Fresenius SE & Co. KGaA (FRE) Earnings Call Transcript

Ladies and gentlemen, good morning, and a warm welcome to our Capital Markets Day here in London. I'm Markus Georgi. I'm heading the Investor Relations and Sustainability team at Fresenius SE. It's my great pleasure to have all of you here today, together with the management of Fresenius Group and Fresenius Kabi. I see many familiar faces. . It's just great to have you this meeting with you in person today after the dreadful phase of pure virtual meetings due to COVID. This is our first Capital Markets Day after more than a decade now. Let me give you a brief overview of today's agenda. We have 3 parts. The first presentation block, Michael Sen, Group CEO, will kick off the event; following him, we have Pierluigi Antonelli, the new CEO of Kabi; followed by Andreas Duenkel, Kabi's CFO. On the second block, we've got Marc-Alexander Mahl presenting Nutrition; and Christian Hauer presenting MedTech. Then we will have a lunch break in a separate area as a [ Thai burn kitchen ], which is located upstairs. In addition, you have the opportunity to visit our product show, which is located in the back of today's presentation room. Finally, you will hear a deep dive on pharma from Marc-Alexander Mahl again and on biopharma from Michael Schönhofen. Each block will be followed by a Q&A session. In total, we aim to conclude this event at 4:30 p.m. Before we begin, I would like to share a few technical details. You can see it in the back office room, the entire event is being recorded and can be followed via webcast. A replay will be available on our corporate website following today's Capital Markets Day. If you would like to ask a question from the webcast via the webcast, please don't forget push the button on the screen. For good order, I would like to draw your attention on the safe harbor statement outlined in our booklets. And without any further ado, let us now start. Please join me in welcoming Michael Sen on the stage. Michael, stage is yours.

So good morning, everybody, from my side. It's great to have you all here. This is quite a lineup, tells you that we've got to come back to having physical meetings and just heard more than a decade ago, the last Capital Market Day. So it's about time that we meet again and also welcome to everybody who is watching us online here in London. There's also a great lineup on the other side of the room where we have a product exhibition and the colleagues of ours who are going to show you what the power is of this wonderful Kabi franchise. Look, I'm going to start it off and kick it off, but I'll be very crisp and brief as well. Ever since we started the journey and I took over in October, I really believe, together with the entire team and Sara is also with us here from group management, that we've been moving rapidly. But there was something which was way overdue, and that is to really intensely have a dialogue with you to really also outline our strategy as such, which I will be doing in the next couple of minutes and then go deep into what we call the operating companies, i.e., being the core of our businesses. And what you will see today is indeed showcasing the strength of Kabi in each and every individual business we're having and managing. Now with a clear direction and being with their Vision 2026, a clear pillar of future Fresenius. Next to the showcasing, you will see under the leadership now, the new leadership of Pierluigi and his management team, that there is commitment. Also, clear commitment to be very ambitious in the marketplace, obviously, vis-à-vis customers and serving patients, but also when it comes to financial outcome, and you will hear about that one in a minute. So all in all, we are very confident that ever since we embarked on that journey of future Fresenius, we can build on a great momentum going forward. Everything starts with our mission. And this is not just lip service. It is about advancing patient care. And we deliberately chose those 3 words because they have a meaning. It is about looking ahead, advancing. It is putting the patient in the center and then it is about care. And we are in a very attractive sector. The sector is growing. It's the health care sector. Everybody is talking about the health care sector growing and being improved and structurally changing. But we are a uniquely positioned company because we can advance care on many levels. It starts with the patient, giving the patient access to medicine, access to the latest treatment, enabling the next level providers to use state-of-the-art tools in order to do nothing less than deliver care. And then the ultimate thing for health care system to increase the outcome and drive efficiency and effectiveness. And with the Fresenius franchise with the core businesses we have with Helios and with Kabi, we're doing this on a global scale. And yet, you will see later on. We are also a very relevant local player. So everything you're going to hear about today from the colleagues is based on that very, very powerful mission advancing patient care. And next to what we've been kicking off in our agenda, and we are reducing the complexity, simplifying the structure, we're increasing the focus and accelerating performance, there is also a long-term vision. There is a strategy. There is a clear direction, which is kind of like the positive North Star for all our employees. And remember, I told you when we started, when we embarked on that journey, we did that portfolio analysis. We dissected Fresenius into 28 businesses, and we're comparing and contrasting them strategically. And then we try to group those businesses. And by grouping those businesses, we said we're going to focus on the therapy space. In the continuum of care, therapy is 70% to 80% of the entire continuum of care or a patient journey. Within therapy, which has the biggest growth potential and the highest profit pool, with the businesses we have and we have positioned them in the portfolio analysis, we really found out that we are catering key trends. And in essence, therefore, we derived 3 growth platforms within the therapy space, all our businesses in 1 way or the other can cater into. And that is the biopharma platform like in a larger and broader sense, including nutrition. This is the MedTech platform, and this is the care delivery, the care provision platform. And we depicted only a few examples where you see not only from a market positioning but from a medical and clinical relevance, we are right at the critical spots. MedTech platform, take breakthrough technology infusion system. If you want to look at it, it's outside the room. Cell and gene therapy, a topic of the future, already the foot in the door. You go to the left side. When we talk about nutrition, you will hear later on. We talk about personalized nutrition. And then care provision. Look at the 400,000 anonymized routine treatment datasets. There is no other institution, which has the largest hospital chain in Europe, and therefore, has access to data and then can build on something which experts call proprietary data assets. So if this is the strategy from coming in -- from the inside, from the portfolio analysis, it caters exactly into what really matters for health care systems. It's better products, it's better treatment, it's better outcome and it's better care. That being said, we're all doing our homework. With or without us, there are a few trends out there. And I know it's sometimes overstress the term paradigm shift, but yet there are some shifts going on in the outside world, whether we want it or not. But the good news is with all our businesses, they are in our favor or the other way around, we pay into these paradigm shifts, and we call it the triple shift here. It's the bio paradigm, the tech paradigm and the data paradigm. And I gave you a few examples at the top of the page, what is going to happen. When you think of biology, the progress in science. People say this is the age of biology, understanding people's biology. Think about the loss of exclusivity on biologicals. That is a huge market. Therefore, just look at the number of monoclonal antibodies, which is going to evolve in the next couple of years. The tech paradigm. Obviously, it is about surgical robots. Helios already apply surgical robots. You can do even more to increase the efficiency, to reduce the errors to then, at the end of the day, maybe even make more revenue, robotic surgeries, the procedure growth is going on. And then obviously, the data paradigm, which I also mentioned already, having probably the potential data lake for the biggest proprietary data set with our clinic chains we have. And then the social, economic and demographic trends. People want to have access to health care, high-quality health care. And that is what biopharma is all about. It's about health equity. And therefore, our businesses are paying also into these long-term trends. And that again makes all our people working within Fresenius so proud now having the clear direction and having a clear kind of vision in front of them, and that is really worth working for and going to work every day. But again, starting at October and going into February 22, it's not only about vision, it's about the hard work. The structural simplification, the focus, the accelerating performance. Fresenius Medical Care, the deconsolidation fully on track. We are looking forward for the extraordinary general meeting on July 14. We are preparing the legal paperwork. We're doing everything which is necessary on the carve-out, having a lot of conversation. You tell me whether this was thinkable a couple of months ago. The new financial framework, will come to that one in a minute, really kind of rigid by the same token transparent and very powerful tool to instill nothing more or less than a performance culture within the organization for good on a very sustainable basis because it's clear, it is measurable. We're going to also disclose it to you guys and everybody within the company knows where we stand or what they need to do in order to increase performance. Cost savings or structural productivity in our business is becoming almost getting into a genetic disposition. And probably Andreas will talk about that later on how it unfolds within Kabi. New people, new team, new incentives. Pierluigi joined the company a couple of weeks ago, already very happy as to how he's leading the team, and you will see that in a couple of minutes. There's another colleague coming soon, Michael Moser joining the Fresenius Board. And then there's a lot of other changes also in many levels of the company, a few you will see later on. And that all ends up structurally, if you have that strategy, which we just alluded to, into this house of Fresenius, into this operating model. This is where we're going to double-down our energy on the businesses within Kabi and within Helios to exactly cater these 3 growth platforms within the therapy space. And the other assets are investment companies, one of them having more freedom. We're on the way of executing that one, Fresenius Medical Care. The other one, yes, we still got work to do, what we're on it and we're going to update you as we go along. So that will then -- if the deconsolidation go through change, obviously, also the interaction and again, the performance mindset because we will be much closer and tighter knit with the core, which you see on that picture. And Helios, just as a teaser, probably the beginning of next year, we will do a Capital Market Day on Helios; prime asset, 24 million patients a year, very strong in the hospital setting, but also in the ambulatory setting, very strong, for example, with Quironsalud, managing patient flows, embedding digitization working in an ecosystem. That's why prime asset paying into the strategy as you have seen it. Kabi, obviously, I don't want to steal the thunder of all the colleagues; very, very good asset as well with all the individual businesses, and that is key. The 28 business fields, we dissected, you will see a little bit in an aggregated view, where we had this 3 plus 1 strategy. It is and was now about growth, about incremental growth in fields which are relevant, which are paying into future trends. And therefore, this 3 plus 1 strategy, the growth vectors and then the basis, the underpinning business, the IV generics and fluids, by the way, highly cash generative and nutrition, for example, just picking out 1 many of you told me up until maybe months, quarters ago, didn't know that we have such a big nutrition franchise. Marc is going to tell you more about it and why it is so distinct, in the clinical nutrition, why we have such a strong market position and it is beyond EUR 2 billion. And I can tell you, it's growing and it's profitable, and it will also deliver the necessary returns. Now on a more aggregate level, 2 years back when I joined Fresenius and I had the privilege to be at Kabi, there are a few attributes from my point of view, which are then underpinned by facts, which really are the character and the profile of Kabi. And the one thing is that Kabi has a very strong customer proximity. We are in so many countries of the world and we are a relevant player with the portfolio. And the portfolio, first of all, in itself the IV generics is relevant. But then what we add to that with the fluids we have medical technology, we have nutrition. And then we are entering a completely new field. So the customer relationship, the, I would say, partnership, the reliability, we are talking here of critical medicine for the ICU or for chronic disease patterns. People need to rely on a partner to be delivered. And the good thing is we know how important that is because we have hospitals on our own. So this embeddedness, closeness to the customer, this partnership, this reliability and quality and then the manufacturing capability and Michael Schönhofen, who is in the team, who's been with Kabi for quite a while, he's been very instrumental also in building up this, what we call, vertical integration. Why do you need the vertical integration? Why do you need the manufacturing network? Because if it's a competitive market, you want to control what you can control, and that is the unit or unit element costs. And if you are good at that one, and I believe Kabi is, and that runs across Kabi also in Christian business because we talk about manufacturing platforms, we talk about capabilities on aseptic, for example; on sterile, which is highly important when you talk on quality, when it comes to nutrition and when it comes to IV generics, but even on sets and disposables on MedTech. And this is on a very aggregate level, I think core competencies Kabi can hammer home, will hammer home as we move forward. And then yet, looking a little bit into the past, it has always been a growing business. This was nice. But when I joined, we realized the team and myself, we realized that the growth dynamics, the growth rates have been easing. And then there was a reason for that. When we cracked our head and then we came up with the Vision 2026 to say we need focus. We need real focus, dedicated focus on new businesses, on growth businesses, on innovation, on launches, and then Vision 2026, this is which will again bring us back to the trajectory of growth or even cater more growth as we go forward. Now this is where the whole journey starts, the growth. You've got to be strong at the customers end, you've got to win against the competition, but growth is not everything. Advancing patient care, the flip side is we need to advance improving bottom line. And that's why we introduced F3 - Fresenius Financial Framework. And I'm telling you this is a very rigorous, candid, transparent change management tool for a performance culture because everybody in the organization running the operational business know what they need to cater to in terms of margin. Here, very transparently for Kabi in the last couple of quarters, I won't go into detail, but what I want to tell you is think about it, if you manage a business by top line growth and margin that is more rigid than managing by earnings growth only because if you grow in the top line and you are able to deliver margin expansion, you do the math. And even for somebody like Helios who are growing in top line and hold the margin stable, what does it mean in absolute terms? It means earnings grow. And therefore, we believe this is a very powerful tool. And as a group management, as the group board, we take care of the capital base because we said in November, when Sara and myself went out, it's all going to be about returns. The team, you will see them in a minute, I believe, a fired up team, very motivational, very ambitious. You will hear that in a minute. And a nice mix. If we want to get a shift in mindset, and I told you, we not only believe we know we have momentum, there needs to be the right balance of change, i.e., fresh pair of eyes, but also building on the things you have been doing good, which I told you, the capabilities, for example, on the manufacturing side. And I think I believe, I know, we have the right kind of mix, and it is going trickling down as Pierluigi is instilling more change. So Pierluigi and Andreas, the CFO, both of them a great track record outside the company and therefore, very beneficial for what we are trying to achieve or they are trying to achieve going forward, especially vis-à-vis the ambitions, you will see that in a minute. Marc has been with the company for quite a while. He is an MD. So he knows what he's talking about. He, by the way, left the company, and then he came back home. And that is good because you have seen -- or he has seen something else. And therefore, it was clear that he became a new Board member within Kabi and then having this great responsibility for the IV Generics and Fluids business and for the pharma business because he also knows what he's talking about when it comes to the clinical application being an MD. Christian, MedTech. Also, he came from a different company a couple of years ago, from the medical devices company. And when I joined, I was impressed by seeing what Christian has done with the TCT, with the transfusion business, especially in terms of incremental growth and incremental margin expansion over the course of 3 years. So it was easy for us to say okay, we'll give him other parts of the medical technology business, and we ask him to do the same with an enlarged portfolio. And then Michael has been with the team for quite a while, as I said, very instrumental also on that vertical integration getting us to that competitive position we have in the IV generics. But he has been, if I may say so also the spirit as Director of Fresenius going into biosimilars a couple of years ago. And together with me and my team was -- last year, 1.5 years ago, we started looking at how can we strengthen that business if and when we are serious about playing in that one and then went into mAbxience. And therefore, very happy that now he will focus 24/7 on the now enlarged biopharma business because this is important -- we are at a very important juncture when it comes to having derisked the development pipeline and now being ready to launch in one of the largest markets. But already having had experience in other markets outside the U.S. So therefore, a great team, great lineup you will see today going through the presentation. That one I won't read through that one. What I'm saying is health care market is very attractive, health care market is going through changes. We are very well positioned to really pay into this one or ride that wave and being as relevant tomorrow as we are today. We have a very committed and dedicated team, they are ambitious, and they're going to talk to you today about their ambition, have fun. Thank you.

Good morning. Good morning, everybody. Thank you for coming here and also welcome to the people who are following from Internet. So my name is Pierluigi Antonelli, and I joined Kabi 3 months ago. So as I was saying to some of you last night, it's -- there've been 3 very intense months because I've been traveling a lot, I've been visiting markets, R&D centers, plants, and we have very long conversation and discussions with my team to understand our business and also relook at the -- and develop and solidify the plans that we're going to be discussing today or how do we move from where we were last year to where we want to be by the end of 2026. Before I enter into and I give you an overview with my colleagues, I want to share with you 1 thought. I mean first of all, I'm here because I like health care. So I've been more than 25 years in healthcare in multinationals, innovation base but genetics, MedTech and also family-owned businesses. But because, I mean, it's what I connect very well with our tagline, you saw Fresenius-Kabi Caring for life. And this is what I've discovered also when talking with many people, they do lots of breakfast meetings and lunch meetings with people within the organization. And I see that there is a sincere passion and attachment by all the colleagues and associates on this tagline. And secondly, before I joined Kabi, I had the possibility to do, I would say, an outside-in understanding and assessment of the company. And I saw and I perceived that there was a significant potential. And frankly speaking, when I came in after these 90 days, I see -- I'm very convinced that we do have great potential and that with the plans that we have in place, we're going to be sharing with you across the different business units, we will be able to grow from where we were with 13.8% in terms of EBIT to where I'm going to share with you in a second by 2026. So what will be the team, the discussion about -- and today, what we're going to be sharing? Certainly, financials, where we are, where we want to be, what is our strategy, what are our plans to get there and also share and discuss with you how we're going to be getting there? Because it's a lot about the execution. It's a lot of hard work, as you can imagine. It's a lot of discipline and attention like Michael was saying on how do we grow. But frankly speaking, how do we grow profitably and sustainably driving margins up versus where they are today. First of all, and yesterday was a good conversation across the table, right? Because I think we need to -- and that's a great opportunity for us to share with you who we are, right? Some still see us a bit as a pharma generic company. There is much more to it than that business, which is still important fundamental. But you see the numbers. Those are impressive numbers, right? We touch 400 -- more than 400 million patient lives every year. And we do it through our portfolio. And you see the relevance of those numbers, more than 1 million of pumps installed, about 235,000 units of Fresubin, which is consumed every day globally, 1.2 billion of injectable units or generics units every year, 1.4 billion on IV fluids units, bags every year. I mean those are impressive numbers that gives you the perspective of how relevant we are as a company and why we think that we are quite unique in the health care setting. Q1. I think Q1 you know it very well. We started quite solidly, and we are very happy. And it didn't happen by chance. There is a work -- hard work by thousands of people and my colleagues who've been, frankly speaking, working here longer than myself. But that's a very good start to the year, and we are very happy and proud because it's good to start well. But one information that I want to share with you, and we are very proud to do it today is that we are upping our guidance. Some of you were asking yesterday, right? And I think, I mean, it's important that we share this information with you. So we are going in terms of sales growth from low mid-single-digit number to mid-single-digit growth. And more importantly, EBIT is going to go, which we were about 100 basis point below our margin, the structural margin band. We're going to go to around 14%. I think that's an important news, and it's something that we want to stress properly because it gives you the confidence that the team has to move in the right direction moving forward. As important, we also set for ourselves specific ambition for 2026. And it is reflected here because we're going to stay between 4% to 7% in terms of growth rate. But you see that we -- our ambition is to move towards the upper end of the structural margin band 14% to 17%. And if you consider the last year, we were at 13.8%. I mean that's also a sign of strong confidence that we have as a team and how to get there, we'll discuss shortly. How is -- how do we get there, right? I think this is what I want to spend a couple of minutes. Our portfolio is unique. Some of you were asking me what do we need -- why you folks have to be in the 4 businesses? The portfolio we have is unique, is essential, is integrated, and we are able to leverage the depth and the breadth of that portfolio in a unique way when we go to customers. And we have a great pipeline, I think, across the board. I mean you'll see that we have from Michael more than 10 pipe -- molecules in biopharma. We're going to be launching between 15 to 17 new products in new -- first launches in pharma genetics. We did this year, 130 launches, okay, in pharma genetics -- in genetics. We have significant launches that happened recently and will be happening in MedTech. And I think in nutrition, more than 10 products in pipeline as a rollout of our existing portfolio in different markets. And what is important and I think you can appreciate it, at least, I mean, in my career, I think that's a uniqueness which not many company can boost the level of record. We are #1. We have solid leading positions in many of these businesses. We are #1 pharma IV generics company globally. We are #1 in parenteral nutrition. We are #2 in enteral in Europe and China. We have -- we are #1 in global blood collection in MedTech. I think if you consider how strong we are in our pipeline and our plans now to drive efficiencies, you see that I think we are here to stay, and we are here to drive margins up and drive profitability up. Clear strategy. When I came, of course, as you can imagine, I spent significant time understanding what's the strategy, right? Do I see it the way it is. And I'm going to be spending some minutes and some words in few minutes on the strategy. I believe it makes -- and I'm convinced it makes a lot of sense. Clarity in terms of portfolio strategy, where we want to invest, how do we want to drive efficiencies moving forward, it's going to stay. And you see the results, right? You start seeing results of what the strategy that has been started to be implemented last year is bringing. And then, of course, it's a high performing team because nothing gets done -- I mean after so many years in the industry, it's all about people, right? You may have a beautiful strategy, but then, I mean, the execution is where the rubber hits the road and where you need to have the right people in the right places. We have a good team, a very solid team, the one that will -- you'll see today, but it's very well supported. And we have -- I see, talking to people, that we have a great drive and a great passion within the company to advance patient care. We start from the hospital, okay? I think, I mean, it's -- we are a one-stop-shop company. So we start from the hospital across our business units, and we cater to critically and chronically ill patients. But the beauty is that over the years, the team has been able to develop specific capabilities to actually follow the patient outside of the hospital. Therefore, you see their long-term care, rehab center, outpatient clinics, home care. I think it is well-oiled machine, very competitive machine that we have, great teams and teams that have been able to drive that level of performance from a competitive standpoint. And my colleagues will give you some examples of patients with classic unfortunately pathologies to whom we actually cater significant number of products and services. We have Agatha with swallowing disorders, Jose with bacterial infection, Jasmine with rheumatoid arthritis, Maria with cancer in different parts in different settings of the health care. Now where do we play, right? I mean, Michael was alluding to the fact that we -- health care is the place to be, right? -- there are underlying trends which make the health care industry a very attractive one. Let's look at the 4 segments in which we play. So we have pharma. The way we define pharma is IV generics, and we also have IV fluids. Big market, but of course, we play in the IV generics segment, growing single digit, very attractive from a profitability standpoint, and you know how much we also drive in terms of profits, right? Because it's visible. We made it visible for the first time with the Q1. It's very accretive, and we are competitive, we know how to drive it. Then we have Nutrition. Again, nutrition is a fantastic business that some don't know well, and this is a great opportunity for us to share where we are. But it's a EUR 10 billion market, growing nicely, split between enteral and parenteral and it's very attractive from an industry segment standpoint in terms of margins. MedTech. Again, I mean Christian will discuss about this, but cell and gene therapies is on the rise. We play very well there, plasma. And then we also have the pumps, large volume pumps with fluids, and we'll discuss about this. And then biopharma. I think everybody knows the importance of biologics, but also that there is a significant pressure from payers to see, to extract some savings that can be reinvested. And we are playing right there with our portfolio and with our company. And then there are these trends that are industry-specific trends. And I think our portfolio is very uniquely positioned to leverage and to take advantage of these trends. You see therapy shifts, biologics we discussed. And therefore, how do we play with our biosimilars and with the acquisitions of mAbxience. We have treatment shifts. Now everybody in many countries, there is a desire to move away from hospital into home. And there, we have our home care business, very strong business. More than 20% of our nutritional sales are in home care. And it's more than EUR 500 million in home care, very attractive segment. We play in more than 10 markets. We are very strong in those markets. And then technology shift, the importance of the digital revolution, data, connectivity of devices. Here, we are with the Ivenix. And you have a chance actually outside to see the uniqueness and the -- how breakthrough is the technology of Ivenix pump and has been also recognized, as you saw from Visiant and from Premier the last week as a breakthrough technology. So I think we are very proud and we can make a difference, and we will make a difference with it in the U.S. market. If those are the segments of the market, this is how we play in those markets. So we have pharma, so IV generics and fluids. You see the split between IV fluids and IV generics here. So on that part, EUR 3.8 billion, very accretive. It's a competitive market, price pressure, but we know how to compete in that market. We have strong operational excellence. We have a portfolio which is unique, relevant, made of essential drugs. We are here to stay. We're going to drive that business. and it's not going to grow a lot. But I think if you consider the margin we have and the growth, we will generate incremental earnings -- absolute earnings moving forward. Nutrition. EUR 2.4 billion. I think that -- I think we are the only company where we play both in PN and EN and you see also that also it's very nicely split our portfolio between enteral and parenteral, which is, I think, a strength because we play within that market in both segments, strong leading positions. MedTech. Once again, we look at MedTech in 2 subsegments, one is TCT, transfusion medicine and cell therapy; the other one is infusion and nutritional systems. You see the split. It's important. We made an important acquisition last year with Ivenix, and now integrating -- we integrated, but now we are operationally integrated in our plans, Ivenix, and we need to drive operating margin improvement, and there is a clear plan and Christian will discuss and share with you the plan. And then we have biopharma. Some people were asking me yesterday, what do you think? Do you need to -- what about biopharma? Do you -- why is it part of your portfolio? We have been investing in biopharma significant money over the last years. Now we have more than 10 molecules in pipeline. We have -- we are launching in the U.S. 2 drugs. We have the infrastructure ready in the U.S., marketing, medical, payer, everything we need in order to launch these drugs and actually launch the future drugs. And we have derisked a significant part of our pipeline because it's about to be launched. And plus, we did with mAbxience, a great industrial acquisition because it complements fantastically well with our biosimilars, right? We have full complementarity. Michael is going to speak about it. But if you think that by tech transferring 2 molecules from Merck into mAbxience, we will generate more than 30% savings in terms of unit cost. And I think that's essential because in biosimilars, you need to be cost competitive in the long term to stay in the game. Therefore, we have the pipeline. We have the infrastructure we made the investment, and now we're going to be driving sales and profits. And it will become profit accretive within -- in our midterm horizon. Going back to our portfolio. It is essential, we discussed, right? That's an example, right? 70% of the IV drug shipped in U.S. from Kabi are part of the essential FDA list. So we are critical for the health care system in the U.S. And more importantly, there is a significant interlinks between all the different businesses, which I want to share with you because some -- it's true that we track performances by business unit, and we allocate resources by business unit. But those business units produces services and products that we are able to connect together when we go to the end customer. So let me give you an example. We have leading nutritional products, but they are administered through state-of-the-art pumps with our disposable and also with our services, home care services, it's a combination of products and services that make us unique in the marketplace. If you think about IV generics, we have also fluids, IV fluids. When you talk to customers, they want to have this offering connected. When you think about, for example, the infusion ecosystem, now we have large volume pumps Ivenix with the IV fluids, therefore, also there in the U.S. is essential. So there are ways, and we know how to do it, where we synergize between our products and services across business unit to make us very relevant and unique vis-à-vis the customer. More than 90% of our customers buy from more than 1 BU, right? That's a key element that we are relevant and we try and we drive that portfolio in a very relevant way. And then, of course, a good thing is that we have access, right? We drive access in more than 100 -- we are present with our products in more than 125 markets. And the beauty is that we have a very balanced portfolio, 1/3 U.S., 1/3 Europe, 1/3 Rest of the World, and that allows us to, of course, have challenges in different parts, but also get opportunities and exploit opportunities in different parts of the world. I think it's good by also reflecting on my past experiences in my other companies, to have a balanced portfolio rather than a portfolio where you have massive presence in one continent versus others. And then, of course, it's about operational excellence. We are master here, right? We know how to manage plans. We drive efficiencies. You see the KPI there. More than 1/3 of our plants in Europe produced for more than 1 business unit, and that's 1 ex trade, exclusive trade of Kabi. Let's go to the Vision 2026. So I came and I discussed with the team. And do I see myself apart from conversing with Michael before I came, do I see myself with the strategy because the normal -- in my previous company, I had to reset the strategy, right? In this case, after multiple meetings, I think that it makes total sense from a portfolio standpoint. There are 3 vectors -- growth vectors, biopharma, MedTech & nutrition. There is full transparency across these 3 vectors. And then we have pharma which is providing great profits that can also -- that we want to keep, right? We want to keep stable margin moving forward, but those profits also help us to drive growth in the green growth vectors. And how the strategy is founded on 3 pillars. One is growth, and we have, therefore, identified specific growth levers across the different business units. One is global competitiveness. That means how we are efficient and competitive in the marketplace. And I'll give you some examples. And the third one, which is actually the one that I modified, is employer of choice. I am a true believer that people make a difference, and we have significant HR agenda to drive. And that's one of the reason why, for example, in the leadership team there is now the presence of our Nature Head, which before was not part of the leadership team. Speaking about growth, I mean, last year, that -- like Michael was saying, we have been growing, right? But you see also the acceleration that we had in the first quarter with about 9%, over 10% in the growth vectors and 9% in totality, but then you see also how we are driving our acquisitions. I share with you the importance of mAbxience, how it fits within our portfolio, how do we drive efficiencies, savings, how do we -- how can we become more and more competitive. But then also Ivenix, which is allowing us to enter in the U.S. market. It's a big market. It's an attractive market for pumps, and we have the offering that allows us to be competitive. And then -- and we're going to drive, of course, as I said, with Christian, by industrializing and taking these start-up within our plans, we're going to drive cost down and therefore, grow our margins. And then we have global competitiveness. More than 500 initiatives and measures that the team has been working on identifying and implementing. You see, the -- last year, we have EUR 74 million of structural savings, EUR 160 million this year. And cumulatively, we're going to be driving EUR 440 million by 2024. How? Well, they can be bucketed in footprint and portfolio simplification. So we have been closing plants. We have -- and we'll give you some further elements. We're going to be close, and we plan to close additional plants. We've been shifting production from different plants in different continents. We also are, for example, we exited Turkey and there is a plan also to relook at our geographical presence, right, moving forward. We also are simplifying our structures -- and this is an important thing, right? We need to simplify, streamline and delayering and find opportunities to become more efficient in the way we look at our processes and then procurement. New team in place, we are now leveraging our scale, and that's fundamental, right, in order to drive savings, structural savings every day across functions. Employer of choice. We need to become faster in decision-making. And that's the reason why we're going to be delayering the organization up to 3 layers that we are now discussing with the management team. This will accelerate our processes. But we also want to change our performance schemes for managers below the leadership team to make it more pay-for-performance driven and also to stress the importance of collaboration. Because when you manage the business in 4 business units, there could be the risk of looking at the -- losing the one Fresenius Kabi approach. Therefore, collaboration, because there are, as I shared with you, important synergies and complementarity between business units. It's important to keep it as very relevant as value. And then we're going to have -- we launch an HR IT system, which will allow us to drive digitalization and eliminate these paper-based processes that we still have. And of course, we have an ambitious ESG agenda. You see the KPI which is set for ourselves. And there, we need to accelerate and we are creating a clear plan with clear milestones how do we move from today to 2040. This is the team, we discussed. There is clear responsibility in terms of P&L for the 3 business units: Marc as Pharma and Nutrition, that are independently separately managed, I mean, in terms of P&L, but they are under responsibility Marc because from a go-to-market model, it would make not a lot of sense to separate them. But then we have Christian with MedTech and Michael with biopharma, supported by our commercial regional heads because you also have specific trends in the geographies and you need to cater to those trends and make sure that they support our BU president. As I said, the -- I'm searching for the CHRO, right, the HR. For the first time, we have HR in the ELT. And then we have corporate development with Matthias. And it's a new role also, which is the take-up Pharma Nutrition Head because we have an important network in Pharma and Nutrition, and we need to have somebody in charge of driving operational -- further operational excellence, standardization and looking also at our network. And it's important for you because I got also some questions yesterday. Hi, you are incentivized. We are -- a very small part of our salary compensation is fixed. The important part is variable and that part is driven by clear KPIs like margin improvement, ROIC, ESG, TSR. Therefore, we're only going to be compensated if we generate value for shareholders and that has to be clear, right? So how do we move from 13.8% to the upper end of our margin? You see down, the growth rate in sales by business unit, which we have throughout 2026. And then, of course, I mean, it's a combination of elements, right? We have cross-cutting initiatives that Andreas is going to discuss and share with you. We have nutrition, right, accretive, higher than our structural band in terms of profit. We have pipeline. We have strong leadership positions, and we want to keep it going. We have opportunities in the U.S. We have opportunities in China. MedTech, it's about Ivenix, launching it, drive TCT, plasma cell and gene and profit improvement. It's a game changer for us, Ivenix. It's a truly game changer for us and frankly, for the customers. And then we have pharma. Pharma is core foundational business for us. As I said, we know how to play. We know how to compete. Yes, there are competitive pressures, but we are -- we know them well how to make it competitive. We have pipeline, we have plans and Marc will discuss with you. We have made significant investments in 2 U.S. plants, and now it's time to harvest this, right? We're going to fill these plants, and we're going to drive volume. And by driving volume, we'll continue to drive profit, absolute profit growth moving forward. And then we have biopharma. You see here 3 to 4x by 2026 growth that means something between EUR 600 million and EUR 800 million in 2026 with biopharma, thanks to the launches that we have planned in our -- during our plan. And by the way, biopharma, we did investments. We are ready. We're going to be harvesting. It's payback time now, right? Because we have what it takes to launch drugs, to produce them and to, therefore, reap benefits of the investments we did. And we are going to be here competing there because we have very competitive unit cost. We will. Therefore, we are a long-term player in biopharma. There are certain -- there is a road map, right? What needs to happen for us to be able to drive to the upper end of the margin as an ambition. It's launching new products in generics, the biosimilar in the U.S. Wilson & Melrose Park are the 2 plants in the U.S. where we made massive investments and they are coming up, right? Then we have Ivenix, of course, and the transfer of our existing molecule from Merck into mAbxience. And then, of course, Nutrition U.S., where we are pretty strong in PN, but we have further growth because we have further products and also we have an opportunity with China. And Marc will discuss with you, will share with you about the FSMP market, the emerging market that exists in China, and therefore, that's also another opportunity. But of course, all of these different cylinders in this engine will drive growth, profitable growth, margin improvement and therefore, value creation for our shareholders. To close, strong start, very strong start. We are increasing our guidance for 2023 and setting an ambition, which is clear for midterm. We have a clear plan in terms of value creation, clear actions by business unit, right, clear efficiencies, cost savings initiatives that we are driving, very disciplined. As a team, we are super disciplined as a team, right? We are on execution. And then, of course, we have clear accountabilities and performance focus, which is going to make a difference moving forward. And this is where now you can count that we're not going to left -- not going to leave any stone unturned in order to get where we want to be. With this, I pass the baton to Andreas, and then we'll take questions afterwards.

Good morning from my side. I'm delighted to be here today to support my operational colleagues. What you're going to hear from me is 3 things. It's about transparency, it's about discipline and most of all, it's about delivery. You've heard from Pierluigi about our ambition through to 2026 and also for this fiscal year. I think one thing that I can promise you as an audience is that we're going to be laser-focused on those numbers. I truly believe we're on a transformational journey financially within Fresenius Kabi. And I'm also delighted to be part of the team. Again, it's about health care, and this is obviously enabled by how we perform financially. So in terms of my agenda as CFO, it's obviously about a clear focus on value creation and returns. Fresenius Kabi has strong fundamentals as a business. We have leading market shares across our portfolio. We have invested significantly in terms of our R&D pipeline. And one of the main reasons for wanting to join the team was the ability and the opportunity to step up performance. Three main things for me, the transparencies are more focused, more discipline around cost and structural productivity, and finally, it's about delivering in terms of improving capital efficiency and returns. So in terms of the focus on transparency, we've recently introduced an end-to-end business unit structure. This gives us more focus overall as a business, as an enterprise and also allows me as CFO to exercise more control. On structural productivity, we have implemented a program with over 500 measures across 16 work streams, and we see already the benefit of those measures in the P&L in Q1. Most importantly, it's about the results. You can have a lot of transparency, you can have a lot of productivity, but it's about the bottom line and also improvement in terms of overall performance. So together with the group, we defined targets for ourselves of an organic sales growth per annum of 4% to 7% and also an EBIT margin range of 14% to 17%. And you heard from Pierluigi already, we have an ambition to be at the upper end of the target margin band by 2026 and I will walk you through how we want to get there financially. In terms of the new reporting structure, we've established cleaner, simpler vertical business units across the company. This enables us to have clear end-to-end accountability. We have 4 P&Ls, 4 business unit owners. This allows a better end-to-end steering and also enables us to allocate capital better between each of the businesses. In terms of performance, and I'm now going to talk to some of the numbers that you see there on the chart on the right-hand side. We had MedTech last year with EUR 1.4 billion, grew 4%, broad-based growth across the globe; nutrition at EUR 2.4 billion. Again, solid growth at 4%. We did see a slow -- COVID-related slowdown in China in December, but we saw a pickup already in terms of our Q1 performance. On biopharma, we grew organically by 107%, so doubling the growth rate from an organic basis. This added 1 percentage point overall to the Kabi growth rate. On the biopharma, a growth of 1%, we did see a slight contraction in the U.S., offset by growth outside of the United States. So in terms of overall margin, we are -- you can see there on the growth vectors, we are at 8.5%. We are not happy with the margin in the growth vectors. And you'll hear, both in my presentation and also from the other colleagues, how we're going to improve that. And on the Pharma IV drugs and fluids, we also -- we see a healthy margin above 20%, and we want to stabilize that margin going forward. In terms of the margin progression year-over-year, we did see some cost headwinds from '21 into 2022. We also saw within our growth vectors certain unique topics relating to each business. For example, Ivenix, we acquired last year, which is dilutive to margin. We're building our infrastructure for our biopharma business in the United States. And in China, on the nutrition side, we did see some pricing pressure, which impacted margins. We did have some cost savings, but overall, we saw a contraction. Similar story on the pharma IV drugs and fluids. Significant cost pressure, some pricing pressure as well, which we were partly able to offset through growth as well as some cost savings. So I now want to look at the portfolio overall and give you some comments in terms of how we are structured. On the pharma IV drugs and fluids, we show a growth rate there of 1%. On the growth vectors, we are growing last year at 6%. We will stay accretive to the Kabi overall growth rate within the growth vectors over the period through to 2026. From a margin perspective, we see strong margins in pharma, which we want to stabilize. Also, in the growth vectors, we see a margin of 8.5%. I now want to give you some color around the margin profile of each of those businesses. So in Nutrition, you know already that, that business is margin-accretive to Kabi overall and also margin-accretive to the target band of 14% to 17%. And you can orientate yourselves on the pharma IV drugs as a margin for that business. Biopharma is in the investment phase for us as a company. And based on -- and is negative in EBIT and based on that, you can triangulate that the EBIT margin for MedTech is low single digit, but importantly, from an EBITDA perspective, it is mid-teen double-digit in terms of EBITDA margins. So EBIT margins, low single digit within MedTech, EBITDA, mid-teens in terms of margin profile. So looking at 2023 performance and how do we want to get to the upgrade of around 14%, which is EUR 80 million in absolute terms. We had a margin in 2022 of 13.8%. We see volume growth benefiting the P&L from our mid-single-digit growth rate. On the price/mix, the picture is differentiated. We see pricing pressure overall in the portfolio for '23, but some positive impacts from mix. On the cost increase, there we still have significant headwinds, also carrying on from what we saw in '22, albeit at lower levels year-over-year. And therefore, it's important that we're driving the structural productivity in terms of cost savings to get to the margin of around 14% for the business. I now want to illustrate more deeply what is going on in the business in terms of our performance over the last 9 months. The last 9 months going back to Q1. So the start of the graph is 30 June last year, and I want to stress it is illustrative. So what you see is a significant pickup in cost increases from June last year, which impacted the P&L from the second half of the year. We do see those cost increases softening in terms of outlook for the rest of this year, but still persisting. We did have some positive success in terms of pricing initiatives that we definitely saw in terms of our Q1 result. But we see those pricing initiatives, the benefit of that contracting over time, so that overall for the full year, we will have a slight price pressure in terms of the portfolio. In terms of the cost savings, you can see that we had EUR 8 million last year, EUR 40 million this year on a cumulative basis, so incremental EUR 32 million year-over-year, and we're ahead of the curve, and we saw it in terms of the benefit of the P&L. So one of the reasons why I wanted to join Kabi was the ability to step-up performance. And here on the cost side, I certainly see a lot of potential to improve the situation and to drive out cost for the business. On the left-hand side, you can see there the EUR 80 million, EUR 160 million, EUR 200 million ramp-up in savings. So it's a cumulatively EUR 440 million by 2024. In terms of the levers that we're driving its footprint and portfolio. So we're targeting divestments, also consolidation and offshoring. We recently set up shared services in Pune, India. In terms of process optimization, it's about concentrating resources in key people, making decision, making it faster and driving our efficiencies. And then on the procurement side, which has been recently established and is reporting into me, it's about centralizing contact -- contracts and optimizing IT, leading to a EUR 190 million in savings. So what does this mean in terms of results? On the CapEx side, we have spent a significant amount on CapEx over the last few years. You will hear from the colleagues we've built out plants in the United States, in emerging markets and in Europe. That spending is complete. And together with the operating colleagues, we will take down the level of CapEx intensity to around 5% of sales from 2024 onwards. Also, in terms of inventory, there is significant potential in terms of optimization. We need to hold a high degree -- a high amount of inventory to ensure customer supply because we are obviously providing critical medicines to our customers and patients. As with a lot of businesses, we saw longer leads times coming out of COVID as well as higher input prices, which has led to higher inventory levels, which means we have started an inventory optimization program across 14,800 SKUs to optimize our inventory level. So in terms of cash conversion rate and return on invested capital, these are very key metrics for us in terms of improving capital efficiency and returns. We want to contribute to the overall group target of around 1. The cash conversion rate is how much cash are we generating out of our earnings as an organization. You've heard about the initiatives that we're starting within CapEx and also within inventory, and there is a significant potential to drive the cash conversion rate up in the mid- to long-term. On the return on invested capital, we are committed to earning our cost of capital as a business. As I said before, we have spent significantly on CapEx. We have also invested in companies. It's now about making those assets more profitable, driving profitability so that overall, we can see an appreciation in our cost of capital. So what does it mean in terms of numbers for the business? Pierluigi has mentioned it already, but we started out strongly in terms of Q1 at a 7% growth, an EBIT margin of 14.5%. We've upgraded the guidance for 2023 to a mid-single-digit percentage in terms of growth, and a margin around 14%, which to repeat is an EBIT improvement of around EUR 80 million. And also, it's about delivering on those numbers, just to be very clear. So looking now at the outlook through to 2026 and also giving you some perspective of our expected evolution. So on MedTech, you see there, it's a growth rate of 8% to 10% per annum. The EBIT margin ambition for 2026 is a significant improvement versus the low single-digit EBIT margin that we see today. Ivenix plays a part in that, but also, we have initiatives on the cost side that Christian will explain in his presentation. This will also lead on the far right-hand side to EBIT development in absolute terms. So that's absolute EBIT development. On Nutrition, we have a target, a growth rate there of 4% to 7%. Marc will talk to you about the EBIT ambition and the plans that we have there in terms of new product launches, but we are confident in seeing a sustained high margin in Nutrition with potential for upside so that overall, we will see also EBIT development in that segment. On Biopharma, it's about 3 to 4x the 2022 revenue number. Michael will explain the plans. Financially, the fixed costs that we need for biopharma are in play. So it's about growing the top line and dropping through to the bottom line in terms of performance and that is why you see there an EBIT margin appreciation as well as also a significant pickup in EBIT development. On Pharma IV Drugs, there, we are seeing -- planning a 2% to 4% growth rate per annum, an EBIT margin of sustaining -- an EBIT margin ambition of sustaining the stable margins, which will then lead to overall positive EBIT development and EBIT growth within the Pharma IV Drugs and Fluids business, and Marc will also explain that in his presentation. So overall, for us, it's about a growth rate of 4% to 7% per annum, increase in the EBIT margin towards the upper end of the range by 2026 and a higher EBIT development given the growth and given our ambitions in terms of margin expansion. So to summarize from my side, we are committed to delivering on our financial targets for 2026. As I said at the beginning, it's all about delivery for us. From a profile of our portfolio, you see that 2022, 2021, and then the ambition level. The growth will be very much driven by our growth vectors remaining accretive to growth the top blue line, the Pharma IV Drug stepping up performance but in the 2% to 4% growth range. On an EBIT margin, you can see that the pharma business will sustain their margins at around the 20% level as well as on the growth vectors through the growth through the fact that we will have cost discipline and focus that we will drive an expansion in margins towards -- into the range in 14% to 17%. So that overall, we will be at the upper end of the EBIT margin range by 2026. So for me, it's definitely about delivery. It's about consistency in growth. It's about a better cost structure. It's about higher margins and also cash. Thank you very much for your attention.

Thanks, both. Thanks, Andreas. Thanks. Pierluigi, it's time for our first Q&A session. [Operator Instructions] The first question comes from Oliver.

I'm Oliver Reinberg from Kepler Cheuvreux. Three questions, if I may. The first one would be on the historic performance of Kabi. For the last 10 years, we have seen an EBIT CAGR, I think, of less than 2%. Obviously, there have been drivers like biosimilar investments. We have seen less shortages in the U.S. and VBP in China. But can you just talk around how much of this underperformance was down to market factors and how much was down to potential homemade issues, quality issues that are worth fixing now? Secondly, can you just give us any kind of color in terms of the composition of growth in the next 2 years? I guess, 2 large profit pools at least in the past have been U.S. generics and nutrition in China. So I guess in IV generics in the U.S., there's no meaningful launches in the next 2 years according to my understanding. While in China, there's still the continuous rollout of VBP. So is the growth in the next year is very much geared towards biopharma? Or what other tangible short-term growth drivers can you point to? And then last question, if I may, just any kind of relevant risk we should be aware of? Any kind of quality findings recently, any kind of regulatory changes or reimbursement issues that we should be aware of?

So look, on the first question, I mean, Oliver, honestly speaking, I'm here for 3 months, right? So I'm not in a position to tell you what has happened in the last year, right? And I think what I'm committed to with my team, and I think that's what you're going to be seeing from each of us, is how do we get from where we were in 2022 to where we want to be in 2026. And I think it's going to be a combination, and I think I answered also to your second question, it's a combination of growth levers that you see in the 3 growth vectors. It's about launching properly and acquiring contracts with Ivenix. It's about launching our 2 molecules this year in U.S., but there is a third one, tocilizumab, which is coming also in the near term, that is about also making sure that with MedTech, we improve our operating margin while we maintain the engine in pharma U.S., in general. Because also, apart from the U.S., where we have a high level of profitability, we are very competitive also in Europe, in other parts of the globe in terms of IV generics. And I think in terms of the pipeline, you mentioned something, which I do not fully agree in the sense that in our pipeline, we're going to be covering about 80% of the upcoming LOEs. And we believe that to be relevant and essential as we are to health care systems, we need to maintain that level of breadth of portfolio. Today, we have 160 molecules in the United States. And therefore, by having 80% of LOEs covered with about 15 to 17 launches in the upcoming years, we're going to stay relevant there. The third question...

Risks.

Risks. Well, let me -- the risks are the usual risks, right? I think it's about -- there are things that are outside of our control. Take, for example, China, right? The large tenders, national tenders are here to stay, they would be 8 or 9 or 10, but we know how to manage those, right? Because we've been in China for decades. We've been, say, upping or reallocating resources when we got, for example, propofol into our large volume tender, and we have a portfolio which allows us to shift resources in other parts of the portfolio. And by the way, I mean, Marc will get into this. But we invested EUR 100 million in Wuxi in China in order to be able to play in that emerging market, which is FSMP. Therefore, I think, yes, it's going to be -- there will be pricing pressure. But I think -- I mean, it's good to have a position in China where we are leaders, right? When you are a leader, then you can -- you have different moves that you can do. We have pipeline. We have investments. We have a very strong leadership team in [ general ] in China it's a good place to be, right?

Next from Veronika.

Veronika Dubajova from Citi. I have 3 questions as well, please, if I can. The first one is just to go back to the IV Pharma and Fluids business. Obviously, your expectation is for flat margins through the midterm, but we've seen a fair amount of margin compression in this business over the last 3 to 5 years. So maybe walk us through the building blocks that give you confidence that you can sustain that roughly 20% profitability? Then my second question is on the expected improvement in the biosimilars EBITDA. I think I can just about work out what the EBIT is at the moment or the losses, but I have no idea what the EBITDA is. So maybe you can help us with that and just how much incrementally that is contributing to that margin improvement that you have? And then Pierluigi, talks a lot about simplifying delayering the organization. Obviously, that's a huge change, I think, for a company that has been fairly static for a long time. What -- how is that process going so far? And maybe what are the risks that you see from a disruption perspective around that? And how much of that is factored into the guidance that you've given today?

So I think for the first question, Veronika, I would actually defer to Marc because it's going to give you more color and I think it makes sense that he answered that question. The second question, Andreas?

Was on the EBITDA versus EBIT, right, in terms of -- yes, yes. So I think what I would say is let's also listen to what Michael has to say in terms of his presentation. I think the -- at the moment, it's a good indicator for where we are in terms of absolute level of profitability. So I think the numbers that you're probably working with from an EBIT perspective or a good proxy for that. Yes.

And on the third question, look, we cannot avoid simplification in our company. I think that's what I noticed when I came is that we have too many layers, too many approval, say, decision makers. We got to be streamlining, flattening, enlarging this panel control, but also, I think it's an issue with processes. I think we have -- as I shared with some of you yesterday, it is surprising to see how many tools, applications and different processes we have within the company. And therefore, I'll give you an example. We have 3 CRM systems. Now why would we have 3 CRM systems? So I think there are things that are part of the past. And I think this team is going to -- is very committed to take that machine, open it up and understand and go in priority, right, and understand which processes and which tools, which applications we need to, frankly speaking, streamline, simplifying because some of us have -- and I think it's -- I agree with Michael point that we have a strong entrepreneurial spirit, but some of us have misinterpreted a bit that entrepreneurship in I do what I think it makes more sense within my region or my function. And instead, I mean, there are opportunities in terms of scaling and simplifying and have -- and that's why the reason why we have functional life functions like finance and HR and the ELT, right? We want to drive functional excellence across. That's the reason why in corporate development, there will be a team on commercial excellence that is going to be working with business units and regions to drive commercial excellence across the board in segmentation, targeting, incentive systems. There are many different areas where actually we can further take the extra opportunities which exist in the marketplace and be more effective and more efficient.

Graham would be next.

It's Graham from UBS. Just one for Andreas on sort of the cost reorganization. You were talking about this regionalization down to verticals last night. And it doesn't sound widely different from what's happening at Fresenius Medical, where it sounds like there's lots of opportunity just to remove cost that's sort of unnecessary now. Is that the same sort of thing you're seeing? And then also to that, are there businesses or regions where they're loss-making and maybe less economic that you can just shut off, I suppose, over time?

Okay. So obviously, when you go through a reorganization or a transformation of an organization from one view to another, there are certain areas of that organization that become redundant. So we're able and we have done is eliminate certain functions, certain activities and concentrated decisions into key people. So that certainly helped in terms of driving streamlining. Pierluigi also mentioned in his presentation about the delayering topic. It's something that we will continue to do, and it's also part of the change that we will bring into the company is this topic of ongoing productivity and cost improvement, right? So to me, it's not just a one and done, it's a continuous effort that we will look to improve the organization.

And I will build on it to say that with the enhanced transparency that we now have in terms of P&L clarity, right, the P&L by business unit and also how it splits in a country, this is an ongoing exercise we are doing to really understand where we have the right to compete, right, where we actually generate accretive growth margins and where we are weaker and therefore, ways how do we can get into the -- we can make those geographies accretive or licensing out other alternatives that exist. So that's an ongoing exercise, which is part of the portfolio and simplification, if you will, from a geographic standpoint.

Next comes from James Vane-Tempest.

James Vane-Tempest from Jefferies. First, if I can just ask on return on invested capital. You've given an indication of the profitability drivers, but given your investment plans, can you give us a feel as to how much returns could increase at the lower and the upper end of your P&L targets if your ROIC is 7.8% now? And also the greatest drivers of the ROIC increase of the business? And then my second question is just on the biopharma business. You talked about 3 to 4x. Can you talk a bit about your capacity and how much of this is CDMO versus your own portfolio and what your ambitions are in CDMO?

So I take the ROIC. I think the -- going forward, as I've said in my presentation, we'll be more disciplined about CapEx, and we will also be very more disciplined around the whole topic of working capital. We've kicked off already a number of initiatives to support that. So the way to look at the ROIC is the big driver for that improvement will be the top line growth as well as the earnings conversion that we see both in terms of absolute profit improvement as well as the incremental margin whilst being very diligent around the whole topic of investment which I've explained in terms of the CapEx profile.

And on your second question, again, because there is also -- there are Q&As for other sections. Michael is going to provide you an answer on that one.

Next from Oliver Metzger.

It's Oliver Metzger from ODDO BHF. Three questions I have. The first one is about the structure saving potential of EUR 440 million. So if I do the math, it means that your EBIT margin might go to 19%, if you can realize that. So is it more a gross or net number and if you can give us more color on that? The second point is on your biopharma potential. You say 3 to 4x sales by '26. The last information we had were a high triple-digit amount in revenues by '24, and that was even before mAbxience. So basically, it means a downgrade of your ambition. Can you tell us what's happening in your expectations in '24? Because right now, it looks that the numbers went up pretty well in -- at least in '22? And the third question is about the structural margin potential of biosimilars. If you compare it to the IV business and the IV business, you have more competition but again an easier manufacturing process. Biosimilar, less competition, more complex manufacturing. So if you compare the margin potential of IV versus biosimilars, where it stands biosimilars?

I'll take the second and the third question, and Andreas, the first.

Yes.

So on the second question, like, I mean, I said before, I -- what was said before I arrived frankly speaking, I cannot take responsibility for, right? I think Michael already provided you in the past that there was a clear differentiation versus what was said 2, 3, 4 years ago and where -- what he said and what I'm saying now. Today, I feel very confident with the 3 to 4. I think what happened before, I don't know. But I can say that there totally different conditions, right, in the past in terms of regulatory hurdles, discussion with also a IP conversations reaction by countries, right, in terms of accepting specific dossier. Today, we are very confident 3 to 4. And we also are very confident the fact that these 3 to 4 multiple will generate accretive growth by 2026. Regarding your third question, which was, remind me.

Structural.

The structural...

Margins, right, versus biopharma...

No, we're not going to go into specifics. No, we're not going to split this margin, as you can imagine, for also competitive reasons. But I think, I mean, as I said, biopharma is important for us. We made significant investments. We have a pipeline which is significantly derisked. We are launching products. We have the -- you see, the production volume. So I think with the mAbxience operation, the M&A, we now have capacity that we can use. And as I said, by tech transferring adalimumab and tocilizumab into mAbxience will drive more than 30% unit cost savings. And as you know, that's essential to stay in the game longer term, right? Because you need to be driving those savings in order to have the proper pricing, be competitive and continue to drive. So what I can say is that with the mAbxience M&A operation, we now are very solid. We are an integrated player. We have all the conditions met in order to succeed and to be there and make money over the medium, long term.

And then on the EUR 440 million. I mean you have to see that within the context of the ambition level that we've just presented today of being more towards the upper end of the 14% to 17%. It is a gross number. And there are obviously other topics that are going against that in terms of pricing pressure, for example, as well as certain cost inflation that we're still seeing.

Hassan.

Hassan Al-Wakeel from Barclays. I have 2 questions, please. Firstly, on your raised guidance at the Kabi level. Do you now think that the upper end of group guidance range on EBIT growth is more realistic? Or is this offset by Vamed and some of the challenging dynamics here? Maybe that's one for Michael. And then specifically on Kabi, how have trends over the course of Q2 supported your decision to raise guidance? And how should we think about the phasing of growth for Kabi this year? And then secondly, if I look at the helpful bridge on Slide 39, nutrition looks to be the largest driver of margin expansion. What are the key building blocks to increase profitability here, given margins are already relatively high and the market continues to shift towards lower-margin enteral nutrition, and is VBP in China a risk to your mind in this business, in particular?

If I may, I grab the first one. Look Hassan, today, we are focusing on Kabi. A good start into the year. We are working on an and next off on group guidance, you want to take it?

So for Q2, I think Hassan, we are very, I'd say, satisfied by increasing our guidance for 2023 to around 14%. Strong Q1. We still have a ton of work to do, right? We are very comfortable and confident on around 14% EBIT. We're not going to be speculating on a quarter-by-quarter basis. I think I mean you have a first quarter result and a full year guidance, which has been up. In terms of nutrition, the nutrition, I think Marc can answer your question because he has all the elements to provide color to your question.

Next comes from Hugo Solvet.

Hugo Solvet from BNP Paribas Exane, I have 3. First on the cost increases on the bridge for the EBIT on Slide 47. Can you maybe walk us through what has changed over the past couple of months on this? Second on CapEx, how comfortable are you with the 5% target, given a lot of what has been done already in the IV generic business, but still a lot needs to be done in the biopharma, for instance. And maybe more broadly in terms of capital allocation, what are the priorities going forward? And lastly, to follow up on the VBP topic, you managed to successfully offset part of the VBP impact historically by restructuring in the country. What room to maneuver you have left should there be additional rounds?

Okay. I will take the topic on the cost increases. So I think overall, when I first joined the company, it was a key topic to get their hands around. And I think that's also where we saw the power of the new reporting and the new business structure and getting an end-to-end view of these impacts. This is a topic that we're literally tracking on a very frequent basis within the organization. Overall, I would say we're seeing some cost relief in areas, like freight, for example. But in terms of our overall basket, it's a relatively small amount compared to our raw materials that we're currently working with. There, the picture is very nuanced, that we have certain long-term contracts that we need to work through. There's also an inventory topic that we need to work through as well. But overall, I would say it's got slightly better. But in areas that are not material, I would say, for the overall business. On the CapEx, as I said in my presentation, it's about delivery. We've put the CapEx number out there because we've signed up to that as a Board for the 5%. You've seen the CapEx that we've done in the past and also the presenters later this afternoon will talk about that. And we feel, based on the CapEx, based on what we need to get done, and also the focus that we have on returns as well as cash, that we are committed to the 5% from 2024 onwards.

And on China, your China question, I think -- I mean, we've been there for decades. We have almost 6,000 people there with 4 plants. So I think we've been operating in that space for -- also with national tenders for some time. So as I would actually reiterate that we know how to manage that business. The business has opportunities and challenges, as you know, right? But I think, I mean we have, as I said, also the possibility to play in this emerging market called FSMP because we have the investments. We have a pipeline. Therefore, we feel comfortable and confident that, I mean, we're going to be able to compete successfully in China. And all these up and downs are actually built in our 2026 ambition. That's important to remember.

Thanks all. Thanks for your question. I would like to stop here with our first Q&A session for today. We are now going for a 5 to 10 minutes coffee break. We'd like to ask you to be back on time and then Mark is starting with his deep dive for Nutrition. Thank you. [Break]

I would like to ask you to come back and take a seat again. I would like to step into the next presentation block, headed by Marc-Alexander Mahl, making deep dive on nutrition.

Good. But let's wait for the colleagues and guests to come back. So good afternoon. After a coffee break, before lunch break, we're going to talk about a really important portfolio segment for Fresenius Kabi, that is clinical nutrition. My name is Marc-Alexander Mahl. I'm heading the Pharma & Nutrition area. I'm a medical doctor by training. And I'm really happy to introduce you now to this portfolio here. Before we get there into the details maybe a little bit for all those who may not be completely familiar with clinical nutrition, what is that? And all of you, you may have someone close to your heart, grandmom or granddad, an aunt who is in retirement home. She is 80, 85. She's not doing really good. She can't eat anymore. She's not drinking enough. Now she is diagnosed with cancer. And I'm talking here about in our example, about Agatha, but it could be anyone you know from your family. Now you care about that person, and you want to see she is getting well again. That cancer treatment is, let's say, picking up and she will recover. Now Agatha here now, for example, she cannot swallow anymore. I said she's not drinking, she's not eating enough. And I want to explain you on this example what we can do, what Fresenius Kabi can contribute to the health care professional who is taking care for Agatha to bring her back into a state where the quality of life is proper and the treatment outcome is good. So in her case, as she cannot swallow, we would either apply a tube or a pac catheter. The pac catheter is a direct connection between the outer skin wall and the stomach. We would feed through this connection, our tube feed product. We would also help her volume balance, the fluid balance with our Crystal-leading solution, Unosteril. And to make sure that everything is applied properly we also use one of the pumps, which are coming from Christian's area. This is a full process solution to help Agatha to come back, let's say, to a proper nutritional status. And that is super important because it is proven that clinical nutrition helps to improved treatment outcome. It helps to reduce length of stay and it helps to control treatment cost. We'll come to that. We are talking about education. Well, on this example, I just wanted to give you a glimpse of that. What is possible with our portfolio in the hands of a health care professional, whether it be a physician, a nurse in a retirement home, in a hospital, in the ambulatory setting? And we have all of that. We have products for parental nutrition, for seriously sick people who are on the ICU. Where the intestine doesn't work, they need to be fed, completely depending on the content of these products. We have patients who are living a life long on these products, and you can do so. When we had our centennial, our celebration of Fresenius Kabi in 2012, we had a few patients there on stage who explained how they're living on parenteral nutrition for a long time. And you can do that only if these products have the highest quality, the formulations are perfect and they address the patient's need. And that is what we do, as business, what we drive every day with these products: Multi-chamber bags; single components; and all the systems you need to support the health care professional with; software devices; compatibility data, we give them all of that. For those patients who can still swallow the food, we have tube feeds with yogurts. We have creams, and I'll talk about that. But we have also the tube feed medical nutrition. So it's a complete universe in the field of clinical nutrition, which we built over time. And it comes, let's say, with a lot of cross-selling opportunity from pumps for IV fluids and others. And therefore, it's great to have it. I would like to walk you now in the coming 20 minutes through our storyline. Why is that not working? The next slide, this one now. Thank you. I would like to walk you in the next 25 minutes through our storyline in a nutshell, how we want to deliver these 4% to 7% top line growth and to maintain or even further expand our margin, which is highly accretive. And the most important point I want to hear strengthen is the fundamentally attractive market in which we operate. Why is that so? We have a growing population on this globe, but we also have an aging population on this globe. In many countries, China, Japan, Europe, big markets where we have more older people. What does it mean? More older people means higher prevalence of chronic diseases, higher frequency for surgery, higher rate of diabetes and so on. This is something which is not going away. This market is going to grow. And there are reasons for that, and I'm going further to elaborate on them. That means the target market, which we can address with our products, is going to grow. That is fundamentally in this business, and I think that is good. We have a broad portfolio. We are a special company because we're not only active in parenteral nutrition, we're both in parenteral nutrition and enteral nutrition. So we can accompany a patient through his journey for clinical nutrition and in the hands of clinical nutrition or the clinical of the pharmacist. And our physician, we have a full process solution, whatever he needs, he can get it from us as a one-stop shop. And we have a proven competence in our development, in our clinical teams, in our regulatory teams, not only to identify the right ideas, but to bring them to approval and to manufacture them in proven quality for supplies all around the globe. And this is what is the great basis and the foundation of this great business. And you may ask, well, but you have been growing the past like that. Why do you want to continue like that? We have identified quite some geographic expansion opportunities, and I will elaborate on two examples for you to give you an idea how we're going to deliver these 4% to 7% top line growth CAGR, and how we are going to keep these margin levels which we have, which are highly accretive and seize where we can the upside potential. Now let's look into that. We have a market which is about EUR 10 billion in total size. 60% of that in enteral nutrition growing with about 6%, EUR 4 billion with parenteral nutrition growing with about 4%. These are few numbers. I don't want to bore you with that. You have probably seen them, and this is not the part for my presentation. I want to strengthen these points, which I indicated. The demographic development is a fundamental driver for these markets. And diabetes just as one example. If you have increasing incidence of type 2 diabetes, and you have that in North America, you have that in the Middle East, you have it in China, the children of these parents have a higher risk to develop type 2 diabetes as well. So if this is a self-perpetuating development, and you see similar trends also in oncology for cancer incidences, that means the number of patients is going up. If these patients or if these people require surgery, clinical treatment and clinical nutrition, they need a dedicated feeding regimen. And we have the products for them. I will talk about that. The second mega trend for our business driving that is the home care segment. Healthcare Solutions or health care systems are in distress. And those who are living here in the U.K., we all see the news about the NHS, how it's struggling to keep up, let's say, with the cost and the patient requirements and so on. A lot of hospitals try to push out, release patients early on to home care segments after surgery, for example, or other treatments to make sure that they can be taken care for in a less costly environment. But that doesn't mean that the treatment need is going down. Malnutrition is carried from the hospital to the home care segment. And therefore, it's important that we address that as well. And Fresenius Kabi is already addressing this segment in various markets, and I will talk in the next slides about the opportunity here. And as a consequence of that, you see specific foods, feeding regimens and products addressing these are really key. And the innovation we came up with, we are coming up with them, we are going to launch, we're exactly targeting these markets in a very successful way. This has made us a global leader in parenteral nutrition. We're the #1 in this parenteral nutrition market. We're the #1 in Europe. We're the #1 in China. And we have a very strong leadership position also in enteral nutrition with a strong #2 position, again here in Europe and China. This is the basis for the way forward. And I would like now to talk a little bit about how did we get into nutrition. I don't want to do here now a history lecture, but I guess it's worthwhile to mention that our first IV lipid emulsion was developed and launched already 60 years ago. That means clinical nutrition is deep in our genes. We understand it. We know it. We know how to develop these products. We know how to produce them. We know our customers, we know our patients, or the patients of our customers, and we know how to serve them best. And you see here, over time, we have innovated in this field in many dimensions. Three chamber bags. That simplified the life of the health care professional because you had a ready to store, ready-to-use solution with all the components in the bag. Just wrap it open. You can use it. I have samples over there in the demonstration. During the next break, I'm happy to explain to you how that works. It's really impressive how simple that is. So here, with these 3 chamber bags, Fresenius has levered its competence in container development, in connectivity components, to make sure that the use is safe. It's simple. It's cost efficient and it's added value for the patient as well as the health care professional. We were the first one to launch a lipid with 4 different oils. You might say, well, actually, I don't care about how many oils are in there or what they are, but the patient does, because its tolerability and its content. If you take, for example, fish oil, it contains a component which is called EPA and DHA, which is necessary if you give that to young infants or to preterm babies like in the case of Omegaven, this helps brain development. It helps to secure that the weight development, the development of the baby is good. And we happen to have the fish oil with the highest content of EPA DHA. And why is that so? Because we are vertically integrated. We do our purification, we do, let's say, the development of that in a way that we have the best solution for the patient. We launched specific products for the intensivist. So we're looking at the patient, we're looking at the health care professional to have the right product to give it into the hands of them. And so this one here in this easy-bag product is dedicated, the intensive product for this target group. But it's also good for the hospital because this is a container on the sustainability aspect, which has the lowest plastic weight and the lowest waste weight. So therefore, when you're looking about sustainability, waste, recycling fees, this helps the user also to reduce these costs. So we're thinking in many dimensions. And so it went on. Fresubin Pro, a recently launched product, the zip feed, which is targeting the trend of high caloric high-protein food. This product has really picked off really well. Just to give you an example, in France, where it was launched within 2 years, the sales increased by a factor of 6. So really great pickup here. And you see we're continuing to launch products for pediatric indications. We're addressing regional rollouts like the FSMP in China. I'm going to tell you more about that. So I believe if there's something exciting, then this is the stuff. And I believe this is going to help us in -- or for the way forward to drive our growth, as shown by Pierluigi. Where do we stand in terms of competitive environment? We have multi-chamber bags, and we have in different content with different formulations. We have them in different geographies. We produce them globally, but we produce them also locally in China for the Chinese market, which is a great and large market for parenteral nutrition. We have lipids. We have all the amino acids. We have a great basket of additives, which is vitamins, trace elements, what have you. And we have, in select markets, also compounding services. That is what I call a comprehensive basket. This is what I call a portfolio on which a customer can rely. And the same is true in enteral nutrition. You see here, four boxes in, allow me quickly to walk over to that slide. For the enteral nutrition, it is important that patients who have to drink these things that they try it, they like the taste and then that they have a choice. Because if you live on that, say, 8 days, 2 weeks, 3 weeks, you don't want to have chocolate and vanilla every day, 3 times a day. That doesn't work for us. It doesn't work for the patient. Therefore, choice is key. So we have, meanwhile, up to 11 tastes for the various formulations. And not only sweet ones, because some people want to have also something savory, salty, so we have tomato, carrot, we have white mushroom or others to make sure that the choice is driving patient compliance. That means if they're prescribed to take the zip feed 3 times a day, they drink it 3 times a day. And that is something what patients like and why the relatives are sent, go get me this Fresenius Kabi zip feed because the taste is nice. And this is not only something I'm telling you. This is proven also in test, independent tests we do with the various customers. We believe our taste is great, and that makes patients return to buy that stuff again. Another topic is volume. If I may go back to, let's say, the relative or the dear around you, you might think who is old and maybe not fit anymore. Those people, the grandma is not drinking a lot. I said that in the beginning. If you give them always 250 milliliters to drink 3 times a day, they might say, well, that's too much for me. Therefore, the topic of concentration is key: To get as much as possible calories and contended protein, fiber, trace elements in as little as possible volume. And that's why we came up with this 3.2 kcal product here, which is in 125 milliliters, 400 kilocalories. If you take 3 of them, you have the full days demand in very small shots. It's 2 zips and you're done. That's also something a 90-year old grand mom can do and manage. And this is something which drives compliance asset. So therefore, that is the part which is driving the patient. For the health care professional, it's for me important whatever they need, you have the tool for it. If you want to have the professionals to be effective, you need to give them tailored formulations that they have for the patient with renal deficiency, with a hepatic deficiency, with diabetes, with cancer, recovering from surgery. Or if it is an infant, that we have the right product. We have it. You see it all down there, and we have it as a zip feed, we have a tube feed. This is what I call a complete universe. And we have it also for kids, because kids are not just small adults. They have specific requirements in terms of composition, in terms of volume and in terms of additives. And this is what we addressed in our Fribini line here, both for tube feeds and for zip feeds, but we have also here to complete this universe the dedicated disposables and pump systems to make sure if you feed someone on a neonatal ICU that the physician, the nurse doesn't have to care about how does all this fit together? It matches connectivities, given this works and you can concentrate on your patient. This is what makes the difference. This has given us a strong growth trajectory. This has made us a leader in this field, and we keep continuously feeding this portfolio to make sure this stays attractive. Nutrition is something where the market is growing, where the demand is there. But as nutrition is not necessary on everyone's mind, you need to do some education. If you educate nurses, physicians, hospitals about the benefits of clinical nutrition, you really get to see that this market is growing, you can tap it, you can step into that and then you can sell. So therefore, education is important, and I would like to put some numbers here in front of you to make them speak for themselves. 25% of hospitalized patients globally are malnourished. That's mainly older people. That means status for vitamins and others is not perfect. They're sometimes obese or they're cachectic, it could be in various directions, but they are malnourished. And the problem is that either way, if you're too obese or you are too cachectic, you have not enough substance in your body anymore to say it in a simple way, this drives cost for treatment in the hospital. For the European Union, it's estimated that this is EUR 120 billion per year. Now just imagine that health care systems could save a fraction of that, that should be a big driver. And therefore, it's up to us also as an industry, as Fresenius Kabi, to educate the users. And also here from the U.K., there was a study for -- from BAPEN, the British Association for Parenteral and Enteral Nutrition have assumed and calculation -- sorry, assumed -- calculated and analyzed that the treatment cost for patients who are malnourished 3 to 4x higher than treating a patient who is properly nourished with exactly the same disease. So that is something where we can help the hospitals, health care systems to say, if you buy this stuff, if you use that, you can actually benefit from that, and the patient will benefit too. So it's a win-win. To make sure that this is properly documented, we are running trials. We're helping professionals to learn about that with screening days in Latin America or in -- in Asia, we're running campaigns. We help young doctors, nurses, pharmacists, what is the right nutritional regimen and what kind of products would fit. This works quite well. And then we also do research grants to make sure that the ideas about the next level of nutrition, the next formulation, that we can seize that and we get it from the researchers. So that is giving you an idea how complete this portfolio is: We're offering the product; we're offering the pumps, the disposables, everything in terms of cross-selling to that; we're offering digital services. So this is the universe which is going across various channels: hospital; the professional care; home care; and even to retail where we can address it. And I told you, the home care segment is becoming more important. And therefore, it is very important to us that we are on top of it, that we have the access to that. And therefore, I'm very happy that already today, more than 20% of our sales in clinical nutrition are in that growing segment. That is a good starting point from where you can take the step with more products, more markets, with the experience we have to make sure that we can grow also in this field to be the leader. More than 30% of the patients, which are tube-fed in this segment, are fed by us. That is good. And therefore, this gives you just the numbers of that. About EUR 500 million sales generated in 2022 in the home care segment. More than 10 markets already addressed today with the opportunity to further extend it. And this is also not a one-trick pony. This is standing on both legs in this segment. We're selling -- we're offering both enteral nutrition and parenteral nutrition. We're offering product delivery services so that the patients get, more or less, a shipment to the home. I've seen that just a few weeks ago when I was in Austria, in our center there for supply chain center, the pallets where the patient gets more or less the complete equipment, sent home. It's a complete for starter package with a pump and infusion pole and all the disposables. When the packages is arriving, they get a call. The nurse is there to receive that and set up everything in the patient's home and they get the education. So it's a universe which goes beyond the product sales. This is connecting these patients to us as a company, as a service provider, and this is really great. The best products won't work if you can't provide them. So that means operations manufacturing is important and, of course, also the brain behind these things, the development. And on this map, I just want to quickly give you an overview. We develop products in Europe for global markets. We do the development for vitamins, additives in India. And we do the development for the nutrition products for the Chinese market, or we support it there with the local development center. This gives us a global and local approach and both is important. You need to have both in your big markets to be successful, and we have it. Same for the plants. We have global plants like in Uppsala, in Sweden, and we have the local plants like in Beijing and Wuxi to serve our important Chinese market. And -- we invested in the last years in Netherlands, in Emmer-Compascuum into a completely new high-tech, highly automated, efficient tube feed production line, which is helping us to feed our growth now also on this one out of this plant. I would like to talk shortly about the two geographic expansion opportunities and the one is in China. You see the Chinese nutrition market here is around EUR 2.8 billion in size, around 15% of that is enteral nutrition. You have seen on the slide before, we are a leader in parenteral nutrition. So this is a segment where we have a clear number one position, and that's good. But there was one question about national value-based procurement. What are you going to do? Yes, one of our 3-chamber bag formulations, for example, is part of this NVBP procedure. And we have adjusted our structure to the effect of that, we have taken the right measures and the effects are baked into our projection for the way forward. But we do not stop here. We're looking for alternatives, how can we lever our competencies, our presence in the Chinese market to continue to grow. And here, we looked into the food for specific medicinal purposes, FSMP, which is a new category in China. And the interesting thing is, these are products which are prescribed in the hospital outpatient clinic, for example, in the hospital. But when the patient is discharged for the way forward, the patient has to pay it out of pocket. So they have to pick it up and they have to pay it themselves. That means this is a growing segment. New, not yet completely overrun by hundreds of competitors. On the contrary, very specialized. We will launch our new products. And this is protected against this value-based pricing pressure. And so therefore, we believe this is a very, very good means in China to keep the momentum and to keep PN, but to add the FSMP in a market which is aging with increasing disease prevalence. So our products are coming at the right time from a company which is in China since 40 years, which has an all China presence. So we believe this is the right place to be. The investment is already done on the concrete and steel. Now we need to do or roll out our pipeline. We need to feed here and there some clinical trials to make sure that the pipeline is nicely building up and to meet the regulatory requirements in China, but this is a great place to be. And the other one is PN in U.S. We have launched the lipids in the U.S. We have brought our multi-chamber bag already there. But with that, and the business of about EUR 60 million in 2022, we address about 20% of this EUR 800 million market in U.S. That is not sufficient for us. We want to get more from this cake. And therefore, we will keep launching amino acids, trace elements and other things to make sure that we complete our portfolio that we can address about 70% of the PN market with our registered portfolio. And here, the good thing is there is a good cross-selling opportunity with around about 1,500 hospitals and accounts where we're selling our IV drugs. We're talking about IV solutions later. That is a great, let's say, synergy within the market. And if you combine that with the innovation coming, that's all the pioneering, which is coming with the fish oil, and the high EPA content fish oil, which we have there, that is then giving you the picture how we intend to succeed in the U.S. market. I would like to wrap up. Time is more or less over. The markets are attractive. They're growing. The demand is going up, driven by disease prevalence, driven by demographics. I think I mentioned that. So therefore, this is a wind which is driving us forward. We have a leading portfolio. We will keep innovating. We have attractive solutions in our basket right for the market, right for the situation there, as I explained with the FSMPs in China. We have the scale production. We did the investment in Wuxi. We did the investment in Emmer-Compascuum. So that means this is the basis and the foundation that we can continue to grow. And the geographic expansion opportunities like in China and the U.S. will further fuel our growth. With that, I'm absolutely confident that we will live up to the sales growth of 4% to 7%, and we will continue to deliver strong margins to contribute to future Fresenius and our story at Fresenius Kabi. Thank you very much.

So the next speaker will be Christian Hauer from MedTech. Christian, the stage is yours.

Yes. Thank you, Mark. Good morning, everybody. My name is Christian Hauer. I'm leading the med tech business. I get that meanwhile, 25 years experience in med tech in various positions working for Fresenius Kabi and before for Drager Medical. Yes, let me start to explain our med tech business a little bit. You heard about the 2 big segments already, TCT, we call it, an INS. Let me start with TCT that is transfusion medicine and cell therapies. Here, our strength is how to separate, how to extract, how to wash certain components out of the blood being a plasma, red cells, platelets, white cells and so on. You see here the different equipment that we have for that. On the other side, we have here our drug delivery business, INS, Infusion and Nutritional Systems. So we have here pumps like the Ageria pump or the Amika pump. You might have seen them when you're in a hospital. We have a high market share when you are here in London, for instance, if you go to King's College or St. George hospitals, you will see our products here. In total, we have a 1.1 million installed base of devices. And I'd like to come back here to the patient story for Maria. So she's a cancer patient, and we would like to explain a bit how important Fresenius Kabi is along the patient journey. And Maria has cancer. She has a special cancer, multiple myeloma. And therefore, there's meanwhile an approved CAR T cell therapy. And in the CAR T cell therapy, first of all, we need the autologos. So the patients owned black, the white blood cells, you can use our apheresis machine here. For instance, the Amico device, you could use for that to collect the T cells, then you need to send them to a manufacturing site, to the biopharma company. And there, the cells will be washed, will be extracted, will be prepared, will be multiplied. And there you can use our CAR T cell device, lower the washing device. And then the product goes back to the patient to be infused and to help the treatment. Of course, it's a very severe illness for Maria. So she also needs nutrition. We have here the 3 chamber bag as described by Mark, and also some IV generics. So you can see how important in this multiple myeloma case our products are for her treatment. And I'd like to highlight some -- 2 specificities about the med tech business. So the first topic is that we have with our customers a multiyear contracts. So usually 5 years, 8 years, 10-year contracts because there's an effort to connect our product to the IT system from the customer to train the users to train the nurses. So there is an effort to do that. And we have, at the moment, as an example, more than 1/3 of our net sales is with existing customer contracts for more than 5 years. And the other important topic of our business is that this is a reoccurring business. So I have here, for instance, an IV set for here with me, this you need for the Agilia pump as an example, and you can run our products only with a dedicated set. So it's a razor-razor blade model. And so it's very important for us to have a huge installed base globally than to sell these sets. And you see, over the last years, this reoccurring business, we were able to increase the share within our business. Yes. We heard from Andreas already that the MedTech business within Fresenius Kabi is below the margin band. And of course, that's a very big task for me to bring this up. This is a high priority to increase the profitability of Kabi's MedTech business. And there's 4 levers, main levers how we like to achieve that and how we will achieve that. The first one is that we have a leading position in our transfusion medicine and cell therapy business, and there is especially 2 growth elements in there, this is the plasma collection and also the cell and gene therapy business to drive that business, also better margin and drive here. The second point is we have already an existing business year for infusion, especially in EMEA, LATAM, we have a very strong position but we are nowhere really in the U.S., but now we acquired Ivenix, and that gives us an additional momentum to really approach and attack the IV therapy market in the U.S. The other topic is we have to continuously, rigorously work on the optimization of our production network and further in-source to improve the cost position. So you see we do millions of these sets. And you can imagine, if you take the $0.01, $0.02, $0.03 out, these are very big and important effects. And last not least, we have a big installed base. There's a lot of data we generate with our products. And we have more and more software products to come, adding value to our users here. And this is also an additional business helping us to grow and helping us to improve the margin. Some more specific on the TCT business. Overall, here, we have a very strong global position in the biggest U.S. market. We are even the leader also strong position in EMEA and rest of world. And you see here basically how we subsegment the market, we have blood collection, plasma cell and gene therapy and then hospital business. You see the market sizes of these segments basically. And yes, we are very proud that we have good customer relationships here. We are very deep inside these customers. We work for many years together with them and develop solutions with these customers. Yes, about these segments, the biggest is blood collection. Here we are the global market leader in blood collection. This is a market with stable development. It's a very stable business, and this is mainly for us to defend the business. It's also to have all the production, everything up and running because it's a big segment and a big entry point in that business. But the real 2 growth areas are plasma, let me start with plasma. So there is a clear expected continued market growth for [ intravenous immunoglobulins ]. There is more and more geriatric patients. There is more occurrence of immunodeficiency diseases and there is more adoption of IVIG treatment, so the market is predicted in the next 10 years to grow 7% to 8%. And we are well placed here with our products to participate in this growth. We saw in the last years that we had double-digit growth. We see that for this year. We have new products. You can see that also in the room next to us in a showroom, we have 1 device with us. So we will continue the growth here in this area also with additional software and bundling with our IV solutions. And then the other very exciting topic, of course, cell and gene therapy here. It's a nicely growing market, more than 20%. We could use many models in our technology, modify them slightly that we used to collect other blood components also here for white T cells. And this is a strong growth market. And we have, meanwhile, we are very proud. So as far as I know, there are 7 FDA-approved CAR-T cells out there and 3 out of these 7 therapies, our equipment is in the registration and these are done with our products. And we work here with more than 250 other customers start-ups together in clinical studies. And as far as we know, it's very confidential, but we know in 33 cases, we are part of a therapy that is meanwhile in the filing process to the FDA. We have also built a joint venture here together with 2 other companies in that space with Bio-Techne and with Wilson Wolf with company name as ScaleReady, so that we have a comprehensive portfolio along the value chain. So we share here jointly our commercial team, our sales forces. Also here, the Cue device, you see that here, we launched that last year in October, you will find that also here in the other room as an example of one of our latest launches. And this is overall the biggest products we launched in TCT recently. So these products drive a lot of organic growth additionally to our baseline, to our business. And the beauty is these products deliver higher margins than our traditional business. So there's an uptick. And there's more to come with a strong pipeline here. We're also very proud that we have a very experienced R&D organization across the globe. So you might know we acquired Fenwal. They are based in Lake Zurich in the U.S., have very strong R&D capabilities, and we have also 2 R&D centers here in Europe so that we are really balanced and listen carefully to demands in Europe, but also in the United States. And you see we were quite successful here driving really the organic growth and also margin improvement by this end-to-end responsibility. There was a decision to really carve out the TCT business has certain specifics that this is an own end-to-end business. And then within Vision 2026, when Michael Sen came and was leading us. There was a discussion, okay, what to do with that? And then was the decision made INS is very close to TCT, then you see from the production process, for instance, from the technological expertise also from direct procurement many topics in R&D. So decision was made to bring that together to form 1 MedTech business within Fresenius Kabi and apply the same things that were successful in TCT also for INS. And now talking about the INS market, you see, we have a good position here in LATAM and in EMEA, but our weak spot is the U.S. market. And for us, of course, when you are leading in EMEA and LATAM, on IV solutions, IV therapy and the pump business, of course, you are desperate also to get into the U.S. market, which is the biggest market here with EURO 4 billion in IV therapy, but there is a certain uniqueness in the business. We try to really enter the market with the Agilia pump but there are certain software requirements that, yes, are very specific high end. So that's why we decided we want to invest in the U.S. We are very serious about that. You will hear about major investments in the planned structure for IV solutions from Marc later on and also, of course, about Ivenix. We said we need the best pump there. We were monitoring the startup Ivenix for many years. And yes, last year was the right moment to really go after them. And this is here the Ivenix pump. It's really a game changer in the market. When you see the pump. Yes, let me start with the interoperability. This is a very important topic here that you can, as a hospital, integrate the infusion pump with your electronical medical record being at Cerner, being at EPIC, and you can then have that old paperless, let's say, you are the pharmacist in the hospital, you update your drug library. And of course, you want to ensure that the new drug library data are immediately basically on all pumps in the hospital wireless immediately. And so this, for instance, can be done with the Ivenix pump. The other beauty is here when you see this is a touch display here, it's colored, it's big, relatively big for such a device and this is optimal, easy to use for the nurse. And with that, we have studies out there that we can significantly reduce the infusion-related errors. It's a big topic here in the industry, and we are very powerful in the workflow and also able to reduce these errors. And the last thing I'd like to highlight is that the pump has a very precise flow rate accuracy, and you have to imagine a very severe ill patient, you get critical drugs and then the flow rate is, of course, very important that it is very precisely administered. And we have a pneumatic-patented pumping mechanism with a cassette. It's very precise, and it doesn't matter under which clinical conditions. For instance, sometimes, the [ head height ] makes a big difference towards the patient in our case with the pneumatic pumping mechanism. It doesn't matter, yes. So it's an unmatched performance here that we offer. And also here, we have in the room next to us. We have a sample here, Steve Schiefen, the leader of our U.S. implementation team is here. So feel free to go to him to ask him, he's happy to do some kind of demonstration to you. And with that, with the Ivenix acquisition, so we have this high precision flow rate pump with a great interoperability plus we also acquired an R&D center. It's near Boston. It's really a mega format tech. We have a very strong R&D team, which is also helpful to be close to U.S. customers to understand, to enhance the product and so on. And on the other hand, there is, of course, the products from traditional Fresenius Kabi on the table like the IV fluids. We're the only company in the U.S. market, offering the HP 3 containers, having also a self-sealing ports, so nothing is stripping out. Small things, but much better than what competition can offer. The premium offer that we have there, we have them also our Fresenius Kabi portfolio when it comes to disposables like needle-free connectors and so on. And of course, super important, Ivenix was a start-up. We have the plant. We have the plants to manufacture that, yes. We have here our plant in Haina, in the Dominican Republic, almost 5,000 people working there. We will bring there the Ivenix set production, and we will bring the device production to our site in Warrendale, near Pittsburgh. And with all that, we have the clear ambition and target to deliver 200 million plus margin-accretive business in IV therapies by -- in 2026. And I'd like to share with you some highlights that we are on a very good track here. So first of all, I think a big highlight was for us Vizient. You might know that in the U.S., you have GPOs, group purchasing organizations. And usually, they have contracts already, and you are signed up. And of course, Vizient, Premier, they have already pump suppliers in that contract. But Vizient, for instance, they run once a year, a big show in Las Vegas where you can apply, when you have something like a breakthrough technology, something really, really innovative and they have a team of experts, of nurses, of CIOs coming looking at your products, and we are very proud, we have been selected. So we are awarded meanwhile, with Vizient. You might have seen that also Vizient is the largest GPO covering more than 50% of the U.S. hospital space. And also this week, Monday, we announced Premier followed. They said also Ivenix. It's a great technology. We want to make sure that we have that in our portfolio. Meanwhile, we have signed contracts with 10 additional providers. We have a very strong pipeline here with many big, prestigious hospitals. We just finished this week, Monday, our next installation year in the hospital in California and Steve Schiefen that you will see will go next week to Wisconsin to do the next installation. So that was about Ivenix. The other important topic is, of course, when you understand this razor-razorblade model, you understand how important the razor blades are to us. There's millions of sets that we are producing. And for that, we, of course, need a very strong global manufacturing footprint. And here, you see our plants, to be honest, this is currently still too many. You will hear in a moment more from me. We have invested here to automate to increase capacity and also to do transfers. We have closed 5 smaller locations in the last years, which is driving a [ double million ] savings here, and we continue to do so. I have here one small example for you, product that we in-source. So with Fenwal, this product came to us, was [ bought ] by a supplier. And we decided to in-source that. That is a [ leukoreduction filter ] in this case that we need in various areas for TCT. And that filter, we could reduce by more than 60% in cost. This is overall annual saving of more than 25 million per year when you really are focused on in-sourcing that. And I think that's very important to understand that we have the capabilities that we have that track record because on Ivenix we also want to in-sourcing and knock down the cost here significantly. And I'd like to share with you 3 details or 3 projects that we are currently working on to improve our operational costs. One is you saw in Marc's presentation, our nutrition plant, Emmer-Compascuum. It was in the past an assembly plant for TCT. We are transferring as we speak, step-by-step, the productions to Haina, to our bigger plant that should be accomplished by middle of next year, bringing significant savings. And the other topic is then Ivenix of course, very big topic. Ivenix had different suppliers. We need to ensure to bring it over to our suppliers where we have other conditions, of course, we can even get for our traditional business better conditions because we have more volume. We work on injection molding, higher cavities, tube extrusion [ bring things ] in-house and mainly bring it in-house and scale it up in our big plant in Haina here by the end of '24. And then the last topic we are working on is in Puerto Rico, we currently have 2 plants, and we are in the process of filing for the 1 plant, all the products we do in the 1 plant to step-by-step also bring it down and there is a closure plan for that plant by the end of '26. So these are big savings, big potential that we have to really like a Swiss watch to execute step-by-step transfer, automate and bring in-house. And the last important topic that helping us driving the margin is, I spoke about the big installed base that we're having there more than 1 million devices out in the field gathering data every day. And we have here software solutions that is adding value for our customers being nurses, being pharmacists, other health care professionals mainly with respect to patient safety and process efficiency. And we have here software solutions, for instance, on the INS side, this is an infusion dashboard, very invoke, of course, you can, as a health care professional, as a nurse, you have a multiviewer. You can see all the beds, all the infusions when there's an alarm or when you have to exchange the line, you can see that. We have, for instance, another very successful software on the plasma collection side where you can optimize based on your personal donor data, your age, your gender, your weight, how much you can donate and of course, if you can optimize that, every milliliter of plasma has a high value to our customers, so then you can ask for pricing for these softwares. And so we see a strong growth in this area and good EBIT margin. So that is also an important driver. Yes. Overall, big ambition, my personal ambition also to bring the Fresenius Kabi MedTech business up in the profitability, bring it into the margin then. And again, how to do that, utilizing the strong TCT position, especially in plasma and cell and gene therapy, using Ivenix, the momentum that we have with this new acquisition in the U.S. market, continue being rigorous on the optimization of the production network and insourcing and, of course, gain traction with the software solutions here also. Yes. Thank you very much for your attention. And Marcus and I hand over to you now for the Q&A.

Very good. Thank you, Christian. And I would like to enter into the next into today's second Q&A session focusing on Nutrition and MedTech. Again, if you would like to ask a question here from the room, do us favor and raise your hand. This first comes from Hassan.

It's Hassan Al-Wakeel from Barclays. I have 3 questions, all on nutrition, please. So firstly, as the nutrition market in China pivots towards enteral nutrition, could you talk about the synergies from your strength in the parenteral space and what you're doing to ensure that you stay ahead of the more traditional enteral peers? Secondly, on Slide 32, you show that your sales are slightly more enteral than parenteral, which is a little surprising to me at least. How do you see the mix trending over time as China shifts enterally and you expand your presence in the U.S. parenteral nutrition. And then finally, if I can come back again on the margin point. Where is the upside in nutrition margins from currently pretty high levels? Given this looks to be the largest lever of margin expansion for Kabi out to 2026 and does VBP pose a risk longer term here.

Yes. Thank you for the 3 questions. Let me take them by order. On China first, we are selling with the FSMP as I have shown here on my slide, into the hospital outpatient clinic setting. That is typically where these specific foods, the FSMPs are prescribed. That is where we are also with PN. So that means there is a synergy in terms of brand positioning, brand reputation, but also a synergy in terms of the first contact to explain the concept of FSMP and to make sure that the prescriber understands our product. That is, for me, the key synergy. So that is on the one on China. The other question was how do we stay ahead of the traditional ones. Well, with the FSMP, and that is the beauty of it. We're not competing with a standard [ sip feed ], let's say, where you have local players and whatever. The EN segment, as you have seen in this pie chart is at the moment, only about 15% of the Chinese market. So it's smaller than PN. But the FSMP segment is something new. This is something we will develop which we will build on our competence. And so therefore, I do not see ourselves here competing with a lot of standard [ sip feed ] competitors, but only with -- even if, let's say, a very, very small number, I would say, of FSMP players, specifically in the beginning as the category is new. On your question on EN sales, you have seen in Pierluigi's presentation, the pie chart. And I guess what is important to understand is that this PN segment and the EN segment, you also have the product which is called ketosteril. ketosteril is around 300 a triple-digit number of sales. But it's a combination of ketosteril and enteral nutrition to explain that this is in 1 segment. Then on the margin upside. You have heard in presentation from Michael Sen, but also in the presentation from Pierluigi that we're focusing on -- well, synergies, structural synergies, operational excellence and to deliver on our projects faster. So the margin upside, I see mainly through levering, let's say, these measures over time. But then you have also seen the geographical expansion into the U.S. market for parenteral nutrition where we want to broaden that one. That should also give a certain margin uplift on the ideal circumstance though it's a mixed bag of that.

Whatever the way I would also integrate is that as we were discussing as before in the break, we are above our margin -- structural margin 14%, 17%, and our goal is to keep it steady, right, and to increase our growth and automatically by increasing -- by delivering the growth that you saw on nutrition will drive an absolute EBIT improvement, right? So it's important to remember, it's above our 14% to 17% and you throw a number during the break. I think I will stay on the above 14% to 17%.

Thanks, both. Next.

David Adlington, JPMorgan. Just one quick question on MedTech. Given the quite long contracts you've got sort of 5 years plus. Just wondered what protection you've got in there from inflation? And as those contracts get renewed, what's the pricing environment like currently?

Yes. So that really depends customer by customer, but there are various kinds of how to build in the inflation, yes? So there's [ indices ] that we have as a baseline here, and that's how these contracts adjust the pricing then on an annual basis, basically. Referring to CPI [ indices ]

Okay. Next comes from Holger Blum, second row here on the right-hand side.

Holger Blum, Patinex. Two questions. One, I remember the Capital Markets Day of [indiscernible] back in 2004, when I got excited about the nutrition story that we had data that people can reduce hospital stay. It was impressive likely presented today. But if I look at the market development since then, if the data is consistent, we are 6.3 billion 20 years ago, excluding Japan and the U.S. If you now get to 10 billion, that would be a CAGR of 2%, which is not reflecting the big unmet medical need that you can fulfill with nutrition. So what's your sense of the historic CAGR of the business? Or is it more of a mismatch of the data back then to today.

Thanks for reminding us on the number for 2004 because I must say. It's -- well, if you take it like that, you could say it's only a 2% growth. But between 2004 and today, a ton of things have happened. If I think back to that time, and at that time, I was in transfusion technology, but we followed, of course, what nutrition was doing. You had professional societies discussing what is the right nutrition regimen. And the demand of malnutrition is nothing new. But to understand the value of proper clinical nutrition is huge. That's the 1 thing. The second thing is to help the health care professionals to understand how they can use the tool of clinical nutrition to help them to really get benefits for the length of stay and so on. And I would firmly assume that over these 20 years, the situation has completely changed. There is a huge increase in understanding compared to 2004. So from that side, I guess, we have today a different momentum, though I acknowledge education is still key. But this is what we have learned also over the last years. I've shown you the slide here with the education days, the screening days we do where, let's say, meanwhile, we have the support as an industry, also from the professional associations and so on to propagate the need of clinical nutrition. Therefore, in a nutshell, I would say the situation in 2004 was more or less the klondike stage. So you knew there's something you had to shovel. Today, we have a completely different universe and environment in which we can take this forward. And this is why I'm more confident today, let's say that we are growing with a 4% to 7% than the 2% you have shown.

The second question, more general, maybe on your innovation spending and margin focus and you seem clearly excited on the Ivenix acquisition. Are there more Ivenix-type companies around that your focus? Or is it mainly now the focus on execution and less on business development?

I'll take this one. So I think, I mean, with our 2 acquisitions of mAbxience and Ivenix are very recent last year. I think as we've been sharing with you, now it's time to deliver. So it's discipline, its execution, it's driving margin up and our plate is quite full as we speak. So therefore, for the time being, we are not actually planning to do any M&A. As usual, like any good team, we're always counting for opportunities but this will be happen in due time for the time being, no M&A.

Next comes from Veronika. Please go ahead.

Veronika Dubajova from Citi. Two questions, please. One is just on the MedTech business and the margin ambition that you've communicated, obviously, moving into the double digits. I'm curious if you can give us a bit of insight on how we get there. Is it mix? Is it the U.S. expansion? Is it efficiencies. Just build a bridge for us, if you will. And then I'm not going to date myself all the way back to 2004, but I will take myself back to 2012, where if I look at both nutrition and MedTech, the organization has for a long time had an ambition to expand into the U.S. And I think there was a target for EUR 50 million to EUR 70 million of sales from nutrition and pumps in the U.S. in 2012. It seems like we're maybe just about there or maybe slightly ahead of it. But it's been very slow progress. And so I'm just curious what gives you the confidence. And I think this is a question for both of you, both on Nutrition and MedTech that this time around, it's going to be different, and you can hit these numbers, which are suggesting sort of multiple hundreds of millions of euros of sales from the U.S.

Okay. yes, on the margin coming back to the question how to address the margin topic and increases significantly. That is basically a mix of growing. We need this growth. And you see we have a strong organic growth, especially in areas with higher margin being at cell and gene therapy, for instance, being very attractive, software plasma and also the Ivenix case, delivering higher margin in these businesses. And simultaneously, we have, of course, to work on our cost position, continue to work very hard on transferring closing down plants and continue the in-sourcing to drive down our costs, especially on the disposable side. Both things go hand in hand and we'll ensure that we can deliver that. And then maybe for your other question about the U.S. business, I think it has changed already significantly. When you look for MedTech, we do almost 40% of our business in Medtech in the U.S. Meanwhile, so a very strong player on the TCT side. I said we are there the #1. We have a very strong position in that market, and it's a big business for us meanwhile.

But in general, I would say also to cover the nutrition part. We had a different team, right? I think from 2012. I don't know who was in 2012, but I can say that today, we have clarity in terms of who is driving which business unit. Therefore, I believe that I mean transparency and clear accountability makes -- covers a lot of ground moving forward. Of course, what you need to do is, which I guess you will do is to measure ourselves, what we are telling you today, right? So give us, for the time being, I think it's a good first quarter. We have clear plans. People, our managers, executives are associated with a specific business unit and measure ourselves moving forward.