What do you see as the future of healthcare? Imagine a world where medicine is perfectly tailored for you. A world where medical products no longer rely on the archaic practice of animal testing. A world where treatments are created specifically for you. Through the bioconvergence revolution, we are solving the challenges of the coming decades by preparing today. By making the right decisions and investments today, we are paving the way for coming generations to have a better future. Today, we are steadfast in our focus to create and develop methods, technologies, and solutions that will advance medicine. Medicine that is based on real data, medicine that is based on relevant models, medicine that is made for you. With MatTek, the world leader of in vitro human tissue models for clinical and pre-clinical studies, we make a leap towards the future we envision for generations to come.
We are strengthening our position as a bioconvergence powerhouse, reinforcing our founding stance to put an end to animal testing by providing alternative and superior testing methods. We see a future, a future where robotics, artificial intelligence, advanced genomics, and bioprinting come together in a beautiful harmony to fundamentally shift the quality of healthcare to create the future of medicine. What do you see as the future of healthcare? Imagine a world where medicine is perfectly tailored for you. A world where medical products no longer rely on the archaic practice of animal testing. A world where treatments are created specifically for you. Through the bioconvergence revolution, we are solving the challenges of the coming decades by preparing today. By making the right decisions and investments today, we are paving the way for coming generations to have a better future.
Today, we are steadfast in our focus to create and develop methods, technologies, and solutions that will advance medicine. Medicine that is based on real data, medicine that is based on relevant models, medicine that is made for you. With MatTek, the world leader of in vitro human tissue models for clinical and pre-clinical studies, we make a leap towards the future we envision for generations to come. We are strengthening our position as a bioconvergence powerhouse, reinforcing our founding stance to put an end to animal testing by providing alternative and superior testing methods. We see a future, a future where robotics, artificial intelligence, advanced genomics, and bioprinting come together in a beautiful harmony to fundamentally shift the quality of healthcare to create the future of medicine. What do you see as the future of healthcare? Imagine a world where medicine is.
Good morning and welcome to the BICO Capital Markets Day 2022. My name is Åsa Hillsten, and I'm head of investor relations. Today, we will introduce our strategy, present our new financial targets, and make a deep dive into our three business areas: bioscience, bioautomation, and bioprinting. This session will be two and a half hours long, and there will be two sessions to answer Q&As. Please write your questions in the chat below. We will cover most of the questions, and if the time is running out, we'll answer your questions by mail. I will now hand over to Erik Gatenholm, CEO and founder of BICO Group. Thank you.
Thank you, Åsa. All right. Hello, and a very warm welcome to the 2022 BICO Capital Markets Day. It's our great honor to have you with us today to take you through our exciting business and how we intend to create the future of health. We're extremely excited about this opportunity as we believe that the next coming years will be even more exciting than the first seven years of our humble beginnings. BICO's mission is to enable the pharmaceutical and biopharma industries to develop new treatments faster and safer, with more specificity and less need for animal testing. Today, we will tell you how we intend to do that. My name is Erik Gatenholm, and I'm the Co-founder and CEO of the company.
My background is a bachelor's degree in business management from Virginia Tech and a master's degree in innovation industrial management from University of Gothenburg. BICO is an award-winning bioconvergence company offering life science tools and reagents for the sake of improving research and development processes in the pharmaceutical industry. In just 7 years, the company has grown into a BICO Group of several decentralized operating units contributing to our combined vision of creating the future of life-saving treatments. Briefly looking at the agenda, we will start with an introduction to BICO, the markets we cater into, and an overview of our strategy. This will be followed by a deep dive into our exciting business areas, followed by the first Q&A session. After the Q&A, we will hear more about BICO's financial performance and new financial targets with our Interim CFO, Mikael Engblom.
I will summarize our day and open up for a final Q&A session. Now, without further ado, I would like to invite you in to one of our customers, Professor Stina Simonsson at the University of Gothenburg, to get a peek into the future of cartilage printing.
Hi, welcome to my lab. I'm Stina Simonsson, and I work in the stem cell field here at Sahlgrenska University Hospital in Sweden. My research interest is within the stem cell field and particularly in reprogramming and rejuvenation of cells into stem cells. We want to make cells young again and reverse aging. We were the first, for instance, in the world to 3D bioprint cartilage tissue, and that used induced pluripotent stem cells, iPS cells. We are interested in osteoarthritis and understand osteoarthritis disease. Now we are focusing on meniscus injury, for instance. We want to 3D Bioprint the meniscus structure from based on patient's MRI scan, and so that we get a perfect fit for the meniscus structure.
The main thing with my research is to understand molecular mechanism. I think is the interest that I have to solve that, but also then to be able to put the basic research into the clinic. Actually, is the long-term aim. CELLINK's products like and technology like the Bioprinter and the bioink has helped me tremendously in my research. And I would never have achieved what I have so far in my research without them. I'm very grateful.
With this great introduction, I would like to start by telling you a bit more about the underlying, very important healthcare challenges that we are addressing as a company. The global healthcare industry is currently undergoing major reconstruction, driven by trends such as digitalization, big data, and personalization. We're seeing larger economic disparities and deviating access to healthcare than ever, with certain regions completely lacking access to adequate treatments. We're at the same time seeing other regions with a growing aging population that wants to be more healthy and active than ever, making it crucial for the global pharmaceutical industry, a $1.4 trillion industry, to ensure a steady pipeline of new treatments that can both treat disease but also improve quality of life, and not only for the wealthy, but for everyone.
A major issue with all of this is that the need for new treatments is expanding more than ever, while the pharma industry has not been able to increase the output of new medications significantly over the last couple of years. The process of developing a new drug is very complex, lengthy, and costly. The reality is that most drugs, a staggering 90%, don't reach the patient in the end, resulting in sunk cost for the pharmaceutical industry and lost hopes for the patients. In reality, FDA only approves about 50 new drugs on an annual basis, but the industry spends close to $200 billion in R&D. The industry has a major problem when it comes to getting new treatments to the patient faster, and we're going to help them with this.
The actual process takes 10-15 years and can cost more than $2 billion from an initial concept through safety and efficacy testing in animals and humans, followed by a lengthy regulatory process and filing, and lastly, reach the patient. As a company, we're targeting and adding value to the first stage of this cycle, namely the drug discovery and preclinical development stage. We see a major potential to speed up the drug discovery process, resulting in better, more cost-effective treatments. Because in the end, the goal is to get new treatments to the market faster and cheaper. We're passionate about helping our customers save time and money, and in the end, and most importantly, save lives. To understand where we're headed, it's crucial to look back at where we come from.
Our story started in 2015 when I met my great colleague and the CTO of our company, Héctor Martínez . We were both studying in Gothenburg, Sweden, and were introduced to each other through my father, who happened to be Hector's professor and also the inventor of our first product, the first universal bioink in the world. Already from the start, we had a desire to be part of the revolution in the healthcare industry and wanted to lead the way forward, specifically in the field of bioprinting, to enable global production of human tissues and organs. We saw major gaps in the industry when it comes to standardization, accessibility, and automation, of which all three were considered to be crucial for increased rate of adoption.
Now, our ability to very rapidly establish an accessible, user-friendly, complete package solution for anyone to get started with was a major defining moment in our history and something that was highly appreciated by our customers. Because it was very clear from the beginning that our future is 100% dependent on the success of our great customers. Throughout the first years of our business, we spent the majority of our time together with these beloved users, learning from their applications and the use of our products. Perhaps most importantly, what other complementary needs they had aside from our bioprinters and bioinks. What we realized was that most of these customers used several other technologies together with our products, and it became clear to me that we are an integral part of a much larger picture, workflows that researchers use to develop new treatments.
These workflows include a wide range of technologies such as liquid handlers, microscopes, analysis tools, automation, and much more. To drive the industry forward, we had to expand our product offering in 2018. We also constructed a very specific strategic plan that was the foundation of our M&A strategy. Throughout the coming four years, we have been fortunate to add 14 companies supporting our vision around becoming leaders in the life science tools and treatment development area. These companies add specific tools in the drug discovery process, namely by either speeding up the drug discovery process, making it more efficient, or preferably both. These acquisitions have been extremely important milestones for BICO over the years, especially during 2021 when M&A and global expansion was highly prioritized by investors and shareholders.
As a team, we're proud to have capitalized on this opportunity to get our hands on some of the most promising companies in the industry, and we thank our shareholders and investors for the confidence and ability to finance this expansion. Here we can better illustrate what this rapid M&A process has resulted in in regards to our business model and how it has improved our position in the marketplace. We can clearly see that the progression going from very early-stage market-challenging products offering a $99 product to customers just seven years ago. From there, we saw a natural expansion of our portfolio to offer bioprinters and a complete package solution to then adding more dispensing and liquid handling capabilities.
With a strong baseline of products, we could then take the first step into semi-automated workflows and getting a deeper insight into what the future of drug discovery holds. From there, with one of the latest and greatest acquisitions, Biosero, we now take the next crucial step in our journey towards full-scale laboratory automation, consolidating multiple parts of the customer's processes, and in some cases, even the entire value chain for the sake of increasing reproducibility and success. The journey will continue as the demand for automation increases over the coming years. Fast-forward now to 2022, the company has become a global established player with the potential to write the history of laboratory automation for the next decades.
With more than 32,000 instruments in the field, catering to more than 65 countries and 1,200 brilliant, passionate colleagues, we're well-positioned to tackle the challenges of tomorrow. The most important achievement to date are the ones where patients' lives have been improved. Today, we're proud to demonstrate how our bioconvergence technologies have enabled many new clinical improvements over the years. For instance, the first bioprinted clinical application took place in May this year, and many more are on the way, giving patients new hope and historical shift in healthcare. Our diagnostics technologies are giving millions of people the opportunity to monitor illnesses in real time, no longer requiring manual and painful sample drawing processes. Our bioprocessing products impact all top pharmaceutical companies worldwide by helping them save precious time in the development process.
Most recently, our automation technologies are used by the largest cancer diagnosis system in the world to detect multiple types of cancer through a single blood draw, revolutionizing the entire cancer detection industry. I must say, it is extremely rewarding to reflect over our journey the last seven years and see how the world has changed for the better. I must admit, I'm even more excited about what the world has in store for us for the coming seven years. With that being said, when it comes to improving drug discovery, we have talked about the process being very costly, mainly driven by rising costs of labor, lack of reproducible results, and lengthy manual processes. With this insight, we have formed the idea that the problem the pharma industry has when it comes to developing new treatments relates to its low implementation of automation.
It's quite interesting because McKinsey & Company recently reported on the state of automation in U.S. industry and rated different industries on their current automation deployed status. They found the pharmaceutical industry to only be at about 40% level of automation deployed when compared to other industries. This is a major gap in the industry that we now perfectly position to capitalize on. For that reason, and with our unique product portfolio, we will focus our attention on becoming the world's leading life science tools and laboratory automation company for specific treatment development applications by 2030. What this means is that we plan on accelerating our efforts when it comes to offering technologies, products, and services that enable our customers to faster develop new treatments such as new biopharmaceuticals, cell and gene therapies, and printed tissues for clinical applications.
Now, let's take a look a bit further on the actual market. We mainly operate in the global market for life science tools and reagents. Precedence Research estimates the market to be about $111 billion in 2022, with a compound annual growth rate of about 12.5%. With a healthy growth rate and continuous strong demand, this market is anticipated to reach roughly $300 billion in 2030. Within this market, we compete with companies such as Thermo Fisher, Beckman Coulter, Tecan, Hamilton, Waters, and many more. While the field is quite broad with a significant amount of players, we have found four niche areas in the field of sample preparation where we can establish a leadership position. These niche markets are namely next generation tissue engineering, multi-omics, cell biology technologies, and diagnostics.
Some of these niche markets within the overall laboratory tools and reagents industry grow faster than others, particularly in the areas of multi-omics research and tissue engineering. BICO's future is 100% dependent on the success of our beloved customers and their ability to develop new life-saving treatments. We're mainly addressing four customer segments, namely universities and public research organizations, pharmaceutical companies, diagnostics companies, and cosmetic companies. Our customers are typically large, stable corporations and organizations with multiple different departments and laboratories where our products make an impact. For instance, just looking at the academic segments, there are roughly 26,000 universities around the world, of which 11,000 are considered potential customers. These 11,000 institutions have 3-5 different applicable departments and typically numerous laboratories in each department that would benefit from the use of our products.
Just as a reference, Stanford University has 29 laboratories in their bioengineering department alone. Other departments we believe would benefit from our products would be biomaterials, medicine, chemistry, and biology. When taking a closer look at these markets and the customer segments, we can quickly see the potential in terms of where we have a leadership position and where we intend to invest to disrupt the market. We see major market trends such as personalized medicine, increased focus on biopharmaceuticals, desires to reduce the use of animals in research, and increased need for automation will drive the demand for our products in the coming years. When it comes to laboratory automation specifically, the main drivers fueling the deployment of automation are increasing labor cost, personnel wanting to work remote, researchers wanting to increase reproducibility of data, and the drug discovery process being painfully slow and costly.
With regards to reproducibility in particular, failure to reproduce experimental outcomes in a pharmaceutical R&D stands in the way of translating discoveries to life-saving therapeutics and revenue-generating products. In economic terms, at least $28 billion in the United States alone is spent annually on preclinical research that is not reproducible. This has provided BICO with a unique market position to truly impact global pharma and treatment developers by helping them save time and money by significantly increasing reproducibility through automation. One of our core areas where we already see an early impact from automation capabilities is in the field of tissue engineering. Our products are unlocking capabilities that have been limited to manual processes in the past. In these past decades, and with the help of our products, researchers can now finally automate the sample preparation process, making it more reproducible and beneficial for higher scale.
More importantly, this technology is driving the revolution in tissue and organ manufacturing with great hopes to reduce organ shortage one day. Already today, this technology enables our customers to perform remarkable research and development, namely because, 1, bioprinting is one of the main technologies challenging the archaic use of animals in treatment development, where researchers can get more accurate, reproducible, and relevant data. 2, the technology is driving the field of personalized medical implants. When developing new implants, bioprinters can print patient-specific structures, ensuring that the new device fits in terms of size. The bioprinting process can also use patient-specific cells so that there's less risk of rejection after implantation.
Now, with regards to the human tissue shortage, we see several customers and collaborators fast-track their progress towards clinical applications, and one noteworthy is Pandorum Technologies, a corneal tissue engineering company that is currently preparing to initiate clinical trials for their bioprinted corneas, a cutting-edge product enabled by our BIO X system anticipated to treat millions of people globally with corneal blindness. Other upcoming applications include cartilage, bone, skin tissues, and even eardrums. Let's take a closer look.
Today's world is defined by digital connectivity, smart processes, systems, hospitals, and cities constantly communicating with each other, progressing and improving the quality of life. At BICO, we create the future of health, a future defined by the convergence of hardware, software, and biology. A future that accelerates research across critical industrial ecosystems like cell line development, tissue engineering, multi-omics, and diagnostics. A future where life and technology become one. Today, we welcome Biosero to the BICO family, an industry leader in developing autonomous and connected workflows. Biosero enables connectivity, capturing data and measuring progress, improving outcomes for healthcare providers around the world, cementing synergies and unlocking new levels of efficiency and smarter workflows. We see a future where this convergence occurs, a future that fuses advanced engineering, software development, and biology, a future where life and technology come together and redefine healthcare.
Another impressive example of how our products are improving our customers' way of working is our cell biology technologies. These products include single cell printers, low volume liquid handling robots, and a wide range of automation solutions, and particularly in the field of single cell RNA sequencing, which offers researchers a new paradigm in transcriptomics, allowing for sensitive, robust profiling of transcript at a single cell resolution. We drive down the cost per sample. For instance, the standard plexWell rapid single cell RNA seq kit costs $3,000 to run a 96 sample and consumed 1,285 pipette tips per run.
When using our I.DOT and our C.WASH systems to automate and miniaturize the workflow, reagents consumption can be reduced by 80% and pipette tips can—the pipette tip use can be reduced by 75%, leading to a per sample cost saving of around 50%. This will not only drive a more cost-effective process for our customers, but also a much more sustainable and environmentally friendly way of working, with significant reduction in disposable plastics. To ensure our position in today's market and expand this position for tomorrow, we're confident that our products and technologies will be providing tremendous value when it comes to saving time and money for our customers in their development processes.
By offering unparalleled speed, accuracy, and efficiencies, we intend to lead the way forward so that our customers can focus their valuable time and energy on developing the treatments of tomorrow and let us handle their laboratory automation. Now, with the tremendous product portfolio we have managed to build over the years, through organic development but also through strategic M&A, we are well positioned to take on our new 2030 strategy, namely to focus more on our core business to become the world's leading life science tools and laboratory automation company for specific treatment development applications. Before we go into our 2030 strategy, let's take a brief look at this slide to summarize a very successful and well-executed 2021.
2021 was an extremely important year for BICO, as we managed to acquire a lot of companies that we had scoped out over the years as we developed our previous strategy. These companies are leaders in their respective niche markets and have added a tremendous impact to the group, from a team, culture, and product portfolio perspective. It's important to remember that the beginning of 2021, many of our operating companies still had several steps to take to mature as businesses operating on a global market for life science products and in a listed environment. 2021 was a year when extraordinary growth was achieved, development and expansion of the global team, and establishment of our bioconvergence operating system, and much more. We have built on this important foundation moving forward into 2023.
Because to achieve our 2030 goal, we have identified crucial focus areas for the next year and beyond. These focus areas are specifically developed given the current global economic conditions, trends and market drivers, potential uncertainties around geographical areas, and access to key personnel and resources. Our next era is marked with improved internal control, cash flow generation, entrepreneurial friendly governance, and internal as well as external automation to achieve profitable growth. We intend to drive the development of BICO with five key areas in mind, namely financials, customers, market leadership, organization, and sustainability. Now let's go through them more in detail. In terms of our financial performance for 2023, it is our ambition to streamline the organization towards the cash flow generating position.
Our ambition is to use our cash flow to fuel our well-defined growth agenda, namely through internal organic product development, but also acquisition of strategically fit companies. To achieve this, we will strengthen our internal control functions, improve policies, and ensure group-wide alignment towards this financial performance target. Mikael will later speak more in detail about our new external financial targets. When it comes to our customers, our strategy is to be best in class, and we will streamline our comm ops in the U.S. and EU, our two biggest markets, by improving our direct sales channels and the entire customer acquisition process. We have some of the best sales people in the industry, and we intend to continue to train and develop our talent to ensure that our customers are more satisfied. With that, we also intend to strengthen customer and technical support throughout the customer journey.
When it comes to supply chain, we intend to further strengthen our centralized ERP and CRM systems for enhanced internal control in regards to inventory levels, supply chain challenges, and drive overall working capital improvements. On the product offering side, we will continue to build a strong foundation with our software and reagents products that will ensure improved standardization and reproducibility for our users. These products will serve as a steady baseline for our recurring business model and long-term profitability. To strive for a market leading position in the areas of automation and drug discovery, we intend to further expand our product portfolio with our Bioconvergence operating system. What this means is that we want to make our technologies more accessible and more automation friendly so that it will increase the rate of adoption and generate great value for our users.
We will do so through natural internal synergies, value generating partnerships, and smaller bolt-on acquisitions of strategically fit companies. One very successful example is our acquisition Allegro 3D and Advanced BioMatrix to further strengthen CELLINK's light-based bioprinting and reagents products portfolio. To further clarify our increased focus on automation, we will improve our automation deployment both internally as well as externally. Internally, it will help us to manufacture products cheaper, help us streamline processes such as customer communication, reporting, working capital management, and administration, and it will reduce a lot of redundancies across the group. From the external perspective, it will ensure that our products are automation and integration ready. For example, the hardware should be integration ready, ensuring grippers can change reagents and plates.
The API should be compatible with the Green Button Go software and in the driver library, and consumables should be standardized so the customer can plug in our products in existing workflows. From a product portfolio expansion perspective, we intend to restart our M&A activities once we have a steady stream of cash flow from operating activities. We will mainly look for software, reagents, and consumables companies initially. We work under the notion that the best team in the right place at the right time is what is going to ensure that we deliver extraordinary results. Our entrepreneurial and decentralized way of working ensures that the operating companies are always focused on delivering great solutions to our customers with as little bureaucracy as possible. We're challenging a quite conservative industry with set ways of doing things, and this requires us to be persistent and resilient.
With that being said, we have already shown early success taking market shares from other more established players and growing faster than the current market CAGR. Important to mention, with recent market sentiments, it's absolutely essential we invest in our people and find ways to continue to motivate our talent to stay with the company and to be committed to our strategy. This will require appropriate incentive plans, performance alignment, and continuous training and development of our staff. We believe this is crucial for the longevity of our company. Speaking of longevity, we will be increasing our focus on developing and operating a more sustainable business to ensure we contribute to a more sustainable world. As of December 2021, we're officially signatories of the UN Global Compact Sustainable Development Goals and the 10 principles of the United Nations Global Compact.
We are committed to training all employees on ensuring safe working conditions and conducting environmentally responsible and ethical operations. Our focus in terms of sustainability has boiled down to what we call the BICO way, and it's split into three main areas, namely our people, planet, and products. Last year, we started to implement a sustainability framework, measuring our emissions and putting structures and processes in place to track these important metrics. We intend to contribute with a sustainable working environment for our employees, a healthier society, and a more sustainable industry with reduced use of harmful materials. Sustainability is a long-term strategic focus of ours, and it's part of our overall business strategy, and there's one particular area that I would like to highlight even further.
We have identified a specific area of the ESG agenda that is very close to our hearts, and that is reducing the use of animals in research. Each year, more than 100 million animals are estimated to be experimented on and euthanized for the use of biomedical research in the United States alone, according to the Humane Society. This is in large part due to the 1938 Federal Food, Drug, and Cosmetic Act, which requires that all new products be tested on animals to ensure safety and efficacy, regardless of if it provides scientific value or not. More than 80 years later, technological breakthroughs including tissue engineering, single-cell isolation, live-cell imaging, and others can be converged to accelerate drug development without the use of animal experimentation.
Since our founding, BICO has been a leader in the efforts to end animal testing in the life science industry and have so far saved more than 95,000 animal lives. We take great pride in this, and we intend to continue to lead the industry towards an animal and cruelty-free era, even though we understand the road to success is quite long. Nevertheless, as David Gortler, former senior advisor to the FDA commissioner, so eloquently stated in Pharma Manufacturing, "It's a heart-wrenching and outdated technology, and it is rarely, if ever, predictive in humans." Now, we want to create a world where more printed tissue applications reach clinical stages, laboratories become more and fully automated, and cost of diagnosis, such as early cancer detection, is significantly reduced and is implemented at a global scale for the sake of improving global healthcare.
We will help the pharma industry increase their automation deployment level, which in turn will lead to a more efficient drug discovery process and a faster path to the patient. Now, my great colleague, Tom Gilman, will tell you more about how we intend to do so as a recent new member of the BICO family.
Hello, everybody from San Diego. This is Tom Gilman. I'm the CEO of Biosero. I want to thank Erik and the BICO team for such a warm and professional experience. That film was really inspirational to our team and was a great welcome for us to come aboard. BICO did an immense amount of due diligence on Biosero, as you can imagine, and we also did the same with BICO. What we found was a great company that had a strong position across the spectrum of tools and technologies in the life science market, not only now, but for what scientists need in the future as well. Their strong patent positions were very convincing as well. The team's focus on accelerating science to help patients receive better health care aligned with our own mission to push forward science and save lives.
Biosero is a member of the Biosciences group within BICO. There are four companies in that group, CYTENA, Discover Echo, Dispendix, and Biosero. CYTENA is a company that focuses on isolation of single cells and analysis. Discover Echo has revolutionized the market by redesigning microscopy and making a lot more widely across the spectrum of applications. Dispendix and Biosero are more applicable not only in cell areas, but also across another wide spectrum in life science. Prior to the acquisition, Biosero had developed an automated tool platform with CYTENA to automate their processes for, again, cell isolation and purification. That platform, called the C.STATION, is currently offered as a CYTENA product today.
Today, I'll discuss Biosero, the company and the team, the need for automation in life science and where Biosero fits, and our opportunities now and in the future. Next slide, please. A little bit about Biosero. Biosero is the best in the world at integrating engineering and science together, two very difficult disciplines, with our software products and engineering teams. Using our Green Button Go Scheduler and Orchestrator software products, we can agnostically link research tools, software, and devices in research companies throughout the world to provide scientists and engineers with better answers in less time. Why did we become part of BICO in 2021? I get asked this all the time. We were growing very well and doing very well on our own. What we saw was that a need for us was being pulled into international areas, particularly Europe and Asia.
BICO immediately extended that international reach, and we knew that we needed that partnership. BICO's plan of not disrupting companies when they acquire them, but they provide them with the best option for extending our own capabilities and continuing our growth was key. Our software leverages what scientists require, an agnostic platform that allows them to integrate the best tools available for them to achieve their results. BICO aligns with our position to provide those best tools and accelerate research to save lives. It's very personal to us at Biosero. I can tell you that every person in Biosero I know very well and have spoken with them about these topics. My parents had cancer. Others in my family have succumbed to heart disease.
The battle for our team is very, very personal, and BICO provided the best route for us to expand our software and engineering capabilities across the world. We know our software provides the capability to accelerate science and save lives. Next slide, please. Biosero, we've been cash flow positive since our first day with that first purchase order from Acadia Pharmaceuticals here in San Diego. Over our 19-year history, we've never required any outside funding. Quarter-over-quarter for 19 years, this will be our 20th year in 2023, we've been cash flow positive. In 2022, we've recorded a record 75% growth rate in revenue, with an expectation to finish that level or higher at the end of the year. It'll be a record year for Biosero due to our key partnerships in Europe and Asia.
Just as we thought, the BICO partnership rapidly extended our international capabilities and helped us support those customers. I'm often asked what I'm most proud of at Biosero, and that's a really easy answer for me. It's the team that we've built here, because the best team wins every time, all the time. I'm sure our team is sick of me saying that, but it's proof positive. Let me just go over a little bit of the team members we have and some quick facts about the company. If you look up in the upper left-hand corner, you have Andrea Salazar. Andrea is our Chief Operating Officer. I'm going to describe a couple of people here on our leadership team. Andrea was formerly with NASA Jet Propulsion Laboratory, where she was in charge of large projects like the Mars Rover.
Andrea was in charge of large budgets, delivering on time, high-quality deliverables that couldn't be compromised. She provides excellent insight to our team in regards to the projects that we still have to deliver to our customers in the same manner. If you go over to the 3rd column, still in the upper right, upper row, David Dammann is our CTO. David also came from the government, where David was responsible for developing software that tracked parts and deliverables throughout the government agencies. He also did other things with software in the government, but he said he'd have to kill me, so I think I'm going to pass on that. To his immediate right is Jerry Alden. I'm just going to give Jerry some kudos. He's in charge of the sales for Biosero in Europe.
Again, he's been responsible with a few other team members there to accelerate our sales. If you go right below David Dammann in the second row, 3rd column is Michelle Talarico. Michelle came from the chemistry industry, and Michelle has many years of experience in life science. She provides invaluable insight to our next steps for Biosero as we move forward. Go down to the next row, and the second column is Dr. Rob Harkness. I've known Rob for 25 years. He's a Ph.D. in chemistry, but more importantly, Rob is working on standards in the industry that don't exist today. Standards mainly on data, focusing on data and data transfer. We're excited about that because it will enable more people to use automation more frequently. If you go over to the fourth column, again, the 3rd row, you have Mr. Ryan Bernhardt.
Ryan is from Eli Lilly, where he was responsible for deploying automation throughout the company. Ryan has invaluable insight to what customers need and what the pharmaceutical companies desire in their automation platforms. Next slide, please. The best team needs the best coaches, and we feel we have those team members as our coaches. If you look to the left there, that bright shining face is Mr. Bill Davidson. He's right now the Chief Operating Officer at a company called Amionx. Amionx provides battery coating technology that prevents batteries from overheating and also prevents them from exploding. More importantly, Bill came from technology giant leader Qualcomm, where he was the chief marketing officer. Again, someone that provides invaluable insight to the team. To his right, Mr. Steve Proia, Chief Financial Officer, retired from NASA Jet Propulsion Laboratory. Obviously, NASA JPL has to deliver products on time.
There is no compromise. They have to work within extremely tight budgets and high-quality deliverable. Again, those deliverables can't be compromised at all. To his right is Maritza Diaz. Maritza Diaz is the CEO of ITJ, a nearshore partner that we use for supplying software team members from Latin and South America. They're integrated rapidly into our team so we can accelerate the production of our own platforms. Prior to that, Maritza was with Thermo Fisher Scientific, where she did the digitization of their platforms across their life science spectrum. Next slide, please. Why is there such a great need for lab automation and why now? We speak with our customers a lot to ask these questions and find out how can we help them, what is it they're really looking for.
What we find with the larger companies, especially pharma, is they want to reduce their cycle time to introduce a drug or therapy or cure to the market by 50%. This can't be done by throwing people at a problem. It takes too much. If you can imagine, Erik discussed the unreproducible results in the North American market at $28 billion. If you want to confuse things even more, try throwing more people at a problem like that. We also extend the workday. You normally have an 8- to 9-hour workday, but with automation, you can extend that workday to 24-7, 365. During development costs need to be reduced. Again, if you reduce the cycle time or drug or therapy to market, you're obviously going to reduce the cost because you've reduced the cycle time.
We call this the COVID-19 effect, but more samples and data are being generated and need to be processed than at any time in history. The patient samples need to be uncompromised. That data needs to be attached to the sample and patients need to understand that their samples are processed in the most effective, efficient way. Larger data sets generated by automation require better capabilities to provide rapid insights so team members can make the best choices. Finally, not all data is good data. I mean, a lot of people think that you just grab data off the instruments and use it. That's not true. Accurate data needs to be supplied for artificial intelligence and machine learning. We ensure that that data is contextualized and put into a format that's usable by scientists, again, to apply these tools. Bad data always produces poor results.
The lab automation market is still very nascent. It's early. It's in its early stages. Most work is still being done at the bench level with potentially low-level automation tools integrated into manual process flows. Next slide, please. That's a great opportunity for automation. This is our technology timeline. A big problem in life science automation is, again, lack of standardization. Device communication protocols are all vendor independent. I'd like to explain our technology timeline a little bit to give you an idea of why it provides Biosero with a unique industry advantage. In 2003, when we launched the company, we really focused on those communication protocols to devices.
We used another software platform, but what we were really focusing on was that communication from devices to devices and how to make them work into an integrated protocol. We came out with our Green Button Go Scheduler in 2011, which was our own software platform, which integrated work cells together and integrated processes into workflows to achieve, again, automated processes. Scientists didn't have to stand in front of their platforms and manually move plates or their labware around. Over those eight years, we focused on the user experience, and 2019, we came out with another software platform. It's called Green Button Go Orchestrator.
Rather than having things at an individual device level integrated into a work cell and process flow, Green Button Go Orchestrator integrates laboratories themselves or even more complex, laboratories all over the world so that scientists can make better decisions using all this aggregated data. Next slide, please. A little more about orchestration. This slide depicts the orchestration process provided by our software. Lab orchestration is the management of workflows by harmonizing processes, people, data, business rules, and materials to achieve the desired results. Everything comes together in a single harmonious process inside of the laboratory. Out of that process comes the generation of results. Results could be a blockbuster molecule, cost savings from improving experimental efficiencies, or it could be knowledge, just a better way of doing something. The scientific process is not linear, it's iterative. Scientists are always looking to get better with every experiment being done.
Next slide, please. This is what we call the lab automation consortium. Biosero started in the middle of the lab automation continuum. Our flagship product, Green Button Go Scheduler, was developed to provide scientists with the ability to integrate devices and capture data at the single work cell level. The next opportunity for us was to unify the process of samples and workflows, capturing data throughout all levels. If you go to the left-hand side of this spectrum, you'll see that again, things are done manually. Typically, that data is not captured all through the workflow. If you go to the far right of the spectrum, you'll see what we call a BioFactory, and that is where there's multiple work cells integrated into a complete workflow. Capturing data is the key.
We want to be able to capture the data from manual tasks done at the bench top in the same manner that is done for a completely automated biofactory. The digital capture of data combined with the physical flow of materials is what orchestration is all about. Next slide, please. Our customers. We've enabled automation and lab orchestration for the industry's largest pharma, biotech, and clinical diagnostic companies, government entities, food and agriscience companies, and some of the most notable academic labs in the world. We're enabling new formulations, discoveries, and cures for customers everywhere. Next slide, please. This is a video presentation of the biofactory. The presentation demonstrates a completely orchestrated workflow for patient samples. Different labware is used for multiple processes completed in a single workflow within the biofactory. All information is tracked back to the original patient sample, ensuring the accuracy of each patient's data.
You can see hundreds of different devices from multiple manufacturers all communicating and providing data throughout the integrated work cell. This particular platform is being used to supply genomic information for individual patients. Personalized medicine will require the processing of millions to billions of samples, and that's exactly what this customer is doing. We'd like to see cancer and heart disease, the two leading causes of disease-related deaths, reduced by 50%. One in every four deaths is related to heart disease. One in every six deaths is related to cancer. Early detection for these disease states is what's key. To achieve the results the world is seeking, to decrease deaths caused by cancer and heart disease, other disease states that impact the world, automation absolutely provides the best path forward. You can roll the film.
Just a little comment about that film. I think the thing to note about that is that not only are you connecting devices in that workflow process, but you're also connecting the laboratory itself. Knowing what the temperature is at, conditions in the laboratory, all things that can affect a patient's sample. That is truly Industry 4.0 with that connectivity. What Biosero is focusing on in our success is related to is really our partnership with our customers. Our customers, we call them our external team because it's really a hand-in-hand fit when you're working on these platforms. You can imagine they're not simple. They're not easy. You need to understand entirely what the process is and what the customer is driving to get the results. We work with them very closely, understanding what their needs are to produce the platforms.
I always tell our team we're a mission with a company. We really want to see heart disease and disease states eradicated, and again, aligning with BICO in that light to ensure that healthcare is better as we move forward in the world of discovery. Next slide, please. Well, I've already gone over the trends and market drivers, but again, to reduce the drug to market time by 50%, which would minimize the cost associated with the drug delivery discovery cycle. Processes more samples and data than ever before. Again, taking that data in, understanding what it is, being able to make rapid decisions. The scientific process, again, is not linear, it's iterative, so you're constantly trying to get better and better results. Feeding those results back into the platform is what's key. Real-time insights with meaningful data produces, again, better results for the future.
Next slide, please. 2023, what Biosero will be focusing on is our own internal processes, streamlining those to be able to deliver our platforms in less time and making greater impact. We're extending our OEM business. Our OEM business has risen 650% this year, and OEM partners are large partners in the industry. Some of the partners are actually competitors that Erik had described earlier. Sometimes we're competitive, sometimes we work together. Again, the goal is to provide scientists an integrated solution with the best tool sets to produce the best results. We're agnostic to the market, and that's what's key for the scientists. We're gonna grow our direct sales business through release and implementation of new products, and basically focus on Industry 4.0 that you saw in the film. I'd like to introduce Dr. Holger Eickhoff.
Holger is a colleague, someone I admire. He's done a great job, great founder, and someone I look forward to meeting every time I see him. Take it away, Holger.
Thank you very much, Tom. And welcome audience to a now much different accent, which is very German after all the American that you have heard. Now, I hope I can be heard loud and clear. My name is Holger Eickhoff. I'm the founder of Scienion. That's a company located originally in Berlin. I founded the company 2001, and together with the team here, we were steering the ship through 9/11 and 2001, grew then through a banking crisis, managed the pandemic and are actually growing from record year to record year even now in the kind of new normal.
The company has expanded over the years from actually Berlin to another city in Germany called Dortmund, which is about a three-hour train ride between the two sites, and we have expanded into the U.S. To Phoenix or Tempe in Arizona. We have a contract manufacturing location in Chichester in the U.K., and we have a subsidiary called Cellenion, which does live cell single-cell dosing, and they are based in Lyon in France. I joined BICO in 2020 when during the pandemic CELLINK acquired Scienion, and it was a fun ride for the last 2+ years. Scienion is part of a larger unit called Bioautomation within the BICO world, and that's shown on the next slide.
Bioautomation is four companies, of which two I have already mentioned, Scienion and Cellenion. There are two other companies in the group, which is Ginolis, which started in 2011, and Q Instruments, which started in 2003. All the companies in that business area are very experienced with their customers, and the customer journey does take everywhere from a couple of weeks to 10-15 years. Very important is that all companies in that group have scalable technologies, and we are all precision liquid handling or precision engineering companies. We work at submicron resolution for movements, and we can dose very accurately very small volumes of liquids, which is picoliter volume.
For those of you who are not that familiar with it, typically everybody knows what a liter is. That's like a box of milk. Thousands of liters, a milliliter, thousands of that is a microliter. Thousands of that is a nanoliter, and thousands of a nanoliter are picoliters. This is what we dose at a precision and resolution that is outstanding. In the next slide, you can see where we are located. Currently, we deal mainly in the diagnostics segment with our companies.
Biosensors have been a continuous topic over the past years, and they're growing because we have a lot of application where the sensing goes from, you know, what was historically known as a one measurement thing to continuous monitoring, and we are very busy with that. One important thing I wanna mention is that our sales model is that we offer not only instruments and services for the instruments, but also contract manufacturing. Where we offer a customer that they can choose between an instrument or a contract development or contract manufacturing in our companies, and this is quite unique and differentiates us from our main competitors, which are, like, Thomas already said, sometimes we compete, sometimes we work together, and they are listed here.
It really depends on which part of the market segment we are looking at or which company we are looking at in Bioautomation. The total addressable market was already cited. It's significant and big. Our market position is that we are in most of the top 25 diagnostic companies, we are present there in the manufacturing of products and have a range of offerings for those, and we are trying to move into the pharma segment with our single-cell genomics and proteomics offerings. The product offerings I will name those in the following slides, but so that you have heard some, a couple of them are really tongue breakers like sciFLEXARRAYER or LFDA makers. We have great products too, like BioShakes and ColdShakes. Next slide, please.
I will introduce all the companies and the offerings now to you, and the most outstanding point with Scienion and Cellenion is that we are probably the only companies capable of dispensing both biological reagents and viable single cells at an industrial scale. I will show you in the following slides how that is possible. Next slide, please. The technology that was originally developed for handling actually dead matter, so dead matter meaning DNAs, proteins, antibodies, everything that needs to be functional but is not living, and this is what we would dose with our technology. Then we got into various volumes or nanoliter dosing, picoliter dosing, and then had customers that wanted to dose single cells.
Our technology is so smooth that we could actually dose those cells living and that is quite unique in the field. We do manufacture all the technology in-house, so it's nothing sourced in for the core dispensing parts or all the golden parts you see in the center picture with the glass tips, which are inert, are the key technology that allows both of those. The next slide, you will see how that is scalable from R&D for the Scienion world of things. If you start in the upper right corner, we offer R&D equipment and as you know, customers want to scale, we have larger equipment called the S12 or SX systems.
When the customer project becomes very successful, we have the sciFLEXARRAYER S100, which is our top-end product for continuous manufacturing. As customers then develop new assays, new workflows, we also then start the cycle again with another instrument in R&D, another manufacturing line. This has actually all around Scienion our technologies that I've just explained. The picture is actually very similar shown for Cellenion on the next slide, where we have instruments also ranging from R&D to manufacturing, where we introduced the cellenONE, which is a single cell living single cell dispenser. We have introduced a spheroid dispenser for larger particles that has created some significant market uptake, higher batch solutions with the cellenONE in a biosafety environment.
also, together with Biosero, and actually Q Instruments, the cellenONE HT, which is a standalone instrument for high throughput cell-based work, and I will get to some customer study in a minute. This is, the scalable technologies are not only there for CYTENA and Cellenion. Also on the next slide, you see, Ginolis, very scalable technology where the customers can start very small with an entry, a small footprint instrument, and then scale this to basically any scale they would like to scale. The last company in our group is shown in the next slide, named Q Instruments. Q Instruments is a specialist in shaking and heating and cooling of any biological vessels that are used in any biological labs.
They have done enormous science to mix liquids adequately by shaking them, and we have used their shakers for a long time inside our company. I know that Tom at Biosero also has used them for a long time. It's an industry standard for heated shakers or cooling shakers with a very nice possibility to actually modify the shaking orbits. This leads me to our customer examples on the next slide, and one further. To start with the kind of Q Instruments world. One main customer or one collaborator in the past has been Becton Dickinson, and they have a range of instruments called the FACSLyric. It's a cell sorter cytometry system.
Every cytometry system that is sold with this universal loader has a Q Instruments system in their solution. This has been now done for many years as a long-lasting relationship, and we are looking forward to a long-lasting relationship with BD in the future. The Q Instruments technology is also present in the next slide's product, named the cellenONE HT, which is the product I had mentioned before, mainly used for clonal development work and unsupervised work for handling single cells. We have already sold a couple of those to pharma and have been super successful in there because it's non-attended use.
Like Tom has already said, there's very little personnel involved, data is outstanding and you will find user testimonials on all kind of social platforms for this. This platform involves the use of consumables that we have launched that is shown in the next slide, which is the cellenCHIP and the proteoCHIP, which is a consumable for small volume liquid handling and allows to run a genomics analysis and proteomics analysis. The chips look slightly different, but so reaction volume's less than 200 nanoliters are possible with that, and this allows very inexpensive reactions.
Plus, we have the possibility not only to analyze for DNA or RNA or protein content of a cell, we also have an image of the cell, which is kind of a very unique point, mainly for pharma companies. We see this technology, and the ones that have followed Bioautomation in the past know that we have taken a technology on board named nanoPOTS, that will be a key towards into the multi-omics space because it has been published that we can identify the genomics and proteomics content from a single cell, which is just one cell, not two cells. Which is an outstanding result.
Another outstanding result utilizing this technology is shown on the next slide, where our customers have developed protocols to utilize this technology for cancer applications, so for whole genome sequencing in cancer cells. It started with a publication in Cell. Now, this has been rolled out by UBC to some other coworkers of them. It has then for some clinical studies been published in Nature and is currently being implemented in several sites in New York, London, Tokyo, and Sydney. We are looking forward to supply those customers with more instruments and cellenCHIP.
While this application might sound very futuristic, we have one that is in the here and now, and is shown in the next slide, which is a 12-year journey we had with a company named Mobidiag, which was acquired by Hologic last year. On the next slide, you can see a little bit of the development of the project. It's a cassette that this company had developed, and the actually testing part of the cassette was developed in France by a company called Genewave in 2000 or before 2011. Mobidiag acquired Genewave. We were active at Genewave and took this forward to Mobidiag.
Novodiag at Mobidiag, together with Ginolis for manufacturing solution, and in 2019, the kit manufacturing started as a real-time PCR test with microarray, differentiation at the end, and allows to identify a pathogen in any biological sample. We were very happy to accompany them with the growth. Before I will keep silent now for 2 minutes because the next slide will show you a movie explaining or showing the technologies we have implemented there.
Those things that you have just to remember is that, in the background, you will see material handling, and in the foreground, the actual cartridge making, including all kind of adding samples to it, adding valving and to welding those things. We will show this, or you can see this in the next slide, which is a movie. Enjoy. Well, after that instrumentation experience, I would like to also stress the fact that we are a kind of a significant contract manufacturing provider.
I've taken as an example that we do, beside all the diagnostic manufacturing we are doing for companies like Dna Nudge or Phenomenex, I've taken on a 3D implant contract manufacturing project for a company named Nanochon, where Nanochon's mission is to develop a new approach to replace cartilage. What the picture shows here is, you know, you have a dysfunctional piece of tissue that gets debrided, and then a patch gets inserted to replace standard joint replacement. There was a kind of a prototyping available of this. On the next slide you can see that, together with Nanochon and for their ChondroGraft technology, we have developed new protocols to actually allow manufacturing of those.
These implants have been quite stable two months after inserting them. I think Nanochon is quite happy with what we are doing. We have put the whole manufacturing process into an ISO 13485 compliant environment. On the next slide you see how this looks like in reality. This is a horse knee where you see a debrided cartilage, and then the trimmed Nanochon chondrograft implanted with some fibrin glue. This is also beauty of what we can do because we can print those discs at any shape or form. Did also develop assays for sterilization and poly vinyl alcohol leaching levels so to make sure it can be inserted safely.
We are positive, very positive for this project to continue this for a lot of applications. It started all in human. It seems that there's also a veterinary market for those. On the next slide, give you a little bit of the outlook for 2023. We are currently working with a joint sales force, and we will continue doing this to offer our products for early detection and monitoring of diseases with affordable diagnostics. That's our home turf, and this is where we wanna continue our market position and also offer a complete solution for medical device manufacturing and drug delivery. We have seen a significant uptake of our technologies in single-cell genomics and proteomics markets.
I think I've given you some good thoughts for contract manufacturing and automated cell line development. One thing I would like to finish with is that we are very active player in the multi-omics arena. I think our technology is the only one that provides access to genomic and proteomic content of single cell. I'm quite proud that our business area is cash flow generating. With that, I would like to hand over to Alex Armento, who will go now with some American accent into MatTek. Thanks a lot.
Very good. Thank you, Holger. And thank you all for your time today. It's great to be with you. My name is Alex Armento. I'm the President and CEO at MatTek Life Sciences. For those of you currently unfamiliar with MatTek, I'd like to give you a brief overview of our business and explain how we fit with BICO's bioconvergence agenda. MatTek is a pioneer and world leading provider of ready-to-use three-dimensional human tissue models that are used in product development and regulatory testing applications. We are the oldest company within BICO, and since our founding in 1985, MatTek has built an excellent reputation for our tissue engineering and our expertise in developing and validating human cell-derived tissue models that replace certain animal tests within drug development and personal care product safety testing.
Next slide, please. MatTek, along with Allegro 3D, advanced BioMatrix, Visikol, and Nanoscribe make up the bioprinting business area within BICO. Individually, we offer industry-leading products and services aimed to accelerate preclinical drug development while reducing, and in some cases, replacing animal testing. Together, we offer solutions for creating and enabling advanced 3D cell culture models for drug screening, disease modeling, regenerative medicine, and personalized medicine. We believe that our technologies can help advance preclinical drug testing to bring the right medicine for the right disease to the right patient. Next slide, please, and feel free to roll the video.
What do you see as the future of healthcare? Imagine a world where medicine is perfectly tailored for you. A world where medical products no longer rely on the archaic practice of animal testing. A world where treatments are created specifically for you. Through the bioconvergence revolution, we are solving the challenges of the coming decades by preparing today. By making the right decisions and investments today, we are paving the way for coming generations to have a better future. Today, we are steadfast in our focus to create and develop methods, technologies, and solutions that will advance medicine. Medicine that is based on real data, medicine that is based on relevant models, medicine that is made for you. With MatTek, the world leader of in vitro human tissue models for clinical and preclinical studies, we make a leap towards the future we envision for generations to come.
We are strengthening our position as a bioconvergence powerhouse, reinforcing our founding stance to put an end to animal testing by providing alternative and superior testing methods. We see a future, a future where robotics, artificial intelligence, advanced genomics, and bioprinting come together in a beautiful harmony to fundamentally shift the quality of healthcare to create the future of medicine.
Today, MatTek has developed the largest portfolio of proprietary three-dimensional human tissue models and disease models in the world, selling our products and services to pharmaceutical, biotech, cosmetic, personal care, academic, and government customers worldwide. Produced from primary human cells and using innovative tissue engineering technologies, our tissue models provide microphysiological platforms that model highly relevant and more predictive human biology. In addition to our products, MatTek, with the support of our industry and regulatory partners, has developed over 30 in vitro or non-animal assays that evaluate toxicology and efficacy of active compounds and final formulations. The outstanding reproducibility and high predictive capacity of our tissue models has led to impressive results in international multi-laboratory validation studies. In fact, 6 of our test methods have been formally validated and recognized by the United States, Europe or international regulatory agencies as standalone replacements for animal-based tests.
Next slide, please. MatTek and our products have generated more than 1,000 peer-reviewed papers and technical references and over 500 patent citations, establishing our market-leading position in this dynamic and cutting-edge industry. MatTek currently employs 93 scientists, laboratory technicians, and client-focused staff between our facilities here in Ashland, Massachusetts, and also in Bratislava, Slovakia. With over 20 years of publicly available validation data, we conservatively estimate that the use of our models has led to the reduced need of laboratory animals by over 95,000 over the last few years, and this is a figure that we aim to grow in the coming years and decades. Next slide, please. MatTek's focus as a 3D human tissue model product and service company allows us to operate within multiple large markets and growing markets.
The in vitro global toxicity testing market includes safety assessment of chemicals, drugs, cosmetic products, food additives without using the use of animals as a test model. In 2022, this market is estimated to be at about $11 billion and is expected to grow at a compound annual growth rate of 10.8%. The nascent 3D cell culture market was valued at $1.3 billion in 2022 and is expected to grow at a compound annual growth rate of 15.6%. 3D cell cultures seem to seek to mimic tissue and organ microarchitectures for studying human-specific diseases. Such cell culture models have been shown to be predictive of in vivo environments and thus useful in a variety of applications. Next slide, please. An important part of our culture at MatTek is to be extremely customer-centric.
We pay very close attention to the feedback from our customers, and I believe that it's these relationships that have been critical to our innovation and success over the last several decades. MatTek has a stable, diverse, and expanding customer base, including large pharmaceutical and biotechnology, emerging growth and midsize companies, as well as personal care and cosmetic companies, academia, and government agencies. We serve over 375 tissue model customers annually, including 10 of the top 15 pharma companies and 10 of the top 15 cosmetic companies.
With over 80% of our revenue coming from repeat customers, we've established many very loyal relationships within our industry, with many customers having been with us for over 15 years. While most of our customers are using our tissue models to conduct very innovative and important science, I'd like to take a moment to spotlight one of our customers and really groundbreaking project that we've been working on recently. Next slide, please. After working with AstraZeneca for a number of years, they approached us recently with a problem. They had a cancer drug that was in a clinical trial, and it was found to be very effective at attacking cancer cells, but it was also causing significant and dose-limiting gastrointestinal toxicities. The compound had passed through preclinical testing without any major safety concerns.
Given that GI toxicities are among the most common adverse events in phase 1 clinical trials, preclinical testing for GI toxicity, which depends on animal tests, is not accurate in translating true safety profiles in humans. In fact, in a retrospective analysis, it was shown that rodent models had only 46% clinical concordance in predicting human GI toxicities. Higher order animal species had slightly better clinical concordance, but testing in these species is limited due to ethical and cost considerations. Scientists at AstraZeneca contracted MatTek to develop a test for GI toxicity using MatTek's EpiIntestinal human tissue model. Using a collection of 31 marketed drugs with known clinical GI toxicities, the EpiIntestinal assay was found to have a predictive accuracy of 84%.
Not only is the EpiIntestinal assay the first in vitro assay to be validated for GI and drug safety testing, the assay is more accurate than expensive animal models and can be used to screen compounds earlier in preclinical testing, saving valuable time and money. Next slide, please. There are really four major trends that we believe will drive the market growth in the coming years, and these are led by a major focus on alternatives to animal testing. From an ethical perspective, consumers of cosmetics and personal care products have been pressuring the industry for years to shift away from animal testing, and this has led to several legislative wins, as animal testing for cosmetic products is now banned in Europe, India, Australia, and parts of North and South America.
From a scientific perspective, historically high rates of drug attrition have plagued the pharmaceutical industry for years. Current estimates now tell us that it takes 12 years and around $1.8 billion to develop a new medicine. While the drug development process is highly complex and drug failures are expected, the accumulation of drug failures in later stages of development lead to years of lost time and hundreds of millions of lost dollars. A major reason for this late-stage drug attrition is that current preclinical testing paradigm relies on animal models to guide decisions on which drugs move into the human clinical trials, and animals are not very predictive of human outcomes.
As the pharmaceutical industry focuses on alternatives to animal testing, and with the FDA Modernization Act moving its way through the U.S. Congress, new innovations are well underway in the area of microfluidics and organ-on-a-chip technologies. Microfluidic platforms enable 3D cell culture to develop microenvironments highly relevant to human physiology and allow for tissue models of various organ systems to be interconnected. Work is currently focused on increasing assay throughput and improving user interfacing, but we believe that innovations in this area will be key to ultimately replacing the laboratory test animal. A longer-term market driver is in the area of personalized medicine.
The 3D cell culture industry continues to advance. We think there will be a significant opportunity in, for example, testing a panel of all available marketed drugs on a specific patient's healthy and diseased tissue, to find the right medicine for the right patient and their specific disease. In all, we believe that the bioprinting group here at BICO is uniquely positioned to take full advantage of these market drivers in the coming years. Next slide, please. To grow upon our market-leading position, we at MatTek are very focused on several key projects for 2023. In the first half of the year, we plan to commercialize several new tissue models for pharmaceutical drug development.
Our 3D liver model has been developed to study how the human liver will metabolize or break down drugs, and to evaluate the drug's potential to cause liver toxicities. Our new 3D kidney model has been developed to evaluate the potential for drug-induced kidney toxicity and to assess how the body will eliminate the drug through the urine. Finally, our product line of 3D human cancer tumor models will enable drug companies to screen their compounds in ready-to-use high-throughput panels of patient-derived cancers. In another project, working with our sister company, Visikol, we are currently validating a first-of-its-kind complex co-culture system of the human intestine and liver combination. Developed for high-throughput screening, our first pass metabolism assay is automation-friendly and is used to evaluate drug uptake of an orally administered drug through the intestine and its subsequent metabolism by the liver.
This assay will also predict GI and liver toxicity of either the parent compound or any of its metabolites within a single assay. Finally, we expect to make great progress next year working with the team at CELLINK to develop a microfluidics and organ-on-a-chip platform capable of integrating tissue models of up to eight healthy or diseased organ systems. We expect to overcome many of the limitations of existing platforms, including throughput and user experience. That's all for this for now, but more information will be available soon. I wanna thank you very much for your time and I hope you enjoy the rest of our Capital Markets Day presentation. Åsa, I'll pass it back to you.
Well, thank you, audience, for all the questions. We received quite many. We're now going into our first Q&A session, and the first colleague of mine to be addressed is CEO of MatTek, Alex Armento again. Also worth mentioning, the questions addressed in this session will also be published on your screen as we go along. Alex, despite an industrial tissue engineering for engineering therapeutics, functional organs is far away in distant future. During the presentation, it was mentioned that some sort of industrial tissue engineering sites are emerging already. Could you please specify for what purposes are end users using industrially produced tissues in near future to add investor understanding of the market?
In our space, thank you very much for the question. Yeah, in our space, our customers are using our tissues that we produce on an industrial scale, for all sorts of product safety testing, efficacy testing, of many different tissue organ systems. I think, you know, clinically there are sites emerging. There's a lot of work being done in this area, mainly centered around more simple tissues or even cells at this point, cell therapies. I think Erik mentioned earlier the corneal work that's being done. You know, I think in the industry clinically, it'll be starting with the more simple tissues building up the complexity of the tissues, as innovations increase.
Thank you. Again, on MatTek and for Alex, what's your impression being integrated into BICO? A lot of new bioprinting companies being acquired in 2021. How are you collaborating with the rest of the bioprinting team, selling Visikol, et cetera?
I mentioned actually projects working with both of those companies. You know, Visikol is a top-notch contract testing lab that really focuses on in vitro science, and we have a lot in common there. We are working with them to develop new assays using in vitro tissue models to advance and accelerate drug development. I mentioned briefly the intestine liver, and I think that's a start of a very long and fruitful relationship that we will be having with Visikol. With CELLINK and other technologies within the bioprinting area, you know, this really offers MatTek a large opportunity here to not only advance our tissue engineering, but also be able to offer new products to customers.
I was mentioning earlier the organ-on-a-chip systems that we are working on. You know, I think that's a really interesting area and it's bringing the tissue engineering and the bioprinting together. I think is the way that we're gonna be able to integrate systems with multiple tissue types to really move away from the laboratory animal in the future.
Thank you. New collaboration between MatTek, Echo. What does this customization entail, and how much of a difference does it make for a customer? What in general is? Would they not in general have a Echo, MatTek scope already?
I didn't mention this in the presentation, but another area that MatTek operates in is a laboratory dish consumable, in which the bottom of the Petri dish is actually a glass coverslip. The cells that are being studied can be cultured in these dishes. These dishes can be moved right onto the microscope without you know bothering the cells at all. There are a lot of live cell imaging applications and that we are working with Echo on. It's a really nice partnership because Echo has you know world-leading microscopes that are being placed in labs all across the world.
MatTek produces these consumable products that are used for live cell imaging and other microscopy endpoints. It is a very nice synergistic fit between the two of us.
Thank you, Alex. Now the questions will be for the CEO of Biosero, Tom Gilman. Tom, the first question is, given the current macro outlook, are you seeing a slowdown in number of CapEx projects in automation?
No, we're actually seeing an increase. Again, for those things I cited, data integrity, if you can really reduce the time to market for these companies, and it's an immense savings that far exceeds the cost of automation. We're actually seeing a drive towards the bio factories as well, incorporating larger automation, as well as on the other side of the spectrum, which is our lab experience products, capturing data on the low end, and then unifying all that. No, we're not seeing any cutbacks.
Thanks. Agnostic platform, are you seeing any limitation from the customer side to include BICO systems in automation projects, customers preferring to include other instruments? Give one example, please.
Sure. We, you know, we don't tell customers what to use. We're completely agnostic. We don't tell scientists how to do their science. We simply have a great applications team to assist them drive their science onto automation platforms, and that's really our role, and that was something BICO also made clear to us as well. They wanna be in an agnostic environment for the scientists to make the best decisions they can. Again, our goal is to save lives and we, like I said, we all take that here at BICO very, very personally. This is dear to our hearts. Hey, the best products win, and if the BICO products are the best products, the BICO products would be on our platforms.
Right. Noting there you have diagnostic customers in the U.S., how important is lab automation for the diagnostic industry?
That's extremely important. As you can imagine, the integrity of data for patient samples is key. As they're trying to process. I explained a little bit, maybe not well enough, but during that COVID pandemic, when it hit, you had many, many more samples being run. We had to deploy a lot of platforms, but again, sample integrity for the patient sample is what was key. As the science world drives forward, what you're seeing is a lot more samples being processed at a much greater rate, and the science is very difficult. I mean, coupling these two things, automation and science, if you choose this as a profession, you're a bit of a masochist, but it's fun. At the end of the day, I can look at my colleagues, we all love it, you know? It's a great environment to be in.
It's inspiring. Anyway, hope that answers the question. Great question.
Thank you. On the note of competition, I know a lot of high-profile players, Danaher, Thermo Fisher. How do you compete in this crowded space? You have worked in a competing organization, right, Hudson? What would be the major difference in Biosero?
Sure. Biosero is a software company. That's what we are first and foremost, and so we develop software tool sets for scientists. The other companies that you mentioned, I've also been part of the Danaher organization as well when I was at Beckman Coulter. That's where I started my career. They focus on providing solutions through hardware and software. But for us, software is first and foremost, and that's what we focus on as a company.
Thank you. Last question for you, Tom, for now. In your demo lab in California, roughly how many demonstrations are you doing monthly? Are you able to handle the demand on building a massive backlog?
I assume when you say backlog, you're talking backlog of deployed platforms. We doubled our number of team members this year, and as you can imagine, team members of the capacity and capabilities we have are not simple and easy to find. But we are doing it. We're scaling. We're working with our partners to, in an effort to help scale them as well and help them learn automation. In regards to the question about, I'm sorry, was it, cleansing control group and where I worked at before, I think that may have been in the previous question. But again, I hope that answered that particular question or that section of it.
Yes. Thank you. Well, thank you all in all, Tom, now the questions will be for the CEO of Scienion, Holger Eickhoff. Holger, current exposure in the diagnostics industry and biosensors, this was big historically. Is this still the case?
We are active in all kinds of continuous monitoring projects, not limited to diabetes industry. There we see a very clear trend that the actual sensors are used to analyze not only glucose but also other side effects of diabetic people, for example, ketones or ketoacidosis as a second marker. We are very well positioned with our technologies to actually address this because the multiplexing of tests is in our DNA since the company's inception. We are looking at a rising market there.
Well, thank you. You previously had some exposure to COVID test. How is this currently looking, and are your customers that switched to COVID testing back to normal operations?
COVID testing was in fact huge for us over the past couple of years. We all hope that the capacity that is existing for those tests is actually sufficient, that there's no more waves coming. What we are seeing regarding the test manufacturers is that those move what they have developed for COVID into kind of you know respiratory tests or you know where companies that had developed breathalyzers for COVID detection, they now move into tuberculosis, for example. There's a number of companies especially on the point of care PCR front, which are moving into lifestyle, which is another big mega trend that we are seeing.
What I've said about the glucose monitoring and the new applications there, you know, it is not limited to diabetic people. It's now in sports where people measure their energy consumption. There's companies addressing this with lactate sensing, which is just another enzyme on the sensor for a company like us. Going back to COVID and its applications, I think, again, we are very well positioned in kind of adding additional markers to what was originally perceived as a purely COVID test to enable more precision medicine for the future. We see a good uptake of this in the marketplace.
Thank you. The cellenONE recently launched, and how has it been received among customers?
The cellenONE technology is still a very young technology, but it has put our organization quite on a growth trajectory. The cellenONE products get a larger share in the overall sales of our unit. I think especially with the moves that we have done in the proteomics market, where we have done marketing agreements with the market leaders for the analytical instruments named Bruker and Thermo Fisher, has taken us to the forefront of this research, which is quite thrilling, especially for oncology and autoimmune diseases.
Thank you, Holger. On the note of Q Instruments, seeing this instrument being integrated into several large dispensing players, as you describe, is there any risk that customers could develop their own?
The do it yourself or home brew is always an issue in our market. People will continue doing this. There will be people developing their own shaker in a lab somewhere. When it comes to kind of industrial performance, delivery, day in, day out, the same quality, a well-engineered product, service around the globe, I think that we are in a very good position there with Q Instruments to actually grow the business.
Well, thank you for your answer, and now I have a question for our CEO, Erik Gatenholm. Which synergies have you already realized from this year's acquisition of Allegro 3D?
Thank you, great question. First of all, before I address that specifically, I think it's important to state our strategy as a company is really to focus on a decentralized way of working so that the companies can ensure the greatest success with their customers and the customer communities. With that being said, we don't force synergies in any of the companies just for the sake of showing synthetic synergies or some kind of unachieved success. It's very important for us that the companies operate successfully in the market and deliver the solutions that the customers are asking for. With that being said, we have done a few bolt-on acquisitions such as the one Allegro 3D, which adds basically additional light-based 3D bioprinting capabilities to the selling product portfolio. It's very good acquisition.
Allegro 3D is a fantastic company, had a great technology that was developed out in San Diego, California, with a focus on speeding up the tissue model production, capabilities. So far, acquisition's been going very well. It's integrated within CELLINK. A product has now been launched called the BIONOVA X, and it's addressing the light-based bioprinting market. The demand for the product has been fantastic since the acquisition. We look forward to scaling up that and ensuring a continued success with that product portfolio.
Well, thank you, Erik, and I will now hand over to our Interim CFO, Mikael Engblom, who gives us a financial update and will present our recently announced financial targets. Welcome.
Thank you. My name is Mikael Engblom, and I will take you through the financial performance and new financial targets. This slide presents the trends to date in terms of profitability. The company reported organic growth for the first nine months this year of 24% and 10% in constant currency. BICO has performed healthy gross margins above 70% during the period. We have seen operating expenses increasing sequentially quarter to quarter. During 2021, this was partly due to acquisitions, and during 2022, due to organic cost increases, for example, increased number of employees. This is a result of building capacity to support future anticipated growth. In the 2nd quarter, we also recorded a cost for bad debt provision of SEK 44 million. There are large differences in the profitability between the companies and the BICO Group.
As an example, the top four companies in the group reported combined EBITDA of SEK 185 million during January to September this year. However, the four companies with the weakest financial performance reported combined EBITDA of SEK -137 million during the same period, whereof SEK 44 million was the bad debt provision I just mentioned. In July, among others due to the weak combined profitability, the company launched a cost reduction program targeting reducing expenses by SEK 100 million on a twelve-month basis with full effect from the 1st quarter 2021-2023. The fact that the picture is so differentiated in terms of profitability in the BICO Group has resulted in BICO continuing to invest resources in the high-performing companies while reducing cost in the financially low-performing companies.
The cost reduction program has been directed to the loss-making companies and to group central costs. In the 3rd quarter this year, we saw signs of improved profitability in the group and reported a small positive EBITDA after 2 quarters of negative EBITDA. The improved profitability is primarily a result of increased sales and currency effects, and to some extent, the initial effects of the cost reduction program. This slide presents the trends to date in terms of cash flow. June 2022, BICO has reported significant negative cash flows totaling SEK 802 million when including changes in short-term investments. During this period, we have spent SEK 124 million on building facilities in Finland and Germany, and we have paid earn-outs related to past acquisitions of SEK 190 million.
If we exclude the investments in facilities and earn-outs, the negative cash flow amounts to SEK -488 million. The cash flow from operating activities this year amounts to SEK -200 million, whereof SEK -178 million was due to increased inventory. The increased inventory is primarily a result of efforts to reduce supply chain risks. Cash flow from investments was, besides the mentioned facility investments and earn-outs, impacted by acquisition of intangible fixed assets, primarily capitalized development cost of SEK -189 million. If we summarize the situation, we can conclude that the negative cash flow is a result of several factors, weak profitability from the combined business, increased working capital, primarily from inventory, facility investments without external financing, and earn-out payments related to past acquisitions.
However, we did see signs of improvements in the last quarter, where the cash flow from operating activities improved significantly compared to the past quarters. The management has developed a plan to strengthen profitability and generate positive cash flow. The plan is based on continued sales expansion driven by market growth. There are growth opportunities in all companies in the group, even though growth rates differ among them. Another component in the plan is the cost reduction program targeting reducing expenses in excess of SEK 100 million on a twelve-month basis with full effect from the 1st quarter 2023. The program is, as I mentioned, directed towards the loss-making companies and group central costs. The company intends to continue to invest resources in the high-performing companies to support their continued growth.
On the financing side, the plan is to secure external financing for the ongoing facility construction projects in Germany and Finland, which has impacted the cash flow during this year. In order to reduce the working capital tied up in accounts receivable, the management is planning to introduce factoring to finance the accounts receivables. The plan is to start with some of our subsidiaries in the beginning of next year, and we plan to free up large amount of capital tied up in accounts receivables. In addition, as a consequence of factoring, there will be a reduced need of working capital to finance future growth. We're also reviewing the inventory levels that has increased significantly during this year. We expect inventory to be reduced following the anticipated high volume of deliveries in the fourth quarter, following the BICO seasonality patterns.
We are also reviewing inventory safety levels in order to reduce inventory. With these activities, we expect earn-out payments next year to be financed by available cash. The board has decided on new financial targets for BICO, valid from 2023 on a midterm basis. The new sales target is double-digit organic growth in constant currency. The growth target captures the market growth opportunities we see in the field. The new profitability target is to have an EBITDA margin less capitalized development cost of at least 10%. The margin target is set to capture the profitability, including the total R&D spend. The margin level is also set to enable positive cash flow, excluding acquisition-related items. The new financial leverage target is that net debt in relation to EBITDA should be less than 3. This level enables flexibility in future financing alternatives for the BICO Group.
In summary, the ambition with the new financial targets is to support self-financed, profitable growth. With that, I hand the world back to Erik.
Thank you, Mikael. To summarize, and first of all, thank you, team, for the great performance today. BICO is a bioconvergence powerhouse on a mission to revolutionize the treatment development industry for years to come. With our newly coined strategy, with focus on improving operational and sustainable excellence in the field of laboratory automation, strengthening internal synergies and teamwork, expanding our market position, and delivering our new established financial targets, we're excited about our future. We're on an inspiring mission to create the future of health and positively impact global healthcare for decades to come. This will not happen overnight, but rather in multiple steps in the right direction. We're confident that with our first-class team, technologies, products, and vision, there are no limits to what we can achieve when we work together and as we start our next 7 years of our story.
Lastly, as Napoleon Hill so eloquently stated, "The starting point of all achievement is desire.
I believe this applies very well to us because if there is something we all have here at BICO, then it's the desire to change the world for the better. With that, we hope that you've enjoyed the 2022 BICO Capital Markets Day. We would like to thank all of the BICO members who presented today, all the members who helped arrange and prepare this great event, and most importantly, all the listeners who decided to join, taking time out of your busy schedules. We now welcome you to the final Q&A session.
Well, thank you, Erik. We'll start out with Holger again. Could you please elaborate on Bruker and Tecan collaboration?
Bruker and Thermo Fisher are the leading companies when it comes to analytical equipment in the proteomics space, especially the single-cell analytics there. The setups of the 2 companies are different, so are the user bases. One company works with what are so-called isobaric labels. The other company works label-free. We made the decision that we are agnostic to this approach of the final end users and that we offer sample prep methods for both analytical tools. This is why we have teamed up with Bruker and Thermo Fisher. As I stated before, it is going very well.
It's very thrilling to see how we can work together with those companies on specific workflows for their customers to actually offer very specific solutions for their customer base. It is quite thrilling to see how this has extended our reach in terms of sales footprint in the field.
Thank you, Holger. Can you please also mention the progress with contract manufacturing and its share of sales? Could you describe the commercial potential of Scienion with the CYTENA deal?
Thank you for the question. That's very interesting because, you know, we have, in contract manufacturing, there's always a kind of a coming and going and conversion of customers. You know, they come in for contract manufacturing, they take an instrument later or, you know, don't wanna have instruments and ask us to contract manufacture. So it is going up and down. All in all, I think it is quite stable in our revenue mix, and it's a central part. The Nanochon work that we have done together is super thrilling. It will not only depend on the excellence of our work, which I think we have shown what we can do.
It will also depend on Nanochon, how they get through all the regulatory approvals required. We think we have developed a very good tool set for them and will help them. We hope that this will go on quite well. This is a little bit not only in our hands, but the work will lead towards the fact that we'll find other customers in that segment.
Thank you, Holger Eickhoff. The next question is for Alex Armento. How far are we really from replacing animal testing?
You know, that is a challenging question to address. We think about it often. There are a lot of things that will need to happen, many of which are out of our control, to come up with a definitive answer on that. Specifically, it has to do with, you know, regulatory and legislation. We are starting to see some movement there, you know, with the FDA Modernization Act. It's a very good step in the right direction, and we're confident that that will pass through the Congress. It's a very challenging question to answer right now, just given the complexities of the industry.
If I were to throw an estimate out there, I would say potentially in the next, you know, decade away.
Thank you. The next question. Now we're going to financial questions. I will address those primarily to Mikael. What are you doing to improve profitability?
Referring then to the bottom four companies. In terms of the cost reduction program, we are addressing the companies that have the weakest profitability, that are reporting losses, and the ambition with the program is to make the companies turn into profitable companies. The cost reduction program is targeting reducing operating expenses and personnel expenses. The biggest item in the cost reduction is related to personnel savings.
Okay, thank you. Which of the companies drove a better organic growth on a segment level?
Yeah, on the segment level, I mean, we don't go into disclosing details on each individual company. The segment level profitability, growth is available in the report.
Okay. What does it mean with midterm 2023?
It means that the new financial targets are valid from 2023 on a midterm basis, so that means for the next coming years.
Thank you. How soon do you expect to become sustainably free cash flow positive? Can you elaborate on that?
The new financial targets that we have set is designed to support future positive cash flow. We have not set a date when we forecast that we will be positive cash flow, but that is the ambition.
Thank you. The next question is really for Erik, and could you please quantify or give us some examples of the approximate customer split between academic institutions, pharma, diagnostics?
Certainly, unfortunately that information is not readily available out in the public. Something we're working on quantifying with more detail in near future. I would say the split is quite significant depending on which companies we're looking at and which business area we're looking at. For instance, Biosciences business area had quite a large exposure to pharma and industrial customer segments, and same thing with Bioautomation, while perhaps the Bioprinting business areas is mainly targeting the academic or research institution-based customers.
Okay, thank you. In the business model evolution slide, to what degree are you already seeing U.S. $3 million-dollar orders for such a large automation facility?
I think we'll let Tom actually respond to that question. Tom, do we still have you with us?
You do. I'm sorry, could you repeat the question again?
Sure.
In the business model evolutions slide, to what degree are you already seeing U.S. $3+3 million-dollar order, or $3 million-dollar orders for such-
Sure
large automation facilities?
Yeah, it is mainly large pharma and the clinical diagnostic area where, again, you're testing very large sample amounts or driving costs down by getting your results faster. Yeah, those would be the two sectors.
Okay, thank you. Let me just read 2 of the recent incoming questions here. This is actually a question from Mikael. How do you see the market develop as a whole with the current interest rate and increasing cost of financing?
Yes, I mean, it is quite clear that the financing cost is increasing as a consequence of inflation and the increased interest rates. For BICO we have convertible bond at the fixed interest rates. That is the current major financing source besides equity. Of course, looking into new financing options that we have discussed about factoring and facility financing, the increased interest rates of course impacts the price for such financing also for BICO.
Thank you. The next question is about organic growth and a new target. Could you address what changed it and how did you set up the new growth goal?
I can address that, Åsa Hillsten. If we're looking at the new financial target of double digit organic growth, it really stems from two changes. First of all, we're looking mainly at the laboratory tools and automation market, which is growing at 12%-12.5% CAGR. We intend to expand and grow within that market. It's a quite healthy market growth rate of those levels, of course. The second perspective is obviously looking at when we established our previous financial targets, we were basically three or four companies in this group. We were quite a small niche player operating in a certainly limited market.
Today, we've grown and built a real established player and a group in this industry, and I think that it's healthy and sustainable for us to set realistic targets that we can continuously achieve.
Thank you, Erik. There is a new question in terms of the top four companies. What are these sales? Will you please elaborate a little bit about that, even though not too in detail?
Yeah. I mean, we don't disclose details on sales. I mean these companies are obviously very profitable, so the margins are all high on these four companies. That's about what I can say about that.
Thank you. You intend to reduce the inventory. Does this mean potential supply chain issue for delivery within 2023 are solved?
No, that is for sure not our intention. We have increased the inventory due to good reasons to mitigate supply chain risks, and we would, of course, not want to reduce inventory to create new supply chain risks. This is a more cautious approach, reviewing where we can have lower inventory levels without taking risks of customer deliveries.
Now, on the subject of factoring, expecting to free up a substantial amount in working capital, referring to the Q3 report, could you expand on that, and please elaborate?
Yes. Accounts receivable is a major asset in our balance sheet, and that has tied up a significant amount of capital. We are looking into ways to reduce working capital in order to finance our operations. Factoring is an attractive financing option for BICO. We are looking into different options for factoring with different suppliers, and we are starting this work with our European companies. We are expecting to have some solutions in place in the beginning of next year, and then we expect that to roll that out to more companies in the group.
Okay, thank you. Well, Mikael, you mentioned that within cost reduction program, especially personnel cost would be reduced. Does this also affect R&D employees?
Yes. It impacts the different functions in the companies.
Can you also give us some information on how you're handling price increases or offset inflation?
Yes. We are subject to cost increases like all companies, and we are increasing our prices to our end customers to compensate for the increased cost that we are facing.
Well, thank you. I've went through the questions that we got, and some of them we will also answer online. I want to thank all presenters, and especially Mikael and Erik who's in the room, but also, of course, our other presenters, Tom, Alex, and Holger. Thank you so much, and thank you for listening to this session. If you have any questions, please email any of us, and use the IR email, and we'll reply as soon as we can. Thank you for today.
Thank you.
What do you see as the future of healthcare? Imagine a world where medicine is perfectly tailored for you, a world where medical products no longer rely on the archaic practice of animal testing, a world where treatments are created specifically for you. Through the bioconvergence revolution, we are solving the challenges of the coming decades by preparing today. By making the right decisions and investments today, we are paving the way for coming generations to have a better future. Today, we are steadfast in our focus to create and develop methods, technologies, and solutions that will advance medicine that is based on real data, medicine that is based on relevant models, medicine that is made for you. With MatTek, the world leader of in vitro human tissue models for clinical and preclinical studies, we make a leap towards the future we envision for generations to come.
We are strengthening our position as a bioconvergence powerhouse, reinforcing our founding stance to put an end to animal testing by providing alternative and superior testing methods. We see a future, a future where robotics, artificial intelligence, advanced genomics, and bioprinting come together in a beautiful harmony to fundamentally shift the quality of healthcare to create the future of medicine.