The global demand for healthcare is rising and rapidly changing. At the heart of this care, demand is the critical need for fast and reliable blood analysis. Yet today's hematology laboratories are under increasing pressure to do more with less, to reduce their costs and resources while accelerating testing and productivity, making it difficult to see a future with a similar, let alone improved, level of diagnostic certainty. At CellaVision, we deliver the power of focus to the healthcare industry with our advanced and intelligent capabilities in microscopy, empowering laboratories with the ability to see the bigger picture faster, smarter, and more efficiently than ever. It is this focus that continues to drive our business within digital cell morphology and new areas of analysis, helping us to maximize, accelerate, expand, and explore as we look to 2026 and beyond.
Because it's only with focus that we can uncover new opportunities in care. Welcome to Capital Markets Day 2022 as we enter the next exciting phase of our strategic vision, the power of focus, enhancing the future of microscopy. My name is Adele Horn, and I am responsible for investor relations at CellaVision, and I have been given the privilege and joy to guide you through today's event. This is a very special day for us, and we are delighted to see all of you joining us here today. We have a full agenda for you today. Simon, Julien, Peter, Adam, Magnus, and Steven will be sharing different perspectives of our strategic vision, a deeper dive into the numerous growth opportunities, and operational priorities for CellaVision over the next five years and beyond.
We will have two short breaks in between these presentations, and in the end, we will have a Q&A session. Should you have any questions during the presentations, please write them down, and we promise to take them in the Q&A session. With that, I would like to kick off Capital Markets Day 2022 by introducing the first speaker today. He will be presenting the journey that we've been on and also enlighten us on how we intend to enhance the future of microscopy. Simon Østergaard, President and CEO, the stage is yours.
Thank you so much, Adele. Welcome, everybody. Welcome to our first Capital Market Day at CellaVision. We are very pleased to unfold the different dimensions of our new strategy, the power of focus. Before we hop into it, just a brief introduction. Who is CellaVision? We're a global company. We have direct presence with our market support organization in 17 countries, covering and working with laboratories and our partners across the entire world. Here at our Lund site, where it all started, here we have our corporate functions, but this is also where we develop superior instruments. We have world-class capabilities within optics and precision mechanics. We develop software. We have for decades been working with artificial intelligence, deep learning algorithms. At our sister site in Martillac, France, we have capabilities both to develop and manufacture reagents.
I'm super proud to emphasize that we're a fully equipped diagnostic company with all the key capabilities to deliver unique offerings to digitize the microscopy workflow. We bring outcome to the next level. Today you will hear and you will see image quality. Behind the scenes, it's all about cell classifications, so the pre-analytical steps, the algorithms. Essentially, we built superior and optimized laboratory workflows. Looking at our mission, our mission defines our line of business and also the purpose we serve. We advance laboratory workflow and diagnostic certainty through intelligent microscopy. The bigger picture as to why we're here is emphasized in our vision. We elevate healthcare through the evolution of microscopy. Let's take a deeper look at healthcare and the market drivers for digital microscopy.
What you see here on this slide at the bottom is the patient value and the lab benefit. Our colleague, Steve, will elaborate on these market drivers. I will talk more about the macro trends for digital that influences digital microscopy. First of all, demography. We have an aging population. There is consensus, at least the numbers vary, but there's consensus that the population above 60 years of age is significantly increasing over the decades to come. Prosperity is increasing. There is a demand for faster and better healthcare. Also, what Adele alluded to. Such macro drivers, they are increasing the number of blood samples that needs to be taken. Efficiency, there is labor shortage. We've just been through the pandemic period. Retirement rates are going up. There's a shortage of medical laboratory professionals.
The educational programs, they cannot supply enough to actually fill the vacant jobs. There's a general pressure on top of it, as Adele alluded to, on the healthcare system. The spending drives the needs for efficiency. There's consolidation around labs. That's both in the ownership structure, in the administration, and the management of them. In fact, it actually seeds the formation of hospital lab networks that we'll talk about today. Standardization and the need for accuracy. Well, it's kind of interesting. The healthcare spent on diagnostics is a tiny proportion of the total healthcare spent. The outcome of the diagnostic directs the treatment decisions, which is the majority of the healthcare spends. The importance of accuracy, the information that goes into a diagnosis, is pivotal for the patient and also for the health economics.
All these macro trends, they favor the adoption of digital microscopy. Now, let's take a look at our journey. We were established in 1994 by Christer Fåhraeus. Christer was a young, hopeful student looking into a manual microscope. He was trying to differentiate cells, and he realized, "Why don't we do this digitally and automate this process?" So he set himself up to solve that task. I'm pleased to say that Christer is with us at the board of directors here at CellaVision. This is the journey of CellaVision in our first era, from our inception in 1994 and 25 years ahead. The digital cell morphology and the digital microscopy was developed throughout the nineties and launched in 2001. After four, five years, we had 100 units out there in the marketplace.
Another five years, we reached the 1,000 unit milestone, and another 1,000 to 2,000 units back in 2015. In fact, last year, we reached 5,000 large instruments. What you see here is the revenue curve of the company where we've sold large instruments to large laboratories only, including software. This is the revenue curve. You can see the launches here, and based on the experience, there was an ask from the large laboratories saying, "We need something for smaller laboratories. Can you develop this?" We launched the DC-1 with CE mark in 2019. Pivotal year for us. We also acquired RAL Diagnostics at the end of 2019. Here with the RAL Diagnostics business, we're able to control the pre-analytical steps, the staining for both large and small labs in terms of the reagent portfolio.
This was the first era. Let's take a look at the second era, so after 2019 and beyond. We all know how it started. Looking back at 2 years of the pandemic, having these new assets and colleagues in our company. Well, we actually managed to get through 2020 with 2% growth. We came back in 2021, regaining momentum and delivered high single-digit growth rates. You can say we were really, really at the top of looking at how can we build a company looking beyond the laboratories. This is the journey we're on now because the power of focus is a multi-pronged strategy, as you will see and as you will hear about today. We will certainly continue the adoption of the large labs.
We'll invest in the future, both for the hematology environment, but we will certainly also invest beyond that. We will create differentiation and future growth opportunities for the company. We will maximize our presence, both with continued adoption, investing in the solution that caters for the large laboratories, and we have an opportunity to accelerate our growth. We've just started penetrating the small and the medium lab segment. Here we have both the DC-1, we have smearing workflows, we have reagents to actually convert from manual microscopy to digitalized workflow. You will see those solutions out there. These components constitute the main revenue drivers throughout the strategic period. We're expanding our portfolio. We're expanding within hematology. We have an ambition to address all unmet needs. We are also exploring new opportunities.
It's about time because we know we can build superior microscopy solutions and platforms. We are broadening our portfolio in this strategy, power of focus. In terms of the large labs, the first pillar we have on the left here, this is a SEK 2 billion market, and we supplement with other segments. We built ecosystem with the small laboratories that we can now tie to our current footprint. We will sell reagents and globally expand our presence with reagents and the RAL branded reagents across the world, as you will hear about. Furthermore, we'll develop new reagents that will be tied to new instruments and new applications. In fact, they will be tied to specialty analysis. The unmet clinical needs of the hematology lab, it's out there and it's waiting to be digitalized.
Taken together, our pillars 1 to 4, they allows us to reach an addressable market of SEK 5 billion. We'll increase from SEK 2 billion to SEK 5 billion. Our new areas, they certainly represent an upside to us. We are at the stage where we will develop and mature the technology, combine it, identify the clinical needs and research and clinical, and then we will certainly come back with our market estimates as we know the clinical needs here. In terms of revenue drivers, we will continue to be a company based on revenues from hardware, from software and reagent consumable. Specialty analysis, as I just launched, is a very, very special pillar because here we are developing new hardware solutions to cater for these workflows that appears in less volume than the peripheral blood samples.
We will have hardware, software, and consumables that caters for this, for these specialty analysis. Essentially, we believe we comprehend the entire hematology lab, all the unmet needs with this offering. In terms of new areas, we believe timing is right. With our capabilities that you will see demonstrated, with our financial backing, it's about time, and we're confident to plant seeds for the future growth of CellaVision. Today, you will witness why we're confident that we disrupt the area for microscopy, hardware-based platforms, both using existing technology but also new technology that you will see. In terms of segments, we of course will identify it as we mature the technology, but we're looking at hematology as one area where we can continue to use our technologies, but we are planning to expand beyond that.
These pockets could be life science and research, microbiology, cytology, and pathology. We expect to expand our setup in terms of partnerships, new channels, but we are also planning to explore alternative models dependent on the needs we will address with our technologies. This brings me to the last slide here. CellaVision is fully committed to fulfill our mission by bundling an ecosystem with opportunities and synergies to address all the unmet needs of the hematology laboratories. The ecosystem that we are building here and that you will hear more about today, it's a very, very sticky offering package, reagents, algorithms, hardware. We believe we are very well positioned to build a differentiating solution here, on top of what we already have, and this will be new revenue opportunities for CellaVision.
As the world leader of digital microscopy, we are proud and we are super committed to advance laboratory workflow and diagnostic certainty through intelligent microscopy. This is actually to the benefit of all people having blood samples taken. Thank you very much, and welcome to everybody.
Thank you, Simon Østergaard, for taking us through the different eras of the company. It's certainly an exciting journey we have ahead. Our next speaker will represent the voice of the customer. Our Scientific and Medical Affairs Advisor, Steven Marionneaux, will be sharing his personal experience from transitioning to CellaVision's product offerings when working at Memorial Sloan Kettering Cancer Center in New York City. Steven, welcome up on stage.
Thank you, Adele. It's good to be with you today. I am excited to be able to share our experience at Memorial Sloan Kettering Cancer Center as we adopted CellaVision technology as a replacement for our manual microscopes, which were causing a multitude of problems for us. I've been at CellaVision about 4 years. Prior to that, I was in the clinical laboratory my entire career. I believe that I can share truthfully the experience from a lab perspective. Memorial Sloan Kettering Cancer Center in New York is consistently ranked the number 2 cancer center in the United States. It's a large facility with a main hospital in Manhattan, New York, and then multiple remote sites around New York, New Jersey, and Connecticut.
Before I dive into our experience, I just would like to set the groundwork by explaining how microscopy, both manual and digital, fit into the workflow of the laboratory. We've all been here, or I think we've all been here. You may wonder what happens to the tube of blood once it's drawn. Well, there's a good chance it ends up in hematology because the complete blood cell count is a very common and popular lab test, and it's generally performed by what we call a cell counter in the hematology laboratory. The complete blood count is done by the cell counter, which consists of the white blood cell count, red blood cells, platelets, and then the differentiation of the five normal types of white blood cells. It's very good if the samples are relatively normal.
If abnormal cells are present or other abnormalities, the analyzer will provide a flag, which is an indication that a blood film should be made and examined microscopically. The traditional route to examine the blood smear, for us and many others over the years, was the manual microscope. The manual microscope involves a person, a tech, sitting in front of the microscope, moving the slide around on the stage and literally counting white blood cells and classifying them. Generally, we count up to 100, sometimes more. We also classify red blood cells by their size and shape, as all of these things can point to the presence of benign and malignant conditions in a patient. The CBC is ordered and the manual differential as a means to help with diagnosis and monitoring of patients.
The manual microscope caused us issues, and I'll explain that, but we decided to transition to CellaVision. Now, CellaVision uses a digital camera which takes pictures of blood cells and then using artificial intelligence, sorts and presents these cells to the user on a high-definition monitor. CellaVision is capable of differentiating between the five normal types of white blood cells, but an additional 12 abnormal types, including malignant, reactive, and other types of cells. CellaVision is also capable of classifying 21 types of red blood cells by size and shape because those can be an indication of the cause of a person's anemia and other diseases. I can always tell how nervous I am when my mouth gets dry, so I'll be running over here to the table just to share that with you. Okay, let's move on.
I'd like to first discuss the issues we had that were ongoing with the use of the manual microscope in the lab. Well, the test, as I mentioned, involves a one-by-one counting and sorting of white blood cells, red blood cells, and platelets. That's very time-consuming. It drains human resources. It involves human interpretation, which is subjective, which leads to poor reproducibility of results. A big problem for us is that it requires a level of expertise at the microscope in order to do this test. At Memorial Sloan Kettering, it involves cancer, and cancer for us meant a lot of leukemia patients and others with blood diseases, which required a higher level of expertise at the microscope. We were facing issues with that because we were growing.
The hospital was experiencing rapid growth, and that meant more patients with blood tests, which meant more patients that needed their blood film reviewed by microscopy. We were experiencing staffing shortages, and then, as I mentioned, we had a lack of qualified techs to examine blood smears. All of these things led to an overall lowering of the quality of our test results and delays in reporting these test results, which slowed down the cancer center tremendously. It slowed down our ability to perform surgery. It slowed down the chemotherapy administration on patients. These things require a CBC, a blood count, to be done before the surgery and administration of chemotherapy can occur. The other thing was that it resulted in delays in physicians' office practice visits, so patients were backed up because the physician needed to see the blood counts prior to seeing the patient.
The issues with manual microscopy affected us in a big way, and overall, it led to a decrease in the quality of care we were delivering to patients. At that point, we decided, after some investigation, to replace all of our manual microscopes for the performance of the blood film review by CellaVision or with CellaVision. Now let's talk about that experience. As mentioned, CellaVision classifies white blood cells into 21 different categories, red blood cells. Excuse me, I got that reversed. White blood cells into 17 categories and red blood cells into 21 different categories. It does all of this before the human intervenes. It presents these cell classes to the operator, whereas not one by one, the analyzer does that, presents them, suggests the types of cells that are seen and the number of them.
At that point, the user simply needs to go in and verify those cells are accurate or rearrange, if needed, some of the cells. This was provided faster test results. One thing that we really liked, and me in particular, is that the system provided a side-by-side view of cell images. Now, to differentiate cells using microscopy, you look at the morphologic features of the cells or basically the internal components of the cells that can be observed visually, like nuclear color, cell size, cell shape, nuclear cytoplasmic ratio, and I could go on listing these features. When the cells are compared next to each other, it is quite easy to determine which cells are alike, which cells have common or similar features, and which cells are different. Now clearly, you can see that this cell probably belongs in a different category.
However, I don't know if you can see this, but there are differences in these cells that can be explored and quickly differentiated by an experienced morphologist. These are all tumor cells, so these are all a leukemia blast, we call them. They're leukemic cells. These are normal lymphocytes. You probably can see now that there is more cytoplasm, the nuclear shape. There are differences that can be observed through side-by-side comparison, which facilitates the differentiation and a higher degree of accuracy. This led to more improvement in reproducibility of test results, which led to more consistent monitoring of patients as they go through chemotherapy or other types of treatment. One thing is that the analyzers, CellaVision actually presents these cell classes, so up to 17, depending upon which ones are present.
It presents these to the operator or the tech, who then reviews them visually, as I told you. What happens at the manual microscope, if there's a low number of malignant cells present, they can be overlooked as they go through and count one by one. CellaVision actually suggests the presence of these by classifying them for you, so the tech is less likely to miss important cells, like leukemia cells. Another thing that was valuable for us is we found that reference cells helped with evaluation of difficult cases because the tech, instead of opening a book, could pull up reference cells and compare their cells to the reference cells. There was increased collaboration offered when we incorporated CellaVision. CellaVision aids in remote working from different locations through remote review software.
A person can be in multiple locations, different locations and assist in the evaluation of that blood smear like we saw in the film that was showed previous to this. This allowed us to ask for second opinions from fellow techs or the pathologist. They simply can come and look at the screen, or you can provide the images digitally over Remote Review, and they can review them at the desk. This is much better than having a person come and sit in front of the microscope with the slide and try to find all the cells that you're talking about. It facilitates. It's an improved ability to recognize cells because you can ask for additional opinions.
Education and training of staff and well, as students, was made easier when we incorporated CellaVision, and our physicians could share images with colleagues anywhere around the world through email, often email these images for consultation. It's like difficult cases. What are these? What is your opinion on these? This is done all the time currently in hospitals, but the blood slide is actually mailed to those folks for their opinion. That takes time. With CellaVision, either remote review, depending upon where they are, or through emails, what we were generally using, because at first, we did not have remote review. That was set up a little later after I left. The physicians could easily email the images and then a faster diagnosis, almost in real-time. Their colleagues could look at that and tell.
Another thing was that the on-call pathologist, when there were cells to review, like a leukemia patient was presenting in the emergency room, and you needed to confirm that leukemia cells were present because the microscope, the blood film, is often the first indicator in patients that arrive in the emergency room as a presence of leukemia. A pathologist was needed to confirm that cell when a tech found it. That would involve them getting in their car and going back to the lab at nights and on weekends to confirm it. With CellaVision, through Remote Review, the tech could consult with pathologists remotely, and then that could be taken care of easily, the confirmation of the abnormal cell, and then that enables quicker diagnosis. It also helped us optimize workflow between sites.
There were several smaller remote cancer centers located in Connecticut, New Jersey, and New York. The main hospital was located in New York City. The problem for us was that each site using a manual microscope required that a person with sufficient expertise be located there to work with the slides and identify cells. Well, the solution with CellaVision was quick and easy because what we did was we moved all of our expert techs to the main hospital and staffed the remote sites with less experienced tech. They would simply load the slide on CellaVision at the remote center, but they would not review the images. The reviewing and reporting of the images would happen in the main lab by expert technologists. This helped in a number of ways.
It ensured high-quality test results for all patients within our network, regardless of where they were located because the same experts were reviewing the slides. It helped us manage human resources. Because of that issue we had with lack of expertise, it helped us solve that issue with human resources and helped us assure that we were accommodating a higher test volume with the same delivery of quality. A higher test volume without quality suffering is a major feat. At Memorial Sloan Kettering, we reaped the benefits, all of the benefits that digital microscopy had to offer to improve patient care at the center. In conclusion, I discussed how manual microscopy was problematic for us at Memorial Sloan Kettering Cancer Center during a time of rapid growth, staff shortages, and lack of microscope experience.
By replacing the manual microscopes with CellaVision digital morphology, it provided us an effective solution for problems related to the manual microscope and provided additional benefits. It improved quality of test results, which led to improved quality of patient care that was delivered to our cancer center patients, and it optimized workflow for gains in efficiency despite increases in test volumes and despite having a lower degree of expertise in remote sites. It improved utilization of human resources by redirecting experts to concentrate them at the main center. In addition, I believe that the wide variety of ongoing and future projects at CellaVision that are occurring now will continue to help improve laboratory operations and the quality of patient care that is delivered globally.
It's a very exciting transition for me to come over and work with CellaVision because I truly believe in the technology, and I think we have the opportunity to significantly help laboratories in blood analysis. I think that's all. Yes. Okay. Thank you very much for your time, and I appreciate your attention.
Thank you, Steven. It's always exciting to hear about your valuable experiences from the hospital lab. Dear audience, we will now be taking a short break before we move into the market agenda. We look forward to seeing you back here at 3:00 P.M. Welcome back. Hope you had a chance to enjoy the daylight and some refreshments, and that you now are ready to listen to our next speaker. He will present how we intend to expand our installed base in the medical labs of the world. I would like to welcome Peter Wilson, VP Global Marketing.
All right. I think you're all settled, so let's move on to the next topic then, market and market opportunities. Before that, I would like to briefly describe or discuss our place in the hematology workflow because in my experience, sometimes people mix up what we do and what our partners do. Steven touched upon it briefly, but I'll do that quickly. In this graph, if you look on the upper part of this graphic, that's a large laboratory sample. The blood tube that Steven talked about comes into the lab. It goes through the cell counter, which is basically a screening device analyzing a lot of different blood parameters.
A certain percentage of those slides or samples are flagged out, and then the sample tube or the blood tube would then be transported to a automated slide maker and stainer, where the blood smear is created and stained. It goes into a digital cell morphology system from CellaVision and sometimes into manual microscopy. The gray boxes indicate what our distributors supply. They supply the cell counter and the big automated slide makers and stainers. CellaVision in this segment can supply the staining reagents for those slide makers and stainers, and then the digital cell morphology solution. If we move down here to the small and mid-size segment, the process is still the same. The sample comes in, it goes through a cell counter, slightly less sophisticated. This cell counter will also flag the sample for additional review.
Typically in this segment, the blood film is prepared manually, and it's also stained manually, and then it's analyzed in a microscope or in a CellaVision DC-1. In this segment, we supply a bigger part of the solution. In this segment, we have a smear-making solution that you could see outside. We have stainers that will stain the slides, and we have the associated methanol-free stains that goes into those stainers, and we have the CellaVision DC-1. There we have a more comprehensive solution. I just wanted to make that clear because we run into those discussions sometimes. All right, let's move over to our sales model. We sell through an indirect sales model using distributors. The distributors are responsible for sales, installation, training, and after-sales support.
Looking at the large lab segment, we work with Sysmex, Beckman Coulter, Siemens, Horiba, and Abbott. Together, they have a market share of more than 90% in this segment. In the small- to medium-sized segment, we work with additional partners like ELITech, Boule, Abaxis, and they typically specialize in this segment, and they do not address the large lab segment. With that said, let's take a look at some marketing insights. If we look at the global market, there's about 17,000 large labs. There's 100,000 small- to medium labs, and our estimate is that about 50,000 of them are addressable. The rest either has a too low sample volume, or they don't have the purchasing power. Looking at our penetration rate in the large lab segment, globally, it's 24%.
In the small lab segment, it's less than 1% right now. The annual addressable market potential in the large lab segment is SEK 2 billion, and in the small segment, it's about SEK 1 billion. The next three slides, I will go through three different regions, Americas, EMEA, and APAC. Starting with Americas then, there's about 5,000 large labs in Americas and 25,000 smaller labs, and 20,000 of them are addressable according to our estimates. The Americas region has the highest penetration rate of all our regions. It's 35%, as of today. In the small lab segment, it's 1%. We introduced the CellaVision DC-1 end of 2020 in this market, so very recent. Looking at market dynamics, it's divided between very mature and developing markets, with US and Canada being very mature.
We've been selling there for close to 20 years now. It's North America is dominated by large integrated health networks with a need for connectivity between sites. It's also the region, our region, with the strongest sales of software and applications, and it's also the market with the highest proportion of capital sales of the Blood Line. Moving over to EMEA, same size market, 5,000 large, 25,000 small, addressable, 20,000. Our penetration rate there is somewhat lower, 26% in the large segment and 1% in the small segment. As Simon said, we introduced the DC-1 in EMEA in 2019. This region contains a diverse mix of market maturity and reimbursement structures. It also has a higher mix of network labs and standalone labs compared to the U.S. market.
It's also markets that's dominated by public hospitals. There's way more private hospitals in the US market. It's the region where we have the strongest sales of RAL reagents. It's also a market with a very high proportion of cost per test sales. When our partners sell that DIFF-Line we just talked about, they sell it as a cost per test. US is more capital sales generally speaking. Finally, APAC. Number of large labs, slightly higher, 7,000. Small labs, 30,000, and here our estimate is that about 10,000 of them are addressable. This region has the lowest penetration rate in the large segment, 15%, and in the small lab, it's less than 1%. The DC-1 was introduced in 2019 together at the same time as we introduced it in EMEA.
The APAC region has the largest proportion of price-sensitive markets. It also has a very low number of connected labs. They are very much standalone, so the need for connectivity is less there compared to the EMEA or the Americas region. China has the highest barrier or the longest approval process for regulatory clearance. To summarize, we have a penetration rate globally of 24% with a range from 15%-36%, so there's still a lot of work to do to grow our business. As I mentioned earlier, we sell through an indirect model, but we do have a global market support organization supporting our distributors. The question is, what do they do? We have 17 organizations throughout the world covering more than 40 countries.
What they do, especially in immature market, is to create awareness of digital cell morphology, but also support our partners in that market by being the product experts, do demonstrations and sales presentations together with our partners. They run user group meetings, they do scientific seminars, and that kind of stuff. Everything to drive awareness and support our partners. Another important aspect is, of course, to establish a network of key opinion leaders in the local market, and then, of course, provide market feedback to headquarters so we can improve our products for the local market. Let's move on to the strategic pillar Accelerate, focusing on the small segment.
As I mentioned, the DC-1 was launched roughly two years ago, which enables the small labs to benefit, get the same benefits as the large labs has been enjoying for many, many years now with respect to quality, standardization, connectivity. It also enables larger networks to create very optimized workflow. It creates efficiency, like we have talked about, or like, Steven talked about, the setup at Memorial Sloan Kettering with multiple sites. You can use our technology in different ways. You can centralize all the data into one site, and they handle the review for all other sites, to minimize the number of, medical technologists you need to perform the analysis. Some customers go the opposite way. They would like to maintain morphology expertise at all sites. They try to staff all sites.
They do it locally, but whenever there is need for second opinion, or if there's staff shortages because of sickness, they can have another lab do the work for them. It's two different philosophies. We typically also see once you implement our solutions, you see about 50% time savings in handling this analysis. It also provides staffing flexibility, like Steve described. Why is that important? Because there is a shortage of medical technologists. Looking at some numbers from 2019 for the U.S., the vacancy rate in hematology labs was then 10%. Retirement rate was 17%. It's really challenging for these labs to handle this analysis. Looking at the number of new med techs trained and coming out of the schools, that's also a challenge.
Between 1990 and 2018, roughly 25% of the med tech training programs disappeared in the U.S. market. There's a great need, but there's not enough new med techs being trained. How we support this is that a few years back ago, we created what we call the CellaVision Classroom Initiative. It's a program where we provide morphology material and also provide free access to our cloud-based Proficiency Software, which is a software for education and morphology assessment. These training programs have access to that program. There's today 475 training programs in the U.S., and 75% are using this program, which means that most of the med techs graduating have been working with digital images.
They have been exposed for CellaVision user interfaces and the way you use CellaVision software. All right. Let's move on talking about the DC-1. How successful have we been? As I mentioned, we launched it in Q1 in 2019 in EMEA, but then as you're all painfully aware of, we were hit by a pandemic that slowed down dramatically marketing and sales activities, especially the physical meetings, which are basically gone, which is important when you try to sell equipment into a new segment. We got FDA clearance in Q4, end of Q4 2020. What we have seen is a very strong momentum in the US market. Looking at the numbers, first half 2021 versus first half 2020, we've seen the increase in sales of 400% in units of DC-1.
Now if you can say post-COVID, I mean, it's not gone, but at least societies are opening up. You can visit customers. Now we have more momentum, so it's possible for our partners to see customers, have the face-to-face conversations with them that we think that will speed up the adoption. We also have a very large customer base, installed customer base, large hospitals, and many of them have associated smaller labs with a need for digital cell morphology. That's kind of low-hanging fruit because a large lab has already bought into the concept of digital cell morphology. They see the benefits of it, so that's pretty easy sales. Then one challenge in the small lab segment is the sample preparation, which is pretty critical. Typically in the small lab, you have less skilled personnel.
They don't do so many slides, so it's a challenge. We are addressing that with creating a bundle consisting of the RAL SmearBox, the RAL StainBox, and the DC-1. I'll explain that a little bit more in detail on the next slide. It's a solution that will standardize a process from the blood tube to the final result by combining these three instrument. The RAL SmearBox, you take your blood tube, you open the lid, you put in the slide, press a button, 1 minute later, you have a perfectly made smear. Then you take that slide, put it into the StainBox. It can stain 5 slides at a time. You put it in there. We have an optimized protocol, so it matches the DC-1.
You stain them in about 5-10 minutes, 5 slides at a time, and then you analyze them on the DC-1. It's very standardized way of addressing the needs of the small labs. This will also then create additional revenue in this segment by selling the staining and smearing devices, but also the associated stains that go with the stainer. Let's look at some early adoption trends with the DC-1. Starting on the left here, we looked at the customers that have acquired DC-1, what type of labs? Is it standalone or are they networked? Globally, it's pretty 50-50, but there are regional differences. If we look at the EMEA region, it's actually the same numbers as the global average.
Moving over to Americas, more than 70% of the DC Ones has been sold into networked labs. Then if we look at APAC, it's the opposite. Close to 70% of the DC Ones have been sold to standalone labs. That's good. That's fine. We have a solution for both types of labs. That means we have a strong value proposition for both segments. When we asked the customers, we did a survey, what are the main drivers for acquiring DC Ones? It's remote pathology review or the ability for pathology review or a second opinion. It's also to eliminate slide transportation because many times if you have the remote site, they have a difficult slide.
Either you send the blood tube or the slide to the main hospital, and then they analyze it, and then you get the result back, which can take a day or two, depending on the geography and so on. Now you can do that digitally in minutes. Also, which is common for both segments, they are looking for standardization and quality, as Steven alluded to. All right. Let's move on to the next pillar. Expand. Oh, I forgot this one. Sorry. Bone marrow. It's done in like 10% in volume compared to the peripheral blood, but it's a highly complex analysis that requires years of training to master. It's typically reported out by a pathologist, which means it's also a very expensive analysis. There is a shortage of pathologists around the world.
That also means they have a very high workload, and the turnaround time or the time it takes before a result is reported out could be days. These analyses present an opportunity. What are those opportunities? Let's look at the addressable market, the product line, and the revenue drivers. If we start with the addressable market, it's all these analyses are done at the large labs, but also the larger small labs. That gray zone, then they do some of those analyses as well. Our ambition is then to develop this application. They will be run on a separate instrument based on the DC1. The ambition is also to develop and validate these applications on our own reagents in order to optimize performance and profitability. We tie it all together.
These applications will also be sold as time-limited licenses and not perpetual licenses. The revenue drivers would be, especially in the large segment, we can sell the larger instrument for the routine handling of peripheral blood smears. To handle the other applications, we'll sell an additional instrument, and that will then also generate recurrent revenue from reagents and recurrent revenue from the applications. On the next slide, I will just then summarize what that means for our future offering. If you look at what's, I don't know if you call it green or. The green part is our current offering. The blue is what's coming. Today, we are the only digital cell morphology company that can offer an extensive portfolio consisting of stains, reagents, instruments out there.
We can, to the small lab, provide a smear-making solution. We have staining devices to the small segment. We have reagent that goes onto those stainers, but we also have reagents for the large lab segment in the automated big slide maker stainers. We have a range of instruments covering the needs from the small lab to the really big, highly integrated labs. As standard, the Peripheral Blood Application goes onto every system. That's a default configuration. We have optional applications like the Advanced RBC, a Body Fluid Application. To connect people and instruments and data to create these efficient workflows, we have the Remote Review Software, the CellaVision Server Software . On top of that, we have our cloud-based Proficiency Software for education and competency assessment throughout the organization.
That's our current offering, and we're gonna expand that with the specialty analyzer. Gonna add on these applications as we go. We will also tie them to our own reagents. We are also looking into using this specialty analyzer with a slightly different configured software to look into opportunities within life science and research within hematology, but also in other areas. My final slide to kind of wrap it up. In the large lab segment, we still have a long runway. We have a penetration rate globally of 24%. There's still a lot of runway in sales there. We will introduce the specialty analyzer into this segment. The small lab segment, we just started. We got less than 1%.
There we will introduce this combined offer. To address the small labs issues in standardization of the sample preparation and then push that solution. Customer engagement, we haven't talked so much about that. We will also expand our research collaboration with larger medical institutions to gain more insights. What other unmet needs are out there, and how can we improve our products even more? Specialty, we talked about that. It's a new product line. We will tie the reagents to the analyses, and we'll also introduce a recurring software model and then use the specialty instrument to explore opportunities within life science and research within and outside hematology. That wraps it up for me.
Thank you, Peter, for unfolding the market dynamics and our product launch strategy. The next speaker we will listen to is our VP Reagents, Julien Veyssy. He will present our roadmap to accelerate our global leadership in reagents. I will hand over to you, Julien.
Thank you. Well, glad to be presenting in front of you today. We'll dive into a specific segment, probably not the most well-known for you, as it's relatively new for CellaVision. It started with the acquisition of RAL Diagnostics in 2019. Well, rough timing just before the pandemic, but that's how it was. I would assume not the least interesting. Are we gonna talk geographical expansion and recurrent revenues? First, it's very important to understand how strategic is the fit between our devices and our reagents. For that, I'll use a quote from someone that I really appreciate and used to be the marketing manager for one of our main partner, in charge of all the morphology product.
He's called Henk Jansen. He used to answer to people from the field who came to him and arguing, "Well, the results of the CellaVision are not so good, blah, blah, the classification." His classic answer was, "CellaVision never makes a mistake. The slide maker stainer does." It's kind of a bold and amusing answer, but it actually translate that what people tend to forget, if you don't have a good sample, you will never get good results from your analyzer, even if it's the best one. That's the first strategic fit. 2, derive the maximum benefit from our analyzer, you have to get good sample preparation. The second one on the other way is that morphology remain a very subjective topic.
All over the world, if you ask people, "What is a good reagents? What is a good result?" You will get different answers. Being able to show the cells, the results on the screen, that's the best way to prove the superiority of our reagent. It's really a two-way strategic fit. Now, what is actually a sample preparation? A sample preparation is a two-step process. First, you smear the slide, and then you stain it. You smear it, you put a drop of blood on a glass slide, you spread it, and then the staining. It's a different set of protocols, different reagents, and you end up with a stained slide.
If you look at it, you could say, "Well, that's pretty simple." It's actually an expert analysis, and it requires skilled people in the lab, meaning cost and all what we said before about the lack of resources. It's actually an expert analysis because the causes of variations are numerous, and I listed some of them, here. In the end, the ideal reading zone where the cells are correctly separated, where they are round, is really small, and it's critical for a good analysis in our analyzer. All of that, it obviously calls for standardization, and for that, calls for automation on one side and reagents quality on the other. It's extremely important. We do believe, of course, that we can, contribute in this reagents quality, and we'll see that later.
First, what is our reagents business today? If you look on the left-hand side of the slide, you can see that it represent SEK 100 million in 2021, mainly with hematology, but we also have some other reagents for microbiology, pathology, and we have some good positions also in these segments. We have some partnerships with microbiology global partners. In the end, it remains segments with a limited growth. On the other side, hematology. Well, it's clearly the centerpiece also now, with the fit with our devices. It's clearly the centerpiece of our strategy going forward. We already had a 14% CAGR over the last five years, but we clearly see an opportunity for acceleration in the next years.
We have some strong USPs, we have good partnership, good collaboration with almost all the hematology players. If you look at the graphic in the middle, you can clearly see that our sales are concentrated in EMEA at the moment. That's paving the way for a global expansion, for geographical expansion and growth. That's the plan for the next year. We have some core strengths, but there are also some market opportunities, some market specificities that are creating opportunities. I'm not gonna detail all of them, but I will pick three. The first one, for example, is the market structure, the competitive landscape. On one side, there is one global leader, unfocused, for which reagents is not really important.
On the other side, there are mostly low-end manufacturers, low quality. That's clearly opening up a space for us being a strategic partner for the IVD industry and providing expertise, knowledge, value on the staining reagents. We have a unique positioning on the market. If you look at the third one, I do believe also it's really important to understand that for the OEM market, the one with our main partners today, changing reagents within the lifetime of an instrument is really difficult for our partners for many reasons that I'm not going to detail here, but it's really difficult. Meaning that the penetration can be slow, but on the other side, the recurring of the business is extremely strong and extremely predictable. Once you are in a lab, you're probably there for five to seven years.
That's also a very nice opportunity for the stability of our business. Finally, the regulatory intensity, it's really accelerating and as a specialist on this market, we really have the knowledge, the bandwidth to overcome the demand of the new regulation. Sorry. It's even more true with the introduction of IVDR, actually last month. It's creating some strong entry barriers. Now, if we go back to reagents quality, we saw that it's extremely important for our analysis. Our aim has been to design the right organization, the right processes to serve this purpose. Today, I would summarize it as having good materials, people, manufacturing equipment. We do invest a lot in our manufacturing.
Quality control, product adaptation, and innovation. Also here, I'll pick a couple of them that are the most distinctive. Materials, for example. We do not only purchase the best materials that we can find on the market. We synthesize our own strategic powders that are used to create or to produce our hematology reagents, meaning that we have a really good control on our supply and on the quality of what we produce. Same for quality control. We go further than what the industry usually do. We don't only process a physical chemical control of our reagents, we also do a biological one, meaning that we stain slides.
We do what our customers do in their labs with each and every lot that are going out of our production, meaning also that we can ensure a really good control and a really good quality of our reagents. Also finally, quality goes through continuous improvement and innovation. We're also, as you can see, or that you will see, we are really committed to that. Innovation indeed. As I said, we are really committed to that, and I'll take two examples to illustrate it and to link it also with the previous presentations. The first one being that we aim at creating an ecosystem with our devices and reagents, really tightening them, because we believe that by tightening these two segments, we can create value and differentiation for both. That's really key.
Again, that's really key for both segments, and we are applying this new philosophy for the first time on our specialty analysis project. For the first time, we will create new reagents, dedicated reagents, and we will train our systems on our reagents, really creating this tight ecosystem. Second example, MCDh. MCDh is actually the outcome of a massive R&D product that has been running for several years. The outcome is a methanol-free staining concept. That's completely unique on the market, meaning that you can reduce the exposure of the lab staff to hazardous chemicals. We are using only ethanol or water. At the same time, it's a really high-quality staining. As you may have seen in the previous graphic, this product is already available for some application.
It already contributes to our revenues, but it's still in the development phase with some of our partners to make it available in their slide maker stainer. There are R&D programs, joint R&D programs ongoing for that. We do believe that when it will be fully available in the different markets with our different partners, that will be a differentiation factor for our geographical expansion. That's what we're gonna see in our roadmap. Yeah. Our geographical expansion roadmap. You'll see that we are at very different steps of our development depending on the region. Overall, there is a strong potential for growth in each of them. If I start with EMEA, it is our best business case. We started already a few years ago, but it clearly demonstrate our ability to succeed.
We do believe that we will continue to be our main growth driver for the next years. Indeed, in this region, we have some strong USPs with some of our partners. There are some countries where we started only a few years ago, and we saw that the penetration takes time. Some countries like UK or Germany are still in an introduction phase. MCDh is not launched yet for some of our partners, so that will get a boost. Finally, IVDR, which is in a European regulation, just came into effect, so that will create opportunities as well. APAC. APAC is our next development step. There are already some pieces in place. Contracts are in place with some of our partners.
Most of the regulatory pieces are in place. We have the commitment from the hematology leader to distribute our partners in this area. China registration is completed, and we have some successful pilots already in Korea and Hong Kong. Basically now we are in the phase where we are focusing on marketing, doing local evaluation, and proving the superiority of our products to be able to launch in APAC. That's coming soon. Americas on the other side. Here we have to recognize that it's a highly competitive market, mainly US. There we are more in the phase where we look at the conditions to be able to penetrate in the coming years. We also believe that we have some strong arguments for that. First, the synergies.
You saw in the other presentation that Americas and mainly U.S. is a region, a country where we are very successful with our devices. We do believe that there are synergies with that. Also, we know that Americas and U.S. are there is a strong demand for premium offers. There, MCDh, when it will be ready and launch, we believe that it will be a strong differentiator. Then and finally, we are also looking at what should be our presence locally. We know that it's an important piece in the decision-making, so we are assessing what should be our presence over there. That's where we are. Overall, different development phases, but overall, we want to accelerate the sale of the reagents. That's really our aspiration.
We want to have a leadership in the hematology reagents in all geographies, not only Europe, also APAC, also Americas and all lab sizes. Not only the high-end segment, also, as you saw in Peter's presentation, also in the low, mid-end with our D line concept. We know it will take time. We know that we are connected with new installations. Yeah, again, that will take time. In parallel, we will establish the structure to succeed. We have some strong value propositions and some are detailed here, but we have strong value proposition for the end customers and also for our partners, meaning that that's added revenue opportunity. We are reducing the service for them, et cetera, et cetera. We have the value to fulfill our ambition.
Finally, if I defocus a little bit from the segment that we looked at, and we look at the CellaVision as a full company. Basically in 2019, by acquiring reagents, we are transforming CellaVision into a fully diagnostic company. That's the process that we have started, and that's also the journey that we have in front of us. From that, I thank you, and I will hand over to Adele.
It was a pleasure to listen to you presenting our path for development on the reagent side. We will now be taking a second break before we'll move on to the innovation agenda. See you back. Welcome back. We have now come to the part of the agenda when we will listen to VP Devices and Software, Adam Morell. He will take us through how we intend to leverage our core capabilities in high-speed robotics, digital imaging, and artificial intelligence to ensure sustained growth. Welcome, Adam Morell.
Thank you, Adele. I'm very glad to be here to make this presentation. To start with, I guess you've understood this by now, but we analyze blood. I assume this is clear to everybody. To be a bit more precise, the main analysis performed by our analyzers is the so-called differential count of white blood cells. This is the most important analysis we do. We do a bit more today, of course, but this analysis means that you look at the number of blood cells, you count them, and differentiate between the different subtypes. Typically, you count 100 cells. In Sweden, we're a bit more thorough, you count 200 cells. You need to learn to divide by two to get the percentages right. Nevertheless, it's about the distribution of white blood cells. Why is this important?
You and I probably, hopefully, have five types of white blood cells in our bloodstream. They are supposed to be there in a certain distribution. If there's a skewness in this distribution, it means that you have an infection. It can be a bacterial infection or a viral infection or a parasitic infection, for example. What can also happen is that you find immature cells in the bloodstreams, cells that should only be found in the bone marrow, the place where the blood is formed. Finding such cells is an indication of more severe conditions like blood cancer, a lymphoma or leukemia. Our analyzers can differentiate between 17 different classes of objects when doing this analysis of peripheral blood. This analysis is also a routine analysis.
You've probably understood this from the volumes and the market size, but this is an important part of the technology. This is done in large quantities in large hospitals and laboratories all over the world. This has some implications for how to build an analyzer, of course. We need to do the analysis quite quickly. How have we done this, then? We mimic the way a human would perform the analysis. We have high-precision mechanics to search for the individual cells. We use optics to take high-quality images of the cells, and then we use AI or machine learning to determine the morphology of each cell and present a suggested classification to the user. In the following, I would like to show you a bit of the technology behind this, the cornerstones of our technology that has made it possible to optimize this analysis.
Here they are. The first thing, the first and foremost is artificial intelligence or machine learning. This supports the decision for the end user, and this provides the classification. This is the expert, the brains of the system. We have, of course, high-precision mechanics in order to find the small individual cells. We have advanced imaging solutions to take high-quality state-of-the-art images of the cells. Finally, we need to have an easy-to-use interface to facilitate the process of working with the instrument. As you've probably noticed, there's been a boom in AI development the last 10 years, and there are today a lot of companies that claim they use AI in some way or another. At CellaVision, we've used AI, or machine learning, as I prefer to call it, for more than 25 years, and I'm pretty confident that we have a lot of expertise in this area.
We have also followed the latest developments, and we incorporate new technologies into our software, of course, going from more handcrafted features to find specific information about cells to more modern-looking convolutional neural networks, deep learning, if you've heard that buzzword. No matter what strategy you use to classify cells, since this is machine learning, you need to train the computer to understand the images, and therefore the ground truth is extremely important. That is actually today more important than the classification algorithms. Therefore, we have built up extensive databases of blood cells. We have grabbed the images using a variety of illumination settings, varying the camera and so on, but also including all the variations in staining and smear preparations that can be found in different labs.
This has enabled us to have high, really high-quality data, and furthermore, we have classified the individual cells using several experts. We built up a worldwide network of experts that provide us with good information of the individual cell classification. All in all, this enables us to be in the forefront of the AI development and to classify cells very accurately. Blood cells are small, extremely small. A red blood cell is about 7 microns in diameter, and a white blood cell is slightly larger. This means that if you're off by like 5 microns in the horizontal direction, horizontal plane, then you could end up looking at the wrong cell. Furthermore, since we are using quite extreme resolution in our images, you have a very limited depth of focus. This is probably rather obvious for anyone who's used a camera.
If you focus a lot to enlarge the image, you get a limited depth of focus if you look nearsighted, so to say. Therefore, since we have this limited depth of focus, even small variations in height can cause out-of-focus images and deteriorating the image quality. Keep in mind that this is a routine analysis that needs to be performed fast. This means that we have to locate a white blood cell, grab an image of it and do the classification in less than a second and then we go on to the next cell. This of course poses some challenges to the precision of the instrument. If you look at the image on top here, which is from our high-power magnification, you see a white blood cell. It's a lymphocyte in this case.
A pixel in this image is one-tenth of a micron, so this is extremely high resolution. It was what I talked about earlier. The wavelength of light here is actually 5 pixels, if that means anything to you. Nevertheless, it's quite extreme, and this is actually right at the brink of what you can resolve using ordinary light. If you would like higher resolution, you need to go to an electron microscope or something like that. Again, the downside of this is then of course the limited depth of focus, posing challenges especially when doing auto-focusing in our system to get the high-quality images.
The traditional way of doing auto-focusing in an imaging system is to grab a stack of images, something looking like this, standing still in the plane, varying the height, and then you can calculate some measure on how well-focused the images are, and then you can compare this and get the most focused image. The downside of this is that you need to grab like 10, 20 images before you're certain that you have the high-quality image which is in perfect focus. We have developed an AI-based strategy, which actually can determine using a single image how to find perfect focus. This has enabled us to build faster instruments. Before presenting the image to the end user, we also what we call normalize them.
We make them look like they would in a microscope, and we also slightly enhance details in important parts of the cells all in all to get this really good image quality that we're proud of. Last but not least, we have the cornerstone of the interface. After all, we have users working with the instrument, and we want them to be able to work swiftly with it since they can't spend too much time on the analysis either. Again, it's a routine analysis. It's an important aspect of the way we work with the instrument that it's the user that performs the actual classification. We provide a very good suggestion, and we sort the cells according to that suggestion, but it's up to the end user to confirm that we're right.
We increase the quality, we increase the speed, but we let them take the final decision. We use the same familiar interface in all of our products. If you work straight at the instrument or if you work afar using our remote review capabilities. This is also an important part of what we deliver. It's possible to have several analyzers feeding information into a central database, and then you have the review station on the network somewhere connecting and doing this classification. You just can have the system in one place and the expert somewhere completely different. When we sold our first instrument, today more than 20 years ago, it looked something like this to the left here. As you probably noticed, it's built of mainly off-the-shelf components.
You recognize the microscope, you can see the camera on top, and somewhere in the back there is an electronics box that we bought off the shelf as well. Basically we focused on the classification of cells and the image quality. That was where we started. Over the 20 years we've been on a journey. In the second generation, you can no longer see the microscope. It's hidden underneath the casing. It's still there, but underneath the casing there's also a lot of the control mechanics which we've developed ourselves. In that generation, we introduced a lot of our own mechanics. In the third generation of analyzers, we also built most of the optics ourselves. Now finally coming to the fourth generation, the DCOne, or the DCOne platform, we will have several analyzers based on the same platform.
We have actually also built our own camera. Now we're in control of basically every part of the instrument. We still use the objective from Olympus, but that's all. All the other parts are CellaVision design in the instrument. This enables greater control of the analyzer of course. In parallel with the development of the analyzers, we've introduced new analyses. We started out doing peripheral blood, the differential count I mentioned, but also a rudimentary red blood cell analysis and platelet analysis. In the second generation, we introduced the possibility to look at body fluids, like synovial fluid in the joints or the most important cerebrospinal fluid from which is produced in the ventricles in the brain, circulating down the spine.
In the third generation, we improved the red blood cell analysis quite a lot, introducing a new application called Advanced RBC for red blood cells. Now with the fourth generation, we see the possibility to expand into specialty analyzer and things like bone marrow. This is really an important step for us. We've already touched a bit upon the specialty segment in previous lectures today, but I'd like to expand a bit on it. Today we have our proven CellaVision DCOne platform, and we would like to put it to use to more things than just doing peripheral blood. Today we have peripheral blood, and you can also digitize slides with it. There are in hematology the most important analyses are looking at white blood cells, red blood cells and platelets, which we've already covered for some time.
There are a few more quite interesting analyses in hematology. Examples of such are the fetal red blood cell count, so-called Kleihauer-Betke test. It's important. It measures how much blood is transferred between the fetus and the mother and it's important for Rh disease in preventing that disease from occurring. You have the reticulocyte count, looking at immature red blood cells. Also very special analysis, but very important for looking at things like anemias. These routine and non-routine analysis and some other examples are definitely candidates for further automation. This is because it's quite difficult to find staff that has the time to be really competent at doing this since they are done in rather small volumes, but they still take a lot of time each time they have to do them.
The DC-1 platform has the same excellent image quality as larger analyzers, but it has a smaller footprint, and it comes at a lower price point. This makes it possible for many customers to buy this as an extra instrument, so they don't have to interrupt the routine workflow of the peripheral blood, and then they can have this extra specialty analyzer for doing things like the fetal red blood cell count or the reticulocyte count. There are some other interesting analyses coming as well. Looking into the sort of near future, we have the bone marrow, the reticulocytes, and the fetal red blood cells. Further ahead, we see malaria and some other parasites that could be relevant to investigate as well. Looking even further ahead, we have possibilities in other areas outside of hematology.
It could be a research use, for example, or it could be things like, cytology or pathology. Turning to the bone marrow analysis then. This is a rather important analysis. It stands out compared to the other specialty analyzer since it's actually done in somewhat larger volumes. Furthermore, it needs more expertise. As Peter mentioned earlier, this is often done by a physician, and it's quite a lengthy analysis. Furthermore, it's very difficult to find people that are proficient enough to analyze bone marrow today, and therefore, there is a great need to automate this process. Why analyze the bone marrow? Some of the reasons are the same as looking at blood. It's for blood cancers and some direct bone marrow disorders.
This analysis is a bit more tricky since we have 17 classes, as I told you in our peripheral blood analysis. In the bone marrow, you're supposed to find all the immature cells. All blood originates from some pluripotent stem cell down here, and then the blood cells mature, and in the bone marrow, you find all the intermediate stages, whereas you only find the mature ones on top in the peripheral blood. Still, it's similar to looking at blood, of course. If it's so important to automate this process, why haven't we done it yet? One answer is, of course, that we haven't had the time. We've prioritized other things over the years. We haven't really had the muscles.
it's also, as I alluded to on the previous slide, a bit more tricky. This is rather advanced. I'd say it's the most difficult analysis to do within hematology. There are three main reasons for this. Firstly, detecting the area is more difficult. In peripheral blood, you basically find your 100, 200 cells. There are some restrictions on the area where you should find them, and then you classify them. When doing a bone marrow analysis, you need to be very careful, because the sample can be contaminated by blood from the bloodstream, and therefore you need to precisely find the areas where you're close enough to bone marrow fragments so that you are more certain that you're analyzing actual bone marrow cells. That's more difficult.
Furthermore, since the blood is formed here, the cells, as I said, occur in immature stages, we need to have better classification, and they also tend to clutter together. You will have clusters of cells that we need to have ways to separate before we classify the individual cells. I'm pretty confident with our technology. I'm very confident, actually, that we can produce a bone marrow application, and I'm glad to say that we have one in our pipeline right now, so we're coming out with a bone marrow application. Now we talked a bit about what's in the pipeline right now. We have some specialty analyzer. And we have the big specialty analysis, bone marrow.
Looking a bit further ahead into the future, I would like to talk a bit about a problem with microscopy or a limitation rather of traditional microscopy. I guess this is rather obvious, but still. If you use a standard microscope or a camera or whatever, it's difficult to get both a large area and a high resolution at the same time. Either you zoom in and get the high resolution and then use a high magnification objective, or you zoom out and then you get the large area. Pretty obvious, I assume. This is so obvious that you think that it has to be this way. It turns out it doesn't really have to be this way. Enter a technology called Fourier Ptychographic Microscopy. I will not repeat that any more times.
Just say FPM. But this is a technology where you can actually combine a large area with a high resolution at the same time. This is sort of groundbreaking. This technology was developed by California Institute of Technology, and CellaVision has acquired the exclusive right to worldwide patent portfolio of this technology. We are currently refining this technology and adapting it for future analysis. Here is an example of a 10x sample from a pathology, it's a tissue sample, and if you enlarge that, just a part of it digitally, it would look something like this. But if we acquire the same image using the FPM technology, you will get this detail, and you will get it on the entire area, the same area as we have in the low power optics.
Same example to the right here with a blood cell, which would look something rather pixelated using a 20x objective in this case. Then using the same objective but applying this technology of FPM, we get a very high-quality image, exactly as good as we have in our 100x high power magnification, actually. How does this work? I will not go into all the details of course, but to get some understanding of it. The principle here is that you actually illuminate the sample several times but at different angles. We have sort of a LED matrix, and then when as we illuminate the sample, we take a low power image for each illumination. Illuminate, get an image, illuminate, get an image.
You can see if we get further out and have a steeper angle, you get very strange-looking images. If we combine them using the FPM algorithms, you will get a result looking something like this. What does this mean? What are the opportunities with this? Very important thing is, of course, that this can provide very fast scanning. If you look at just 10x versus a 40x image, then you need to grab 16 times as many images to cover the same area you're using a 40x since it's short-sighted. It hasn't had such a big field of view. That's important. It's rather obvious we can build a faster scanner that produces high-quality images. Furthermore, we get a wider depth of focus.
The depth of focus that I talked about, the problem of focusing, it almost disappears because you have the depth of focus of the objective you're using, and that's a low power objective, which has a much wider depth of focus. Today there is a problem with the scanners, high-quality scanners in the market that they have a narrow depth of focus, so you can only see parts of a thick sample. In order to cover the entire sample, you often use multiple layers to scan it again and again. With FPM, you could see everything at once. This also means, of course, that you could probably rely on less precision in the mechanics since you don't have to position so accurately. This is quite good, and there is an additional benefit actually. You get some extra information.
This needs to be explored, but you actually get what we call phase information from the images, something that you would only get from phase contrast microscopy. Looking something like the third image down here, which is of an embryo. That can be used for looking at live specimens, for example, when you do not want to stain them for obvious reasons. There are definite possibilities with getting this extra 3-D information, if you like. This has great potential, I think, to be used in both hematology and within other areas, but there is a lot of exploring that remains to be done on our part. To summarize, we are world-leading in digital microscopy within hematology. Our strength is that we have the ability to combine several technologies.
We do not only do AI, we have the artificial intelligence, we have the precision mechanics, we have the knowledge of the optics and of the customer and how to build good user interfaces. All in all, this provides a very good analysis. The evolution of our analysis has made it possible to expand into other areas such as the specialty segment, and I see even better possibilities with reagents that we can combine reagents with analyses so that we can tailor them and get even better results. Finally, for the future, I think it's very bright, and we have a lot of possibilities to explore with FPM. There's the possibility of doing a lot of things, and I don't think we've really understood how many possibilities this open up yet.
With that, thank you so much for listening, and I hope you find it at least half as interesting as I do. Thank you.
Thank you, Adam, for helping us recognize the improvements that the company has made in innovation over the years, and also for enlightening us on the interesting FPM technology. Now, we look forward to listen to our final presentation of the day. CFO Magnus Blixt will link our financial development to the power of focus to 2026 and beyond. Magnus, the stage is yours.
Thank you very much, Adele. Good afternoon, ladies and gentlemen. I hope that you're enjoying the time with us and that you're getting good and relevant, interesting information about CellaVision, our strategy, and our journey towards 2026. The ambition with my financial part of the Capital Markets Day is to link the strategy to a brief financial outlook. I want to color our activities and plans with some financial data, like market size, growth opportunities, and also profitability levels. Before we move into all that, I'd like to recap a couple of things with you all. First thing that I'd like to recap is actually to have a look at our financial targets. I think that's a good starting point for this presentation, and it can be a conclusion at the end as well.
Our financial targets can be summarized in one sentence: We are here for long-term profitable growth. The first target is the growth. It's 15% annual growth, and the second target is above 30% EBITDA margin. You could hear that I emphasize the above a little bit extra. I will come back to that in a minute. If we look at our historical track record, we've been very close to our targets, both growth and profitability. Except in recent years, then we have overperformed a little bit on the profitability target. Therefore, looking out in time, we will keep our financial targets unchanged, but we should see our EBITDA or the profitability target as a baseline. It says above 30%. We signal here that it's likely that we will overshoot that target a little bit.
Second thing that I would like to highlight is our financial developments. CellaVision has recovered really well after COVID. In fact, our two latest quarters, that we have reported, last quarter last year and first quarter this year, has been all-time high numbers. We're stronger now in sales than we were before COVID. Also, from a profitability point of view, we're very strong. If we look at full year last year, we had 35% EBITDA margin, and Q1 this year was 36% EBITDA margin. Here we can see that we are above our financial targets. There are a lot of positive observations around our financial performance right now. It's a solid base for an outlook, I would say. There are also some challenges, of course. The most important one, I think, is the sourcing of critical components.
Like many other companies, we find it difficult to source electronics. So far, we've been able to mitigate and keep our delivery performance intact. We have cash, so whenever possible, we try to increase our safety stocks. That's one way to mitigate. Also, we use some resources to validate second sourcing for critical components. Okay. Next important topic is growth. To achieve growth, it's important to have a large arena to play on. It's important to have a large market. Over the years, CellaVision has invested a lot of efforts into product development and also acquisitions to expand our addressable markets. A result of that is that we will be able to expand our market from $2 billion-$5 billion over this strategic period, over the five years that we see in front of us here.
That's a significant increase. That's a great change, and it's a really good base for growth. Because if you have a large arena and you have a low penetration, then there's lots of runway for growth. We think that, historically, we've had 15% CAGRs, and with the market expansion and the low penetration, we set ourself a target for 15% also for the future when it comes to growth. I'd like to highlight the explore pillar to the left of the screen or to the right from you here. That's not included in these SEK 5 billion in the market here. That's something that can come on top. It's the FPM technology that Adam talked about here that seems so interesting. We're still evaluating the technology.
We don't have proof of concept yet, and it's too early days to calculate the value for that market. You know, I hope to be able to stand here on a future Capital Market Day, and then we have proof of concept, and we would be able to put a number on that explore pillar over there. That would come on top of the SEK 5 billion that we can see in front of us here. Okay. It's not just about growth. For us it's about profitable growth. We are currently at a good level, 35% EBITDA margin, and we aspire to stay highly profitable. The problem is that you want to invest for the future as well, and sometimes there is a trade-off between short-term profitability and long-term growth.
Historically, CellaVision has showed that we can do both at the same time. I think part of the explanation to that is that we have a scalable business model. Our model can absorb operating expenses as we grow our revenues. That's well illustrated by the blue line that you can see on this side. The blue line is pointing downwards, and that is of course good if the KPI is operating expenses in relation to sales. The blue line represents all our operating expenses excluding the R&D, and you can see clearly that we start around the 35% in 2017, and five years later we have 15 percentage points in there. That's our proof of scalability, let's say.
On the other hand, the other operating expenses, R&D expenses, start out at around 15%. We're currently running at around 16%-18%. Over the strategic period in front of us, in the beginning of that phase, I think we will increase a little bit more even. Our scalability allows us to invest in the future without compromising our profitability. Reasons for scalability is, I would say an important reason for it or, a driver for it is our indirect sales model. We're a relatively small company, about 200 employees, and we have a completely global reach. That would not be possible without an indirect sales model. We work through distributors, and we can tap into their network of salespeople and also service technicians. That is scalable and efficient for us.
Another important thing that you sometimes don't think of is that our product offering is truly global. The procedures that we serve in the hospital labs are exactly the same. If you're in Shanghai, New York or in Stockholm, it's the same procedure, and that means that we can have a completely global product offering without local adaptations. That also creates economies of scale, so that's efficient for us as well. Lastly, our administration. We have been able to centralize our operations to Lund and to Bordeaux. All transactions basically take place either in Lund or Bordeaux, and that creates economies of scale when it comes to administration. An efficient setup allows us to remain profitable even though we invest for the future. Okay. The last two slides that we talked about was general drivers.
Drivers for growth and drivers for profitability. Now I would like to be a little bit more specific and move down into our product groups and look at the dynamics in there. The first product group that I'd like to look at is our instruments. The instruments, that's the biggest product group. They represent about 80% of our sales. We have a yearly market of about SEK 3 billion, SEK 2 billion from the large laboratories, and SEK 1 billion from the small and medium-sized laboratories. In the instruments, we have three components when it comes to our product offering. We have the instrument itself, naturally. We also have software that we load to the instruments, and then we have some spare parts and consumables.
About 2/3 of the revenue in this product segment here comes from the instruments, and 1/3 from the other two. The large instruments is of course the bulk in this product offering, and there we have a market penetration of 24% at the end of 2021. That's a low penetration, so there's lots of runway to still grow within the large instruments. Then the small instruments has recently been market launched or introduced to the market, so those are more to be seen accelerators. If we look at our history, we can see that we've been running at around 15% growth in this area. With the addition of the small instruments, we believe that we can stay at around 15% growth, for these two, for these products combined here.
Obviously, a little faster growth on the small instruments, but from a very low base then. Next product group to look into is the reagents or the reagents and sample preparation products. The market for it, and now it's the market for the hematology reagents that I'm talking about, is approximately SEK 1 billion. As you've heard before, reagents was acquired in 2019, and there is strong synergy with the CellaVision instruments for the hematology part of the product offering, and that's where we see the fastest growth as well. We have growth in other reagents as well, the microbiology reagents, but it's more single-digit growth that we see in that area. Combined growth for reagents and sample preparation instruments as a total, we estimate to be around 15% as well.
Maybe a little bit lower in the early phase of our strategic cycle before we have engaged that geographical expansion that we want to trigger. To accommodate the growth, we bought some land, and we're currently constructing a building very close to the factory that we have in Bordeaux to accommodate the new volumes that our growth will bring to us. Okay, the last product group that I'd like to dive into is the specialty analysis. These are products that are not yet on the market. They're product developments that are ongoing, and as you can see on the chart here, we believe that we can have market introduction late 2023 or early 2024, and a gradual adoption of those products over the strategic cycle here.
It's also clear that it's early days. It's hard to see, but we feel that the adoption will probably be more after this strategic period than during the period, actually. The offering will be around instruments, software, and reagents. The instruments will be designed for specialty analysis, so it'll be adoptions of the current instruments. Also, the software will be, of course, specific for these analysis, and the reagents will be tailor-made and sold in association with this offering. We estimate the global market to be around SEK 1 billion also for this assortment here. We can say that most of the customers that will buy this, well, not all, but many of the customers that will buy this assortment are customers that know our technology already.
Once we have the products out on the market, we feel that we can probably get a fairly fast adoption of these product groups. To summarize, this is my last slide, and I would like to use this slide to summarize my presentation. I've chosen the title growth on this slide, and that is because CellaVision is on a growth journey. By the way, we have always been on a growth journey. The chart to the right here shows the bridge, how we will become a SEK 1 billion company by 2026. It shows the components of the growth. I also have some key financial messages that I would like to send at the end here. Things to remember, that we increase the addressable market. That's key for us.
We increase from SEK 2 billion to SEK 5 billion over the period. That's important. We also double the sales over these 5 years and become more than SEK 1 billion in sales. The third bullet here is around profitability. We believe that we can both invest for the future and stay highly profitable over time. The last bullet is around capital allocation. If you look at our strategy, the way we've laid it out, it's all about organic growth, actually. If you look at the past, we made some acquisitions, and the strategy incorporates those acquisitions, how we take care of those. That's part of it. It's really a growth journey driven by organic growth that we have in front of us.
It is possible if the timing is right and if we find the right object that we will do some acquisitions as well over this period of time, but it's not part of the strategy. That would come to the side or on top, of this. All in all, I would say that we're quite well fit, with our plans to achieve our financial targets over the next five years. With that, I conclude my presentation.
Thank you, Magnus, for a stimulating presentation and for giving us an overview of what we can expect in terms of financial growth over the years. We have now made some room for a Q&A session, so I would like to invite all speakers to the stage. Now, we have received some questions beforehand per mail, and if we don't have time to take them today, we will get back to you in writing. For you in the audience who have any questions, please raise your hand and wait until Johan or Hugo hands you a microphone and then ask your question. I will then be directing your question to one of the speakers here. We would very much appreciate if you could ask one question at the time. Do we have any questions?
Hello. Can you hear me? Samuel here from Harding Loevner. Thank you for your presentation. I was wondering if you could outline, 'cause you've talked about a time horizon of a couple of years out, if you could outline maybe what are the key milestones that we should be looking for, as you progress to meeting your guidance and making these innovations happen. For example, if you have in mind what date you might get certain clearances or what are the main milestones we should look forward to help us keep track of your progress?
I would like to pass this question to Simon.
Yeah. Thank you very much, Samuel. I think first of all, as you saw on the last slide presented by Magnus, the business will be driven or the contribution will come from instruments and software addressing the large and the small labs, including our reagents. Our accelerators and maximizing this. You can really follow that as KPIs of how we track.
Specifically milestone related, I think we should look into the specialty arena. You heard my colleagues talk about the clinical opportunities. The first launch, we expect that to be bone marrow. As Adam alluded to, this is where we see a significant, probably the largest volume. It's a difficult analysis. This is the one you should be looking out for. That could be, we are testing prototypes. You saw the confidence from the team. I hope you appreciate that. This is, we will launch this within 18-24 months. That's our intentions.
Thank you, Simon.
Thanks. Just to clarify, based, you know, the specialty stuff, which are low volume given that they're relatively rare, you mentioned how in Europe your business model is predominantly pay-per-use as opposed to instrument purchases. Does that mean the analyzer will exclusively be capital only, or how do you imagine that panning out?
Simon.
Thanks. No, that's a good question. Remember, we are selling through partners, so they are managing the price per tests. If they enter price per tests, it's something which is managed between our partners and the end customer. We will be selling instruments. They may enter or be included in a price per test engagement. We will have revenues from selling the instruments. We'll have revenues, recurrent revenues from software applications which are non-perpetual, meaning that they need to be reviewed, and we will have recurrent revenues from the consumption of the specific reagent consumables that Julien spoke to.
Thank you for that answer.
Hi there. Trevor Fitzgerald from Mirabaud Asset Management. Just a question about conversion and upsell and cross-sell. Sorry, this is two questions in one. Sorry. When it comes to upselling software to the equipment, give us a really good idea about what that opportunity is. We talked about the reagents as well. With the reagents, you've got great penetration in Europe, but how does that cross-sell work when it comes to the rest of the world as well. Just maybe there's two questions hidden in there for that cross-sell, upsell, would you like fries with that kind of thing.
Should we start with the reagent question? Julien, would you like to comment?
Yeah. Well, regarding the reagents, as it was explained, we have very different position in the different regions. We do have the same commitment from our partners. We started with Europe, but now we have also global contracts. It's more a question of time than really commitment. We do believe that we can reproduce what we've done in EMEA in other parts of the world. We have the right products, because they are different in regions, depending on the education of the people in the lab. We do have the product, we do have the commitment from our partners, again, that's just a question of time.
Would you like to repeat your question on software once more?
Just further upsells on software with the equipment. Understand it's the remote monitoring software. Is that sold with every single piece of software, or is that an upsell that customers buy?
Peter, would you like to take that question?
I mean, that's optional software. Typically, the customer purchase one or multiple analyzer, and then depending on the setup, if it's a larger network with multiple analyzers, then we have different versions of the Remote Review based on concurrent users. We have like a professional version for single use and then 5 concurrent, 25, 75. It depends on the need, but that's sold as an option. Same thing goes with the server software. If you would like to centralize all the data and images, that's an optional application or software as well. Also, the Advanced RBC application is an optional software. The Body Fluid Application is also optional. The Proficiency Software is also optional. The analyzer comes with the...
as standard with a Peripheral Blood Application, and then there's a range of software options and applications that are sold on top of that.
Thank you.
Go for it.
Can't leave the microphone now. Okay. We're in an environment where everyone's talking about things getting more expensive. In capital equipment across the industry, that's typically been something that's been very difficult to achieve. I'm just wondering how you're getting on in recent years, in recent quarters. Like for like, are your instruments about the same on ASP, or are they keeping up with inflation, or how should we think about that?
I would like to pass this question to you, Magnus.
All right. Yeah. Over the years before this inflation era that we're in now, we have had fairly stable pricing on our COGS development, I would say. If we look at what's going on right now, I'd say it's a moving target. It's not very easy to say where this will end. We see steep price increases on certain components on transportation and some plastics.
Of course we're then in dialogue with our partners if we can push these cost increases on to the end customer. The hard thing right now is to estimate what's a reasonable amount to pass on. For sure, it's difficult. Two parts is one, general inflation, and the second one that is for some critical components we have to source on the spot market, and then it's a totally different price. That should be a temporary increase as we see it.
Thank you for that. The next question is for you, Adam. What is the current status of the FPM technology, and how far have the feasibility studies come?
Yeah, the images I show in the presentation were actual FPM images. I'd say we've proven the concept, and we have good algorithms to reconstruct images. It remains to explore how to make this fit with our product portfolio. Furthermore, how we could optimize the speed somewhat. I think we've proven the concept, but we need to explore quite a bit more before we are ready to have any analyzers based on FPM.
We look forward to exploring more of that. Steven, we have a question for you.
Okay.
What are the laboratory personnel missing with CellaVision's offerings?
Say that again.
What are the laboratory personnel missing with our offerings?
None. With CellaVision in place in the lab there, it makes the operations more efficient. It directs expertise where it's needed. CellaVision presents images that all need to be verified by an expert. I think the process with CellaVision does not eliminate any staff. It just allows staff to operate with more efficiency. Yeah, so that's it. Yeah.
Thank you, Steven.
You're welcome.
Simon, if you'd like to take this question. Have you considered to go with a direct sales model to take some of the revenue that your partners receive? Could that be profitable at some point?
Here I think we should dissect our business. For the large laboratory segment, we have a perfect setup since we are integrated with our partners in the purchasing processes with the cell counter and the digital morphology. We don't have a plan to change that model. We're now starting to penetrate the small segment, you can say starting from above. We're starting from penetrating the network labs and some of the standalone labs. That's the data we saw today. We will certainly learn what is the reach in that segment geographically, but also the demographics, if you like, between different lab sizes. We'll understand that as we penetrate and we get out there. If there are opportunities to sell alternatively, we will certainly exploit that.
We think when we open up also the new areas, that could be opportunities for different selling methods and looking alternatively. Because we are coming out with hardware which will, first of all, as we heard today, host our specialty analysis. Peter alluded to it, that there could be other opportunities to utilize general microscopes, very sophisticated, potentially intelligent also, in other segments. Could we exploit other go-to-market models? That's certainly something we will look into.
Very interesting. Any more questions? I think we will take our last question from the mailbox then. Also for you, Simon Østergaard. This ecosystem that you want to create, are there any missing parts of it, or can we expect that a medical lab has everything once this is fully implemented?
I actually love that question, by the way. My brief answer will be we pretty much have everything. I'm also proud to say that we are, as I see it, the one player who can make this happen, given our acquisition of RAL. Having control of the pre-analytical steps and the reagents, having the core capabilities that Adam outlined, we can connect labs, different lab sizes, different tests, across geographies. We can really, really build this ecosystem where we don't need to transfer the slides at all. My answer is, I actually think we serve all the clinical needs of the hematology lab when we have fulfilled the ecosystem within the strategic horizon.
That's very exciting. Thank you for your answer. Okay, time flies. Let's wrap up this Q&A session. Thank you all for good questions, and thank you for good answers. On behalf of the team, we would also thank you for joining us here on our Capital Markets Day. This leaves me to hand over to Simon. Simon, would you like to summarize this day?
I would love to. I would echo you, Adele. Thank you, everybody, for coming here in person. This is what we've been missing throughout the pandemic, so it's highly appreciated. Some key takeaways here for today. We've repeated our journey and told our journey, and there's no doubt that CellaVision has paved the way for digitalizing and automating blood analysis in the labs. Now, we've built a position over the years as the number one market leader. This is a position we intend to protect and build upon. We've heard about the market opportunities from Julien and Peter. We've heard about the profound capabilities also expanded from Julien and Adam. We've heard about our financial strength that Magnus alluded to. It's time to invest. We're a super profitable company with double-digit growth within the diagnostic arena.
It's very rare you see that. We are committed to lead and to invest in the evolution of microscopy. This is our vision, and we're gonna deliver on that. Our power of focus strategy will actually address all clinical needs of the hematology labs by building these ecosystems out there. Financially, we strive to deliver highly profitable double-digit revenue growth from hematology offerings, exceeding SEK 1 billion 2026, while pursuing long-term growth opportunities outside of hematology, building the basis which goes beyond the strategic horizons, but we can't wait to share more about the progress around that journey. With that, thank you for coming.