Thank you, operator, and good afternoon, and welcome to our full year 'nineteen-'twenty conference call. I'm here joined by our CFO, Anders Larneskogou and our Investor Relations team, and we will start with a short presentation by Anders and myself and then open up for questions. Please turn to Slide 3. This year has been one of the most challenging years in our company's history. Few anticipated the severity and speed with which COVID-nineteen impacted the global population in early 2020.
Through strong global crisis management, we swiftly put all necessary measures in place to keep our people safe, continue to serve our customers and maintain business operations. Our teams across the world have managed the situation locally, and I would like to to
deliver
to deliver on our priorities. I'd also like to take this opportunity to thank our clinician partners for their commitment to serving patients throughout this very difficult time. Our full year results were negatively impacted by the cancellation of elective procedures in our interventional urology business as well as the negative impact from the pandemic on our Wound and Skin Care business in China and on our Chronic Care business in Europe, in particular, in the U. K. We continue to adapt our business to the challenging situation, and we are encouraged by the largely stable underlying growth in the U.
S. And in our emerging markets. We delivered 4% organic growth and EBIT margin of 32% and a return on invested capital of 46%. A solid set of results, I believe, in a year, which has been unlike any other in the history of our company. We've seen lower growth in new patients in Ostomy Incontinence Care as a result of the COVID-nineteen outbreak.
Broadly speaking, across markets, surgeries and procedures have picked up again and in our key markets, new patient levels are normalizing. Our challenge is currently in Europe, and we're unfortunately seeing what can probably best be described as the 2nd wave of the virus. We do not know what the 2nd wave will look like. In Q4, we saw flat growth in several countries in Europe due to limited growth in new patients and in the U. K.
Due to the extended lockdown and measures put in place by the NHS to handle the COVID-nineteen crisis, there's been a significant decline in screening, referrals and operations. The situation in the U. K. Has improved and new patients discharged is now around 80% to 90% of pre COVID levels up from an April low of around 60% of pre COVID levels. Anders will speak more about guidance later, but we are seeing a more challenged European business as we move into 2021, also bearing baseline in mind.
As we navigate the crisis, we're adapting our business and commercial activities and continuously rebalancing our go to market model. In many of our markets, our sales forces are still working from home, and in response, we've accelerated our digital investments. We continue to build stronger capabilities in virtual education, remote support and digital sales with tools now deployed globally. As we continue to mitigate the pandemic and focus on business continuity, we're also working to ensure that we emerge stronger from the crisis. As this year draws to a close, I feel optimistic about our future, which holds many opportunities for growth.
We hosted our Capital Markets Day at the end of September, and to recap, the core of the new STRIVE 25 strategy is all about innovation and growth in our 2 core geographies, U. S. And China. The strategy will be supported by key growth enablers including our efficiency agenda, our people and culture agenda and our sustainability agenda. We expect to deliver 7% to 9% organic growth per annum and more than 30% EBIT margin.
The work is well underway. We remain confident in our long term guidance and the underlying market growth and potential for growth in the segments we serve. Today, the Board of Directors approved an ordinary dividend of DKK 13 in addition to the dividend of DKK 5 paid in connection with our half year results. This brings the total dividend for the year to DKK 18 per share compared to DKK 17 last year. Our guidance for 2021 is an organic revenue growth of 7% to 8% and a reported growth in Danish kroner of 4% to 5%.
The reported EBIT margin in Danish kroner is expected to be 31% to 32%. In 2021, we will continue to prioritize investing growth and invest up to 2% of revenues in incremental growth initiatives focused in particular on Asia, Interventional Urology and Digital Initiatives. Before we take a closer look at today's results, I'd like to spend a few minutes on the acquisition of 9 Continence Medical that we announced today. Please turn to Slide number 4. At our Capital Markets Day in September, we spoke about pursuing acquisitions within adjacent markets in our Interventional Urology business.
Today, I'm very pleased to announce that we've completed the acquisition of 9 Continence Medical, an early stage company pioneering urological or active bladder treatment with tibial nerve stimulation. Globally, around 80,000,000 people suffer from overactive bladder, which is a condition that causes a frequent and sudden urge to urinate. The condition impacts a person's ability to work and socialize and the overall quality of life. Many of these people suffer in silence. So called first line therapies, including behavioral and lifestyle changes often yield poor results and second line therapies including a variety of pharmacological options are often associated with negative side effects.
Patients who fail 1st and second line treatments may be offered more invasive treatment options so called third line therapies such as Botox injections, percutaneous tibial nerve stimulation and sacrum neurostimulation. Of the 80,000,000 people globally that suffer from overactive bladder, approximately 40% seek treatment and of those, about 3,000,000 patients globally are candidates for 3rd line therapy. Today, less than 10% of these patients are actually treated and the market is around $1,000,000,000 in size, growing around mid single digit. The company that we've acquired, 9 Continence, have developed an innovative third line therapy that is not on the market today to compete with the treatments that I mentioned before. The device is an implantable tibial nerve stimulator.
It's a miniaturized self powered unit placed in the lower leg on the local anesthesia during a short, minimally invasive procedure. The solution requires no patient activation, no recharging, nor any recurring doctor visits, and it builds on the clinically proven mode of action from percutaneous tibial nerve stimulation, which is an overactive bladder treatment available in the market today. The feasibility data that we have so far is promising and the next step will be to design and execute the pivotal study, which is expected to begin during 2021 and continue until 2023, 2024. I'm very excited about this acquisition. It represents a long term growth opportunity for Coloplast in a large underserved market.
The technology is exciting and it is the type of opportunity we wish to pursue. It's a minimally invasive procedure that takes place outside of the operating theater and a device that if successful can make people basically forget about their condition and live a normal life. This fits perfectly with Coloplast's mission. As the adoption of implantable tibial nerve stimulation increases and if the 9 Continence product is successful, we are looking at a very large growth opportunity for our Interventional Urology business. Now with that, let's take a closer look at today's results.
Please turn to Slide number 5. In Q4, we got back into positive organic growth territory and posted 2% organic growth. The quarter was impacted by challenges due to the COVID-nineteen outbreak as we had expected, but there were also positives. In Ostomy Care, organic growth was 6% for the full year and growth in Danish kroner was 5%. In Q4, organic growth was 3% and growth in Danish kroner was flat.
From a product perspective, growth continues to be driven by our SenSura Mio and Brava supporting products in larger markets like the U. K, U. S. And Germany. Sinceermu Convex continues to be the main contributor to growth driven by both Europe and the U.
S. Brava supporting products delivered double digit growth for the year driven by growth in the U. S, China and the U. K. Our Sensura and Asura alterna portfolio growth was driven by China, Latin America and tender deliveries in Russia.
In Q4, China and the U. S. Were the key contributors to growth. The growth in Europe and in particular in the U. K.
Was challenged by lower growth in new patients due to COVID-nineteen. Phasing of tender deliveries in Russia last year impacted growth negatively due to a very tough comparison period. Across the Ostomy Care business, growth in new patients has been negatively impacted as only the most acute ostomy surgeries have taken place following the COVID-nineteen outbreak. The impact has been the largest in Europe, in particular in the U. K, which is coloplast's largest market in Europe.
Growth in new patients continues to improve, albeit at a slower pace in Europe and is still too early to fully assess the impact of the 2nd wave of COVID-nineteen. In Continence Care, organic growth was 6% for the full year and growth in Danish kroner was likewise 6%. In Q4, organic growth was 4% and growth in Danish kroner was 2%. From a product perspective, the SpeediCath ready to use in the mitten catheters continue to drive growth. SpeediCath's Flex contributed positively to growth, especially in the U.
S. And across the European markets. SpeediCath compact catheters continue to drive growth in countries like the U. K. And France, and sales growth for Peristeen products remain satisfactory, driven by France, the U.
S. And the U. K. From a country perspective, the U. S, Argentina, Germany and Italy were the main contributors to growth in Q4.
Growth in Europe and mainly the UK was challenged by lower growth in new patients due to COVID-nineteen. Across the Continence Care business growth in new patients has been negatively impacted due to the COVID-nineteen outbreak as only the most acute patient group such as spinal cord injuries have been treated, whereas other patient groups including multiple sclerosis and the BPH patients have often postponed the treatment. The impact has been the largest in Europe and in particular in the UK and growth in patients now continues to improve albeit at a slower pace in Europe. In Interventional Urology, organic growth was down 7% for the full year and growth in Danish kroner was also down 7%. In Q4, organic growth was flat and growth in Danish kroner was down 3%.
The negative growth for the full year was mainly due to the decline in sales of Titan penile implants and Alta's single incision slings due to the cancellation of elective surgeries in the U. S. Within men's and women's health. Elective procedures in the European business were also negatively impacted resulting in lower sales of disposable surgical products. Elective procedures recovered during the second half of the year at an encouraging pace.
And despite the surge in COVID-nineteen cases in several key revenue states in the U. S, the recovery in our men's and women's health business has continued. We delivered flat growth for the Q4, but in October, the business returned to growth driven by Men's Health in the U. S. We continue to invest in commercial initiatives, including the launch of the Endourology portfolio in the U.
S. In Wound and Skin Care, organic growth for the full year was 1% and and and Skin Care delivered negative 3% organic growth and Wound Care and Isolation delivered 1% organic growth. The Biatain Silicone portfolio was the main contributor to growth driven by the U. S. And Germany.
Growth in Biatain Silicone was offset by a decline in revenues in the Biatain and Confield product portfolios primarily in China, which has seen a significant decline in hospital activity on the Wound Care side due to COVID-nineteen. The European Wound Care business improved significantly in Q4 compared to Q3, in part driven by a good contribution from the recently launched Biatain Fiber portfolio. Biatain Fiber has now been launched across 7 markets and continues to be well received. China and the wider Emerging Markets region contributed negatively to growth in Q4 due to a decline in hospital activity and sales related to COVID-nineteen. The skin care business reported double digit organic growth in Q4 due to increased demand for Interdry and Easy Cleanse products, which is correlated with an increase in non COVID hospital admissions in the U.
S. The compete contract manufacturing business contracted from growth in Q4 impacted by lower demand due to the COVID-nineteen pandemic. On a separate note, before I hand over to Anders, I'm pleased to release our new sustainability report. A few noteworthy achievements this year include a further reduction in occupational injuries, 41% of our waste now recycled, up from 32% last year, and 67% of our production now runs on renewable energy. As part of our new strategy, we've launched several new ambitious targets to reduce emissions and improve our products and packaging, and I look forward to reporting on our progress.
With this, I'll now hand over to Anders, who will take you through the financials and outlook in more detail. Please turn to Slide 6.
Thank you, Christian, and good afternoon, everyone. Reported revenue for the full year increased by around DKK 600,000,000 or 3% compared to last year. Most of the growth was driven by organic growth, which contributed around DKK 700,000,000 or 4% to reported revenue. Foreign exchange rate had a negative impact of DKK 132,000,000 or minus 1% on reported revenue. A positive effect from a favorable development in the U.
S. Dollar and the British pound against the Danish kroner was offset by a significant decrease in the value of Argentinian pesos and Brazilian real against the Danish kroner. Please turn to Slide 7. Gross profit was up by 4% for the full year to around DKK 12,600,000,000 This equals a gross margin of 68% on par with last year. The gross margin was positively impacted by operating leverage, driven by revenue growth as well as savings from the GOP4 program, including the closure of the Tisted factory in Denmark in 2019.
The gross margin was also positively impacted by restructuring cost DKK43 1,000,000 in the comparison period last year. The gross margin was negatively impacted by product mix due to the decline in U. S. Sales and in Interventional Urology. Increasing cost in Hungary due to salary inflation and labor shortages also weighed on the gross margin.
There was a further negative impact on the gross margin from extraordinary costs related to the COVID-nineteen outbreak. The gross margin includes a positive impact from currencies of around 30 basis points. In Q4, the gross margin was 69% on par with last year. The distribution to sales ratio for the full year came in at 29% on par with last year. The 2% increase reflects increased investments in sales and marketing activities across multiple markets and business areas.
For example, in China, the U. S. And the U. K. The impact from these investments was offset by lower travel and sales and marketing expenses due to the COVID-nineteen situation.
In Q4, the distribution cost decreased by 1% compared to last year, reflecting strong cost control as well as sustained investments. The admin to sales ratio for the full year and Q4 came in at 4% of sales on par with last year. The R and D to sales ratio for the full year and in Q4 came in at 4 percent of sales in line with last year. Overall, this resulted in an increase in operating profit of 5% for the full year, corresponding to an EBIT margin of 32% compared to 31% last year. EBIT margin contains a positive impact from currencies of 20 basis points.
The EBIT margin was positively impacted by cost saving initiatives and lower spending following the COVID-nineteen outbreak. Please turn to Slide 8. Operating cash flow for the full year amounted to around DKK 4,800,000,000 compared with around DKK 4,400,000,000 last year and includes a positive impact of DKK 197,000,000 related to a reclassification of lease payments following the adoption of IFRS 16. The positive development in cash flows mainly due to an increase in operating profit of DKK 298,000,000. Cash flow from investing activities was impacted by investments in optimization, IT and the new factory in Costa Rica.
CapEx investments amounted to DKK 931,000,000 for the full year, up DKK 295,000,000 compared to last year. As a result, CapEx accounted for 4% last year. As a result, the free cash flow for the full year was an inflow of DKK 3,900,000,000 against DKK 3,080,000,000 against DKK 3,800,000,000 last year. Adjusted for the DKK 197,000,000 positive impact from the IFRS 16, the free cash flow was down by 3%. Our cash conversion for the full year was 90%.
Net working capital for the full year amounted to 23% of sales compared to 24% last year. Inventories increased by around DKK 300,000,000 due to an increase in inventories of strategic products. Trade receivables decreased by around DKK 200,000,000 due to an increased focus on payment terms in primarily emerging markets. Due to the COVID-nineteen outbreak, I continue to monitor trade receivables closely. We also continued to pay smaller suppliers earlier.
In Q2, a new share buyback program was launched, totaling DKK 500,000,000 and it was completed during our Q4. Full year return on invested capital after tax before special items was 46% against 48% last year. Excluding the impact from IFRS 16, return on invested capital would have been 48% and on par with last year. Please turn to Slide 9. For 2021, we expect revenues to grow 7% to 8% organically and 4% to 5% in Danish kroner.
Phasing of growth is expected to be back end loaded with low single digit growth in the first half of the year and double digit growth in the second half of the year. The organic growth guidance is based on 4 key assumptions. 1st, be positively impacted by the comparison period in 20 nineteen-twenty 20. 2nd, there is an uncertainty around growth in new patients across chronic care in the UK and other markets, especially in Europe. In addition to a tough comparison period, the lower growth in new patients will lead to weaker growth in the chronic business in the first half of the year.
Underlying growth in the U. S. And emerging markets is expected to be largely stable. 3rd, there is an uncertainty around the resumption of hospital activity impacting wound and skin care. This is partly offset by the comparison period in China and France in 2019 2020 as well as the full year impact of the biotin fiber launch.
4th, we have no current knowledge of any significant health care reforms whereas last year we saw a large negative impact from the French health care reform. Finally, the guidance also assumes a stable supply and distribution of products across the company. Due to the depreciation of the U. S. Dollar, British pound, Brazilian real and the Argentinean peso against Danish kroner reported growth in Danish kroner is expected to be 4% to 5%.
The currency impact is based on spot rates as of November 2. For 2021, we expect a reported EBIT margin in Danish kroner of 31% to 32%. The reported margin in Danish kroner is expected to be positively impacted by the Hungarian hoof, but this is offset by the depreciation of the U. S. Dollar, Brazilian real, Argentinean peso against the Danish kroner.
As a result of the COVID-nineteen outbreak, we have exercised strong cost control. And we have also seen a natural reduction in cost due to lower travel costs and sales and marketing spend. We expect this natural cost reduction to continue into the first half of twenty twenty one. To ensure that we emerge strongly from this crisis, we continue to invest for growth and invest up to 2% of sales in incremental investments into innovation and sales and marketing initiatives. For 2021, the bulk of investments will go into Intrinsia Rheology, Asia and consumer and digital investments.
We announced the acquisition of 9 Continents Medical today and during 2021 we will primarily invest into R and D including clinical trials. The gross margin will be positively impacted by operating leverage and the Global Operations Plans 45. The positive impact is expected to be partly offset by cost pressure in Hungary from wage inflation and labor shortages as well as transfer costs related to the transfer of machines to new factory in Costa Rica. Sustainability investments will also impact the gross margin. Overall, the expectation is that the gross margin for 2021 will be in line with 20 nineteentwenty twenty factoring in a positive impact from currency.
We expect our net financials to end the financial year 2021 at around 0. This is primarily due to hedging gains on the U. S. Dollar and British pound against the Danish kroner, offset by losses on balance sheet items denominated in a number of foreign currencies, including the Argentinean peso. Kabi's guidance for 2021 is expected to be around DKK 1,100,000,000 and is driven by investments in optimization initiatives as part of GOP5, the next factory expansion in Costa Rica, more capacity for new and existing products as well as IT and sustainability investments.
Our first volume factory in Costa Rica will be operational at the start of 2021. Next year, there will be an important transfer year that we will see the transfer of around the 15 machines to Costa Rica. Finally, our effective tax rate is expected to be around 23%. Thank you very much. Operator, we are now ready to take questions.
Our first question comes from the line of Lisa Klaive from Bernstein. Please go ahead.
Hi, thanks very much. Just have two questions on the guidance. First of all, could you be fairly specific around what your assumptions are around the second wave for COVID and the potential for disruptions of elective procedures, which obviously would have an effect on urology, but as well as your wound division? And then second, I know you don't typically do this, but could you give us some indication of what your guidance on the top line is by division, I suppose, just because it's much more important this year given the COVID variables? Thank you.
Thank you, Lisa. Good questions. We're not going to guide by division. I'll put some color to each of the businesses. Regarding your first questions related to COVID, we are not assuming, I'll be explicit about that, another, if you will, fundamental lockdown of elective procedures.
So we are seeing in the U. S. That elective procedures are continuing. We're seeing that also in Europe. I'd say our view is and this is also what gets back to us from our markets is that the health care systems are in a very different shape now than they were back in March.
There are processes in place, PPE in place, ventilators in place. So we think that's a sensible base case. On impact by division, we're not giving specific guidance when it comes to growth rates. But for chronic, it will be, like Andrew said, a weaker first half, basically driven by both a baseline effect from last year and if you will, a somewhat lower growth in the new patients in the period from March and onwards, primarily in Europe. On Wound Care, we are seeing, I think, good performance in Europe.
We're also seeing good impact from the Biatain Fibre launch. We're also seeing good performance in North America. Really the challenge has been more in China and EM. And I am expecting that we're going to get back to growth in this year, the growth in Wound Care in China. In Interventional Urology, as you can imagine, of course, since that led to the revision of guidance back in March and had clearly the largest impact from COVID will have a significant impact the other way this year driven by baseline.
Thanks.
And the next question comes from the line of Veronika Dubajova from Goldman Sachs. Please go
ahead. Hey guys, good afternoon. Thank you I'll keep it to 2, please. One, just would love to understand which markets outside of the U. K.
You're seeing a slowdown in new patient kind of generation, if I can call it that, for chronic care. And I guess kind of what your thoughts are on, 1, of duration of that? And 2, do you think these are patients that are disappearing from the system altogether due to things like mortality? Or do you think we will see a pent up demand at some point in time in the future? Just would love to get your thoughts on that.
And I guess related to that, I seem to remember that when we talked to Q3, your guidance was for the U. K. To be flat. Clearly, given that Europe was flat in the Q4, suspect the U. K.
Was either worse or you had a lot of other markets that were flat. So if you can give some granularity on that, that would be great. And then my second question is just the competitive environment in Ostomy. And I know you get asked this question every quarter, but if I look at the kind of divergence between your growth rate and the growth rate of your closest publicly listed peer, the gap has been narrowing pretty substantially over the past 6 to 7 quarters. And I know you're saying you're not seeing any change, but we'd just love to get an update and how you're thinking about the narrowing of that gap.
Is there something we should be reading into that or not at this stage? Thanks, guys.
Thank you, Veronika. I'm not sure I took note of all the questions. So Anders will supplement me here. Let me start from the top on which countries that we've seen negatively impacted in Europe. U.
K. Is at the top of the list because of its size. We've also seen significant negative impact in a number of the smaller markets in Europe. It's typically highly correlated with incidents of COVID. We've seen good performance from Southern Europe and from Germany.
So I hope that gives a bit of color. So it's mostly UK and a number of the smaller markets in Europe. So European markets posted 0% growth in the quarter, but IU was positive, wound care was positive and the flat growth in chronic was principally UK plus a number of smaller markets like I talked about. But are you positive and UK positive for Europe? What was the second question?
Maybe I just address the Ostomy competitiveness. So we've grown 6% on the year for Ostomy Care, which is still significantly above market, 3% for the quarter. And still our read is above competition. Ostomy Care is a long play, Veronika. And I wouldn't read too much into quarterly figures.
I'd be looking at moving annual totals, but of course, we also pay close attention to activities from competition. Anders, anything you want to add? I missed the question after your first one.
Yes. My second question was just the patients that you are not seeing in the Chronic Care segment. Do you think this is a temporary delay? And if so, how long until it gets better? Or is there a risk that there is an element of mortality in here, which means there might be some duration to the kind of depressed growth rate, if I can call it that?
Yes. So I think the truth is a bit in between. So for some of the patients, it will be just literally just a postponement. But I'm also painfully aware that a number of the healthcare systems are projecting higher mortality rates from colon cancer simply because some of the screening programs are not operating at full capacity or not operating at all. And objectively, the surgery levels have been depressed.
So I think you are going to see some level of excess mortality, particularly on the colon cancer side.
Okay. And can I just confirm, I think you had said in Q3 that you expected the U? K. To be flat. It sounds like it was not flat that it was down.
Is that fair?
It was flat.
It was flat. Okay. Understood. Okay, excellent. Thanks guys.
And the next question comes from the line of Christian Ruyon from Nordea Markets. Please go ahead.
Hi, good afternoon and thank you for taking my questions. I have 2 as well. So my first question is also on the NPD and flow. And maybe whether you could talk to sort of when for how long you potentially foresee this having an impact on your growth rates? Because as I understand your business, you of course benefit from an accumulating base of users and the slower inflow thus risks having some knock on effects in the next quarters.
Can you maybe help us a little bit with just how to think about that dynamic? And then my second question is to the OpEx growth for next year, whether we should also expect that to be back end loaded? Thank you.
If I start with your first question. So really it is going to depend on how the virus plays out and how quickly healthcare systems get, if you will, fully normalized. But please also bear in mind that we have a couple of very significant baseline effects on the year, also for Europe. The first two quarters last year were very strong. In particular, the second quarter was an exceptionally strong quarter for Europe.
So there is also a baseline effect in there. But there is an uncertainty there that I don't think I can accurately predict when we will be fully out of it. It's going to depend on how the virus pans out. But the good thing is that we know that it is going to pan out. The question is the profile and how fast.
And Christian, in terms of your question related to the OpEx growth, yes, you should also expect that to be back end loaded. I am assuming that the global travel ban, the prudency that we have in terms of our cost will continue throughout this quarter and into the Q2. When that is said, we have initiated the investments into therology business. As you might recall, we put quite a few of the activities within urology on hold during our second and third quarter last year, but we have initiated those activities again throughout the Q4. And as a consequence of the acquisition of 9 Continents, we are also starting up investments into that area over the next couple of quarters.
But overall, I'm expecting the OpEx growth to be back and loaded as well.
Okay. Thank you very much.
And the next question comes from the line of Michael Jungling from Morgan Stanley. Please go ahead.
Great. Thank you. Good afternoon. Three questions, please. Firstly, on the 2021 guidance, what margin guidance or what would the margin guidance have been if you did not acquire 9 continents?
Or perhaps you can do the other way around and say what the dilution would be from the acquisition? Question number 2 is also on the 2021 guidance. I'm not quite sure what you mean by the assumptions that you've made on Page 17 for this year's guidance with respect to the uncertainty around growth in new patients across chronic care. Is it included or is it not included? What I mean by that is, is if the COVID crisis continue at a higher rate as we're seeing now, are we including that in the guidance or not?
And then question number 3 is, the 9 continents medical product, can you sell this through your existing sales force Or do you need to build a specialized sales force that can cater for these new devices? Thank you.
So thanks for the questions, Michael. Let me start with the question around the investments we will do into the acquisition we just made. So the guidance of an EBIT margin of 31% 32% would not have changed if we have not done this. When that is said, we have committed ourselves to invest up to 2% of revenue into new activities to drive growth. And this is one of the key initiatives into 2021.
And we are going to increase our R and D spend within IU, and we will also invest into a team to run the clinical studies.
And Michael, on your second question when it comes to guidance around new patients, so we are, if you will, on the negative side, we're not assuming a complete lockdown. I mean, that will be a change to our outlook, similar to what we saw in March or a significant disruption of elective procedure. We are assuming that this the current level that we have in Europe is going to continue for at least the next couple of quarters. When it comes to your question around 9 continents and the sales force, the product will fit nicely within our existing sales force. But of course, once and I will also emphasize that the first job now is to do the clinical work and get us through pivotal and get the product reimbursed.
Assuming that, that happens and depending on the strength of the product, I mean, we will also be, of course, willing to invest more heavily if we think that, that is what is required to maximize the potential. Great.
Can I just follow-up on the uncertainty around growth in new patients? If I understand this correctly, the next sort of 2 quarters, the expectations are for not a lot of new patient growth, but then to improve in the remaining 2 quarters of the year. Broadly speaking, that's what your guidance is suggesting as I understand.
Broadly speaking, continuing at the current level, Michael.
Great. Thank you.
And the next question comes from the line of Kit Lee from Jefferies. Please go ahead.
Thank you. I have two questions please. Firstly, I just want to get some color on your U. S. Chronic cat performance in 4Q, whether that was back to double digit growth or was it running at a lower level?
And then my second question is just to get your latest thoughts on the digital channel. Do you now see a more permanent shift to virtual sales and marketing going forward, which might potentially make your cost base more efficient as well? Thank you.
Thanks. Good questions. U. S. Chronic care performance has continued to be very strong here in Q4, and we're delivering both a quarter and a year with double digit growth.
We're very satisfied with that and really strong performance on the ground from our U. S. Team. We've also launched a new member to the SpeediCath family, a new product that fits into the 5.1 category in the U. S.
Called SpeediCath Soft, which we think is going to be a nice addition to the portfolio in the U. S. To your question on the digital channel, to me, this we have certainly expanded significantly on the digital front. We've deployed a number of tools and made an investment into both training our people and deploying the tools globally. I suspect that these are going to be at least a semi permanent mix of the go to market model.
And at the very least, you're going to find, I think, a large number of customers who you are actually going to better serve through these types of channels going forward. But my base scenario is not that COVID is going to continue. My base scenario is it will at some point stop, right? And that we are going to get back to something that looks a lot like what we used to have with much better access. And we know from customers that there's a real thirst for getting back together.
And when we're talking about doing training, when we're talking about doing in servicing of accounts, I mean, these are what you might call a contact sport. And there's a lot of hunger in the market to get back to that. So I don't envision that it's going to fundamentally change the cost structure of the commercial organization. If anything, it's going to expand its reach.
That's great. Thank you.
And the next question comes from the line of Scott Barter from Berenberg. Please go ahead.
Hi, guys. Thanks for taking my questions. Yes, first question, please. I wonder if you could just give a little bit more color on Oliver Johansen's departure. Obviously, only a few weeks ago, he was giving us an innovation update of the company and now he's left.
I'm not sure if that's performance related or anything connected with the Ambu issues. If you could just give us a little bit more understanding there that would be helpful please. And second question sorry if I missed this, But did you call out what you are seeing with respect to new patient growth in the Q4 and for the full year both for Ostomy and Continence. Any feeling for how those patient numbers look like that would be very helpful, please. And lastly, on the Nine Continents acquisition, it looks to be quite an interesting little pre revenue technology company.
Dollars 1 145,000,000 is obviously a meaningful sum given that revenues aren't
expected for 4, 5 years or so. So I
wonder if you could help us understand Or what is the sort of opportunity for this product? Or what is the sort of opportunity for this product if it comes to market? Thanks.
Thanks, Scott. Lots of meat on at least 2 of those three questions. Let me start from the top with your question about Oliver Johansen. Please don't read anything into that. Our innovation projects are continuing just as we presented them.
As you know, we changed the structure of the company just recently in connection with the STRIVE 25 strategy. And Nikolai Boul Anderson now heads up the innovation area. Nikolai is basically reconfiguring his team for what he thinks is the job at hand. So please don't read anything into this that's related to neither performance nor Ambu. This is Nikolay setting his team.
When it comes to the inflow of new patients for Q4 and the full year this year, the as you know, we had the bulk or if you will, the most dramatic impact to the business back in the March, April May timeframe when the healthcare systems were also most badly hit. And we have basically seen the patient inflow starting to pick up from that timeframe throughout the months until this year. It's been at a slower pace in the UK. And like we said earlier, the UK is sitting at around index 80 or 90 to pre COVID levels. So it's certainly not gone, but it's not back to growth from pre COVID levels.
When it comes to 9 continents, well, good question. As you heard from our presentation of the strategy, we are adamant that this should become a significant growth contributor to the group. That is going to require that we expand beyond the segments that we're in. We've done a very serious piece of work when it comes to scanning literally many hundreds of companies and ranking them pretty much based on the strength of the technology team, etcetera. And for a number of the segments that we're in, we've developed what you might call a target list.
For overactive bladder, where noncontinence medical are developing a product, this was a company at the top of the list from our view. It went up for sale a bit earlier than we had expected. But the valuation reflects that the size of the underlying medical need is very significant. It reflects that the existing alternatives to patients or the existing treatment options really should be improved and can be improved and the strength of what we believe is the technology here. So of course, you model out different scenarios for what kind of pickup and what type of share that you could get.
You also model up different scenarios even if you might fail and that's how you get to a perspective on value. And then of course, there are there's a negotiation with the selling side and this is where we came out. In my mind, Scott, this is a strategic play on behalf of the company. Overactive bladder is a it's a big segment. It's got a lot of people suffering from this condition.
And they really deserve better treatment options than they have today. And so I'm pretty excited about it, but also humble that we need to show clinical results and reimbursement before we can really start talking about how it's going to contribute to the company. But in the scenario that we get through that with good results, this will be very important to the group.
Yes, brilliant. Thanks for the answers. And maybe just a quick follow-up, please. I think at the Capital Markets Day, you outlined there's quite a lot of innovation programs going on at Coloplast, and you still expect it to sort of maintain this 4% R and D ratio. I mean, does that still hold despite this 9 continents acquisition?
I would imagine running a Class III device clinical study is not going to be cheap for a product that has a big market potential. I just wonder if that guidance still encompasses this acquisition. Thanks.
It does. It does, Scott.
Okay. Perfect.
Thanks. We can manage within this guidance. And we think that we are going to well, we are going to make a very serious effort on this device.
Great. Thanks for the questions.
And the next question comes from the line of Maja Pataki from Kepler Cheuvreux. Please go ahead.
Hi, good afternoon. Also two questions from my side, please. The first one is a question around guidance. You have talked a lot about the baseline that you have coming out of this year, which is understandable in favor. But I was wondering, how do you think about pent up demand when it comes to interventional urology?
Is this something that you believe is existing and is that baked into your guidance? And then my second question relates to the acquisition of 9 Continents. You point out what the current 3rd generation or third line therapies are. Could you give us a bit more indication on which of the pockets is actually leading? And can you tell us also if it is possible in a short answer what the shortcomings are of the current third line therapies?
Thank you very much.
Great questions. Just when it comes to the question on pent up demand in interventional urology, We believe that there is not that much of pent up demand. The growth that we're seeing now is, if you will, clean. There may be some level of that, but separating out how much it is, I'd say it's almost unknowable. The team's view our team's view is that it is quite limited.
When it comes to the question around 9 continents, let me see if I capture all of the sub questions that you had. So the prevailing treatment out there in third line, so one is Botox injections. And clearly, there's both a couple of questions related to that. One is the actual efficacy of this treatment working and the other one is that you actually have to go back for Botox injection at regular intervals. The more invasive option is the Sacral Nurse Stimulation, which is a market that was invented by Medtronic and that Axonics has now recently launched a product into, of course, these are very invasive procedures, where people have to undergo in some cases multiple surgeries to get to results.
And of course, that is going to be something that everybody will think about before they undergo that type of treatment. The alternative that we're talking about here is tibial nerve stimulation and there are solutions to that in the market today, but they require you to go to the doctor to go through treatment. The implant that we're talking about here would be less invasive. It's basically a miniaturized version of an implant be done in the outpatient setting and you wouldn't have to go to the doctor. It's basically a one time procedure and something that you could be using for years if you are a responder to treatment.
I think you had some question around guidance. Was there that I missed? What was that?
No, no, that's perfectly fine. Just to understand, is BOTOX the most common third line therapy because it's not invasive? I'm just trying to understand how we how the market for third line therapies is roughly split, No numbers, just magnitude.
So the BOTOX market today is about a $300,000,000 market. If you look at the PTNS market, so the percutaneous tip of nerve stimulation, that's around a $60,000,000 market today. But of course, that is very correlated also with the types of solutions that are out there. The bulk of the market now sits in a sacral nerve stimulation with the Medtronic as the market leader and Axonics as the runner-up, that's a market of the about $700,000,000 today. So that's how it breaks down.
Thank you very much.
And the next question comes from the line of Martin Parcoy from Danske Bank. Please go ahead.
Martin Parkhoi, Danske Bank. Just coming back to normal attrition rates in a pivotal trial like that? I'm just trying to see what kind of risk there is. And then secondly, can you speak a little bit about the cost that you could be likely to incur if this will be a marketed product because I guess the $175,000,000 are only one off upfront payment? And then final question, just like anecdotal stories.
Can you talk about how you I think
I know it's been difficult after you have won the huge GGO contract in U. S, but have you been able to gain some traction?
Thank you, Martin. I'm going to have to take a pass on the attrition rate in pivotal trials, but I promise you I'll do some investigation for when we meet each other next. To your question on cost, as I understood it, was related to the total cost of the acquisition and subsequent milestone. We aren't disclosing the size of what it is. I'll say also we have to get to the milestone first.
It's related to, of course, us getting successfully through the clinical work and getting FDA approval, but I can say it's significantly less than the upfront, significantly less. And then anecdotally on Ostomy Care, we are we have built a strong pipeline for accounts within the GPO. And we have seen the first conversions. But access on the OC side, Martin, is more restricted than it is on the continent side. So it has acted as a bit of a damper on progress, but I'm still very satisfied that the business is posting a double digit growth in both Ostomy and Continence are pulling their weight.
And then just a follow-up question, it's probably actually completely new question. Just on the contract manufacturing on the compete, is this completely neutralized because you have both growth in wound care and skincare in the quarter, but the division is minus 3%. How should I look at that in with the comparison base in the coming quarters?
Yeah, Martin, let me take that one. So our contract manufacturing of compete is around 15% of our total wound and skin franchise. And it is true that in our Q4 last year, we had a significant impact from the COVID. So it has a negative growth, a quite significant negative growth. And that's actually also our assumption into 2021 that due to the COVID situation and the low activity levels in the society, it is impacting our contract manufacturing business.
Okay. Thank you.
The next question comes from the line of Nils Lett from Carnegie. Please go ahead.
Good afternoon. My first question is kind of a housekeeping question. So when would you expect to initiate amortizations related to the 9 Medical acquisition? And how many years would you amortize the acquisition price over? And my second question is, when it comes to your acquisition strategy, would you consider to enter the urologic endoscope market through acquisitions?
You mentioned that you had an interest to enter this space on your Capital Market Day. Thank you.
So Anil, let me take the first one. In terms of our amortization assumptions, we will start the amortization in the year when we launch the product. And my assumption for now is it will be amortized over 15 years.
And Nils, when it comes to your question regarding scope, the work that we're doing right now is focused on distribution agreements and that is that's
our focus.
Okay. Thank you.
And the next question comes from the line of Annette Luegge from Henrik Banken. Please go ahead.
Thank you so much. My first question would be if you could maybe say a little bit about the growth trends in the quarter for the division that has relation to elective surgery? Has it been sort of the same recovery? Or have you seen some sort of slowdown in the situation with the 2nd coverage wave? And then just some housekeeping question.
Net finance, what should we expect for the full year? Could you give some kind of indication here? And then the net negative FX of around 3%, should we assume more or less the same for all the 4 segments? Thank you.
So, Annette, just a point of clarification. Your question on elective surgery, if that is related to interventional urology, the trend that we've seen through the quarter has been improving. And it's also the improvement has continued into the month of October. We have pretty good visibility on the surgery levels. So we have not seen any impact from a second wave of COVID on the IU surgery levels.
And neither for the Wound Care division
So for so Wound Care, it has played out differently depending on market. Skin in the U. S. Has come through the quarter well. Wound Care Europe has come through the quarter quite well.
The challenge has really been Wound Care in emerging markets in China.
Okay. Thank you.
And in terms of your what you said, the household questions. So financial items for 2021, I'm expecting a level of around 0. And the other the last question you had, that was around the currency effect, right?
Yes.
Yes. So overall for 2021, I'm expecting a negative currency effect of around 3%. So we are expecting a reported growth of 4% to 5%. And my current view is that it's more or less equally split across our franchises.
Okay, great. Thank you for taking my questions.
Okay, operator, this is as far as we are going to get today, I just want one wrap up comment to Martin Parquette's question about attrition rate in these types of trials. We would say now from having gotten the input that typically this would be quite low and under 10%. But here during COVID times, attrition rates have been higher, but more to come on that front, Martin, when we see each other. From our side, thank you all of you for dialing in and for your interest in the company. Continue to stay safe.
Thank you very much.