Good day, and welcome to the bioMérieux Third Quarter 2023 Sales Release Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Aymeric Fichet. Please go ahead.
Thank you. Good afternoon, everyone, and thank you for joining us to review bioMérieux's performance for the Q3 of 2023. I am online with Pierre Boulud, CEO, as well as Guillaume Bouhours, CFO. Before handing the call over to Pierre for preliminary remarks, 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 these objectives. I also remind you that today's call is being recorded and that a replay will be available on our website, www.biomerieux-finance.com. I will now hand the call over to Pierre, and then we will open the call to discussion and questions.
Thank you, Aymeric, and good day, everyone. Very glad to be with you to share the latest update on bioMérieux and a very strong performance in Q3 that I'm happy to further share with Guillaume. So, the Q3 of 2023, as you've seen, we've displayed year to date a very strong 8% organic growth. That comes together year to date with close to 11% of sales growth, excluding BioFire RP panel. As you remember, we guided between 8%-10% for our sales growth for the full year, excluding BioFire RP panel.
As we explained, for the performance in the first half of the year, we are benefiting from three sales growth pillars that are still very much consistent in the third quarter of the year: molecular application, microbiology application, and finally, industrial application. So let me go through each one of them rapidly. Molecular, the striking element again this quarter is a very strong performance from a non-respiratory panel. In Q3, we are growing 24% versus Q3 2022, and we still benefit from a very resilient performance on RP panels, even though, as you all know, very low COVID flu season. So we are actually very happy, and I'm very satisfied with the very strong resilience that is also demonstrating the medical value of RP panel beyond flu and COVID.
So that's for molecular. The second growth pillar is microbiology. We were reporting very strong performance at the end of H1. Q3 is still growing double digits, strong performance on IVIG, strong performance on hemoculture, strong performance and continued success on VITEK MS PRIME. So, very much in line with, the performance that we've seen until now. Finally, industrial application. We have a good business, especially coming from reagents, with a 9% sales growth. A slowdown in instruments that is not a worrying factor, more or less anticipated, so, very confident with, the good performance for industrial applications and still good performance on, price increase that, Guillaume will, further share. Immunoassay, we are guiding on a flattish performance. Q3 was slight sales growth, actually.
The good news coming from immunoassay is the launch of VIDAS Cube is still doing well. We have more than 160 VIDAS Cube installed as we speak. And we've also very recently communicated on the CE Marking for a new high medical value marker, traumatic brain injury, which is a blood test that allows to identify your risk for traumatic brain injury and avoid a CT scan. So, interesting marker that will further complement the menu that we have on VIDAS. Finally, SPOTFIRE. That was a hot topic when we communicated the results at the end of H1. Very much in line with our plan, with three pieces of good news. The first one is commercially in the U.S., good growth of our install base.
We are reaching close to 400 instruments installed in total, even though we don't have yet a distributor, and good consumption of the installed base that we have from a reagents perspective, so commercially, very much on track. We also shared that we want to develop the menu. As you know, we have a mini RP and a large RP panel. We have filed to the US FDA another panel for respiratory that will further complement the menu, and as you know, this is important in the strategy deployment, that we complement the menu that we have on SPOTFIRE. And three, we are moving forward in terms of geographic expansion beyond having the approval in Japan. Now, we have installed in Japan our first instrument. We have also launched in Hong Kong.
We have also launched in Germany, where we have a point of care in the physician office, office labs, market. So, we are starting to leverage the launch of SPOTFIRE in the different geographies. So that's for the sales part, and Guillaume will give you more details in a minute. Two pieces of additional positive news coming from the last few months. The first one, last few weeks, actually. The first one is our investment in Oxford Nanopore. As we communicated last week, we acquired 3.5% due to a capital raise at Oxford. As we shared also, we have acquired additional shares on the secondary market, so we now own 6.8% of the equity of Oxford Nanopore. We are very glad with this investment.
That has been discussed and agreed together with Oxford, that will further strengthen the collaboration, the research and development collaboration. In the context of our investment, we are implementing a specific governance, an IVD board, that will allow bioMérieux and Oxford Nanopore teams to work together on optimizing the development for IVD solutions with Oxford Nanopore promising technology. That's the first piece of good news. The second piece of good news I want to share with you, coming from the other side of the planet, we got a manufacturing plant in China recently approved, actually last week. It's for hemoculture. As you know, we have a strong, growing microbiology business in China, so we are now in a position to sell products manufactured in China for China, so that will further consolidate our presence in China and strengthen our capacity to grow in China.
It also gives a nice capacity increase globally, because our primary manufacturing comes from the U.S. And as you know, it's a very dynamic segment that is enjoying a very significant growth in the last few months. So with all of this, we confirm a 2023 full year guidance. We are doing very well, but as you know, we have a Q4 2023 that is very much depending on the RP season. And as you know, we have a very high Q4 2022 sales on our RP panel related to the Triple Demic last year, where we had a significant supply of new sales. So it's still a significant element of risk.
However, as we speak, we are seeing a very average respiratory season, not below expectations, not above expectations, but a very average respiratory season as we're seeing it. And with this, I hand over to Guillaume, who will be able to share with you more details on our sales performance.
Thank you, Pierre. Hello, everyone. A few additional details. So as you have read, the Q3 revenues are almost at EUR 900 million, with an organic growth over Q3 of 7.1%. To be noted, a very significant negative foreign exchange impact on sales in Q3 of EUR 66 million negative again. The main reason is that the euro is actually in appreciation against many currencies, actually, most of the world currencies. Against, we can mention China, Japan, U.S., and a lot of currencies. Going back to some details on the molecular, so as Pierre mentioned, one of the big growth driver is the growth on non-respiratory panels, +24% growth in the quarter.
The good news is that this growth is actually very well balanced again, between our different panels, so the non-respiratory, BCID, gastro, meningitis, pneumonia, and the latest joint infection. So very balanced growth across the panels, as well as a very balanced growth across the regions. So it's not, one, growing much faster. We have strong growth in all our different regions. As Pierre mentioned, RP is proving very resilient. We had a slight decrease, in RP in Q3 of 5%, mainly coming from the U.S., of course, our bigger base, biggest base, as well as Asia Pacific, which was strong in Japan last year at the same time. But still growing actually on the respiratory panel in Europe in the quarter and Latin America.
In Q3, respiratory represented 56% of the reagent sales of BioFire of BioFire, versus about 63% at the same quarter last year. As you know, we always measure the cross-selling, so I give you, I give you the figure. The way we measure it is the number of, or the share of customers that actually consume, buy and consume two panels or more in our menu. And we are now at 75% of BioFire customers with two or more panels in the portfolio. SPOTFIRE, as Pierre mentioned, very promising launch. So at the end of September, we were at 375 instruments.
Just mention that these 375 are on top of the 24,800 instruments that we mentioned in the press release for the, let's say, usual BioFire, so especially our Torch instrument. These SPOTFIRE instruments are very mainly placed. It's a part of the model in the point of care. And in terms of sales, they represent about EUR 4 million of sales in reagents in the last quarter. So of course, it's the start of these products. Now, turning to microbiology, +11%, so still a very high growth and a very satisfactory growth. Double digit in both the VITEK identification AST franchise, as well as BACT/ALERT blood culture franchise. The price increase in microbiology is very satisfactory. Year to date, we are at 4%.
And we also had a nice growth, actually double-digit, for instruments, equipments, driven by our VITEK MS PRIME, so our new mass spectrometry instrument. Immunoassay flat, actually very slight organic growth, with a mixed trend. So we continue to decrease on procalcitonin, PCT, about 11%. I'll remind you that PCT is now only 25% of the whole immunoassay reagent sales, but yet decreasing. Whereas we were able to increase, have a nice growth, double digits, for the rest of the portfolio, on the VIDAS, especially strong in, of course, more the, the more emerging, like Latin America, Asia Pacific, Africa. Industrial applications, on top of what Pierre mentioned for the 6% growth in Q3, I can mention that the price increase are very satisfactory.
We are at 6% price increase, and the reagent growth is at 9%, that Pierre already highlighted. So as you can deduct, the lower part is actually on the equipment, where we were negative compared to last year, especially from U.S. and China equipment. To build on Pierre comments on the guidance and maybe give a slight more color and maybe at this moment in the year, the way we look at our range of guidance. So on sales, on the range, which is a 4%-6% organic growth, the way we see it today is at the lower end of the range is less likely, it's possible, but less likely, clearly. Again, with the flu season, the start very average, as Pierre said.
On the contributive EBIT, the way we look at the range, which is EUR 600 million-EUR 630 million, that the lower end, which might be your question, is possible at this stage. Which by the way, would be in line with consensus because we have the respiratory season uncertainty, and on top of that, important to note that the FX, as you see on the sales, is also pretty strong negative on the bottom line, as we can see with Euro appreciation. And with that, we can move on to the Q&A session.
Thank you. If you'd 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, and we'll pause just briefly to assemble our queue. We go to our first question from Hugh Fulvey with BNP. Please go ahead.
Hi, hello. Thanks for taking my questions. I have three. First, on the SPOTFIRE placement, could you maybe help us understand, looking forward, what could be a good run rate based on customer feedback you are getting or even what competition is doing and what we should see if we—if the 300 placement in the quarter is something sustainable or if you can get higher than that? Second, some of your peers have reported a pull forward in demand for respiratory testing. Is that something that you are also seeing? Lastly, on microbiology, you mentioned, Guillaume, that you would have new capacity coming online. Should we understand that it should help support double-digit growth into 2024 for the microbiology portfolio? Thank you.
Okay, thank you very much for the question. Maybe I'll start with the first one on the run rate for SPOTFIRE. I mean, very early days for us. It's very complicated to extrapolate because we are just entering the respiratory season. So, what we said when we were sharing the launch actually at the end of H1 was that probably a good moment to step back and look at the performance of SPOTFIRE and start thinking about extrapolation was probably at the end of this respiratory season, so Q1 2024. When we have the results of SPOTFIRE, we'll better understand the mix, we'll better understand the consumption, the competitive attractiveness. So far, we're very much in line with our plan, as I said, very consistent.
We are hearing a lot of positive feedback, but too early to give you extrapolation on run rates. I can take the second one. I'll let you answer, Guillaume, the third one, respiratory demand. Yeah, we've seen a little bit of competition talking about early flu season. What we are seeing from CDC, actually, is that the respiratory season has barely started, which is normal. So, on our side, we don't believe we're in a position to say it's going to be stronger or lower than an average respiratory season. So that's basically what I can share with you, but we have access to the same data as you, and the epidemiology doesn't show at this stage an earlier start than usual.
The last question on microbiology, Guillaume? Yeah, yeah, with pleasure. So definitely a new capacity with a nice growth on equipment sales.
as well as installation. So again, it's a market that is growing probably around 5%, where we already have a stronger leadership position. So we are very, very glad to be double digit this year, but we are not committing, and we are not forecasting to remain double digit. Already being, let's say, faster than the market, as already a strong leader with strong positions would be a great performance. So we are more looking at being, let's say, high single digits than double digits.
Thank you.
If you find your question has been answered and would like to remove yourself from the queue, you may do so by pressing star two. Next, we go to the line of Maja Pataki with Kepler. Please go ahead.
Thank you very much for taking my question. I have a few. Let me start with SPOTFIRE. You mentioned during the call that you did not sign yet with a distributor. Is that-does it prove more difficult, more complicated, or could you just share some thoughts around that and whether that would provide a meaningful boost to the placement numbers? The second point is, when we look at the pricing impact, which was still strong for micro and industrial in Q3, how should we think about a pricing impact going into Q4? And then, if we look at the distribution of SPOTFIRE placements, where you talk about, you talk about the U.S., you talk about Germany, I believe, and Japan. Is it evenly distributed, or is there a market where you see stronger demand? Thank you.
Yeah, thank you for the question. So, with regards to the distributor, no, no specific, no specific order expected. It's actually more a matter of making the right agreement and the, the right conditions, and, it's a kind of long-term partnership that we want to sign, so no, no specific concern on this side. With regards to the pricing impact, maybe I can start, and Guillaume, maybe you want to elaborate, but, it's complicated to, to anticipate the price increase that we are going to do in Q4. But what we know is that last year we actually started to increase, a little bit stronger, the prices in microbiology in Q4, so we have a higher base impact.
So, kind of expecting that this very nice 3%-4% that we've been seeing at some point will erode. And with regards to distribution. Your last question was geographic distribution of SPOTFIRE?
Yes. Yes.
Yeah, very, very good and relevant question. I'm going to sound like a little bit of a broken record on this one. Very early days. We are launching again in Japan, in Germany, in Hong Kong. We have a little bit more history in the US, but we're talking a few months. And you remember the mini panel was actually approved very recently in June. So, nothing meaningful that is worth sharing at this stage in terms of distribution of placement from a geographic perspective. But, yeah, hopefully we can share more in the next few months.
Yeah, that's great. Just two follow-up questions on that, please. With regards to signing on a distributor, could that have a meaningful impact on the quarterly placements? Like, how should we think about that? Would that mean, like, if you have a larger distributor, you sign a contract, you could suddenly have 600 placements in a quarter, or is the capacity not there, or does it take longer? That's my first follow-up question. My second follow-up question is, you're guiding for 8%-10% growth ex Resty. And you're above 10% for the nine months, right? Close to 11% for the nine months.
What is it that makes you cautious or didn't, you know, make you give us an indication that you expect to see the organic growth ex Resty around the upper end of the guidance?
Yeah. Thank you, Maja. So I start with the first follow-up question on the distribution potential acceleration of placements. Yes, that, I mean, that's the whole purpose, right? That we can benefit from the commercial footprint of a distributor. It's particularly relevant in the US. Again, it's, it comes together with capacity to supply and making sure that we have a solid agreement, but the whole idea is that we can benefit from it, so it should help and improve. The other follow-up question was-
The guidance ex-rest.
On the guidance for the 8-10, and any specific point of attention. I don't know, Guillaume.
No, I've mentioned, I mean, clearly, the main uncertainty now is on the respiratory season in Q4. And as I mentioned, there's still some probability, but a low probability that we would be on the sales, on the low end of the guidance. Definitely, yeah, if the season continues normally, we should be more on the sales on the higher part of the guidance range. And, as mentioned-
Also, for the 8-10. Sorry. Sorry, Guillaume.
I'm talking... No, I'm talking about the full guidance. Yeah, yeah, the full, 4-6.
Okay, and no-
Yeah, well, it's looking good as well for the 8-10, definitely. Yeah.
Okay. And just my very last follow-up, and then I swear I go into the queue again. Is there a limitation from a capacity on your side, how much SPOTFIRE instruments you could place per quarter? I mean, of course, there is a capacity limitation, but, I mean, can you give us a bit of a feeling how much?
Yeah.
Just for Q4.
The short answer is no. We are capable to supply reagents and instruments as the demand comes. We may-
Oh, okay.
I mean, we may be overwhelmed by the demand. That would be a good problem to have. At this stage, we feel we are totally capable to supply what we plan to supply.
At least for the foreseeable quarters, the next one-
Yeah.
1, 2, 3 quarters, yeah.
Okay, great. Thank you very much.
Next, we go to the line of Ayesha Noor with Morgan Stanley. Please go ahead.
Hi, good afternoon. Thanks for taking the question. My first question is on SPOTFIRE as well. Obviously, it looks quite encouraging based on the 275 systems you've placed this quarter. Again, I understand it's early days, but what is the mix in demand you're seeing between the RP5 and the RP15? And why do you think customers are picking one over the other? And if, I guess, you don't have enough sales data yet, then maybe how are your salespeople kind of positioning one against the other, and why? The second question was just a technical one around the EBIT guidance in light of the stronger than expected FX headwind you saw in Q3.
On my calculations, you could be looking at close to double the currency headwind you initially assumed for EBIT for the full year over around EUR 40 million. Is that the right way to think about it, Guillaume? And if not, what, what makes you confident in the EUR 600-630 EBIT guidance you provided?
So maybe I'll start with the positioning, and Guillaume can come back to the numbers, the number part. So the positioning of RP5 and 15 very clearly complementary to us, and that's the beauty actually of the offering that we have. So RP5, we are very much positioning it from a frontline testing perspective in the U.S. because the coverage is significantly better than 15 plex. So that allows to position ourselves in a very competitive manner in frontline testing for respiratory.
15 plex is the traditional BioFire, amazing success on syndromic testing, where, when you really want to know, and you need to know because you are dealing with immunodepressed patients or emergency cases, then you don't take a risk with 5 plex, you go for 15 plex directly. And that's the way we position the two products. In terms of mix, as we speak, what we're seeing, but obviously early days, is something along the lines of 75% 5 plex, 25% 15 plex. Which is how we're seeing the sales developing as we speak. But again, very early days. And what's a little bit complicated to measure is, as you know, there was a timeline between 15 and 5. So the 15 was marketed before.
So in our sales numbers, we're actually above in 15 plex, but the projections are more 75-25. And maybe-
So second question on FX. Yes, there is some wind. You very rightly understood, FX is not going the right direction. Doubling is, no, I'm not sure how you calculated that. I don't have a doubling. So we said, possibly around EUR 40 million on CEBIT impact, for the full year. I think now it could be, it could be EUR 50 million, as a difference. So more this kind of magnitude.
Okay, that's perfect. Thank you so much. If I could ask a follow-up then around China. I mean, it sounds like it was a little bit weaker on the industrial segment for China. If you could give some color as to how this, how long you think this weakness lasts, and, you know, when you expect a recovery?
I think it's mostly related to the fact that we had a bit of strong sales in Q3 last year, so the base impact in China related to government orders that were making the sales baseline very high. So, it doesn't look like we're having a slowdown from a dynamic perspective. It's more a bit of an artifact related to a base effect that we had in Q3, year 2022. So nothing that we believe should last too much.
Okay. Thank you so much.
Once again, that is star two to remove yourself from the queue, star one to signal. Next, we go to Peter Welford of Jefferies. Please go ahead.
Oh, hi. Thanks. I think I've just got 3 left for you. First of all, just on BioFire, I wonder if you could actually give us the sales in EUR, actually, for the third quarter, if possible. And if you could possibly break that down as well by geography, if you can, US, ex-US, that would be helpful for 3Q. Second, then, just on VITEK MS Prime, have you managed to debottleneck at all the manufacturing? You mentioned instruments, you know, double-digit. Is this still a very much constrained supply? And, you know, is there any risk, I guess, the inventories are running short, or are you very much still shipping as you manufacture, and it's gonna be not until, you know, the end of next year before we see any sort of further acceleration in that?...
And then just thirdly, on the Oxford Nanopore collaboration. Curious, what is the main current focus of the, the IVD solutions to the development work, from the board you set up, in terms of what is the sort of highest priority areas, that you're currently looking into with that collaboration? Thank you.
Yeah. Thank you, Peter. Maybe I'll start with the VITEK MS PRIME question and the Oxford Nanopore, and Guillaume will answer your question on BioFire sales. So VITEK MS PRIME, we're yeah, two answers to your question. The first one is, we still could sell more than we supply. We have, as we said, very strong demand, very positive feedback from the market, and yes, a very strong commercial success. We could deliver more. We're still limited by supply. The second part of the answer is, we are making good progress in terms of increasing the manufacturing output, together with a partner, KMC. We have actually people from bioMérieux together with KMC.
The KMC teams are also investing and doing more to be able to cope with the demand. So we're seeing an increase in our capacity to supply. Not yet, unfortunately, to the point where we're capable to fully cover the demand. So that's to your question on manufacturing of VITEK MS PRIME. For Oxford Nanopore, and I guess your question was on what is it we expect from the IVD advisory board, right? What we really want to do together with Oxford is make sure that beyond the research and development of new solutions, we have a forum where we can share, in a very transparent manner, what are the challenges and opportunities in IVD.
Obviously, it's a different market for Oxford and for us, the technology is also new, so we need to learn together and work together on making sure that we have a system that can be used from a routine perspective for infectious disease applications. That takes from a market access perspective, regulatory perspective, but also R&D perspective, a lot of working together. We felt it was a good way to strengthen the partnership and make sure we maximize the value of the collaboration between the two parties.
With regards to first applications, there, I mean, by working together, we may come up with new ideas, but at this stage, the first topic that we're really working on relates to tuberculosis, TB, where, as you know, secondary testing and antibiotics, the diagnosis for antibiotic resistance to tuberculosis is an important component, both in developed and developing settings. So that's the first application that we are, where we're seeing an opportunity to leverage the technology of Oxford and the footprint and expertise from bioMérieux.
Regarding BioFire sales, so just the figure is EUR 312 million, all included reagent equipment, for the quarter, and 71% of the reagent sales is in the U.S.
That's great. Thanks. Sorry, just coming back, you mentioned tuberculosis. Could I just ask, is there an update at all on relaunching the immunoassay, your tuberculosis immunoassay, which I think you've been trying to rectify the issues? Or any sort of update you can give on that relaunch? Thank you.
So TBI, we, on immunoassays, it's, we are progressing very well. We are actually, we've basically completed, all the, all the investigations and, remediation plans. We're in the process of resubmitting the dossier to the authorities. In the next few weeks, that, product will be available as soon as possible. We are targeting, obviously, it depends now on the feedback from the authorities, but we are expecting to be able to be back to the market, and we are very confident that we should be able to be back in the market first half of 2024.
That's great. Thank you.
Great.
Next, next we go to the line of Odysseas Manasiotis with Berenberg. Please go ahead.
Hi. Thanks for taking my questions. Just on microbiology first, to know about how to think going into next year. So do the VITEK MS placements come with a material consumable revenue pull-through? I mean, there's an expectation that with MS, you realize most of the value on the instrument placement. If that's the case, does it make sense to think that the consumable sales in 2024, coming from your 2023 placements for VITEK MS won't be, let's say, more than the price of the instrument on an annual basis? And secondly, could you remind us your China exposure by division, and what percentage of your group sales you're supposed to be, you expect to be exposed to VBP coming through next year? Thank you.
So thank you for your question. So VITEK MS PRIME success, I guess your question is, what's the impact for the kind of reagent sales for the future? So as you know, there is no specific dedicated reagents related to VITEK MS PRIME placements. There are two elements that need to be factored in. The first one is when we sell instruments, we also sell service contracts, especially for those complicated machines. So that translates into regular revenues. And we sell disposables, not at the level of the other solution that we have, for instance, on IVD, where reagents stand for 80% of the sales. But there is significant amount of sales that relate to disposables.
So, that's more or less the pull-through that you can expect with regards to VITEK MS PRIME sales. China exposure, total sales, Guillaume, were-
7% of our total sales.
So that's a big country for us, and it's 7% of the total sales revenues.
The vast majority of it is actually microbiology, where we have a strong position, as, as Pierre said earlier, and good growth this year, actually. At this stage, VBP, yes, will, will likely come. So for everyone, volume-based pricing with a new push by China authorities. It's actually reference per reference and by, let's say, block of provinces. So we have no visibility yet on when it could come for microbiology, typically. We understand that at this stage it's more on the chemistry side and immunoassay side.
On selected parameters. So, for the selection of provinces, so it's and definitely not yet in microbiology.
Thank you very much. And may I squeeze one more, please? Could you remind us what the life of your average BioFire instrument is after placement? I mean, assuming the customer is not signed up on a recurring service contract. I'm just thinking, given that you nearly doubled your installs in 2020 and 2021, is there a risk that many of these placements, let's say, come to their end of life at a similar time?
So by it, BioFire is a concept, in terms of equipment, where as soon as there is a failure, we actually have on what we call a swap model. So we replace very quickly for the customer, which also means that compared to some other instruments that could last for maybe 10-15 years, I mean, the customer always has a running, well-running instrument. And then, so the question at the end, then, of course, there are some that stop using the equipment, but we net that out of the installed base that we report.
So when we tell you 24,800 instruments, it's actually netted of the reports we can get of instruments that are not used anymore.
Yeah, and I don't know if we—I, maybe I missed it, but we have installed 500 more BioFire instruments. Victor, I know you mentioned this. On top of the SPOTFIRE instruments, huh?
Mm-hmm.
So we are still seeing very good dynamics in terms of new installations on BioFire.
Very clear. Thank you. And just to make a small clarification: so this swap model that you mentioned, does it apply to, to all your customers or just the ones that have the recurring service contract?
Everybody.
Everybody, yeah.
We don't repair BioFire instruments, so it's a model where we swap them. We exchange with the one that is working, so that's how it works for 100% of the customers.
It's proved to be a high customer satisfaction driver.
Yes. And we have three repair centers, one in Salt Lake City, one in Firenze, Italy, and one in Tokyo, Japan.
All clear. Thank you very much.
Our next question or comment comes from the line of Shubhangi Gupta with HSBC. Please go ahead.
Hello. Thanks for taking my question. So my first question is related to Oxford Nanopore. So the partnership that you're doing with them is, one of the applications would be the drug-resistant TB. So where would Oxford's technology fit into that workflow? Would it be to determine the mutations and the infection, and do you have any timeline for that? Second, related to the softness in China, is it related to the anti-corruption probe, due to which several companies have flagged they have been destocking? And third, on the respiratory season, so do you expect an average respiratory season? Some of the U.S. large names have flagged strong respiratory testing revenues in Q3, or do you think there could be a potential upside risk to it? Thank you.
So thank you for the question. I'll start with the TB question. So, as I said, it's a first application where we're kind of testing the partnership and the quality of the collaboration. We haven't communicated yet dates, because we are working on it. It could well start with a product in a research use model and then moving into IVD. But we are still working—I mean, the teams are actively working on it, but we're still working on refining the timing, and we'll share with you a tentative date when we have finalized the assessments and we have something solid to share. Softness in China on instruments, just to make sure that you have an accurate perspective.
Actually, the only softness that we're seeing from an instruments perspective is coming from industrial application. It's actually not a real softness. It's more in the comparison with Q3 2022. When we look at instruments sales and placement for the rest of the business, it's actually still going very well. So no, no specific impact of the anti-corruption campaign to your question. And actually, we're seeing it fading away as we speak. So, so no specific concern on our side with regards to China for this specific topic. Guillaume? Yeah, it was on a national for-
Respiratory season. So yes, we commented already, but to repeat, yes, we saw some of our competitors mentioning the early start of the season. That's not at all what we see in the statistics of the CDC, which are showing, let's say, a usual start, quite a medium season. No early pickup yet. So at this stage, we don't see any reason to state that the season would be high or low, or early or late. It starts like a medium season. We will see probably better in the next three, four weeks.
Thank you. Just a follow-up on Oxford Nanopore. So the test would be for active infections, not for latent TB infections, am I correct?
Yeah, it would be for active infection, but for the cases that are secondary level. So the first level of screening, probably we don't expect maybe we'll actually come there later. We don't expect the screening for TB to be relevant for sequencing. However, for complicated tuberculosis with drug resistance mechanisms, yes, sequencing is a very strong solution, and we believe that being capable to bring an IVD solution using sequencing will be a significant game changer. So, this is the application we are looking for.
Thank you.
We can take a few questions from actually, the investors, online. There's a question on the update on the VITEK REVEAL in the U.S. and contribution on European sales. So I remind everyone that VITEK REVEAL, we filed with the FDA back in March. We have a back and forth, a normal one, with questions and answers on our side. We could expect an approval probably for Q1 or early 2024. Contribution to European side is still very small, but we are gaining customers. We are around 25 customers at the end of Q3, so it's going on the right track, maybe a bit slower than we would have expected, but going on the right direction.
There's a related question on the Specific Diagnostics, let's say the, the contributive, loss actually. Still on track, yes, for the EUR 25 million loss in 2023, which is included in our, in our guidance, and in our confirmation of the guidance. Yes, looking to be breakeven, by, 2025.
We go to our next question from Delphine Le Louët with SG. Please go ahead.
Yes. Hi, good afternoon, everyone. Delphine speaking here. A follow-up on Odysseas' question, please, regarding the maintenance revenue on the VITEK side. Can we assume that to be in the range of 25%-35% on a global envelope on a yearly basis? Is that the right assumption? First question. Second question regarding SPOTFIRE. I was wondering, when do you plan, and if you do plan, but I think it would be very useful, to get the full figure for SPOTFIRE. And so far, when you look at the revenue made, can we have a breakup in between the instruments and the reagents? Also very useful. Thank you.
So on SPOTFIRE, but no, no problem to share the, the figures. I mentioned we are close to EUR 4 million reagent sales in Q3 and about EUR 1 million in terms of sale of instrument. But I remind you that the vast majority, more than 90% of the installations were actually placements and not sales, but still some sales. And on the mass spectrometry, which I think is your follow-on question, when we look back at our former platform of mass spectrometry, yes, having about figures you mentioned, 30%-35% of sales from reagents is definitely the type of business model we can look at.
Thank you.
We go back to Hugh Fulvey with BNP Paribas. Please go ahead.
Hi, thanks. Quick follow-up on my end. Just on the growth trajectory for the non-LP panel, should we assume next year that you guys should be able to grow that for BioFire in the mid-teens, as you guided initially for 2023, or probably above around 25%, which is what you are delivering this year? Second, on SPOTFIRE, you guide for EUR 400 million by 2027, but that, if I remember well, only includes sales from respiratory panel. You will be adding sore throat in H1 next year, so will this help to lift the EUR 400 million target up, or will it be only a marginal contribution? More generally, could you please discuss the pipeline for the menu of tests and the menu expansion plan? Thank you.
So I can start with SPOTFIRE. I'll let Guillaume on the growth trajectory. So SPOTFIRE, no, actually, the EUR 400 million that we were talking about was including development of the menu and especially SPOTFIRE. Because, as you—I'm not sure we've communicated clearly on that, but in the US we have only RP, but actually in Europe, we have already respiratory panel and SPOTFIRE. So actually, it's very much part of the target that we have. And even in the 400, I think we are including not that much, but additional sales coming from even other panels. So that's a full franchise for SPOTFIRE that we are targeting with EUR 400 million. Growth trajectory?
So non-RP growth trajectory, very good reminder on the mid-teens prospect, and we confirm this is more in line with our prospects and let's say forecast. We are very glad this year that we are above that, but it will, of course, make the base more challenging for the future. We are very successful on our cross-selling, continuing to sell the syndromic value beyond respiratory. And mid-teens is definitely a good trajectory.
We go next to the line of Maja Pataki with Kepler. Please go ahead.
Yes. Thank you very much. Could you talk a bit about the trends that you're seeing in the end market for industrial applications? You know, what are the underlying trends, pharma versus food? That would be my first question.
So, for industrial applications, in our case, you need to dissociate between the food industry and the healthcare industry. Food industry, we're seeing a dynamism, which is relatively low because there is a significant impact on food testing in the market, even though Q3 was actually better on the food front. So we are seeing this year overall a relatively less dynamic segment, but it seems that it's recovering in Q3, so that's what I can say on food. With regards to pharmaceutical control, we're actually seeing a very strong dynamics on this one. As you know, we're also benefiting from presence in the segment of cell and gene therapy and different pharma segments. And so far, we are seeing good traction from a volume perspective in terms of demand.
So, yeah, if to give a little bit of color on the [inaudible, I don't know if you can answer your question, Maja.
Yeah, sure. And just to clarify or to better understand, the EUR 4 million revenues that you have reported for SPOTFIRE, are they included in the five percent decline of respiratory for BioFire? Just to understand?
No.
No. Okay.
Yeah.
This is separate?
Yeah, it's separate. We-
Separate, because it's not comparing apples with apples, right? So we're looking at RP panel on BioFire, and that's the one that we are isolating, because that's the one that benefited from COVID and the triple pandemic last year. So that's why we put it aside. But you're right that SPOTFIRE revenues are also related-
Yeah, I think-
Moving forward to respiratory season.
At this stage, it's small, but of course, it's an important question for the future on how we report both.
It's a very relevant question, yeah.
Maybe taking some questions also on the chat, and thank you very much to investors for that. There's a question about the approach of customers and on SPOTFIRE, how we placed or maybe which segments. If I more about the pipeline, if you want to...
Yeah. So, I mean, yeah, there is a question on how we approach them. Were the clients approached a few months ago, more recently? Actually, because, for compliance reasons, we could not really have a commercial effort before the product was approved. So, it's very much related to a commercial effort in the last few weeks and months. We are seeing two different types of segments for SPOTFIRE. We are seeing what we call the pure point of care, which is really a small point of care, decentralized setting. But we're also seeing a level of interest from IDNs, Integrated Delivery Network, who also have, beyond their centralized testing facilities, a lot of small clinics, family clinics with decentralized testing, and that are very interested in making potential deals with point-of-care solutions.
And we have those two segments. The second one brings more volumes, if you wish, because when you sign a deal with an IDN, you bring 10, 15, 20 SPOTFIRE in one go. However, they also take a little bit more time. So we have a good pipeline of opportunities that are being discussed. But for most cases, obviously, the purchasing process is a little bit more lengthy. You go through purchasing, finance, and so on and so forth. But we're seeing those two segments with actually a relatively high level of interest.
We have a question online on the phase two of process, the manufacturing process, simplification, automation at BioFire, and the impact on margin. So this process is continuing to make progress. We are in the final validation phase. And actually in terms of impact on the margin, it should start, but of course, modestly, next year and ramp up over the next few years. Because we have to install one line and then a second line, and then a third line, so that progressively we have more and more of our manufacturing that gets more automated. But it's of course, it's a step-by-step approach. But definitely with some help on the margin.
And the last question on the chat is on Oxford Nanopore. I understand the industrial collaboration around tuberculosis, et cetera. Why did you need to take a stake to collaborate? And what type of return do you expect on that investment? So for us, the rationale for the investment was to really position the R&D partnership that we signed a few months ago with Oxford, as more like a long-term partnership than a one-time R&D agreement. We are convinced that the two teams working together can bring very attractive solutions in the diagnostic field.
And we really felt together with Oxford colleagues that by strengthening the collaboration and making an equity investment, we would maximize the value of the collaboration between the two companies, and really make this agreement actually a long-term partnership between the two companies. So it was, it is a way to solidify this agreement.
Is there any other question on the call?
We have no further signals.
Okay. With that-
Thank you very much for your questions and listening, and looking forward to the next meeting that we have together. Thank you. Bye-bye.
Thank you.
Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time.