Refinitiv StreetEvents Event Transcript
E D I T E D V E R S I O N
DIAS.MI - DiaSorin SpA
Full Year 2024 DiaSorin SpA Earnings Call
Mar 14, 2025 / 04:30PM GMT
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Presentation
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Unidentified_1 [1]
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Good afternoon. This is the COSCO conference operator. Welcome and thank you for joining the DSR in full year 2024 results conference call. As a reminder, all participants are in listen-only mode.
After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing and 0 on their telephone. At this time, I would like to turn the conference over to Mr. Carlo Rosa, CEO of Diasain. Please go ahead, sir.
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Unidentified_2 [2]
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Yes, thank you, operator. Good afternoon and welcome to the full year conference call.
We're going to make first some comments on the full year results and then I move to the quarter 4.
In 2024, revenue and profitability are in line with the plan, the budget and the guidance, despite the geopolitical tensions and microeconomics heads.
Specifically, when it comes to the immuno as a business, we perform very well in the main geography US and Europe, whereas we will see later, we continue to experience.
Difficult situations in China, although that represents a very small portion of our revenues when it comes to molecular.
Molecular overall in the year perform better than the initial assumptions. Clearly, this is this for us has been a transition year because we launched successfully the liaison complex with the respiratory panels. And this better result of molecular over there clearly compensated the LTG software performance compared to expectations because of the life situations as we've been discussing over the last quarters.
And, overall, from a pricing perspective, which is something that we did discuss a few times in the last quarter, so we've implemented a pricing program and that was in place and overcompensate.
The inflationary effects.
That we as an industry we are registered in 2024. So overall I believe that 2024 was a very good year and we to the point that I remind everybody, we raised our guidance twice upward clearly in 2024.
Just a couple of comments on the different legs if we go back to immuno.
Clearly our US hospital strategy is working well and delivering according to expectation. Let me remind you that our idea was to get to 4 hospitals served by year end, which was achieved with so we are perfectly in plan with the LTP. The LTP calls for 600 systems installed 6 hospitals by the end of 2026 27.
When it comes to ME, we had the first active custom hospital systems. I need to be very careful here because when it comes to ME, we need to talk about the hospital system because placements do follow the concept of having spoke, right, so multiple installations between key.
And liaison excel.
And as we discussed, we do have as a target 75 hospital system by the end of 2025. When it comes to Europe, 2024 has been very strong year with double digit growth, a combination of successful placements, increasing volumes and outbreaks in certain areas of Europe. And then last but not least, we finally started to get a regulatory approval for the first products manufactured in China.
And we expect that by 2026 we are going to have the manual approved.
In the Chinese market.
If we go to molecular, everybody knows, we launch in in September our liaison ple with the respiratory panel, we got the second panel approved shortly thereafter and we submitted.
Two blood culture panels expecting approval in 2025.
In November I made a comment. I said we had a funnel in the US clearly with 100 customers equivalent equivalent to 500 placements we are well on track and we'll discuss later about that.
We're well on track to hit our target has been.
Received extremely positively by by the customers and I'm going to give more color later when I talk about the quarter.
We are wrapping up the clinical study as expected.
And they were going to be filing within the next quarter or so.
So, also on on track.
And finally, let me just come in to the LTG and we certainly had a good performance of the LTG business better thanch notwithstanding the unfavorable environment in life science.
In fact, at the end of the year, LTG grew by 3% compared to previous year clearly driven by A very good performance of our diagnostic partners.
They totally compensated weaknesses in the life science that we have seen at the beginning until mid 2024.
So, from a 2024 perspective, a very satisfactory result. Now let's go to quarter 4. As usual, I'm going to come in the quarter 4 at constant exchange rate.
We had an excellent quarter, total revenues 310 million in the quarter.
With a growth Of 5% year on year in quarter 4 excluding COVID in line with expectations and in line with guidance of 2024 full year. When it comes to COVID, clearly there is a softening of testing in the quarter we had â¬6 million of revenues, 26 million in full year 2024. So and we see that testing continues to continues to decrease.
If now we go to, I would like to com each individual segment of the business starting from immuno diagnostic.
I diagnostic ex COVID 6% in the quarter with good performance in the US and Europe.
You notice deceleration versus previous quarters, but that is due to TAcom versus Q423 because in Q423 we had exceptional instrument revenues. Indeed, if we go down and look at clear reagent in a quarter and not immuno.
Agent grew 9% in the quarter.
This is a net of clearly negative GDP impact in China in the US, in North America.
A group 14% and this is related to the hospital strategy that where we keep again I said before expanding our our presence in US hospitals in Europe in 4, 8% growth.
For immuno in clear 9%, so we continue to see a very strong growth for our immuno franchise in Europe as well.
Export in Core4 was negative, but this is mainly due to the Iran market where in King K4 last year we had again shipments that did not materialize in Q4 so it's a phasing issue.
China, we continue to experience headwinds as we have been experiencing since many quarters, double digit decreasing Q4 as a result of BBP in certain provinces and the fact that we continue to see overall tough competition coming from local competitors.
Clearly for the so in China is a very small percentage of our business moving forward. So long story short, Q4 immuno diagnostic very strong in North America and very strong in Europe, tough comparison to last quarter of last year due to some phasing and the fact that we had instrument sales last year to certain tenders.
Now let's look at the molecular diagnostic. Molecular diagnostic in Q4X COVID.
Is pretty much flat, so plus 1% in a quarter, but again we need to look at the different components of the business separately. When it comes to our targeted molecular business, which is the Dioring business, the original Disorian business, so the business we bought from Focus. There is a double digit growth above 20%, and this is thanks to the introduction to the US market of the Candida Orris product where we continue to see a tremendous traction and success also in in 2025.
In 24.
I need to remind you that we have discontinued the Aries platform as part of the plan. It was the synergy plan that was presented to the market after the Luminex acquisition. So we are missing in Q4, the Aries revenues, and we had in Q4 2023 last buy orders for A. So again.
There is a delta which was expected in this in this quarter due to the discontinuation of the area.
And then last but not least and not surprisingly, as everybody else has reported, mild start to flu season in Q4, but strong Q1 and so you will see that in in Q1 there is going to be a recovery of the.
Of the respiratory respirator.
Now let's focus more on blacks. Okay. I said before, for launch started in September 2024.
We launched it in the US respiratory. We got first blood culture approved, second, and then the two additional blood culture panels. Blood, sorry, blood panels submitted to the FDA in September and November 2024, and we expect them to be approved by Media 25.
GI clinical study ongoing and submission in 2025. This means that as per our long term planning by 2026, we're going to have the full.
A multiplex in panel proleplex.
In order to guide or explain the way that our business is performing, we decided that moving forward, we are not going to talk about placements, customers, but we're going to talk about total revenues.
And this is because we look at multiplexing as a franchise, a combination of the aging one, which is a business, historical business where we're building on and clear the liaison complex, which is the increment of the new platform that we we're going to be building on our install base and adding certainly new customers so.
The launch has been extremely successful, and our ambition for 2025 is that we are going to grow the overall franchise of the region 1 plus the ple to â¬75 million so the growth of 25%.
Over prior year as a combination of new accounts and conversion of some respiratory accounts with price increases from the Virgin one to the liaison.
This corresponds pretty much to the addition of around 150 customers plex customers by year end. Again, I'm not going to comment any longer from now on in terms of how many customers we add per quarter.
I'm just indicating what is the, what the budget of the today is going to be.
4 plex and I will continue to update the market in total multiplexing revenue growth versus 2024.
What's very interesting is that when it comes to the existing customers that are using now, the Flex in the US, my last comment was that 50%, which I think it was November 50% were flex and 50% were actually fixed.
Clearly moving on now the situation is that we have more flex than fixed, right? And so we see that. The adoption of our customer base of the flex concept is really providing.
An advantage versus current solutions that only provide either fixed or mini panels.
Last but not least, which is a very interesting, I think, point strategic for the soaring. If I look at the current complex customer base, 20% are commercial labs and 80% of hospitals, why is this strategic? Because as this goes hand in hand with the immuno strategy.
Where we intend to continue to develop the hospital business combination of immuno and molecular solutions.
The just one comment overall, the varying other panels which are non-respiratory are relatively flat.
Now finally, final comment Q4 on LTG.
The LTG in Q4 did better than expected.
So we have a growth of 4% in the quarter, and it is a combination of diagnostic.
Growing, but also we are seeing that the life science is recovering and we saw also life science.
Slowly growing back in in 4 as well and we actually continue to see a very favorable LTG trend in the 1st month of 2025.
Again.
You need to understand that for us this business is not purely life science but a combination of partnership with diagnostic and life science and biopharma. So we actually serve with this technology 3 different segments in the In the market one more update, which is more on a clinical side of me, which I think is very interesting. There have been a slew of publications that came to the market.
As a result of independent clinical studies that are being run by ME, I think they are available on the website, and I would like to point specifically to three studies, very interesting.
The first one has been published on 4,000 patients through across 10 different urgent care centers, and the key finding of the study is that there is a 63% reduction in unnecessary antibiotic prescription.
And 70% of previously potentially mis bacterial infections have been now correctly identified, so This is a very important data point to support the adoption of meme. The second study on 1,000 patients in 17 centers in the US and Europe, and which is very interesting where they were comparing meme to procalcitonin, and the conclusion is that meme BB outperforms standard care calcitonin distinguishing between bacteria and viral infection.
Quite often we get questions from investors about what's different.
Between PCT and BB, and this study clearly shows that B is much better in classifying bacteria versus virus. The first study, which goes more on the pharmacoeconomic side, is demonstrating that there is a significant cost saving.
Up to GBP250 per patient in case of infection if you adopt.
If you adopt the meme testing prior to administering the antibodies. So not only you do have a clinical impact, you also have an economic impact to the hospital budget.
All said and done. I'm going to now leave the microphone to Mr. Pedron, our CFO is going to drive you to the numbers and then we're going to go to Q&A.
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Unidentified_3 [3]
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Thank you, Carlo. Good morning, good afternoon, everybody.
Thank you for joining the SRN Q424 earnings call and for the interest you are showing in our company. In the next few minutes I'm going to walk you through 2024 financial performance, and then I will turn the line to the operator for the usual Q&A session.
Full year total revenues at â¬1,185 million are above the previous year by 3% or â¬37 million despite the expected decrease in COVID sales, which are down by â¬33 million and the carve out of the 4 cytometry franchise back in Q123. The business ex COVID is growing at constant exchange rate by 7%, as we heard. Therefore, in line with the full year guidance. 2024 COVID sales accounted for â¬26 million vis a vis EUR60 million in 2023. That's broadly in line with our outlook which was calling for â¬30 million. The FX impact in the year is negligible. Let's now turn to Q4 revenues ex discovered at constant exchange rate, which grew by 5% as a result of a solid performance of the new franchise, up by 6%, as we heard, with clear revenues up by 9% despite what we heard once again happened last year in Q4, actually in 2023, Q4.
For the reasons that Carlo just discussed about, we had a good performance of the LTG franchise, up by 4% thanks to mainly recovering instrument sales, which brings 2024 full year performance of the whole LTG business to 2% 2%.
And the Fleish performance of the molecular franchise 1 where once again the very good start of the liaisonple RSP panel and the strong growth of the targeted specialty product lines have been offset by the mild beginning of the flu seasons as the CDC and the tough com with Q4 when we had some last time by orders of the Irish reagents as discussed a couple of minutes ago. 2024 full year adjusted gross profit at â¬782 million is better than last year by â¬33 million or 4% with a ratio of revenues of 66%, which is better than 2023, which closed at 65%.
All the initiatives aimed at improving operational processes and containing costs allowed us to preserve margins despite, as we know, some inflationary pressure and the manufacturing costs we are incurring in our new plant in Shanghai which has not reached its full capacity production yet.
As I said last quarter, I do really believe this is a remarkable indicator of the success of the efforts we put in place to safeguard our profitability. Q424 shows a similar dynamic both in terms of margins at 66% vis a 65% of 2023 and growth versus previous year.
2024 adjusted operating expenses at â¬469 million are basically in line with 2023 with a ratio of revenues of 40% vis a vis 41 of last year confirming the trend we discussed during previous quarter's call.
Q4 adjusted OPECs at â¬125 million are in line with previous year as well. As expected, Q4 is recording an increase in the operating expenses rate compared to the beginning of the year as we saw last year, by the way, mainly because of the phasing of some projects and throw up of some costs, mainly insurance, health insurance costs in the US. This means to be clear that Q424 is higher than the average quarterly rate we should expect for our OPECs during 2025.
2024 other adjusted operating expenses were negative â¬10 million. Therefore, recording an increase of â¬11 million compared to the previous year.
This variance is mainly due to a tough comp with 2023, which closed with an income of â¬1 million as a result of some material one of positive elements recorded in the previous fiscal year.
Additionally, in 2024, there were several one-off expenses which made these variances even wider.
I do really believe it is important to consider this substantial swing between 23 and 24, driven largely by non-recurring items to fully appreciate our journey to increasing margins.
I will further explore this when I discuss the adjust evolution.
As a result of what was just described, full year, just a little bit at â¬303 million or 26% of the revenues is higher than 23 by â¬20 million or 7%. 2024 adjusted interest income at â¬4 million is EUR1 million short compared to 2023.
Because of the lower yield on our cash balance coming mainly from a reduction in interest rates in the second part of 2024, and the adjusted tax rate at 23% is a touch higher than 2023, which closed at 22%.
24 adjusted net result at â¬236 million or 20% of revenues is better than 2023 by 12 million or 5%.
Lastly, full year 2024, adjusted stands at â¬394 million or 33% of revenues, which is â¬190 million better than 2023.
And aligns with the full year guidance. Q4 profitability or 33% is better than the 32% achieved the previous year. As mentioned earlier, to better appreciate that the base business bida margin expansion from 23 to 24, it's important to consider that in 23 we had material and no recurring earning elements in other adjustable operating income.
Excluding this, that the path to be damaged and increases would have been even more apparent as we will see in a minute, this is confirmed by the 2025 EEA guidance which represents another step forward toward the 2027 margin expansion journey set during the last capital market date.
Let me now move to the net financial position. We closed 2024 with a net debt of â¬6180 million therefore according an improvement of â¬159 million compared to the end of 2023, mainly as a result of the very sounder cash flow generated during the year â¬241 million vis a vis â¬209 million in 2023.
As a result, our net debt to bidda ratio is down to 1.6% from the 2.1% we saw at the end of 2023, continuing the deleveraging trajectory shared during the last capital market day.
Let me now finish my remarks moving to 2025 guidance as always expressed at previous year exchange rate, so we expect revenues like COVID to grow by about 8% with COVID sales around â¬20 million and therefore total revenue, total revenues of the company to grow by about 7%.
We also expect an increase in our adjusted margin which in our guidance will be moving from the 33% we had in 2024 to about 34% which we are guiding for in 2025.
Please note that this guidance includes the very recent tariffs which have been introduced and are now in force between US, Canada, Mexico, and China.
Before concluding, let me please remember that dinosaurian financials are highly exposed to the US dollar. As a rule of the thumb, consider that for every $0.01 movement of the dollar against the EUR, the revenues move by about 6 to â¬8 million on a yearly basis. And they adjusted the bidder moves by â¬23 million. With that said, let me please turn the line to the operator to open the Q&A session.
Thank you.
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Unidentified_1 [4]
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Thank you. This is the Carsco conference operator. We will now begin the question and answer session.
Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. To remove yourself from the question queue, please press star and 2. We can be asked to use.
We kindly ask to pick up your phone when asking questions. Anyone who has a question may press star and one at this time.
The first question is from Kavia Deshpande of UBS. Please go ahead.
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Unidentified_4 [5]
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Hi Carla, hi PG, thank you for taking my questions. The first one was just, on the guidance for 2025, so you've obviously had a very strong 24, but just thinking about some of the headwinds next year, such as, the tough kind of European immuno diagnostics comparator, China maybe, when you exclude these, is it fair to say your guide actually probably implies like 9 to 10% underlying growth on the top line. And are there any other factors in that 2024 comparator that we should be thinking about when modeling? And then my second question was just on immuno diagnostics. So your target of 600 hospitals in the US by the end of 2027. When we think about the liaison XXL, does that potentially expand that addressable market? Is that how to think about the opportunity going forward from here?
Thank you.
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Unidentified_2 [6]
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Hi, yes, look, I will, I'm trying to resonate on on how to answer here. Let's start on the second one, which is easier.
The XXL is, one of the biggest mistakes that companies can make in diagnostic is to.
When you have a very extensive install base is to launch a system that is not going to also protect your install base.
Because then, clearly your store base is aging and the new system is not protecting and then it's a full recipe for a disaster. So long story short, the XXL, as we've indicated, is providing 30 to 35% with several features, right, but 30-35% increase throughput to the existing excel and that is fundamentally allowing us on a on a cost on a cost base that is comparable.
And this is fundamentally provide allowing us to do two things for the next 10 years, right, we can expand into the into the into the hospital market, laboratory markets, and also since everybody is expecting consolidation increase volume will allow us to follow the trendy the same token, it will allow us to go back to the base, our existing 7,000 install base and protect that when that is going to be aging.
We will substitute with with a new system that fundamentally the same footprint and and better and better throughput.
So long story short, I believe that we will continue to be the specialists into the same segment, which is pretty much the whole market because we're going to, we are today in very large commercial labs. Think aboutuest and lab Corp.
As a specialist with the current Excel and so the ex, we continue to go there and by the same token we can also serve the mid segment and high segment of the hospital market. Now if I go back to the first question you said, yeah, if I could cancel China from the map.
And just look at the other markets outside China. We expect that we continue to grow double digits in the main market. So the US will continue to be a double digit market for us, and Europe is going to be a high single digit market.
Australia, Brazil, I mean, everywhere where we are direct, we will continue to see double digit growth in 20 2025. When it comes to other geographies what we call exports, it clearly is a touch and go situation there because as we saw in Iran, I mean we do have prices in certain markets.
It it goes and it goes, right? I mean it's a fly by night operation in certain situations. However, our expectation for the overall export market, right, ex Iran is that that should deliver a growth in immune around.
7%, so 6 or 70%, right, so it's not going to be so diluted with with the rest of the geographies.
Thank you very much.
Thank you.
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Unidentified_1 [7]
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The next question is from Maya Pataki of Kettler. Please go ahead.
Hi, good evening.
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Unidentified_5 [8]
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Carlo, PG, everyone. A couple of questions from my side, please. I would like to start with a bigger picture question, Carla, on the US, on the mess that we're seeing in the US, it's great news that you're not going to have any impact from the tariffs. You're solidly positioned from your manufacturing standpoint. There are a couple of things that are, moving targets. I understand. So it could have a potential impact like.
Vaccination hesitancy, stop of the US aid funds, generally speaking, I guess a positive for the diagnostic market. Then on the other hand, discussions on the NIH budget cuts and headcount reductions at the FDA.
How do you navigate through the news slow mess and what kind of push and pulls do you expect to have from everything that is happening in the US? That would be my first question.
My second question on China, so you're going to have a broader product portfolio manufactured in China as of 2026.
How shall we think about China from then on? Is it going to be a growth market for you, or what is it in your plan that is going to happen with China?
And my last question is I was trying to take notes.
I'm not sure I got it. I, my understanding was that in the beginning you said that you're well on track to have 100 customers with liaison plex by the end of 2025, representing roughly 500 placements and then throughout the call I thought that you said.
150+ customers, maybe I mis misunderstood, but I just want to make sure that I know which number to take.
Thank you.
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Unidentified_2 [9]
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Hey Maya, actually both numbers are correct, but I will go back. Okay, it's not that I'm a magician, right? I will explain to you why they're correct. So let's start from the first question, which is the big pictures about the US. Look, I'm going to say a terrible thing, but, actually if you decrease vaccination, you have outbreaks. You saw the one now in Texas with measles, right, yeah. And so unfortunately every time a vaccination goes down infection goes up, and we are the kings, the soaring of measles, mumps, varicella, herpes, name it, all these kind of bugs, we do have a very high market share and so unfortunately if Americans decide to vaccinate less we're going to enjoy, we're going to benefit not enjoy benefit from it.
When it comes to the NIH, I mean, your guess is as good as my guess. We so far we don't clearly we don't serve the NIH directly, but our partners the Fisher and Baora, all these people do serve the NIH.
I don't think that today there is any visibility, to be H1st with you, so I would wait until dust settle and for the time being, as what they've been cutting is budget related to expenses, right, funding so far has not been cut, but I think they have, they're not allowing other universities to take more than 15% as overhead, right, because they say everything else has to be spent. In the lab, so how that is going to turn, I think we don't know also because every day is a new day in the US, right, these days. So let's see. FDA for the time being, we have not seen delays, although.
Although we don't know.
Okay, H1stly, I mean, every day you read and you hear something different about what what's happening in the US for the time being, the FDA has not been an issue for us in terms of vacancies. I will update you a quarter from now, okay.
The overall hospital business, private lab, I mean commercial business, we have not seen any impact and we don't expect to see any impact from at least what we know today, okay.
China China, I think we've been very H1st because we were one of the first ones to say that China is going the wrong way, and I continue to say China will continue to go the wrong way. And this is why for us it's not strategic any longer. However, as I said, we are well positioned if something is going to change because now we're going to have our products made there. We're going to have the ideas on Excel. We expect that by the end of Q2 we're going to have a China-made liaison ex approved. We submitted and that clearly will allow us to participate to certain tenders, but on the on the short term don't don't hold your breath on China. I mean, it's it's no good, I think.
But it's not a big damage for the authority.
Now let's go to the magic 100 to 150.
I, two different time horizons. I refer to the comment I made in November, right? And I said that we have a funnel of 100 customers which correspond to 500 systems.
Okay, the funnel we're working on. What we, what I said now is that in 2025 our ambition in the US is to have 150 customers running our platforms, right? And that corresponds that will allow us to increase our Multiplexing franchise because what's not obvious is that we do have A few tens of millions as we speak of aging revenues and so now we look at this franchise a combination of bein plus plaques. So our ambition is to get to 75 million in multiplexing business in the US, which does represent a 25% growth versus 2024.
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Unidentified_5 [10]
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Brilliant.
Carla, just 11 add up, one of the things that I've forgotten to ask you specifically.
If there were any costs introduced to Medicaid, which I believe is, in debate and feared and everything.
My understanding is that Medicaid covered patients are roughly 20% of overall covered patients or insured patients in the US. Do you think this is a fair assumption for the overall diagnostic space as well?
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Unidentified_2 [11]
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I was closer to, I thought it was more 30%, to be H1st with you, okay, so it's it's slightly higher, but don't forget that in the past.
That started with Obamacare and Obama, right? There was actually a program to reduce reimbursement over 5 years and it was 30%, so it was a significant number and eventually that program was actually stopped by Trump 1, right?
And then it's been the discussion has been lingering there. Back then I keep saying to be H1st with you, Maya, that my concern in the US or generally speaking, right, except for any draconian measure, right, but my concern when it comes to pricing has to do more with.
To do more with competition rather than, the government reimbursement are really driving pricing down significantly.
Okay. So in my concern, not that much.
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Unidentified_5 [12]
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Okay, thank you very much.
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Unidentified_1 [13]
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The next question is from Ayeshanor of Morgan Stanley. Please go ahead.
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Unidentified_6 [14]
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Hi, good afternoon, Carlo MP00. Thanks for taking my question. My first one is on the complex, so thank you for the sales guidance of 75 million for 2025. My question is, what portion of this do you expect to be from the very converted accounts versus new placements? My second question is on China and apologies I missed it, but did you provide an update to this 5 to EUR6 million impact you anticipate from VBP in 2025? And if so, could you just provide some color around the timing of this, VBP what regions are affected or any impact you anticipate on a more broader scope of targets. And then my last question is on your outlook for the immuno business. Just trying to understand the mix of the growth drivers in that portfolio, between Pontierron, memedyme. What are the biggest components that could drive the, move the needle the most for immuno growth this year?
Thank you.
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Unidentified_2 [15]
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Okay, so let me start with the first question I not okay, I decided that what's very relevant for the is when it comes to multiplexing is at the end of the story combination of technologies, where is that we want to be at the end of 2027, right? And we said we want to have 10% market share.
The pretty much it's 200 million, give or take, right? And so this is the way we drive the business and this is the way I want to explain the business to the investors. Otherwise, if I get into how many, how much are you converting, what's the price increase, believe me, each analyst and every investor is going to do a different calculation, and I will spend more time trying to correct mistakes rather than look at what's relevant for the business. So track it, the 75 million this year will become 2,100 million, and this is what we are targeting, okay.
Second question China BDP is a very short answer. Now 56 million already started in Q1.
Because BBP now has been extended from the original panel now they went also to, they included more essays, right? So the overall effect for the soaring yearly is around 5 to 6 million in 2025.
Third question is immuno.
I keep saying that the beauty of the Assurian is that we are not a one trick pony.
As we know, I learned that expression in 2015 when vitamin D was 44% of our revenues.
So we are far off the One Tree pony story. We win and we retain customers because we have an offering of specialties that go across many different segments. Okay, Certainly Quantiferron is a door opener and it is a relevant assay to have in the hospital market because hospitals are doing quantiference.
And actually, as we discussed a few times, hospitals are sending out quantifiron and now they have the ability with the better technology to do it in-house. Stool is a tremendous opportunities because IBDIBS is exploding in the market and we are very well positioned today to allow this growing volume to be done effectively on our we have a lot to say when it comes to protecting 3.0 that it's going to be. In my opinion, revolution and the ability to properly diagnose IBD and IBS. Then you have all the infectious disease panel that follows suit. Let me just give you an example which is not trivial. Take hepatitis HIV. Hepatitis HIV is one of the most coatized menu you can imagine because Ebbott, Siemens, Sarosh, you name it, they all have it.
Our revenues, our hepatitis franchise in the US as a result of the very we are expanding the install base in hospitals, and every hospital is doing hepatitis.
Today that business is close to 60 to â¬70 million and is growing more than double digits.
Okay, so you're saying what's driving the success is a combination of certain specialties and all the me too products, very good quality. We have an infectious disease that follows suit as long as you start with the conversation with. A stool with TV and now with M. I made a comment already, as you know that Mme today is not many dollars but a ton of interest by customers to talk to theorin and drives placements of existing menu waiting for validation of meme to be completed.
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Unidentified_6 [16]
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Understood thank you very much.
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Unidentified_1 [17]
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The next question is from Bilam Kanhaien of CIL. Please go ahead.
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Unidentified_7 [18]
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Hi guys, this is Dylan. Good afternoon, and so just, to for me, so firstly just on molecular, and we spoke about the respiratory season and I think.
I mean we knew there was going to be delayed season. I just was just wondering, maybe we're expecting slightly stronger visibility just on lex maybe with more pre-buying happening in the 4Q relative to the one queue, any commentary there on, I guess the purchasing patterns and I guess then. Secondly, just to check just on the numbers of varying, I think you said it was a double digit number, underlying, and then if we think about the 75 million number, then essentially is it fair to say that plexus like low single digit, maybe even slightly higher. Incremental, growth, let's say onto your year on year growth is that kind of the way we should kind of think about it? And is there anything outside of the China weakness and dollar weakness that you want to flag that gets you closer to sort of that 8% that you're guiding right now? Is there anything we haven't spoken about in this call so far?
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Unidentified_2 [19]
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Dylan, I'm not really sure on the second question. I'm going to answer the first question and third, so when it comes to purchasing pattern, it's actually the opposite. Hospitals do not tend to buy in season because they don't have time to validate and so this so this is very interesting because notwithstanding that pattern that hospitals don't want to switch.
During the season, and we launched the system fundamentally during the season, we are having a strong success notwithstanding the fact that hospitals don't have a lot of time to validate, right? So the data that you see is not that you know we upfront the revenues because they bought a lot during the season it's the opposite, okay.
Your third question, which is 8%, is there anything, any headwind that we didn't take into account? Is that what you were interested to discuss?
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Unidentified_7 [20]
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Sorry, I'll rephrase. It's just that I think if I understand correctly what you're saying about Plex being incremental, I think it looks like something like 3% incremental growth year on year, and then basically everything else looks like business as usual, so that. I would point to something like on an underlying level that actually feels like it's accelerating even excluding the China business and I think you said already that much with saying that US and Europe are kind of like Europe is high single digit, US is double digit. I was just wondering how we get to that 8% and whether that's maybe, I mean, obviously we'd ask if that's conservative, but I'm just wondering if that's conservative given just the plex number even being incremental.
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Unidentified_3 [21]
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And this is, I will TRY to take it. I'm not sure I completely understood the question, but I will do my best. So I believe Carlo comments when he was saying double digits and so on and so forth, he was specifically talking about the immuno business because as you might know, our presence, molecular presence in Europe is not as big in the US even though we're in the process of launching the in Europe as well. But it's not as big as in the US, right? So if I can TRY to broadly right to dissect for you where these 8% guidance for 2025 is coming from if I look at our three.
Franchisees immuno molecular, and LTG. What I think you should imagine is a molecular business to grow at a faster pace than the 8% because you will see the impact of what Carlo has been discussing about and this is by the way, in line with our long term plan when we guided the molecular franchise to grow. Digit increase right you should expect the immuno franchise to grow more or less at the same pace of our full guidance, which is once again in line with our long term plan when we said the high single digit, that was how we guided the market. And then LTG and don't look at LTG every quarter because you know we have some bike shipments which can skew one quarter up and the following quarter down, but for the LTG franchise you should expect a growth in 2025 which is below the 8% for the full the Australian business, right? So as a combination of these three franchises.
You see the 8% we are guiding for.
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Unidentified_7 [22]
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Awesome, thank you so much, PG.
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Unidentified_3 [23]
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Thank you.
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Unidentified_1 [24]
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The next question is from Odysseus Maniazotti of the paper parriba. Please go ahead.
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Unidentified_8 [25]
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Hi, thanks for taking my questions. Just a couple of modeling ones. So, on the Q for Minase weakness, just to think about how to model this, for this year.
Factoring in the VB2 weakness. Is it fair to expect this one to grow higher than Q4 in the coming quarters, but a touch lower than what you grew last year in the 1st 9 months? Secondly, I want you to get a feeling of how your business is, performing in in North America X QuantiferTB.
Would say around 8 to 9% CR growth, to be a decent estimate, for a full year 24, or is it not much of a difference to the 10% you grew in the region last year?
And, a quick one for for PG as well. I remember you saying around 40 to â¬50 million in capitalized R&D for 2023. How did that look, in 2024 and what should we expect for this year?
Thank you.
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Unidentified_3 [26]
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A says, I'm going to take some but not all of them, so.
And for the immuno franchise, what I believe we were hinting when we discussed about China and the comp, I believe was very clearly captured by Cairo when he said, if you look at clear growth in the quarter, you have 9%, which is in line with what we saw in Tijuana.
Which resonates with what we saw in Q3, which was 10%. If I look at the growth without China, obviously, the growth is even better, and I believe that for the whole of 2025 you will see that, 4 or 5 million GDP impact, as an a window.
Meaning that the underlying business obviously, is is is doing better and means, meaning once again that once that VP is under the belt you're not going to see that that win any longer. For the growth in North America without the quantifi business, I'm not going to comment there, I believe as Carlos said, I refer to what Carlos said, meaning that you know we're not a pony. We have several business lines which are doing very well in our immuno franchise in the US.
Quantifierron is definitely one of those, but we have much more.
I'm sorry, I don't remember. Oh yeah, the CapEx R&D.
I believe the right way to think about it is that in 24 you see the peak in terms of R&D CapEx because we are at the Let me say at the highest point of our effort of bringing new platforms and new products to the market. Think about the Plexa, which has been launched now. Think about the mess. Think about all the clinical studies to support the different panels and products that we're going to launch.
I'm expecting a deceleration and that's budgeted for, by the way, in 2025 of that R&D CapEx and even a further and steeper deceleration in 206 and in 207, right, simply because we will go back to, let me say, normal business if I can use that word, because now we are working on several different platforms at the same time.
And several different panels. So if overall, you think about our CapEx in 2024, which is around $130 million as a combination of R&D instruments we are placing in customer premises which are staying in our books.
I'm expecting that number and that's also included in our long term plan.
To decrease materially, not so much in 2025, where we will see anyway a deceleration, but even more so in 206 and in 207.
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Unidentified_1 [27]
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The next question is from Natalia Webster of RBC Capital Markets. Please go ahead.
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Unidentified_9 [28]
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Hi, thanks for taking my questions. Just following up on some of the previous ones around the expectations since 2025. I wanted to check if you're still confident in your midterm guidance for the high single digit to low double digit sales to 2027. And the specific segmental guidance you provided within this, particularly on licensed technologies, you said you're expecting this to be lower than the group 8% in 2025, but are you expecting this to reach the sort of mid to high single digit level that you guided for the midterm now that you're seeing some recovery from life sciences?
Thank you.
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Unidentified_3 [29]
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Natalia, hi, this is speaking.
Yes, I mean, absolutely we feel very comfortable with the midterm guidance we gave, and I believe the fact that we grow already in 2024, the business ex COVID by 7% is a very clear and we are guiding for 25% at 8%. It's very clear without the impact of the plaques, then as you know all of those programs which are coming our way, I believe we feel very comfortable with the high single to low double digit guidance we give for the midterm. Absolutely very comfortable with that.
You can obviously have some, let me say a little movement amongst the three different technologies, so very difficult to say what's going to happen for the licensed technology. What we what we saw is that we closed 24 with the plus 2%, but as Carlo was saying, if you look at the performance of the diagnostics business, there is, high or mid to high.
It's actually 7%, right?
And we've had the headwind for the life science business that everybody has discussed about them. How long is that going to last, very difficult to say, but I believe we're kind of shielded there compared to pure life science company for the reasons we've discussed. So the let me say the middle of the mid to high single digit number we gave for the during the capital market day, I believe it's absolutely barring the fact that once again you know these days it's very difficult to make predictions about what's going to happen in the US, but you know.
That's how we see it.
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Unidentified_9 [30]
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Thank you, that's helpful and I guess just the same question on the margin. I mean, you're guiding to expansion to 34% in 2025, but you still confident on that 36 to 37% target for 27 and also just following up, apologies if I missed it, but did you quantify the impact you're assuming from tariffs as well?
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Unidentified_3 [31]
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Also for margin we do feel very comfortable with the midterm guidance. We closed 2024 with 33% and by the way, the guidance was upgraded, reviewed upward during the year. The budget for 20 guidance for 25% is 34%, so we are absolutely in the trajectory. I was telling you to 336 37% and no doubt there.
For the tariffs, the impact of what has already been approved by the Trump administration and the counter tariffs put in place by, Mexico, China, and Canada is negligible, it's it's embedded in our guidance, but it's negligible because as most of the products we sell in the US are manufactured in the US. We have, a very big manufacturing footprint there. And so you know we as things are today, we don't see issues.
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Unidentified_9 [32]
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Great thank you.
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Unidentified_1 [33]
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The next question is from Jan Koch of Deutsche Bank. Please go ahead.
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Unidentified_10 [34]
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Good afternoon. Thanks for taking my questions. I have 3, if I may. I have to TRY my luck on the plex again. So the â¬75 million you mentioned as a target for multiplex does not assume negative growth of your very gene business in 2025.
And secondly, of the customers that have already received a tax system, how many slots do they activate on average? And then finally, coming to the tariff question again, thanks for providing the comments on the potential impact in case, the situation escalates further, how easy is it for you to pass on additional cost to your customers? Are there any differences between your segments in terms of pricing power?
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Unidentified_2 [35]
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Again, sorry, I don't want to.
I don't want to annoy anybody, but I have no intention whatsoever to enter into detail of cannibalization, price increase, and so forth because it's very confusing when it comes to plaques. So I kept saying we have a target to get to 200 million in the plan, and next year the 200 million.
He talks to the 75 million targets.
Which is a combination of new accounts, conversion of existing account, price increase and so forth, okay.
When it comes to the second question is to do with tariffs.
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Unidentified_3 [36]
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Yeah, it was the 3rd. The 2nd was about black customers, but I'm not sure I completely understood what the question was. I understood the 3rd 1, so I can start taking the 3rd 1 about tariffs, so.
And so what I said is that the current guidance for 2025 does include the new tariffs which have already been, let me say, which became a reality, right, because of what the Trump administration did when the counter tariffs from China, from Canada, from Mexico.
What's going to happen in the future, man, it's very difficult to say, very difficult to say, yeah, and then I believe the question was, would you have passing power to offset those tariffs?
And how can you allocate the different pricing power by segment, I guess that was the question, right, Ian?
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Unidentified_2 [37]
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Yeah.
Listen, if I may take one, during the inflation, I think our industry, as everybody has learned that There is there is a rationale behind.
You're allowed to increase your pricing, which we did very successfully.
So, if there is an increase, due to tariffs, the whole industry.
It's going to go back and put pressure on the customers.
For price increases, right, and this is what exactly everybody is saying.
Eventually all these tariffs will bring more inflation.
Because of price increases, so We will do all we can by contract to achieve that.
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Unidentified_10 [38]
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Okay, understood. And maybe in terms of the second question, let me rephrase that one.
Given that the plex has 6 slots, how many slots are being used by an average customer so far?
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Unidentified_3 [39]
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What we are seeing so far is that many customers are asking to have most of the slots filled, let me put it that way, meaning that most of the chassis, that's how we call the frame right that our customers are installing are filled with all of the slots, all of the available slots.
Understood.
Thank you.
Thank you.
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Unidentified_1 [40]
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The next question is from Shubanji Gupta of HSBC. Please go ahead.
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Unidentified_11 [41]
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Hi, thanks for taking my question. So my first question is on the LTG business. So, it's more of a clarification. So you mentioned you're seeing some, improvement in the life sciences as well as the biopharma segment. So could you give some color on what portion is life science and what portion is biopharma second on the molecular diagnostic business. So in Q4 sequentially, could you give some color on the growth of instruments versus reagents for Q4 versus Q3?
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Unidentified_3 [42]
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Hey hi this is I will take it. So broadly speaking, when you think about our LPG, 50%, half of it is represented by diagnostic companies, right, and 50% is what we call life science, biopharma. Academia, research, all the rest, right? And what we said is that on the 50%, which is diagnostics, we are very protective because you don't see the headwind that you see on the life science.
We are not sharing numbers of.exactly how much we saw in case or the case in instruments or royalties or, but you know the main message is that where we are where we suffer the most in 2024 is on instruments like most of the industry CapEx.
Whereas we didn't see such a let me say a headwind on beats and royalties because of the installed base obviously which keeps pulling beats.
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Unidentified_11 [43]
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Thank you. Just a quick follow up on the LTG business. So you have some exposure to the academic customers. So is that direct exposure.
And I know this has been covered earlier, but do you have any direct exposure to NIH because you have exposure to academic customers.
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Unidentified_2 [44]
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Mm, no, we, well, first you need to understand is B2B, so we don't know where these instruments are going to because we sell it to Thermo Fisher, we sell it to Brad, we sell to biotechnique, and they go and they sell themselves.
Right, so we don't know if there is a big exposure with the NIH. What I know, what we see is that there is a good chunk of the systems that are actually going outside the US.
1st and 2nd, because we sell to a partner in the US and they they distribute worldwide.
The second thing that we see is that there is a growing biopharma business for them.
Okay, when it comes to the NH exposure, as I said, I think before, we need to wait for their comments in 11.
So we will learn from them.
How they see the NIA situation.
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Unidentified_1 [45]
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Mr. Rosa, Mr. Pedron, there are no more questions registered at this time.
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Unidentified_2 [46]
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Thank you.
Bye.
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Unidentified_3 [47]
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Bye.
Thank you, bye.
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