Ipsen SA

PAR:IPN

Earnings Call Transcript 2022-Q4

[David Loew, CEO]

Thank you, operator. Good afternoon or good morning, everyone. I'm delighted to welcome you to our full year results call 2022. As you've just heard, I'm David Loew, Chief Executive of Ipsen, and it's a real pleasure to be here today to run through our performance in 2022 and our guidance for 2023.

Please note that our presentation is available on ipsen.com. Please turn to Slide 2. This is our safe harbor statement, which outlines the routine risks and uncertainties contained within this presentation. Also any commentary on growth you'll hear today will be based on constant exchange rates, unless stated otherwise.

Please turn to Slide 3. I'm joined today by our CFO, Aymeric Le Chatelier as well as Howard Mayer, Head of Research and Development. Howard will be with us for the question-and-answer session later.

Please turn to Slide 4. Here is the agenda for today's call. I will start our presentation with an overview of the business, after which Aymeric will take you through our financial performance in the year as well as our 2023 guidance. After concluding our presentation, we'll be happy to take your questions.

Please turn to Slide 5. So let's begin with the business overview.

Please turn to Slide 6. We are consistently growing our business. In 2022, we produced total sales growth of 8.5% at constant exchange rates with a core operating margin of around 37%. On the pipeline, there were compelling data presented last month for the Onivyde regimen, which could lead to a significant impact on the lives of patients with pancreatic cancer. On palovarotene in FOP, we received a complete response letter from the FDA in December as well as a negative opinion from the CHMP last month.

We remain with the conviction that the data are supporting the benefits of palovarotene as a potential treatment for people living with FOP and, therefore, will ask for a reexamination in the European Union and submit the additional data requested by the FDA.

I was delighted by the progress we made in our external innovation strategy, acquiring Edison in the summer and as we anticipate by the end of next month, all derail. We are replenishing the pipeline at pace, adding 20 new assets in the last 2 years alone.

Lastly, we are guiding to further top line growth this year of greater than 4%, with a core operating margin of around 30%.

Please turn to Slide 7. Our growth platforms are continuing to outweigh the gradual decline of Somatuline with each of esports, Decapeptyl, Cabometyx and Onivyde delivering double-digit performance in the year. As we begin to relaunch TEZERIC in the United States, we expect this will drive an increasingly meaningful contribution to our growth as well Bellway. Please turn to Slide 8. Our growth platforms grew by 21% in the year led by this board.

Strong performances across both aesthetics and therapeutics, drove disparate sales growth of 29%. To meet consistently growing demand, we increased capacity in our factory in the United Kingdom in the year, helping to deliver sales growth in the fourth quarter of 40%. The 12% growth in the competitive sales in the year was mainly driven by continued strong underlying growth despite the impact of the pandemic in China. Cabometyx up by 24% and was supported by the growing contribution from the first-line renal cell carcinoma combination with nivolumab, including in France, Germany at the recent launch in Italy. I'm pleased with the progress we are making.

The momentum in second-line monotherapy also continued as we launched and gained reimbursement in more markets with the region and strongest growth for Cabometyx being the rest of the world where sales were up by 79%. Finally, the 14% increase in Onivyde sales, which is currently approved only in the post-gemcitabine setting reflected solid growth in the United States, while there was a good performance from our ex-U.S. partner.

Please turn to Slide 9. Somatuline sales declined by around 6% in the year, accelerating to a 13% decline in the fourth quarter, reflecting an increased impact from competitor activities in the U.S. and in Europe. In North America, sales of Somatuline declined by 7.5% in the year and around 18% in Q4. Pricing was impacted by the level of commercial rebates and we experienced continued unfavorable movements in channel mix driven by the increased effect of 340B.

We were also impacted by lower wholesaler inventories this year, notably impacting the year-on-year performance in Q4. In Europe, the volume and pricing impact from generic competition intensified in the second half of the year. This was most keenly felt in Germany, France and Spain, and we expect this trend in Europe to continue in 2023.

The Somatuline performance in the rest of the world, however, was excellent with strong volumes and sales growth in a number of markets, including Japan and Brazil. We will continue to see growth in the rest of the world in 2023 for Somatuline, albeit at a lower level.

Please turn to Slide 10. When I first laid out our strategy, I said that building our pipeline was central to our future growth. So I'm delighted with our external innovation process or progress across the 3 therapy areas and the different stages of development. Most recently, the acquisition of Epizyme, not only broad teceRIC, but also an oral SETD2 inhibitor and the number of preclinical assets. And while a number of deals were indeed designed to replenish our early-stage pipeline, I'd now like to turn to our most recent deal designed to deliver a number of further additions to the pipeline.

Please turn to Slide 11. The expansion in rare disease through the acquisition of Albireo is perfectly aligned to our external innovation strategy. The focus of this deal was on the potential of Bylvay, possibly best-in-class rare liver disease medicine with global rights, that's already on the market for progressive familiar intrahepatic cholestasis in the United States and in Europe.

There were multiple attractive opportunities presented by this deal. We have the possibility of adding 2 further indications to the currently approved indication for Bylvay with algal syndrome, which was filed end of last year and biliary atresia. Furthermore, the acquisition also comes with an earlier stage pipeline in adult cholestatic liver diseases.

Bylvay and the clinical and preclinical novel bile acid transport inhibitors are clearly an excellent potential strategic fit in rare liver disease with elafibranor. And financially, we anticipate sales of around EUR 800 million and an accretive impact to core operating income in 2 years tax.

Please turn to Slide 12. Turning to the major elements of our pipeline, this chart continues to build nicely, thanks to the progress of our external innovation strategy. The next time we show this chart, we anticipate reflecting the Albireo acquisition. We have developments in Phase II to highlights. Firstly, we recently initiated the ONWARD trial for elafibranor in primary sclerosing cholangitis.

In neuroscience, we have now focused our longer-acting neurotoxin development on one candidate, IPN10200. In aesthetics, this has now progressed to Phase II development with the LANTIK trial. Also in neuroscience, we do note that the primary endpoint was not met in the Phase IIb trial of mestopitam in levodopa-induced dyskinesia within Parkinson's disease. We were delighted that the Onivyde regimen in the first-line PDAC setting met its primary endpoint, and we plan to file data with the FDA in the first half of 2023.

We have a number of milestones for the pipeline in the next few months, which I'll address on the next slide. So please turn to Slide 13. Firstly, in rare disease, we await the unblinding of the Elite Phase III trial for elafibranor in primary biliary cholangitis. This is likely to come around halfway through the year. As mentioned, the complete response letter issued by the FDA in December in respect of palovarotene was related to the regulatory agency's previous request for additional information on clinical trial data around the time the advisory committee was.

It was not a request for additional efficacy or safety data beyond existing studies, and we anticipate responding to the request in quarter 1 with an expected 6-month FDA review cycle. Last month, we received a negative opinion from the CHMP for palovarotene, so we will request a reexamination of the opinion based on scientific data available from the existing palovarotene clinical trial program.

We do look forward to filing with the FDA the data from the Phase III NAPOLI-3 trial for the Onivyde regimen in first-line pancreatic ductal donor carcinoma, while we have progression-free survival data from the Phase III CONTACT-02 trial of caboatezo in second-line metastatic castration-resistant prostate cancer. It's worth noting that for Ipsen's territories, approval and reimbursement may well require mature overall survival data.

Finally, in the second half of the year, we anticipate a regulatory decision in the U.S. and Europe for Bylvay in Alagille syndrome.

Please turn to Slide 14. I do want to draw your attention to the opportunity for Onivyde as mentioned. We have the United States rights for Onivyde, which is currently approved in the post-gemcitabine setting in pancreatic ductal adenocarcinoma, and we were delighted by the results from the Phase III NAPOLI-3 trial that demonstrated a statistically significant and clinically meaningful improvement in overall survival and a significant improvement in progression-free survival versus gemcitabine-abraxane in the first-line indication.

I want to stress the important point that NaliriFox is a novel regimen based on the liposomal formulation and dose of irinotecan and the dose of oxaliplatin used. We believe that in addition to the efficacy demonstrated against the standard of care treatment with gem-abraxane, this regimen has a manageable safety profile that, if approved, could allow MaliriFox to be used more broadly in patients with untreated metastatic pancreatic cancer.

We will look to file with the FDA in due course. And should we be granted approval, this would present a significant opportunity for Ipsen, especially given the substantial increases in treatment duration and the number of treated patients versus the current setting.

As with the Epizyme acquisition, the Onivyde opportunity will leverage further our in-market U.S. presence and will build on our sustained commitment to oncology.

Please turn to Slide 15. I want to turn to generation Ipsen, our identity that centers on our ESG strategy. I was very pleased with the progress we made on the ever pillar in the year. Within our focus on environment, our trajectory to reduce greenhouse gas emissions was officially certified by the science-based target initiative, while the move to renewable electricity resulted in our global operations, utilizing 90% renewable electricity. We also launched fleet for future programs supporting our ambitions to reduce greenhouse gas emissions by moving to electric cars.

Our patient focus has included the partnership with Axis accelerated as we continue to support communities that lacks sufficient access to health care. We also provided support to people in Ukraine in medical need with financial donations to direct cross and Tulip as well as the nations of assets.

Within the people pillar, we are targeting a balanced generation for our global leadership team by 2025, and we are very proud to report that ratio has already reached 48% from 43% the year before. Ipsen was also recognized as an employer of choice in 23 countries.

Finally, our focus on governance included the renewal of anticorruption certification by ISO, and we have maintained our unrelented rigorous compliance with the highest ethics and compliance standards.

I will now hand over to Aymeric. Please turn to Slide 16.

[Aymeric Le Chatelier, CFO]

Thank you, David, and hello, everyone. Please turn to Slide 17. As David said, we've delivered a very strong financial performance in 2022 across all metrics. The success of our growth platform means that total sales increased by 8.5% at constant exchange rate to exceed EUR 3 billion. Our core operating income grew by 13.5%, and our core operating margin was broadly unchanged at around 37% of sales supported by our strategic focus on growth and efficiencies, while our core earnings per share was up by 18%.

The emphasis on cash generation led also to an increase in free cash flow of 4%. Please turn to Slide 18. Looking at the detail of the core P&L, the growth in total sales at actual rates was augmented by favorable currency movements boosting sales by additional 6 percentage points. Other revenue increased by 25%, primarily reflecting the increase in royalties received from our partner for this port in aesthetics. In fact, despite the impact on the mix of sales by the decline of Somatuline, the gross profit margin only failed by 0.5 percentage points.

R&D costs increased by 5% as a result of investment in newly acquired assets, while SG&A costs increased by 13%, reflecting commercial investment to support growth as well as preparing for several potential launches. We also experienced a substantial impact from the level of postponing spend on T&E and medical and marketing activity, offset by our continued focus on driving cost efficiencies across the organization. As a consequence, core operating income grew by 13%, as I said, with a broadly unchanged core operating margin at 36.9%.

Please turn to Slide 19. Not only we deliver a strong profitability. We continue to deliver strong cash flow and have today a robust balance sheet. Free cash flow grew by around 5% to EUR 817 million. The rate of growth was impacted by increase in the change of operating working capital driven by our sales performance, while we increased our CapEx investment to ensure that we have the capacity to support our ambitions.

After the dividend, the net investment from business development, including the acquisition of Epizyme as well as the proceeds from the divestment of our Consumer Healthcare business, Ipsen became fully deleveraged with a closing net cash position of around EUR 400 million. Our capital allocation priority remains focused on increasing our firepower for our external innovation strategy. At the end of 2022, and on a pro forma basis, assuming the closing of the planned Albireo acquisition, we have today firepower of EUR 1.5 billion available for further transaction, all of that is based on the net debt below 2x EBITDA.

Please turn to Slide 20. So now going more into the detail of our guidance for 2023. First, I wanted to remind you that this guidance incorporates the impact of the Albireo deal, which should be completed by the end of the first quarter. We expect growth in total sales of more than 4% at constant exchange rates, our growth platform are set to continue performing well and to again outweigh the gradual decline of Somatuline. We will also have the first full year impact of sales as well as the contribution of Bylvay from the second quarter.

On the core operating margin, we anticipate a level around 30% of total sales. This lower margin versus 2022 reflects clearly the dilutive impact from the investment in growth as a result of the external innovation strategy, including the Albireo plan acquisition.

Alongside the significant increase in R&D investment in 2023, which will come mainly from Epizyme and Albireo, we will also increase our commercial investment to support and creep up the launch of new media. Finally, just for information, we plan to provide a midterm outlook before the end of the year to reflect the anticipated completion of the acquisition of Albireo as well as the pipeline milestone that David presented.

With that, I will now hand over back to David. Please turn to Slide 21.

[David Loew, CEO]

Thanks, Aymeric. Please turn to Slide 22. So before we go to questions, please let me conclude. The ongoing execution of our strategy and the progress we are making means that we are continuing to deliver strong results. Our growth platforms are performing very well ahead of the gradual decline and the potential new medicines are set to augment our growth journey.

The pipeline is advancing, and we're making good progress in the number of trials and the assets we are developing. We have clear opportunities across 3 therapy areas. And in near term, we look forward to a number of key milestones.

Finally, our focus on external innovation has led to a significant replenishment of the pipeline with substantial firepower derived from a strong balance sheet and our ability to generate good levels of cash. And our strategic momentum will support further external innovation deals in the future.

Please turn to Slide 23. Thank you for listening to our presentation. We now have time for your questions. Operator, over to you.

[Operator]

[Operator Instructions] We'll now take our first question and is from the line of Elizabeth Walton from Credit Suisse.

[Elizabeth Walton, Credit Suisse]

I have two to start with. Perhaps we can start on Dysport. You had a particularly strong quarter. What level of sustainable growth should we be thinking about for this product going forward? And what does that mean for your other revenue royalties as well? And then just to touch on TetERIC, are there any updates you can share here on the relaunch? And 4Q sales looked a little bit modest. So what gives you confidence that this should accelerate into 2023?

[David Loew, CEO]

Thank you, Liz. Let's start with the Dysport Q4, which of course, was very strong. We do forecast a continued strong growth of Dysport in aesthetics and in therapeutics also in 2023. Also, you have to keep in mind that with the increased volume that we were able to produce, there was a catch-up effect in Q3 and Q4. On the other royalties, I'll let Aymeric elaborate.

[Aymeric Le Chatelier, CFO]

So as you know, the way we account for our partnership with Galderma, we book part of the revenue in sales, part in royalty. So you should expect the other revenue line to grow as the aesthetic business is going to grow.

[David Loew, CEO]

And then on the CEREC relaunch, please remember, we have finalized the integration of Epizyme by the end of October. In November, the field force was first brought together. We are redoing the promotional material and repositioning the drug. On the good news side, we have gotten inclusion in the NCCN guidelines, not only for mutants, but now also for wild-type patients, which was a very important point.

And we also need to remember that the pickup is going to be gradual because follicular lymphoma is a very slowly progressing disease and the typical office base hematologist has 1 to 2 patients. So it's going to take some time until patients are going to start to progress, and that's the time point when the physician can then decide what they want to put them on. So it's a normal dynamic which is going to play through in the duration of 2023. Next question.

[Operator]

We will now take our next question. This is from the line of Richard Vosser from JPMorgan.

[Richard Vosser, JPMorgan]

First question, just on pricing pressure in Europe. A number of companies are calling out increased pressure from clawbacks and other mechanisms. Just -- how do you see that picture across your portfolio? That would be great. Maybe a question as well on the erosion of Somatuline. You've said a gradual erosion from here. But how are you seeing the specifics in the U.S. and Europe -- and do you see pressure increasing from the launch of another generic in Europe on top of advance towards the end of the year? And then maybe one final one, if I can speak in. You've mentioned you started the ELMO trial for elafibranor. Just what data gives you the confidence to start that trial now?

[David Loew, CEO]

Richard, thanks for your questions. In terms of your first question on pricing pressure in Europe, I think all companies see that because the clawback mechanisms, which are being put in place are not necessarily specific to a given product, but often, they are on the part of your sales that you're having on the national health care system. And so these clawbacks are broad brush clawbacks and they are included in the 2022 performance, but they are also included in our 2023 guidance.

In terms of the erosion on Somatuline, clearly, I mean, we are seeing that this is becoming more competitive. And for example, in Europe, Vance is launching or preparing to launch in additional markets, for example, like the U.K. but also some other markets. But it's going to continue to gradually ramp up the erosion. The same thing is true for the U.S.

Perhaps you need to be a bit careful for the Q4, where there was also the inventory comparison against the Q4 2021. So the erosion should not be seen as a quarter-on-quarter, but more that this erosion that we are seeing in Q4 overall is probably kind of predictive for an erosion that you might see in full year in 2023.

Please remember also that the rest of the world is continuing to grow very nicely, and we anticipate that the rest of the world will continue doing that, albeit perhap to a bit of a lesser degree, but we still see a very strong dynamic there. And then on the ALMA trial, I'm going to refer to Howard.

[Howard Mayer, Head, Research and Development]

Great. Thanks, David. So good question. So basically, in terms of elafibranor, we're optimistic about PBC based on the Phase II data, which led to FDA granting breakthrough therapy designation. And we decided to conduct mid, which is a proof-of-concept study in a related disease, PSC, to really determine if we should move on to a registrational trial. And that's the thinking behind Elmwood and we consider PSC to be a really significant opportunity, both medically and commercially given the lack of effective therapies available for patients with PSC.

[David Loew, CEO]

Operator, next question, please.

[Operator]

We will take our next question. This is from the line of Charles Pitman from Barclays.

[Charles Pitman, Barclays]

Charles Pitman from Barclays. Maybe just firstly on Onivyde. If you could give us any more details on kind of when you expect to file this and we could see a launch and maybe the expected incremental investment that it's going to require to expand into first-line PDAC and what I mean for your second line sales?

And then just secondly, you give us an idea maybe on the kind of OpEx move between SG&A and R&D as you conclude some Phase III trials, but then you're offsetting this with kind of product launch activities. What are we going to expect to shift from R&D and SG&A? Or can you maybe see some cost savings over FY '23?

[David Loew, CEO]

Thank you, Charles. In terms of the Onivyde filing, we anticipate it will be as we said in the first half. So the team is working on the filing preparations. The launch will depend if we're going to get priority review, we could get an approval at the very end of this year. If it's a normal review, then it's going to be at the beginning of next year.

In terms of your question on the investment and what comes incremental, there will be a very small incremental spend because you need to remember, we already are actually seeing physicians with our field force and they can easily put this into their bag. So yes, over time, there is going to be some small cannibalization that you're going to see in second or third line. But since the pool of patients is so much larger in first line because you need to remember, pancreatic cancer is a very fast progressing disease and actually less proportionally patients in pancreatic make it to second or third line then, for example, in breast cancer, where you can have like 6 or 7 lines of therapies nowadays, so it's very different. And also the treatment duration is much longer.

So there are going to be these 2 additional benefits. Then also, if we get the first-line indication, we anticipate that all patients are eligible. So it's not just like post-gem-abraxane like in the second line, and you can't use it after FOLFIRINOX. We actually believe that the NaliriFox regimen can definitely start to replace FOLFIRINOX, but it can also start to replace gem-abraxane as the trial has very nicely shown. Then in terms of OpEx and the SG&A and R&D dynamics, I referred to Aymeric.

[Aymeric Le Chatelier, CFO]

Yes. So regarding that question, as you can see in 2022 we have lowered significantly our SG&A to reach a level of below 35% or R&D expenses were below 15%. 2023 is going to be a very different year. And I think it was your question, where we will see a significant increase in R&D as we're going to integrate both Epizyme and Albireo because today, as you see, Albireo is fully included in our guidance. So we expose the R&D to significantly increase.

As we integrate Epizyme, which was only consolidated for 4 months in 2022 and that we will integrate Albireo, we will also see some increase in SG&A, while we are still committed to increase our efficiency program and to continue to generate cost savings. So this is really the way we see our cost base to evolve in 2023, which will explain the dilution from the 37% that we deliver in 2022 and the guidance above 30% that we provide today.

[David Loew, CEO]

Thank you. also, next question.

[Operator]

I'll now take our next question. This is from the line of Rosie Turner from Jefferies.

[Rosie Turner, Jefferies]

Just a couple more on Dysport, if that's all right. Just a follow-up on Elizabeth's question. So this catch-up effect that you saw in Q3, Q4. So does that mean kind of mechanistically, the beginning of 2023 could be, I guess, quarter-on-quarter could be a little bit challenging? And thinking about the kind of phenomenal growth that you're having in terms of demand, so is that the broader market growing and you're continuing to kind of keep your share stable? Or is that you kind of taking market share? And then just on the long-acting neurotoxin that's gone into Phase II, which is super exciting, what are the timings around that? When can we potentially kind of see data?

[David Loew, CEO]

Thank you, Rosie. In terms of the catch-ups we are not guiding quarter by quarter, but we do see very strong underlying dynamic in the aesthetic but also in the treatment space. So we anticipate solid double-digit growth. In terms of the demand, is it the market growing or market share, it's actually both. So clearly, the aesthetic market is growing very rapidly with the expansion into younger people using it, also more males starting to use it. We have to also -- when you look at our growth by region, you can see that, in fact, the rest of the world region has very, very strong growth. So we see also an expansion, for example, in Latin America or in Asia. And then in parallel, we have been gaining some market share in the treatment space in the market. For aesthetics, it's a little bit harder to say because, as you know, there are not IQVIA data like we have, for example, in cancer. So it's harder to say, but clearly, we are very happy with the developments that we are seeing. In terms of the long-acting neurotoxins in terms of when we can expect data, Howard, do you want to elaborate on this?

[Howard Mayer, Head, Research and Development]

Yes. Thanks, David. So as you know, we -- as David said, we've started the Phase II program in GL for the land, and we anticipate having proof-of-concept data, including 9-month data at the very beginning of next year. And then we also are planning on moving into Phase II for adult upper limb spasticity the year. And we'll probably see those proof-of-concept data in more mid next year. So that's the time line for the land program.

[Operator]

We will take our next question. This is from the line of Thibault Boutherin from Morgan Stanley.

[Thibault Boutherin, Morgan Stanley]

So just one on Elefsina and the readout we expect in TBC in the first half. If you could explain a little bit different possible outcomes. I guess there is a very clear situation where the composite biomarker endpoint reach a threshold that you can file for accelerated approval. But is there also a scenario where maybe the interim is not reached, and the study continues. And if that's the case, what is the likelihood of reaching a positive outcome at a later date?

[David Loew, CEO]

Okay. Howard, do you want to take that?

[Howard Mayer, Head, Research and Development]

Yes. I mean I think the bottom line is that we will -- we're optimistic about the trial because of the Phase II data and the primary endpoint will be the composite endpoint versus placebo. So I think that the reality is that if we meet the primary endpoint on the composite endpoint, then we will move to submit an application for accelerated approval.

I'm not convinced that there's a second scenario. So I think, again, we're optimistic about meeting the endpoint because it's basically what was done in a shorter time frame in Phase, but we'll have to meet the primary endpoint in order to file for accelerated approval.

[David Loew, CEO]

Thank you, Thibault. Next question, operator.

[Operator]

We'll take our next question. This is from the line of Keyur Parekh from Goldman Sachs.

[Keyur Parekh, Goldman Sachs]

Two, if I may, please. The first one, on your next-generation long-acting neurotoxin. Just wondering kind of what is the point at which Galderma has the right to open to it? Is it at the end of Phase II? Or is that time line already passed?

Linked with that, as I look at kind of the Phase II, you've got 2 studies ongoing, one in aesthetics, one in therapeutics. On the aesthetic side, what are you hoping to know by the end of the study? Will we kind of be in a position where we know your target profile for this is our duration of, say, 6 months or whatever that number is? And how should we think of that? And then separately, going on to Somatuline for next year. Can you give us a bit of a sense for how you are seeing kind of the underlying volume dynamics versus the pricing dynamics across the various geographies?

[David Loew, CEO]

Thank you, Keyur. On the land, so on the Galderma opt-in socal Derma does not have currently a license. We would have to enter into negotiations and it would be after proof-of-concept. Regarding your question on the Phase II data on aesthetics and treatment, I will let Howard elaborate. Do you want to start with aesthetics and a question on the 6-month duration.

[Howard Mayer, Head, Research and Development]

Sure. I mean I think the question was what will know at the end of the proof-of-concept study and obviously, this is a trial that's comparing versus Dysport and placebo. So at the end of the proof of -- when we achieve proof-of-concept, we'll know how the drug compares in terms of efficacy with the standard and also what it looks like in terms of long-term efficacy. So we'll have 9-month data in all the patients. So we'll know how many patients achieved 6 months of efficacy, how many patients achieved 9 months of efficacy and how it looks like versus competitor products. And again, we anticipate seeing that at the very beginning of next year.

[David Loew, CEO]

Somatuline, the underlying mix of volume and price, I guess, this is your question. So in the U.S., we still see continued growth on volume. However, of course, then you have the price impact, you have the market share impact with Cipla and you have this inventory impact that I just talked about. In Europe, it's mixed. So for example, Germany, we still don't see a lot of market share. It's very flat with advance. And -- but for example, in Spain, they have referenced themselves with the lowest price, and they are taking rapidly market share. So it depends market by market.

In the rest of the world, of course, we still see a very strong volume growth. So overall, volume growth dynamics, very strong, which continues. So you need to have production capacity that's important to satisfy to the mat. Next question.

[Operator]

We will take our next question. This is from the line of Colin White from UBS.

[Unidentified Analyst]

Just a couple of questions for me. The first question was on how much inventory there was in Dysport and the second question was just on the differentiation of the NileroFox regimen. I was wondering if you could go into a bit more detail on how you see the safety profile specifically in terms of adverse events offering an advantage over Folfirinox in the first line?

[David Loew, CEO]

Yes. Thank you, Colin. In terms of the inventory of Dysport, so it was not a question of really just the inventory, but it's actually a catch-up effect -- so I hope this clarifies it. Then on the differentiation on Nalirifox, that's a very important question, Howard, what can you tell us about this?

[Howard Mayer, Head, Research and Development]

I mean I think that obviously, it's difficult to compare across studies because these were very different studies. I think David highlighted this, but it's important to know that Nallirutox is a novel regimen that consists of lyposomal irinotecan plus a different dose of an -- and we think from a safety point of view, this has potential advantages in terms of Neuropimyelo suppression and other factors. So we think that this is a regimen that provides both efficacy and also some potential safety advantage that may allow us to be used more broadly in patients. But obviously, the next steps are for us to to file with FDA and hopefully get it accepted and reviewed.

[David Loew, CEO]

Thank you, Colin. Operator, next question.

[Operator]

We'll take our next question. This is from the line of Alistair Campbell from Royal Bank of Canada.

[Alistair Campbell, Royal Bank of Canada]

Is this the top level of business development because I can argue with your existing growth drivers adding on top of the Talavera and Bovan. Hopefully, Sybrin from Mace, you have a lot on internally in terms of new product as you roll out. And I could argue that could paint a quite robust picture for growth beyond 2023. So does that perhaps lessen the urgency for BD activity? Or would you anticipate continuing at the pace we've seen for the last 12 months?

[David Loew, CEO]

Thank you, Alistair. Well, so we are definitely in a much better situation right now because we, of course, knew that this ethylene gradual erosion is going to happen. But then we had presented to you this 4-pillar strategy, and one of them, which was a very important one, was to maximize our current brands. And that is actually executed very nicely. So we had to really work with all the affiliates on making sure that we are very, very strongly focused and we see this very nice growth now with our growth platforms, plus, as you said, we are going to get more growth from the Serica and Bylvay ultimately.

So that puts us in a situation where we now have to first digest the time and Albireo acquisitions. So -- we're not in a hurry to make another late-stage deal right now, so at least short term. And so we can -- we will, of course, still continue to refill the pipeline also in the earlier stage. But we're going to be opportunistic. I mean as Aymeric told you, we have EUR 1.5 billion firepower even after the integration of Albireo. But we need to give the organization a little bit of time now to digest it. to really focus on the execution on what we have acquired in terms of the late stage. And then a bit later on, continue to add also more later-stage rocks.

Operator, next question? That's our last question.

[Operator]

Yes, we'll take the last question now. This is from the line of Delphine Le Louet from Societe Generale.

[Delphine Le Louet, Societe Generale]

Congratulations for the results. A quick question on the capital. We have a lot of a stocking effect in Q4 year. Can you extract the Chinese performance for the Cape and probably quantify this stocking effects that we've seen in Q4, just to get a better view on the underlying growth. A question regarding the mood in China of a whole, if you can also specify that Other question deals with the difficulty that some of us may have regarding the forecasting. You had some, let's say, engagement regarding the R&D target last year in the range of 14% to 15%. Is it fair to assume that we are more in the range of 19% to 21% of revenue for this year? And finally, I was wondering if your assumption in terms of revenue growth includes this already 18% erosion on so much lead.

[David Loew, CEO]

Thank you, Delphine. So on Decapeptyl and the China effect, we have seen a bit of a slower down in Q4 because of what was happening around COVID, obviously, because this was a very difficult situation China is going through. But there wasn't a particular really strong stocking effect in that sense.

In terms of the mood in China, I think people want to get back to a normal life. Of course, it was a lot of dramatic things happening, but we see also that people come to work. Some of them, of course, fell sick, but they are now coming out of this, and we all know that the current variance is less lethal than what we have seen 2 years ago. So it might be that it's going to normalize more rapidly than what we have seen before.

We also need to remember that China has started to open up again. So international travel now is allowed again. So there, I think, is a willingness to try to come back to a more normal life as quickly as possible. But we need to be careful. And it's hard to know exactly what it is going to do to elderly people, what the mortality rate is because of the statistics, not being very precise. It's hard to say what could this trigger as an impact, for example, on elderly people and the epidemiology and the way they're going to get their treatments.

Clearly, we have seen less people turning off elderly demand, for example, with prostate cancer, less people turning up in the hospitals. So there is going to be an effect there, and we have to see what happens there. On the forecasting on the R&D targets, Aymeric, you want to take that?

[Aymeric Le Chatelier, CFO]

Yes, David. Delphine, as I said before, I mean, our guidance is assuming that a significant part of the dilution that we're going to see this year versus 2022 is going to come from higher R&D investment. And the range that you are proposing is probably makes some sense given where we are today slightly below 15%. Clearly, the ambition will be to bring that ratio closer to this year.

[David Loew, CEO]

And then in terms of the revenue growth, the erosion of Somatuline is obviously included in the growth rate that we have guided for you. So with this, we are wrapping up our call today. Thank you very much. Back to you, operator.