Okay. Good morning, everyone. It's fantastic to see so many familiar faces in the crowd today. My name is Ellen Bjurgert. I head up the Investor Relations department at Coloplast. On behalf of investor relations, I would like to say a warm welcome to all of you today. We have an exciting program lined up for you, and before we dive into that, I would just like to say that throughout the day, to my right in Ballroom 3, there will be refreshments available, and we will also have our product stands out there throughout the day so that you can visit and talk about existing and new products. With that, I would just like to say I hope you have a fantastic day. We look forward to the discussions.
If you have any questions, do not hesitate to reach out to myself or Rasmus at the back. With that, I'd like to hand over to our CEO, Kristian Villumsen.
Thank you very much. Good morning to everybody. Is the clicker, Ellen, somewhere to be found? We are going to need that. We're very happy to see so many of you joining the program. It's good to see so many familiar faces. We've put together a day that I hope will meet, maybe even exceed your expectations. Here, initially, let me just take you through the people who have joined us today. We brought quite a few members of the team that runs the company. In addition to Anders and myself, whom you've seen before, Allan Rasmussen, our EVP for Global Operations, and I think the most senior people in the group was Allan. Allan's there, more than 30 years with the company.
Paul Marcun, who runs our Chronic Care business. Oliver Johansen, who looks after our Global R&D function. Nicolai Buhl Andersen, who looks after our Wound Care business. Christian Bo Petersen, who's over here, who looks after our Payers and Trade organization. Finally, Manu Varma, who looks after our Chronic Care North America business. I hope that you will see this as an opportunity today to actually get engaged with some of the people who do the work, lead the work, and not just executive management. This is the program. Anders and I will take you through our Q3, but today is really not about Q3, so we expect that that will be swift.
I will give a group strategy update along with Christian Bo Petersen and Oliver Johansen, who will join me on stage for a couple of the topics that we have there. We basically designed the rest of the day as rotating Q and A sessions. I will be hosting one of the sessions together with Oliver and Christian. We have no presentation, which means that it's 4 x 50 minutes for questions. We have lots of water in the room, and we're well prepared. For the other sessions, we are going to have a short presentation about the area, and then followed by Q and A around the topics that you deem relevant. Let's start with Q3. The headline is, we're pretty happy with our Q3 results.
We post 8% growth organically, and continued strong momentum across our regions. We're growing across all regions, both Europe, other developed markets, and emerging markets. This was also the quarter when we finally reached the conclusion for the French healthcare reform. It landed at 9%. For those of you who haven't followed the trail of events for that reform, let me remind you that the initial ask was quite a bit higher. Even though we don't like a price cut of 9%, I'm very pleased with the work that our team in France and our global team has done in ensuring that we are now actually able to continue to serve France with the products and brands that are in the market today.
Our worry at part of this process was that we'd get into a situation where we would have to pull back some of the newer technologies and start serving France with older products. Mitigation activities are underway, and we expect them to mimic where we've been historically. We've also communicated earlier that we have initiated a strategic review of our Interventional Neurology business. I am certain that we will have some questions around that topic today, let me just say a few things about that.
It's been our intention all along that when we got to the point in time when we could see, if you will, light at the end of the tunnel of the multidistrict litigation in which we've been involved, that we wanted to have a hard look at how to create value from this business area. We're very happy with the performance. The business is growing at double digit, a very healthy expansion of earnings, very good returns. For me, as a new CEO to the company, I'm also very pleased with the work that I see, the quality of the work and the team of people that lead this business. We expect this re-review to be finalized by the...
latest, by the end of the calendar year, and of course, keep you informed about our conclusions. Good progress on EBIT, 13% growth, and we're maintaining a reported EBIT margin of 31% and also a very strong return on invested capital of 46%, which lead us to maintain guidance for the year of around 8% top line growth and around 38% profitability. CapEx is unchanged. If you look at how the business performs across business areas and regions, this is a picture I have to say I'm quite pleased with. Europe is growing 6%, and this is significantly above the market. Other developed markets is growing double digit, driven by U.S.
I'll come back to later in the day of how we think about our investment program for U.S., and Manu and Paul will tell you a lot more about the work that we're doing there. Emerging markets did 13%, and if I have to point out one where we wanna see more, this is one of the areas. I don't think 13% is a bad number, but our ambition is higher than that. We also think that the region carries potential to deliver more than that. All this adds up to about 8%, and across business areas, the Chronic Care business is now growing a little bit less than the smaller business areas.
7% for Ostomy year to date, 8% for Continence still significantly above the market growth rates, the businesses continue to take share. Interventional Urology around 10%, and the Wound and Skin Care around 9%. This is a picture that we're satisfied with.
Just a couple of remarks on the EBIT margin development. As Kristian said, we delivered an EBIT margin in the first nine months of 30.6, and an EBIT growth of 11%, and that is something that we are very satisfied with after the first nine months. Just a couple of things I would like to mention. One thing is, we have completed the closure of the Thisted factory in Denmark. As you are all aware, we have been working on consolidating our innovation factories in Denmark for the last couple of years, and we have now, over the summer, completed the closure of Thisted. That also means that I don't expect more restructuring costs this year. We have included in the first nine months a restructuring cost in the level of DKK 43 million.
The other thing I would like to mention is that we are continuing to invest into the business. We are investing this year, 1%-2% of sales into the business. It's basically across most of our regions and also across most of our business areas. This year, we are investing quite significantly into the U.S. Overall, we are satisfied with the development on our EBIT and our EBIT margin so far this year. In terms of our cash flow, it's also developing as we had expected. A couple of points. One is around our net working capital. As we have also earlier communicated, we are increasing our inventory levels a bit more this year in order to have a bit more stock for our strategic products.
That's one thing. I still expect for the full year, we will be around 24% in terms of net working capital. The other thing I would like to mention is our CapEx level. This year, our CapEx level is a bit lower than in the previous years, and that is primarily due to timing and also that this year we are not investing into a new volume site. Next year, we will start to invest into our new volume site in Costa Rica. Overall, our CapEx for this year is expected to be a bit lower from a ratio point of view compared to the previous years. That gives us the, you can say, the guidance for the year. As Kristian mentioned earlier, our guidance is unchanged.
Our organic growth guidance is around 8%, and it is including the impact from the French healthcare reform. Kristian said, we had a conclusion on the healthcare reform early July, so we are expecting an impact this quarter, so Q4. Including a bit slowdown in emerging markets as a consequence of the lower demand in North Africa. We have also been talking to you guys about that earlier this year. Our EBIT margin, we also maintain that 30%-31% in standard currencies and around 31% in reported currencies.
As I said, I don't expect more restructuring costs into Q4. We have also included, additional investments into the Medical Device Regulation program, and we're also investing a bit more this year into IT, in order to support some of the commercial programs we are running. From a guidance in Danish kroner point of view, we have used the currency rate the 13th of August. We have seen over last week, a quite a big devaluation, the Argentinian peso, and I still believe we are able to handle that within the around 9% growth guidance in Danish kroner. As I said, CapEx, and the tax rate is unchanged. That's basically a quick update on our Q3 numbers.
We will now open for a couple of questions before we move into the strategy update.
Hi, good morning, it's Veronika Dubajova from Goldman Sachs. I have a question about sort of how to think about Q4 in the context of what you've delivered year to date. I think at the outset of the year, you had talked about sort of growth around 8% every quarter this year. Obviously, some things have changed. You have a bit more headwinds from North Africa. You have the French reimbursement kicking in.
... now as of July 1st, how do you think about your ability to still hit the 8% in the Q4? You know, should we be extrapolating from that Q4 growth rate as we think about the 2020 growth outlook as well? Thank you.
When we move into our fourth quarter, it is correct, as you were saying, that we are going to see headwinds from the French healthcare reform, as we just talked about. You also see a bit lower momentum in North Africa, and that is impacting our EM. We are expecting that our Wound Care, our Urology business, and the rest of the Chronic business will continue at the level we have seen in the first nine months. We are expecting that will continue into the fourth quarter. We, for the year, is going to deliver an organic growth in the level of 8%. That's how we see it.
Niels?
I think Niels had a question.
Hi, it's Niels from Carnegie. Just a repetition of the question I asked on the last conference call. Perhaps you could just walk us through the mechanics of the Argentinian hyperinflation and how it affects your organic growth?
This year, we are having a, you can say, a positive effect in our Argentinian business from higher inflation. We are actually seeing a quite significant inflation that is impacting our Argentinian Peso and the business. Inflation is impacting our Argentinian business, but we also see a volume impact, and we also see a mix impact. The inflation impact, Niels, yes, it is impacting the Argentinian business, but the impact for the group is at a very small level.
The calculated effect on your organic growth would be in the-.
So-
20, 30 basis points?
We are not giving you specific numbers, but it is at a very low level that the inflation in Argentina is impacting the organic growth, yes.
A final question?
All right, all right. Thank you, Anders. We're changing gears and moving into our group strategy update. The pictures that you see here are all part of a new campaign that we've done internally for our own organization, that basically talks to who we are. I thought that before I venture into all the content of the day, I wanted to show you the video that we also show to our own people. Please play the video. All right. I chose to start with this because I believe fundamentally that this actually matters quite a lot to our company. Coloplast is a purpose-driven and mission-driven company with a strong set of values, and it's a company that I myself am super proud to be a part of.
I know the group of people that I brought along today are all super proud to be part of the company. This extends beyond this room that there's a feeling inside the company in the culture, which is some of the soft stuff, if you will, that makes some of the hard stuff that we're going to talk about today possible. I think that we have something good going on with this, and all the pictures that you're going to see today are real people, real customers of the company, and that's a reminder to our organization about why we do what we do. As CEO, one of the things I started doing in my quarterly updates to our company was connecting business performance with purpose.
Rather than just talking about the financial figures, I also try to put words to how many people do we help? How many more people have we helped this quarter? I also try to put words to how many people out there need our help, but are not getting it today. The answer is a lot more. A lot more. I can, in the break, I can tell you about all the market research behind that, but the company has a lot of growth opportunity, and the tagline internally that I use for this and a lot of other stuff that we're doing is, "We have more work to do." We have more work to do.
I fundamentally remain optimistic about the potential and also about the role that our culture plays in actually realizing it. If we start from the top, I've six messages today. First one is that the LEAD 20 strategy is doing well. We decided to invest more into growth. We are growing more, we are creating more value. We have been transforming our company for some years now, and moving from being, if you will, a classical medical device manufacturer, to being more of what we call a consumer healthcare company. This is a company that assumes a greater responsibility for what happens with the people who use the products, for how the products get used, and a company that tries to enable, if you will, self-care.
With where healthcare is going, we think this will increasingly be demanded of healthcare companies. We are an innovative company. We believe in products, and at the core of what we do, there are great products. This is also at the core of the company that we're trying to build. The portfolio that we have in the market right now is the strongest we've ever had. It's doing well and contributing to growth, but we've also set our sights on the next level of innovation, and today is really about showing you some of that work and showing you what it's going to take.
You should not look at that and think, "Hey, that's home safe." We've set an ambition that is much, much higher than what's out there today, and of course, inherently, when you put new technology into a product, you are uncertain of the outcome. I remain optimistic, though, and I hope that once you've been through the presentations today from Oliver Johansen, who heads up R&D, and Christian Bo Petersen, who heads up our Payers and Trade team, you will agree with me. On the Wound Care side, we're committed to Wound Care. We've got good growth in Wound Care, growing significantly above the market, and one of the things I've been particularly pleased about in my first roughly nine months as CEO, is the quality of the work around building a differentiated position in the silicone category.
Biatain Silicone is driving our growth. We have more work to do on increasing that level of differentiation and expanding our position. In multiple markets, we are already leading the category, if you look at the rep level or at the region level. These are important data points for a guy like me in validating that the work that we're doing works, and it has potential. Now, Wound Care needs more scale. We know that, and the contribution to value creation in the company right now is too small. We're committed to also scaling the business, and we've also invested in the business, principally in China and the U.S. over the last few years, and are seeing good results from that. Early, but good results.
Strive25 already commented on. The last point is really around our efficiency agenda. Efficiency has been a staple of our company for the past decade. This is a topic that's never going to go away. We think it matters to constantly try and move the bar. We're not very creative in the operations organization when it comes to finding the marketing title of the work that we do. 10 years ago, it was called Global Operations Plan I. We're now at number four. That plan is tracking to deliver 150 basis points by 2021. All right.
We're moving into the final year of the LEAD 20 strategy period, and I'll just remind you that the four core themes of the strategy relate to innovation, and what we call a unique user-focused market approach, unparalleled efficiency, and strong leadership development. Back in November 17, we changed our guidance to 7%-9% growth and more than 30% EBIT, and we did that because we wanted more degrees of freedom to invest in some of the opportunities that we saw in the business. I am happy to see that the financial performance is also playing out like we expected it to. We expect this year to conclude at around 8% growth, around 31% EBIT, and a return on invested capital in the high 40%s.
I am proud of this set of number. I think by any standard, this is a pretty decent result. I'm going to spend a little bit of time here to just talk about the structure of the group as it looks today, and talk about what I believe is the potential for growth in each of the categories. The core of the company is in chronic care. This is 75% of the company, and we've for those of you who followed us, you've seen our work around Ostomy Care and Continence Care. Both of these businesses are growing significantly above the underlying market. Now, what's driving growth? Innovation is driving growth.
If you look at the Ostomy business, the SenSura Mio Convex, the SenSura Mio Concave products, the supporting products portfolio, all contribute very nicely to growth. Concave and Convex are both in higher reimbursement categories and are therefore, in effect, a value upgrade of the market. We're the only one with a concave solution in the market, and I can also tell you we patent it. We think we're going to have a nice good run on continuing that value upgrade. From a product point of view, we see lots more work to do on Ostomy. On the product side for Continence, SpeediCath Flex and the SpeediCath brand is driving growth. There's still nice growth around the compact catheters, and in particular, the transition between old technology...
Old technology, when I use that term in continence, it refers to uncoated products. The transition to modern technology has largely happened in Europe, but not in the rest of the world. For us, from a geographical perspective in Continence Care, the U.S. remains a very large opportunity. More than 50% of our sales now in the U.S., in value terms, is hydrophilic, but it's a lot less in volume. If you look at the market, that market still needs to be converted, and it only received decent reimbursement about a decade ago, so treatment standards are behind Europe. What do I want to say with this? There's a good long run on the U.S. from a geographical point of view. U.S. is also a big opportunity in Ostomy. We have 15% market share in Ostomy.
We are working hard to increase that. We're growing significantly above the market and taking share. We want more. I'm sure we're going to talk quite a bit about Ostomy in the U.S., so I won't say more other than emphasize the point that there's a lot of growth still to be had. The regions around or outside of developed markets that we now call emerging markets, standards of care are low, treatment penetration rates are low. Hence, the, if you will, the run associated with these categories, we believe, is long. The main emerging market is China. We have a strong position in China. We've been there for 35 years. It forms the core of our emerging markets region. There are other great, important markets there. We've done most of our work historically in Ostomy in emerging markets.
If you open the lid on any of the large markets in our emerging markets region, we started with ostomy. Increasingly, over the past half a dozen years, we've invested in building access for our products in Continence Care. Remember, we worked with Continence Care for about 25 years in Europe to help build this category. It's been a consistent grower for more than two decades. You have about 350 million people in Europe. We just established reimbursement in Japan for 110 million people. We established reimbursement in South Korea for 55 million people, in Australia for 20 million people, access to the products also in a number of markets in the Middle East. All this to say is, lots of work to do. Lots of work to do and growth to be had.
I remain optimistic that in both of the chronic care categories, we can have a good long run on growth. Now, I haven't even talked about all the innovation that should drive a step change for us, that's in the pipeline. We'll get back to that in a little while. Our two other businesses, we're of course, competing from a very different position. We are not market leaders in Wound Care, far from. We're number five, but that also means that we have the benefit of being the attacker. There, the job is to basically build a differentiated position around our core focus category, which is silicone.
We will do more on the innovation side in Wound Care, and today we will be showing you our latest addition to the portfolio, a great product in the fiber category called Biatain Fiber, that Nicolai and his team will present to you later in the day. It's a very nice complement to Biatain Silicone, and I think we found a great way to get it to market such that these two products complement each other. I have no further comment on Urology, and then, of course, underneath all of this, there's a foundation of running an efficient company on a global and scalable platform with leaders who've been in the company and worked together for many years in a culture with a strong emphasis on collaboration. This is our growth starting point.
Let's see if I can manage to change to the next chart. Now, there's an idea behind the initiatives that we have going in chronic care, and it's really conceptually a simple idea. Healthcare is changing and is under extraordinary, and will be under still stronger pressure from demographics. Healthcare budgets across the world will be under pressure. Consumers will be getting more involved in the, both the choice of products and service, driven by the rise of mobile technology.
The channels in which we operate, and we see this pretty consistently across regions, the channels are consolidating, and we see the advent of players whose answer to this challenge is to supply products that are, quote, unquote, "good enough." For healthcare systems, it will increasingly be the ask when you look to a healthcare company, that the healthcare company assumes greater responsibility for what happens with the products that they produce, for how they get used, for how healthcare professionals get trained, for how consumers use them in their daily lives, that they actually know how to use them, and that they can prove that they add value to the system. It's not going to be enough to show up with just another product. It has to work.
It has to work from a systems point of view, from a consumer point of view, and from a clinical point of view. The currency of that conversation will be data. I will show you some of the investments that we've made into building the data around our next generation of ostomy products that Christian will show you in a little while. This, of course, is not all that we do. We think that there are a good half dozen of very sensible growth drivers to invest in. I've highlighted the first two because Oliver and Christian will help me talk through our work there. Then I will talk through the remaining four. We'll talk about how we think about building and shaping reimbursement categories.
90% of our turnover happens in reimbursed categories, either through centralized reimbursement, regional reimbursement, insurance companies, but reimbursement. Only 10% of our business is out of pocket. We rely on partnerships with healthcare systems, as many other healthcare companies. We've talked about our clinical performance program before. Oliver will show you how we're thinking about building that, and we'll showcase the work around ostomy. I'll talk to the work or how we think about building a, if you will, attractive portfolio of investment opportunities that provide a good, a good balance. We think about that pretty pragmatically, but that our core belief is that you need a portfolio of growth opportunities to sustain long-term competitive advantage and drive growth.
If you run the company with only a two, three-year horizon, you risk running out of steam. If you run the company only focused on one region, you risk standing on one leg. We think that the portfolio approach makes all the sense in the world. You know that we've communicated that we're willing to invest up to 2% of sales, and we basically allocate that capital across functions, geographies, and time horizons, and business areas. What you see here is the split over the last three years, and there are a couple of takeaways, I think, from this chart. The one is that we've invested a lot in sales and marketing. That's salespeople opening up new subsidiaries around the world, but it's people. It's people selling products around the world in the geographies that we've been focused on.
You can also see here. This laser doesn't work. If it worked, I would have been pointing to the developed markets in the middle column on geographies. That's U.S. U.S. has been a major investment area, not just for the Chronic Care business, also for the Wound Care business and for our Interventional Urology business. We put our money where our mouth is. This is important to us, and it's also where we've invested. Here we go. Across time horizons, of course, if you look at putting additional sales pressure into the market, that needs to have a payback that's pretty fast. When we add 20, 30, 40 people to our setup in China, we more or less know the payback before we begin.
That's very different than investing in market access and opening up markets for reimbursement. The, the work that we've done around getting reimbursement, for example, in Japan, was years underway before it reached a successful conclusion, right? These are different types of investment opportunities, but the group needs to have a portfolio with a decent balance in it, that we have a good development over time. How are we doing? I think pretty well. When we look at reviewing these opportunities, we are largely satisfied. Of course, everything doesn't go exactly according to plan, but by and large, we get good payback from our investments.
I put this into parenthesis because really, the innovation work that we're doing, we still need to prove that we can build the next generation of products, prove that they work, and also prove that we can get healthcare systems to support that. We still haven't done that. We'll show you more about that work in a little while. Chronic Care, lots about U.S. China has been a big investment area. U.K. has been an investment area, and then a number of smaller markets. Wound Care has been mostly China and the U.S. On the Urology side has been very much U.S., and to a smaller extent, also a bit in emerging markets. You can see how this lady smiles. She's also happy with the progress.
Briefly on brands, SenSura Mio, SpeediCath, and Biatain, in particular, Biatain Silicone, these are the brands that power the company. These are the brands under which we drive innovation, and they will be also for the foreseeable future. For Interventional Urology, Titan and Altis. All of these, all of these categories, I think what marks them right now is that we have the best offering in the market than we've had to date. Now, we have more work to do. What this chart basically shows is that for all of the categories that we're in, there are still significant clinical issues that need to be solved, where we believe products can play a role.
For example, ostomates, way, way too many people worry about leakage, and way too many people experience leakage and associated complications. We can do better than that, and we must do better than that. This becomes the starting point for how we think about building the next generation of products. You start with the clinical need in the center and solve for that. Basically, our job is to mobilize our organization in R&D and the service model that we build around care, to make that, you know, to make a concept where that innovation can come into the world and actually make a difference to both clinicians and to payers. With that, I'd like to hand it over to Christian Bo Petersen, who's our SVP for Payers and Trade, to tell you more about our work on reimbursement categories.
All right. Thank you, Kristian. My name is Christian Bo Petersen. I've been with the company for 10 years, and I'm heading up this function we call Payers and Trade, and I'm really looking forward to explain more what is that really about. Prior to Coloplast, I've been working in the pharma industry for + 10 years in various positions within business development, market access, and key account management. Today, I would like to talk a little more about what is the work we are doing with payers, how are we working both to defend existing reimbursement, and in particular, how are we building new premiums and new categories, and how do we view the willingness to pay for payers for new innovations?
First of all, this is an area that we have upscaled, and we have invested significantly into within the last couple of years. We have changed the reporting line, so my function now reports directly into executive management. We have done the same in our subsidiaries. The Payers and Trade functions now report into the country managers to better reflect the way we view payers and commercial partners as key customers. We have also gathered those specialist functions, pricing, market access, and government affairs, in one unit, called Payers and Trade, to reflect the different dynamics we see across markets. You can have some markets where the assessment of new products is done on a national level, very technical assessment on clinical data, health economic arguments. You can have other markets where it's more decentralized, procurement, tender business, and so forth.
Then you can have other markets, again, where it's rather political decisions. We have found that this setup really addresses all the different aspects. We have also invested into the number of people, we have doubled more or less the number of persons working in this area. We today are well above 100 specialized persons working with the Payers. It's not just about the number, it's very much about the quality as well. We are not only looking for people with the right skills within clinical understanding and the health economic capabilities, but also very much established relationships towards Payers, both at national and local level, and also to other decision makers around the Payers. That can be policy makers, patient organizations, and so forth.
This is really, really important when you want to open up new categories, but also when you are defending review of existing ones. The whole reimbursement and pricing framework has also been established in our way we develop new products, so we take this discussion quite early on. First of all, it's quite important that we actually make sure that the products are physically designed in the right way and we have the right features so that it fits into the existing categories. With our categories, it's quite complex when you look into the markets, and across markets, there's a lot of categories, there's a lot of technical specifications, and the ones that can actually understand this has a clear advantage and opportunities in maneuvering within that landscape. We are also looking into, you can say, clinical potential of the new products.
Here, it's quite important, of course, to understand what is actually the potential improvement that these new products are bringing to the market, and how do we document that in the right way. Are we using the right endpoints, and are we setting up the clinical studies in a way that is accepted by payers? I will talk a little more into this later on. What we have also been doing, I would say, within the recent couple of years, is we have invested into what we call burden of illness studies, which is basically tapping into real-world evidence around the payers.
Here you can see real cost data for a specific payer population, which is quite useful when you wanna evaluate your products, and it's also really a good way to start the dialogue with the payers around the problems, the financial burden they have around these patient groups. We have been doing this, or are doing this, in all our large markets, Germany, U.S., U.K., and a few more. Finally, we are continuing the exciting and important work of opening up new markets, just like we saw in Asia Pacific, as Kristian just mentioned, in Japan, Korea, and Australia. This is what we call our roadmap to premium on new reimbursement categories, and it basically starts out by understanding the unmet need of the consumer or the nurse, so to say.
I think Coloplast has been quite good for a number of years at doing that. This is also why our value propositions are based on input from thousands of interviews with consumers and with nurses. What we have done recently is to see how does these medical problems cascade down to the payers? What does it really mean when you solve a medical condition or a medical problem? How does that show up on the payer account, so to say? Understanding the unmet needs of the payers is quite important. When we are designing our clinical studies in all of our teams, then we're making sure that the endpoints not only are living up to what the healthcare professionals want to see, but also what the payer want to see.
An example of that could be within Ostomy Care, where we know one of the unmet need is the burden of leakage. This is what most of the end users and nurses are focusing on. To the payers, the leakage in itself is actually not really a problem, it's more the consequences of the leakage, for instance, the skin complications, and particularly, what are the costs associated with treating that? When we set up a clinical study with an ostomy, we do not only wanna look at leakage, but also skin complications and some of the costs linked to that. Quite important to do that right.
When we know the cost drivers to the payers, and when we have designed the clinical study, and hopefully get a positive outcome, then we will build our value argumentation, and we do that around health economic models. I will also get a little more into detail what that really means. When we have done that, we are submitting the application to the authorities, asking for a premium or new category. This is not just about submitting a file and hope for the best, it's about doing that, but then also work with all the stakeholders around the decision makers, policy makers, patient organizations, clinicians, and so forth. Going forward, I would like to focus on bullet number two and four, namely, how do we actually build our value argumentation? You can say, the burden of illness is actually looking backwards.
It's looking into real payer costs, so it's about identifying the costs, putting a value to it, and establishing an unmet need to the payers, so they are also looking for solutions that we hopefully can provide them with. The health economic modeling is actually looking forward, so it's about, you can say, simulating what will be the expected outcomes, the expected clinical outcomes, and the expected cost impacts to payers when we launch new products. Okay, we start out by the health economic modeling. Now, this is a little academic by nature, so I'll try not to do it too technical, but it basically starts out by gathering a group of key opinion leaders, and then you would talk about how do you actually treat a specific medical condition?
A group of key opinion leaders would then establish some sort of consensus treatment algorithm, you can say, for a specific medical condition. In this case, this is skin complications. We have divided skin complications into five different types, so that could be irritant contact dermatitis, mechanical trauma, and so forth. Within each type, you have graduated it into severity, so it can come in a mild, moderate, and severe form. This panel then would decide for each of those stages, what is the standard care? How do you actually treat that condition? What type of medical specialist do you go to? Do you have to go to the hospitals? What type of drugs are you using, and so forth. This is, of course, quite important, because then you can put a cost to that.
What is actually the cost linked to treating, especially that condition? The difficult part about this is to gather the right international experts, to get the model peer-reviewed, and to get it published in a medical journal, so that when we talk to the payers, we can actually refer to this. This is the way you treat this condition, and these are the costs associated with that. The advantages is that you can actually build the model around a specific intervention or a specific product we are launching. Of course, the disadvantages is more that it is simulating and is based on a lot of assumptions, which can be a little tricky to some payers.
This is an example of such a model in a U.K. setting, where we have looked at the cost of treating skin complications in the U.K., using the Drug Tariff and then NHS costs to ostomy products and drugs and nursing and so forth. What you can see here is that the cost associated with the handling skin complications accounts to approximately one third of the product cost, the ostomy product costs. Put in another word, if you were to remove the skin complications in a U.K. setting, the value to the payers would be around one third of the product costs. If you're not eliminating, but you are only reducing it, then the value would go down. Again, this is only simulating on one intervention.
You may also be able to address other medical conditions and quality of life, and so forth. Of course, a significant potential. If we look into the burden of illness, which is a different way of looking at it, here we look backwards, and here we look at real payer costs. What you basically do is you have a payer population, and within that payer population, you can look at, for instance, ostomates, and then you can follow for a period all the costs associated with being an ostomate. Ideally, you would see an individual before you, for instance, are diagnosed with cancer, and then you can also see what is happening in the year when you undergo treatment, surgery, and chemotherapy, and what are the costs associated after that as well. You're basically following an individual through a period.
Not just one individual, but all the population within that payer group. It's actually really, really powerful when you talk to the payers because it's actually really real costs. That is something we use to put a value on the potential when we are solving the new products, of course, or when we are delivering the new products. What it also does, it is exploratory in the way that in this case, we are not only looking at, for instance, skin complications, you would capture other costs as well. All costs that could be, for instance, a readmission linked to dehydration, use of antidepressants, it could be sick leave, and so forth, you would also capture on this.
It really unfolds in a way, all the costs linked to being an ostomate and the potential you would have if you were to solve those issues. This is, again, a real example, quite recent actually, where we looked into a German database, payer database, quite a big one, 2.5 million Germans insured in a few sick funds. We have been following the cost associated with that. Here you have two quite important findings. First of all, you can see that the cost linked to ostomates is actually three times higher than the average cost to the payer in that group. You can say the average cost is already at a level where some payers at least would think that's significant.
A cost that is 3x higher is, of course, something that they are concerned about, and they would like to have a discussion around, can we do something about that? Further, when you look into this cost, you will see over here that a lot of that cost is actually driven than not only ostomy products, but something else. That can be readmissions, it can be drugs, and so forth. The product cost and the stoma nursing is only one fifth of the total cost. That's a significant burden to the payers, and they would, of course, be quite interested in anyone coming up with a solution in that area.
Now, some of these costs are, of course, linked to the underlying diseases, so the surgery and the chemotherapy, but that normally lies in the early part of the treatment period within the first year. If you were to look at that period only, the cost would actually be double up this amount. There are some significant costs in the first year linked with treating the underlying disease, but also because this is actually when you have not established your routines, you may not have been trained properly and so forth. There's a lot of value in the first year, and after the first year, you have a quite significant chronic level, you can call it, of cost to the payer.
We believe that there's a big potential in actually addressing those issues, if, of course, you can deliver the products that are actually reducing the cost, and you can prove it in a proper way. I think this is something that Oliver will now share with you in more detail.
Good morning, everyone. My name is Oliver Johansen. I've been with Coloplast for 17 years, and I've been heading up Global R&D for the last 7 years. There's been many exciting years throughout my time in Coloplast, but as heading up Global R&D, I can't think of a more exciting moment than this one, because we want to raise the standard of care through clinically superior innovation. Over the recent years, we have increased our R&D spend from 3%-4% to invest in new device technologies, to invest in digital health and in clinical trials, to support the journey that Christian Bo just explained of showing improved clinical outcome, but also savings to payers. The key messages from my presentation today is that we are progressing well with our clinical performance program.
I'll give you an update on one of our latest clinical trials within Ostomy Care, where we have showed a significant improvement in skin health and also a very clear use of preference among users. The second takeaway from my presentation is that we are progressing well with our digital efforts, where we've conducted two clinical studies, where we have seen very high accuracy in actually detecting leakage and actually transforming that signals into meaningful communication to users, giving them more of a peace of mind. Let's start with the preclinical area, because in the recent years, we have invested quite a bit in our preclinical area in order to enable us to screen and test materials faster compared to what we have done in the past.
We have intensified our in vitro and in vivo experiments, overall, with the objective of ensuring better product performance prior to entering clinical trials. After our preclinical work, we conduct pilot studies. In Coloplast, pilot studies typically involve six to 40 patients. It usually has the preliminary purpose of getting early indications of efficacy and safety. After pilot studies, we conduct pivotal studies, which are used for reimbursement. It's used for a regulatory submission and to support claims. The size of those trials, depending on the statistical power, but usually it's around 100 to 200 patients. The duration of those trials is usually four to 10 weeks, can be longer within Ostomy Care, and it can be longer within in Continence Care. The cost per patient is typically around EUR 5,000-7,000 per patient.
Now, as you can also see, to the right up here on the chart, the number of trials that we have conducted, related to our development projects, have increased substantially. The increase in trials that we have conducted is related to pilot studies that we've conducted within Ostomy Care and Continence Care. today, I'll focus on Ostomy Care to give some updates on that. We have similar work going on in Continence Care. Within Ostomy Care, the peristomal skin complications that Christian Bo already talked about, is a major burden for many users and is also a burden for payers.
73% of users, they tell us that they experienced skin issues within the last six months, and 52% of them, they actually say that it's one of the main reasons for seeing a doctor or nurse, driving a cost, as Christian Bo explained. It also has a huge impact on the quality of life for these users. You can see some of the quotes up here. That means staying home and dealing with the skin issues. It means losing sleep. It overall impacts the quality of life. If you think about skin complications that you see up here in the pictures, and you need to change an adhesive baseplate on a daily or every other day, this is a real burden for these people.
The root cause, the underlying root cause, is the enzymes that supports digestion in the intestines. Basically, what we have done is we've developed a new skin-protecting technology that can actually protect the skin against those aggressive enzymes. What we have conducted recently is a pilot study where we have tested this new skin-protecting technology. We have basically recruited patients with liquid output and problems with leakage, because this is the population that is very prone to skin complications. We had them use SenSura Mio, which is the golden standard in the market today, for a baseline period of two weeks, and after that, they tested our new skin-protecting technology for four weeks. There's a lot of endpoints that I'm not gonna get into the details of today.
The main takeaways is that we saw a significant improvement in skin health. We actually had users report back a 40% improvement in itching, pain, and discomfort, and we saw a very high user preference. 71% of the users preferred the test product over SenSura Mio. Heading up R&D, I'm of course, really happy about this because the test product that we had in this clinical trial was not the final device. It did have some usability flaws compared to SenSura Mio, it really reminded us of how key the skin health is in driving user preference. Despite not having the final device design that was equally usable as SenSura Mio, 71% of the users preferred the test product over SenSura Mio because it solved a real problem for them. This is very encouraging.
We also believe that this type of results will support our ambition, as Christian Bo explained, about achieving a price premium. We're not done yet, but we find these results very encouraging, and we'll continue to conduct pilot and pivotal studies on the final device and the final formulation. As part of our clinical performance program, we're also using our artificial intelligence for peristomal skin analysis. When we conduct these clinical trials, we equip the users with a smartphone and an app where they take pictures of the peristomal area and on the actual product. From these pictures, we can actually use artificial intelligence to identify the area of affection, but also the intensity of the discoloration that patients experience.
The results that we've gotten so far is that we have, over the number of clinical studies we've conducted, we have built up a database of over 10,000 pictures, where we've used two-thirds of those pictures to develop and train our artificial models and the last third to validate them. We've actually been able to achieve a very high accuracy level on determining the area of affection, the intensity of the discoloration, and also the leakage. For the discoloration, we have actually achieved a 93% accuracy, and for the leakage detection, it's a 95% accuracy. Currently, these efforts are targeted our clinical performance program, but further down the line, we also see a number of commercial opportunities in using artificial intelligence for peristomal skin analysis. Our digital efforts are progressing well.
We have conducted two clinical studies that have shown a very high reliability in detecting leakage. We have, as you know, worked on a digital concept where we have basically integrated a sensor into an adhesive that can detect leakage. It sends a signal via a low-powered Bluetooth transmitter to an app, which then can notify the user of doing something before they have an embarrassing moment or before they have skin complications. We have actually gotten very positive feedback from users and nurses, including using such a digital solution in a discharge setting, because as Christian Bo mentioned, many users, they struggle for the first year after discharge. Having a digital device that can enable personalized monitoring will actually help many users and healthcare professionals in establishing healthy routines.
Our capability in actually using those signals and transforming that on into a meaningful communication to users is developing very quickly. In our two pilot studies, we have shown an over 95% accuracy in detecting leakage, so we feel that we have a technology that works. Equally important to the technology is actually the usability, because we are addressing a population group which is typically +50, 60 years. Actually understanding how to pair devices, actually to connect a Bluetooth transmitter, is not to be underestimated. I would say the usability part is as important as the actually the technical part, and that's something we're working on. We've also spent a fair amount of work into the manufacturing processes because integrating new sensor technology with our adhesive technology is not a trivial task.
We've come very far to the extent that we can now actually produce these products. We believe it's feasible from a cost price perspective and also from a manufacturing perspective, and we can now actually produce full devices for clinical trials and user evaluation. The biggest challenge with this initiative is actually the reimbursement and payment model. There is no product categories out there for digital ostomy devices. There is no categories for services as such, that's a key challenge for us to show payers that the value we can generate from our products and service offering is real for them. An important part of raising the bar of innovation is also that we protect our intellectual property, and we have increased the number of patents filed quite substantially in recent years.
May I just remind you all that there is usually a year and a half between when we file a patent to when it becomes published, and what you see up here on the chart is the number of patents that we expect to publish in 2019 compared to the previous six years. The key areas that we've been focusing on is our digital health solution, and also the skin protecting technology that I just talked about when we ran the clinical trials. We have filed a number of patents within Continence Care, including patents for our new catheter platform. Overall, I believe we have a very strong pipeline that can deliver growth, both short term and long term.
We will continue with more incremental innovation, like SpeediCath Navi, for example, that we have recently launched. It's known materials, known processes. We have the in-house expertise, usually have a short time to market. We design the products for existing price categories. I would say overall, the risk of these projects is low. We're also making really good progress on the next level of innovation, where I've given one example, a couple of examples within Ostomy Care. These projects do take longer to get to market due to the technology development required. It involves new materials, new manufacturing processes, and new partnerships. They also come with a quite ambitious clinical program to support our reimbursement strategy.
It's also going to be launches that are very different to how we do it today, because price will beat time to market, so it'll be more of a staggered launch, depending on the local price negotiation in each country. It goes without saying that the risk profile, as Christian mentioned, is also significantly higher than the more incremental innovations that we bring to market. Overall, I believe we're making really good progress. To sum up my part, in Ostomy Care, we've conducted some very encouraging clinical trials that shows us that we can really make a delta in improving life for users and improving, skin health.
We have progressed well with our digital efforts, where we believe that it's feasible to actually, from a technical perspective and from a usability perspective, and the big challenge is to, is to get the reimbursement and payment model in place. Within Continence Care, we will include our work, including our new catheter platform, which will include the bacteria barrier technology that many of you have heard a year ago. It'll also include other technologies that address some of the risk factors that users face in getting urinary tract infections. Also within Continence Care, like I presented for Ostomy Care, we'll continue our preclinical efforts in conducting pilot studies in the coming years.
Within Wound Care, we have done some exciting work on strengthening the pipeline. My colleague, Nicolai, will talk to that this today, where we'll have some exciting launches ahead of us. We'll keep focused on the silicone category, which we find very attractive, and where we feel we have a strong offering with our 3D technology. That was my part of the presentation, and thank you for listening. Over to you, Kristian.
I'll put a few words to the last remaining four of the growth drivers that we typically invest in. We're in the fortunate situation that we still have good growth opportunities and good investment opportunities in all the regions that we're in, including Europe. Including Europe, we continue to invest in European markets. You'll see over the last period, we've invested in both the U.K., Germany, France, and Italy, and actually also a few markets, smaller markets beyond that. We continue to be optimistic about Europe. Other developed markets has been very much about U.S. We also have our Pacific region in that category.
We've invested in Pacific, but the bulk of the investments that have happened in this period have been in the U.S., and Manu and Paul talk extensively to the work that we've been doing there. In EM, we have a 15%-20% stated growth ambition. China is core, China has also been a core in investment area. It will continue to be that also in the next strategy period. I can say that already now. We have lots of opportunity in in China, we're doing well in China. Again, from our experience in EM, you really need to run a portfolio of opportunities and have good discipline in in the things that you invest in.
You also need to be willing to and committed to taking capital and people out of situations where the returns that you're expecting aren't happening. Our consumer focus really enabled us to do a lot of exciting things, and I hope that everybody can see how this links to all the work that Kristian and Oliver described. The work that we've been doing over the last eight years of basically creating a channel to the people who use our products and building a care program at the core of that, across 30 markets, is of strategic importance. I've said many times when I've been in front of this type of group, that we made a lot of mistakes in trying to make the care program work globally.
What we learned, overwhelmingly, is that this is something that you need to co-develop with local clinicians. There are no shortcuts, right? This has to actually be tailor-made to Saudi Arabia, to South Korea, to the U.S., to Brazil, to Denmark, et cetera. We put a lot of work into making that happen, and the number that you see up here, the 1 million, is closer now to 1.5 million. This program, it works, and it fulfills a very, very important role in providing patients with support from the acute setting to their home on a good routine, on a product that they can use, and it is, of course, a way of identifying customers within our markets, and also a way of building trust.
We can have a dialogue with the customers in this market. We have increasingly coupled this with a direct presence. We are direct in our top five markets, so U.S., U.K., Germany, France, and China. Have done quite a lot of work with that. Digital platforms is something that we are increasingly using, and also something that customers increasingly expect. One example of this is that we do, for example, customer service call in China, will often happen on the WeChat platform, as live video. Live video demos or live video conversations with customers dialing in, and this is what Chinese customers expect. Yeah, I talked to how important it is to build content with local clinicians, but there is also just a point around that this is content rich, right?
This is not a push type channel. It is a high touch, high touch, high engagement type channel, where what you bring to bear for consumers actually to solve real problems, deliver real content on the platforms where consumers are, right? The kinds of people that we have manning the phones in these 30 markets are people who, of course, have been trained in the different treatment algorithms that are present in the geographies that they're in. Wound Care. We are going to talk a lot more about what we're doing in Wound Care in one of the breakouts. I'm very, very happy with the kind of growth that we're seeing from the business right now. We think there's more to do.
We also think that the launch of Biatain Fiber opens up a new set of opportunity, and Just like with silicone, there's a very intuitive and clinically relevant launch concept that Nicolai and his team will demonstrate for you live in the breakout session. We definitely expect more and want more from the Wound Care business. Urology, delivering great results, lots of opportunity, and I'm also very happy to say that the investments that we made, they're actually delivering very healthy returns. Our strategic review will put clear direction on how we, how we want to take this business forward. I think I ran out of the ability to switch charts. Finally, we need to run a company that's responsible.
We need to run a company that's responsible. We don't talk too much about that, or haven't talked too much about this with you historically. We will do more to talk about the work that we're doing. There's lots of good work in the company that right now we group under three headings: empowering people, acting respectfully, and minimizing our footprint. You can see here, a number of what we think are relevant data points to the work that we've done. I'm very happy and proud of the work that's done around access to healthcare. This has been running for more than a decade, with more than 50 projects conducted. We run that under separate governance, but this is also the types of projects that have resulted in actual access to the categories that we're active in, right?
It also has, I think, a meaningful business impact. Wonderful feedback on the quality of engagement that consumers find with the care program. I will emphasize quality here, that for this channel to work, you have to have quality content and quality people and a quality dialogue. Respect over here has a lot to do with business ethics, the way we think about screening suppliers, that we don't find ourselves in a situation where we work with people who violate human rights and things like that. All the stuff that you may take for granted, but there is a ton of things happening inside the engine room of the company to make sure that we run it soundly. Finally, footprint.
This year will mark the first year where we're on 100% renewable energy. We hit this year, 33% recycling of production waste. And a 72% reduction per product since 2009. While this is good progress, this is definitely one area where I can say that we have more work to do, that we'll talk about in our upcoming strategy. That's pretty much it from my side on the strategy overview. I will not repeat the key messages of today. I'll ask Oliver and Christian Bo to join me here on stage, and then we've got time for 10-15 minutes worth of questions before we break.
Thanks a lot, Carsten, from SEB. A lot of your new sales investments have been done in the U.S. market, as you say yourself, and a lot has been made in Ostomy Care, in particular, in the U.S. market. How satisfied are you with the output you have secured there, and in terms of market share gains, of course, and then also for the upcoming Premier contract, the whole GPO topic?
Yes.
How important is it today versus maybe two or three years ago for your future growth?
A great question. The short answer is we want more. Manu is down there, he can hear me answering the question now. We want more. We've invested significantly in the front line. We've introduced new product and technology into the U.S. We've invested in building a strong consumer offering and care program in the U.S. While we have grown, and still grow, twice the speed of the market and take share, I would be remiss to say that we're satisfied with where we are. We want the Ostomy business to deliver more than it does in the U.S. does.
You're also growing twice the market speed in Ostomy Care in the U.S.?
We're growing, high single-digit. Depending on when you look at the business, we'll be growing high single-digit, low double-digit. The business with the investments that we're making and the kind of share that we have, we believe it should do more. We believe it should do more. Does GPO matter? Yes. GPO is one of the things that you need to have in place to be fully competitive. It's not a silver bullet. There's a process running now. I think we have a good shot. It's not concluded yet. Premier is coming up this fall.
Definitely what will happen if we get on that GPO, is that our territory managers will have better access and an easier time in converting an account if they win the contract.
Hi, this is Michael Jüngling , Morgan Stanley. I have three questions for you. Firstly, when it comes to sales, I'm sort of talking off slide, I think it's slide number seven. You mentioned that you've got a fairly good idea now about sales force productivity and the returns that you get.
Yes.
I'm curious about how the sales force turnover looks like in the emerging markets, especially China.
Yes.
In the past, I think you've had some speed bumps on the turnover side, which perhaps surprised you to the downside. Can you talk about sales force turnover in the emerging markets, and why it's so difficult to not get to your sort of upper end of your emerging markets growth guidance, if you've now got a fairly good sense about sales force returns or, yeah, returns on the sales force? Secondly, when it comes to this new ostomy product, when it comes to the sensor, do you think this will be seen by payers more as a convenience product or indeed more of a healthcare beneficial product, for which the payer is willing to pay for? Thirdly, what is the timing of this ostomy product, which includes the sensing technology?
These were the three questions?
Yes.
All right. Let's start with emerging markets and sales force productivity. You know, we've been expanding sales teams in many markets across the globe, and depending on business area, we have a pretty good feeling for once you've got people on board, you get them trained. Assuming you've done your job in getting people into the company that will stay with the company, they'll start to yield a return within a nine-12 month horizon. Right? Now, in some of the markets that we're in, the competition for salespeople is pretty fierce, and in some markets, people are, if you will, very responsive to changes in incentive.
I think what you're going to find, if you start looking at what are the people turnover rates in Chinese organizations, what I've been, what I've been looking at for best practice, people will get around 12%-15% people turnover. This would be very, very strong performance. Normal people will probably be sitting closer to 20%, and, you know, when we've been doing poorly in some of the teams that we have or regions that we have, we've been moving into the mid-20%s, even high 20%s, depending on quarter, right? Clearly, you cannot run a sustainable sales team, if you have that high people turnover. We've done a lot of work on getting that down. This has a lot to do with thinking...
This has a lot to do with leadership. It has a lot to do with incentives and targets. We've done a lot of that, and we're seeing those numbers move down in China. I think this has been more pronounced for the Wound Care side of the business. Much, much less for the Ostomy side of the business. I think if I were to take a macro snapshot of where has this been an issue in EM, China is it. I think we run very, we run very stable organizations, by and large, in emerging markets, other than that. Second topic was the innovation in ostomy. I think what, maybe I should allow you guys to, Christian, maybe you take a stab at that rather than I do?
Maybe I can start out by the payers. Can you hear me? Yeah, okay. The payers, I think, is not so concerned around the technology, actually. They wouldn't care too much about the sensors or devices or whatever we put into it, but more the outcome. As long as we are solving a clinical problem, and we document that in the right way, and hopefully also link it into a cost savings to them, we have no doubt that they will actually pay for that.
Michael, you're right, we still need to prove that.
Yeah, yeah, need to prove it.
We still need to prove that.
I mean, to me, leakage sounds perhaps a little bit more like a convenience problem than perhaps a healthcare problem. I mean, the reason why many governments don't pay for dentistry, because it's aesthetics, and therefore, it's not critical to a patient. You feel that a sensor-driven product that tells you that you may have a leak is going to be reimbursed?
You have to think about it differently. The clinical issue are the skin-associated conditions. If you don't believe us, you should try and interview a dozen ostomates who've had severe skin issues, and then talk to them about the pain that's associated with it, the discomfort that's associated with it, potential infections that are associated with it, and for in severe instances, also readmissions. This is not a small thing. What we're talking about is basically preventing the issue from arising, right? Even though it may be an aesthetic issue, I think for most people, it's intuitively obvious, you don't want that to happen, right? You just don't want that to happen.
Timing?
Timing? For now, I'll say beyond 2020.
Martin Parkhøi at Danske Bank. Coming back to the leakage thing, the improvements you've shown also in preclinical studies, whatever you call it, is quite significant. How do you think that would impact your accessories business? Which I guess also is based on the fear of leakage or support to that, and will the digital solution actually be sold as an accessory? The second question is that, I guess some of your competitors is also working on digital solutions, and I guess it's also a race. Do you know, do you believe that you'll be the first one with such a product within ostomy?
Oliver?
Right. Well, to answer your last question first, if you look at within the ostomy space, there is currently, if you look into the patent published, there's not a lot of companies out there working with this. There's a company called 11 Health, which is out there that are working on similar themes as we do. We believe in that from that perspective, and, as some of you may know, we've just published a quite large number of patents in June. We believe that we have a leading edge on this, both on the technology part, but also on the manufacturing part and actually being able to scale it up.
I think it's hugely important that we have a solution that is actually scalable and feasible, and not just, you know, technically interesting. Coming back to your question regarding, you know, what is it trying to solve? I think a lot of ostomates today are used to actually having itching or pain as a notification for when to change the product. We believe that, you know, this technology that we're working with can actually advance the users in being able to manage their Ostomy and actually avoid skin complications and embarrassing moments. We believe that this is a key. The concept that we are working with is something where we want a concept that is applicable to the broad base of ostomates.
If you look at the ostomate population and not just a certain niche of ostomates. Does that answer your questions?
Related questions on accessories. If the product works very well, yes.
Right? It may have an effect, but it would clearly be a better solution. Right now, our challenge, I think back to what Oliver described is, even though we can show that we can make this thing work technically, it also has to work with real people in real usage situation, where they express clear preference, and we can see results that we can measure. We still need to document that.
Just the last part of my question, will the digital part be an accessory?
We can't say that yet.
Just to comment on the accessories, I mean, we have a few data points also from the investigations we've done on Concave, where with Concave, for example, we have a product which is clearly performing better than what's in the market, but that doesn't mean that the users are using less accessories. Accessories is often used for the individual body types, if you have scars after operations, et cetera, and that need won't go away, no matter if you have a digital product or a new Concave, because that's basically a personalization to the individual body types. The digital solution actually empowers the patient of being more in control.
I think there's a balance here also, that even though you bring these new innovations to market, there will still be a very large need for accessories also in the future.
It's Oliver Metzger from Commerzbank. My first question is about the composition of growth. In Ostomy Care, it's quite obvious that going forward, the contribution from value or value growth is higher than unit growth. In Continence Care, over the last 10 years, you already had some significant value contribution through innovations, through intermittent catheters. If you compare in Continence Care, the last 10 years with your aspirations for the next 10 years, do you think that the growth contribution from value is similar to that we saw in the past 10 years? My second question is, you're doing a lot of these initiatives simultaneously, and they are complementary to each other.
If you were in a more financially constrained situation, and you had to decide between the different initiatives from a return of invested capital perspective, which initiatives would receive the same amount of money, and which would be less, which would you be less generous?
That's a great question. Let me start with your question on Continence. You know, we're not that theoretical about it. When we think of the opportunity in the continence space, we look at a market, we see for a developed market, where we've done the most work, is Europe. If you look at the penetration rate of the treatment regime called intermittent catheterization with ready-to-use products, and you compare the standard of care in Northern Europe to the standard of care in Southern Europe, there are factors of difference, not percentages. There are factors of difference.
We think there's still lots more work to do on actually making this truly standard of care for every single European country in the markets where we've worked on this for a quarter of a century, right? I talked to the opportunity in the U.S. The U.S. is only pretty much 10 years old when it comes to building this standard of care. We've now worked on it for 2.5 decades in Europe. You know, lots of work to do in the U.S. A number of new, large geographies around the world are coming on stream. We're not short of growth opportunity, I think you can attack most of that growth opportunity with existing technology. We have a pretty good offering already.
What we've done in addition to that is say, we think that in this space, there are still clinical issues that are so significant that we're going to take a stab at trying to solve them, or if not solve them, make a positive difference, right? That's what Oliver referred to in the Continence Care pipeline, where the clinical aspiration is to reduce the incidence of urinary tract infection. There's a reason why this hasn't been done historically. That's actually quite hard, and once you start digging into what's the source of urinary tract infection, it's a hornet's nest of complexity, right?
This stuff is hard, but we do have some exciting technology in the pipeline that, of course, if we can make it work, of course, we need to get paid for that innovation. Payers, back to my opening statement around our model, payers will not pay if you haven't proven that it makes a difference. The answer to your question is, we need to prove that we can raise that bar, and then I think there's also, you know, there's also a play for value. Are we out of time?
Out of time.
We're out of time. That's great, 'cause I'll take a rain check on your portfolio question, and answer that in the breakout. The short answer to that is, we already do that to a great extent, right? Even when we impose a 30% margin on the company, above 30% margin on the company, that acts as a disciplinary mechanism. We are not maybe as formal as formulaic about it as you would think. I think there's a pretty large element of judgment. Some of the investments that we're making into the clinical side and innovation side of the business, I would definitely continue to do, 'cause I think that's where the future needs to go, it has inherently a higher degree of uncertainty. All right. Thank you.
Lots of opportunity in the breakouts to ask more questions, but right now, we're breaking for lunch.
Yep, lunch will be served out here in Ballroom 3, and the first breakout session starts at 1:15 P.M . If you look at your name tag, you'll find a color, and the color is associated with a room, so you just need to find your room and get ready for the first breakout session at 1:15 P.M . Enjoy your lunch!