Hello and welcome to the BioMaru H1 twenty twenty five Financial Performance Call. Please note this webcast is being recorded and for the first part participants lines will be in listen only mode. You will have the opportunity to ask questions at the end of the presentation. I will now hand the conference over to Aymeric Fiche, Head of Investor Relations.
Hello, everyone. Good afternoon, and thank you for joining this call. I'm in line with Pierre Boulud, CEO, together with Guillaume Rouault, CFO. Please note that this conference call will include forward looking statements that may change or be modified due to uncertainties and risks related to the company's environment. Accordingly, we cannot give any assurance as to whether we will achieve this objective.
I also remind you that today's call is being recorded and that a replay will be available on our website, www.biomerieuxfinance.com. I will now hand the call over to Claire, and then we will open the call to discussions and questions. Claire?
Hello, everyone. Good morning, good afternoon. So I'm going to share with you, first of all, key highlights this first half of the year, and and then I'll follow-up with business highlights. Then I will hand over to Dion who will share with you an extensive update of the financial performance, and then I will you will hand over to me to discuss about guidance that we've issued for the full year 2025, and we'll open for q and a. So key highlights.
If we look at the key numbers for the 2025, very strong 9.4% sales growth, which we see as a very solid performance in the market, mostly driven by double digit growth in both in all of the good '28 growth drivers together with strong performance for respiratory balance. What's what's we believe remarkable in the first half of the year is that together with this 9.4% sales growth, we've managed to achieve close to 24% like for like increase in profitability. So we are now moving from profitability that was 16.4% at the '23 to 18.2% at the June 2025. So very solid performance. And finally and, you know, we it was a topic that we were working on in the context of our goal '28 plan, generation of cash flow.
We have tripled more than tripled our free cash flow generation to €170,000,000 in the 2025 versus the 2024. Now if we go into the different levers and dimensions of a good '28 plan that we shared with you at the beginning of two thousand twenty four, go for growth. I'll come back in detail on the sales growth drivers. But beyond those growth drivers, it's worth mentioning that the first half was very busy with new launches that are obviously instrumental for future success and sales growth. We've also strengthened our a and d portfolio with two acquisitions in the first half, point of care immunoassay solutions with the acquisition of SpinCheet and the acquisition of next generation sequencing with a US company based in Boston, DayZero assets.
And all of that is embedded into a 12% of sales invested into l and d for now and for the years to come. Going simple, we'll come back to that in detail, and Guillaume, we will also share with you very, very glad with very strong success. You've seen the 24% improvement of EBIT, but we see the result of those efforts on many dimensions, big procurement, big manufacturing, big g and a improvements, very satisfactory and and definitely a little bit faster than our expectations. Go stronger relates to the engagement of the employees, and we are also ahead of the plan. Last year, the voice of employee showed we're on the top 25 companies that were in top 5% in terms of engagement from the employees of BioMarieux.
And finally, going responsible, we are very much on track with the CSR mission. Just would like to highlight 27% reduction in greenhouse gas absolute reductions while, as you can see, we're growing very strongly. So moving on to the business performance, and I start as usual with the four growth drivers that we identified with GO '28. So first of all, BioFire nonrespiratory panel, we continue the expansion. We have launched two new panels in the 2025.
A mid plex GI panel that is targeting 11 pathogens associated with gastroenteritis, and that allows to address a segment of the market where the reimbursement and coverage, especially in The US, goes from five to 11 parameters. So that allows to maximize the level of coverage while maximizing the diagnostics efficiency. And we are continuing the deployment of our commercial levers, cross selling strategy, like to highlight a very satisfactory performance on now we have a majority of customers that are using at least three panels. And as we're broadening as a menu of panels, obviously, it will help and support, but three additional percentage points since h one. And the other element, which is also more for the future years or in quarters, relates to our installed base.
We already you already know we are the largest installed base in the market with more than 27,000 units. We don't give anymore because, you know, the market is mature. So quite early installations for BioFireTouch. However, I'm very happy to share with you that when we look at h one, the number of net new installations, so between the losses and the gains, the new installations are actually stronger in h one twenty five than in '24. We So are not only not only increasing our installed base, we are accelerating the increase of the installed base.
Growth driver number two is Spotfire. So Spotfire, I want to come back to the very competitive features of the solution, maybe mentioning the very recent FDA approval of nasal swab for. So until now, we needed a nasal pharyngeal swab that we have all experienced in the context of COVID. Now with nasal swab, we have a less invasive, especially very relevant for pediatric patients that will hopefully help and support continued growth of our spot failure solution. We have a number of installation in q two that is a bit slower because it's a very low respiratory season.
We'll come back to that. But overall, very strong increase in h one of our installed base, 1,600 additional instruments and very much in line with our plan. And we are growing 143%, so very much in line with our target for the end of the year to double up six. Growth driver number three is probably a problem child for this first half. We are below expectations, to be honest, and it's mostly related to China.
So 3.3% sales growth. It was a very strong impact of Chinese decline and the market decline in China that has continued in q one and q two. We'll come back to that when we when we come back to the guidance. Excluding China, it's interesting to see that we're still growing very nicely, 6%. And taking share is more or less with your colleagues market, and we are seeing the competition actually with negative sales.
So we have a dine very strong dynamics in instruments. We believe our competitive position is stronger, but, obviously, because of China, below our expectations. What's it's worthwhile saying to the credit of the commercial teams that even though the inflation is now very low, we've managed to increase prices by two points in h one versus h one twenty four. The fourth growth driver, very, very positive at 10%, very on industrial applications. We're actually a little bit above ambition.
We are seeing very strong dynamics very much driven by pharma quality control with the agent sales of 15%. And what is very nice in these growth and very satisfying is that it's very much driven by the innovation that we've launched in the last few years. So I mean, I will mention three. The first one is BioFire microplasma. We have a industrial application using BioFire platform for pharma customers.
Very strong growth of sales in h one and very, very strong dynamics. GNUP is also a molecular solution mostly used for food, but we're seeing very strong dynamics also on this new system. And finally, we have a environment monitoring of new solution called Skippy Enterprise that is showing very, very good promise and also very strong drivers, not only for h one, but for the future. And still, even though the markets obviously are more complicated with inflation, we managed to increase pricing by two points. Now to give you the full perspective of the product portfolio, I need to mention Biofire respiratory panel.
So we've been growing actually 12%. Q two was lower, plus 1%, very much driven by a very low epidemiology. And also worth saying, one last year, are we growing 17%. So very stronger basis as we've managed to actually not reduce the sales in spite of the lower epidemiology. We're seeing limited price erosion.
So overall, strong performance in h one. Immunoassays, again, this one is a note is the other problem, China, that we have with a bit of more disappointing performance in h one, very much driven by China. The positive note on immunoassays is the new system that we launched on Vynas Vynas cube, is actually we now have 2,600 instruments installed and 700 only in h one twenty twenty five. So we're start starting to see a good ramp up of new installations for Vynas cube, is also a good factor for for the future. And with this, I hand over to Guillaume, who will go through more details on our financial performance.
Thank you, Pierre. Hello, everyone. So this is a wrap up of what Pierre presented. You see the full sales of the group by product range and the different overall drivers of our 9.4% organic growth. Obviously, Molecular as a whole with BioFire RP, non RP and Spotfire is a very strong driver.
Taken altogether, it's actually plus 18% organic growth on on molecular. And industry applications, as already mentioned, is also a very nice growth driver. Overall, it's important to state that with 9.4% organic, such a strong performance is probably one of the best in the overall diagnostics market if you look at other players. Looking at the same but by geography, you see that the main source of growth this h one was coming from North America at 15% organic and Latin America at 17% organic. Notably, molecular in The US was was very strong from BioFire and Spotfire.
EMEA was softer at plus 4% despite a solid growth in BioFire non RP and blood culture culture reagents. The Asia Pacific performance was very contrasted with China, we mentioned already, overall down 17%, while actually Japan was had a very strong growth boosted by the success of Spotfire in Japan. And India continues to grow double digit notably on Vidas immunoassay. So overall, 2% in Asia Pacific more than offsetting China in the region. Now if we move to the overall P and L view, and I will comment on the right column on a like for like basis.
You see that with 9.4% growth of sales, we generated 11% organic growth of gross profit, so an improvement of 80 basis point of the gross margin, thanks to a favorable product mix on the equipment reagents, but also the BioFire share, which as you know is high margin in the overall mix of reagents, as well as part of our GO28 Go Simple pillar with a contained rise in manufacturing cost and lower transportation cost in the in H1. SG and A costs were up 7.7% in H1 with, let's say, a significant one off to mention in this line, which is the MyShare program, this employee shareholder plan with favorable conditions for employees to buy shares, which costed accounting wise €8,000,000 in this line in H1. So excluding MyShare, we are even growing, let's say, only 6% on SG and A, which reflects the as well the GO28 initiatives on simplification and efficiency. I will come back to it in a minute. R and D, up 3%, at 12.2%.
And as Pierre mentioned, this includes on the 12.2%, the spin ship running costs that are mostly in this R and D line. So overall, thanks to GO28, you can see an improved operating leverage with 24% organic growth on CBIT, while we grow sales by 9.4%. Last comment on this page is FX foreign exchange, which was neutral on EBIT in H1 despite the euro appreciation over Q2 and thanks to our hedging policy in place. Let's zoom together on the Go Simple. Pierre already mentioned the the progress.
As a reminder, Go Simple is not a few landmark big initiative, but quite the opposite. It's actually more than 50 different actions being rolled out and delivering on efficiency. So here, we want to give some examples. In the COGS category, cost of goods sold, we can mention that we successfully internalized the manufacturing of our mass spectrometry instrument by Tech MS PRIME in The U. S.
And in Italy, with a significant reduction in the cost of the instrument from purchased last year to actually now internally manufactured. On automation, we are making continuing to make progress on the automation of the BioFire reagent manufacturing. Now at 30% of the volume on fully automated lines. Third example on COGS, major progress on purchasing or procurement with successful negotiation and also sometimes resourcing, delivering savings on sometimes direct materials among these figures, but also on indirect services. I mentioned earlier in the P and L, lower transportation costs.
This is partly due to purchasing efforts. In support functions, we are working on the new HR operating model that has been finalized in terms of design, and we also implemented actually a simplified budget and performance monitoring in finance for the company. In commercial operations, I want to mention the ongoing transformation of global customer service department as well as the finalization of design for the new marketing operating model. As you can hear, when it's about finalizing design, it means that we will deploy in the future of these initiatives. So we're also preparing for additional efficiency in the next three years of GO '28.
Overall, examples and other initiatives translate into notably limited headcount evolution. We are at about 2% increase in headcount to be compared to the 9% top line increase. And as you saw in the P and L contained controlled SG and A increase. Now turning to the P and L profit and loss below contributive EBIT. There is this line about amortization of acquired intangibles, which this H1 has a very significant one off with the impairment of the Reveal technology.
As a reminder, Reveal is a fast AST, anti susceptibility testing technology, that we acquired in 2022, the company's specific diagnostics. We obtained FDA approval in mid-twenty twenty four, and we launched commercial in The U. S. In H2 twenty twenty four. We see today that this market segment, the market segment itself of Fast AST is developing slower, much more slower than our expectations.
And therefore, our own commercial ramp up on Reveal is below expectations and below our plans. As a consequence, we have revised our plans and we recognized in H1 a partial impairment of €146,000,000 of these assets. It's about twothree of the value that is being tested, so about 80,000,000 roughly is still in the books. We still believe actually strongly in this technology and in the strong medical the high medical value that it brings for the most critical sepsis patients. Below in the profit and loss, you see that net financial income improved versus last year, thanks to exchange gains on the mainly cash positions and hedging.
Tax is relatively stable at 24.7% effective tax rate, actually 24.1% on a recurring basis. And overall, net income is down 25% due to this one off reveal impairment, but is actually up 45% year on year excluding this one off reveal impact. Now moving to free cash flow. A very strong free cash flow overall compared to last year, more than tripled at €170,000,000 You can see that the first explanation is that our improvement in EBITDA, which is pretty nice. Working capital requirement was also less negative than last year.
We have inventories up €25,000,000 in H1. One of the key elements was the as part of what I explained earlier, internalizing the manufacturing of our Vitech MS PRIME instrument. We took over all the inventory from our external supplier that was part of h one effort and also replenished our Bacti Alert raw material. You remember the the story of Bacti bottles last year. Also to mention working capital, a really nice, let's say, improvement on the receivables with an efficient cash collection notably in The US in h one.
CapEx are pretty stable in amount at 7.5% with investment, especially on The US manufacturing sites, capacity automation, as well in CapEx as investment in our installed base with placement in some markets such as Spotfire in The U. S. The €170,000,000 free cash flow were notably spent on business developments with the SpinShip and DayZero that Pierre already mentioned. And overall, the group's balance sheet is very strong with a net debt of, let's say, only €126,000,000 0.1 time twelve months EBITDA. We can now turn to the outlook for 2025, and I will start by giving you some, let's say, updated tariffs exposure from, of course, what the tariffs have been announced today.
So we have basically a three fold exposure for tariffs. The main ones are on The US side. We manufacture 85% roughly of what we sell in The US is manufactured in The US. So we have an exposure on the 15% of finished products that we import into The US from mainly Europe and, of course, small parts Australia. Second exposure are the imports for US plants of raw materials and components from outside of The US, mainly Europe, sometimes China or Mexico.
And then the third one is the import into China of microbiology instruments and biotech reagents. Overall, taking all that together, trying to update our calculation, we believe we should have an impact, but that you will see embedded in the guidance of about 5,000,000 to €10,000,000 on SIBIIT in 2025. So it's mainly an h two impact, not much in H1. And our first estimate, it's complex, for 2026 would be a growth impact of about €35,000,000 When I say growth, it means it's before mitigation actions such as procurement, negotiating with the supplier or resourcing, supply chain, or commercial, of course. And with that, I hand over to Pierre.
Yes. So it's a final slide on the revised guidance. So as you can see, we have in fact, again, because of China, the the major impact of sales reduction of sales guidance is China. It shows on two lines, actually, microbiology. We have a significant share of our sales in China and immunoassays.
We have a we don't believe it's relevant to maintain the guidance that we had before. The rest of the guidance is actually very similar and very much in line with what we shared. Biophile on IP at plus 10, but fire of public sales, industry applications around 9%. And biophilia respiratory panels flat, assuming a medium flu season. And I just want to highlight here that we've given a bracket six We're to not not
So for respiratory that. Panels, even though we show We're today the sales growth, we cannot expect an impact based on the epidemiology. That's for sales. With regards to CebiT, based on a very strong performance of h one as a 24%, we are now in a position to review our guidance across between 12 to 18% of organic EBIT improvement. We've also revised a little bit of FX impact.
Guillaume was sharing a neutral impact in h one. Still expect to see, unfortunately, an impact in h two. But for the full year, that would be €25,000,000, where we actually guided on 35 to 40 initially. And the last slight update to the guidance is CapEx, which we now see coming up to 9% of our consolidated sales versus 11% that we mentioned at the beginning of the year. And that's pretty much it for us.
So, Henrik, I think you will handle the q and a.
Yeah. We can now open the the q and a session, And I will have first question from Anshan Verma from JPMorgan.
Please go ahead.
Hi, good morning. Two questions from me, please. Firstly, can you elaborate a bit more on what you're seeing on the ground in microbiology in China? And given that you've upgraded guidance for the full year, but when do you expect any improvement in the market and what sort of visibility do you have? And then the second one is, can you help us understand the drivers of H2 margins a bit better?
Can we expect gross margins to improve year over year in H2, perhaps that is in the magnitude to H1? And how sustainable do you think the H1 margin momentum is? Essentially, trying to understand what gives you confidence in the upgraded EBIT growth guidance? Thank you.
Okay. So I start with the first question on the dynamics in China, and Guillaume will try to give a bit of color on h two financial performance. So with regards to microbiology in China, what we're seeing, we have we have to be what we're seeing is a very strong cost containment plan in the Chinese health care system that is impacting your microbiology among other categories. And in microbiology, we have it's really reduction of stock, reduction of use of bottles. It's a it's a massive and drastic effort to reduce the cost of the health care system that impacts microbiology.
We are not seeing volume based pricing happening in microbiology. We are not seeing spectacular competition move. It's really driven by the market decline. Hope that answers your question. And and and, honestly, I mean, for the rest of the year, we are kind of assuming that it will stay like this.
We are not seeing the light at the end of channel for the rest of the year. Hence, our revised guidance with a market six to seven six to 7.5% sales growth. Guillaume, you want to give
Yes. Availability going forward. So we we again, as Pierre said, we factor the the it's very strong h one as as well the prospects for for h two, including, as Pierre mentioned, respiratory panel, which should be lower, especially in our in our assumption of a medium season means lower in Q4 than in Q4 twenty twenty four. So that will have an impact on profitability on gross margin and profitability overall. But overall, on the trends of OpEx, we expect to pursue, of course, the GO28 efficiency trend that we are seeing and delivering with continued operating leverage as we deliver.
So we factor all this into this, let's say, 12% to 18% range for the year. And again, I would say, like the top line, the main viability on the bottom line is linked to actually top line RPCs and effects.
The next question comes from Kavya Deshpand from UBS. Please go ahead.
Good afternoon. Thank you for taking my questions. I just had a couple on Spotfire, please. So the first one was just around placement. So I completely understand Q2 is the seasonally weakest quarter.
Maybe this time, there was a bit of additional pull forward from Japan. But considering all of this sort of maybe phasing effect, would it be reasonable to expect in Q3 that you can do a bit better than last year's Q3, so maybe like six fifty placements? And then just a follow-up. So I saw that the SPOTFIRE 15 plex panel had obtained a new PLA code in The U. S.
As of the July 1. Do you think this provides a reimbursement tailwind for that particular panel in The U. S. In H2? Thank you.
Thank you, Gabrielle, for your questions. So on Spotfire, first question, we don't I mean, we don't I don't want to give specific projections on q three, q four. We what we know by experience now is that q four and q one are the big quarters in terms of placement because that's the respiratory season happens. Q two usually lower. We don't give a specific guidance for placements in q three or q four or even the full year.
What but what we're seeing, which we feel very healthy, is that we keep doubling our sales every quarter. So very much in line. Even if there is less epidemiology, we are seeing that we are getting the traction that we need to get based on the installed base that we have. And and remember that we had a q one that was I think we said it. Q one was extremely high.
It was related to the one off in Japan. So definitely difficult to compare q one with q two. With regards to your next question on PLA change or market access reimbursement, it's the short answer to your question is the coverage of point of care respiratory panels in The US is very dependent also by state. So they are depending of the state. Some states reimburse very well 15 plex, some much lower, depends on the conditions.
The same for the five plex. So we're not seeing the way we don't sort your question is we're definitely not seeing any headwind with regards to reimbursement as we speak, but no specific tailwind either related to the PLA that you're mentioning that is filling out in the July 1.
Sure. Thank you very much.
Thank you, Kalyan.
The next question comes from Isiah Noor from Ms.
I have two as well. My first one is on the BioFire placements, which I understand you no longer provide. But could you comment on whether your U. S. Installed base for BioFire grew year on year?
And what trends are you observing in The U. S. Given your number two competitor has been talking about winning a lot of U. S. Business in the first half?
Then my second question is for Guillaume on the CEBIT development. Your new guidance implies around 18% margin, which is a big step up versus 2024. If I understand correctly, this is driven by your Go Simple program, which is ahead of schedule, but also positive mix from molecular being stronger and then micro and immuno being weaker. So if you look into 2026, could you is there a potential that you see a reversal of this dynamic? So your Go Simple benefits are weaker than this year and your mix normalizes to more micro and immuno.
So is there a chance here where your margin also takes a step down? Not asking for guidance for 2026, but just want your thoughts on the potential for a slower SEBIC growth in 2026. Thank you.
Okay. That's a good question. That's a long question for Liam, but I'll start with the first one on the biofayer placement. So I maybe to remind to remind you and the whole team, but I'm I'm sure you have it in mind. When we communicated the guidance for good '28 plan, we actually knew the competition, and we embedded into flat sales for FP and 10% sales growth for non FP. So the fact that we'll be a little bit more intense competition. So market share erosion and a bit of price erosion.
So it's fully embedded into our guidance for our plan with '28, but obviously also for '25. So what we're seeing is very much in line with the plan that we have, and we strongly believe that actually, it's a big market. It's especially non FP is a market that will keep growing. So there is room for all all players. And in this big market, we still expect to grow 10%.
So that's what I can say on the competitive dynamics. And and as I mentioned earlier, we had placement actually in h one that were better than in h one twenty four. And in The US, we are also seeing a positive improvement in terms of installed base. So at this stage, we I mean, don't take me wrong. I would love to have less competition, but at this stage, we are seeing the competition performance very compatible with what we are seeing for our own plans. Cebit wise?
Yeah. I'm going to Cebit and and going first, thank you very much to recognize that you've seen the figures or what we had, let's say, promised and put forward with GoSimple efficiency, which definitely is visible and and and probably ahead. So the initiatives as well as the mix, sure, you're very right. Reversal, I I don't see how we could have a reversal. I mean, the mix, again, it's quite relatively obvious that molecular is growing faster than microbiology and immunoassay or even going forward in the the guidance that we have given already on GO 28 trends overall, average trends. So I don't see this as, yeah, as a in any way, to reversal or would reverse.
And and then the go simple initiatives, as we mentioned, we have initiatives that are already delivering that you've seen the figures that we tried to explain some to give you some examples. We already have also have some that are in the making, when I said design, operating model, etcetera, that we deliver over the coming, let's say, quarters and and years. So more to come as well. So I don't see a way that it would reverse, actually.
Yeah. And then you get to
Okay. That's that's very helpful. Yeah. That's very helpful. Thank you. And if I can just follow-up quickly with Guillaume as well on the tariffs. Can we annualize the 5 to 5 to 10,000,000 number you're expecting this year to about 10,000,000 to €20,000,000 for next year? Or do you expect some mitigation factors to come into play?
Yes. Thank you for your question on tariffs. So actually, what I mentioned is that the annualization, we did the calculation, which is €35,000,000 gross gross impact in 2026. We already have some actions that that we have been working on to to mitigate some of it. We need to continue to work, and it's it's still very recent.
And then but we we believe it's it's manageable in our go '28 plan. This 35,000,000 impact, it's significant but manageable.
Thank
The next question comes from Maha Stephanie Pataki from Kepler.
Hi, good afternoon. I have a couple of questions and I'll take them one by one. First of all, can we circle back to China, please? Can you remind us how big China is as a total of group and what it represents of micro and muna at this point in time? And then also how big do you how big is the risk that China might just not return to growth?
We've seen a couple of companies that have talked about softness in China before you and those companies continue to struggle? So China going ex growth, what would that do to your GO '28 guidance? And then I'll have another one after that.
Okay. So I'll speak under the control of Guillaume and Henrik on the share of sales. So it's I think it's 5% as we speak. 66% of the group sales are in China in h one twenty five. Microbiology, I would say ten ten ish of sales in microbiology.
So so it's really having an impact. Now to your I mean, the what we're seeing again, it's I mean, for what we're seeing is beyond the decline, major. It's actually yeah. Very strong decline. That's good flat.
So what we are seeing is for the rest of the year, and that led to the revised guidance, we don't see the situation improving. We are kind of assuming it will keep declining at the same pace. I think you mentioned minus 17% in h one. So we are projecting something of that nature between it's mostly microbiology, but microbiology and immunotherapies. And and, of course, we need to work on 2026 impact.
It's I I mean, at some point, it will not reduce by 20% every year. So the change in '25 is that we are going from a very solid growth to a very solid decline. So it's a very brutal change of dynamics. I'm not sure it's sustainable for the Chinese health care market to decline by 20% every year, but definitely something that we need to refine and work on with the teams as we prepare for 2026.
Got it. And then my second question, congrats on the strong RP sales for H1 despite the fact that you had a very tough comparison base. And if we compare the non RP versus the RP performance of BioFire, it might be a bit surprising that the RP continues to do better than the non RP. I was trying to understand what the dynamics are there because obviously there's probably lower penetration in the non RP patient population. Is it just that it takes longer until dose panels are being used?
Or is it because competition has increased that now everyone is eating part of the cake?
Yes. It's a very good question, Major. Thank you. Maybe three answers. The first one is when you compare FP with non FP and their quality performance in H1 twenty twenty five, First of all, we had a very strong h one on very strong epidemiology into a very, very strong probably the strongest we've seen in many years.
So we have very strong dynamics of the IP, which to your point, we love and we enjoy. But we don't we don't benefit that kind of epidemiology boost on non RP. Non RP, it's more growing and educating the market. And to your point, it takes a bit of time. So you don't have the ups and downs of RP seasons on non RP, which, by the way, for for the teams, the manufacturing team, the supply chain teams, and for our results, good news. But it's when you compare the two, you have to you have to take into account that q one was super strong, especially for a r p. The second element that you need to have in mind is I talked about the base effect of q one in h one twenty four. Non f p was extremely strong in '24. It was growing 19%, way above the expectation. So we had a very, very high basis on which to go.
So what we are seeing is it's it's very much in line with our plan and the 10% sales force. Finally, to your point, it's a market that takes a little bit of time to grow. And and, actually, I think that's probably the only area where I think competition is not necessarily bad because there are more companies making noise. And I strongly believe that be it many jointists, it BCID, be it GI. There is a benefit in in growing the market, and having more players in the market makes more noise and is growing the market.
So it takes a bit of time, and we are working on it, but progressing as we planned.
Okay. And then quickly a last question, maybe a bit of a philosophical question, something that you can't answer at that point in time. But what do you make out of the developments in The U. S, the debates about vaccinations, the changes at the CDC, the uncertainty that is rising. How are you what are the internal discussions?
Are you popping the campaign already? Or are you expecting this to be rather neutral for the group?
So, I mean, from a
I have a general comment and a more specific comment for my manager. General comment is obviously having a lower vaccination item is not positive for spread for fighting against the threat of infectious disease outside. It's unfortunately a scientific data, so it's I think it's bad news for The US as we speak. If I take a very selfish bio Mario perspective, the challenge is if there is a big spread of pathogen and the population is very poorly vaccinated, It will generate more people in hospitals. It's it's very short term.
That would be good news, but I I generally believe that would not be a positive development for the country.
Okay. Thank you very much.
Okay. We have some online questions. The first one from Marco Saromani. What potential midterm outside US? So you are with the list, etcetera, for BioFire and Spotfire.
Okay. Thank you, Marcos. Probably takes two answers. Biofire, what we've kept saying since Capital Market Day is that overall, a good 50% of the IVD market is outside of The US. So we should see I I don't know when, but at some point, sales of Biofare being split between The US and ex US.
And today, think we're at seven Seventy two. 72%. So the room for growth outside of The US is immense for Biofare. And we keep working on it. And by the way, that's still where we grow faster, our installed base, even if we keep growing our installed base in The US.
On Spotfire, very different story because on Spotfire, our plan to be to be transparent with you is US and Japan mostly. That's where we expect core of the for the the men's majority of the sales to come from. There may be evolutions for Spotfire as point of care testing that is being developed by the health care market in the world. But as you know, in Europe, it's still very patchy. We are working on it, and these are topics of discussion that we have with public authorities on a regular basis.
But the the development of the point of care market in Europe is still very nascent, and it's not assumed to develop in a good twenty year plan.
Okay. Another question from Arno Kedar, SAIC.
Okay. So, of course, we've I mean, some of you are in the in the process, but for BD, we've obviously witnessed and the the transaction with what else. It's a significant change for BD, so we expect a little bit of descriptions between selling and closing, but we are watching. What does is not expensively present into the segments where we are, so we are not seeing obvious synergies on the topics that we are looking at, mostly microbiology. But, of course, we are we'll be looking at the development of the situation as we see.
And as I said, until now, h one, we have very competitive position.
Okay. We'll come back to live question.
The next question comes from Jan Koch from Deutsche Bank. Please go ahead.
Good afternoon. Thanks for taking my questions. I would also like to start with BioFire. With a competitor launching a high throughput multiplex instrument, I'm interested in your assessment of the market size for such a net solution. Could you elaborate on the current utilization levels of your BioPharma instruments within large reference laboratories in The U.
S? And then secondly, regarding VTechReveal, could you provide an update on your 2028 sales targets? And given that this business segment is probably still quite loss making, are you planning to implement any kind of cost management measures? And then finally, on Industrial Applications, given that reagent sales grew by 9%, while the overall Industrial segment grew by 11%, that implies about 20% growth in instruments. Could you provide further comments or color on the dynamics contributing to this strong growth?
Okay. Thank you for your good questions, Chen. So let's start with BioFire high throughput system launched by the competition. It actually already exists in Europe. It's just been recently approved in The US, so we know it.
It's a level of automation, actually, especially for the the loading of the reagent. We see it as an interesting development, but very targeted for very few clients. I mean, to go into that level of automation, need to be very high level user of the solutions. It's just been recently launched, so we are we'll be looking at the impact on the market. And and of and, of course, we'll we'll play with with what is coming.
The second element is second question on Vitek reveal. And so we had two two sub questions actually. 2028 target. So what we've actually decided to do is to the 2028 target for review was already embedded into a microbiology sales. It was not on top of so the way instead of giving you a target and, you know, reviewing, we don't do it for any other microbiology product is we keep six to 8% target for microbiology in the GOO '28 plan, which would be this very relevant target, including lower number for Vitek reveal.
It it will work. It it it doesn't have a massive impact to the total sales of Vitek reveal on the total sales for the group. So we think it's it's still manageable. And maybe two comments on your third questions because sorry. On on your sub questions on cost management.
On this on the top line, I just want to highlight the fact that beyond and if, you know, when you do the impairment test and speak in terms of control of the overall the impairment test process, we look at the assets in isolation. But the the improvement that it brings to the overall offering of biomedical in microbiology and the capacity to show that we are leaders, that we bring innovation even if by technically, it doesn't bring as much as we expected initially, it's still very valuable. And it and it shows in the discussion that we have with the microbiology labs every day. So as Guillaume said, we keep working on developing it. We see it as a very strategic offering that brings significant medical value.
So we are working, you know, very diligently to make it a success. And it has already a positive impact on the perspective of BioMarket offering in microbiology. Now you're right here. I think the point of managing cost in the context where the sales are not at the level we expect. We've already made the decision to accelerate the integration of the specific diagnostics company.
That's the that's the origin of Vitek Reveal into BioMarule. And the r and d organization of Vitek Reveal is now reporting into the microbiology team of BioMarieux so that we fully leverage the expertise, the capabilities, and we generate some efficiencies on working together. So that's a very first step to better manage the cost in the context of the top line, which is not where we wanted it to be. Finally, industrial applications, a very fair point. We are actually growing faster on instruments and non reagents.
It actually equals the comment I was making that what's very positive in the growth of industrial applications is that our new solutions are very successful. It comes together with successful new installations, new systems that will pave the way for future growth in reagents. So very healthy sales growth that, to your point, is not only coming from reagents, also from a very nice increase of our installed base of our new systems.
Great. Thank you.
Thanks again.
The next question comes from Natalia Webster from RBC. Please go ahead.
Hi, thank you for taking my questions. Just a couple of follow ups on the microbiology outlook, please. Firstly, just outside of China, you previously talked around some issues around the demand for blood culture also in other regions, including The U. S. In Q1.
Just curious to see if this has improved in Q2 and if you'd say that this market has now normalized ex China? Secondly, just following up on that question around the GO 28 target. You seem to still be happy with the 6% to 8% for microbiology as a whole despite the downgrade to 3% this year. So are you just able to comment a bit more about how your other launches are going and what you really expect to drive this in '26 to '28, given the lower expectations for Vitek Reveal? And then finally, just a confirmation around the CBIK guidance.
Just wanted to check that the tariff impact will be included within the underlying CBIK guidance for the full year and also for the midterm. Thank you.
I mean, is that the easiest one? Let's start with the last one. You?
Yes. So, yes, on the last one, EBIT guidance. So, we confirm that we include in the 2025 upward revised guidance The tariff impact that we estimate five to 10,000,000, so that's included. And and, again, our message on the long and midterm is that we believe that the 35,000,000 growth is is significant, but manageable with mitigations actions and inside the overall targets of go '28.
So on your questions for microbiology, so as you as you you said very rightly, outside of China, microbial is growing 6%, which is a very decent sales growth. It should at the bottom end of our six to 8% go '28 target, so it's very reasonable. You have to remember that 2024 was actually very strong. We are actually above the dot, above 8%. So, I mean, unfortunately, I would love to be in control of market evolution, but there will be stronger here and lower here.
So, really, in terms of for us, it's very much in in the spirit of the goal '28 target. And this year, we'll be a little bit slower because because of China. The other elements is you are you you are coming back to the blood culture kind of crisis. I would not say the market is fully normalized yet. We are what we are seeing is it's it's very very much depending on the geographies because a competitor got into back order, not in every country at once.
So some countries were more impacted than others. And in the countries that were impacted, even though the supply is now normalized from the competitor, know, as you know, there was no back order on our side. There are still a bit of restrictive use of bottles, I would call it this way. We are seeing clients being a little bit careful, making sure that they use the minimum level of bottles to not put themselves into danger. So I think it will take probably a few quarters to get back to a a full normal use.
And, again, we were building on actually a very dynamic 2024. So that is also a point of comparison for '25, which was a bit higher. Your question on Vitek reveal? No. No specific question, I'm sorry.
No. Some question online. Some question from Christophe Haffet from ODDO. On the accounts for how long do we expect to limit the increase in the in the FTS or in the accounts?
India, can we get an update on the market share percentage of sales, level of profitability. I think we don't disclose those details on a country basis. And by your fire, can we have the split between RP and non RP for h one?
So I I can start with headcount evolution because, as you know, we actually when we published 2024, we communicated 00% additional 0% additional headcount in 2024. This first half, we're at around 2%. There is no plan actually to to to limit it. It's not it's not ask that is made to the teams. What we are doing, and you alluded to that in the most simple description, is we are working on improving efficiency.
So when we get more efficient, but we don't need to recruit more people because you manage to actually absorb the workload of the additional worker with the people that you have. So when we need to recruit, when we want when and where we want to increase our capabilities, we do. And there are some areas where we actually invest and have more people. But some of the areas that we're reducing, an obvious one is you alluded to automation of BioFire, where when you automate the manufacturing of BioFire reagents, you reduce quite significantly, actually, the number of people that are employed on the light. So it has an impact also on the total evolution of it cost.
So it's not an objective, but it's definitely an indicator of efficiency in my mind that shows into the improvement of the profitability.
And RP yes. RP, non RP. So RP is actually 66, 60% of our RP, non RP from BioFire panels sales overall in h one.
We have one question from Ed Paul on so you have now impaired specific diagnostic, but not fully. Is there an idea we could see further impairment down the line? And what are the criteria here? So maybe for you, Gil.
Yes. So to to remind everyone, it's a partial impairment, about two third of the value that is tested. The goodwill is not tested. The goodwill is part of the overall microbiology goodwill. So the value that is left remaining on the books is about €80,000,000.
And, of course, criteria for for further empowerment would be to have another, let's say, slower or lower than than planned performance in the coming years.
And another question from Ed was the margin progress was quite stellar. Can you break down the 200 bps improvement? How much was pricing? How much was mix and how much is efficiency from operating leverage from SG
and and A? A? Thank you very much for the recognition of the stellar margin improvement. In terms of mix, we try to give you the different elements on on not exactly as a split of the 200, but yet on the price, we mentioned about 2% price improvement on microbiology and on the industry applications and a slight small erosion of price on the respiratory panels, flat for the rest. And on the mix, we mentioned that it has a it's a significant part of the AC bps of gross margin improvement in in h one.
And that's it. So, yeah, maybe one last question from Edward Bruton. Do you expect to benefit from the one big beautiful deal in The US on the r and d and CapEx side? Do you do you expect, sorry, any temporary tailwind to P and L tax rate, cash tax output?
Thank you for the question. Indeed, we we don't expect much on the r and d CapEx side. It's except there is some cut on the r and d tax credit in The US, but not very significant for BioMario. Overall, it's it's manageable. What is very positive is more the cash side of tax, which not to make it too complex, but drive for an expense in tax, an expense of the r and d year on year, whereas the US administration previously was on a capitalization, depreciation of of r and d expense, which will basically, with the transition, have possibly a very positive impact in terms of cash outflow, tax outflow, very positive impact in 2025 and 2026.
So we'll come back to that in the full year, but we should expect a very positive inflow there.
Okay. Thank you, Guillaume. And with that, if there is no more question, we can we can close the call. Talk to you soon and most probably for for all of you on November for the presentation of the q three financial performance.
Thank you very much.
Thank you.
Have a good day. Good afternoon. Bye bye.