AptarGroup, Inc. (ATR) Earnings Call Transcript & Summary

[Presentation] Hello, everyone, and welcome to the Aptar 2021 Virtual Capital Markets Day. My name is Matt DellaMaria, and I oversee our Investor Relations and Communications Activities. We are excited today to speak with you about our resiliency and our bright future, including a variety of growth opportunities. While I certainly look forward to the next chance to catch up with you face-to-face, I'm confident you will find today's digital event informative and representative of our creative culture. If you haven't had the chance to explore our virtual library on our event portal, I invite you to do so after the event. You'll experience Aptar through an engaging and highly visual experience that showcases our transformative solutions and highlights our efforts to be a more sustainable, innovative and impactful company. Today, you will hear from our senior leadership team. As you watch our event, we will be incorporating slides and visuals. If you prefer, you can download the presentation from this webcast streaming page. There, you will also find a slide viewer where you can advance the slides at your own pace. The slides will also be available on our investor website. After our prepared remarks, we will open a Q&A session where each member of the executive team will be available to answer your questions. You will have the opportunity to ask questions via the box on your screen. We will post a replay of this event on our Investor website. Today's presentation includes some forward-looking statements. Please refer to our SEC filings to review factors that could cause actual results to differ materially from what we are discussing today. Also, please refer to our slide deck with reconciliations of any non-GAAP measures. This file is also posted in the webcast streaming page and on our Aptar Investor website. Now we are ready to begin our program. On behalf of the entire Aptar organization, thank you for joining us today. And with that, I will turn it over to Stephan.

Thank you, Matt, and hello, everyone. I'm very glad you could join us today. I fully understand that this Capital Markets Day comes at a time when you may have even more questions than usual following our recent discussions on the quarter and the near-term outlook amidst still uncertain recovery from the pandemic. Without glancing over the short-term issues, we will share with you today why we are so excited about the long-term growth trajectory of the company and why we are really well positioned to take advantage of the global recovery as it unfolds. You will also hear why we are a clear industry leader, why our products are in the hands of millions of people every single day, how we have built a strong reputation in high-growth areas and how our businesses have a very clear competitive advantage with irreplaceable assets and solutions. For those of you that are new to our story, Aptar is one of the world's largest suppliers of innovative drug delivery, consumer product dispensing and active material science solutions. We offer a deep portfolio of product and services that spans many different attractive and growing health care and consumer markets, including drug delivery for prescription and consumer health care markets, elastomeric components for the delivery of injected medicines, as well as dispensing solutions for the beauty, personal care, home care, food and beverage markets. In addition, our growing active Material Science Solutions group is providing highly technical and often complementary solutions for the pharma and food markets. Millions of people use our products every day. Our solutions are in your kitchen, in your medicine cabinet, even in your purse, gym bag and your car. We operate across a broad geographic footprint active in 20 countries with our global headquarters located just outside of Chicago. Our European headquarter is located just outside of Paris, where we recently opened our new customer experience and innovation center aptly named InVision Lab. In Asia, we continue to build out our manufacturing and our innovation footprint with a significant presence across China and India. In line with our long-standing strategy to manufacture in region for the region, we operate manufacturing facilities in all key geographies, with additional sales offices in places like Dallas, Los Angeles, Tokyo and Dubai, to name just a few. With a team of nearly 13,000 talented and dedicated employees, we are partners to many of the world's leading brands. We proudly live up to our purpose statement, transforming ideas into solutions that improve everyday life. The simple yet powerful statement encompasses what we do here at Aptar every day, and the pandemic has only reinforced our essential purpose. We benefit from our long 75-year history of innovation and entrepreneurial spirit. Our customized solutions are created by engineers, scientists and design specialists. We invest in research and development, often well ahead of our peers. And as a result, unlike other companies, we own the intellectual property for the products we sell, some of which you can see on this slide. Our commitment to such high levels of innovation adds value to our customers, consumers and ultimately, to all Aptar stakeholders. We hold nearly 5,000 active patents and our research and development focus ensures that we are constantly developing new, innovative and competitive delivery and active material solutions. Our customers recognize us as a true innovation leader who has shaped the drug delivery and consumer product dispensing industry, while becoming a proactive leader in sustainability. Turning to our Pharma segments. In pharma, we are the leading global supplier of nasal drug delivery systems and pulmonary metered dose inhaler valves. At the same time, we continue to grow our customer base in the ophthalmic and dermal delivery routes. We've also built a strong reputation in our pharma business, which results from leveraging our decades of expertise in the regulated pharma space, our global clean room manufacturing footprint and our expansive offering of devices and services, which increasingly include digital health care solutions. Gael Touya will speak more about the market opportunities in our Pharma segment, such as the conversion of existing treatments and the development of new treatments for the nasal and pulmonary delivery routes, the continued steady demand for elastomeric components for injectable medicines and evolving growth dynamics for our material science team. Switching to our Beauty + Home segment. We are known as the innovation leader with our broad portfolio of brand differentiating solutions across prestige and Masstige fragrances, luxury facial skin care and other personal care and home care products. Building on the 2020 acquisition of FusionPKG, we're also growing our rapid go-to-market services along with e-commerce-ready concepts that enable us to support our customers large and small. Leveraging our historic strength in fragrance and lotion pumps, Xiangwei Gong and Marc Prieur will talk about the significant growth opportunities we see in Asia, especially in the beauty market. Marc will also speak to market opportunities in the global Prestige beauty market, especially in makeup and skin care, along with sustainable opportunities, which could impact each of our markets. In addition, the transformation of our Beauty + Home segment has been and continues to be 1 of our 5 corporate strategic priorities. We have executed on thousands of initiatives, instilled a sense of urgency and a continuous improvement mindset, which continues to work on reducing costs, making our operations more efficient, penetrating additional markets and securing larger shares of our customers' wallets. I'm extremely proud of our people who remain so committed to our objective to make our business a more efficient and agile solution provider. I will speak to more specifics around the transformation in the context of our strategic priorities in a few minutes. Now turning to Food + Beverage, we have been able to grow significantly as consumers continue to show their preference for performance-enhancing and convenient features. We are delivering strong core growth in the food market, which is attributed to the recent demand for pantry staples as consumers continue to cook at home during COVID-19. Asia also plays a big role in the growth of food and beverage, including the strong franchise we have built in infant nutrition in China. Hedi Tlili will share more on the market opportunities related to changes in consumer buying and consumption attributed to the pandemic, opportunities for Aptar to provide even more sustainable products and solutions, and finally how we are focused on consumer-centric innovation capabilities. While we serve multiple end markets with an extensive customer list, we are One Aptar. We share our insights, product designs, industrial capabilities and footprint, and overall operational expertise across all of our 3 segments, resulting in significant efficiencies and scalability across the business. Later, you will hear our shared technology systems and manufacturing processes and how they benefit each of our segments and Aptar as a whole. We use our own expertise, our customers' insights and the core set of proprietary technologies to transform ideas into solutions that improve everyday life for consumers and patients, and sometimes we even help to save lives. This coherence of values, purpose and strategy binds all areas of our company together. And the combination of our industrial activities and our commitment to innovation allows us to leverage our integrated operating model across the entire Aptar enterprise. In addition, we believe that our well-established strong governance and responsible corporate behavior are essential to our long-term success. That is why we practice business relationships that are based on transparency and accountability in order to advance the long-term mutual interest of all our stakeholders. To that end, we have a profound respect for the environment that drives sustainable energy consumption, operating landfill-free facilities and developing increasingly circular product designs. We are collaborating with our industry partners to implement powerful changes to plastics manufacturing and to promote the reuse of plastics. Our R&D teams continue to focus on sustainable product solutions, and you will hear about some exciting new developments from Marc and Hedi. We are a proud signatory of the Al McArthur New Plastics Economy Global Commitment. And in alignment with that commitment, Aptar's products will be 100% recyclable, reusable or compostable by 2025 for our dispensing solutions for the beauty, personal care, home care and food and beverage markets. We are also a critical partner for our customers as they transition toward a more sustainable product lineup. As a result of these efforts, we have been recognized as 1 of the top 100 most sustainable companies by Barron's for the past 3 years in a row, and one of America's most responsible companies for 2020 and 2021 by Newsweek. In addition, we have received recognition from many other organizations, including the CBP for our ESG leadership and progress. We believe that the lives of people should be enriched from having worked for and with Aptar. To that end, the safety and well-being of our employees is a top priority at Aptar. Throughout the pandemic, we ensured that our production sites maintained our stringent pandemic exposure control plans. We also recently published our updated policies on human rights, community engagement and global giving and diversity, equity and inclusion. We are proud to support the communities where we live and work. Aptar's global signature cause is our partnership with CARE, an organization that works around the globe to save lives, defeat poverty and achieve social justice. CARE's mission aligns with our purpose, values and mission to further diversity, equity and inclusion, empower women and support our local communities as well as global communities that are most in need. As we have seen during the pandemic, our solutions also greatly benefit society at large. Last year, we saw an increase in demand for our pumps and closures used on sanitizers and cleaners, which are vital in the fight against COVID-19. As a result, we made investments in new capacity and even repurposed beverage closure production to help meet the need for sanitizing and cleansing products. We also supply a range of vital drug delivery solutions for a wide variety of medicines and treatments, some with life-saving potential. Turning to governance. We are deeply saddened by the passing of long-term Board member, Dr. Joanne Smith. Joanne served faithfully on our Board for 22 years and was an inspiring and dedicated leader who contributed greatly to Aptar's success in our vibrant culture. Her presence on our Board will be greatly missed. Our current Board of Directors is comprised of highly experienced and accomplished multicultural leaders who come from a wide variety of backgrounds and countries. With this breadth of diversity, the Board can provide effective experiential oversight that is very relevant to the different end markets and geographic regions in which we operate. We have a 6-year average board tenure, and all of our directors are independent, except for me. 40% of our directors are women, and 3 of our 10 board members self-identify as persons of color. We have been recognized by several organizations for our Board diversity, including Women on Boards and the Women's Forum of New York. Now let me talk about our strategic priorities, which are guiding our path forward. These priorities are influenced by a number of factors, including the macro trends that are currently relevant for Aptar, which are shown at the bottom of the slide. On the left, you can see where we're coming from. And on the right, you can see where we're going to. We aspire to grow faster, improve profitability and create a more diverse and inclusive culture while expanding geographically and complementing our organic growth and our innovation with partnerships and acquisitions. Our 5 strategic priorities are all about how we get there. Starting with organic growth. We are focused on capturing the opportunity in faster-growing economies. For all of our businesses, rapid growth in Asia is an absolute imperative. As a traditionally Western organization, the rise of China is a tremendous opportunity with a massive and growing market, full of consumers ready to buy our products. The Chinese economy is a peer of the U.S. and Europe and is set to exceed the size of the U.S. economy in the coming decade. Beyond our operations in China, India and Thailand, we have opened sales offices in Japan and Dubai, where we also see strong potential to penetrate the market and grow. We are also focused on growth through investing in our capabilities and driving new product innovations across each of our businesses. The drivers of organic growth include adding solutions provider, FusionPKG, to our beauty business; developing a wider range of sustainable solutions for our different markets; and expanding our services and digital platforms, especially in our pharma business. We are also investing in growth capacity in key areas such as our elastomeric components business for injected medicines and our prestige beauty decorative businesses that will support many of our facial skin care customers. As we emerge from the pandemic, we expect 2022 to be a more normal year of organic growth for Aptar. Later, you will hear from our CFO, Bob Kuhn, who will provide an overview of our financials and review our long-term growth targets. Our second strategic priority is talent development. Any organization is only as good as the people in it, all the people who power it, all the people who pull it into the future, all the people who want to, who need to reach their full potential. Leaders who were the homegrown from within our organization or recruited from other great companies make all the difference in going from good to great. If we want to take care of the strategic priority, we cannot expect to be successful in our other priorities. We are making tremendous progress in developing internal talent as well as adding new talent and capabilities from the outside. Our excellence pillars are key elements of our strategy. In 2017, we recognize the need to formalize functional excellence pillars so that our regions could better leverage the global capabilities of our businesses while remaining focused on their local regional strategy. Our goal is to be best-in-class in product development, manufacturing and value delivery to our customers. Let me start with innovation, the lifeblood of Aptar. The DNA of our founders runs deep through our organization today. We have built a reputation of being the innovative leader in our space, and we aim to stay in the lead. In order to do that, we have established the Innovation Excellence pillar to: one, ensure we are sharing externally benchmark best practices and processes when it comes to idea generation, intellectual property management innovation project and portfolio management, face transfers, scale-up and product launch. Number two, ensure we are sharing the best ideas across all of our businesses. What is developed as an idea to serve one market can easily become a huge success in another market or a different business segment. Number three, pool our resources to investigate new innovation from peers like sustainability, material science or digital content and devices, tapping to outside innovators, including startup ventures and inventories. Our environmental health and safety organization has grown and become a key element of our operational excellence pillar, raising the bar for plant and business leaders with external benchmarks and tools. Through operational excellence, we also want to make sure we are developing the best quality protocols and are enhancing our continued improvement discipline, including the broad adoption of Six Sigma. We are focused on automation, automating material flows in our factories and implementing many other digital solutions to enable more efficient and better quality outcomes. Our supply chains are increasingly integrated, so we are able to operate in real time and still meet our OTIF, or on time in full delivery targets. This allows us to meet our commitments to customers while providing flexibility as their needs evolve. Our operational excellence pillar was also instrumental in developing and implementing our global pandemic protocols in collaboration with HR. This was a huge effort that helped Aptar safely navigate through the COVID-19 crisis to date. Another learning from the pandemic is that regional research and development and manufacturing capabilities in the supply chain are growing in importance with our customers. A more integrated local supply chain means lower lead times and faster market launches. Our manufacturing strategy has been and continues to be local production for the local markets. Our commercial excellence pillar is charged with implementing best practices for sales and marketing. When it comes to segmentation, pricing strategies, marketing strategies, customer engagement, sales force management, key account management and many other customer-facing initiatives, we must become and remain best-in-class. To do so, we also must measure how we stack up against the competition and against customer expectations, with feedback tools like NPS or Net Promoter Score. To name just a couple of examples, we recently reinforced our digital engagement toolkit and established a strategic marketing count. We have come a long way since kicking off the transformation of our Beauty + Home business in early 2018. Our teams have implemented the majority of our planned transformation initiatives over the past 3 years. These include new commercial strategies, better sales and customer project management on a weekly cadence. Also, factory improvements, cost reductions and new capabilities in Asia and fast-growing application fields, such as skin care and color cosmetics. I'm proud of what we have accomplished in a short amount of time. That said, due to the pandemic-related volume shortfall, we have yet to show the margin improvement towards our published EBITDA margin target of 15% to 17%. The transformation will not be accomplished until we are solidly and reliably in that range. We will continue to optimize our footprint, focus on SG&A cost containment and implement new strategies to expand our capabilities and product lines. Turning to our fifth strategic priority. We use acquisitions and partnerships to complement our organic growth and organic innovation activities. Through acquisitions and partnerships, we also add capabilities and technologies and feed the innovation and talent pipelines. As you can see here, we have been very active over the past several years. We acquired CSP Technologies in 2018 with great expectations about the material science technology, which is now helping to fight the pandemic and protect antigen tests. We have also been active in acquiring several pharma services companies, including Gateway Analytical, Noble International and Nanopharm to expand our offerings in the health care space. As I mentioned earlier, we acquired U.S. turnkey packaging experts, FusionPKG, to expand in the fast beauty sector of our Beauty + Home business and grow stronger in skin care. We also made key investments in Asia taking a stake in BTY to give us metal and decorative capabilities for the local beauty market along with YAT, the Chinese online influencer and online skin care company, to develop a wide range of products and services for the skin care market. In addition, we've made small investments in digital health care, including taking an equity stake in Sonmol, also based in China, and acquiring the assets of Cohero. We will continue to invest in the exciting and evolving digital health care space. Our sustainability-related venturing investments like Loop, Pure Cycle, Neva and REBO provide us with deep insight into the future of the circular economy and how to help make it a reality. We will continue to monitor areas for growth and seek strategic partnerships to expand Aptar's offering for customers, including the 2 most recent announcement in the health care space. In July, we announced another significant step towards building our foundation in digital health care with our intention to acquire Voluntis, a pioneer in the digital therapeutic space. We've also acquired 80% of Weihai Hengyu medical products, a leading Chinese manufacturer of elastomeric and plastic components used in injectable drug delivery. By adding local manufacturing capacity, this acquisition positions us to capitalize on the growth potential in the Asian region, while further strengthening the company's ability to serve local and global customers in the injectable drug market with best-in-class products and services, competitive lead times and technical support, all while leveraging our global network. I am incredibly excited about Aptar's bright future, which is underpinned by the execution of our strategic priorities. Aptar is a steady, long-term compounding growth story. And this execution has allowed our shareholders to achieve 104% total shareholder return from the end of 2016 through June of this year. Our dividend program is a key element of this compounding growth story, and this will be our 28th consecutive year of paying increased annual dividends. If the pandemic has taught us anything, it is that our lives are increasingly becoming more dependent on new and better technologies. This is relevant to each of the markets we are serving. We believe patients and consumers are going to demand technologically advanced solutions that help them with their daily lives, easier-to-use dispensing, improved recyclability, smart, connected and communicative devices. And Aptar is uniquely positioned to provide these solutions for our customers. Our executive team is pleased to share with you today how Aptar has built a strong offering in high-growth areas and how our businesses have a very clear competitive advantage with irreplaceable assets and solutions. This is how we will continue to deliver on our promises to all stakeholders for many years to come. Now I would like to welcome Shiela Vinczeller, Aptar's Chief Human Resources Officer. Shiela?

Thank you, Stephan, and hello, everyone. I'm Shiela Vinczeller, Chief Human Resources Officer. I'm very pleased to be here today to speak with you about our programs and initiatives that support our global workforce of 13,000, including our diversity, equity and inclusion journey and how we continue to adapt to the ever-changing Q1 capital landscape. A lot has changed in the past couple of years, and companies had to adapt in tremendous ways. Aptar is no exception, and I would like to start by sharing how impressed I am with how our global teams responded to the COVID-19 pandemic and rose to the challenge of ensuring the continuity of supply for the products that millions of people around the world rely on every day. In addition to advanced safety, hygiene and cleaning measures, we pivoted early and restricted travel and implemented new, remote and flexible work arrangement policies. As the pandemic grew, we also recognized the need for greater mental health awareness and we expanded our counseling support to all employees globally. Additional communication measures included the creation of a COVID-19 global action team, local site teams, biweekly global town halls and a COVID-19 resource center on our global Internet. Our leadership oversight and agility during the pandemic has reinforced our company's adaptability to change, and this mindset is present in all areas of our organization. Turning to leadership and development. Our highly appreciated Aptar Corporate University has been very agile and experimental in transforming face-to-face programs to full online interactive learning experiences and also recently received a top level award for culture and technology as part of a national awards recognition program in Europe. With so many changes brought about by the pandemic, it was, of course, critical that we kept a pass on the expectations and sentiments of our people. We adapted our annual employee engagement survey to include specific topics related to the pandemic, which includes remote working conditions and effectiveness, communications and, of course, health and wellness. We were delighted to see a continued strong response rate at over 75%, and that our overall scores actually improved in 2020, putting Aptar in the top quartile compared to other organizations in the global benchmark. Our adaptability as a company is only made possible by our diverse global workforce. I want to reinforce something that Stephan has talked about many times in our leadership meetings. Diversity, equity and inclusion, or DE&I, is not only the right thing to do, it is a business imperative for Aptar. And as Stephan showed earlier, this starts at the top with our Board and Executive Committee. Stephan talked about the diversity of our Board, and today, our Executive Committee has 38% of our leaders who are women and 2 of our 8 executive committee members self-identify as persons of color. All of our executive committee members have lived and worked in countries outside of their home country. It is also important that we partner with organizations who help us better implement, measure and uphold our DEI goals and commitments. We are members of the Gender and Diversity KPI Alliance, and we are using key performance indicators to measure gender and diversity in the workforce. In addition, our leadership position with Catalyst, CEO Champions for Change, is focused on furthering gender equality, diversity and inclusion in the workplace with an emphasis on accelerating progress in the representation of women, including women of color in executive or senior level positions. As a company, we, of course, remain committed to furthering our DEI progress and stand by our goal for women to make up 30% of our leadership team, vice president level and above by 2025. Today, we're just under 20% and are taking active development, networking and recruiting steps to reach our target. To help further our efforts, this year we launched our first women's leadership and development network called ALIGN, which is open to everyone. Hedi Tlili is the executive sponsor and is very engaged in growing this network, which is led by a creative and energetic team of Aptar women. Further networks are being explored, and we expect to launch some of them in the coming year. Colleagues often come to work for us because of our values because we are an ethical company who treats everyone with dignity and respect. And because our products are relatable, you use them every day. However, like many companies, we are not immune to the war for talent or retention challenges, including an aging workforce, rising wages, growing and shifting benefits packages and the old competitive race to offer the most flexible work arrangements. To recruit successfully, we have implemented a series of actions and tools that vary across our facilities and regions depending on, of course, what is most meaningful locally. These include attractive incentive and reward programs, identifying different sources of labor skills and sometimes temporary work arrangements. We are also working with different recruitment partners and training partners to ensure we are creative and competitive on all fronts. It is critical that we also focus on succession plans and the early identification of high-potential individuals to ensure that we have clear and effective development plans, including mentorships. We also have the benefit of being a global organization with a presence in 20 countries around the world. We leverage this capability, and we believe that leaders of tomorrow should have global experience living and working in a country that's other than their birth country, so they can experience different cultures, which in turn allows them to understand what drives consumer preferences and have a global perspective. This is a real competitive advantage for us. We are also applying our learnings from the pandemic to continue to operate with agility, efficiency and adaptability to enhance how we attract and retain talent. So with all that said, what's next? As we hopefully, at some point, have the pandemic in the rearview mirror, we want to ensure that we transition seamlessly into the next normal with workplace flexibility, an enhanced focus on employee health and awareness programs and then ever vibrant Aptar culture. As we move forward, employee engagement continues to be top of mind, and we have formed a future of work team with multifunctional representatives to ensure that we keep on top of best practices in this new dynamic and changing world. I'm proud of our progress as we continue to strengthen our leadership and talent development programs and advance our commitment to DE&I. Looking ahead, I'm excited about the future as we continue to position Aptar as an employer of choice and a great place to work. With that, I would like to turn the presentation over to Xiangwei Gong, President of Asia, who will join us right after a short video. [Presentation]

Hello, everyone. It is my pleasure to be with you today. My name is Xiangwei Gong, and I'm the President of the Asia Region. I'm based in Shanghai and have been with Aptar since 2018. I'm honored to share with you the progress we have made in Asia and the great opportunities we see for the region. Today, we employ 1,200 dedicated teammates in China, India, Thailand, Indonesia and Japan. Sales in the region, whether manufactured in the region or imported, represent about 10% of Aptar's global revenues. We have plans to grow our share of this expanding economies where we aim to help global and local customers win with locally designed and manufactured solutions. It is important to note that we serve global customers and local customers who are sometimes equal in size or larger than their western counterparts. We also deployed a full range of Aptar technologies in the region, as consumers and patients in these markets demand the same quality and experience as in other parts of the world but very often at a faster pace. As you saw in the short video, there are more than 4.6 billion people in Asia, equal to 60% of the total world's population, and Asia is expected to contribute to roughly 60% of global economic growth by 2030. The rapid emergence of Asia's middle class will bring far-reaching economic changes, creating new market opportunities for both domestic and the international companies like Aptar, transforming the region from a global manufacturing hub into a consumption powerhouse. The sheer vast size of the markets in the region presents unique business opportunities for our customers and, of course, for each one of Aptar segments. Starting with our Beauty + Home segment. The markets are attractive, large and growing. Research estimates that the Chinese beauty market is the largest in the world that's just under $80 billion in value and expected to double in size by the year 2025. Many of our global customers have commented on their optimism about the region and have posted their own impressive growth figures. We also see the rise of Chinese brands such as Proya and Jala as they continue to make their products more premium, which offers us great opportunity to grow with them. We also see significant potential in our Pharma segment. China is the world's second largest pharmaceutical market after the U.S., followed by Japan, and India's pharmaceutical market is growing rapidly. In Asia Pacific, the injectable drug delivery market alone is estimated to grow at a CAGR of 11% in the coming years, making it one of the fastest-growing regions. The Asia Pacific's nasal spray and the pulmonary device markets are also estimated to grow above 10% through 2028 due to the increasing elderly population, better diagnosis and higher adoption rates of effective treatments. Our Food + Beverage segment is benefiting from growing market trends such as wellness, nutrition, convenience and premiumization. Over the past few years, our business has built a healthy diversified portfolio to serve customers in sports and health beverages, infant nutrition as well as coking oils and sources. Asia Pacific is the largest market for infant nutrition products in the world and is projected to grow at 11% CAGR in the next 5 years, and customers are expanding their portfolio from infant nutrition to early child nutrition and to adult nutrition. The business opportunity is clearly there. And I'd like to speak to key drivers that are integral to our strategy. The first one is innovation, which includes innovation capabilities in product design, engineering, decoration, all the way to the end user experience. Our global customers are accelerating their innovation investments in China. For example, Estée Lauder is investing $35 million to create its world-class innovation hub in China. Either we invest alongside our customers, or we will no longer be their partner of choice over time. Our second driver is the supply chain and increasing localization, capability and speed to market. The pandemic told us that localization is critical. The booming e-commerce in the region also requires fast turnaround, lower lead times and agility to market. With those market opportunities and our key drivers in mind, we are investing in Asia to prepare for our future. On the innovation front, we are investing in the cross-segment regional innovation hub in China. We hired a very experienced senior executive with a pharma background and decades-long experience in leading beauty innovation for both global as well as Chinese beauty companies. In addition, we are increasing our innovation and service capabilities in the region through strategic partnerships and open innovation. We partnered with the renowned design and innovation School of Tongji University and launched a packaging lab to drive open innovation and sustainability initiatives. To address the need for greater localization, as previously announced, we are building a new state-of-the-art facility in Suzhou area. This facility will bring our 3 segments under one roof, with the latest equipment and automation technologies. We are also expanding key capacities in India and Thailand to serve each of our markets in the region. On the M&A front, our equity interest in BTY provides additional metal and decorating capabilities for the color cosmetics market, and our recently announced acquisition of 80% of Hengyu Medical products adds critical rubber and plastic components capabilities for injected medicines. In closing, although Asia is a relatively small part of our global business today, as you can see, the potential is huge. We have built a solid foundation and are starting to see the benefits of our work in this region. We plan to continue to invest in our capabilities and talents in Asia, as the region will become a significant growth engine for Aptar. Thank you very much. Now I'd like to turn it over to Gael.

Thank you, Xiangwei. My name is Gael Touya, President of Aptar Pharma, and I'm very excited to speak with you today. I've been fortunate to work for Aptar for over 25 years in roles across all of our business segments, spanning from sales, business development, marketing and regional or global P&L leadership positions based in Europe and Asia, including a multiyear assignment in China. Today, I'm based out of Paris, 1.6 billion patients. At any given moment across the globe, 1.6 billion people annually use Aptar Pharma products or solutions to breathe easier or just live better. Let me first remind you what Stephan said earlier. At Aptar Pharma, we have built a strong reputation in high-growth areas. Our businesses have a very clear competitive advantage with highly differentiated pharma solutions and services. With more than 30 years of experience in the pharma ecosystem, we have become the partner of choice for large pharma companies, biotechs and start-ups in our focus categories. We have the deep know-how to derisk and accelerate their drug development programs. Driven by our R&D-centric approach and portfolio of proprietary technologies, Aptar Pharma is the established global leader in drug delivery for pulmonary, nasal, opthalmic and drug thermal solutions, and we are rapidly growing our active material science solutions business. We are a trusted partner to more than 1,500 customers across a wide range of therapeutic areas and delivery routes. Our strategy is to support them from the formulation phase all the way to launch. And then even beyond launch with remote patient monitoring, to help improve patient outcomes as well as patient onboarding solutions for better adherence. Our solutions span many therapeutic and disease categories, including allergy, cough and cold, asthma and COPD, pain management, central nervous system, vaccines and biologics. This business has been growing consistently within our target range of 6% to 10% organic growth over the past decade, including a strong 2020 and at EBITDA margin within the 32% to 36% range. We've recently updated our 5-years planning process, and we can confirm our long-term target ranges based on our project pipeline. As you have heard in our recent earnings calls, the pandemic has caused temporary destocking in our prescription drug market and with some consumer health care products. We currently expect this to continue through the third quarter. Customers build safety stock prior to and especially throughout 2020, while the lockdowns caused fewer incidents of cold, flu, allergies and certainly fewer doctors visit. Our fourth quarter looks more promising from the destocking situation to abate, especially in our consumer health care division, given our conversation with industry professionals and key customers. According to the U.S. CDC, common respiratory viruses, including those that cause the common colds, are on the rise this summer, and this is happening outside of the U.S. also. We also see some signals from market data, including IQVA reporting for the first time this year from June 21 onwards. Allergic rhinitis total prescriptions for the U.S. market is expected to be back to pre-pandemic levels in the U.S. But as we are still dealing with the destocking situation on a global basis, our prescription device sales are not yet reaching their prepandemic levels. However, these trends underscore that demand for our core devices has only been temporarily impacted by the pandemic and that there have been no fundamental changes in our markets, nor have allergies, the cold or flu been eliminated. That said, we are able to grow this segment with good profitability, with growth in our elastomeric components and active material solutions. Our core sales increased 1% through the first 6 months and with adjusted EBITDA margin of 34%. Turning to examples of current market opportunities, I'd like to speak about drug repurposing, injected medicines and new applications for active materials. Drug repurposing is the use of existing drugs for new therapies or through new routes of administration. We also call this process conversion, converting a drug from a historic delivery mechanism to a new one using Aptar's technologies and devices. The regulatory approval process for new drugs is long and arduous, taking on average 5 to 10 years from concept to approval. It's also a very costly investment by our customers. Repurposing is less expensive but remains a very underestimated and complex exercise. The most well-known repurposed drug using our device is [ Narthian ], and we continue to play a role in helping those at risk of overdosing, and we have seen that 2020 was the worst year for overdoses death in the U.S. Other examples of repurposed drugs using Aptar devices include, for instance, the antidepression treatment SPRAVATO from Jannsen Pharmaceutical and the seizure rescue treatment NAYZILAM from UCD. There are several trends related to injected medicines that are presenting opportunities for growth. The COVID-19 pandemic is still with us. The need for boosters is already starting in some countries while the rest of the world is catching up with the first wave of vaccinations. In short, we will need annual vaccinations for some time to come. There will be a shift from multi-dose vials to single-dose vials and prefilled syringes that require an elastomeric plunger and needle shield. The acceleration of know-how around mRNA technology should support an acceleration of new medicines. Already, Moderna is speaking about an HIV vaccine and a vaccine for melanoma using mRNA technology. All of these considered supports our belief that demand for injection systems is steady and growing over the next several years. Our active material science business called Aptar CSP Technologies provide highly engineered active packaging solutions. This provide optimal shelf life, stability and speed to market for prescription and OTC drug products, diagnostic tests, drug delivery and medical devices and probiotics. We continue to see opportunities for the protection of diagnostic system elements such as test strips, including COVID-19 antigen test strips, and glucose monitoring devices for diabetes market as well as protection of [ overall ] solid dose medicines. Today, we see additional opportunity to expand our technology in Asia Pacific with our newly developed NextGen diabetes vials. Over-the-counter probiotics is also a growing application field with a strong market share in North America, where our active vials are used. We have the opportunity to expand this in Latin America, EMEA and Asia. We are investing around $120 million in 2021 and 2022, in the U.S. and France, to increase our capacity for elastomer components for injection systems. With these investments, we are also increasing our premium cutting capabilities. Pharma capacity needs to be built, validated by our teams, validated by our customers, and this all takes time. The vaccine and biologic injectable drug market in China is rapidly growing. We are expanding there by acquiring local capabilities and capacities of Weihai Hengyu Medical Products. Leveraging these existing facilities with full Chinese regulatory approval will allow us to quickly capture growth and meet rapidly expanding customer demand. We are also investing in capacity increases in other divisions, including for our consumer health care and active materials divisions. We are expanding into services that is supported by several industry trends. First, drug repurposing that I mentioned earlier. Through formulation support, analytical and regulatory expertise, we help our customers to accelerate and derisk their drug development programs. Second, between 2011 and 2018, new drug approvals attributed to small and midsized pharma companies increased from 31% to 68% of total approvals, and we see this trend continuing. Third, regulatory complexity is increasing on a worldwide basis, and this includes devices. In digital health care, we are very focused on building a comprehensive digital health platform in our niche markets. Through our connected add-on sensors on our drug delivery devices, we have the ability to track and improve patient adherence and patient diagnostics. Our recent strategic acquisitions of Voluntis will offer a comprehensive portfolio of digital therapeutics. Based on clinically relevant evaluations approved by FDA, Aptar Voluntis Digital Therapeutics, or DTx, is used as a digital company into a drug. The DTx is fully part of the drug regulatory pathway of pharmaceutical companies. The aim is to be co-packaged and co-prescribed with a drug. DTx is a drug's digital extension of classic therapy and a way for our customers to expand IP protection, differentiate their offer in the markets, generate new revenue stream and gain access to patient information. Now let me speak about patient centricity, which leads to better outcomes and lower health care costs. Patients increasingly rely on complex drug delivery devices, our self-injection devices to administer their medications at home. New drugs are available to address chronic disease such as diabetes, MS and Crohn's disease, for instance. We see huge opportunity to design patient-centric devices that are easy to use. We also provide patient onboarding solutions with Aptar novel expertise for better patient adherence. In closing, we are a leader in several key markets, from formulation capabilities to patient-centric services. We are very optimistic about the long-term view of the Pharma segment. Given our efforts to add capacity in our injectables business, our growth in our Active Materials Solutions business, our focus on growing our services platform and adding digital health care technologies and capabilities. This is the reason why across the globe, 1.6 billion patients trust Aptar Pharma to deliver their medication, to breathe easier or just live better. The robust high-quality project pipeline across each of our divisions, combined with the expected gradual recovery of the traditional allergic rhinitis and cough and cold categories give me confidence in our continued robust organic growth. Thank you.

Thank you, Gael, and hello, everyone. I'm delighted to be here with you. I'm Marc Prieur, President of Beauty + Home. I have been with the Aptar Group for the past 22 years in leadership roles within pharma, operational excellence and food and beverage. For the past 18 months since, I have led the Beauty + Home segment. Beauty + Home is a global leader in consumer product dispensing solutions and innovative packaging experiences for the beauty, personal care and home markets. Our portfolio of other 13 growth technologies allow us to deliver more than 16 billion solutions each year, mainly protected by over 950 patents. Partnering with other 6,000 customers around the world, we create responsible and innovative market-shaping products. And we are doing this across the entire industry from the world's best-known beauty brands to the company's big and small. We are operating in attractive and growing markets in beauty trendsettings countries such as France, the U.S., China and Brazil and many others. We offer our clients the widest portfolio of innovative solutions, ranging from fine sprays, pumps and valves to lotion and serum dispensers to airless systems to sophisticated decorative features and more. We also offer our clients customization, prototyping, in-house testing and tailored regulatory guidance. In 2020, the global pandemic almost halted brick-and-mortar and travel retail. While the beauty business was negatively impacted, our Personal Care business finished the year up, as declines in grooming and sun care products were more than offset by a surge in demand for sanitizing and cleaning products. Prior to 2020, we had been executing a multitude of initiatives associated with our transformation. While we continue to recover our volumes to support our long-term margin goals, we have continued to optimize our footprint. We have completed the closure of 8 facilities and made significant investments in upcoming state-of-the-art sites. Ultimately, as our volumes recover, we will see our margins improving. Using 2019 as a benchmark, we are at approximately 90% of our 2019 sales levels, and we expect 2022 to be a more normal year for our customers and end consumers, and we expect to grow above 2019 levels, expanding our margins towards our long-term targets. Turning to our recent financial performance. Our first half 2021 results reflects solid growth with our core sales up 5% year-over-year due to higher volumes and pricing initiatives. While we have been successful in passing along inflationary cost adjustments other than raw materials, we are still behind the raw material cost curve, and we are making progress each quarter. Now let's look at a few important market opportunities for our business. China Beauty, the rise of facial skin care and dermocosmetics, the recovery of prestige beauty, postpandemic and premiumization in mass personal care and home care. Sustainability and e-commerce are also overarching opportunities across each area of our business. As you have heard from Xiangwei, Asia is a huge opportunity for us. For cultural and demographic reasons, in a typical Asian middle-class consumer basket, beauty is over-indexing a western consumer basket by a factor of 2 including much higher consumption by male consumers. Chinese consumers are at the forefront of beauty and skin care, seeking the highest quality products. In fact, skin care, the largest beauty super category in China, grew 58% in the first quarter of 2021 year-over-year. Fragrance also thrived in China, growing 80% in the first half of 2021 year-over-year albeit from a small base. In the beauty market, facial skin care has seen significant global growth especially as consumers become aware that maintaining healthy skin not only enhances appearance but also protects from the effect of aging and sun damage. Third-party research shows that in Q2 2021, U.S. prestige skin care grew 32% year-over-year. Equally exciting is the emergence of dermocosmetics in the personal care market. These products for daily use are primarily targeted at healthier skin in all areas of the body with more advanced formulations. For example, during the first half of 2021, L'Oreal and Beiersdorf grew, respectively, at 32% and 22% year-over-year in dermocosmetics. The products shown are all using our lotion and airless dispensing technologies, and we will continue to drive further innovative and sustainable solutions. Industry survey shows that 65% of shoppers are excited to wear makeup again, and we are fully ready for this recovery and actively working with our customers. In addition to facial skin care rising, there is an opportunity for growth as consumers emerge from the pandemic seeking premium color cosmetics and fragrances. Aptar is recognized as an innovative, reliable, global top player in the prestige beauty market that is now becoming even more attractive to our customers as they seek to further differentiate their brands and provide consumers with exceptional user experiences. In Personal Care and Home Care, an important trend we are witnessing is premiumization, with customization and increasingly, reusability where consumers are searching for a personalized, upscaled experience with their products. For example, P&G recently restaged an iconic hair care product Pantene, with a high-end lotion pump instead of a closure. Other examples include our custom dual spray actuator for Reckitt's SBP insect repellent spray and major dish soap brand that has restaged globally with our inverted closure and valve, a product that will be expanded on various brands. Now let me talk about how we are positioning ourselves to capture a greater share of these opportunities. Beginning with Asia, our plan is to double down on our growth efforts in China while leveraging an entrepreneurial approach for the rest of Asia. As announced, we are investing in a new state-of-the-art facility in Suzhou. We will continue to build a best-in-class Asia team, and we will continue to enter into selective acquisitions and partnerships, building on our recent moves such as BTY for metal capabilities and YAT for skin care, fast beauty, social commerce and formulation expertise. Our goal is to become the global market leader in prestige beauty, facial skin care, fragrance and makeup focus, catering to the specific needs of our prestige customers. To do that, we must lead the niche market of decorative features, and that is why we have accelerated investments in our new state-of-the-art custom products and decorative facility in France. This will leverage our range of dispensing technologies in parallel with decorating capabilities while rationalizing our fragmented footprint. We will also continue to invest in new innovations for skin care, color cosmetics and fragrance dispensing, such as our new [ immune ] pump, a collection of prestige sprays for perfumes with a nice conception, including an interchangeable and refillable solution. Another driver to accelerate our growth is to go beyond dispensing. For instance, leveraging on FusionPKG attributes such as agility, creativity and speed to market. These enable us to tap into fast emerging ingredients and to replicate this similar full-pack turnkey model in other regions. Our sustainability goal is to deliver circular life cycle solutions for our clients. We have become a trusted partner for our clients to help them achieve, like us, their commitment to 100% recyclable, compostable or reusable packaging by 2025. Last spring, we introduced FUTURE, our first fully recyclable mono-material and e-commerce capable pump. At Aptar, the Beauty + Home segment is leading the way on sustainability. We are forging ahead with industry-leading solution, including the use of post-consumer resins, fully recyclable mono-material dispensers and e-commerce ready solutions requiring less protective packaging. Focusing on the consumer and implementing our omnichannel approach, we will continue to grow our portfolio, now at more than 40 solutions of e-commerce capable products, helping to overcome transport constraints and distribution pressures. Thanks to our broad portfolio and global presence, Beauty + Home is resilient when faced with a challenging macro environment. I am confident we are well positioned to innovate and deliver world-class sustainable and digital solutions as we take advantage of the ongoing postpandemic recovery. I'm excited about what's ahead for Aptar, and I'm looking forward to Beauty + Home's contributions to our collective growth. Thanks for your time, and I will turn it over to Hedi.

Thank you, Marc, and hello, everyone. My name is Hedi Tlili, and I'm the President of Aptar's Food and Beverage segment. I joined Aptar in 2016. And prior to my current role, I led EMEA sales and operations for both Beauty + Home and Food & Beverage businesses. Before coming to Aptar, I had leadership positions with Sunoco and Albea. I'm pleased to speak with you today to expand upon Aptar's Food + Beverage growth story. The Aptar Food & Beverage segment continues to extend its global market leadership in developing and delivering innovative dispensing solutions that enhance the consumer's drinking and eating experiences. At Aptar Food + Beverage, we have a strong innovation culture demonstrated through our transformational first-to-market launches with key brands like inverted Kraft Heinz ketchup to now inverted JIF peanut butter in a flexible pouch. The Food + Beverage segment produces over 7 billion units of products annually from sport closure to infant nutrition and everything in between. We currently partner with leading and emerging regional and global brands to promote package differentiation, improve product safety and reduce their environmental footprint. Today, the majority of our Food + Beverage revenue comes from North America and Europe, and we are expanding our footprint through facility expansions in growing economies such as China and Latin America. As we review our financials results, we saw a shift in consumer behavior from out-of-home to at-home consumptions due to the effects of the pandemic over the last 12 to 18 months. As we look at our first half of 2021, the Food + Beverage segment delivered strong core sales growth of 18% compared to the first half of 2020, driven by high demand for our solution and by price adjustments related to higher material costs and inflation. We've done a terrific job managing our raw material pass-throughs and segment-adjusted EBITDA increased despite the significant inflationary environment that so rises in many categories, including resin. We improved the timing of our contractual pass-through of these costs, but this can have a compression impact on our margins. Excluding that impact, we would have been within our long-term target range at 18% for the first half of the year-to-date. I will now highlight some key trends that we identify for future market opportunities. They include leveraging consumers at home consumption, driven by the impact of the pandemic; sustainability; and consumers' demand for caring for our planet and continued consumer focus on health and wellness. As we all experience with the pandemic, we have seen a shift in behaviors impacting where consumers eat and drink. If the trend of work-from-home continues, we expect to see a sustained level of at-home consumption above prepandemic times. Another market opportunity is customer and end-user demand for greater sustainability. Aptar's food and beverage customers are increasingly coming under pressure to help solve global sustainability challenges. We're partnering with them to help meet their own sustainability commitments. The third market opportunity is capturing health and wellness needs, which allows us to leverage our key technologies to support continued consumer demand for convenience and safety. Our first growth strategy focuses around at-home consumption. Our range of flexible pouch fitments and flow control valves continue to gain the attention of customers and consumers. First, by leveraging the success of our inverted flexible fitments and closure in the dairy market, we now see customers expanding this technology into new markets to achieve key growth. Some recent brand examples in North America are JIF peanut butter providing utensil-less dispensing, and Yukatan Guacamole with significant increase in product freshness, thanks to the Aptar dispensing system in the new squeezable inverted flexible packaging format. In addition, we're expanding our at-home beverage portfolio. For example, we currently support the coffee creamer multiserve business with leading brands like Starbucks. We will continue to leverage our multi-serve closure for at-home users around the world. Another at-home growth area for us is China. Through in-depth consumer studies, we identified the opportunity to provide clean dispensing experiences for oyster sauce formula specific to this significant market. We recently launched a new squeezable oyster sauce product in China using Aptar's valve technology. Our strategy around sustainability is to be the partner of choice to help our customers achieve their goals. This includes advances in product design, operational excellence and strategic partnerships. At the recently introduced SimpliCycle, our new and fully recyclable flow control valve technology, which has been accredited by the association of plastics recyclers, a leading recycling organization in the U.S., we're working with several important customers like Kraft Heinz, where we announced their commitment to implement SimpliCycle this year, utilizing this new technology to further advance their goal of full package recyclability by 2025. As we heard earlier from Marc, we invested into our cycle, which offers breakthrough technology to provide food-grade recycled polypropylene to be used within our dispensing platforms. Aptar's global scale and network of proven technologies allows us to deliver solutions that address local consumer pain point and thus, leverage on innovation across geographies and adjacent categories. As we see consumers continue to put personal health and safety top of mind, we are expanding our knowledge and capabilities to include new business models and enter strategic partnerships. For example, we partnered with REBO to launch a smart connected reusable bottle that uses Bluetooth technology embedded in the cap to track the amount of water consumed and inform consumers of the total number of plastic bottles avoided by using the REBO bottle. Another example of our global growth and consumer-centric innovation is through our in-depth studies conducted with infant formula in China, a continued key focus area for us. We're also working with our nutrition customers on ways to enhance safety and ingredients protection for all age demographics. Lastly, our active packaging business from the Aptar CSP acquisition continues to provide solution to food service and food safety within the grocery and retail markets. Our technologies address key pain points in the fresh food supply chain related to moisture, oxygen, other and antimicrobial concerns. As you can see, Aptar Food + Beverage has a strong foundation for growth. Our mission is to expand our global leadership position, always focused on consumer-centric innovations and partnering with our customers for growth. We will continue to advance our technology, manufacturing footprint and portfolio capabilities globally, especially in new markets like Southeast Asia, Middle East and Africa, where the opportunity for growth is significant. If we see an opportunity to enter into key partnership and M&A, we're prepared to quickly move forward to achieve our growth objectives and drive value for our shareholders. And now I will turn it back over to Stephan.

Now that you've heard from our business leaders, we would like to take a few moments to discuss our integrated operating model. Our objective is that each business unit, whether it be a segment or key regions such as Asia or especially a smaller regional P&L team, operates with an entrepreneurial mindset, always thinking about and winning in the local market, while at the same time leveraging across our global functions and expertise and tapping into our network of talent and experts around the world. This notion of linking and leveraging across our enterprise begins with the work of our senior leadership team, all of whom have gained multi-region and multifunction or multi-business experience throughout their careers. In addition to their respective segment or functional leadership roles, our executive committee members have also corporate right responsibilities. For example, each leader is also sponsoring a certain geographic region and keeps up to date with strategic regional developments there that are relevant to Aptar. Examples of key functions that are leveraged across Aptar include our operational, commercial and innovation excellence pillars, our sustainability initiatives and some of our shared services. I will now hand it over to Marc, Hedi, Gael and Bob, who will highlight a few examples.

Thank you, Stephan. In addition to leading the Beauty + Home organization, I sponsor our Latin American region as well as Aptar sustainability initiatives. I am also responsible for our operational excellence pillar, where we are focused on sharing operational knowledge and best practices in manufacturing and more across our business segments. This knowledge sharing helps us leverage our expertise across segments and allows us to become more efficient as a company, driving savings in our processes. Each of our 3 segments shares GMP practices, even clean room capabilities for pharma and food and beverage and use common state-of-the-art manufacturing technologies, including mold-building equipment, high-speed assembly machines, precision injection molding prices, rapid prototyping and 3D printers along with in-house testing centers. All of these allow for accelerated product development while achieving project cost efficiencies and increasing our ability to respond quickly to market needs. Our focus includes new factory layouts, automated material flows and embedding digital solutions, including use of virtual reality for certain machine repairs. We are also implementing artificial intelligence to enable better quality outcomes. Our operations specialists are responsible for applying and ensuring compliance with our operational excellence standards, such as our Lean Six Sigma program and our health and safety procedures. We also leverage our sustainability initiatives across our company, including our grassroots landfill-free program. By year-end 2020, 53% of all Aptar sites were landfill-free certified. Also, where Beauty + Home is taking the lead on developing sustainable solutions, Food + Beverage and also Pharma will soon be leveraging our growing knowledge base and sustainable product development innovations. Lastly, while we will drive to bring ultrapure post-consumer resin to the food market through our partnership with PureCycle, this competitive advantage is of interest to our prestige beauty and pharma customers. With that, I will now pass things over to Hedi for additional examples on our integrated model.

Thank you, Marc. In addition to leading our Food + Beverage segment, I sponsor our business opportunities in the Middle East and Africa. I'm also responsible for our commercial excellence pillar and our global purchasing organization. The goal of our commercial excellence pillar is to implement best sales and marketing practices across Aptar that improve our revenue generation abilities and our margins. A recent example of cross-segment effort to impact margin is the new pricing management tool and practices we are implementing worldwide. We aim to capture 100 basis points of EBITDA margin in certain regions as a result of this initiative. We're also working hand-in-hand with our digital team to deploy a new suite of digital tools that will enhance efficiencies and generate new sales leads while improving the interface with customers. With regard to global purchasing, our cross-functional team leverages our scale to drive savings across business segments. This includes reducing the cost of raw materials, energy costs, transportation and machinery among others. For example, we achieved tens of millions of savings each year that offset some cost inflation, and this is only possible with the collective leveraging of the group. Now I will turn it over to Gael to discuss innovation excellence.

Thank you, Hedi. In addition to leading our Pharma segment, I sponsor our business opportunities in Western Europe, and I'm responsible for our innovation excellence pillar. For Aptar, innovation excellence is critical as it stands as a funnel to ensure that we are sharing the best ideas and practices across our segments. Ideas developed from one market can easily be leveraged and result in a huge success in another market or different business segments. With a common design thinking process and pipeline management tool, we are able to easily have visibility across all the 3 segments for a balanced approach that often leads to recommendation of new technologies across the segments. Our team also meets with start-ups, looking to partner with highly innovative companies that invest in technology that have applicability in our industry and product end markets. In addition, many of our innovations and customer success stories are the results of the work in our InVision lab near Paris. This lab was designed to rapidly co-create innovative solutions with our clients and showcases our technology's innovation and creative problem-solving capabilities. If you have not done so already, we encourage you to take a virtual tour of our InVision lab in the virtual library space on today's event platform. I will now hand it over to Bob for additional comments on our collective strength.

Thank you, Gael. Hello, everyone. Great to be able to speak with you today. I am Bob Kuhn, Executive Vice President and CFO. In addition to deploying our shared excellence practices, we have implemented an Aptar in-sourced business service center model that host corporate functions that support our 3 business segments in key regions, including transactional accounting, information services, human resources, master data governance and more. We are building out these centers to include purchasing, trade compliance, reporting and analytics, to name a few others. Our current business service centers are located within our regions of North America, Eastern Europe and Latin America with plans to implement in Asia. These service centers not only help us to reduce our fixed costs. They bring improved productivity and efficiencies as we harmonize our business processes. Future expansions and M&A can then leverage these established business service centers, including facilitating integration efforts.

Another important example is how we share our product technologies. Take our critical spray pump technology. Not many people know that we first became experts in spray technology in our Beauty + Home segment with fine fragrance spray pumps. And we leverage that knowledge and product performance designs to create the first nasal spray pumps. In essence, our leading pharma nasal delivery device platform was born in our beauty business. Even in our Food and Beverage segment, we have customers relying on our spray technology to deliver oils and salad dressing for their meal.

Another game-changing technology developed by Aptar is our SimpliSqueeze flow control valve, which has application ranging from personal care body washes to food and condiment dispensing. With over 30 billion valves sold cumulatively to date, this technology originated in our Beauty + Home segment for use with body wash products. Then it helped us to upend the consumer catch-up experience with the launch of the revolutionary inverted condiment package. Our flow controlling valve technology provides cleanliness, convenience and freshness and is responsible for transforming the entire condiment aisle at your grocery shop.

We also have a technology called Bag-on-Valve that is leveraged across all 3 segments. This technology, which essentially is approached welded to the underside of a dispensing valve and protects the purity of the formulation. It is offered by our Pharma segment for use with nasal saline rinses and our new PureHale device, which emits a fine mist of saline that can be inhaled to moisten the upper airways. This same technology is used by our Beauty + Home segment where it transformed the sprays and screen category. This is the same technology used in Food + Beverage for many cooking sprays.

I think it's also important that we talk about the product applications and opportunities for our active material science solutions. Our active vials and related technologies are essential to maintain the integrity of a variety of diagnostic systems. In our Pharma business, for example, our active film protects certain COVID-19 antigen test strips and swabs, and our active vials protect glucose monitoring test strips for moisture. We are also finding opportunities to offer drug delivery devices or dispensing solutions in combination with protective vials, such as our solution for Lilly with their BAQSIMI treatment for hypoglycemia. Similar technology is being leveraged for the food industry, where there is a need for antimicrobial packaging that could virtually eliminate pathogens after fresh-cut produce or seafood is sealed in its package. In addition, we are working with our core food and beverage business to help customers solve existing market needs and to further differentiate our solutions from competition.

These are just a few examples of the many ties that bind Aptar together in ways that leverage the collective strengths and talents across our segments and regions. To round out the geographic sponsorships, Kim Chainey, our Global General Counsel, also sponsors North America and is building up a government affairs and contracting capability that we did not have before. And Shiela Vinczeller, our CHRO, is sponsoring Russia and Eastern Europe. While we serve multiple end markets and have a long and growing list of customers, we are One Aptar. We share insights, product designs, operational expertise and functional support across our global enterprise. The end result is our ability to drive significant efficiencies and scalability making us a stronger, more competitive and resilient market leader. Now I would like to turn the discussion back over to Bob, who will share some comments on our financial performance and our long-term targets.

Well, thank you, Stephan. You've heard from my colleagues today about current market conditions and opportunities as well as the direction the company is heading, where we are investing for growth and why we are excited about our future. I'm going to try and put things in perspective as it relates to our overall strength and performance and our long-term financial objectives. I would like to start with a brief recap of where we are thus far this year compared to the prior year and equally meaningful where we are relative to 2019. Through the first half of the year, reported sales are up 12%, with core sales growth up 5% and currency and acquisitions contributing the remainder. As you saw earlier, each segment achieved core sales growth through the first 6 months on increased demand and pricing adjustments. Inflation is another topic that is top of mind right now, and I would just like to remind everyone of where we are and what we expect in the near term. Currently, we are doing an excellent job of passing through inflationary costs such as labor, freight and energy. We are seeing significant headwinds on raw material costs. And while we have had roughly a $15 million negative impact on our adjusted EBITDA through the first half of 2021, we do expect to catch up further on our pass-through efforts. And that number should be less in the third quarter than it was in the second. Looking at our consolidated adjusted EBITDA margins for the first half of 2021, if we adjust for the effects of passing through the cost increases on a dollar-for-dollar basis and for the residual raw material pass-through lag, our margin would have been at 20% rather than just under 19%. As we are still navigating the pandemic, it is relevant to understand where we are in relation to prepandemic times. If we isolate the top line contributions from M&A and adjust for currency movements, Core sales are slightly higher than 2019 sales through the first 6 months. If we look at the segments, both Pharma and Food + Beverage are up 7% on a core basis from the first half of 2019 and while Beauty + Home is more than 90% of the way back to 2019 first half levels. Now let's turn to our capital allocation strategy, followed by a brief look at our returns on invested capital. As you can see, Aptar has historically been well balanced with its capital allocation priorities. Since 2017 and through the first half of 2021, we have deployed approximately $2.5 billion focusing first on reinvestments in the business, then our accretive acquisition strategy, which I will discuss further momentarily, and finally, returning value to shareholders via dividends and share repurchases. We've been able to effectively execute our capital allocation strategy while maintaining a very healthy balance sheet and low leverage multiple. Going forward, our strategy will not change significantly. Importantly, we have, for many years, included a return on capital factor in our incentive compensation formulas. As a result, our investment decisions are better aligned with shareholder interests and in initiatives that are expected to generate growth and value. Our first priority use of capital will continue to be reinvesting in the business, which generates our highest risk-adjusted return. This is followed by strategic M&A and then our dividend. And finally, our share repurchase program. We have generated sufficient cash flow over the years to fund our balanced capital allocation strategy and has have [indiscernible] self-fund any capital needs. Turning to our ROIC calculation, which is tax affected EBIT over average net capital. Prior to 2018, we had been as high as 15% on our ROIC. However, our recent increase in M&A activity has weighed on our calculation, including the balance sheet effects and the negative impact from M&A-related amortization and depreciation from allocated purchase prices. And today, we are at approximately 10%. We do not adjust for these items in our return calculation. We have an internal target to return to preacquisition ROIC within 3 years absent any additional M&A. We estimate that for every $100 million in M&A spending, we are initially negatively impacting our ROIC calculation by roughly 20 basis points. And therefore, you can see a decline starting in 2018 when we made our largest acquisition, CSP Technologies, for $550 million. While we recognize the short-term ROIC impacts from these acquisitions, we have seen that longer term, they are helping create shareholder value and acquisitions will remain an important enabler of our strategy in the future. As Stephan presented earlier, we have been actively investing in new capabilities, technologies and partnerships over the past several years. Some of these transactions are investment in smaller companies with a few larger ones included. We have been pleased with the performance of these businesses. For example, if we look at the businesses we have acquired since 2018 and take the 4 largest transactions, we expect these entities to collectively generate and be accretive to our overall company adjusted EBITDA margin with margins in the low 20s and that they will contribute approximately $35 million to $40 million of free cash flow this year. These acquisitions have added capabilities to all 3 of our segments, providing us opportunities to offer differentiated solutions to our customers as well as enable us to penetrate into new markets. We recently completed our 5-year planning process, including a review of our strategy and how that will impact the long-term plans of each business segment. Each of these plans confirm that Aptar continues to be a long-term growth story affirming our long-term growth targets for both revenue and adjusted EBITDA margin for the company. As a result, we are confident in and are maintaining our overall long-term targets of 4% to 7% core sales growth and 20% to 22% adjusted EBITDA margin. We are adjusting our ROIC target based on my previous comments about the impact of M&A to 10% to 13%. Looking at our segments, we are reaffirming each of the long-term targets based on our 5-year plan. Achieving our plans is expected to generate significant shareholder value in the process. In 5 years' time, we expect that Aptar will grow excluding any future M&A to achieve revenues of approximately $3.6 billion to $4 billion with adjusted EBITDA between $750 million and $900 million. Additionally, we expect strong cash flows as a result of executing our plan. We expect to generate operating cash flows as a percentage of adjusted EBITDA between 75% and 90% over the next 5 years. Our ability to generate cash and our strong balance sheet allows us to grow organically and inorganically across all 3 businesses and return value to shareholders. In closing, after a detailed review of our growth strategy and completion of a comprehensive bottoms-up 5-year planning process, we are reaffirming our long-term targets and the profitable growth potential of the company. We intend to invest according to our market opportunities and strategic priorities, as outlined by the information we presented to you today, and we expect to generate strong cash flow to support our initiatives and to maintain a strong and flexible balance sheet. With that, I would like to turn it back over to Stephan.

Before we close out the day and wrap it up for Q&A, I would like to leave you with a few key thoughts. First, we are in an excellent position to develop and share all of our drug delivery, consumer dispensing and active material science, technological advancements across each of our businesses. Second, as the lines between Health and Beauty and Food begin to blur, Aptar technologies can be leveraged across all of our end markets and for any customers. Premiumization and personalization will also drive share developments in our markets. What is developed for Pharma customers may have very relevant application in beauty. Same for Food + Beverage, connectedness, connected devices and leveraged intellectual property. This is the strength of One Aptar. Our multiple markets One Aptar approach provides stable growth, strong shareholder returns and resiliency that is difficult to replicate, especially during challenging times. Third, we are a clear market leader, and we turn ideas into solutions that improve the lives of millions of people every single day.

That concludes our prepared remarks. We will now take a brief 5-minute break before starting the Q&A. [Break]

Thank you, everyone. We're about to begin our Q&A session. Even though the members of our executive committee are in different locations, we're all connected and ready to go. The preferred method to submit questions [indiscernible] to my colleague, Katie Reardon, [email protected]. Katie.Reardon@ aptar.com. And with that, we're going to take our first question. First question is from Ghansham Panjabi at Baird. Realizing that China has and has always had a large addressable market for Aptar Group, how much do you think growth in China or Asia will contribute towards the core sales growth target for each of the segments and on a consolidated basis? And we'll put that question over to Xiangwei.

Thank you for this question. We continue to commit to the growth in China. And we have shown that we are growing double digits for every segment. And as you have seen, our current share is still at around 10% to our global business. We are going to move to double of that in some years and actually trending towards 30% in the long term. Thank you.

Question comes from John Kreger at William Blair. And John asked, Gael mentioned that destocking will continue through Q3 but you are also seeing signs of improvements for Q4. Can you please elaborate on these signs. And that's over to you, Gael.

And twofold, I will say, I mean, the first one, when you look at the North American energy market, I mean, we see in June some positive signs of business being above the pandemic-level. That was for the first time in ages. I mean Q1 has been a disaster, gradually, April and May have been above 2020, but behind prepandemic levels. June, July did confirm that trend. So that's onefold. And twofold, this is our engagement with our customers. So we got customers, some of our customers telling us that basically, they have reached their target inventory levels, some others not yet. So telling us that basically step by step, we're going to be back to gradual recovery of the business.

Our next question is from Salvator Tiano with Seaport Global. You reiterated your long-term targets, what makes you confident you can achieve them in Food + Beverage and Beauty + Home in the future years given that you've missed these targets for a number of years. We'll put that over to Stephan.

Sure. I hope the previous 1.5 hours have given you a good sense of where we -- and how we see the opportunity with Food + Beverage I think you already see the top line developing quite well. Clearly, in Beauty + Home, we have made tremendous progress on the transformation that is masked right now with the delayed COVID recovery. But Beauty, in particular, is a high-growth market. And as we pivot our portfolio towards the higher growing areas. No doubt that we will catch up with that growth rate. Remember that our historic base is in fragrance in Western Europe. The growth is in skin care in Asia and in color cosmetics in Asia. So in addition to all our internal execution, issues that we addressed through the transformation, we also had to pivot our portfolio for the high-growth markets. And as you've heard from Xiangwei, we feel we are already much better positioned, but it's continued work to continue that journey.

Okay. And we will get questions that are very similar to ones previously answered. So I will skip a few as they come in if they've already been addressed or very similar. The next question is from Kim Bretz at State Farm. How much of Aptar's innovation is done solely internally versus in partnership with other customers? And of those innovations done with customers, are they exclusive to those customers? So maybe we'll start with Stephan and then we can kick it over to Gael.

Sure. Let's zoom out a little bit. Clearly, the research and development benchwork, a lot of that is happening in our technology centers around the world internally. That is our first focus for innovation. We complement that internal organic innovation effort with venturing activities. And you've seen us make a number of those with each of these venturing investments, we have some kind of connection hook agreement, Board seat so that we can be at the forefront of the development and then take advantage as those venture developments come to fruition. Engage with customers whether it's technology push from us or pull from the customer roughly, that's about 50-50 in our business. It is above -- it's all of the above. And then in terms of exclusive agreements, it's very rare that we give exclusivity to our customer at best often, it's a lead time of 12 months, 18 months for a specific development. We certainly look forward to intensify the cocreation with customers in our innovation center in Paris and in the innovation center that we envision to come in place in China. Maybe Gael, you can peel back the onion a little bit further?

Yes. And the one element that I would add to your comments is 100% of our innovation, our patient are consumer centric. There's not a single type of innovation that is done out of the vacuum. So basically -- so we are very much connected with our patients, with our consumers in order to understand their unmet needs and to be able whenever we start partnering with our customers across the globe to have a true, I would say engagement, but I'm thinking process in order to come to co-creation. And that's really what we are doing and what we are leveraging across the different segments.

The next question is from Adam Josephson at KeyBanc. It's a 2-part question. One was on Pharma destocking, which I think we addressed through Gael's earlier comments. And the second is on, we've mentioned significant headwinds on raw materials, speaking about our guidance. How did these comments compare to what you said on your Q2 call regarding your Q3 guidance? Has inflation gotten worse? And let's put that one over to Bob.

So as it concerns raw materials, yes, raw materials, particularly in North America, pricing is increasing more than what we had originally anticipated. Europe is -- has remained relatively stable. Overall, inflationary costs, again, we're constantly following this, and we're constantly evaluating new price increases. And on the raw material side, we have the legs and passing those through. So as they go up, we're going to be passing those through. And we've got other positives on the flip side. So we're really not changing our guidance that we had for Q3.

And maybe I can just add on the puts and takes. I would say we're still -- and we mentioned that with Q2 experiencing friction in the supply chain, you don't just restart the whole economy with the press of a button. In North America, labor shortages continue to hobble us especially as we move some of the manufacturing around. But also it's a mundane thing, just getting shipping a range, getting truck drivers to show up. Many of our shipping providers don't have the truck drivers. So this friction in supply chain will be with us for some time as the economy kind of gets back on its feet and the supply demand imbalances all along the supply chain, incoming, outgoing get sorted out.

So maybe as a follow-on with that, Stephan, Ghansham is touching on actual raw material shortages. And if we've had any significant raw material shortages due to the supply chain issues.

Yes. We're not as much impacted from the initial situation in Texas. But the most recent one with [ AIDA ], we start to see some real concerns, especially in North America. So I would say, historically, not so much. But going forward, we may have here and there some issues. It's a bit too early to say where that falls. I would also say building on my previous comment, as some of these government support schemes come off not only in the U.S., but also in Europe, we see some of our suppliers really struggle to be economically viable and suppliers go out of business and you have to look at alternative suppliers or have safety stock, again, there's quite a bit of friction in getting the supply chains restarted.

The next question is from Gabe Hajde at Wells Fargo. It's a question for Gael. I believe most of your business before had been in multi-dose stoppers in reference to the injectable components business. It sounds like some of the recent growth is focused on prefilled syringes. Is this a new and/or a bigger opportunity for you than it was prepandemic?

So the growth is coming from multi-dose components. That's a fact. I mean 70% of our growth I mean, it's [ biological ] related and amount of 70%, you've got 55%, 60% being COVID-related. And we know that basically, COVID is under multidose vials formats. But as the paneling still continue to be there, we believe that the market and based upon the insight we've got with our customers, the market will transition to single dose vials but also to prefilled syringes, where basically we've got solutions with plunger or [indiscernible] protection. So we see a dynamic growth moving up. And we are quite confident on in -- capturing that growth.

Gael, we're going to stay with you. The next question is from Dan Rizzo at Jefferies related to Pharma. Can you talk a little bit about the win-loss ratio with products that are developed when you kind of codevelop with a customer? And how many products are in development versus how many reach commercial launch? So really a question on the pipeline.

I mean we are having a similar, I mean, win and loss ratio that the Pharma industry. I mean that's a very long process, so first. And then you've got a loss ratio, we are here to win. I mean the industry, you've got 35,000 developments in the market so far, basically from early stage to clinicals. I mean, the industry is facing an attrition rate very high, and it's no different from us. I won't comment on the number of projects we are having in our innovation pipeline with our customers is significant, and we are tracking. We are very disciplined, I mean, to support our customers. The one element I'd like to share is the acquisition of experiences and capabilities around services from [ formulation ], to analytical support, regulatory expenses. We are supporting our customers in our niche market to accelerate and derisk their drug development program. So I'm pretty confident that we've got a very strong innovation pipeline build and pipeline conversion. Now it's pretty obvious that if from a clinical phases, whatever 1, 2 or 3 pharmaceutical companies is getting negative results. I mean the project is dropping. That's what we know from a market perspective.

Maybe I can just build on that for -- taking it a little bit broader, Gael, of course, talked about the very high attrition rate of Pharma projects in the pipeline. But I think the question was also win-loss ratio versus competition. And that is something we track closely, but frankly, it's much more relevant in the consumer-facing businesses where you might have an RFP out for a project client and 3 companies get engaged and then maybe the 2 shoot it out. That is not really how Pharma works. I mean, especially in the nasal respirate side, we have very high participation rates in that market. Let me put it this way. And we get engaged 5, 7 years prelaunch provide services. This is not a competitive situation where you talk about win-loss, it's more about does the project make it through the pipeline through launch, and then is the launch successful for every [indiscernible] out there, there are 10 others that don't make it. We have some service revenue but then no product revenue. And it's a little bit different in injectable, but even there in injectable the market is growing so rapidly, so many opportunities. This is not an attrition market. I mean, all the players take price and we kind of ramp up capacity to keep up with demand as opposed to fight each other. And even in active materials, it's much more about how many problems can be solved and can dedicate that -- our researches to solve those problems as opposed to we're being pitted against somebody else. It's much more of can we provide a solution that is relevant to the client. As you see with COVID test from [indiscernible], we can turn it down very quickly if our solution is what the client needs.

Okay. We have a couple of questions on capital expenditures. So one is kind of an overall question from Kyle White at Deutsche Bank and a follow-up from Gabe Hajde at Wells Fargo. Bob, the first one is for you, which is what should we expect in terms of CapEx over the next 5-year period? Should we expect it to continue to increase as a percent of sales? Or do you see it stabilizing at current levels or even potentially declining? And then the second is for you, Gael, which I'll come back with.

Sure. I think it might be beneficial to take a quick review of some of the major capital projects that we initiated this year. There's a large injectable capacity expansion that Gael was talking about there. That's really a 2- to 3-year project. This year, we expect to spend about $35 million on that. And the total project cost over the life is probably going to be closer to $120 million. We also have our Suzhou facility are putting -- essentially regrouping 5 of our factory units under 1 state-of-the-art facility. There, we've got about, let's say, $14 million out of about $42 million in that project. And then we also have a decoration facility in France where, again, similar where we're grouping 5 different factory workshops under one. And there, you're $22 million spent this year with a total cost of about $44 million. So how does that pan out? I mean our guidance this year is $300 million to $330 million. I think those projects as they run out, will probably be close to that range and then looking at our long-term plan, we would expect to come back to a little bit more normal levels below $300 million.

And -- thanks, Bob, the follow-up to that, and Bob mentioned the $120 million. So we are updating that kind of overall investment in the business for injected meds, but I'll kick that to you, Gael. We had previously targeted a near of $90 million. It's now $120 million. Can you just speak and remind the audience again of what we're investing in?

Well, we are increasing investment because we've got a good pipeline for [indiscernible]. We are investing in mix capacity and additional capacity from injection to training, to working equipment, not only in France, in our [indiscernible] and Brazil factories, but also in the U.S., in addition to the Weihai Hengyu acquisition in China in order to better say local markets. One of the key lessons from COVID-19 has been basically critical health care space to get a more region to region in our local to region type of [indiscernible] chain. And we are following that path in order to better serve our customer.

So we have 2 questions that touch on Pharma services. So we're going to stay with you, Gael. One is from Kim Bretz, State Farm. You've been using M&A to build out Pharma service capabilities. Talk about the longer-term strategy here and how this becomes a new revenue strategy for Aptar. And then a follow-up from related similar from John Kreger. Within the Pharma business, can you elaborate on your portfolio of services business either how large or where they are important?

Yes. So let me some out and just reexplain the strategic question for building these capabilities and expertise. Aptar has been known for years with a very strong verticals around our drug delivery devices. I mean [indiscernible], all that in very specific and focused market by a request of our customers and by being close to our partners, basically, we've seen that we had to extend our experiences and capabilities from early on development with formulation support. And this is the acquisition of Nanopharm, which is an expert and world-wide leader in formulation development and optimization for nasal or preliminary routes through analytical support in order to derisk and accelerate, once again, the drug development program of our customers. 70% of any drug approvals in the world are coming from small company, biotech, medium size, pharmaceuticals company, and they do need to get a partner like Aptar in order to provide them those services to be in front of the regulatory bodies with the right combination product solutions. And so, I would say, regulatory requirements are raising the bar year-after-year. And not only in the U.S. but also in Europe, I mean the Article 117, for example, I mean, we have organized webinars with our regulatory expertise where we had hundreds of different customers joining the webinars in order to see how Aptar would better support them to better understand regulatory constraint. We've got the same approach with China. So that's really our ability to be from formulation down to patient centricity. When we go for the acquisition of Noble being a leader in onboarding solutions for patients in order to improve adherence of patients with a new drug delivery format, for example. I mean, we are with the marketing and the commercial focus of our customers. So from formulation early stage to the commercial and to the onboarding of solutions for better adherence, we are there to improve basically our partnership with customers, and we are increasing basically our moat around our drug delivery devices plate. So that's not yet a significant part of our business. But I can tell you, from access fees, milestone payment, we are also looking at different way of getting revenue generating from our services play.

Yes. And maybe I can just jump here, Kim and everyone. Just to remind everyone, our device business is really unique in the sense that most of the time, our delivery device is in the drug master file. And that basically means for the life of the drug, whether it's in originated phase, generic phase or over-the-counter phase, that's the device that's dispensing the drug. And the services, of course, if you are early on engaged with the client, as Gael said, makes it the obvious device then to be in the drug master file. So services is a nice business in its own right, profitable business, maybe tens of million, maybe 1 day, it's $100 million. But of course, the second area, and if you want the primary benefit, is then our device in the drug master file, and we have device revenue for the life of that product. So it's truly synergistic effect.

Okay. Marc, the next question will be for you. It's from Anojja Shah at BMO. Can we get an update on what you're seeing in the Brazilian beauty market right now? Is COVID still having an impact? And how are you thinking about medium-term growth in the region? Over to you, Marc.

Yes. Yes, we see what I call a miracle happening in Brazil. We were certainly affected last year during the hurt of the pandemic. But since then, we have seen the market recovering greatly. It's a market of 2 or 3 big customers, of course, and also a market of custom-designed fragrance products. And this is where we are capable of providing a multitude of solutions and ability to design what our customers are looking for. And they were very active in relaunching and pushing new products through the doors of their virtual stores because both -- especially 1 of our 2 main customers was already very much on the e-commerce and digitally agile, and they benefited, and they were able to push the recovery, leveraging that e-commerce solution. So, so far, what we see is a very resilient market, more resilient than we thought, a market that is now very dynamic in launching new projects. And as we are also increasing our capabilities and capacities, in Brazil, we just opened a new factory in the state of Bahia to serve as much as we can in a very close look, 1 of these 2 customers, we can benefit from the recovery postpandemic of Brazil.

Okay. The next question is from Chris Harper, at The London Company. Has the M&A strategy changed given low leverage, strong cash flows and lower ROIC target? Where are the gaps in the portfolio? Over to Stephan.

Okay. And Bob -- maybe Bob can complement it. I don't think our M&A strategy has changed. If you look at the history of the company, Aptar is an amalgamation of many different smaller companies. And of course, 28 years ago that we were spun out of who was the aggregator as a public company, and we have kept going, you may say, and it's true that we've picked up the pace a bit in recent years. And that triggered the ROIC discussion that Bob went into. But the fundamental strategy is no different. What we've added probably is the -- in addition to adding the pace of the bolt-ons is the venturing investment angle to complement our innovation activities. It's quite simple. We have to admit the 99% of the smart people in this world don't work for us. And we'd like to tap into some outside innovation as well and link that to Aptar, and we found that very, very useful. Bob, maybe you want -- you have a more historic perspective.

Yes. No, I would fully agree with what Stephan has mentioned. I mean, historically, Aptar has always been a core growth story, right? And I think today is no different. We're going to use M&A to complement our capabilities in region, help us to accelerate growth. And as Stephan has said many times before, you just can't time M&A deals, right? They don't -- there's not a linear path to that. So I think the beauty of us being very financially responsible in the balance sheet is it gives us optionality, right? It gives us the ability to take a look at assets and still be disciplined in our approach when we look at them. But Aptar is still a core growth story, and I agree with Stephan, we haven't fundamentally changed our approach.

Maybe we'll stay there, Bob, just for a quick follow-up from Adam Josephson at KeyBanc, as we talked a little bit about our ROIC target, which we calculate as a tax-effected EBIT over average capital. In the event of another sizable acquisition, would it be reasonable to assume further degradation of your ROIC? And if so, do you have an ROIC boundary kind of below limit, which you're unwilling to go?

I think the easy answer to that is yes. If we were to do a sizable transaction, you would see a degradation of the ROIC. We do have our internal targets to get back to preacquisition ROIC within 3 years. And so that is us generating the synergies that we set out to achieve in the transaction. Do we have a lower boundary limit? Of course, we want to stay above our cost of capital. But I think we're a long way from getting there. I think I mentioned that roughly it's about 0.2% for every $100 million that we invest.

Okay. The next question is from Tom Meyer at Hilton Capital. This is over to you, Gael. Thinking about the Pharma sector and the COVID-related impacts. Any sense of what revenues may be viewed as onetime? Any sense of what parts of the business might have benefited from the pandemic proving out new technologies, such as mRNA vaccines? And lastly, did your ability to deliver products in a timely fashion strengthen relationships with existing customers or bring new ones to Aptar? So I could come back to these, Gael, too if you'd like. 3 -- kind of a 3-part question.

Yes, Yes. I mean, this is what I was sharing. I mean, 70% of our growth around biologics, including vaccines, I mean, 55%, 60% of that growth is coming from COVID. I mean, if I refer to the deliberation from the WHO this morning telling us that basically the world will have difficulties to achieve herd immunity, therefore we are at massively vaccinating people. I'm telling you that basically, we might move from pandemic situation to a non-pandemic one. And recently, we talked about a third boosters. My parents are 80-plus, and they received last week their third booster. So we believe that basically [indiscernible], we will have to leave with that virus. So I don't think this is a one-off. I think that's going to continue with. I think that the drug delivery format might be evolving from multi-dose vials to single dose, where stoppers will be requested, but also moving to prefilled syringes where you will need launch middle chip. So I think that's going to continue. So that's to answer your question number one. You had 3 questions. Number 2 was regarding the new technology vaccines. So on that one, I mean, I run biologics, so customers are looking for purity, I mean making sure that any component in contact with formulation will be as pure as possible. And when you look at the extractable and leachables profile, which will be as neutral as possible. And on that one, our new technology around premium coats where we are having an additional coating in order to be really inert with formulation, I mean, is coming up greatly. We have been exposed, yes, with existing customers, but also new customers with our premium code technology. And out of the $120 million we are investing, I mean, a portion of it is to get the capacity or I mean to take the pipeline we are having our own premium coat.

And really, the last part of Tom's question is relevant to really all of Aptar. Through the pandemic, did our ability to deliver products in a timely fashion strengthen relationships with existing customers or bring new ones to Aptar. I mean this is a relevant question across all of our businesses.

Yes. I would say -- maybe I ask all 3 segment presidents to answer that. But in general, what I got from customer interactions is a newfound appreciation for a partner who can execute on global activities, can execute in multi-region activities. It started just by keeping the show going when the pandemic came out initially. We're now executing global product launch in the distributed fashion around the region, supplying the region, for the region. And remember, throughout the pandemic, we kept making tremendous progress on the sustainability front, on the digital front. So it is a more complex world. We all realize that. And larger companies -- or Aptar is not that larger company, a larger company is better to -- is better able to navigate the more complex world than smaller regional competitors for who new regimes, transportation issues, political issues become a bigger hurdle. But maybe just go around the table, maybe starting with Heidi.

I'll repeat the question.

Sorry to take over your job.

No, I think I'll repeat it. It's really through the pandemic, our ability to deliver as it strengthened relationships are broadening new ones. And we'll start with you, Heidi.

Yes. Thank you. So of course, it did for 1 reason is that we did not stop our operation. We kept delivering products to the Kraft Heinz of the world to everybody that was needing products to use them at home. And I think the at-home consumption at that time was very high, and we kept producing and manufacturing in all the regions of the world, not even 1 day. And I think we owe that to our teams that have been operating during that period with no interruption. So -- and in the meantime, we used, as you said, Stephan, the digital platforms to continue to develop products. So we could not develop them and visit them in their factories because of COVID, but we continued designing, developing products for them. So I think that I would -- I think we're stronger after COVID as a company, and our relationships are much tighter.

Maybe over to Marc, and we can finish with Gael, and Xiangwei.

I can tell you several of our customers during the peak of the pandemic last year where people were begging us to stay open and we did, and they were really thankful for this. And even today, with the [indiscernible] tension and et cetera, we are capable of delivering everything we need. And this has been improving our relationship, giving a different tone to the relationships we have with many of our customers. and, of course, helping for the business to come. And we stayed open and sometimes at cost, but this has been recognized greatly in the market.

Well, no different from Heidi or Marc. I mean you know that in Pharma, due to the nature of our business, I mean, safety of supply is more than critical, quality of supply. So they were, I mean the team, Pharma team worked, and fantastic job, I mean, to be up and running and making sure that we won't have any supply chain disruption. We've got very long-term relationship with our partners and suppliers at the same time. So yes, customers have been sending kudos to the Pharma organizations in order to make sure that basically, the -- we are recognized for what we have done. And with [indiscernible] in line with this. That's quite impressive through the digitalization of our connections with customers, and we have increased the number of webinars, for example, technical webinars, scientific webinars with different subjects. The number of leads we have generated and the number of activity, engaging with noncustomers, but also new ones. So...

Xiangwei?

Yes. I just want to add on to that with 2 examples. We digitalized our -- all our product catalog and because we couldn't do trade show. And as a result, we won Unilever's innovation award, they call it [ Unovation ] and actually really transformed how we interact with customers, not just going to purchasing and packaging, but really to the whole R&D community, marketing community because the digitalized tool is much more fluid and much more just user-friendly and opens all kinds of doors. That's one. And another example I want to bring is to add on to the injectable business growth in China, which also is why we just executed -- closed this transaction in acquiring 80% of Hengyu. Our largest customer in China, which has been really growing leaps and bounds, and they have specifically appreciated so much how our French manufacturing facilities have been able to supply their hugely increase in demand in the past year. So it's really, really a big complement to our French colleagues. Despite all the supply challenges, we have been able to keep up with the increasing demand. And our relationship is going really, really strong in the injectable, which provides us a huge growth opportunity. Thanks.

Okay. The next question is from Bob Stephan, State Farm. What are the toughest points of competition in the prestige area of the Beauty + Health business -- Beauty + Home? Do those competitive points differ across geographies? So that's over to you, Marc.

I will give you answer solely focused on the Beauty market. If you want to compete in the prestige beauty market, you need to be able to align very large set of technologies that you combine into innovative products, and you can create very complex, high-end products still at an affordable price like the one I have here. And creating these complex products in a very short period of time. So -- and there is no big differences from one region to another one, but sometimes in China, for instance, is more speed to the market in Europe would be more the innovative complexity, the look, the customization, as I said before, in Latin America. But all in all, this is where we can leverage what Aptar can offer to the market versus competition is a very wide range of verticals, of technologies that we have available almost everywhere in the world. We can leverage what -- the transformation was also bringing to us in Beauty always being faster to the market because we developed in a better way the products in a more cost-efficient way of product is something that we are not capable of doing several years ago. So we can -- and we have also a set of very bright people bringing innovation, seeking innovation from the outside as well, combining this into a unique value proposition to the market, adapting our proposal to the [indiscernible] of the customer. So all these competitive elements in the Beauty market are really advantage to compete with the others that very few competitors can align all these capabilities, actually.

Okay. The next question comes from George Staphos at Bank of America. The company has detailed its many advantages in the industry and benefits of the integrated business model. Why then have Food + Beverage and Beauty + Home seen EBIT flat to down since 2015 or before and performance that has trailed other specialty packaging peers even before COVID? And if not for COVID, would Beauty + Home had been at its 15% margin target in 2021? And what progress should we expect in 2022? And when do you achieve your target for 2023? So a lot to unpack there, but...

Yes. Let me kick it off, and I'm sure Bob and Marc and others will jump in. So I think we've been very transparent that our Beauty + Home business was not where we wanted it to be for a number of years in the 2010s. In late 2017, early 2018, we kicked off the transformation to address those issues. And those issues were at the front end of the business, starting with the segmentation, commercial practices, customer project management, win rate tracking, [indiscernible] cadence. And just before the pandemic hit, you saw a nice tick up as a response to all the work we did there in the organic growth. The second is that we had dated assets, especially in the West and practices that needed to change, which was the original trigger for the transformation. As you may recall, this now already some time ago, tremendous issues with decorative site in France, also some of our anodization sites. So a lot of work in improving the factories. I've stated earlier that it took longer than I would have liked. And some factories, we had to go through 2 times and even 3 times to get it right, but tremendous improvement in our operational performance, which then in turn allowed us to start to take some factories offline and absorb that capability in others. And then thirdly, to pivot our product portfolio and our talent portfolio towards the higher growing market of skin care, color cosmetics Asia, while keeping executing on our traditional markets and all of that designed to get toward the 15% to 17%. We've said at normal levels of demand, so pre-COVID and normal supply chains, I would say, we will get to the 15% and that what the transformation is designed. And two, and that's what we're committed to. Food + Beverage is a slightly different story. As you know, we've had 1 single large client in China where we went from sole source to dual source over a number of years that kind of overshadowed the rest of the Food + Beverage business, if you exclude it, which is, of course, not our intent. But just for the sake of argument, the rest of the Food + Beverage business has done very, very well. And you now see that the Chinese beverage customer, in fact, almost to wash out of the results, and you see Food + Beverage do very well. I think those are kind of the big picture answers. But maybe, Bob, you want to add some things.

Sure. I'll just add a couple of points. specific as it relates to Beauty + Home and I don't know if this was -- I don't want to focus on the specificity here. But if we're looking at EBIT and not EBITDA, you have to take into account for Beauty + Home, the acquisitions that we've done since 2015 because there is additional DNA that's related to those M&A acquisitions that go in there. So that's also depressing a little bit. As far as would we be at the 15% margin again, this one, you have to think about how -- what Marc has said around keeping some of the factories open so that we could supply customers throughout the pandemic. Our factories, particularly in Beauty + Home, are organized by technologies, right? So we have dedicated Beauty factories in Europe and in France. And if you were to look at some of the personal care factories, which we're running, obviously, full out during the pandemic, our margins were definitely well within the targets that we set out. You take the Beauty factories operating at less than optimal capacity and volumes, and that's dragging it down. So ultimately, we need to get the factories back up to absorb some of those fixed overhead costs, and then we would be close to that 15% target in my opinion, this year.

Okay. Moving to a follow-up question from Ghansham Panjabi at Baird. Given confidence in your core sales growth and margin conversion, is there a reason that explicit EPS targets are not outlined? And more broadly, in retrospect, what are the primary reasons EPS growth has been modest over the past decade, 4% below the peer group relative to your above peer group sales growth? So again, EPS, reference to EPS, Bob.

Sure. So I mean I'm going to come back to the comments that I just made. Obviously, EPS is calculated on a net income basis. So not to give an accounting lesson here, but obviously, we've been much more acquisitive over the past 5 or 6 years. And so roughly, if you look at the purchase price paid versus the equity in the businesses that we acquired, you take that differential and roughly -- and these are just ballpark numbers, it depends on each acquisition, but you can count on 50% to 60% of that excess purchase price over the equity in the business goes to amortizable assets. So you've seen a big uptick in depreciation and amortization, primarily from those acquisitions. And obviously, that then pulls down the diluted EPS figure. That's probably the primary reason that I would mention. And that's why I think if you look at the company, it's never 1 key metric that you need to look at. These are very positive cash-generating businesses. These are bringing synergies across the board. And again, we have the drag on EPS. In some cases, they're amortized out over a shorter period of 3 years. In other cases, they could be customer list or technology or IP or patents that run out over a longer period, like 12 to 15 years. So it's really important to look at the full picture and look at cash flow from operations, obviously, in this respect.

I would just add a quick follow-up. That's the reason also we talked about the 4 notable acquisitions that we've done recently in our presentation and show -- to show the accretiveness, not only at the margin level, but the cash contribution level as well. So it's important to bring that up. We're going to keep going a little bit longer. I know this was the slated time to end, so apologies if some of you have to drop, but we still have a couple of questions in the pipeline, and I'd like to get to those. One is for Gael from John Kreger at William Blair. Gael, you mentioned increasing capacity for the premium coated elastomer products. Can you tell how much you are expanding capacity? And when will this come online?

So the premium -- the additional premium capacity for the injectable division is targeting to come live by the first half of 2022. I will say Q1 2022. We are investing in France. We are investing also in the U.S. in order to manage the market team, and how much we are investing from a capacity perspective, that's kind of information that I am not going to be sharing, but I can tell you that the group is investing in order to give the ability for the division to convert the pipeline we are having and the orders we are having.

Okay. This is a question for Xiangwei. With approximately -- this is from Kyle White at Deutsche Bank. For -- 10% of your sales are in Asia with about half of that being in China or from China. In your 5-year plan and long-term targets, how much of your sales do you expect to be generated in China by 2025? And how do returns and margins in that region currently compare to other major regions such as the U.S. and Europe?

This is a great question. Basically, you see that we have invoiced and we have shipped to -- with -- so our business invoice in China is actually still higher then that 50-50, but we still -- we ship from China to also some other parts of Asia, there is Japan, there is Indonesia and all that. But you can see that China continues to be a key driver of the growth -- of the regional growth. And you could argue that I -- in the next 5 years, I would think it will be 70%. In fact, the driving force, if you look at how China is driving the business, then it is also 70%. What we reflect based on shipped to, it's about half of that. So in terms of margins, we have very attractive businesses. We have customers who really just want innovation, innovative products, they want speed, they want you to deliver full-time solutions. And in that case, pricing is not always an issue, and we can really demand very good premium. But on the other hand, we are also -- in some places, we are still building our capabilities, and we are really still making strategic investments, especially in resources. So for those strategic markets and strategic entry points, then this would hurt our margin a little bit in the short term. But on the other hand, over the long term, in the long run, in the 5-year plan, we do that the Asia overall, the margins should be at a similar level of our group target. So maybe Stephan, Bob, you have something?

Well, of course, we get this question a lot. And I keep coming back. China is almost the size of the U.S. and Europe as an economy. And it's, of course, much more rapidly growing. And not unlike any other economy, if you have good people who understand the consumer, the patient, the competitive environment and our technologies, they find the niches where we can compete and derive differentiation and make money. The thing that is different in China is the speed. So that's why you need to be able to react very quickly, tap into opportunities. And often that if you do it twice the speed, you might still have a chance. Sometimes you need to do it at 3x the speed as you would do it in the rest of the market. So that's why you need good people on the ground. That's why we have strong P&L leaders build up. But the same economic supply as everywhere else, speed differentiation relevance to customers. And if you offer these things, you make money. If you don't have differentiation, you will not make any money. It's as simple as that. As far as IP, I hear that a lot, and I just want to be on the record, the last major 4 IP challenges we had came from Western competitors or clients. So IP management in China is no different than anywhere else. You compartmentalize your know-how, you file for intellectual property protection. And you make sure that not any single person can walk out the door. But frankly, that's no different in other economies. Risk. Risk is a matter of how far are you away from the situation that you control. So for U.S. in business, for people who only used to do business in the U.S., China looks very risky. I can tell you for a Chinese business person, who's only done business in China, the U.S. looks very risky and Europe the same. So the key is to have good talent, good people in the region that know their environment, that live in the environment and do all the right things to make money. And then China is no different than any other economy to compete for growth. And you see many U.S. companies, whether it's Tesla or Apple or Starbucks and many European companies, Daimler, Mercedes who are very happy with the position in China. And that's really our approach to be in the region for the region doing good business.

May I add? Okay. So the question was also about Asia. So I do want to add that we talk about China a lot, and China is critical. But on the other hand, we also see a lot of other opportunities in the region. And the region is also more connected than ever. So Japan, for example, is all the time seeing a premium, and we do see the Chinese and consumers alike, [indiscernible] made in Japan, and that the order is actually shifting East and building an innovation center in China, but also building manufacturing capabilities in Japan. So they were making Japan and probably ship to China as an example. And we see continued growth in the Pharma opportunities in India and also Sub-Indian continent, even in Bangladesh, we have huge opportunities there as well. And also, we still continue to see the important markets in masstige and personal care as well as food opportunities for Indonesia, for India, for the rising economy in Asian countries, this is just going to be up and coming in the next 5 years, and we just cannot ignore. So thanks for this great question.

Maybe 1 follow-up. I think we've addressed. We've got a couple of questions on IP, and I think you addressed that. Region-for-region, I think, is important. You addressed that. There's a question, a follow-up from Kyle White at Deutsche Bank about risk given the current situation and with China potentially having increased regulations that provide national companies with competitive advantages to ensure supply chain...

I think that's important to address, so thanks for bringing it up. I would say the following. Not unlike the European politician or an American politician, most of your communication is for domestic audience purposes. I mean those are the people who elect you. That is different from business, conducting business. And we basically provide this churn with consumers' everyday needs, patients' everyday needs and improving the quality of life. That is what the Chinese government wants. Frankly, that's what every government wants is to improve the quality of life of their people, especially the middle class. So we have no challenges to our business, our thumbs on the scale or anything like that. And in fact, local government is very, very interested in having continued foreign direct investment, especially from the U.S., knowing what all the political statements are mainly for domestic purposes. So I do not see a risk. Now I fully acknowledge if you are in strategically sensitive industries, aerospace, semiconductors, 5G, that is much more problematic for Western suppliers to do business in China. But let's be honest, it's as problematic for foreign suppliers to do business in the U.S. I mean when is the last time Airbus sold something to the Department of Defense, it just doesn't happen. And for good reasons. So -- but we are not in those industries. And without being smart, lipstick and face cream just do not rise to the point where it's important for the Chinese government to put their thumbs on the scale.

Okay. We have a question from Garo Norian at Palisade. We've highlighted innovations such as spray pumps, sickly squeeze, bag on valves. Are there any new innovations that are close to coming to market, which could have a similar or significant impact on the business moving forward? So this is really -- maybe I'll kick it over to Marc to talk a little bit about -- we've had some exciting announcements on some recent product launches.

Yes, absolutely. And the short answer is yes, we have many innovations to come, and some of them are very disruptive or about to convert some markets that we are in. Recently, we launched and we are promoting in [ which are known ] the plastic lotion pumps so fully recyclable, can be made of fully [indiscernible] recycled. And this is only the first one of many to come because this is the trend of sustainability, and this is the way we answer. And we see also from the COVID pandemic new market trends that are calling for truly innovative products that are not existing today. And again, where with our talented innovation set of engineers, with all the technologies we have, we can create a unique value proposition to the market. So yes, many more innovations to come. Sometimes, we recombine the existing technologies to create a unique proposition as well. And health innovation. But when it comes, for instance, soon in the home care business where we are about to maybe convert a big category with a giant global player, this is -- could be considered as a very innovative push on the market.

Bob as -- will follow up and then maybe even Heidi, we can go to Heidi after Bob.

Yes, I just wanted to mention, don't take your eye off the active material solutions group. They're working on a lot of very interesting platform technologies. You know them for oxygen cabbaging and moisture scavenging. But we're also working on some new technologies coming from this platform around food safety, in terms of antimicrobial packaging, which is obviously very relevant in today's world. We talked a little bit about protecting COVID test kits and things like that. We're also experimenting with sterilization of medical instruments and the like. So I think we're just starting to scratch the surface there and all those could be very interesting long-term projects if they pan out.

Maybe we'll go to Heidi.

Yes. Adding to what Bob just said, we're creating synergies with our active material in our standard closures where we could avoid having to clean the on-the-go beverage dispensing system that we have. So I think that's 1 part. The second part is instant mixing. And I can talk about that because it's already on the market. Of course, I won't disclose anything that will be coming in the coming years, but instant mixing is a big element for us. People want premiumization. People want to have their product mix at the last minute to get all the vitamins and the effect of the vitamins. So I believe that this is probably a big trend that is coming in the beverage side and on the go.

And then maybe to Gael because we do have a kind of a question on digital health here from John Kreger. Could you talk a little bit more about digital health investments? How do these drive share gains in the broader Pharma segment and that kind of segue from innovation and what we've recently invested in, in terms of digital health?

I mean, with Voluntis I mean -- so first, and let me back out to be -- I mean, 3 years ago, when we started to invest in connected devices and into truck [indiscernible], plugging in sensors to non-truck delivery devices, and that was fine so far. But we realized that basically customers who are looking for way more [ ventures ] tracking [indiscernible]. And we have been scouting and scaling the market we found Voluntis. That's another player. They are founder of the Digital Therapeutics Alliance. They've got 13 years of digital clinically-relevant data. They've got 11 regulatory approvals on the market. They have been signing, I mean, deals on oncology and diabetes with major players. And so they're going to give us the ability basically to be the value creation with the pharmaceutical companies, believing that basically should be co-prescribed a drug with a digital companion in order to face, I mean, collateral side effects. Whether you are on oncology treatment or whether you are facing diabetes type 1 or 2 in order to provide new support to better connect patients with the health care provider, but also improving the overall, I would say, once again, patients experience and ability to better manage their treatment. So how big it could be, that's a long-shot investment for us. That's what we believe will help us to be a key player, and we believe that data will be critical elements of revenue. But that -- once again, that's a long-shot investment that we are looking at.

Okay. We're getting to the end here. So a couple of questions that have come in have been answered already or very similarly. So I could follow-up one on one. if there are any clarifications necessary. But there's a question from Kyle White from Deutsche Bank related to Beauty. So this is over to you, Marc. Are you seeing any shift in customer behavior in terms of upcoming product launches possibly being delayed due to the Delta variant? And is there any information or color you want to give on the product pipeline, the launches? So it's really specific to kind of delays that could happen because of the Delta variant.

Yes. Actually, many projects were delayed at the very beginning of the pandemic. But what we see today is an increasing activity in the new product launches, new projects in quantities, certainly less than before, but in quality and willingness to launch more than before. So we are very serious about it. They really try to target where it will have an impact and directing all the efforts on these product launches. And we have seen, for instance, you know that the makeup is affected greatly by the pandemic. But what we have seen recently, for instance, is a very, very strong increase in the number of projects in lipstick, and we are still a small player in lipstick, but it's a level -- number of projects that is twice or 3x what we have seen before for short-term launches, let's say, beginning of next year. So we see our customers coming back with very specific needs and asking for fast to market, speed to market and something very special, very niche in many of the cases. So we are very, very satisfied with the trend we see here. And we see behind this. I was mentioning lipstick, but fragrance is now restarting with many launches, new products, same for face care with 3 areas where we are a very strong player.

Two last follow-ups from George on margin, maybe we stay with you, Marc, because one is will the move to more sustainable products, improve or be dilutive to margins? That's the first one. And then Heidi we'll come to you, which when you mention that commercial, how we have synergies and integration and capturing margin improvement from commercial initiatives 100 basis points, can you just give a little more color on that? And what are some of the initiatives? So with you, Marc, on sustainable products improving or dilutive to margins?

Yes, improving, definitely improving, improving because we can either redesign our products to make them sustainable and when we redesign, we redesign for cost. But more importantly, we design new products to be sustainable, but we have some features so we upscale the products as well to stick with the new market trends. And also more margins because there are very few options today available on the market very few people that can offer a wide range of sustainable products. Therefore, it creates a different relationship with the customer as they have also their own targets, most of them by 2025. They are eager to get real sustainable solutions on the market, whatever they are. And here, we can definitely bring more value, value that translates into better margins and better bottom line for sure.

Okay. Thanks, Marc. And then, Heidi, do you want to elaborate a little bit on commercial excellence initiatives that help improve margin?

Absolutely. So the key driver in commercial excellence and specifically around margin is our ability to identify the value drivers and then to extract the value out of all this driver. And for me, we are much more systematic in measuring the willingness to pay of our customer in all the regions. So our ability first to measure and then to integrate that in our pricing is allowing us to target this increase in margin. And specifically in some regions where really we know our competitive situation, and we know how we can sell the value. And just coming back very quickly to sustainability. I would just add 1 point is that, for me, sustainability in all regions will become a needed thing to operate with our customers, either our brand owners are asking for it or even government because we see that the Chinese government is really pushing for sustainability. So in those countries, sometimes it's not coming from the brand or the consumer from the government that is pushing for more sustainable solutions. So I think that this will become a must if we want to operate in the packaging going forward.

Great. Thank you. And with that, we're going to close our Q&A session. On behalf of the Executive Committee of Aptar and all of the employees of Aptar, we'd like to thank you for joining us today. Thank you very much.

Thank you.