Good morning, everyone. My name is Ellen Bjurgert, I head up the Investor Relations department at Coloplast. On behalf of Investor Relations, I would like to welcome you all here today. It's a great pleasure to see you all. We have an exciting program planned for the day. Before we get started, I would just like to run through a few practicalities. You have on arrival, all received a welcome card. On the front, you have today's agenda, on the back, a floor plan, as well as the Wi-Fi network. No password is required. During the day, there will be three breaks, including lunch.
During all the breaks, I would encourage you to visit our product display area, where there will be representatives from all four business areas on hand to answer any questions that you might have about our products. I would also like to say that following each presentation on the stage, there will be a 10-minute Q&A session. If you have any questions throughout the day, do not hesitate to reach out to myself or to Rasmus. Before I hand over to our CEO, Lars Rasmussen, I would like to show a video describing what Coloplast is trying to achieve.
There's nothing more relaxing than being in a stream. To feel the water pressing against the back of your legs, it makes you forget about everything that's going on, and there's just nothing like it.
I love the theater. This is the first production that I've been in since 2002.
I've recently returned to work after three years of being unemployed, and I now work outdoors in the community with physically disabled people, trying to help them access the countryside again and get back to doing the stuff that they didn't think possible.
If someone asks me today whether I want to get completely well again, I always say, "No." Now I can just sit back and say, "Oh, beautiful day today. Drink a cup of coffee and let the day be a day.
I started playing hockey because my dad played hockey. As soon as I threw a pair of skates on, I was in love with it. I've been playing goalie ever since I started skating, and what I loved about it was the excitement of trying to stop somebody else's corner ball.
I was so concerned about maybe possibly having an accident on stage or not being well enough to commit to the full run of a production, because when you do a production, you have to commit to it.
I like doing this. I can do it. I make special machines for the concrete industry. I am very happy with it. The customers, they are so satisfied that they send messengers after me.
I've been able to actually commit to this, so it's been amazing.
Well, we have a bucket list in mind of places that we'd like to go. One of them that we've talked about is Iceland. Another place would be to New Zealand.
I consider myself more active now, purely because I've had a better perspective. Having something quite major happen to you, kind of puts in place what's important to you.
Now that I'm in my twenties, and I have my implant, it's made relationships flourish. There's something there that wasn't there before that can be there now. Predominantly, it comes from me being confident.
Yes, it has gotten better. I think that I am inside more relaxed than I was before. It was a real eye-opener, where you can still get to using a wheelchair.
This company exists because we want to help people with intimate healthcare needs. Understanding of the people you serve is critical, and understanding is much more than just asking questions. It's the ability to get yourself in the shoes of the people that you work for, not just in a rational way, but also in an emotional way.
We actually, ideally, would like to have people forget that they have a chronic condition. It's all about making people just live the life they want.
Welcome. Welcome to our home here in Humlebæk. It's great to see you. We are very excited to have you, personally, I'm very excited to have a chance to let you meet some of the people who drive the business on a daily basis. Normally you'll see Ellen, and you'll see Rasmus, and Anders, and myself. Well, we are quite important, of course, but there's a ton of other people that makes a difference on a daily basis. You're going to meet the.
... a lot of them today, and we're looking very much forward to that. We try to build a consumer healthcare company, and that's what everything today will be about. It's about what a company is in 2020 when you're in our industry, and we think we have a pretty good shot at that. That's what we're going to share with you, let me dive into it. Last November, we changed our guidance, and we changed our guidance because we thought that we were not really utilizing our growth potential. We were growing, or have been growing, for the last years, around 7%. We have been investing approximately 1% of sales to get that growth.
We have a return on invested capital, which sits around 45%, and we thought that we could grow more, but we also needed to invest more to get that growth. That was why we were changing the guidance. Now we aim for a growth which is at the upper end of our guidance, and we try to do that with an EBIT margin, which is above 30%. For the last five quarters, we have had 8% growth, and we're going to talk about today how we are sustaining a high growth, because the market is growing, like, 4%.
With the growth that we are having, the organic growth that we're having, which is the 8% that I'm talking about in fixed currencies, we do take market shares, and we do take market shares from a pretty high vantage point. We have in Ostomy Care, we have around 35%-40%; in Continence Care, more than 40%. It's quite a challenge on a daily basis, but we think that we're equipped for keeping, taking market shares. Since we launched the current strategy in 2016, LEAD 20, we have invested to increase our growth and, most of what we have been investing in is in sales and marketing activities, but we've also been investing in R&D.
If you look historically, we have been investing in incremental R&D, so bringing products to the market on an ongoing basis. We have been investing in enhancing our sales force footprint. We have been investing in consumer and in a direct-to-consumer channel. It's not just a homepage and a database, Christian will come back to that later. It's a business system. It is a real sales channel. We have also then upped our investments in the next level innovation. We have upped our investments in direct distribution, where we've also done some inorganic investments, and we have invested in market access competencies and in clinical competencies.
We're going to talk a lot about that later on. If we look at the short-term growth that we are going for, we have two areas where we get the growth primarily. One is in emerging markets, where we need to be at 15% growth year-over-year or more. That's what we're investing for. Here, we're investing in traditional sales force expansions. We are also investing quite a bit in market access because we need funding for our products. We have got that recently, for example, in Korea. We also invest in Coloplast Care, which is the patient support program that Coloplast has, and it's all over the place in emerging markets.
We invest for a double-digit growth in the US, that's very much about the service model that we're having in the US. How are we bringing the innovation that we have in front of people who need it? We will also talk much more about that later on today. If we look at the at the current strategy, it's. This is the simplest version that I have. We have four different areas that we work with, let me start at the right-hand side. We work a lot with the strong leadership development. We think that no company is stronger than its leadership.
We have approximately 12,000 people in the company. We have a ratio of approximately 1 to 10 on the leadership side. That means that we have 1,200 leaders. The company grows with approximately 1,000 people per year. If you take the churn on top of that, it tells you a little bit about the need for leaders that we're having. Part of the strong leadership development is that we like to have leaders that come from within. We'd like 2/3 of the leaders in the company to come from within. Currently, we are a little bit below that. We are around 50%-53%. We still need a stronger leadership bench because that's defining the future for the company. It's not going that bad.
If we're looking at the engagement index, we do on a global scale, from time to time, an engagement survey. Everybody who is employed in the company, they have a chance to cast their vote, so to speak. We have a global engagement index, which is 74. That's a mix of people who are filling in the questionnaire of people that you meet in this room, but also people who are sitting at the machines at the night shift in China or in Hungary. The benchmark that we have, the European benchmark from the company that supplies this to us is 64.
We have a very engaged staff, and that's of course, a very good outset for having a strong delivery performance and having or delivering strong quality. That's just one of the things that we never talk about. We take it for granted. Another thing that we don't talk about is on the unparalleled efficiency. We quite rarely talk about our infrastructure, our IT infrastructure. We are actually a quite rare company when it comes to that, because we have one CRM system, and we have one ERP system. That's quite odd for companies. Most companies are actually a patchwork of many systems. To drive unparalleled efficiency, we have a very good outset because we have a very, very, very simple system landscape.
Then to top it off, we have GOP4, that you heard a lot about, which is the operating, operations plans that we are utilizing in order to up our gross margins. Today, we're not going to talk a lot about that because you can see the two parts of the slide that I'll talk about here, they are a little bit dim. What we will talk about today is the superior products and innovation and unique user-focused market approach. That is where the concentration will be today. If I take a deeper dive on the superior products and innovation, then on the ostomy side, we are very much up to speed.
We have launched across the board, new products. We have products for, you could say, what we call a standard ostomy, and that's the SenSura Mio products that we have there. We also launched a couple of years back, the best convex products that exist in the market. We have just recently launched a product for people who have an outward body shape, the concave product. That is a product that we expect a lot from. It's a product that really helps people who are in a difficult position. We made a survey, what we call an ostomy life survey, with more than 4,000 participants.
Out of that survey, we have this number of 83% saying that they have leakage issues when they have outward body shapes. This specific product addresses that, and this product is launched in nine countries now. It's launched with a premium price of 50% compared to a standard appliance. We think it's at least as big a segment as the convex segment, meaning that at least 30% of the market value could be this specific product. That gives us a new angle to work on in Ostomy Care. With 9% growth year to date, in a market growing approximately half, we, of course, also need some bullets, that's for sure.
On the Continence Care side, we're also having 9% growth year to date after nine months. Here, we're also addressing real issues. Approximately half of everybody who have a spinal cord injury are worrying that they should have a UTI, a urine tract infection. People who use catheters, on average, have almost three UTIs per year. If any of us will get a UTI, we'll just feel that we are peeing glass. If you get a urine tract infection when your spinal cord injured, you will get very high fever. Very often, people will be hospitalized, and that's a week-long hospitalization.
That means that for many people who are using catheters, at least one month a year are set aside just to have urinary tract infections where they can do nothing else. It's a real issue for them, and it's a real cost to society. Whatever we can do, here to help, well, is quite important. What we'll be bringing to the market very soon is our barrier technology or the Bacteria Barrier Technology on catheters, where we are compared to a standard product, reducing by a factor 10, the number of bacteria that are brought into the body by the catheter. We have wound care.
When we launched our LEAD 20 strategy, we explained that we are subscale, and therefore, we do not have the same profitability in wound care as we have in the other areas, and we are still subscale. At that point in time, we thought that we could grow 15% year-over-year or more, and thereby doubling the business in 5 years, and we cannot do that. We are growing slower than that. Part of it is because the market growth has slowed. The market growth at that point in time, we thought was 3%-5%, and now we think it's between 2% and 4%, and for the time being, more 2%.
The underlying demand is there, but there's been a lot of pressure on prices, especially in France and also in the UK. Nicolai will come back to that. Therefore, we are growing at a slower pace, but the underlying logic still holds that this is a value-creating asset. For it to be even more value creative, it needs to be bigger, and it needs to get out of this subscale position that it does have right now. We are growing more than the market, and we are also quite confident that we can up the growth that we're having right now. Nicolai will speak much more to that later on. On the Urology Care side, we're actually having a very, very good performance.
Double-digit growth year to date, and also a major improvement on the EBIT margin. This part of the company is doing really well. It's a part that we have not invested heavily in because, as you know, we are part of a mass tort litigation in the US, and we spend quite some resources on that, both in terms of time and money. Therefore, we have been quite prudent in the way that we have been investing, but we have gotten a lot out of it, and Stefan will explain much more about that later on. Then let me switch to the unique user-focused market approach, where we have invested in reaching out to consumers, and this is all about access.
We are the most innovative company in the industry, lots of patients do not know what kind of products that they could get and what they're really entitled to get. In many systems, it's not, it's not really in the interest of the dealers to bring innovation forward to patients because they have lower margins on innovative products. They hold back on that. We are quite committed to continue to innovate, and we'd like to get our products out there and work. Therefore, we decided to start building a separate sales channel where we are reaching out directly to consumers, to patients. Today, we have 1.2 million people on our database, and that is after we cleaned it up, after GDPR in May.
They are active names, and that's approximately 60% of the global population of people who use catheters and ostomy products. So that's a very, very good outset. If you have names on your database, you don't have a business, you just have names. To create a business, you also need to be able to access people, you need to be able to speak to payers, and you need to have a real business system under it. As I said before, Christian and also Manu from the U.S., will come back to that.
I'll just mention that as it is today, we are direct, both in terms of the direct-to-consumer digital channel in many ways, but in many countries, but we are also direct with the physical distribution in our main markets. Both in the U.K., where we have Tiara and Marie from the U.K., which is, by the way, the biggest sales stuff we have. We'll talk about that later on. We are also direct in Germany. We came direct in France earlier on this year when we bought LILIAL. We are direct in the U.S. and in China, where we have a very, very strong market leadership position on Ostomy Care, and where most of that business is a direct business.
Then, to something which is completely new, because we did go digital on the way that we are marketing ourselves, some seven years back, actually seven years back now. We are digital with Coloplast Care, and we're also digital with the way that we are launching our new products to patients. Of course, we're digital with distribution and the way that we're handling prescriptions in the UK and so on and so forth, but we are now also going digital on our products. Our products have been analog up until today, but from 2020 and onwards, our products will also be digital. The whole idea about digitalization is to make sure that people get a much better, much more enhanced experience when they're using the product.
The products needs to be able to do what they're doing today, but the products will also, in the future, be able to talk to the patients about what's the status of the product, when is the time to change, how to replenish. It's about giving data to healthcare professionals, about how people are using the products or any problems with the products. There's a ton of opportunities that emerge once you go digital. That's what we are going to present to you today, and we'll have Oliver, who leads R&D, on stage to talk about that in just a moment. That's the 2020 version of what Coloplast is and what this industry is about to become. It will be a digitally enhanced business that we're talking about.
I think I'll leave it there because there's so much more to talk about here, but that Oliver will come and talk about in just a moment. For now, I think that we will open up for questions. Right? Thank you.
Thank you very much. It's Ida from Deutsche Bank. Just a couple of questions, I guess. The first one is, I think at your capital market day, I asked the question of how far you are versus your competition. I think at the time, you said it was 3 years -5 years. Where would you put yourself relative to your competition now? Secondly, in terms of all the innovation and all this digitization that you've talked about, can you comment on your strategy for getting them paid?
Yeah. It's very hard for me to comment on where we are vis-à-vis competition, because the way that we know about competitors' new products is by reading patent and patent literature. You know, for the first year after you file a patent application, it's actually hidden, you can't see it. Very soon, you can see a ton of patents from us, but maybe they have other patents that we just don't know about. So far we have not seen anything to the tune of what we are talking about here. I don't. I basically don't know, but you guys also speak to my competitors much more than I do, so maybe I can interview you in the break.
We have the payments for the products. That is the challenge about this, there's no doubt about that. Because we don't have a lot of experience in opening up new reimbursement categories. It's many years since we opened new reimbursement categories. We just opened one now with the Concave, or with the Concave products. The Concave products we have now, within less than half a year, gotten into 9 markets with a premium of 50%. It's not the same as it will be as easy for the next products. We know that we will have to be able to document clinically to a much stronger degree than what we are doing today in the markets that we are in.
When we bring, or if somebody, anybody brings a product to the market which fits into existing reimbursement categories, the products basically have to fit the technical requirements in that reimbursement category, and then in most markets, you will actually be granted the reimbursement.
There's very little tradition for strong clinical development, strong clinical proofs, for the type of products that we are bringing to the market. We know that we need that in order to be able to claim a higher price, because we need to be able to show what's in it for the patients, but also to show what's in it for society. We have upped our clinical competencies quite considerably. That's already in the numbers that you're seeing today. We are running, and we'll also come back to that.
We're running much more clinical work, much more clinical studies than what we see competitors are doing. That's one part of it. The other part of it is the market access part. You also need to be able to take the clinical documentation that you're having and then translate that, take that, and make that a case for a better reimbursement. The market access competence is both here in Humlebæk, but also locally. This has also been an investment topic for us, because we simply need to be prepared for that, otherwise, we would not be able to obtain a better reimbursement. That's a prerequisite, of course. We are bringing something to the market, which is a major benefit, of course, we'd like to be paid for that.
Two questions. First, with respect to Concave, you said that you expected it could gain or grab 30% of the value market. What time period are we talking about? The second question, the chart you showed with the 7% growth for several years and then 8% for the past five quarters, there has also been some issues in the 7% years with the destocking in U.S., and we have Charter Healthcare and Dow Jones. Sorry, not Dow Jones, the Department of Justice investigation. If we look at underlying growth rates, are this actually showing a true picture, or is it just a coincidence that comes slightly easier now also with the agreed health reform?
Yeah, I think you're right, that if we have no issues, we have higher growth. Well, I can think of one year where we had no issues, that was 2015, then we actually made an up, or adjustment of our guidance. That was just a bad timing. I think that the rule is that when you run a business, you have issues, and your guidance should be able to absorb those issues, because it's almost impossible to run a company in that many countries and in four different business areas, and then envision that you have no issues. You'll always have something. That's what you see, that we also have something now, but we have 8% growth for the last quarters.
We had for many, many quarters, if you take the last 10 years, most quarters have been around 7%. We are running at a better rate. I don't know how long time it takes to get to 30%. What I do know is to 30% or more of the market value on Concave. What I do know is that if you go back to the time before Coloplast was in a position where we also had a direct channel, when we were launching a new product, we would launch it to the hospitals. An ostomy patient lives on average for 10 years, so you see 10% of a population in a year.
A catheter patient lives on average for 30 years, so you see a much lower part or a much smaller fraction of the potential customers in one year. You have all of the rest of the people, they're living in community. They take care of themselves. They are most of them not in contact with the hospital system anymore. Who are informing them about the new products? That will have to be other people who also have the same situation, and who discover that there are new products in the market, or it will have to be the dealers. As I explained, it's not always the dealers who would like to push the new products because they do not necessarily make better margins on new products.
In the past, when we were launching a new product, the uptake curve was rather sort of flattish. Today, we have access to 60% plus of the patients. We have consent, we can contact them. That means that when we are launching a new product, whether it, you know, if even when it's something completely new to the market, we can actually push it directly in community. That also means that the uptake curve is much steeper. It also means that we can afford to invest more in new product development, because we simply have better access, and thereby we get a very different financial backing for the new products that we're bringing to the market. As I said, we are not in a situation where we have launched a lot of new reimbursement categories.
Therefore, I don't know, but we have access, and that's a very important part of it. More than 80% of people who have an outward body shape, they have leakage issues. We know that when people have leakage issues, they are more willing to try out new stuff.
Thank you. Good morning, Veronika Dubajova from Goldman Sachs. Good morning, Lars. Thank you for having us here today. I have two questions for you. The first is on M&A. If I look at your business, you've been a lot more focused on acquisitions in the past couple of years than in the past. I wonder if you can comment on what your appetite is from here, and what would strategically make sense. Then my second question's on the wound care business, because if I look at the history of the company over the past 10 years, I think you've made some progress towards improving the performance here, but it's fallen short of the ambitions that you've had...
Mm.
-for wound care for a while. I guess my question is, really strategically, how do you think about keeping this business going forward? I know you'd like to do M&A, but there don't seem to be that many assets, so is it maybe the answer of selling the business instead? Thank you.
Let me start with Wound Care first. The way that we run the company is we focus on value creation. Whatever we do, we do the economic profit numbers on it. It's also a fact that if we go 10 years back, Wound Care was not really value creating. By the way, Urology Care was barely value creating either. Today, we are in a situation where we have no business areas in the group that are not value creating. They are all creating value. Once you're in a situation where you do create value and where business area is also creating incremental value year-over-year, then we are very patient.
Because then we are not, we're not destroying value for any shareholders. Then we also have the opportunity, if we come with great new products, which we have in the pipeline, and also if M&A opportunities emerge, then we can go for it. It's all about the value creation. If we did not have strong value creation in one of the businesses that we're having, it would be much harder to defend why we keep it. Because we are not a seller, and currently, the other guys who also have a wound care business are not sellers either. You know, things can change tomorrow, then we are ready. We think we have the leadership capacity to also go for M&A.
It's not something that we're ruling out, but we have created most of the value in the company by organic, by going the organic journey. We also have a size. I also think that we have a leadership capacity today that makes it much more possible for us to go for acquisitions, whether that's for products or brands, businesses, and so on. There is a limit, of course. With the current business, there's a limit to what we can do on the M&A side when it comes to Ostomy Care and Continence Care, because anything global is out of. You know, we can rule it out because we are dominant. We have a dominant market position. Very large M&A is quite unlikely.
Thank you. I have one question, and that is: If you look at the balance between organic sales growth and margins, arguably, your revised guidance mathematically doesn't result in the maximum profit of shareholders in three years' time. If you, let's say, were to grow at 7%, and you look at the sales in three years' time on a margin of maybe 33% versus growing at 8% on a margin of 31%, the shareholders are worse off. I'm trying to understand why you think this is the right way to go when you don't really accelerate growth by all that much, but you're sacrificing a lot of margins.
If, when I do the math, I'm sitting somewhere between 8% and 9% and above 30, I'm not sure that the shareholders, they are a lot worse off than if we keep 7% growth and 33% or 34% EBIT margin. You're right, if you take it 8.0%, 30% instead of 7.0% and 33%, 34%, then you're right. If you open up a little bit and then say, okay, it's seven, and the EBIT margin that we were promising before, or 8% - 9% and something above 30, then you will arrive at a situation where I think this is definitely defendable also in a value creative perspective. That's one part of it.
There is the other part of it, which is, how many companies are in a position where you have 7% organic growth and a dominant market position, then you can see that you can go to 8%-9% organic growth and still have the best EBIT margin in the business? Where you still have a return on invested capital way up in the 40s. Not many. If, if we do not pursue that, we are also allowing our competitors to grow stronger than they would be able to grow if we are growing more.
If you are not taking a three-year perspective on this but a bit longer perspective, I don't think that the shareholders are sacrificing anything, but I think that we are putting ourselves in a position where we are even more competitive in the longer term. That's, that's my math. I think that we are not sacrificing the economic profit on this, and economic profit equals shareholder value. A company growing 8%-9% will, over time, if we have prudent investments, of course, will over time create more value than one which stick to 7% and not That are not utilizing its growth potential.
Yeah, thank you. Scott Bardo from Berenberg Bank. Lars, you mentioned that there's been a slowing in the end market for the Wound Care division. I just wondered if you could give us some comments. Is this potentially a red flag for a slowing end market across the board for Coloplast? Is there any evidence that, you know, we could start to see, given the relative maturity of some of these categories, slower end market growth? Just a second question, please. I think on the occasion of last year's Capital Markets Day, you mentioned you wanted to step up R&D investment for this next generation of products, but you did highlight there was a degree of uncertainty surrounding whether payers would be willing to step up and reimburse premium reimburse those products.
Has there been any progress on that front that gives you comfort that this is investment well made?
Nikolai will talk much more to the market, of course, but we see the underlying demand, if you look at the volume, is intact and very strong when it comes to wound care. There's no doubt that to keep growth up, we need to be innovative. I've made no secret out of the fact that we have not been investing a lot in innovation for many years in wound care because it was a turnaround situation. We wanted it to become value creative. We did not invest a lot in R&D. Today, we have launched a number of products in wound care, and one of the latest ones was pressure injury prevention in the U.S.
We're also investing to get a footprint in the U.S. that will be a major market force and a driver of growth. Of course, you have to be innovative to get growth, and we have not been really innovative in wound care, and that's what we're investing in now. You need innovation, otherwise you can't grow. We know that very much from Ostomy Care and Continence Care also. Then the funding. As I mentioned before, it's not a guarantee. It's a guarantee if you go for existing reimbursement categories, it's a guarantee that you can also get your products in if you fit the technical specifications. Here, we have to create new reimbursement categories.
We are trying it out right now as we speak, because we have gotten the Concave into nine different countries within a very short timeframe. Of course, we have to work for it. We're going for higher pay, and nobody are sitting there thinking about what are they going to spend their healthcare money on. We just need to be able to also document why is it that you should spend more in our products. Not all payers are as rational as you guys are. I thought that everything was about cost and use, but it's almost divided.
You need to be able to show better outcomes, better quality of life, or you need to be able to show better cost and use, and in some markets, you need to be able to show both. It's not completely linear. Thank God. Thank you.
Good morning, everyone. My name is Oliver Johansen, and I've been with Coloplast for 16 years, and I've been heading up Global R&D for six years. I've been looking forward to be here today and being able to share with you the latest update on our new innovation ambition. The key messages from my side is that we want to raise the standard of care through clinically superior products. We're investing more in R&D, we're investing in new technologies, we're investing in digital health care, and we're investing in market access capabilities and clinical trials. The third message I have is that we believe we have a strong pipeline, which is well-balanced, driving both short, medium, and long-term growth.
As Lars mentioned, innovation has been a core of this company. Recently we have launched a number of new products within Chronic Care. We have launched the Mio Convex, which is our most successful launch ever within Ostomy Care. We have just launched a Mio Concave, which I will address in more details in a little bit. Within our catheter business, we have launched SpeediCath Flex, which when we look at the sales uptake 18 months after launch, it's the most successful launch we've ever had. It far exceeds prior launches within the catheter space. We have high hope for this product also in the future.
We did have a bump on the road in the US, where PDAC made the product reclassified into a lower reimbursement code, we showed our ability to respond, and six months later, we launched the SpeediCath Flex Coudé Pro, which is basically a modified version with a fixed curve tip. It was launched in May, it's now approved for the higher reimbursement level with a attractive price point of $6.6. It's still early days for the launch, it's off to a really good start, we remain very positive also in the US for this product. In addition to this, we have launched a new assortment of hospital products, which are key for people that have just been operated, as an example.
It's not a big volume driver for us, but the portfolio is very important to drive new patient discharge and also to win tenders. Last but not least, we have launched two Brava products , Brava Protective Seal and Brava XL, and both of these have been positively received by users, and overall, the Brava category is really driving strong growth and contributing to the overall OC growth. As Lars mentioned, we have been driving, you could say a shaping the market to think of different solutions for different peristomal body types. As you can see in the chart here, we have MioFlat products for people with a regular peristomal area.
We have Mio Convex for people with a inward peristomal area. Now we have completed the portfolio with the launch of Mio Concave, which is the first product ever that is specifically designed for people with an outward peristomal. That can be due to a hernia or caused by obesity. As Lars mentioned, a lot of these people are struggling with leakage. One of the first things that we needed to address was the pure fact that most of people with an outward peristomal area today, they use a flat appliance. Imagine you take a flat baseplate and try to apply it over a hernia. You cannot do that without getting creases and folds in the adhesive, which increases the risk of leakage. We have developed this curved star-shaped baseplate, which ensures a snug fit over the outward area.
In our research, it became very clear how dynamic this area is. A person with a hernia, it's quite amazing actually, how much that area changes during the day, depending on whether the user is laying down, sitting up, running, being active, and we need to cope with those dynamics. The two key features for this is a stability ring around the stoma that can actually absorb some of the forces and protect the stoma. The second feature is the elastic adhesive, which basically ensures that the baseplate has the flexibility to follow these movements. For Mio Concave, we conducted two multicenter randomized clinical trials. We did one study for two-piece users and a second study for two-piece users. Each study had approximately 50 patients in four different countries.
The primary endpoint was body fit to support our overall shaping of the market to think of different solutions for different body profiles. The secondary endpoints were quality of life, user preference, wear time, and leakage. Both of the studies showed that Mio Concave was far superior to flat products. It was far superior on body fit, on quality of life, and user preference. Across the two studies, 75% of all users actually preferred their own products towards Mio Concave towards their own products. The comparator was their own products, and that could be competitor products or a Coloplast product. If we kind of put this into perspective, a 75% preference compared to Mio Convex, where we had about 65% preference.
We believe that with Mio Concave, that we can actually convert people or users using flat appliances to convex or concave appliances. The average selling prices, as Lars mentioned, are quite attractive for this category. It's a 50% premium compared to flat prices, and we believe the market potential is 30%. In a couple of hours from now, I look forward to have Rachel on stage. She will share with us her own experience with using this new concave product, which I'm looking very much forward to. On Mio Convex, we did a clinical trial involving 127 patients in six different countries. The primary endpoint was leakage, and the secondary endpoints were quality of life, use of preference, wear time, and body fit.
As you can see from the numbers up here, we're able to show significant reduction in leakage. It was actually the first time ever that any company could document this in a randomized clinical trial, and as you can see on the right-hand side, it's really been driving the overall sales momentum of our ostomy business. What we haven't talked so much about is up here in the left-hand corner, and what you see up here is the number of clinical studies done in our industry in the last 10 years, that we have done and our competitors. As you can probably see from the figures, is that we have done two-thirds of all studies in the last 10 years. We see this as one data point out of many of the innovation leadership that we have.
We've come far with these new products, but there are still some fundamental challenges that we haven't solved, and Lars mentioned one of them, the constant concern of urinary tract infections. It's a huge thing for people with a spinal cord injury and spending a lot of their time in a wheelchair. We want to address this. They have a life expectancy of 35 years, and with 2.7 UTIs a year, that means over 100 UTIs during their lifetime. It's a huge burden for these people. We want to continue our efforts in reducing leakage, but also solve the core issue for a lot of these users with skin problems, which I'll address in a little bit. To achieve this new ambition, we have five themes that are driving us forward in the coming years.
The first two themes you've heard about, previously, with regards to our updates on innovation excellence. It's all about ramping down our activities here in Denmark, and we're in the transition of establishing one dedicated R&D site in Myrtle, which is accountable for all the process development, which is hugely important when you talk single-use devices, high millions of annual volumes. What I would like to focus on today are the new areas that we're investing in, which are new device technologies, digital healthcare, and our investments in market access and value documentation. We have, over the last four years, increased our R&D spend from 3% to 4%.
A good part of that increase has been driven by external partnerships. This is a major change in our innovation strategy, because historically, we have done all innovations internally. Going forward, that will basically limit our capability to raise the bar for innovation. What we have invested in is teaming up with companies that are experts in sensor technology, in software, electronics, fluidics, et cetera, to support our efforts across our product categories. In addition to this, we have strengthened a number of internal capabilities, for example, the preclinical area, which I will address in a little bit. We have invested more in medical and clinical affairs to support our ramp-up of clinical trials.
We've onboarded a number of new material scientists to strengthen our efforts within new adhesives and coating systems , and overall, we've increased R&D staffing by 20% in the last two years. Now, as an example of a new device technology that we've been working on, within the Continence Care care area, is the BBT technology, as Lars also mentioned. 42% of all users that daily need to catheterize themselves 4x-6 x during the day, they actually see, they actually have a fear of inserting bacteria into the urethra, into the bladder on a daily basis. To address this, we've developed the BBT technology, and what you see up here on the graph is basically a modified ISO standard test method for measuring antibacterial performance on plastic materials. Basically, what we do is we contaminate catheters with E. coli.
coli bacteria. The reason why it's E. coli bacteria is because that accounts for 60%-70% of all UTIs. After five minutes, we count the number of viable bacteria. What you see up here, a high number is bad, a low number is good. What you see up here is the results from some of our competitors. They have a fairly high number of viable bacteria after five minutes. The third bar is SpeediCath, which has been the golden standard for many years in our industry. To the very right, you see the results of our BBT technology. It's a substantial improvement in reducing the risk of inserting a bacteria into the body. We believe this is an important response to the patent expiry that we have on SpeediCath.
Over the summer holiday, we had the results verified by an external lab called the Danish Technological Institute, which we, of course, are very happy with. That's a good quality stamp of the performance that we have. We will initially launch this technology into our standard straight category, because that's where our patent risk is has the highest exposure, and we are building up capacity for the launch in 1920. The BBT technology is also relevant for our premium and compact catheters, so that's also a part of our pipeline. We see this as a first important step towards reducing urinary tract infections. We have several additional initiatives in our pipeline, and more will follow later. Going back to Ostomy Care, we've talked about a leakage.
We have not talked so much about the skin problems that a lot of ostomates are experiencing. Our studies actually shows that 30% of this population is actually having mild to severe skin damage on a weekly basis. You see some examples up here. Just imagine that a person with skin looking like this needs to change their adhesive baseplate on a daily or every other day. They need to clean the peristomal area. It's painful. It's really a burden for these people. We want to address this. Some of these cases, they require medical treatment, like the use of antibiotics and steroids. That's why we believe that there's something to go for here. The key to improve this outcome for us is twofold.
We believe that new adhesives can make a delta, but we also see a digital solution as a key enabler for ensuring better outcomes. As an example of our efforts, normally, a lot of people, they use pain or itching as an analog notification for when to change their product. That's a very late and poor notification because itching or pain usually means damaged skin. This is just one simple example of how we believe that digital solutions can enable a much more personalized monitoring and a much better early heads-up for each individual. It can basically give them a much better insight to how their product is performing.
What we have tested this year is we've done a pilot study covering 20 patients, where we have tested a sensor technology which has been integrated with the adhesives, which could actually indicate leakage and adhesive deterioration. The data from the sensors were sent to a smartphone via a transmitter, and data was sent on from the smartphone to a cloud solution, so we could actually follow each patient in the clinical study minute by minute. The way we went about this was basically to test the technical feasibility. That's why it's a pilot study. The way we actually validated the sensors was that each patient took pictures during the study when they changed the bag. They took pictures of the peristomal area and the baseplate, and we compared those images with what the sensor signals gave us.
We were very happy about the results, because in 95% of the cases, we could reliably predict leakage and adhesive deterioration. That's very encouraging for us. In the same project, we have actually done quite a number of smaller pilot studies. We've actually collected quite a number of images, and we've actually successfully used artificial intelligence and neural networks to automate the image analysis. We're now, when we're running clinical studies, able to upload images and automatically analyze the pictures and determine the skin health and the leakage underneath the bag. Right now, those efforts are targeted at our clinical performance program, but down the road, we also see several commercial opportunities using artificial intelligence. This is just one example of how, as Lars mentioned, digitalization of our products is absolutely key.
Our efforts goes across product categories within Ostomy Care, within our catheter business, and bowel management. As Lars mentioned, we plan to do the first launch in 2020. Our aspiration is also, as Lars mentioned, we see an opportunity to connect and digitalize both our services and products, which we fundamentally believe can set a new standard for the industry. Again, just imagine all the I think you get a feel for all the benefits that a person could have with digital solutions, having better insight to what's going on with their product and their condition. If a person is struggling, just imagine that they call their nurse, or they call Coloplast Care, where we would actually have access to data generated by the product.
We would have access to usage patterns, leakage pattern, maybe pictures of the peristomal area, and in that way, we could support the patient in a completely new way and also enable better outcomes. Having real-life data could also improve our ability to have a dialogue with payers about the value of our great products and services. We see this as a strategically important initiative for us. It's a very exciting journey that we're embarking on, but I also think it's fair to say that it's still early days. A second means to address the skin problems that many users are facing is working with new adhesives. As I mentioned, clinical trials is not new to Coloplast. We have been running two-thirds of all the trials in our industry for the last 10 years.
What's new to us is that we've invested quite a bit in our preclinical capabilities in recent years. That means that today we are have the capability to do high-throughput screening of new materials in the lab. We have invested in a number of battery of test methods in the lab that resemble real-life usage. In that way, we can generally much faster screen new materials. In general, we have intensified our in vitro and in vivo experiments, all with the purpose of making sure that the actual product materials perform better prior to entering clinical trials. After that, we run pilot studies, which in Coloplast is normally six patients to 40 patients over a few weeks. What we do there is basically get a preliminary indication of efficacy and safety.
We've actually tested some new adhesive materials that shows very promising results in actually making quite a big improvement in skin health, addressing some of the problems that I talked about earlier. Pivotal trials have three purposes. We use them for regulatory submissions, we use them to document commercial claims, and we use them as part of the value documentation towards reimbursement. The trial size is actually driven by the statistical power, but usually it's around 100 patients -200 patients. The duration of a clinical trial is typically four weeks to 10 weeks within Ostomy Care, slightly longer within Continence Care, and the cost per patient is around EUR 5,000-EUR 6,000, and which is why we believe that we can achieve the clinical performance ambition with the current R&D spend.
As was addressed already in this morning's session, one of the big challenges is, of course, getting a premium, and we've done quite a bit investigations into this and talked to several payers in some of our core markets. I would say the overall conclusion is they acknowledge the clinical challenges that we have regarding urinary tract infections and skin problems, and there is a willingness to pay a premium if you, as a company, can deliver strong, convincing clinical evidence. Within Ostomy Care, as an example, you would be needing to deliver evidence on at least three drivers. That would be improved skin health, better quality of life, and clear user preference. To sum up my presentation, we want to raise the standard through clinically superior products. We're investing more in R&D.
We're investing in new technologies and in digital healthcare. We believe that we have a well-balanced pipeline that can deliver both short, medium, and long term. We are committed to do line extensions, as you can see to the left here on of the chart. That means shorter lead times, higher launch cadence, lower risk projects. Pricing strategy is usually a parity or parity plus, at the same time, we are pursuing the next level innovation with a premium reimbursement ambition. Time to market will be longer due to the technology development efforts required and also the clinical efforts required. It will be more of a staggered commercial launch because price beats time to market. We won't be launching at the same time across all European markets. It will be more of a staggered launch, depending on each of the local price negotiations.
As Lars mentioned, the market access capabilities are absolutely key, and we're investing in this to make sure that we have the right local capabilities to have the dialogue with payers and to ensure that we can deliver the necessary value documentation. Overall, we believe we have a very well-balanced pipeline that can both deliver short and long term. Thank you for listening. Now it's time for some questions.
Thank you, Ed, with Redburn. Firstly, in terms of just BBT, if I could press you on the rollout timeline for that technology, clearly differentiating, could you give a little bit more color on that, firstly? Secondly, given the results you're having, and obviously you've had some technology validated by various authorities, but why don't you just do head-to-head RCTs, publish it in the journals? Is that the way you're thinking? I mean, given where you're standing relative to where the competition are, why don't you just put it in the do head-to-heads and put it in the journals?
Well, BBT has, from the beginning, been an important response to our patent risk on SpeediCath, and we prioritize time to market, basically. We want to launch the BBT to continue the growth momentum that we see on our SpeediCath range so far. That has been the rationale. Time to meet market beats, you could say, larger clinical trials.
Yeah. Sorry, just to follow up on that. That's on the BBT, but in terms of head-to-head, I mean, are you considering any head-to-head trials?
We will, of course, consider opportunities in each local market from a reimbursement perspective, but at the moment, we don't have any larger clinical trials planned for BBT.
Thank you. Carsten, SB. When it comes to these new digitally enhanced products, will they be created by implementing sensors into the existing SenSura Mio franchise, for example? When it comes to production, do you need to build new machines, develop a whole new production lines in order to capitalize on these opportunities?
Well, it's too early to comment on the specific product design, but it you could say across our categories, it requires both new development, but also new manufacturing partners. We are not gonna do a PPCA board assembly, et cetera. There are people from the EMS world that are much better than us in doing that. You will, from a production viewpoint, see a mix of new partners also on the manufacturing side, and you will also see new work from our side to embed those different components into our production.
Then when we talk about this potential 2020 launch for the first new product, should we see this as a very small batch that you'll start up with a limited supply initially, or will it be? How should we view this? Based on your comments here, it sounds like it is early days.
It's, yeah, it is, already is, absolutely. We are committed to launching the first products in 2020, you know, this part of the pipeline is actually something that will drive growth beyond 2020.
Hi, it's Chris Cooper, Credit Suisse. I'm here. Hi. I have a question on, you know, the budgeting process. Now, could you explain to us how you allocate your R&D resources to the different franchises? For example, I haven't heard anything about the wound care or urology care, so but I guess, you know, you have some innovation going on there as well. Just in general terms now, if you get to know all these projects coming in, you know, how do you allocate, you know, kind of, you know, the personnel, you know, and, you know, generally?
Yeah.
external resources to those projects?
Right. I'll let my colleague, Stefan and Nikolai, answer on the urology and wound care side, but for the Chronic Care, we basically look at a number of parameters, including our pipeline value. We very much measure our ability to drive incremental growth from new products. We want a good part of the over the above market growth to come from new products, and we continuously review what is actually the strength of our pipeline to deliver this. That's how we are actually managing and allocating resources to the different product categories.
I have a question on your new Convex and Concave products. You mentioned that they have been awarded a reimbursement premium of about 50%, but could you also talk about the consumption of these bags per patient? I understand that they generate a somewhat lower consumption per patient. What's the net impact of those two parameters? Given the experience you have with the products so far, what is actually the consumption per patient compared to your previous generations? Thank you.
You're absolutely right, that, I mean, we're very happy about the 50% premium. And we've also seen that since the products are working so much better, that consumption is lower. I would say it's still early days, so I don't have an exact number for you at this point in time, but it's not a 1-to-1 between the premium and the revenue growth that we are generating. There is a part moving the other way, which is lower consumption, but we don't have an exact figure on that at the moment.
What's the net impact of those two?
Yeah, that number I don't have.
A question here, Annette Lykke, Handelsbanken. Just in terms of the studies you make on your concave ostomy bag, to me, it appears you didn't show any significant difference on leakage. Can you comment on that, at that study, design, numbers, protocol? Then I'm a little bit, it's unclear to me, whether the new innovation is a new sort of moisture-absorbing adhesive that you are doing clinical trials on, or is it the combination of that and this, new sensor you will, implant into that you expect will be able to, sort of define a new category in terms of reimbursement?
Well, to address the first question, as I mentioned, we did two studies on Mio Concave, one for one piece and one for two piece. The two-piece study showed a 20% reduction in leakage, actually outperforming our Mio Convex. The second study, which was the one piece, showed a on par performance, so it's kind of a mixed picture. It's also important to say that the sizing of the studies were determined by body fit, as a primary endpoint. Had the primary endpoint been leakage, we would have sized up the study in a different way. For me, I feel pretty comfortable that we also see significant leakage reduction with our Mio Concave.
That's also the feedback that we get from our users, and you will hear one of the testaments from Rachel later on today. Regarding the new adhesives, I would say it's too early which what type of technology that we are, you could say, betting on. We are working on several fronts, I would say. You are mentioning one of them, but we are also working on several other initiatives that we see some potential, but it's too early to comment specifically which technology at this stage.
Hi, it's Ian Douglas-Pennant at UBS. I'm at the back. Hi.
Yeah.
The first one on the ostomy digital products. Can you actually do this without extra reimbursement? Presumably, the cost of manufacture is a little higher. Are you completely reliant on that? The second on the BBT products. In my head, I'm drawing parallels to the wound market of five years ago with a attempted evergreen, the Aquacel patent. Could you just, in layman's terms, what is exactly the innovation here? Is it a higher concentration of an existing compound that you're using on the coat? Is it completely new compounds? Maybe is that patentable, or how should we think about the lifetime of this product?
Right. Regarding BBT, I mean, we generally make an extra effort for protecting our investments into innovation, and we believe we also have a decent protection on BBT. It's too early at this point to comment the specific, you could say, mode of actions for this technology. What was your first question? Could you repeat that, please. Yes, I think that point is whether we talk about digital or new adhesives, I think it goes without saying that these technologies will make the products more expensive, so that requires to get a premium reimbursement. Otherwise, it doesn't make financially sense. I see it as a prerequisite.
Thank you. Scott Bardo from Berenberg Bank. Just a question on BBT again, please. Can you help us understand a little bit the action of the technology? Does the coating immediately kill bacteria, or are we talking about a prolonged period where bacterial growth is inhibited? The reason I ask, of course, is that the majority of to my understanding, the majority of urinary tract infections are contamination at the point of administration bacteria.
Mm.
Unless it immediately kills that bacteria, it appears to me to have less clinical utility. Just to show on the data here, you show that there are less viable bacteria. Over what time, and how difficult is it to demonstrate lower urinary tract infections because patients have latent immunity? Thank you.
Right. Well, the BBT technology, as such, is a coating technology, which basically reduces the risk of inserting bacteria. I'm not gonna comment the actual mode of action at this point, but I think the sweet spot of this technology is that it doesn't include any active ingredients that could cause a bacterial resistance or anything like that. We're in a different place with this technology, but has a very impactful performance as these figures show. That's also why we find it relevant, not just for the straight category, but also for our premium and compact range.
Last question.
Perfect. Thank you. It's Patrick Wood from Bank of America Merrill Lynch. I only have 1, which is, I get the value of driving to higher reimbursement categories, whether through digitalization or whatever. The only difficulty, how do you get around in some of the markets where there's a proportional copay from the patient, like the U.S., where you've got a 20% copay? For a lot of these patients, I'm guessing they're on a comparatively lower disposable income. I understand some of that copay nowadays is eaten by the distributor, but as you move up that higher price chain, that copay becomes a larger and larger proportion for these patients. How are you gonna convince them to pay that money?
I think the specifics on the U.S., I'll probably leave that up to my colleague, Manu. I would say generally a very large part of the Chronic Care revenue is fully reimbursed for the patient. We also believe that that's the majority of the reimbursement scheme looking ahead.
My name is Steffen Hovard. I'm the Senior Vice President of Urology Care. Been with Coloplast for the past 19 years. I've been working with urology since the point of acquisition, actually before the acquisition even. I'm based in Minneapolis and run the team from there. Last time we gave an update for Urology Care was at the Capital Markets Day in 2016. I can say that, looking over the past years, the business has come far. It's come far from a revenue standpoint, from an organizational standpoint, and I would say sort of overall maturity. The update we're giving today is quite timely. We have delivered on the strategy we set out, I think, originally in 2014.
We have delivered on the initiatives we defined, and we have achieved the target we'd set out. We have the DKK 2 billion revenue sort of within reach, so we'll see that materializing in the nearer future. We believe that by continuing to execute strongly and being thoughtful about the investments in the business, we believe that we can continue to scale it, and we will be able to continue to create value for the group doing that. Here's a little service message and also an indication of the strategic intent of the business. We're renaming it from Urology Care to Interventional Urology, as you see here, and I'll get a little bit more into that through the presentation.
If we take sort of a view on the fundamentals of the business, we come out of a Q3, where we showed a year to date around 11% growth, and it adds another few quarters to a top-line growth in the just around the 10%. We've been at that range for about four years. It's a fairly consistent performance, and what I like about it is that it's broadly based. We have a very nice above-market growth in all of our four business areas: endourology for stone management. Men's Health, which is primarily inflatable penile implants. Women's Health, which is measures and slings for pelvic organ prolapse and stress urinary incontinence. Specialty interventions, a number of products for lower urology.
Another service message here, we have renamed two of the business areas within Interventional Urology. Female Pelvic Health has been renamed to Women's Health, and General Urology has been renamed to Specialty Interventions. From a definition standpoint, the products included are still the same. From a geographical perspective, it's still a revenue split of roughly 50/50 between US and outside US. We have achieved a strong profit rate compared to external benchmark. Organizationally, as I mentioned, the organization has come far. We have a both a strong and very experienced management team on board. We see the effects of the business, for sure, a significant part of the performance comes from bringing that management team on board. Overall, it's a business with approximately 900 FTEs.
We'll share a bit more of how we have achieved the performance through the presentation. What I think is important is, if I look across the initiatives we have had, they have all built foundation for the business. We believe that there is an opportunity for continuing with a high performance. The Interventional Urology is a definition we have felt we needed to set up to become even clearer on where we want to focus. Our focus is still hospital. Our call points are still primarily urologist and urogynecologist, but being able to specify it also from a patient pathway perspective, makes it easier for us to focus our efforts, both commercially and also in innovation.
The way we define the interventional space is where the medical condition is substantially changed by implants, interventional diagnostics, and procedures. We believe that that is the place in the patient pathway where the organizational capabilities come to full effect. We have an organization that is very deep clinically, and being able to focus in that space gives us even a stronger go-to-market opportunity. At the same time, we also believe that the name change give us an opportunity to specify what we intend to do strategically. We look at the circumstances or the market characteristics, generally, they are favorable, but there, of course, there are a few watch outs, as is true for all industries.
Patient demographics still favorable, aging population, and also lifestyle that escalates prevalence in our procedure areas. The push in decision power that we have seen happening or materializing at the hospital level to non-clinical stakeholders has increased the need for contracting capabilities that we have built up. It has increased the need for health economics that we're also building up, similar to what you have heard from Chronic Care. The other thing is that the need for truly differentiated product is, or solutions, becomes even clearer. We see that as clear opportunities that matches well with the organizational capabilities. From a regulatory standpoint, the EU MDR or the Medical Device Regulation, we believe will have a significant impact in our industry.
We believe that it will most likely lead to some degree of consolidation. Exactly who, when, how much is yet to be seen, but that's what we expect to see. Not for us. We have a good setup, and we are ready to take on the challenges. Also, we have seen quite a lot of consolidation in the space already, and we've seen sort of corporate moves in our space. I would say if I go back quite a few years, through the updates I've given on capital markets days in the past, what we had expected for consolidation in our industry, it has happened pretty much as we expected. No surprises.
Our growth, then, one other competitor seems to be taking the forefront of the industry. We've seen quite a few of the competitors we saw in the past either pulling back or completely pulling out. That goes across all the business areas. As mentioned, we believe we are well-positioned to materialize or capitalize on the opportunities in the market. The market numbers, it's still a roughly DKK 12 billion market globally that we estimate is growing somewhere between 3% and 5%. In the past, when I've given these updates, I've said it's fragmented data. It's hard. It's sort of a best man's estimate.
I think we're becoming more firm on our market estimates, and I would say fortunately, as we have been able to access more data, we have seen that our estimates actually held true. No surprises on the sort of the overall market dynamics. I should mention that when we say DKK 12 billion, it is the combination of the product areas we're in and the geographies we play in. It's sort of a triangling of the size of the market. If we look across the four business areas, endourology, characteristic from a competitive standpoint, the need for a full portfolio still holds true. We have a strong position. We have a very broad portfolio. We have a deep portfolio.
We see both the continued penetration of flexible scopes and also visualization being a major opportunity. Innovation, obviously, where both time and cost effectiveness in procedure is essential. Growth rate for endourology around 5%. Men's Health, primarily IPPs, as mentioned, we still estimate a market growth of approximately 4% at a global level. We have seen quite positive effect of the patient awareness programs we've been running in the U.S., which is part of a significant of our drivers for growth especially this year. We believe that there is much more opportunity in the market. If we look at the penetration for the procedure, it is still way below what we know is the essential market need.
We believe that that will hold true not only in the U.S., but also in Europe. Also, in men's health, we see that there are opportunities for what we could call nearer adjacencies, and looking maybe a little bit broader at the definition of men's health. If we look at Women's Health, the former Female Pelvic Health, we still see a growth that is in the low-end single-digit. The market is not likely to recover where it was from a value standpoint six or seven years ago. The fundamental needs of the patients are still there, and we see that as an opportunity for innovation going forward. In this space, as you're probably all aware, regulatory requirements have gone up. We've seen up classification, and we've seen a significant demand for clinical documentation.
The legal situation is normalized, and I would say is now a non-issue also in the U.S. The Multidistrict litigation is in its last administrative phases, and we believe that the provision is sufficient. The renaming of this area to Women's Health gives us a bit more strategic flexibility to take a look at the call point and see what the future market offering should be. In specialty interventions, it's a very broad portfolio. We are talking thousands of SKUs, the broad portfolio is still the name of the game. We see a growth in the low-end single digit, a lot of it driven from the emerging markets. This is a particular area where we see, expect to see effects of the EU MDR.
As mentioned, we're very happy with the performance. The business is doing really well, we've been outgrowing the market, as I mentioned, by a factor of two to 2.5 over the past years. It's been a consistent performance, and it has been consistent across both the business areas and also the geographical setup. Profitability or profit rate is strong compared to external benchmark, we will be hitting, as mentioned, the DKK 2 billion mark in the foreseeable future. It was an ambition we set out some years ago when that was a true ambition, I would say running the business on a daily basis, it feels great being out of that subscale disadvantage we had at that time.
As mentioned, we have been able to mature the business, both organizationally and also structurally, where we in the past, some years ago, had two different SBUs. Now we have one global business, we have aligned planning, and we have aligned execution, and we do that at a global level. The geographical footprint is stronger. We have broadened the availability of our products, so all of the implantable products have been brought to Europe, and we are still in process of bringing our endourology products to the U.S. We have also strengthened our commercial footprint. We have developed our commercial organizations, virtually in all markets, and we have opened more market registrations in more markets. We have aligned the organization to the question of R&D earlier in urology.
We have aligned the entire organization around the value chain, which is, I think, a significant part of the performance uptake we've had. We've been able to set up an organization around, specifically around the value chain, making sure that we have a tight-knit organization and makes us very focused on one specific customer. It's also allowed us to streamline our setup when it comes to operations, and also makes it easier from an innovation standpoint. We have seen effects of our innovation products in the growth we've had, and these are products we have launched in the past, but I think they are still good indicators on what we will be doing in the future. We will be accelerating our innovation efforts in Urology Care.
I think some of the products we've had, it also shows that there is a lot of mileage in our space. ReTrace, which you launched some years ago, a very innovative access sheath that eliminates the need for a safety guide wire during precision procedure, and it basically takes cost out of the procedure. The Titan inflatable penile implants, where we've had a very good response, with a product that has been launched. It's been on the market for quite some years. If I look at the growth we have in North America, it shows that there is still a ton of potential.
The Altis single incision sling is becoming the market standard for single incision slings, and then with Aris that we launched a few years ago, that we see a significant acceleration from a performance standpoint. If we look at the guiding principles for our innovation efforts going forward, we will be leveraging very clearly the clinical capability of our go-to-market organization. We have set up dedicated sales organizations for the specific areas that allows us to go very deep from a clinical standpoint, partnering up with the physicians. We will be focusing on procedures or products and solutions that simplifies procedures and improves outcomes. We will be looking at both elevating our existing portfolio that is broad, and we will also be looking at opportunities for nearer adjacencies....
The agenda for the business over the next plan period will be a focus on doubling down and doing more of what works well. We're not fundamentally shifting our strategy. It's working. We have set up a new ambition, and we have defined an agenda that sets priorities for the organization on a daily basis. We will be continuing to develop the portfolio, as I mentioned, both with portfolio management and also near adjacencies. We will be pragmatic whether we do organic or partnerships or inorganic opportunities in the space. We believe there is a lot more mileage in our commercial organization.
We've seen a very good return on the investments we've done from a commercial standpoint. We believe that the structure we have set up allows us to go deeper and get an even stronger return. We will be focusing more on our operations set up, and operations not just in terms of manufacturing, but also other operations processes in the business. That's one of the benefits of scale and one of the benefits of the structure we have. We believe that that will free up investment capacity, especially for innovation. Of course, we're still a maturing organization, so we will be investing resources also in both infrastructure and bringing on the right capability and capacity. We have, very high level, three different regions.
We pursue similar strategies, similar priorities, but obviously they are on different levels of maturity. In the North American area, we will be focusing and continue to focus on patient awareness investments especially in Men's Health, but also across the business areas, and then developing a long-term competitive position for our endourology products. In Europe, we will be expanding our commercial downstream activities. We have restructured the organization to be ready to do that with dedicated sales teams, as I mentioned, that allows us to focus on the clinical acumen of the organization. In rest of world, emerging markets, continued market registrations and a focus on high growth markets, and we will be setting up a number of place in the Far Eastern markets as well.
Globally, we are roughly a number four, and if you look across the four different business areas, in Men's Health, we are probably a number two, Women's Health, probably a number three, Endourology, probably a number two, and in specialist interventions, a number five or six. We have a strong position, and we're quite comfortable with the position we have.
The commercial priorities that I just mentioned, matched with accelerated innovation, we believe gives us a good opportunity for continuing growth in the high-end single-digit for the next plan period. Because we have established a dedicated organization with the necessary clinical depth, we also believe that we are able to address near adjacencies that eventually will allow us to address a larger total market.
The box you see here on the top right is illustrative. It is to show that the organization is capable of addressing a larger potential market. As you look out the years to come, we believe that the outlook for Interventional Urology is favorable, and the fundamentals are positive in the market. We have a good momentum with the organization. We believe that many of the improvements we've done have set us up for a sustainable performance. We believe we can continue to scale the business and doing that by a high-end single-digit revenue growth. In order to have something to shoot for, we have defined a DKK 4 billion mark.
It's not because it's a doubling of the business, but we believe that that is where we need to get to have the next truly transformational stage for the business overall. When do we hit the DKK 4 billion? Well, to be seen. There is an indication, obviously, with the high-end single-digit revenue growth. Then, of course, if we were to do something inorganic, that would be upside to the revenue projection I just mentioned. We believe we can do it while continuing with a strong profit rate, and in that way, continue to create value for the group overall. Thank you for your attention, and ready to take questions if you have any.
Hi. Thank you. It's Oliver from Commerzbank. My both questions are from a regional perspective.
Mm-hmm.
You still have a strong footprint towards U.S. with roughly 50% of revenues. While the U.S., on one hand, is quite attractive market for these devices, basically, it also bears some risk. Potentially, you can just comment on your strategy, how to more internationalize this business and where you see also the mix potentially in a five years period. My second question is also regarding.
Sorry.
This regional mix. Is it easier for you just to bring, for example, the endourology business to the U.S. instead for bringing more Women's Health to Europe? What are the lower-hanging fruits, and where are the requirements much higher?
Yeah. Thank you very much for both questions. If I go back in time, I was talking about the 50/50 split, we said we would actually like to shift that over time. The challenge has been that we've been growing very well in both regions. Where we are today from a, from a risk standpoint, if I look at it regionally, the split is the same, but the volume we have in both overall regions is significantly higher. It's actually double of where it was. I'm not overly concerned for the regional split. We are, as I mentioned, growing in all countries, in all geographies, so we're not dependent on one specific geography. We've been able to push investments in the commercial organizations in all.
I'm not particularly concerned for the regional split. I believe we have a setup that will allow us to continue to grow in both. In terms of low-hanging fruit, we have taken all of the implantable products, we have launched them in Europe, and we still have some opportunities in emerging markets. We are still in the process of registering all of our endourology products in the U.S. That is a long-term investment, and we are setting off for the long term with that. I think those are the low-hanging fruits. If you go down at a more granular level in the portfolio, we still have more opportunity to sell the entire portfolio to all customers in all country.
There is a, there is opportunity there. You could say, if I take the projection, you have a market growth, we believe that we can strengthen our commercial execution, and then you can put innovation on top of that. It's a fairly, well-based, revenue projection.
Ida Wang from Deutsche Bank. Two questions.
There we are.
One is, I'm curious why you've set your growth target to the higher end of single digit, when you've successfully achieved double digit, and it seems that the opportunity's quite a bit bigger, if you can go into adjacencies, and the organization seems to be much stronger than we have seen over the last few years. The second question is, I suppose resources. I'm sure you would like more money, but, yeah, how would you know, convince top management to provide more funding so that you could, you know, get to that $4 billion faster...
Thank you very much.
That high end single digit growth?
Thank you very much for both questions. I hope Anders and Lars are listening. If I look at the high-end single-digit revenue growth, and I hold it up against where we have been performing over the past years, I have to assume that not everything will work all the time. Of course, I need to be a little bit not careful, but I have to be mindful of where we are. If I look at the high-end single digit, that's what I'm thinking of as a sustainable performance. There will be, hopefully, years and quarters where we will dip into double digit. I believe that the opportunities are there.
It's a question of what do I, what do I dare predict, and what over time? That's primarily from that standpoint. If I look at the investments, I would say one of the big differences in the urology business now compared to worse, where it was some years ago, the impact of scale is that we are actually able to fund quite a lot of the investments in the P&L.
We have been able to show profitable growth. We've been able to improve both our top line and also our EBIT rate year-over-year. I think the best way to attract investments in this organization is to show that we deliver when we get the investments, and I believe we do that. I believe, to your point, that there is significant opportunity in the business going forward.
Hi, Ingeborg Øie from DNB . My question goes to the U.S. endourology business.
Mm-hmm.
As far as I recall, you also talked about registering these products, at the last Capital Markets Day, and maybe even before that. Can you comment on whether this process has taken longer than what you anticipated, and what the obstacles might be? Then as a follow-on, as a related question, is there some potential sales synergies when you eventually get this into the market, with the rest of your business? Thank you.
Thank you for both questions. The process has taken longer than I had anticipated. We simply have to go through a number of tests and additional documentation, even for products that have been on the European market for quite a few years. So we are doing what the FDA is requiring us to do to get the 510(k) clearances, and it has taken longer than we expected.
We remain committed to getting it done. We believe we have a portfolio that is competitive, and we believe that we will have a significant impact to the business over the long haul. To your question on the benefits, we will see opportunities in the contracting area when we have the entire portfolio.
We can see that playing out in quite a few of the European markets, and that is why we're pushing it through. It will also change the dynamics of the endourology and also the special sense intervention space when we get the volumes from the U.S. market, for sure.
Can you comment anything on what you expect the timeline to be from here? Do you have any visibility on that?
As soon as possible. It's a daily focus, and we're pushing, pushing. As soon as we can get it done.
Thank you.
Veronika here from Goldman Sachs. Two questions for me. One is actually on the profitability of the, your business, because you have delivered a pretty impressive improvement over the last three, four years, and I wonder if you think you can go any further from the current high thirties contribution margin that you have in the business? My second question is, looking at the competitive environment.
The past few years, you've had the benefit of one of your competitors in Women's Health exiting. Are you starting to see more focus on these categories now, and how do you think about your ability to grow at twice the market as we see maybe some refocusing, and you don't have the tailwind of a player leaving the market?
Sorry, your first question one more time?
Margins.
Margins, yep.
Where do they go from here?
I think it's always a balance of how much do you deliver down to the bottom line and how much do you reinvest in the business. We still have work to do, we still have a P&L that needs to work. I believe we're able to improve our profitability margins over the next years as well. There is more mileage, exactly how much to be determined. We see a scale effect, obviously, as we continue to grow the business, and when you're in sort of that high-end single digit range, it makes it fairly comfortable for the organization. That's a daily discussion of how do we prioritize.
To the question of the Women's Health area, we don't believe that it will get back to the market volumes it was some years ago. We believe that, as I mentioned, the growth is in the low-end single digit. We have been outgrowing that market for quite a while, to your point, we set ourselves up strategically to benefit as other competitors exited as we had expected. We got the benefit of the investments we made early on. If I look at the growth rates right now, we are growing well above twice the speed of market in that area as well, so we continue to see improvement.
Thank you. That was the last question. Thank you very much, Steffen.
Thank you.
Well, welcome back. Based on the intro comments, I felt like you guys wanna have 20 minutes Q&A and 10 minutes presentation. We're gonna stick to the agenda, so we'll do 20 minutes presentation from my side, and then we'll do 10 minutes Q&A. My presentation is basically divided into two sections. First, I would like to take you through a section where we are talking about where it is we want to compete and how we want to compete, and then, followed up by a section where I'll take you through our performance picture across the key geographies.
You're also gonna have breakout sessions just before lunch. I really encourage you to attend our wound care breakout, where we'll give you guys a chance to dive further into our products, and in particular, give you insights to our Biatain Silicone portfolio. The concept we just have launched that we call 3DFit Technology, which is one of the driving vehicles behind the uptake we are seeing of our Biatain Silicone portfolio right now. Please really ensure that you also get to the breakout sessions, because here you can also dive further into the products and also some of the data and evidence we have behind our products.
The first message that I would like to convey is that the strategy that we laid out at the CMD in Minneapolis in 2016 is the one we are pursuing, and it's the one we are investing in. We are not at all where we would like to be, due to some headwinds that I will come back to, but there's no doubt about that we still believe that the strategic themes that you see up here, that we also spoke to at Meet the Management in London, we still believe are relevant in order to drive growth going forward with our business. One of the reasons why we stay loyal to our strategy is because we still see that the overall wound care market represents a significant value pool.
This is the overall wound care market, consisting of the advanced wound care market, the so-called dressing market, the NPWT market, and then the biologic markets. What we see right now is that both within biologics and within the advanced wound care market, it is still growing categories. However, in the NPWT segment, we see that the category as such is under pressure, in particular, driven by a very large amount of players in that space. Let's double-click on the category that we are really playing in. We try to double-click here. Here we go. Here you see that the space we can address is approximately these 18 billion-20 billion DKK. You also clearly can see here that still a big chunk of that is sitting within Europe.
One of the reasons why we also have taken down the overall growth rate compared to when we went live in Minneapolis is because we've, in particular in Europe, seen some of the key markets being undergoing price reforms. That, of course, has had an influence on the total European market growth. Yet, we still see an overall category that is growing.
Some of the key drivers behind the growth, I think you are acquainted with, but there's two that I would like to highlight. One driver of growth that we believe will continue to fuel growth into that wound care market, is the shift from traditional wound care management into advanced wound care management. This is not just a driver for the emerging markets, this is also still a driver for the mature markets.
Another key driver that we believe will fuel the growth of the Advanced Wound Care market, is infected wounds. Infected wounds represent a significant clinical burden to clinicians, but is also a major cost burden to the healthcare system, because as of today, we are still not seeing sophisticated and advanced solution when it comes to dealing with infected wounds. We do also see, of course, that there is a continuous pressure and focus and attention towards value for money.
That means you need to really be able to address the clinical relevance of your portfolio versus the other opportunities that are out there, in order to be considered. We do also see, in particular in the U.S., that payers and buyers are consolidating. We see a lot of consolidation going on, for instance, within the IDNs of the U.S.
We do also see that some of our competitors has referred to, let's say, price as a key point of differentiation. We can discuss the rationality of that, let's do that in the Q&A. Let's talk about what part of the advanced wound care market we believe you need to be in order to have a growing business. Here we see two segments that really sticks out. First of all, the so-called silicone foam segment, and secondly, the so-called antimicrobial segment. Why? Well, first of all, these are the two single biggest categories within the overall wound care market. Secondly, these are the categories that are growing the fastest right now. If you want to win in wound care, you need to win in particular in these two categories.
Let's ask ourselves, what does it then take to win in these two categories? Well, you need to be clinical relevant. What does it take to be clinical relevant in these two categories? Well, wound management is all about addressing exudate management. If you ask clinicians and go through the scientific material that is out there, then there's no doubt about that there is consensus among clinicians around what does end of the day really matter if you want to deal with exudate management, and the answer is: you need a conforming dressing. It's all about conformability. Let me explain in more details. On the picture you see here, you see an illustration of a dressing and a model of a wound, and you see a dressing that do not conform to the wound or to the wound bed. Is that bad? Yes, it is. Why?
Because you create a gap, and a gap creates space for exudate pooling. What does that mean? It means if you have a gap of exudate, then you're really promoting the bacterial growth, which will lead to infection. Secondly, if you have exudate that leaks onto the wound edges and the peri-wound, then you will also have a situation where the skin becomes macerated, which means that you will further delay the healing of the wound. It's all about conformability in order to handle exudate management. Do we believe that all foams out there are doing the same job when it comes to exudate management? Absolutely not. We actually believe that Biatain Silicone, with a so-called 3DFit Technology, sticks out.
I actually would like to explain to you why, and as I mentioned before, you have more details on this whole new concept in our breakout session. First of all, if we ask clinicians who are out there, does Biatain Silicone really sticks out when it comes to conformability? We see a clear yes to that specific question. Secondly, when we do in vitro tests with Biatain Silicone, when it comes to conformability versus our leading competitors, we see a foam that is doing a significant better job compared to our competitors. As illustrated on this photo, you can see that all of the exudate is absorbed by the Biatain Silicone foam.
While the foams from our competitors are not able to absorb to the same degree, as you can see here with the blue color, where you still have exudate that sits in the wound bed. We have, together with clinicians, developed a concept that enables us to talk about what is it that makes Biatain Silicone so distinct difference when it comes to conformability. That's a concept we call 3DFit Technology, simply because it consists of three very basic but very important parameters where we are standing out. First of all, we can see that we fully conform to the wound bed. It is really absorbing the exudate vertically, and it retains exudate.
With 3DFit Technology, we actually believe we are in a very strong position to talk about what we can do, not only when it comes to non-infected wounds, but also to infected wounds. We have conducted a couple of studies to generate evidence on this front, and what you see here is that we clearly, when it comes to non-infected wounds, stands with a foam, when tested in clinical practice, turns out to have almost zero patients where you see maceration or exudate pooling. When it comes to infected wounds, where you need an antimicrobial solution, when we use Biatain Silicone Ag in combination with 3DFit Technology, we are also doing a significant better job when it comes to addressing the so-called biofilm burden.
Biofilms are clusters of bacteria and fungi that you need to address in order to avoid infection, also to ensure that you don't have inflammation in the wound. Not only are we doing a good job when it comes to non-infected wounds, we can also clearly see that Biatain Silicone in an antimicrobial solution is doing a pretty good job. What we're very pleased with is that since we went live with our full portfolio, our 3DFit Technology, and our new position within biofilm, we can see that the performance of Biatain Silicone has really picked up significantly. Message number one is, if you want to play in advanced wound care category, you need to be relevant when it comes to the foam segment, in particular, the silicone foam segment, and within antimicrobials.
We believe today that we are standing with a broader and more competitive portfolio than we previously have done. We really believe that we are well positioned to tap into these two key segments. Let's talk performance. Before we talk performance, let's just remind ourselves of the way we talk about Wound and Skin Care in Coloplast. As you well know, Wound and Skin Care consists of basically three components. We have a global wound care business, with the majority of its footprint still sitting in Europe. We have a skin care business, which mainly is sitting in the U.S. and Canada, and then we have our contract manufacturing business. What I'm mainly going to speak to is the performance of our wound care business.
This is what has happened since we went live with our strategy back in Minneapolis in 2016. Yes, this is a different picture than we anticipated. Why? Well, we got hit by three external factors that we didn't foresee. First of all, we got hit significantly in our French market, where it turned out not only to be a price reform, it actually also became a volume reform. The second factor was Greece, where we got hit by two consecutive reforms in Greece as well. Thirdly, we have seen a slowdown in the overall Chinese market. There's no doubt about when we are hit in Greece, in France, and in China, not only does it have a big impact locally, but it also have a big impact on the global performance picture, given the importance of these three markets for our total business.
When we zoom in and zoom in on Europe, which we consider a highly competitive environment, we've been used to competing with a lot of players in the different categories. We clearly see that right now we have turned every single European market around, and are right now growing significantly faster than the total market. It means we are taking share across all of our European markets. If you further zoom in on those two categories that I just described as being the most important ones to win in, we can see that we are among the fastest growing players in those categories.
We are very pleased with what we are doing in Europe right now, and we are very pleased with the performance, and we are very pleased with the way we see that clinicians also are following some of the clinical relevance in the portfolio that we have been bringing to the market. In the U.S., we are building a momentum, and that takes time, in particular, if you want to play in the acute channel. As we shared with you last year at Meet the Management in London, we have basically right now created a completely new approach to our U.S. Wound and Skin Care business. We have invested to get a bigger footprint in the U.S. We have a different management structure than we used to have. What we also have done now is that we basically have launched a complete portfolio.
That we did in the spring of this year, where we launched the entire Biatain Silicone and the 3DFit Technology concept to the US market, including a new product that we never have had in the market before, which is a Biatain Silicone PIP, Pressure Injury Prevention. If you want to be relevant in the US, you need to be able to cater both for the treatment as well as for the preventive segment. As you can see up here, more than 40% of the total business in the US is so-called preventive wound management. Now we believe we have a complete portfolio that enables us to tap into the US market. We have never, ever had that before.
We believe we can address the clinical relevance of our portfolio when it comes to treatment based on the conformability and based on the 3DFit concept that I just talked about. When it comes to Pressure Injury Prevention, we do also believe that we have a relevant offering, because as you can see here, I will not get into all the details. On the key proxies that you are measuring a PIP dressing on, we actually believe that we have a product that is more than relevant. We believe we are doing the right things in the U.S. right now. We can see we are more relevant than ever. However, as you know, it's a contractual business. It takes time from you invest until you start to see the impact.
There's no doubt about that by the end of next financial year, I would like to be able to speak in more details about an uplift in our U.S. business. Let me conclude on the performance update and give a little bit of insight to emerging markets, because emerging markets is also important from a wound care point of view. If you further zoom in on emerging markets, there's no doubt about that China is the single most important country in that portfolio of countries. China remains important because it's an attractive market, and it is a growing market, and we are growing faster than the market. It is also a market where we have a strong position. We are actually among the leading wound care players in China, with one of the biggest sales forces.
We have invested to ensure that we can outgrow the market. However, as mentioned before, what has influenced our performance in China has been a contraction of the market, which has been driven, in particular, by two things. One, it has become more complicated to get your products listed at the leading hospitals, and two, there has also been a desire to do some cost savings among some of the key hospitals in China. However, we remain very optimistic about China's ability to fuel growth to our total business. We believe we can do that with the exact same things that we're doing in the rest of the world, with our Biatain portfolio and our 3DFit Technology. We do also see that we can continue to drive growth with our legacy product, Comfeel, in the hydrocolloid segment.
Last but not least, we are also investing significantly to ensure that we are considered a preferred educational partner among the key clinicians in China. Last but not least, we are also building a tail of new positions in the other emerging markets. We do it in sequence or in waves, and right now we are building positions in a couple of new markets. Australia and South Africa are two examples, and we have a very careful, let's say, process for ensuring that we are investing wisely in terms of building new positions in the rest of the emerging markets. In summary, we still see that we can drive value creation within the wound care space, and we continue to invest in the strategy that we laid out because we believe those strategic themes remains relevant.
Yes, we have had some severe headwinds in our in three key markets. We clearly can see that within the key categories and within the key geographies, we are making a distinct difference right now with our business. Our overall ambition remains the same. We need to get more scale so we can drive more profitability, and that's really what we are pursuing. That was basically the slides. I can also see that I'm out of time, so that gives me time for some Q&As.
Annette Lykke, Handelsbanken. Just on your strategic focus on the acute care segment in the States.
Yes.
Is that because you need to be strong in that segment before you can be strong in, I would say, the long care, term care or the home care segment?
The main reason why we have decided to go for the acute segment in the U.S. is basically because it's representing half of the total value pool in the U.S. There's an attractive amount of commercial opportunities. Secondly, you have to remember that 80% of our footprint in the U.S. is skincare. Most of our skincare customers sit in the acute channel. Here we have an opportunity to leverage existing call points and customer relationships and contracts to cater for our wound care portfolio.
How, what are you expecting in terms of getting into GPO contracts there? It seems to be a very fragmented, very competitive market.
Yeah.
What are your sort of game changer?
Of course, GPOs matters, and I think, as you also will hear later from Manu in terms of the Chronic Care business, we do believe that you can drive a lot of demand for your portfolio, even though you're not fully listed on all of the GPOs. We will and have the assumption that we don't necessarily need to be listed completely at all of the GPOs in order to deliver on the ambitions we have. We believe we can drive demand sufficiently through the IDNs.
Hi, it's Ian Douglas-Pennant at UBS. You mentioned the UK as a source of.
Sorry, where are you sitting? I can't see you.
Oh, here.
Oh, sorry. Right here.
Yes, sure.
Hey.
You mentioned the UK as a source of weakness. Are you seeing new discount competitors coming in any other markets? I'm in particular thinking about the US, but also other European territories. Secondly, on your exudate pooling, I must need some education because my understanding was that was what Hydrofibers was for.
Yeah, on the last one, I'm pretty sure that Hydrofibers believe they also can do a job when it comes to exudate management. I think what we can see here, and actually also prove, that even compared to Hydrofibers, Biatain Silicone sticks out when it comes to exudate management. I really encourage you to go into the breakout session and ask that detailed question, because then we can also show to you some of the evidence we have. With regard to competition and pricing, we see particular one player that is pretty pronounced on their pricing parameter. We see that in a couple of markets, but it's mainly in the contractual markets.
With regard to your comment about the U.K., is that in terms of whether there is a reform on its way in U.K., or what was your question about U.K.?
Discount players.
Discount players. Well, yes, we have seen an increased amount of, let's say, low-price players in the UK that has popped in recently. Is that a big new part of our, let's say, environment? No, not at all. We have seen that in many other European markets. Is it a little bit more new to the UK? Yes. I think some of the players with the big shares in the UK can probably feel that competition a little bit more severely than we can. Scott?
Thanks, Niklas. Yeah, I think we've discussed before about the potential synergies between the ostomy business and wound care.
Yeah
... with ostomy and wound care nurses. The question is, ostomy seems to be going very well...
Yeah
way above industry growth rates. That doesn't appear to have rubbed off on your business. I just wonder if you could talk a little bit about, you know, the synergy potential and how you can close the gap. The second part of the question is, I think, three or four years back, we talked about how negative pressure wound therapy might be important for Coloplast.
Mm.
-hence the Devon Medical investment. You're pretty sure it's not.
Mm.
I just wondered if, what's changed your opinion there?
Yeah, let's take NPWT. It's still a category that, of course, plays a clinical relevant role in the overall treatment of wounds. For certain call points and certain customer types, they, of course, would like to have, let's say, the full co-portfolio available. At this point in time, we see more attractive investment opportunities than embarking on NPWT.
We keep an eye on it. There might be some geographical differences versus global perspectives, but so far, it's not a space we really have on the top of our priorities. When it comes to synergies between wound care and ostomy care, if your question is, could we grow faster, it was the ostomy franchise that was running, let's say, the wound care business. You have to remember, a lot of the call points are very different.
Most of the wound care opportunity sits in community. Secondly, you could say a lot of the contracts, be it tenders or other contractual opportunities, are not necessarily bundled between Wound Skin Care and Ostomy Care products. At this point in time, my clear view is that, it makes a lot of sense to have them separate.
Perfect. Thank you. It's Patrick at Merrill Lynch. Two from me, please. One, from the Smith & Nephew perspective of the price cuts in tender markets, and also, why do you think that they're doing that? Is that a response to the low-cost competition in other markets, or is it just them getting greedy on unit growth? What's going on on that side? Maybe if we start there, that'd be great.
I keep a very close eye on my competitors, but I'm probably much better in talking about my own business than my competing business. I think you should ask Smith & Nephew why they pursue a strategy like that. I don't want to speculate on it.
The second one would be, on the M&A front, I mean, obviously, everyone's been looking for a Wound Care deal.
Sure
... for a considerable length of time. Is this, I've asked this question before, but is this a situation at the moment where there's literally no assets up for sale, or is it that there are one or two, but that they're at a price which you can't make sense?
I don't wanna elaborate too much on that front. I think my answer is we have a plan which is based on organic growth. That's what we're pursuing, and that's what I'm spending my time on. As you've heard from Lars and others, we keep an eye on what's going on in the industry, and we'll continue to do that.
hi, I have three questions. Firstly, on, antimicrobials.
Yes.
Can you comment how your product performs against Aquacel Ag in terms of the kill rate? That product probably is the market leader, and I think you probably have to beat them to make sure that you can have a much nicer runway. Secondly, when it comes to advanced wound care market growth, if you do a bottom-up approach, there's no doubt the market has slowed, maybe 2% or so. Does that worry you that you have investing in a business that may be a market that really is only a 2% growing market and is completely incompatible with that growth, the growth rate or so that we're projecting for the entire organization?
On our head-to-head profile on antimicrobials, I think we should take that in the breakout. There you can see some more details. We feel that we are capable of addressing our relevance when it comes to biofilm quite competitively, including some of the products you talked about as well. When it comes to how attractive is the overall wound care category now, when we have seen a decline in the growth, that's, of course, a fair question. I still have a strategy which is mainly about taking share, and we will continue to do that, and I believe we can continue to do that given the size we are also in the different geographies.
In terms of outlook, I think, if we take a continent like Europe, we probably have some of the bigger reforms more behind us than in front of us. We have a French reform that is coming to a conclusion. France is the single biggest market in Europe. The rest of the European markets, we do not see some sort of something big on the horizon as far as we can see and read the market. There's probably some discussions going on right now in the UK, but we feel given the size we are and, given our strategic approaches, that we can also comprehend, let's say, a slowdown of the UK market. In China, we still see a market that is growing quite substantially.
It's lower than what we saw in the past, but there's still plenty of growth for us to create a true difference. In the U.S., with less than 2% share, I believe we, from a share gaining point of view, can deliver much more value going forward, even though the market might be growing at a different pace than it did in the past. Do you have time for more, or is it... Veronika, can you-
One final question.
Sure.
Thank you. I promise to keep it to one.
Okay.
I wanted to ask about the U.S.
Yes.
I think when we met Minneapolis a couple of years ago, you had grand ambitions for getting that growth to accelerate. It's very hard to see that that's happened.
Yeah
from the numbers.
Yeah.
What exactly has gone wrong? You know, do you think it's a realistic ambition to try to get your U.S. market share from zero to something that's more comparable to your rest of the world share?
I wouldn't say something have went wrong. I think, what we're doing right now, and that's also the purpose of the slide, is that it's not before the spring of this year that we really went into the market with a relevant portfolio. You could say, when did we really become competitive? Spring of this year. Would we have liked to have been in, let's say, that position a little bit earlier? Yes. It's not before the spring of this year that we really went out there and pursued the opportunities we see for our wound care franchise in the U.S. I won't say anything is going wrong.
I would say my challenge is that it takes time to win these contracts. We do believe that by the end of next physical year, we need to be able to be more concrete in terms of showing a more firm and accelerated momentum when it comes to our wound care business in the U.S.
Thank you very much. Nikolai?
You're welcome. Let's see if there's any connection. Sounds like it is. Good morning. I'm glad to be here to present the Chronic Care business. I've been with Coloplast for a bit more than a decade. I worked in the Chronic Care business throughout those 10 years in different roles in marketing and in sales. I'll be up here a lot today because these days I'm double jobbing. I'm also looking after our Emerging Markets region, so the update on Emerging Markets, I'll also be doing. Our new SVP for Emerging Markets is here, and Andrew Robinson, who is joining us from Alcon. He will start here on October 1st, and I, for one, am pretty happy about that.
I'll also be doing the introduction to Europe later on today, we brought two colleagues from the main markets to present a couple of the businesses that we're in. Anne-Marie van Neck, who's our GM for UK business. This is our largest subsidiary. I'm really happy to see Anne-Marie here today, and she's gonna talk to you about the work that we do there. Manu Varma, who's our new SVP for North America, who'll talk to the work that we do there. What I'm gonna be doing here over the next 15 minutes , 20 minutes is give you an overview of the Chronic Care business, where it sits, the strategy that we employ, my main message is that the Chronic Care business is in good shape. It's in really good shape.
We see much stronger growth than market, we continue to take share. We have the best product offering that we've ever had in the 10 years that I've been in the business. You heard an update earlier today from Oliver, and I can also say I'm more excited about the pipeline than I've ever been. On the product side, we're really doing well. I'm also really happy about the work that we're doing with our two main customer groups, being healthcare professionals and consumers, and I'll talk to what we do around the platform that we call Coloplast Professional and our care program. Finally, one of the things that is making me the most pleased the current performance is that it's broad-based. We're growing across product categories and across geographies.
Now, let's start with the big picture. The Chronic Care business is about 75% of Coloplast revenue. It's been like that for a while. Every time that I've been here, I've been saying that same thing. It's still growing nicely. It's still pretty much evenly split between Ostomy Care and Continence Care, and it is a business that we have continued to compete very strongly across all of the geographies that we're in. In all regions, we are taking share.
We also believe that underneath, these two categories, there's good support for future growth, both from a, if you will, an innovation standpoint, that we are going to be able to bring to market, products, that are clinically validated, that will be driving growth, not only in developed markets, but also in emerging markets. Demographics are working in our favor. What we see is that once you expose people to better products, they will, on balance, choose the better offering, right? We feel good about the, the underlying growth of both of the categories, we're not blind, of course, to headwinds. Nikolai talked to some of the reforms that we've been exposed on the wound care side.
Healthcare reforms do happen, with the demographic, underlying increase in market demand, payers have to look at how they spend their money and look for value. That pressure is real, and we see them from time to time. One of the most prominent examples, most recently, that we've talked to is in Greece, where we've had a couple of pretty significant reforms that unfortunately have hurt our business down there. We also keep an eye out on earlier detection, the technologies that are employed for earlier detection and a potential cure. We see nothing on the horizon that we think will be disruptive. Of course, we've also talked to previously the consolidation of the channels that we participate in, which is happening, I think, in pretty much all of our major markets.
You're gonna see this same chart from me three times today, right? These strategic themes are consistent across the Chronic Care business. They're played out slightly differently in the different regions, but they are consistent. Lars talked to, Oliver talked to a fundamental belief in product innovation and the ability for products to make a difference for the users that we serve. We believe that strongly. We believe there's plenty of innovation headroom in both of the core categories, you will be, I think, moved after this session when you will meet one of our customers, Rachel, who will be on stage here and talk to you about what it's like to live with an ostomy and also use one of our products.
She'll be here on stage together with Dennis Kaysen from our corporate communications department. One theme, consistent across all our regions, is about superior products. The second theme is really about customers, and so this is not just a relationship with consumers, but it's also our relationship and partnership with healthcare professionals. This is real, and we invest in it. We do it across all of our regions and our global marketing function, that everything that we do supports these two customer groups. These are the people that we're loyal to. These are the people that we invest in, because this is what the mission of the company is.
Then, of course, there's something that's related to execution and organization, and a lot of this has to do with our go-to-market model that I'll talk to in a minute, how we think that model will unfold over the coming years, but really some good work happening on that front. For both of the businesses, you can see here on the top right, that for both ostomy and continence, we have taken share, the outliers 15, 16, where we reduced inventories in our U.S. business. I'm quite pleased with where the business sits at the moment. I also hope I'm conveying that this is by design, right? Let's turn to products and Ostomy Care. Lars already talked about SenSura Mio Concave, and so did Oliver.
The Concave product basically completes a unique offering in the Ostomy Care space, which is centered around a very simple but compelling idea, that we think needs to be reflected when you serve this market space, which is every body is different, and every user who goes through surgery and has an ostomy, will need to somehow find a way to customize a fit to their specific body. To keep things simple, we've divided the world into three types of bodies: some that are flat, some that bend inwards, and some that bend outwards. If you look at the actual portfolio underneath all of this, you will see product variants that allow a customized fit. We think, and strongly believe, that this is also what's powering the growth. It works. It works, right?
This simple idea that you need to be able to get a customized fit and bring this to market, and of course, also couple it with a service that supports that and sustains that, is the right model. We're, of course, particularly excited about Concave because it's unique. Nobody else has an offering like that, and we are now in 9 markets, and what I can say at this stage is that the feedback that we're getting is very strong, both from users and healthcare professionals. The product works. The product works, and there's a need for it.
I'm also very pleased that it's gotten into a reimbursement category that allows us to continue the upgrade of the market that we have been on for over the past three, four years through our launch of SenSura Mio Convex, that Lars talked to earlier. In ostomy, on the backs and plates segment, we're very pleased with where we are, and more good things coming. Now, the customized fit really also requires the use of accessories. We know that pretty much everybody who has an ostomy and use products all over the world, use accessories. We continue to innovate in this category. This is a place where consumers experiment more, try out new things, and this is also a place where the category is more dynamic, so the innovation pace needs to be higher.
It's a category that lends itself very well to the consumer channel that we built, this is also where we launch the innovations as we do them. It's a category that's contributing significantly to our growth, so much so that our assessment of the share that we have in the market, we're upping that by five points compared to where we were just a few years ago. Overall, I'm very, very pleased with where Ostomy is at and the performance of the business. The product lineup is strong, the pipeline is also strong. On the catheter side, it's really about SpeediCath and the portfolio around that brand. Allow me to start at the bottom of this page with SpeediCath Standard.
There was quite a bit of speculation what would happen once we would face the patent expiration last year. We also speculated about that, and I'm happy to confirm again that the impact was quite insignificant. This is still a growing brand. It's not a growing brand in Europe. Europe is more driven by the compact portfolio, but it's growing very strongly in the U.S. with our conversion of the market to hydrophilics. It's growing very strongly in emerging markets, and this is also the lead brand in some of the markets that were opened just recently with reimbursement in both Japan, Australia, and Korea.
This is just a great product, and it continues to do well, and we're excited that we can offer it to many more people now in emerging markets with the new reimbursements that have opened up. Compact continues to do well. It's the core growth driver in Europe. Our latest addition to the family is SpeediCath Flex, that both Oliver and Lars talked to. Both the products that have been launched under the Flex brand are doing phenomenally well, and driving growth. SpeediCath Flex is now in 16 countries, and the Flex Coudé Pro that we launched into the U.S. market allows us to continue the value operate from the reimbursement in the U.S. We're really happy with how both of these products are doing. Turning to customers.
This is a company that partners with healthcare professionals. We know that it's not enough to just make great products. We actually have to have healthcare professionals know about them, try them out, and prefer them. That has a lot to do with education and partnership. Our collaboration and education platform and our commitment to that area, we call Coloplast Professional. I am super proud of the work that's happening on that front.
This comes down to classes around fundamentals about therapy, disease state, and things like that, master classes and events, clinical trials, and advisory boards across the world. This is not just something that we have in a couple of markets. This is across the global Chronic Care business. This is live, and we think of it like that. We invest in it like this.
If you look at all of the business plans that go on in the business that I work with, we talk about this and invest in this and manage this because we believe that this partnership is absolutely critical to our business. By the way, we also involve healthcare professionals extensively in the work that we do around innovation, also across the world. We also believe that it's this partnership that has allowed Coloplast Care to become a global program. We have co-designed in every single market that the Coloplast Care program is in, I'll talk more about that in a minute. We've co-designed the program with clinicians.
What that means is that you have to think of a patient support program like Care, as something that needs to be tailored to local conditions, to the locally available products, to the local available access, to the local clinical standards. If you think of this as just something that you can switch on with a website and a few people on the phone, you'll be dead wrong. We tried that, and we made a lot of mistakes trying to get scale on the Coloplast Care program. The only way to make this work is sustained investment and partnership with local clinicians. Otherwise, it will just not scale. This is also the partnership that we use to train our own advisors, who advise people on the phone, in the Care program.
If you look at how extensive the Coloplast Care program is now, this is one of the charts I'm the most proud to be able to present. This is eight years' worth of work, guys. hundreds of people in our organization who speak with thousands of consumers every single day. It's through that work that we build trust, both with the healthcare professionals, but certainly also the consumers in these markets. We're now in more than 30 countries. We're adding more, and we're also adding other product categories that haven't been in the program before. This is a real capability built over the last eight years through sustained investment and sustained partnerships with healthcare professionals. We're very, very proud of this. We've also strengthened our position in the channel in our main markets.
Lars talked to this in his opening remarks. Our biggest presence in the distribution is with Charter Healthcare in the UK, and Anne-Marie is here, and she'll talk to how we think of that business. The UK business is probably the most mature example of what we think is the future model, where you'll see very nice integration between good products, strong partnerships with healthcare professionals, access to consumers, and a resulting strong value proposition to payers. These things are connected, and that's also why we think that the investment into digital, both on the product side and on the service sides, just makes a ton of sense.
You're gonna see a lot more work around that over the coming years, and Anne-Marie will talk more about the U.K. later. We also think that this has been validated in the U.S., as in our original investment thesis was just that there is a service value proposition that needs to be made available in the U.S. that isn't at this stage, and Manu will talk to that when he gets up here. We acquired LILIAL in France to be able to do similar type of work in our second-largest business in Europe.
We're already forward integrated in Germany, and of course, China is unique in this context in that if you look at the way that the channels work in China, the online channels are growing way faster than everything else. Way faster. This, this is both an investment as it relates to our own direct presence on Tmall and the other online platforms in China, but also, as prominently, at least, our partnerships with the DTC pharmacies. We think this makes a lot of sense as a way to make sure that products are available to consumers, that they can access them. We think there's work to do on improving the service experience, which, by the way, will have a positive impact on retention and compliance, and therefore, also outcomes.
We think that this is also the ticket that you have to pay to have a seat at the table with the dialogues with payers. The key message is, we are forward integrated now in our top five markets, and we're very pleased with that. Still more to invest in, and we think that this foundation we here, we call the strategic foundation of our business, there are lots of good opportunities to invest in, both around innovation. I hope you feel that Oliver highlighted some of those opportunities, Lars, the same. The pipeline is exciting. We think there's a continued need to invest in the relationship that we have with healthcare professionals.
The most recent example of innovation on this front are, you could say, dedicated congresses and events that we do. We last year, or some, a couple of quarters back, we did our Coloplast Ostomy Days and had 1,000 customers here in Copenhagen, where, you get to design an event, that's very heavy on great professional content, and also just a great experience for everybody who participates. We think there's also room to elevate the game when it comes to partnership with healthcare professionals, and I already talked to the work that we're doing on the direct consumer model. There's also a good space to invest across the geographies. We continue to invest in all of the regions. Europe is still doing well. We continue to invest in Europe.
Just over the past 12 months, we have invested, approved investments into the U.K., Germany, France, and Portugal. Very profitable region, very healthy growth, and great scalability effect. U.S., absolutely a core priority, and I am very happy that we have double-digit growth in the business now, still want more. That's an ongoing discussion that I have with Manu, and he'll be here to talk more about the new strategy that we have. We tagline it, Consumers First. Of course, EM, that I'll get back to later, but EM is really a lot of different geographies, but we feel that we have a very good grip on that and also a setup with very strong leadership to invest in.
With that, I will just say that we remain committed to growing more than the market, and open it up for questions.
Hi there. Thank you, it's Kit Lee from Jefferies. I just have a question on the SpeediCath Compact. I think that's perhaps your largest sales category. How do you plan to mitigate the competitive risk, as I guess, one of your major competitors is looking to launch a compact version of the product into the European market sometime, soon?
We keep an eye on competition. We like competition. They keep us on our toes, and they keep us sharp. I'll say that there are plenty of compact catheters in the market already today. If you look at across Europe, we could probably find you anywhere from half to a full dozen of different offerings that are already out there that are compact. It will be another product.
A question on your SpeediCath Flex product. You have this patent dispute...
Who's speaking?
I'm here.
There you go.
You have this patent dispute ongoing with Hollister, about the protective sleeve, and I believe they won the first round in the commercial court in Denmark. When should we expect a final verdict in this matter? What would happen if Hollister is able to claim a valid patent on this protective sleeve on relative to your Flex product? Thank you.
The answer is, I don't know when the court proceedings will reach any conclusion, but we fundamentally don't believe that we violate any patents in the way that we conduct our business. We don't believe we're violating any patents.
Over here.
Yeah.
There you go.
Just in respect to those new, highly innovative products that we have heard a bit about from the whole management team and IR. In respect to get these into the market and get those higher or unique product categories, how is the regulatory profile for these or process? I guess you cannot make a 510(k), for example, with similar substance. What should we expect, and will you have to spend longer times on getting these into the market?
It's a great question, and the true answer is: it depends, right? It depends on the specific product that we're talking about and the specific country that we want to get it into. For anything that has a higher clinical, that has a higher, if you will, clinical burden of evidence that we bring into the market, the regulatory pathway is more complicated. We will have to seek a path to build a new category in each individual market, and there's not a blanket answer to it, but it takes longer.
Thank you. It's Yi-Dan from Deutsche Bank. I think a couple of questions. The first one is, yeah, I mean, the products have been very compelling, but you seem to run into more manufacturing issues, albeit, you know, things are harder to make than you expected or you don't have sufficient capacity. Great position to be in, but nevertheless, not ideal. Can you talk about, you know, the investments that you're making there, and, you know, how we should think about the dynamics of the business going forward? Clearly, the products are a lot more differentiated, but there again, you know, the, the operational challenges is also greater. The second one is on the direct-to-consumer platform that you've built. It seems to have become very significant in size.
I mean, so far, we've seen a bit of benefit from that for the accessories, revenues. Can you comment on the potential impact of that channel on your business over the next two to three years or longer, as you care to comment?
Okay, good questions. You know, one of the really difficult things is to predict how a new product will be received. If you try to do something new, you can ask a few people who get access to the products, whether they like it or not, and whether they would use it. You won't really know until it gets into the world, and people get their hands on it, and it gets into the market. I think we underestimated the success of the Convex launch, and boy, would I have loved to have had double the capacity when we did that, but we underestimated that. I don't think, Yi-Dan, that there is a foolproof way to do it.
What we have changed in the way that we run our processes is that we now plan with excess capacity for everything that we're doing now. We have more flexibility for everything that we've done since Convex than we had in the past. We've also invested a lot of resources in making sure that capacity is available on time. Your second question, what's the importance of the consumer channel? Sure, it's important to accessories, but I think if you want to understand why we're growing in the core categories as well, you cannot just attribute that to product. You also have to attribute that to the service that we provide in the markets that we're in. In my book, this is a real capability-...
That we have built over the last eight years, we continue to refine and practice, and learn from. We'll continue to invest in it. I also think, to the latter part of that question, that it's going to continue to contribute to growth.
Should we expect to contribute more to growth over the next, you know, 2-3 years than we've seen over the last 2-3?
I think the only thing that we're saying right now is that we're confident that we can outgrow the market. At this stage, I am expecting it to contribute and continue to contribute significantly.
Thank you. You're not seeing any sort of risk or threat from disruptive technologies, but we are seeing increased use of colonic stenting.
Yeah.
endoscopic resection.
Yes.
Visualizations much better. In terms of clinical practice, more surgeons are adopting those techniques and avoiding doing a stoma. Is there really no effect yet on the market, particularly in the U.S.?
You have a number of different technologies and a number of different companies that do, that sell products into the market, that claim to both detect earlier and promote different surgical techniques. Assessing the impact, we really can't see an impact on the underlying market growth in the U.S. at this stage. Whether it's going to have an impact over time, TBD, but I think Remember that we're the market is also helped by demographics, and the fact that if somebody gets an earlier detection and they go through surgery, many of them will still need a product.
Maybe using it as a temporary solution rather than a permanent solution, and I think we do see some tendency, that the temporary stomas are increasing in share of total market. We are seeing that.
I mean, we've heard from the other divisions about how they're looking at maybe new adjacent technologies, but, again, given Coloplast's excellent cash position, you're in a great position, should you want to, perhaps to invest in some of those technologies, to move more into endoscopic surgery in Europe, in this area.
As at this stage, we have no plans to do so.
Hi. Hi.
Hey.
Just a small question. Bowel irrigation...
Yes.
-being done by patients with a stoma, are you seeing this as a tendency that could affect Ostomy Care?
There are some products in the market. We actually, we have some solutions for that. some years back, we thought that this would be a big thing, but it never really played out. I think unless somebody shows up with a completely different take on how that would happen and how it performs, we don't see it as a disruptive technology, no.
I'm thinking about the emerging countries, because it's a cheap solution.
Yeah.
to be done at home, and then it requires a bag every 2 days instead of daily.
It is being used in some markets.
Yeah.
Some patients do prefer it. That's true. We haven't seen it pick up and become preferential with any meaningful component of, if you will, percentage share, in any of the major markets. I'll talk a little bit to it when I'm on stage for EM later today.
Great. Thanks.
Thank you. That was the last question. You'll have time to ask Christian more questions later.
Like to welcome on stage, Dennis and Rachel. Please give them a warm hand.
Thank you. Good morning, everyone. I am Dennis, and this is Rachel. Rachel, would you please introduce yourself?
Thank you, Dennis. Hello, my name is Rachel Jury. I'm 31 years old. I live in Bournemouth. I originally was born in Wales. I class myself as Welsh. My profession before I got ill, I worked in an oncology center. I treated patients with radiation. I loved my job. Unfortunately, had to give this up due to ill health. Now I guess I've kind of changed it around. Now I'm a patient advocate, I'm a patient leader. I help support many people with stomas. I work closely with healthcare professionals to try and change things for people with stomas.
All right. You've been living with a stoma since 2012. Can you tell us about the years leading up to that, about your illness?
Yeah. When 10 years ago. Growing up as a child, I was healthy, and I was in university, and I got food poisoning, and I was very poorly. Afterwards, I noticed that my bladder and my bowel just did not work the same, and it was quite a difficult time, and not knowing why my organs weren't working. You know, I had to have a catheter, really young age, so I had to actually use the SpeediCath catheter. I had to have a long-term catheter from 21. While that was happening, my bowel also wasn't working. The muscles and the peristalsis just weren't able to get the bowel to work. It was a hard time. Many interventions failed, in 2012, I was 24. I was very malnutritioned.
I weighed less than seven stone. I was very, very poorly, and they decided that I needed to have a stoma, so I have an ileostomy. Where my stoma is for fecal matter, and my large bowel was diverted. It was quite a tough time, you know. I was young, and I dealt with patients that had stomas, but when it came to myself, I didn't want to know anything about it at all, which surprised me. I had my stoma for three years, and in 2015, after seven years of having a long-term catheter, the cells in my bladder mutated. I had an investigation, and the biopsy said that I needed to have the bladder removed within two weeks.
I was 28, I got told I needed a second stoma, I just thought: "How am I going to cope?" In reality, far better than I ever did with the catheter. Having the two stomas, you know, looking at me, you can't tell I've got stomas, which I quite like. It enabled me to live my life again. It enabled me to actually come here today and to do all the things that I do that I wouldn't be able to have done before.
You live with two stomas?
Yes.
Can you just explain the difference between the two stomas and maybe also how it impacts the type of products that you use? 'Cause they're different.
Yeah. I have. My urostomy is where my bladder has been removed, and I've got a piece of bowel that's connected to the urethra, to my kidneys, and it's where urine comes out. My ileostomy is where I have fecal matter, and that's on this side. I use the SenSura Mio Convex for urostomy, and for years, I really struggled to get a pouch that would fit, and when I found this one, it was amazing. I had many leaks. I couldn't find. The consistency of urine is different to fecal matter, and I just couldn't find one that worked, and when I found this product, it was. Yeah, it was the eureka moment because I was not having leaks anymore.
With my ileostomy, I actually have an outward body shape, so I have a hernia. My hernia is about the size of a grapefruit, and I found that I was using the SenSura Mio Convex pouch, but it wasn't fitting perfectly. It was the best out there, but I was getting lots of leaks because there was channels, there was kinks, there was lifting, 'cause I guess if you think about wrapping a football with some paper, you're not going to be able to wrap a flat object around one, and that's what I found. I used to use other accessories to help and supporting products to help, you know, enable me not to leak, but they weren't really working.
All right, now, you use the Concave.
I do.
Can you tell us a little bit about the difference? What does this product do?
I don't have any more leaks. I used to have a lot of leaks at night, so I found that nighttime, it impacted my sleep. It made me, you know, not worried about going to sleep and going out, it worried me as well. Now, having the Concave, I don't have leaks. I have confidence to leave my house. You know, up to last year, I hadn't been abroad for seven years. This is my fourth time abroad now, and it's because I have confidence in the products that I wear, that I can do this today. I can go abroad. I can go swimming. All these things I couldn't do before because I was worried about leaks, because leaks can affect you know, mentally, physically, it can make you anxious about leaving, and, you know, it really has.
It's changed my life because now I don't have to worry about that. I can wear white today, you know, I would never have done that before.
You actually also have a lot of knowledge about how other people are using the product. Your partner, Steve, uses the same product.
Yeah.
In your role as a patient advocate, you also get a lot of feedback. How is Steve getting on with the product, and what are you hearing?
My partner, Steve, also has an ileostomy. We actually met through the community, I guess our stomas kind of found us love, and there's another positive out of getting stomas, which I didn't expect would happen. But he had many, many leaks. His hernia is actually bigger than mine, and he found that at night, he would have to wear a band because he was worried about having accidents, and he wanted to keep it contained. He never went swimming. He never wore a white shirt, and it really impacted him. When he first tried the product, he was just blown away because it, he wasn't leaking anymore. He could go out.
He went swimming the same day, and he would never have done that before, and it has changed his life, and I've seen the confidence in him grow, as I have many others, and I have in myself. I like to think that the curves of the Concave, you know, give confidence, and they provide confidence.
I hand this to you.
Thank you.
Yeah.
They provide confidence because it wraps around the roundness of the hernia, and you don't get any leaks. You don't get any kinks or channels, which can make you a bit worried, you know, and maybe not as carry on what you were doing. In the ostomy community, many people would reach out to me about having a hernia. They haven't left their house because they are having lots of leaks. You know, having a hernia on outward body shape, it can affect your body image. It's not very nice, and if you want a product you can trust, where you're not going to leak, and before this one came out, there was nothing for hernias. There was nothing for outward body shapes, and I think that's what I like about Coloplast is they are innovative. They saw a need.
They saw a gap where many of us were having leaks. They've provided that. You know, I get comments saying that now they can go out for meals with their two grandchildren, or they can take their grandchildren out. It's really, it is making a difference. I'm noticing that myself.
Can you tell us a little bit about your role as a patient advocate, and why have you chosen to go down that path? What does it give to you, that role?
Okay, having two stomas are quite rare. You know, there aren't many people with two, although there are more coming up now as cancer surgeries are increasing, and there are more coming through. I felt really alone. I felt like there was nobody else. I was 28. There was... I kept asking my nurses, "There must be other people with two." I started my blog, Rocking Two Stomas, and from that, I connected with a community that I didn't know existed, and now, because I felt so alone, I didn't want others to feel alone. To help show that, yeah, you can embrace life, you can still do things, you know, having a... I've got... These are permanent. I've got them forever, and it's like, okay, I have been in that place where I hated my stoma.
I felt very victim, and I thought, "How am I going to turn this around and actually live life to the fullest?" You know, we've been through a lot of surgeries. You know, we've been through a lot, now it's how do we live life, you know, one day at a time in order to do that?
Before we take questions from the room, final question from me: besides the product features, what does a product like this actually mean to you in your life?
Very simply, provides freedom. You know, it provides me to able to be the best me that I possibly could be. If I didn't have these products, I wouldn't be doing half of what I do. I wouldn't be able to help all the people that I help. I wouldn't be here today speaking. You know, I trust my products. They, I know I'm not gonna leak, and I forget I have stomas, and isn't that what it's about? You know, having a product where you don't actually know that you're wearing it. You know, because I don't want to be reminded all the time, and that's, for me, it enables me to be the best person I want to be and to live life to the fullest.
After many close calls and having sepsis so many times, now it's about giving back, helping others, and Coloplast and the products help with that.
All right. Thank you for sharing. Do we have any questions? Yeah. Over here, Ellie.
Thank you very much. Yeah, Yi-Dan from Deutsche Bank. Can you comment on how you came across SenSura Mio Concave, and how long did it take from the time you discovered it to the time that you became a regular user of it? Then secondly, on your usage, if you could, how many products were you using before a week, and how many are you using it now, and how has that affected your skin condition as well?
My partner was actually trialing the Concave product. I wasn't trialing it. I knew it was there. I waited for that to come out. I was able to purchase the product. I was able to find out to get that delivered. Before the Convex, I was probably going through nearly one every day. I was having accidents all the time. I felt I had to change it very regularly because I wasn't able to. I was worried about leakage. When I have the Concave now, I change it every two to three days. It's less, you know. If I found that when I would go swimming, I had, maybe had to change twice in a day.
The Concave provide, gives me that extra kind of freedom that I don't have to change so regularly, and I don't worry about leaking.
How long did your partner try before he became a regular user? You know, from the time he tried to becoming a regular user, what's the time frame?
Sorry, could you say that again?
The time. From the time you said that your partner was trying the product...
Yeah.
Just wondering, from the time that he got his hands on the product?
Yeah
to the time that he became a regular user, how long did it take to convince him to try? Is it a matter of days, months?
Oh, he was converted straight away. He loved the product. Yeah, I don't think I answered that.
Basically, as soon as you get your hands on the product-
Yeah
... you try it for a week, you could be convinced within the week-
Yeah
... that you would be suitable for you?
Yeah, both of us. As soon as we tried that first one on, like, he went swimming. He knew it was the product for him. I knew it was the product for me. 'Cause nothing else has fitted over a hernia so well. I found that it made sense that I would use this one, and I wouldn't go back, even if I had the option. I wouldn't go back, 'cause this, for me, fits perfectly around my hernia.
Thank you.
Steve used to have leakage, and how often does he have leakage now?
He has never had a leak, and neither have I. You know, that's, you know, amazing and life-changing.
Hi, Rachel. Oh, I'll be here. Thanks for sharing your story. Just wanted to understand a bit, little bit there. In the UK, there's lots of competing companies, and many of them have their own home care or care programs, Fittleworth and others. Can you share some thoughts about these home care programs? Do you consider them a nuisance? Are they helpful? Is everyone trying to ring you all the time? Can you just share some thoughts about your experience there, and also a little bit following on with the accessories? Not being an ostomate, you know, it's quite confusing. There are so many different accessories.
Yeah.
How many of those are actually useful, not useful to you? Yeah, maybe you should share some thoughts about which ones you still use now and are relevant.
The home delivery companies, I don't find that I don't get any nuisance phone calls. I find that they're very supportive. Many other ostomates, where if they've got any problems, they can access a nurse, and I find that I don't get any nuisance calls, which I was worried when I first became an ostomate that I would. That, to be honest, I liked that some of the care programs that they do give, like Charter and a few others. What was the second question again?
About the accessories, as well.
Oh, yes. as a ostomy advocate, we don't actually like to use the term accessories because we have trouble in the UK at the moment trying to get them, we use supporting products. for us, because for us, they are essential for some people. for me, with the Concave, I have to use the Brava Protective Seal. If I don't, you know, That's my solution. Also, I have the extend tapes that I use as well, everybody is different. Every stoma is different, every body shape is different, we work out what solution works best. You know, they're the products that I find that, the Brava tape in particular, has been very, very good.
What was your average monthly consumption before you went to use Convex or Concave products, and what is your average monthly consumption today?
If I go back to my urostomy, I was changing 2x, 3 x a day. They just weren't lasting until I found the Coloplast Convex urostomy pouch, I think six, seven, I've got to work out my math now. I was probably using about 60 a month until I found the Coloplast one, it was my nurse that helped instigate to find that solution for me. With the concave before, if I was having about, I probably was about 50, maybe less than that. The concave, it means it's better. Even though I was using more products, I didn't feel I wasn't able to go out as much because I didn't know when it would leak and it, you know, to be covered in your clothes and things like that.
You would say you had to reduce the consumption from more than 60.
Yeah.
about 50 or so?
Yeah.
Okay, thank you.
All right.
Thank you very much.
Thank you.
Thank you.
Welcome back. I hope you enjoyed lunch. I would like to invite Kristoffer Williamson on the stage again. He needs no introduction. Please, Kristoffer.
Thank you. All right. Our next session is about emerging markets. I promised I'd be back to talk about this. This is a region that's near and dear to my heart. I used to work here a few years back and lead up the region, and I've also been leading our work there for the past quarter until Anders starts here, October one. Now, big picture, our emerging markets region is really the world.
This is about 80% of the people that live on the planet. We have sales in more than 70 countries, we're actively present with our own setup, either via a subsidiary or a rep office in about 24 markets. This has become over the last, let's say, decade, a really significant contributor to the group's growth.
It continues to be so. Go back about 10 years, the ostomy share of the business was even bigger than it is now, so it's declined about a 5 percentage point in terms of share of total volume in the region. That really comes back to the work that we've been doing, both around wound care and Continence Care, that have been growing very nicely for us. All three categories in EM, we fundamentally believe have a basic attractiveness to them. Let's look at them in turn. Ostomy Care, this is really a lot about access to good products and access to good healthcare standards. It's driven by demographics.
Like I said in my previous session, our experience is also, if you put a great product in front of people, they tend to choose it. They tend to choose it. In emerging markets, of course, you have to have a great product at the right price point, I'll get back to that in a minute. We think Ostomy Care, 5%-10% growth in emerging markets as far as we can see. Continence Care is a different category. This is a category, now speaking about the catheter side of that business, that is more often than not, is dependent on the availability of reimbursement.
A lot of the work that we've been engaged in on the Continence side of the business has been investments into building standards of care, for bladder management, and it has been also investments into building access and reimbursement, and I'll talk about how we think about this and manage this, in a few charts from now. We've had some success with that. We've achieved reimbursement for intermittent catheters in Korea, also Japan. I know Japan wouldn't normally figure in an emerging markets lineup, but nevertheless, when it comes to the use of intermittent catheters that are ready to use, Japan is in that category, too, and we've gotten access for that.
That's part of why we think that the fundamental growth outlook is very positive. Here we put 5%-15%. Again, I'd say this is for as long as we can see. Wound care, also fundamentally attractive, a bit more volatile as a category. Very much driven, like Nikolai talked about standards of care for AWC, and there's an underlying demographic trend and lifestyle, disease-driven trend that from diabetes and whatnot, will promote the use of wound care products. If we look at how we've been performing over the course of this period, I think one takeaway is, this is a bit more of a volatile place than Europe that I'll talk to in a few minutes. Right?
I used to head up the region five years back. As much as I'd like to think that the growth rates that we're seeing up there on that chart is a testament to leadership, that would probably be taking way too much of the credit. We had very nice tailwind in those years on the back of a big investment program. Saw growth in the 20s, and we've seen growth come down over the last few years, but stabilizing around now, around 15%. In the meantime, what happened? A slowdown of the wound care category in China happened. We had an economic crisis or two in Brazil.
We had an oil price that dropped very significantly, that had severe impact on the business that we do in the Middle East. You know, events happened and we think that events will continue to happen in emerging markets. We will talk about some of them in a minute now, when I talk about the different businesses that we're in. One of the events that we're dealing with now is a reimbursement reform in Greece, which poses a headwind of up to DKK 100 million just this year. This is a more volatile region, but fundamentally an attractive place to be, with lots of relevant customers and a real desire also for a good solution. It's not a one-size-fits-all. You have to manage a pretty heterogeneous portfolio of markets.
If you think of the work that we do in China, that has a lot to do with product upgrade, has a lot to do with e-commerce, working with DTC pharmacies to drive growth. If you go to Russia, the discipline is really winning tenders. Russia is powered by thousands of tenders every year that happen through an auction-like process, and you have to build a capability around participating in and winning these tenders alongside with distributor partners in that market. It's a different animal than China. Argentina is also quite different. Our work down there, we've been there for about 20 years. It's been all about working on consumption, access to good products, and upgrading the portfolio, and we've seen very nice growth down there and a good position.
South Korea, I already mentioned the reimbursement of IC. We're also seeing very nice growth in the other categories that we're active in South Korea. Saudi Arabia really has been one opportunity where it was all about actually getting in the market, building the categories, getting on some of the large tenders in the region, and then starting to build demand. It's not the same, but a portfolio of opportunities that you have to manage, and also a portfolio of investments that you have to manage. Outside of the large five markets, where I also want to say we are market leaders in our two largest categories for Ostomy Care and Continence Care in all five markets. We have a tail of what we call Tier Two markets, where we also see pretty attractive growth.
Some volatility comes with the territory. You'll know what I'm talking about when I mention both India and Turkey. Poland's on that list, Algeria's on that list, so is South Africa and the Gulf region. A very diverse place, but fundamentally a place where we believe it's possible to drive growth in the neighborhood of 15%-20% if we continue to invest. You recognize the themes from the earlier Chronic Care strategy. I can already reveal now that when we talk about Europe, they're gonna be the same. Here, there's also products play a really important role. We've seen lots of growth come out of product upgrade across many of these markets.
For the first time, we are also going to be launching products that are tailored to emerging markets and price points in the emerging markets and clinical needs in the emerging markets. You'll see more about that in the future, but we're pretty excited about that as an avenue for growth. Then accessories, also here, plays an important role in managing the ostomy category. Brava is launched in more than half the markets that I mentioned before. On the consumer and customer side, these are the same, the same two partners and same two customers, healthcare professionals. A lot of the reason that we have strong positions in these markets is that we partnered with healthcare professionals over the last three decades in EM.
The care program, which is some of the work that I am the most proud of, in EM, has become really a way of building standard of care and compliance in many of these markets. In many of these markets, it is the care that people will be getting. We're very, very proud of that. We run a program that we call Access to Healthcare, and which is a portfolio of investments in projects to basically build reimbursement and clinical standards in a number of these markets. The final bit around execution is really a commitment to continuing to invest and staying engaged with the region, and one where we also continue to invest in running an ethical business and a compliant business.
One of the things that I am particularly happy about is that if you look at the lineup of the organization that we have in emerging markets, when you look at the general manager portfolio, these are people who've been with the company more often than not, decades. They're very experienced, and the group is doing just really phenomenal work. Products, we have the right portfolio to compete. We have the broadest ostomy portfolio in the market, and we're active with all of the brands in select markets. Of course, you see more volume growth on all the brands in emerging markets, but we think that we can sustain market leadership with what we have.
We also think that we can complement growth both through product upgrades and accessories. A number of these markets that are particularly immature, we think we can also play a real role in compliance through the Care program. Continence Care, I'm not gonna talk too much about that. The lead brand for us in emerging markets is still SpeediCath, and this is a business that is more often than not contingent on us getting reimbursement, and then once we have that, people will appreciate having access to modern technology. Wound Care, it's a commitment to still building the category, and like Nikolai talked about earlier, also taking share from competitors in the markets where we have invested quite selectively. I wanna spend a few minutes on care.
'Cause if you think of the model that we run the Chronic Care business around, this is really at the center of what we do. The Care Program is now live pretty much across all of Emerging Markets. It's been a program that we have invested in for more than five years to develop. The Care Program has become, in many of these markets, the foundation for the partnership that we have with healthcare professionals, and you'll find our people working very, very closely in the acute setting in many of these markets, together with healthcare professionals. The Care Program in many of these markets is also lived out basically through nurse teams, that will help people in their homes if they have issues.
In effect, we become semi-integrated in many of these healthcare systems, with the healthcare system itself, to provide care and good access to products and good compliance, and therefore, also good outcomes. The other thing that we do is the path to actually getting reimbursement in many of these markets, if you are a consumer, can be pretty cumbersome. If you've broken your spine and you're confined to a wheelchair, and you need to use catheters in Russia, from the time of your injury to achieving reimbursement is a six-nine month process that has to be managed. You can take my word for it, that it's paper heavy. It requires a lot of handholding, a number of meetings, lots of follow-up, good documentation. That's the work we do. That's the work we do.
We connect patients from the point of their injury and their surgery, and we hold their hand throughout the process until they get access to reimbursement and access to the product. We are super proud of this work, and I think it's a key source of competitiveness. We continue to invest, so we put on the chart here, eight markets that we've invested in over the past few years. We lay down a filter of course, macroeconomics, political stability, market intrinsics, the fact that we have local leaders that we trust, local teams that we trust, and a good business case. You look at this chart, and you have to smile a little bit, right?
'Cause you think of what's been in the news in Financial Times and economists over the past few months around Argentina, for example, and the currency. You could say: Why are you investing there? We've been in Argentina for two decades, guys, and one of the reasons that we are market leaders there is that we stuck around when the going got tough. We're market leaders in Russia. We stuck around when the going got tough. We think that emerging markets and success over time in emerging markets requires you to stick around even when the going gets tough. Of course, you have to manage your business and your business processes in a way that you still run a sound business. We do that, but fundamentally, you have to commit.
You have to commit. We've done that, and we've found a way, we think, to run a good and healthy investment pipeline. We still have a healthy investment pipeline, and we try to run it in a way that we don't commit to more than we think that we can manage, and we make sure that the business cases get delivered, and when they if they veer off stream, we get them back on track before we start doing something new. Those were the investments that we'd make. A few remarks also about Ostomy Care in China. Here we have a market leadership position. We've been in China for 30 years plus, so this is not something that we built overnight.
We are quite confident that we can continue to outgrow the market in China. We continue to invest in this market. We grow through product upgrade. We grow through the use of accessories and the promotion of accessories that people get onto a good routine. We grow through the care program. Here again, is a great example of how the care program needs to be adapted to the country that it's in. The platform of choice digitally in China is WeChat. Pretty much everybody who goes through the care program today get enrolled through WeChat. A lot of the support that happens in the care program in China happens on WeChat. Why? That's the platform.
If you're not on the platform, you're not relevant, you have to adapt the program to the local conditions that you're in. Lots is happening on e-commerce. We commented on that earlier. We're seeing exponential growth on Tmall and very, very high growth also through our DTC partners. I don't think that's gonna go away, it's only gonna get more pronounced. Like I said, we continue to invest here, and if I were to point to one market in ostomy, in the global portfolio of markets that I deal with, I'm probably the most proud of this team's work. They're growing across every single region, every single brand, and they've done so for a long while.
They are super competitive, and I'm full of confidence that with that team on board, we can continue to see good growth in China. Reimbursement and expanding access to reimbursement, those are, let me just call them nonlinear challenges. These are not problems that lend themselves well to a quarterly budget-type process or a yearly budget-type process. These are complicated projects where you have to work with multiple stakeholders, oftentimes over years, to get to the right type of result. The way that we thought about this is that you basically have to run a portfolio of these types of projects, and we've been practicing this for the last 10 years with some success. We put 3 up here of successes that we think we have some share in.
A significant part of the growth that we see in our catheter business in EM comes down to this type of work. This type of work. What we've concluded is, this you have to fund and set up with a different mindset than other activities that we do. This comes out of a dedicated global team around market access and public affairs that manages this portfolio. And in the individual markets, we run super tailored projects that involve a multitude of stakeholders to get to the outcome. Not linear, but really important work, and we are putting resources behind it that we treat very differently than the rest of the growth initiatives that we do.
We think of this in option-like terms, that the capital that works here and the people that work here create openings for future growth. Very, very important work. What does that add up to? We're optimistic about getting good growth from emerging markets. We think we also have a pretty solid track record. The region is contributing significantly to the group already. We have a good pipeline of opportunities that are both short, medium, and long term. We have made significant investments that are paying back, and we'll continue to be making investments. I want to emphasize, it's with a good dose of discipline that we make sure that the business cases and the investments get implemented and delivered before we take on new opportunities.
With that, I have 45 seconds left, so we can transition to Q&A.
With respect to the investments that you've done in the additional sales initiative, both the first one you did many years back with the initial DKK 1 billion, and now with the latest from about one year ago, can you quantify or elaborate a little bit of the effect of these initiatives? What would have growth when rates would have been without it? Because as I recall, that one of the first markets you did investments in was actually in Brazil, and that's not even on the map anymore.
No.
That was, you know, was not a good one, I guess.
No.
If you look at the overall business, what do you think it have done to the growth rate? I know it's tough to put it on, but.
It is, it's a great question. It's also a question that we've been asking ourselves. By the way, on Brazil, we're having a killer year in Brazil. It's been, like you said, it's also been a bit of a volatile ride. The honest answer is, I don't know if you can do an analytical exercise that's gonna provide you with a definitive answer. At the level of the business case, once you're about 12 months in, how certain are you that you can attribute the effect that you see in the market to the leader that's there or the additional salespeople that you have?
The way that we think about this is, if we run an investment, an individual investment, we track a number of KPIs for that are both related to process and results. Then we track it at the overall level, at the regional level, that for an SVP of emerging markets, if we have allocated a certain amount of capital into the investment, are we getting the effect on the top line that you promised? I'll say in some years, yes, in some years, no. All the volatility that I talked about plays into that equation, and this is an elaborate way of giving you an answer that is fundamentally that it's uncertain. We see an effect.
Of course, we see an effect, otherwise, we couldn't be sustaining the growth rate that we have in the Chronic Care business.
Christian, over here. Hi, I'm Veronica from Goldman. Two questions for me, please. Looking at the 15%-20% ambition that you have for emerging markets, what needs to happen for you to get into the upper half of that? If I look at your business, and frankly, all of your peers, EM growth in the industry has decelerated as everyone's gained scale.
Yes.
What would need to happen for you to do 17-20?
You could say, a year without too many adverse events. Right now, we have about DKK 100 million worth of headwind, which certainly is detrimental to growth. For our investments to work. At the, if you want to look at it from the portfolio level, there are about half a dozen markets that really matter. China, Brazil, Argentina, Poland, and a few others, where if we have good performance in those markets, we have a good year in the region.
My second question is on the 20 pipeline opportunities where you're looking for getting reimbursement. Can you maybe highlight two or three that you think are most likely to come through in the next two years?
I'm not sure I understand the question.
You said there are about 20 different projects where you're trying to get-.
Oh.
reimbursement-
Yes.
in different markets for different products.
Yes.
Can you maybe give us an insight into what we might see in the next couple of years?
We'll comment on that when we have the breakthrough.
Okay. Thank you.
I have two questions. Firstly, when you give the growth range of 15%-20%, I recognize it's ambition, it's what you're striving for. Realistically, if you look at the next one or two years, are we talking more 15%? Because if I look at your growth rates, they've been slightly below that. Rather than talk about the aspirational goals, what is a realistic number that we can go for near term? Secondly, if I look at China, you've had some instability in the past with the sales force, et cetera. Can you talk about the competitiveness for salespeople?
Yes.
Stability, and also, what is happening to the labor rates, in China?
Yes. To your first question, Michael, if I could predict what we... How it would pan out, I could make a, I could make a fortune, in the stock market, predicting how things would develop. No, kidding aside, I think it's realistic to get into the ambition range, otherwise, we wouldn't be putting it out there. We're very close with where we are now. We have invested over the past 18 months, and I'm expecting that the team will deliver. We are, of course, subject to some of the volatility, that happens in some of these markets.
It is, it is a statement that has, I think, a higher degree of certainty, uncertainty than when we talk about the work that we do in Europe. When it comes to China, true, very high competition in the labor market. Also, I think, relatively significant increases in salary for you to remain competitive. We've worked a lot on our people turnover rates, and we've gotten them into territory where we think we have, where we can be and where we have a stable organization. Still challenging. Did that answer your question?
It does, but more specifically, are we talking here about a turnover in the Chinese sales force of 10% or 20% per year?
No.
I think at one stage, you were talking about 20%.
Yeah, we, when we think that this is at a manageable rate, it has to get below 20%.
What is the wage increase per year? Are we talking 10% or more, or, some guidance?
Depends on the year. Depends on the year. Do I talk about that? 6%, 7%. 6%, 7%.
Yeah, one further question on the product portfolio, which you mentioned in particular for the emerging markets...
Yes.
First question, how does it distinguish to your traditional legacy portfolio, which you use to serve the emerging markets? Second question, from a margin perspective, I can imagine that it's more favorable to use a legacy portfolio than to create a new portfolio.
I'm not gonna give away what the products will be. Since they're in the pipeline, they're confidential. We think that they will be very attractive also from a margin point of view. I think the key thing to make note of is that some of the clinical standards in emerging markets are specific to emerging markets. We think it pays off to make products that are tailored to those clinical needs.
Does attractive means similar, or...
Yes.
But-
To be what happens to in many of these markets, I would say, we don't necessarily have reimbursement. In some we do, and the reimbursement typically trails inflation. You have to also work on your prices in market, which obviously then, puts a squeeze on the channels in the market that you participate in. The onus is also on us to make sure that our local pricing keeps up with inflation.
Hi, Patrick at Merrill Lynch. Who would you call out in ostomy incontinence within the region, other than yourselves, is doing the best job? Who are you fighting day to day? Is it the regular names you've heard about or-
Yes.
Yeah, okay.
It is the regular names that you've heard about, and then in a number of the markets, you'll see a myriad of local players who are trying to get into the category. Probably most pronounced in China. Otherwise, it's the names that you've heard us talk about.
Have you seen any change in Bard's behavior since its acquisition?
Not really. Not really.
Christian from Nordea. Can you comment on the overall profitability level of your emerging markets region and how that has been developing in the last few years, and particularly in light of these new investments that you are putting in? Thank you.
... that's part of, if you will, the overall business plan that we have for the region. The region is, I think, healthy when it comes to profitability. We have allowed ourselves to have, well, we began the investment program without giving you too much detail, that we call that investment program Arrowhead, for a number of internal reasons around how we developed the program. In the initial year of that program, profitability did come down a little bit, and it's now back up.
One more? Yeah.
Thanks very much. It's Ian Douglas-Pennant at UBS. Can we touch on the local competitors again? Are you seeing anyone, anywhere, in any of the local markets that has a product that even is broadly equivalent to yours? I'm not talking about, like, interchangeable, but a lower quality version of yours in either ostomy, continence, or wound.
The short answer is no. Um, and , that doesn't mean that there are not a lot of products out there. Uh, so you will find, if you, if you go to China, or if you go to India, if you go to any of the markets in, in Africa or Latin America, you're going to find local versions of catheters and ostomy products, but they are of a much lower quality, much lower quality than what you'll see from a company like ours.
Is this on? Can I, can I... Oh, hello.
Yeah.
Why, why not? It strikes me as you have a big factory in China, there must be people there who understand what these products look like in a lot of detail. Why has it been hard to just copy what you've got?
It's a little bit hard to do. It's not so easy to do. A full ostomy portfolio that's relevant has hundreds of SKUs. Before you even start getting into the category, you have to figure out how to produce a portfolio. You have to get yourself a sales team that knows how to work with clinicians, that clinicians will actually use and prescribe your product.
Also now, if you wanna be relevant, you also have to have a presence in front of consumers who will look at your product and compare it, because they can see the technology that's already available. That, you will have to be persuasive in both of those situations, vis-à-vis healthcare professionals and consumers, nobody's managed to do that. Does that answer your question?
It's-
It's harder than it might seem conceptually to just go around and build yourself an ostomy portfolio. That's one of the reasons why there are not that many people doing it.
Thank you for your questions. Let's move on to Europe.
Europe. Is it me again?
It is.
All right. I'll get out of your hair soon. This is our heartland. This is our heartland. 14 markets where we are present with subsidiaries. We serve more than 10,000 hospitals, a bit more than 1,250 people. Very strong positions that we've built over the company's lifetime. These are products that are fully reimbursed, by and large, in very stable categories, and a business that's pretty much evenly split between Continence Care and Ostomy Care. You can also see, like I said earlier, that Europe still remains the bulk of the Chronic Care business, so this is incredibly important to us.
You can also see that from a growth point of view, other developed markets and emerging markets, the investments that we're making there are paying off when it comes to the share of the growth. Now, we still think that the categories are attractive in Europe. There's still growth in both Ostomy Care and Continence Care.
There's good access. There is some pressure on price, typically through reimbursement reforms, and there is some consolidation of channel, but there's nothing happening where we think the fundamental model is being questioned or fundamental access is being questioned. We think we're looking at a stable and attractive set of categories, with good growth for as far as the eye can see. This will be familiar by now.
These strategic themes that we run the rest of the business by is also, of course, what we run Europe by. Strong role of products. I'm not gonna repeat what I've said about the ostomy offering and the continence offering. They are fully launched in all of the European markets. They're working well. Everything that we've been talking about with the Coloplast Care program and forward integration is playing out in the large markets in Europe. Anne-Marie will be on stage in a few minutes to talk about what we view as the most mature version of an integrated offering between product and service that also has relevance for payers. Of course, there's a lot of work around building a still stronger.
a still stronger organization, we do lots of the classical work that you would find around leadership, that Lars alluded to earlier, salesforce effectiveness, and increasingly, also a lot of work around payers, where over the past three years, as we have geared up investments in innovation, as you heard earlier, we have built local payer teams in all of these markets or strengthened the teams that we already have. It's working. We, this position, this combination of product and service and teams that are very experienced, ensures that we continue to grow above the market in all of the European countries, and most notably, our investment areas remain the three big markets.
I'd like to invite Anne-Marie onto the stage now to talk to you about the work that we do in the UK. Once she concludes that presentation, there'll be Q&A again, and if you have any questions that pertains to Europe, I'll take those. Anne-Marie will take the questions about the UK. Thank you.
Thank you very much. I'll just flip forward to the U.K. Hello, my name is Anne-Marie van Neck. I joined Coloplast around four years ago in the Netherlands as a country manager, and I moved to the U.K. a year and a half ago to be responsible for Chronic Care in the U.K., and let's not forget about Ireland. I'll be talking to you today about what is happening in the U.K., what is happening with our business model, both in terms of integrating product and services as a business model, but also what we're doing with being closer to the payer, the NHS, and the local CCGs. As many of you are aware, the U.K. is still the largest business of Coloplast worldwide.
We did last year around DKK 2.4 billion in sales, and we are market leading across all categories. We derive more than 50% of our sales through Coloplast Charter, our home delivery company, and the business is evenly split between OC and CC. What you can also see is that we have been consistently outgrowing the market, both in terms of product and also in terms of channel. What is happening in the market? I'm sure there will be a question about Brexit, so I will not steal that person's thunder. Obviously, we are dealing with the NHS. The NHS has been under pressure for many, many years, and I do not think that will change. That means that they need to always look at how they are spending their resources.
For those of you living in the U.K., you will have heard about winter pressures over the last years, which have slightly affected the number of ostomy surgeries that were performed. What does it mean for Coloplast in the U.K.? I will go in depth into the following three points, but to just give you a highlight, we are looking to grow our business, not only through investing in the acute point of discharge, but we are sourcing our business increasingly in the community. We are also making sure that we retain our consumers with us as long as possible. Thirdly, we're working closely with the local payers to ensure that they can have optimal population management. Before going into a bit more detail on the strategy, I wanted to explain to you what Charter is actually all about.
Charter is our home delivery company or DEC, which means a dispense appliance contractor. What does that actually mean? We are contracted by the NHS to take orders, to collect prescriptions, and to deliver products to people's homes. That is basically what we are contracted to do. We have embarked already many years ago on actually delivering much more than that.
To give you some examples, obviously, we are no longer just taking orders over the phone. We have a full digital offering, but also we proactively call out to people to make sure they are onboarded well into our service. Also, we have specific programs for what we call vulnerable people, where we actually help them to manage their chronic condition. As you can see here also, we are growing very nicely.
For those of you that have followed the company a bit longer, we had a blip in 2014-2015, but since then are back on track with a quite satisfactory growth. In terms of our ambitious growth plan for the future, there are no surprises on this chart in terms of the three pillars of growth. For the U.K., it all starts with our superior product offering, which I will tell you a little bit about. We are very fortunate in the U.K. that we have a healthcare system which enables access to our latest innovations. We have been able to launch every innovation that R&D has come up with to great success. In terms of unique consumer relationships, I do think we are a bit ahead of the pack because of Charter.
We have day-to-day, we have more than 4,000 interactions over the phone in terms of orders and questions, and on top of that, interactions obviously digitally, and we ship to 60,000 people every month, which means that we know a lot about what goes on in the lives of people with an ostomy or people using our continence products. It also means that we have the ability to actually have insights into their behavior through their ordering pattern, and that's what we utilize to interact with our payers. I'll tell a little bit about that when we get to it. Nothing, you can make really great plans without commercial execution, it all amounts to nothing. That's what I will finish my talk with today. Let's start with the products.
The Convex launch, which was launched prior to my coming to the U.K., has been phenomenal and has really, I think, made a big change all around where it was launched, but certainly in the U.K. Now, with Concave being added to the portfolio, we now have the best portfolio in the market, and we are able to basically offer a complete portfolio. I would also want to say that with Concave, we had a lot of discussion with Concave in the U.K., where from a global point of view, we talked about establishing a new category.
I think in the U.K., because of the level of obesity, actually, the category was quite well accepted by the healthcare professionals, and rather, we were looking at, you know, the challenge to make sure that the patients are getting access to that product early on in their journey. The results are really good. You've heard Rachel talk about the Concave and her partner, Steve, also. He could not be here today. He would have been probably dancing over the podium because it made a real big change for him, and also, healthcare professionals are very happy with that product. Now, there was one thing that Rachel said to me after hearing some of our colleagues talk here.
She was a bit upset that we were still talking about accessories, because in the U.K., we do not talk about accessories, we talk about supporting products, because these products are not nice to have. These products are really essential for a good experience as an ostomate. For the U.K., therefore, Brava has been a really important category that we continue to launch new products in, and the Brava Protective Seal that Oliver talked about earlier today has been a huge winner. Also, the tape where we are a market leader by far, is driving growth. I'm particularly proud that in the last financial year, we became officially market leader in this highly competitive segment of the market.
Lastly, let me tell you something about Flex. You will have seen the demonstration earlier today. Flex is quite a game changer. It has completed our SpeediCath portfolio. We have done very well. As always, when you launch new products, you do not want to cannibalize on your existing business, and I can tell you that in the U.K., we have really accelerated growth rather than cannibalized business. We're very, very pleased with that product. Now I'm gonna take a little bit of time and talk to you about integrated services. Charter has been part of the U.K. for many years, for decades. It grew sort of organically and is now the market leader in home delivery.
At the same time, around eight years ago, the company started the consumer journey. The U.K. was at the forefront of really developing that, and very successfully. It is really an integral part of our business. On the one hand, when I came to the U.K., there was a big, what we call, inbound operation, where we take orders, and we make sure those orders get a prescription and get dispatched as soon as possible. On the other hand, we had a big consumer and care operation where we do outbound calling, and we make sure that we understand what's happening in the lives of our patients, of our consumers.
We have probably a more detailed conversation, a more upskilled conversation, to really understand how people are doing, if we can help them, if they have problem being concordant to their therapy, if they need a different product solution, et cetera, et cetera. Both parts of the business were doing quite well in their own merits. Actually, if you take a little bit of what we're doing in consumer and put that into home delivery, then you can do much more. Think about if you have those 4,000 inbound conversations every day, if you ask a few intelligent questions, you can actually hear very quickly if people are thriving or if they are not thriving. If they're not thriving, make sure they talk to a product specialist that can then help them have a better solution.
That has been sort of the start of the integration of home delivery and Care. We like to say we put home delivery into Care rather than saying Care into home delivery. It hasn't stopped there, because we also figured out that we can do much better when it comes to our healthcare professionals. Our healthcare professionals, we have people who bring us 300, 400 new patients every year. We call them an NPR, New Patient Registered. These are super important customers to us, and they see many people. They see our TMs, they talk to people on the phone, I go by and see them, and we were still, in my experience, not giving them a really golden service. That's one of the other things that we are changing for our healthcare professionals.
Lastly, as I said before, because we have this big database with insight of what people are actually doing, how they are behaving, and because of the questions we're asking, actually, also how they are feeling, that is something that is, as they would say in the UK, gold dust and of real value to the NHS. That's what we are utilizing to get closer to the NHS, work together with them to manage populations, and to make sure that we are a responsible partner to the NHS.
What does that mean, being a responsible partner? It means that you make sure that people don't use too much product, but also don't use too little. 'Cause when you dig under the surface and you look at the data, you actually see that in catheter users, more than half of users are actually not catheterizing enough.
If you don't catheterize enough, you're not emptying your bladder correctly, the UTI will come. The NHS will actually pay for a lot because you will have to manage that UTI. As Oliver said earlier today, a UTI for a healthy person maybe doesn't cost the NHS that much, but a lot of our users are actually not that healthy or have chronic conditions, and then it does cost them a lot because people may be hospitalized. In the end, we're talking about an integrated model of a fantastic product portfolio, unparalleled services, and deep insight and control. Before, going on to our execution, I wanted to talk to you a little bit about what we're doing on the ground, because you have the NHS, which is a big national organization, and then you have the NHS on the ground.
They have devolved their responsibilities into the CCGs, the clinical commissioning groups. These CCGs, they have the responsibility for a certain region to manage the budget. What we have found by engaging with them, is that they actually didn't really understand what was happening with people with an ostomy or using catheters. They could see they're spending money, they probably wanna spend less, but they don't understand really what's happening. They don't even really understand how many people are using appliances. We have found a way to give them more insight, but then also, we are partnering with them to improve compliance, to ensure appropriate usage, but also, most importantly, to actually make sure people are doing well.
We do that through a nursing service, through online services, through outbound services, so it's quite a cross collaborative effort that we call a Stoma Partnership Program or a Continence Partnership Programme. As said, all these plans come to nothing if we don't execute well, and what we have said together, we need to have an ethos of exceeding customer expectations. For that, we didn't have enough. We didn't have enough resources, and that's why we are investing in the UK, as was said before. We are adding colleagues to make sure that we can have sufficient training, sufficient quality, and continuous process improvement.
I can tell you that having come from a simple subsidiary that only does sales and marketing, to actually having a direct distribution arm, it is a different animal, which requires diligent process control and continuous process improvement. What is also important, with all the people that are supporting our business, is that they have great career trajectories, and that's also what we're investing in. One of the things that I believe very strongly in is cross-functional collaboration. If you look at the individual customer, they are touched by many different people of the organization, and we need to make sure that we all know who's doing what and who's responsible for what, so that in the end, we are exceeding customer expectations.
With that, I would like to open it up for questions, please.
Thank you very much. Scott Bardo from Berenberg Bank. Just, also I'd like to pull in one of the presentations that Christian made, which showed that the Chronic Care market growth was around 4% in Europe, and that Coloplast has been, if you like, trending towards that maybe 5% growth in Europe at the moment. Just the observation would be that given that the U.K. is the biggest market for Coloplast, and one that I think has been very successfully growing at high single digits, that would imply that maybe some other European markets are growing sub-market in Europe, outside of the U.K. That would be 1 question.
The question directly for you would be: What is it about the U.K. market that just allows continued high single-digit growth, despite it already being your strongest market?
Well, I think it's not for nothing that the UK has always been labeled as a pocket of growth. Despite being the largest subsidiary, I think we still have enormous amount of growth to go for. We are not where we want to be yet, I think that's why we can continue to be growing that amount. I also think it's also because of continuous investment in the market. You know, we are now on a big investment program, but I think back in 2014, 2015, also, there was a big investment done in the company. I think that is just, you know, continuing to fuel the growth. Absolutely.
Can I... Can you hear me? Scott, to your question about the other markets in Europe, yes, there are some markets that are growing less. It is a blend. The number that you see is a blended number. Overall, the growth rates that you saw before, very stable.
...with the prevalence of sternum and hospitalization similar to you. Just make some opinion to.
Yeah.
Ex-UK regions are.
Yeah. Well, the markets are different, if you may say that Let's just, for simplicity's sake, say the incidents of cancer are roughly the same, let's say access is roughly the same. The channels are not the same. Reimbursement levels are not the same. The healthcare, different healthcare systems are not run the same way. The dynamics play out differently, and you have to manage it by market.
Hi, Veronika here from Goldman. The growth ambitions that you have for the U.K. going forward, you said you have a desire to accelerate growth.
Mm-hmm.
Can you help us understand what you see as your aspirational target for the U.K. business over the next 2 years -4 years, and how long until you get there? Then I have a very peculiar or particular question really, which is on Concave, and how is it possible that you were able to get a reimbursement premium for that in the U.K.?
Let me answer the question on concave. We obviously have some experience with Drug Tariffs and how to deal with them. We were able, with the data provided from the trials done on a global level, but also locally, we did trials to convince Drug Tariff that we should be reimbursed at the level that we applied for. We're very happy with that. Regarding numbers, I'm afraid I can't comment on that.
Okay.
Just in respect to the two great launches you have of convex bags and concave bags. Any difference there between those two? Also, in terms of whether you are converting own sales of flat or other solutions into either convex or concave bags, or are you able to sort of grab market share from your competitors?
Yeah, well, I think we wouldn't be showing the satisfactory growth if we would only be cannibalizing. No, we also are very satisfied with what we're doing in terms of converting competitor users. I think the first part of your question was around differences between convex-.
Yes
and concave. I think, well, with convex, it is a well-known concept, with a superior product, probably the sale is easier. With concave, although the segment itself is accepted, that there are people without outward body profiles, the more obese you get, also the higher the probabilities that you will herniate. It is still to actually talk to people and say: We now have a product specifically designed. It's, yeah, I think it's a nice challenge for the sales force to have, I'm very satisfied with how the launch is progressing.
How long time will it take for you to reach out to those patients with these specific problems? Will they, and will they be responsive immediately, or will it take you maybe one, two, three years?
No, so I think...
to convert?
I just build on what was said earlier. Because we now have, and particularly in the U.K., we have such a strong consumer arm, and we have a Charter, we are able to reach people in the community much earlier. It's not, it's not only in what we would call an NPD product, so we're not only counting on new people being discharged. Actually, in the case of Concave, the herniation is not there at the start. What we do is we engage with people in the community in many different ways, either face-to-face, through consumer engagement meetings or, through there are many charities in the U.K. that cater to people with ostomy, so we engage with them. We do a lot of online.
Probably 50% of our leads do come online, people do search for problems with their stoma. We have different ways of getting to them, but we have quite a, you know, I think quite a mature organization to do that. Yes?
Hi. Okay, I'll be the guy. Brexit. obviously, negotiation is going really well, almost exactly as planned. just wondered how you were planning for Brexit, what you see as, well, as the key risks.
Yes. It was about October 2016, 17, sorry, we're now 18, that it was my husband who said, "Anne-Marie, what are you doing about Brexit?" I said, "Oh, well, better get on it." All kidding aside, we started probably in December 2017, with a big cross-functional team, both from headquarters and local.
You have to think about supply chain, finance, legal, regulatory, commercial, from all the three business areas, not only Chronic Care. To really go start a project about assessing all the risks, then think about how we can mitigate, and then plan for the mitigation. We are now at T minus 6 months, and we saw the main risk in the supply chain in the short term.
In the longer term, I'm sure we'll have to adapt some regulatory processes once the U.K. starts to diverge from European regulations. We have mitigated for that. We are executing on a plan to get additional stock on U.K. soil in time for a potential hard Brexit.
Thanks. Sounds like you're more prepared than the government.
Thank you.
Hi. When you benchmark the U.K. with other relevant markets, do you find that the strength in your Chronic business is having a benefit in terms of developing the momentum also in Wound, in Urology? Is the sort of extended portfolio benefiting from the relative strength of Chronic in the U.K. relative to other geographies, and can it work as a blueprint for other markets?
I don't think I'm that well apt to answer for Urology Care and Wound Care. The one thing I would say is that they are quite different touchpoints because urology is not urology. You have many different types of urology. Wound Care is such a community off-script model in the U.K. that we have very little in common with them. I don't think that they would benefit a lot from what we're doing in Chronic Care. At this time, we're not really looking into that. Okay.
Thank you very much, Anne-Marie, and we have another coffee break now. Welcome back, everyone. I now have the pleasure of introducing our new SVP for North America Chronic Care, Manu Varma.
Thank you. Thank you, Ellen. Good afternoon, everyone, and welcome to the North America portion, the U.S. portion of the presentation today. Before I get into the slides, let me just take a moment to introduce myself. I've worked my entire career in healthcare. I started in healthcare technology, in electronic medical records.
After that, I worked for a number of years in management consulting and then in medical devices for a number of years. Most recently, I was at Philips in their healthcare division, and I was general manager for businesses in telehealth and population health management, where I focused on building technology solutions for providers to take c are of patients in a way that would improve the long-term outcomes, both clinical, financial, and in terms of patient satisfaction.
A fair bit of that work was about making sure that you're doing right by people who have chronic conditions, because, as we know, a lot of the costs in the healthcare system and poor experiences happen for those patients. When Coloplast called me, I was intrigued, because even though I'd been working in chronic disease management, you know, the ostomy and catheter space wasn't something I was very familiar with.
I am here because every conversation, every piece of exposure I got to the company, made me like it more and more, I realized that there's something special going on here. In terms of the fact that, you know, when we talk about chronic diseases, for instance, I know from my experience that when you have good products, they lead to compliant patients.
When you have compliant patients, there are fewer complications. When you have fewer complications, you have fewer doctors visits, emergency room visits, hospitalizations. It's better for everybody. Good products stop a daisy chain of bad events. I could see what Coloplast is bringing to the market. You know, you know the product portfolio that's out today and the kind of things Oliver and team are working on, really do stand out as the best products in the industry. I was also happy to see the stable, strong leadership, and my interactions with everybody in EXM also convinced me that this was the right place for me.
Those were the things about the company, then the role itself, the more I looked at the North America situation, I was very compelled by the size of opportunity and untapped potential we saw in the U.S. market in particular. That's a good segue into my first page, which is really the big picture. You can see, these are some of the statistics about the U.S. market, you will notice we are a little bit different from some other geographies in that we're bigger in Continence than we are in Ostomy. We have the number 1 growth opportunity in Coloplast when you look at the market potential that is available to us.
You can see that we've been growing faster than market, but our market shares are still nowhere close to what you see for Coloplast in region Europe and some other geographies. A lot of potential for us to go and tap it. That's the company. When you look at the market, there's a set of trends that we see. There are certain things which are independent of our categories, which is, you know, kind of common in many markets. There is a greater amount of cost pressure on healthcare in general. Payers really want to spend less. There's a rising emphasis on value-based care. You know, even when they spend, they want to see some value-based outcomes. It isn't enough to just supply the product. You have to guarantee outcomes more and more.
The reality of the kind of business we are in is that our channels, the dealers, distributors, have been consolidating over a period of time. And that's the market side of it. When you look at the consumer side of it's very interesting as well. We see, unlike, you know, some other geographies, there is quite a bit of low-quality products in the market, and the economics are such that there is a lot of rent-seeking behavior, and you find, you know, substituting, switching patients to lower quality products just makes more money for people who are servicing the patients. On top of that, when you follow the patients and see how they're experiencing the service and product, it's not, it's not quite what you would expect in a, in a developed geography and economy like the U.S.
Certainly, you know, we have really short, real emphasis on shorter length of stay in the hospital. People get, you know, an ostomy surgery. They have some support from home health, but really, they very quickly are on their own. The amount of qualified guidance to patients is fairly limited. To address this context, we have launched a new strategy for the U.S. market. This clearly has echoes of what you've heard from Christian, and you heard from Anne-Marie. There are 3 teams, I will focus more on the contrast from what you've already heard. I think the number one thing that is fundamental to our new strategy is this recognition that, you know, patients, users are not getting the best products.
Actually, if they are empowered, they are rational, they are sophisticated enough that they will try different things and choose the best products. A big part of what we're gonna do in the first team is really drive, through various means, more access to our products. It's through our sales channel, it's through engagement with payers, it's through medical marketing and, you know, focus on clinical guidelines and so on. The second team is about service. You heard from me that the service experience for patients is pretty ordinary to subpar, and we feel we can raise that standard, and if that happens, that would be beneficial for the manufacturers that make the best products, like ourselves.
Last but not least, you know, we have to do it within a culture of commercial excellence and be good stewards of our resources. Our ambition would be double-digit, profitable growth for the U.S. in the coming years. Let me get a little more into detail here. One of the contrasts I already mentioned is that whereas in the past we've absolutely focused on sales and marketing in the provider segment, we're expanding that to include more of consumers. We already do some of that. We will do even more, and also including payers in that approach. Ultimately, we bring value to all the stakeholders in the healthcare ecosystem. Now, I mentioned best products. A big part of that is bringing the best products to the market.
You know, I feel very fortunate, I know my team feels very fortunate that, you know, we work with our headquarters, and they've introduced a number of differentiated products over the years. You know, sometimes I hear the word, we are a launch machine. We do launches every year, and that's a big part of how we grow the business.
You've heard about Flex Pro, Flex Coudé Pro. That's really important for us in the coming year. SenSura Mio Convex is already making a substantial difference for us. I do want to call out the hospital assortment because I know many of you have heard of the success we had at Cleveland Clinic. You know, we take a lot of pride in the fact that we succeeded there because Cleveland Clinic is a, you know, highly regarded institution.
We take even more pride in the fact that it wasn't just a relationship-based sale. They actually did a proper clinical evaluation for our product portfolio and our competitors and chose to work with us as a sole source supplier for ostomy. That was a great proof point, not just in the reputation of the institution, but the strength of our portfolio as well.
Brava is very important for our ostomy business and continues to deliver strong numbers. We are not among the nine geographies that have launched Concave yet. We intend to do that in the next fiscal year, and we're looking forward to launching SpeediCath Standard BBT as well. These products would put us at a significant advantage, we believe, compared to our competitors in the market.
As we look down into the segments, Continence Care, you are aware of this, we have gained substantial share in Continence over the last few years. You know, a lot of it is driven by the upgrade of people on uncoated catheters to hydrophilic catheters. We see that in the coming year, this momentum would be continued by the launch of SpeediCath Flex Coudé Pro, which has been received very well by the market. We did the relaunch this summer, we heard nothing but good things. We are, I'm willing to share, going to expand our sales force in Continence Care in the coming fiscal year, that should also increase our momentum. Really important, I think we've done really a nice job of in-the-field winning business.
We are going to increase also the emphasis on medical marketing, working with clinicians to improve the education, engaging directly with key opinion leaders, and developing strong clinical evidence, ultimately, with the purpose of having better support in clinical guidelines. You know, I tell people when I meet people outside Coloplast, you know, I hear from people that uncoated catheters are considered a barbaric procedure in some geographies.
You know, in U.S., it's still majority of the patients who use uncoated catheters. You know, we can win that one script at a time in the field, we intend to, but we also intend to actually move the needle through clinical guidelines and more engagement with clinicians. On the ostomy side, we feel pretty good about the one solution story.
We feel, when we interact with clinicians, they find it compelling that we are not just giving a product, we're also helping them deliver better outcomes. This aligns well with their desire to do more value-based care. It has been instrumental in our wins over the last few quarters. You've heard of Cleveland Clinic. I'm willing to share some more names here.
Baptist Health is a very large health system in Florida. University of Florida Health, also in Florida, and then Franciscan Missionaries is in Louisiana. These are all large IDNs who have, become, you know, our sole source customers. Over the last six months, this has been helped by expansion of our sales team, and because of all these things, we expect to continue to grow our share.
Now, I know GPOs is a hot topic in this group of audiences, you know, you can see here, GPOs, we believe, are important. Ultimately, ostomy is a fairly small portion of spend inside a hospital, and it is the kind of thing which they would generally like to rely on GPOs to just source for them. Having GPO contracts is something we feel that would help us grease, you know, the initial sales and marketing processes. We don't have these today. We don't have the big ones. We have some smaller ones, and we think we want to win those as soon as possible. There's a little bit of a schematic here of how they actually do the process.
They have a category manager, they rely on a clinical committee, which is basically clinicians and supply chain people who work inside the hospitals. The category manager, if you will, runs the process. The decisions are made by the clinical committee, and then the contract is awarded, which may be a sole source, dual source, multi-source.
If you look at Vizient and Premier, those are dual source contracts, and our hope would be to make them multi-source or be one of the dual source entrants. HealthTrust used to be dual source, and now it's a single source. As these come up for evaluation, our goal would be to present the best possible face and make it basically impossible for them to ignore our portfolio and our strength in the market. We are looking forward to winning this in the coming years.
I would like to point out, even though we do not necessarily have all the GPOs, it does not make us feel like we don't have access to opportunities in the market. We feel pretty good about the pipeline we have, and we will continue to, you know, push for winning strategic accounts, and, you know, effectively do that by communicating the Coloplast story of superior products, patient support, and one solution. An important footnote in this is actually, we have had a lot of focus on hospitals, but, you know, we haven't spent as much time talking about home health agencies. They're an interesting animal in this mix because patients about three out of four patients who are discharged end up going to home health agencies for support.
The challenge becomes that home health agencies are, it's a highly fragmented market at one level. They don't get a lot of qualified guidance because most of the nurses in home health agencies see, you know, ostomates on a fairly sporadic basis. They don't tend to be experts in ostomy. We are working on a new strategy because we've seen the cases where we've won home health agency accounts, that has made a substantial difference, 'cause some of them are big and can actually influence patient behavior and choice. We are investing directly in that segment, and we want to, you know, have a plan to go after home health agencies in the coming year as well. As I alluded earlier, we are going to expand our market access team also.
I think everybody here knows how the payer environment in the U.S. is far more complex than, you know, most of the European economies or emerging markets economy, where you have a government-established payer. In U.S., you know, you may have hundreds of health plans that you have to contract with individually. In order to really have more presence with them, we are going to build up our sales team for payers, both on the manufacturing side and in Comfort Medical. We want to basically do that in order to have more meaningful conversations with payers about better reimbursement support for products that we have in the market, for products that are in the pipeline, and equally important, for all the service that we do, which leads to better outcomes.
Today, we don't think they appreciate that enough because they don't really spend a lot of time understanding the disease burden for ostomy and continence. That's another area where we intend to work on in the coming year. Now, switching gears to the second theme, this is about raising the bar for service. As I mentioned earlier, there's a lot of low-quality products and switching happening in the market, the service experience is subpar, we want to address this in two ways. One is increasing the consumer's power through a program we call Seamless Transitions, I'll get into that in a moment, also by building a platform to improve consumers' access in Comfort Medical. Let's look at Seamless Transitions. Oh, actually, first, care. This is just a reminder.
Care, which we started in the U.S., is a very big part of what we do. In fact, I believe we have one of the largest, if not the largest, databases of patients, in the world. The reason why you see that dip over there is simply, what Lars mentioned earlier, due to the GDPR and other regulations where we had to, you know, remove some names, that were dormant. This is the new baseline, we will go from here, again. We service a lot of patients. We talk to a lot of people through Care. Because it's a patient support program, it's regulated a certain way, you know, it's not a sales, thing for us directly.
Obviously, people who come to us are there because they're planning to use our products. Seamless Transitions is this thing we've begun doing recently, whereby when patients come in, you know, instead of just assigning them to an individual dealer, we actually now maintain a database of information on dealers in the market. We track what kind of insurance contracts they have. If we know the patient's insurance, we don't send them to somebody who doesn't have a contract with that insurance plan. Besides that, we also track, we regularly survey the users and actually capture information about their experience with the dealers, what kind of service levels they're getting, ranging from holding times to, you know, did the dealer try to switch them?
When we see behavior that's contrary to what you would expect for the patient's benefit, we would reduce the rating of the dealer. When it is time for us to offer a patient certain dealers they could work with, we basically say, "Here are the ones that have the highest rating within your health plan," and we let the patient choose. This means, people who are in the channel, people who are dealers, they actually pay close attention to this, and we share their ratings with them. We tell them, "You're rated high or low based on your performance." We believe it is making already a difference, and we want to expand this even further and make it more sophisticated. We think it would be really valuable in increasing the service levels in the industry itself. Comfort Medical.
I think there's a little bit more mixed story on Comfort Medical. I think, on the one hand, we have absolutely been able to validate the rationale we had behind the acquisition. You know, we have been able to secure access of consumers to the best products. There's no switching. They're offered the best product in the industry, and that is good for them and good for us, and we see ourselves participating in a larger value pool also. We've also gotten a lot closer to what happens actually in that moment of truth when dealers are interacting with patients. Equally important, we are much more in the thick of conversations that happens between dealers and payers. It's been a great infusion of knowledge and experience from that standpoint.
It hasn't quite met, I would say, all our expectations, and part of that has been the things we've learned. For instance, you know, Comfort has some important payer contracts, but their coverage is not where we want it to be, so we are investing in increasing the amount of payer contracts they have. Also because it's a fairly complex regulatory environment between us and Comfort, we are building the right model for working the two. You know, unlike, you heard about U.K. from Anne-Marie. Unlike that, in U.S., there's a lot of other constraints that play into the mix, when you start doing these kind of things together.
The simplest example I can give you is that, you know, we cannot merge the data on the Comfort side with the data on the manufacturing side, simply because there is a set of regulations and audits that happen on a regular basis on the Comfort side. If we just mix everything up immediately, then the entity that has to be audited becomes much bigger, and that's to nobody's benefit. There are some complexities that we are working through there. Coming to the commercial excellence, this is an area where we believe there's room for tremendous opportunity. You know, we do Coloplast Care, mostly analog and through websites.
you know, our sales teams use some amount of technology capability, but we are about to launch Salesforce.com in the U.S. for both our care consumer, as well as field sales team. We think that is really the foundation on top of which we want to then build even more compelling digital experiences. We feel if we do that, we would be able to get even more out of our investments in the market. Those are some of the things in the new plan. Just as a reminder at the end, you know, we believe if we do these things and do these things well, we can deliver on our ambition of double-digit and profitable growth in the coming years. I think I can take questions now.
This Seamless Transition program that you've announced, it seems to me that it skirts dangerously close to some of the issues that you had to resolve with the DOJ a couple of years ago. Can you comment on that, and how do you avoid that you don't fall into the same trap as you did when you had to pay the fine?
I was not around when the DOJ thing happened. You know, unless Christian wants to comment, I'll speak just to the fact why I think Seamless Transitions is not running afoul of any kind of regulation, okay? Fundamentally, by law, what we're not supposed to do is create activity that leads to excess utilization of healthcare or mix data between things are meant for a provision of care purpose to a sales and marketing purpose, right? From that standpoint, if anything, we feel sales, Seamless Transitions adds an objective layer of disposition of, you know, any kind of leads we have.
We're not telling patients, "You should go to X dealer or Y dealer." We're simply telling them: "We have a database which tells us how the dealers are performing, and based on that, these are the dealers, and this is what their ratings are, and you can choose where you want to go." We're not imposing, you know, our will on anybody. From that standpoint, we feel it's in the clear.
If I may add.
Yeah.
because you were not here.
Yeah.
I'll be teaching a little bit now. We did not have a fine. We had a settlement. Thank you very much. $3 million for not being completely clear on how we were handling data. There's no guarantees, but there's one guarantee at least, and that is that we know the law, from both ends now, and we will do whatever not to, in any way, infringe any laws. And the one in the U.S., when it comes to patient data, we are very much aware how that works. This design that we have here, it's been pressure tested.
Yep.
Martin Parkhøi at Danske Bank. Just on the GPO, maybe it's for Lars, because how important is it for you the next time you're updating your long-term financial targets to gain these contracts? Now, it has been with Vizient, it has been postponed. Your possibility has been postponed to 2021, I guess you will need to come with new long-term financial targets before that. Visibility has become lower for you now. How important part is this after 2000 and 2020? Secondly, you know, I know you've not been here very long, but I've been covering Novo Nordisk for close. Sorry, Coloplast, actually, but also Novo.
For Coloplast for more than almost 20 years now, and we have always quite well, and the next time you win it, and now we have hospital assortments, and now we have this and that, and it really need, it really never happens. What do you think actually is the key issue?
This, I'll take this, Manu.
Thank you.
Last time we had a capital market day, actually, at our headquarters in Minneapolis, we talked about access. At that point in time, we explained that we actually do have access to more than 50% of the relevant hospital beds in the U.S. when it comes to ostomy. It's only relevant for ostomy.
Continence Care in our category is handled in a different way, and we do have more access on Wound Care than we actually do on Ostomy Care. We have no excuses. We have today a significantly higher market share in hospitals than what we have in community. Because Vizient is an open contract, we can actually go and secure contracts with every hospital system under the Vizient contract.
As you saw on the slide, it's 50% of the total market, and then there are a number of independents also. We do have access. It's easier when you're on a GPO contract, but in the old days, the contracts were locked. It was an 80-20 rule. It's not that anymore. In that sense, we can go for it. Vizient also have some of the more prominent names, like, for example, Cleveland Clinic, and that one became a sole source contract, so it's not in any ways impossible for us to go for it. Of course, it's annoying. We are not running the GPOs, and if they choose to prolong the existing contracts, we can basically do nothing about it.
What we can do is that we can make sure that we go for the most important parts of the hospitals that we can go for. We do that. We have a target list of the most important accounts, and this gentleman's major part of his bonus is on how well is that going. Of course, we go for it. With the kind of market shares that we're having, we have plenty to go for. You will also have an attractive guidance next time.
Can I briefly ask on these hospital networks in the United States? The wins that you had so far, let's say, call it the Cleveland Clinic and some of the others, I'm trying to understand how relevant they are in terms of organic growth showing up in your North American growth rates. Are any of these IDNs large enough to see that in the organic growth rate on their own? Are there contracts up for negotiation, where if you do win one, it'll show up in the organic sales growth? Just some sort of materiality to some of these larger hospital IDN wins.
Yeah, it's a little difficult to say that for a couple of reasons. There's about 400 or 500 IDNs in the U.S. You know, 200 are considered decent-sized IDNs. You know, even if you win 1 or 2, assuming they're roughly the same size, you're talking about 50 basis points of the market, right? That's only on the acute side. It has to travel into the community for it to make a difference. I guess what I'm saying in a somewhat long way is that this is really a Chronic Care business. It grows steadily, we continue to feed in more to keep that momentum going. I don't know if I can think of one which would immediately make a huge difference.
Of the 200 larger ones, what would need to happen for us to see, let's say, a point of additional organic sales growth in the U.S., or if you like, in the North American market? Would you need to win five in, theoretically, five in the same year for it to show up as a point of organic growth? Some sort of sanity check, I think, would be helpful.
Yeah. Unfortunately, I'm not able to give you anything specific on that today. It's a good question. It's one I'll think about.
Got you.
maybe I'll have something to say next time.
You've just mentioned the number of 400 IDNs -500 IDNs in the U.S., and basically, the strategy to focus on IDN started some years ago. Can you disclose where you are in this process? First, are all this 400-500 addressable? Is or is this the addressable amount of IDNs because some are basically related to the GPO and cannot buy outside the GPO contract, where you are right now, starting strategy some years ago, and what might be the best case on this road?
First of all, we are well along our way, so it's not the case we're just starting out. I mean, you see, even in my slides, names like Johns Hopkins Partners HealthCare, which is Harvard Medical School, and so we have a number of accounts today. The way we focus on our businesses, we're looking for total growth, and it comes from acute in the sense that the NPDs get put on our product more, but we also do a lot of work in the community to win that business. I don't want you to think that it's only acute that drives growth in the business. Where exactly do we stand today? It's, you know, what I can say is that we do not find ourselves constrained for opportunities.
It's not the case that we're saying we're running into accounts where we just don't have the ability to get a conversation going. We get that. We are able to access pretty much anywhere we're going. From a GPO standpoint, is there a segment of the market that perhaps, you know, is not going to want to talk to us? Probably, we haven't run into that. I can tell you, like, the GPO space itself, on that slide, it looks really simple. In reality, it's not. There's a number of new GPOs. There are GPOs that are inside GPOs. You know, Vizient has completely made it optional and voluntary to be part of, you know, to be using their contracts.
There's a lot of dynamism there, and, it's just not possible to just give you a clean, simple answer on that front.
Yeah. Can you share with us just a rough number, where you are, how many IDNs you serve at the current stage?
I don't think I have a number today for you. Sorry.
Hi, Christian from Nordea. I'll try and dig a little bit more into this question around the IDNs, and maybe if you can comment on the growth that you're seeing right now in the U.S. ostomy business, where you're saying you're growing at roughly twice the market. Can you comment on what is driving that? Is that a matter of the fact the IDNs and the hospitals that you've signed up over the last few years, or is it more a matter of the wins that you've had in among home health agencies? How... What are the relative drivers here?
This is the thing. I mean, this is really about an entire pathway, and if you just focus on one thing, you cannot get secular growth everywhere. The way we think about it is that, you know, the patient's journey starts in an acute setting, and so we want to win as many hospitals and IDNs as possible. On the home health agencies, as I said, you know, it hasn't been an area of focus for us. A substantial portion of home health agencies are owned by IDNs, and that's been sort of where we have had conversations, but we believe that that is an opportunity worth exploring and going after in a more meaningful way, and that's something we're investing in.
On the community side, we, you know, through Coloplast Care and various other forums, we have been growing our share as well. It's really primarily coming from acute and community side. Home health, you know, we want to go after more in the future.
Thank you.
This is Idan from Deutsche Bank. Two questions. I mean, our understanding is that you've come on board to substantially improve the service levels that we see in the U.S. Can you give us some sense of where that is? If you can score out of 100, I'd appreciate it to see where, you know, how far you've got to go there. You know, as you become more and more successful in delivering that goal, how should we think about the trajectory of the businesses for ostomy and continence care? That's the first question. Sorry.
No, it's fine.
One subject. In terms of the Premier contract, I mean, the Vizient one is an open one. Is there any scope for the other contracts to become more open so that even if you don't win, you know, the GPO contract, your access will go beyond that 50%?
Yeah, let me start with the last one. Premier, I believe most GPOs, in fact, give all their members a certain list. They say that, you know, these are all the categories, and of these, there's a number, fixed number, that you can totally buy off contract, off GPO contract. Invariably, all hospitals have the choice of using those options for ostomy. We have that option. Your question about service levels. You know, maybe the simplest thing I can say is that if I had to score it on a scale of one- 100, I feel like we're on the wrong side of 50. It's not where it needs to be. You know, just the quality of experience we feel patients have is not right.
As I covered earlier, Seamless Transitions and, you know, our own channel should help change that. We already see some signals of it improving. You know, is that work done? I don't think. We're just getting started on that front, and we hope to move the needle substantially in the coming years. You had a third question, which I'm.
That was just, in terms of the impact on your growth trajectory, should we, you know, see meaningful accelerations from the level that you've seen here as you deliver on those goals?
Well, I think the guidance is pretty clear, so I'll stick to that, but we believe these things will definitely help us.
Okay, thank you for your questions, and thank you, Manu.
Thanks. Good afternoon, everybody. My name is Anders. I'm the CFO in Coloplast. I've been with the company since 2006, and been the CFO since 2014. What I will do is speak a little bit to our revenue growth drivers, and also how we see the margin develop in the coming years. As you know, this is our guidance, so we are aiming for delivering 7%-9% in a market that is growing 4%-5%, and our ambition is to grow the company in the upper end. In order to pursue those opportunities, we decided last year to adjust our EBIT margin guidance to a minimum of 30%, because we see a number of organic, but also inorganic opportunities out there.
I'm happy to say that this year, we are going to deliver 8% in organic growth after a number of years with 7% growth, so we are very satisfied with the momentum we see this year. When we include acquired growth and also the currency impact, our guidance for this year is around 6% in reported growth. We've also mentioned throughout the year that this year is an investment year. It is a year where we are investing more than we have done prior also this year into commercial activities, but also into innovation. We're also impacted by currency, and we're also impacted by the fact that our production is not fully optimized for our new latest launches.
Our margin guidance for this year is around 31% in reported currency. In standard currencies, our guidance for the year is 31%-32%, and I'm expecting to deliver in the middle of that range. I'm still happy to see that we are able to deliver and return on invested capital in the level of mid-40s, and we also committed to continue to increase our earnings and also return our cash to our shareholders, primarily as dividends and via share buyback programs. Before I will dive into the investments that we're doing, I would just like to remind you around our currency exposure, because it has really impacted our financials over the last couple of years. We had the Brexit impact on the sterling.
That impacted the sterling versus the Danish kroner quite significantly. You can see here on the chart, our sensitivity when the sterling has dropped 10%, we had a negative impact on DKK 160 million on our EBIT development. This year, we are especially impacted by the emerging markets currencies like the Argentinian peso, but also the Brazilian real, and we're also impacted by the fact that the US dollar has also decreased in the level of 10%. It is impacting our financials quite significantly. Speaking a little bit more to the investments that we have been doing, we are willing to invest up to 2% of revenue in various activities.
As you have heard today, we have been investing quite significantly into other developed region, so that is especially the U.S. We've also invested into emerging markets and into a couple of markets here in Europe. The other big investment, that is innovation. We have increased our R&D ratio to sales from around 3% now up to 4%. The investments we have been doing across sales and marketing, we have increased our sales force quite significantly over the last couple of years by around 10%. We have also increased our market access functions with around 50%, we have increased our the number of people in our R&D function. The investments we have been doing are starting to pay off.
I'm happy to say that the growth we are seeing is actually pretty broad-based. We are seeing that emerging markets and also other developed markets are contributing more to our overall growth. So it is more broad-based today than it has been in the past. Still, our European region is contributing quite significantly to our growth. Going forward with the ambitions of growing 15%-20% within emerging markets and delivering double-digit growth in the US, those two regions will also contribute quite significantly to our growth going forward. It is still the core that is contributing mostly to our growth, so it is still Ostomy and Continence Care that are contributing the most.
We have seen, as Steffen talked to earlier today, that Urology Care is starting to contribute more today than some years back. Overall, we are satisfied with the fact that the growth we are seeing is very broad-based. It's not coming just from one region, it's coming from all regions, and it's also coming from all our business areas. If we look a little bit to the revenue and then the growth, the drivers. The underlying market growth, we still expect that to be in the level of 4%-5%. The underlying dynamics across our business is more or less the same that we have been talking to over the last several years.
We are positively impacted by aging population, and we're also positively impacted by emerging markets, where a number of emerging markets are investing more into our healthcare categories. We are seeing healthcare reforms also this year. We're also seeing some opportunities to increase, you can say, the mix or to do value upgrades. I'll come back to a couple examples in a couple of minutes. We believe that we are able to outgrow the market with a 2x in the coming years. This year, we have been impacted by healthcare reform in Greece. As we have been talking quite a lot to over the year, the impact is in the level of up to DKK 100 million, because the Greek healthcare authorities have reduced the prices with around 25% across all our business areas.
It is quite significant, the impact we have seen in Greece. For the coming year, we are seeing that the French healthcare authorities will do some kind of a periodic review of the Ostomy and Continence categories. What the impact will be and the timing of that review, I don't know. I expect that going forward, we will not see that the price impact on our business will be larger than the -1%. Coming back to some of the activities we are working on in order to increase the general price levels, we're actually working with three areas. One area is related to the upgrade opportunity we have within Ostomy.
What we have been talking to today is that convex and concave, in general, is priced at around 50% higher than the flat appliances. That will upgrade our Ostomy portfolio. We also see within Continence Care that we are getting a higher price in a number of markets for our compact portfolio and also our flex portfolio. The second opportunity we have is within emerging markets. Here, within Ostomy, the standard portfolio we have in the market, that is our Assura platform, that we launched back in the 1990s. We are now starting to launch our SenSura 2006 version, that is in several emerging markets, priced at a level of 20%-30% higher than the Assura platform. The third example is an example that we have been talking a lot to.
That is the U.S., where we are trying to upgrade the market from the non-coated catheters to the SpeediCath family. That's also impacting our value upgrade in the U.S. market. Today, the hydrophilic portfolio in the U.S. is around 50% of our sales. Those three are three examples of how we are working with upgrade in general. Let's talk a little bit about our margin drivers and the way we see our margin develop in this the LEAD 20 period.
This overview here is illustrative, but the way you should look at it is that we are expecting that we will see some impact from the work we do within Global Operations to become even more efficient, and that will improve our gross margin in this period. Secondly, as we are growing, we are also expecting we will see some leverage effect across our business and across our fixed costs. Those initiatives, we are using that in order to increase our capacity in terms of investing into the business. We are investing some of that into both organic and inorganic opportunities, and I'm also committed to increase our earnings and still deliver more than 30% EBIT margin in 2019-2020.
The biggest initiative we have in order to become even more efficient, that is our work within global operations, that we call Global Operations Plan 4. We have been talking to it earlier this year, this is just to confirm that we are on track with this initiative. The initiative is consisting of three areas. One area is that we will consolidate the sites here in Denmark and bring down the number of production employees in Denmark to around 200. We are expecting that this initiative will be done by the end of next financial year. The second initiative is regarding procurement. Around 50% of our cost of goods sold is procurement of raw materials.
We will continue to work with procurement and optimize the pricing and do a number of other activities in order that also this initiative will contribute to the overall ambition for the GOP4 plan . Finally, the third initiative is related to leverage effect, also across the fixed costs in the global operations. Overall, I'm expecting that this initiative will contribute around 100 basis points on the EBIT margin in 2020, and 150 basis points in 2021. This year, and also next year, we will have some restructuring costs as we are in the process of laying off people here in Denmark.
If we look across the other cost items, if we have our distribution to sales ratio, distribution in our P&L is covering logistics, sales, and marketing. I'm still expecting that we will be in the level of 28%-30%. The leverage effect we are getting here in Europe, we are basically reinvesting that into growth initiatives in emerging markets or in the U.S. The admin ratio, I'm still expecting that to be in the level of 4%. We have been working a lot by utilizing our business center in Poland, I'm also increasing our spending within IT. We are currently investing quite a lot into even more and better digital solutions. For instance, we are going to implement the Salesforce.com, and we have also increased our cost within the legal area.
Finally, we have the R&D to sales ratio that we've also been talking to earlier today. I'm expecting that we will be in the level of 4%. This also includes that we are starting to invest into the Medical Device Regulation program, and most of those costs are booked in our P&L in the R&D area. One area where we are getting quite a lot of leverage effect is our business support area. It is an area that we have been working a lot with over the last five to six years. We have a global business support center in Poland that we established in 2010. Over the years, we have also been globalizing and centralizing the way we work with our IT.
We have one global EP solution. We also have one global CRM solution that we are now converting into Salesforce.com, and we also have a lot of other global solutions. That, combined with a global IT infrastructure, means that we are basically handling a lot of the underlying business support processes out of our Polish setup. Today, we are handling 90% of our financial transactions, so accounts payable, accounts receivable, out of Poland. We are handling almost 100% of the processing of all the leads that we are getting out of Poland. We are handling around 70% of all the trade orders we are getting in out of Poland. We're also handling most of the cases we are getting in within HR, IT, and a number of other areas.
It basically means that our business support setup is really scalable, and we also have one template that we are using when we opening up new offices, like in Portugal or in Costa Rica, that we are currently working on. It is an area where we are getting a lot of leverage effect. The work we are doing within Global Operations, but also the work we are doing within the business support, means that we are able to invest into the business. For the coming financial year, as you have heard today, we are committed to continue our investment program.
Next year, we will continue to invest into innovation, into the activities that Oliver talked about, but also Nikolai talked about within Wound Care, and also the things that we have been talking about within Urology Care. We also committed to continue our investment program within Consumer and within Care, and one of the bigger initiatives, that is a further investment into our Charter, that Anne-Marie talked to earlier today. Then we have our four business areas. Here we are committed to continue investment programs and investing further into our sales force. Again, next year, U.S. is going to be a big focus and a big investment for us. We're also continuing our investment into selected emerging markets and the Pacific region.
Again, we will invest in order to deliver on the upper end of our growth guidance. Just to speak a little bit to some of the main drivers, the main other drivers within our cash flow, basically, they are unchanged. I still expect that we will deliver a tax rate in the level of 23%. I'm also expecting that we will continue to deliver a net working capital in the level of 24%. I am getting some tailwind from the growth we are getting in mature markets, on the other hand, I'm also having some headwind from emerging markets, where the payment terms are longer.
Finally, our CapEx ratio, I still expect that we will be in the level of 4%-5%, and also be handling some of the things that you have been talking to earlier today. My rule of thumb is that around one third of our CapEx is going into innovation, one third is going into machinery to handle existing products, one third is going into new facilities, IT, and other things. I'm still expecting that we will be able to deliver a CapEx ratio in the level of 4%-5%. To summarize, we are committed to deliver a growth in the level of 7%-9%. Our ambition is to deliver in the higher end of this growth guidance.
We are committed to deliver an EBIT margin of more than 30%, we also committed to increase our earnings in this LEAD 20 period. The cash that we're generating, we also committed to return that, either as dividend or as share buyback programs. Yeah. Now we are ready for a couple of questions.
Thank you. Just two for me, please. Hi, Daniel. On the price mix side, obviously, like-for-like pricing is set up to -1%. If you were to include mix in that, would we be looking at more like a net price mix of 0? Would you expect mix to be enough to offset the price impact, year-on-year going forward? That'd be the first question. The second, just I think you've been pretty clear about it, but I just want absolute clarity. Should we be interpreting the commentary here about incremental investment and moving next year and the bridge and understanding that to mean margins probably are flat to down, but obviously growth is right towards the top end of the range that you've indicated? I just wanna be very clear, if that's the message I should be taking away from this.
Yeah. If we should take the last question first. I will not give you our specific guidance for '18, '19. We will guide the market when we announce our annual report early in November. Here we will guide how we see that. I think I have given you at least some of the moving parts over the last 20 minutes or so. In terms of the other question, we are seeing in a number of markets that we are, in general, able to offset some of the price pressure we have seen due to the activities we are working on. We are able to offset the price pressure. This year, we are having a quite significant price pressure in Greece, as I talked to.
It's actually up close to -1%, we are able to offset that with some of the activities we are working on within the upgrade area.
Martin Paget, two questions. Again, I know you don't want to comment on next year's guidance, but still, many companies that I meet, they have great ambitions in the long-term targets, but when they then have to guide on the short term, it's a little bit different. Do you have the guts to remove the 7% when you're guiding for next year?
As I said earlier, Martin, we're coming up with our guidance early November, we are committed to deliver on our long-term guidance of delivering 7%-9%. We are committed to invest in order to go for the higher end of our long-term guidance interval.
It will not only be in the last year?
Well-
It will not only be in the last year, it will be '18, '19.
I think I just said.
Okay
how we see it.
The second question on the margin, I just need to on the slide, I can't remember which one it was. On the margin bridge, you say that, as I read it, you have a base of 31% in this year, and then you have 2% leverage effect, and that is reduced by 2% due to the investments in initial sales initiatives. The 31% already include the 2%, I guess, because you're already taking down your margin this year by investing additional 2%.
Yeah.
I don't understand why I should remove 2% more, because that is already out of the 2017, 2018. I guess there must be some kind of leverage effect.
Yeah
net on that.
Yeah. What I said, the, the chart, I showed you is illustrative on. That is showing how we are working with both the leverage effects, but also the activities we are working on in order to improve the efficiency. I'm expecting leverage effect throughout the organization. I'm expecting that will increase the capacity to invest even further, because we are seeing a number of interesting growth initiatives across all our business areas.
Still again, correct me if I'm wrong, in the 31% you're delivering in 2017, 2018...
Yeah
that's already included 2% of extra investments.
Yeah.
Okay. Why in the bridge, do you then show additional 2%, which are negative, if it's already included in the base year?
Yeah. Some of the investments we are going to do is also a carryover. There will be some of the things we set we will do this year, that will be also coming in the next year.
I don't understand if I should I add 2% more? Because if.
I would not say that you should add 2% more. The way you should look at it is that we are going to deliver around 31% this year in reported currencies. The dynamic is that we are working on efficiency. We are also going to have leverage effect next year, and part of that we will reinvest into the business. The specific guidance for next year, we will give you that when we announce our annual report early November.
Yeah, hi.
Yeah.
The question is, organic sales growth doesn't re-accelerate, let's say, to 9%. Can you gain confidence in this investment process with Michael?
I'll start out. I'll give it to Michael afterwards. There you go, Mike. Sorry.
It does say dead battery on here. Let's assume you are successful in accelerating organic sales growth to the upper end of 9% and gain confidence in this investment process and so forth. Would you entertain maybe in a year's time that this process really works, and therefore we have a period of taking it a bit higher, the organic growth, but then saying we'll take margins down to 28%? Would you entertain that, or would you rule that out of the process for the medium term?
Yeah. So the guidance we have now of 7%-9% and delivering a minimum 30%, that is the guidance for this, LEAD 20 period. That is up until, 2020.
That sacrosanct, you will not change that, right? There's no change to that at all.
That's not. With the current knowledge, we are not changing that. We are seeing a number of opportunities organically that we are going for, and we believe that with the leverage effect we have and with the efficiency work we are doing, that we're able to handle those opportunities we have in order to grow and invest into our business.
Thanks. Again, back to the margin bridge. You also mentioned the impact from potential bolt-on M&A in your long-term targets, which is not something we see a lot of. I think when you announced the new targets, people looked at this and said: "Okay, since they mentioned it, something will happen pretty soon." Nothing has happened. It's still here in the bridge. Should we expect some sort of transformative, larger deal within the next couple of years, or is this more a sign that you'll see smaller forward integration deals that could potentially, when you sum everything up, put some pressure on your EBIT margin now?
When we announced this guidance back in November, we were actually working on some M&A activities. Back then, we said that we would like to pursue inorganic opportunities, and the reason why was that we were working on the LILIAL acquisition that we did, I think it was around January 1st, and we've also acquired a smaller one in Germany. What I'm saying here is that within this guidance, we are having some capacity for acquisitions at the more or less the same size as the LILIAL acquisition. I'm not talking to bolt-on acquisitions within this guidance we have.
How many LILIAL types of acquisitions should you make in order to reduce your margins by maybe 2 percentage points?
What I'm saying is that within minimum 30% EBIT margin guidance, my estimate is a couple of acquisitions at the size of LILIAL.
Thanks.
Yeah, thanks. I appreciate there's been a lot to get through today, but given that the GOP4 initiative is the principal source for your margin expansion over, if you like, the next few years, just a little bit more detail on some of the key drivers there, please. Also with particular reference to Hungarian wage inflation, which seems to be double digits at the moment, I just wonder whether this is sort of an incremental headwind for Allan and team.
What we have been working on for a number of years now is to move out the production of new products from Denmark to Hungary. We have been doing that actually for a number of years, but since we have launched the new SenSura Mio program, those products have been produced in Denmark. I am happy to say that we have now completed the transfer of the Convex, and the transfer of Concave, that is something that will happen sometime next year, we will be able to consolidate the sites in Denmark. We are expecting that the consolidation of the sites in Denmark will reduce the number of production FTEs to 200.
I'm also expecting that the transfers, that we have been doing to Hungary, that will also improve the unit cost levels for our SenSura Mio platform, and that will also contribute to our overall efficiencies within Global Operations. You're right, we are having some headwind in Hungary from higher salary and inflation than we thought just a couple of years back. Last year we had an impact of around 15% on the salary inflation in Hungary, and this year it's high single digit. I expect that that will be that will continue at that level going forward. We are seeing some headwind in relation to that.
Thank you. That was the last question. It's time to wrap up.
All right, we spent most of the day talking about sales, talking about what kind of innovations should people who are customers with Coloplast experience. We didn't pay that much attention to our savings programs, to our leadership development, to the organization as such, because we wanted to explain to you how we are going to accelerate the growth of the company. We hope that you will trust us, that we will figure out how to save money and how to stay very profitable. It's a really big deal for us to accelerate growth. We are already growing quite nicely with 8% growth, we want to grow even faster. To do that, there are two things that really need to work for us.
We need to bring into the market a completely different level of innovation, which Oliver explained to you, on the Chronic business, what that means. We need to continue to grow at a fast pace in Urology Care, and we need to up the growth in Wound Care. And then we need to enhance the service experience that people are having. And I think that both when it comes to innovation and also when it comes to service, we're leading the way. It's very hard to go to other businesses in our industry and find what we talk about here. And, a lot of what we talk about, we don't want to be too precise, because we're also feeling that we are giving away, for free, goodies to our competitors.
We do not talk about these things without being quite certain that we can also deliver them, otherwise we could wait until next year. There's another Capital Markets Day. We just gave you a sneak peek into what is 2020 going to look like, and there's a lot on the plate that we are going to present later on. With that said, thank you very much for being here. We have had a chance for you to meet some of the people that are going to deliver also these numbers.
Of course, we all feel that we should deliver, but you have seen some of the people from the countries also who are really in the hot seat, so to say, because they had to deliver the numbers also month after month, so that we can sum it up and come back to you guys. The good thing is also that now they know what we are up against. If they feel like we are annoying, well, no. I wouldn't say that. I love you.
It's been a great pleasure to have you here, and thank you very much for really engaging, because it's a real challenge for us to stand up in front of you, and we know that we have to be super sharp, because that's what you are. Thank you very much, and we will see you later on. How much later, Ellen?
For those of you who are joining us for dinner, drinks start at 6:30. For those of you that are taking the bus into town, it leaves at 4:30.
Yeah.
Just on behalf of Investor Relations, I would like to say it's been a pleasure having you here today, and thank you very much.