Laboratorio Reig Jofre SA

MAD:RJF

Earnings Call Transcript 2022-Q4

[Javier Florindo, executive]

[Interpreted] Okay. Good morning. First of all, I'd like to thank you for following this webcast here in-person, but also the many people who are following us online. I'd, of course, like to thank the company because -- once again, the Trust, the Spanish Analysts Institute to host this presentation -- the traditional annual earnings presentation. I was just saying to the CEO that we hadn't been able to do this in-person for 3 years. So today is definitely a reason for celebration.And, of course, I also want to thank them that they always do it at the highest level with the company's CEO, Ignasi Biosca; COO -- Roser Gomila, CFO; and Inma Santa-Pau, who is the Head of Investor Relations. So thank you always for showing your commitment in this way, and to say that the institute has always considered Reig as a company with a long tradition of investor relations. They understand what proper reporting and disclosure should be. And you'll see there's a wonderful presentation today. I think you can also see it on the website, and also their interest in direct contact, which has always taken standard corporate communications to the next level. So that's something we're also grateful for.So I just wanted to give you this quick intro to the meeting, and now I'm going to give the floor to Inma Santa-Pau, and afterwards, we will hear the presentations. I think first we're going to then answer questions here in the room and then questions coming in online, and that's all. I just want to thank you once again. On behalf of the Spanish Analysts Institute, I want to thank the company and -- on our behalf. Thank you.

[Inma Santa-Pau, executive]

[Interpreted] Thank you, Javier. Welcome, everyone, to this Reig Jofre earnings presentation for 2022. As Javier has just said, we're going back to in-person earnings presentation. So I'm really glad to see all these faces here in the room today and to be able to see one another after all these years. Last time we were able to meet in-person was in 2019, and also that year, we were celebrating the 5 years listing and the continuous market with commemorative [ bell toll ]. And this year, we're once again able to see each other in-person, but we're also webcasting or streaming this in Spanish and English, and so, we would also like to welcome and greet everyone who is following this online. This will last for 1 hour this year.And we will hear from Ignasi Biosca, who is the company's CEO; and Roser Gomila, who is the CFO. And that's all. When we finish the presentation, we will open the floor for questions, as Javier has said. And without any further ado, welcome. I'm going to give the floor now to Ignasi Biosca.

[Ignasi Biosca Reig, executive]

[Interpreted] Well, thank you very much, Inma, and good morning, everyone. And thank you for joining us today whether in-person or online. It's really an absolute pleasure to see you all face-to-face again.2022's closing shows, we're proud to present the best yearly closing for Reig Jofre in its 93 years history, quite a long one. On behalf of the 1,213 people who work for Reig Jofre, it's a real pleasure to be here representing them and sharing with the market the company's performance over these 12 months.Turnover was over EUR 250 million, actually EUR 271 million. That's up 15% versus the previous year where our turnover was [ EUR 257] million. So we're really happy to have reached this record EUR 271 million in turnover.Our EBITDA was EUR 30.4 million. That is 11% higher than the previous year 2021. We closed at around EUR 27 million EBITDA. And again, we're very pleased because we have exceeded that EUR 30 million EBITDA target. Net profit up 60% versus the previous year, with EUR 8.1 million. Debt/EBITDA ratio is currently 2x. Debt/EBITDA down from 2.5x the previous year.And as for investment, and even though we have been completing a strong investment period, we're still investing EUR 13.4 million in 2022. So there's still a significant Reig Jofre commitment towards investment for the future, even though the number is 20% lower than that of the previous year. Since as I've said, we're closing this 5-year phase with strong investment strategy.In today's presentation, we will try to review some of the business metrics. And then, Roser Gomila, our CFO, will speak about some of the financial metrics and our balance sheet and our P&L. And then I will give you a description of the milestones we've achieved in 2022 which have brought in these excellent results, and also explain why these milestones are laying the foundation so that the next 2 or 3 years will be also excellent years with strong growth. And finally, I will give you some comments about our outlook and why we think that this European pharmaceutical company is excellently positioned to materialize our vision for the future, which I'll try and share at the end of the presentation.Quick overview of the company. You know we're organized around 3 different business units. Pharmaceutical Technologies unit grew 20%, up to EUR 125 million and it's approximately 50% of our total revenues. But beyond that percentage, it is, of course, one of our core differentiating strengths at Reig Jofre in Europe.Specialty Pharmacare is a business unit that works with prescription products. They focused on osteoarticular health and dermatology. Revenue this year was EUR 80.4 million, that's up 7%. Well, done excellent growth the previous year as well. So it's a unit which is performing very well and now represents 30% of our total turnover.And finally Consumer Healthcare, which is our OTC nutritional supplement division. The turnover is EUR 65.7 million, that's 24% of our total turnover, and 16% in 2022 with 8% growth the previous year. So 2 years very strong growth.Going into each of our 3 business units in turn. In Pharmaceutical Technologies, as you know, basically we are organized around 2 main areas: antibiotics and injectables -- and freeze-dried injectables. Growth, as I said, has been very strong, up 20% in the year. But what I'd like to underscore is that 20% growth has occurred in both areas. That is, both the antibiotics business and the injectables business shown similar growth rates.In antibiotics, we've seen 20% growth and that shows a pickup of the antibiotic business from 2022 when we all stopped using face masks, and therefore bacterial infections came back to our lives, significant [ number ]. After significant drops in the antibiotic market, because of the widespread use of face masks, we've seen growth pick up again in 2022.But in parallel, we've also seen very solid growth of also around 20% in the sale of injectables and freeze-dried products, and they're -- of course, the causes are very different, basically as a result of the investments made in new facilities, new products, opening up new markets and the signing of new contracts, including the contract to manufacture COVID vaccines, which I will discuss in a bit more detail later, which in 2020-2022 period drove this 20% growth in our injectables and freeze-dried products business.Our Pharmaceutical Technologies business is very international. 62% of the revenues come from essentially Europe, and of that, 20% are what we call contract development and manufacturing organization. That is, we develop and manufacture under contract. While 80% of this business is marketing of products developed by Reig Jofre itself in-house. Of this 80%, approximately 1/3, EUR 35 million are product sales through our own sales teams in different markets, in this case in 6 markets globally, where we have our own sales teams.And I'd like to emphasize that in 2022 we've opened 2 new markets. We've started to sell products in France and also Poland with our own sales force. And the other 2/3s of our product sales are marketed through distributors, licensees and other partners in over 70 countries all over the world, up 16% in the year -- sales -- through our own sales force networks, up in the year more 26%. And that's, of course, also business that brings in a bit more margin.As for products in 2022, we marketed 2 more off-patent molecules in different countries. We currently have 7 new molecules under development. And as for innovation projects, we have 3 main projects as part of a consortium in partnership with other companies and public research institutions, basically universities targeting antimicrobial resistance, and there's some other projects in the area of nanoencapsulation and new technologies for injectables.Moving on to our Specialty Pharmacare division. Specialty Pharmacare is basically business with a strong Spanish component. 69% of the business of this division is [ indiscernible] in Spain. And even though Spain has continued to grow both organically and through new launches, as we'll see in dermatology and in osteoarticular care and nutritional supplements, the rest of Europe and the world is growing very strongly. And we predict that gradually this business unit will have an increasingly international character and will be less dependent on the Spanish market, even though as I've said, Spain is still growing very strongly.International growth in this last year in 2022 was driven mostly by growth in Poland. We'll see some figures later. EUR 7 million in turnover for Specialty Pharmacare in Poland. Remember that Poland is a market which we opened in 2020. So it's a relatively new market for us. And I should also point out that our business in Sweden also deployed a new manufacturing technology for gels, semi-solid dermatology products, and we have a contract with a German company [indiscernible] with whom we have been developing gels for [ enteral ] administration, which have really driven the growth of Specialty Pharmacare in that market.And finally here, we also have several internal projects for development of products in dermatology and 2 other projects in consortium with other companies and public research institutions.Our third division or business unit, Consumer Healthcare, still has a highly diversified product portfolio. Traditionally, our strength lay in weight control, and that's becoming less important, but that's because we're growing in other areas, including energy and general wellness products.When we speak about Consumer Healthcare, I'd like to separate the OTC business, which are the more pharmaceutical products sold in chemists to treat specific disorders. This is our business that has a significant Spanish component, particularly strong in Spain, especially with our Oto range with certain products like Otospray, Otocerum, Otocalm, which we launched this year.We've restructured our OTC range in Spain because we're focused, and that's one of our priority areas for growth in the future. Spain represents 25% of our Consumer Healthcare division internationally, but it's growing 23%, and the jewel in the crown of the Consumer Healthcare division of Reig Jofre is the French market. France, together with other European markets, essentially Belgium and some other countries.72% of the total turnover of this division, growing strongly also 14%, slightly less than in Spain. But there, we are focusing in Europe on the Forte Pharma brand and division, nutritional supplements, which in the French market is the leading brand in pharmacies in France, and the eighth brand in nutritional supplements in chemists or pharmacies in France.The nutritional supplements market is growing strongly at about just over 11% in France, and also Reig Jofre has made a significant effort to grow the online part of the business. Internationally, our performance -- as I mentioned before, we're a company that has 66% -- no, sorry, 56% of its turnover donated outside Spain. Europe is where we have almost half the rest of our business.That's Europe without Spain, up 21% and this last year, and basically we have a presence in 70 different countries -- in over 70 countries globally, and with around sales force, 8 of the 70 countries, basically France, Spain, Portugal, U.K., Sweden, Poland and Belgium. 61% are turnover through our direct sales networks, and the rest, the other 39% we sell in other markets through the network of over 160 partners, some of which are distributors or licensees or third-party manufacturing, to reach those 70 markets globally.In 2022, we started selling in 4 new countries, in 4 new markets, and I'd like to mention one of them, Ukraine. As a result of the war of aggression on Ukraine, Reig Jofre's tried to focus initially, of course, by providing donations for essential drugs or antibiotics that might be needed in Ukraine. And we partnered with some NGOs -- international NGOs which could guarantee that those donations will reach the beneficiaries. But quickly our strategy changed and we've continued to work with local partners, with local companies, with whom we've had a relationship for years. And we decided to accelerate the drugs registration processes for essential drugs in Ukraine. There we've had enormous support from the local authorities.In order to speed up these processes, our regulatory teams in Spain and in other countries committed to streamline and speed up these processes, carrying out some tasks that are normally done locally from Spain or other countries in order to manage to get registration for these products in record times and start being able to sell these drugs, our antibiotics, but also critical drugs for critical care units, for intensive care units in that country. So we're really satisfied with what has been achieved. We're working side by side with our partners there, given them all the support we can so that we can mitigate the impact of a conflict, which we hope will end as soon as possible.As for our employees, I said that we have 1,213 people working at Reig Jofre, which is, I think, key part of the company, our most valuable assets. 59% of our employees are women. We're particularly proud of that. And we also think that you can tell in the day-to-day atmosphere and the organization and the way we work, we have a lot of diversity with 22 nationalities, highly trained team. 38% of our employees have university degrees and our contracts are very stable, a very low churn. 94% of our employees have long-term contracts.And as I always say, when I talk to governments here and internationally, it's absolutely wonderful team, and it's something that as a country we should be very proud of having, and I know that all countries are aiming to have human resources of this quality, this caliber. Most of our employees work in Spain, mostly in the plant in Toledo and Barcelona, but we also have over 100 people in Sweden, 125 in France. Poland is growing, and then we have a small number in Portugal and in Belgium.At this point, we're going to move to the more financial metrics, and I'm going to give the floor to Roser Gomila, so she can review the P&L.

[Roser Zabala, executive]

[Interpreted] Thank you very much, Ignasi. It's a pleasure to be able to meet with all of you face-to-face once again after these years of doing it only online. In the P&L, we're going to look at the different lines which lie behind this 15% increase in our income and this 11% increase in our EBITDA. It's good to remember that last year was a year in which we had 3% growth of our turnover and our EBITDA. So it was a difficult year to achieve growth in the context which was not favorable. And so, 2022 after that more difficult 2021, in which nevertheless we had managed to grow, is a quantitative and qualitative leap forward, consolidating income and profit levels which, I think take us one step further in our medium-term strategy.15% growth in our turnover with additional EUR 35 million in income in the year. Where did they come from? Well, as we've explained in the presentation, mostly from European markets. European markets bring in just over EUR 20 million of these EUR 35 million additional income led by those countries where we have our own subsidiaries and our own sales force.Growth in Europe has been led by France, Poland and the U.K. Spain also has contributed significant EUR 17 million additional income. And these 2 markets with such excellent performance offset a small drop in other international markets whose contribution to our turnover is sticky slightly. So solid behavior of our turnover.Gross margin not growing as much ourselves, 9%, which means that some of our costs have grown more than last year. And if we look at the numbers in our gross operating margin, this year 2022, our margin is 58%, which is 3 points lower than the previous year. And what's behind this drop in our gross operating margin were basically 2 factors. First of all, the greater contribution of antibiotic sales this year. Of course, that's a product with regulated prices with rising material costs and with a cap on its prices. And so, that's the fastest growing portfolio, but it's one of the least profitable for the group, and that's why our gross margin has been affected.We've also had the opening of the new plant for injectables in Barcelona, which, during the first quarter, was using materials that were for standardizing and registering molecules in Europe, and so were not being sold, and therefore, have had an impact on our material costs.And finally a trend which began to emerge in Q3 and which has consolidated in Q4, which is rising cost of raw materials and other manufacturing materials. Like us, our suppliers have been seeing rising costs of energy and transport and they've passed on those impacts to their prices as far as they've been able to, and so we have been feeling rising prices of raw materials and supplies.These are costs that we will have to continue to manage in 2023, particularly increasing material costs in a context in which our sale prices are regulated. And so, we'll have to manage our profitability and our product mix in order to prevent that from having an impact on our bottom line.What lies behind this gross margin, which is nevertheless growing, a solid 9%? Well, as well as the activation of our R&D investment, which is slightly smaller than the previous year, it doesn't mean that we're making less of an R&D effort. It's just that the effect of the activation has been a bit lower, but also very careful management of expenses. That is, we had solid double-digit growth of our sales. We saw our margins being eroded somewhat. And so we felt it was very important to manage expenses very carefully.And so what we've tried to do is, first of all, to contain personnel costs. They are up 10% versus 15% of our sales. And what's behind this 10% increase in our personnel costs? Well, more -- both for the future, growth of our sales network, our headcount increase in Europe, mostly in our sales force in France, especially in Poland.Let's remember that Poland is a new subsidiary which was established in 2020, and in 2022, it's almost doubled its sales force and it is now a subsidiary with almost 30 people working on the ground. And this impact is [ changing ] our headcount, together with the increase in France, and some increase in headcount because of more industrial manufacturing has increased our personnel expenses 10%, which is [ nevertheless ] lower than sales growth.And it's important, of course, to manage operating costs, and this is where perhaps you can have more ability to manage these costs. And you can see that our Consumer Healthcare and Specialty Pharmacare units have achieved significant sales growth, whilst containing the management and marketing costs very effectively. So increase in absolute terms, but containment versus the growth in sales in these commercial and marketing expenses, and also a slight increase in expenses associated with bigger manufacturing volumes.But in any case, costs have only grown 6%, while sales have grown 15%, which I think shows our tight management, of course, which enables us to have an EBITDA, which offsets part of that margin drop, which is 11% higher than the previous years with EUR 30 million, which was, of course, one of our target milestones exceeding EUR 30 million in EBITDA, and that's what we will see later.Moving from around EUR 15 million to EUR 20 million took us several years, but it was much faster to move from EUR 20 million EBITDA to EUR 30 million. And so, that's also a milestone that has been achieved and improving our EBITDA to sales margin, which this year 2022 is above 11%, and so, consolidating the 11% we achieved last year.And if we look at it, in the second semester alone, we're already above the EBITDA-to-sales ratio of 2021, with levels closer to 12%. And so, a good trend also in our EBITDA. And what's behind that EBITDA, an item which we expected to increase this year, which were amortizations going from EUR 18 million to EUR 21 million, is EUR 3 million more, 17% more.And basically, 2/3s of that is due to the new plant in Barcelona. You know that, that was an investment of almost EUR 40 million during -- with an average amortization period of just over 10 years. And that means that each year, we're going to have an impact of about EUR 4 million on amortizations. And in 2022, that's been booked just in the second semester.And so, of this EUR 3 million in amortization, EUR 2 million are due to the new plant in Barcelona, and the other EUR 1 million are the industrial and technology investments plus the amortization of R&D projects, which once they get to the registration and marketing phase are amortized in 5 years. And so, this is a number that will grow, and will grow also in 2023 because of our investment policy over the last few years.Another item which shows a slight negative variation is the result of our [ related ] investments. And that means that our operating margin is EUR 800 million. That's slightly lower than the previous year, and that's mostly due to, as I said, EBITDA was growing 11%, but the impact of amortization is why this operating margin is lower. But underneath that, we have 2 lines, which enable us to significantly improve the bottom line for the company this year. On the one hand, we have financial expenses, which, as you can see, are down to half of what they were last year. It was EUR 3 million and this year is EUR 1,400,000.Basically, this is because in 2021, in this line, we have the impact of the review of the variable price that Reig Jofre had to pay for the osteoarticular business, which was acquired in 2019. Total costs were just above EUR 50 million. And in 2021, because of the evolution of sales, we had to revise that price by an additional EUR 2 million. And so, without that one-off, we can see that our financial expenses have actually increased slightly, given the company's debt levels and also the effect of exchange rate impacts this year. And so we have a positive impact on this line of our financial expenses.And something we haven't seen of this magnitude in rate reform, which we're happy to share, which is the earnings of our equity method companies -- because you know that as well as the companies within the Reig Jofre perimeter, we have stake in other companies. And specifically, we have a 50% stake in joint venture, Syna Therapeutics, which develops biosimilar products.That's a joint venture, which started in 2017, 2018 and successful development of one of these biosimilar products has meant that in '22, it was able to close an agreement to continue co-developing and licensing the sales of this product to a company of the Accord Pharmaceutical Group, and this has brought in revenue already in 2022 for Syna, and it will continue to do so in future years until the product is actually marketed.There are still a couple of years to go, 2 or 3 more years of development. But you will see that the earnings of this joint venture will have a positive impact on Reig's P&L and there's EUR 1.5 million. About 50% of those profits are already being reflected in our P&L. So a successful project and also a project which gives us access to new technologies and the development of biosimilars, which are apart from our traditional core products, but where we already have a strong presence with this on other projects.And so, the impact of these 2 lines, better financial expenses, plus the impact of these joint ventures means that our profit before taxes is up over 50% -- 51% with EUR 8.7 million after tax. With the new legislation, we have a minimum tax rate of 15% minus the effect of some DTAs. The net profit of the year was EUR 8 million. That's EUR 3 million more than the previous year. And also, we have an excellent bottom line with an excellent trend. Of course, we always want to see it grow even more, particularly in terms of return over sales, but it's still 60% higher than the previous year.Moving on now to the balance sheet and the most important metrics for our financial management. I'm going to try and be brief. This is a summary balance sheet showing assets, EUR 209 million. These are intangible assets, mostly products, brands, businesses merged within the perimeter. And the working capital here net of asset liability effects, EUR 55 million. And this year, for the first time, we have what we announced last year in this presentation, where amortization levels for the first time are higher than investment levels, which means that actually our asset base decreases slightly, not significantly, but it does show that after a period of very strong investments, we have invested less than previous years and are already booking the amortization of those past investments.This year, our CapEx was EUR 10 million. That's investment in industrial capacity, a level which we have seen since 2012 because we've exceeded that number year after year. This was a year with lower investments because we're focused on payback of past investments. But even within these EUR 10 million, we've been able to build a new manufacturing line in Malmo, as our CEO mentioned, to manufacture a CMO product for STADA. And this means that this investment is contained -- in this way, we're able to face new periods of investments and focus on new capabilities.On the CapEx -- and the new Barcelona plant, as I've said, is having an impact of EUR 2 million on this EUR 8.6 million, the amortization of brands and products. Remember here that osteoarticular products were acquired through the acquisition of licenses and products. And therefore, there's EUR 4.5 million in amortizations out of the 6 amortization of our osteoarticular products; and finally, amortization of R&D products -- of products that have already been launched and marketed, which is close to activation levels.If we look at the liability side and we look at debt, our financial debt, without discounting treasury, was EUR 68 million -- EUR 68.8 million. We subtract the effect of IFRS 16, which shows a financial debt, future payments for leases. And we focus on the almost EUR 18 million of banking debt and that with other institutions, we see that 80% of our debt is fixed rate.That's essentially loans, but also other lines of credit that with public institutions that's mostly subsidies and preferred interest loans. And the fact that our debt is decreasing, as we will see, and mostly with fixed interest rates, means that our financial risk in terms of hiking interest rates, we feel is very moderate for this year and the next.Net financial debt because of the effect of repayment of debt on investments comes down by almost EUR 7 million. In 2021, it was EUR 69 million, and now it's EUR 62 million. Therefore, we are seeing a clear phase of debt repayment in the net. And that, together with our rising EBITDA means that our debt-to-EBITDA ratio is now at 2x as we said at the beginning of the presentation, were below 2.5x last year. And that, of course, is a comfortable level. It's not a level where we want to be, structurally, but it is a level that will enable us to conclude that the company will be comfortably positioned to undertake future investments and projects since -- as a relatively comfortable low leverage level in order to face the challenges of next year.And after this financial analysis, we're going to give you a brief look back, and then I will give the floor back to Ignasi who will be speaking about the outlook for the future.So looking back briefly, we'd like to share the trends experienced by Reig Jofre in the last 10 years. Looking at 10 years, we should see the impact of the strategies that we've been deploying affecting these different metrics. And here in our turnover, you can see how from 2013 with a turnover of just over EUR 100 million, we have increased that to -- up to more than 2.5x to EUR 271 million in 2022. That's 10% constant growth over these 10 years and also sustained growth.So year after year, we have seen growth in our turnover. Although that growth has speeded up, as you can see in the last few years as a result of the investments and M&A activity and our ability to reach markets with new products, to the development of new technologies and manufacturing capabilities.As for our EBITDA, I would say that it has not exactly followed the same trend as our turnover. We can see the first few years of this period of 10 years, the first 7 where EBITDA oscillated between EUR 15 million and EUR 20 million. That was a period where with some fluctuations we remained between EUR 15 million and EUR 20 million in EBITDA.2019 brought us up to a level close to EUR 20 million already. And then, in the following 3 years, we've managed to take that qualitative leap to this milestone we had internally, of exceeding the EUR 30 million in EBITDA. And so you can see how in these last years, we have been able to grow our EBITDA faster than the previous years with an improvement, therefore, on our EBITDA over sales. If in 2019 or '18, that was 9% EBITDA to sales and now we're talking about over 11% and actually close to 12% EBITDA to sales., so growing our profitability and not just our income.As for R&D investments, of course, we need to keep an eye on the future. And from 2016, we have been growing an R&D investment by 50% over the previous level with EUR 9 million, EUR 10 million of investment year after year between EUR 10 million, EUR 11 million until 2021. And this year, 2022, because of our focus on new projects and new technologies, which are not today's products, but will be our future products, we will be maintaining this R&D investment level, which is what will bring in the future product portfolio for the company.And as for investments, as I said, when talking about 2022, EUR 10 million this last year, you have to go back to 2015 to see a similar level. But what you see here is that, strong investment period between 2017 and 2020, particularly in '18 and '19 when we made most of the investment for the new Barcelona plant, [ EUR 40 million ], and the acquisition of the osteoarticular business, [ EUR 48 million ]. So we're now seeing a return to more normal recurrent CapEx levels.So that was a quick look back, and now Ignasi is going to give us a quick summary of our outlook for the future.

[Ignasi Biosca Reig, executive]

[Interpreted] Thank you very much, Roser. I'd like to start with this slide showing past trends, to remind you what our strategic vision was in 2015. 2020, we said we would focus on investment, and our turnover grew but not our EBITDA so much because we were focused on investments. But then from 2020, we can see the real return on those investments and how our sales and our EBITDA have grown as our investment has slowed down, and that's because of the strategy that we announced several years ago.For the period 2015, 2019, 2020, we made investments for around EUR 150 million in 3 areas: industrial capabilities; the new plant in Barcelona; the extension of the Toledo plant and the more recent extension of the Swedish plant, 1/3; about EUR 50 million of investment in products and businesses with first the merger with Forte Pharma and then the acquisition of a business in the U.K., for Reig Jofre U.K., and then the acquisition -- major acquisition of the osteoarticular business from Bioiberica in 2019, and then in 2020-'21, the opening of Reig Jofre Poland.And there's a third set of investments, which are more product-related. 2018, we started investing in biosimilars. During this whole period, we've been investing in products whose patent was expiring and which we could manufacture in our -- in facilities for injectables, freeze-dried products and complex products, and we've also been moving into the field of vaccines and biologicals. In this phase, 2019-2020 was completed. We were supposed to start seeing the return on those investments, but we had that 2-year pandemic hiatus. But as a company, they've given us a very significant boost.If we look at the different milestones of 2022, which are also the result of this investment strategy along these 3 lines, facilities, products and development, you can see that in 2022, we launched 2 products in the Spanish market for now, connected to the Ciclotech technology, which is an in-house development, together with the University of Santiago, where we have a public-private partnership for the release of -- trans-nail release of products. These are 2 nail varnish products, which release innovative therapeutic product to treat fungal infections of the nail bed. The 2 products are RegeNail and DexULac. There's a potential market of EUR 15 million just in Spain.And 6 months ago, at the beginning of September, we launched these products that we started from scratch, at the beginning of September 2022. And now February '23, you can see the weekly sales growth continue to accelerate. And so, the prospects for next year for 2023 are going to show growth over the whole year. And so, we're particularly happy with the contribution to our 2022 earnings, but especially what it will contribute in 2023 and in future years.I'd also like to mention especially with Forte Pharma, with a net perimeter, but particularly, as I've said, in the French, Belgian, and to a lesser extent, also Spanish markets, that's the result of the merger that we had with the -- with Natraceutical in 2015.And you can see that after the first few years when we had to change the strategy and the focus of the business, the strategy we've deployed has been very successful in the last 5 years. And you can see that we've had a significant compound growth of over 16% during this 5-year period, and our EUR 55.2 million Forte Pharma perimeter. Sector of nutritional supplements and prevention, it's not so much treatment, but wellness is a sector which was growing before the pandemic, but since we have seen an acceleration of that growth, I think all of us have realized that we need to take charge of our own health and well-being. And Forte Pharma in 2017 was #12 in nutritional supplements in France. It is now #8 and we're satisfied with that growth.And you can see also that, essentially, we sell through chemists, although also through per pharmacies. In this case, we are leaders of that segment. And I'd also like to mention that during the pandemic, online sales grew significantly, doubled, in fact, every year. In 2022, online sales grew 15% and we gained rapid progress on developing our whole online strategy because consumers want to be able to find our products through all types of channels. And so we'll continue to work with joint strategies in order to take advantage of these 3 channels. Sales online of this division are already over 10% of our total sales.And basically, it's not just the online sales but also online marketing. And beyond the pill, as we call it, which is about providing services on the web where you buy the box in the pharmacy, but then there's a bar code or some kind of link which you can use to access nutritional advice or learn more about the benefits of the product or about how to use it, innovation, new technologies, gummies. And basically, this is a sector which is growing strongly in France. Double-digit growth this last year, but also seen as a natural alternative to OTC drugs. So we expect the growth to continue.And within the Forte Pharma brand, we'll continue to go from strength to strength. It still has potential growth in its core markets, the French speaking markets. But in Spain, we're also very focused on growing the brand and we're launching both in Poland and Sweden. In Poland, that's another major milestone for Reig. Not just in 2022, but also in the last 2 years, the -- we started after we reached an agreement with one of our Polish distributors in 2020, in the middle of the pandemic. So we organized the whole transaction. We organized the company during the pandemic, remotely, of course. But we managed to have a first half year with about EUR 400,000 in sales; and then in '21 to EUR 0.5 million, and in '22, EUR 7 million, and turnover, which is over 10% of the Specialty Pharmacare division sales.Our launch in Poland basically happened through our dermatology and osteoarticular products. And what I feel I should emphasize about the Polish business where we already have over 27 people is that, it defines how we will continue to internationalize our strategy, opening a market with one of our business units, building a team. And then once we have the team and the infrastructure in place, we can start selling the other 2 business units -- products, using the sales force and administrative structure created by the first business unit.And so, the Polish model in 2022, we started with Pharma Tech, but in 2023, it will grow with 12 months of new product registrations for Pharma Tech in Poland, and we'll also grow with Forte Pharma in Poland. And so, the Polish market, we expect to continue to grow strongly in the coming years. And of course, we want to invest and accelerate growth also in the U.K. following the Polish model. And so, 2023, we expect to be a very good year there as well.In Sweden, we also want to continue to grow our sales. We want to continue to focus on reinforcing our sales force for the 3 business units in Sweden. And in fact, we speak not just about Sweden, but Reig Jofre Nordics, which is our unit selling in Sweden, Denmark, Finland and Norway. And basically, we're working to get the 3 business units up and running there.You know we have a plant manufacturing semi-solid products in Sweden, generally dermatology products. But this last year, we've been making investments in order to get into an additional line. Creams and gels are what we were manufacturing, but we also want to get into enteral gels, which are applied directly into the stomach for patients with Parkinson's who have problems swallowing, and really the first way of guaranteeing that they get their appropriate drug dose is by having it reached the stomach directly with enteral feed throughout the day.The prospects for '23 again are very good. In sales, we've been growing our teams and making progress. And as for the new plant and our partnership with STADA, we've been manufacturing in an older plant, and then towards the end of Q3 of 2023. So in the next months, we will have the new plant up and running. And since with STADA, we worked on the development project and now we're in the manufacturing phase. We expect that we will continue to grow with them through this partnership as they grow their sales globally.The next business area I'd like to refer to is our antibiotics business, the Pharma Tech business unit. Reig Jofre is one of the main European players in the antibiotic field. That's a fact. Antibiotics are a mature market. As Roser explained earlier, these are not expensive products and not high-margin products where there's a lot of innovations, but they are, of course, very broad use.You will have heard probably in the media recently, about problems with antibiotic supplies, pediatric antibiotics especially, and that's basically due to the fact that, since the pandemic, as every country did away with the use of face mask, there was a big spike in the number of bacterial infections and therefore, in the demand for antibiotics, which is why there have been some gaps in the supply in those markets where they didn't have the mechanism to pay a bit more for those antibiotics, which ended up going to those markets of the world where prices were more in line with the demand for these products.Since the pandemic, of course, antibiotics have become a strategic product. Personally, I met recently with a group of CEOs of multinational pharmaceutical companies, not Spanish companies, global companies, with the Prime Minister of Spain, and what I said there was precisely about antibiotics and how they are essential drugs, and therefore, if there is another pandemic linked to antimicrobial resistance, but also about the difficulties to develop new antibiotics, because we need to find new commercial models, since the best antibiotic is always used as the last line of treatment, and it's the penicillins because they are cheaper, that tend to be used as the first-line of treatment in any infection and that's going to continue to be the case since they won't want to use the latest generation antibiotics as first-line of treatment also to prevent the development of new resistances.And so in that sense, Reig has been trying to get the message across in the media, through Europe. We've been in contact with a lot of journalists and we've been very active in this awareness campaign. As for the pandemic '20 and '21 period, especially Reig Jofre went through this period with a great deal of focus. We really had to work extremely hard and it was really tough. But at the same time, it was very rewarding, and I think we all feel a great sense of pride in how we've been able to rise to this challenge, and Reig is a company that has always tried to be there, or is in the second line, and we're in the front line in the fight against the pandemic in an initial phase in 2020 providing essential drugs to hospitals, particularly to intensive care units, which needed very basic drugs, but supply was lacking in Europe because it was going to other countries in the world.So we were supplying very essential cheap drugs, but very necessary drugs to ICUs, and in a [ weekend ], we switched our manufacturing lines so that we could supply these drugs. And so, we're a company which, for better or worse, has 50 of the essential drugs listed by the Spanish drug agency as critical during the pandemic. And so, they might not be the newest or the most innovative of drugs, but they are very essential, critical drugs. For patients in the second phase of 2021, that was the year of the vaccines and we had decided before then in 2017, 2018 and the Board to invest in a plant for injectables in Barcelona. The vaccines are all injectables, and that was providential as it happened in order to have the manufacturing capacity we needed in Europe to manufacture vaccines.And after that, of course, we established that partnership with the Spanish health authorities and the European health authorities, European Commission and then the agreement with Janssen and Johnson in order to manufacture their vaccine in Spain and be part of their global supply network for their vaccine. And of course, we made all that effort without knowing exactly how much demand there was going to be for those COVID vaccines. But of course, in the end, there were, as we all saw some technologies which were more popular than others in the developed world, especially the messenger RNA technologies proved to be the better efficacy, safety profile.And so, we were there supporting our client, making sure that they could -- that we could provide the vaccines they would need. And the end of '22 and the last quarter of the year, we closed the agreement with Janssen, which we had signed for '21 and '22 for 2 years. As we said at the beginning, and therefore, we have now back on our Plan A, which was to go back to the launching of our internally developed products, our clients, our internationalization, and that's what we're doing right now. And so we're now in Phase 3, I would say. It was '21, also '22 and '23. Post-pandemic period, the company's image has been strengthened.Our teams have enormous, tremendous -- enormous expertise in this kind of products. And our facilities, of course, have been strengthened to deal with this type of situation and are now in fact part of the strategic capabilities identified by the European Commission. In Europe, there was a lot of political noise at the time. But looking forward, which is my biggest concern, President Sanchez himself when he talks about the European presidency of the European Council on the part of Spain, in the second semester of this year speaks a lot about the strategic autonomy for European citizens, and that includes, of course, the healthcare sector.And Europe wants to make sure that Europe has within its borders the capabilities it needs to manufacture these essential drugs so that we will not be dependent on other countries in case of critical situations, like the ones we experienced in 2020 and '21. The new manufacturing plant is, therefore, a very important asset for us as a company, but also for Spain and for Europe, increased capacity, increased quality in the manufacturing because of the technology we use with no human contact on a very, very productive plant in terms of capacity and numbers.And as for the vision for the future, Reig is ready for the future. Why? Because since the pandemic, we have noticed that there's been a lot of progress with the COVID vaccine technologies. It has accelerated the implementation of these technologies. And traditionally, therapeutics were developed based on chemical technologies, but then for the last 15 years, biotechnology was the big driver, treatments with monoclonal antibodies and proteins. And now what we're seeing since the pandemic is a new therapeutic phase with the development of RNA tech -- messenger RNA technologies and viral vectors and advanced therapies and therapeutic vaccines.So everything to do with how to strengthen our immune system so that it can fight these threats, whether they be cancers or infections, which we might face. And so we're seeing a new phase in the technology for the next years. And all of these products that are to come, including biologicals and also new cell therapies are injectables they have in common.So you need expertise both for development and manufacturing that we have. They're not very stable products. COVID vaccines had to be stored at really low temperatures. So these are not very stable products. Reig Jofre, of course, has expertise in that area because of our freeze-dried products. And these are effective in smaller quantities. So you can definitely contribute to strategic autonomy and Reig Jofre could definitely be part of the vertical integration of manufacturing of some of these active products.And so, we have the know-how, we have the expertise, we have the specialization and the teams and the plants and the facilities and the recognition from the health authorities here in Spain and in Europe so that we can continue to make progress in this vision for the future where Europe wants to become a bit more autonomous. And that's our facilities and we will continue to fill them with increasingly high value-added products with higher prices, higher margins, fulfilling more relevant healthcare needs for the European citizens.And finally, the last thing I wanted to say just so you can see, that we're not just thinking about the vision, also moving to taking real steps.Disruptive innovation is moving to these new technologies I mentioned before, thanks to progress made with the COVID vaccines, and that means that there's room in the biotechnology field with biosimilar products, which are patents that are expiring for products that have been registered for the last 15 years.And biosimilars for me have 2 main strengths. One is that in the developing -- in the developed world, there's a cost advantage, but especially also that for the developing world, there's an access advantage. There's lots of biotechnology treatments, which when under patent had really high prices and were not affordable for most of the world. Biosimilars will be very innovative for most of the that world and will give access to a big part of the world's population to this type of treatments.Reig Jofre invested in Syna Therapeutics in 2017-'18. And as we have explained, that has been able to give a company of the Accord Group the license to co-develop and then market this product in 2022, which will be completed in '22-'23 and we hope that it will be marketed within the next 2, 3 years. That's just 1 more step in our reaching for the future for these new treatments and new technologies and Reig Jofre there, together with companies that require services, our know-how, our facilities, which can help us to move forward in that direction, or with projects in which we evolve directly as a company within our investment capabilities, but in consortia with other companies and with access to European funding.And now there's quite a lot of European funding in Spain, but also next-gen in Europe, we're able to make our own in-house innovation in these areas so that we can face the future from the brightest prospects looking forward to strong growth for the company in the coming years.Now that's all I had to share, and I'm just going to -- Roser is just going to show you one last slide. Just to close the presentation today, we are out of time for questions. Inma will have to tell us, share price in '22 fell -- in 2022, [ I state the ] IBEX, but our shares fell more. You will know as shareholders, of course, we always address our shareholders and investors by saying that we work to make sure that we deliver on the results.And in this case, we think we have done so in 2022. But of course, markets decide based on other considerations or expectations. And even though in 2022 we have seen a fall in our share price, we have to say that in Q1 of 2023, and to date, we have seen our share price pick up almost 20%. And so it's true that markets don't always follow a company's earnings in their trading, but our job is to focus on those results and wait for the markets to recognize them. But we think the share price will reflect our achievements and the company's growth plans, and we are grateful to our shareholders and our investors for their trust in us, which we are sure will bear fruit.As for other things to do with the share, I'll just say that the next General Shareholders' Meeting on March 30th will prove the same scrip dividend scheme we had last year. And this way we think is the best way to remunerate our shareholders' loyalty. And that's really all. We're working to make sure that the share price reflects the value of the company.And that completes this earnings presentation today and I'm going to give the floor to Inma, who's going to tell us whether we have time for questions or not.

[Inma Santa-Pau, executive]

[Interpreted] No, we really not. We don't have any time. We'll just -- and so one question which has come online and we will answer the rest of your questions via e-mail.Question is, after a 5-year period of strong investments, mostly in Toledo and St Joan Despii as well as the new manufacturing line in Malmo, could you give us some information about your potential additional revenue once these new facilities are maximum capacity? What kind of revenue range can we expect medium term? Could you tell us what your medium-term ambitions are in terms of turnover and EBITDA?

[Unknown Executive]

[Interpreted] Well, I can answer and then Roser can like maybe add some more specific details. This year, we closed with EUR 270 million turnover. And clearly, the EUR 300 million are within reach and we expect to be able to exceed that number very soon. And our challenge as a company is to keep growing beyond that number. Medium-term, we think that with everything that we have been laying down with those investments in the next 2, 3, 4 years, we will be able to grow this number very significantly. As for the real strategy behind that, what we really seek is to grow our EBITDA-to-sales ratio. So it's not just to grow our sales and that's important, obviously, because it proves that our strategy is the right one for the market and that our clients and markets really want what we are offering. But our focus is to increase the profitability of those sales to make sure that the growth in our sales feeds through to the bottom line, that it happened in our more profitable business lines to improve our EBITDA-to-sales margin, which is what will give us the kind of metrics that will enable us to invest more in the future and have bigger global presence.

[Roser Zabala, executive]

[Interpreted] Yes, and I would add. As you know, we don't really give any specific guidance. But on this point, but thinking that we had a year with double-digit growth, and as Ignasi said, we're already within reach of the next level, which are the EUR 300 million with growing profitability. That should be the short-term target. And more medium-term, it will depend on the company's perimeter with our current capacity. We still have room to grow our turnover, obviously, but we shouldn't just think about that in our view because our manufacturing technology follows our growth. But it's not the only limiting factor, we have growth opportunities particularly in the less technologically specialized divisions like Consumer Healthcare, which are not all affected by manufacturing capacity factors, but simply by market growth in international markets.And I think we have successfully demonstrated growth models this year in Europe, which we will replicate and which are not really that investment-intensive and which should give us new opportunities for growth. So it's not just about our manufacturing capacity, but also about our ability to deploy our marketing strategy in products and markets to new geographies. And that's why we expect ambitious growth in the next years. And then, of course, there might be M&A opportunities as well as there have been in the last few years and we're sure will be again in the future and we're ready to approach them from a very solid financial footing. So no specific numbers to give you, but definite ambition to grow our sales and our EBITDA definitely.

[Inma Santa-Pau, executive]

[Interpreted] Well, thank you, Roser. And so we don't take up any more of your time. We can have just one more question from the room, if somebody wants to ask it. If not, we'll just leave it there.

[Unknown Analyst]

I have a question. The explanation Roser gave you about the gross margin, you said that regulator has not changed the cap price on antibiotics. How willing do you think they might be to do that in the future?

[Ignasi Biosca Reig, executive]

[Interpreted] Well, I think the situation right now at the beginning of March '23, this is actually a European issue, not just Spanish. The governments are realizing that these types of drugs, and the buyer [ adds ], have a value which is much higher than the price that's being paid. And so we need to find mechanisms to be able to adjust market prices so that global manufacturing capacity will not all flow towards other more profitable markets. I think we've seen that lately all over Europe. We've seen it in Germany and France and Spain, too, obviously, and in the U.K. rather. And so I think the different countries will gradually take action so that they can adjust prices for this type of drugs so that supply can be guaranteed.It's not just about us being able to cover our costs, which I'm sure is not our main concern. But to guarantee supply, we have a facility with over 300 people in Toledo manufacturing exclusively antibiotics. And you know that antibody manufacturing requires dedicated plants, which cannot be used to manufacture anything else. And so they are what they are and they aren't anymore. And in order to make sure that a plant or a facility of this type will remain within European or Spanish territory, which is, I think, what governments and companies realize that these are strategic critical products.So I'm sure that they will continue to seek mechanisms to make sure that this type of facilities, which are here will remain here and not be off-shored to other markets where you can bring down costs by concentrating volumes, but we will not be able to guarantee supply when there's truly a critical need globally. And so I think that we will start to see a change from a focus on price. We're focused on the guarantee of supply. And we, with our 300 people in Toledo, are fully committed that if the government is willing to seek ways for us to cover the impact on our costs medium term, we will be able to guarantee the supply chain.

[Inma Santa-Pau, executive]

[Interpreted] Thank you very much, Ignasi. We're going to leave it there. And not to say that we will, of course, continue with these annual earnings presentations here in Madrid and we hope that you will be able to continue to join us year after year. Thank you very much, everyone, for following this presentation here or online.