2 sales on par with H1?
And can you, Michael, say a little bit about this, why we should expect not to see any growth sequentially between H1 and H2? Thank you so much.
Thank you, Ned. So let me start talking about the improvements and then the clinical and then Michael can comment on the guidance and expectation for the second half. So what I said was maneuverability, so the ability for this call to navigate in CYTOPODI. Now we actually believe that, that is a core strength of our product. But we have learned from the launch and most importantly, we have seen that we have technology available that we could bring forward faster to further strengthen the performance of the product.
And I cannot comment on that, but you can imagine that basically means improving the aim as a solution, improving the functionality and improving the ability to navigate inside the body. And we are doing that ahead of October 1, because we want to make sure that the health care system says, well, Now we have an even bigger economic incentive to move to single use. The value proposition of Ambu is as attractive and competitive as it can be. Now in terms of the clinicals, I mean, we started with 2 and then at the most, we expanded in 5. Now we are basically going to restart with our ASCO DUO 1.5.
We want the clinical data to reflect the performance of the product that we will be commercializing, and we will continue to expand the number of sites. I think it's likely that by the time we finish, we'll probably be beyond DH centers. Now in terms of the mid guidance, Michael? Yes. Thank you for the question, Annette.
I know exactly what you mean. There is definitely when you model it out And we end in the middle of the guidance. There are scenarios for revenue being the way they are. I think As Jose was also saying, what the signal we would really like to send here is that despite the performance that we have for the quarter and for the half year, we In a very volatile environment, we are seeing signs that we are moving out of the pandemic, but we're also seeing a Science that Europe is not yet fully out. And on the top of that, we still have launches that will have Good impact or that are planned to have good impact for the second half of our year.
So I think all those elements taken into consideration is the reason why we have said We'll just reiterate the guidance for this quarter here, and we will then take it as we move forward. But to your point on whether that scenario for where we are being in the mid And revenue will be flat. I understand what you mean.
Okay. Thank you.
Thank you, Annette.
Our next question comes from the line of Niels Leth of Carnegie, please go ahead. Your line is now open.
Thank you very much. So if you're going to make material changes To your duodenoscope, so for example, the elevator system, which some doctors have requested, Would that require a new FDA approval? Thank you.
Yes. Neil, thank you for your question. As I mentioned before, you cannot do rapid upgrades if those require material changes. So basically, we have a good working product that we could strengthen and that's what we are doing. And the nature of the changes does not require an FDA approval, a new FDA approval.
So what you're saying is that the changes you're making are immaterial changes?
What I'm saying is that the changes I'm making does not require a new FDA submission.
Okay. And then just a second question, Perhaps more relevant for Michael. If we look across your 3 reporting segments and if we apply The an EBIT margin, I'd say 10%, 12% to your legacy businesses, the anesthesia and PMP divisions, which used to be the case Before the visualization business became so big, it would indirectly It would imply that your Endoscope business is loss making if you adjust for R and D capitalization. Obviously, you're investing quite heavily into the GEOI business. And if I'm not If I'm correct, you must have invested like more than DKK 2,500,000,000 into the GI space by now.
How far are you willing to take your investments in the GY space given the effect it has on your P and L? Thank you.
Thank you for that question, miss. I think just to get one thing right, I think when you are referring to that very big amount, you're of course including the Inventor
acquisition, which I think is a separate thing.
And I was Decision, which I think is a separate thing. And I would say overall, our innovation costs considering our modular Crocs, when you look at it across the pipeline that we will be launching, are very, very reasonable. That being said, And when you're trying to do the profitability per segment, which I cannot really comment on, but that's just one thing I would love to say is that And you know that within visualization, we have 2 or 3 different sales forces. And those Products related to the sales forces are on very different lives on their life circle curve. So it's very natural that have some of those products that are generating better profitability than others.
And could you just update us on the effect of R and D capitalization for the full year?
That's not really an information that we Yes, sharing. But when you are building an R and D organization, it is something that is moving very slow. So the impact that you're going to see In the second half, I'm not going to defer that significantly from what you have been seeing in the first half. It's going to be higher, Maybe 10%, 15% or something like that, but it's going to be in the 4th month. But you're right and as also disclosed in the presentation, we continue to build our innovation organization.
We are expanding in our site in Germany. And in order to continue to have an increasing launch plan in front of us, it is Requiring that we commit to those investments.
So that also means that your free cash flow for the full year Will be negative.
I'm not saying that. In fact, we are not guiding on that. But But I think that the takeaway is that the overall investments into innovation is very much in accordance with the plans that we have been having.
Okay.
Thank you, Nilsa. And as you can imagine, our assessment regarding the potential of Ambu NPI It's such that we are building a new single use endoscopy plant in Mexico, an R and D GI center. We are in right now in the midst of building our business in Duo and in a few months, we're entering into GasLog. So this is actually not a long term bet. This is a bet we are doing now and we expect to see the benefits as we have seen the benefits in any of the other launches.
Thank you. Great. Thank you.
Thank you, Neil.
Our next question comes from the line of Michael Healy from Berenberg. Please go ahead. Your line is now open.
Thanks very much for taking my questions. Hi, Juan Jose and hi, Michael. And not to lay on the due to the scope too much, but just in terms of your strategy for regulatory approval outside of the U. S. Can you just share with us your thoughts on European and maybe Japanese approval and which versions We should expect for those approvals.
Secondly, I don't know if you can help here, just in terms of the revenues you're generating from the AVU-two advance, If you could just share a little bit of a thought around that. Are you selling many screens or are they still heavily discounted and perhaps what the margin profile is there? And then final question, just on semiconductors and maybe rising plastic costs, are you experiencing any impacts on your business? Thank you.
Thank you very much, Michael, and excellent questions. So in terms of duodenoscopy, As you can imagine, this is a global launch. And we already submitted for regulatory approval for our ESCOP duo in Europe, and that's going to be the 1.5 our ESCOP duo 1.5. It's the same case in Australia, we have already submitted. And in the case of Japan, we are We're going to enter with our ESCO Duo 2.0.
And it's mainly driven by the fact that Japan Jazz actually started the commercialization of our ESCO for Bronco, and they are getting approvals of our ESCO E and P and system. So they are actually building the company on those segments and then they are going to get the ESCOB Duo 2.0 and then they will build the GI business. In terms of semiconductors, I think everybody reads the disruption and the fact that there are some product shortages. We haven't been impacted by that. We actually prioritize to make sure that We maintain our service levels and that is a key priority and kind of the pricing changes we are seeing to this point immaterial for us.
But of course, there is volatility in terms of our sensor market. Terms of potential market. And Michael, do you want to comment on the ABU to advance?
Yes. Thank you for the question, Michael. I think we've been talking about this in the past also that when we sell monitors, there are a variety of Different models, some monitors are being sold at full price, some are being sold at a rebated price. And In some cases, we are bundling monitors together with a certain volume of scopes. It's clear now that when we are in a phase where we really want to Our monitors in order to for customers to take better advantage of the full range of our technology.
We have a larger incentive to get the money turned and I think our behavior should be seen in that light. But even considering that, we are taking healthy revenue streams
Our next question comes from the line of Alex Gibson from Morgan Stanley. Please go ahead. Your line is now open.
Great. Thanks. Most of them have been answered. But I guess just to narrow down on in the visualization business, You're talking about flat revenues in Q3, and that just goes a bit counterintuitive to the momentum you're seeing, customers you're adding and the product launches Being rolled out. So I just wanted to check what sort of level of growth are you actually seeing in April May?
And is it just based on a conservative assumption? Or have you seen a real step down in terms of momentum? And then lastly, on the GI launches in the gastroscope, we're getting pretty close to the expected launches. How confident are you of having a product ready in the next 4 months that can be commercially sold? And what are your expectations for volumes relative to maybe prior launches in the 1st year for the gastroscope?
Thanks.
Thank you for the question. Let me take the first one. It's a tricky one because, as you know, we have very high comparables, And we also have a very solid Q2 that we are now leaving out of. So I think the signal we are just sending is that Operating within the guidance that we have given you and considering the comparable from last year and considering a quite healthy Q2 here. We are just cautious that Q3 may be on the same level, which is actually a very, very solid and good level that we would be
Yes. Alex, let me talk about GasLog, because I would say, when I look at the launches in front of us, GasLog is going to be a very important one. And unlike ERCP procedures are maybe more similar to system ENT, a gastro procedure is more relatively straightforward. And of course, we are talking about a market which is several times larger than the market where we are operating now. It's actually bigger than all the markets that we are commercializing today.
We are basically in line to do our regulatory submission as planned. Of course, we need to wait to See the response from the authorities and they have their own timeline, but we are basically moving at that. Now in terms of the uptake, it always takes time at the beginning when you introduce it. But as I just said, in the case of Catroscope, we are expecting to see a more rapid uptake than what we are seeing in the case of Duo. And we are confident that when we look at 2024, 2025, that is going to be an important part of the market as well.
Okay, great.
And in terms of latest pricing dynamics for the gastroscope, have you Come to any conclusion on where it should come out?
Yes. I mean, we will share our pricing strategy as soon as we launch the product. Again, Our pricing is very much grounded on healthcare economics. So if you look at how much it costs a hospital to use our reusable scope. If you take into account the cost of the tower, the scope, the repairs, the contamination and so forth.
Whatever it costs a hospital, a high volume hospital to do a gastroscopy, that will be the pricing for our product.
What is that number then?
We share our pricing only when we introduce our products, Alex. So you are a few more currently, but I'm so happy to get it.
Got to try.
Got
it, Charles.
Thank you. At this stage, we have no further questions. I will hand back to the speakers for any final remarks.
Okay. Thank you. And Listen, thank you, everyone, for your patience with some of our technical issues and also for your interest in Ambu. Let me just take the opportunity To say one thing, and in this calls, we have investors, we have analysts, but we also have hundreds of Fambus employees. And this is a tradition that every time there is a quarterly earning, all of them join to listen the result.
And everything we have shared, this is your work. All these progress, all these launches, everything that we are doing reflects all your efforts. And I know that in the midst of COVID-nineteen pandemic, it had not been very easy. But you guys are the biggest source of confidence we have in terms of the future outlook for the company. So thank you very much and everybody enjoy the rest of the day.