All right. We're going to get started here this morning. Good morning, everyone, and welcome to the Teleflex Incorporated 2018 Investor Day. My name is Jake Helgoes, and I'm the Treasurer and Vice President of Investor Relations at Teleflex, and it's my pleasure to be the host of today's event. Before we begin the presentations, I'd like to remind you that some of the matters discussed today will contain forward looking statements regarding future events.
We wish to caution you that such statements are in fact forward looking in nature and are subject to risks and uncertainties and that actual events or results may differ materially. I'd also like to point you to the disclosure that the 2 physician speakers you will hear from today, Doctor. David Sussman and Doctor. Greg Yore are both paid consultants to Teleflex. Their opinions they express today are their own and do not necessarily reflect the views of Teleflex Incorporated.
We are very excited to be here with you this morning and we hope that over the course of the next few hours you'll obtain a better sense of the opportunities that lie in front of Teleflex as well as the strategies that we will employ to accomplish those objectives. We'll start with a strategic overview from our President and CEO, Liam Kelly. Liam will cover the strategies that we believe will enable Teleflex to deliver on its business and financial objectives and he'll specifically cover our 3 year growth drivers behind our organic constant currency revenue growth assumptions from 2019 through 2021. So then turn the presentation to the key business unit executives who will provide a market update and discuss in more detail the revenue growth drivers within their respective areas. We'll begin the presentation with Jay White, President of the Americas and Sunny Go, President of Asia Pacific.
And after taking a 5 minute break, we'll hear from Jean Luc Deanda, President of Europe, Middle East and Africa followed by Stu Strong, President of Interventional North America and Dave Amerson, President of Interventional Urology North America. Following Dave, we're very pleased to have with us 2 thought leading urologists who are experienced users of the UroLift system. Doctor. David Sussman practices at Delaware Valley Urology. He also serves as Chief of Urology First Jefferson, New Jersey and as a clinical associate professor in the division of urology at Berlin University.
Doctor. Sussman has lectured and published in peer reviewed journals and on the subjects of overactive bladder, urinary incontinence, voiding dysfunction, benign prostatic hyperplasia or BPH and erectile dysfunction. Doctor. Greg Yure practices general urology and is the chair of research at Urology of Virginia. Doctor.
Yohr focuses on the treatment of BPH including minimally invasive and laser techniques and men's health issues including prostate cancer and erectile dysfunction. Doctor. Yoo is active in clinical research and has begun an investigator in numerous clinical trials including the LIFT study. Following the physician presentations, we'll hold a 20 minute question and answer session. Following the Q and A, we'll hear from Tom Powell, Executive Vice President and Chief Financial Officer, who will provide you with a review of our financial performance since 2015 and provide our financial outlook for the 3 year period from 2019 through 2021.
Liam will then return for very brief concluding remarks and we'll then hold a second Q and A session. You're welcome to remain here with us after the Q and A for lunch and product demonstration. Before I turn the event over to Liam, I'd like to provide you with some tentative fiscal year 2018 earnings release dates as shown on this slide. Please note that all dates are tentative until posted on our website. And I'd also like to mention that the slides for today's event are available online and you can download them and there is a press release that also went out a few moments ago.
So with that, I'd like to turn the event over to Liam.
Thank you, Jake, and good morning, everyone. It's great to be here with all of you who are attending in person this morning and welcome to everyone who is joining us via the live webcast. The objective of today's event is to review Teleflex's longer term business and financial objectives, as well as to provide the investment community with a deeper dive into what we believe are the drivers of our future revenue growth, margin expansion and cash flow generation over a multi year period. During my time as Chief Operating Officer and over the last few months as Chief Executive Officer, I've had the opportunity to meet with many investors and sell side research analysts. Much of today's presentation has been influenced by feedback we have received from investors and analysts.
My presentation will focus on why we are so excited about the future of Teleflex and what we anticipate the key drivers of our organic growth will be over the next several years with specific focus on 2019 through to 2021. We have tried to focus today's Analyst Day presentation on those regions, our business units that we believe will be the most significant drivers of our growth during this time period. And of those businesses, our products investors have asked to hear more about, for example, NeoTract. To that end, I will first touch on some of the key strategies we have developed to achieve our long term revenue growth objectives. Then Jay, Sunny, Jean Luc, Stu and Dave will dive deeper into the execution of these strategies specific to their regions and business units before Tom provides our multiyear financial outlook.
I want to start by explaining why we do what we do at Teleflex. Our mission is to improve the health and quality of people's lives. Nothing emphasizes that more than a recent story that was shared with me. A first responder called us to tell the story about a little girl who was injured during the terrorist attack at the Ariana Grande concert last May in Manchester in the U. K.
He articulated that because of the training that he had received from our clinical and medical affairs group, he was able to administer critical medications through the use of the ARO Easy. Io product that helps save that young girl's life. That is why we do what we do in Teleflex every day and it makes me incredibly proud to be part of this great company. Because of how broadly our products are used to positively impact the health of human life globally, we have many stories like this. We estimate that every day our products are used in over 31,000 surgical procedures in the United States to help more than 1600 patients who require vascular access intervention, to care for more than 6,000 patients in the intensive care units, and by 3,200 first responders to treat patients in the field.
We have always said that demographics are going to play a big part in the future demand of healthcare. And one of the things we think is unique about Teleflex is how well we are purposely aligned our product portfolio to these favorable demographics. Let me give a few trends that illustrate how Teleflex will benefit from changes in the healthcare landscape. There are 10,000 Americans every day crossing over the 65 year age mark. Most Americans spend about 10 percent of their total healthcare expenditure between 5065.
However, between the age of 6585, they spend 60% of that total. And our view is, therefore, the demand is inevitable. What we've tried to do as a company is to position our portfolio and what we would classify as non postponable procedures, where it is very difficult to cancel the delivery of care and the use of our products without having a very adverse event on the patient. To illustrate this point, consider a typical patient who enters through the hospital emergency room with a heart attack. Patient will arrive in an ambulance and they will probably have an EZIO already in place to get fluid in.
They will then be fitted with a laryngeal mask from our LMA portfolio and ultimately will need an endotracheal tube, respiratory breathing device and a CBC or a PIC catheter. Now notably, the hospital reimbursement for this patient could run $10,000 to $15,000 per day, but the Teleflex products involved in the care of this patient would have a total price tag of approximately $600 Clearly, a very small part of the overall cost of the procedure and therefore not a huge target for price concessions. And I would also point out that the delivery of care as that patient flow through the hospital was non optional. It was emergent in every as the patient moved through the facility. In Asia, one of our fastest growing geographies, there will be over 1,000,000,000 people over the age of 50 by the time we reach the year 2025.
The middle class in China is also growing rapidly and they are demanding better health care. Another important trend we are seeing is the shift of the lower acuity patient out of the hospital and into lower cost sites such as the ASC. This actually benefits Teleflex in 2 ways. 1st, the hospital is left with a higher acuity and higher cost mix of patients, putting more pressure on hospital systems to reduce costs and take actions that shorten the length of stay and reduce hospital acquired infections. This most obviously benefits our coated catheter products.
Secondly, the products that lower cost sites of service utilize are generally the same products used in the hospitals. This allows Teleflex to participate in the shift to lower cost sites of care. Not only are the demographics changing in our industry, so is the regulatory environment and the way we think about payment or performance. In fact, these changes started happening several years ago. Some examples that I am sure many of you are aware of.
The Medicare Access and CHIP Reauthorization Act of 2015 is expected to drive care delivery and payment reform across the U. S. Healthcare system for the foreseeable future. CMS began reporting on 30 day mortality, readmission and safety measures in 2,007. Medicare has set up a website to specifically compare hospitals based on quality outcomes measures for the public to access.
And as we all know, educated patients are more demanding than ever. It is our view that the companies that can deliver a suite of products to GPOs and IDNs are the ones we believe that can compete in this changing market. We believe Teleflex is extremely well positioned in these categories to add value to delivery systems and help hospitals deliver improved care at a lower cost and with better patient outcomes. Before we dive into the growth strategies, I wanted to take a couple of minutes to highlight why we are so excited about the opportunities that lie ahead of Teleflex. First, we enjoy leadership positions in growing markets such as vascular, anesthesia, interventional access, surgical and now of course interventional urology with the acquisition of NeoTract.
These leadership positions are built on established and well respected brands that stand for quality and innovation. Our customers trust and respect the clinical value of our products. We have a unique size which we believe is an advantage because we have global scale, we're relevant to every GPO and IDN within the United States. We can apply for tenders within Europe and we are relevant to Asian markets with an infrastructure and a footprint in each of these areas. We are also small enough to be nimble and make quick but informed business decisions.
For example, we've completed several acquisitions over the years that move the needle for Teleflex, whereas those acquisitions may not have the same impact for other larger companies. We have a track record of execution, delivering a combination of revenue growth with growth and operating margin expansion that has resulted in an approximately 13.5 percent adjusted earnings per share CAGR since our 2015 Analyst Day. And we have been and will continue to be a serial acquirer. We have completed over 40 transactions since 2011, most of which have added scale, revenue growth, margin expansion and ultimately shareholder value. We think we are in as good as anyone in medical devices at sourcing, researching and integrating acquisitions.
And lastly, we have momentum heading into 2018 and beyond. We expect our recent scale acquisitions, new product introductions and emerging markets to further transform our organic revenue growth profile. But we were not always in such a strong position. Let's take a brief look at the portfolio transformation that resulted in who we are today. Back in 2010, Teleflex was a very different organization.
We were more of a conglomerate with businesses in multiple industries. The healthcare business we did have was mostly a commodity supply business. Our new product pipeline was limited as we did not spend significantly on R and D. Leadership and the sales force were more regionally focused and our manufacturing and global operations needed to be optimized. Fast forward to 2018.
We are a focused medical device company with strong brands and high value differentiated products. We have increased spending in R and D and innovation, which has led to improving growth driven by new products each year. We reorganized the leadership and sales teams to be more product and customer orientated, while also increasing our sales force efficiencies. And we executed several restructuring and footprint optimization plans that resulted in a more consolidated lower cost manufacturing infrastructure and which delivered non revenue dependent growth and operating margin expansion. But rest assured in no way are we resting on our laurels.
We plan to continue transforming this company over the next several years and our goal is to provide you with an understanding of how we plan to achieve this in today's presentation. And there's one thing that is not on this slide, but it remains incredibly important to Teleflex and that is our culture. The credit for our success over the years belongs to the employees of Teleflex. The entire organization has worked incredibly hard to develop a culture of entrepreneurial spirit that is reinforced by strong trust between every employee. We will continue to build this culture and attract best in class talent over the long term.
Indeed, our culture has also been an important factor in our acquisition success. This has made us an appealing buyer and on many occasions has shifted the seller's decision in our favor. Today, we have 8 reportable segments, each of which are run as their own separate business units. Combined, these business units reported revenues of more than $2,100,000,000 for the year 2017. Our business unit structure provides us with a couple of key advantages.
1st is product and local market expertise. We made the decision long ago to stay close to the customer and improve customer experience while allowing each general manager to make local decisions that they feel is right for their business. Our structure also allows us to complete acquisitions and integrate them successfully because the business units allow us to do several things at one time without impacting our entire business. We have set up today's discussion to focus on those segments, business units and products, so I won't go through each of the segments in detail. However, there are a few that we would still like to highlight as key contributors to our organic growth expectations over the next 3 years.
Beginning from the top with vascular. This is our core line of PICC CBCs and other catheters where we have a strong global leadership on antimicrobial and antithrombogenic coatings. Next is interventional North America, which includes the North American part of the vascular solutions business that we recently acquired. In anesthesia and surgical, we feel we have taken a practical and relatively conservative approach to the 2 largest growth opportunities over the next 3 years, namely RePlas and Percutaneous. EMEA through new product introductions, the recent VSI Go Direct and investments in clinical and medical affairs, we think will drive meaningful growth into the future.
Asia Pacific is another key area of anticipated high growth with China being a major contributor to that growth over a multiyear period. And lastly, but certainly not least is our all other category, which includes NeoTract's North American business, which we now refer to as Interventional Urology North America. We acquired NeoTract in October 2017 and expect rapid growth over the next several years, which should move this business size relative to our overall portfolio meaningfully higher in the future. When you roll all of those businesses together and look at the trend over a multiyear period, you can see we have delivered relatively consistent revenue growth over the long term since the beginning of our portfolio transformation. And when you look at our average annual organic constant currency revenue growth over the past 3 years, we have averaged approximately 4%.
In just a few moments, I will outline our strategy to drive that 4% significantly higher over the next 3 years. Our ability to consistently and meaningfully drive both operating margin expansion continues to be a differentiator for Teleflex as compared to many of our peers. We achieved this expansion through non revenue dependent sources such as restructuring initiatives and by adding higher margin products to our portfolio through either scale acquisitions, distributor to direct conversions or internally developed products. We often get asked pardon me, we often get questions from the investment community about whether Teleflex has opportunities to further expand growth and operating margins. The answer is that we see significant opportunity over the next 3 years to expand both.
Tom Powell, our Chief Financial Officer, will outline our specific projections and give commentary on the drivers of our continued growth and operating margin expansion in his financial overview. I've also been asked several times since I was appointed CEO in January, what parts of the Teleflex strategy will change under your leadership? Let me answer that question by first outlining the strategy that our board and management team developed and have executed to deliver shareholder value over the past several years and what we believe makes us a truly unique MedTech asset. We have focused on 5 strategic building blocks. 1st is driving core organic revenue growth by addressing major healthcare challenges such as through infection prevention, improving outcomes with less invasive evidence based products that lowered the overall cost of care augmenting that growth with strategic M and A.
2nd is delivering non revenue dependent margin expansion. We believe we are one of the few med tech companies that has consistently delivered this expansion and we think we have more room for further expansion. Next is being a serial acquirer. Strategic M and A has come in the form of tuck ins, late stage technology, distributor conversions and of course scale acquisition. Each transaction has added shareholder value in different ways and we think we get better with each deal that we complete.
I talked earlier about demographics. We believe we are in a unique position and well aligned our and we have our portfolio well aligned to take advantage of the favorable demographics. And last and by no means least is our people. We continue to work hard to make Teleflex a great place to work, offering people career building opportunities and striving to maintain our core values and culture. But like any good strategy, we must evolve with the environment and the business.
We believe it is unrealistic to expect the exact strategy that delivered returns over the past 3 years is going to deliver the same returns over the next 3 years. Therefore, I see an opportunity to fine tune our core strategy for enhanced performance. Our goal by the end of 2021 is to further transform Teleflex from a medium growth company with growth and operating margin expansion to a high growth company with growth and operating margin expansion. What you see on this slide is how we have evolved our strategy to achieve that goal. Our focus over the course of the remainder of this year and through 2019, 2020 2021 will be to selectively invest in what we have identified as key disease states and markets, continue the cadence of new product launches that have organic growth potential, focus our sales and marketing efforts on driving utilization of sticky, high growth products in strong markets, leverage our global infrastructure for incremental margin expansion and execute strategic M and A as a growth accelerator.
You will hear these recurring themes over the course of the morning from each member of the Teleflex leadership team speaking today. They will outline the specific business unit level strategies we believe will contribute to the accomplishment of our overall goals. Let me now cover each element of our overall strategy in a little bit more detail. I often said that all growth is not created equal. Our preference as a management team is to invest more heavily where we see the highest potential returns on capital.
The characteristics we evaluate include IP protection, product differentiation, market size and of course incremental margin opportunity. This slide categorizes what we like to call the disease states and target markets that rank highest across each category in our evaluation. In some of these market segments such as catheter complications and emergency medicine, we already have significant leadership positions and the objective is to drive deeper utilization. Others such as percutaneous laparoscopy and interventional cardiology offer the opportunity to grow our market share significantly. The interventional urology men's health category is a bit of a unique situation in that while we have a leadership position in the market for the minimally invasive treatment of benign prostate hyperplasia, the global market is enormous and we have only scratched the surface.
I should add that while the focus of our investments in each of these areas is on our existing product portfolio, we also see opportunities to augment our internal product development efforts with external acquired products and technologies. Our strategy is to operate in market segments and disease states that have the most acquisition opportunities than others. What I mean by that is, markets that have the potential for product innovation spawning entrepreneurial companies anywhere from $10,000,000 to $200,000,000 in revenues. Organic revenue growth from new products will continue to be an important driver of our overall organic revenue growth going forward. As a reminder, we define new products as any product that was launched during the previous 36 months, after which time they are captured in volume.
Here is a look at our year over year growth driven by new products over the past 4 years. As you can see, we have delivered a steady cadence of increasing growth driven by innovation and we will continue to invest in that innovation across our portfolio with an emphasis on the key disease states and markets I mentioned previously. Underneath each of the bars in this chart is a ranking of the top individual product contributors for our overall growth from new products in that year. What is interesting to note is the consistency by which new products contribute to growth on a multiyear basis, in some cases generating more growth than the previous year relative to other products as they gain additional traction and market adoption. This is especially impressive given the challenging comparison some of these products faced during their 1st or second year in the market.
We expect this trend of robust growth driven by new products continue over a multiyear period going forward. In addition to growth from new products, we also have implemented various initiatives to drive utilization of existing products with our current customers. The key products we are focused on are those that sell into large markets that have obvious clinical differentiation. And while we may have good call point coverage for most of the products, we in most cases have only captured a small share of each customer's total procedure in that area. The products on the upper half of the slide are classic examples of high margin products that fit exactly this description and relative to the bottom half of the slide represents larger overall growth opportunities.
As many of you know, all three products, the UroLift system and the OnControl and EZIO device came from scale acquisitions. Our strategy is to leverage our global resources to further drive physician adoption of these products. Jay White, Dave Amerson and Stu Strong will explain those specific strategies in their respective sessions. We believe leveraging our global infrastructure is one of the core competencies of Teleflex, especially as it relates to our M and A strategy. There are several opportunities to enter new markets with the UroLift system and the VSI products, especially across Europe and Asia.
Our regional regulatory and commercial teams are working closely with their counterparts within the interventional access and interventional urology segments to develop country specific strategies that should help ensure we achieve our multi year revenue growth objectives. We also see opportunities across other business units to collaborate for introductions of new products and existing products into new geographies. An example of this is our current plans to register our coated PIC in China. Dealer to direct conversions have been a significant driver of value over the past several years as the ability to gain better control of the commercial channel has obvious long term benefits for Teleflex. Going direct has accelerated our revenue growth, strengthened customer relationships and of course delivered incremental growth and operating margins.
And while not every market is a fit for a dealer to direct conversion, we believe there is incremental dry powder to take businesses direct in several countries outside of North America. In fact, if you look at our total expected business for the full year 2018, we estimate approximately 6% will be sold through traditional in country dealers. If we look at the business sold through dealers, we believe there is an is an opportunity to convert some portion of that to direct sales over time, thereby recouping additional price and margin. It is important to understand that none of this is contemplated in the 3 year financial outlook we are providing today. And while there is no assurance that we will be able to convert a meaningful portion of the targeted revenues to direct, we wanted to provide the investment community with visibility into the potential for future dealer to direct conversions.
We have also leveraged our global infrastructure to deliver non revenue dependent margin expansion through various restructuring programs, resulting in approximately $60,000,000 of savings achieved as of the end of 2017. This consists of approximately $15,000,000 in savings associated with restructuring initiatives that have been completed as well as $45,000,000 of savings that have been generated from plans that are still underway. And in conjunction with our Q1 earnings call, we also announced our 2018 footprint realignment plan. We expect this program will generate approximately $25,000,000 to $30,000,000 in annualized pre tax savings once fully implemented, which we believe will be by the end of 2024. Tom will provide a comprehensive overview of our restructuring initiatives in his financial overview this morning.
Turning to M and A. We have been and will continue to be a serial acquirer. We believe we are best in class at sourcing, researching and of course integrating acquisitions. We believe that our track record speaks for itself. While we have completed over 40 M and A transactions since 2011, I want to highlight the last 4 scale acquisitions we completed as we believe all 4 have had a profound impact on our financial profile and ultimately the creation and delivery of shareholder value.
LMA, which we acquired in 2012, is a global market leader in laryngeal mass with a portfolio of innovative products used extensively in anesthesia and emergency medicine. This acquisition expanded Teleflex's anesthesia franchise and brought us a leading worldwide position in laryngeal mass. By purchasing VidaCare in 2013, we acquired the leading provider of intraosseous or inside the bone access device. This transaction contributed significantly to our revenue growth and gross margin expansion, while also expanding our comprehensive vascular access product portfolio with a defining technology that continues to deliver strong organic growth contributions today. Vascular Solutions acquired in early 2017 provides a broad range of products in the interventional cardiology and interventional radiology space with strong clinical benefits and IP protection.
And of course, NeoTract acquired late in 2017 provided us an extremely high growth asset an innovative technology that is creating a new category of minimally invasive treatment for BPA. We anticipate that each of these acquisitions will make significant contributions to our revenue growth and our adjusted growth and operating margin expansion over the next 3 years and beyond. At the time each of the scale acquisitions I just mentioned was made, they had very similar characteristics. They had market leadership positions. They presented obvious clinical benefits.
They lowered the overall cost of care, they had strong IP, they afforded us the ability to leverage our sales force and they allowed us to take those technologies to new geographies and leverage our pre existing infrastructure. There has been much talk in the medical device world about consolidation. We don't believe in consolidation for consolidation sake. We believe the real consolidation opportunity is for companies in the $50,000,000 to $200,000,000 revenue range. These companies simply don't have the scale to have a footprint overseas.
They don't have the scale to be relevant to all GPOs and IDNs within the key North American markets, and they don't have the resources to expand. So again, we think our size is a unique advantage in that not only can we move quickly on these types of transactions, but the completion of those types of acquisitions really moves the needle for Teleflex and it wouldn't for larger companies. We will continue to look for businesses that fit this mold and that fit our existing business unit structure. Despite the fact that we have completed 2 scale acquisitions in 2017, we have a broad M and A focus across 4 categories. Dealer to direct opportunities remain in focus as I mentioned earlier.
And often when we complete a scale acquisition that refills the bucket with new opportunities to go direct as was the case with VSI. Late stage technology acquisitions also continue to interest us if they fit our strict criteria. And sometimes we have opportunistically bought a supplier and reverse integrated them, such as when we purchased the manufacturer of some of our laryngeal masks. You should expect Teleflex to maintain the same discipline and diligence in our M and A process that we have in the past. So to recap, transforming Teleflex from a medium growth company with growth in operating margin expansion to a high growth company with growth in operating margin expansion rests in 4 primary initiatives with the 5th serving as a further accelerator of growth into the future.
1st is investing in key disease states and market segments. 2nd is the continued cadence of new product launches. 3rd is our ability to drive utilization of growth products. And 4th is the ability to leverage our global infrastructure. The 5th, executing additional strategic M and A can help us to accelerate our growth even higher.
We believe the successful execution of those first four initiatives will deliver organic constant currency revenue growth of between 6% 7% per year from 2019 through to 2021, with M and A serving as a further opportunity to accelerate that revenue growth to higher levels. Let me provide you with a summary of how we get to 6% to 7% growth rate. 1st, we know the investment community is focused on the base business and we recognize that strength in the base business is very important for our multiyear growth. We are confident we can deliver an average of 4% growth from the base business over 2019 to 2021. How are we going to achieve that?
We expect Asia Pacific to accelerate its growth rate following better control of the commercial channel. We expect our interventional business to deliver strong growth driven by key products such as OnControl and the AC3. We expect strength in our vascular business driven by EZIO and our ability to continue to take share because of our coating technology. And we expect EMEA to grow at levels above those that they have been growing over the past several years. Then when you add our expectation of 2% to 3% contribution from vascular solutions and NeoTract to our 4% expected base business growth, you reach a total of 6% to 7% expected total revenue growth over the time frame.
It is our belief that this growth rate is balanced. On the one hand, it does not factor in Teleflex continuing to prune our product portfolio. However, it also only factors in modest contributions from products like Perkivance and Reclass. If the adoption of those products occurred more rapidly than we assumed, we have the ability to exceed a 6% to 7% organic revenue growth rate. We have also not assumed any dealer to direct our other acquisitions in this timeframe.
These traditionally have been an accelerator of top line growth and margin expansion. That completes my prepared remarks. Let me now turn the stage over to Jay White and he'll outline the growth strategies for the Americas. Jay?
Good morning.
It's a
pleasure to be here this morning to share an overview of the Americas business. The Americas is unique in the fact that it's made up of both regions as well as business units. From a regional standpoint, obviously it includes Canada, U. S. And Latin America countries, but it also includes 7 of our 8 strategic business units.
In 2017, our revenue was $1,300,000,000 which is just over 60% of Teleflex's total revenue. If you look at our blended gross margin in that same period, we were approximately 58%. We operate in roughly 35 different countries, sell roughly 40,000 different products to almost 60,000 different companies, our customers. You can see it's a pretty diverse portfolio and business that we manage every day. If you look at the bottom right of the screen, you'll see that vascular access makes up the largest portion of the Americas revenue.
The majority of that revenue is coming in products like CVCs, arterials, EasyIO and again our fastest growing category in that area is scale. Interventional Access is our 2nd largest business unit and that is made up in one of our newer business units and that's made up of the combination of the Vascular Solutions acquisition, existing interventional radiology products and a cardiac business that focused on intrahectic wound pump. You go all the way to the bottom of the screen, you'll notice our newest business unit, which of course is interventional urology. And as Liam mentioned, that's the new NeoTract acquisition. In 2017, that really only made up 1 quarter of revenue.
If you were to pro form a that out for a full 2017, it would have made up roughly 9% of Teleflex's or of America's revenue. As Liam touched on our growth drivers, I wanted to go into a little bit more depth today. I'm going to really focus on the 5 key growth areas for Teleflex. I'll share some of the products and new products that will be coming in these areas and of course touch on some of the strategies that will be driving growth over the next 3 years. So here's an overview of the disease states that Liam mentioned.
It's pretty clear that we are going to be driving focus in these areas. We'll be shifting resources, increasing focus and increasing investment dollars because we believe we can get a higher return in these areas. These are large, fast growing markets with clinical challenges that put a high burden on the patient and the healthcare system. Our opportunity is to address those clinical challenges with innovative products and solutions. So if we start touching on those 5, first of all is catheter related complications, which is the primary focus of our Vascular Access business.
Vascular related complications is costing the U. S. Healthcare system 1,000,000,000 of dollars each year and more importantly, it's costing 1,000 of patients' lives. Teleflex continues to be the leading provider of antimicrobial and anti thrombogenic catheters that are clinically proven to reduce bloodstream infection. The second category is our interventional procedural category.
With approximately 500 1,000 percutaneous coronary interventions performed annually in the U. S. With the addition of the vascular solutions portfolio on top of an already broad portfolio of products, we believe we're well positioned to focus on this area of growth moving forward. The 3rd category that I'll talk about today is men's health. We believe that men's health is an area that we can build over the long run.
However, in the short term, BPH is such a large opportunity that we want to continue to stay laser focused in this area. With roughly 12,000,000 men in the U. S. That are actively being managed by a physician, this creates a large short term opportunity for Teleflex. The 4th area that I'll touch on today is percutaneous laparoscopy.
Our goal is to make minimally invasive surgery less invasive, and we've only scratched the surface with the potential of 3,500,000 laparoscopic procedures performed every year in the U. S. And lastly, we see an opportunity in emergency medicine. This area is part of our anesthesia business, and it's an area that to be honest, a lot of companies have overlooked. We see it as a large opportunity and we have some products that are positioned well both today and some new products coming down the pipeline that we believe will show nice growth over the horizon of our strap plan.
So let's get into more detail. The first category I want to talk about today is catheter related complications. We have made significant investments in this area over the last several years, and it's paying off. We're seeing growth well above the market. And the reason for that is we're in a unique position to address vascular related complications.
1 in 3 catheters are going to develop some form of complications, whether that's infection, whether that's thrombosis, whether that's occlusion or tip malposition. There is clearly a heightened market awareness of these issues. Hospitals are pushing hard to drive down infection rate and to avoid the high costs cost that these complications bring. Our strategy is built around the philosophy of the right line for the right patient at the right time. Because Teleflex has the broadest portfolio in vascular access and the most innovative portfolio, we believe that we continue to offer products and services that are truly best for the patient.
Again, we are in a unique position in this area. No one has the breadth of our portfolio or technologies that are clinically proven to reduce vascular related complications. And let me share a perfect example of this. We talk a lot about our protected catheters, and rightfully so, because they are clinically proven to reduce vascular related complications. But let me focus on an area where we can show that our product is simply broader than other areas, and that's in tip navigation, which is a key part of our pick strategy.
Teleflex once again has the broadest offer in the marketplace. We have a full family of products from our premium VPS G4, which provides a highly accurate tip positioning confirmation system to our new VPS Rhythm, which offers visual tip navigation and then last, the VPS Rhythm with ECG only, which offers a option for those low cost and price sensitive markets around the world. As a market leader, our strategy is more than just product. To truly partner with hospitals to reduce vascular related complications, we also offer a full portfolio of professional education, of risk sharing and consultative programs that are focused on improving patient outcomes, improving workflow efficiencies and reducing the overall cost of care. Catheter complications associated with Vascular Access is a primary example of our strategy to invest in the markets where we have leadership positions and highly differentiated solutions that help solve real world problem.
Let's move to the next category, interventional procedures. As I mentioned, this is one of our newer business units, and we're really excited about the opportunities that this presents. Stu Strong, our President of our Interventional Business Unit is going to present in more detail later in the day. So I'm going to stay somewhat brief in my comments in this area. The interventional procedures market is a large fast growing market that Teleflex has and will continue to invest in.
The statistics are staggering in this area. There's 370,000 deaths annually in the U. S. Due to heart disease. There are over 500,000 PCI's or percutaneous coronary interventions done every year in the U.
S. And 20% of those are complex PCIs, which are growing at a 7% rate. There's roughly 12,000,000 Americans that suffer from peripheral arterial disease. Our primary focus today from a procedural standpoint is really around complex PCIs, CTOs, which are chronic total occlusion, peripheral arterial disease procedures, bone marrow biopsies and intra aortic balloon pump procedure. Strategically, portfolio enhancement, both organically and inorganically, will continue to be a key driver of growth in this segment.
We have a very robust new product pipeline that we're really excited about driven by the vascular solutions R and D organization. In addition to new products, we're going to continue to focus on building brand awareness, deepening utilization in existing practices through professional education. Again, our clinical and medical affairs team will play a critical role in this area, and we've recently expanded their focus to cover interventional, and we're excited about the progress we're making around some of these programs. We have a large portfolio that's well positioned in interventional. And later today, Stu is going to focus on some of these key growth drivers, products like OnControl, AC3, Turnpike and Trapliner.
The 3rd category I want to touch on today is Men's Health. Men's health represents our fastest growing segment, thanks to the acquisition of NeoTract. And this is an area that we plan to continue to make significant investments in both the short and long term. As I stated earlier, there are roughly 12,000,000 men with BPH who are actively being managed by a physician. Historically, there has been a huge gap in care between the drug therapies and the tissue destructive procedures when these men are being treated.
These men are typically dissatisfied with medication, which offers only partial relief and can lead to side effects such as sexual dysfunction, headaches and of course the inconvenience of taking pills every single day. On the other side of the care continuum is the tissue destructive procedures, which cut or burn the prostate. These procedures typically involve a longer recovery period, which may require a catheter. In addition, patients carry a high risk of sexual dysfunction. The UroLift on the other hand is a 1 hour procedure that provides rapid relief, 0 incidents of new sustained sexual dysfunction, low risk of needing a catheter and a procedure that can be done in the doctor's office.
Our strategies to drive sustained rapid growth include physician education and onboarding programs, a commercial focus on going deep within urology practices, patient marketing strategies in key markets and further investment in clinical studies to help us maintain a strong clinical leadership position. Dave Amerson will cover on this in much more detail later in the day. Needless to say, we are extremely excited about the growth profile that the interventional urology business presents. The 4th area that I want to cover today is percutaneous laparoscopy. Teleflex remains bullish on the potential that percutaneous laparoscopy presents.
Our strategy remains to make minimally invasive surgery less invasive. The market continues to see an influx of new technologies trying to meet this goal, but we remain confident that our approach is going to be the best solution long term. There are roughly 3,500,000 laparoscopic procedures performed in the U. S. Every year.
And we believe that percutaneous laparoscopy can address a lot of those procedures. Why do we remain so confident in this opportunity? Well, 1, we continue to put research into the marketplace and our research continues to tell us that both patients and surgeons are seeking less invasive approaches because of the benefits like decreased trauma, the increased safety profile and overall improved cosmesis post procedure. On top of that, percutaneous procedures play directly into the pay for performance trends that continue to permeate throughout the healthcare industry. We think we can help shift the market towards better patient outcomes with our portfolio of minimally invasive products.
These products allow for the insertion of a tool without the need for a trocar, ultimately causing less trauma. The patient heals with only a minor scar, sometimes only the size of a freckle. And best of all, the physician does not have to change their technique. It's a very short learning curve for the physicians, which I think is a big difference in other less invasive technologies that have tried to gain market share. We are currently strengthening our brand awareness of the benefits of the percutaneous portfolio through market development activities driven by our clinical teams.
We are working closely with the surgical societies to continue to help drive education of the benefits of percutaneous surgery. And last, we're working with key teaching institutes to continue to invest in more clinical evidence that will show the benefits of this product over time. The last area that I want to touch on today is emergency medicine. And as I mentioned earlier, this is part of our anesthesia business unit. This is an area where we have current and future technologies that are highly differentiated in large fast growing markets.
There are roughly 141,000,000 visits to the ER every year in the U. S. That means nearly 45% of the U. S. Population will see the ER this year.
When we talk about Teleflex being well positioned and non postponable procedures, this is a perfect example of that. A high percentage of these visits are cardiac related cases, sepsis related cases or trauma cases with mass bleeding. And our portfolio is well positioned to make a difference in these life saving events. I want to mention a couple of products today and highlight those. The first is Easy.
Io. We continue to see double digit growth in this key product and we're really excited about what this brings. I'm also going to touch on the RePlast, which is the freeze dried plasma product later in the presentation. Sepsis or cardiac arrest are 2 situations where fluid resuscitation is critical and finding a vein can be very challenging. Time is of the essence and the EZIO device is a tool that enables clinicians to establish vascular access quickly.
Our goal is to continue this double digit growth with our continued focus in the pre hospital markets, in the hospital emergency rooms, with rapid response teams and with vascular access teams. Through our cadaver training and extensive education campaigns, our team teaches the correct techniques and engages with the emergency medicine community to expand utilization in a variety of different clinical situations. We currently train tens of thousands of clinicians on an annual basis. And I believe that's a big reason why the clinical outcomes continue to be positive within this area around the safe and effective use of this product. So let's move to a new product that will be coming out in emergency medicine.
RePlas, which is our brand name for the new freeze dried plasma product is currently on a fast track BLA regulatory pathway. Again, this is another highly innovative product in our new product pipeline that we are extremely excited about. In the clinical environment, resuscitation with plasma is required to stop uncontrolled bleeding and prevent shock. It's estimated that 1% in 3% of all civilian trauma patients, whether that be car accidents, gunshots or falls, require a massive transfusion due to hemorrhage. The rate of massive transfusion is even higher in the military segment, close to 5% to 15% because of the severe nature of those injuries.
The unmet need in both the military and civilian markets is the logistical challenges that fresh frozen plasma presents. Let me give you an example. Today in the civilian market, plasma is typically stored fresh plasma is typically stored frozen. It requires space and maintenance to manage the program. It takes roughly 30 minutes to thaw plasma in a water bath that can then be used clinically.
Healthcare providers must balance the short shelf life, which is roughly 24 hours once thawed with the immediate needs of the patient. And remember, these are pretty unpredictable events. And so waste is a major problem in the marketplace. The clinical study done in 2015 indicated that there was roughly 3,700,000 units of plasma sold in the marketplace, but only 2,700,000 were actually transfused. That 25% difference was waste.
On the military side, freeze dried plasma is available. It's not FDA approved and it only comes in a large glass bottle that is too heavy and fragile for the military medic backpacks. Through both of these situations, we believe RePlas can improve what is currently used in the marketplace. RePlas addresses both of these issues with patented technologies that allow for packaging of a single unit of freeze dried plasma in a lightweight flexible polymer bag that can be stored at room temperature and fully reconstituted with sterile water in roughly 2 minutes. To our knowledge, no current blood component technology can match the nearly immediate availability of freeze dried plasma during an emergency situation.
Let's touch a little bit on where we believe this product will be used. We see 2 major segments, 1 on the government side and the second on the civilian side. The government segment includes battlefield and evacuation disaster stockpiles and stockpiles for more important government officials such as U. S. Ambassadors overseas.
On the civilian side, there are roughly 1,000 EMS rotor vehicles such as helicopters or airplanes that respond to trauma cases as well as the 36,000 EMS ground vehicles. There's also a hospital segment that we believe this will be a good fit, primarily the rural hospital segment where the logistical challenges of fresh frozen plasma are even more difficult than in your large urban centers. So again, let me reiterate the challenge that hospitals and caregivers face every day. The challenge is the time it takes to thaw fresh frozen plasma because of the urgency of administration in these trauma events, balanced by the high waste once it's thawed because they've only got 24 hours to use that product. We believe RePlas addresses these challenges providing immediate availability by reducing the logistic complexities of fresh frozen plasma.
We believe RePlas can transform the plasma market as we know it today. We see the plasma or the freeze dried plasma market at roughly $100,000,000 market. 75% of that market is on the civilian side and about 25% is on the government side. Our objective will be to start on the government and military side given our partnership with the U. S.
Army and then we'll move over to the civilian side over time. I wanted to provide a regulatory update on where we are in the pathway of this product. As we stated just a few weeks ago in the quarterly update, this product is on a fast track approval. We met with the FDA and the DoD in December of 2017, where the replast product was put on a fast track approval process. We again met with the FDA in 2018, where they have again confirmed that this product will stay on the fast track pathway.
We believe that we will have a BLA submission in quarter 1 of 2019, which allows us to then launch the product at some point in 2019. If you look at the picture, again, it's the first time you can really get a good view of what this product is. And again, you can see the polymer bag that I referenced and then some of the other components that are used for this product. On the right of the screen, you can see the benefits that we have and how this is packaged for military use. So before moving on, I just want to highlight again how excited we are with this product.
So we've had we have invested in and will continue to invest in areas and key disease states and markets with key unmet needs in the five areas that I've touched on. We have a differentiated product portfolio to address some of the key challenges in each of those markets, many of which we believe have significant utilization upside. We have some very exciting products in our pipeline that we believe can disrupt their target markets in emergency medicine, in percutaneous laparoscopy and in the other areas I've talked about today. At this time, I'd like to introduce Sunny Goh, who will talk about our Asia Pacific business. Sunny?
Good morning. My name is Sunny and I'm based in Singapore. I hate the region for Teleflex. Thank you for joining us today. The Asia Pacific region had about 2 70,000,000 in revenue of last year 2017.
This is about 13% of Teleflex total revenues in the period and with the gross margins of about 65%. We operate in 21 countries in the region, China and India being the most significant. We sell 5,400 products to our customer base of about 3,700. When you look at the revenue mix, our surgical business leads the way, thanks to our live Asian products. In vascular, we have a well known set of brands and have more recently strengthened our control of the sales channel as a result of the Go Direct transaction we completed in China in 2017.
The medical device market in APAC is incredibly large and fast growing. As many of us are aware, the market in APAC has significant needs with growing demand for better healthcare. In addition, the APAC medical device market is number 2 in the world behind only the United States. It is expected to reach $133,000,000,000 by the year 2020. Additionally, the demographics in the region are arguably more favorable than the United States.
It is estimated that there will be more than 500,000,000 elderly people in APAC by the year 2,030. And many of these people will be in the expanding middle to upper middle class, which we in Teleflex believe will demand better health care. The Teleflex product portfolio is well positioned to take advantage of these strong demographic trends. So what are the 3 year growth drivers for APAC? First, we have a significant opportunity to expand our presence within China and we plan on investing in resources and new product launches there.
2nd, to strengthen our control of the channel commercially. We are already off to a good start in China with our Go Direct, which we completed in the Q4 of 2017 and we see further opportunity to strengthen our channel control. And thirdly, to drive growth of what we consider to be leadership products. These are products with strong brand recognition and clinical differentiation. So what are the headwinds and tailwinds to our growth strategy in China?
Firstly, the aging population, which I mentioned previously, is a clear tailwind. Another trend worth noting is increasing urbanization of the Chinese population and their demand for access to good healthcare. However, there are also challenges or headwinds. China's regulatory environment continues to be complex and more stringent. In the past, there were multiple layers of distributors and as you can imagine, multiple invoices.
The provincial government has cut that down and now insists there can only be one invoice from manufacturer to distributor and another invoice from distributor to hospital. This means cost pressures, but it also means an opportunity for us, Teleflex, to be closer to the end user. In the past, hospitals could buy products through direct negotiations. But now hospitals are being moved to tendering, which means further price reductions. And finally, budget cuts and a capping of reimbursement for treatments will put further pressure on price.
The silver lining is that there are opportunities for Teleflex to be even closer to the end users. And there is an increasing importance plays on value and the quality of products that are offered to the hospitals. We view these headwinds as opportunities and believe our portfolio is well suited to succeed in this very dynamic Chinese healthcare market. Now we often use the analogy of a kite. If our China business is considered a kite, the kite will fly higher and higher against the wind and not wait to win.
Our strategy for accelerating growth in China is focused on 3 primary initiatives. Firstly, defending our existing business. Hemalog Liguasion Clips and LMA laryngel mouse are core to this strategy, given the clinical differentiation and market share in the country, while in respiratory and surgical, we plan to introduce more clinically differentiated products to capture more market share. In the past, we sold to 1 master distributor. And today, we sell to multiple distributors who in turn sell directly to the hospitals.
This helps us reboot our brands and develop closer relationships with distributors that know the differentiation of our products. Our focus is on deepening relationship with our distribution partners and providing them with the proper training and medical education resources they need to successfully drive deeper utilization of our products. From a go to market standpoint, how do we get these distributors to sell more? Well, we have an ongoing project at the moment that is building new programs to determine the optimal coverage of each sales rep, measure their performance more closely and hold them more accountable to the goals that we set for them. From an account perspective, we are analyzing which accounts are considered key to our multi year growth objectives and therefore deserve more attention from our sales team members.
These strategies give us confidence that we can deliver our CAGR rate in China of over 10% between 2019 2021. Strengthening control of our commercial channel in APAC is also very important to the business long term growth. I already mentioned the Go Direct we executed in China and taking advantage of the 2 invoice rule there, which will move us closer to our end customer. However, control of the commercial channel also involves initiatives such as utilizing in country sourcing. We will continue to look for additional opportunities to work directly with local providers of materials.
From a sales and marketing standpoint, we are committed to investing in more programs that educate not only our sales professionals, but also the physicians they call on. We believe the commercial organization in APAC has significant opportunity to deepen their ability to sell clinically and strengthen their ability to sell the products that we have in our portfolio. The programs we have initiated will be key drivers of increased control of APAC commercial channel. From a product level perspective, we have a broad range of products that we believe will make strong growth contributions in APAC from 2019 through 2021. However, if we had to highlight the products on the slide that you see in front of you, we believe that will make the biggest impact relative to the rest of the products you see on this page.
Guideline PICs, the EasyIO device and the EuroLeaf are the main focus products for us. With that, my presentation comes to an end and I hope that you have a better understanding of the Palaflex business as well as the strategies that will take us forward. Thank you and I hand over the session back to Jake.
Thanks, Sunny. At this time, we're going to take a 5 minute break and then we'd ask you to return back to your seats. When we return, we'll hear from Jean Luc regarding our EMEA business. So I'd ask you to be back around 10:20. Thank you.
All right, great. Thanks. Appreciate it. We're going to start the live broadcast again. So welcome back.
At this time, I'd like to introduce Jean Luc Deanda, President of our Europe, Middle East and Africa segment. Jean Luc?
Thank you, Jake. It is a pleasure to be here this morning. As a bit of background, I joined Teleflex as a result of the Hudson RCI acquisition in 2004 and have seen many business cycle in the EMEA region, both as a General Manager for Hudson and in a variety of roles within Teleflex. I must say, it is truly exciting time at Teleflex, and I'm very pleased to share with you the EMEA growth strategy. The EMEA region at approximately 553,000,000 dollars for the full year 2017, which is about 26% of Teleflex total revenue in that period and has gross margin of approximately 53%.
We are geographically diverse as we operate in over 100 countries with Germany, Italy and France being the
most significant.
We sell 15,000 products to a customer base of approximately 13,000. Compared to other regions, the Cineflex EMEA segment is unique in that our revenue mix is dominated by urology. In addition to having a large established urology business, we also have a significant presence in anesthesia, vascular and surgical product. We believe that EMEA will serve as a growth engine for global Teleflex revenue given its scale and the many initiatives I will walk you through on subsequent slides. As you can see, we have a very balanced portfolio and an established footprint in EMEA, much of which has already been converted to direct sales.
We plan to leverage this infrastructure to drive incremental revenue from our recently completed scale acquisition of Vascular Solution and NeoTract as we integrate those recently acquired products into our pre existing EMEA sales force. There are 3 major things from 2019 through 2021 that will drive growth. 1st, we will drive utilization of our products within underpenetrated markets. Next, we will leverage our recent Go Direct, specifically the recently completed vascular solution Go Direct. And lastly, we will focus our sales, marketing and clinical education resources on products that we consider to be leadership high margin products.
Here are the underpenetrated EMEA market where we believe we can drive additional utilization. From an interventional access perspective, it's all about our newly hired individuals that have entered a clinical sales training program that our clinical medical affairs team recently launched. We have nearly completed the training and so far the results have been very positive. Keep in mind, we are still very early in entering the international and coronary markets in EMEA and have an opportunity to gain early traction there while we also cross sell our growth portfolio. It is a recurring theme that you will hear during here today.
Our clinical and medical affairs group is also playing a very big role in driving sales of our intra osseous access product. The Cadaver lab programs have been a huge success in the United States and we will continue bringing those programs to the European marketplace, which will allow us to penetrate the market for the ARO EasyIO device and home control system more deeply. From a Neotrack perspective, our success in Europe is highly tied to procuring appropriate reimbursement in key countries. Currently, the majority of EMEA revenue for the EuroLift systems come from the UK. Our focus going forward is to leverage the initial investment we have made in European countries with big potentials in place like France and the Netherlands.
Clinical data will be a key component to gaining proper reimbursement and we are planning local clinical trials in select countries where we believe it will be necessary to support the process. As I mentioned on my first slide, we also have a large urology presence in Europe and plan to selectively elaborate that commercial presence to facilitate introductions to the UroLift system over time. To be clear, the expected contribution of the UroLift system during the 3 years period contemplated in this Analyst Day is relatively small given our near term focus on the U. S. However, when we think about longer term time frame, we think the UroLift systems offer a very large opportunity in Europe.
When considering catheter complications, the market in Europe is very similar to the United States and there is a trend toward reducing infection and reducing length
of stay.
Our products do very well in that type of environment. But we are not simply selling more of the same. We have initiated programs to better bridge our catheter teeth positioning offering to drive depolarization in that category. The vascular solution Go Direct have been going quite well since we completed the majority of them late last year. We acquired assets from legacy distributors providing us with the opportunity to accelerate revenue growth and expand margins.
We are only in the beginning stages of teaching sales representatives to sell the full portfolio of products and are leveraging clinical education tools that will deepen relationships with internationalists. This is yet another case where we are bringing the pride and true practices that have worked in other markets and applying them here in order to create rapid growth. Turning to some of the product growth drivers in the EMEA. You will see a mix of products on this slide, some legacy and some newer. The guideline of these 3 catheters can be a growth engine given the Go Direct we recently completed in Europe.
The Arrow Easy IO device and OnControl system both present large opportunities as the intra sales market in Europe remains very underpenetrated. The ROACE 3 Optimus IABP is gaining traction. And of course, we have a strong market presence in urology that we still think will make growth contributions. That brings my presentation this morning to a close. I hope that you now have a better understanding of CetiFlex EMEA Business and the growth strategy that will make us successful in the future.
At this time, I would now like to turn the presentation to Stu Strong President America. Stu?
Thank you, Jean Luc, and thank you for the time today. Let's dive right into the interventional market update and 3 year growth drivers for our business unit. The Teleflex Interventional North American business had approximately $221,000,000 in revenue in 2017, representing approximately 10% of Teleflex' total revenues. And we have gross margins that are in excess of 60%. We wanted to highlight this business given the fact that we have diversity of where we believe the growth is coming from over a multiyear period, as demonstrated by the list of therapeutic areas you can see here on the right hand side of this slide.
Teleflex, as you know, recently included Vascular Solutions' North American business within its Interventional North America segment, And that business makes up a meaningful portion of the overall revenue growth that the segment is expected to deliver in 2019 through 2021. So let's focus first on the vascular solutions business. This business added approximately 8% to our constant currency revenue for the full year of 2017. In February of this year, vascular solutions became organic as we passed the anniversary date of our acquisition, which was February 17th last year. This should lead to accelerating organic revenue growth in Interventional North American segment going forward.
We've completed our distributor to direct sales conversions within the North American market and that positions us for accelerated growth in 2018 and beyond. With the combination of a robust R and D product pipeline that we believe will drive significant product momentum going forward and now control of the direct sales channel in North America, we believe that vascular solutions products are poised to deliver strong revenue growth and a mixed benefit to the total Teleflex margins from 2019 to 2021. So, if you look at the next slide, the 3 key growth drivers for the interventional North American business over the next 3 years start with, number 1, further strengthening our commercial organization, which leads directly into the 2nd growth driver for us, which is deepening utilization of what we consider to be our focus or growth products. And lastly, we believe that there are several opportunities for us to enter into new markets. If you look at this next slide, let me walk you through some of these three drivers in more detail.
First, we continue to strengthen the commercial organization by building on what we believe to be a very strong base. What you see on this slide is a 3 pronged approach. At the bottom of the slide, there are some of the blocking and tackling that we plan to execute on, such as deepening key opinion leader relationships and leveraging a very talented and experienced R and D team from the legacy Vascular Solutions business in Minneapolis to continue to develop new products. This will enable us to accelerate revenue growth in both the interventional cardiology and interventional radiology spaces. Our midterm vision or Phase 2 here in the middle of this slide is to become a true valued partner for complex percutaneous coronary interventions and for peripheral vascular interventions.
Physicians, as you know, place a strong premium on clinical training and product knowledge. We think that with the clinical training and education programs we've introduced to the commercial team, we'll be valued by physicians as true consultants for solving complex and difficult clinical treatment issues in both the coronary and peripheral interventional spaces. In essence, our job is to make the physician's life easier and to really partner with them in producing better outcomes for the patient. Lastly, at the top of the slide, a bit of a longer term vision is for us to establish ourselves as a respected clinical leader in both interventional radiology and interventional cardiology. We're working on expanding indications for things like chronic total occlusion, as well as developing new professional education programs for interventional procedures such as complex PCI.
This is an incredibly exciting last phase for us we're ambitiously moving forward
on that plan. If you look at
the next slide, I want to highlight some of our growth products as we plan to drive deeper utilization over the next 3 years. I'll start with the OnControl powered bone access system, which most of you are aware of at this point. We estimate the total addressable U. S. Market to be approximately $160,000,000 which includes the opportunities for both of the procedures that OnControl is currently approved for.
Number 1, bone marrow biopsies and also bone lesion biopsies. To give you a frame of reference, ON control sales globally for the full year of 2017 were about 25,000,000. So we still have plenty of room to significantly further penetrate into this market. This product essentially competes with a manual biopsy tool and there's nothing else like it on the market today. When compared to manual biopsy needles, our OnControl system procedure times are up to 55% faster than the competition.
The ON control system also provides consistently larger, higher quality core specimens, which is important to pathologists. As a result, pathologists love the procedure. They get a higher quality and more consistent specimen from the physician. The OnControl system also offers increased user control, reduced and reduced physician requirements to obtain specimens. And finally, the ON control system has demonstrated significantly less pain post procedurally than with the use of a manual biopsy needle.
If you take a look at this slide, I want to dig a little deeper into the utilization opportunity for OnControl just among existing accounts. So if you look at our current account segment on the left, you can see that about 60% of our current users are what we consider to be light users using less than 4 kits per month. As you move up the scale, you can see that about 14% of our accounts are what we call regulars using 10 to 18 kits per month. While at the very top there, you can see that the smallest percentage of our accounts are what we consider to be our leaders using 20 kits or more per month. We think that there's a significant opportunity for us to move this 11% number to a significantly higher number over time.
So how will we do that? Probably the most significant driver for us is an investment in professional education, specifically peer to peer education and cadaver lab training. In 2018 and beyond, we'll be putting more resources into these programs. We are also now able to leverage a significantly larger interventional sales force than we had only 1 year ago, thanks of course to the addition of the highly talented vascular solutions sales force that we acquired last February. Lastly, we have a better a program to better influence the key decision makers that play a role in whether the powered system is used or a manual system is used.
The oncologists and pathologists are critical to influencing this decision, given that they're the ultimate users of the core samples that we've collected with the device. Our mission is to prove to them that our OnControl system is clinically superior to a manual biopsy and that the system is easy for the physician to use. So, let's move on to another product in the portfolio that's a driver of expected growth, the AC3 intra aortic balloon pump. The purpose of intra aortic balloon pumps is generally to provide hemodynamic support to an injured or diseased heart as a patient recovers or as the medical team prepares for further intervention. There continues to be a large market for what we like to call a workhorse balloon pump like the AC-three.
Our balloon pump is the medical team's first line of defense. It's really easy to use and it's very cost effective for the physicians. I encourage you to get a demo over in the other room in our product demonstration area just to see how easy it is to use in a critical situation. Despite that ease of use, it's still the most sophisticated pump on the market in our view. When a patient's survival depends on the intra aortic balloon pump to keep pace with complex arrhythmias, just like AFib or whether higher or whether a patient has higher heart rates, the AC3 has a proprietary algorithm that allows for inflation timing a critical differentiator between us and the competition.
It also has a 3rd generation autopilot mode that addresses key clinical challenges to simplify the delivery of IAB therapy. Longer term, we think there will be some other opportunities for emerging indications tied to transplant, for example, that we will cover more at a later date as that program moves forward. Moving to the next slide. The turnpike catheter or turnpike microcatheters have seen impressive success in penetrating the PCI market over the course of 2017. And we believe we'll continue to see that growth trajectory and they can be used to facilitate placement or exchange of guide wires to selectively infuse or deliver diagnostic and therapeutic agents in highly torturous vessels or in narrowed vessels or highly calcified vessels.
Not only does turnpike move through these tortuous anatomies very well, it provides superior tracking that the physician can always easily identify for catheter placement during the procedure. We offer 3 versions of turnpike and you can see them there on the slide. The first is the turnpike spiral, followed by the turnpike gold, which is a gold plated threaded metallic tip for enhanced advancement and a low profile turnpike at the bottom for physicians when they need to advance through extreme tortuosity. The next slide shows our an example of our Trapliner catheter. And this is a product that allows physicians to more easily access difficult to reach areas and provide interventional cardiologists with the ability to more efficiently exchange instruments during complex PCI procedures.
And this of course is called Trapliner. As we expand our footprint in PCI procedures, we believe that Trapliner will be a significant growth driver for us in the future. Trapliner is built on the platform of the popular Guidelineer guide extension catheter. Trapliner is really a 2 in-one product. It has the benefits of our Guidelineer catheter in providing distal catheter support with the added feature of an integrated trapping balloon for trapping the standard guide wire.
It can be used as an alternative method to the trapping technique that requires the use of a PTCA balloon to exchange an existing over the wire catheter, while maintaining guide wire position. This technique is most often used in complex PCI procedures where it's quite common for the interventional cardiologists to need a longer guide wire or a different type of wire in the middle of a procedure as they try to access lesions deep within the complex vasculature. During this exchange, it's critical to maintain the position of the tip of the wire. Trapliner's built in inflatable balloon enables the operator to complete this exchange with an extension guide wire to reach the desired anatomy quickly and efficiently without compromising that critical tip positioning or introducing a secondary trapping balloon. As we saw with the launch of GuidelineR several years ago, which really created that guide extension catheter category, Trapliner will allow us to create new markets that enables procedures to be done more efficiently without using up valuable real estate inside the catheter, while also reducing procedure times and eliminating the use of another device.
In summary, we feel confident that the Interventional North American segment is poised to execute on our 3 phase growth strategy. And we have a range of innovative products, as you've seen here, that will make contributions for us to the 3 year revenue growth plan. So that completes my presentation for today. Thank you for allowing me to speak with you about our growth strategies for the interventional business. And at this time, I'm going to turn it over to Dave Emerson, the President of Interventional Urology for his presentation.
Dave?
Hey, good morning, everyone. As mentioned, I'm Dave Amerson. I'm the President of Interventional Urology. Prior, I was the President and CEO of NeoTract. I will tell you that during the break, I saw a pretty significant line at the men's room.
So please make sure you pay attention. But I am looking forward to sharing the story of UroLift, NeoTract and our 3 year growth strategy. Let me start with our vision. Our vision is pretty simple. We want to be the leader in BPH care.
We've come a long way. We have treated over 50,000 men globally. But guess what? There's 12,000,000 men in the United States alone, 80,000,000 men globally that suffer from moderate to severe BPH. We have a long runway ahead of us.
Our mission is centered squarely around the patient. We've got a pretty simple philosophy. If the patient does well, the urologist is happy, we win as an organization. Here's a quick update on the NeoTract business since it was acquired by Teleflex in October of 2017. The short story is that integration is on track.
The operational management team is fully intact. The sales force remains highly engaged, motivated. We have had 0 regrettable turnover. Our high performance culture, our employment engagement, what I like to call our secret sauce, remains a best in class and Teleflex has really been investing in what they see as a growth engine for this business. And I truly do believe that we have a great home in Teleflex with this business and we are excited about the future.
So why are we so excited about UroLift? First of all, it's a huge market in the United States, a $30,000,000,000 total addressable market. We've also introduced this technology the right way with 25 peer reviewed publications, 5 year data and a clinical bibliography that I firmly believe that is one of the most studied treatments in urology. And we've also worked incredibly hard to establish sufficient reimbursement across all sites of service. We got our CPT-one code in January of 2015 and it took us many years of working with Medicare and commercial payers to reach where we are today, 240,000,000 covered lives.
We also have a very strong commercial infrastructure in what I believe are the best highest quality sales and marketing people in the industry. The UroLift system that you do see on the right is really creating a new category of truly minimally invasive BPH care, offering men rapid symptom relief without the typical trade offs of drugs or tissue destructive procedures such as sexual dysfunction or the need to wear a catheter. So let's talk a little bit about the market. There are 12,000,000 men in the United States alone who are actively being managed for their BPH. And as you can see from the slide, a lot of those men are on drugs or drug dropout.
That represents a significant portion of the overall market. If we just focus on the 1,500,000 men who have tried medication and dropped out because they've been frustrated with the lack of efficacy, the side effects, the challenge of taking medications every year, that's a $6,000,000,000 market alone. As you can see, we have a significant opportunity ahead of us. Now I'm really thrilled to have Doctor. Yuhr and Doctor.
Sussman here today. They'll be able to speak to, but I see this as really a practice development play for us. BPH is the number one reason men visit a urologist and almost half of the 12,000,000 men, almost 6,000,000 men are seeing that urologist. Our initial focus is on approximately 5,500 urologists that see a high percentage of these DPH patients. Keep in mind that urologists are highly trained surgeons and before UroLift really had 2 options, medications
or surgery.
What we're trying to do is have them put down the pen versus writing a prescription doing a simple, truly minimally invasive procedure. Now I will tell you that we took a totally different approach to developing a BPH technology, actually developing a product that a patient would want. This was our roadmap back in 2004 of what we had to accomplish in order to develop a truly patient friendly minimally invasive product, rapid symptom relief, minimal side effects performed in a less invasive site of service like the office or ambulatory surgery center, performed under local anesthesia, a straightforward procedure, you didn't need to do 500 to become certified, Certainly, durability in line with traditional surgical procedures and economically viable for all of our key stakeholders. I can confidently tell you that we check, UroLift checks every single one of these boxes. Men do want symptom relief for VPH, but not at the cost of sexual function.
We actually surveyed 1,000 patients and their partners. And what was interesting was 86% of men said that preserving sexual function was really an important choice when choosing a BPH option. As you will see throughout the presentations from myself, Doctor. Sussman and Doctor. UroLift is the only BPH procedure that can claim 100 percent sexual preservation.
I am often asked if UroLift can truly be a first line therapy. Answer is pretty simple. Absolutely, yes. We conducted a survey of 600 UroLift patients, patients who actually got the UroLift procedure and asked what would they have done had UroLift not existed. 2 thirds of those patients actually said they would have stayed on their drugs or done nothing had UroLift not been available.
The conclusion is that UroLift is taking share from drugs and the watchful waiting category. I'm also really pleased to report that we've had a number of urologists personally get UroLift. And I will boldly say if you ask most urologists, would they get other tissue destructive procedures, the answer would be no. The picture here really does illustrate why UroLift makes a difference. BPH is a benign disease.
So why do we need to cut or damage tissue that's benign? With UroLift, we preserve the prostate anatomy. Hence, it's safe. Patients have rapid symptom relief. Most don't need post op catheter and we preserve sexual function.
You contrast that to any tissue destructive procedure, no matter how minimally invasive they say they are, when you destroy tissue, you have side effects, period. You have risk of bleeding, you get worse before you get better, you wear a catheter for a week, if not weeks or months, and there is a risk of sexual dysfunction. Preserving the prostate anatomy is what makes UroLift a game changer. As a small company, we wanted to have robust data for 2 primary reasons. Number 1, I've been in urology now for 30 years and we've seen a lot of BPH technologies just frankly overpromise and underdeliver.
Our goal was to provide urologists with data so that it was clear who the ideal patient was and what to expect. Number 2, we knew that we had a unique technology and that we needed data to get our own CPT-one code. To summarize the data, what it has shown is that patients improve quickly, most don't need a catheter, we preserve sexual function, downtime is minimal and the UroLift can be performed in the office under local anesthesia. So let's look at UroLift compared to traditional drugs. As you see, the time to effectiveness is similar to an alpha blocker like Flomax, but much quicker than a 5 ARI like Avadart.
Symptom improvement is 2 to 3 times better than drugs. Drugs we know can cause sexual dysfunction, UroLift does not. A quick comparison to UroLift to tissue destructive procedures. The catheter rate for UroLift is around 20% versus 100% for tissue destructive procedures. Sexual function with UroLift is preserved.
No other BPH tissue destructive procedure can say that. And tissue destructive procedures have other known side effects like incontinence and structures. Because of the investments we have made in data, we are recognizing you see at the bottom by the American Urological Association with a very positive position statement that's posted on their website. The AUA guidelines for BPH haven't been updated since 2010. We do expect an update to be announced at this year's annual urology meeting, which will be hosted actually this month in San Francisco.
As you see at the top, UroLift is now part of the American Urological Association Board Exam. The question as you look at it is centered around a patient who has BPH, but they want to preserve their sexual function. And we've highlighted it. So if you actually want to become a urologist, you'll have one answer correct, but you see the correct answer is UroLift. Reimbursement, we consider reimbursement to be a core competence to have in place and we have worked incredibly hard to get a dedicated CPT-one code for a year left.
We now have over 240,000,000 covered lives. All Medicare regions are on board. Additionally, payers like United, Cigna, Blue Cross Blue Shield are now covering UroLift. There is payment in all sites of service, hospital, ambulatory surgery center and office. We have grown to 60% of our business now is coming from the office and ambulatory surgery center.
We do expect that trend to continue. UroLift is the only BPH procedure with a 0 day global period. All other tissue destructive procedures have what's called a 90 day global period. Let me explain that just really quickly. When a patient gets a UroLift procedure, day of the procedure, any follow-up visits are billable events for the urologist.
For the tissue destructive procedure, they get the procedure done. Any follow-up visits, if there's 5 or 50 during that 90 day period, those are non billable events for the urologist. So our global day our 0 day global period is in line with pharma like urology products like BOTOX and Testapel. Final comment is this group knows reimbursement is never easy, but the team has done a phenomenal job in this area. Our commercial strategy is focused and centered around 4 pillars.
Number 1, building the brand with data and having a strong voice on the podium, driving adoption by training the urologists and our sales team the right way and investing in peer to peer education. And then driving awareness, we're going to do that through publications, digital media, practice materials. We've got a simple goal. We want patients coming in and asking for UroLift. Finally, pursuing the outside the United States market.
There is a big opportunity, OUS and I'll spend just a little bit more time in that on the OUS market in a moment. So one of our strategies is around urologist adoption and what we like to call going deep. So what is going deep and why is it so important? Simply going deep is training the urologists and their staff the right way, making reimbursement easy and assisting with some type of patient education. If we do those things right, UroLift becomes the standard of care within the practice.
We also know that going deep creates better patient outcomes and customer stickiness. We are becoming the standard of care in BPH one practice at a time. I will tell you that driving adoption and creating a new category is hard and it takes time. So you have to change behavior, getting them to put down the pen to do a simple minimally invasive procedure. This is a great example of what it takes to go deep with a urologist, a single urologist, a single practice.
And as mentioned, we have found that focusing in on training, making reimbursement easy for the practice and assisting with some fashion of patient education are really the key drivers to adoption. One of the areas, I believe that separated UroLift from most other BPH treatments is our commitment to clinical data. We will continue to invest in clinical data to secure our market leadership position, support the brand and to meet our high growth expectations. To the right, you actually see a few of our targeted studies. I'm going to spend some time today registry.
One of UroLift's early contraindications is what's called obstructive middle lobe. We initiated our MEDLIFT study to really look at treating obstructive middle lobe. Doctor. Ure will provide some more color on that later. But using the data, the contraindications for obstructive middle lobe were removed by the FDA.
This expands our market in the U. S. Alone to approximately 2,000,000 patients. So now UroLift is able to treat 90% to 95% of the U. S.
Patients with BPH. That said, obstructive middle lobe is a technique sensitive procedure. So we're going to be rolling that out very methodically with our sales team and our customer base. At the European Urology Meeting that was held in March, our retrospective registry of more than 800 UroLift procedures performed at 7 different centers was presented. The study was the first real world look at how UroLift performs in everyday cases compared to our published 5 year LIFT study.
The data, what showed is it's consistent with our LIFT trial, looking at IPSS scores, quality of life and sexual function. What I was really thrilled to see was we had a cohort of men in the study that were in retention. They needed a catheter to urinate before UroLift. 96% of those men no longer needed a catheter after having the UroLift procedure. We're truly delighted that UroLift is offering relief for these very challenging patients.
Our enrollment goal for this registry is 2,000 patients. As mentioned, our strategy outside the United States has really been focused on building a foundation for meaningful long term growth. A few milestones I'd like to highlight, we have now treated over 7,500 patients outside the United States. UroLift has a positive position paper in the European guidelines with the 1st BPH procedure to receive nice guidance. And as Jean Luc mentioned, we now have specific UroLift reimbursement in the U.
K, Australia and now the Netherlands. Great. One market that we are really excited about is Japan. Our shonen has been submitted. We have an excellent relationship with the Japanese Urological Society.
But as we know with Japan, there's a lot of moving parts. We hope to be commercial in Japan in late 2020 or sometime in 2021. In closing, just to spend a little time on our 3 year strategy and I'll start at the bottom. But our focus is going to be to continue to drive U. S.
Utilization to strategically expand our sales organization and to gain some additional reimbursement wins. If we move up the other area, we do plan on leveraging our middle lobe indication. We're thrilled that UroLift is now available to 90% to 95% of men suffering for BPH and introducing our next generation device, UroLift 2. Finally, we do see tremendous opportunity growth outside the United States, some 80,000,000 men are seeing a position for their BPH and we are excited to be able to offer UroLift globally to men suffering from BPH. So I appreciate you listening to the UroLift story.
And at this time, I am pleased to introduce Doctor. David Sussman from Delaware Valley Urology. Doctor. Sussman.
Good morning. So as I sat here and listened to the presentations this morning, I thought the most salient point was Mr. Kelly's comment about 10,000 men turning 65 each day. I think Doctor. Yoo and I saw most of those patients last week.
So, I think it's important to understand that as urologists, BPH is a very significant part of what we do. No matter what type of urology that you practice or the area of expertise that you have, BPH is a critical part of urologists and what we see in the office on a daily basis. So I'm a urologist in Southern New Jersey. I've been in practice for about 25 years. And every day in my office, this is an ongoing discussion.
And I think it's critical that we as urologists do the best job we can to deliver current care to our patients. Men come to urologists, they're very anxious about their prostate symptoms. And they come to us looking for solutions that make sense to them. So I think it's really incumbent upon us as urologists to deliver that kind of care and offer newer therapies that really do make sense to treat their BPH symptoms. I've been doing a UroLift now for 3 plus years and it really has revolutionized what I do in the office on a daily basis.
These patients are really thrilled to discuss their treatment options, especially with this type of a treatment in mind because of the safety and benefits they receive. As men age, and unfortunately, all of us will face this at some point, As men get older, all men's prostates enlarge to some degree and often do cause some urinary complaints. Frequent urination, multiple trips to the bathroom, urgency, sometimes difficult in voiding, weak streams, hesitancy, poor emptying. These are all the things that men experience. And I can tell you it is a pretty uncomfortable process for lots of men.
And as you can see on the cartoon here, this is what a normal bladder looks like under a smaller prostate. The bladder looks nice and smooth. As prostates enlarge, the bladder had to generate more pressure to get that urine out. And you can see the changes in his bladder, this thickening and what we call trabeculation. This is an unhealthy bladder.
And as urologists, we're looking to intervene before that occurs. We want to treat men's symptoms before they begin to develop bladders like that, which could be really problematic for the long term. We know this data about the number of men who are experiencing BPH. We know that it's age related. And as you can see here, by the age of 60, 70% of men do have BPH histologically and often symptomatically.
And I think it's now the numbers are dramatic. I think you've seen those numbers here today. I think as Mr. Anderson pointed out, there's been a large gap in what we've been able to deliver to patients. I think that's been the most troubling issue for us as urologists.
We've had medical therapy for years. You've heard about Flomax, etcetera. They're okay medications, but they have their attending problems with side effects. And I think that we've been looking for this type of procedure for a long time to fill this gap. As you can see, lots of men come in the office just with mild symptoms and we treat them expectantly with a watchful waiting.
Then we have the segment of men who are bothered by their symptoms for whom we may recommend medical therapy and that has always been kind of the first line as in medical therapy. And I think as Mr. Anderson pointed out, we're now beginning to offer UroLift as a first line. It makes sense for these patients. The problem has been for years, lots of men have dropped out.
They didn't like the options available to them for the BPH therapy. They were not happy with the medications and they did not want these tissue destructive procedures because of the side effects. So they kind of said to themselves, I can live with this, and they stopped coming to the office. And I think that's a huge problem that we faced. So again, we've been looking for this niche product to gather those patients back and offer this to them because it really does fill that niche perfectly.
And again, we do obviously do destructive procedures for some men, much, much larger prostates under certain circumstances. But the large number of patients really in that middle who are bothered by the other symptoms and need to be treated, that's where UroLift really comes in. And as I said, it has really changed the dynamics in our practice and how we deal with men and how we have that discussion about their BPH and the treatment of their symptoms. So again, UroLift is really kind of fits the bill. And I know it sounds we've said this again today, but for us as urologists, which is this is what we do on a daily basis, it's made a huge difference in how we treat our patients and our patients being happy with the results and pleased with what we can offer them to treat their symptoms.
So it really has filled that niche for us. Again, patients are often not happy with the medical therapy that we give them. They don't like the side effects. They don't like taking a pill every day. And believe it or not, for some people, taking medicines every day is an economic hardship.
So even with a generic drug, it can be expensive. So all these things come into play when it comes to treating them with BPH. Men are looking for options. I mean, they come to us and they seek our advice and counsel about what's the best way to treat them, they don't want to have therapies that cause sexual side effects. It's one of the things I think that often prevents men from seeking help in the office is because of the fear of what we may do to them.
So again, these kinds of options make a lot of sense for us and the patients. Some of the drugs besides some of the issues with sexual dysfunction can cause lack of libido and other side effects that are bothersome. So, the medical therapy which we've used for years, we are beginning to realize are probably not the best thing for these patients long term. And again, we're now discussing UroLift early on as a first option for treatment. The other issue, I think, of course, is that lots of patients don't want to have general anesthesia for these destructive procedures.
They don't want catheters in their bladders for several days. They have quite a bit of bothersome symptoms after these destructive procedures. So, again, lots of reasons not to want to have these more invasive things and prefer to have these less invasive options office based or in the ambulatory surgical center to have a UroLift procedure. And again, as can see here, again, another representation of what we're trying to prevent. As you can see on the left hand side, over here, a normal bladder, nice and smooth.
And as you progress to the right, you can see what occurs in these bladders over time because the bladders are working harder, if you will, generating more pressure to get that urine out through the prostate because of the obstruction. And what we're trying to prevent is that bladder on the right, which looks very irregular, very thickened and what we, as I said, trabeculated. This is the kind of thing we want to prevent as urologists. It really preserves bladder health, another important part of this whole story other than just symptom relief. So I think the engineers that are involved with UroLift really were brilliant.
This is an elegant procedure. It's quite easily done in the office setting. You can see the device here. And it really is simple to teach other urologists. The concept makes sense to us.
It's a mechanical treatment for mechanical problem. And I think as urologists, we're very technologically oriented. And when this came along, I think most of us who treat BPH said, this is brilliant, because it does what we're trying to do is remove the obstruction so that men can urinate with greater ease. And this is exactly what it does in a very simple and kind of an elegant fashion. In my practice, I see men every day and they really are looking for a solution.
They really are looking for ways to treat their symptoms without taking medicine every day, without some invasive procedure. And they worry about all the risks and all the side effects. I think that's the most important thing. Men often come to the office because their wives or their partners say, you need to go see the urologist. They don't really want to be there.
And when they come in the office, we really have frank discussions about their symptoms and about what's out there to treat them. And I think having these kind of discussions now, they take a little more time because I think we go through things in a little more stepwise approach.
But I think at the end
of the day, they're quite happy with the results often when they choose to have UroLift. And I think as Mr. Amerson pointed out, several of my colleagues have already had UroLift, and I can tell you they're very pleased. So here's the kind of from going to left to right, the minimally invasive procedures, tissue preservation in the office or the ASC, the rapid relief, these gentlemen are improved in 3 to 5 days. Catheters rarely, I always tell my patients about 20% may have a catheter just overnight, most go home without a catheter.
They're back to doing their normal activities in several days, which is fabulous for men that are working. And again, the side effects and that's really the key issue is they have no sexual side effects. And I can tell you personally, I have not seen that individual with any complaints about sexual dysfunction in any way after this procedure. This is a huge issue for men. And again, it often is something that prevents men from seeking help from their BPH symptoms.
As you go across, you can see other less invasive procedures. But again, they require some type of tissue ablation. They have a longer recovery period. And of course, finally, the more invasive procedures in the hospital, either with laser or traditional reception of the prostate, again, hospitalization for a day or so, catheter for a week or so, quite a lengthy recovery process. I think that it makes patients less anxious, fewer risks, faster recovery, minimal anesthesia.
And I think that we are teaching urologists every week how to do this procedure and I think it's incredible. We were in the office yesterday. 1 of our colleagues was in the office with us, learning how to do the procedure. We did 3 or 4 of them. And when he left, he said, I can't believe it took me this long to come to you guys to learn this because I'm going to start doing this next week.
It's perfect for my patients. So, here's a recent patient came in the office about a month ago, 65 years old, bothersome symptoms. He was miserable, poor flow, hesitancy up at night, just really unhappy with his current status. This IPSS, which is a tool that we use to kind of assess how bothered men are, 22 is a pretty high number. The average, if you took a score here for a younger person, it'd probably be 5 or 6.
This is a bothered patient who's really miserable. He's an active guy. He's an executive. He's all over the country and he just can't do his job. He tried some medication, which I had given him initially and he had some relief from the symptoms, but really wasn't happy with the side effects.
And he said to me, I need a better option. So we talked about UroLift. We did the things that are typically involved. We do an ultrasound of the prostate and a quick cystoscopy to assess him. We did a UroLift.
He was back to work in 2 days. His symptoms have just about completely resolved. We did a repeat evaluation and his IPSS score was down to 8. He was up at night 0 to 1 times and he's back doing what he wants to do. And this is a typical patient that we see every day.
So I think that this has really changed what we do in urology. And it's pretty exciting to be involved with this, I will tell you that. So at this point, let me stop here, turn it over to Doctor. Yura. Thank you for your attention.
Thanks, David, and thanks, Mr. Kelly and Mr. Emerson for having me. It is exciting. So I will tell you my story and introduce DOCA a little bit more in the median lobe and kind of where this is.
So I am with Urology of Virginia. We're a 33 man woman urology group and we're also the Department of Urology for Eastern Virginia Medical School. So it's kind of unique blend. I to teach residents and do training as well. We have designated center of excellence, which has been a very good marketing thing to identify with patients.
And it's nice that a big group you have the opportunity to subspecialize. So probably close to 20 years ago, I started out trying to find us something minimally invasive for BPH. So, I've tried everything in some form or fashion. And along that path, I do a lot of green light lasers. It's I think a great procedure.
I'm still doing almost as many of those, but I've truly lifted the UroLift has lifted the tide. So, I'm doing so many more of those now and it's just brought patients into the practice. And as Mr. Emerson said, it's not very much fun writing a prescription, although now we do it with a scribe and it's electronic, it's still not as fun as doing procedures. So and this really is an opportunity to fix patients.
But I have gotten to do a lot of clinical trial stuff and train in both with the laser and with the UroLift and we'll go through that. These guys have been good with the clinical trials. I think that's really important as well. We'll touch on that. So today, just over 3 years of experience, over 400 cases, do them all as an outpatient with I've done some in the office local, but now pretty much all are in the surgery center.
And just like any procedure, we've been burned by a lot of minimally invasive procedures in the past. I was investigated with the microwave company and with several others. And so I started slow. This honestly, the cirrh lift seemed just too simple. There's no way this can work and you're going to get that good a result.
So, we didn't have coverage initially that started to come with Medicare that 3 years ago. And so I said, all right, to be a BPH expert, I'm going to try it, but not overly optimistic. And just like with anything, and don't pass this on to my patients, but you save just a new technology for just that we call TRAIN REX, it's the most difficult late stage patients. And I did that, started slowly and got really good results and was surprised with no complications. So, I'll show you some more of that in a bit.
As Mr. Anderson said, these guys have really done it right growing this business and they've done clinical trials. They've paid their dues with that and continue to do so. And again, I think that's definitely the right strategy for long term. So and as Doctor.
Sussman mentioned, our workup BPH is a very common disease, very straightforward workup and it's a patient questionnaire they fill out. They now fill it out online before coming in with us. We scan for how much how effective or efficient they're avoiding, so what they're leaving behind, a flow rate, how strong the stream is. And then we track those results and that's important I think to it's going to be more important outcomes based medicine and as a scientist to know how you're doing with things. I was not part of the original LIFT study that was used for their FDA approval, but you can see that and I think most of you are familiar with this, but it was a well done study, the standard process style over 200 patients and there was a placebo arm as well.
And then it's this group that they continue to follow out for long term data. Data. And again, that's not always and often done and not inexpensive, but I think very worthwhile that they did this. So all these patients out in 74 were still evaluable at 5 years, which is very high for a study like this. And this shows that 5 year data.
So that top graph is the IPSS, so that symptom score is 0 to 35. The higher the number, the more troublesome your symptoms are. And then the quality of life is a single question. If you had to live with these symptoms the rest of your life, how would you be? That's a 0 to 6.
And then the Qmax is the flow rate, so that flow rate that I told you. And some medications, daily Cialis doesn't even increase that flow rate. So can see a pretty significant increase in flow rate. And the key with this is it's sustainable all the way out. So really no significant fall off.
The graph on the right shows compared to other treatments in the BPH space out there. Again, UroLift is very much with what call the gold standard, the TURP. And you can see the others. I said I'm a fan of the green light laser, but again the redo rate is not good with that. I think there are a number of issues with that.
But again, UroLift has been very durable and very sustained results. And I'm sure you've seen that in my practice. Out of over 400 now, I've only redone 5. And 2 of those were my fault. 2 of those were some of those original ones that had huge median loads I shouldn't have done in the 1st place, but nothing else to offer.
And we went back and did another UroLift on one patient who did well. He initially did well. 6 months later came back, symptoms are coming back, looked in, and there was one area that was kind of obstructing, collapsing. He wanted to do it again, said, I hadn't done this, but sure, let's try. And he's done well now over a year out.
And then the others did a TUR on 1 and then laser on the other 3. And again, they've all done well. So didn't burn any bridges with that. These are the side effects from that original LIFT study. And this we're going to see less than this with the real world study, I'm sure.
But the dysuria, that's if you check the box one time, you have any burning with urination, you're going to end up in that column, blood in the urine. In 400 plus, I've never had to give a patient blood. Pelvic pain, I would say when I started, I was probably in that 18%, 20% range. Now it's very rare. I don't even give patients pain medication afterwards.
They take Tylenol and I think part of that is technique related and just learning over time. And again, no significant side effects. This is really a key game changer too with the technology, but this part of the story is the sexual function. For years, you would tell patients, I would tell patients with the surgery, you're going to get likely get retrograde ejaculation and with the laser. And I would tell them there's no danger, damage or harm unless you're trying to have babies.
And I didn't think it was that important a thing. But now with this coming out, you can guarantee a patient they're not going to have any kind of sexual or ejaculatory dysfunction. They're coming out of the woodworks asking for this. So and that is very comforting, very nice to be able to do to counsel patients with that. And like Doctor.
Sutton said, I haven't had any issues with that in my 400 plus. So again to NeoTract and Nautilaflex's credit, they have presented every study that's out there. You can see the curves overlap very well. There hadn't been any sort of outliers with the studies. And again, that's reassuring.
So I told you I started out slow and wanted to prove to myself that this can't be that good and those results can't be real. So, this was the first 34 patients that I treated. And as you can see kind of down at the bottom, 11 had known bladder issues. They had strokes, multiple sclerosis, Parkinson's, which are just you want to avoid any kind of BPH procedure, but they were sort of in stage and were begging for help. And 2 of them were in retention there.
And I did these 34 patients, kind of didn't really do any others, followed them out for that year and my curve very much overlapped or even slightly better than the original LIFT study. And then 2 things are really eye opening to me. 1, gosh, these are not ideal candidates and they did this well, I surely can offer this to the run of the mill BPH patient. And really the real eye opener was those 2 patients in retention. 1 was in his late 80s, 1 was in 93.
And they came in with catheters brought in by the family too sick for any other kind of procedure and I said, I've got this new procedure, I'm happy to try, no guarantee, but I don't think it's going to burn any bridges or make any worse. And I did UroLift on both of them. Both of them, we got catheters out and both of them did very well. Both passed away about 6 months later and both families came back and just said, I wanted to thank you for doing that. It really was the best thing he had done.
It really improved quality of life so much. And that really got me. And again, like Mr. Kelly said at the beginning, that's kind of why we do what we do. And that really was a game changer for me.
So and happy that I could that we have this to offer. I just took some pictures. Like I said, I get to teach. This was a pretty early on typical patient, 85, not multiple other medical problems, not an ideal surgical candidate on Plavix. It's a blood thinner.
It's the, I think, the worst of the surgeon to deal with. Wasn't a large gland, so that's a gland that I wouldn't want to do a laser on. It's going to have more complications, more issues, more bleeding, and you can see the outcome, the results of that picture there. And then it's another patient, 68, again, other medical problems, had a large residual. So it wasn't in retention, but was walking around with 3 15 milliliters or over 10 ounces in his bladder post op at 3 weeks that AUA scores.
So it was 24 in the severe range down to 4 and emptying much more efficiently. And again, it's kind of patients love seeing this. I'll take these pictures and show them to the wife if they're interested and the patient and for God, it's a visual and seeing is believing. So this is exciting too. When they first started off, as Mr.
Amerson said, they had the obstructing median lobe exclusion. It's not a huge number of patients, but they did it right. They did this study. We were part of this and they got that exclusion lifted. And basically what we do is treat that median lobe and I'll show you pictures of that.
So this has now can treat 95% of patients based on label indications. And again, it's really 5%, 10% of the BPH population, not huge, but I think the biggest thing for them is just the marketing side. Any competitors would say, you can't make noise with the middle lobe thing, you can't treat middle lobes. And I think urologists are just kind of confused it a little bit, say, oh, well, there's a lot of patients have middle lobe, I'm not going to do that. But now that's gone.
So again, it's a positive thing. The NEDLIFT study at 9 sites, 45 patients, we treated 5 of those. I've now done almost 20 patients with middle lobes myself, some a few before the trial and then continue to do some afterwards. And again, that kind of meets with that low percentage as well. But on the trial, we followed them up very closely.
We looked in the bladder to make sure there were no implants in there, no issues and we had no adverse bad complications. And this shows the results out to 6 months. The 1 year data I think is going to look very similar and it's going to be presented at this year's national meeting AUA next week in San Francisco. The top curve is the sham arm and then the one below it is the lift from that original FDA trial. So the FDA let us use those as comparatives for the median lobe study and you can see a 14.2 decrease in improvement in that AUA symptom score at 6 months out.
And I can tell you at least in my NO5 patients, they've all done well and haven't been retreated now. I guess we're going on almost 2 years out. This is a little busy, but if you look at that top column, those are the pre, the before, the middle lobe, case 3, the guide salon on the side it looks like, but I apologize for that. The second column is after the LL, the lateral lobe treatment. So, the first step of treating the median lobe, middle lobe is to pull those lateral lobes open and then you can see kind of this mountain in the distance there and that's the obstructed medium lobe.
So, physically there's still obstruction there. Then the bottom row is after the middle lobe treatment. And you can see it took 1, 2 and 1 implant on each of those to basically use the device to almost grasp or pull that median lobe back into the prosthetic fossa and tack it to one side or the other. And I'll admit it was a little scary the first time doing that, but it's not scary now. It just is some technique dependent to it and I think they're doing the right thing to roll it out slowly and make sure physicians are educated to stay out of trouble with this.
But it's been great. And it really has been a positive impact on the practice. It's more favorable treatment to offer to patients. And as Doctor. Sussman said, BPH, so many are on pills by the primary care.
They're often on pills. I'd tell you the other thing we didn't mention in this, but the pills are getting a little bit worse of a bad rap there, the 5 ARs, the Provestar, which is generic finasteride, Avadar, generic dutasteride. Several good studies have come out and said long term those have had impact on sexual function and it's not reversible. But now in the past, we would tell patients, if you started, you had the impact on sexual function, you stop it, it comes back. There's good evidence now that that's actually probably not true in every patient.
And the other is the Flomax, the PEZ dispenser common drug that's out there, a couple of studies now saying maybe some increased risk of dementia, of memory issues. So, I'm now a little more cautious with that and it's great to have something that we can move more shift more to that first line early in the disease process space. And 2, I tell patients, you get this done now, you get your symptoms fixed, you can enjoy those benefits longer. It really does bring more procedure orientation to the office. And as you've heard a number of times, we are a surgical subspecialty.
I basically had become an office urologist. I would be in the clinic 4 days a week and I would do green light lasers one day a week. I now basically am doing procedures 3 days a week. So a day of green light hadn't changed a lot. And you say, well, why is it even doing that at all?
So, so many patients wait till they're they've got a 200 gram prostate. They're just they've missed the window of opportunity for the UroLift. But most come in asking for that and then default to the other. But now I'm operating doing procedures 3 times a week, which is again a lot more fun and my wife can attest to that. It really is more productive too in a 33 man group.
I'm actually, although old, the most productive, put the most on the bottom line for our practice. And it's not because of it's just the volume efficiency. And we see the patient, diagnose them, work them up, you get some reimbursement for that, do the procedure, you get reimbursed for that. And then you saw that no global, it's really a key thing and it's really made us it's an open door policy. If you have any questions, any trouble, call, come on in.
We're happy to see you. And the patients like that kind of reassurance and get them through. But after well, I'll see them about 3 or 4 weeks out, then if they're doing great at that time, oftentimes cut them loose or one more time at 3 to 4 months, it's sometimes hard to shoo them out of the nest. And then but I move them on or send them back to primary care, so I open up a spot for a new patient and it's been really good from the business side of things. And it really does give us an opportunity to fix the patient and have had some amazingly satisfied patients.
Hopefully, took out my fun slide. All right. Well, thank you all very much. I appreciate it. Thanks.
And I think we're now going to field
questions.
All right. So we're going to do a 15 minute Q and A. And I would just ask, we're going to limit this to any of the topics discussed up until this point. And I'd ask the Teleflex individuals whoever has spoken so far, if you could just come up to the stage and sit here and the doctors will be placed right here. Great.
So again, we're going to limit we'd ask you to limit these questions to the topics discussed up until this point and then we'll have another opportunity for a Q and A where we can get into financial questions.
David?
David?
Thanks. David Lewis, Morgan Stanley. Just one on broader NeoTract and then one for Liam maybe. So 2 part question on NeoTract, one for sort of doctors and then maybe Dave you can weigh in. But the first thing is a lot of times in med tech it's about share capture.
Here it seems like you're meeting an unmet clinical need in your practices. So can you both talk about the number of BPH patients you have in your practice? What percent of those are applicable for NeoTract? And if there's a gap between those that are applicable for NeoTract but are not getting NeoTract, why is that gap and how do you fill it?
Yes. Thanks. It's a good question. So the first time, I'm a little unique because it's kind of a referral practice. So my numbers for UroLift are continuing to grow.
And in the 33 man group, now close to 8 have been trained to do it. So practice wise, overall, it's growing. But some who say just focused in prostate cancer, they'll send me the patients for this. Part of it is just getting the word out. Doctors are slow to change.
Again, realizing that this really does work. And 2, the first time I see a patient, I'll introduce it to them and then they'll do the research. I'll give them the literature and they'll come back asking for asking a candidate for that procedure. So it's continuing to grow. And there are a few who just don't want to change.
They're stable on their medicines. And I'm sending them back to the primary care to open up the spot to continue to grow this business. So hopefully that answered the question. I think it's continuing to grow. The thing that's held me back in our practice the most has just been the coverage and that's continued to improve.
So we're a little bit unique. We have some Medicare coverage, which is great. Our next two payers are Anthem Blue Cross, which is a stubborn Blue Cross plan and Optima. So Centerra is the gorilla health system in our area, hospitals, plus their own insurance,
which I still it baffles me that that's legal. But they
so that's easy for them. And they're in cahoots with Blue Cross to price fix. And so they've dug in. Now Optum actually does cover. We just have to get a fire off.
And there's more and more positive signs that Blue Cross is going to cover. Our 3rd payer TRICARE, the military just started covering within 6 months. So again, the gates are opening more and more for us.
Adopting something, it's remarkable how that process changes. In my practice, it's 32 neurologists, myself and one other partner, we we adopted this early on and we reviewed it to the office and some of my partners were looking at what he's doing, what he's doing, what he's doing on. Today, half of my partners are doing a year over. So I think it takes a little bit of time, people to kind of accept a new technique, understand where it fits in. I think that gap can close over the next several years.
We're changing our talking presentation because of it. And I think that's going to change dramatically with the uptake of using the right.
Just to follow-up, Dave, one for you. The one thing missing from this presentation on NeoTract was kind of sustainability of growth. I mean, you did 80% -plus growth in the Q1, that's 2x what the guidance was for 2018. But 2019 through 2021, there's sort of no commentary on how quickly this business can grow. I mean, can you talk about sustainability of this business 2019 through 2021 and what could be a reasonable CAGR to expect for near track?
And then Liam, I'll ask one for you as well.
Well, I might start on the first one and then I'll throw it to Dave. So I think that if you look at how we structured deal, it gives a good indication as to what this product is capable of doing. In order for the sellers of this asset to realize their full earnout, the asset needs to generate $325,000,000 of revenue by the end of 2020. So that would indicate a CAGR over the lifetime of the period we're talking about of in excess of 20%. And that's our expectation for the product in the timeframe we're talking about.
Dave, do you want to add any further comments?
No. Yes, I think that's right. I think that's good guidance from an overall standpoint. And I think for us having Doctor. Sussman in your hear is changing behavior is hard.
That's the hardest part of really trying to create a new category where urologists have been burned with other technologies and really change their mindset. And I use that slide in the presentation to show that, hey, you get someone started, but there are things that have to happen for the trajectory to move up. So I think the guidance is right on and it just takes hard work and time to make sure we become the standard of care within urology.
And just to make a macro comment a few on broad guides we get to Tom's presentation later. If you think about 2015 to 2018, you outperformed your margin targets materially, half that performance came from M and A. As you think about the 2019 to 2021 portfolio, how should investors think about M and A? Do you see it as upside from M and A? Do you see it as frankly a cushion in the result of sort of untoward events?
And should we think about the 2019 through 2021 M and A cycle being as active as it was 2015 through 2018? Thanks.
Thank you. You're absolutely right. We actually got to our gross and operating margin objectives a year earlier than we anticipated. So think one thing that the investment community should understand about Teleflex is we set our chart for a journey. And by hook or by crook, we were going to get there.
Now sometimes, and as we all know this, you sit into your car and you're going to head on a destination, you plug in your satnav. When we began with our satnav in 2017, we couldn't anticipate the oil based economies running into such difficulty. So the revenue growth was more difficult to attain, but we augmented that with M and A in order to get to where we wanted to go. And now we're in a really strong position this year having organic growth of 5 percent to 5.5 percent, which ironically was in the range of where we began our journey back in 2015. As I look forward into the current horizon, I think that we fairly well outlined that the 4% base growth of the company's base business is very achievable.
You look at where we finished last year, we finished last year days adjusted about 3.5%. So with the recovering APAC now, we've gone direct there. With the interventional business outside of VSI performing better, with Europe doing better and with us taking share in our PICC business, we think that that 4% is eminently achievable. And I also believe that we will augment that growth with dealer to directs and with M and A. And you should see M and A as additive to that top line growth.
Matt O'Brien, Piper Jaffray. Questions for the clinicians, if that's okay. Just to stick on where you're getting your patients from. Are you getting them from the watchful waiting group? Are you getting them from the drug therapy group that's just looking for something else?
Or is it coming from the people that have just kind of given up on even trying anything? And then are you starting to see some patients from other practices coming to you and now your peers are starting to get to the point where if they're not doing UroLift, they're going to it's going to damage their
Well, I can tell you this much from in my practice in Southern New Jersey. I think the majority of the patients that I see on a weekly basis, they're either on have been on medical therapy for years and are looking for a new option or have really tried nothing. And now that there's something available like this, are interested in pursuing that. There's no doubt that if you're not doing We're seeing that already. So I think that that's kind of been an interesting thing to see around the country.
And as I've talked to my colleagues around the country, even those that were a little bit reluctant early on have recognized the fact that it really has become a standard of care. And if they don't do this procedure in their office in some way, shape or form, they're going to lose patients.
Just a quick follow-up
on that as well. I know you're working with Teleflex and are big fans of UroLift, but just would love to hear your thoughts on Rezum and any interest in trialing that, anything along those lines?
Yes. I mean, just to finish that other one, we're getting the patients from every which direction. So again, I think you saw in one of the slides, less than 3% of patients with diagnosed with BPHC and clinicians get some sort of intervention up to date. So there's a huge 97% that to pick from. So, and again, it's just it's brought more in.
Some have been sitting on the sidelines, some often on medicines, but some new ones coming in now and they learn this as an option. So again, it's been exciting. I've been asked to investigate, speak for, consult for every one of the BPH things out there. And I only do I try them all in some form or fashion, but only do those that I believe in it and think are good for the patient and good all the way around. Rezum, it's not covered in our state.
So it's very much invited to be involved with all that. But I've done Tuna and in my mind, I just don't see that it's that different a procedure than Tuna. And the biggest thing, if we didn't have UroLift, I think maybe it'd be something to offer. But to tell a patient that got this minimally invasive procedure, you're a lift, 80% of you are going to go home without a catheter versus Rezum, probably going to have that catheter for a week, going to have some irritative symptoms. It's going to hurt a little bit.
Let's go for it. This is going to be a hard sell from our standpoint. So again, if he offers nothing, especially with the median lobe, the nail exclusion gone, it offers nothing that UroLift doesn't do anything better.
And these heat transfer systems, which is basically what that is, RIZUM is a heat transfer procedure. And I think we've all been through that as urologists. And although it does there has been some role for those things in the past, I think this the idea of a mechanical procedure to unobstruct the patient just makes so much more sense physiologically than this heat transfer does. So I looked at both of these as well. I had the resume guys calling me on a weekly basis, showing up in the OR between my cases to bug me.
And I kind of said, you know what, I just I can't see that the physiology of this procedure makes as much sense in my mind as the UroLift. It was as simple as that.
Rich?
Hi, thanks. Rich Newitter from Leerink Partners. Two questions. Liam, maybe just to start with the 6% to 7% revenue growth over the period. It does not include any distributor to direct reliance in that '19 to 'twenty one 'eighteen to 'twenty one timeframe.
Can you just remind us what the impact or the contribution was from distributor to direct conversions that you did execute over the last several years? How much did that contribute to the roughly 4% organic growth? And then just also remind us where you were a few years ago and the percentage of sales that were distributor. I think you said you're currently at 6%. So there's 6% left to potentially go after.
What was the kind of the work down to get to that 6%? And what did that contribute to the 4% growth?
So there's a lot there, Rich. So let me start with the contribution of dealer to direct. So any acquisition is not included in that 4% that I spoke about. There are no dealer to direct contemplated in the horizon we spoke about. You are correct on that.
Regarding your question of the 6%, so it's 6% of a much bigger base now. And ironically, with the acquisitions that we did, we actually pretty much refilled the bucket again. So the 6% is pretty much aligned to the 8% to 9% of €1,800,000,000 back in the day when we began this conversation. Now the one thing that has changed is the potential of that 6 There are some parts of the world where we will never go direct in our There are some parts of the world where we will never go direct in the horizon in the multiyear horizon that we look out towards. But it is still an opportunity for Teleflex.
There are still areas of the world in Asia and Latin America that we would be relationship, we are actually able to accelerate the growth of that business in those markets. So as well as getting the pickup on pricing and gross margin, we actually accelerate the growth because we're investing in the long term and we actually have a better focus and we're able to utilize some of our global marketing programs with that.
That. And then just one other one on PercuVant or Percutaneous Solutions to kind of move along the minimally invasive surgery kind of adoption trend.
This is something that just
we haven't really seen anything to truly transform minimally invasive surgery to convert open procedures, maybe other than robotics as really being needle moving. I guess, what could you say to investors to give them confidence that PercuVance is potentially going to be a solution there that is more needle moving than things that we've seen in the past? Thanks.
Well, I think that what we hear back from clinicians is still very, very positive regard for cutaneous solutions. Anything that causes less of a damage to the patient when you're doing the procedure ultimately will have better patient outcomes. And what we found with percutaneous is that it is very applicable to some key surgery areas. So it's very applicable in the women's health space for gynecological procedures, very applicable in bariatric procedures and very applicable in complex procedures because you can actually position the Perkivant in areas that you wouldn't be able to position a trocar. We have been, I've got to say, fairly conservative in our numbers going forward for Perkivans.
We want to get back into the market later on this year, start generating revenue next year. And in our multiyear guidance, as we're sharing with you today, we are only getting to 1% of revenue growth by the end of the time frame we're talking about, which is conservative. We still think this is over a $300,000,000 $400,000,000 market. But as we sit here today, we genuinely want to get back into the market with the customer. There should be a lot of pent up demand.
We want to get back to clinicians. And we also have to prove out the concept that by making a smaller incision that therefore it should have a better patient outcome to help us get through these VAC committees quicker.
Raj?
Hi, guys. Thanks. Maybe one for the clinicians just on the economics of the various procedures. I wonder if you could maybe elucidate us on what you get paid to do a UroLift procedure, how the economics actually flow through given that you have to buy a disposable or an implant for them and how that compares to other things? And maybe you could opine on whether that's encouraging of adoption of it relative to other procedures?
Well, it's interesting. I'd like to think that as clinicians, we make our decisions initially based on patient outcomes and what's best for the patient. And quite frankly, I think that's how both Greg and I started to do this procedure. The reimbursements were tenuous at best early on. And we were struggling a bit with coverage 3 4 years ago.
So I think we all made the decisions initially to do it because it made sense. I think financially, it also makes sense, as it turns out. There are disposables, but the reimbursement is fairly good for these products. So even if you eliminate the cost of the disposables, the reimbursement, I think, makes sense for a procedure like this versus other types of prostate procedures. So I think there definitely is some financial upside for the patient or for the physician and the practice.
But again, I think we began this journey looking really not looking at that, quite frankly, because that upside really wasn't there in the beginning. So ultimately, I do think there is a lot of upside for urologists. And quite frankly, I think that's part of what we do in medicine, and we've stopped to be sustainable and find things to do make sense. But the benefits and the procedure itself really are were the key drivers for us. The financial is just kind of a nice add on, but there is definitely financial benefit versus other types of BPH procedures.
Yes, I would echo that. I think some of the technologies in the past microwave, some of the use sadly was driven because it was over reimbursed and even hung around longer than it should have. So this is a nice window where it is. I think when we first started, my group didn't want me to do many because we weren't financially doing well with it. But now it's good.
And like I said, I'm the most productive in the group and this is pretty much what I do. So and I don't have the greatest payer mix, it's predominantly Medicare, but it's just through this the efficient workup with them, the whole process, you get the patient in, diagnose them, fix them and release them and open a space for another new patient. And it's much more economical than rewriting a prescription every year. And I think doctors are slowly figuring that out, urologists are slowly figuring that out too.
Great. Thanks. Maybe I could just ask one on reclass because it seems like you've derisked the regulatory path there quite a bit and yet you still haven't included it I guess in your guidance it sounded like going forward. So I'm curious what the hurdles still are for you on that sort of and why not give us
some numbers around it? So it's very exciting first, Raj. We've had a number of really positive meetings with the FDA. We have included freeze dried in our guidance over the 3 year, but we have been, again, relatively conservative. We anticipate converting slightly less than 10% of the global market in the lifetime of the plan that we're looking at.
And we think that we have been conservative in the same ways we have been relatively conservative with Percutaneous because we still have a few hurdles to get over. Now it's very, very positive. We met with the FDA. We should have our BLA submission in early 2019. If it goes through a fast track process, we should be in the market at the latter half of twenty nineteen or maybe even a little bit earlier than that.
We are now engaging in conversations with the military trying to define what type of volumes that they're going to need when this product does get through its submission. And once we have that, we'll be able to get better indications of what we think this can do. We still think it's a $100,000,000 market as Jay White outlined during his presentation. And we still think that it is one of the most exciting technologies we have that along with some of the and it all goes back to not all growth is equal, Raj. I have to go back to that.
Not all growth is equal. If you look at where we're growing our portfolio, we're growing it in our highest margin segment. So therefore, that really assists in the mix. And you'll hear from Tom in a couple of minutes the impact that has on our gross and operating margin. And I think it's really exciting what you're going to see in Tom's presentation.
Yes. The other addition I'd add to that is obviously we're very excited about the accelerated pathway. The collaboration between the FDA and the DoD has been high, but no product has been through this new accelerated approval process still. So there's still unknowns. There's still risks that we're worried about.
Again, it's been a very collaborative process, but we're being conservative just because no product has made it through it yet.
So we're going to take 2 more questions. And then,
Larry? Okay. Thanks. For the clinicians, just I guess a product specific question is, have you had any challenges absolutely deploying the implants in any of the cases that you've done? And have you seen or heard of any implant failures?
So I guess that's question 1. And then the second question is, when we think about durability and I recognize the 5 year lift data is out there, is that sufficient or what do you need as clinicians to really ultimately get comfortable with
the durability of this therapy?
I'll take the second one first. So the durability, there's no study going beyond 5 years of any BPH therapy or pretty much anything else in the urology world. So and applaud them for this real world study. This is looking retrospective at high volume places and really looking at how we've done. So I think that should be a very good reassurance.
These are not hand selected study patients. This is real world and you saw that number, I think, is amazing. 96% came in with a catheter and I mean 100% that came in with a catheter, 96% left without. So that's huge. And so I think again there's areas to grow this.
The neurologic disease patients, the following prostate cancer, we don't want to do any of these destructive procedures on an increased risk, but you can do your lift on them and it's been great niche for those folks as well. And you're going to hear more that's going to grow and hear more and more about that. As far as what was the other one, the durability and then malfunction, yes, again, 400 plus, pretty much everyone that has best up with user issues. I was much more accurate at hitting pelvic bone when I first started. Now it's just a little subtle thing of lifting legs.
And just like anything that you do more of, you get better at. It's fun now and art to it. We get everybody in the room sort of, do you like where I am now? What about here? And so it's given us some creativity to even improve outcomes, I think, with it.
And so I think results should get better with it. But no overall and I guess I'm allowed to say I've gotten to work with the new version of the device and again that's going to just be a great thing as well. So it's amazing the engineering, as you heard, behind it and how that works. And then just a follow-up I was going to ask on the Gen 2 device. What is the timing now for the launch there?
And remind us again of the changes between the prior generation?
Just to back up real quickly on mechanical reliability. We do our manufacturing in just outside of the San Francisco. We actually test every device before fire every device before it gets to a clinician. We track mechanical reliability pretty closely. I think it's right around 99.8%, pretty darn high.
So we're really proud of that. As Liam has indicated, our next generation device we're calling UroLift 2 really offers, I'd say, 3 advantages. Number 1, it doesn't reduce waste. Our current design is all disposable. So you're throwing a delivery device away.
With the next generation device, it is a cartridge based system. So it's one delivery device. Urologists will be able to just load cartridges into the device. And then obviously, we believe it's going to give us some margin impact as well. With obstructive middle lobe coming out, we do want to make sure the organization is focused in on working with urologists because it is a technique sensitive procedure.
So we do hope to have UroLift 2 out sometime in mid to late 2019.
We're going to take one more question, Brian.
Thanks. For Dave, you talked about driving patient awareness and the digital campaign that you're doing, but we've seen success with other companies in our coverage universe with DTC. This seems to be an ideal candidate for a DTC campaign. Is this being considered now that reimbursement is in place and there's growing levels of physicians that are trained? And I'd be curious what the surgeons think about if the company were to do something like that?
All right. You're going to put me on the spot with those guys now. But we certainly think DTC could be in our future. Keep in mind there's 12,000 urologists right now. We've trained probably less than 10% of the urologists out there for us before we move into a meaningful DTC campaign.
I think first of all, we need to make sure we've got a foundation of urologists across the nation that could support that type of initiative, number 1. And number 2, I think much like we run all of our different programs, we want to test it in specific markets to make sure there was some meaningful uptake. But it's something I do think longer term we'll have in our plan. I have
no problem with DTC, quite frankly. I think there's a role for it in some disease states. I sometimes think there's a little too much DTC in other areas, quite frankly. But I think that for men and for BPH, I think that's reasonable. We've seen it for overactive bladder, which I think has been very effective.
I think what it does is it just piques people's interest and it makes them realize that there's things out there that are available that are reasonable options for them. And I think it's I think ultimately, at the end of the day, we have to make the decisions about what's best for the patient and we have the dialogue. But for them to come in to discuss it, I think, is reasonable. It's a dialogue between the patient and the physician, but I don't have a problem with encouraging patients to talk to their physicians about what's out there. So ultimately, I think that's a reasonable thing for BPH.
I agree. I think it's a very marketable thing for that. We I snuck in a little bit with basically a commercial that's on in our local area for our practice. And I mentioned this and yesterday a 20 year old came in asking for a year. So Fortunately, I didn't have to see him.
I had to catch an earlier flight and so my PA dealt with that. I said, don't give him a year lift. But it's not for everybody. But it's definitely I agree with Dave completely that the patient disease state, patient awareness thing is really good and gets patients in because this is a disease BPH that men will put off. I joke that they'll put it off forever until they finally have a catheter and they're drug in by their wife, you're going to get this fixed now.
So it's nice to see these patients earlier in their disease process and fix them and move on.
Great. Okay. We're going to end the first Q and A right there. And we're going to turn the presentation over to Tom Powell for our multiyear financial outlook. Thank you.
Well, thanks, Jake, and good afternoon, everyone. I think we're now in afternoon. I'd like to begin by first reinforcing our commitment to enhance shareholder value and by examining some of the techniques and strategies that we've employed since 2015 to do so. So starting first with revenue, and I will acknowledge that we have had some variability in our revenue from quarter to quarter. However, if you look at the timeframe from 2015 to 2017, our average CAGR was 4%.
And we were able to achieve that CAGR by focusing on highly differentiated products such as the Easy. Io, our HemoLock clip and some of our vascular access products that have got antimicrobial coatings. And as a result of these highly differentiated products, we've been able to consistently increase our pricing year after year. In addition, we've also reinvigorated our new product pipeline. And as Liam showed, we saw some acceleration in the growth coming out of there.
And at the same time, we've also been layering in a number of acquisitions that have further accelerated our constant currency growth. Now turning to gross margin expansion, we will continue to be focused in this area. We think it's a tremendous source of value creation for Teleflex. And we focused on productivity initiatives in this area such as the consolidation of our manufacturing into lower cost labor environment as well as annual productivity programs. We've also been able to do a number of distributor conversions, which allows us to recapture the margin that was otherwise going to the distributor.
And then through sales force focus, new product development, M and A, we've been able to skew our product mix to a higher margin mix than what we had previously. Now on the SG and A line, we've been able to drive productivity by reorganizing both our management and our sales force structures to create greater efficiency as well as to reduce cost. And we've also leveraged our shared services organizations more fully in areas such as back office support or in customer service. Then finally on the tax line, we've got a tax efficient structure, which has benefited our profitability. And we've also had access to some of our international cash, which has provided us greater balance sheet leverage.
And combining all of these has allowed us to create great operational leverage and to drive our adjusted earnings per share at a compound annual rate of 13.5% over the timeframe from 20 15 to 2017. Now execution against these strategies has positioned Teleflex well to go back and achieve a lot of the financial objectives we outlined 3 years ago at the Analyst Day in 2015. Now admittedly, we haven't always taken the exact path that we initially envisioned. We've sometimes take in a different direction or chose to focus on something new as we saw that opportunity increasing in potential. However, I am pleased to say that what we've accomplished over the past 3 years is actually quite impressive.
And I'd like to review with you kind of where we are at this point in time. So from our 2018 guidance, it implies growth at a rate of 5% to 5.5%, Again, over that timeframe from 2016, 2017 2018, we expect to increase our adjusted gross margin by 480 basis points to 5.30 basis points and our adjusted operating margin by 460 basis points to 500 basis points. For 2018, we expect an adjusted tax rate in the range of 15% to 16% and free cash flow of approximately $375,000,000 given our financial performance over the past couple of years as well as the outlook for the future has allowed Teleflex's stock price to appreciate more quickly than that in the marketplace. And what you see is since 2015 to date, our share price has appreciated by 121 percent. And this is roughly 2 times the rate of appreciation of the iShares Medical Device Index and approximately 5 times the appreciation of the S and P five 100.
And before turning to our multiyear outlook, I'll spend a little bit more time on 2018. So last week, we released Q1 earnings. The results were good. Constant currency revenue grew at 14.6% and our adjusted earnings per share increased by 19.4%. In connection with that call, we took the opportunity to increase our full year 2018 adjusted EPS guidance by $0.15 and to raise our reported revenue growth by 1%.
And so just to highlight the metrics that we reaffirmed on that call, our constant currency revenue growth is expected to be 12% to 13% for the year. Our adjusted constant currency revenue growth is expected to be 5% to 5 0.5%. Adjusted gross margin is expected to be in the range of 57.5% to 58%. Our adjusted operating margin is expected to be between 26.1% 26.5 percent and adjusted earnings per share expected to be at 9.70 dollars to $9.90 Now, as we look to the future, we're really focused on 3 primary areas that we think are capable of driving sustained earnings momentum, providing financial returns and shareholder value creation. Now, the first area of focus is on organic revenue growth.
In the past, we mentioned we were largely in the lower mid single digits around 4% from a growth perspective. And we look to accelerate that to the upper mid single digits. And hopefully this morning's presentations have provided greater insight into some of the exciting opportunities that we believe will allow us to achieve this objective. And our second area of focus is continued margin expansion through multiple drivers. We believe that non revenue dependent margin expansion is a critical piece of the Teleflex evaluation thesis.
And given the recently announced footprint programs combined with the acquisitions of NeoTract and VitaCare gives us great confidence in our ability to continue to drive that margin expansion into the future. And our 3rd focus area is efficient capital deployment, where we look to leverage strong cash flow generation for investments in organic and inorganic opportunities that can further accelerate our financial returns. And then moving on to our financial objectives for the coming 3 years, I'll first outline the objectives and then go into more detail in the coming slides. For revenue, we expect organic constant currency growth between 6% 7%. We expect our adjusted gross margin to reach between 60% 61% by 2021.
We expect adjusted operating margin to reach between 30% 31% by 2021.
We expect
an adjusted tax rate in the range of 16% to 17.5 percent. Tax rate in the range of 16% to 17.5%. And finally, we expect we will generate on average free cash flow in the range of 500 dollars to $550,000,000 per year. Turning now to the drivers of growth. Here we provide on this chart a bridge from where we've been over the past couple of years, which was organic constant currency growth in the range of 4%.
For 2018, we're expecting growth of 5% to 5.5%, and that step up in growth is largely due to the acquisition of NeoTract and Vitacare. And as we look to the future in 2019 to 2021, we're expecting that to further accelerate to 6% to 7% with VidaCare and Vascular Solutions and Vascular Accounting for 2% to 3% of that growth. Turning now to our gross margin assumptions. So over the past couple of years, you can see on the chart, we've made good progress in expanding our gross margin, up 3 10 basis points over the period of 20 16 2017. In 2018, we expect a further 170 to 220 basis point improvement.
And as we look to the future, another 200 to 350 basis point improvement over the period through 2021. And expect to be able to drive these gains through a mix improvement from recent acquisitions, through a number previously announced distributor conversions, and then all the other restructuring programs that we have in place that still haven't fully played out. Now, I do want to point out that it's our expectation that these improvements will be ratable over time and that they do not assume additional footprint consolidation initiatives or additional acquisitions. Then turning to adjusted operating margin. So during 2016 and 2017, we expanded adjusted margin by 360 basis points and we expect a further 100 basis points to 140 basis points during 2018.
As we look out to 2021, we expect another 350 to 490 basis points. And the key source of this improvement is largely the flow through from gross margin coming down to adjusted operating margin. And that we're also going to get some additional gains through leverage as the revenue base grows and we continue to leverage that cost structure. Turning next to restructuring. On this slide, we're outlining the restructuring programs that are currently active and outstanding.
And you can see on the right hand top, in total, we have programs totaling savings of $107,000,000 to $127,000,000 For the period 2014 through 2017, we realized about $45,000,000 of those projected savings, which leaves another $62,000,000 to $82,000,000 for the timeframe 2018 to 2024. And I do want to point out that we expect to realize savings of between $25,000,000 $35,000,000 over the next 3 year period from 2019 to 2021. Turning now to our tax rate. In the past, Teleflex's profitability has certainly been enhanced through an efficient tax structure. For 2017, our tax rate was 15.3%.
For this year, we're expecting 15% to 16%.
As we look to the future, we expect to continue to benefit from that efficient tax structure. However, we see 2 areas that are putting some upward pressure on the rate. First, we expect to realize a higher percentage of revenues and profits being generated in the United States and this is going to move our rate up modestly. And that's largely due to growth assumptions inherent from NeoTract and Vascular Solutions. 2nd, following the acquisition of NeoTract, our leverage levels were elevated above our longer term target.
And so, as we look to bring that leverage level down to a more consistent range of about 3%, we'll start to lose some of the interest benefit associated with the higher leverage levels. And so as a result, we currently expect a tax rate in the range of 16% to 17.5% as we look at the period 2019 through 2021. And then turning to my final topic of the day, which is free cash flow objectives as well as capital allocation priorities. So we expect to generate between $500,000,000 $550,000,000 of free cash flow over the periods 2019 to 2021. Our priorities for capital allocation include footprint consolidation and other productivity initiatives that are currently out there and running.
A $0.34 dividend is expected to continue at the same rate into the future. Then again, we want to continue to invest in inorganic opportunities such as distributor to direct conversions as well as any late stage or technology acquisitions or perhaps steel acquisitions that we see as being beneficial to the company strategically and in terms of returns to our financials. And so that's really our priority for the next couple of years. And that concludes the comments that I had for today. I'd like to turn the meeting back over to Liam for some closing comments.
Thank you very much, Tom. And thanks to all of you who have taken time out of your schedule to help the was to help the investment community gain a deeper understanding of the Teleflex business, highlight some of the key management talent responsible for driving our growth over a multiyear period and share with you how excited we are about what the future holds for this great company Teleflex. We believe Teleflex is a rare and differentiated asset in the medical device space. With accelerating organic revenue growth, incremental non revenue dependent margin expansion opportunities, strong free cash flow and robust adjusted earnings per share growth. But most of all, our goal today was to clearly articulate how we intend to further transform Teleflex from a medium growth company with growth and operating margin expansion potential to a high growth company with growth and operating margin expansion opportunities.
We believe we have the right strategy to accomplish that and are confident in our team's ability to succeed. Thank you all so very much for your time and attention today. I would now like to turn the podium over to Jake and he will help moderate the last of our Q and A session. Thank you very
much.
Okay, great. I just asked going to be some people coming around with microphones, so maybe we'll start with Matt.
And this question is for Liam. I think when I look at this 3 year outlook and compare it to like last 2015 Analyst Day with the 3 year outlook, you really hit all of your numbers with the exception of the organic revenue growth rate. And as we kind of move forward to 2019 to 2021, you kind of highlighted a lot of really solid opportunities moving forward. What gives you confidence this go more confidence this go around that you're going to be able to hit the 6% to 7% compared to how you were looking at it 3 years ago?
Thanks, Matt. Great question. I think we are just so better positioned at this end of the state than we were in 15. We've just acquired 2 high growth assets that are going to grow 2% to 3% on top of our base business. We also have some very exciting opportunities that we think we've probably underclubbed in our guidance.
So, RePlas being 1, Percutaneous being the other. So, if anything, I think we've probably taken a more conservative approach this time on our top line guidance. Our base business is well capable of 4% organic constant currency revenue growth in my mind. And that is being driven by some of the key business units performing well. I mean, I think what's sometimes underappreciated is probably how well our vascular business has continued to do over the last 4 years.
It's probably been slightly overshadowed by what happened in Latin America in our respiratory therapy business. And now we have an interventional business that had 26 salespeople previously, and we've got 86 salespeople now out there every day selling the OnControl and selling that suite of products. EMEA is recovering and we took the decision to go direct in APAC early in 2017. And now we're going to reap the rewards of that. So I think the environment of our core business with these very exciting assets that we're going to that we've added in 2017 gives me a really high level of confidence of hitting that 6% to 7%.
And rest assured, it's not lost on us. We didn't hit the 5% to 6% when we gave guidance in 'fifteen. So we have been thoughtful on the 6% to 7% in this range that we've given out.
And then Tom, the free cash flow really reflects from 2018 to what you're saying, $500,000,000 to $600,000,000 per year over a 3 year period. What's driving the inflection in free cash flow over the next couple of years? And then how should we be thinking about modeling that like $1,500,000,000 through the P and L over the next 3 years?
Sure. So as we look at the free cash flow generation, the biggest driver is obviously the improvement in our earnings growth. At the same time, we're able to leverage our capital spending. We're slightly elevated right now as a result of some investments we've got to expand manufacturing capacity in Malaysia, some investments in systems and otherwise. And we expect to better lever our CapEx spending in the future.
So as you think about where to use that cash flow, we've assumed that the restructuring programs are funded in or the announced restructuring programs are funded in that free cash flow number. And so what you've really got is $550,000,000 or $500,000,000 to 5 $50,000,000 of free cash flow. We do have a commitment of the dividend, which is approximately $60,000,000 and our you're you're left with a net of $3,000,000 to $3.50 of cash available for investment. As mentioned in our capital allocation priorities, our focus will be to look for strategic or late stage or distributor direct acquisitions. We haven't modeled those in.
And to the extent we find attractive opportunities, that's where we would use it. If we were not to find those opportunities, you could probably assume that we'd look to reduce the level of pre payable debt for the next couple of years by perhaps $300,000,000 a year would be a good assumption. But again, our priority would be to look for those opportunities because we think that's a better use of our capital versus paying down debt.
Mike? All right. Mike Matson, Needham and Company. Just wanted to ask a couple more questions on replays. So first, just to be clear, when you get the BLA in 2019, you'll be able to sell it to both the military and civilian
customers? That is absolutely correct. Yes, we'll be able to sell it to both. It will be a 510 process, which will make it applicable to all customers in the United States.
Okay. And then, is there any international opportunity for replays?
Yes. And there is for sure. I mean, in military and civilian markets, where we're focused on the overall market size, we have included some international opportunities as we size that market. So that $100,000,000 includes overseas opportunities. Our initial focus is going to be the military.
I mean, they have worked with us to develop this product. There is an immediate need for our troops to have access to this technology. The DoD and along with the FDA are working hand in glove with Teleflex to have a fast track process for this technology. Subsequent to that, obviously, we will then address the civilian market in the United States. And then after that, we'll do a submission overseas to address the overseas markets.
So there is a global this is a global product and it will be launched globally. And again, it goes back to our strategy, utilizing our footprint globally to grow our business. Okay, thanks. And then just with regard to the military orders, I mean, are
you sure that that's going to be kind of a smooth quarterly run rate or is it going to be pretty sort of lumpy like they ordered $20,000,000 in 1 quarter? Is there a way you can kind of smooth that out? Mike, if
it's $20,000,000 in 1 quarter, I'll take it. So we don't know yet. And that's why we've been relatively conservative in our guidance for RePlas. So we have assumed less than 10% of the total market is converted in this plan we've laid in front of the investment community today. We know that we have clear visibility on the fast track process, we will now go back to the military and have discussions on volumes.
What normally happens is that they start rolling it out with the special ops forces, they fill their kit bags and then they roll it to other brands in the military. But we'll have further information on that as we go through this year, clearly, and we are in discussions with them.
Chris? Thank you. A quick question as we think about margins. One of the key aspects of the story has always been growth, but really attractive that you have commensurate margin expansion as well, both the gross and the operating line. So when we look at your objectives for the next 3 years, it looks the majority to be structural, these initiatives that are already in place to reduce costs.
So 2 part question here. 1, what inning would you characterize us right now in terms of restructuring the footprint corporately, whether it be manufacturing, back office, what have you? And then secondly, help us think about product mix over time, geographic mix over time and what that can maybe mean to further upside or putting you closer to the upper bound of that guidance range for margin?
Sure. Well, just to think about the source of where that margin improvement is coming from, to your point, a significant portion is coming from mix, close to half of it in part due to the higher growth, higher margin businesses of NeoTract and Vascular Solutions. We're getting another about, call it, 40% coming from operations. About half of that are the restructuring programs that we've announced, half our other initiatives, whether it's annual cost improvement programs or material substitution where we look to substitute products for lower cost products. That's net of inflation, that 40%, I should say.
And then 10% is coming from all other. So if I were characterize what inning we're in with regard to the footprint restructuring programs, we're pretty far along. So we've gotten now the larger programs underway. We'll always have different opportunities. We'll get new opportunities should there be acquisitions.
But in part, this last announcement that we've made was to extend the timeline. So the 2014 through 2017 initiatives were starting to run out of steam and savings as you got into 2021. We've now added these other programs that are a little bit longer lived. And so they'll extend that timeframe out to 2024. And then what was the second part of the question?
I think you had
2 pieces. Okay.
And I would just add on the mix. The mix of growth in Teleflex is very focused on the higher margin products in this timeframe we're looking at. That will continue beyond 2021. If you look at NeoTract, for example, most of the growth coming from NeoTract and the time frame we're talking about is coming from the U. S.
Market. We have submitted our shonen. We've accelerated our registrations in other parts of Asia. And we are starting on the clinical studies in France to get reimbursement. So what you'll see beyond 2021 is you will see further acceleration in growth of near track overseas to augment the growth that's already existing within the United States.
Kristen?
I was wondering if you could just give an update on the NeoTract incremental EPS in 2019, if that's still included in your forecast? I think it was $0.35 to $0.40 How is that tracking relative to your expectations?
Well, our guidance was $0.35 to $0.40 and we're tracking very well against that. We've had a couple of benefits since we put out that guidance. First of all, the tax rate has come down. That's created a little extra. And then additionally, that number assumed financing associated with the acquisition.
So we attributed the interest cost of that deal in that number. And as we did the high yield offering last fall, we were able to attract a better rate than we had assumed. So we assumed a rate of 5.25% and we actually raised it 4% and I think 5.8%. So we're tracking very well against that number. And as we mentioned on the Q1 call, we're actually putting additional investments forward this year to help accelerate the top line.
I think it's a little early to give any updated guidance on the top line, but
I would say we're in good shape.
And just thinking about the growth of the company, is it fair to say that of the 2% to 3%, vascular solutions continues to be around 1% contribution?
That is correct.
Okay. And does your organic 4% include any divestitures or elimination of product lines similar to what you're seeing this year with surgery?
No. As I said in my prepared remarks, we think it's balanced. Number 1, we haven't taken into account any exits that we may contemplate in the time frame. And number 2, we haven't contemplated any Go Directs, any M and A. And also, we've been fairly conservative on Riplast and Fercutaneous.
Okay. Thank you.
David? Thanks. David Lewis, Morgan Stanley. Just a couple of quick notes here. First, Tom for you, on gross margin, kind of midpoint of the expansion is kind of 2 75 bps.
What percent of that just comes from the contribution of VSI and NeoTract kind of rolling in the next 3 years? So that accounts for about half of that improvement
on the gross margin line.
Okay. Thank you. And then on non op, non op expenses is up 2.5 fold in 2 years. So the one thing I talked about today was sort of how you think about non op over the next 3 years. It's $100,000,000 or so this year.
Can you just maybe talk through net debt to EBITDA? What is a good target range for the business? And I guess we assume that not a number should come down, but any sort of trajectory you can give us on non op? You said number down 10%, 20%. And how should interest move here in the next 2, 3 years?
Well, as we look at interest expense over time, that is dependent somewhat on what happens on the acquisition front. So to the extent we find an attractive candidate, we would likely use cash to go ahead and do a transaction. So we have spoken about a longer term leverage level of 3 times or below. And so we continue to maintain that as a target. We've also spoken about the willingness to go above that level should there an attractive acquisition come about as long as we had a pathway to quickly move back.
So interest is a tough one to kind of peg. I think for modeling purposes, it may be fair to use the free cash flow less the contingent payments, less the dividend. We've got about $300,000,000 to I think $350,000,000 per year and assume about $300,000,000 of that is used to pay down our repayable debt. So, for modeling purpose.
And Tom, just lastly for me on tax. SBC had a big impact here in the Q1. I'm assuming the 16% to 17.5% rate forecasted has no assumption for SBC?
We do have some assumption based on a trend in run rate. So really what's driving the tax rate up are 2 things. As mentioned, as our U. S. Business continues to grow, that's going to be a drag on our tax rate, just given the tax rates in the U.
S. Relative to international. And as I mentioned, our assumption is that we will delever over time. So right now, we've got a bit of an interest shield that's benefiting the rate. And as that leverage level goes down, our assumption is that relatively speaking, we benefit from that from a tax rate standpoint also goes down.
Is there one point can you give us a sense of how much SPC is in the number, one point a year?
I'd have to go back and I don't have the number specifically.
Hi, there. Isaac Ro from Goldman. Thanks. Question for you on Asia and then another one on UroLift. On the Asia side, you have some favorable growth tailwinds and you've got obviously a nice mix there.
So the gross margin contribution to the corporate is favorable. But when I put in context the changes in the invoice policy, how should I think about gross margin trajectory net of all those things over the next 3 year cycle?
So you're correct. Our gross margins in Asia are accretive to Teleflex in general. We tend to be in the upper mid-60s for our gross margin in general across Asia. The decision that we took in early 2017 to take our business direct was in direct anticipation of the 2 invoice rule. We anticipated that being implemented across some of the geographies within China.
So we are now pretty compliant with that rule and we anticipate being able to have 2 invoices from us and the end customer. In every market, there are price pressures in certain segments of the business, but there are also opportunities to take price. I think what needs to be understood about our portfolio in China is it's our most differentiated portfolio, and therefore, isn't as prone to pricing pressures as other parts of our business. As you saw from Sunny's slides, surgical and vascular are our 2 biggest segments in Asia, and those are our 2 most differentiated segments within our business portfolio. So therefore, we don't have as much exposure to pricing pressures in that marketplace.
Okay. It's helpful. And then just a follow-up on UroLift 2. You guys talked a little bit about the, I think, the launch plans for the back half of next year. Can you help us think about what the mix between UroLift 1 and 2 looks like?
I mean, is it going to be all UroLift 2 in several years' time? And assuming that product is gross margin accretive as well to the base UroLift business, how does that factor into the overall guidance? So within our guidance, we anticipate having the
majority of the North American market converted to UroLift 2 by late 2021. It is accretive to our margins of the UroLift 1. It will go from the lower 70s to the higher 70s, and that's our expectation. The product has been tried with some clinicians. It has received good reviews.
It makes the procedure easier to perform. There's just a nuance on how you use the device, and it just makes it simpler for the surgeon. So we anticipate rolling that out in the latter half of twenty nineteen and then converting the American market,
as I said, in that timeframe. Anthony?
Anthony, Jefferies. Thank you. 1 on just PIKs. We haven't touched on that a bit. So mean just the overall picture in PIKs and where your share sits today versus AngioDynamics and IMVECTAN and what's baked in the guidance for PIKs and then maybe within that, what's baked in there for entry into China for PIKs?
And then I have a follow-up. With regard to PIKs, we continue to see ourselves taking share within the PIK market. Just on the last quarter, we grew by about 20% in the key North American market. We estimate that our share now is getting up towards that 10%. We anticipate and it's one of the drivers that we believe is going to ensure that 4% in our base business is the growth in our PICs.
And our pigs what's unique about our pigs, obviously, is our coatings, our antimicrobial and antithrombogenic coatings. Again, it's not an area that we see tremendous price pressure because any infection is going to cost the hospital in excess of $43,000 So and hospitals are now getting penalized for their infection rates and they have to measure the infection rates and pick. So in the lifetime of our plan, we see ourselves continue to take share in the U. S. Market.
We anticipate having our registration for our PIK in China halfway through this life cycle of the current plan. And we have PIK share gains in China modeled in
as well. Helpful. And then a follow-up on UroLift. Just a recap on how many reps you have and how many you're adding per quarter and the range that you have on them in terms of quarter, what they're generating a year? Thanks.
So what we had said was our plan was to have approximately 70 reps the end of 'seventeen. We actually went beyond that number of 70 reps. And we had that was up from 55 reps the prior year. We expected we told the investment community to expect a similar cadence of the addition of reps. And we've and last quarter, we announced that we're actually even accelerating that.
We plan to add between additional 5 to 7 reps to that number. And you saw, I mean, the asset grew by 87% in quarter 1. The accelerated investment that we're making in that product is bearing fruit. And again, I know I'm repeating myself, but not all growth is equal. And we will invest behind the best opportunity for Teleflex that gives the greatest return.
Regarding rep productivity, we see reps getting now above average revenue per rep getting up above that $2,000,000 mark. And we see that it takes about 7 months for a rep to generate $1,000,000 in a virgin territory when we put them into it. So it's a very rapid growing asset and it will continue to be so. And we're so early in the conversion cycle. That's the beauty about this.
We're so early in the conversion cycle. It's a $6,000,000,000 market in the United States, and we did $125,000,000 last year. Rich?
Thanks. Rich Nood at Learning Partners. So based on the guidance, the operating margin and gross margin and sales, I think, were more or less kind of in line with where the street was modeling. The tax rate is a little bit higher. But there's also some potential deleveraging that could come with that.
So it's the right way to think about this. All the pieces together, you're basically looking at even with a higher tax rate, something in the low to mid teens earnings growth kind of range over the time horizon here with kind of a placeholder in the lowered interest expense as you pay down debt and to the extent that you're able to go and deploy that free cash flow towards higher return endeavors like distributor to direct or M and A, maybe it comes up higher?
Well, let me just touch on the tax point, first of all. That rate is out there assuming where we are now, our understanding of the current tax law and that's still subject to interpretation. And candidly, that's been where a lot of our focus has been is interpreting the new tax law. What you're going to see over the next couple of years is us looking for planning opportunities to perhaps lower that rate. We haven't made any of those assumptions, but I just want to make sure you're aware.
We're not happy with where it is now. We're going to look for those planning opportunities into the future. And so with regard to providing EPS guidance, we as you noted, we didn't provide guidance. So I'll obviously let you work through the models. But I think we've given the components with revenue, we've got the margins, you've got a tax rate.
I think a fair assumption since we don't have M and A in there is to assume that we do delever by say a range of $300,000,000 or so per year throughout the 2019 through 2021 timeframe.
Okay. So but generally speaking, it's safe to assume that the way you've thought about the tax shield going away is kind of with that commensurate level of kind of delevering and those 2 should offset to a certain extent to the bottom line.
That's a fair assumption. Okay.
Thank you.
If anyone else has any questions, please raise your hand.
Okay.
I'm sorry.
Back row.
Ted Graham, Voya. So if you exceed your 6% to 7%, let's say you do 8%, would that incremental 1% require your conservative guidance, if you could leverage the opportunities based over the next quarter?
So and I'm going to answer that in the same way I've answered the upside on NeoTract. Are we going to let the upside in NeoTract if it comes flow through? And the answer to that is the majority we will let flow through, but we will have to add incremental investment to ensure that the growth in the outer years can continue to accelerate. I think that the potential opportunities for upside on the 6% to 7% are accelerated growth on RePlas, Percutaneous, NeoTract, BSI performing above expectations and markets like our Asia Pacific market and EMEA coming in a little bit stronger than expected.
If it comes from replan and it's coming from
the military, that is not going to demand a high level of investment. It's normally a low touch point from a sales rep perspective. Percutaneous will require some investment. NeoTract will require some investment, but there will be still a significant amount of drop through if we do overachieve on the top line, but there will be some investment as well.
Great. Any other questions? All right. I don't see any other hands up. So thank you very much for all your time and attention today.
It's greatly appreciated for you to be here and for those of you who listened in on the live webcast. This concludes the Teleflex Incorporated 2018 Investor and Analyst Day. Thanks very much. Have a great weekend.