Earnings Call: H1 2020

Sep 2, 2020

Good day, and welcome to the Beer Marriot Half Year 2020 Financial Results Call. Today's conference is being recorded. All participants are in a listen only mode. After the presentation, there will be a question and answer session. At this time, I would like to turn the conference over to Sylvain Morko. Please go ahead, sir. Thank you, Diana. Good day, everyone. Thank you for joining us to review BioMarriott's performance for the first half of twenty twenty. Before leaving the floor to Alexandre Marriot, Chairman and CEO and to Guillaume Beur, CFO, I will just make a very short introduction to provide you a couple of information. First of all, our press release was published this morning at 7 am. The press release can be found in the Investors section of our website, www.bionaria.com. In addition, please note that the slides of this printing are still available and they can be downloaded directly from the webcast. So promptly after the end of the meeting, the webcast and the call will be available in replay on our website. Now going to the presentation content after reviewing the performance after the 1st 6 months of 2020, We will hold a Q and A session. Questions can come from the conference call or from the chat of the webcast. And if you wish to ask a question, please make sure to identify yourself. A very last word before starting the presentation. I will not read the slide that is currently projecting, but I recommend that you take note of this content that remind the usual disclaimer about the forward looking statements. And with that, I will now hand the call over to Alexandre Monterreyes. Thank you, Sylvain. Hello to all. Thank you for joining this call. So I will start with a snapshot T2A messages from H1 personas. As you know, since the beginning of the crisis, diagnostics is at the forefront of the fight against COVID and Biomerieux has delivered well on its mission by developing a comprehensive range of diagnostic solutions. And you can see also that during H1, the strong performance was driven by very strong demand for molecular tests. So we displayed a growth of around 16%, 15.7% in H1, So nice, nice increase and also increase in terms of profitability to reach around 17% EBIT during H1. I will move to the next one. So you see that we developed a comprehensive range of solution, both in the field of molecular, but also in the field of serology and immunoassay. So looking at the molecular front, we have available the extraction with the EMAG and the EZIMAG. We developed the PCR test, Monopex test with the Argin solutions. And also, we have now the syndromic test with RP2.1 in the U. S. And RP2.1 plus for Europe and the rest of the world. Also for Celogy, end of June, I believe that we have we delivered we launched the test for Vidaas both on IGM and also on IGG. So quite a complete range of solutions coming from the portfolio of BioMarion. Since the beginning of the crisis, we kept the same priorities. The first one is to ensure safety of our employees. 2nd one is to ensure business continuity. So we're getting employees to ensure that sanitary safety, I would say, but also we took care of them more socially. And also you see that the Board of Directors has decided to allocate half of the dividends of 2019 to support solidarity actions. Part of it will go to the NAREA Foundation, which is very active in emerging countries. The foundation has redirected part of its program to fight COVID-nineteen. And also significant amount also will be allocated to support local initiatives in the countries where BioMarriott is operating. Regarding Molecular Biology in general, but more particular for BioFire, which is still a growth of 60% in the 1st semester with an installed base moving from 10,400 instruments to 14,000 units worldwide, 80% of the business being done in the U. S. From 20% outside of the U. S. So we see a strong demand for the test, mainly for RP RP2.1 knowing that it is a very adequate test in the current context and it will be also very adequate for this upcoming flu season where it will be critical to detect, identify between what type of virus is impacting the population in the flu season. We are ramping up our manufacturing capacity, not only in molecular, but this is also this is in Salt Lake. And you see that in June, we have been able to, I would say, to put in place or to operate on another site for the production of film array pouches working for some so we're really working to improve the capacity and production. So strong demand, surge in molecular, but it's quite contrasted also regarding clinical applications outside of molecular, mainly in the field of microbiology and also immunoassay. We have seen in the 1st 6 months overall reduced hospital traffic with less patients going into the hospital. So we have seen a decline of sales on the ranges such as VITAC, BACPLF and ImmunoSA, which is, I would say, consistent with what we see also outside in the world with other competitors. Looking at the field of Industry Applications, which represent 15% of BioMarriott business at the end of June, Basically, we remained just in a 1% growth. Trauma remains solid. But in the food business, we have been impacted by the fact that the catering services and the restaurants were not able to work. So we had an impact on this with less testing coming from these 2 sectors. With this short introduction, I leave the floor to Guillaume for the financial results. Thank you, Alexandre. So let's review our financial performance in H1. Total sales growth of 50.8%, no major FX effects, actually neutral in H1, no scope effect either. Just to mention that when looking at H2 with the variation of USD recently, it's likely that the effects on revenues and also on operating profit will be more negative from foreign exchange impact, just to keep in mind. So let's review now the 15.7 percent organic growth of H1 by range and following that by geography. So this shows actually the translation in financial terms of all the trends that Alexandre has just explained. So the especially the reduced traffic in hospitals impacts microbiology with a minus 4% in H1 and impacts even more immunoassays minus 14%. We have, let's say, a mix in immunoassays of partly routine in the portfolio more impacted and partly more, let's say, emergency type, slightly less impacted. Molecular, very impressive. We just saw the biopharma figure, adding the we go to plus 69% growth. And actually, you have to add potentially the molecular biopharma defense, which is the gray other of 3% on top to get to actually the plus 80% organic growth of Molecular that is mentioned in the press release. And Industry already commented by Exxon, but pretty solid on pharma, much more impacted on food and overall 1% growth organic for H1. Now looking at the same by, let's say, region. The main comment is actually that the region trends, let's say, mirror or reflect our exposure or penetration of molecular in the different markets. So obviously, Americas is where we have the best positions in molecular with the huge success of BioFire. So overall, 30% growth. On the other side, Asia Pacific is probably the region where the weight of molecular is least at this stage and therefore most impacted by this H1 context with only 2% growth. And EMEA is somehow in the middle with slightly better exposure and position of biopharma and molecular than in Asia Pacific and therefore higher growth of 4.5%. Now coming to the P and L. So we just commented the first line of sales. Gross profit, you can see, is slightly decreasing percentage wise from 55.7% to 55.3 percent. There are 2, I call it external factors there, which is FX, slightly negative and also the Phantom shares impact with the share price increase, we had to provision more of the Phantom shares bonus. When we exclude those two effects in gross profit, actually the percentage is flat year on year. And this flat percentage includes, I would say, mix effects that are positive on one side for the film array growth, having again a positive effect and negative on the other side with the stronger equipment sales. And as we usually mention, of course, equipments have lower margin on sales. So that's the different effects for the gross margin. Then SG and A is up 8% on an organic basis. You will see that it's much lower than sales trend, but also much lower than our usual trend, which is used to be double digit. Of course, we have there a lot of savings in the lockdown periods in the different regions on less travel, less Congress, less promotion on the commercial front. R and D is up 12%. So that reflects, of course, all the COVID-nineteen developments, specific developments that we had in Q1 and Q2, but also an effort to maintain as much as we could the pace of innovation for the rest of the business. So all in, margin operating current operating margin contributed at 17%, 17.1% and up organic wise 32%. Just to mention on the next page some, let's say, exceptionals that you might want to look at differently. So including this operating margin, the U. S. Pension. So we finalized in June the termination of U. S. Defined benefit pension schemes. So it had, if you remember, positive effects last year of plus 10 or 11 in H1 and negative minus 4 in H1 this year. So year on year, it's a variation of minus 14. That's one effect. Now it's this operation is done. It was over 2 years. And we have, let's say, the usual four zero one for all of our employees in the U. S. Now. And the second effect is, of course, Phantom Share plan. I remind everyone this is a special scheme of long term incentive bonus linked where the amounts are linked to the share price of BioMarion. And these schemes will end in Q1 end of Q1 2021, so next year. So we have, of course, with this huge increase of the share price, pretty significant expense provision for Phantom shares, €42,000,000 in H1 this year compared to €26,000,000 last year. So this is a variation of minus €16,000,000 SEK 16. And a final point to mention here, minus SEK 7 on FX. So overall, with some emerging currencies, especially that devaluated in Q1. Few comments on the next slide between contributive operating income and net income. So we have our usual Biofryer acquisition related costs, amortization, flat, dollars 18 per year, dollars 9 for the each one. Special line that is new and mentioned by Alexandre in the willingness and decision by the Board to support solidarity initiatives for, let's say, half of the dividend. We already booked €12,000,000 of this, the foundation amount in H1. It will be overall for the year, it will be 20 2% in this line. And these, let's say, special actions are considered as non recurring. So that's why they are classified here. Net financial expense improved slightly to €12,000,000 expense and the tax rate was at 22%, I will comment on next slide. So overall, net income group share €173,000,000 and up 23% all inclusive. A quick comment on the tax rate. So we end up just below 22% effective tax rate. We have, of course, the major effect of our mix of countries, especially a pretty significant exposure on the U. S. Profits with lower tax rate than France. Just to mention the sponsorship, so this €12,000,000 let's say solidarity actions funding has a slight impact, let's say, positive to reduce to 21.7%, reduction of 0.6%, percent non recurring. Let's now look at the cash flow. So pretty strong cash flow free cash flow generation, €144,000,000 as compared to €55,000,000 last year for H1. Of course, the first driver is operating profit, pretty strong. Working capital was up, let's say, only €22,000,000 overall. We're still inside this €22,000,000 a very significant increase of inventory due to slower sales in microbiology and immunoassays, where the, let's say, the adjustments of production with the lack of visibility was difficult to go at the same pace. A really good level of collection and AR and days of sales. We also slightly accelerated and we wanted to accelerate our payment to vendors and included there a positive effect of PSAP as we provision more than we cashed out. In the free cash flow also, let's say, sustained level of investment. As you can see, 127%, 9% of sales. It includes, of course, the new manufacturing capacity for BioFire and the new plant that Alexandre showed. But not only, we also invest in the rest of our industrial setup. We also invest in this amount, I remind everyone, on the ISKAL base with all the placement that are considered as CapEx. With this strong free cash flow, our net debt decreased to €192,000,000 so pretty significant decrease to a very low 0.3 times leverage. And just to mention that we refinanced our 2013 bond coming due in October with a €200,000,000 private placement. EuroPP, 8 year maturity, so pretty long for better diversity of our financing maturities and 1.6%, pretty successful transaction. And with that, I hand over back to Alexandre for the outlook. Thank you. Thank you, Guillaume. So you see that under the fixed fuel circumstances, BioMarriott delivered a sound performance in H1. Through the market, there's still a lot of uncertainties linked to COVID around the world. So we felt we prefer not to issue any new annual guidance as of this date. Because we have to follow and monitor the evolution of the market and Biomerieux even if we say we are on a good trend. With this, if it's okay with you, we can open the floor to questions. We will now take our first question from Katherine Tennyson with Bank of America. Please go ahead. Hi, thank you for taking my questions. I have 3, if I may. The first one would be, if you could just talk us through the exit rates that you saw on your base business in August in both Europe and U. S. That would be helpful. Then secondly, we've recently seen rapid flow antigen test from Abbott and also from Roche. If you could just help us understand where you see that test fitting into the general COVID testing landscape and if you're interested in expanding in that space? And then finally, on the increase in BioFire placements, I still see in the slides that an ex U. S. Increase in the installed base is a key priority. How then should we think about additional investments in selling and marketing and advertising in say 2021 to get back on that agenda? Thank you. Thank you. I'm not sure I understood the first question. So, Simon, what I'll do for the first one, Can you maybe repeat the first part of your question, please? Of course. It's just basically what level of activity are you seeing in your immunoassay and your routine molecular business in Europe and the U. S. In August. Okay. In August? Okay. I'm not sure we mentioned this. No, as you can see, yes, the routine testing has been impacted. I believe it continues to be. We are not back to what we can call normal, but we are monitoring this situation. So the trend has not completely reversed yet. For immunoSA, we have launched end of June test for Vida for COVID. It's a bit early to say. It's a slow ramp up. It's a bit early to comment at this stage. Regarding your question around the Abbott's new test and the upcoming potential Roche new test, Difficult for me to comment especially. I would say it's good to have more players coming with more solutions because there is a strong demand for test on any type of test all over the world. Today, the standard is PCR, but it's a different technology. So let's wait and see. I don't Biomerius since the most of our growth on our push and demand is coming for syndromic testing, which is different. And I just have a comprehensive view of all the potential viruses and bacteria involved in discovery disease. And I missed the 3rd question. Guillaume, you have the And the 3rd was on the placement for BioFire. So ex U. S. Actually was 25 percent of the new installations over the first half. So it was a bit more U. S. Focused than in the past years. And yes, I think the question was on the additional investment, sales and marketing investment to continue to expand the Biofriere base and customer in 2021. Certainly, we will continue to invest. We will continue to invest, as we mentioned. It's our strategy in the outside of the U. S. Expansion and market share gain and new customers for BioFire. Super. If I could just be very choppy and slip in an extra quick one. Also the new install bases that we've had in the U. S. And elsewhere, presume a lot of that is linked to COVID testing. Can you just talk us through the contract that those new placements have? Do you have specific volume agreement into 2021 for tests on those machines that aren't COVID related? So your question is really about BioFire. I guess, most of the equipments are actually sold to customers. And in this case, I mean, there's no specific volume agreement on the customer by the system and then can purchase reagents. What we can say today is that the demand is super high, and we are even, let's struggling to deliver at the level of the demand that we see. Yes, so it's more subject to supply the market. Also referring to what I explained that it's good to have a new test with such a huge demand overall. That's great. Thanks so much. And we will now take our next question from Hugo Solvay with Exane BNP Paribas. Please go ahead. Hi, hello. Thanks for taking the question. I have one on the guidance that you've put for 2020. Just wondering if we should extrapolate the sustainable impact on financials in H2 from the base of H1 2020, meaning organic growth of 16% or from a base that you had in the Q2, I. E. A growth of 10%? And also on the maintenance pace of innovation that you had with the level of R and D at above 10% of sales, Could you remind us of the upcoming launches and product that you have in the pipeline and if you've seen any delays here? Thanks. Yes. For the level of R and D, as we mentioned, we primarily will always invest in R and D. But this year is true that we have focused our efforts both on the Arginine, on the extraction and also on syndromic and to be able to deliver in a few weeks also immunoassay because it was the plan in our budget. So we invested to deliver this develop this test. In terms of potential delay compared to what we announced, I think, yes, maybe on immunocept, I think there will be some delays on the test that was announced, such as PBI, IGRA, on the because the clinical trials have been a bit postponed or slowed down during the COVID crisis. So this is, I would say, mainly compared to what's going on, this is mainly in that space that we see some delay. Your first question is around the guidance for 2020, but we don't give a guidance. So cannot give you more details. On the dynamic is strong. The demand for molecular is very strong. But as you know, it's a very lots of uncertainties. So difficult for us to project. Otherwise, they would have done it. Very strong for molecular and not yet back to normal, and we don't see back to normal on the other ranges that are negatively impacting. Okay. And just a quick follow-up. Are you seeing different dynamics in the recovery of the immunoassay and or microbiology? Immunoassay is more impacted than macro because of the root testing, but also because of the usual consolidation of labs. At this stage, it's difficult to see a difference in recovery. Okay. Thank you. We will now take our next question from Delphine Le Douet of Ex Societe Generale. Please go ahead. Thank you. Hi, good afternoon, everybody. Alexandre, can you be more specific in the breakdown? I tried to figure out in when I look at BioFire, how much of BioFire sales is today dedicated to COVID versus the rest of the panels? This is my first question. Secondly, within the COVID testing, can we get a breakdown of revenue between the extraction and the testing, meaning between arginine testing and COVID-nineteen or RSV 2.1 testing? And third question will deal with I just got the finding that Asia is a bit of a lagard and effectively due to the immunoassay, we have normal backtracking to hospitalization there in the region. So how do you explain this, the fact that there is no more strong rebound in Asia? And how do you see, more broadly speaking, the sequential take up in revenue in between April, May, June, July and even August? Just to give us a flavor? Thank you. Okay. So I'll take the last question and then I forgot the other one. But okay, the last question is, so Asia Pacific, yes, as mentioned by Guillaume, Asia Pacific is less exposed to molecular than the rest of the regions. This is where we don't see the same uptake with Filmorhea. It's not the complete back to normal in Asia. China, we see a slow ramp up, but it's a slow ramp up. I wouldn't say that life going back to normal, at least in terms of hospital traffic. And countries such as India are very on the very, very difficult situation. So I believe that the ramp up of Asia will come back also with a return to normal. Asia is not only China for us. So there are still many, many countries which are under difficult situations. Your question on the split between BioFire and You don't need to take that? Yes. So COVID and COVID, okay. Most of so far. The ramp up in molecular is linked to respiratory and COVID, be it for BioFire or linked to BioFire Okay. And with the time, have you seen a switch from Respe 2.1 to COVID only and or from COVID only to RSV 2.1? Is it a trend? Is it something that you observe? Or you have order for both COVID testing indifferently the same? How do we how can we think about the next wave or next post 2021, 2022? Just to think about the when you say COVID only, I guess, you are referring to the BioFire COVID single digit? Yes, yes. Yes. Just to explain this one, this one was developed by a sub called the BioFire Defense with a contract and a demand and the financing from the Department of Defense, U. S. DoD, so pretty early in Q1. Then the vast majority of these tests were and are sold to the Department of Defense. We wonder if we should actually sell it broader, but we've been able to add COVID to the RP panel with RP2 becoming RP 2.1, including COVID, really fast. Biopharma teams have done an excellent job there. And therefore, our approach, our strategy is really to push the syndromic value and the syndromic approach. So we actually sell in the U. S. And everywhere RP2.1, the syndromic approach. We only continue to sell the single test for the DoD. DoD, okay. And the breakdown in selling between the origin test for the extraction and the RP2, is it well balanced? To give you the breakdown, so you have in the slide, you have €557,000,000 of molecular. You see that on Slide number 15. In this, that includes all the arginine and extraction that represent about almost €70,000,000 And then you have to not forget don't forget the biopharma defense, we classified in others, it's in the Great Park and it's about EUR 40,000,000. It's not included in the EUR 5 57,000,000. Okay? Okay. Thank you. We will now take the next question from Scott Bardo with Berenberg. Please go ahead. Yes, thanks very much for taking my questions. So first question, please. I think there is a sort of a broader expectation that as we come into the winter months that life will get a bit more difficult for respiratory cases, those with combined flu or presenting with flu symptoms, is it flu, is it COVID? But I really wanted to point to your thoughts on the development in Australia where there seems to be a very benign flu season indeed and with not many people presenting with respiratory symptoms. Is this a potential concern to you that in a sense or an observation that we might not see that strong pickup in cases into the back end of the year thus limiting the demand for BioFire and Filmora consumables. So some thoughts on the Australian dynamic and read across would be helpful, please. You want to start with this one? Austria, for me, it's difficult to know what it means, in fact, because I think the country has been in lockdown also during the part of the summer months, summer for us and the winter for them. So when you're under lockdown, I'm not sure this is where respiratory diseases spread a lot. So I think it's difficult to see a correlation between what happens in Australia and what will happen in the upcoming winter. Whatever happens, I believe the syndromic approach is the right one to detect, as you mentioned, COVID through A, through B or the other. But difficult to make a correlation at this stage. Understood. Thank you. And you communicated then that you are ramping up production of film array consumables. And obviously, I note that these are uncertain times and you're not giving any explicit guidance. But could you help at least us to piece together some of these things by providing a sense of what your ramp up of consumables will be at full capacities, some sense of perspective as to where we are today would be helpful, please. So first, it's a site and we have not initiated the site with it, which was planned before, anticipating the future growth of BioFire. I would say that now I don't know what we need to say. We should be soon be able to produce around 1,000,000 test 1,000,000 pouches per month. And we are working hard to keep on improving this production capacity. Understood. And that compares to several 100,000 today or something like that, is that correct? Months, sorry, what you say? Sorry, I'm trying to understand the incremental step up. So that 1,000,000 pouches is compared to where are we today as of Q2, about 700,000, 800,000 per month or something like this? I should know. I'm not sure. I know we are improving. We are progressing. The site is operational since June. Yes, yes. So it's not the only site, it's an extra site for production. Okay, understood. Thank you. And maybe an additional question on Biophive, please. Obviously, you've been a very important part of solution in containing the virus and giving optimal clinical diagnosis. Has there been any evidence of a significant channel shift in North America testing a lot of nursing patients or in the out nursing home patients or in the outpatient setting? Has there been any change in the mix? Or has it remained predominantly hospital related business? To be frank, I didn't follow this exactly. We have been we have no way to know if it's hospital or if there is a change between inpatient or outpatients. We can guess that there are more outpatients currently, but it's just a guess that it's better. I don't have the data. It has to come from the hospital. Okay. And last question for me, please. I note that your selling and marketing costs have fallen year over year, and I think you explained that there was obviously some lower travel and congresses and things helping reduce that total expenditure. But as we go forward and we think about the business into the second half of the year and into 2021, could you help describe these cost reductions? Are they relatively transitory and just related to near term COVID impacts? Or could this indeed be some more structural change or lowering of your selling and marketing costs going forward? Thank you. I think it's linked to it's been linked to COVID. The sooner I can travel, the happier I will be. So no, it has been to COVID mainly. So we should assume that SG and A ratios sort of return to historic levels at some point? Depending on the sanitary situation next year, at some point when we can travel. Understood. Thanks for answering my questions. Thank you. And we will now take our next Yes. A couple of questions. I'll take them in turn. Firstly, just sticking with the sales and marketing, if I may. You mentioned that it was the usual double digit trend that was decreased for SG and A due to lockdowns. I guess looking beyond that for 2020 and given your plans to expand ex U. S. The BioFire rollout, should we consider that double digit should be a trend that will likely continue to sales and marketing for a few years? Or I guess if you could perhaps balance that with also some of the factors you mentioned such as the change in the U. S. Pension and the Phantom share plan? And perhaps give us some sort of idea how we should be thinking about the sales and marketing trend beyond 2020, if possible? Yes. It's related to the earlier question. But again, a lot of the decrease or savings was due to COVID, to lockdown, to the possibility to travel, to access customers and to organize the Congress and events. So again, our ambition remains the same, to continue to expand the base, the customer base in the U. S, but even more and even more internationally outside of the U. S, which will require, of course, sales and marketing, let's say, expenses and trends in a significant way. Then the way this becomes a reality depends on the sanitary crisis and when we can travel or reorganize events that potentially are not digital events. Okay. Thank you. And then the second one, just on BioPhy. When we look at the new placements that we've seen during the first half of the year, perhaps you can just talk about, are the majority of those placements new customers, so new labs or new hospitals or physician offices? Or are the majority of those placements from existing customers looking to increase their testing capacity beyond what they currently have? And also has there been sorry, Carole. Yes. It's clearly a mix. Of course, we are gaining new customers for sure, especially outside of the U. S. But there are also a lot of existing customers that have increased their capacity to do more. We can tell you that approximately for the U. S. Only, only the U. S, about 75% of the new installations are with existing customers. That's for U. S. That's great. That's all there. That's great. Thank you very much. We will now take our next question from Manon Couronne with EHAUS Securities. Please go ahead. Hello. Thank you very much for taking my questions. I have 2. Well, first, on immuno, I microbiology industry, could you give us maybe the exit rate, I mean, the growth in these three segments in June? And second question would be on BioFire Defense. On the COVID tests that you sell to the Department of Defense, Can you remind me what the agreements you have with them? Because I'm just thinking that could they maybe at some point switch for the ultrafast American version of the PCR test, I mean, BioVaxNOW, the BioVaxNOW solution? Thank you. Okay. Maybe the trends on the macro and immunoasset, I end of June it was minus 4 for micro? Yes. I think the question was on the month of June. So probably we don't see the month of June, but just maybe a comment. As you have seen, so microbiology for Q2 was at minus 14, immunoasset minus 18, which obviously Q2 is the most impacted with both Europe and our lockdown most of the period, U. S. And is our lockdown measures, Latin America, India, etcetera. So Q2 was the most impacted. So when we monitor internally the speed of recovery, which we were discussing earlier, we kind of look at how we get back from there. And as we said, it's contrasted, it's slow recovery. So even without giving a figure, it's a bit better, let's say, June July, but not a fast recovery at all, probably because again hospital traffic has not fully recovered and lockdown measures in different countries reduce also maybe ID transmissions. Okay. Thank you. Your other question was? The other question was on the Department of Defense agreement and BioFire's events. Can you refresh my memory on what is it exactly? Because I'm just thinking that now they have I'm not sure we displayed that Can they switch from your solutions to their solutions? There is no link with by next. And I don't understand why you want to switch. I can just switch. But anyway, broad terms, so BioFire and Defense is a specific fab with strong links with DoD that existed before we acquired BioFire and remain, so specific contracts with the DoD. So in this case, actually, the DoD asked for development of a COVID test and funded it. As I said in Q1, we were able to actually develop it very fast. That led to this single COVID test that was sold and is still sold to the DoD. And that's the main term. And they also funded recently an increase in the capacity. So it means that they are interested in continuing to be supplied by biopharmacy. But we cannot really give more details in that. These are the broad terms. Okay. Very clear. Thank you very much. And as I said, this represented EUR 40,000,000 revenues, so pretty significant compared to the past in H1. And we will now take our next question from Christophe Gagne with ODDO. Please go ahead. Yes, good afternoon, gentlemen. Can you hear me correctly? Yes. Perfect. Thanks for taking my question. Actually 3 of them may qualitative answers requested. The first one would be how would you qualify maybe region by region the gap between demand and supply currently for COVID tests? And what's your view in terms of overcapacity, under capacities given what we have seen as a full test on the markets? That's one. 2nd question would be related to your guidance. I'm wondering if the biggest reason why you haven't precise your guidance is related to price evolution, related to market share, competition or specific political decisions? That's the second question. And the last question, maybe a more general question regarding the current position now of Boumayeur. Would you consider that after this sanitary crisis, the global competitiveness of BioMarriott has increased, has stabilized or has declined and why? Thank you. I don't know which one to take. I think the reason for the guidance is that linked to price or volume or I think it's linked, I would say, to some uncertainties on the market. It's a very volatile environment. So it's the demand is there for molecular, but difficult to predict the rest. So this is more linked to that to make sure that we don't have the flexibility to follow the market for the market evolution. Your last question, I believe Biomerieux, but I would say maybe a diagnostic company will be stronger because I think this crisis has shown the value of diagnostics. It's all in a place of a pandemic, but also in the role of care in care of patients. And I believe also that we have increased our positioning in molecular, which is a very promising technology in that space. So I would say that we should be with a stronger positions. But let's wait for the market dynamics and what comes after COVID. But for us, it's a I think it's a recognition of the value of diagnostics. And the first question, the GAAP demand, has evolved a bit. I would say now we need test. I think we are we are seeing strong demand. So I believe the more test available in the market, the better it will be to go back to normalize and to use the phrase to isolate and It takes time now to get some results on that. So it's good to have more tests. Okay. Thanks. And we will now take a follow-up question from Scott Bardo with Berenberg. Please go ahead. Yes, thanks very much for the follow ups. A question just related to progress with the BioFire approval, film array approval in China. I understand that there's been a lot of flexibility from the regulatory authorities, particularly in this COVID environment. And I wonder whether that's enabled some more momentum with approval in this important growth region. If you can comment on progress there, please, that would be appreciated. Second question, please. And again, I appreciate you're not giving a quantitative guidance. But if you could help me with the logic path, if one is seeing some recovery in your routine business microbiology and immunoassay industrial application and you're expanding capacities for bio fire pouches. Could that indeed mean that we see accelerated growth to what we've seen half in the second half of the year. Would you agree with that statement? Or if not, could you please provide some reasons why? Thank you. I think the 16% growth is quite it's linked, I would say, to exceptional circumstances. So I wouldn't use this as a I wouldn't extrapolate this for the coming years for BioMar year. And the recovery, I told you at this stage and we told you we don't see strong signs of recovery on the rest. So we don't expect things to happen overnight or for 1 month to further. I forgot the first question. Biosphere China. Biosphere China. No specific progress to report on the validation or the certification of the on this time regarding the Q1. Maybe we will take a couple of questions from the webcast. The first one was the recovery trend in bacteriology and industrial application in recent weeks, post end of lockdown, coming from Marie Anne at HSBC and the CapEx intensity that we have to expect for H2. So the recovery in immuno and microbiology, I think we commented already that we see some recovery as compared to the Q2 trend, but a slow recovery, not at all back to normal in July, August on these ranges. CapEx? CapEx should be probably sustained still and probably at a similar level overall than H1. A second question from Jacob Berry at the point. Why was there a sequential decline in sales of Bio Fire in Q2, about EUR 225,000,000 from EUR 265,000,000 in Q1? Was due to an ASP increase as there were more TranscoV2 singles like that since Q2 for the launch of RP, including SARS CoV-two? So it's actually no, it's not price. Price was very stable actually. It's more a question of inventory and capacity on our side to manufacture. So we ended the year 2019 with a pretty high inventory. I think that's also something we commented with you. So high inventory, especially on RP to prepare for the full season. And actually, these were totally sold, especially in, I think, March, April when RP was used, RP without COVID as a first line, let's say, detection or negative detection of non COVID patients. So that boosted actually Q1 revenues. And then in Q2, we also had the switch effect. We had the most of strange revenues where we announced the launch of RP2.1. And so the demand moved massively and very quickly from RP without COVID to RP2.1 with COVID. So that explains also maybe a slight timeline of about 2 weeks, I think, in Q2. Thanks. And then we have a question from Darius from Kepler, but I guess he's also queuing on the phone, so maybe we can switch to the phone. Please go ahead, Darius. Your line is open. Yes, hello. Thank you. It's Darius Schubic from Kepler Cheuvreux. Thank you for taking my questions. We can't hear you very well. Can you speak a little bit louder, please? Is it any better now or? It's okay. Okay. Thank you. It's Thari Zhubik from Kepler Cheuvreux. And thank you for taking my questions. 2, if I may. My first question would be on the positioning of different testing alternatives. And what's your view on what populations or what application field do you see for the antigen test? And maybe where do you think that PCR test are absolutely necessary? And maybe also a positioning of multiplex increase? And my second question, if you could please share your view on what is the risk that the film array instruments will no longer be used once the pandemic period is over? Thank you very much. Just mentioning the test, I would say for me the most I defend the value. I believe the most comprehensive test is done with SYNDROmic, is done with Filmorhea. This is where you get the most indication. It's also important for patients who are showing symptoms. I believe PCR today is a standard in the lab. So it will remain on this new antigen test is using a different technology with a different, I believe, performance. But I think it can be useful. But if I understand clearly, it's for people without symptoms at this stage, so it's a bit different. I believe there will be room for everyone, but because medical value, I believe, will be for the syndromic one. And second question was about the risk that TIMORA instruments will no longer be used after the pandemic. We don't know. Today, the focus is, of course, a lot on RP2.1, but we have a very comprehensive range of tests for fimarena. We have a gastrointestinal, we have meningitis, we have pneumonia test. So that's it's a menu impact that we have with the Filarena. We did a focus on the RP, but the menu is much, much broader with strong indications for other type of disease. Thank you. Thank you very much. And we will now take a follow-up question from Delphine Delouet with Societe Generale. Please go ahead. Yes. Two additional questions. One regarding the industrial application. Can you give us the sense of the business? I mean, Q2 was poor and effectively, we everybody understand that. What do we see in that space since summertime? Any recovery? And can you quantify that or clarify this recovery? Secondly, on the European business, it sounds like very, very strange for a European company not to be more present in Europe and especially regarding BioFire. How do you explain that? What's your take up from the discussion you have with the government? Everyone is in dire need for testing everywhere. And it's a bit difficult in understanding, at least to my point of view, why Europe is not more reactive with the European company like yours and why we have such a performance in Europe. Can you elaborate a bit on this one? Yes. We have a good growth of Filmora in Europe. You don't see the same results as we've seen in the U. S. And the Americas because in the Europe, we are more impacted by the decline of immunoassay into the routine testing being less present also according to the competition. But fumarate is increasing in quite steady, I would say, with the COVID in Europe. It's not the level of the U. S. For many reasons. It could be a reimbursement, the focus also on the value based health care, which I believe is stronger in the U. S. Than it is in some countries in Europe. But this is I think the crisis has or is accelerating to the penetration of Filmora in Europe. Regarding your question on too early to tell for food business, because as we mentioned, I think part of the business, which is into catering or in French, what we say, restaurant collective has not really started yet again. So we have to monitor this. It could be we expect things to improve, but we have to monitor. All right. Thank you. And we will now take a follow-up question from Malon Coulomb with Erasmus Cheption. Please go ahead. Thank you for taking my follow-up question. Just one for me, please. Looking at your bio fire system installed, looking at your installed base, do you know the average capacity utilization rates before COVID? And what is this capacity utilization rate today? Thank you. I don't think we have looked at it. Like we don't communicate externally on this. Okay. Thanks. It has increased for sure and that's why we explained earlier that a lot of our existing customers have increased their capacity by buying new bio fire instruments. So yes, the consumption has increased for instruments. And maybe we have a last question coming from the webcast and what is the in potential for BioFire in the U. S. And ex U. S. And where do we stand regarding the market penetration? I don't think we will be quantitative on this, but from a qualitative point of view, as we said, we believe there's potentially still a lot of growth outside of the U. S. Clearly, we are continuing to gain a lot of new customers in Europe, in Latin America. There's a lot to grow for sure in Asia Pacific. By the way, Japan that we entered more recently proved really good success. Australia as well also entered maybe more recently. So clearly, still a lot to gain. And in the U. S, probably as well, even though it's more difficult to say because our penetration is, of course, much stronger. So that's something to see when all this settles in the U. S. Very good. Thank you very much. I think we don't have any more questions, both from the call and from the webcast. Thank you everyone for attending this meeting for the very good interactions and we are looking forward to speaking to you in the next couple of days or weeks for the Q3 results. Q3 results, October. Thank you very much. Thank you. Thank you. Bye. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.