Thank you all for standing by. Welcome to Uniphar full year 2022 earnings call. My name is Brica, I'll be your event specialist running today's call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will conduct a question and answer session. To ask a question at this time, please press star followed by one on your telephone keypads. If you change your mind at any time, please press star two. To remove your request to speak or sorry, to speak to an operator at any point, it's star zero. Thank you. I will now turn the conference over to your host, Allan Smylie. Please go ahead when you're ready.
Good morning, everyone, welcome to Uniphar plc's full year results presentation, which covers the period from the 1st of January 2022 to the 31st of December 2022. I'm Allan Smylie, I look after investor relations Uniphar plc. Presenting our results today is Ger Rabbette, our CEO, and Tim Dolphin, our CFO. We're also joined on the call today by Dermot Ryan, our COO and Managing Director of Supply Chain and Retail, Brian O'Shaughnessy, our CCO and Commercial Lead for CSE Pharma and Product Access, and Seamus Egan, who heads our Corporate Development. Before we begin, I would like to remind everyone that you can access the presentation either on our website under Latest Results and Presentations or via the link sent to you when you registered for the conference call. The results presentation will last approximately 20 minutes and will be followed by Q&A.
Please note the full year results presentation may contain certain forward-looking statements, beliefs, or opinions which are based on current expectations and projections about future events. Actual results may differ materially from those expressed or implied in such forward-looking statements. I would now like to hand you over to our CEO, Ger Rabbette.
Thanks, Allan. We're going to start on slide five, which presents an overview of the group. As you know, Uniphar operates across three divisions, serving over 200 of the world's leading pharma and medtech manufacturers. We serve over 160 countries worldwide and now have operations across Europe, North America, APAC, and MENA. I'm really pleased with the group's performance in 2022. Against another challenging market backdrop, we delivered gross profit growth of almost 12%, with strong organic growth across all of our divisions. Our gross profit has increased by almost 30% over the last three years, which is a great achievement by the team, and we remain ambitious for the group's further growth potential going forward. If you move to slide six, we discuss our financial highlights. At a group level, EPS increased by 13%, with EBITDA growing to EUR 98 million.
Return on capital employed was once again ahead of our range at 17.3%. Normalized free cash flow was 78%, we finished the period with modest leverage of just 1x. We've also continued to build on our excellent M&A track record, announcing four deals. Orspec and BModesto expands our Product Access capability into continental Europe and APAC. Inspired adds a great team with a great insight and consultancy capability into our commercial and clinical division. McCauley's enhances our market-leading retail capabilities. During the year, we also announced a EUR 60 million investment in a new world-class distribution facility in Dublin, which will future-proof this division for 15+ years, creating a serious competitive moat for this highly cash generative business. On slide seven, we outline the continued progress we're making on initiatives across our five sustainability pillars.
Our people represent our first pillar. We're proud to have launched a number of initiatives last year to promote equity, diversity, inclusion right across the group, including the Women's Alliance and the Rainbow Alliance. We continue to make strong progress completing our first Scope 3 carbon footprinting exercise. We remain committed to reducing our Scope 1 and 2 emissions by 50% by 2030. From a governance perspective, the group adopted the UK Corporate Governance Code in early 2022.
Moving on, I will bring you through a review of each division's progress during the year. On slide nine, we highlight our divisional objectives. In commercial and clinical, we are focused on continuing to build out our Pan-European platform. In Product Access, we are focused on providing patient-centric solutions with ambition to become a truly global leader in the delivery of unlicensed medicines.
In Supply Chain and Retail, we continue to grow our market leadership position through continued investment in our infrastructure and our digital and business solutions. Turn to slide 10, Commercial and Clinical, this division provides sales, marketing, and distribution solutions to both pharma and med tech manufacturers. The business is specialty focused. In pharma, we're insight driven and leverage our fully integrated omnichannel model for our clients. In Med tech, we deliver an integrated agency model managing the entire sales, marketing, and distribution value chain on behalf of our partners. Europe, as you know, is a very fragmented marketplace and poses considerable challenges for specialty manufacturers who wish to enter. We remain committed to building out our Pan-European platform to offer our clients a one-stop shop for Europe.
This strategy has been well received by our partners. We now represent 77 clients across two or more geographies, an increase of 10 over the year. We've also recently added med a ffairs expertise across nine European geographies and have plans to add more capability and geographies in the medium term. Our bespoke service offering in the U.S. continues to build scale. We continue to evaluate capital deployment opportunities in the world's largest healthcare market. On slide 11, you will note that this division grew strongly with revenue for the year coming in at EUR 307 million and gross profit increasing by 13% to almost EUR 180 million.
On slide 12, Product Access. You can see that we're building out a global capability to source and supply medicines which are unlicensed or in short supply, and to manage the release of specialty medicines to specific patients on behalf of the manufacturers. We've worked on more than 70 exclusive patient access programs to date and delivered medicines to over 160 countries across the globe. If you turn to slide 13, you can see that the revenue for this division was EUR 207 million, with a 21% increase in gross profit. Organic gross profit was 7%, which was in line with the revised guidance we gave last year.
As we look forward, we continue to see a very significant opportunity for both our on-demand and our EAP business due to the huge growth in specialty pharma and the challenges governments and patients face in accessing these treatments, both pre and post commercialization. We expect this division to return to double-digit organic growth in the second half of this year. On slide 14, we talk about the great market position we have in supply chain and retail. We are the market leader in the two-player market, servicing over 2,000 hospital and retail pharmacies. This strong market position is supported by a network of over 420 owned and franchised pharmacies.
As we move to slide 15, you can see that this division has once again outperformed its medium-term guidance with revenues at EUR 1.6 billion, with gross profit coming in at EUR 139 million, delivering reported gross profit growth of 8%. They continue to grow share and outperform the market. The gross profit margin of this division is now close to 9%, which is up from 5.5% at the time of IPO. This is now roughly evenly split between supply chain and retail. Both our growth margin and retail mix will be enhanced this year by the addition of the McCauley Group. I'll now hand over to Tim to provide you with some more color on our financial performance.
Thanks, sir. I would now like to take you through the financial highlights for 2022. I am pleased to say that the group has delivered a strong performance during the period, with gross profit growth across all three divisions. At an overall group level, we generated gross profit of EUR 306.7 million, up 11.7% from FY 2021. The group delivered strong organic gross profit growth of 5.7%. Our gross margin percentage has increased from 14.1% to 14.8%, reflecting our continued growth into higher margin opportunities. EBITDA has increased by 13.4% to EUR 98 million, and EBITDA margins have increased from 4.5% to 4.7% despite the backdrop of ongoing inflationary pressures.
This has resulted in a very strong return on capital employed of 17.2%, above our medium-term guidance of 12%-15%. Adjusted earnings per share increased by 14.3% on a like-for-like basis to EUR 0.184. Moving on to the next slide to have a look at gross profit. Gross profit and gross margin percentage are the key financial metrics we use to track profitability at a divisional level. Commercial and Clinical delivered a strong outturn in FY 2022. The division delivered reported gross profit growth of 12.6%, with both C&C MedTech and C&C Pharma delivering double-digit gross profit growth. Organic gross profit growth of 7.1% was at the top end of our mid-single-digit growth guidance range.
This performance reflects the strength of our business, the deep expertise of our teams, and the diversity across our service offerings. This division contributed 38% of the group's gross profit for the period, and its gross profit margin increased during the period from 34.8% to 38.3%. Product Access delivered reported growth of 21.4% and organic growth of 7% at the upper end of the revised guidance we gave you at the time of the interims last year. We invested heavily in our on-demand business to expand this platform. It's now extremely well positioned across Europe, APAC, and MENA to deal with the increasing challenges patients and HCPs face in getting access to medicines. Our EAP business continues to rebuild this business development pipeline following disruption through COVID-19.
We are now guiding to return to double-digit organic growth in the second half of this year and remain confident we will deliver double-digit organic growth in this division into the medium term. Product Access represents 17% of group gross profit. The divisional gross profit margin decreased from 26.3% to 24.3% following the BModesto acquisition, which adds significantly to divisional profit but has a lower margin profile. Supply Chain and Retail once again outperformed its divisional guidance, with reported growth of 7.9% and organic growth of 4.1%. This division has strong recurring revenues plus a stable and robust gross profit profile. In terms of volume, we once again outperformed the market. This division represented 45% of group gross profit for the period.
Its gross profit margin increased during the period from 8.7% to 8.9%. We expect this to increase further in 2023 as we consolidate McCauley. Moving on to have a look at the balance sheet and have a look at net debt. At a high level, we finished the period with a net bank debt position of EUR 91.2 million, driven by an opening net debt position of EUR 48.3 million. Strong EBITDA of EUR 98 million, offset by working capital investment of EUR 5.4 million. CapEx includes strategic CapEx of EUR 19.9 million. Acquisition and deferred consideration payments of EUR 89 million. Other items of EUR 26.6 million, which included exceptional costs, tax, dividends, finance costs, and lease payments.
Our reported free cash flow for the period was EUR 80.9 million. I'll take you through the details of that on the next slide. Free cash flow. Here we outline our free cash flow generation and our free cash flow conversion for the year. As you know, we define free cash flow as EBITDA, less investment in working capital, less maintenance CapEx. Our medium-term guidance for free cash flow conversion is 60%-70%. This translated into reported free cash flow conversion of 82.5%. When you adjust for minor timing differences of EUR 4 million, our normalized free cash flow conversion came in at 78.4%.
Just moving on to have a look at liquidity. From a liquidity perspective, the group is in an excellent position, finishing the period with a 1x leverage. The group has a strong capital structure in place with significant cash resources available. At the end of December 2022, we'd had a net bank deposition of EUR 91.2 million, made up of EUR 103.7 million of cash and cash equivalents and EUR 194.9 million of bank debt. As flagged previously, we also completed a planned refinance agreement last year, which doubled our facilities and brings in new international banking partners. In summary, our capital structure remains well positioned to support the execution of our growth strategy. I'll now hand you back to Ger.
Thanks, Tim. We're now on slide 23. Capital allocation has and remains a key focus for the group as we adopt a very disciplined and balanced investment approach. As we've always said, we will invest in organic and inorganic opportunities across each of our three divisions, which support our strategic objectives and delivers a return on capital employed at and above our hurdle rate. Our capital structure is strong with leverage of 1x and our new banking facility. The larger banking club gives us the financial flexibility and support we need to continue to invest across all our platforms.
If you go to slide 24, we discuss M&A. Last August, we completed the acquisition of Orspec Pharma, marking our entry into the strategically important APAC market. APAC is a very significant market for unlicensed medicines and EAPs, and Orspec will be a key enabler for us to grow our service offering in the region.
In September, we announced the acquisition of McCauley's, a leading independent pharmacy chain in Ireland. McCauley's is widely recognized as a leading brand across health and well-being, and this acquisition will complement our fast-growing consumer business. McCauley's was followed by the acquisition of Inspired Health, a U.S. headquartered insight and intelligence consultancy. Inspired adds another vital component to our high-value commercialization offering and further increases our scale in the world's largest healthcare market. Finally, in November, we acquired the BModesto Group, a significant addition to our Product Access capabilities in Europe and beyond. BModesto adds strategic distribution capabilities in Central Europe, as well as sophisticated source and regulatory capabilities with access to key pharmacy and wholesale channels.
We're confident that the successful track record of value-accretive M&A will continue into the future. If you look at us over the last 10 years, we've developed the ability to identify assets with strong cultural and strategic fit for Uniphar that will deliver a return on capital employed above our hurdle rates. We work hard on M&A and continue to manage an active pipeline of opportunities in order to add further scale and breadth to our existing platforms.
If you move to slide 25, our medium-term guidance remains unchanged. Double-digit organic growth, profit growth for Product Access, mid-single digits for Commercial and Clinical, and low single digits for Supply Chain. We remain confident that we will deliver in excess of 60% free cash flow in the medium term, keep return on capital employed between 12% and 5% or above, and adopt a disciplined approach to capital deployment.
We're mindful of the very challenging macro environment that we currently operate in. However, we will continue to mitigate these significant challenges by leveraging our scale and our ability to innovate in order to deliver value for our partners. If you go to slide 26, we outline our investment case. As we see it, we are a well diversified quality healthcare service business positioned to win in growth markets. There's no doubt that we have a compelling market opportunity, be driven by increased demand across the globe for specialty products and a growing trend by pharma and med tech manufacturers to outsource to specialist providers who are well invested and have a proven infrastructure. In response to this, we've designed the ability to create a model, providing end-to-end solutions right across the value chain and throughout the project cycle.
The platform for growth is in place. We believe that we have a distinct competitive edge through our high-tech distribution facilities, our deep relationships with global manufacturers, our scalable tech, our highly skilled people, and our strong M&A track record. We have a strong balance sheet, a great ability to generate cash, and a highly experienced industry team. At the time of IPO, we committed to doubling our EBITDA within five years. I'm pleased to say that we're on track to meet this commitment. We also remain ambitious for the future of our business. We will continue to invest both organically and through M&A to scale our platforms. I expect to update you on our new growth targets later on this year.
In summary, we remain confident that we have the strategy, the market opportunity, the platforms, the competitive edge, and the team in place to deliver on our future growth plans. Thanks for listening.
Thank you. If you would like to ask a question, please press star then one on your telephone keypad. If you change your mind, please press star two. The first question we have comes from Colin Grant of Davy. Your line is open.
Yeah, good morning, everybody, thanks very much for doing the call. I've got three questions. I'll just run through them one at a time if I can. Maybe just to start with the first one, Ger. It just follows on a point you just made there in your closing remarks about targets. You mentioned you'd update guidance maybe later this year in terms of targets having kind of pretty much done your doubling of EBITDA within five years. Is there any details you can give us at this stage in terms of what we might expect in terms of new targets going forward?
Thanks, Colin. I think if you look at it, since 2018 we've more than doubled our earnings per share. We're now with a clear line of sight of doubling our EBITDA in H2. As we look at it, I think the timing at that point, it'd be right to give further guidance in H2. I would say as an ambitious business with strong growth targets, we need to continue to invest in our platforms.
When we come back to our shareholders in H2, we'll be giving guidance on our, where, what the next chapter of our progress will be, plus what our investors need to make sure those investments, that growth comes through. As a business as you know, Colin, we like to invest strongly in our platforms and make sure that we're building our house on a very strong foundation. I think H2 is when we'll come back to the shareholders to give them more guidance on the next stage of our development.
Okay. Thanks, Ger, for that. A second question really just relates to organic investments you're making in Europe and the U.S. in the C&C division. Are there any further details you can give us on those organic investments you're making?
Yeah. Brian, if you are online, I'd ask Brian to answer that question, Colin, please.
Yeah, no problem. Thanks, Ger. We'll start with the first part of the question, Colin, on regarding Europe. Europe, although, is the second most lucrative market after the U.S., it's a challenge for pharma and biotech to commercialize in due to the complexity brought about by commercializing across over 40 individual countries. Our strategy is to build a pan-European commercial solution for pharma and biotech clients in Europe. This organic investment in building out Medical Affairs capabilities, key components to interact with local bodies, HEBs, KOLs, and patients. We're now active in Ireland, U.K., Germany, Austria, Switzerland, France, Belgium, Luxembourg, and Italy, with near-term plans to add Spain and Portugal. This is another example of Uniphar investing in our platform today with a view to creating future value.
We still see ourselves very much in a building growth phase in our C&C Pharma and Product Access divisions. If we move to the second part of the question with regard to the U.S. This new 65,000 square foot facility located in the Research Triangle of North Carolina will support both our Pharma and MedTech clients. As you know, we have existing distribution capability in the U.S. This investment will complement that infrastructure and provide a hub in a strategically important location on the eastern seaboard, where Uniphar's M&A activity has concentrated to date. Strategically, the Research Triangle is a hub for over 500 pharma and biotech companies such as Pfizer, Novartis, Amgen, Merck, Lilly, amongst others. The key part of our MedTech strategy is helping U.S. MedTech commercialize across Europe, and we've invested in BD resources in the U.S.
As these relationships have grown, our U.S.-based team have been asked to support our partners in the U.S. This facility will enable us to offer that support, grow relationships, and then attract new business across our group.
Okay, very good. Thanks to you both. I suppose the final question from me and then I can hand it over to others, will be on the Product Access division, where around 60%, just under 60% of gross profit is coming from on-demand. You've made the BModesto acquisition. I'm wondering if you could just give us a flavor or a sense as to where you see, in fiscal 2023, the share of earnings and gross profits coming from on-demand with the full integration of BModesto.
Colin, I'll just ask Dermot or Brian to answer that question, please.
Thanks, Colin. I suppose I think we said at the time of acquisition that BModesto would contribute about EUR 18 million-EUR 20 million in gross profit. It's a circuit sort of 10% gross profit business today. I suppose it's a fantastic asset for us because it's got that strategic located infrastructure, I suppose, in mainland Europe, and then they're very strong on their sourcing capabilities. I suppose they've built a very fast-growing business to date, but it's focused on the specialty wholesaling in the in-license space. I n certain instances, they'll also in-license product as well.
I suppose for us, whilst the core business will continue to grow, we see this asset as being a huge support to our unlicensed on-demand business, where, you know, we focus on the higher value, more complex, higher margin opportunities. I suppose in time it will also support our EAP programs in mainland Europe as well.
Okay, great. Thanks very much. I'll hand it over.
Thank you. Our next question comes from Christian Glennie of Stifel. Your line is open.
Yeah. Good morning. Thanks for taking the questions, guys. A couple, please, then. First one will be just to drill a bit more into the specifics on the gross profit, organic gross profit outlook for Supply Chain and Retail products. Supply Chain and Retail, you continue to deliver higher than the low single digits for the midterm. What should we be expecting for 2023 in terms of that organic in supply chain retail? On the Product Access, obviously you targeted the second half return to the double digit organic. If you could just remind us what we saw in the second half of 2022 and therefore what we should expect in terms of the first half performance for organic Product Access.
Tim, will you do this?
Yeah. Yeah. Christian, thanks for the question. I'll take you back to our medium-term guidance on organic growth possible. As we've all said, supply chain retail will be in the low single-digit range, and we will be projecting that for 2023 as well. As we would have said earlier, Product Access, our target there is in the medium term is to have double-digit organic gross profit growth there, and we will return to that in the second half of this year. For the first half of this year double digits, second half will be above double digits. At the higher end of the single-digit range.
For the full year, we're confident that in the medium term, as we look forward into the future, we will deliver double-digit organic gross profit growth in the Product Access division. Just to round off our Commercial and Clinical, we've consistently said it'll be mid-single-digit, and we continue to forecast that for 2023 and into the medium term.
That's clear. Thank you. Then, just if you can touch on the sort of potential regrowth drivers then in Product Access. I assume there's a reasonable amount of that from, you know, winning more of these expanded access programs. What's in the mix there? Then on the Expanded Access Program, is there anything particularly to update us there in terms of the demand, you know, the availability of those programs that you can go after, and maybe some of the competitive tensions there, whether it's from other outsourcers like yourself or maybe other companies actually doing it more in-house.
Brian, will you take that question, please?
Yeah, of course. Thanks, Christian. On the first point around the, I suppose, the number of programs. We would have flagged previously it is a long sales cycle. You know, macro factors such as slowdown in investment in biotechs and COVID did have an impact. You know, as Tim indicated, you know, we do see a return of our growth. In terms of the actual market, we haven't seen a fundamental shift in the competitive landscape other than Clinigen being taken private. The market is effectively split, you know, from our perspective in between outsourced providers and then pharma companies running programs in-house. We target both segments. A good example of us successfully working with a company that traditionally runs programs in-house is Novartis.
We run the ex-U.S. Expanded Access Program for gene therapy on behalf of Novartis. We initially won the program when it was owned by AveXis, which was subsequently acquired by Novartis. Not only did we continue to work on this program, but it opened up other opportunities and other programs within Novartis. You know, the way we see it is as therapies become more complex, such as cell and gene therapies, so does the complexity of the solutions which our clients require. This tends to lead to a greater need for outsourcing expert service providers such as Uniphar.
Okay. Thank you.
Thank you. Our next question comes from Charles Weston of RBC. Please go ahead when you're ready.
Hello. Thanks for taking my questions. My first is on the commercial and clinical business. Obviously organic growth was delivered at the higher end of expectations for 2022. I just wondered if you could touch on the key drivers for that. You know, what drove that? Could we expect those drivers to be sustained into 2023, or was it to do with something to do with the comps as well?
Thanks, Charles. I think the standard performance in commercial and clinical this year has been our MedTech division. It's a business, as you know, we've invested heavily. It's probably quite a mature business at this stage, and it's had a really good year as we build out our European platform. On the Pharma side, we've had some headwinds through COVID, but that again, as Brian outlined, you know, there are huge opportunities going forward for us as we build out our capability. I think MedTech has been a standard here. As we look forward, Charles, I think we're confident we're going to have another good year again in 2023. Like, you know, ultimately, as we build out the platform, the opportunities become bigger and bigger, for this division.
Thanks. Just to clarify, on the Medtech side, were there any particularly big wins that contributed to that, or was it more diversified growth across all of Medtech?
Oh, quite right across the companies, right across the geographies, they all had a really strong year, Charles. Like, you know, which gives us great confidence as we look forward. This division will continue to drive our market. It's. No, it's not down to any one particular sector here, Charles. It's right across the division.
Thank you. My second question, I guess, complements Christian's, which is focused on more on the EAPs. I just wondered if we could look at the on-demand business and if whether you could give us some color on the market at the moment, whether there, you know, obviously there was a step up in medicine shortages last year. You know, what does that look like for 2023, 2024? Are supply chains normalizing at all there?
I think that before I hand on to Dermot, Charles, this is an area that, we've grown this business pretty much organically 10 years ago when we joined. It's an area that's grown very strongly for us. We see continued opportunity for us to develop and grow this business. Dermot?
Yeah. I think, look, in the on-demand space, the focus is really around helping patients to get access to drugs which are either unlicensed, difficult to source or in short supply. You know, given the ongoing disruption to global supply chains, we expect this to continue. You know, the business performed really well during the period, but, you know, we've continued to invest in that, in building out that global platform through BModesto in Europe, Orspec in APAC and Devonshire in MENA. You know, the exciting piece for us is just integrating those businesses and building out our service offering and our sourcing capability on a global scale. That's really what it's about in on-demand.
Okay, thanks for the color. Just one last one, please, on the M&A side, and your balance sheet. You talked about, your current gearing, your potential gearing of up to sort of 2.5 x. In the past you've provided, the math in terms of what that means from a firepower perspective over the next, year or two. I'm just wondering if you can give us an update in terms of how much you'd be comfortable spending on new deals.
I think, Charles, as you see, we're building out three very strong platforms. We've always been very conservative with how we deploy capital. We want to keep leverage around 2x to 2.5x . We have very strong free cash flow, so we have very strong ability to generate cash. I think we go back to our guidance in H2, when we come back to you guys about where the next stage, where our next chapter of development is where we give a lot more color. I think as a business, we're very comfortable because we generate so much cash and with leverage in sub 2.5x, Charles.
Obviously, we've tried to keep it in around 1x-1.5x, but ultimately we work very comfortable drifting up to 2.5x on the base, and we can get it down very quickly. Tim?
Yeah. Charles, if you take that capital structure into account, our firepower when you calculate it through would be somewhere between EUR 50 million and EUR 100 million of capacity to do these under our current capital structure and taking those leverage up into consideration.
Thank you very much.
Thank you. We now have Paul Cuddon of Numis Securities. You may go ahead.
Hello, guys. I have two questions focusing on Supply Chain and Retail. Just firstly on the market growth. It was pretty subdued in 2020, kind of pandemic restrictions. 2021 saw a big recovery, and it seems to have accelerated in 2022. I just wonder what your thoughts are for market growth into 2023, and whether it can continue to be so strong. Secondly, as you're thinking of supply chain and retail outside of Ireland, I mean, are you thinking organic acquisition? I mean, what would your strategy be, and which countries would you be most interested in? Thank you.
I'll just hand over. Dermot, do you want to answer the first part of that question?
Yeah. I mean, what we saw this year was maybe a very strong cold and flu season in the second half of the year, which probably helped the growth in the market. Long term, we're looking at sort of 2% to 2.5% growth would be where we expect the market to be over time.
Outside of Ireland, I think basically, we love our supply to retail business. It's a key piece of infrastructure hanging off Europe's fastest growing economy. It's a duopoly and we've built significant competitive moats around this business. When we look to other geographies, we'd love to do it in another geography. I think, it has to hit those. We have to be able to build a better moat around hitting our thresholds. It would be a challenge to get a business as strong as our business outside of Ireland. We will keep looking at that.
There is opportunities for us to do, be more bespoke in some of the solutions that we see, and that we compare to different geographies within our supply to retail business. I think, there's still opportunity for us to grow that business. We're still actively looking at other markets and see could we do something in other markets.
Okay, thank you very much.
Thank you. We now have Sam England of Berenberg. Please go ahead when you're ready, Sam.
Morning, guys. Thanks very much for taking the questions. The first one, just on Product Access. Can you discuss the key factors as you see them involved in returning that business to double-digit organic growth in the second half of 2023? How much of it is just sort of an easing of the COVID-19 headwinds that you've talked about in the past versus sort of internally generated initiative?
I think we, as we flagged previously, early access is long sales cycles. It's definitely that cycle has been disrupted from COVID. I think we're very confident with a very clear line of sight that by H2 that we'll get that business back to double-digit growth here. J ust basically, it's disruption really down to COVID is what's challenging in that business.
Okay, great. Just on the Supply Chain and Retail side, you obviously called out market share gains during 2022. Is that something you expect to continue as you move into 2023? Or should we expect more normalized conditions from a market share perspective?
We've always focused on being building a profitable business in that space. We've every year on year, we've grown our market share. We would expect that to continue. Not in a very big way. We keep growing share year on year because of the value of the service offering we give to our customers. Dermot?
Yeah. We're always focused on innovation. We're focused on our retail, symbol group offering to help us drive market share. You know, our consumer business had another very, very strong year as well. That's a big focus for us, and we think there's a little bit more in that as well as we grow our market share.
Okay, great. Lastly, just on Commercial and Clinical. You obviously call out the number of manufacturers that you're working with in two or more geographies. Could you give a bit more color around that? You know, how many of those are progressing from working together in two geographies to sort of multiple geographies beyond that? You know, how many are just where you've gone from working with them in one geography to two?
I think basically, I mean, it's a key area for us to grow that out. Very, very significant opportunity. It's an area that's again probably has been impacted by COVID in that basically face-to-face meetings are much easier to do this, like you know. Ultimately, we think we can really drive our business going forward by expanding out our footprint working with existing manufacturers. At this point, I think we come back, I think in H2 to give more guidance on this, but it's an area we see a significant opportunity for us in both our Commercial and Clinical Pharma and Medtech business, like you know.
Okay, great. Thanks very much.
Thank you. Your next question comes from Seb Jantet of Liberum. Please go ahead when you're ready.
Hi. Morning everyone. Thanks for taking my questions. I'm actually deputizing for Ed today, who's on the slopes sunning himself, but he has sent through a couple of questions. Both in the C&C division. First he wanted to understand a little bit more how many of the clients are now full service and how that's evolved during the year. Then second one was more around the changes in the Medtech sales force. How are you coping with the kind of shift towards ASCs and a shift towards less face-to-face selling within Medtech?
Brian, you may take that question.
On the full service points, I suppose, you know, it's only in Q4 that we invested in the medical capability, so that's an organic investment. We'll take time to embed in. If we look back then to the key reason for the investment in the acquisition of E4H was around that omnichannel solution. We have a number of clients, I suppose cutting across both the where we were operating in multi-channel, which is essentially a people solution, driven by insights, combined now with digital solutions. You know, one cornerstone client where we have, you know, fully integrated omnichannel, where we're providing both the, you know, web-enabled omnichannel sites, analysis over all digital interactions with HCPs, and combine that with the in -person.
The omnichannel piece is performing well. The investment is proven, I suppose, you know, strong. Now with the medical capability is a key step in terms of the connectivity between Product Access and Commercial and Clinical, but that medical team will take time to embed in.
Thank you. On the Medtech sales force, changes.
Brian, do you want to take that?
Sorry, could you repeat that first part of that question?
Yeah. It's just kind of, wondering how, shift towards ASCs away from hospitals and, shift towards or away from face-to-face selling, how that's impacted your business?
I suppose the structure of selling between Medtech and Pharma are fundamentally different in, and specifically down to where we've concentrated on the growth of our Medtech business, is what we describe as specialist consultant-led products. These are highly specialist. A lot of them being implanted into the human body, such as interventional cardiology, orthopedics. It's the consultant who's making that decision around the product. Our field forces aren't, you know, really called them sales teams would be underrating them. They're clinically trained. They spend half the time side by side with the consultant actually in the surgeries, guiding them on any questions they have with the product. We wouldn't have seen an impact, I suppose.
In the initial stages when I suppose non-urgent surgeries were being canceled for COVID, that had a separate impact. It wasn't about our sales teams not getting access. On our Medtech side, just given the sophistication of the products that we're actually representing, we haven't seen an impact in terms of access to hospitals.
Brilliant. Thank you.
Thank you. We now have Max Herrmann of Stifel. Please go ahead when you're ready, Max.
Great. Thanks for taking my questions and congratulations on another strong year performance. Three questions, if I may, just more a little bit of detail. Would like to understand a little bit more about the North Carolina facility and what that actually is entailing in terms of maybe square foot and people. T hen again, in the Medical Affairs build out in Europe, you know, has that just been adding single heads in different regions or what have you been actually doing there in the fourth quarter last year?
Then finally, just an update on elective surgeries. Obviously, that's been a big area of impact during COVID. We've seen a recovery in elective surgeries. Obviously, that will be a major beneficiary or you will be a major beneficiary of that in the Commercial and Clinical in the Medtech area. I wondered whether you think surgeries are now up to sort of pre-pandemic levels or there's further to go? Obviously, you know, there's a backlog as well on how you see that playing out. Thank you.
I'll take the third question, Max, and then hand over to Brian for the first. Sorry for Brian for the second one. Dermot, you might take the first question. Electives definitely fell off during COVID, and now we've a huge backlog to catch up on. I think what we'd see is we've received a shift from the public to private, where the less activity in the public and the private sector has taken it up. I think they're struggling to get back to pre-COVID levels of volumes. I think when you look at our Medtech business, we went through COVID very well because it's a very diverse business.
C ritical care did well in COVID. It's now come back to normal levels and electives are struggling to catch back up again. It's the beauty about having a very diversified portfolio of business. We've got through COVID pretty well. As we go forward, we continue to grow this business again. Dermot, if question number one.
Yeah. In terms of North Carolina, obviously it's located in the Research Triangle there. Strategically located beside Pharma and Medtech clients. I think it's to give us additional capacity and distribution capability to complement our existing businesses there. As you know, we do have our Durbin business in the U.S., and it will support that. Y ou know, it's to look at other opportunities maybe within Medtech as well and how we build out that from a U.S. point of view.
It's 65,000 sq ft.
It's 65,000 sq ft. Yeah. Yeah.
That's it.
Right.
Brian?
Yeah. Thanks, Max. As you mentioned, Europe in theory should be the second most lucrative market after the U.S. for pharma and biotech. In theory, it should be 20% of the value of a product. The complexities puts up an enormous barrier to actually unlocking that. The key to unlock it starts with the science. You know, having that medical capability is fundamentally important if we want to be attracting more clients to providing commercial solutions. An example of, you know, pitfalls we've seen clients falling into is they would concentrate all of their clinical studies, regulatory documentation preparation, all focused towards U.S. approval, which is understandable 'cause in theory it should be 50% of the value of the product.
With some tweaks to some of those clinical development plans, they could accelerate their launch to Europe. Because what tends to happen is when they come to Europe, they realize that there's some clinical data points that, be it regulatory or payers within Europe require, and then that sets them back another three to five years. Whereby had they actually captured this upfront when designing the initial clinical study, that would've actually, you know, saved them that three to five years. That takes a medical input, which is why we've invested in this. In terms of creating that accelerated pathway in term for unlocking the value of Europe, this is a really key component, a s well as then understanding the local payers, the HCPs, the patients, KOLs.
So far, we've invested in that team, you know, now covering U.K., Germany, Ireland, Austria, Switzerland, France, Belgium, Luxembourg, Italy, with short-term plans to add in Spain and Portugal. There's further capabilities that we seek to add to that in order to build out that full solution. We'll invest in that be it organically or inorganically.
Is that just people? Is that what you're bringing in a consultancy, you know, different individual consultants in each of those geographies or what are you doing?
Yes. It's people with medical background, so be it, you know, pharmacy, pharm toxicology, you know. A specific background in pharmaceutical products with experience of bringing products through launch. They've a very strong understanding of the pathways, both in terms of the regulatory landscape, the payer landscape, the KOL landscape, and those access points. T hese are, you know, fundamental resources in terms of unlocking those countries that are hard to find. It is, you know, having the right individuals with that broad set of capabilities with the right science backgrounds in countries.
Great. Thank you very much.
Thank you. We have no further questions online. Oops. I'll hand it back to the management team.
Okay. Okay. Just wanna thank everybody for listening this morning and for all your continued support and hope to see you in the medium term. Thank you very much.
Thank you for joining the call. You may now disconnect your lines and have a lovely day.