Good day and welcome to the bioMérieux Q3 sales release conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Admant. Please go ahead, sir.
Thank you. Good afternoon, and thank you for joining us to review bioMérieux performance for this first quarter of 2022. As usual, I am online with Alexandre Mérieux, Chairman and CEO, as well as Guillaume Bouhours, CFO. Before handing the call over to Alexandre for preliminary remarks, please note that this conference call will include forward-looking statements. I would like to remind you of the usual disclaimer stating that forward-looking statements are based entirely or partially on assessments or judgments that may change or be modified due to uncertainties and risks related to the company's environment. Notably, those described in the 2021 registration document, including, but not limited to, economic conditions, financial exposure to currency exchange fluctuations, change in government policies and regulations, third-party reimbursement policies, timing on the onset, length and severity of flu season and competition.
Accordingly, we cannot give any assurance as to whether we will achieve these objectives. I also remind you that today's call is being recorded and that a replay will be available on our website. I now hand the call over to Alexandre Mérieux, and then we will open the call to discussion and questions.
Thank you, Franck, and good day. Good afternoon to everyone. Thank you for joining the call. We'll start with a short overview of the activity for the third quarter. In Q3, we recorded sales of EUR 902 million, which represent an organic evolution of -5.3%. On this, reported evolution was at +2.8%, mainly due to USD currency fluctuations year on year. This evolution has been driven by the solid performance in industrial applications, close to 8%, in clinical micro, close to 9%, on the very strong performance in the non-respiratory panels at nearly +30%.
While the demand for BioFire respiratory panels remain very firm in the context of circulation of multiple respiratory pathogens, the multiplexing offer shows how resilient and pertinent it is even with the context of endemicity of COVID-19. Also as expected, immunoassay sales are still suffering from PCT U.S. sales decrease and also COVID-related 2021 baselines. On the molecular front, BioFire FilmArray panel sales reached EUR 293 million over the quarter. As I said already, respiratory panels demand remains strong in Q3. However, due to a very high base of comparison with the Delta last year, the sales decreased by 20%, mainly in U.S. and Europe, Middle East, where it was still growing in Asia Pacific and LATAM. On the non-RP side, the growth has been robust at almost 30%.
On the robustness across all the regions on all the panels, and it's worth to mention that the latest launch panel, the joint infection one, contributed as well to this performance. Still our installed base kept on growing with +400 units with a well-balanced footprint of 50% in the U.S. and 50% outside of the U.S. The total number of instruments now climbed to a solid 23,200 units at the end of September 2022. In microbiology, we are very pleased with the very solid performance at about 9% growth in Q3. This growth was fueled by a robust reagent sales growth in both VITEK and bacterial ranges, especially in LATAM and Asia Pacific. Equipment sales also have been solid over the quarter at almost +10%, and particularly in North America.
As already commented, the immunoassays have been still suffering during this last quarter. However, routine testing recovered at +5%. Lastly, the industry unit keeps on maintaining a very firm performance on reagents sales growth over the quarter, such as the year-to-date recent growth is reaching +8%, and it happened both in healthcare and food segments, which fueled this growth. As a conclusion, the sales performance of many key segments have been very robust over the quarter and as well year-to-date, despite a very complex macroeconomic environment and the base effect from from COVID. At this stage, we confirm our provisions, and we are also pleased to target the upper end of the respective ranges of our 2022 outlook, as stated in our media communication on both sales but also on EBITDA.
With this being said, I think we can now open the floor for questions. Thank you.
If you would like to ask a question over the phone line, please signal by pressing star one on your telephone keypad. Please ensure that the mute function of your telephone is switched off to allow your signal to reach our equipment. Again, it is star one to ask a question. Our first question comes from Maja Pataki of Kepler Cheuvreux.
Yes, good afternoon, and thanks for taking my question. Alexandre, three questions, if I may. The first one, you had very strong microbiology growth of close to 9%. You know, you said it was broad-based, but can you indicate whether you're seeing already some meaningful impact from the launch of the new mass spec instrument? I think you've mentioned something about the U.S., but any more color around that would be great. The second question is on BioFire. Your revenues are holding up really well. If we look at Q3, we obviously haven't had a lot of hospitalizations due to COVID. When I look at your guidance, and I also look at what is being reported from various regions, we start to see an uptick in respiratory hospitalizations that are non-COVID.
Like, for example, the U.S. is experiencing an RSV outbreak in children and high hospitalizations. Just to understand, your move to the upper end of the guidance is a reflection of what has been reported so far and not taking into account a harsh respiratory season, or is it already taking into account that the respiratory season could be quite meaningful? And then the last question is could you maybe talk a bit about what you've managed to do in this quarter on pricing? Thank you.
Thank you, Maja. Maybe your question on the guidance. I think also we have targeted at the upper end of the guidance, mainly because of what happened this last quarter. Basically, the good, I would say, resilience of syndromic testing during the context, and the good performance that you saw on microbiology and on the industrial business. I don't think we have modeled at this stage what would be the impact of a big flu season. We see the data also that it is starting, but it didn't enter into the model for that. It's more reflection of the good performance we had. The first nine months.
Your question on microbiology at +9%. Yes, we are very pleased with this performance. I think it has been all across product ranges. VITEK, like CHROMID. VITEK MS is part of it. I'm not so sure I have the similar split in my head on the VITEK MS impact on number of instruments. Yeah, very good start on the VITEK MS PRIME, the new VITEK MS, and we have more than 100 customers already. As we said several times, a very good traction, very good start. We think we gain market share in this field. Definitely it helps on the microbiology growth.
Maybe to your last point, Maja, pricing, of course, definitely, an important question, and we are happy to report first on industry. You remember that we already said half year that we have a good dynamic. Very similar after nine months, about 2.5% price increase already, let's say in the books. Very good work by the team, and of course they continue there. We need at least that. On the clinical part, we also made progress. After nine months, we are close to 1% price increase over nine months, and you remember that we were almost neutral after six months. In the close to 1%, I include, for the third time, I explained last time the transport part.
We are able to reinvoice in some regions, the transport or part of the transport to our customers. Of course the increase pushes the increase in the reinvoicing to customers. This is included. The additional price of the reagents as well as the additional reinvoicing of transport. It's a significant acceleration over Q3. Obviously not enough yet, and we are continuing to work on this. We'll continue over the next quarter. It's nice to see this, let's say, new dynamic in the figures.
Perfect. Thank you very much. I'll join the queue again.
All right. Next question comes from Aisyah Noor of Morgan Stanley.
Oh, great. Thank you for taking my questions. I have two, please. The first is on the immunoassay business. Are you able to quantify, as you did in August, how much of the decline in immunoassay was driven by China and PCT, separately? The second one is, more kind of big picture question around, the announcement by the U.S. government last week around, $88 billion of funding to expand pandemic preparedness over the next five years. Understand it's early days, but any initial thoughts on how the plan could be relevant for you and how much of your group business could meet the, capacity expansion projects they're talking about? Thank you.
Yes. Thank you, Aisyah. So on VIDAS, so definitely PCT is one of the topics. So among the decrease that we have on the quarter, actually about 50% is linked to COVID base effects. So the you know the slowdown of demand for COVID-related assays where we had a strong demand last year at the same period. About 40% is linked to PCT, and there are a mix actually, PCT U.S. and PCT as well in China. So big part again is really the PCT and the COVID explains almost everything. If we take more by geography, and not by type of assays, Asia Pacific alone is about one quarter of the decrease.
When I say that, let's be careful in the Asia Pacific. One quarter of the decrease, you have a part of COVID decrease and a part of PCT decrease as well.
Okay.
To your question on the U.S. funding, to be frank, at this stage we'll see what happens in terms of potential needs of R&D support on the manufacturing support. At this stage, we have not been totally in contact on this front, but we are of course, and we keep on investing on our front on the CapEx for capacity and also our R&D programs are quite ambitious also in the field of molecular and BioFire.
Great. Thank you.
Thank you.
The next question comes from Odysseas Manesiotis of Berenberg.
Hi there. Thanks for taking my questions. I've got three please. First of all, could you give us some color on the Spotfire progress on reimbursement and customer interest? Secondly, one on your VITEK MS PRIME franchise. I want to get a feeling of how far you are in converting customers from the Shimadzu-based instrument. As in, has conversion so far been quicker than you expected, and when do you think we'll see the benefits of this launch peak? And lastly, do you have any updates on the launch timelines for your TB test? Thank you.
Okay. Maybe I'll start with the mass spec question. As we mentioned, we told you that's a good start. It's quite recent. This launch was quite recent, but good success, good traction in Europe and in the U.S.. That this is FDA approved. Of course, now we will work on the existing customer base, when we need to replace or the current instrument we have. We also believe that the VITEK MS PRIME is also a very competitive platform. The idea will be also to look at the competition. Early days, but very promising, and I would say good feedback from the users and from the customers.
Your question on SPOTFIRE, it's too early 'cause the SPOTFIRE is not launched yet, and this is still under filing. We will prefer to communicate at the time of launch, when we'll be more ready to communicate, in fact. I'm sorry, I forgot the third question. TB, as we mentioned in the call at the end of August, and we are still investigating at this stage the root cause. We're making good progress, but there is no short-term remediation being that we have to communicate. Still working on this, making good progress on the root cause analysis.
All clear. Thank you very much.
Thank you.
Our next question is from Peter Welford of Jefferies.
Hi. Thanks for taking my question. I've got a few, please, going back to BioFire multiplexing. Firstly, I wonder if you could just talk a little bit about whether or not you think there was any stocking at all in the quarter, particularly near the end, of respiratory panels in particular, I'm thinking, given what we're looking to, potentially quite a severe flu season, or whether you believe all of the panels are being used. Perhaps you could talk about the inventory levels you think at the, at your lab customers. Secondly, I just wondered if you could give us an approximate split, for the BioFire reagents, sales for respiratory versus non-respiratory, if that's possible, in the quarter, to give us some sort of idea of how that split worked out.
Could you comment at all on pricing? I think you made a comment in August that you're beginning to see some price pressure now in the BioFire business. I wonder if you could just comment at all or update on that. Sorry, just finally, just with the months of Q3, I think you said in August, July and August was similar demand to what you've seen before. There wasn't a summer decrease. What have you seen in September and October? If you could possibly qualitatively describe the trends you're seeing there for the BioFire. Thank you.
Okay. To your first question, we see a steady demand. In fact, of course, we say we mentioned that we are of course less than last year because we were in the middle of the Delta variant, but we have a good steady demand. I don't know if the customers are stocking. That's not my impression, but it's difficult for us to know. Maybe I come back to insist a bit on the non-RP panel. We are also growing at 30% and this one is not linked to any flu season or getting prepared. First, we're happy to see that the resilience of the RP and the strong demand for the non-RP, but difficult to talk about the stocking on that.
Regarding the pricing, we have a little pressure so far on BioFire. I think this is not something so much significant in the spend that we follow. We have not seen the trend moving downwards, I would say, so far. Something we are monitoring, but I think we are all defending the value of syndromic and on multiplexing. Again, I never remember the third questions.
The last one was on the trends of September or October, which are very similar to July, August. Remaining very solid. Yeah, very solid. Of course, slightly up from July, August, probably preparing for the winter season. Yeah, that's very similar. There was an ask on the figure for the split of respiratory sales. It's 65% respiratory reagents sales on the year to date, nine months, 35% on the non-respiratory.
That's great. Thank you.
Great. Thank you.
Our next question is from Hugo Solvet of BNP Paribas.
Thanks for taking my question. I have two. First on the placement trend for instrument placement for FilmArray. It seems that you're now back to about pre-COVID level. Do you see this trend sustainable, or would you expect that to increase slightly or go down. I just wanted to get your thoughts on that. On Specific Diagnostics, probably early days, but could you come back on the building blocks for the EUR 60 million in sales that you have set for 2027, which seems relatively cautious in light of what your competitors are communicating on in terms of total addressable markets. Thank you.
Okay. On the placement on the sales of instruments, yes, plus 400, which we believe is a good number because as you know or remember, we doubled the installed base of BioFire systems during the COVID pandemic time, so it's good to see that there is a need to buy more and more instruments. It's important to notice also that we are really pushing the BioFire solution outside of the U.S. This is a part of it, also part of our strategy to push more outside the U.S. and also work on the menu impact. Well, we're satisfied with the numbers, but that's a trend we'd like to keep. Regarding Specific Diagnostics too.
Yeah, to mention the building blocks, you remember that the only panel or menu on the Specific Diagnostics, but the most important is actually blood specimens or Gram-negative, which are the most critical. That's of course where there is the most medical value. It also means that in terms of addressable market, just for this one, it's about 5% of the AST samples, if you compare to the whole addressable market of VITEK, for example, where, as you know, we are leader in AST testing. 5% of the market can be addressed by Specific. Then we took some assumptions of ramp up. Obviously, year five is not the end of the ramp up.
It's a milestone, but we took these assumptions of ramp up considering our past experience, so we will see. Again, I think it's important to keep in mind the size of the addressable market. I also say that because of course we will see in the future if we are able also to, and we are working on that, to add other panels, other tests to the Specific REVEAL platform, but the number of communities are really on this first application.
Thank you.
Our next question is from Delphine Le Louet of Société Générale.
Hello. Hi, good afternoon, everyone. Congratulations for the results. Few questions on my side. Alexandre, how should we think in the future about the growth of the RP and non-RP panel, let's say, on the standardized manner? Meaning in the next two years or what's your vision regarding that? Back to the installation and the number of equipment, can we get a figure for how many labs have BioFire instrument today? Thirdly, you touched on a little bit regarding the pricing evolution that we have on BioFire so far year to date. Can we have a breakdown between RP and non-RP? A follow-up question from Hugo's question on Specific Diagnostics. Can you let us know what are already the major synergies you've implemented?
Where are we in this process of integration, and how do you see the next 12 months? Thank you.
I will start by your last question. The synergy that we see with Specific is of course a very strong complementarity of the portfolio. It's a perfect fit between BacT/ALERT, VITEK 2 and VITEK MS and also it will complement the offer. That's a full portfolio that we are aiming to develop. That's the synergy side. Otherwise, as you know, we acquired a company that we need to ramp up and grow. It's still investment time for us to develop this company, work on the medical front and also work to go through the FDA filing.
The synergy is in the portfolio, in the medical value that we bring. There is work to be done, of course, on developing the company. It's a growth story more than a cost synergy story. Growth RP, non-RP projections. Difficult to tell you to give projections, but the data RP we are, yes, of course, expecting to keep on growing at, I would say, double-digit growth. It looks rational to grow like this, mainly on the newest panel that we have launched. On the RP, there will be some dependence on COVID ups and downs.
also, I insist on the fact that also we are really working to promote BioFire outside of the U.S. and it will remain a strong wheel of growth for us for the years to come. I cannot give you a clear number in terms of expectations on that. I think I need to understand the question. You asked about the number of labs with BioFire instruments.
Yeah.
I think the estimate is about 2000-2500 in the U.S. and overall probably around 5000, I think overall customers worldwide, right?
Yes.
Sorry. It's always a difficult topic to count customers, I must say. That's why you hear me a bit cautious on my answer. You asked about RP, non-RP. I didn't hear if it was about growth or figures, so I just repeat, and you correct me if it's not what you wanted. On the figures, 65% RP sales, 35% non-RP sales. On the growth in Q3, we mentioned almost 30% growth, 29% growth for non-respiratory. Respiratory was down 25% in Q3. Again, the 25%, I just want to re-emphasize, it's a very, very good, let's say, absolute level, much better than we were expecting.
Of course, it's down negative to last year, which was exceptional demand last year due to the Delta wave of COVID from end of July, August, September, et cetera, that we were not forecasting in any way to redo.
All right. Okay, just a quick clarification regarding the number of, let's say, labs or structure, adding the BioFire. It's 5,000 globally. Does that include the 2.5 in the U.S. or is it 5 + 2.5?
Yes.
7.5?
No, it includes the U.S..
Okay. Thank you very much.
As a reminder, please press star one to ask a question. Now we can go back to Maja Pataki of Kepler Cheuvreux.
Yeah, thanks for taking my follow-up question. On your comments around the pricing pressure in BioFire, can you please be a bit more specific whether that is across all panels, or whether it's only in respiratory, and whether it is from your main competitors in the market or whether it is coming more from the low plex side? Just to understand what are the dynamics that we need to look out for. Thank you.
Again, it's very, very limited pressure. It's on that at this stage, but we're monitoring. It's mainly coming from competition on syndromic, on respiratory and the gastrointestinal. The rest is no competitive pressure on the other panel that we have promoted recently.
Thank you.
We can go to Peter Welford of Jefferies.
Hi, thanks for taking my follow-up. It's actually just a really quick one following on from your interesting data on the customers in terms of the labs. I was wondering, do you have any data similarly for those labs? What proportion, roughly, of those labs are hospital labs versus, on the other hand, perhaps sort of emergency room type or alternatively, local sort of communities or otherwise the mega sort of big labs that are dedicated, you know, mega labs for servicing a range of hospitals? Any sort of, I guess, any sort of split on the type of lab would be really interesting. Thank you.
No, sorry. We don't have this readily available on the split or the categorization of customers.
All right. That's great. Thank you.
Again, it is star one to ask a question.
Maybe by the time we have question from the webcast, a question on the potential of BioFire and SpotFire, potential in terms of install base, in terms of revenue.
Again, revenues on reagents, I can already answer that non-respiratory we expect to grow double digits. Respiratory will be, let's say, moving also with the strength of respiratory winter seasons, be it COVID or flu, et cetera. That's a bit more difficult to predict. On top we will have an underlying growth of the out-of-US penetration and customer adoption. On SpotFire, we have not given a figure.
I think one thing that we said just is not the market figure, but if it's not the size of the market figure, but that the number of sites typically in the U.S., just to give an idea, that the total number of labs U.S. that could have syndromic are estimated around 5,000, where the total number of sites that could have some more emergency care clinics, et cetera, for point of care is above 10,000. Of course it doesn't give the market because consumption per site is not the same. It's a much higher number of potential customers. Nice possible addressable market. But we have not given a size.
Any last question on BioFire? Do you have some plan to launch a 4-plex RP?
On BioFire?
Yes. I'm guessing it's BioFire SpotFire.
No. At this stage the development we are doing and the filing we are doing are for the multiplex approach. Any other question from the web?
What is driving EBITDA guidance in the upper half of the range, revenue in the upper half as well? We answer all the questions.
Yeah. Clearly the upper end of the guidance is relating to the sales. Now we don't have any significant change in our OpEx or cost trend since we updated everyone early September. Very similar trends on inflation, on cost, on our own spend. So it's really sales driven.
Any other question on the phone?
There are no questions at this time.
Perfect. Okay. Thank you.
Okay.
Thank you very much.
Thank you. Thank you for participating in this call and for your questions. Our next formal release will be on March 8, 2023 with a webcast to present our full year results. By then we may not do this follow-up if you have any more questions. Thank you very much.
Bye.
Bye-bye.
Ladies and gentlemen, that does conclude today's conference call. We thank you all for your participation, and you may now disconnect.