Inspired by the customers we serve, we are dedicated to rethinking medical solutions that save lives and improve patient care. We believe that great innovations are born beyond the office desk. They are born at health facilities, where needs arise fast, tasks are ever-growing, and time is a luxury. We are here to make a real difference for those who work tirelessly to better the lives of patients. Across nationalities and specialties, we bring people together to address some of the biggest challenges in healthcare systems worldwide. We break down conventional barriers by developing smarter and simpler solutions and ways of working for hospitals, clinics, and emergency services. Shoulder to shoulder with healthcare professionals, we uncover medical needs in depth. We listen and we learn, and we translate those needs into solutions that activate the future. It all started in 1937 with one man's dream to save lives.
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Good morning, everyone, and welcome to this Ambu Capital Market Day, March 2023. It has been almost four years since we last hosted an event like this, so we have been looking very much forward. For Ambu, we see a future full of potential. We think we are strongly positioned as a business to deliver on that potential, and we hope to convince you about the same during today. I know most of you know our business very well. You also know the products we bring to the market. Let me just kick this meeting off by telling you what is the everyday life of our customers, hospitals and clinics when they do endoscopy.
Every year, 200 million people in the world go through an endoscopy procedure, either as a simple check for cancer or as a more specialized procedure. This is a fact. What's not so commonly used is that this involves a lot of complexity. Let me walk you through some of the steps of what actually happens when an endoscopy procedure is done. First, the physician has to go and get a clean and well-functioning endoscope. Ideally, this is in storage. It's not always the case. It can be for service or repair, and it can be borrowed by another department or at cleaning. Let's presume it's available. The next step is to go and get the tower and bring that to the room where the procedure is done. The procedure is taking place.
The physician performs it, he may sometimes experience some variation in performance due to wear and tear of the endoscopy that is being used. Once the procedure is done, the endoscope is put on a tray, it's transported to the nearby cleaning facility. Here, the cleaning procedure takes place. This can consist of over 100 steps, after completion, it's stored in a drying chamber. Due to focus on patient safety, this procedure has, over the years, only become more cumbersome. Before the scope is used again, it's checked for performance and functionality. If it's good, it's ready to be used again. Sometimes this is not the case, then the endoscope is sent for repair. If this is the case, a supplier is called. They will come in and pick up the endoscope and transport it to external repair.
It can stay with the supplier sometimes for weeks until it's fixed and ready to use again. When the repair is completed, the endoscope is transported back to the hospital and ready to be used for the patient. Then the procedure and this journey starts all over again. This has been the pro-procedure in hospitals when doing endoscopy for decades. There has been very few changes to this way of doing endoscopy. Let's now assume a world where the basics of endoscopy is fundamentally changed. In this case, the physician goes to the storage and collect the endoscope. Given it has never been used before, it's fully sterile, and there's no need to worry about availability. He or she takes the monitor along with him and goes to the procedure room where the procedure is performed.
This is typically happening in the same way as with a reusable endoscope, the only difference being that the physician can be sure that there's no wear and tear due to previous use. When the endoscope is used, it's either being discarded or the endoscope is sent to recycling purposes, and that's it. The key takeaway here is that endoscopy with a single-use endoscope, a physician can perform as many procedures as he wish or she wish during the day without worrying about either whether there's a scope available, if there's potential variation in the performance of the scope, or if there's a colleague available to be able to do the cleaning. If we look at the patients, they also experience benefits from this. They can rest assure that they will not be exposed to any infection or bacteria from previous use of the endoscope.
There's evidence showing that readmission rates to hospital after using a single-use scope is more than half compared to when using a reusable scope. On top of this, patients also experience far less cancellations. More specifically, according to a study, 59% fewer procedures are canceled when using a single-use endoscope. Today, you'll hear much more about the growing market that we have here in Ambu and that we serve, and the substantial unmet needs that I just alluded to. You'll also hear about how we were the first to invest in single-use endoscopy, and that we today have a unique position with our solutions to address the patient needs. Then we'll also show how our business model is proven to deliver on this. Last but not least, we'll talk about how we deliver sustainable growth.
We are targeting a five year CAGR, as you'll hear about later today, of more than 10% when it comes to organic revenue growth. We target to reach an EBIT margin around 20% in five years from now with potential trade-offs allocated to growth investments. Today, you'll hear from myself. I'm Britt Meelby Jensen, the CEO of Ambu. You'll hear from my two colleagues, Thomas Frederik Schmidt, our CFO. You'll hear from Bassel Rifai, who's our Chief Marketing Officer and also responsible for sales in EMEA and APAC. We are also very pleased that we have three external speakers with us today. We have Dr. Sachdeva, who will speak to you shortly around what considerations and value his hospital has from single use. You'll hear from Dr. Shah as well, who'll talk about the latest innovation and single-use endoscope benefits.
We'll hear from Dr. Babu, who will talk about the importance of single use or in relation to sustainability and share some interesting finding from some studies that he has performed. From the Board of Directors, I'm also pleased that today with us in the room, we have our Chairman, Jørgen Jensen, with us. We have our Board Member, Simon Hesse, with us today as well. The agenda that we are to get through today is, as you can see up here. We'll start before the break with an introduction, an update on the strategy and the business. We'll have the external presentation around how single use is used in the hospital and the value of this.
After the break, we'll dive into our solutions, and we'll have an external speaker to share some of his perspectives on innovation in this field. Finally, after the lunch break, we'll cover our execution, which includes our transformation project. We'll cover sustainability, our people, we'll also cover our financial targets. During the day, we'll also host two Q&A sessions, one right before lunch and one at the end of the day, where people in the room are able to ask questions, and we'll get back to more details on this. The mandatory disclaimer here, let me move into the introduction and also the strategy update. Most of you are familiar with Ambu. We were founded 85 years ago.
Our revenue last year was around DKK 4.5 billion, more than half of that from our endoscopy solutions, and then the other half, our anesthesia and patient monitoring business. Our products are sold roughly in 100 countries, and we have just over 4,500 employees. We are a growth company, so our business has, over the past five years, roughly doubled. If we look at our endoscopy solutions business, that has more or less quadrupled in this period with 29% reported CAGR in the period. From this fiscal year, we are reporting on sales in pulmonology and then separately on sales in everything in endoscopy solutions, excluding pulmonology.
If we look at the pulmonology revenue first, this has over the past years grown by 16% CAGR. As you see, it has been highly affected by COVID, the fiscal year 2019-2020, it took a big jump when COVID first came. Later, our revenue in this category was last year under pressure as we were seeing hospitals using some of the inventories that they had, which they had bought during COVID. Over the past three to four years, we expanded into new segments. We expanded into ENT some three, four years ago. The following year, we expanded into urology, and most recently we went into the largest segment in endoscopy, gastroenterology. We went in a four year period from only being in pulmonology to being in all four major endoscopy segments.
On top of that last year, we expanded our market in pulmonology, addressing around 60 procedures more as we launched our aScope 5, addressing the interventional pulmonology being the most advanced procedures. All this is achieved because we have great people at Ambu who is working hard every day, but it's also driven by the favorable market dynamics. If we look at market dynamics, there's the dynamics around the overall endoscopy area, which is growing, driven by mainly three factors. One being that the number of patients are growing partly related to the aging population. Secondly, it's because more people are getting access to healthcare. Thirdly, there's an increase in procedures that used to be done invasive but are now done using endoscopy. When we look at single-use endoscopy, there's additional benefits.
I've highlighted four up here, one being the efficient workflow, where because you don't need to go through the cleaning process, you save significant amount of time, more precisely one hour and 16 minutes when using a single-use endoscope. You also have better availability. As I mentioned, 59% fewer appointments are canceled when using a single-use endoscope compared to reusable. We have also proven strong health economic benefits from using a single-use endoscope. Lastly, but also very important, we have an increased focus on patient safety as the patient is exposed to a fully sterile endoscope that is used for the first time. Why Ambu is positioned well to grow in this area? Well, there's basically a couple of things that I would like to highlight. One is that we have deep customer relationships and also a strong customer understanding now across all these four segments.
We have a comprehensive portfolio that we have built over these last years. We have know-how in innovation and manufacturing. We have a direct commercial infrastructure in all key markets. We have high-quality solutions, we have a clear sustainability agenda as well, which is also addressing the needs of our customers. Back to our products, as I alluded to, we are in the four major segments, and as you can see on this one, we have products across all four segments on the market, and we have also across all four segments the products marked with a green dot, products in development that will be launched near term.
We are very excited about this portfolio and how this has expanded, and we are announcing today for the first time that within gastrology, where we launched a gastroscope last year, we now also have a Gastro Large in pipeline, which Bassel will talk more about later today. All of these products are hooked up to a system where we have our aBox 2 and our aView 2 Advance that has the software that supports all our endoscopes across all segments. How do we bring all these products to market? For us, it's very important that we select and chase the highest value opportunities that we see out there.
Basically, this requires that we have a very flexible model when it comes to both the customers that we are addressing, how we are set up in terms of our commercial field force, and also how we work in innovation using the technology that we have with a modular setup that we have implemented over the past couple of years. One thing we know is that not all segments will develop with the same pace. This is something we have experienced ourself, where we saw a significantly higher uptake when it came to our cystoscope in urology compared to our duodenoscope. There are three main things that drives this difference in uptake across the markets. One is the customer willingness to adopt a new single-use endoscope. The second one is different requirements to product performance.
Each of the segments that we address also have different regulatory and clinical recommendations. If we look at what we have done as a management, when I came in together with Thomas and worked together with the management team, there were some questions around the previous strategy. As you see up here, it was clear that our EBIT margin and our cash flow had been declining. This was because we had assumed a quite a high uptake for our duodenoscope, and we had set our investment levels accordingly. Not only had we invested in that, but we had also invested in many other areas, which is what you can see from the comprehensive pipeline that we're excited to have today. We had simply too many projects, and we were spread too thin. This is what we started to address.
As a new management, we very quickly got on board and saw a need to turn this situation around. After two months, we did a cost reduction program where we unfortunately had to say goodbye to some colleagues. We also started the work on a new strategy where a big component on that was a transformation program, so we make sure that we continue to also increase our profits. Our strategy was first and foremost a growth strategy that was centered around the customer. If we look at who the customer is, our customer basically consists of a large group of shareholders that are all in the healthcare systems. If we zoom in on the biggest stakeholder in this, the hospitals, they have a lot of needs and challenges that has been important to address with our strategy.
They see financial pressure right now in the hospitals worldwide. They struggle with capacity management, partly also with increasing age in the population. They face staff shortages. There's a lot of regulation that they need to comply with. They need to integrate new technology. What is number one on their agenda is patient safety and care. This has been the basis for the strategy that we developed and launched mid-November. Our strategy, which will form the structure of the rest of the day, is first and foremost developed with a vision and an ambition from us as a management team to deliver strong, profitable growth. The way we want to focus on this is through four specific areas. The first one is around our solutions.
We get there to make sure that we bring solutions that give value for our customers. It's about execution, where it's both about optimizing how we work and also making sure we are more profitable. Sustainability is a zoom area that is very important because we believe that being environmentally responsible is closely linked to also good business results. Last but not least, the way we deliver success as a business is by focusing on our people and making sure that we bring people together in one shared culture. The strategy is about delivering strong, profitable growth. What that means is basically, what we give our estimate on and our target on and our commitment on today with our long-term financial targets. Last fiscal year, we delivered 4% organic growth and 3% EBIT.
For this year, we are maintaining the guidance of 5%-8% revenue, organic revenue growth and 3%-5% EBIT. As a long-term financial target, we believe that we should deliver a five year CAGR organic revenue growth of above 10%. The growth should primarily come from the endoscopy solutions, where we expect to deliver between 15% and 20% growth. When it comes to our EBIT margin, we expect to deliver in five years from now around 20% EBIT margin. Of course, making sure that we have the right balance between investing in growth, which is our number one focus. Still also we believe that we should be a company that is at significantly higher EBIT margins than we have seen until today.
To sum up this introduction, I've talked about the growing market and also our ambition to expand our leadership in single-use. I'll remind you what we expect to do to deliver on this. It's about delivering on our zoom-in strategy that we'll go into detail with today. It's about being disciplined in our capital allocation and also successful with our transformation program. It is also about our focus on sustainability. With this, I'm very pleased to invite our first external speaker on stage, Dr. Ashutosh Sachdeva. Dr. Sachdeva, he's an associate professor of interventional pulmonology at the University of Maryland in the US, and in addition, he's also part of the hospital administration. Today, he's going to share his view on single-use endoscopy and what that does for the US health system.
He will also talk about some of the challenges that many systems have been facing post-pandemic, and also how single-use endoscopy has mitigated these and increased patient care. Dr. Sachdeva, please join me on stage. Thank you.
Thank you, Britt. Thank you. Great presentation. Can everybody hear me? How's the energy in the room, investors? I'm an investor too. I invest in human capital, and you guys invest in technology that helps me invest in my human capital. I will share some stories that I've shared with the Ambu team, but I want to bring you to my university hospital. Britt did a phenomenal job talking about where the single-use endoscopy is going, and I'll just build upon that. Currently, I'm chief of section of interventional pulmonology, and I have a leadership responsibility to take care of four interventional pulmonologists, a big bronchoscopy team. As the pandemic unfolded, lot other responsibilities that I could not imagine. The last slide that Britt showed, the customer is not just the patient. The customer is not just the healthcare provider.
The customer is the entire team, including the payers, insurers, practitioners, and so on. We already have seen that there is a shortage of healthcare workers, both in United States, across the globe. No matter which country you go, you cannot churn out professionals in one year, one day. Our health system invested about $4 million. Just the level of investment that health systems are doing, and that's not enough. We have been apprised of healthcare-associated infections. That was a very big task. The CMS provided guidance on how to reduce it, how the incentives were given back to the hospital, and we were doing great until the pandemic happened. The data from The New England Journal suggested that during the pandemic, the line infections, those were the simplest to capture, went up by 28%.
The other healthcare-associated infection, ventilator-associated pneumonia, is how we are capturing. They went up to 40%. Part of the issue was that we didn't have enough human capital to actually take care of the patients, or they were overworked, overwhelmed. You have probably been reading in the newspaper about the FDA recommendations, starting with the cross-contamination with duodenoscope, ERCP procedures, and most recently, the guidelines to sterilize or recommendations to sterilize bronchoscopes. It's just going to continue to evolve because we are uncovering a lot of things that were either underreported, under-identified, or we didn't have the tools to focus on because there was no need for, as we were doing things the old way, right? Who's an interventional pulmonologist, you might be wondering, some of you. Maybe you all know.
I'm a plumber of the airways, but our field is at an inflection point. We are seeing a lot of growth in terms of the number of vendors, industry investing in technology that can help treat pulmonary diseases. The market landscape is tremendous, but I'm going to stay focused on the complex airway procedures that have evolved, advanced diagnostic and therapeutic procedures where we add on cryotherapy, biopsying the lung in a different way, tumor debulking using electrocautery. All that can be done for a single patient in a single setting, and they don't have to come back for repeated procedures. A big area is COPD and how we address the treatment for these complex diseases that are a global problem. It's not just unique to United States.
Over the past few years, during the pandemic, my role also evolved into helping the health system identify where we could create more value by decreasing the cost. Decreasing the cost not just by saying that we are going to introduce single-use bronchoscope, but looking carefully at what is costing us. The biggest cost is in the repairs. When you have short staff, when you have to transport the bronchoscope from one place to another, or any type of endoscope from one place to another, or you have not enough time to invest in our trainees, where they are using the scopes as they want, which is fine. You know, Most physicians have this experiential learning model and they want to experience what's happening. You can certainly reduce that, the drivers for causing the scope damage.
This past few years has really opened my eyes on how things should be and how they have been. I always say time is the most valuable commodity that we can give to our patients. Is that really happening? Each one of us is going to be a patient one day, and I think that's the whole truth in this world. If that is the most, you know, valid statement, then how do we bring time? The best way to bring time back to our patients is to ensure that our healthcare teams are not overstretched. We have the time to spend with our patients to understand, and that is a real investment we can do. The patients will go to the nth degree to follow their healthcare providers, and I've shown that repeatedly in my own system. This is my healthcare system.
This is a last picture taken with a non-digital camera. I've saved this, and I present it. On the bottom portion, you see the oldest medical school, that is University of Maryland, still functioning lecture hall. It used to be an anatomical theater, and that's our flagship hospital. We have a 13-hospital health system that is trying to, and now effectively implementing the strategy to be one University of Maryland Medical System, there is commonality, there is decrease in wasteage, there is a strategic growth that is more on a hub-and-spoke model where you can invest in one particular hospital to deliver high-quality care in certain areas and the other smaller hospitals, community hospital to partner and create more value.
Just like any other health system, we are facing a lot of dynamics that pandemic has uncovered. It has done a lot of bad and a lot of good, you all are very smart people in this room to know that. We are struggling with labor shortage, we are investing both money, time, and strategically getting the healthcare teams back in action. I'm proud to say that I did not lose a single of my team members to another health system. We have only grown as a bronchoscopy team. Part of the reason is that I am proactive, and I invest in my team. You have to continue to invest to make sure that you don't lose your team members. We worked and looked through the workflow and processing challenges.
We actually every month, we look at the cost of repairs. We look at strategies to implement certain action plan. One of the things that I've tried over the 10 years is educating the team members. It sounds great, but the team members keep changing. You have to do a continuous process, and it's very hard to monitor. So while education seems to be a great way, and it should be done, but it's not in lieu of technology making things more efficient for us. So we have seen that single-use endoscopy was able to help support our patient care in a better and transformative ways. We started in the pre-pandemic area. It was very slow. As the pandemic hit, we partnered with vendors, like Ambu and others, and that was a transformation.
It helped us get to the patient bedside without having the staff to assemble, disassemble the scope. That was the biggest risk factor for cross-contamination, apart from the ability to clean the scopes down in the central sterile processing. A part of the scope cleaning is done by humans. It's not automated. A part of the scope cleaning is automated. When you're talking about humans, and they are overworked, pressured, no matter where you go in the world, it is going to be a challenge. You will have to live with the errors that happen. We clearly saw an inflection point post-pandemic, and that has, to this point, sustained because we started looking at things that made more sense, that created more value.
I would say I was a little bit skeptical in the beginning, and I'm talking about a decade from this time point, and we have evolved in our thinking as well. We also saw that it was not just the ICU, but my colleagues in ENT, urology. Urology is one space where there is so much scope damage. Part of the reason is that they have to do retroflexion, almost go backwards, and then shoot or fire lasers in areas of kidney that actually require a lot more manipulation. The energy delivered in those small spaces cause scope damages. A half of our million-dollar contract that we have, service contract with the vendors, goes to manage the urology scope damages.
We have a person who's dedicated to educate, prevent scope damages, and time and again, we see these in ebbs and flow, and I think we try to manage or mitigate, but it doesn't work that way. It has clearly helped us mitigate some of the costs, and the cost is not just the capital purchase of the equipment, but a major cost goes into the repairs and so forth. It has helped with the workflow, and I'll share some not patient stories, but my staff stories, and improved staff satisfaction and retention. I firmly believe that that is helping us. We will continue to see the evolution of this single-use endoscopy in future as well.
To go back to what I've been talking, and I'll keep it very simple, in the pre-pandemic, things were already under pressure, right? We all said, "Build resilience. That's the way to go," right? We do a lot of resilience education and so on. During the COVID, it uncovered some of the challenges, and we were able to adapt and adopt both the single-use bronchoscopy. The benefits have been very clear. We also found that the transition is easy to do. It is not cumbersome. The health systems can adopt. The staff experiences improve the workflow and the ability to focus more on the important task, which being time and efficiency. Then we could expand it to other areas of skill building. This is my bronch suite supervisor.
I want you to hear directly from her mind, so.
In our bronchoscopy suite, the use of disposable scopes was made the process of doing multiple bronchoscopies throughout the day easier. We had the scopes readily available on the third floor without going down to the basement for scope reprocessing. At the end of each case, being able to dispose of the scope made it easier on the staff to be able to turn around the room faster.
Nobody likes to go down to the basement. You can increase the daily procedure capacity, and I think it's in a good way, and there are various models. The scope is readily available. There's a lot of challenges that happen with transportation. Faster turnaround makes the pressure on the staff a little bit easy. This is one of the staff members talking about time and risk mitigation benefits.
Some of the major benefits, included time management and decrease in risk mitigation. The time spent with turnaround of the scopes, decreased significantly because we didn't have to take the scopes down for reprocessing and wait for those cleaning times and then bring them back up to our area for use. Additionally, we didn't have to worry about any damage to the scopes, or fear that there was something wrong with the scopes that could either hurt the patient, including infections or damage to the scope that could injure a patient.
The other thing that fundamentally changed was how we educate our learners. How do we impart this deliberate practice model in a repetitive and sustainable model, right? We have high-fidelity models that cost a lot, and everybody's financially cash-strapped, so how do we do that? I went to our fellowship program director, Dr. Holden, and asked, "You know, you do monthly courses. How has using a single-use bronchoscope helped you?" We have mannequin models, and you'll see outside.
There are several advantages to using the Ambu a5 Bronchoscope for bronchoscopy training. Number one, it is very easy to set up. This easy setup allows our fellows to do on-the-fly impromptu training sessions. Number two, this setup is mobile, we can move our training session from a bronchoscopy suite to another education area. Number three, it is low cost. Low cost makes it low risk for our trainees to do their bronchoscopy skills development.
Dr. Holden has a very large fellowship at the University of Maryland and is my colleague in interventional pulmonology. As we will see that, you know, Britt talked about it, we have expanded into areas in ENT, urology, many other ICUs, education and training. Before this talk, I was talking to our ENT colleague, and I said, "Hey, do you guys use disposable scopes or single-use scope for your procedure?" She said, "Yeah, our residents love it. It's nice for the faculty to be able to review their exams much better than pushing around." Who does the pushing around in the hospital? Either the resident or the staff, right? The big guys don't. Clearly it has value creation and workflow improvements. There is clearly organizational impact on equipment setup.
I'm not saying that reusable scopes are not meaningful. It's just that there are a lot of areas, opportunities where we could use single-use scopes. Cost reduction is the repairs and patient benefit from decreased cross-contamination. This is my team, very happy. I don't know if it's a video or, but thank you. Thank you again. Yeah.
Thank you very much, Dr. Sachdeva. It was very interesting to get a sneak peek into your daily life treating patients. I think also particularly interesting to hear how easy it is to for your staff to be trained to use single-use endoscopes and also I think what we all appreciate, how much time is freed up from doing the reprocessing and the cleaning and actually to do real patient care. Thank you very much again for sharing your perspectives on this. The next topic we have before we dive into our strategy is a focus on our business model. This is basically how we are set up to win and basically how we are set up to create value for our customers.
How we work in Ambu, it's basically the full value chain we have is with a very strong focus on innovation that is driven out of customer needs. It's set up in terms of manufacturing to make sure that we can produce high-quality products. Then it's our commercial organization that makes sure also that our products gets out to our customers and bring the value there. That's really the interaction across all these functions that, plus some of the staff functions that we have and support functions, that is how we work here at Ambu every day. If we start with our innovation, we basically have a couple of major innovation hubs. We have people sitting here in Ballerup.
We have an innovation center in Augsburg, which we set up a couple of years ago after the Invendo acquisition and where we are next door basically to one of the biggest GI hospitals in Germany, based in Augsburg. We also have a growing center of innovation in Malaysia, and we are in with our production in the other places where we produce, we also have people in innovation to make sure we have that handover from innovation to manufacturing. We are around today 370 people in innovation at Ambu. If we look at how we work, we basically create value for healthcare professionals and with healthcare professionals. This is how we have operated since we were founded.
I have three examples up here that you see that are very different, but that all underlines how we work. The first one is our famous Ambu Bag, which was launched in the fifties, which is used for respiratory needs, and that is still a big product today. As you can see from the top to the bottom picture, I mean, there has been some evolution, but it's basically, I mean, the same concept of product. We were the first to develop a single-use endoscope some 15 years ago with the aScope Broncho. Last year, we launched the fifth generation of this scope, and this is also a result of continuous collaboration with our customers. The third example is how we moved from pulmonology with our bronchoscope into other segments, the ENT segment, urology, and latest gastroenterology.
All these are examples of how we in innovation work closely with our customers. But let's look at what how we work and what delivers value. There are basically three main components that are very important in our daily work with innovation. The first one is around proprietary technology. We have and develop a lot of IP, and that is related to the key features of our endoscopes, such as imaging, which is a key feature across most of our endoscopes. It's about maneuverability, making sure that when it gets into the edges that it can maneuver in the way that is needed for the specific procedure. It's around the systems, the software which is becoming a more and more important part, and then it's about sustainability and a number of other areas. We are also working with modularity.
Basically, while it's important that we address the specific needs of the segments that we address, there's a lot we can do to add scale to our innovation and manufacturing by having a modular approach, using some of the same features and learning from the different scopes. It's also helping to get faster to market, and it's helping to decrease the risk in the development projects when we have proven something already works from a technical perspective. We don't do the work alone. We partner first and foremost with customers, but we also have a number of development partners that are quite important for us in how we work and innovate here at Ambu.
If we look at what that leads to, basically, as you can see on the top here, we spend a lot of money on innovation because this is very important. We went from some years back to be at levels of 6%-7% of our total revenue. As we increased in the past couple of years, our investment levels, we were all the way up to 13% of our revenue. Now this year, we expect to spend 8% roughly of our revenue on innovation, which is in line with industry benchmarks and what we believe is meaningful with the type of business we are. With all this innovation, we also developed a lot of IP, which is important to have patents in our industry.
We basically sent in 3x more applications in 2021 than three years before that as we were ramping up in innovation. Also we expanded our portfolio, as I alluded to, on moving into more segments. As we move ahead, it's very important for us to remain customer-centric. We believe we have the right organization. We have right-sized the organization last year in connection with the cost reduction. Also this matches and the capabilities we have matches our overall priorities. If we look ahead in terms of innovation, what is important? I think we have still strong opportunities to continue to evolve how we work within our different segments, which as I mentioned before, some of them we are quite new into only for the last couple of years.
We do have innovation projects that are quite far ahead in all these segments. We work very closely in our innovation team, in project teams. We believe that being focused in different projects on our solutions it is what makes us deliver the strong solutions to our customers. With that, we have plenty of opportunities both to improve the offering that we have for the targets that we are currently addressing. We have opportunities also to expand the target groups, as is an example with our aScope 5, and then also to bring over the years and more long-term additional value by looking into other ways where we can meet the needs of our customers. This is how innovation in Ambu is really one of the key parts of our DNA that is very important to drive continued growth. Comes operations.
Today, we have four factories around the world, in Xiamen in China, in Penang in Malaysia, where most of the endoscopy manufacturing is done. In Noblesville in the US Last year we opened a factory in China, our largest and most modern factory to date, where we will also produce a lot of our endoscopes going forward and some of our anesthesia and patient monitoring products. We believe in our manufacturing, we have a number of competitive advantages. Cost leadership, I mean, we were the first to develop endoscopes. We are the ones with the broadest portfolio. There is a lot of synergies in terms of cost. We have proven during COVID and day to day that we have a very robust and resilient manufacturing set up with manufacturing around different parts of the world.
With the opening of Mexico, we have ample of capacity also for the next many years that allows us to grow in line with our strategy. With Mexico, we also, given roughly half of our revenue today comes from the United States. It's a big benefit to be able to produce close to our customers. That also adds flexibility. It reduces transportation. Finally, we were one of the first companies in the med tech industry to fully complete our upgrade to be in compliance with the Medical Device Regulation that is new within the EU. Overall, I feel quite comfortable that we have a unique and highly competitive manufacturing set up that can deliver the high quality of products that Ambu stands for. The last part of our business model is our commercial organization.
We are roughly 800 people in Ambu, Commercial functions. We are present with direct sales force across all the major markets worldwide. Both in the US, where we have close to half of our revenue, in Europe, also in the rest of the world, where Japan, Australia, and China are places where we have our own direct sales force. We are in these places because we value to be close to our customers. As I mentioned in my introduction, the customers, that's an ecosystem of different stakeholders in the health system. We have a commercial setup that makes sure that we addresses all these needs and also are well aware of the different influences they have in the decision-making process. In many of our markets, we have a sales setup with three specific sales forces.
One that goes to the hospitals addressing pulmonology and gastroenterology, one that focus on ENT and urology, one that focus on anesthesia and patient monitoring. Other than the field force that is out with the hospital, we have a number of other capabilities, such as inside sales, so people sitting in our offices supporting our customers. We have tender support and a number of other capabilities that we share across the different markets we operate in. One thing when it comes to commercialization, there's one thing we have not talked a lot about externally and that I think it's important to also clarify and align on, and that's our launch process. What happens when you launch new products in our industry?
If you compare an endoscopy launch with many other med tech products, the sales cycle varies slightly, and it's slightly longer when it comes to endoscopy. Let me go through some of the main steps because what we basically experience, despite having differences across different countries and different segments, overall, it's a six to 12-month process to launch a new product. What happens is that we are, of course, preparing well in advance. When we get the regulatory approval, what we do is that we do what we call a controlled market release. Basically, we go out to customers, having them try our product, which, I mean, they're allowed to now, the product has been approved.
This is something that often takes 12 weeks, where the customers get familiar with the products, and we get feedback, making sure that also the product delivers on the expectations that we set. Then we start to go broader out, basically engaging with the customers, doing product demonstrations. I mean, they do their clinical evaluation using the products. Then what happens in most hospital is that there's a value committee at the hospital that will then look at the offering and also look at the costs and benefits. This whole process takes a number of months, varying across customers. Then finally, we are able to have a contract.
Of course, the job is not done there because typically, they will gradually increase the use of our endoscopes. We are, of course, focused on both getting new customers, but with that specific customer to make sure that they can see the benefits for even more patients. I think this is also why when we launch a new product, we don't see an immediate fast ramp-up, but that it takes time. What we have learned is that it's very important that we make sure that the customers get properly familiar with the product, and that we also get the feedback and get comfortable that the products also fulfill the expectations that the customers have.
In conclusion, to sum up on our business model, we have our customer-focused innovation, which is based on key proprietary technologies and a modular setup that basically drives, reduces the risk of products not working. It drives scale, and it also drives time to market being faster. Our manufacturing, we have set up with our new factory in Mexico, making sure we have ample of capacity to also fulfill our growth strategy. When it comes to commercialization, we have direct sales forces in all major markets. The key focus when it comes to commercial is that we have the flexible approach that I talked about in the introduction. We make sure that we invest and adjust so we go where the biggest return on investment is for Ambu. With that, I'm happy to announce that we have a short break.
You can stretch your legs, restrooms, as Nikolaj said, are outside, and get some coffee, and then we'll meet back here in 15 minutes. Thank you.
All right. Welcome back, everyone. Britt introduced me earlier. My name is Bassel Rifai. I'm the Chief Marketing Officer for Ambu, and I also lead our sales teams for Europe and Asia. Britt also shared earlier that one of the key parts of our zoom-in strategy is to provide innovative solutions to address customer needs. For us, for Ambu, that's a very important part because that's also a big differentiator for us as a company. Actually, you know, when it comes to customer needs, we believe that we're one of the best in terms of being able to identify what those are in single-use endoscopy. Then we also believe that we're the best in terms of translating into innovative solutions.
Those two things combined, the fact that we can identify customer needs and translate it into innovation, that's actually two of the key things that made us the world leader in single-use endoscopy over the past years. For this session, I'm going to go deeper into those two things. Part one is going to be really just to better understand what are the customer needs that drive the transition to single-use, and we'll talk about it in terms of needs, and I'll also translate it in terms of market value and market potential. Then part two is going to be around basically a deep dive into each of the four segments we compete in, then what is our plan to win, what's the progress we've made, what's our upcoming pipeline, and what do we expect in terms of outlook.
We're also going to have a chance to hear from Professor Pallav Shah, who is a professor of respiratory medicine in the UK. Professor Shah is going to talk about, you know, what advanced bronchoscopy is, kind of some of the main trends in that segment, and then specifically what the role of single use can be in pulmonology going forward. That will be the plan. You know, if I can just, you know, as we go through this session, I think that there's probably three key things that you should take away from today. One of them is that single-use endoscopy is a attractive and fast-growing market.
We expect it to grow from roughly DKK 5 billion today to something closer to DKK 15 billion-DKK 20 billion over the next five years, almost tripling or quadrupling. The second thing is that with our focus on innovation, Ambu is very well positioned to continue to be the world leader in this segment. The final thing is that for our other two segments in our business, anesthesia and patient monitoring, those are going to continue to be steady, stable growth contributors and profitable growth contributors for us as a company. Let's dive in, starting with customer needs. Now, when it comes to customer needs, maybe I'll start by sharing that this reflects 15 years of Ambu experience, almost 15 years in single-use endoscopy.
Basically, the reason this is so important is because when we decide to enter into a new market, one of the first things we ask ourselves is, what are the main, you know, across these four customer needs, what are the main segments where these play a critical role? That's where we start, and that's where we enter in to build a foothold and then expand over time. That's been our strategy to success in the past, and that's kind of the winning formula for Ambu to apply to future segments. Let's start with the, with the customer needs, and I'll go through them left to right. I mean, you've heard already a lot from Britt and also from Dr. Sachdeva on the role of workflow and availability when it comes to single-use endoscopy.
I mean, basically reprocessing reusable endoscopes is a big challenge, and because of increased focus on regulatory scrutiny, quality assurance, infection prevention, that challenge is only going to get bigger and bigger, and the bigger that challenge gets, the more attractive single-use endoscopy becomes. The third one is economics, and this one's also quite straightforward, is basically that for many procedures, if a doctor switches from a reusable endoscope to a single-use endoscope, they'll save money for their health system because reusable endoscopes are, you know, expensive, complex, fragile devices that often break and repair costs can run into the thousands. Then the fourth key unmet need is around patient safety. You know, Dr.
Sachdeva talked a little bit about it. Basically, cross-contamination is continuing to be a growing issue because you use a scope in one patient, then you have to clean it, then you use it the next patient, and you have to take a lot of steps in between, a lot of manual steps, a lot of steps with humans involved, and humans can be prone to error. There's increasing awareness that cross-contamination in reusable endoscopy is a big issue. You know, of course, the more focus there is on that, then the greater the need is going to be towards single-use endoscopy. Those are the four main things, the main kind of customer needs that are driving the, you know, the interest in single-use endoscopy.
Again, it's important because basically when we start in a segment, we always start from what needs are we addressing here, build a foothold, and then expand over time. A great example of kind of this winning approach is what we've done in pulmonology. For pulmonology, we launched our first single-use endoscope in 2009. When we launched, even though pulmonology overall is a, you know, 5 million procedure market, we were targeting a very specific niche and only that niche in the operating room. Then basically with every generation that passed, then we were able to target more procedures in the operating room. We were able to expand from the operating room to also the ICU. As you also heard with the launch of aScope 5, now we've been able to also expand into the bronchoscopy suite.
It just shows that for us, success is all about entering into a market, starting with a segment where the unmet need is greatest, and then building over time. That's been our success, our path to success in the past, and that's going to be our path to success in the, in the future. If those are our, you know, if those are the customer needs and kind of our approach to identifying target markets, the next question is, what does it translate to in terms of the overall endoscopy market? I'm going to take you through it in two slides. We're going to go through one slide which talks about how we look at the market overall in terms of volume, and then we'll talk about what it translates to in terms of value.
If we step back now away from pulmonology, overall looking at endoscopy, we see endoscopy as a 100 million procedure segment. Every year, 100 million endoscopy procedures are done in the main markets we compete. Actually, if we look globally, it's closer to 150 or 200 million. A 100 million in the main segments we compete. Then you can see how they break down between the four key areas, pulmonology, urology, ENT, and GI. Then the second thing is, you know, within that 100 million. You can see, you know, first of all, what is Ambu's sales volume today? We sold 1.7 million single-use endoscopes last year. We're less than 2% of the overall endoscopy market. You can also see how it breaks down.
If you include competitors in that too, then it's just over 2% of endoscopy market is single-use. If we just look at what are the target markets we compete in today, the areas that we focus on, that's 16 million procedures. 16 million procedures we target with our current portfolio. If you add to that our near-term pipeline, the pipeline that Britt shared earlier, that 16 million becomes 23 million. The, you know, the three main takeaways from this is, number one, even within the existing areas we compete, there is significant headroom for future growth. We've sold 1.7 million endoscopes last year, and we're operating in a 16 million procedure segment. The second key message is that the target segment itself is going to grow over time.
Even when we launch just when we launch our near-term portfolio, that 16 will become 23. Then, of course, I mean, you know, the third key takeaway, which is potentially the most exciting for the long term, is that even when we've gone through this entire growth agenda and achieved all the, you know, the targets and financials that we are going to lay out today, that will still only represent that we're targeting and going after a 1/4, less than a 1/4 of the endoscopy market, which means that the long-term potential for single-use endoscopy is significant.
I mean, if this is the, you know, the picture in terms of the value or the procedure volume and the segments we target, of course, the two key questions are, you know, what do we expect the single-use penetration to be within those segments? What does that translate to in terms of market value? Let's talk about that. Basically, I mean, the overall takeaway is that we expect the single-use endoscopy market to more than triple over the next five years, to grow from DKK 5 billion to somewhere between DKK 15 billion-DKK 20 billion. I'll kind of walk you through how we see that. Basically, we start on the left with the target market with near-term pipeline.
Those are the same numbers you saw on the last slide, the 23 million procedures that we target with our current portfolio combined with our near-term pipeline. The second chart is what would happen if that entire market, all that 23 million procedures transition from reusable to single-use. Theoretically, what's the value of those segments? You can see for pulmonology, it will be DKK 8 billion, for cystoscopy, DKK 7 billion, and so on and so forth. Of course, those segments are not all going to transition 100% over the next five years. The question is, what do we assume in terms of five year penetration? You can see that on the third column. It basically shows that you have some segments like cholangio, which has already fully transitioned to single-use.
You have areas like pulmonology, which is, you know, we expect to be more than half single-use in the, in the next five years, and so on and so forth. You can see the different segments at different stages of penetration. For all this analysis, by the way, we don't include anything about the colonoscopy segment, which of course, is a huge segment in terms of procedure volume, but where we still have some work to do to understand what the potential can be. If we just take, you know, that market potential at 100% penetration, multiply it by what do we expect penetration to be, and then add those all up, you get to the DKK 15 billion-DKK 20 billion target market that we expect over the coming years.
I think the, you know, the two main takeaways from this is, of course, number one, that this is a, you know, very attractive, fast-growing market that we compete in and that we're a market leader in. Then number two, which is important also, is that it's a very well-balanced market outlook. Because historically, Britt also shared this, that historically, we were very dependent on duo for our success. What you see here is not a, you know, an outlook that says we need to make one big bet and hope or, you know, expect that it pans out. It actually says that we have a bunch of different markets in different stages of maturity with different risk levels, all of which are contributing to the overall single-use value of DKK 15 billion-DKK 20 billion.
That's a very important thing in terms of, also how we, how we run this company to maximize value and also to minimize risk. You know, stepping back and again, putting the entire thing in terms of volume or in terms of value, this is what it looks like. It's a DKK 5 billion market today. It's growing to DKK 15 billion-DKK 20 billion in five years. Of course, the long-term outlook and, you know, key question is what will happen beyond those five years? If you start saying, what will happen if those entire 23 million target procedures at some point migrate to single-use, that could be a DKK 45 billion market. What if at some point in the distant future, the entire world of endoscopy translates into single-use?
That, of course, would be a significant long-term potential. That's basically where we are in terms of market. That was part one. Now let's move to part two, which is all about if that's the market and those are the segments we're competing in and where we see the potential, what is our plan to win in each of those segments? I'm going to go through each of the four segments, which is pulmonology, urology, ENT, and GI. I'm going to start with pulmonology. As we've often shared, for pulmonology, returning this segment to growth is a key priority for Ambu. Basically, to achieve this, we have two focus areas. Number one is to grow and defend our position in the OR and ICU.
Number two is to drive conversion to single-use in the bronchoscopy suite. For the OR and ICU, you know, this is a 3 million procedure segment. It's a segment that has two main dynamics. Number one is it's 40% penetrated into single-use. That means there's plenty of headroom to grow. The second is we have competitors coming in. That means we need to find ways to also defend and differentiate ourselves. From an innovation perspective, basically, our plan to respond to that is that we want to have a or we plan to have a market-leading total airway portfolio. For us, that will include our bronchoscope, the aScope 4 platform and aScope 5 platform. It's going to include our VivaSight 2, which we're very close to relaunching. That's a unique solution to one lung ventilation.
There's no other competitor that has something like that on the market. It's also going to include our SureSight, which is our next-generation video laryngoscope. The important thing about these is that all of these are going to be standalone, you know, differentiated solutions. On top of that, they're all going to be connected to the Ambu ecosystem, to our aView 2 Advance platform and our aBox 2 platform. That basically means that compared to today, where we have aScope 4 facing some competitive threats from kind of me-too products with some differentiators, if you fast-forward to when we launch these products, we will basically have a market-leading portfolio in the OR and ICU. When we have that, combined with our dedicated commercial infrastructure, those are going to put us in a very strong position to defend and grow our business in those segments.
Second priority for pulmonology is to enter into the bronchoscopy suite. The bronchoscopy suite, as Dr. Shah is going to share more about in a second, is a 2-million-procedure segment where doctors are doing some of the most advanced bronchoscopy procedures. It's a segment that's almost fully reusable today because up until today, you know, no single-use endoscope has been able to meet the performance requirements of these doctors in this advanced setting. That is until today, because now with the launch of aScope 5, for the first time, there's a single-use scope out there that's starting to meet those needs. We're very proud to share some of the.
We're proud to see some of the evidence that's coming out, clinical evidence, you know, pre-clinical evidence that's talking about aScope 5 not just being the market-leading single-use bronchoscope, which is, you know, something of course, we're proud about and expected, but also that it's starting to be on par or superior to reusable endoscopes in many important areas. That is, you know, that's kind of a first for endoscopy, so it's, you know, worth kind of recognizing that for a moment. Up until now, in the world of endoscopy, basically, if a customer was transitioning from a reusable endoscope to a single-use endoscope, it was usually because they were getting some sort of convenience or safety benefit, but not because they were getting a performance benefit. They were actually, in many cases, willing to accept some performance trade-offs in exchange for all the other benefits.
With aScope 5, for the first time, we're going to be launching a scope, or we are launching a scope that carries all the benefits of single-use, and on top of that, it has the performance improvements that allow it to go head-to-head against the reusable endoscope. That's, you know, that's also the experience we're having now that we're going into the commercial launch. We're continuing to see very positive feedback, you know, in a clinical setting and papers coming out on our product being used in some advanced procedures. To share more on that, I'm actually going to welcome Professor Shah to the stage. Professor Shah is a professor of respiratory medicine in the UK, he's going to share more about.
You know, what's happening in advanced bronchoscopy today and then also what the role is that single use can play. Professor Shah.
Thank you, Bassel. Thank you very much. It's a pleasure to be here with you to really share with you my kind of passion and enjoyment in respiratory medicine. A lot of you will be familiar with some of the growth areas in technology, and I think a lot of innovation and investments done in pharma. Also, if you look at devices, you have a huge amount of investment in cardiovascular and also gastroenterology. What I'd like to show you today is really respiratory is where the growth area is. This is where Ambu can make a difference. This is where there is a lot more growth potential compared to all of these other areas of medicine.
what I want to try and give you a flavor for, I mean, I can't show you all the things we can do in 15, 20 minutes, but what I can do is give you a flavor for what's the direction of growth, what's the kind of innovation potential, where are we compared to just being in the ICU where Ambu is being used to my bronchoscopy suite, where we have a lot of complex procedure, and we're really transitioning towards that panacea that people used to talk about 10 years ago, natural orifice transesophageal surgery. That's really what the direction we're going into. You can see that we've got a portfolio of procedures that not only looks at diagnosis, 'cause traditionally bronchoscopy was diagnosis. It was all about diagnosing lung cancer, and that was about its potential.
Now I'm going to share with you kind of therapeutic procedures in emphysema, in asthma, in COPD, chronic bronchitis. If you look at COPD, the prevalence globally is 10% of the population over the age of 40. This is a huge growth market, and if you marry it with the right tools, there we have a lot of potential. Traditionally, as you've kind of heard, we used to think of single-use scopes as, you know, used for very simple basic procedure, have a quick look at a airway, maybe get some saline samples from it, maybe use it for intubation. What I'll show you is that we've got the potential now to have a reusable, a disposable single-use scope which can fulfill virtually all of my needs.
Also, if you look at the device field, 10 years ago, before the bovine spongiform crisis, we were using reusable instruments as well, not just reusable scopes, but reusable instruments. Reusable needles, reusable forceps, and now that market is completely single-use disposable instruments. I think this is the next step forward to going completely disposable. Also some of the procedures I'm showing you are going to be invasive procedures. They're not just a simple diagnostic procedure. You have the potential to introduce infections into these patients with reusable scopes, and therefore, single-use makes a lot more sense. Part of this portfolio, you can see that the current aScope 5 that's been introduced meets a lot of the characteristics that I'm looking for a whole variety of procedures.
For example, when we perform endobronchial valve placement for emphysema, we have to quite often get to very difficult anatomical areas. The right upper lobe apical segment has quite a curve, and our standard instruments sometimes don't allow it. Our current gold standard is the Olympus scope, and you can see with that scope, with the tool in place, the deflection that we can achieve at maximum is about 160 degrees. With Ambu scope, I can almost get a look literally on itself with a 180 degree turn, and that will allow me to place these tools much more effectively and more precisely. In fact, this is a valve procedure that I did with the current aScope 5 a few months ago.
With this procedure, you can see that, we essentially, this is an emphysema where you get hyperinflation. Normally, you have surgery for this procedure, patients in the ICU for like five days, maybe 10 days. I can do a procedure where the patient just comes in, we use a catheter-based technology. We place these one-way valves into the airway. These one-way valves allow the lung to deflate and have the same effect as lung volume reduction surgery, but without all the kind of complications and risks associated with it. That valve I placed, as you can see, it goes quite high up in an apical segment, and normally it would have been a bit more challenging to place that valve with a conventional scope, whereas it's a lot more simplified with the current aScope 5. Much more refined procedure.
We normally need excellent optics for this procedure because I want to place that valve with micro precision. Before, with single-use scopes, that was not possible. We couldn't get the kind of refinement visually that we'd like. We couldn't get the flexibility we'd like. With the aScope 5, it actually meets my needs and maybe almost is more superior to the current gold standard. It allows us this kind of precision placement where we can literally deploy the valve and place it like a leaflet rather than firing it like a bullet, which we would have to do without the precision there. This is another area. This is a patient with a tumor. This tumor is in the trachea. If we do not do anything, you know, basically this patient would get infections and start going into palliative care and suffocation.
Again, with flexible devices, we can do diathermy to resect this tumor. Just with one quick moment with a snare, we've literally resected most of that tumor away. You can use coagulation probes to debride the tumor from the side, free it up, and then again, put a snare over it. These are procedures we'd need a bit of technical finesse. We need the right amount of vision to be able to see properly. Also, this Ambu scope is the only scope which has a ceramic tip in it. It's the only single-use scope which allows us to use electrocautery tools which have the risk of causing electrical energy, shocks, fires, etc. Yet we can achieve this also with disposable scopes.
You know, in this patient, we've virtually debulked a whole tumor in the space of 10 minutes with this kind of flexibility. Again, really just showing you the kind of breadth of procedures we can perform and the utility of these kind of systems. Here's another one. This is the treatment we do for asthma. I mean, asthma, there's a huge unmet need. In the Western world, if you look at just Europe, there are about EUR 300 million spent each year trying to look after these patients in hospital. We have therapies which are still underexploited. This is bronchial thermoplasty, where we use radiofrequency energy to ablate the smooth muscle. In asthma, it's the smooth muscle that causes the constriction. The airways tighten up. That's why the patient feels breathless and cannot really get the gas exchange they need.
If you thermoablate and destroy the smooth muscle, that constriction, the smooth muscle is eradicated, and these patients feel much better. They have fewer exacerbations. They're less breathless. Again, I'm trying to demonstrate to you a procedure and potential which can be very comfortably and easily done through aScope 5. aScope 5 has a scope which has a outer diameter of 4.2 mm. It has an inner diameter of 2 mm, so I can comfortably pass this tool into the more distal airways that I need to, and therefore, really quite efficiently and easily do this procedure with the aScope 5. You've seen the quality of the imaging and everything, and you can see how we're transitioning to being able to do these things really quite precisely. Now, this is another interesting procedure.
In this patient, they had cancer, they had radiotherapy, basically, their left main bronchus had completely disintegrated. The gastroenterologist had put a esophageal stent in. When I did my camera procedure, I could actually see the metalwork of the esophageal stent in the left main bronchus. That's not a great idea, therefore, I had to put another stent in into the airway to protect that airway and stop food from going into the wrong place into the lungs. Here we have a thin scope. This scope has an external diameter of 2 mm, so I can pass it along my endotracheal tube and actually very carefully, under direct vision, place a stent with utmost precision. I mean, this is real-time, you can see it looks like it's in slow motion, just really slowly kind of deploying it.
There's the metalwork you can see from the esophagus, which is the esophageal stent penetrating into the left main bronchus. Really just trying to illustrate to you the precision that we need with these kind of procedures, the finesse and the quality of imaging that we need, and that's why the aScope 5 makes a huge difference to us because it'll allow us to facilitate these kind of procedures. Now, effectively, I've created another artificial airway, where this now forms the lumen of the airway and reduces the chance of food and debris going from the esophagus into the left lung. More developments. Chronic bronchitis does not have a treatment. It affects 10% of the population, like I mentioned, and this is a treatment where we can use liquid nitrogen to freeze the epithelium.
It ablates the epithelium immediately and then allows the epithelium to grow from the stem cells and the regenerated epithelium is younger and also has less goblet cells, so the patients make less mucus. What's the problem with this procedure? Well, liquid nitrogen freezes that airway to minus 196 degrees, but also it's a gas that expands to 700 times its volume. If this gas cannot escape properly, that patient literally will be blown up. Here you have a tool where with the Ambu scope, we can actually use a very thin scope, so there's lots of space around it. We can put our tools in, we have good vision, and yet it allows that gas to escape. If the gas can easily escape, then you're not going to get that complication.
Another area where just having a different tool just helps us make it happen. This, I'm just showing you another variation of a tumor. I showed you the hot treatment earlier, which was the electrocautery, but we can very similarly do stuff with ice. Here we have a cryo probe, and effectively what we can do is to apply it to the tumor and then basically use that as a way of resecting the tumor. It needs less precision and skill than the snare and the electrocautery method, and again, just facilitates it. In this kind of situation, I want a tool that will give me plenty of suction, so if there is any bleeding, then I can very comfortably suction away the blood and manage this procedure carefully.
What I've tried to do is show you just a kinda glimpse of all the kinda things we can do, but in the real terms, to do all of this in my bronchoscopy suite, I need a portfolio. You can't just have one spanner in your toolbox. You need a variety of tools to be able to do your work. You know, not everything is a Phillips screwdriver. You need different kind of tools and instruments to really achieve your work. If you think about most of these scopes cost GBP 30,000. I'm not sure how much that is in Danish krone, but just having one of all of this is going to invest about GBP 300,000. I've got 40 in my bronchoscopy suite.
We're an international center, and we can afford to do that, but not every hospital can. How can you reduce the cost? You know, there's a huge capital cost with these kind of tools. If you can't make the most of them, then it doesn't really work. But all of a sudden, you now have these disposable scopes. I'm not making any capital investment. I have a niche procedure. For example, for that stent, I have the ultra-thin bronchoscope would be perfect for that. I only use it 10x a year. Is it really worth spending GBP 50,000 on a scope which I'm going to use 10x a year? Is it better to have a disposable single-use scope which I can use as and when I need it, and I'm using it on a pay-per-use basis?
For me, having a wide range of toolbox which Ambu has now achieved with this aScope 5, I've got four different products, and I'm sure we'll have three or four more products very quickly. The life cycle of your tools are much quicker. When you have a system where you're using disposable products, you can create new tools very quickly. If I'm going to have a reusable system, it's going to take me five years, eight years to go from development through to product delivery, and you could probably squash this development into kinda two years. There are so many drivers that are going to push all of this towards single-use. The versatility and diversity of the procedures we can do. The invasiveness. Now that we're doing invasive procedures, it's no longer good enough to have a disinfected scope.
Remember, your, our reusable scopes are not sterile. They're just disinfected. There is a driver for using sterile instruments and sterile scopes, and that again is achieved through using these single-use products. The other people have already talked about the workflow, the repairing cost. When you're doing invasive procedure and you have these remarkable tools you're putting through, when you're training people, but even when you're developing new techniques and new procedures, there's a high tendency to breakages and damaging reusable scopes. Again, you can see how it's much more sensible economically and in terms of workflow as well, and in terms of not having to suspend your service because you've destroyed all your scopes, really that's the big driver for single-use instruments.
Just to reiterate it, I think, I hope I've shown you that interventional pulmonology is going to outstrip gastroenterology and hopefully cardiovascular one day in terms of growth potential. I kid there. The numbers there are different scale, but we're going to be on their coattails and really run this area through. With that, I'd like to thank you.
Thank you, Professor Shah. Cheers. All right. Thank you, Professor Shah. That was We like a bit of competition between pulmonology and GI doctors. That's good. I mean, kidding aside, of course, first of all, it's amazing to see just what advancements have happened in bronchoscopy. Those are a lot of things that Professor Shah shared would be things that either, you know, wouldn't have been treated in the past or would've been treated using much more invasive means and endoscopy, remember everyone is a less invasive way of doing, you know, healthcare. That's of course one of the main kind of macro drivers behind it. Thanks for sharing that and also for sharing the role that aScope 5 and Ambu can play.
That's, but you know, by the way, also from Ambu's perspective, why, you know, because of those drivers, that's why, for us one of our main priorities is to enter into the bronch suite. Just to kind of wrap things up in pulmonology, just again, between the plans to enter the bronch suite and then to grow and defend our position in OR and ICU, we believe that we're going to be well-positioned to have sustained growth in pulmonology over the coming years. Now moving forward and, the plan now for the rest of this session, I have 40 minutes on the clock, but I have a few segments to go through. I want to take you through ENT, urology, and GI. Of course, within GI there's a few sub-segments.
This is going to be the marathon session, but hopefully a lot of insights for you to all take away. starting with ENT. For ENT, this was our second entry into endoscopy, starting with bronch, then we went to ENT. For ENT, you know, we entered in 2018, 2019, we, you know, we've had a lot of adoption, mostly because of workflow and availability benefits of single use, not as much around repair or cross-contamination for these kind of more simple procedures. For us, the two key objectives is, number one, to continue to commercialize aScope 4 platform, and continue to drive growth there. The second is to unlock new parts of the market, expanding into the outpatient setting with next generation ENT high-resolution scope.
Before I dive in, I just want to share one customer story for ENT. We don't unfortunately have a live customer here, but I want to share the story of Jackie Mojica, who's a speech pathologist in New York City. Like many other clinics, you know, Jackie is struggling with all the workflow challenges. She's based in New York City, where space is at a premium, so they also don't have a bunch of room to have all the infrastructure around cleaning, drying, culturing, sampling, et cetera. So for them, transitioning to single-use was a clear option. When they took the decision to switch, you can see the feedback here that they see improved operating efficiency, they don't spend time on logistics, and they can see more patients in a day.
Of course, I mean, that is, you know, it's quite simple that healthcare professionals want to see more patients in a day, and anything that can support them to do that is of course something that they're going to have a lot of interest in. It is customers like Jackie who are continuing to rapidly adopt the ENT scope. We launched, you know, again, 2018, 2019. Last year we sold over 300,000 ENT scopes. Stepping back, it's a 17 million procedure market, and the main focus we've had so far is just one segment, which is the inpatient procedures. A key thing is that for the future, we want to expand also into an outpatient setting.
The challenge with that has been that, you know, we've had a barrier, which is the image quality of our fourth generation platform. In the same way that for Professor Shah, we couldn't enter into the bronch suite with aScope 4, but we could with aScope 5. Our plan will be for ENT, that we go from just covering the inpatient setting to also being able to go into the outpatient setting. When we do that, we're going to more than triple the addressable market for our ENT platform. That will set us up for a strong continued growth in the ENT segment. Then let's turn to urology. For urology, we basically have two main priorities. Again, this is a segment we entered into a year after ENT, so 2019, 2020.
Here we basically have one goal, which is to continue the successful expansion of aScope 4 Cysto together with Cysto HD. The second one is to enter into the ureteroscopy segment, and that's a segment where single use is established and already fast-growing, and we have a huge potential to continue to expand the market with competing players and also to take market share. For Cysto, you know, like ENT, it's been, you know, all around workflow and availability.
Overall it's a 10 million procedure segment as I shared, we sold over 400,000 units last year. The main focus here has been on the hospital setting, and one of the key priorities we have is when we launch the Cysto HD scope, similar to what we're doing in ENT, it will allow us to expand the types of procedures that we can cover. In the case of cysto, one key area that we haven't been able to cover is bladder cancer, screening, detection, and so forth. Once we launch the Cysto HD scope, that's going to unlock an additional, you can see here, 2.5 million procedures in the market.
Like, you know, like ENT, it's going to be a segment where we have a lot of runway for continued growth on the back of our current product, which, you know, this year, and we expect for the future, will continue to have high momentum, and then also with our next generation product. All right, moving on to ureteral. This again, is our second priority within urology, is to enter into the ureteral segment. This is a segment that has already progressed in the transition from reusable to single-use. You know, reusable ureteral scopes are, if you've seen them, they're long, thin, flexible, fragile scopes, And they're being used in procedures for stone treatment. When you're doing a kidney stone treatment removal, that means you're passing through lasers, other like, you know, aggressive instrumentation.
Sometimes you're also having to really aggressively maneuver the endoscope to try to get to the position of stones. For all those reasons, ureteral scopes are very frequently breaking. There are studies coming out that say, or that have come out that say that forgetting about the capital investment, forgetting about reprocessing, forgetting about all that, if you just look at the repair cost per procedure for a ureteral scope, it's $450 on average. If you can imagine adding everything else around that, the, you know, the value proposition for single-use becomes very clear. It's mainly about economics, and it's mainly because when you transition from a reusable ureteral scope to a single-use, you save money. Because of that, the market has already transitioned, you know, somewhere between 20%-25% transition to single-use.
Our plan is going to be to launch a high-performing ureteroscope, and with that, the goal will be to enter the market, expand the market ourselves, and also take share from existing players based on our performance and based on our commercial infrastructure. That's actually an important point because, you know, four years ago, I mean, urology is a great example of a segment that we had no, you know, customer relationships, we had no sales force, we had no products four years ago. Then if you fast-forward to today, it's an area where we have, you know, one of our most attractive segments that we compete in and with even more runway ahead when we launch the ureteroscope.
It's a good example that we have the, you know, with the modular innovation and with our, you know, approach to selling single-use endoscopes, those can successfully allow us to enter into new segments where we haven't previously participated in. That's ENT and urology. Moving on to GI. For GI, basically, there are two main, you know, I'd say takeaways for the GI section. Number one is, it is, as you saw also earlier, it is a very large market, and in that market are many attractive segments for us to go after. The second thing is that we are very well-positioned to enter into this market and to drive market creation, and the plan will be to do it through a focused approach.
When we say focused approach, we say it for a very specific reason, which is that we want to maximize value, and we want to minimize risk. That's, you know, our approach to entering new markets in line with the zoom-in strategy. You know, in GI, there are four very different segments, gastro, duo, colon, and cholangio. Each of those first four, I'm going to go through each one of them. They all have very different dynamics. The common thing about all of them is that we're going to take that same approach of entering in a given target market and then expanding stepwise over time. I'm going to spend a little bit more time on gastro and duo, and then we'll go more quickly through colon and cholangio. Let's start with gastro.
For gastro, you know, I mentioned earlier, it's a 28 million procedure market, a huge market. Very similar conditions to what's driven single-use endoscopy in other segments. There's a lot of procedures taking place outside the GI suite in the operating room and intensive care, sometimes even the ER. There's a need for health systems to do more and more procedures, growing waiting list issues and so forth, and all that is coming up against capital constraints and labor shortages. Those are like the macro conditions that are, you know, driving the need for single-use gastroscopy. On the back of that or with that environment, we launched our aScope Gastro and aBox 2. When we launched, our initial focus is the 2 million procedures taking place outside the GI suite.
Again, I mean, you could look at that and say, you know, "28 million procedures, and here we've already decided to focus on two." I think one of the key takeaways from today is that, you know, when we start with two, it doesn't mean we ignore the other 26. It means that when you're entering into a new market, the best place to start to maximize value and minimize risk is the areas where there's the biggest need. That's the clearest way to gain a foothold, and then once you have that foothold, you can continue to expand over time. It's a very resource-efficient way for Ambu as a company to enter into a new segment. The plan will be to enter into this 2 million procedure segment, and then, of course, we will opportunistically also chase other parts outside the 2 million.
If I look at it today, we have a growing base of reusable customers. A lot of those customers are, you know, surgeons or customers doing procedures outside the GI suite. We also have a healthy amount that are doing cases inside the GI suite, either because they need the scope as a backup or for the typical logistics cases, nights, weekends, out of hours, those types of things, or for specific procedures where they want some of the performance characteristics of our scope. We'll the focus will be the 2 million, but of course, we opportunistically look outside of there as well. Now in terms of the 2 million, there is one customer here I can share a little bit of, you know, of a customer story from.
I'll start with, and I think we have to play the video here. I'll start with a video from a general surgeon in the US on what their experience has been since adopting aScope Gastro.
My name is Dr. Morris Washington. I'm the Director of bariatric surgery here at East Cooper Medical Center in Mount Pleasant, South Carolina. I've been practicing for about 35 years, and I've been doing bariatric surgery for 15 years. My current reusable endoscopes, they require a lot of support staff, first of all. You have to have one person that's doing the procedure with you, a nurse that's charting, and then an additional person to actually process the scopes. You know, the reusable gastroscopes, the regulations behind processing those scopes has become, you know, very rigorous. Using single-use endoscopes has made it where I can do all the procedures with just a nurse that does the charting and a tech that does the procedure with me, freeing up another tech that can then do other surgical procedures in the OR, which is a really big benefit.
What attracted me to using single-use gastroscopes was that I knew that it could improve my workflow. You know, I usually every other Friday do between, you know, 10 and 15 upper endoscopies, and that was just very cumbersome when we were using reusable scopes. We have a small area here we do endoscopy. We only have one reprocessor. If that one reprocessor goes down, then I know that we are, you know, pretty much stuck. I knew that this would allow us to be able to get through the day for sure, and in addition, not use a lot of the resources. I can tell you what made me say that this is better than a regular gastroscope. One, it's light compared to a reusable gastroscope. Two, the retroflexion on the scope is just incredible.
It can retroflex even greater than 180 degrees. Seeing the cardia with these scopes is a real benefit. It's very important to rule out a hiatal hernia in these patients. This scope consistently gives me a great view of the cardia. I think eventually that reusable scopes will probably be a thing of the past. You know, I embrace new technology very early on. It's nice to know that I'm a leader in the upper endoscopy with single-use gastroscopes. I hope other people will follow with me. It's really increased my efficiency, it's made my staff happier. I don't have to worry about any infectious transmission.
I mean, it would've been great to have him here in person, but at least good to hear from Dr. Washington. For me, I mean, for sure, two key messages that came across that I thought were very important from that video. Number one is, you know, he talked about, "It's made my staff happier," and you know, the efficiency in making staff happier, especially I think everyone here hears the news stories about the challenges that hospitals are having, the challenges with staff turnover, the challenges with burnout, which are real issues that health systems are facing, and they're struggling, and they don't see a clear an easy fix or an easy solution.
The fact that we can contribute to alleviating that a little bit is a, is a strong signal. The second thing which really, really of course excited me is that eventually reusable scopes will be a thing of the past. I shared earlier that, you know, even in our five-year assumptions, we think only a small part of the market will be transitioning to single use. It is kind of exciting to hear that someone speak about that because when we think long term, of course, this is a very large procedure segment, so the opportunity could be, could be significant.
The last thing I want to share on Gastro is kind of an exciting update and a new piece of information that we wanted to share with this group, is that we have identified another attractive niche within gastroscopy, and it's for specialty procedures that require a scope with a large working channel. Procedures like bleed management or necrosectomy. Procedures where you want a large working channel, either because it offers better suction, so you can, you know, manage a bleed, or where it allows you to pass larger instruments. We've taken the decision, and you know, we've had some development on this ongoing to add to our pipeline, large working channel gastroscope.
That's a project that's under development, and when we launch, it will expand the addressable market that we reach in Gastro by 75%, so from 2 million to 3.5 million procedures. So between Gastro and the progress we're seeing in terms of adoption, rebuying customers and the up, you know, the future launch of Gastro Large, then that's going to position us well to start to create the single-use market in this segment. Next, let's switch to Duo. For Duo, I thought, you know, we want to share some perspectives on Duo and also share a little bit about the history of Duo and the history of Ambu and Duo because it is, you know, quite a journey we've been through in this segment.
Unlike other segments, Duo has been one where the main driver towards single use has been around patient safety, and it started in 2019. It started before that, but I think there was growing awareness. Finally in 2019, the FDA issued a report warning health systems about issues with contamination of reusable duodenoscopes. Duodenoscopes are one of the most, you know, complex and difficult to treat or difficult to clean, you know, endoscopes in any, in the world of endoscopy, they have some very intricate parts that it's very difficult for any, you know, human or automated reprocessor to fully clean. Cross-contamination from one patient to the next between cleanings is a growing issue. After the FDA issued this warning, the next thing they did was to issue guidance. Soft guidance.
It wasn't something that was enforced, but it was clear guidance to health systems saying, "You should not use reusable duodenoscopes because of the risk of cross-contamination. You should transition to either single-use duodenoscopes or reusable duodenoscopes that have detachable disposable components that facilitate cleaning." Then, later that year, they put in place specific reimbursement just for single-use duodenoscopes. That started in the government healthcare and Medicare, and then it expanded also into the private insurance market in the US That was the backdrop, you know, the customer need and the clinical need and patient safety need behind which Ambu launched its DUO 1.0. For DUO 1.0, because of the urgency and the clinical need, Ambu got Breakthrough Device Designation status for DUO 1.0.
That's a kind of a designation that's only awarded to maybe 5%, or I think a little bit less than 5% of all medical devices. It allowed fast-track approval of our products because of the customer need. We launched DUO 1.0, and what we learned was that this was a much more challenging and clinically complex environment. We underestimated the complexity. We underestimated the complexity of the procedure, and we underestimated the high bar that, you know, advanced GI endoscopists have for the performance of a duodenoscope. You know, we ran a clinical trial, and the results from that trial was that our DUO 1.0 was able to, you know, successfully complete 85% of procedures. Yeah, 85% of procedures. Just for reference, for ERCP, a typical quality metric will be 93% or above.
Most doctors will say they want it to be between 93% and 95% completion rate to say this is acceptable. Of course, we took the feedback. We saw that this wasn't meeting our customer needs. We decided to pause the commercialization. We decided to take the feedback and make some incremental improvements to the product, still within the kind of 1.0 generation, but what improvements we could make to address some of these challenges. Nine months later, we launched the Duo 1.5. The thing that we were very excited about 1.5 was that as we went through the clinical trial, we actually found out that this was a step change in terms of product performance.
Those same clinical trial sites, the same doctors went from an 85% success rate to a 96% success rate, and as I showed, that's in line with ERCP kind of quality metrics. You know, as we moved more towards commercial launch, what we realized is that although doctors are able to successfully complete the procedure with 1.5, they're still having some challenges with the scope, and those challenges have become barriers to adoption. They gave us very clear feedback.
I mean, these are doctors now that we have growing, deeper relationships with. They shared with us that we have three, and not to get technical, areas that we need feedback, which is we need to improve the image quality, we need to improve the elevator performance of our scope, and we need to improve the ability to pass instruments through the scope. That's basically, you know, where we are today. That because of those challenges, we're seeing limited adoption of DUO 1.5. We're looking more towards the future and what to expect from DUO 2.0 and the future beyond that. For us, the. I think there's two key messages to share when it comes to DUO 2.0 or to the DUO segment.
Number one is that, we continue to believe in this segment and continue to believe it's going to be an important market opportunity for the future. You can see it here. It's a 1.4 million procedure segment, so when you compare that to 28 million gastroscopies, it sounds small, and even within that 1.4 million, we're only going to start targeting a quarter of that, 350,000 procedures. 350,000 because those are the procedures that take place with high-risk patients that are immunocompromised or infected, the ones where if you ask most ERCP doctors, "That's where I want to use a single-use scope," or low volume centers. Those are centers who are doing 100 ERCPs a year, 200 ERCPs a year.
Those centers are actually some of the highest variability in terms of reprocessing standards. For them, single transition to single-use can be a good option. Even if we just look at that 350,000 procedure segment, then if that transitions to single-use, it represents a DKK 4 billion market opportunity. In terms of procedure numbers, it always appears smaller, but for DUO, the value per product or per case is so high that this continues to be a very attractive segment for us. That's number one. Number two is that we do expect to meet performance requirements with DUO 2.0. Again, we've gotten very clear feedback on the 1.5 platform. We've taken very specific decisions to continue development of DUO 2.0 rather than kind of rush it to market.
The purpose of that was to make sure that the very specific feedback we got, we address in this generation. In this generation, you're going to see improvements to image quality, improvements to elevator performance, and improvements to the ability to pass tools. You know, we've taken the latest development versions, we've had pre-clinical testing with US and European doctors, and we've continued to get positive feedback on this generation of the product. The plan will be, you know, as we continue development and then get to launch, the plan will be to launch it in a very focused way, specifically targeting these 350,000 procedures in ERCP. Just to round things out when it comes to, when it comes to GI, we have colonoscopy, which is our third segment.
Colon is a segment which we've probably gotten the most questions about. you know, why are you continuing with colon? Should we pause colon? Actually, we talked a little bit about it in November, that if this was a product that was early on, had a lot of investment ahead of us, in the context of the zoom-in strategy, we might have taken the decision to pause colon, and that would have been the right decision. The reality has been that there have been a lot of development synergies between the gastroscope and the colonoscope. They basically have gone hand-in-hand for a lot of the way, and most of the investment in the colonoscope is behind us. When we look at it objectively, the correct business decision is to finalize and, you know, the colonoscope and launch and bring it to market.
When it comes to the market, in many ways, it is a market that's very similar to gastro, where it's a very large volume segment, and there are niches, areas like colorectal surgery that can be attractive, procedures taking place outside the GI suite. At the same time, we know it's a product where the performance requirements are very high, high in terms of very specific handling and in terms of image quality. Our plan with the colonoscope is we're not going to go into a full commercial launch because that will also represent, you know, the investment and resource and risk that represents. Instead, we're going to bring it to market. We're going to test it in a few key centers. We're going to get product feedback on the performance of the product and also where it can fit.
Once we get to that point, we'll take a decision on where to proceed from there. Finally, for cholangio, this I shared earlier, is a segment that's already transitioned to single-use. These are even compared to uretero, these are longer, thinner, more fragile scopes. The repair costs had, you know, become very high and the movement towards single-use already happened. Our plan here is to develop a best-in-class solution. When we, you know, when we launch this product, we expect to both continue to expand the market and then also take share from the existing competitor. Stepping back for GI overall, I mean, basically, I think there's three main takeaways when it comes to our position and approach in GI.
Number one is, as I shared, this is a very large and attractive market that can have like many attractive niches for us to enter into. Number two is, you know, based on what you've seen, we've made significant progress on our innovation agenda. The final thing is that, you know, we expect that with the focus areas that we have, with the, you know, the targeted approach towards our launch, we're going to be in a very strong position to enter into this market and start to create the market and be the market leader in GI. Just to round things out now, we've covered endoscopy. The last things we want to cover is just anesthesia and patient monitoring. These segments represent our heritage.
These segments are areas where we have a very strong portfolio, a very strong position in the market, a strong brand reputation. The focus for us in these segments is going to be on optimizing the portfolio, driving continued sustained profitable growth. Optimizing the portfolio in, you know, across anesthesia and patient monitoring, and then making select innovation bets, especially within patient monitoring. Let me share a little bit more about what that means. In terms of anesthesia, there are three areas we compete, resuscitators, masks, and circuits. Overall, it's a 3 billion DKK like value market, and it's growing at low single digits. The main growth drivers are demographics, and we also benefit from some favorable mix shift in the way treatment is done, moving from endotracheal tubes to laryngeal masks.
In general, it's just quite a steady, slow growth segment. For us, we have a very strong value proposition and a strong position in the market, and a big focus is going to be just around optimizing profitability, and that's going to happen in the context of this business and also in the context of the, you know, transformation program, which Britt has spoken about. Finally, when it comes to patient monitoring, again, here we're also in three segments, cardio and then two segments within neurology. This is a DKK 4 billion segment growing low single digits. In this segment, for the most areas, we are a high-quality premium player. In this area, in this part of the market, we have an opportunity to strengthen our portfolio also with some incremental innovation.
Between optimizing our profitability across anesthesia and patient monitoring and introducing some select innovation, we'll be in a strong position to drive stable, profitable growth in these two segments while we focus our future growth also towards endoscopy. Just to wrap up my section before we move towards Q&A. Again, I think there's three key messages to take away from innovation and how we plan to, you know, provide innovative solutions to address true customer needs. Number one is single-use endoscopy is a large, attractive, fast-growing market. We expect it to more than triple over the next five years from DKK 5 billion today to DKK 15 billion-DKK 20 billion in five years' time. Ambu is well-positioned to continue to be the world leader in this segment.
We're the world leader today in each of the segments we compete, and we expect to be the world leader in all segments in the future. We're going to do that through our focused approach to innovation and our targeted approach to commercialization. Finally, when it comes to anesthesia and patient monitoring, we expect these businesses to continue to drive stable, profitable growth for Ambu. With that, I will ask Britt and Thomas to join me on stage, and we'll start a Q&A session.
Yeah. Thanks, thanks a lot, Bassel, first of all, for a very comprehensive and a good presentation. What we'll do now is to open up for a Q&A session. It's only for people in the room that can ask questions, given we'll have a second Q&A session towards the end of today, I think questions around our financials, sustainability, our transformation program, I mean, should be saved for the last section when we have been through those. Everything that covers our portfolio, the market, what we have gone through, I think it's relevant to ask questions now. We have two of our good colleagues with mics in the room and we'll take the questions by.
You raise your hand, then you should only pose the question when you get a mic. I think we'll. I think, Niels, you were first. We'll start with Niels with the first question.
Okay, great. Thank you. It's Niels Leth from Carnegie Investment Bank. A question on your strategy and the discussion whether you should address a few categories in its depth or to go broader across multiple categories. Have you made any considerations around focusing on fewer categories, but then offer multiple products within those categories, say, tools, softwares, et cetera, rather than spread your resources across multiple categories and within endoscopes? Would you not be concerned that a single-use endoscopes in, say, 10 years will be a commodity product, and in order to own the each of the categories, you would need to have a deeper assortment within each category?
I think I can start that and then you're free to add, Bassel. I think we have had obviously a lot of considerations around what is the right approach when we look at our different segments. Also acknowledging that we have an attractive and relevant portfolio of endoscopes across those portfolios. The approach that we have taken now has been to say, I mean, we have this portfolio, we have a lot of synergies both in our development, I mean, with the software and the systems that supports that. We also believe, given we were first in endoscopy, we have very strong knowledge and experience in how to sell single-use endoscopes into hospitals. Given, as we were embarking on our new strategy, we had the portfolio that we have.
Our decision was to focus on the portfolio and move forward with that full portfolio and then, as Bassel explained, then be much more targeted in how we promote our products. I think we can do that because we already have a very good knowledge of the customers based on some of our experience. So that's our approach now. Also, as I shared in my introduction, we know that these segments will not all develop at the same speed because decision-making is different across the segments. Requirements for product performance will vary, and there are different clinical and regulatory recommendations. It's with all this in mind, we said, I mean, let's use the knowledge we have and go in with a more targeted approach in each of the segments because we have the products and we have that knowledge.
When you ask about the long term, I mean, in 10 years, I mean, it's very hard to predict exactly what is the slope going to be in the different segments when it comes to uptake. That's also why we believe it's very important that we are close to the customers and close to our execution. We would not rule out that we would look in to go deeper by offering other products in different segments long term. We think for now, I mean, we have a clear benefit in the offering we have.
We are also not so sure that this will in 10 years be a commodity market because we see from our interactions with customers that there's still a lot of requirements to functionality such as image quality and so on, things that are not easily easy to commoditize because it puts a requirement on the quality of the scopes. That's where our experience and low cost production, we basically believe that we are positioned to be ahead here, even should there over time be more players and a cost pressure. We do believe that more players also has advantages because that also helps create awareness around single-use endoscopy, which we cannot alone as Ambu do. I think I think you were first.
Hi. David Adlington, JP Morgan. Recently Verathon indicated they expect to be number one in bronchoscopes in the US this year. I just wondered if that was something you recognize, and if so, what are you going to do to sort of counter that expectation? Possibly related to that, obviously video laryngoscope, just wondered if you had an update on the timing of launch of that, please.
Yeah. I think, Bassel, do you want to answer this?
Sure, yeah. Yeah. We of course heard that also heard that announcement. I think when we're looking at the market, there may be some specific segments where, you know, that's their view of things. When we look overall at bronchoscopy in the US, we are confident that we are and we will continue to be the market leader. I shared earlier that, you know, our key priority is to return pulmonology to growth, and behind that the main focus is to defend and grow in the OR and ICU. You know, that's going to continue to be an important stronghold for us. You know, because of that also, the video laryngoscope is a top priority project for us at the moment.
We're not communicating about specific timelines when it comes to our pipeline, I think, you know, what you're observing in terms of the competitive dynamics is exactly also what we're seeing, that if for us pulmonology is a key priority, then making sure that we have the right product portfolio and the right commercial focus is going to be a big, big focus for us as a company.
Yeah. In terms of timelines, I mean, we don't communicate timelines for our launches for competitive reasons.
Yeah.
Thanks, David. I think Wei, you were next with a question.
It's Wei from SEB. Thank you for taking my question. I'll try to limit my question to two for now. Firstly, you mentioned the financial pressure on the hospitals, which is also a big topic for the entire healthcare sector. Do you see this as a opportunity or a caution when you're selling the new products? I'm asking because we also hear from doctors saying the number of procedures or single-use products they can use is very limited. They cannot use more because the hospital already were equipped with reusable scopes, then they don't have additional resource for single-use.
Yeah.
Would you comment on this?
I think I can comment on that. Basically, you can say it's true that in terms of the financial pressure that we see hospitals are under, there's, I mean, to us, a positive and a potential threat. The potential threat in that hospitals are more asked to use their reusable scopes. Also a positive, because when you are to have reusable scopes in the practice or in the hospital, it comes with a huge capital investment. We know that in many countries, I mean, UK, where I was a couple of weeks ago visiting customers, a lot of their reusable setups are getting too old and have to be replaced, so they continue to see, I mean, their scopes break down and we heard earlier also the price of buying one new scope.
We can also see that being a driver, because you don't have to make these big investments into the reusable setup. Of course, I mean, the financial department of the hospital, we do see them encouraging the doctors to perform more scopes with reusable. At the same time, the other driver that is in favor of us is the staff that you need and that's a shortage that we see both in Europe and US, that the staff needed for being able to reprocess the reusable scopes is a bottleneck, combined also with the cost that every time you have to cancel a procedure, that comes with a lot of cost that people are not able to work.
I think net-net, we do see this as a benefit, but of course there's also, I mean, the pressure on using more of the reusable in some cases.
Yeah. Very helpful. Very helpful. Thanks. My second question is regarding to the FDA's warning letter s ent to Olympus last week regarding the disposable cap version, duodenoscope. What are you hearing from your customers? Do you consider this as a positive trigger for you?
Do you want to?
Yeah. Maybe just for everyone's benefit, of course, there was a warning letter sent to Olympus from the FDA, which was talking about some observations they have when it comes to complaints, complaint reporting, and like some other kind of standards and processes around their latest reusable duodenoscope with a disposable end cap. I think when of course, when we saw the launch of this generation of product, we think that, you know, for us as a company where we see that patient safety is a top priority and where cross-contamination in duo is a big issue, then the disposable end caps is kind of a we see it as a partial solution.
You know, we've even seen studies come out now that show that the contamination rate is dropping with the disposable end caps, but it's not dropping to zero. If it's not at zero, then that means it's not the right long-term solution for patient care. Last week's FDA warning letter is just one in a string of activities or events we continue to see that show that the FDA is getting more and more focused on cross-contamination as an issue. They're continuing to call out when, you know, issues related to quality that can have impacts on patient safety are coming up, we expect those all to be macro drivers towards single-use, especially in duo, but also overall for the market.
Yeah. I think, Christian, you had a question.
Hi, good afternoon. Christian Reim from Danske Bank. A couple of questions from me as well. First, on the aScope Broncho 5, can you talk a bit about your expectations for the shape of the adoption curve here? My reason for asking is that Dr. Shah, of course, made a very compelling presentation of how this could be used for some quite advanced therapeutic procedures. My thinking is this is somewhat resembling what you were trying to penetrate into with the duodenoscope, also some quite advanced therapeutic procedures. Should we expect that this is in the case of most doctors, something that will take a long time for them to get familiar and comfortable with?
Do you see another rationale at play here given your existing presence in the pulmonary space?
Yeah. Maybe I can cover that. I think the first thing to just calibrate is when we talk about duodenoscopes, it is at the far extreme of complexity, both in terms of the procedures and then also in terms of the endoscopes themselves, the complexity of the endoscope, the performance requirements, and so forth. Even here, when we say, okay, we're moving from the fourth generation that was covering simpler procedures in the OR and ICU to the fifth generation, it's still, like, fundamentally as a product, a simpler product. It has two-way bending. It's much It's, you know, fairly straightforward to maneuver. The nuances aren't as specific as for GI scopes, so it's not at the same same level of complexity.
Therefore, we don't expect it to have anything close to the same, let's say, launch curve as the duodenoscope. I think at this point, we are. At this point, we have high confidence that it's meeting customer requirements in a fairly, like, straightforward way. Now the main thing that we're focused on is the commercialization process or the sales cycle. Britt shared a bit about that earlier, that it's, you know, of course, we go to our customers, and one thing that has happened is, you know, Wei brought up with the hospital constraints, is we do see a longer approval processes. Value analysis meetings are happening less frequently, and so forth.
That's the, you know, the focus we put now is just how do we continue to drive the sales funnel and sales cycle because we have a high confidence now that the product is meeting performance requirements and it's addressing unmet needs that our customers have.
Great. Thank you very much. Then a second question, which is more for understanding. The new Gastro Large that you're announcing today, should we think of that as a new product, a new separate product category, which will be introduced at a higher price point? It sounds like it's more complex niche procedures than the existing Gastro scope is targeting. Or should we essentially think of it as in the same vein as on the bronch side, where you also have different scope sizes that are sold at not too different price points?
I mean, I think it's probably a little bit early for us to talk about pricing. What I would say is in terms of the value to the customer, of course, it brings the value of the single-use endoscope like our gastro, and then on top of that, it has some benefits of the larger working channel. I think that's how we're looking at this as a product.
Great. Thank you.
Yes. I think, we can have a few final questions before lunch. I think, Martin.
Hi. Martin from Nordea. Just one quick question following up on the gastro. I think it's quite early that you launched a new size to a product since you barely just launched the first gastro. Is that a. Are you doubling down on confidence here, or is that more a reflection of the feedback that you have received, that you have a higher chance of succeeding in a different sort of category or size?
Yeah. I would say that it's, you know, overall, when we look at the gastro market, we see it as having many attractive niches, and we've been looking at what are the right ways to target each of those niches. It happened to be that the first opportunity we had was for a standard gastroscope, but we also see that as a very attractive niche that a large working channel gastroscope can fill. We thought it was important to bring that into our pipeline. Actually, we benefited a lot from modular innovation in that aspect.
It's not that, you know, we launched and then we said, "Oh, wow, now we have a barrier or we see a need and now we want to create a new generation to address it." Actually, it's that a lot of the things that we did to develop and launch the Gastro Scope are some of the same things that we can benefit from for a Gastro Large. The plan will be that those two coexist. That Gastro, which we continue to see positive feedback like we shared and continuing, like, steady growth of rebuying customers, will continue to grow. Then this specific therapeutic gastroscope, when we continue development and bring it to market, will also have its own niche in the market where it will continue to grow.
Yeah. Yeah. I think down here.
Hi. Rickard Anderkrans on Handelsbanken. Just one question from me, please. On the slides, you expect the single-use endoscopy market to grow about, you know, 25%-30% per year for the next 5 years. You guide for 15%-20% CAGR in 5-year for the endoscopy solution segment. How should we think about that sort of below-market growth? Is there an ASP dynamic from bronchoscopy or anything else we should think about in the guidance in relation to the market growth? Thank you.
I can take it. Basically, what we do expect is also that we will no longer be alone. I mean, we were the first, and we were alone for many years in pulmonology. We do expect, and to some extent also, I mean, hope that there will be more competition, so we will not take the full market by ourself. We believe that, I mean, the more competition, we'll also be able to have a larger share of voice, supporting the use of single use. That's how to think about that. I think we'll take the last question from Niels, and then I think you all deserve a lunch break.
Thank you. Bassel, you mentioned a 40% conversion rate, I think it was in the area of pulmonology. Could you just repeat whether this is within your existing 3 million procedural core segment, or is it in the total market? Secondly, what are you actually doing to protect your market share in the 3 million procedural market where you already have a strong position? There are many, many new players entering this space. The procedures are more simple. What are you doing to protect your strong position?
Yeah. Yeah, first of all, just to the, to the first question is, it's a 40% penetration in the OR and ICU. Now it's 5 million pulmonology procedures, 3 million of that is in OR and ICU, and we see that as being about 40% penetrated. I shared earlier that mean, you know, two main things are happening. That means there's room for further penetration, but there's also competitors coming in. When it comes to competition, we are still the world leader in bronchoscopy, and we have, on the one hand, a strong portfolio, and on the other hand, we have a dedicated commercial infrastructure.
You know, those benefit, those two, like, those two main, let's say, differentiators combined with the full, let's say, ecosystem offering that we have as Ambu, are the main ways that we go into our customers and say, you know, let's stay with Ambu and grow with Ambu. For the most part, the competitors that are coming in, we see competitors globally. I think the bigger presence is in the US, and then we're seeing less competitive impact outside the US. For the most part, they're coming in with, you know, more or less me-too products, maybe with some slight differentiators. Of course, in a growing market, with increasing competition, they will take some part of the market.
For us, what's very important is that, if we want to continue to be the market leader, if we have a market-leading portfolio, and if we have a market-leading commercial infrastructure, that should be a recipe for us to maintain market leadership. It doesn't mean that competitors aren't going to come in and take some share of the market, but we want to still maintain our position as market leader. Of course, as the market grows, that will represent how we can sustain growth for the coming years.
Good. Thank you. I think it's time for lunch. I think everyone deserved a lunch, deserves a lunch break now. We'll have a couple of minutes to stretch the legs, and then the lunch will be served at the tables in this room. Don't go too far from your chair. Thanks, and then we'll have the clock up here. We should be back in 35 minutes to start again. Welcome back from the lunch break. I think we should have fresh coffee at all tables, or it's coming in a second. Hope you had a nice lunch, and we are ready now to kick off the final session. In the final session, we have the three remaining focus areas in our Zoom-in strategy that we're going to go through.
We'll finish with Thomas talking about our financials and financial targets. We have a Q&A session before we close the meeting in this room and head out for those that are in the room next door for product demonstrations afterwards. I'm going to talk about the second Zoom-in area, which is about excelling in execution across our value chain. A large focus in this area is to make sure that we have an efficient and scalable business model to grow from. The strategy is very much about growth, and we need to make sure that we also as an organization are able to scale up and follow as we grow.
Why this is specifically important, I think you all remember this slide that I showed in my introduction this morning, that we are in a situation where we have had our margins declining. We've had a negative cash flow in the past quarters. This just puts even more focus on why it is we, under execution, have launched a transformation program with a key focus to improve our profitability. How we focus on this, there are three things essentially that we see as focus areas in ex-execution and with our transformation program. This is number one, to accelerate our journey to profitable growth. We have to do better in this area. Secondly, it's about creating more financial flexibility to invest in opportunities. We are not exactly at the stage that we would like to be here.
Lastly, it's to build a strong foundation to scale from, as I just mentioned. This is not something that happens from one day to the next. We launched mid-November a transformation program which consists of three phases. It's a program that we expect to run for approximately three years. It's also a program that includes a number of activities that I'll come back to, but there's also an element of culture and culture change here, because this is also about our mindset. This has been very well received internally so far.
When we launched the strategy, we focused a lot on making sure that it was cascaded out in the organization and that each department had made specific plans of what is it that they can do and they are going to do to contribute not only to the growth strategy, because that's very important, but also to this transformation program. It is today anchored well in the different functional areas that we have. The first phase is where we are now, and that is a mix of scoping the different initiatives, understanding how is it we are getting more out of the different areas that we're in. It's also about execution because there are some obvious things that we focus on.
That is also relevant for our second phase, which we label it the second half of this year, where there's a focus on what we call the more quick wins. I'll come a little bit more back to that. We have a phase three, which is over the next couple of years, where our focus is very much on how is it that we build a sustainable foundation for the future. Some of the initiatives that we implement are also well-rooted in the organization. Some of the things that we are focusing on are more short-term quick wins, and others are more long-term and take some time to implement. You'll see that shortly. If we look at our P&L, it's, I mean, this we are doing addresses all levels of the P&L.
We have six specific initiatives, where three of them will have a direct impact on the gross margin and the other three will focus on our EBIT margin. When it comes to our gross margin, it's, as you can see on the benchmark that we have up here, we are below industry benchmarks. This is not where we should be. The three things we have focus on here is pricing, optimizing that both for in-market and launch products. It's about our COGS, how do we reduce our COGS on different products, and it's about our portfolio streamlining. When it then comes to the EBIT level, where we are also not at the target we have set and what can be expected in our industry, we have three initiatives addressing that. 1 is around sales force effectiveness. How is it we optimize that?
We already talked about that during the day. What should our operating model look like? Our ways of working. There's a lot of details behind this. I'll share some of the headlines to give you a flavor of what it is we're doing to get to where we want to do in terms of the targets that we are communicating and that Thomas will elaborate on later today. When it comes to the three initiatives that focus on the gross margin, one is about optimizing our pricing. In the past years at Ambu, price increases has not been a strong focus. The focus has been very much on building an endoscopy market, it has been very much focused on the volume and getting products out and a bit less on pricing. That we're going to change.
Secondly, we all know there has been inflation, and that has, of course, also increased our cost for raw material and labor, so putting an increased pressure on our pricing. What we are doing here right now, we have already strengthened the governance, and this is what we are rolling out because we need stronger governance on pricing. This is a lever that is filtering, as you know, all the way through. We are also looking to the extent possible, and it's not possible everywhere because a lot of our business is contracted, it's about at least adjusting our prices for inflation. It's also when we launch new products that we increase our capabilities, so we are much more strategic about what is the price we take when we bring products out.
It's always much more challenging to change the price significantly if you launch a product at the wrong level. Secondly, there's something around COGS reductions that is a focus as well. A big part of our COGS relates to the material. We have strong partnerships here and given back to what I talked about before, in innovation and how we set up our products, it has more been a focus to get with speed to market than actually the solution. We have implemented a number of initiatives here to also make sure that we address the obvious design and material changes. We have a dedicated procurement program that is already running. We have some production efficiencies that we can see that we can capture. Some of it helped by our factory in Mexico.
The last one in this category is around portfolio streamlining. We have looked at the whole portfolio. A lot of our anesthesia and patient monitoring products, as an example, we have great variation in our contribution margins, so there's an obvious way to improve that. Also again, here, we can strengthen our governance where we have operated fairly decentral when it comes to these areas. This is where we are looking into adjusting our pricing and potentially discontinuing some of the products that are not generating the profit levels that we believe we need to have. Also, we are seeing some obvious areas where we can make a conversion to different products that are also higher margin.
These are the three things that we essentially are doing as part of our transformation to have a direct impact on increasing our gross margin. There's of course a lot affecting the gross margin related to product mix and so on, but that we keep a little separate from this specific initiative. When it comes to our, I mean, our EBIT and our operating expenses, there are also three focus areas that we have. One is around sales force effectiveness. Again, we, I mean, we have moved, as we have talked about a couple of times today, from pulmonology into four different segments in a relatively short time. We have launched our a new CRM system a couple of years ago, so we have a very good system in place.
We are not using it sufficiently also to understand how is it we invest across the sales force to drive the maximum efficiency. That's a focus that we have in terms of optimizing our resource allocation in the field. We have also a focus on, we call it here, omni-channel approach, but how is it really we sell to our customers? What habits have changed and how do we even better leverage other ways than actually driving out to the hospitals to see the doctor in person. The CRM, there's obvious ways where we can improve the use that we have of that and also get more efficiency. Comes the operating model, and that's basically also how we operate on a daily basis.
With the high investment levels that we have had the past couple of years, we have brought in a lot of new people. We scaled that back, as you have heard, a bit over the summer. When you bring in a lot of people in a short time and you also have COVID, most people are not seeing each other in person, that leads to inefficiencies. That combined with the fact that we have been very decentral in the past, gives obvious opportunities for us to improve our efficiency scaling in our support functions, which has not been a focus before. Having a different balance between centralization and decentralization, there are things where we don't need to reinvent the wheel in all markets at the same time. Also business services globally.
There's some obvious scale that we can do there, which we haven't done. The third and last point that we are addressing under our transformation program is our ways of working. How is it we operate as a business? That's back to some of what I alluded to, that our fast expansion in terms of number of people has led to inefficiencies in the way we work. We have a lot of great people here. A lot of them, when I came in, came to my office with a lot of obvious ideas to how can we do things better. We did an engagement survey as well, a couple of weeks after I joined, and there were a lot of comments, and it was very clear that there are areas where we can optimize how we work.
Not only improving our profitability, but actually also improving our engagement. Another very important topic that I'll come back to. We are in the process of simplifying and clarifying our business processes and also defining much better our roles and responsibilities. That should also bring efficiencies and thereby also help increase our profitability as a company. All this is organized under a central program internally here, our transformation program. I'm in the steering committee, and I'm quite close to this together with my executive leadership team colleagues, because we believe this is important.
We believe with the ample growth opportunities we have as a company, which you have seen earlier today, it is of vital importance that we build a strong, efficient, and scalable business model because this is the way that we should be better positioned to also capture all the opportunities we have in the right way. I'll conclude this section on the transformation program and how we excel in execution by recapping that we have a transformation program that is in focus. I look forward to report our progress on that to you in the next period as we are making progress. Also, we have. It's a program that we have launched that we believe is not happening this year, so it's a three-year program.
We're of course, very focused on driving efficiencies as fast as we can and also getting the organization with us. It's very much focused on improving our gross margin and EBIT, where we have clear KPIs internally that we track in order to deliver this. I think that was what I wanted to cover on this zoom-in area where we talk about our execution. I want to switch to the next zoom-in area, which is a very important area for us. It's an area that we are focusing on to an increasing extent because we believe it's good business. It's something that benefits the customers, it benefits the environment, and it benefits us as a business. It's about sustainability.
Before we explain to you with Bassel what we are doing, how our focus is in this area, I'd like to invite our third external speaker up. Mr. or Dr. Mickaël Baboudjian is an Assistant Professor in urology on the university hospital in Marseille. He is a co-author of actually two game-changing studies that have been completed around focusing on the environment footprint of doing endoscopy, also looking into single-use endoscopy. I'm very pleased to have you here today, so thanks a lot and I'll leave the clicker to you. Thank you.
Can you hear me? It's okay. Thank you for the introduction. I'm Mickaël Baboudjian, medical doctor and a urologist in Marseille in the south of France. I would like to thank all the Ambu team for the invitation for this very important day for the company. In this presentation, I would like to share with you first my experience with the single-use cystoscopes that we use, the one from Ambu. In the second part, we'll talk about sustainability in endoscopy. For those who are still sleeping after the lunch, you have here two key messages that you can take home with you. The first one is single-use endoscope address true customer needs by ensuring availability, you can use it when you want, where you want.
Consistent endoscopy performance, since you start every procedure with a new device, no risk of cross-contamination compared to the reusable one. The second message refers to thetwo publications that we did in collaboration with Ambu. We compared the cost and environmental impact of single-use and reusable cystoscope, we found many advantages in favor of the single-use device. I will explain and develop a little bit more in the next slides. How the story begins. The story begins in my hospital in 2020, at this time we had eight reusable cystoscope and two associated endoscopy video columns, it was the end of life of the reusable material. What does that mean? We had a loss of image quality and a loss of deflection capacity of the endoscope.
We needed to replace the material that we had. At this time, we were contacted by Ambu to make some trials with the single-use cystoscope that is the only cystoscope that is currently available in France. The trial were successful, and we are an academic center, so we did two evaluation of the cost and the environment of the cystoscope compared to the reusable one. Now we have implemented an exclusive use of the single-use cystoscope into my hospital. Why endoscopy and cystoscopy is important in urology? On the left side of the slide, you can see a cystoscopy, and the cystoscopy you can see a lot of tumors inside the bladder.
It's a very important tool to diagnose, treat, and monitor patients with a lot of pathology from the urethra and the bladder. It's EUR 3 million procedure per year in Europe and $4.5 million per year in USA. How can we do a cystoscopy? Until now, it was using a reusable material, and there are a lot of limitation for us urologist by using a reusable material. The first is the risk of breakage and the unavailability of the material. I can give you, one example. I used to do my cystoscopy in one afternoon every week, and I have two room for doing that, three, four patient each room, and sometimes I had only one reusable cystoscope. For cleaning the cystoscope for sterilize, we need 30 minutes. I need to wait 30 minutes between each patients.
I cannot work like that. The second limitation, we have already talked about it, is a loss of image quality and deflection capacities over time because we use the material. There are also a lot of limitation about sterilization. The first one is a risk for the patient himself, because if you don't clean well the cystoscope, you can transmit to another patient protein, DNA, bacteria with a risk of cross-contamination leading to nosocomial infection. The second risk of sterilization of reusable material is the exposition of healthcare workers. For example, in my institution, we use peracetic acid to clean the endoscope. By using peracetic acid, you can lead some problems to healthcare workers such as A or respiratory, sorry, symptoms.
The last limitation is the environmental impact, since for a sterilization for one procedure, you will produce 800 g of waste, and you will use 60 liter of water. Here come the single-use devices with many benefits, but also criticize. What are the benefits? The first one is the immediate availability of the material. You can use it when you want and where you want. Here you can see the suitcase with the cystoscope and the TV, and we can go do a cystoscopy everywhere. For example, patient in intensive care unit intubated, he cannot move. We go to the patient. We have a constant image quality since we start every procedure with a new device, and we avoid the sterilization and all limitation related to the sterilization.
There are a lot of criticize. Since the single-use cystoscope is discarded immediately after use, it has been supposed that the environmental footprint of the single-use cystoscope is higher than the reusable one. This limitation come while healthcare represent 5% of global greenhouse gas emission, and if healthcare system were a state, you can see, they would be the fifth largest emitter of the planet. Are we sure that the environmental footprint of single-use cystoscope is higher than the reusable one? Let's give a look of what we do when we use a reusable cystoscope. For sterilization, do you remember, we consume 800 g of waste. We produce 800 g of waste and 60 liter of water.
In my center, for example, we perform 1,500 procedure per year, so it's equivalent to 95,000 liter of water per year. If you report to all cystoscopy performed in Europe and US, you can imagine the result. If you look at what we produce using a single-use cystoscope, we have 200 g of waste, which is the weight of the cystoscope, and we do not use water since there is no sterilization. After this brief and very simple comparison based on the amount of waste generated, we did a life cycle assessment. What is a life cycle assessment? It's a standardized and validated method to evaluate the carbon footprint of a product.
We take into account the whole life cycle of this product, from raw material extraction, the production, the packaging, the transportation, use, and then end of life. We compared in that study the life cycle of the single-use cystoscope by Ambu and the life cycle of a reusable scope. As you can see, you can see the result. We have evaluated five different endpoints. The first one, and everyone know here, is the climate change, so the production of CO2, methane, that will lead to an increase in temperature in atmosphere and ocean. We have evaluated other endpoints, such as mineral resource depletion, relating to the scarcity, ecotoxicity for the fauna or flora, population, acidification, eutrophication.
In blue, you have the results using the reusable cystoscope, and in green, using the single-use cystoscope. We found that the carbon footprint of the single-use cystoscope was lower for each endpoint that we have assessed compared to the reusable one. Quite surprising, this is why that kind of study are needed to have a greener healthcare. We published two very important studies in two journal with high visibility among urologists, we can think about the next step to be even more greener, like recycling some parts of the single-use devices, and think about the site of production, transportation, packaging. Thank you for your attention.
Thank you, Mickaël. Yes, I have props. All right. Thank you, Mickaël. Doctor, sorry, Dr. Baboudjian. It was great to hear, you know, everything you shared in terms of not just the benefits of aScope Cysto and the overall health system, but also some of the groundbreaking work that you and your colleagues are doing in terms of looking more at the sustainability impact. I mean, in general, just so everyone knows, sustainability in endoscopy is a very, like, you know, high-profile topic, not just because of reusable versus single-use, but because the environmental footprint of reusable endoscopy is so high, compared to other departments in the health system. There's a lot of focus on how we can make endoscopy more green.
There's even societies called Green Endoscopy, which are just focused on that. It's a very important topic where I think you're bringing a lot of important, like, you know, facts and data to the table. For Ambu, I mean, sustainability is also the third pillar of our strategy for a reason. I think as Britt shared, it's, of course, it's the right thing to do, and it's an important thing for us as a company, but it's also very important for our customers. You know, you can imagine that when you talk about going from reusable to single-use products, the immediate reaction that can have is about what's going to be the impact on the environment.
It's very important for us as a company that we can clearly articulate not just what is a true waste associated with reprocessing reusable endoscopes versus single-use, and the fact that single-use can, you know, unexpectedly be better for the environment. That's one key thing to do. The other thing is, you know, we've talked a lot about there's going to be more competition in single-use endoscopy, and then the question is, how can we, as a company, also differentiate ourselves? For us, we believe it's very important as a company that sustainability becomes a true source of competitive advantage for Ambu in endoscopy. I'm going to share a little bit more about, you know, what we're doing on that front. For me, there's, you know, I think there's two key things to take away from this session.
Number one is that we have made significant progress when it comes to sustainability as a company over the past couple of years. Because of that, we are recognized as a leader in the industry, also by external rating agencies. I'll share more on that. The second thing is that, you know, despite that, we are pleased, but we're not satisfied. We have a very strong commitment to continue to do more. That's why taking leaps in sustainability is such a key part of our strategy. Let's dive into, you know, what we've done so far. Basically, I mean, you know, I shared we've taken major steps over the past years. There's been a couple of key areas that we've been focused on.
I think a lot of companies who are trying to elevate their, let's say, sustainability baseline and our hygiene has been very, very important, which is, number one, we have established a baseline, and that means we basically understand what is the overall scope of our emissions. We've done a materiality assessment of what different things could be impacting our ESG performance. We've set some specific targets. For example, in the case of greenhouse gases, we committed to reduce our CO2 emissions by 50% compared to our 2019 baseline by 2025. Those are key things we've done as part of our as part of our baseline. We've also, you know, put in place multiple partnerships and strategic initiatives. I won't go through all of them that we have.
Here's just a few, like, kind of key examples. I mean, one is that we've signed up to science-based targets. That's an important step that it basically means that's a commitment to reduce carbon emissions in line with what's needed to keep the temperature rise to below 1.5 degrees Celsius. The second one is Operation Clean Sweep, which is an industry kind of initiative. The idea for this is to basically better manage plastic waste coming from our production sites. It includes certain specific commitments we make to make sure that we're being very efficient with the plastic that we use. Then the third one is Plastic Bank. Plastic Bank is basically a plastic offset program.
It means that for every 1 kg of plastic associated with our single-use endoscopes that are used by customers, we will collect, and we do collect, 1 kg of ocean-bound plastic, so that it can be recycled for other purposes. That's, of course, our long-term goal is to be truly circular, but that's an important first step, that while we're still navigating all the regulatory environment and local infrastructure needed to truly do recycling at scale at hospital systems, that we have this sort of plastic offset program in place. I think for us, what's, like, very encouraging is that external agencies have recognized that on the back of all these initiatives, we are a leader when it comes to sustainability. We got an AA rating from MSCI.
Just to put in perspective, every competitor that we talked about today, the reusable ones, the single-use ones that have come up, every one of them is in the average rating, whereas Ambu is rated A A and rated as a leader. Already today, you know, for ourselves that's great, and also when we go to customers, and increasingly customers, especially in Northern Europe, in the UK, in the Nordics, increasingly in Germany, when they put out tenders to get our you know, get products listed for their health system, they of course have a scoring system. It says, you know, 30% for price, 40% for product quality, et cetera. Now they're starting to have 5% for sustainability, 10% for sustainability, and we see it growing more and more because of the increasing focus.
The more that happens, the more we want to be positioned as a leader in sustainability so that we can be the ones partnering with those accounts and taking and, you know, maintaining our market leadership. This is important because it says what we're doing is already industry-leading, but it's also important because commercially it's impacting our customers and our business. You know, with that we are. I would say we're pleased, but we're not satisfied. For us, we are committed to take further steps, that's why it's a key part of the strategy, and there's two main areas we're going to be focusing on for the future. Number one is our commitment to circular products and packaging, and I'm going to share more on that in a second. The second is to approach net zero emissions.
I think, you know, another thing we're excited to share today is that we will plan to have a long-term plan in place for how we will reach net zero by the end, the plan in place by the end of this fiscal year, that we clearly communicate what will be the long-term roadmap to reach net zero emissions as a company. Let's take them one at a time, and I'll start with circular products and packaging. When it comes to circular products and packaging, we have, you know, three key initiatives and some very specific and ambitious targets. The first one is circular products, and that includes bioplastics in all of our endoscopes. Bioplastics, I've actually brought a sample here. One of these is a bioplastic-based endoscope handle, and the other one is a fossil fuel-based.
Fossil fuel plastic-based endoscope handle. You can't tell the difference between them, but one of them has a 70% lower CO2 footprint than the other one, because one is derived from fossil fuels, and it's extractive, and the other one is derived from bio-based sources, things like food waste. Our plan is to introduce bioplastics into our entire fleet of endoscopes in the future, and we're going to be the first company that does that, and that's just a statement of our commitment to be sustainable. The second one is around circular packaging. When it comes to circular packaging, we've already have our secondary packaging is made out of renewable cardboards, and now we're going to incorporate these same bioplastics into our primary packaging for high-volume products. Finally, in terms of recycling.
For recycling, we've already made some important steps forward in many markets. With many customers we've formed partnerships to see how can we recycle our products. It's not straightforward because there's regulations in each country. There's different rules around you know, handling of medical waste. There's different rules around recycling of medical waste. The important thing is for us to get started, and that's why we've decided in many of the major countries we operate in to start to push the boundaries of if we want to achieve this, what types of, you know, partners we have locally, what types of things can we do. The idea will be that by 2025 we have a recycling offering in all of our major markets, something that we can actually scale. That's commitment number one to circular products and packaging.
The second one is around operating responsibly and approaching net zero emissions. Again, this is one where we've also made great strides. One area you know, we can talk about is around optimizing production. Just to give, you know, aScope Broncho as an example, we've more than halved the carbon emissions per endoscope from aScope 1 to aScope 4, and we're going to go even lower with aScope 5. That, that's already significant progress we've made in terms of approaching net zero. We're also transitioning more of our manufacturing footprint towards renewable energy. For the future, again, I, you know, I shared briefly our goal is to, you know, build a long-term roadmap to reach net zero. The idea is that we will have that roadmap in place by end of this fiscal year.
It's going to include two main things. Number one is the extended use of renewable materials and recycling products and packaging. The second one is to approach 100% renewable energy. Just to give you a sense, in our manufacturing sites, we were at, you know, less than 10% a couple of years ago. Last year, we were above 20%, and we're going to continue to move towards 100% renewable. That in a, you know, kind of brief summary is where we are when it comes to taking leaps towards a sustainable future. I think, again, the main things to take away is that we have made significant steps. On the back of that, we are recognized as an industry leader. The second thing is that we're committed to take further steps for the future.
Finally, that we have, you know, very high ambitions and targets, and we're going to exit this fiscal year with a very strong plan in place to deliver on them. With that, I'm going to hand it over to Britt to share more on the last area of our Zoom-in strategy, which is to bring people together in one shared culture.
Thank you, Bassel, for a great presentation. As I hope you heard from Bassel, we are very focused on sustainability as a key area, not only for the sake of the environment, but also for the sake of our business. All what you have heard today is only possible to do because of the people that we have and because of the focus we have of bringing all our colleagues together. This is what I'm going to talk to you a little bit about now, and this is also the last topic in our strategy, so the last Zoom-in area.
This is an area that I personally find very important. I mean, for us to be able to create value for our customers, for us to be able to create strong business results, we are only able to do that if we have engaged, motivated, capable people working at Ambu. We are very fortunate that we have a lot of those. Our people are spread across our centers and our organizations globally, and we have a lot of people that have been with us for many years, and we have also people that have joined us more recently. Together, I feel very comfortable and very proud about the team that we have. What I'll talk to you about now is first give you a little facts around our organization.
I'll talk about our leadership, how that is set up, and then I'll talk about our focus areas in the strategy. Let's start with some facts. We are around 4,500 colleagues here at Ambu. We're a global company with a strong purpose, which is in our DNA. Our employees are spread across more than 22 countries, four production facilities, three innovation centers. If we look at the gender split, we are very focused on making sure that we have a diverse and inclusive workforce. When we look at the overall workforce, we are slightly more females than men. When we look at our leadership levels, it's a little bit the other way around. We have 42% of our leadership positions being held by women.
I think this is a decent number, but we continue to have a strong focus on this because we want to continue to do better, not only across all leadership levels, but also at the senior level in the company. While we are proud to be a global diverse leader, let's take a look at the leadership team. We have a very strong and focused executive leadership team. Based on the strategy that we launched mid-November last month, we made some changes to the leadership team internally, simply to reflect that we have the best possible team to deliver on the strategy that we have set out. This is.
The changes we have made, we have both made the team slightly smaller than what we had before, and then we have made some changes that we are going in the next couple of months. We expect to be able to announce a new head of innovation or R&D, which I'm currently leading interim together with a very strong leadership team in that function. We are also expecting a new chief operating officer will join us and that we can announce that in the next couple of months. And then Bassel, having been re-responsible for the global marketing, is transitioning in to be responsible as president for EMEA and APAC. We are also looking to bring a new colleague on board here. I think when we have these positions complete, I think we have a very strong team.
Also, again, if we look at the levels that we have in the leadership team that is below, we have around 80 people in what we call the global leadership team with very diverse backgrounds, with very strong experience. Many have been with Ambu for many years, some have been with Ambu less. I feel quite comfortable about the structure that we have and the capabilities we have. Again, I think it's fully normal when we embark on a new strategy and look into the future. We have to assess what are the capabilities. It's the leadership team that sets the example and that also sets the direction for the rest of the organization. Other than a leadership team, we also have a very strong and Board of Directors. we have our Chairman and Simon present here today.
I think also the board has many different skills and capabilities, both from different functional areas, but also from different geographies. Half of our market is in the US, it's great that we welcomed as the second American citizen on our board, Shacey Petrovic, who's the former CEO of a successful high-growth med tech company, Insulet, in the US, who was elected to join our board in December together with Simon Hesse, who is other than his capabilities, also representing our Asia holders. I think management and the board, we have a very close collaboration. I believe we very much discuss openly both the opportunities we have, the challenges we have. I think we benefit from the skills that we have in the board.
I think they do a pretty good job in also challenging us as a management, which we appreciate. If we look at our focus in the organization, we are very fortunate to have a strong heritage to build on with the long history we have as a company. That really is something that means something for people working at Ambu. The purpose has, as I mentioned, been in our DNA for many years, and it remains also very strong in the DNA. We have a lot of passion among our people. That passion is driven very much by the strong difference we make for patients, for people out there. Our products touch over 100 million patients every year, something that people here in Ambu are very proud about, and that means something when we go to work every day.
I think we have a number of the core elements to build a strong culture with focus on diversity and inclusion being very important. Also, with focus on performing, we are very focused on having both a high-performing culture, but also one that has a very strong customer centricity. We are all here because we do a difference for customers. That is something that is a key focus across all areas of the company. Because talent is what makes us deliver good business results, we are very focused on both retaining and maintaining strong results. All this and in the strategy that we have, we have three headlines that I'll go through in terms of how we are successful to create that one shared culture. The first one is what I was alluding to now about talent.
In the past, we had less focus on talent development. This is something as we have a lot of very talented people, we focus very much on that, making sure we give opportunities to people, but also making sure that we develop people internally but also are able to re-attract talents from outside, so we have a good mix in how we drive the business forward. That goes for all levels of the organization, but with a specific focus also on making sure that we have the right leadership capabilities, which is where it all starts in terms of executing on our strategy. Ways of working, I talked about that under our transformation program.
We simply believe, again, as I mentioned, we have heard from our people that there are opportunities to strengthen how we work, and that's something that we have focused initiatives on as well, which are shared among all colleagues because we believe that making a commitment to people, we hold ourselves responsible, which I think is important. Then we are trying again to make a scalable model to simplify our processes and really make sure we are set up in a way where we can drive fast progress. That also again focuses on our culture, how we build a diverse and inclusive culture with a high level of engagement. As I mentioned, when I just joined, other than speaking to people, I did an engagement survey. We saw definitely a number of areas for improvement. We did that before the summer.
We're going to repeat it because we want to again see the progress that we are making, because if we don't have a highly engaged organization with strong talents and capabilities, we are not able to deliver the strong business results that we would like to do. I think that concludes my focus on people. Focusing on executing and delivering on our strategy is all about our people. We believe that despite being spread around the globe, that the 4,500 people we have can and are coming together in one shared culture, and then with a focus on talent, ways of working, and our culture is what we believe is our way forward. With that focus on our people, I think it's a nice segue to hand to something that also involves people, and that's our financials.
It's people that will deliver and make you happy, Thomas. Let's move on to the finance section.
Yes. Thank you, Britt. I'm looking forward also to this financial presentation. Today we have gone through, Bassel has presented the market size, the market potential that we operate in. We've shown our strategy. We've talked about how we execute on that strategy. We have shown our business model, our innovation model, and also the innovation pipeline that we have, our approach on sustainability, and also our one shared culture. Key important parts in terms of the strategy driving forward. We've also seen some great presentations by our external speakers that really truly speak to how single-use is disrupting and certainly also is already changing clinical practice.
I will try to bring that all together in the financial update, and I will also answer, of course, questions not only in the Q&A, but also hopefully during the presentation of how that translates into the Ambu financials, how Ambu will deliver on strong profitable growth, and certainly also what our long-term financial targets are. We started, or Britt started the day also with this slide, where basically our zoom-in strategy aims to unlock the high potential that we have in terms of driving profitable growth through a very disciplined capital allocation. Firstly, we are extremely well-positioned in a large and very attractive market with substantial growth opportunity. Bassel also spoke to that earlier today, a market size of roughly DKK 15 billion-DKK 20 billion.
Secondly, we have a very rich pipeline, as we also spoke about. Currently, we have 9 endoscopes in our pipeline, which was also shown, and in the development, which was also shown by Bassel. A unique innovation engine where we quickly can adapt and adjust new technology into our portfolio, and where we can take advantage of that in order to truly deliver new solutions that cover unmet medical needs. Thirdly, I do think that we have a very strong business model, as we've also presented today. We are pioneering single-use endoscopy. We have a operations expertise that really can continue to drive high quality products and produce it at low cost. We have a sales and marketing organization that is very close to our customers, helping us really to drive the transition to single use, also.
In order to get there and behind that, we need a disciplined capital allocation to ensure that we invest in the right segment, in the right businesses with the highest value. How do we improve then our financial performance to do exactly just that? We certainly come out of a year 2021, 2022 with a financial performance that was not at a satisfactory level, where we saw organic growth of 4%, EBIT margin of 3%, and a significant negative cash flow of DKK 458 million. Therefore, we took some immediate actions with our restructuring program or with, as it listed here, our cost reduction program, that was to fix some of the very short-term financial improvements, but also importantly, to create a platform from where we could further grow and improve.
Thirdly, or secondly, we then also looked at our finance operating model, which is now fully aligned with our zoom-in strategy and a finance model that really again will allow us to allocate the right sources to the highest value opportunities that we have. I won't go too much into detail or actually won't go into detail with our cost reduction program. We have earlier spoken about that. We have also earlier detailed in terms of what exactly that we did with our cost reduction program. However, I do think that it's important to note that this was and has been an important first step in creating this platform from where we could really thrive and create further performance improvements.
This slide was basically to show that we've actually succeeded in what we set out to do. We've seen the benefits fairly quickly of that restructuring plan, as we've also shown in our Q1 results that we fairly recently also communicated. On top of that, as Britt also just in one of the previous sessions showed, we have a transformation program that also addresses pricing, COGS improvement, further streamlining of our low profitable segments, sales force effectiveness, operating model and ways of working that will continue to help drive our profitability upwards.
We've also taken time to have a closer look at the financial operating model that we have to make sure that we change that model and zoom in on the key areas in terms of how we improve further performance and how we actually also can help focus on executing on our strategy. Four elements in our financial operating model. One, we have installed a very strict governance and disciplined cash flow management. We are working relentlessly to improve, amongst others, our net working capital. Especially inventory levels are in focus, but we are certainly also improving cash collection and payment terms across the entire company. Cash flow will be a key element and is a key element in terms of how we also fund our growth journey.
Alongside cash, we are also driving cost efficiencies and tight cost management throughout the company through a structured prioritization and where we are allocating and deploying resources to the segments, markets and businesses as mentioned with the highest value opportunities. This means also that we're continuously working to streamline as mentioned before, also our portfolio really to put a high focus on the highest profitable areas of our business. Our financial governance model is also one of the cornerstones in our operating model and where we are increasing our standardization and thereby also secondly, the automation throughout our financing processes. We will take a much broader look of how we utilize global business services setup. That should help for better scalability throughout the Ambu world.
It will certainly help on efficiencies and it will also help on our cost position. Last but not least in the model, we will also aim to strengthen our balance sheet. Strengthen our balance sheet obviously in order to provide sufficient financial strength and flexibility to fund our growth. This we will do by having a look at our capital structure, but also by reducing debt and thereby also reducing gearing, financial gearing. An important step also in really providing flexibility of investing into the strategy and investing into our growth path. This brings us to the financial targets that we have. First and foremost, cash flow, once again, cash flow is very important for us, and we will become a positive cash flow generating company.
That is really truly key for our strategy. The key areas to improve and drive positive cash flow is on one hand side, our EBITDA. Long-term target, we have a long-term target of double-digit revenue growth, that will certainly help on the EBITDA and drive EBITDA. We also have the impact from the transformation program mentioned just before, and also the cost containment measures that we have in place. That all should help driving cash flow upwards from our operating activities. CapEx, we aim to normalize at a level of roughly 9% of our revenue.
This corresponds fairly well to also what we see in within the industry, and we can certainly benefit also if we look at our innovation from our modularization concept, efficiencies in our cost model and structure, and we can thereby also improve cash flow, but still make sure that we deliver high quality and high innovative products. That I am convinced of. Net working capital, as mentioned before, we target roughly approximately 20% net working capital towards revenue. A key driver of that will also be that we lower our inventories. We've built over the past time way too high inventories. We've now put into place a very clear plan in terms of how we will reduce inventories. We've started that, we are seeing the benefits of that also.
We will, at the same time, of course, not only optimize, but also guarantee that we have undisrupted, undisruptive supply of our products to the market. As mentioned also just before, not only inventory is in focus, but certainly also our cash collection and our payment terms we are working diligently with in order to also improve our net working capital in that respect. All of this is, of course, important, all three areas, in order to become a positive generating, positive cash flow generating company. Here to the left-hand side of the slide is a target that we've set ourselves for this year, which is an improvement of DKK 350 million-DKK 450 million this year. As of next year, we do expect to become a positive, cash flow generating company.
In creating a strong balance sheet, our target is also on the financial leverage side to improve in that level and to come below 2.5 times EBITDA on our financial gearing. We do have a clear long-term plan in place in terms of how we will improve on exactly just that. We have focused on EBITDA improvements. I've spoken about the free cash flow management that we are improving, and also our disciplined capital allocation model. All that combined will help us and long-term drive us in the direction of coming below 2.5x EBITDA on the gearing level. We are following that plan, and we are committed to that plan that we will do.
However, also, in the current times and the current environment with geopolitical uncertainties, high economic uncertainties, we aim actually to accelerate that deleveraging of our financial leverage, so that we have ample buffer within that target of 2.5x financial gearing on EBITDA. We actually also find it very prudent in this current time to consider a capital raise of approximately 5% of our company's B shares outstanding. This will certainly, as mentioned, strengthen our balance sheet, but also give us ample room and flexibility, operational and financial flexibility, and ensure that we can focus on our strategy in delivering high profitable growth. Also, of course, reaching our financial targets.
Our financial targets, first and foremost, Britt has mentioned this earlier in today's presentation, we are today confirming and maintaining our financial guidance for 2022, 2023, meaning organic revenue growth between 5%-8% for the company and an EBIT margin before special items between 3%-5%. As mentioned also, we have, we are on track on our guidance for this year as we've also stated in the Q1 results and update. Today, we are also specifying our long-term targets. On revenue growth long-term target is a five-year compounded annual growth rate for revenue above 10%. Our biggest growth driver, as we've also seen and heard today, is within the endoscopy solution part of our business. Here we do expect and target a 15%-20% CAGR over the same five-year period.
We have a lot of great pipeline products also in the endoscopy solutions, but also therefore many different options and many different possibilities of how we can secure that 15%-20% CAGR. I will in the next slide just have some of the examples in terms of how we will do exactly just that or get there. Anesthesia and patient monitoring is a very stable business of ours, a very steady growing business as of ours. We do set a target over the five year period, a CAGR of 2%-4% growth in our anesthesia and patient monitoring business combined.
We've also mentioned in this part of the business also that we're also addressing lower margin products, lower margin part of that business, that's also where we are zooming in on streamlining some of that portfolio. Again, over the five-year period, we have a target of 2%-4% growth. The streamlining will, however, help in improving profitability also in that area. Talking about profitability, our long-term target on EBIT is, as stated here, approximately 20% EBIT margin target five in five years. We do expect within the next two years to actually get into double-digit EBIT figures, or as it's stated here, above 10%. This comes from the financial operating model, as just mentioned earlier. It comes from our go-to-market focus.
It comes from us making sure that we invest into the high valuable segments of ours. It also is important to state that there will be potential trade-offs within our target of 20% EBIT margin as trade-offs based on the growth investments as we see them come through. A little bit more flavor to the double-digit growth within endoscopy solutions and some of the main drivers we also see there. We've gone through the business of our endoscopy solution business. These are some of the drivers within that part of our business. Important will be that we protect our bronchoscopy business in OR and ICU, that we enter and gain traction in the broncho suite with our aScope 5 launch. We further expand in ENT and also launch ENT high resolution.
We further penetrate the market within urology, including also new launches of our ureteroscope and our cystoscope HD in that segment. We continue to grow or that we grow gastro in targeted segments. When launching our Duo 2.0 that we focus on selected ERCP procedures. Again, these are some of the drivers, within the scope of, give us targeting above 10% compounded annual growth rate. It will be important to stress that balancing growth and profitability and investing in the segment with the highest growth is really fundamental of us achieving the long-term targets. We will consistently and continuously review and make sure that we adapt and change our investment policy. Reaching the EBIT margin of approximately 20% will be driven by improvement in gross margin and scale in our OpEx.
Scale in our OpEx to start with, that is expected to deliver the most significant addition or improvements into our EBIT margin. This is again due to benefits of our go-to-market model, our transformation program, the financial operating model that I've talked about, the commercial excellence, efficiency improvements, and scalability throughout our organization. Gross margin improvements we do expect through portfolio streamlining again, price adjustment, price monitoring, and a clear price strategy. Cost of goods improvements, not only on the low-margin products, but also throughout some of, or the entirety of our business. Last but not least, also scale from our Mexican production plant as we ramp that up. Before coming to the final slide, again, I just with a bit of an illustrative slide, just again want to stress the importance. Oops.
The importance of how we will balance growth and profitability with a flexible approach, and again, investing in the high-value opportunities as they occur. We are developing the single-use market. We do have a clear plan in terms of how we will do that. We also know that there are certainly some uncertainties in terms of how fast these markets will develop. Some may develop faster than others, and therefore it's important that we quickly can adapt and change our investments to these new learnings as we grow. That will really be important that we make sure that we invest into the value propositions, the value opportunities, and therefore balance again, the growth with profitability.
We have a number of options that are before us, and that will be a key element as we also go through. That brings me to my key takeaways before we then head into a Q&A session. Three key takeaways is, one, of course, our long-term targets with revenue growth, as mentioned, for the next five years, with a CAGR of above 10% and an EBIT margin ratio of approximately 20% in five years. We will increase our operational flexibility by zooming in and reducing our financial leverage to be below 2.5x EBITDA. We will ensure value creation by balancing growth and profitability. With that, thank you, and we will then now move into a Q&A session. Thank you.
Okay, we have come to the final part of the day, our Q&A session, covering, I mean, the most recent topics, but also the rest of the day. I think we should just get started. I think, Christian, you were first this time with your hand up.
Great. Thank you very much. It's Christian again from Danske Bank. A couple of questions. First, to you, Thomas, and probably also to you, Britt, on the motivation for this consideration around doing an issuance of B shares. When I look at your cash flow guidance for this year and next year, and also the 2025 guide for the EBIT margin, that implies that you will be well below your gearing target at the latest by 2025 and probably well before that. With that in mind, why do the equity raise now? Are there some potential investment opportunities that you're afraid that you might be locked out of if you don't pursue an equity raise now?
Yeah, I can maybe start, and you can add, Thomas. I think it's of course something that we have discussed quite a lot also with our board. You can say, as we have previously communicated, we made a plan to and have a plan that we continue to follow on getting to the target leverage without having to raise equity. I think as we are looking at the world around us to see how how that is evolving, combined with the fact that we are well aware, as communicated, that we will, for the next two quarters, have a leverage that is slightly above our target. That has really been the consideration for us to say.
Given that we are a growth company, we have lots of growth opportunities, then it may be prudent, given the geopolitical and economic uncertainty, we don't know these days what will happen tomorrow, that we take action and then improve our operational flexibility and get the leverage down faster than we have in our current plan. That has been some of the considerations that we have had behind. I don't know if you want to add.
No, no, I think you've covered it quite well, Britt. It has, as Britt has said, we have a clear plan ahead of us, and we will not deviate from that plan. With the uncertainty, with the macroeconomical environment that we are in, we do think that it's prudent that we accelerate that deleverage.
Great. Thank you. Then maybe a second question. Thomas, you outlined that for the EBIT margin bridge, you're basically seeing slightly greater potential over the medium term from scale on OpEx, also significant potential on the gross margin. When we look at for the near term, so the next couple of years, Is it possible to say where there are more low-hanging fruits in terms of those two buckets?
Very, very good question. We do expect to see improvements in both buckets, is my honest answer. Why do I say that? Again, we've started and really created a platform with the restructuring that we did. We will see further benefits also coming out of that with a different approach that we have taken. Secondly, Blitz spoke about the transformation program that goes really across the entire PNL. We do expect over. It's a three-year program that we're targeting, but we do expect that we will see benefits in all of those areas over the coming time. It will be coming from both those two buckets.
Thank you.
Yeah. We don't provide the split, but it's clear that there are some things that are faster implementable on the transformation program. I mean, pricing, we are limited on contracts in, with some customers, so it's not that we can easily increase the prices, but where we see opportunities and also because it hasn't been a past focus area.
Yeah.
That's of course.
Yeah.
That we can do. Then there are some areas related to the costs that we are also focused on, where there you find two buckets, some that will take a longer time because it will require some changes and to how we produce, and some that are more faster to implement, and we are in the process of implementing those.
I think. Yeah.
Benjamin maybe.
I think we have Benjamin first.
Yeah.
Today we heard a lot about the interesting opportunities within the endoscope solution, whereas the patient and monitoring devices anesthesia seems to be a bit less attractive going forward. Working up to today, what were your thoughts about the potential sell-off of the anesthesia and patient monitoring devices? This would, I assume, help you bring down the leverage and also make you able to focus 100% on the more exciting part of the business.
I think very good question. In the strategy process, we discussed a lot about our anesthesia and patient monitoring business. It's close to half of our business today. We came to the conclusion that it has been an area that has not been a lot in focus in recent years. We definitely see opportunities to also, I mean, improve profitability, so that can generate cash. We frankly also had some discussions around that. I mean, if we are to look at divesting that now, we still think it brings value for us as a business. This would also require a lot of work. There are, in some of the areas, synergies with what we do. We put that completely to the side and say, Let's not do it.
Let's not even start to spend time on focusing on sub areas of that right now, because that will take away focus from, I mean, growing in the exciting areas where we see we can grow. We have a very loyal and stable customer base in these areas. We think it makes sense for us to optimize in that and not focus on sell-off in the near future. We don't have any plans on that.
With a second question is regarding the CAGR of 10% for the next five years. We do have a lot of exciting product launches coming in the near term. If you look past the next five years, what should we think about the CAGR then going forward? Would there be a additional pipeline to sort of fuel the new growth from new products, or how do you think about that currently?
I mean, I think we should speak in a couple of years. I mean, I think we are very focused on growth. What was very clear is also that, I mean, the way that single-use endoscopy is going to grow and with the huge market potential that Bassel showed, I mean, there's enough potential to grow for many years. Also with our portfolio right now, we focus on, I mean, with the also near-term pipeline, the products that we have now, and then the next step, as I shared with under my innovation presentation, how can we even meet the.
I mean, innovate, so we meet the targets of the needs of the target customers, expanding that target, and then it will be beyond that we look at also what Niels was asking about, is there something we can do where we go more in depth? I think we have a lot of opportunities, I mean, to grow also post the period that we guide on now. It is very difficult right now to say how will the slope be. I think it also depends on how many other players will be there. I think if we have more players in the field promoting this, I mean, I also think it may go faster, and I believe we will benefit from that as a company.
Thank you very much.
Thanks. Yeah, I think we have Niels was first, and then Wei.
Wei maybe. Yeah.
Thank you. A question on your EBIT margin expectation for more than 10%. Is that specifically for fiscal 2024, or is it fiscal 2025?
So.
Yeah.
Yeah. As mentioned, within the next two years. So we've set a guidance for this year. In the next two years is where we aim to get above that.
Yeah. Yeah. We are not more, Niels, we're not more specific when it comes to the fiscal years. I think, I mean, the reason for this is of course there's a number of things playing in.
Correct.
A big unknown. That's why we say within two years not more specific on our fiscal year.
Okay. Then on, the 10% organic growth cake over the next five years, could you talk about the phasing of those 10%? Since you have quite many products being introduced, and some of them will have, I guess, a larger effect towards the end of the strategy period, should we expect an acceleration of the growth, so a little below 10% in the beginning and then accelerating above 10%, in the past, in the last two or three years of the strategy period?
Yeah. I think to be fair, we don't want to be more specific on. On our guidance right now. I think you are right in that, of course, we have... I mean, we have more products coming in, and they will of course help. If you combine that with how I shared the launch process, that we don't immediately after launch see a very fast ramp-up because there's this evaluation process. I think that's of course, the drivers. I think Thomas shared also right now, I mean, there are some uncertainties as to the different segments, how fast they will grow. I think, I mean, the best expert will not be able to get it specific.
I think for us, this is where it's extremely important that we are very close to the execution and very flexible in that we can, I mean, adjust our resources to where we see the momentum and that's really what we will do.
Yeah. I think
Yeah. Wei you have.
Wei had a question also in front.
Two questions. Firstly, one question back to the duodenoscope. I remember previously you actually target the large centers, high volume centers, because for example, in the US the most approaches are centered in the 500 largest, GI clinics. Now as I understand, you start to targeting the low volume centers. What has changed your view here? Is it fair to assume that Boston Scientific, they have, I mean, have create a barriers of entry for you and now they are also, I realize it just recently launched the third generation EXALT D and, how do you see that product?
Sure, maybe I can take that one.
Yeah.
I mean to start with, just to clarify, in terms of the segments we're going after, we see two main segments to go after. One is the highest risk patients in the high volume centers, and the other is all patients in the low volume centers. Actually, if you look at some of the publications coming out from, like in the GI community, that's exactly kind of the treatment algorithm that a lot of doctors think and leading KOLs think is going to be the adoption pattern for single-use endoscopes. The high risk patients often go towards the high volume centers. Those are the ones that are infected, immunocompromised, you know, like higher risk patients. Those should be treated with single-use endoscopes, and we're going to compete in that area.
In the low volume centers, because the reprocessing standards aren't as rigorous, a recommendation is that those should also transition to single use, we will target those two. Up till now, I think, you know, in terms of the competitive landscape, we still see it as a very, you know, blue ocean. You know, I think as we shared, we've had limited adoption of our aScope Duodeno 1.5, and we're also seeing in general limited adoption of single-use duodenoscope. It's not that there's nothing in terms of competitive barriers to entry for single-use duodenoscopes that is having any impact on our commercialization strategy.
We'll go after the large centers where we have also our own strong footprint. We're building a footprint with Gastro and we'll expand with Duo. Then we'll also go after the smaller centers. In terms of the, you mentioned then the next iteration of the EXALT D, which I, you know, we've started to see some communication around. I think it's still early in the launch. I think, you know, we've been clear on what customer feedback we've heard for their current model duodenoscope, and then the feedback we've heard from ours. I think we generally hear that we're kind of neck and neck. I think with the improvements we plan for Duo 2.0, we also have a high level of confidence that we'll be in a strong position to compete in that market.
You know, when we go into the ERCP market, it's not that we want to take 100%. Well, we do, of course, but not that we plan to take 100% or Boston will. It's that we expect it to be a competitive, you know, market and we both can take our fair share.
Thanks. My next question maybe to Thomas. You mentioned 20% target for the net working capital. Could you maybe give a timeline for you to reduce to that level?
Yeah. So yes, although that we didn't deliberately specify a target. It's of no secret that if you look to Q1, we were at 25% of our net working capital. We have some work cut out for us in order to get to the 20%. Year end last year we were at 23%. We've really put in a very detailed plan in terms of how do we really take back the ownership, so to speak, of our inventories. What I mean with that is really a dedicated plan by when do we need to be where on our inventory. That will be a big part in terms of how we improve our net working capital.
By Q1, we had DKK 1.2 billion of inventory. As I said, way too high, and certainly needs to be normalized. That takes a little bit longer time than just to do it in over a nine-month period, and something that we will continue to focus on over the coming quarters, and also into next financial year. The target is clear. We need to get minimally down to that level.
Can we assume that 20% will be also the long-term target?
That would be the target that we're aiming for, to stay within that, within that range, yes.
Okay, thank you.
Rickard.
Thank you for taking my question. You outlined a few scenarios on the endoscopy solutions five-year sort of trajectory with the different product categories. You previously mentioned that the new launches comes initially with the lower gross margin profile, and you also have different gross margin profiles across the portfolio. Which of these scenarios would you say is the most similar to your current guidance, the current gross margin bridge you provided? You know, if you can talk about the sensitivities, how we should think about it, because would be interesting to understand. Thank you.
Yeah. Just to understand your question correctly, Rickard. Your question is out of the pipeline products that we have, where from a sensitivity, what helps from a margin perspective or whatnot? Is that the question?
I think it's two questions in one really. Which one of the different scenarios reflects the guidance you provided for the gross margin bridge to 2025. It was five years out, sorry. Sort of if you could talk about the sensitivities in which scenario would be a big sort of upside or potential downside to. Thank you.
Okay, good. Understood. We won't be providing all the different scenarios that we've built, but for sure, we have a number of different scenarios built in our long-term planning also. With the caveat, as Britt has also mentioned, that we don't know exactly how fast each segment will uptake. Or said differently, we at least need to be able to have some flexibility within that and also to act from an investment perspective in really fueling some of that growth also. We will not specify the upper or the lower end of our long-term guidance.
There is of course a long-term planning behind with some different scenarios in order to make sure that we, on a top-line perspective, get towards the 10%, above the 10%, and also on our EBIT level, of course, get to the round about 20% in 5 years' time. Again, as said, we will be balancing growth with profitability also. Important for us is that we really drive value and maximize the value, and minimize the risk, and that's what we will be doing.
Yeah. Maybe to clarify for everyone here what you're, for, what you're meaning with this is that what we have said that in terms of our two new launches that we launched last year, so our aScope 5 and our gastroscope, their gross margin, not in value, but because they are sold at a higher price, but percentage-wise is slightly lower than some of the previous scopes we have. That doesn't mean that that is like the new trend.
No. Right.
And that is back to our focus on our COGS levels. Some of that, say, I mean, some of the improvement in that will come from scale, and some of it will come from other initiatives. And why we are in this situation, you could say it's a number of different things, partly because our focus in the past couple of years was more about getting fast to market than on the cost. That's of course something we have changed. That is of course affecting the mix, as you are rightly alluding to, but it's not that you should expect the gross margins to go down on the future products, because it's not the I mean, we believe that we are able to launch products at the same % margins as we have in the past.
Good point. Christian.
Yeah. Actually, just a follow-up on exactly the margin profile on these two new products, and maybe also understanding how far along you really are in the commercial launch here. As I've understood you, the sort of bill of materials on these products are significantly higher than what you'd like them to be. Are you confident that you can bring the margin sufficiently up on these simply through greater scale, better efficiency? Or do you think there is a you would have to do re-evaluate pricing of these products? Yeah, that's the question.
Yeah. Yeah, I think that. That's a very good question. I think, I mean, we're not communicating on the details on that. I'll say we, I mean, we definitely have identified ways to get them to a different level. I mean, we're looking into, I mean, the different initiatives. pursue and which one do we not. We cannot be very specific. You're right in that this is, of course, also partly related to some material, and that's where the modular approach we have will also give us some benefits that, I mean, was not fully implemented for these products.
Thank you.
Thank you. I have a question here regarding the raw material. The image sensor and the camera is the main production cost, if I remember correctly still. Earlier this year, your main supplier of camera, they sent out a major profit warning. They complain about the slowdown the consumer electronic demand. I guess they also talk about the inventory reduction in the industry and et cetera. What kind of dialogue do you have at the moment with the supplier? Do you have, like, more room for negotiate the price at the moment? Because they are getting hit right now on the demand, and I guess you are still a more resilient customer for them.
Yeah. I think it's fair to say.
Can you comment?
I don't think we comment on specific suppliers. What I can say is that, I mean, part of the reason why we have a high inventory, back to Thomas' point, I mean, this is not only finished goods, it's also raw material, because we were, you can say, making purchase orders for a different scenario. I think that goes back to our downgrades that we had before, that we were planning for something different. That, of course, means that when we have more inventory, I mean, we're using some of that before we are rebuying. I think we have a good dialogue with our suppliers. I've met with several or all our biggest suppliers right now. I think in general, I can say on cameras and sensors and so on, we do benefit.
I mean, we saw the inflation being quite high, but we also see now, given the demand for consumer electronics is declining, that gives opportunities for us in the sense that it's slightly easier negotiations we have with our suppliers than we had in the past.
Great. Thanks.
Maybe just one small addition, mentioned it already. We are very close with our suppliers and a close relationship also. It's of course normal discussions that we're having throughout with all our suppliers within the current market conditions. I wanted to say that also because we've also not had any supply disruptions in the past. That also just speaks to how good and how close relationships we actually have with our partners.
I think, it seems like no further questions. It has, it has also been a long day, so I think we are at the closing remarks before we switch off the camera and go next door for product demonstrations. Thanks a lot for coming to everyone. I hope this was a useful spend of several hours today. I hope also you have a good or at least a better sense of what we are focusing on in our business, me and my colleagues.
A lot has been said, a lot has been asked, I think what I want to leave you with, that I can guarantee you that both myself and the rest of the team here, we are 100% committed to deliver on our strategy and to deliver strong, profitable growth. We believe we have a strong strategy in place to do that. We also believe that we have strengthened and will strengthen our business model with the transformation program that we have ongoing. We believe we have a great portfolio that also, a comprehensive portfolio that address the needs out there for the customers, and that can also drive improvements in how patient care is done in hospitals with endoscopy.
I think the external speakers hopefully gave you not only our words, but some of what they face in their world when doing endoscopy, where at least I think it's clear also from visiting customers on a regular basis, there is room for improvement, and why every one of us going to hospital should not be provided with a fully sterile endoscope when we go into a procedure. That's at least if I have to get a procedure done, what I would like to ask for myself. I think we operate in a great market with great opportunities. Thanks again. I think we should just remind ourself with the small video that we have here in the end.
All around the world, hospitals are under pressure to do more with less. We believe healthcare professionals deserve a better way to do endoscopy, one that will help them move forward with readily available, single-use solutions that promote a more efficient and flexible workflow. Convenient, cost-transparent solutions that simplify hospital administration. Sterile solutions that help save lives and improve patient care. We pioneered single-use endoscopy. Today, our modular design approach enables us to share technology and customer insights among our clinical teams, resulting in rapid, high-quality innovations. With factories in China, Malaysia, Mexico, and the US, our customers around the world can count on a single-use portfolio covering a broad array of endoscopy procedures from routine to advanced. Ambu has been rethinking solutions since 1937.
Today, we continue to collaborate with leading medical experts to deliver innovations that make a real difference to healthcare professionals and their patients. Ambu, forever forward.
That's it. Thanks a lot, and, I hope you'll all join me and the team both for drinks and snacks, but, not least for product demonstrations. The exciting part ahead of us. Thank you.