Good day, and welcome to the bioMérieux First Quarter Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Franck Admant. Please go ahead.
Thank you, Ruth. Good afternoon. Thank you for joining us to review bioMérieux performance for this first quarter of 2023. 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 saying that forward-looking statements are based on entirely or partially on assessments or judgments that may change or be modified due to uncertainties and risks related to the company environment, notably those described in the 2022 registration documents, including, but not limited to, economic conditions, financial exposure to currency exchange fluctuations, change in government policies or regulation, third-party reimbursement policies, timing of the onset, length, and severity of flu season and competition.
Accordingly, we cannot give you any assurance as to whether we will achieve these objectives. I also remind you that today's call is being recorded and that replay will be available on our website. I now hand over the call to Alexandre Mérieux, and then we will open the call to discussion and questions.
Thank you, Franck. Hello, everyone. Thank you for joining this call. I will start by giving some highlights on the performance of bioMérieux in Q1. It was a good performance as we call it sales of EUR 906 million, which represent an organic evolution at +7.5%. Very close to the reported ones at 8.2% with a limited currency effect this quarter. The evolution has been driven by a steady performance of the non-respiratory sales at almost 9%. This is totally in line with the objective of the full year guidance. As you remember, we said we'll be growing between 8%-10% on the non-respiratory sales.
For Q1, the pillars of this performance are first maybe Industrial Applications, where we grew at a healthy 9% growth with a good performance of the Healthcare business. Clinical Microbiology grew at a nice double-digit growth of +12%. Also, we had a remarkable performance of the non-respiratory panels on BIOFIRE growing at +32%, which is good news and in line with the push that we're having on this cross-selling of the panel. This is also bringing the split between respiratory and non-respiratory from 60, 64 respiratory and 36 non-respiratory. The demand for BIOFIRE respiratory panels in Q1 was strong in the beginning of the quarter. You know that the flu has stopped quite abruptly, in fact.
All in all, we are growing at +3% in Q1 on the respiratory panels on BIOFIRE. We brought the install base to now 24,000 units sold and placed worldwide. On the Immuno assay front, we saw a decrease at -7%, still suffering from PCT, while the routine parameters grew all in all by close to +8%. Decreasing in Q1, we still confirm that we emanate to be flattish on this range for the whole year. Q1 was also an active quarter in term of milestone that we reached in the product development, in R&D and in commercial launches.
Beginning of April, we officially launched VIDAS KUBE, which is CE marked. Regarding SPOTFIRE, we got in February the FDA clearance for both 510(k) and CLIA-waived for our first panel, which is a 15-plex respiratory panel. At the same time, we filed the RP Mini Panel, which is 5-plex, that we got cleared mid-April, and we submitted for the CLIA waiver that we should hopefully get before the flu season. Specific diagnostic, important also, you know that this is CE marked and launched in Europe, but we filed during March to the FDA, and now it's in the process of getting the FDA filing.
Lastly, we were pleased also to announce recently a R&D partnership with Oxford Nanopore in the field of infectious disease. The goal there will be to work together with this very say, good company in the field of sequencing and to bring ideally the sequencing technology to the diagnostic market. With this short introduction, maybe I will leave the floor to the questions.
We'll take the first question, please.
If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star one to ask a question. First, we'll go to Aisyah Noor with Morgan Stanley.
Yeah, good afternoon, and thanks for taking my questions. My first one is on the microbiology growth of 12% in the quarter. Could you clarify how much of this was driven by pricing, and volume growth, please? The second question is on the immuno business, where you mentioned that routine assays have returned to growth, in the quarter, but the organic growth figure was -7%, which would imply on my estimate, double-digit declines in PCT, around 25%-30% declines. Can you confirm this or if there was other drivers of the decline here, like COVID or China? Thank you.
Thank you. This is Guillaume Bouhours, CFO. Microbiology, actually, on the pricing, we are pleased to say that we are in line with what we announced and targeted as part of our guidance. We are close to +4% as an effective price overall, net price, for all the ranges and regions in the Clinical Application, which again is in line with our overall target. 4%, almost 4% out of the 12% growth that Alexandre mentioned for microbiology clinical.
By the way, as we are talking about pricing, I can also mention that on the industry side, Industrial Applications, which is the other part where you remember we were, let's say, ambitioning to have a stronger push on the pricing to pass through inflation, of course. We are also pleased to report that we are slightly above 4% in terms of price effect in industry, in line with our target. Back to your second question about immuno assay and the different effects inside the portfolio. Yes, PCT was down a strong double digit, actually around 20%, decrease between the volume and mainly volume effect. Whereas routine, as Alexandre mentioned, was up 8%.
The third part is more the emergency parameters, which were actually on a slightly high base. Last year, Q1 was COVID impacted, some emergency sales driver.
Great. Thank you.
We'll go next to Maja Pataki with Kepler.
Yes. Hi, this is Maja. 2 questions from my side as well. First of all, could you give us a bit of an indication on the BIOFIRE local currency growth or the total franchise on the reagent side? Are we on the double, on the low teen side? That's what I calculated, but I'm not sure if it's correct. My second question is when we look at the SPOTFIRE, the 15 pathogen panel that you have gotten the approval, are you in discussions on the reimbursement already? You know, how is it going? Any feedback on early input from clients and regulators would be great. Thank you.
Thank you, Maja. Guillaume again. On BIOFIRE, in terms of local currency to actually organic growth, the overall range is up 10% in Q1, with a mix of respiratory, non-respiratory, very strong growth and equipment. When we look only at the reagents, the mix of the +3 respiratory and +32 non-respiratory is actually a +12% for BIOFIRE reagents only in Q1. Okay. On the SPOTFIRE Respiratory 15, yes, the reimbursement is one of the topics. As I think we mentioned in the annual results and further discussions, it's a challenge. It's the coverage in the U.S. is different from one region and type of population from another.
Overall, not very strong coverage outside of the hospital for outpatients. This is the exact one of the reason for us wanting also to launch the RP 5 that was approved a few weeks ago, and that we expect to have approved and CLIA-waived later on this year. Definitely the reimbursement for the RP 5 will be much broader in coverage and much more solid in terms of reimbursement.
Maybe what we can say that there is, I think we officially launched on April sixth. There's good traction so far coming from the customers in term of interest on the SPOTFIRE range. A reminder to the people that one of the key attributes of SPOTFIRE is to be CLIA-waived, so to be aiming at the point of care market. One of the key features also is the fact that we have a time to results close to 15 minutes, which is a very strong, I would say, technical performance.
Thank you. Can you say, have you seen any discussions with existing customers that are looking at the 15 pathogen panel, you know, hospitals starting to say like, okay, you know, maybe this is sufficient for us or is there no potential cannibalization discussions ongoing?
No. They are not the primary targets for SPOTFIRE. Again, the menu on BIOFIRE is quite large, quite adapted to the hospitals. So far, SPOTFIRE is only with the targeting only respiratory. There is no big discussion at this stage, to my knowledge, with some big lab hospital who wanted to switch.
Thank you very much.
We'll go next to Hugo Solvet with BNP Paribas.
Hi. Hello. Thanks for taking the questions. First on the split respiratory versus non-respiratory, can you maybe give us a bit more details on what the split was at the end of March? Was probably a best indicator for what we should expect for the remainder of the year between respiratory and non-RP. Second, on tuberculosis tests, latent TB tests. You've identified the problem for the false positive. Can you update us on the path to resuming launch activities? Third, on margins, probably more longer term here, but can you maybe talk to the moving part for the margin and the, say, a bit margin longer term?
Update us also on where you are in terms of automation of the manufacturing line for BIOFIRE. Thank you.
Okay. to your first question, I think I told you yesterday that the split is 64 respiratory and 36% non-respiratory. Better balance linked to the strong performance we had on the non-RP in this in this Q1. Regarding tuberculosis, IGRA. We said it's still, I would say, industrialization work on this. We identified the root cause. We need to make sure that we have the right the right process in place. No, no date to give you, but I think that's a good progress on the working on it, both in term of R&D and the industrialization with good progress. No, no date to tell you when we'll come back on the market.
To your last question, long-term margin. I'm not sure it's something we do, Guillaume, or...
Not really. We can maybe to your questions on margins, we can give some elements about this year for of interest, because we mentioned a lot of topics about the cost inflation as many companies for 2023. In terms of update, we start to see a bit less pressure, a bit and even positive trends on some of the raw materials. Also on the transport costs, it starts to decrease in terms of headwind, the better. Yet the global inflation environment is still pretty intense in many countries. Therefore, on the salary part and compensation part for our teams, we still see there a pretty solid inflation going forward.
For BIOFIRE, which was also part of your question on the manufacturing and the overall cost of goods. We are making progress on the automation. Still planned for the very significant milestone of, I think we face two evaluation at the end of this year in H2, which will help in the coming years, between automation, volume and some also, let's say, purchasing savings, to continue to improve the cost of BIOFIRE.
Thank you.
As a reminder, if you would like to ask a question, that is star one. We'll go next to Shubhangi Gupta with HSBC.
Hi. Thanks for taking my question. I have a couple of questions. First, can you maybe talk about pricing and margins between BIOFIRE's SPOTFIRE 15-plex and the Mini Panel? Also regarding your collaboration with Oxford Nanopore, can you maybe talk a little more about it? What kind of test is that, and is it low plex, multiplex, and would it work on the existing platforms? Thank you.
Okay. I will take the one on the collaboration with Oxford Nanopore. Yes, we have a collaboration, we announce a R&D partnership with Oxford Nanopore. The question is that on low plex or high plex, it's really Oxford, it's a company with a very strong technology in the field of sequencing. Sequencing today, it's very promising technology, very active in the field of life science, but also in oncology, in a prenatal screening. Our job in bioMérieux is to make sure that we work on the next promising technologies to improve patient care, improve our time to results.
We are really quite, I would say interested, by the Oxford Nanopore technology, which has proven to be developing very well. So the goal of this partnership is to work together to put on the first R&D collaboration. The idea is to be able to bring to the market, hopefully, some test in the diagnostic, in the routine use. We are aiming to work on three type of activities. First one is around epidemiology. Second will be on tuberculosis. We also work on sepsis on the sterile fluids. That's the three I would say, topics of this R&D collaboration, which is just starting.
With, I would say with so far good connection between our respective teams.
The first question. First question was on pricing margins for BIOFIRE SPOTFIRE. Obviously we don't give details of margin by product. What we have said in the past is not a relative let's say profitability range, that BIOFIRE was in the top. Not the only one, but amongst the top margins in our ranges. The second part, maybe BIOFIRE versus SPOTFIRE, definitely the content and of the high plex on BIOFIRE is different from the possibly low plex on the SPOTFIRE, so will be priced also differently. As Dave, we have just said that we will be, of course, competitive on the low plex point of care against players that are already established such as Quidel or others.
Thank you.
There are no other questions over the phone lines.
There is one on the web. Do you wanna read it? Yes. There is a question from an investor. What was the respiratory growth in Q1 to Q4 2022? Helping on the 2022 comps for BIOFIRE respiratory. The comps are very special when we think about BIOFIRE respiratory Q1. You have to remember that last year, Q1 2022, demand was high, but we were on backorder due to very high demand. Backorder for I think January and February last year. While this year, we were able to get out of backorder at the end of January. It's not our revenues don't fully mirror the demand due to the backorder situation last year.
Q1 versus Q4, broadly, it was around EUR 300 million RP in Q4 of 2022, and around EUR 200 million RP in the Q1 of 2023. I don't have it exactly in terms of organic growth. I'm sorry, we don't put as a sequential quarter-on-quarter growth, and maybe not so comparable to Q1 versus Q4, but it gives you an idea of the difference throughout the winter season. EUR 300 Q4, EUR 200 Q1, RP only. The second one is on specific diagnostics. It's an update and about the launch in Europe. Good traction, maybe more in some specific countries like Spain and Germany. I think that the technology is well-recognized.
Last week, there was a big event in Europe called the ESCMID Congress, where bioMérieux was very well-present. Of course, we announced the partnership with Oxford. We introduced for the first time on the booth, SPOTFIRE. We also introduced VITEK REVEAL. Good traction. It's a different selling process because we of course deal with biologists, but also with physicians. All in all, we're going on track. Another one about the same M&A strategy. We remain as we are. We stay open to looking, targeting some type of technologies which could have a good impact on the first time to result.
Also watching what is happening in the field of Industrial Applications. I would say classic work that we do, you know that we invest in R&D, but at the same time, it's a fast-moving environment, so we look at what's on the market, and we are also lucky. I wouldn't say lucky because we work for this, but we are a debt-free company, so we have some room of maneuver if we find something interesting and strategic. There was a question on the chat about the PFAS chemicals being an opportunity possibly for bioMérieux industry application.
Just to remind everyone, we are very focused on infectious disease diagnostics, and we apply this to the industry applications for our food customers and our pharma customers, but really more testing on let's say virus and bacteria. Not at all on the chemicals detection. It's not our field. There's another question on chat, and then we can also take question from people online. SPOTFIRE launch contribution, do we expect in 2023, and the ramp-up after that? I think we have mentioned and also because it's due to the approval and the start, that it will be a minor overall, not so big contribution in terms of revenues this year in 2023.
With the target, as announced, 2 months ago, it will be above EUR 400 million in year 5. Any questions from the room or from the line? A ny question from the call?
Yes, we do. We have a follow-up question from Hugo Solvet with BNP Paribas.
Thanks for the follow-up. Two quick ones on respiratory panel test sales for BIOFIRE. Did you observe any stocking effect in January and February? Guillaume, you mentioned the split RP, non-RP was 64/36, but that's on like Q1, but in March or let's say the evolution of that split from January to March. Can you maybe talk to that? Thank you.
Okay. Yeah, thank you, Hugo. Stocking effect always difficult to measure. You know, we don't have any specific KPI, so we have, of course, people talking to customers every day, but yet it's difficult to tell you. You know.
I don't believe so.
No, we don't-
No KPIs.
No specific KPI. I try to find the answer to your specific question on the March. Yeah, actually, non-RP is slightly above 40% in March. Which definitely the right gives you an idea of what it will be more in the Q2, Q3. More looking like a Q2, Q3 season. Yeah. Which is good. We are very pleased again to have such a success on non-respiratory. As Alexandre mentioned, it's what we had told you for a long time about our strategy to cross-sell on the largest base from customers who had entered for RP and that are now convinced on the technology and that use the other part of our larger menu. We are very pleased with this dynamic.
Yeah. All in all, we are growing at +7.5% in Q1, so it's showing, I would say also the impact of the full portfolio of bioMérieux with nice growth. The, the resilience we have, that we had already last year in a declining COVID environment. In this Q1 where COVID was almost not present, I think it was good to show this overall growth for bioMérieux.
the other question on the.
Thank you.
Can we maintain... Yes, thank you. Can we maintain the momentum on the microbio and industrials? Definitely we had announced that we see a strong growth, and in both these domains also with some price effect, of course. We had announced around high single digits for micro, high single digits for industrial. That's what we deliver, even a bit more than that for micro, and we expect to maintain this dynamics.
To be high single digits on both.
Yeah, to our guidance. To our guidance, yeah.
Perfect. I don't know if there are other questions coming from the audience.
We do not have any other questions from the phone lines at this time.
Okay. if it's fine with you, we.
We can end.
We can stop there. Okay. Thank you.
Thank you very much. The next communication will be?
Will be on, September first.
Okay.
With H1, sales, and users.
Exactly. Thank you very much.
Thank you very much.
Thank you, everyone.
For connecting to the call.
Bye.
Bye-bye.
This does conclude today's conference call. Thank you for your participation. You may now disconnect.