Good afternoon, and welcome to our First Half twenty twenty one Conference Call. My name is Christian Willemssen, CEO of Coloplast, and I'm joined by our CFO, Anders Lonnings Skogor and our Investor Relations team. We'll start with a short presentation by Anders and myself like we usually do and then we'll open up by questions. Please turn to Slide number 3. After an encouraging start to the year in Q1, by the end of the call.
We had expected a weaker second quarter due to a large stocking impact in our baseline and the continued negative impact of COVID-nineteen on our European Chronic Care business. We we delivered 2% organic growth, a 33 percent EBIT margin before special items and a return on invested capital before special items of 42%. By adjusted for the DKK 150,000,000 stocking effect in Q2 of last year, organic growth was around 5% for the Q2. By we maintain our organic growth guidance for the full year of 7% to 8%. On the EBIT margin, we've upgraded our guidance from 31% to 32% to 32% to 33% before special items.
The revised EBIT margin guidance reflects efficiency gains and lower costs across the business due to COVID-nineteen. We're optimistic about the COVID-nineteen vaccine rollout, but the pandemic is still very much at large and our priorities remain clear. To keep our people safe, continue to serve our customers and maintain business operations. At the same time, we're executing on our strategic priorities within the STRIVE 25 strategy. And today, I'd like to mention just a few highlights.
By innovation. We're making good progress on all key projects across our business areas. Within Ostomy and Continence Care, the clinical performance program is on track. By we've hired a new Senior Vice President for R and D. Alexis Roberts McIntosh will join us in July by Alexis comes with a wealth of experience from innovation work across the healthcare space.
And we look forward to welcoming her here to Coloplast. By within Interventional Urology, the feasibility study for our overactive bladder product within 9 continents medical has been completed with encouraging results.
By we're
in the process of finalizing the pivotal study design that will be submitted to the FDA for approval later this month. By in our chronic business in the U. S, we achieved a key milestone for our Ostomy business this quarter by securing access to the Vizient GPO, by which is the largest group purchasing organization in the U. S. With Vizient and Premier, we now have contracted access to more than 70 percent of the U.
S. Hospitals and we will invest to strengthen and expand our sales force. In our U. S. Continence Care business, we continue to grow our dealer business.
We've made a few tuck in acquisitions during the quarter to broaden our insurance coverage. In the markets where we have good access, we're executing on investments in strategic areas and those by Asia and Interventional Urology in the U. S. On our sustainability strategy, we've also made by key progress this quarter on our production waste recycling ambition. Through collaboration with a local Hungarian waste management supplier, a large share of our production waste can now be used for rubber flooring for playgrounds and sports facilities.
With 58% of our production waste recycled, we've exceeded our 2025 ambition by 50%, and we will set and communicate a new ambition later this year. We monitor our organizational health closely and have invested in a number of precautionary measures, initiatives and tools focusing on employee health and engagement to fight corona fatigue. We conducted an employee engagement survey in April. We're very pleased to see a score of 8.2 against a healthcare industry benchmark by the company of 7.9. Within Global Operations, we're making solid progress on the Global Operations Plan 5.
Our first high volume production site in Costa Rica became operational this quarter and the construction of the next volume site has already begun. By we've begun to realize cost savings from our automation activities and we've seen efficiency gains in our high volume production sites in Hungary. By moving to our results this quarter. A few highlights include continued strong momentum in emerging markets with 14% organic growth. By the growth continues to be broad based and especially strong in China and Latin America.
We're pleased to see the continued recovery in elective procedures within our Interventional Urology Business. With 9% organic growth in the quarter, our Wound Care business continues to post solid growth driven by Europe, by China and our newly launched Biatain Fibre portfolio. The challenge continues to be in Europe within the chronic care business and in particular in the U. K. We assume that the worst is now behind us and that the situation will gradually improve in the second half of our financial year as vaccines are rolled out.
By the U. K, the scale of the NHS waiting list is large, but Ostomy Care is expected to benefit from the prioritization placed on accelerating cancer diagnosis by elective surgery levels. Continence Care is expected to recover a bit more slowly because of intermittent catheterization and bowel management treatment being deprioritized. By the chronic care business recovers during the second half. We expect the recovery in Continence Care to lag Ostomy Care.
By today the Board of Directors approved a half year interim dividend of DKK 5 per share corresponding to a total interim dividend payout of approximately DKK1 billion. Now let's take a closer look at today's results. And ladies and gentlemen, please turn to Slide number 4. By in Ostomy Care organic growth was 5% for the 1st 6 months and growth in Danish kroner was 1%. In Q2 organic growth was 4% and growth in Danish kroner was 1%.
Growth continues to be driven by our SenSura Mio and Brava supporting products. By Asensura and Asensura alternative portfolios continue to post solid growth in emerging markets. By growth in Q2 was negatively impacted by stock building in Europe in the comparison period. Lower growth in new patients in Europe due to by COVID-nineteen also weighed on growth as explained earlier. On a positive note, the Emerging Markets region continues to be the strongest contributor to growth led by China, by Latin America and tender deliveries in Russia.
China posted solid in market sales and benefited from an easier baseline and the U. S. Also by the continued growth. In Continence Care, organic growth was 3% for the 1st 6 months and growth in Danish kroner was down by 1%. In Q2 organic growth was 0% and growth in Danish kroner was down by 3%.
Growth continues to be driven by SpeediCath ready to use and emittent catheters with good contribution from the SpeediCath Flex portfolio as well as our SpeediCath compact and standard catheters. By sales growth for Peristeen products and collecting devices has been negatively impacted by COVID-nineteen. By In Q2, organic growth was flat due to the large stocking impact in the baseline as well as lower growth in new patients in Europe and the U. S. By, as explained earlier, an emittent catheterization treatment and bowel management treatment has not been prioritized during the pandemic as these treatments can many times be postponed by and there are other alternatives.
On a positive note, we continue to see solid growth rates in South Korea and Japan where reimbursement for catheters was introduced a few years back. In Interventional Urology, organic growth was 4% for the 1st 6 months and growth in Danish kroner was down by 1%. By Q2 organic growth was 3% and reported growth was down by 2%. Growth continues to be negatively impacted by by COVID-nineteen, but the trend from Q1 continued into Q2 as elective procedures continue to rebound. In particular, March was strong by encouraging.
Men's Health continues to lead the recovery in the U. S. Delivering another quarter of double digit growth. Towards the end of the quarter, we also began to see a pickup in women's health procedures. COVID related lockdowns inhibited surgical procedures in the largest EU markets in Q2, but overall our single use devices business posted growth in Europe for the quarter.
By Wound and Skin Care, organic growth for the 1st 6 months was 1% and reported growth in Danish kroner was down by 3%. By the Wound Care business in isolation delivered 7% organic growth for the 1st 6 months. And in Q2, Wound and Skin Care delivered 1% organic growth and the Wound Care business in isolation delivered 9% organic growth. By the Biatain Silicone and Biatain Fiber portfolios were the main contributors to growth driven by France, Germany and Spain. By TitanFiber continues to deliver solid contribution to growth.
China posted another quarter of solid growth, which was also helped by a weak comparison period. And the European hospital business continues to be negatively impacted by COVID-nineteen, but the community business is performing well. In the U. S, our skincare business continues to report negative growth due to weaker demand and our compete contract manufacturing business attracted significantly from growth in the quarter due to lower demand as a result of the pandemic. With this, I'll now hand over to Anders who will taking you through the financials and outlook in more detail.
Please turn to Slide number 5.
By Thank you, Christian, and good afternoon, everyone. Reported revenue for the 1st 6 months decreased by DKK 44,000,000 or 0.5 percent compared to last year. By Organic growth contributed $342,000,000 or 4% to reported revenue. By the financial results. Foreign exchange rates had a significant negative impact of DKK 389,000,000 or around 4% on reported revenue as by the U.
S. Dollar, British pound and several emerging markets currencies against the Danish kroner. In particular, the by the contingent peso, Brazilian real and Russian ruble. The depreciation in the U. S.
Dollar accounted for approximately 50% by the negative currency impact. Please turn to Slide 6. Gross profit by amounted to around DKK 6,500,000,000 corresponding to a gross margin of 68%, which was on par with last year. The gross margin was positively impacted by savings from Global Operations Plans 45. On the other hand, the gross margin was negatively impacted by increasing cost in Hungary due to salary inflation and labor shortages as well as extraordinary costs related to COVID-nineteen outbreak and ramp up costs at our new volume site in Costa Rica.
The gross margin includes a negative impact from currencies of around 40 basis points. The gross margin in Q2 by the 2 benefited from positive product mix, efficiency gains at our Hungarian factories and lower depreciation. By the distribution to sales ratio for the 1st 6 months came in at 28% compared to 29% last year. The 5% decrease in cost reflects cost savings from lower travel and sales and marketing costs due to COVID-nineteen, which was partly offset by investments in sales and marketing activities in Asia, interventional urology and consumer and digital initiatives. By the admin to sales and R and D to sales ratios for the 1st 6 months came in at 4% of sales on par with last year.
By DKK 200,000,000 to cover costs in connection with the MET litigation, which is booked as special items. By the law. The lawsuits are taking longer to settle than previously anticipated in part due to COVID-nineteen, which has led to an increase in legal costs. By the increase brings the total provision to DKK 5,850,000,000.
By the
end of the year. We have now settled around 97% of the known cases. In December 2020, the Coloplast MDL was closed and we are seeing by a very low inflow of new cases. Overall, this resulted an increase in operating profit before special items of 3% for the 1st 6 months corresponding to an EBIT margin before special items of 33% compared to 32% last year. By the EBIT margin contained a negative impact from currencies of 70 basis points mainly related to the depreciation of the U.
S. Dollar against Danish kroner. By Please turn to Slide 7. Operating cash flow for the 1st 6 months amounted to around DKK 2,000,000,000 compared with around DKK 1 point by DKK 6,000,000,000 last year. The positive development in cash flows was due to a gain on financial items, a decrease in income tax paid by the company's financial results.
And an increase in operating profit before special items of DKK 99,000,000. Cash flow from investing was impacted by increased investments in automation, IT and the new factory in Costa Rica. By the CapEx investments amounted to DKK 509 million for the 1st 6 months or 5% of revenues on par with last year. By the acquisition of 9 Continents Medical reduced the cash flow by DKK 950,000,000. By DKK 446,000,000 against an inflow of around
DKK 1,200,000,000 against an inflow
of around DKK 1,200,000,000 Danish kroner last year. Adjusted for acquisitions, the free cash flow was up by 23%. Our trading 12 months cash conversion for the 1st 6 months, excluding the 9 Continence Medical acquisition, was 90%. By Net working capital for the 1st 6 months amounted to 25% of sales. For the full year, net working capital is still expected to be around 24% of sales.
By a new share buyback program totaling DKK 500,000,000 was launched in Q2 and the program is expected to be completed before the end of the by the end of the year. Please turn to Slide 8. For 2021, we by the U. S. Consumer market.
We're pleased to announce that we're pleased to announce that we're pleased to announce that we're by the results of the results. Growth in the new patients in Europe in the chronic business is expected to gradually normalize throughout the second half of the year. In Wound Care, we expect continued solid performance in Europe and China. By Due to the depreciation of mainly the U. S.
Dollar, Argentinean peso, Brazilian real and Russian ruble against Danish kroner, by the reported growth in Danish krone is still expected to be 4% to 5%. The currency impact is based on spot rates as of May 5. By For 2021, we now expect a reported EBIT margin in Danish kroner before special items of 32% to 33% from previously 31% to 32% due to efficiency gains and lower cost levels as a result of COVID-nineteen. By We estimate that roughly half of these savings will remain in our P and L next year from efficiency gains, less travel and more digitalized interaction with customers. By After special items of DKK 200,000,000, the reported EBIT margin is expected to be 31% to 32%.
By the JN. The reported margin in Danish krone is expected to be positively impacted by the HOOPF, but this is offset by depreciation of the U. S. Dollar by a number of emerging markets currencies against the Danish kroner. To ensure that we emerge strongly from this COVID crisis, by the company's leading position.
We continue to invest for growth in incremental investments into innovation and sales and marketing activities. By the end of the year. For 2021, the bulk of the investments will go into Interventional Urology, Asia, the U. S. Sales force expansion and consumer and digital activities.
By the gross margin this year will be positively impacted by operating leverage as well as Global Operations Plan 5. By the company's new business. As mentioned previously, we have extracted some efficiency from Global Operations Plan 5 earlier than anticipated. By the positive impact is expected to be partly offset by cost pressure in Hungary from wage inflation and labor shortages as well as ramp up of costs by the new factory in Costa Rica and sustainability investments. Overall, the expectation is still that the gross margin for 2021 by DKK0 1,000,000.
We still expect our net financials to end the financial year 2021 at around by DKK0 1,000,000. Based on current exchange rates, the hedging gains that we saw in Q2 on balance sheet items will be offset by losses on cash flow hedges by the British pound as the year progresses. CapEx guidance for 2021 by DKK 1,100,000,000 and our effective tax rate is still expected to be around 23%. Thank you very much. By
by by the line of Veronika Dovaova of Goldman Sachs. Please go ahead. Your line is open.
By the end of the call.
Hey guys, good afternoon and thank you for taking my questions. I have sort of 2 if I can. One is just looking at emerging markets growth in the second quarter. Given the easier comp that you had year on year, I'm just a bit surprised to not see a better by the performance there. I don't know if there were some regions in there that might have softened or tenders that might have moved.
I'm I'm also kind of contrasting it with a very strong performance from CombiTech. So if you can guys talk a little bit to what went wrong or maybe didn't go as well as one might have by the market in emerging markets and if you're seeing any changes in that competitive environment in select markets, that would be helpful. By And then my second question is just trying to think through the sort of progression and the exit growth rate that you saw at the end of the quarter and as you transition to by Q3. Anders, I know you've given obviously the guidance for the second half, but if you can be a bit more specific as to kind of how you exited the by the Q2 period. And as you're thinking about the Q3, what we should be thinking about phasing of organic growth more broadly for the group, that would be helpful.
Sorry, your line is sounded a bit faint there.
By sorry about that. Hang on one second. Is this better now operator?
That's a lot better. Thank you.
Okay. By thank you for the question Veronika. We came through with 14% growth and true there was a bit of an easier comp on China. China is back to good growth in patients and good activity levels. But we saw growth being broad based, by really nice momentum in Eastern Europe and Russia, strong tender wins in Russia and deliveries in Russia, strong growth in LatAm.
So But I'm looking at a region where I think good momentum overall, and we are projecting by a good year for us in EM. We're not picking up major events on the competitive side. But of course, we're also noting that other people are investing. I'm seeing broad based growth in the yen.
All right. Thanks for the question Veronika to the phasing of our growth in the second half. So as I mentioned earlier, we are by double digit growth in the second half of the year. In terms of our Q3, we are also expecting a very by we had a negative growth within IU of minus 40%. So we are expecting a strong Q3 as a result of that.
By But overall for the second half, we are expecting double digit growth. So I hope that answered your question.
By No, that's helpful. And if I can just quickly follow-up on that. Just I guess if you think about the IU business versus 2019, I know we're going back 2 years, but are you comfortable with the kind of pace of recovery that you're seeing? And I know you mentioned in your prepared remarks that things picked up towards by the quarter, if you can quantify that.
So yes, Veronika, the short answer is yes. We are We're comfortable with where the IU business is at the moment. We're seeing strong growth in men's health come off to a good start. The last couple of months, the activity levels are also picking up on the women's health side. So We definitely have an encouraging outlook for U.
S. Demand has been a bit more subdued on the surgical side in Europe, but with growth in the disposable product. So we are expecting that things will project by or progress as planned for the remainder of the year. Also, of course, helped by the vaccination rollouts in the general pickup in activity.
Great. Thank you, guys.
Thank you. Our next Question comes from the line of Maja Pertzukvic of Kepler Cheuvreux. Please go ahead. Your line is open.
Yes.
By Maja, we can't hear you.
Can you
hear me now?
Yes. Hello?
Yes.
Okay. By the Q1 and by the comparative base and now Q2, it seems like there has been a bit of a softening. I was wondering if you could by the end of the year. Talk to that, has it been due to the fact that we've seen again a bit in line with the pandemic development that we've seen the by Softness or do you think that Q1 has seen some pent up demand come through, which has slowed in Q2, just to understand a bit by the growth rates compared to last year. And then the second question with regards to your cost savings that you've mentioned that half of the cost savings are going to be by staying with you.
Is that something because you're moving your some of your events to more digital platforms? Could you just talk by the
question. Thank you, Maja, for for the questions. So just quickly on IU, the headline perspective on where the IU business is positive. It's true that there is always a bit of this demand at the beginning of the year that is related to January, February and by deductibles. So we've been seeing that pattern also in previous years.
I'm looking at March April by and see a good pickup in growth. So we feel confident about the outlook for the year that the IU business is coming back on track. When it comes to your questions about sustained improvements on costs. The banal observation that I think you're going to hear also from a lot of other companies is we're traveling less. By the pandemic here.
We think we can run the company with less travel and therefore also cost savings. The marketing initiatives and customer interaction has by seeing a lot of digital initiatives over the past year. We think some of those are here to stay. By and then I'll say also from our Global Operations Plan 5, we're off to a good start. By the company.
When it comes to strategy, there's really no change to the what we're investing in and by our geographical focus areas. It's more related to the how.
Thank you very much.
By Thank you. Our next question comes from the line of Scott Bardo of Berenberg. Please go ahead. Your line is open.
By Yes, thanks very much for taking the questions. So I just wonder if you could by Help understand or explain a little bit your confidence in your share position and maintaining market share or by increasing market share. It must be quite difficult to do, of course, when procedure volumes are falling off. But by we've seen various competitive numbers from Boston Scientific and Combiotech spitting out growth that's a bit ahead of you this quarter. So I just wonder, again, can you help us understand your confidence levels in market share capture, please, across your various different businesses?
By The second question, please, just again relates to the sustainability of your current high by EBIT margins. I appreciate that the cost base is somewhat depressed. I think in December or by the end of the year, at your Capital Markets event, you highlighted a rather flattish midterm EBIT expectation, similar gross margin, similar by the Q1 of 2019. Is there any reason to revise that upwards now given your reassessment on operating costs? Or put another way, should we expect group margins to dip next year as costs resume?
Thank you.
By the 2 good questions. I'll comment on your first question and Andres will take the second. So I feel good about the company's competitive position. And we've talked about this on numerous occasions that if you want to understand the company, by these quarters that we talk about and where they are don't necessarily give by the best of snapshot. So I think the 7% to 8% of growth for the year, we delivered that.
That by a strong performance in the environment. So for chronic, I feel good about the position, Scott, and how we're going to deliver the year. We have really good portfolios in the market by and they're in general all the newer brands are doing well and driving growth just as we would expect. If we turn to the 2 smaller business areas in Wound Care. We just closed a very strong quarter by and with good growth in both China and Europe and good growth contributions from Biatain Fiber.
By we're hoping to do a lot more on fiber as hospitals open up and we get broader access. So on wound care, by good things coming. And of course, for IU, I would say, We're going to have a good year. Part of that is going to be baseline, but we're seeing good growth momentum in men's health. By I'm also cautiously optimistic now that the last two months of data on the women's health side in the U.
S. Is a good later for how the year will progress. And as you know, we've been investing in Endo to U. S. And then if you look a bit further ahead for growth.
You will also know that one of my convictions is that growth over the medium and long term will be tied to your innovation capability. And we've been investing in that now on the chronic side with the clinical performance program for some years as you know this strategic period will have to deliver. These products they are progressing through the pipeline by and I think we have some really strong answers to the needs that are out there for both ostomy incontinence. By some good things also coming for Wound Care. And then for interventional urology, we've ramped up by Organic R and D.
We haven't invested there much historically, but we are ramping up now. And as you know, by we've made 2 smaller business development M and A moves in that business also. The 9 Continence Medical by is a move into an adjacency that holds a lot of promise and our investment into Francis Medical. It's also a company that we're quite excited about. By so lots to do on all of them.
I feel good about the competitive position, Scott. By
Yes. Thanks, Christian. And then the second question you have, Scott, around our EBIT margin development by the end of the year. And as I said earlier, by the company's name. It's due to strict cost control.
It's also corona impacted. As Christian mentioned earlier, we are traveling less. We are not having by many sales meetings, congresses, etcetera. But at the end of the day, we are off to a better start and that's also why we are this year guiding for an EBIT margin of 32% to 33% before special items. And I think in terms of our efficiency programs, I think also we can be satisfied on where we are with our GOP5 implementation.
We are by production efficiencies in Hungary especially and that is also contributing to our EBIT margin development. By In terms of next year, as you all are aware, the outset for next year will be where we will land this year. By So we will evaluate our EBIT margin guidance for next year also when we take additional investments into the equation. By But the underlying level of 32% to 33% will be the outset also for next year. That's our expectation.
Thanks very much indeed.
Thank you. Currently, we've got one further line in the queue for questions. By the line of Kitley at Jefferies. Please go ahead. Your line is open.
Thank you, guys. I have two questions, please. My first one is just on skin care and contract manufacturing. By just how should we think about the impact of that in the second half and whether that will still be a drag to the women's skin franchise or if you're expecting growth by the 2 business segments, please. And my second question is just on Continence Care.
You mentioned that by Right now patients are being deprioritized in that area. I'm just wondering if they have switched to any other solutions or technologies, so might not come back to using by the FDA. Thank you.
By So, Kieth thanks for the question around our Wound and Skin business. And as we by talked about earlier, our contract manufacturing of Compile and Band Aid has been quite negatively impacted due to the corona in the first half. By the end of the year. We are expecting a bull come back in terms of growth in the second half and especially in our Q4. By the end of the year.
If you might recall last year in our Q4, we had quite a significant negative impact on our consumer business by the U. S. Dollar market share. So we are expecting our consumer business as we call it that will bounce back in the second half of the year and especially in our Q4.
And Kit, to your second question. Good one. So for some of the patients who we're supposed to get on an intermittent catheter treatment who may be put on an indwelling catheter. There is a risk that they may not be able to transition back to IC treatment. We also have quite a significant by Chair of the Continence business that is within collecting devices and bowel management.
And the bowel management procedures by our assessment is that they are those patients are essentially postponed. The underlying demand it's not going to go away. The people who went up on that treatment regime are typically years in progress. By and so a delay of some months is not going to fundamentally change that and for collecting devices we also expect things to come back faster. But that may be some patients who cannot transition back to IC on the catheter side.
By the first is from
the line of Janik Denholm of ABG. Please go ahead. Your line is open.
Hi, guys. It's Janik by Just two quick follow ups. One of them just being a housekeeping question for you, Anders. Depreciation and by the amortizations. Can you update us on, you can say, the outlook for the year, obviously, coming in quite low this quarter to normal would be my first one.
And secondly, you talked a little earlier on the innovation pipeline. Any chance you can provide a little more color in terms expectations of timelines and I'm thinking both on the new Ostomy platform as a whole, but also this digital accessory, by which one should come first or do they go hand in hand? And also how much behind the Ostomy platform is the Continence platform? Thanks. By
Thanks, Yannick. Why don't I start with the innovation question? So remember, we've talked to you guys about by 3 major projects, one being a new catheter platform. By you should expect us to launch that in the first half of the strategic period. Progress is well underway.
We have a strong concept and a clinically relevant by concept that we're doing clinical strategy work at the moment. But we think we've got something there that is going to be by quite exciting. On the digital ostomy appliance, it's moving into pilots with payers in Germany and the U. K. And remember, this is the first time that we put the product into the wild, so by Speak where it will be used on a large number of patients.
We're doing the pilots with payers because there is no established payment model for these types of devices. And I'm quite excited to see how these pilots are going to progress. They will run for a good year's time before we have by Efficient Data to form a conclusion on the impact. And then as we have by I told you earlier, we ran into some technical issues on the new Ostomy platform. We are working to resolve those.
By and we'll update you once we have clarity on what that means for launch timeline.
By Yes. And Janik, in terms of your first question around depreciation and amortization, by the end of the year. Yes, we are developing our depreciation and amortization line is developing better than I earlier anticipated. By the currency situation on the Hungarian hoof. So my estimate by the current run rate for the first half will be a good proxy for the full year.
Also by Please keep in mind, and I think we have talked to this in the past that the amortization we have on the Menta acquisition and also Comfort Medical will start to be reduced also in the second half of this year and into next year.
Okay. Thanks. By
Thank you. And we have one further question in the queue so far. That's a follow-up from Scott Bardo of Berenberg. Please go ahead. Your line is open.
By Yes. Thanks very much for the follow ups. So congratulations on the vision, Ostomy GPO. By I think now you now have relatively good access into the North American hospital market for Ostomy. But unfortunately until this point, you haven't really had the opportunity to capitalize because of the COVID-nineteen crisis.
So by I wonder, Christian, if you could help us understand what really needs to happen for you to really capitalize on this opportunity now? By What degree of investment or go to the changing go to market strategy do you need to adopt to really inflect your U. S. Ostomy position? By And so I wonder if you could talk to that a little bit.
And second, somewhat related question. Now, of course, we have a new administration in North America. By the U. S. Regulatory affairs can share any thoughts about the change in by the reimbursement environment or any healthcare policy in the U.
S. That we need to consider or is in discussion? Thanks.
By Thanks, Scott. Two good questions. So the VyZIENT win to us by the Premier win and now the Vizient win, by it basically marks the first time that we believe we are competing on a fully equal footing in the U. S. Ostomy market.
And of course we're going to invest in that. We have invested I should say in the Osteo business in the U. S. For some time in building a dedicated sales team, building a strong care program and by a DTC engine. We've also invested in home health presence.
But with the double opening on the GPO side, we have so by much expanded access that we are going to enlarge the sales footprint. And combined with the product portfolio that we have in the market. We think that's the recipe. So make no mistake, the reason that we have We've gotten on both of these contracts is a sustained effort, but it is also a recognition that the product portfolio by is differentiated. And the signature, if you will, signature accounts by the fact that we have started working with and who have converted to Coloplast over the years, over the past few years have been instrumental in, I think, in persuading the GPOs that we should have broad based access.
We will be doing that basically now our read of what's happening in the U. S. Net is that the vaccine deployment is happening at scale. By we are expecting access to improve. We are seeing it improve in our own figures.
So the time to to start investing is now. And then to your second question, Scott, on whether we're seeing any, if you will, dark by the regulatory horizon, not so far, but we are keeping both eyes and ears open.
By Very good. And thanks for the last follow-up, please. I see on the wires that Anders has by the company. I had an interview with one of the media companies and there's a discussion about M and A and Coloplast by the ability and appetite to do deals. Obviously, you've made some smaller tuck ins so far this year.
But by the company. But I wonder if you can comment as to whether the organization is poised to do by bigger more meaningful deals, whether that still is very much a focus or whether some of these comments on the media somewhat taken out of context? Thank you.
By the end of the call. So these discussions get a bit binary, right, when either there is a deal or there isn't. By we've made a couple of tuck ins this past quarter. This has, by, I think, a very pragmatic event, Scott. We're basically increasing insurance coverage in our own channel in the U.
S. As you know, we have by very limited debt. We have the capacity to act. We have done a bit of M and A work on the IU side. By the company.
But we'll update you, Scott, once we're ready to do more. I think that's as much as I'll say at the moment. It is a part of the strategy and we will also be doing more in the strategic period, by the end of the call.
Thank you.
Thank you. We've had a couple more questions by The first is from the line of Kate Kalashnikova of Citi. Please go ahead. Your line is open.
By Hello, Kristian. It's Kate Klashnikova from Citi. I've got two questions. The first one is on interventional urology. By Given better than expected procedure volume recovery in men's health and also improvements that you've seen in recent weeks in women's health, by Why are you not assuming any pent up demand benefit in the guidance this year?
Are you simply waiting to see more evidence of improving procedural volumes in Q3? By Or is it just a timing issue? And if so, do you expect pent up benefit next year by the U. K. And Interventional Urology.
And then the second question is on chronic care. Could you update us on new patient discharge for Ostomy by the U. K. And Continental Europe, perhaps how much improvement have you seen from January, when you noted that patient discharge in the U. K.
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By the end of the call. Sure. So to your first question, it's true that we're not assuming a lot of pent up demand. We'll definitely celebrate it if it's there, Kate. I guess we also want to see a few more months behind us.
We're encouraged by the progress so far, particularly for men's health. Women's health, we only have a couple of months now with increasing momentum. By the end of the call. So let's see that when we get a few more months behind us. When it comes to your question on new patient discharge was mainly Europe, correct?
By Yes, Europe and the UK.
Yes. So for the UK, We are seeing the ostomy new patient discharge approved ahead of the Continence new patient by Charge. We've seen OC come from, I would say, Index 60 to now Index 80, Index 80 plus by Wild Continence is lagging a bit behind, it's still sitting around a bit more than 60, Index 60. By the U. S.
And if you look to the rest of Europe, we are seeing a relatively mixed picture. I would say the smaller markets by that would cover, let's say, Switzerland, the Benelux, Nordics. We're seeing numbers around the index 80 range. By but for Germany and Italy, we are seeing we're seeing better numbers and better momentum. So it is a bit of a mixed picture.
Okay. Thank you. And could you comment on the U. S. As well?
That would be helpful.
So on the U. S. For new patient discharge. We are seeing pretty much normal around ostomy. By the company.
So that's also what leads us to be, if you will, bullish about investing in that side of the business and confidence around by Index 80.
Thank you.
Thank you. And we have one further question in the queue so far, that's from the line of Carsten Lundborg of SEP. Please go ahead. Your line is open.
By Thank you very much. Just one question here. Christian, I'm just following up
on a comment you had about
the neuro ostomy platform. As you said, you have previously told us that you
by had a setback. But I
also think you said back then that the root cause was identified. Maybe I'm putting a little by too much emphasis on your wording. But to me, it sounds a little bit like that you didn't really have had a lot of progress by the end of the year. In fixing the root cause over the last couple of months. Is that correct?
By the end of
the call. So it's clear, it's true, Karsten. We have isolated the root cause. We also believe that we have a fix. Without walking into, if you will, our development progress in too much detail.
We still haven't decided fully how long it is going to take, so when an appropriate time to launch would be. Okay.
Okay. Thank you very much.
That was all for me.
Thank you.
By
And we've had one further question come through. That's from the line of Janik Denholm of ABG. Please go ahead. Your line is open.
Hi, again, Janik from ABG. Just a follow-up. On the savings, I understand that some of them on OpEx side by structural, obviously also you can say the post pandemic scenario, less traveling, etcetera. Anders, can you quantify by You can say or at least split them out a little bit. Where do you see that being the most?
Is it on admin? Is it on SMD? Or how should we think of that going forward?
By So Janik, as I said earlier, I expect that by half of the improvements we have seen will continue. And it's a little bit mix across by our P and L. We are having a better start as we talked to you guys about on the gross margin as by the global operation plans and the execution we have seen so far. But we're also seeing some efficiency gains on the other P and L items. So it is a little bit of mix across our P and L.
Okay. Thanks.
Thank you.
Okay. There seems to be no further questions from the phone. So I'll hand back to our speakers
by the end of the call.