Good morning, welcome everybody. Welcome to Össur Capital Markets Day. My name is Niels Jacobsen, I'm Chairman of Össur, I'm CEO of William Demant Invest, that's the reason for my presence here today. William Demant Invest have been invested in Össur since 2004. The company and the profile and purpose align well with our investment philosophy of owning significant shares in medical device companies that are operating in markets with sustainable favorable growth dynamics. As you probably know, William Demant Invest is an evergreen investor, meaning that we own our companies on the long-term basis, and we operate our companies not in a way for selling them again.
We really think that having this long-term perspective and running the companies in a long-term perspective makes a difference compared to how we see private equity run companies with a future sale as the main purpose. Over the last 2 decades, Össur have grown consistently through organic growth and acquisitions. The company continues to mature and develop its business model with a goal of improving the mobility of more individuals. The business environment have been challenging in recent years, several factors have impacted growth, which has been lower than we expect for Össur. However, the business has also been resilient and is very well positioned to take advantage of opportunities in this industry. After leading Össur successfully for 26 year, Jón Sigurðsson stepped down last year, and Sveinn Sölvason took over as CEO.
The new executive team is consisting of both new members and individuals that have been with the company in a long tenure. Sveinn and his team will today present their future vision for the company, and I'm confident that the strategic focus that will be presented will support continued growth of Embla Medical. With these closing comments, I will hand over to Sveinn. Thank you.
Welcome to Embla Medical Capital Markets Day. It's fantastic to be here with all of you today. We appreciate that greatly that you take time out of your busy schedules to be with us for the next 4 hours. In the room, we have people that have followed Embla Medical for a long time and have been investors in Embla Medical for a long time, and also people that are newer to the case. We're also broadcasting this live. We have also a virtual audience. Welcome to those of you who are listening also. Over the next 4 hours, we will go through our strategy and prioritization over the next couple of years. Here we have the agenda for the next, yeah, 4 hours.
We have also Fleur Jong with us, who is one of our Össur ambassadors. She will give us a little break from discussing strategy and talk about her what she is doing and the amazing things that she is doing. She's actually the world record holder in long jump for Paralympians and also 100-meter run. Her world record is 6.30, isn't that right?
6:34.
634. This stage is, I think, 6 meters. That just puts it a little bit into perspective. She is truly a good example of what it means to live life without limitations. Thanks for being with us here today, Fleur. This is the team that will present here today. This is the Össur executive team. We did change this to our structure or how we manage the business in Q3 last year. Because ultimately, we're in the business of providing solutions for mobility challenges, and these mobility challenges are the same everywhere in the world. Patient journeys, competitive dynamics, and how solutions are paid for differs. We need a structure that allows for flexibility to apply what is relevant in each and every market.
Also, Ólafur is here, and he will present, is responsible for the commercial framework or the growth framework that is executed in the regions. Guðjón is leading EMEA and APAC, and Christian, Americas. We have the functional leaders, Egill on manufacturing and operations, Hildur, R&D, Margrét on people, strategy, and sustainability, and Árni on finance. This is a team that has been with Össur for a long time and has a long tenure in the industry. I what I was gonna cover here in this opening session is, first and foremost, go through the main messages, what we would like you to take away from this program today.
A few slides on how Össur looks like now, the markets we compete in, what has happened since the last Capital Markets Day. We look forward and talk about our strategic priorities and then ultimately what that means for you in terms of how we intend to grow the business. The main messages that we hope that you will take away from this program is, first and foremost, that Össur is well-positioned in a market that provides products and services to people with mostly a chronic mobility challenge. We're presenting our new strategy, Growth'27, which is a combination of priorities that have been successful for the company in the past, but also new priorities.
Most importantly, it presents how we will be successful in operating in the whole value chain that, again, mostly serves people with a chronic mobility challenge, everything from product to patient. It is about continued growth. Growth because we have strong opportunities in our core markets, growth because we are now have an opportunity to capture more value of each mobility solution that is created. Growth because there's still an opportunity to drive consolidation in the overall mobility market. Our objective is to accelerate organic growth. We're gonna continue to execute on our Bracing Simplified strategy. Christian will talk about that. Acquisitions will also continue to be a theme. We still see opportunities to do selective acquisitions to strengthen our execution in our markets. We're gonna also continue to focus on our foundational pillars, sustainability, scalability, and our people.
We're also providing better transparency on our sales segmentation that is more in line with how we think about the business going forward. That is another major topic that our business mix has changed over the last couple of years, where we have divested part of our bracing business, invested in strong assets on the prosthetic side, and strong companies on the patient care side. Now 80% of our business is in providing solutions for chronic mobility. These will be the main messages, and I'll repeat that at the end of the program. This is what we're gonna spend the time on going through today. Now just a few slides on how Össur how our business looks likes today. Our vision is to enable life without limitations, and we do that by improving people's mobility.
This is a key point that we're in the business of supplying products and service to people that have a lifetime mobility challenge of some sort. We're going to be referring a lot to the concept of chronic, and we refer to the people that use our products as patients. You're going to look at Fleur later and then when you look at her, the last thing you think that is, that she's a patients, patient. We talked about this with her yesterday, and she had a good answer and said that, "Yes, initially, when I was amputated, I am, I consider myself a patient. Gradually I become a client, and now I consider myself a consumer." I thought that was a pretty good answer. And this is how Össur looks like today.
We are a 50-year-old company. We have 50 years of experience in mobility. We operate in 36 countries and have over 4,000 employees. Most of our business is in the reimbursed healthcare markets that have a well-funded reimbursement system and protocols for how amputees and people with other chronic mobility challenges are served. This is the bulk of our business. This is, however, a mix that we will see change over the next years, as most of the people that need our products reside in other markets. If we also revisit a little bit what has happened since we met last time at the Capital Markets Day four years ago. Niels touched a little bit on this. The business environment has been a little volatile. Growth has not been where we wanted, but the business has also been resilient.
We've grown the business in all our segments and regions, and profitability remains strong despite this short-term turbulence around supply chain challenges. Fundamentally, there's no structural change in how we see profitability develop for the business. We've also continued to invest in R&D. We've grown our investment in innovation at a faster pace than we've grown our overall organic business. Last year, we launched our new version of the POWER KNEE, which is again, an example how Össur has been or is able to change the dynamics in prosthetics and provide solutions that drive even more mobility and more functional upgrade for amputees. Market access was a major theme at our last Capital Markets Day. Then we presented plans that by this time, we would have gone direct in 10 new markets, and we've executed on that.
Since our last Capital Markets Day, we've gone direct in 9 new markets, Ólafur will touch a little bit on that later. We see the highest relative growth rates in private pay markets where the ability to invest in good healthcare solutions is increasing. Again, this point on business mix, which I mentioned earlier. Our business mix has changed fundamentally over the last 4 years. We've divested part of our bracing business. We've acquired strong assets in prosthetics, College Park and Naked Prosthetics, which we announced in quarter 3 last year. We've acquired strong patient care companies in all of our, or in virtually all of our core markets. Now, again, 80% of our business is centered on providing products and solutions for chronic mobility. This is our playing field.
These are the markets we compete in. Prosthetics here, we are one of the category leaders in this $1.4 billion-$1.5 billion market. In bracing, we're now a smaller, more focused player. Then there's the patient care side. This is the front end of the value chain. This is where those that need our products come for service, maintenance, upgrades, and renewals of their mobility solutions. This is still a fragmented space, and that's a business mix, and patient mix differs between countries, ultimately driven by how the different reimbursement systems have decided to pay for these types of solutions. This is now our playing field. After we have taken the step to also be at the front end of the value chain, we are now operating in a larger market.
That was the sort of the background. If we now look forward to talk about our Growth'27 strategy, which is a strategy that we've developed with broad participation within the organization. We've talked to the people that use our products and our customers. We're excited to be here today to also to share this with you, how we intend to prioritize for the next couple of years. If we start by putting things a little bit into historical perspective. Össur started as a small patient care facility in Iceland 50 years ago. It took 25 years that ultimately led to the development of the silicone liner, which is still one of our most important products, what all amputees use, One or two pairs of liners every year.
That laid the foundation for building the business in terms of more product and more geographic access, building our commercial capabilities in more markets. All of these remain valid themes. Over the last 10 years, we've built up a presence again at the front end of the value chain, owning and operating companies that are servicing the patients that need our products. Now we are, you could say, in the middle of the river, in this maturity stage, and again, at an exciting opportunity or an exciting point in the company's development, because this opens up further growth opportunities. Growth 27 is all about how we position Össur to be successful as a vertically integrated provider of mobility solutions, mostly again for chronic conditions.
In shaping our strategic priorities, we've looked at the main or taken a view on the main industry trends. There's a continuous consolidation at all levels of the value chain in the O&P market. Reimbursement continues to be a major theme as well. There's a continuous demand for more productivity, more efficiency, demonstrating outcomes to the payers that pay for our products. Healthcare consumerism is also a major trend. People are more, or those that use our products are increasingly aware of what options are out there, especially in private markets, private pay markets. Digitalization is impacting how products are delivered or how full solutions are delivered, and also having an impact on the traditional, let's say, channel structure.
Very importantly for how we understand our Growth'27 strategy is the fact that the O&P clinics, which is our This is where we are strong, this is where we have relationships, this is where we now own patient care facilities or O&P clinics, but this is again, where we have very strong commercial relationships in all of our core markets. These businesses, they are serving other chronic mobility challenges as well, not just amputations, but also other chronic mobility challenges. You'll hear more about this today. We strategically need to address all of those challenges. What that means for Össur is that we are transitioning from being a niche product business operating in these two small markets, prosthetics and bracing and support, to operating in a larger market, being more patient-centric, more patient-driven.
Focusing on selected chronic mobility categories, but also individuals that need the more short-term solution on the, on the bracing and support side. This offers opportunities. Our strategy is to capture more of the value of each mobility solution that is created. It's also an opportunity to address, again, broader set of chronic mobility categories. We have direct access to patients, which is critical for our innovation work, and direct access to the, to payers that decide what is paid for. That's also critical when it comes to creating more access for high-end devices in terms of demonstrating the health economic benefits of using good mobility solutions. This is the company that we are building, a patient-centric business focusing on chronic mobility challenges.
When it comes to growth in this space, we need to address the right patient groups with the right solutions and deliver those solutions in the most effective manner. Therefore, our growth drivers are patient reach, innovative solutions, and O&P value creation. Patient reach in the short term is more about driving patient volumes in our patient care facilities. Also, especially in private pay markets, finding innovative ways to drive volume and awareness of in terms of what is available. Innovative solutions, that is where we are strong. In the short term, that is where we will see the most impact on growth. We have a very strong product pipeline, especially on the bionics, and Hildur will talk more about that later.
The O&P value creation theme, that is about how we deliver as effectively as possible the mobility solutions that our customers or patients need. We need to do that well on our own facilities, and if we own patient care facilities, and if we do that drives strength that we can leverage as a better, stronger commercial partner to our independent clinics. These themes are reinforcing and executing well on these themes will make us successful in this whole ecosystem. There's also the element of time, with regard to these themes. Our maturity on innovative solutions is higher and on O&P value creation. Again, this is where we'll see more growth driven in the short term. The concept of patient reach is something we'll see mature within the organization.
As time goes, we will start to report more on number of patients served. Also remember, the people that need our products and services have a chronic ability. This is part of their life. There are so many other things that need to work out well in order to keep mobility levels at the right level. The applicability of these themes is also different, very different, whether you're in a reimbursed environment or whether you're in a private pay environment. Keep that in mind. Most of the day today will be around going through these themes, explaining how we intend to prioritize and where we are gonna focus. That is the essence of what we're gonna, yeah, spend most of the time on here today.
We're gonna continue to be focus on growth through acquisitions. M&A has been or acquisitions has been a major growth theme for us historically, and we'll continue to look at opportunities to grow the business through acquisitions. Around reaching more patients, about acquiring product or technology that broadens our access. We're gonna be continue to be disciplined on our capital allocation, use our strong free cash flow to grow the business, and return remaining free cash flow to our shareholders in the form of share buybacks. What does then all of this mean for you? What does it mean for growth? The structural aspects that drive demand for our products and services in this industry are favorable. There's more tailwind than headwind.
Our business mix now, compared to a couple of years ago, also has more favorable underlying growth dynamics. As again, we've are a little bit smaller on the bracing of the sale bracing side. We are bigger on prosthetics and bigger on patient care. Executing on our growth themes, it is our intention to drive an acceleration in organic growth rate. In the short term, that is all about executing on our bionic strategy, growing in emerging markets, and capturing more value of each mobility solution that is created. For you to form an opinion on our ability to be at the upper end of that range, that those are the key themes in the very, very short term. Those are my final remarks for this opening session.
This is a slide that we'll refer to again and again today, just for you to understand where we are in the, in talking through the components of our, of our growth, Growth'27 strategy. Thank you.
Th ank you, Sveinn. My name is Edda, I'm the Investor Relations Director of Össur, I will be moderating the Q&A sessions we will have throughout the day. We will be taking questions now, both from the live audience, we'll be passing on microphones to those of you who will raise your hand. I kindly ask you to state your name and your question clearly into the microphone. For those of you who are watching this Capital Market Day online, you're welcome to type in your questions in the question option in front of you on the screen. Remember, you're able to type in your questions throughout the presentations, you do not need to wait for the Q&A sessions to start. While we wait for the audience to raise their hand,
Yeah.
We have already, 1 question here from a virtual attendee. The question is: Is it fair to say that acquiring patient care is a defensive strategy, and will it not dilute your margins?
Well, there's an element of it being defensive, surely. But we believe that we are in the business of acquiring patient care and being in the whole chain because we think it's it is about growth. At the end of the day, the reason we are in the whole chain is that we are capturing more of the value of each mobility solution that is created. Yes, on average, margins are a bit lower in a typical or an average patient care facility compared to our wholesale product business. There are also O&P operators that are higher and lower, and there's again, depending on product mix and patient mix.
At the end of the day, we're in the business of creating shareholder value by growing cash flows. That's what we're gonna do and create synergies and drive return on invested capital by capturing more value of each mobility solution that is created. That is how we think about it. It also drives more resilience in our business, because what we are inherently acquiring when we are investing in an O&P clinic, we are buying a base that of patients that consistently need to upgrade, maintain, and re-renew their mobility solution. It's our job to make sure they get better solutions and drive productivity in how these mobility solutions are created. Holistically, this drives more resilience and positions us stronger to grow going forward. That is how we think about it.
Thank you.
Benjamin from ABG. Just to recap from the last CMD, looking at your new 5-year growth targets of around 5%-7% organic growth, where do the exoskeleton fit in in this? Is this something that provides an upside to the current target for the next 5 years, or is this something that is incorporated already?
We'll touch on this also later today. That's a good question because it addresses the picture that I was going through earlier, that for example, stroke patients find their way to our patient care facilities that they're typically having, like, some sort of customized orthosis or an off-the-shelf brace in some shape or form to help them increase their mobility levels. There is, let's say when it comes to exoskeletons or bionic bracing, that is very close to our competencies when in mobility, both our intellectual property and our knowledge and experience in bringing complex medical devices to market and creating reimbursement for those devices. Reimbursement is starting. There is an element of reimbursement in some of our biggest markets today, already around certain types of exoskeletons.
This is what we mean with the fact that we are now in the whole chain and we are servicing and addressing patients with these types of indications, opens up opportunity for us to also leverage our knowledge and participate in these markets. The answer to whether that is actually part of our growth plans in the short to medium term, the answer to that is no.
Thank you.
Okay. We have a question here from the virtual audience. The question is, you announced your five-year growth ambition to the market. I was surprised that you did not include an EBITDA margin ambition as well. Why not? How should we interpret that?
I addressed this partly earlier. Part of, let's say, when it comes to how margin will develop, will again be dependent on what, how our acquisition strategy will develop, because that provides some level of unpredictability, let's say. Our decision was not to give specific margin guidance, but rather talk about the things that are moving our profitability and explain that, and that's what we're gonna do today. We're not gonna provide a specific guidance in terms of where we think the margin will be within the next five year period.
Okay. Thank you, Sveinn . That concludes the Q&A session for now. I would like to welcome Ólafur Gylfason to the stage. Thank you.
Good morning, everyone. I will be covering patient reach today, which is one of our three growth drivers. As Margrét Lára and Sveinn mentioned earlier, our biggest growth opportunity is to reach more patients with chronic mobility challenges. The key topics for me today is to explain to you why chronic mobility is a priority. Also go through the patient journeys, the dynamics there, and what is the key to success. Finally, call out the main growth opportunities in patient reach. Before we go into the patient reach, just a little background on our stakeholders. We have typically four stakeholders that we focus on. Certified prosthetist and orthotist, as we call CPOs, typically in the O&P clinic.
We have the payers, typically public or private insurance, the referrals, typically physicians or rehab doctor, and then, the patient, what it is all about. If you look a little bit at the history of Össur, the CPOs, that has been our focus over the past decades. We have built up a very strong relationship with this target group. We believe that the CPOs and Össur together has basically been the foundation of a great growth in technology trade-up. As we grew, there was a more need for going in relationship with payers.
Quite many markets that we had challenges getting the products listed, there's been a lot of effort making sure that our customers, our CPOs, are able to get paid for the product. In recent years, going into the patient care, we have been connecting to referrals and the patients. If we look at the patient population, the big picture there, we estimate the market to be $13 billion-$14 billion in patient care. Above 80%, like Sveinn mentioned, is patient with chronic mobility challenges. There is one thing they have in common. They have chronic mobility challenges for life, and they need service for life. We have chronic, non-chronic patients.
Quite a lot of that population comes into the O&P clinic as well, and we have developed a different strategy to address them. We call it Bracing Simplified. My colleague Christian, he will go through that later on today. We have those two segments that we are focusing on that should be the underlying part of our growth, prosthetics and orthotics. We have often called our business, prosthetics and bracing and support. Bracing and support is a much broader definition of those devices, and orthotics is basically a subsegment of that we're focusing on in the O&P channel. If you look first at the prosthetics, this is a pretty well-known space for us. This is what we have concentrated on.
You don't get service if you're an amputee, except in an O&P facility. They all go into the O&P clinics. We believe there are around 30 million patients out there that are in a need of improved mobility. What always strikes us when we look at this, and if we just look at the pie there, 10 million lower limb amputees and less than half of them get prosthesis so they're able to walk. A majority of them are simply not walking, and that just is striking for us. I mean, this is our mission. This is why we exist as a company. We want to go after this population and improve their mobility. Then we have a 20 million population of amputees with upper limb loss.
That ratio is much higher. The challenge there is also a lot about awareness. Quite often the physician simply doesn't refer, doesn't prescribe, and it somehow gets lost, and millions of people simply don't have anything to improve their mobility. That's definitely a huge opportunity. On the right side, the orthotics. There's a lot of or much bigger area of population. We are talking about hundreds of millions or even above 1 billion people that have indications like stroke, osteoarthritis, et cetera. A much smaller amount of that group goes into the O&P facility. Still quite a lot. Still a lot of opportunities. We have not done much to really take that like we have done in prosthetics.
We have identified stroke as the next, big thing for us. We think we can help a lot of people, that have challenges, due to stroke. We will, dive a bit deeper into that in the innovation, solution chapter. Hildur will, explain a bit further. But we believe this is the most likely next thing to be able to commercialize and bring into the, into the world. Let's, dive then into the chronic patient. From now on, I'm going to just focus on amputees and the prosthetic business because we know so much about it. You can definitely apply the material that I share with you into the other side, the orthotic part. If we look at a, a chronic patient, I have a...
There is a woman here called, Paola Antonini, a fantastic ambassador, professor, goes throughout the world to present our solutions and help us getting the message to the market. If she wants to be able to walk and have a leg, she needs 10 different body parts, if you will, to be able to walk. And you see those body parts there and actually 9, if you count. You need 2 liners, if you want to live a pretty normal life. You need to wash it and have another one meanwhile you dry it up. 10 components. This provides a tremendous challenges. She has to get a new liner maybe every 6 months, new knee maybe every 3-5 years. There are issues, challenges.
She has a socket that is produced, handcrafted, quite often in the workshop. If she has a volume fluctuation with her stump, she has to go back in and get help on that. It's just a challenge to be an amputee. Important to keep in mind, above 70% of our revenues are coming from patients that are already on prosthesis. That is kind of what Svein was talking about. We just want to take care of this population much better than we have done. We think we have so much more to do to improve their mobility, create solutions like one leg, make it think in more harmony, et cetera, et cetera.
Maybe one more slide on the patient population, and that relates to this big opportunity emerging market. So you see the, on the graph here, the gray shaded area, these are number of amputees in the world, the 30 million. You can see how they distribute, depending on development of our markets. The right size, the blue area, this is Össur sales. The yellow area is the Össur sales in the emerging markets. What strikes you when you look at this picture, above 80% of all amputees are in the emerging, meaning less than 20 are in the Western world, but 90% of our revenues stay in the Western world market. We are direct in all of those markets, 22 countries, and have established a pretty good business there.
The reason for this obviously is funding, reimbursement, and historic presence of us in those markets. Still a lot of opportunities there. I will come into that a bit later. It screams at us, of course, the opportunities on the emerging markets. The reason for that is the opposite: limited funding, limited infrastructure, and what we have done, we have kind of split the emerging markets into basic and developing. As Sveinn mentioned, we have made a specific effort on that in the recent years. We're very successful. It's going very well, and we can see how growth picks up very fast soon, as soon as we have established a good ground in those markets. We will continue to do that.
Just to explain a bit those two different worlds, I will go into the patient journeys. We believe it's really, really important to understand this space well to be able to continue to be successful and to increase the growth opportunities that we have, because there are a lot of opportunities. The trick is, how are you going to capture them? Still same color applied here. The blue area is the developed markets, and you can see our stakeholders there at the top. Same stakeholders. What strikes you with developed market, even though we dive deeper into the amputees that are fitted, only half of lower limb amputees in this country, in Western world, are getting prosthesis. The other half is not. And we have reimbursement.
It's, there is funding and, we have established patient care. There are people that can receive them. Our approach on this, first and foremost, we. That's where we come from, that's what we know, functional trade up. We see big opportunities continue to innovate and get solutions, and this is a lot of elderly patients that are not getting the prosthesis. But at the same time, it's not gonna be easy if we come with cool products like we have are about to launch, where you have a patient that is not even able to stand up and go to the restroom. We are providing, want to bring a product to the market that does that.
Actually, our POWER KNEE that is for higher active does that. We want to have a product that allows people to stand up, help some stand up, go to the restroom, but it costs money. We need proper access to the prescribers and the payer and convince them that the health economics and the clinical benefits are there. It is not easy, but definitely an opportunity. Lastly, you have to have a very strong presence in the O&P and make sure that... Because it's a lot of work for the O&P clinics to do this work, to get all the paperwork and they might not be successful with few of them. So we have to have people that are able and willing to do it in the patient care.
That's kind of the high level approach on developed markets. You go to emerging markets. It's very difficult to find a common thread in those markets. What is common is that the fitting rate is really, really low. There is a lot of private pay, and we estimate 70%. There is funding out there. The trick is to find that. Lastly, in some markets, there is simply no patient care, and they don't know where to go. That stops it from people getting prosthesis. Our approach, again, functional trade-up, make sure we have the right solution, affordable, durable, et cetera, access to the private pay, and find ways to create patient care. That's kind of the two approaches, if you will, in those two big markets.
I have two examples. One on the established markets. What we have been doing in the established market very, very successfully is to do this functional trade up. As Sveinn mentioned, our silicone liners, the suspension to the body. People 30 years ago, no one was using it. They were all using straps or something for $30. Now everyone is using it, $200-$300 or even more on the average. Same was with the carbon feet that we have today. Everyone was using wooden leg, wooden ankle. Now it's carbon ankle. We see exactly the same apply to bionics. Absolutely the same. When we were trying to sell the liners, I mean, we got so much pushback from payers, from referrers, all around.
We just are experiencing exactly the same with the bionics. And we have given out a number, 21%, which is the bionic sales as a ratio of our full prosthetic sales. We think there is still a lot of opportunities to go for. You, you see the colored dots there. They are an indication of our maturity with stakeholders in the Western world and North America. In DACH, we are pretty well established, and then there are opportunities there as well, but even further in the other areas. What we are doing, have been doing, want to put much more effort on, is to drive preference and value among all stakeholders. You have the bionic, it's a patient in need.
For the referrer, it's the clinical benefit, it's the health economic benefits, it's improved quality of life for the patient. In the patient care, we are expanding as a partnership and acquiring our own patient care to make sure there are people that are able to fit it. That's kind of relatively high level, the approach that we will continue to do to increase the growth of bionics. It has to be mentioned that the pipe of new products in bionics is extremely attractive for us at the moment. It takes so many years to develop those products, and we've been waiting a long time for our colleagues in R&D to get the cool and fancy products out. Hildur will talk about it later, and it's very exciting.
and Guðjón, my colleagues, will talk more about this in more details. Hildur on innovative solution and Guðjón on the O&P value creation. On the emerging markets, give you two example of what we're doing that we are very excited about. These are pilots. We've been doing both of those for a few years, in COVID, maybe it hasn't helped too much. We have built a partnership. We are working on ways to create new ways to serve amputees in Zambia, in Africa. We partnered up with a fantastic local team there. They have a patient that is without a service, they don't know where to go, and they can't get prosthesis on their leg. There is funding.
There are, for example, mining companies and money, external monies interested to go into Africa that are willing to pay. We have established a joint effort O&P clinic and a mobile clinic. We simply have created products that are very simple to use, very effective. You can fit them in a day. You simply drive to the patient, you find the patient, serves them on the spot where they are, voilà, you have a full-fledged O&P value chain. This is going very promising. If this will work, there are big opportunities to scale this to countries like India. The other opportunity is access to private pay in China. Again, it is very different depending on markets, but we are hopeful that we are building up something that is scalable there.
We have a lot of patients that have money in China, and there is a relatively good setup in that market. What we have been doing over the past two years or so, we have been building up a team of we call them social media influencers. They become Össur ambassadors. They're quite popular. You see two example of them on the screen. Do all kind of fancy stuff and get a lot of attention, and they attract the patients that are in need into our Össur website and teams. That team has built, established a group of VIP customers or O&P partners, and they refer them, the patients, into those clinics. We have a patient on Össur mobility solution.
Not a complex model, but sometimes simple things are the best. This is very promising as well. That concludes my chapter. Key message, to repeat what I've been going through, what we think is the key to continue to growth and hopefully grow a bit faster than we have done historically. Majority of patients in O&P channel are chronic patient, and they need service for life, and we want to be that partner. Less than half of all new amputees are fitted with prosthetic solution. Huge opportunity. Not easy, but huge opportunity. Potential to develop further chronic mobility solutions like stroke patients. Personally, I'm very excited about this. We've been watching this for 10, 15 years. The trick always when you come out with new innovation is the timing. Is the timing correct?
I cross my fingers, I think the timing is coming now. Then we have further growing bionics through functional fit up in developed markets and make sure that we drive preferences with value to all stakeholders that I went through. Then finally, what I just finished going through, develop new ways to reach patients in emerging markets like with private pay. Thank you.
Thank you, Ólafur . Now we move into the next Q&A session. We will go about things the same way as we did in the first Q&A session. Please raise your hand if you have any questions here from the live audience. For you who are watching online, please write your question in the question option box in front of you. So while you're raising your hands here, I will read out the first question. Ólafur here's a question on who makes the decision on which mobility solution a patient gets, and how can you influence that choice?
Thank you. Yeah. It has been historically, I think above 90% the CPO. He is the decision maker. That is, of course, the reason why we have spent all our sales and marketing money mostly on this group. As you grow and have stronger presence, it changes because we have kind of reached a certain level with it. What we are experiencing is the patient is becoming a bigger decision maker. Sven described it so well with our conversation with Fleur last night, where she describes, "Yeah, I was a patient, I didn't have a clue. I just did what I was told, totally. Then I became a client. Now I'm a consumer, and I'm telling my CPO what I want." I think this will increase, and especially because this is so.
Something has changed in the world with prosthesis. 20 years ago, people were hiding this. Today, you watch Super Bowl, and I saw on the last of the one before, 3 amputees in advertisement on Super Bowl, where hundreds of millions are watching. I'm kind of have to hold myself with the excitement of the opportunities with that, which I think is very different from other healthcare. That there is something there that can make us grow faster.
Okay. We have a question here from the audience.
Yes. A couple of questions, if I may. It's Christian again from Danske Bank. First question is, do you believe you have the right portfolio in place now to target emerging markets at large? I know you've sort of. Part of the motivation for the College Park acquisition, as I understood, it was also to expand into more affordable prosthetic solutions. Do you have the portfolio in place or is more development or acquisitions required?
Yeah. I'm not sure if we need to acquire more products for that. Maybe to get some local local products. We have. We are lacking like in Africa, if you go to those markets, and we have had R&D helping us out develop a very simple, robust solution that can last as long as possible and with the least maintenance. We will continue with that. In some local markets, it takes time to develop people away from their habits, so we might acquire a local player. We have a pretty broad portfolio. For example, in China, the portfolio fits perfectly into the private payer. There is some work to do, and my gut is that we need to figure that out ourselves more than acquiring it.
On the orthotic side, there is a lot of opportunities there. We've done some work there, but I think there is room for improvement in that space, which we intend to put more focus on now with more clarity on the indications we're going to serve.
Great. Thank you very much. Then a second question. This is on the financial incentives for fitting bionic solutions. Can you talk about whether there is, I assume this is different market by market, but in your largest markets, whether there is a difference in the financial incentive from, say, you owning a vertically integrated O&P clinic, does that make it easier to fit a bionic solution rather than, say, a non-vertically integrated independent clinic?
Yeah, I have to be careful what I say here to the financial audience. I can easily talk to my customers. Do you want me to make a go at this one, or do you want to take it later on?
Go ahead.
Yeah. So we have good margin, obviously. When we sell the products into our own clinics, it is very healthy and good for us. The more we sell, fit, our own products in our own clinics, we will get more profit. There is no doubt about that. It's more beneficial for us owning the whole value chain than being an independent O&P player, if that answers the question.
No, no, I think the question is actually more whether, say, an independent is disincentivized to fit, bionics because, they might be able to keep a larger margin on fitting a mechanic solution.
Okay. Got your question. That's an easier question. Yes, this is a constant battle, but the trick is, if the CPO doesn't do his best to keep his patient and keep them mobile and starts to make profit on it and have them with lower mobility, you will probably end up in trouble. There are limitations without a question. For example, with the POWER KNEE, we were selling very few pieces until I think one or two years ago, we got an L-Code approved. It's a system in the U.S. that just a fixed price you get, and it totally changes the game for the CPO, and it doesn't matter whether that's our own clinics or the independent.
That is really the effort that we need to make more of in the payer area in the Western world. We have done a good job in both in Germany and the U.S., and we have people on the ground that just think about this and nothing else. We need to do better in some of the other established markets.
Great. Thank you.
Welcome.
Okay. We'll be taking 1 question here from Wei after I read this question out loud. We will have 2 questions, and that will conclude this Q&A session. I'll first read this question out loud to you. How do you view the competitive environment in China and the strategic ambitions of local players?
Yeah. China is a bit tricky place. We have maybe just been. Yeah, we're fortunate. Over the last 7 years, 8 years, we went direct in China. It's been a very successful journey, so far we have basically been tapping into the premium market. That is okay. That is totally fine for the Chinese market and the Chinese setup, if you will, what the Chinese want. If you dive too deep into the market and you own a big cake of the public market, then it's more challenging. We haven't stepped into the tenders there yet. That is one of the big decisions we have to make in coming years, how deep we are.
Today, we're in a very good spot and we do not worry about local governmental changes that will affect our success there at the moment.
Okay. Thank you. We'll take 1 question from Wei.
Yeah, Wei from SEB. Thank you, for taking my question. A question on the general market. We heard already there is a staff shortage for the CPOs before the COVID time, and now it's probably accelerated a little bit. You are an important industry stakeholder. How have you sort of, or how will you address this issue? Is there sort of opportunity for you or sort of more challenge you are seeing? Could you maybe comment on this?
Yeah. Guðjón, my colleague in the O&P value creation session, will probably address it better. We see opportunity to dive deeper in the value chain. Today, there is in almost every workshop or O&P clinic, there is a workshop where people are manufacturing the sockets, as an example. We have been waiting for years to find the right paradigm shift to change this and bring this probably just to the manufacturers like Össur. That will make the life much easier for the CPO, and we will sort out some of that shortage, without a question. Then just more efficient and effective solutions. We have a Direct Socket, as an example, where you can cast the prosthesis in a day, which is unique in the world. No one else is able to do that.
That saves time. You can hopefully sort out those challenges.
Hildur and Guðjón will dive into this question after the coffee break. I would like to thank you, Ólafur , and, I am very proud to now be introducing to the stage our team Össur member, Fleur Jong.
Thank you very much. Thank you for having me here. Thank you for inviting me, and I wanna tell you something that I experienced a few weeks ago. A few weeks ago, I was training at a sports facility. The sports facility is also a location where my CPO is located. We have the luxury of having an athletics track. In the middle is the prosthetic shop. I was just training. While I was taking a break in between my runs, there was, I think 70, 80-year-old man walking into the prosthetic shop with his wife, just normal. That's what happens on a normal day there. It was not that much later that I noticed that he also had 2 prosthetic legs, exactly like me, 2 lower limb amputations.
He was walking pretty well, with all due respect to his age. You know, right now I'm 27, I am an athlete, I'm fit, I'm walking very vividly, but sometimes I do wonder what it's like when I get older. I mean, it seems to be that getting older makes you move a little bit more difficult. I don't know what that's gonna be like, having two prosthetic legs. Just seeing that man walk into the prosthetic shop, realizing he had two prosthetic legs just like me, I was like, "Okay, there's hope for me too when I get older." I decided to walk up to him and tell him that.
You know, as an athlete, I go to a lot of places, and I also give clinics with a lot of kids, a lot of young people, but I don't encounter senior people that much with prosthetic legs. I decided to walk up to him and tell him, like, "Hey, I'm Fleur. I have the same amputation as you do." It's a little bit weird start of conversation, but that's what happened. I just wanted to say hi and introduce myself and tell him that I thought it was very inspiring to me and very hopeful to me to see him walk like this. But he'd been in the prosthetic shop the whole morning, and he'd seen me running and jumping around. He immediately countered me back, and he told me, "No, wait.
I've seen you run around all morning, and you are inspiring to me because if you can do all those extreme things on the track, why wouldn't I be able to just still walk?" He told me that it was just his goal to, at his age, be still able to walk from his house to the café, so he could have a date night with his wife until he would pass away, actually. I thought, "Yeah, of course. This is the way it goes." I have my goals on the track, and he has his goals just in life. It was really, really inspiring to me. I think it was one of the most special encounters I had in my life so far because him and I both resembled something.
We both resemble how we feel free to do whatever we like and have goals and be ambitious about it, each in our own way, while still using but also needing the service of a prosthetic company and prosthetic legs. That's absolutely fine and great. Now, I lost my legs 10 years ago due to a blood bacteria, my body went into a toxic shock, that shock is actually what caused my body to only have blood flowing to my brains, my lungs, my heart, just to keep me alive and not so much to my feet but also not to my fingers. They had to be amputated. I was 16 at the time. That's already an age where, you know, figuring out who are you, who do you want to be, how do you get there.
I was pretty scared and insecure, and I was also a little scared about my possible new life. I didn't know what it was gonna look like. I didn't have any knowledge about it. When I first got my prosthetic legs, it really felt like a product. Like a product is put on me, and this is what you have to deal with. Good luck. I was like, "Yeah, I'm not sure how to do this." While working with my CPO, but also getting into sports, I soon learned how to move with my new legs. I learned how to walk, how to skip a little bit, how to walk the stairs up and down, how to walk through steep declining sidewalks, which is a challenge in the beginning. I started feeling more comfortable.
While being taken back and being a little bit shocked by what had happened to me and how my first prosthetic legs felt and moved, I started getting more comfortable. Sport really helped me in that. It really grew back, like, kind of my confidence. Throughout the years, my legs have... Yeah, they kinda became more feeling like legs, not products anymore. They're my legs. They're not just prosthetic legs. They're my legs. That's really helping me. Even now, we're 10 years later, and we're still tailoring. We're tailoring, we're training, we're looking into all the details of my legs because as a person, we all evolve mentally, physically, and I need my legs to keep up with me, actually. We need to keep working on it, keep tailoring it.
It's just about keeping yourself but also your legs in the best shape possible because that's the most important thing. Now, when I started getting into sports, I first entered the track at a Paralympic talent day. I was just there to figure out what sport I was going to like. I had a new body, a new life. I thought I might as well look for a new sport. I was always dancing and playing tennis. I didn't wanna play tennis anymore because that would mean if you have a disability that they put you in a wheelchair. I was like, "No, I don't think that's necessary." I didn't wanna do that anymore. Dancing, I still kept falling a lot because I was not balanced that right. I still had to practice a lot.
I went to the track, and the coach there talked to me. I trained. I did, like, a little clinic. There were other athletes there. I was just absolutely amazed by how much all these athletes did on their daily prosthetics. Because what I saw on websites, on YouTube, I saw people flying on the track with blades, and I thought, "That's what I'm gonna see all clinic long," but I didn't. I only saw them training on their daily prosthetic legs. Just to give you an idea of what I'm able to do nowadays on my prosthetic legs, I compiled a little video for you. Now, I've been a professional athlete for over 7 years now, and there has also not been a year that has been the same. We're constantly changing. We're developing me. We're developing the gear.
We're looking for change, we're ultimately always looking for improvement as well. In Tokyo 2021, I experienced my first big win at the Paralympic Games, so on the biggest stage in the world. I brought the video of my first and eventually my winning jump, I brought the raw material because Tokyo 2021 was pretty special. Empty stadium, COVID, everything, like, locked away safely, sort of. I want you to see my jump, but I also want you to pay attention to what you hear in the stadium because it's pretty weird.
We've just completed round one of the women's T64 long jump qualifiers, with Blatchford leading with 5.78. Ganseving coming in second, 5.60. Sara Banzhaf for Ottobock. Whoopsie. Okay.
After the competition, there was a lot of talk about why I said, "Whoopsie," because it had aired, and I didn't know. I said whoopsie because I made a deal with my coach to slowly get into it, get into the competition, feel it's gone a little bit weird in the stadium, being empty but also quiet. Try to also not get distracted or taken back by it, but just slowly build up your competition. I jumped a new world record in my first attempt, and it ended up being the winning jump. That was not the deal, but it worked. I won. It was amazing to feel that, well, actually nine years after I lost my legs, to be able to put out such an accomplishment.
Actually, a few weeks ago, I improved the mark that I jumped there, 6 meters 16 to 6 meters 34. We're going to try keep improving that. Of course, now what? As Sveinn told you, I also have the world record in the 100 meters. I broke it last year, and I ran 12.46, and that made me also the first woman to go below 12.5 seconds, which was really a benchmark in female sprinting. It made me the fastest woman on blades ever. That was a very proud moment. Now what? What do we do to keep improving? Well, together with my team, I am going to have to redefine the limits of what we think is possible, and even in the most exaggerated way, try to live this ultimate life without limitations in every possible way.
From a practical point of view, this year is the World Championships. Finally, there's a big championship again, and it's the only title I do not yet have. I have the European title over 100 and in the long jump. I've got the Paralympic title in the long jump, but I don't have a World title yet. That's definitely the goal for this year. Next year, of course, is gonna be an even bigger party because then we have another Paralympic Games, and this time it's in Europe again. My expectations are high for it, and I don't expect a quiet stadium at all. Regarding all the work that we do on sockets, on alignments, but also on training, not much has changed. Of course, I've been an athlete for 7 years, so we have learned a lot. My team learned a lot.
I learned a lot. My CPO learned a lot. My coach learned a lot. I think together with Össur, we learned a lot, and we've really gotten to know each other so much better that we can go into the slightest details. The slightest details of my training, the slightest details of my material, every bolt, every alignment, it matters. We are just never done learning. I truly believe that is the attitude that we've got to have. I'm very happy to have a team around me that believes exactly the same. We're constantly trying to be innovating and trying new things and, well, in my case, stay ahead of the competition because the targets are on my back and no one else's. I have to be careful there. It's just very special.
From the moment I lost my legs to the moment I got my first prosthetic legs, I think throughout the 10 years, I just I love how my legs are not just a product anymore. This, but also this, it's all part of my body, and I'm proud of it to be part of my body. That is also what I want other people, the younger generation, the current generation, the older generation, I want everyone to know that. I want them to see me on the track. I want them to see me here. I want them to see me in commercials because it's increasing, and I want them to see that having prosthetic legs is also something to be proud of.
I mean, even if I put on my blades, I just feel like an increasement of a level of coolness. It's just very, very nice to experience that. I think it really doesn't matter whether it's about me trying to break new records and more records on the track, or it's about that 80-year-old man who just wants to still be able to go on a date with his wife. I just hope that these legs will just last a lifetime with me, and that I'll be able to live a happy life and enjoy everything I'm able to do right now. I hope I can turn 80 in a way that that old man also turned 80 and still be able to walk to go on a date with my future husband. Thank you so much.
Thank you, Fleur. That was truly inspirational. I think I, my eyes are a bit watery and from the audience here, I can see, I'm not the only one. Thank you once again. Now we will be heading into a coffee break, and we will be back at 10:15 A.M. sharp, when Hildur Einarsdóttir, EVP of R&D, is gonna take the stage. Thank you.
All right. Welcome back, everyone. We're gonna dive straight into it. I'm gonna tell you about innovative solutions, which, as Svein introduced to you before, is one of the three key pillars of our Growth '27 strategy. Our innovative pipeline is expected to contribute significantly to our growth in the coming five years. There's nothing new there. Innovation has always been at the core of Össur and a key factor for growth in the past. What is, however, different is that our corporate vision is giving us an opportunity to look at innovation and innovative solutions in a broader sense than in the past. Today I'm gonna walk you through our innovation strategy.
I'm gonna give you examples of where we believe there is opportunity for growth in the short term, growth within reach, based on solutions that we have recently launched or are about to place on the market. Also provide you with insights into some of the future avenues that we have started to explore in order to contribute to growth further into the future. I chose this picture specifically because I will be talking about clinical benefits and long-term impact of our solutions to our patients that are chronic. I think it's good to remember going into that it is also about developing for people's day-to-day life, to make sure that people can go to the pool or to the water slide park with the kids and not worry about their prosthetics.
That is what truly allows us to live up to our vision to enable people to live life without limitations. So let's start with our innovation strategy. Our innovation strategy follows the corporate vision, and I think it's good to recap a little bit on where we're coming from. We're coming from being a provider of products, a manufacturer. The way Össur has been evolving over the past years, stepping more and more into patient care, is putting us in a good position in an external environment that is changing. We see payers looking more and more at the total cost of care and the long-term benefits that any type of healthcare solutions are provided can bring.
This rhymes really well with Össur's innovation strategy, past and present, because we are always innovating to benefit our patients in the short term, but also looking at how our solutions can impact people in the long term in a positive manner. The environment is changing. We have the solutions to support that change. We are also in patient care. This puts us in a perfect position to make this transition from being a provider of products to being a provider of lifetime health services. Being in the whole value chain, like Sveinn described before, gives us great opportunities on the development side. Being closer to our patients, being closer to our payers, prescribers, and practitioners, always has really good input into our development efforts and R&D work.
We of course always want to capture commercial opportunities with our solutions while being very patient-centric and aim to drive better health outcomes. Our competitive advantage continues to be in our very strong and extensive intellectual property portfolio. There are three interlinked areas that I think are critical to develop successful solutions. Technology and innovation is one, and technology can do many wonderful things, and it's easy to get excited about new tech, us engineers can tell you all about that. Technology alone doesn't cut it. The only way technology and innovation become impactful is when they are perceived by our patients as truly transformational, and that is what we always strive to do. In order to develop transformational solutions, we need to understand our patients from a clinical perspective, but also from personal preferences and lifestyle perspective.
That is how we can drive outcome. It's not enough to have access to great technology and develop great products. We, of course, need to make sure patients have access to our products. This is why we put high focus on collecting evidence and being able to interact with payers and reimbursement systems around the world to ensure access to our products. When we talk about long-term impact, Fleur actually mentioned it before in a very nice setting. It is our patients are chronic, and it is so important for them to preserve their rest of their body as well as possible so that they can become 80 or 90 and go on a date. I take our Pro-Flex foot as an example.
This is our pro flagship foot. It gives the user an instant gratification. They find it to be comfortable, it gives them a large range of motion and a push in every step. They like it, you know, and we tick that box of mobility and benefits. What we also know is that that particular design reduces the strain on people's knees. What the strain on your knees mean, it often develops into conditions such as osteoarthritis. Osteoarthritis is a terminology very difficult for Icelandic people to pronounce, but more importantly, it is also a very common condition for amputees because they are constantly compensating for their limb loss and for sometimes their lack of good prosthetics by placing more weight and more strain on their sound limb.
This is why we want our designs to not only cater for the patients and their lifestyles right now, but can give them a great opportunity to be mobile in the long term. Our innovation core is in prosthetics. That is where we come from, and that is where the biggest intensity of our investment in R&D is and continues to be. We want to have solutions that cater for every stage in people's lives, from postoperative care to rehabilitation to normal life and again, to older age, because we need to make sure the care we provide and the solutions can cater for every stage in people's lives. I actually like to say our solutions accompany people through life. We've gone through why we innovate.
I think it's good to shift gears and talk about where we think growth is in reach, within reach based on the solutions we have recently launched or about to introduce. I'm gonna give you three examples, and they relate to the opportunities that were mentioned in the patient reach section on the commercial side. One is to contribute to higher fitting rates of amputees. Two is to increase the penetration of bionics, and thirdly, to continue to drive functional trade-up. Let's dive into those individually. Ólafur explained before the no low, lower limb amputees. They are very low, 40%-60% in the developed healthcare markets.
We believe by innovating in the socket space can give us an opportunity to drive adoption of prosthetic solutions in large patient groups, in the elderly population, as well as in some of the rural areas. We believe we can shorten rehabilitation time and with that impact cost in a positive manner. We talk about innovation in sockets. What is a socket? The socket is the only thing on a prosthetic leg that is truly custom. It is built around the residual limb of the individual, and it attaches the leg or the knee and the foot to the rest of the body. The conventional way of making a socket is very complex and can often be the reason why people are deemed unsafe for prosthetic care. It's a very iterative process.
It requires the patient to come back iteratively to the O&P clinic, and that is often for elderly amputees, just it's a physical process. Our solutions are intended to remove these complex processes. They ensure that you get a good fitting socket within an hour or two instead of sometimes weeks, which means that people can get up faster and be mobile faster. This also gives us an opportunity to fit people outside of the clinic. You can do this in the clinic if you like, but you can also do it in the hospital, in the rehabilitation centers, in care homes, or in rural areas. That gives us an opportunity to access patients that currently don't get the prosthesis.
We know it is much better clinically for people to be mobile following an amputation. It increases, improves people's quality of life and actually increases their life expectancy. It is our duty to Affect these low fitting rates as well as we can, and there is an opportunity in it for us both on the patient care side, but also on the product side. Another opportunity we discussed is in bionics, and here we have both an opportunity to increase our market share, but also to increase the bionic market as a whole. Like Ola mentioned, 21% of our prosthetic sales came from bionics last year, and bionics contributed to 1 percentage point increase of our organic growth in that same year.
That is mostly attributed to the POWER KNEE launch that we had in that year, and it goes to show how impactful our bionic launches can be. If we look at the graph here, in the light area, it's indicative of the volume of patients. You have the low active population, which is a bigger population, but in the solid blue, you have the moderate to high active population. That's a smaller population in terms of volume, but this is where reimbursement is established in all main markets. This is where our intensity in development has been for the past years, our pipeline has been developed truly to tap into those opportunities to increase our market share in this segment, but also to increase the bionic market in general by merging into the low active patient segment.
Their reimbursement is evolving. We have shown that we can drive reimbursement. The reason why powered prosthetics are reimbursed in the U.S., for example, are because of our innovation efforts as well as our interaction and efforts with the payers in the U.S., both on the knees and on the ankles. We believe we can and we should do the same for the low active population because studies have shown that bionics are very cost-effective solutions. They reduce the likelihood of falls and reduce the likelihood of hospitalization following falls, which of course can be costly. POWER KNEE has been mentioned here before. It's a good example of where we're able to drive functional upgrade, giving people a solution that gives them more functionality and couple that with groundbreaking technology.
Another example of a functional upgrade coupled with groundbreaking technology is our AeroFit solution that we are very proud to have recently placed on the market. This solution addresses a major clinical challenge for amputees. It is a liner and a socket. Basically, the liner goes straight onto the residual limb, the socket goes on top, and then everything else attaches to the socket. A liner and a socket are the foundation for prosthetic use. If you can't wear your socket or your liner, you don't have a leg to use, and that obviously has an impact. Sweat remains the leading challenge for amputees and their leading complaint for kind of the day-to-day life and what affects them the most in their day-to-day lives.
Sweat within the system is something that most amputees recognize, and many of them develop some sort of skin issues in relation to this. Skin issues might sound lightweight, but if you think about our older population, this vascular patients, healing wounds that start to form on the residual limb can be very challenging and costly. Actually, wounds are oftentimes the root cause for amputation of this actual patient. Also importantly, for our higher active amputees, when they can't wear their prosthesis, this is where they truly experience their disability. That is what we want to do. What is AeroFit? It is a fully breathable liner and a socket. It's the world's first 3D printed silicone liner that is fully breathable, and ensures that there is no buildup of sweat and humidity within the socket.
All of those solutions we have discussed, and we can have a look at them later on the stand, but they all have the potential to give people this instant gratification, but also long-term clinical benefits. As for the other solutions that I mentioned before, we have ongoing clinical trials in every area that are intended to capture the biggest impact of our solutions and give us data to work with to interact with our payers. We spoke about some opportunities we have to capture growth short-term. Let's look at some of the examples we have been looking at for the longer term.
Those examples, they touch our participation in the future of healthcare, to drive functional trade-up in prosthetics as we have done in the past, and to shape new solutions in the O&P space, as was mentioned here before. We spoke about, you know, our goal, why do we innovate? It is to innovate for the short term, but also for the long term. We're solving clinical challenges, but also bringing long-term benefits. The more payers are looking at the long-term benefits, the more opportunities we see with data collection. Being able to interact digitally with all our other legs and all our other arms gives us a very good option to build platforms that can benefit everyone in our value chain.
If we look at the payer and the reimbursement, our ability to capture data on patient groups and show health trajectories throughout their day or week or month, in comparison to other solutions can be very strong. To drive patient engagement tools, to give people individual training experiences or even networking with other amputees, can also be impactful. It also allows us to allow our clinicians to have remote interactions with their clients or their patients when that is applicable. Of course, data and more knowledge of our solutions out there give us a much better opportunity to service our products in the future, but also feeds into our development efforts. In my mind, when it comes to our future potential of being a provider of lifetime healthcare, this data element is a crucial part.
We have introduced the concept of mind controls in the past. Mind controls are our objective to provide amputees with more control over their prosthesis. To date, our biggest focus has been on the IMES system. The IMES system relies on implanted sensors that are implanted in the muscle body of the residual limb, and we pick up signals from those sensors to decide and control the prosthesis. This is of course quite a complex journey when we're going invasive. It will add to the value chain and the stakeholders because you're including surgeons and other health practitioners that are currently not in our value chain. We have been taking very considerate and pragmatic steps, I would say, on this journey.
This year was a big milestone for us when we started our clinical trials in Europe for upper limb amputees. These trials will run throughout this year and into the next year. Those will shape our future steps and define our route to a marketable product. However, what we also believe is that we can tap into some of the technology advancements that are happening in the world in order to drive mind controls in a non-invasive way. Artificial intelligence and machine learning are definitely areas where we feel we can utilize to better adjust every single product to each individual. This is the route that we are taking in an exploratory phase at the moment, but that we truly believe gives us a good opportunity for the near-term future.
Developing prosthetics is really a very clear journey. We have a perfect example in front of us of a healthy leg or a healthy arm. We know where we want to go, and we're convinced that the next big step in prosthetics is to give amputees a more intuitive and direct control. These are kind of our efforts on that end. Finally, we discussed before that there are various conditions being treated within the O&P clinics. Amputees are obviously a sizable part and where our focus is and the intensity of our investment. We also want to see can we apply our extensive knowledge in mobility, both from an engineering IP perspective, but application and clinical perspective as well. The neurological space is a sizable one.
Majority of those individuals coming into the O&P clinics have suffered from stroke and are getting some sort of relatively simple braces. There is an opportunity there to further develop. Majority of stroke survivors actually experience mobility challenges. The rehabilitation of stroke patients is a very manual one. It often requires two physical therapists for an extensive time of a very repetitive training. We have indications that wearable robotics or exoskeletons can help in this scene, both to reduce the labor intensity of the training, but also to improve the symmetry and gait of that individual. We have started this journey, and we actually also had a big milestone this year when we are starting clinical trials both in the U.S. and in Europe on our concepts in this field.
It will be exciting to see kind of where that takes us. In the, in parallel, we are investigating other potential indications, of course, within the O&P channel. To summarize, we believe we are in a good position to transition from being a provider of products to being a provider of lifetime health services. Our innovation investment is based on commercial opportunities, focusing on proven long-term benefits for O&P patients, and I iterate proven. That's critical for reimbursement and payer perspective. We continue to drive functional trade-up coupled with groundbreaking technology, and we are planting seeds in other chronic categories that are cared for in the O&P clinic. With that, I will close.
Thank you, Hildur. Now we move into a Q&A session. I just wanna remind everyone of the format of the Q&A session. We'll be taking both questions here from the live audience. Welcome to raise your hand if you have any questions. I kindly ask you to state your name and the questions clearly into the microphone. For those of you who are watching the Capital Markets Day online, you are welcome to write in your questions in the question option in front of you on the screen, and you can do so throughout the day. You don't need to wait for the Q&A sessions to start. While you're raising your 2 hands here, I can see 2 hands already. I have already received 1 question here.
Can you elaborate on the product pipeline for 2023-2027, and what products you are launching this year?
Yes. Our main focus last year, this year and the next is on bionics. We launched the POWER KNEE last year with great success. We are just about to launch the next generation of Proprio Foot, which is our bionic ankle. We are in the process of releasing our next generation of the RHEO KNEE as well. Those are kind of all products in those kind of moderate to high active population where reimbursement is fully established. We are working on a low active solution, as you saw in the graph before, that is intended for that population. We are planning to introduce that to select customers this year and be available in the market in the next year.
Perfect. Nils?
Thank you. Could you provide an update on the progression of reimbursement for your mind control prosthesis? Are you in discussions with healthcare authorities, or is it still too early?
I would say, I mean, we will rely on the reimbursement setup that we have for our bionic devices, and that is a critical part of the pathway is to make them compatible with the mind control system. Our focus to date has been more in relation to the protocols that we're running on the clinical end, but also our interaction with FDA actually on how you can bring products like this to market. We're in kind of the early stages on the reimbursement side, I would say for that solution in particular.
Would there be any established reimbursement codes for the bionic brace systems that you and some other companies are developing?
That would maybe more be applicable on the exoskeletal side. We believe that most of the code sets that would apply to mind controls would be from prosthetics in particular.
Okay. Thank you, Nils. We have another question here from Christian.
Hi. Christian again from Danske Bank. A couple of questions. First on mind control. You touched very briefly on it on the slide, so the potential for non-invasive…
Mm-hmm.
mind control, so basically neuro electric prosthetics. How big a potential do you see for that? Is that something that you're also investing into? Will that play any meaningful role within this current strategy period?
I believe so. I think, I mean, as soon as you're not invasive, your timelines obviously and complexity levels get lower. Also technology advancements in other bigger fields, we can rely on and kind of Be fast followers there. You know, the way we sense and process information from sensors in our devices today is pretty good. It is this kind of personalization of the behavior of the prosthesis that we want to achieve. Being able to adapt to the individual, their gait patterns, their, you know, where their safety margins are in terms of not falling and things like that, we can definitely utilize that. I think the non-invasive route is definitely a shorter term thing.
Okay, great. Thank you. Then a second question, particularly on this or specifically on this low active POWER KNEE.
Mm-hmm.
How, how should we think about, say, the near to medium term commercial opportunity for this?
Mm-hmm.
Within the next 3 to 5 years, is this something that you believe have significant over that horizon? Or is it akin to when you first launched the POWER KNEE many years ago...
Mm-hmm.
Really a market that has to be built over a fairly long horizon?
I think it definitely needs to be built up over time. I don't think it's gonna take us maybe as long because we have established both the understanding of the powered platform and what that does clinically. We are very focused on collecting the evidence and driving the development of that product to specifically cater for the needs of that population. Like I said before, I mean, cost effectiveness of solution for the elderly population is a key thing and for independence. I think also when we talk about kind of quality of life and, you know, the first step in being mobile is actually to stand up.
That is sometimes what these amputees struggle with, because when you stand up from a seated position, if you use any other knee than a POWER KNEE, you will rely completely on your sound side while doing that. You can try it at home tonight. It's very difficult in heels. Think about it, you know, you stand up 60, 70 times per day, that, you know, relies both I mean, it's straining on your body, but also for those elderly and more frail amputees, this just can be impossible to do. It's important if we only use the motor power to get people out of a chair, that's a win already. It has other benefits in walking as well.
Thank you.
Okay. We'll be taking the next question from Wei.
Yeah. Thank you. Wei from SEB. Just a question on the Proprio Feet.
Mm-hmm.
I remember the previous version when you launched it, you had talked about the adoption has been challenged by, not technically, but, basically the mechanic fit was good enough.
Mm-hmm. Mm-hmm.
The adoption rate was low. Now you're talking about the next generation. Should we expect this to be a major launch for you, or is still the same expectation in terms of the patient adoption?
I think, I mean, you're right, absolutely. The mechanical fit are still very strong, and that is, you know, where our stronghold is as well. The adoption of bionics in general, obviously is kind of gradually increasing. We believe that, for example, one of the features of this new generation is that it's waterproof. Kind of that is, has sometimes been the challenge with bionic products versus the mechanical ones, is that the mechanical ones maybe tolerate more in terms of the environment. That has been a big focus for us, for the Proprio Foot, but also for the other bionic products that we are launching. I think we should expect, you know, it's not gonna be a huge jump.
I think the ankle and is always, you know, gonna be a more gradual increase than what you would see on knees, in my mind.
Is it possible to indicate the increase in the adoption rate for the previous version over the last five years, let's say?
Yeah. Yeah. I don't have it on the, from the top of my head, but that is something that we can definitely look into, for sure.
Great. Thanks.
Yeah.
That's all for me now.
Okay. Thank you. We're talking about the bionics throughout the day, and we have a question here with regards to the POWER KNEE. The question is, have you been able to sell POWER KNEEs according to demand in 2023, and when do you foresee that competitors would be launching competing products? Yeah. We obviously saw a huge demand for the product last year, and which required us to scale up in terms of manufacturing, and throughput. We have been able to meet that demand this year, absolutely. In terms of competition, I think we're definitely seeing competitors realizing the benefits that a powered platform can bring.
I think we should expect competition to be visible in the coming years, while we in parallel continue to build on our very well-protected, from an IP perspective, powered platform, going forward. Maybe one thing, because you asked about before the product launches also, I should have mentioned that on the upper limb side, we have big efforts on our next generation of a myoelectric hand. Just so that we keep that as well. That's very good to add that. Thank you, Hildur. Another question here from the virtual audience is with regards to reimbursement, which is very important in our business. The question is, are you actively driving reimbursement change by engaging with reimbursement authorities? Yeah.
I would say we're doing that in pockets, and especially in markets like France and the U.S., where we have close interaction with the payers and the reimbursement authorities. In France, for example, we've run extensive clinical trials when we launch new products. We have about 50 patients in a study for our bionics this year, for example. I would say. Our focus continues to increase in this area, both to make sure we have the right relationships, but we kind of drive the conversation, but also to capture the data and the evidence that we know our products can bring. Okay, thank you. We'll be taking the last question now, and it's from the virtual audience as well.
Can you speak to digitization of your product development and trial process, and how that impacts the development timeline of new products? Well, I think if we talk about digitalization of the products themselves in the field, that is, like I think is gonna be critical and give us a very strong advantage going forward. We are already able to collect data and evidence on the, on the bionic devices, but there's nothing to say we can't do that on the, on the mechanical legs and arms as well. I think the question is also about our development times and the way we develop.
There are big improvements, you know, and technology advancements happening in parallel fields, and the way we can actually drive software development and do software testing, for example, using a digital twin, that is completely transforming the way we develop and the way we can test and run with our software and firmware development a little bit parallel to the hardware side. That definitely has the potential to change the way we operate and work and give us the ability to be more and work in a more of an agile environment on the digital side. Thank you very much, Hildur. That's it for this Q&A session, and I would like to welcome Guðjón Karason to the stage.
Hello, everybody. I will be having the pleasure of talking about one of the growth drivers, the O&P Value Creation. We have established how it is important to reach out to our patients, and Hildur in an excellent manner, I have to say, presented our innovative solutions. I will be talking about the last element we believe is going to help us to grow the business going forward. What is that? O&P value creation. Basically, we believe it closes the circles. It is what connects the two elements we've already spoken about. This is, as we have heard about, one of our ways to be able to, as I sometimes say, get a seat at the table. We are...
By being present in patient care, we are able to interact in a completely 'nother level with the, with some of the key stakeholders that Ólafur very clearly mentioned. By having direct access to the patients, we also get better information, better knowledge, and we are able to collect better data than we have been able to do so far. This focus on the whole value chain is also something that brings us efficiency. We can now look at the whole how we generate value and how we can improve and how we can apply the technology we have in the company in the best possible manner. I spent more than a decade talking about how we should not go into patient care. I was on the product side. I was in R&D. Products are the thing.
One of the things was that we were very afraid of it because we thought everybody will be, will be against us. The world has changed. One of the key benefits of being in patient care is that we are a better partner to our customers. I will go more into that later. What I will talk about is where we come from and where we are today when it comes to patient care. I will talk about what we believe are the key value drivers in the O&P clinic space. I will mention some of the initiatives we are going to be focusing on in the near term. Sveinn already established that the company is founded as an O&P clinic more than 50 years ago in Iceland. That clinic is still going strong.
Even though the company then went into the product side of the business, as I explained, we saw an opportunity now 10 years ago to go with a significant effort into the patient care, and that happened in Scandinavia. We have grown both organically and we have acquired more clinics, and today we have clinics in 11 countries. There are around 200 locations, and these clinics are in all of our three regions, EMEA, APAC and Americas. What has been happening in the last few years is more of an effort to reform, to improve the business in the clinics, in the patient care. This has been a lot to do with alignment, defining the key processes and how we can improve on those.
Finding these economies of scale, because as we grow bigger, we see more opportunities to be simply more efficient in running these clinics. Then, like Hildur also mentioned, we have a lot of technology, but we also have other things, the supporting functions in the company where we can find synergies with the acquired clinics. We've spoken a lot about O&P clinics, and we've seen some very impressive people and wearing prosthetics. I think I would like to spend a few words on explaining what happens within the clinics. Ólafur already established that we have many different types of patients, and every single patient has their unique challenge. This is not a mass manufacturing facility. This is a facility where understanding the need of the individual is key.
We know from before that the absolute majority of these patients have chronic mobility challenges. That means that the connection, the relationship, most of the time, actually, with the clinician is extremely strong. We can all relate to our dentist. We have a relationship with our dentist. We want that person to help us, and we want them to care what happens. It's exactly the same. It's also then important to understand that when we innovate, we have to do it together with the clinician and the patient. They do not want to experiment unless they really trust us. Being close to the CPO, being close to the patient allows us to innovate better. That is my excuse why I.
When I was working in R&D, I was nowhere near as good as the people that are working there now, because now it's a lot easier. I try to tell myself that at least. In the clinics, we do both products and service. This is not just a product delivery. This is definitely a place where you add a lot of value through the service that you provide. There can be simple products. We mentioned before that some of the solutions we deliver are off-the-shelf. Where there is one visit. There's still a significant element of service. You have to choose the right product. You have to train, you have to teach. It's very important to realize that whatever it is, there's always a high service element.
That is, of course, capturing a bigger share of the value when we have our presence in the patient care, we get a bigger part of the total value of the patient. The more complex solutions, as Hildur explained, requires multiple visits and a lot of the bigger part of the element is service. As we have also heard before, we are basically stepping into a market, a market that is roughly 3 times bigger than the component market. A lot of opportunity for growth. The question becomes: how are we creating value? Is it just making it easier for us, or is there true value to be had? We mentioned some of the key trends, we definitely see this shortage of clinicians.
We have good ways to tackle that, but also we are able to train, we are able to help by training more people when we are closer to the, to the action. We are very happy to see that there's a new generation of CPOs coming, a lot more focused on the patient than the technology. Not technology in terms of innovation, but they are not as interested in plaster of Paris as they are in how the person is doing. That is helping us in the development. We definitely have to take reimbursement into account. These are just the rules of the game. We can sometimes influence them, but everyday work is done according to the rules of the game. That is always the case in all our markets.
They differ a lot, but now we know them a lot better because we are in the game. We are not on the outside. We are not in the stadium watching. We are in the field playing the game. Digitalization is definitely a driver, we are well equipped to participate in that change and have multiple solutions we are working on there. The numbers in the table are representative of U.S. clinics. It's a big chunk of the market, so it is something that we can use as a reference point. How are we impacting? Absolute best way is to grow the revenue. We do that in two ways. We help more people, and the second way, we help them more.
We help more people by attracting them to the clinic, and we, and by expanding our offering to other categories. We can help them more with the help of great solutions like the ones Hildur is explaining. Another, I have to mention it, another big opportunity is when we reach further into the chain of healthcare. We go into the hospitals, into the doctors, and start cooperating. This has proven to be a way to increase the number of people getting prosthetics because we can talk to them prior to the amputation. When you amputate, do like this. That is not possible if you're only a manufacturer. This is something that we have good data showing that this is possible. This will help us in the developed market in the virtual world.
We can also lower the cost of running the clinics through efficiency, and that has to do both with the manufacturing technology and the G&A cost. Before anyone asks, "How much will you increase it?" We will not report on that. We will not talk about how much we're gonna increase the profitability, but this is one of the reasons why Sveinn is relatively confident when it comes to the question, will our profitability not go down when we acquire more clinics. Our efforts on improving the efficiency on the clinical side, you may wonder, why isn't that getting bigger? The reason is that when Hildur mentioned that we can do a socket in only a couple of hours than multiple visits, we want the clinician to use the time saved with the patient.
I told you before, the interaction, the training, the relationship, that's the value. We are not saying just take more patients, we are saying be better clinician. Therefore, we are not saying that we're gonna save a lot of time on the clinical time, but on the technical time and the DNA time, definitely. Over to some of the things we are doing to improve the life of the CPO. An Össur Portal is an example. It's a platform where you can order the products, where you can order the components. Yeah, I think we've, most of us have seen a webshop, but this is something way beyond that.
The building in the intelligence necessary to select the right componentry is what is helping the CPO and also, again, helping them create more time for the patient. Another element was also mentioned, the patient engagement. Doing this together with the patient, not locking yourself in the back room while you flip through 10 catalogs, but doing it on the screen in front of the patient. That is what increases the engagement and makes sure that the user, as we've heard before, makes it to their prosthesis. Not a device you hate to see every morning, but something that is something you generated together with a clinician. It helps with collecting data. I always do what Hildur tells me, we do that. It also helps with...
It helps the clinician to remember when is the time for renewal, when is it time for service. It makes sure that we maximize both the clinical and the commercial benefit you can reach. These quotes from a couple of clinicians in the US, a good example of how the new generation of CPOs is more focused on the patient than being allowed to hammer together their unique set of componentry. The Össur Portal goes beyond just ordering the different components. A traditional method of building a prosthetic leg is quite labor-intensive and complex, and most of the time, it involves components from multiple manufacturers, where one of the key challenges is knowing the compatibility, not legal, but functional compatibility of the different components. What works well together.
You can just imagine when you have found your solution, you stick to it. Why should you take the risk? Of course, when we innovate, we want people to try out our new solutions. One of the big developments that have happened lately is that we have started selling complete Össur Legs. Some of you may be surprised, but we are actually just in the starting blocks there. This industry has been the same way dental and audiology industry audiologists were working decades ago, meaning that people are buying componentry and assembling locally. We are now moving to a new era, a new way of working, where Össur as a manufacturer is capable of delivering the full set of everything that is needed, a full Össur Leg.
Adding to that, the socket technology already explained, we are able to serve the patient at a completely different level. It is not only in terms of clinician time, but it's also everything to do with safety and regulatory compliance. In general, this is a whole new platform for my colleagues in R&D to work from when they can start looking at a whole solution and develop from that. I am pretty certain that this is a future that we'll see in the future how this will explode. We sometimes get stuck in technology, as Hildur said. It's very reassuring that when we then launch this, we see that the acceptance goes up. We have seen that the...
Our customers using this technology are more loyal than others, meaning that they simply use more products. What's even better, we see that they are able to see more patients because they see the benefits of this technology. This is now available in selected markets. We are launching it in more markets in coming years, and we do believe that this will contribute to our future growth. As a final remark, I'm gonna mention a bit how we see the possibility to utilize our O&P model, the operating model, in an emerging market. We all know what is happening in Ukraine, and what has happened is that there is a... As an impact of the war, we are seeing a huge unmet need of...
With amputee, number of amputees is unclear, but numbers as high as 10 or 15,000 have been mentioned. This is not only soldiers, this is also civilians, both grown-ups and children. We are lucky enough to be able to help. We've been working with others to donating both componentry and training. This has been very well received. Now we are at the point that we are evaluating how we'll take the next step.
We are determined that we will continue to help, but what we see is a proof how our technology and our knowledge on how to fit the patient is something that can be turned into a turnkey solution for these areas where basically nothing functions. The interest is extreme, and I'm very happy to be working in a company that is able to help in this manner. To summarize, we've been expanding in the O&P clinics, in the patient care, and that we believe has allowed us to be a better partner to not only the clinics where we have invested, but in the whole market. I do believe that this is helping the whole industry, because this has been a way for us to launch new innovation.
We can launch in our own clinics faster, and thereby we can upgrade the whole market. Examples of innovation are the Össur Portal and Select concepts. In the end, we know that our presence in the patient care will allow us to capture a bigger part of the value generated in the industry as a whole. Thank you. Before we take a Q&A, I would like to invite my colleague, Christian Robinson, to talk about Bracing Simplified.
Thank you. All right, let me start by articulating how bracing fits into Embla Medical's strategic framework. What we've been explaining to you here today is about how Embla Medical is increasingly transforming into a patient-driven organization that serves a population of people with chronic or recurring mobility impairments. Within bracing, we provide solutions for addressing this category of people, principally with our osteoarthritis products, which has been an area of key growth and brand strength for us. We also provide products that serve people that have temporary or acute injuries. What I can tell you is we've got a very strong portfolio of products that goes from cervical collars, back braces, knee braces, walker boots, and other related bracing products that solve fundamental healthcare problems in both the chronic and acute segments. I've experienced this personally in my life over the last few years.
My midlife crisis sporting endeavors have required that I've used an Össur wrist brace, neck cervical collar, and rigid and soft ligament knee braces. I made the very questionable decision at 40 years old to enter into a jiu-jitsu tournament last year. After spraining my LCL, lateral cruciate ligaments, I was wearing 2 Össur knee sleeves. Not as impressive as Fleur Jong, but that gave me the confidence to go in and actually do quite well, and I won both categories in which I entered. I'm very grateful for Össur's products for giving the confidence of out of shape middle-aged man to do something new in the sporting world.
Today, I'm gonna talk a little bit about how bracing has developed in recent years, and I'm gonna provide some insights into our Bracing Simplified strategy. All right. We've seen big changes in the bracing landscape over the last few years, and we've also restructured our business in important ways to better position it for growth and success in today's market. In 2020, we pruned our bracing business. We divested in some areas that were non-focus, lower growth areas. Gibaud is a manufacturer of soft goods and compression therapy products distributed primarily through pharmacy channels in France. We also divested 2 distribution entities in the United States. In 2021, there was a big change in the U.S. market.
Competitive bidding was a program that was introduced through the US Medicare administration and affected off-the-shelf bracing categories for both knee and back braces. Fortunately, the impact from that program wasn't as bad as we'd feared because we prepared in advance. We help our customers implement custom-fit bracing protocols, and we streamline our bracing business to make it more efficient. It's a three-year program. It's ending in 2023. We don't know yet. There's been no announcement as to whether the program is going to be expanded, whether the same categories are going to be rebid, or whether there's just gonna be some continuation of the status quo. In 2021, we refreshed our bracing strategy with this Bracing Simplified strategy.
I'm gonna cover it in more detail on the following slide, but essentially it's a strategy that's designed to help us innovate in areas outside of just product development, principally in experience, customer service, and partnership. It's also designed to help us to run our business more efficiently. The net result of all these changes is now we have a bracing business that's smaller, more agile, more focused, and with a strategy that's better suited for the current bracing market. We've also been able to launch products in key categories. Our universal adjustable cervical collar, Miami J Select, Unloader One X, our unique patented, clinically proven flagship OA brace, CTi3. Most recently, it's an innovative new carbon composite dual upright ligament knee brace. Been very happy about these product launches. We see the bracing market growing about 2%-3% a year.
Last year, we grew in line with the market at 2%. That included some planned product rationalization. Some of the fundamental growth drivers that we see, number one, aging population with an increasing prevalence of osteoarthritis. Also, people are trying to stay more active as they are older. Another condition that we see for growth is that there's an opportunity to differentiate in this market, based on service, partnership, and overall experience. What we see and what we believe is with our target customers, they're willing to pay a premium for that differentiated experience, even when there's a perceived lack of differentiation in some product categories. In addition, we've been pleased with our ability to raise prices in recent years in the current environment. Most of our sales for bracing are in the American and European markets.
We do have some sales in Europe and emerging markets. Our sales are primarily through reimbursed channels, both public and private means. This is important for us as a bracing company as there are some critical barriers for entry, principally with quality and regulatory, especially with the advent of MDR in Europe. Also to be a large-scale bracing player in the reimbursed space, you need to have critical distribution and service capabilities. As with prosthetics, most of our sales in bracing are through the O&P channel. In the U.S. and some other markets, we do have other focus customer segments. In the U.S., we're focused also on hospitals and orthopedic clinics.
One more point is even though we do have to some extent, a separate sales channel focus between prosthetics and bracing in the U.S., we're able to enjoy the benefits of scale, share back-office logistics and infrastructure, and so forth. When we set out to refresh our Bracing Simplified strategy in 2020, we wanted to accomplish 2 things. First, we wanted a strategy that was not as dependent on product innovation, which in the bracing world has become an increasingly expensive and less effective way of driving growth. Instead, we wanted to innovate in other areas. Second, we wanted a strategy that would provide a framework for running our business more efficiently and streamlining it. Our Bracing Simplified strategy aims to achieve these objectives through 4 key pillars.
First, the core identity of our bracing business, what we want to achieve is we wanna be the trusted partner to our customers. We've implemented a new sales training methodology, which is based on value-based selling. Instead of having a sales rep show up, pull some products out of the bag, talk about random features and benefits, we train our sales reps to go in to conduct discovery, understand what the needs and the problems are that our customers face, explain and articulate how our pro-products and solutions can solve those problems, and then quantify the impact for our customers. We're trying to help our customers grow their business, reduce their costs, make more money, make business overall easier. Customer convenience, it's not just about ease of doing business, it's also about reducing complexity for our customers. I'll give you an example.
One of the biggest problems that healthcare providers have faced in recent years, especially our customers, and there was a question about this, are staffing shortages. It's difficult and expensive to train new employees. Instead of doing what we've historically done to help our customers train their employees on bracing protocols, which is send Academy team members to in-person, in-service trainings, what we've done is we've invested and shifted our resources into a curated digital education platform. What we're able to do is we're able to quickly produce high-quality co-branded education that's specific for a particular customer with their bracing protocols. When a customer has a new employee, they're able to take this digital education, which has been deployed into their own content and learning management system, and very quickly ramp up their new employee.
It's much more convenient for the customers, and it's more cost-effective for us. In addition, we have a digital inventory and practice management solution that we offer to our orthopedic clinics in the United States. Solves a whole host of problems for those customers. What we see is when they go onto this platform, we have significantly less churn and a lot higher growth rate with these customers. With product confidence, we wanna provide a simple product portfolio that's high value. Something significant that we've done is we brought in an external firm to train us on how to value engineer our products. What value engineering is you take a product, you add quality where necessary, and then you remove unnecessary features and costs to create a product that's higher value.
An example of this is when I was growing up, I had a mountain bike that had 2 gear shifters, 2 derailleurs, and 2 sets of multiple gears. You had 27 total possible gear combinations. If you go buy a mountain bike now, what do you get? You get 1 shifter, 1 derailleur, and you've only got 12 possible gear combinations. It's easier to use, it's less prone to failure, and it's cheaper to produce. We're also focused on streamlining our portfolio. We believe that by reducing the number of product variants and the number of components that go into our products, we can provide simpler, more easily understood portfolio products for our customers, and we'll also have a product portfolio that's easier to manage, cheaper to manage, and that we can grow faster. Finally, responsibility.
This is about reducing not only our carbon footprint, but the carbon footprint of our customers. Margaret's gonna cover this in detail, but I'll just share a few thoughts as they pertain to bracing. Where we started our responsibility journey is packaging. I know at first glance, packaging might seem boring, but I can tell you packaging has never been so exciting for us as it is now in bracing. We have new environmentally friendly packaging, and it's better for the environment, but it has the added value of costing less for us and delivering benefits to our customers. It takes up less space for them to store, so it's easier to store. It's critical in hospitals, and it's also easier to dispose of. That's it for Bracing Simplified. Thank you all very much.
Thank you, Christian. I would like to welcome Guðjón back to the stage, and we'll do a Q&A session with both of these gentlemen. We have questions already here. I would like to take the first question from Benjamin.
Thank you. Benjamin from ABG here. My first question is regarding the complete leg or the Össur Leg. Could you just elaborate a little bit about how far you are versus main competitors such as Ottobock with this offering? Also looking at the end users, it seems like a product that would be quite suitable for emerging markets where there aren't that many patient sites. Looking at the Western markets, how would these patient sites that you don't own respond to this offering? 'Cause it would take some of their workflow away, I guess.
Okay. Yeah. I do believe that, as I said before, that we are in the forefront of this development and others will be trying, but there are only very few companies capable of putting together a complete leg. We definitely will see all the others do that. The differentiation will be in the platform, and we as a company have been investing heavily in our fundamental processes and the systems, that will, and is allowing us to do a quite good solution when it comes to the system running behind the scenes. We do believe that that will allow us to be more advanced and react quicker to the needs of our clients.
To the second part of your question, yes, we have already seen this opportunity that we can deliver to places where you need more to assist more. Yeah, since I mentioned Ukraine, that was the solution that we used because not only does it simplify the ordering process, but it guides people. It's an educational thing that we can help them in defining a good combination. As you can imagine, there's a huge need for training and education. Christian mentioned our efforts in digital training, and that is another link to that. When it comes to selling to others, it is highly depending on the type of customer. This is maybe not for everybody, but there is a...
In all our markets, there's a very significant part of the market that are independent O&P clinics, as we call them, meaning that they are not linked to any specific manufacturer, and they are just looking for efficiency and safety. Even though this, like many other things, will take some time, change is always good if you don't have to do it yourself. It's it is gonna take some time, but this is definitely something that will grow with those customers.
Thank you. Just one last follow-up question regarding the value creation that you get from this complete leg. Do you have any examples of a patient you had before this offering, and then looking at how much more value actually captured by offering the full leg?
We have multiple examples. My thoughts are just about what am I allowed to promise to you guys. The, the, like I said before, most clinicians have their own combination. They have their own favorite componentry, and they are not really eager to test something new. That needs very controlled environment. The ordering a complete leg will mean that they, yeah, they will give it a go. As we can prove to them that the combinations work very well, that is sticking. That is meaning that they will continue.
I think I will try to answer you in the manner that in any area in our product portfolio where we have been weaker, this is a method to level the playfield, and we are able to sell the full solution where we may have been only selling parts of it.
Thank you.
Okay. We will move on to Wei.
Yeah.
Wei from SEB. Thank you for taking my question. Also a question on the Össur Leg solution and also the Össur Portal, the digital platform. When you implement or market those new strategy to your own clinic and the independent O&P clinics, I guess there's a huge difference. Could you maybe comment on the progress and also the main challenges or pushbacks from those independent clinics?
Our own clinics are in some cases leading, but not in all. Like I said before, one of the key benefits is that you get complete solutions. If they are already buying complete Össur solutions, the benefit of the Portal is not as huge, then it's more a convenience. I think it's safe to say that it is, there are multiple things that we need to take care of. One of the things is the connection to all their local ERP systems and all kind of data that they need to get. That may mean that people are not that eager to log into another platform.
As soon as we get people to test and see the benefits of doing that, then we normally see and we track very carefully how many are buying and leaving and how many are buying and staying. We are getting better and better as we develop. We have a lot of good people developing our digital solutions, and as many people in here probably know better than I, it is all about being agile, being fast and meeting the customer demand. By doing that, we have been improving a lot. We have done that mainly in the U.S. market, and please step in Christian at any point. We feel now that we are at the stage that we can take it to other markets.
We do know that markets are different. We've been around for a while. We are not expecting it will go easily. We will definitely find a way to put this to use in all our key markets.
Just wanna follow up on this. Could you maybe provide a sort of or indicate a trend with the independent O&P clinics? How has the adoption been so far in the U.S.?
Of the Össur Legs program in particular? It's been very good. It's been very successful. I think one of the things that's been great about it is it helps us target customers that might not have otherwise been a focus customer for us. It's really exciting because you see customers that have been struggling with staffing issues and, or that are trying to start up a business, and we're able to achieve a much higher penetration in terms of product than we otherwise would. It's been variable, very favorable for us. I would say our, one of our biggest challenges has just been scaling the program and the complexities of scaling custom manufacturing. It's just been challenges from growth, essentially.
Great. Thanks.
Okay. That will be the last question of this Q&A session. If there are any more questions, we will also have a Q&A session at the end today, where we'll have a Q&A panel where all of the executive management will be up on stage. Thank you very much Christian, and thank you Guðjón. Now I'd like to welcome Margrét Lára onto the stage.
Hi. Now you've heard about our growth drivers and Bracing Simplified. A lot of things that we're gonna do, but we are also gonna work on our sustainability commitment. It's one of the foundational pillars of our Growth'27 strategy. We believe that sustainable growth is the only way to build a successful and responsible business for the benefits of future generations. Our sustainability commitment is called Responsible for Tomorrow.
We have Three main pillars of our commitment. It's about our environment, it's about our people, and it's about the business that we conduct. Then in the center of it all is our mission and purpose, that we improve people's mobility so they can live a life without limitations. We have Three main pillars of our sustainability commitment. In those Three pillars, we have metrics and action items and targets that we are working on. We of course support the United Nations Sustainable Development Goals, and we have selected and have metrics in place for Six of the 17 goals. Those are linked to our sustainability commitment. Let's now dive into each of the pillars of the sustainability commitment.
When looking closer at our environmental pillar, we are reducing the environmental impact by focusing on our operations, our products, and our supply chain. For our operations, we've been carbon neutral for Scope One and Two and selected Three emissions now for Two years, and we have actively been improving our energy efficiency. We now source 99% of electricity from renewable energy sources. Last year, we committed to setting science-based emission reduction targets that are in line what climate science deems necessary to limit global warming.
I heard in the lobby this morning that people were missing the global warming here in Copenhagen, but we are working now on these targets, and we will submit them for validation for to the Science-Based Targets initiative later this year. You heard Christian talk about the environmental impact of our packaging, and we are working on reducing the environmental impact of our products and packaging. We have mapped opportunities for improvements through a life cycle analysis on key products. We have already implemented improvements on selected packaging, and we are committed to continue our packaging journey. It's a win-win for us and our customers and the environment.
Uh, we also have mapped the main emissions in our supply chain, and we are launching a supplier sustainability program this year with the aim of reducing our supply ta-chain, uh, emissions. So all those milestones that we are working on now will lead to the target of being net zero in, in twenty fifty. And through our people pillar, uh, we take responsibility for enhancing the social well-being of our people and communities, uh, focusing on our customers, our employees, our suppliers, and communities. You've heard, uh, Ólafur, Hildur, and, and Guðjón talk about our, our, uh, the fitting rate of prosthetics. And, uh, it is an unacceptable fact that, uh, people are not able to stand up, like Hildur talked about, a part of being mobile. And, uh, our biggest positive impact in, uh, to the communities and to our customers, uh, is through our products.
United Nations Sustainable Development Goal number Three on good health and well-being is a primary goal for us. We have a project ongoing related to that goal, where we're designing functional products for the elderly population. The fitting rate for the elderly population is lower than you heard from Ólafur and Hildur. It's only 30%-40% of new lower limb amputees that are fitted with products. Meaning that 60%-70% of people are not getting prosthetic products, which reduces their life expectancy and mobility. We have launched now 3 products related to these initiatives and the 4th one will come out early next year. It's our employees, our greatest assets.
We just got the results from a workplace survey where we see that our engagement scores are increasing between years. Very happy to see that. We of course embrace diversity, equity, and inclusion in our organization, and we monitor the gender split in the organization very carefully. Currently, we are quite even gender split with 51% male and 49% female. Of course, our employees are able also to register as non-binary in our systems. Currently, the female in management positions is the ratio is 38%, and we aim to increase that ratio and have it more in line with our overall gender split. We have a target on the overall gender split. We wanna be at 50% plus or minus 10 percentage points in the organization.
We launched a give back program two years ago, where every Össur employee can give back to their communities, get one day per year with pay to give back to their communities. This program has turned out to be a win-win program for everyone. It's a positive impact of our communities, but also a great team-building effort within our organization. 4,000 employees can go one day a year and give back to their communities. You heard Guðjón talk about the humanitarian aid that we're providing in Ukraine by providing our products to the victims of the war. It is good to be able to give back to the communities. It's our last pillar, which is our business.
We believe that integrity and transparency are the foundation for a responsible business, we practice sound governance in all our activities and ensure transparent reporting of our business practices. As a part of being a responsible business, we encourage our employees, business partners, and customers, and all stakeholders to raise any observations or knowledge of misconduct or unethical behavior in our whistleblower system. It's called Össur Speak-Up Line. We launched new code of conduct last year, we are in the process of training our employees on our new code of conduct, and we've already trained 73% of our employees. We are, like other companies, preparing for the new CSRD regulations to take effect in 2024, we will of course, be ready and prepared to report accordingly.
When that comes. To sum this up, our purpose places us in a unique position to contribute in a meaningful way to the society. We will continue to design and market functional products for elderly amputees. This of course, relates to the action items for Goal number 3 on Good Health and Well-Being. We need to get more amputees, elderly amputees fitted on prosthetics. We have committed to Science-Based Targets last year, and we are submitting our targets this year. Sustainalytics is now working on our ESG risk rating scores, and you will see that in the coming weeks, the results of that work. Sustainability is embedded throughout our organization. It's a simple model that we have in the organization for everyone to understand what sustainability is about.
It's about the environmental impact, it's about our people and the business that we conduct. We have to act now to be Responsible for Tomorrow. Here we can see a message of our sustainability commitment. Thank you. Good day, everyone. I'm gonna talk about Össur financials. I will tie Growth'27 strategy to our financial ambitions. Össur has a solid and focused business which is resilient and has been growing in all regions where we operate, through challenges in external environment in last years. We have made prosthetic product acquisitions to strengthen our product portfolio, and we also acquired patient care companies both in Americas and in Europe. In emerging markets, reaching patients through direct market access model. Bracing and support has been streamlined.
We've made some divestments, and we have implemented Bracing Simplified strategy, as Christian talked about earlier. Looking ahead, we see opportunities to deliver strong organic growth and margin expansion. For 2023, we are guiding sales growth to be between 4% and 8%, and EBITDA margin to be between 17% and 20%. Key topics I'm gonna talk about today is how business mix has changed and has been changing and our new sales segmentations. Financial ambitions of Growth'27 and strong cash growth, sorry, strong cash generation. Our business mix has changed significantly over the last 5 years. We see focus on chronic mobility challenges. It has been increasing. The change has been driven by organic growth, by acquired growth and divestments like I mentioned earlier.
As you can see, over the last five years, patient care have grown materially and is now 36% of sales. At the same time, bracing and support has decreased to 19%, while prosthetic product sale is stable around 45%. As our business has changed, we are introducing new sales segmentation. We are introducing a new sales segmentation to increase transparency and to provide more visibility into our sales performance. Current segment reporting is focused on product delivery, that is prosthetic and bracing and support. New segmentation reporting better reflects our current business model as a vertically integrated provider of mobility solutions. We will now provide both total product sales and external product sales, and report patient care as a new segment. We will also continue to report organic growth, acquired growth, and local currency growth for the segment, as we have done in the past.
For more details, I would like to refer to announcement from last night where you can see new sales segmentation for the last two years. Let's talk about financial ambitions for Growth'27. Our sales growth ambition is 7%-10% yearly sales growth on average in local currency, as Sveinn talked about earlier this morning. Our ambition for organic growth is 5%-7% yearly sales growth on average, and to grow additionally 2%-3% through acquisition. Our ambition is to gradually increase EBITDA margin, and historically, EBITDA margin has been between 18% and 22%. EBITDA margin is though subject to acquisition, currency movement, and changes in business mix. Capital allocation remains unchanged. We will prioritize growth opportunities. We will do value-add investments and acquisition.
At the same time, we will always focus on maintaining a healthy balance sheet, and target range remains between 2 and 3 times in net interest-bearing debt to EBITDA. We will also continue to return excess capital to shareholders via purchase of own shares. In following slides, I will go into a bit more details about our financial ambitions, starting with sales growth. Sveinn already shared this slide with you this morning. The industry fundamentals are positive, and estimated market growth is between 3%-4%. Historically, Össur has grown organically between 4 and 6%. But with changes in business mix, we believe that our current portfolio has, on average, more favorable organic growth potential, or on a normalized base around in the range of 5%-6%.
You heard Ólafur, you heard Hildur and Guðjón earlier this morning talk about how we'll drive targeted initiatives across the three growth drivers. Our ambition is to strive for accelerating organic growth through execution of Growth'27 initiatives. As has been mentioned this morning, in short to medium term, it's all about bionics, it's about emerging markets, and it's about capturing more of the value of each leg we build. Hence, going forward, we see organic growth and put our organic growth ambitions to be in the range of 5%-7%. There will also. There has been and will be a continued focus on investment of opportunity, investment in new technology, and to expand the product portfolio and investment opportunities to gain. We also see an opportunity investment to gain market access.
Focus on value-add acquisition will continue to be part of our growth strategy, with 2%-3% acquisitive growth per year on average. Our ambition is to increase our EBITDA margin and we see several opportunities to do so. We will continue to see positive effect from product mix as prosthetic is growing faster than the rest of the portfolio. As the supply chain normalize, we will get back to seeing improvement in unit cost reduction of 2-3 years, but this is very integrated part of our manufacturing process to currently and constantly improve our processes and our unit cost. We have operating leverage on mainly G&A, but also on S&M. If we look at those items together, we have seen historically 25-75 basis point increase in EBITDA margin as result of this dynamic.
We will continue to adjust pricing as reimbursement system adjust to inflationary environment. As we further expect normalization of some items like freight, that has been extraordinarily high in recent years, but is already coming down. We will also see some margin increase due to that. As Guðjón mentioned this morning, we are yet to harvest more scalability in our patient care platform as we continue to develop that. On the investment side, it is mainly continued focus on investment in R&D. It's about expanding in emerging markets and the digitalization initiatives. Acquiring companies, in most cases, have lower margins and effects will of course continue to be both positive and negative.
These are the main building blocks that we expect to move our EBITDA margin going forward. We have some householding items. Bedre has a history of healthy balance sheet and a strong cash generation, with majority of the EBIT being converted into free cash flow. In 2022, free cash flow was impacted by inventory buildup, while both accounting receivable and accounts payable stayed stable. Due to supply chain challenges and shortages of some components, we decided to increase our state safety stock just to ensure product delivery to our patients. As the situation normalize and all else equal, we expect inventory to come down and reduce between $10 million-$15 million over time. Effective tax rate is in the range of 23%-24%, and we have a stable CapEx around 4% of sales.
Net interest bearing debt, like I mentioned earlier, target stays in 2 to 3 times. Excess capital will be returned to our shareholders via purchase our own shares. At year 2022, the leverage ratio was above our target of 3.2. Because of that, we stopped our share buyback program. Not stopped, we paused it, just to have that said correctly. We will evaluate on quarterly basis when to start the program again. To summarize, we have introduced new sales segmentation reporting to better reflect our current business and to increase transparency. Our ambition is to grow sales 7% to 10% yearly on average, and our ambition is to gradually increase the EBITDA margin over time. The main drivers being positive product mix, scalability in manufacturing, and operating leverage on fixed cost.
We will deploy our strong cash generation for strategic investment and acquisitions. With those key messages, I complete the financial overview. Thank you, all.
Thank you very much, Árni . Now I would like to welcome our executive management to the stage. We will have our Q&A panel. While they are walking up on stage, I would like for you to watch a video on the screens. Well, thank you. Yeah, that deserves a clap, definitely. It's always good to go into a Q&A session with goosebumps. Now we have welcomed here back on the stage all the presenters and the executive management team. I would especially want to welcome Ade Johnson, EVP of Operations, also onto the stage. Now we will be taking the first questions. If we can move the microphones over here, I will read the question that we have from the virtual audience to start with. This is by...
I would like to direct this question to you, Árni. Are you going to raise capital to accelerate the Growth'27 strategy since your leverage is above your target leverage range?
As I talked about earlier, we have a strong cash generation, and in a normal year, we are seeing around NOK 70 million free cash flow from our business. We believe that this cash generation will enable us to continue with the strategy we have today.
When we add to that we are decreasing our inventory and seeing reduction in between NOK 10 million or NOK 15 million, we believe we will be and we know we will be within the target range this year.
Thank you. We have a first question here from Wei.
Yes, thank you for taking my question. Wei from SEB. I think Árni has partly answered my question. Still, the 2%-3% acquisitive growth, should we expect a stable contribution over the coming years, or it will be fluctuation? I'm asking because, as I can see, the leverage and the balance sheet, doesn't look like you have a lot of room in the short term to do acquisition. At the same time, if you want to resume the share buyback program.
Sveinn?
We should expect some fluctuations in terms of contribution from M&A, as we've seen historically. We have an active pipeline. We are always screening for the right opportunities along the three M&A categories that we have talked about here today. But you can expect some fluctuation. But in a normal year, on average, 2%-3% from our M&A strategy. And as Árni mentioned, our free cash flow is strong. And the last normal year, if you look at 2021, we created something like $76.7 million in free cash flow. Acquiring 2%-3%, that can mean anything between $30 million-$50 million, depending on, again, multiples, the type of assets that we're buying.
We should have ample headroom within our organically generated cash flow to support our overall growth strategy.
Great. Thanks. I have another question regarding the 2% organic growth in patient care in 2022. Is it possible to split the growth to the same clinic growth and the clinic growth? I guess I guess most of that has been come from the same clinic growth.
That's a good question, Wei. We'll continue to develop our reporting on the patient care segment. I also expect us to start to report on sort of development in patient volumes year-over-year. The 2% growth was very much impacted by the fact that the beginning of last year, we stopped the business with our Walter Reed partner in the US. On a normalized basis, we are growing faster than the market in 2022. Yeah, same-store growth is a metric that we will look into providing because ultimately, that will give the best indication of how our organic business is developing.
Great. Thanks. That's all for me now.
Thank you.
Thank you. We'll be taking the next question from, Christian.
Yes. A couple of questions from my side as well. Can you give us some kind of a indicative margin potential as you see it for the patient care business? You mentioned in the presentation that U.S. clinics in general is delivering a margin of around 8% for the market. I'm assuming that's an EBIT margin. Correct me if it's EBITDA instead. How do you see the sort of potential when these are mature, fully integrated into your business?
Yes, it is EBIT margin, what we showed earlier, and that is reasonably indicative of, let's say, the profitability level in an average patient care business. However, it does differ. It differs because of, let's say, the patient types, that are treated in O&P clinics and reimbursement systems. For example, in Europe, you have typically more mature systems that have a more diversified portfolio, and on average, perhaps a little bit lower profitability. While in other markets which are more heavy on prosthetics, you see higher margins. The assets that we've acquired are, yeah, both above or, and below that industry benchmark. I think that's a reasonable indication for you to work with in terms of, let's say, where we can take our platform.
We are not gonna put a specific target on that. As Guðjón mentioned, there is a significant opportunity to increase productivity in how mobility solutions are created. Drawing parallels to other industries, dentistry, hearing aids, others, there's a lot of activity at the front end of the value chain today, customizing solutions. At the end of the day, the opportunity and our job in this industry is to drive more quality and more productivity in how these solutions are created. That is gonna drive margin expansion in our underlying business. Also, it's gonna position us better as a stronger partner for independent clinics.
That's, again, a strength we derive from being in the whole value chain, is that we can do these things at scale and then share those benefits and act as a more comprehensive partner for independent clinics. That's, again, a key element of how we derive strength from being in the whole value chain.
Thank you.
Maybe a quick second question, if I may.
Of course.
Given that you are now growing in patient care, should we still think of your R&D investment level as being 5% of total sales? Will that essentially keep a fixed ratio to your product sales?
We have historically invested at a faster pace in R&D than we've grown our top line. As you saw on Árni's EBITDA bridge, we intend to continue on that path. As Hildur talked about, the intensity in our R&D investment today is on what we are good at. That's the core in creating prosthetic products to solve the unmet need there is in that market. However, as we start to look at how we operate in the whole chain, we will start to see where we can also channel some of our innovation efforts into, again, being more efficient in the delivery process. We'll continue to grow R&D at a faster pace than our organic sales growth.
Okay. We're getting questions also from the virtual audience. I would just like to remind you for those of you who are watching the capital markets day online, that you can type in your questions in the question function on the screen in front of you. I will be taking the next question here from Benjamin.
Thank you. Benjamin from ABG. Thank you all for the presentation today. It's been great. My final question is regarding the EBITDA margin, as you mentioned before. While I do understand you are not providing any five-year targets due to your original flexibility, all else equal, with this Growth'27 strategy and on numerous opportunities to improve the EBITDA margin, would it be fair to assume that the EBITDA margin over the next five years would peak above 22%?
Oof, difficult to say.
I understand that you're fishing for a number here. Árni has the disadvantage of being that me previously being her role, so I have a tendency to jump on these finance questions. Apologies, before I enter on that. I understand you want us to be more specific on margins. I fully understand that. Just a few things for you to think about. Let's say on margin, in our core EBITDA margin 10 years ago, when we started this journey of building a business at the front end, was about 18%, 19%. 10 years ago. It's one-third of our business, and the margin is still similar. That means that we've had an underlying improvement in the underlying business. That's what we're always trying to explain.
There's an underlying gradual increase in our margin through product mix, through cost efficiency and scalability on the OpEx side. Now we're talking about the opportunities we have in delivering full solutions and delivering mobility solutions more effectively. With more scale and with good execution on those initiatives, we will see an increase in margin. That is subject to what happens on the M&A side, because the margins differ in terms of what companies and types of companies we will acquire. So that is the hesitancy in terms of providing a specific guidance on margins as we feel that boxes us in terms of will create complexities as our business mix changes. Yes, we do have an opportunity, and that is our job, to deliver profitable growth.
Now being in the whole chain, capturing more profit from every solution that is created. That is ultimately the logic of being vertically integrated and provides resilience and strength to our business model.
Thank you, Sveinn. Appreciate it. Thanks.
Thank you. I'll be taking a question here from the virtual audience. And the question is, It could be directed at multiple EVPs here on stage. Now it's a question, who is gonna jump for it now? I'm gonna pick a few. You wait and see. What exactly does the inventory contain? Are these individual components or finished products? Is there a risk with regard to depreciation?
I think it's obvious that I should take this.
Exactly.
question. It's quite a normal question. The answer is it's both. It's both raw materials and components and finished goods, especially in bracing and support. That part ties to the troubles we had with Asia throughout the COVID. Not the Asian manufacturing, but the transportation was kind of screwed up in COVID. We have a high inventory of bracing and support. We are definitely on the way scaling it down. We have as well, fortunately, built up inventory of components and raw materials for the bionic platform. Last year, we had supply problems on the POWER KNEE. The good thing is we are absolutely kind of in a way better mode now due to the inventory.
By the way, we will need to keep a high inventory there for a while, but we will then start scaling it down when the supply chain issues are more behind us.
Okay. We have a question here from Helgi.
Hi. Helgi from Arion Banki in Iceland. First of all, thank you guys for a great event. It's really informative, and thank you analysts for good questions. There are a few of us here from Iceland today in the audience. It's more of a comment than a question that just saying that you're such a unique company, and you're doing really well. We're just saying that the Icelandic stock market really misses you. I don't know if you can take this question with your shareholders and on the board level to maybe consider returning to some extent, being listed in Iceland. 'Cause the market, since you delisted a few years ago, the market has really grown.
There are more international investors looking at Iceland. We're part of international indexes now. Just, yeah, that's more sort of a comment to you guys to take with you.
Thank-
Thanks again. Great event.
Thank you, Helgi. I, it's good to hear that we're missed. I would like to direct that comment to Sveinn for you to elaborate on.
The Icelandic Stock Exchange, or our access to capital. The Icelandic Stock Exchange was fundamental to what we are as a company today, and I don't think we would have gotten to where we are today without the support from Icelandic pension funds and Icelandic institutional investors and the Icelandic public that supported the business. We will forever be grateful for that. That, again, sort of, just a good example of how being a listed company opens up for access to capital and creates value and creates growth. We decided to take the step to list the business here in Denmark as it had grown.
Here in Denmark, we have a good, let's say, investor base and an investor community that has been successful in investing in med tech and healthcare companies, and that has been a good thing for us. We don't have, at the moment, plans of relisting in Iceland, but that's, it's certainly as we go forward, we keep all options open. Thanks for the positive comments. Appreciate that.
Thank you.
Okay. We'd like to take the next question here from Nils.
Thank you. Sveinn, I believe you said in combination with the full year report that you expected this year to start on a strong note. Now we're a bit further into the year. Could you just confirm that you expect this year to begin pretty strongly?
Yes. Going back to, like, quarterly and expectations, we are optimistic on this year. That's why we guided 4% to 8%. The last couple of years have been turbulent because of COVID, because of supply chain complications, also because simply the intensity and the engagement in at the front end of the value chain has just been lower in this post-COVID period. We expected volumes to come up and activity to come up. We again, we've never had such a strong pipeline on bionic launches as we have today. Our assumptions on the year, I can confirm that those have not changed.
Thank you, Nils. Also a reminder to those of you who are watching this live here, if you have any questions, please raise your hand, and we will pass on the microphone. We have a question here from Henrik.
Hi. Henrik from Sewell. Regarding supply chains, have you changed your supply chains so you get supplies for more, close to the markets?
We have changed, in some cases, suppliers, because during the COVID situation, we faced all kind of challenges and problems we never faced before. Even with suppliers we had been working with problem-free for 20 years, suddenly they became a problem. Definitely in some cases, we have just been getting new, better, more reliable suppliers, but not kind of focusing on the distance. For instance, we still get a big part or majority of our products bracing support from Asia. It is at the moment quite solid. As I mentioned, we have not had problems there with the manufacturing. It was more hiccups in the transportation.
Definitely, in some cases we have selected new, more reliable suppliers, and in some cases we are as well going for a second source to be more on the safe side than we did before COVID.
Thank you. We have another question here. If you could pass the microphone to Christian. He has already grabbed the microphone.
Yeah. Thank you. Just a follow-up and a question for clarification. On the slide you've shown a number of times today, you have this expectation for 3%-4% market growth, and one of the detractors that you mentioned is pricing, but you put that in brackets that it's a short-term thing. Can you maybe clarify to us how we should understand that?
The pricing in, in the markets where we generate the bulk of our business has been stable. Reimbursement is stable, and pricing is all else equal stable year-over-year. On the prosthetic side, we grow by more people having access to better technology and also better access in private pay markets. On the bracing side is just these traditional healthcare growth drivers, aging population, demand for more active lifestyle, the prevalence of osteoarthritis, et cetera, drives volume growth. If anything, if we look again over the last 10 years, there's been an increased willingness to pay for good mobility solutions. We see more and more markets being receptive to bionics.
Just last year, and you correct me if I'm wrong, like for example, in Belgium, we now have reimbursement for bionics, which we've not had historically. Some of the big systems in Europe, NHS around 2019. It's not many years where the system has been open for paying for these products. If anything, there's more willingness to pay. We can do more there. If we are to succeed with our growth plans over the next five years, we need to continue to invest more effort and get better in influencing reimbursement and those that decide in terms of what is paid for.
Okay.
I can also add, if I may, to that comment.
Of course.
The reimbursement levels are often indexed. In times of high inflation, they will go up, but there's a time lag.
We may see, the development of reimbursement will be in line with inflation, but it will take some time, and that sometimes can cause a short-term impact.
Thank you. Here's a question from the virtual audience, with regards to sustainability. I'm directing this question at you, Margrét Lára. The question is: Are your sustainability targets tied to management compensation and to your financing costs?
Yes. We got an approval of a long-term incentive program, new long-term incentive program in the annual general meeting in March. We have tied sustainability targets to the executive team's long-term incentive plan and also to the short-term incentive plan this year. In our financing agreements, we also have sustainability targets.
Okay. Thank you. Another question from the virtual audience, I would like to direct this to you, Hildur. You mentioned a new product innovation. I believe you called it a breathable liner. Can you elaborate on that and the potential you see for it?
Absolutely. For those of you here, we have a sample here on the stands that we can look at later. This is a solution. This is a system. It's a liner and a socket combined, where we have built internally capabilities to 3D print silicone, utilizing, you know, and building on the Össur known comfort and suspension of the silicone that we use in our typical liners. Bringing into that the breathability that is, in our mind, critical for amputees to really, you know, reduce this sweat built up in the socket and reduce the impact that it has on their daily lives.
However, like I mentioned before, it is not only about the comfort for the patient in the short term, it is also about the long-term impact. Like we discussed, sweat can lead to skin issues, and skin issues can lead to other complications that are both costly and time-consuming to impact. That is what our clinical studies are focused on to show the impact that we can have in the long and the short term to benefit the payers and the total cost of care for the patient. When it comes to the potential and the benefit for the users, I think that's undeniable.
It's up to us to carry that through and ensure that people have access to that type of solution based on the evidence and the potential.
Okay. Thank you. Another question here is on bracing. Christian, directing this at you. Can you tell us? You talk about a differentiated experience. In bracing, can you please elaborate on what you mean by that?
Yeah. I think we think of experience in terms of ability to generate value, increase revenue, reduce cost, improve quality of life for our customers. I think we see doing that on two big trends that exist in medtech. One is this ecosystem of services and products, and how can you have an overall ecosystem that's complementary to the overall experience? We do that with our digital inventory management system, for example. Also, you see trends in medtech that have to do with this omni-channel concept, more touchpoints. We have a new digital marketing platform, curated digital educations. We're finding new ways to interact with our customers and engaging with them through different curated channels. The net effect of that, it becomes easier to do business and reduces complexity for our customers.
Okay. Thank you. One question on emerging markets. Ólafur, directing this at you. Can you tell us what are your most important emerging markets?
Yeah. I mean, in terms of, let's say, success over the past few years, we can definitely call out China and Brazil and South Africa. These markets have done really, really well by doing building up infrastructure. Did that probably close to a decade ago. Now there are just other markets coming strong in that we went direct in the past few years. To name a few, East Europe is coming strong in. We're going into Mexico recently. Yeah, there are, on the horizon, some other markets that we are looking to build establishment in.
Thank you, Ólafur . That will be the last question of today. If you have any further questions, you're welcome to contact me in Investor Relations. If you would like to set up a meeting as well, please feel free to contact me as well. Any final words, Sveinn?
Yes. Thank you, Edda Lára. Just a few words here at the end. I've been, on Saturday, I've had the privilege of being in my new role in Össur for a full year. It's been a pleasure traveling around to our locations, and I've been in all our regions, met a lot of our customers, the people that use our products. Our strength as a business is our purpose. We have a very, very easily understandable purpose, you saw that earlier with Fleur talking about what she is doing and how she lives her life. This is our, I think, our most valuable asset. It drives engagement, it drives energy in the organization, it's a privilege to be part of that journey.
Now we, this team here and the whole Össur team, we're building a patient-centric healthcare company that is gonna take the lead in developing solutions for individuals that have a chronic mobility challenge. We talked about the structural growth opportunities we have in our core markets. Ólafur talked about the low fitting rates, the low penetration of bionics, and the opportunity in emerging markets, Hildur talked about the opportunities how we're focusing in terms of what problems are we solving. Finally on the O&P value creation topic, this is where we have an opportunity to change this industry. To change how mobility solutions are created, to create more efficiency and more quality, and being laser-focused on developing the best possible patient care. That's our job, and that's how we're gonna drive organic growth rates.
We thank you all for being here today. All of you are also a big part of this journey. I wanna thank also the people that have produced this event and the whole Össur team and my colleagues here on the Össur executive team. Thanks a lot for being with us here today. We greatly appreciate it. Thank you.