Earnings Transcript for BIM.PA - Q4 Fiscal Year 2021

Operator: Good day, and welcome to the bioMérieux Full Year 2021 Financial Results. Today's call is being recorded. At this time, I would like to turn the conference over to Franck Admant. Please go ahead.

Franck Admant: Thank you. Good day everyone and thank you for joining us to review bioMérieux performance for 2021 and our objectives for 2022. Before leaving the floor to Alexandre Mérieux, Chairman and CEO; and Guillaume Bouhours, CFO, I will just make a very short introduction to provide you with a couple of information. First of all, our press release was released this morning at 7 AM. You can find it on the home page of our website. In addition, note that the slide of this meeting will be available also on the home page. And you can download it shortly after the webcast. Promptly after the end of the meeting, the webcast and the call will be available in replay on our website. Now going to the presentation contains, after reviewing our 2021 performance and 2022 objectives, we will hold a Q&A session. Question can come from the conference call and from the chat of the webcast. If you wish to ask a question please make sure to identify yourself, name and company. The very last word before starting the presentation, I will not read the slide which is currently projected, but I recommend you to take note of its contents. Let's remind the usual disclaimer about the forward-looking statements. Now I hand the call over to Alexandre Mérieux.

Alexandre Mérieux: Thank you. Hello, everyone. Good morning or good afternoon for some of you. So let's start with the review of our '21 activity. So we'll start by saying that 2021 has been primary after two years of COVID, again a year of remarkable performance and a little bit of sound performance both in term of sales growth and organic growth was double-digit at plus 10.5%. Strong financial performance also, as we reached €801 million in term of contributive EBIT, close to 24% of the sales. And also worth noting also that we are debt free company, since we had a free cash flow generation of more than €500 million. I would say also that during this -- this last year also we have been able to improve [indiscernible] corporate social is a key vision and roadmap and as you will see also a bit further we have a solid pipeline of new solutions to be launched. And also as we hope that the world is going into an endemic phase of the COVID, we believe we are well-positioned for the rest of this endemicity and also all the needs related to the fight against AMR standing for antimicrobial resistance. So maybe I'll start with the performance of Q4 which is BIOFIRE, as you can see we have, we displayed that here organic growth of plus 14%. Important to note that during the COVID time period, we doubled the installed base of instrument. Now we reached around the 22,000 units being sold and placed. We also saw that we had a good growth on respiratory panel at plus 14%. But the non-respiratory gastrointestinal panel, meningitis panel, pneumonia panel and BCID panel also displayed a nice growth in term of region at plus 35%. So solid growth this year, the fact that Omicron was hitting the U.S. and the rest of the world in Q4 also what we seen -- we had a strong demand signals in Q4 for RP panels. Maybe the next slide, microbiology, which was also core to us, I believe this quarter saw a nice solid performance as we had both [indiscernible] growing well in term of growth, in term of placement also we have been able to leverage our offer across the portfolio. We launched in Europe the CE marking for the VK MS prime, which is promising a system and we expect to have the VK MS prime to be FDA-cleared in 2023. Regarding immunoassay, we had a growth of 8% last year. I would say we [indiscernible] some tailwind from the pandemic, of course we benefited from the good performance of our SARS-CoV-2 serology test also we have a stronger demand for specific test linked to the infectious cases linked to COVID. But we also have some headwinds and we could continue to have competitive pressure on the PCT mainly in the U.S. and also we had to -- we had Field Corrective Action in Q4, which is now resolved, which impacted us in Q4. Otherwise also we made good progress launching important new product to VIDAS, such as the one at TB IGRA for tuberculosis, NEPHROCHECK for acute injury, and also Dengue year, the first one for Arbovirus. Looking at the industrial application, which also had a solid performance double-digit growth for the industry business in 2021 after a more difficult 2020 linked to the different lockdown. And as you know, we are active in the field of health care and also in the field of food testing and quality control. And I would say in both segments we enjoy the good growth pushed by the -- our offering of course and the fact that the biopharma, bio-manufacturing market is moving fast and our QC solution are well-adapted. In the field of food testing we had a very stronger momentum with our solutions on mainly our solutions related to molecular technologies such as Gene-Up [indiscernible]. With this short review of '21, I will now leave the floor to Guillaume to guide us on the performance.

Guillaume Bouhours: Thank you. Hello everyone. So let's review our financial and operating performance. So here you have the summary of what Alexandre has already presented, how the split of the organic growth by major range. So you see actually that all of our major ranges performed extremely well in '21. Molecular always is the number one with 38% of sales. Although on molecular is plus 8%, inside molecular Alexandre presented BIOFIRE, overall plus 14%. I have to mention that the non-syndromic molecular was actually down and we had reported on that during the year after an exceptional 2020, ARGENE, NUCLISENS ranges were overall down 40% in '21, so basically coming back to more pre-pandemic levels or closer to. Microbiology plus 13, Immunoassays plus 8, and Industrial plus 10 as presented by Alexandre, so really balanced growth between the clinical application plus 10.5 and industry plus 10.2. Now looking at the same so organic growth by geography, Americas remains of course our first region with almost half of the Group sales at €1.7 billion. North America was up 8% with a strong push from syndromic molecular, as well as microbiology slightly offset by PCT pressure as Alexandre mentioned already. We can notice remarkable growth of 19% in Latin America, well-balancing overall inside the region in different countries. EMEA of course, our second region at 11%. Europe was pushed by or driven by syndromic molecular, but also a good growth of microbiology immunoassay recovery from a lower 2020 and industry as well. The Middle East and Africa region was at double digit. So overall, an excellent performance there as well. In Asia-Pacific plus 16%, there I would like to mention very strong success in Japan since the introduction of BIOFIRE at the end of 2019. And so with the success that we had mentioned in '20 was pursued and accelerated in '21, so excellent there. Steady growth in India and Southeast Asia. And overall China, suffered a bit in Q4 because we have a lot of immunoassay business there from the Field Corrective Action. But still overall during the year is a bit more than the middle digit growth. So quite good growth in China. Now moving to the P&L. So overall the 10% organic growth turns into an 8% reported growth with some negative foreign exchange, especially on the dollar on the sales. As you can see, gross profit improved from 56% to 58%. So it's a significant improvement linked first to volumes, volume increase of course, and better absorption of fixed costs at our global gross profit, gross margin. And second to the mix with a positive mix effect, you have seen that the reagents of BIOFIRE in terms of growth are plus 18, in terms of organics, so obviously higher than the rest. Cost below gross profit, so SG&A is overall a 5% like-for-like growth. But we have to mention that this is on the low level of spend as we have said for the last two year actually, 2020 and 2021 due to COVID were very low on congress, marketing, travel, and the number of these, let's say commercial topics. R&D was overall on a like-for-like basis flat after we actually ended 2020 some COVID-related product development cost and performance shares -- Phantom shares, sorry -- Phantom share will cost that we have 2018 to 2020 base, not only in R&D but in the number of lines. So overall contributing operating income our main KPIs at a record level of €800 million, almost 24% of sales and up 36% on a like-for-like basis, just to mention that on EBIT, on contributive operating income, the foreign exchange effect was also negative minus €33 million in line with our, let's say, expectations. I will move on now to the P&L below contributive EBIT. So still little bit flat recurring cost of acquisition or the PPA of BIOFIRE acquisition over [indiscernible] €70 million. This year, in '21, we have no non-recurring expenses versus 2020 where we have a lot of exceptional solidarity action and the first the contribution to our corporate endowment fund of bioMérieux that all these made €42 million last year as a reminder. Something to note, the major improvement in the net financial expense moving to minus 10, of course, we do it in a minute that our net debt position, move to a net cash position that helps, but also the refinancing that we did on all that in June 2020 helps improve the situation and lower the cost. Income tax is slightly decreasing at 22.7% effective tax rate. We benefit from a lower French corporate income tax that moved from 32% to 28%. And also to from a stronger U.S. profit base. So overall, net income group share €600 million up 49%, €5.06 EPS that will lead to a proposal at the AGM of dividend of €0.85 per share, which represents payout ratio of 17%. If we look together at our cash flow statement, for the first time our EBITDA was above €1 billion, of course, in line with the EBIT improvement. Working capital was actually consumption of €38 million of cash. Inventory increased by €62 million, remember we were very low on inventory of BIOFIRE actually back earlier at the end of 2020. So we actually, especially increased raw material and finished products for the BIOFIRE products. And payables and receivables overall very much in line with our activity even some improvements of the days of receivables. And important to note, the last part of the famous Phantom share plan for everyone this is our U.S. team's retention plan that was bonus -- long-term incentive plan based on the share prices by value. So we paid it fully the last part of it in March, April. So that's of course through cash out in terms of working capital. CapEx, I will show you some details in a minute, but pretty solid at 9% of sales, €290 million. So overall leading to a free cash flow that is a record for us at €540 million. And that leads even after a few small acquisitions and the dividend at strong, strong improvement of our net debt actually becoming net cash position. So now a net cash position of €340 million including the IFRS 16, which is about €96 million. Just a few pictures, I think it's nice to share with you where we invest. So some of the main CapEx of 2021, we are not the only ones, of course, but on the top left you have the office, the new office building in Salt Lake City, just right next to the new plant that we opened a year before, that is finished. And that actually our teams have moved in, in November. On the top right you have a picture of all the, let's say, additional capacity and also progressive automation of BIOFIRE manufacturing that we are investing in. And on the bottom left and right, you have two buildings that are almost next to each other in Suzhou in China. One is for bioMérieux blood culture business produced in China, for China. And the other one is for Hybiome, our immunoassay business that we took control of remember three years ago, which is building its new site manufacturing and all functions. And with that I hand over back to Alexandre for '22 priorities.

Alexandre Mérieux: Thanks Guillaume. So let's start mainly to -- let's switch to our '22 priorities and outlook and we focus a bit on that, on two key focus for us which the fight against antimicrobial resistance also syndromic testing, I will give you also some details around the innovation R&D roadmap and new product launches TB-IGRA and of course we'll give the guidance for 2022. So let's start with the antimicrobial resistance which as you know is a really core to bioMérieux, it's in our DNA to be present and to fight this important threat. You might have seen that the Lancet study has shown that in 2019 in fact we had 1.3 million of deaths linked to AMR, some call it as a silent pandemic. And this is where bioMérieux is active and we have seen during this last two year, strong recognition of value of diagnostics. And diagnostics also will be key to fight against the AMR knowing that we are lacking new antibiotics, but diagnostics will be a key element of the fight against AMR. So of course we have R&D, we have a commercial relationship or co-distribution of specific data. But we keep on investing in that space. And also we'll develop some priorities for '22 linked to medical education first to train and inform all the different healthcare providers around the world. Investment also in medical and economical outcome studies to support the adoption of the access of diagnostics. And also partnerships with selected centers of excellence as a vitrine to share our AMS best practices around the world. The second topic, which is important for us, of course, you know, the success we had and the leadership we have with syndromic testing. With BIOFIRE, we'll keep on, on FILMARRAY we'll keep on expanding the menu. We should be able to launch the new panel or the joint infection panel in 2022. As mentioned also we doubled the installed base. So that is going to grow for the mid to long-term also leveraging this installed base, which are doubled, growing also the non-RP panels, and again I'll be going international, I mean, outside of U.S. remains a key priority for us. But we're also very pleased to note that we'll be launching a new BIOFIRE platform, which has been started to be submitted I think in December to the FDA. And as you know also during this last two years we have seen some movement in the field of overall diagnostic, and of course the push for molecular solution, but also the push for decentralized testing solution targeting near patient or endpoint of care. And this new solution will be key element we'll have it's results in less than 20 minutes. So we are very pleased to be the first one to bring syndromic testing close to the patients with this new solution, which is under FDA filing at this stage and I guess more to come when we get closer to the launch. Pipeline, we know, you know, that we invest in R&D for today and for tomorrow and we should also be able this year to deliver important new products and new solutions. We are planning to launch a new VIDAS platform at the end of 2022 bringing scalability, connectivity and traceability. In addition on the VIDAS platform we'll be able to launch two parameters important. The first one being VIDAS TBI which is a biomarker to detect traumatic brain injury. And also we increased our range of solution to detect Arbovirus with the launch of VIDAS Chikungunya. Looking at the industry allocation also both food and pharma will have important launches as in the far space and we are launching the industry 3P range, bringing automation, software, traceability, integrity of the result also, and this is -- we'll start working implementing distinct solutions with selected customers in 2022. And industrial, there is the food testing and quality control. While good performance in 2021, mainly on the molecular ranges. And we'll keep on, I would say, developing new assays, running on our Gene-Up equipment and also targeting a new market this year for the food application. So a good pipeline of new solution. Moving to next one. Also we mentioned I think last year we formalized our CSR ambition, which is pandemic into bioMérieux strategy around five pillar; Health, Planet, Healthcare Ecosystem, Employees, and Extended company, and we have been able to, I would say deliver and agree on some key important KPIs, that we will follow or that we'll deliver on both for 2025 and also for 2030. With this being said, regarding 2022, we are also planning for hopefully for a situation where COVID is becoming endemic and with this we should see a decrease regarding the demand for actually panels. So we are targeting sales to be between €3.2 billion and €3.3 billion reflecting receivables negative growth between minus 7% and minus 3%, all of these are in a very volatile environment. Regarding the CEBIT also we'll be targeting to be in the range between €530 million to €610 million of total into the linked to the decrease foreseen in term of sales, but also knowing that we'll be able to invest more in the upturn in customer facing activities, so supporting our key launches, supporting the clinical world studies. And also like to be one, we will be facing inflation on salary growth and raw material. So all of this will be done by keeping a strong investment in R&D and also in CapEx, which should be around 11% of our consolidated sales. With this being said, I believe, Franck, we can open the floor to questions.

Franck Admant: Yes.

Operator: [Operator Instructions] We will take our first question from Maja Pataki with Kepler. Please go ahead.

Maja Pataki: Good afternoon. Thank you very much. I have three questions please. First of all, Alexandre, on the new BIOFIRE platform, can you tell us something about the panel, is it going to be the full respiratory plus some sore throat pathogens on it or is it like a slimmed down version of respiratory and shall we expect that you're going to put to the full menu of BIOFIRE over time on the new platform with less than 20 minutes turnaround time. That will be the first question. The second question with regards to the new virus platform you talk about scalability are you increasing the throughput or how shall we think about that. And then the last question is with regards to inflation. Can you please be a bit more specific how much - how many millions, Euro millions you're seeing as new headwinds and inflation that wasn't anticipate - that you couldn't anticipate late last year. And how much of that would be - could you pass on and which part do you think you won't be able to pass on? Thank you.

Alexandre Mérieux: Okay, thank you, Maja. I will start with the new bio platform, which is not closely yet its only the state of fact with the FDA we're waiting for the reviewing and there is some backlog, but yes, the --, it's very important piece has been a key investment for us this past year. So it's a way for us to enter into the decentralized testing space bringing syndromic solution. On yes - to your first question, it will be - as we're seeing a risk strategy and the soft fruits with less than 20 – turnaround time. Let us what we announce, we'll see - we'll see for after. But usually we don't flow into platform is only one panel, but then again maybe I wouldn't say reducing but let's wait to have the official launch or when we'll be closer to the launch but since FDA we filing and studying that we felt it was important to share with you. VIDAS platform, yes, the scalability will be able to bring a higher throughput to the platform and by that also this - we'll be able to transfer most of the guidance partly to reducing today on guidance on this new platform, question on the inflation Guillaume to answer.

Guillaume Bouhours: Yes, of course so inflation as every company in the world. I think we see and accelerate in inflation since especially the last three to four months. When it's accelerated I mean on the raw materials, but I also mean on the salary on the pensions. On the labor markets that clearly are stronger than they were five, six months ago. So what we took into account to - summarize in doing let's say I'm talking about the midpoint of our guidance is roughly €50 million on the salaries, and the salary increase which would be higher than usual salary increase and about let's say roughly €20 million on the raw materials. Yes and of course the question you're very right is a pass-through so we have taken and we are taking actions for some pass-through, but of course in our industry. There are some tenders and multi-year contracts et-cetera. So even though we are quite confident on passing through it's not a direct and immediate pass through so there can be some time lag between our actions and through pass through of inflation.

Maja Pataki: Thank you very much. Maybe just a quick follow-up Alexandre on the decentralized placements of the new BIOFIRE platform, shall we think about it more like emergency room settings and clinician, clinics like that. So really I'll take it out of the lab, but it's into clinic setting?

Alexandre Mérieux: Yes it could be the plan. Yes, because it could be CLIA-waived so it could be used by non-lab professionals.

Maja Pataki: And sorry for another follow-up on that, but you did have the respiratory CLIA-waived a couple of years ago, I don't know whether it was four years ago something and it seems like it never really made big inroads in the U.S. in the finishing of the sets or am I wrong. Could you talk about that and may be say what it was?

Alexandre Mérieux: No, but we said we'll be transparent because the way also for us to test the market as we see the adoption around these type of platform. On the more I believe in COVID times, I think we have seen some good success also on this platform. But again, we reached to one and we'll have a much shorter turnaround time, so it should be more fitting the needs of decentralized testing.

Maja Pataki: Okay, thank you. I'll go back into the queue.

Alexandre Mérieux: Thank you.

Operator: [Operator Instructions] There are no further questions at this time.

Alexandre Mérieux: Maybe we can take questions from the chat. And the first one is, from [indiscernible] and talking about asking for how much BIOFIRE revenue comes from non-U.S. sales?

Guillaume Bouhours: So, non-U.S BIOFIRE is 27% in 2021, it was actually 23% in 2020. So we are continuing to increase and Japan is I think we mentioned is now the second country of course, staff in the U.S. , but overall to all the other countries Europe, et-cetera so, definitely a great success in Japan.

Alexandre Mérieux: And what is your assumption on COVID test prices by 2022 compared to 2021?

Guillaume Bouhours: I would say, on the syndromic market where we are positioned so far we might see a slight pressure, but nothing significant so far. So for me, it will be more on the single tax rate, that happened already, so we are - the guidance that will be impacted.

Alexandre Mérieux: Question from Louise Boyer what is a, chunk of your price to reach the COVID?

Guillaume Bouhours: So that's a difficult one. As you know, of course our company sales are very much committed on COVID, non-COVID. The difficulty for us is that if I understand that syndromic testing, respiratory panel is not a single COVID test is a test that as usual you have COVID flu A, flu B, RSV and I don't give you the list of the 28 or 27 pathogens in the panel. So it's more, let's say, it's a respiratory syndromic panel. So we cannot really classify it as a, COVID-related sales, even though of course, COVID and COVID demand and the most severe cases of COVID was fueling the demand for this panel. Something, but what is so we know that we hope that we're moving into the pandemic sales for COVID-19 market will decrease. I would say, drastically this year, hopefully, which we believe that syndromic in the right technology to address and the mix market it moving that COVID-19 will be part of - for many years will be part of the difference, I said that we have to test so earlier. And so that being said, again we don't classify the respiratory panel as COVID, because again it's broader, but yes, if you want to think about the question actually was 72% of our BIOFIRE region sales in 2021 and on top of that please remember that we had also. And I mentioned it some COVID related additional demand on immunoassay in 2021 that if COVID becomes pandemic will slow down of course.

Alexandre Mérieux: Second question from Louise is about the future growth drivers profit and margin?

Guillaume Bouhours: So the growth drivers, we mentioned in terms of trends you might have seen in the outlook. So if you take it by the segment of technology microbiology is a market where know we have very strong positions the market its surface For the year 4%, 5% of the market growth and we expect mid-single digit growth probably slightly higher than the market. That's what we've been able to do in the last two years. On immunoassay, we have, as you've seen some positives and negative the negative being especially the PCT Pressure positives also, our emerging position the margin market positions. So overall a stable to slightly more stable outlook, we expect a very strong growth from non-respiratory panels. As we have shown and enable to deliver last year and the past year actually and the industry expects a mid to high single-digit growth, that was again on the strong fundamentals. On top of all the let's say, actions and portfolio as Alexandre detailed.

Alexandre Mérieux: Still the next one is it -- you asking as a COVID name what are, you know [indiscernible]. So I will take this one Charlie? No, we are not COVID company and we'll present for close to CCS we are company focusing on infectious disease through the value of diagnostic investing in R&D. This is in capacity and manufacturing. We exited where we would be for COVID and we have a long story after COVID even if could be will stay for some time. I'll now stories about bringing innovation time market, time to result of in the field of infectious disease.

Alexandre Mérieux: A question is from Rohit [ph] about expectation on the BIOFIRE development outside of the U.S. and number of units, but we are taking Q4. So we expect to continue to grow and to grow strongly outside of the U.S., as we've shown in the past - actually the growth in the U.S. has been good, but we really it wasn't higher outside of the U.S. We mentioned Japan that we can mention Europe as well as in 2021. They performed very well on syndromic testing I mentioned Latin America as well. So we expect to pursue the growth of BIOFIRE outside of the U.S.

Alexandre Mérieux: Question from Christos. Maybe question from line. Is that somebody from the call.

Operator: Yes. We have Ms. Pataki, again in the queued. So we'll take the question.

Alexandre Mérieux: Okay.

Operator: Ms. Pataki with Kepler. Please go ahead.

Maja Pataki: Yes thank you. So I keep asking, if no else wants to do. Just a quick question, can you quantify the field corrective action. How much was it in Q4, and how much of that was in China. And then thanks for the elaboration that virus is going to be a higher throughput, but could you maybe compare it a bit to your competitors, are you going to be closer to the LIAISON XS platform and therefore the latent TB competition starts to level out a bit. And then the third question would be, I mean, I do understand that it's difficult to pass on this amount of inflationary headwinds, but in which areas do you believe, can you easiest increased prices, would that be BIOFIRE or would that be in the other - in your other businesses. And then for now, lastly, do you believe that M&A is now more a topic for you to broaden your offering or do you think you're well established to deliver attractive growth going forward.

Alexandre Mérieux: I will start with the M&A question, Guillaume with the other questions. M&A, I know we remain active in M&A on that we are also lucky enough to keep it now we are debt free company. So we have room of maneuver. And we remain active to look at technologies or companies, which are - which can bring which can complement our portfolio [indiscernible], is also is a new or emerging technologies, which have the potential to improve patient care on the decision time to results. So we are - we still there. At the same time, I believe, so the pipeline, we have a healthy pipeline coming - from our years of investment in R&D but we'll stay open and pragmatic. Guillaume?

Guillaume Bouhours: Yes of course, to your question was about field corrective action. So the virus field correction action in Q4 and so the overall P&L impact is €20 million in terms of EBIT in Q4. So it's a mix of some of great news that we had to make to some customer some scrap and also some replacement of by us products buy new ones. It's more difficult to assess on the sales part because the some not ordering is difficult to exactly catch. But I would say ballpark it's about €20 million as well on the sales and I just reiterate that it's fully sold. I think, we manage to when it was a difficult topic by fitting all of the assays from this quality issue of the supplier, but we manage it well and quickly into that to replace is now fully resolved. And you had a question about the price increases. I would say that it will depend on our position in every country, in every for our segments which are very different actually from one country to another. So I wouldn't say there one the major or rule of thumb that we can give. So, our General Manager our looking and pushing and acting it's a country-by-country and segment-by-segment.

Maja Pataki: And the VIDAS throughput?

Alexandre Mérieux: Yes so throughput will be higher thanks to scalability. I should know but to be frank I didn't compare two years on this. So it's a recent launch, we didn't because we felt that it was need a demand final throughputs by the way both for clinical and industrial applications, but we followed our path and didn't compare to SSCA.

Maja Pataki: Okay. And maybe just one more that came up. I mean you have doubled your installed base in BIOFIRE, but do you have any visibility or data that you could share with us how many of 10,000 plus have gone to new customers and how many have gone to repeat customers?

Alexandre Mérieux: So on the year we on the U.S. at lease, you know [indiscernible]. That's why we can really follow. We have about 64% with new customer overall on the increase and we gained approximately 200 new customers in the U.S. devaluation.

Maja Pataki: So the 36% new customers with U.S. as well?

Alexandre Mérieux: Yes.

Maja Pataki: Okay. And then international is obviously mostly new customers?

Alexandre Mérieux: Yes, mostly, yes. We don't have the precise measure, but yes, of course, mostly.

Maja Pataki: Thank you.

Alexandre Mérieux: Yes okay. So let's move through question from the chat. Question from Mark [indiscernible] what we have forgotten for yes, we'll use some excess cash flow to buy back? So we don't have buyback. We do start buyback but only to cover our let's say free share programs, the usual free share programs, but we don't do. We start part - of the company policy to do stock buybacks and it is for reevaluation of the shareholders. So I need to cover management and employees and talents free share programs.

Alexandre Mérieux: Question from Chris Ganet, how much of the OpEx where reduced due to the pandemic compared by 2021?

Guillaume Bouhours: So thank you for the question. I think we are committed to the number of times that it was a very significant reduction. So several 10s of millions on the different lines overall, though we always mentioned travel and congress marketing but it also impacting are allowance for example, clinical trials, which is actually costing the R&D line well were postponed due to COVID -- with difficulties to recruit patients for some clinical trials and that's also significant savings and control their savings in a number of lines. What we have factored in our 2022 guidance is actually with COVID becoming an unique a progressive come back and ramp-up of this cost. In view that we want to invest as Alexandre said for the future of bioMérieux be it in R&D anything from - I just mentioned. Be it also in the commercial activities more customer facing pushing our new products and new launches, we don't face it now. So that's all factored in these higher costs very visible higher cost base in 2022 guidance.

Alexandre Mérieux: Next one still from Chris, what's type of CapEx shall we expect from 2022 and 2023?

Guillaume Bouhours: So 2022, we gave it with 11% of sales all round and a 11% of sales is not exact and beyond that, I would say the 10%, a good overall benchmark overtime.

Alexandre Mérieux: And last one from Christophe so U.S. issue on supply chain and I think issue on supply chain?

Guillaume Bouhours: So supply chain we have issues for the last 2 years with all the difficulties that you read everywhere with the you know the parts of being blocked high - much higher cost of transportation. Of course the bigger topic today is about the Russia, Ukraine topic, but that's a very small part of our revenues we can say it is times, but managed.

Alexandre Mérieux: You also mention it yes and the next question is about Russia as we from Citigroup so what is compensation of sales planning in Russia?

Guillaume Bouhours: Russia for us and I'll say this is less than 1% of the revenue of bioMérieux but we have a strong team over there and we are not present in Ukraine directly we have a distributor.

Alexandre Mérieux: And other question from Chibu can you be more specific on your sales guidance how would you specify it's a low and high range?

Guillaume Bouhours: I think, I won't surprise you saying it's a very volatile environment at this stage. It was not so even easier. I would say to give a range for this year, it will depend a lot of hopefully moving into pandemic, but we see - we'll see what and I hope they won't be more variance. We'll see will finally have a flu season next year which was not the case this year. So it's a bit of a volatile environment. So this is, I would say the projection that we are making here at this stage with the vision that we have it's not so easy, I believe for us for the diagnostic industry to predict what will happen, but I would say our view this is into ending of a COVID.

Alexandre Mérieux: Question from [indiscernible] investors any reflections from the seed cultivation. Thank you (inaudible)? New annual earnings of but the spot I would say of the, what we're doing our industry. Sometimes we rely on some key components small components substrates that we have to deal with. key running. I would say first maybe internally. It was well managed internally discredits you [ph]said is quite this was it was. But the idea was not to impact to most of customers are mainly the patients. But I would say that's part of our lifetime, but it means we have a strong scrutiny on the different the suppliers or different levels, but also the strong scrutiny and the quality of the raw materials that we use but no specific things on Guillaume.

Guillaume Bouhours: Just to add - on top of whether we're concern. We also had good management internally but we've seen a good partnership with these suppliers really good work together and beyond that. We have a number of raw material that are on the single source mode and actually we have launched, but not from the, these field corrective action that's a decision we took more than a year and a half ago. A three-year plan to really manage the most pretty cool single source topics that we can have in our portfolio and to find the risk mitigation actions, that can be sometimes of diversity.

Alexandre Mérieux: Next one is from [indiscernible] over on guidance?

Guillaume Bouhours: Why do we make even an earnings guidance, again as Alexandre said it's a very volatile environment. And stood I think one of our competitor did not make any guidance. We talked about it -- but we saw that the best let's say approach, even though things are moving so fast and so fast was to give you our best view as of today, and again it's a very difficult exercise for us which we share with you what we see today. Maybe we shouldn't have.

Alexandre Mérieux: A question from [indiscernible]. The top guidance looks quite conservative to get there we are almost need to assume that monitoring on genetic come back to 20%. I'm getting 20% of overall sales and over lines 20% we moved up. Are these two divisions that benefited from COVID was about sales? Maybe if I can comment. Yes, of course, we assume BIOFIRE or syndromic respiratory to go down. I think it's not a surprise to - it shouldn't be a surprise to anyone that it was boosted by COVID in the last two years even though, again it syndromic - it's a product and a diagnostic product that goes beyond COVID for other viruses that will be used for respiratory pathogens beyond. But, yes so in 2022, we do factor our showdown about 25% to 30% of decrease of demand, but - linked to COVID decrease of - on our capital.

Alexandre Mérieux: Question from [indiscernible] Regarding M&A, are you looking at new technologies. Would you willing to us leverage like in the first half of BIOFIRE acquisition?

Guillaume Bouhours: Yes, we are sorry -- we are, again, we are pragmatic. We also entrepreneurial we know when - to take bets. So yes, we will use the tools - which are keeping bioMérieux of course, secured. But we look at different options here.

Guillaume Bouhours: Immunoassay is on the other question about immunoassay guidance and more details than just about the headwinds so just to re-explain situation in immunoassay. So you know virus is low mid-throughput platform. So we are not fighting on the higher throughput thought. On the negatives, we have a first the lab consolidation that is going on in Europe and in other parts of the world that of course when labs consolidate they got to broader or bigger it's a common platform with higher throughput and therefore we by that it tends to be displaced because it's a low throughput platform. And so first negative. The second big negative is [indiscernible] U.S. and China we were let's say China for loan in the U.S. until 2027 competition until the progressively. So we have a volume and price pressure all the time on this parameter. On the positive, we have first, our innovation as there is a some expand we announced and we'll continue to launch new assays on - to complement our portfolio and increase our sales. One of the good examples recently was the latent TB with TBI launched in 2021 and the second positive is that the VIDAS has a strong position in emerging countries. For last well, the broad menu on immunoassay and the throughput is adapted and of course that's growing position. So between these immunoassay two negatives and two positives, we expect some sustainability in 2022 and maybe a bit better and stability beyond that.

Alexandre Mérieux: Yes, [indiscernible] commercial loan activities to future growth are you able to quantify the incremental spend?

Guillaume Bouhours: I can mention one element, which is because we talk so much about travel, marketing, congress inside of the sales and marketing if you take the midpoint of our guidance. It's roughly to give an idea about €30 million of additional spend on this kind of nature of costs that we, that we expect. And again, we believe these are important spend to fuel our growth for the future and to push our new products.

Alexandre Mérieux: Question is can you comment on M&A for this? Yes, question, can you comment on M&A, well do you see the future of domestic at bioMérieux.

Guillaume Bouhours: How I see the future of bioMérieux we'll say bright. I would say, closer to the patient. And I would say also with a stronger impact on patient care and I believe this is what COVID has demonstrated that we've set of value of diagnostic and we will our job us and users such as a to that whoever that will be our job to promote and defend the value of diagnostic. But no specific comment on bioMérieux to make.

Alexandre Mérieux: Question from Hugo Solvet. PCT testing when could we expect price pressure to stabilize or an annualize?

Guillaume Bouhours: PCT I think there is still a trend to at least in the U.S. on price pressure, but when we stabilize if you could predict, but just there is less pressure, I would say now that we have more competitors. So we start we continue to see pressure, but I would say less impacting than it was the last two years.

Alexandre Mérieux: Same question from Hugo as pre-classified for our sales between U.S., Japan and Europe?

Guillaume Bouhours: So we gave U.S. non-U.S. which is 73% U.S. and 27% non-US. We have another split the non-U.S. between the growth Japan, LATAM.

Alexandre Mérieux: By the way we said that Japan become number.

Guillaume Bouhours: Number two.

Alexandre Mérieux: Number two market for us. By the way also linked to the COVID-19 crisis, by the end of last year, I believe it was number two country for us.

Alexandre Mérieux: And yet there is a DTV from China.

Guillaume Bouhours: So we are not have, actually it is volume based procurement. Some of you know that this was a new way to buy in China that was invested in one province and three-province in China that went through with pretty major price decreases around 50%. It's a very small province, I'll do more local immunoassay company participated. We don't see any, let's say extension, or it might be convert to pharma a very small market and complex to mobilize for this.

Alexandre Mérieux: Going back to first question but this time on testing are you seeing any moves on enough - this continued price pressure?

Guillaume Bouhours: To be frank, not, so much in during the recent context, we cannot say that was intensified pressure both commercially, I would say on price. Any update on the specific dates deployments. Also, we started the quarter distribution in September, I guess, so we are still in the phase where we are, I would say promoting and the doing some pilots on this evolution of technology, which looks quite interesting thing, from a customer perspective.

Alexandre Mérieux: Coming back to Russia so the size of the units, we already answer we led by 1%. But how do you think the current crisis and impact the business?

Guillaume Bouhours: Difficult to predict, it will depend on the embargo conditions, but we are there serve the weekends. So with that, I would say, but then again very difficult to have visibility on this very tough situation.

Alexandre Mérieux: Are there questions on the line?

Operator: Yes, we have one more question from Maja Pataki with Kepler Group.

Maja Pataki: Yes just a quick follow-up on that. I couldn't really understand VITEK MS PRIME when are you expecting the U.S. launch is it 2022 or 2023?

Alexandre Mérieux: So we Maja know we had a short disconnection. So, can you repeat your question.

Maja Pataki: Yes, sure VITEK MS PRIME launch in the U.S. is it 2022 or 2023, I couldn't acoustically understand it?

Alexandre Mérieux: We expect to be in 2022. But to be frank, there is some FDA is quite busy. So this has caused some backlog the linked to COVID but our situation is for 2022 difficult-to-talk for them.

Maja Pataki: Of course, but let's start with the expectation and we'll see where comes.

Alexandre Mérieux: The expectation is for 2022.

Maja Pataki: Okay perfect, thank you.

Alexandre Mérieux: So maybe a last question from the chat, I know there another question on the June and the result of we are industrial. So we are again we have said already that we don't comment on rumors always see more let's say rumors on the big usual suspect in industry has not many companies of our size and mid-caps just serving going so no specific comments. No more questions from the chat, Is there any question from the call.

Operator: There are no further questions on the phone.

Alexandre Mérieux: So I think we can end of the call right now, if there is no more question. Okay, thank you very much for participation attention. I'll just to remind you but through next release will be on the April 27 concerning our Q1 sales performance. Thank you very much indeed for your attention. Bye, bye.

Guillaume Bouhours: Thank you.

Operator: This concludes today's call. Thank you for your participation, you may now disconnect.