All right. Good morning, everyone. Thank you for joining us. My name is Martina Czerevitz. I'm from the Life Science Tools and Diagnostics team. It's my pleasure to introduce our next company, Stevanato Group. Just as a reminder on logistics, after the presentation, we'll have a Q&A, and if somebody has a question in the audience, you can raise your hand, otherwise you can submit it online. And with that, I will turn it over to the CEO, Franco Moro.
Thank you. Thanks so much, and welcome to Stevanato Group presentation. I'm glad to be here to give you an update and overview about our company, our business, our strategy. I see in the room, people that we met also before, but, also people that, could be less familiar with the Stevanato Group, so I'm delighted to give you more information. During our conversation, I could do some forward-looking statements in nature, so standard safe harbor statements apply. We are provider of mission-critical solution for the supply chain of pharma industry. Our company grew consistently along the last years, double-digit growth, and in 2022, we delivered 17% revenue growth year-over-year, with expanded EBITDA margin up to 26.8%. We are a global player, and we are supplying the vast majority of the pharma and biopharma industry.
We are leaders, or we have a leadership position in many product lines that are critical for the supply chain of pharma, that are critical for safe delivery of treatment to patients. We are a company with more than 70 years of history, really close to 75, because, we have been founded in, back in 1949. Our historical starting business was in glass packaging for different industries, but along the time, we reached a very important step at the end of last century, when the company decided to have 100% focus on pharma. It was a very important decision also to trigger the decision to expand our value proposition, including other capabilities on top of the glass primary packaging.
We did that journey by acquisition and by organic growth, and, very recently, more recently, in 2022, in 2021, sorry, we had our very important step entering in the environment of a public company, and we consider that day as the first day of a new cycle of growth for the company. We are a global player. We are present with our industrial footprint in all the main region of the world. Obviously, EMEA is the main region today, but also the Americas and the growing area in Asia-Pacific and China in specific. We have 16 sites around the world, and we are investing in three main areas, in three main sites, to expand our capacity for high-value solution. But it's something that I will cover later in our presentation. We play a mission-critical role in the pharma supply chain.
We have different capability, broad range of capabilities, that we use to follow customer needs and to match their needs along the entire life cycle of their projects and programs. So we can stay with them from the early stage in project, preclinical and clinical phase, up to full commercial. In this journey, our product becomes embedded in the Drug Master File, so we build a strong link, durable link, in between our products and solution, together with the life cycle of the drug, that may last not even for years, but also decades. Looking more in detail to what we do. At the Stevanato Group, we look at our business in two segments: Biopharmaceutical and Diagnostic Solutions and Engineering. But the strength of our value proposition is the strong integration of the two segments.
More closely, starting on the left, our core business in, is in primary packaging, glass primary packaging. We are leaders in that space. We have all main formats in terms of syringes, vials, and cartridges. Syringes are almost all sterile, but in cartridges and vials, we have been the inventor of the containment technology for ready-to-use vials and cartridges, and now we serve the market both ways: bulk configuration or sterile configuration. In drug delivery space, we started working as a CDMO, as well as a company that has its own platform of proprietary devices. Obviously, this part of the business is a growing area, and we target to become an important player in a few years. In- vitro Diagnostics, we deliver to customer plastic consumable for the standard diagnostics and also more complex items, more complex cartridges, for the new systems in molecular diagnostics.
Moving to the right, on the engineering segment, we supply to customer machinery for their filling lines in terms of visual inspection. We have a broad range of solutions, starting from the benchtop solution up to the big machinery, highly automated, high speed for the commercial production of in filling lines. Serving the market of a drug delivery system, we supply the market also complex, very huge lines for assembly of devices, maybe autoinjector or pen injector. At the same time, we maintain our historical leadership in the technology for the glass forming. That is for the specific market that, that we used to serve since many, many years. In Biopharmaceutical service, back to the left, it's very important to have, for us to develop also the possibility to serve the market with innovation and advanced technology.
So we support our value proposition with our tech centers we have in Europe and in Boston, in the US, that deliver analytical services or development services. I want to tell you more about the value of the integration of the two segments, because it's a unique and differentiating factors in the competitive landscape that give us a lot of opportunities. The integration deliver benefit to customer and to the company. For the customer, we are able to provide to them a full solution, taking care not only of the products, but also of the technology to produce the product. This is a very important tool to speed up the evolution of products, and also to match upside in demand or specific requirement of our customers. So we simplify the supply chain of a pharma company and make their life much easier.
For the company, the integration is also very important because we are, at the same time, the user and the manufacturer of the technologies. So you can imagine that, our team works, intimately together, moving faster from the workshop floor in production back to the design office to improve the technology in term of a higher quality of products and a higher productivity. Is a very powerful tool that work every day in our factories. At the same time, that we have another different advantage, because serving the market with, machineries for the filling lines, we can have an insight, a very early insight, in the capital allocation strategy of, pharma companies. That is the signal of the future demand of a container solution, so we can anticipate what customer will need, in the next future.
It's so important that I wanted to try to give you a practical example of how this integration really works, in the real life, how our value proposition is in action. I'm referring to an example of a big project we had, with Merck Serono, when the customer involved us in a very important project linked to a biological drug that was designed for administration by pen injector. We developed for the customer test protocol, custom test protocols, to identify the best containment solution that was a cartridges and proved to be our Nexa cartridges. But in parallel, we could work with them to prepare the technology for the assembly of the device. They needed to have a highly flexible lines because the same device, the pen, has different, different configuration depending of the therapeutic needs and the regimen of administration for different patients.
So overall, this is an example of how we can work as a single team together with the customer, taking care of all the needs of a big project and delivery value, delivery result. Now, I want to move to give you an overview about the market and about the strategy we have at the Stevanato Group. In terms of the market, the growth of the market is driven by secular trends, secular tailwinds. I don't want to enter in each one of them, but I want to underline some of them. First, the increased number of worldwide population and aging population that is moving more and more the need to drugs that may take care of chronic diseases. Then the trend, the clear trend, you I believe you have already your view about that, the trend to go towards more biologics drugs.
Biologics drugs need a specific containment solution, high quality, high performance, containment solution, and I will tell you something more in the next slides. At the same time, patients want to have a better life also under sickness condition, so the self-administration of medicine is driving the fast growth of self-administration by injectors, pen injector or autoinjector. Pharma company are really focusing more and more on their core business, that is the discovery, the development of new drugs. So we can take the advantages of their tendency to outsource more and more what is not core for them, and we can take care of their needs at scale with much higher efficiency and also productivity. In this fantastic environment of growth, we have the opportunity to leverage on our capabilities with a very clear strategic goal.
One is global expansion. As I told you, we are already a global player, but we are expanding all our capabilities around the world to increase also the capacity we have in production of high-value solution. That, as I will tell you later, are driving also the growth and profitability of the company. The high-value solution growth is the second pillar of our strategy, and it is around the demand driven by the growth of biologics. For the same reason, is the third priority we have, we continue to invest in innovation and R&D to expand our portfolio of high-value solution, and we are building a multi-year pipeline of new opportunities, also in this case, overweighted in the biological space. Starting from global expansion, is the capacity expansion that are supporting our organic growth.
We invested a lot in the recent years for the EMEA region in Italy, at our headquarters that is close to Venice, in the north of Italy. But then we decided to have a second hub in Italy for the EMEA region, and it is, it is in Latina, that is very close to Rome, and also close by one of the existing facility for bag production. This huge investment for the second EMEA regional hub is now already in commercial production in the last quarter of 2023. But at the same time, we are ramping up and going ahead with our plan, that is a multi-year plan, to install module by module, more capacity and to fulfill the project. We have the same, very similar strategy for the U.S., where we decide to invest heavily in Fishers, Indiana.
This big project is now underway. We are close to have the first validation in terms of new products for the new facilities, and we expect to have revenue generation along 2024. For the big effort we are doing in the U.S. and in EMEA, put the condition to pausing a little the investment in China. Not because we are changing our view of Asia-Pacific as one of the strategic area, very fast-growing area, but we decide to have 100% focus on good execution on the big investment where we have a strong demand to meet, and there are big opportunity to expand the high-value solution. Really, we saw a big acceleration in the demand that outpaced by far our expectation at the time of the IPO.
So this is the reason why we accelerated in Europe and in the U.S., pausing a little bit in China. Almost all our growth CapEx are demand-driven. Demand-driven because we are setting the stage to give a customer what they are asking for, and almost all are dedicated to high-value solutions. High-value solution includes the different products, but I want to start giving you a glance into the value that we can deliver to the customer and to the company. For the customer, high-value solutions are beneficial because of the superior quality, the superior scientific performances of these containment solution. In the meantime, we can help them to reduce total cost of ownership, to have shortened time to market, more flexibility, and also to de-risk the entire supply chain of pharma.
But this high-value solution are also so important for us because of the higher sales price associated to the solution and also much higher marginality. So it's the best situation to give the customer what they need and also to push the growth and the marginality of the company. This evolution of the share of high-value solution in our portfolio is consistent. In 2019, the share of high-value solution was in the range of 17%. We closed 2022 at 30%. Our guidance for 2023 are in the range in between 32%-34%, and the trajectory is consistent also for the next years. But why there is a so big success of a high-value solution?
Because they are designed to match the needs of the best and fastest-growing area of the market, that is biologics. In biologics, you know, that, the share of biologics in new approval of FDA grew a lot. Looking back to 2021, at that time, FDA approval, new approval, was twenty-eight percent related to biologics. This percentage grew in one year, 2022, up to 40%. If we have a glance into the approval for potential blockbuster in 2022, there are four of them. All these four are biologics, and Stevanato Group is present in three of these big potential blockbusters. Our exposure to biologics is growing. If we compare the situation the first half of 2021, our exposure in term of share of revenue was 16%.
But last year, 2023, in the same period, first half, we reached 26% of our revenues associated to biologics. So a very fast growth in term of high-value solution and exposure to biologics that are more or less in parallel. Obviously, biologics are part of a fantastic environment of growth that is not limited to biologics. But compared to other area, biologics are growing faster, 15% expected growth in the next years. And in this huge and fantastic environment of opportunities, we have exposure to all the subcategories: mRNA application, monoclonal antibody, and GLP-1s. The first two are expected to grow low double-digit. GLP-1s, you are well aware that, is booming in high double-digit growth. But we have a very well-balanced portfolio opportunities and commercial business in this area.
Biologics are part of a larger environment and big addressable market for us in the range of or exceeding $15 billion market that we can address with our different capabilities and with our integrated value proposition. So it's a huge market full of opportunities, but luckily enough, they are not opportunity for everybody. This market has very high barrier to entry. I want to name the more important for us. The first is the know-how you need to enter the market. I'm not referring just to intellectual property, that obvious part of the game. I'm also referring to industrial secrets, industrial know-how, that you deserve several years, if not decades, to build. Second, we have a unique value proposition.
The integration of the two segments, the capabilities that we have in engineering and in containment solution and drug delivery device, this value proposition, very broad, is unique in the market. It's a distinctive advantage, a winning factor in many, many cases. We operate in a highly concentrated market, and in this market, the regulatory requirements and quality requirements are growing year after year. So it's an additional barrier for a new entrant to cope with this new regulation. And the same burden of regulatory requirements is also causing or setting the stage for very high switching cost if a company would consider to have big changes in the supply chain. So it is another way to protect the existing business. Lastly, we are also talking about a very highly capital-intensive business.
I hope that you can visit our facility sometime, and you could feel how much is the technology and the value of this technology that we apply in our production. In closing, I want to summarize the main messages associated to the presentation of our company. First, we play mission-critical role in the pharma supply chain. We are part of a specific environment with a very strictly and high regulation that protect the market. It's a highly concentrated market with high barriers to entry. We have our unique value proposition that is made by the integration of the segments I mentioned before, and we have a very clear operational and strategic priorities, and we are executing according to them. Demand-driven expansion in high-value solution will support opportunities for sustainable organic growth.
With that, I join my colleague, Marco Dal Lago, the CFO of the company. I'm available for Q&A. Thanks so much.
Great. Thank you for the presentation. As a reminder, if anyone has a question, feel free to raise your hand. As you highlighted in your presentation, biologics is a key growth driver across a number of therapeutic areas. Can you talk about your history with GLP-1s, your current position, and how you're participating in the market currently?
I didn't expect this question. So let me think. Now, I have to step back to reinforce the message that our high-value solution designed for the full biological space is not only for GLP-1s. We have plenty of opportunity also in other areas. But back to GLP-1s, I want to start saying that we are in the diabetes care since decades, so we are an established player in a market that is not new. We have been also one of the first to help customer back in 2010 to start the journey of GLP-1s at industrial scale. So our involvement in GLP-1 is not recent, it's back for many reason. For the reason are associated to the fact that we continue to serve diabetes care in GLP-1s, being a leader in cartridges.
Cartridges, and you know that diabetes care is almost only pen cartridges today, and, in the future, we expect to have a good proportion staying in pen injector also in GLP-1s. So we have this production, historical production, and we have the leadership position worldwide in terms of, this product, the cartridges. So this is the very important entry point for us. It's also, true that we, in the future, we have opportunities not only in terms of, cartridges, but in many respects, we can serve, GLP-1s. Cartridges, as I said, already told, both in bulk and sterile configuration, but also high-value syringes because they are the option to administrate GLP-1s drugs by auto-injectors. So we have also high-value syringes available.
On top of that, we serve also the expansion of capacity in filling with our visual inspection system and, with the engineering segment, we deliver also assembly line, both for pens and auto-injectors. So our exposure to GLP-1s is not specific to a single product line, but is much broader.
You touched a bit, a little bit about this already, but how large do you think this opportunity can be for you? Like, how are you thinking about it long term, and what competitive dynamics are you seeing in the space?
Specifically referring to GLP-1s is, again, something that is common to biologics. These kind of drugs are very high sensitivity. Sometimes there are issues related to the formulation, the high viscosity of the product. So the solution must be a very high quality, high performance solution. It is the driver for the expansion of a high-value solution in term of volume, but also more importantly, in term of the growth of the company. I think, Marco, you can give them some figures around the value in term of revenues and profitability.
Yeah. About high-value solution?
Yeah.
Yeah, high-value solution, we have obviously higher price per unit associated, and they are much more accretive products. In high-value Solution, the gross profit margin is ranging between 40%-70%, while in other containment and delivery solution, the gross profit margin is usually between 15%-35%. And you have seen, you have heard from Franco before, the expansion we have in the share of revenue in a value solution, and this has been the main driver for margin expansions in recent years. We went up by over 600 basis points in gross profit margin and in EBITDA margin from 2019 to 2022. And again, the main driver has been the mix shift to our high-value products.
Thank you. Speaking about the difference between high-value solutions and other offerings, you know, the penetration rates in ready-to-use vials and cartridges are still quite low. So how do you see customer adoption unfolding for these formats going forward?
Yes, we are following the same trajectory that happened in different product lines many years ago. Because now syringes are almost all converted in sterile configuration, but the starting point was close to zero at the beginning of the century. And the same trajectory was mirrored by stoppers and plunger, all these rubber components later on, that are now more than two-thirds in sterile configuration. It's a process that takes time. Takes time, and this expansion of capacity, for instance, in the GLP-1s for cartridges, is an accelerator because when a company has to decide a big investment to increase the filling capacity, for them it's much easier to shift immediately, to switch immediately to high-value solutions, the right configuration.
This is the reason why we have now an accelerated transformation in cartridges because of the decision of some big players to move immediately in that direction. Vials market is more fragmented, so we expect that to follow the trajectory in some years.
Thank you. How early do you typically engage with customers? How do you leverage your analytical labs in Italy and in Boston when working with your customers?
That is a very good point. It's obviously a very important point for, science and technology-driven company like we are. We decided to expand our capabilities in tech center, having the second hub in Boston, because, it's the best way to engage the customer when they start reasoning about the formulation of the drug, and they have to select the best containment solution. It's the best entry point to build a legacy, to build a link with the drug life cycle, selecting for them, the most suitable solution. We have a possibility to run tests, to develop, custom protocols if needed, as in the example I did before, but also to have all the analytical testing that is needed to prove the stability of the drug in the container.
It's a way to serve the customer and to complement our value proposition as a single player able to take care of most of the need in a new project.
Okay. Switching gears to your engineering segment, can you provide some more context around exactly what do you do and who are your end customers for your engineering products? You know, you gave a customer example, you mentioned greater capabilities, but can you elaborate on how engineering strategically fits with your BDS segment?
Yeah, it's a very important point because as I told you during presentation, there is an historical starting point. Why we are so big now in terms of leadership position in containment solution? Because we have the possibility to leverage on the invention of our founder to develop a new technology, to improve productivity, to reduce cost, and to improve quality of products. It's the same way is working now at a different level for high-value solution, because we can develop not only the products in terms of a special coating, just to give you an example, but in our engineering department, we can develop also the technology to have this special coating applied to the containment solution. And so we maintain for ourselves the intellectual property, the know-how, and we can be faster reaching the market.
Obviously, we are also faster when there is an upside in demand. Indeed during COVID, we have been much faster than anybody else because we can step up our capacity immediately, working in our engineering department to install more lines.
Thank you. So as you mentioned in the presentation, you're currently in the high CapEx cycle with your current expansion projects underway. So once we're through this period, what is the right way to think about a more normalized level of CapEx spending?
Yeah, consistently with our pre-IPO plan, we expect 2023 as being the peak of our cycle of CapEx. We have spent, between 35%-40% as a percentage of revenue in CapEx in 2023. We expect that 2024 will still, be a relevant, year of CapEx to execute our plans in Fishers, Indiana, and, in Latina plant in Italy. Medium long term, but at a lower level compared to 2023. Medium long term, we see CapEx, ranging as a percentage of revenue from high single digit to low double digit to sustain an organic growth in the low double-digit range.
Great, thank you. Then as a follow-up to that, is there a rule of thumb that for every euro of CapEx, you can generate X amount of revenue?
Well, when we talk about the EZ-fill projects like Fishers and Latina, we estimate EUR 1 CapEx will be translated into EUR 1 revenue per year when fully ramped up. So this is, for those kind of projects, also, it depends also on the type of investments.
Okay. Speaking of CapEx, there's a lot of capacity being added, so how do you avoid potential overcapacity, and is there a risk that there will be too much capacity a few years down the road for you?
It's a tricky point because this deserves some explanation. The need is not for capacity, it's for the right capacity, the possibility to have a high-value solution in the future. So the standard capacity that is now is partially not fungible for the new needs. So there is a replacement in term of capacity, and obviously, there is also the possibility to follow the growth of the market that is very huge. We are in very good position because we master the technology, and we can adjust our pace in the progression of the capacity much better than other, because we have an engineering department in-house.
My personal opinion is that this strength will play a major role in speeding up and following increasing needs, but potentially is also the best way to manage different situation and to proceed in investment in a modular approach.
Great. And then in the last couple of minutes here, what would you say is the most underappreciated part of your story as we head into 2024 that you would like investors to understand better?
As you can understand by the presentation, we have two main messages to deliver. The one is our unique situation in the market. Our value proposition is really unique, and our set of capabilities, there is no other company that may have the same value proposition. This setup is specifically designed for high-value solution, following the need and the demand of biologics. So all our effort in CapEx are demand driven. We are matching the new opportunities coming for Stevanato Group in the next years, and we believe that we can continue to deliver as we did in the past.
Wonderful. Are there any questions in the audience? In that case, well, thank you so much.
Thanks for your attention.