Convatec Group PLC (CTEC) Earnings Call Transcript & Summary

Good morning, good afternoon, wherever you may be. It's a real pleasure to have you all with us here today. Today, we'll be focusing on technology innovation, and it's the ConvaTec Technology and Innovation Event. Here we are in London, and we're actually hosting you live. Before I move on to sharing with you who's here with us, I would just note that we do have a disclaimer. So hopefully, all of you have noted that. And joining me here in London are Divakar Ramakrishnan, our Chief Technology Officer and Head of R&D; and Jonny Mason, our Chief Financial Officer. Let's take a look at what we're going to discuss today and in essence, during the course of the next 90 minutes or so, what we'll try to do is to really cover 6 different elements. I'll start off with a brief introduction and try to give you some context. And then Divakar will go ahead and give you some context as to specifically in the R&D function what is it exactly that he's found, and based on that, how has he strengthened along with his leadership team and the entire enterprise, the whole R&D and innovation and technology capability. Thereafter, we'll spend some quality time on how are we launching new products, we're in the midst of doing that, and we'll be continuing to do that for the next 24 months and thereafter. And also, how do we manage this? And so Jonny will also be collaborating with Divakar in helping us understand how do we actually govern and invest appropriately. Clearly, you'll get a sense that our confidence is growing, and we'll talk more about that and why that is the case. And then lastly, after about an hour or so of discussion, we'll try to open it up for Q&A. So that's the basic agenda we have for today. So let's go back to what is ConvaTec's vision, what is our true north. Our vision is very simple. It's pioneering trusted medical solutions to improve the lives we touch. 10 very simple words with 3 different concepts. Concept number 1 is all about pioneering, being R&D-driven, being innovation-driven. It's at the core and heart of everything we do. But what is it that we're pioneering. We're pioneering medical solutions where we integrate a device with digital and service. But it's critical that these 3 elements be trusted because we're talking about helping your mom, my dad, your brother, my sister. And so folks are relying on us. And these solutions improve the lives we touch because we touch people's lives not only functionally, but also socially and emotionally. What's super exciting is that, in fact, you're going to be getting a sneak preview of the fact that we refreshed the ConvaTec brand. And we have a new brand promise, and we'll be launching our new brand on a global basis, in fact, tomorrow. The refreshed brand comes with this new promise, which is forever caring. And you might be thinking is Karim really focused on a new slogan and some new icons and colors? The short answer is, absolutely not. Because at the heart, at the essence of what we're trying to do with our vision and our brand promise, is to focus on the patient, to focus on the consumer and ensure that we leverage technology and innovation to better serve consumers, to better serve patients and doing that in a collaborative manner with all the various health care providers and actors in the health care industry. [Presentation]

Good. Well, I hope you enjoyed that really inspiring video and hopefully give you a sense of our new and refreshed brand and the new brand promise. But as I was saying, prior to the video, the essence of what we're trying to do is to really connect the needs, whether they be social, whether it be emotional or functional of patients and consumers to our technology and innovation agenda. Now let's shift gears a little bit and try to understand where is it that we, as ConvaTec, are competing and how is it that we're actually performing. I think what's important to highlight is that we actually compete in 4 chronic care categories. All 4 categories, Advanced Wound Care, Ostomy Care, Continence Care and Infusion Care, are large categories and are growing anywhere between 4% to 7%. What I would point out to you are 3 observations. Observation number 1 is that here we are talking about 4 different chronic care categories, but technology and innovation are critical to be able to win in each one of these respective marketplaces. The second observation I would have is because fundamentally, we at ConvaTec are focused on chronic care, not acute care or in a hospital setting, but chronic care, the implication is that we have an opportunity, frankly, to be able to see more recurring revenues and more repeatability so it create a more robust business. And then thirdly and lastly, what I would highlight to you is that the technologies that are used across all 4 of these categories are frankly common and shared because what's common about all these 4 categories is that we are developing and producing and distributing and marketing consistently high-volume, high-quality, single-use consumables. And what they have in common is oftentimes that the biomaterials that we use, the adhesives and coatings that we use, the technologies that we use to produce them, such as automated injection molding or automated extrusion, are actually very common. The bottom line is, ConvaTec competes in 4 categories that are large and growing. So how effectively has ConvaTec been competing during the course of the last 2 to 3 years? I think what's fair to say is that, first and foremost, our business is a lot more focused. We've identified 4 categories and 12 geographies to focus on, with the U.S.A. and China being uber important. As we focused our business, we've gone ahead and carried out bolt-on acquisitions to strengthen our competitive position in key categories and geographies. For example, we acquired Cure Medical, that was in Continence Care, U.S.A. It strengthened our position in that important marketplace and that important category. Similarly, we recently acquired Triad Life Sciences, again, Advanced Wound Care, U.S.A., we bolstered and strengthened our position in Advanced Wound Care. At the same time, there were businesses that we don't view or think that we can effectively compete. We may not be at scale. We may not see sufficient growth opportunities. We may not see sufficient margin opportunities. And so we've opted to go ahead and exit from these businesses. For example, the SkinCare business. Another example, most recently, we announced our exit from the Hospital Care business. But in addition to going ahead and focusing our business much more so, we've been investing heavily in R&D and innovation. In fact, we've doubled the investment in R&D. But frankly, we've quadrupled the potential new products we're in the midst of launching and will be launching during the course of the next 24 months. But in addition to going ahead and focusing driving the innovation agenda, which we'll spend a lot more time on today, we've been improving our execution, both our commercial execution, but also our execution in quality and operations. And what you'll notice on this slide in the top right-hand corner is that, in fact, when you look at the complaints per million, which is a measure of quality, the complaints per million in terms of the products we produce, have come down pretty significantly by about 25%. As we focus more, as we invest in innovation, as we improve our execution, guess what? We're starting to see our top line, frankly, increase and our revenues grow. And in fact, back in 2018, we, in essence, were flat in terms of revenue growth. This is organic sales revenue growth. In 2021, we actually grew slightly ahead of 5%. Now let's go ahead and move beyond not only where we compete and how we compete. And what we want to do now is just to remind you about our corporate strategy, FISBE: focus, innovate, simplify, build and execute. And what we're going to do today is really dig deep and have a deep dive on the whole aspect of innovation, how are we approaching innovation. Hopefully, what you'll get a sense of during the course of the next 45 minutes or so are 3 key takeaways. The first one is that we have significantly strengthened and ours continuing to strengthen our technology and innovation capability. The second one is that we are in the midst right now of launching new products, but in addition to the 8 exciting new products, we're in the midst of launching and will continue to do so during the course of the next 24 months. We have a more robust pipeline. It's broader and deeper. Lastly, I would say, that our confidence in being able to deliver sustainable and profitable growth is growing, and hopefully you'll get a sense and share that similar sentiment. At this point, I'd like to go ahead and shift gears, I'd like to go ahead and introduce my colleague, Divakar Ramakrishnan. As I said, Divakar is the Head of Technology and Innovation and the Head of R&D. Divakar spent many, many years working at Eli Lilly and Company, and I'll tell you more about that. But what I want to highlight to you are 3 observations I'd make about Divakar. The first one is that he's an outstanding people leader. People generally want to follow Divakar. Secondly, he's incredibly collaborative, works very, very well with all the various business units and customer supporting functions. And lastly, with over 2 decades of experience in the health care sector, he has deep technical expertise in 3 key areas: process development, product development and operations. And those 3 competencies are particularly relevant to what we, as a company, want to do and are doing. On that note, I'm delighted to pass the baton on to Divakar. Divakar, it's all yours.

Thank you, Karim. It's great to be here today. And good morning and good afternoon to everyone viewing this live presentation. Before I start with the slides, a few words about myself. I joined ConvaTec in February of 2020 after almost 21 years in the health care industry, primarily at Eli Lilly with other stints at Cook Pharmica, [ Mobil ] and Moderna Therapeutics. Through these years, my work has panned process development and design for manufacturing and also product development, primarily single-use devices and our digital connected solutions. So why did I join ConvaTec? That's probably going on in your thoughts. First, the purpose has been very key to me. I have known family members and friends that have needed intermittent catheters, ostomy products and infusion sets. These are all chronic conditions impacting people. And I believe there's still a lot that can be done to make a meaningful difference for people around the globe through innovation. A second has been ConvaTec's reputation. Actually, I knew them from my days at Lilly as a customer and a collaborator and was favorably impressed by their expertise in areas, such as Infusion Care. And finally, professionally, this is a really compelling opportunity to drive transformation turnaround that cuts across R&D, medical, regulatory and to deliver a portfolio with both the top line and the bottom line impact. So moving on to the slides here. What did I encounter when I first joined and how have we changed since then, right? First, in terms of the historical context, ConvaTec has pockets of great innovation to this day, and it serves as a very good foundation for future products as well. There are 4 examples that I have highlighted here on the left of the slide, namely, number one, AQUACEL, silver portfolio, this is for Wound Care; number 2 is neria guard, the inserter, that also represents our next-generation technology platform for infusion sets; number 3 is the FeelClean Technology, it's a unique third-generation technology for catheters; and number 4 is our Moldable adhesive technology in ostomy, which provides convenience and skin protection. On the other side, the key challenge I've seen is that we faced limited investment in innovation over the past decade. And this has resulted in a loss of key capabilities required to deliver innovation to the marketplace. For example, back in 2019, we, as a company, only filed 14 new patent applications, a more normal figure would be more like 40 or above. R&D spend had also been less than 3% of revenues. And consequently, the business had relatively limited new launches. Also, my observation was R&D was fragmented into 4 small teams, dedicated to each of the product categories, but lack critical mass. Medical and regulatory was set up, mostly to support products in the market versus being a core partner to innovation. It was also set up in a pre-EU medical device regulation era, where evidence generation and the associated reporting requirements were a lot less important. However, by far, the biggest issue I saw was the absence of a capability that I call design for manufacturing. This is the capability that enables us to scale up and launch new innovations and meet high demand volumes -- high volumes as well as appropriate cost levels for these products. This was most obvious to me with the original GC Air for women catheter, which was not designed to be made in large volumes and also at a cost that delivered good bottom line results, too. More about that later. So what has changed and what have we changed here since I took over. First, one of the most important changes has been the articulation of a very clear ambition and a goal more importantly. Our goal is to be leading in terms of new product vitality, which is that by end of 2025, we want to be at least contributing to 30% of total new revenues from new products launched in the last 5 years. To put this in perspective, we were hovering in the 10% to 15% range just a few years ago. We are now in the early to mid-20s, principally, and thanks to the regular innovations we have seen in our Infusion Care business, which has been our fastest growing category in recent years. And I said, our aim is to get to this goal of 30% plus by end of 2025 and also to do this in a more balanced way, where we have contributions from all the 4 categories. Over the next few slides, I'm going to demonstrate to you how we have pushed effectively 5 levers, if you will, and they're shown on the bottom of the slide. First, we have introduced an innovation mindset to guide our plans and execution. Second, we have stepped up investment, as Karim mentioned earlier. Third, we have significantly enhanced and are still enhancing our leadership and our technical competencies. Four, we have changed how we move from ideation to development and launch activities using a single and simplified business process across the entire company. And finally, we have put in place a portfolio management process to focus and prioritize the launch pipeline. All 5 levers and the resulting pipeline effectively contribute to our confidence of getting to our new product vitality goal and enhancing the growth prospects of our company. So talking about the pipeline. The pictorial here on the left shows you how our pipeline looked about 2 years ago. Each of the individual boxes represent a project with the different colors representing the 4 categories we operate in. The boxes in the launch section of the graph refers to both major launches and minor iterations, such as different sizes in different geographies. The pictorial on the right shows you that over the past 2 years, we have developed a much richer pipeline of opportunities and also our patent applications have increased considerably. Please note the number for the patent applications in 2022 only represents patent applications we have made year-to-date. And more specifically, we are now at a stage in terms of the pipeline where we are focused on delivering 8 major launches over the next 2 years. And also, we are confident with this pipeline that we will be able to pick and start developing 3 to 4 new major launch products every year. This will set us up for a sustainable and profitable growth. So how have we been strengthening our innovation capability. As you can see in this pictorial, we have 3 key aspects informing our innovation mindset. And we got to this mindset really by mapping the patient journeys, the market landscapes and the technologies within each of the 4 product categories. And how -- then the question comes down to how is this mindset impacting our decisions. First of all, it's about people, like you and me, moms, dads and kids, not just patients with chronic conditions. And that clearly and definitely medical and functional needs for all these conditions, but that needs to be addressed. But added to it, is the insight that there are clear social needs, such as discretion, the need to reduce the emotional burden for the users and the caregivers. This mindset has driven our investments in areas such as user centered design and human factors as well as healthy volunteer studies, program and capabilities in our medical and clinical function. The second critical insight is in the middle icon, which is that our business comprises single-use devices across all 4 categories. And these products are produced at high volumes. For example, in the last year, we shipped about 1 billion units, significantly higher than one would expect for a medtech company our size. So the secret sauce here has to be about doing manufacturing with quality, speed and at the right cost. This focus has guided our investment in advanced biomaterials and process development or scale up in terms of capability centers. And then the final and third insight relates to the people whose lives we touch. These are patients, caregivers and health care providers. They all want actionable insights in addition to our products. So we need to be thinking about the overall solutions comprising products, the digital tools and the services. Consequently, we are investing in digital medical education capability. Last year, we engaged over 300,000 health care professionals through online learning. We have started deploying peer-to-peer teaching tools and apps such, as ConvaTeach. In this regard, we are also focused on regulated digital and connected solutions capability, and we are broadly evaluating them across multiple categories, Ostomy, Advanced Wound Care and Continence Care. At this stage, I see connected solutions less as a technology challenge and more about ensuring that it solves a real pain point in the user, caregiver and provider journeys. It is very important that we introduce such solutions that reduce the burden of care and not add to it. Clearly, this is an area that we believe represents transformative R&D. The second and critical lever we have pushed here is to increase investment in R&D. And if I can move to the next slide here. We have effectively doubled our investment in R&D. And with this investment, we have created a single integrated technology and innovation function, where we are reaching critical mass in terms of science and technology capabilities and the associated simplified governance systems and processes. We have recognized and we have reorganized the integrated function and are already seeing payoffs with respect to our upcoming 8 key product launches. Going to the next slide here. Let me speak a little bit more about how we did this reorganization to achieve scale and capabilities. Back in 2019, we were subscale and highly fragmented. We essentially had 4 small and somewhat variable R&D units, all reporting to each of the category leads with a shared services type lab for testing and microbiology work. The regulatory and clinical functions set separately within quality and operations and really were set up more to support product in the market, less more as a partner for innovation functions. And today, what you see on the right is we have a technology and innovation function, or T&I in short, with a seat at the table at the ConvaTec executive leadership team, and this is by way of my role. Furthermore, at the Board level, we are much more focused on innovation and the patient experience. Nonexecutive directors had impressive R&D expertise and patient experience have joined the Board. And consequentially, the discussion at the Board is rich and engaging. As you can see from this pictorial, we have now moved to a technology innovation function, which preserves the product category level focus, while investing in critical capabilities, such as medical, clinical, regulatory, intellectual property. We've also created several shared capability centers where there's synergy between the different product categories. As I mentioned earlier, these are areas like advanced materials and design for manufacturing, which involves process development, of course, and user centered design and human factors and connected solutions. So let me speak about the leadership also and the expertise that we have added as a result of this reorganization. We have been successful in attracting top talent across R&D, medical, regulatory, intellectual property and portfolio management. And it's a talent base that is fairly global. We have increased the caliber of leadership, I would say, both in terms of the experience they bring and the educational training. These team members are experts in their fields, many with strong academic and career credentials, and some clearly are new to ConvaTec, such as our VP of Ostomy R&D, our VP of Advanced Wound Care R&D as well as our VP of Regulatory. While others have been here for years, delivering for ConvaTec, notwithstanding the historic subscale R&D investment, and such as our VP of R&D for Infusion Care, who has been here for more than 10 years, or our VP of Continence Care R&D who was previously at another major competitor of ours. In terms of numbers, we effectively started in 2020 with about 150 people across T&I. And our overall team has now grown by about 140% today. About 30% of that growth came from internal transfers relating to the restructuring and 70% were actually new roles. We have almost doubled the category-specific R&D teams as well as medical regulatory and also while establishing our new capability centers. As you can see from my next slide, we have been able to source this talent globally, thanks to our R&D network. It's really about R&D without walls. In terms of our footprint today, we have 4 major technology centers, with the most recent addition being our site in Boston. It's crucial we have an R&D presence in the U.S. It's the largest medtech market, and Boston is the leading hub for health care and medtech innovation. Apart from some of my leadership team being based in Boston with me, it's also where we have some of our new shared capability centers, and we've already seen payoffs in terms of critical support for our upcoming new product launches. With our sites in Slovakia and Denmark, we are leveraging process engineering and manufacturing facing R&D expertise for multiple business unit areas, in addition to hosting Infusion Care R&D out of Denmark. At Deeside in the U.K., in addition to hosting our Wound Care R&D team and some teams for Ostomy and Continence Care, this center is also playing a role in terms of our shared microbiology and testing labs as well as our infection prevention expertise that supports all 4 categories. Aside from these R&D locations, we're also now leveraging internal partnerships more effectively across ConvaTec. For example, our emerging market clinics that provide tertiary care have begun serving as key enablers for our clinical evidence generation for our T&I function. And we are also leveraging our home services group, both in the U.S. and U.K. to gather user input and feedback that is driving rapid user center design iterations. It's all good to have great individuals and to be making investments, but it is even more important that we can all work in tandem in a synchronized manner so that we can deliver solutions efficiently and effectively. To get this done, we have introduced a single business and project management process across all 4 categories from ideation all the way through launch that we call I-D-E-A-L, IDEAL. In plain English, it's somewhat like synchronized swimming, which for us involves very tight coordinations across a dozen or so functions. On the slide, what you can see is a high-level view of the single unified process, expands detailed requirements across all the functions, commercial, technical and operations. So this is not just something that folks in R&D do. For example, at the ideation stage, we work very closely with the commercial teams, examining patient journeys, patient pain points, market research and customer insight. And we use this to identify unmet needs. In the development section, we engaged closely with the operations groups to ensure that we can scale effectively and efficiently. And finally, in the approval and launch section of this process, it's the commercial teams who are actually responsible for planning and directing the launch activities. A key benefit of IDEAL is that it helps us deliver in a reliable and consistent manner. And we also do this at scale now. We previously used to work on 2 major launches at any given time. And we are now easily working on 8 key new product launches at the same time, not to mention the minor and incremental launches that we're also working on. To me, IDEAL is a living set of documents that we constantly upgrade and use to share learnings from one project to another. So this expertise is not just within individuals delivering a key project, but shared and scaled and across the enterprise. In addition, we've also used IDEAL to embed our ESG agenda from an innovation perspective. We have introduced Green Design Guidelines, where we are interested in examining the environmental footprint of our innovation solutions. And we are systematically considering ways to reduce waste. With these new tools, we are now exploring whether we can use smarter materials in the design process. And we're also thinking about products themselves. For example, an area we're already working on is to increase the wear time of our devices and reduce the plastic waste as a result. Finally, each stage of the IDEAL process is gated, as you can see with the pad locks on this pictorial. With 4 of these key milestones, Karim is personally involved in the review process to ensure that we are creating focus and accountability across the entire company. As I said, it's not just the thing R&D does. As it also focuses on very important and crucial matters, such as go-to-market strategies, commercial readiness and execution. Now moving to the final and fifth lever. We are going to talk about the use of portfolio management reviews to ensure that we appropriately prioritize the projects in our pipeline. These project portfolio reviews are also include Karim and Jonny. So now I'm going to request Jonny to describe how we strategically and proactively manage the portfolio process. Jonny?

Thanks, Divakar. Hello, everybody. It's good to be here with you today to talk about technology and innovation at ConvaTec. I'm just going to say a few words about how we control the investment in technology and innovation to ensure that the great work Divakar has been describing results in increased shareholder value. So it starts with thorough regular and detailed reviews. Previous slide, thank you. Twice a year, we take a few days of focused deep dive to review the portfolio of projects. And this includes the heads of R&D, the business unit leaders and the entire executive team, including Karim and me. We look through all of the projects to prioritize where the resources are best deployed, the OpEx and the CapEx funding and the human resources. And in between these biannual deep dives, we have the annual budget process and we have the strategic plan process. And the review of technology and innovation is integral to both of those as well. And in addition, we have regular reviews with the Board. So these reviews are hardheaded. We assess a range of financial and other metrics. You can see on the left of this slide, a summary of the key financial metrics that we look at. We're considering the rate, the speed and the risk of returns. And we're assessing those returns against the use of valuable resources, human, physical and IT. And then on the right, we've listed a few of the other key parameters that we consider. Each project is evaluated for its strategic contribution to the portfolio. We look at the markets. We think about the evolution of customer demand, competitive positioning. We think about the costs in sales and marketing required to establish a new product. Is there an unmet need? What is the size of the opportunity? Can we differentiate? Can we build an IP position? So through these reviews, we are looking to deliver a strong pipeline of innovation and vitality across all of our categories and in all of our core markets. We're looking for mid-teens returns comfortably above our cost of capital. Now taken together, this is the system of control that we apply to ensure that the investment in technology and innovation leads to sustainable and profitable growth and therefore, adds to shareholder value. Thanks very much. I'll now hand back to Divakar.

Thank you, Jonny. So just as a recap, so far, we have spent quite some time talking about how we have gone about setting our new product vitality goal, our innovation mindset and how it has informed the development of our capabilities, the structure and investment decisions. Now let me dive a bit deeper into our upcoming product launches as you can appreciate why we are so excited about this for the future. Before I do this, however, I thought it would be valuable to share how we are looking at different types of innovation solutions. First, there is rapid iterations. This involves incremental capital investments and improvements based on user center needs or patient feedback with our existing marketed portfolio. These are projects that we see us delivering within the 6- to 24-month period on average, though there is a big variability in these numbers, depending on the complexity of the change with some of the simpler ones taking a lot -- happening a lot sooner. Then there are the new platforms, which is the middle bucket. These comprise innovations, which require the installation of new high-speed, high-volume lines. These often need significant capital investment and the associated lead times. And as a result, it takes us roughly 2 to 4 years. Then there is the transformative bucket. These represent technology and manufacturing platforms that will help us leap progress a company. Today, these are biologically-derived extracellular matrix, the digital mechatronic solutions, including neuromodulation and advanced biomaterials that span all the way from nano materials, skin protecting adhesives and anti-infection technologies. Needless to say, this R&D that we are pursuing is R&D without walls. For all 3 types of R&D projects or categories, if you will, we are looking at driving both organic projects and also inorganic activity. And this activity can span outright acquisitions, partnerships, collaborations, licensing and equity stakes. The most recent example is we acquired Triad that I'll talk about shortly. We also took a minority stake in BlueWind, highlighting our interest in neuromodulation as a technology platform. We feel with this platform -- while this platform can transform health outcomes for users, for people, we're also responding to the shift that we see in terms of procedures moving from the surgical room to the outpatient setting or the physician's office, so to speak. Here, you can see our new key product launches over the next 2 years. And we are really excited about all 8 of them that you see here. This matrix shows where our upcoming launches fit in terms of the type of R&D, rapid iteration, new platform and transformative. I'll now take an example for each and deep dive into the products we are launching currently in 2022. Please note, I'm using the word launching and not launched. Let me first start with GC Air for men. Here is a video that captures some of the key attributes of this technology and product launch as well. [Presentation]

So this is an example of rapid iteration. But before go there, let me talk a little bit about the market segment here. The compact catheter market today is valued at approximately $525 million. It's the fastest-growing segment, growing high single digits rather than the 4% we see in the overall Continence Care market. Why compact catheters, this segment only accounts for 25% of the overall catheter market, the intermittent catheter market? In the 4 largest European markets, it accounts for more than 50%, and in the U.S. about 10%. So strategically, we are very excited to be launching a product that will enable us to access these key markets with a premium male compact offering. In terms of the features and benefits we have here, this is a unique product. It is a -- the base technology is a third-generation catheter technology. Generally speaking, the other products we see in the marketplace represent what I would call a second-generation technology, in that they all have a coating that is known to get sticky during use with potential for both trauma and deposition of coating in the urethra. On the other hand, with our technology, it builds on a very good polymer technology, which is actually coating-free. The lubricity function is actually built into the plastic or the polymer of the catheter, and therefore it is intrinsically hydrophilic. So it doesn't have any of the disadvantages associated with the coatings, especially for an application that we all can agree is somewhat invasive. This project was a rapid iteration project for us rather than a new platform. It only took us about 18 months from start to finish versus the 4-year -- 2- to 4-year time frame that you would see for a new platform. And it's also very important to highlight that we leverage our internal partnerships. In this case, we leveraged our Home Services Group that helped us with some of the user centered design input. By way of an update, we recently launched this in France with initial positive feedback from both consumers and payers and rapidly scaling up for the U.S. and U.K. launch that's expected to happen over the next couple of months. Our next example is the Mio Advance Extended Wear infusion set. This is an example of a new platform, which we will be launching in the U.S. in due course. We've been developing high-speed automation lines and currently in the final phases of scaling up. This project is also unique, in that it is a partnership with our customer, Medtronic. By way of background of the segment, it is part of the automated insulin delivery segment that is currently gaining traction within the type 1 diabetes segment, also some in the type 2 diabetes segment, who previously used multiple daily injections. As a consequence, overall, it is growing at high single digits. The infusion set here is truly unique. It uses our leading neria guard-type inserted technology, which not only delivers an improved user experience, but significantly reduces the number of complaints given the insert is automated at the touch of a button. However, the key benefit of this entire system is that it reduces the body burden by 50%. Patients can now wear their infusion sets for twice as long. This is preferable for patients in terms of convenience, but more importantly, in terms of the performance of the product and the usage of precious body real estate for injections. There is an added benefit further, increasingly important in this day and age of needing to reduce the level of plastic waste generated. It's a neat example of how we partnered with our customers also. It's our IP from the neria guard technology plus our know of design -- know-how for design for manufacturing, coupled with our partners' IP. As I said, we are now in the process of scaling up for the U.S. launch. And we have already seen popularity of the product in Europe. And we are -- so we are definitely excited and we share the excitement of our partners about the upcoming U.S. launch. Finally, a recent add to our portfolio is the InnovaMatrix AC product is an example of transformative R&D. It's also a good illustration of R&D without walls attitude. For a number of years, we have been contemplating a move into the biologics -- the wound biologics market segment and have been scanning the market. Just as background, the wound biologics market segment is large. It's $1.8 billion and rapidly growing in high single digits. It consists of skin substitutes, active collagen dressings and topical drug delivery. In particular, for hard-to-heal wounds, there are roughly about 3.7 million patients in the U.S. alone every year. For us, in Wound Care, we already participate in areas like foam dressings, exudate management and infection prevention as well as negative pressure. So expanding into this fourth and crucial segment was a strategic business imperative to meet the needs of people with hard-to-heal acute and chronic wounds. What also makes us excited about this opportunity is the transformative potential of this technology. It is mammalian-derived, but not human-derived, so we call this or refer to it as xenograft. Because of the technology and how it's sourced, we can generate wound dressings, roughly 6 to 10x larger than dressings derived from human-derived tissue. Plus, it has other amazing properties, like better mechanical strength. This platform has the potential to disrupt the human placenta-based competitor projects by offering a lower cost, equivalent and more consistent material from a highly controlled animal source. In addition, the proprietary manufacturing process used here is relatively better than other xenograft platforms, in that it does a great job retaining good levels of active ingredients in the extracellular matrix needed for Wound Care, while also demonstrating lower levels of cell debris and DNA. These are both important factors that deem to be minimized for effective wound healing. Furthermore, we believe this technology sets up really well in terms of additional product presentations, for wound care, thanks to our infection prevention expertise we already have in ConvaTec. And also, we see potential to drive into adjacent surgical applications. Beyond these 3 I've just addressed, I also want to share insights about the other 5 new products arriving within the next 2 years. This graphic here shows another way, other lens through which you can view our launches. And hopefully helps you appreciate why we have growing confidence in our ability to drive sustainable and profitable growth. On the top row, you can see Avelle 2.0. It represents a rapid iteration improvement to our current Avelle pump for the single-use negative pressure wound therapy. In terms of the entire segment, it's roughly valued at approximately $350 million. However, it's growing at double-digit growth rate. With this specific product solution, we are making improvements to both the pump and the dressing and also looking to improve the cost as we scale this product. As a platform, it also has the potential for us to leverage our expertise in infection prevention for future iterations. Next, the Tandem Mobi Infusion Set, another rapid iteration. This is for Tandem's Mobi pump. The pump is a hybrid patch pump, which is both durable and also small, like a patch pump. The time line for the launch of this infusion set is directly linked to Tandem's launch of Mobi. It's an exciting strategic development in the world of automated insulin delivery. Now going to the second row are some of our new platform launches. On the next -- on the left, you will see Esteem 2.0. Esteem is a major upgrade to our Ostomy portfolio and will provide an improved user center design to our one-piece ConvaTec's offering. This is important as the one-piece market segment is worth approximately $500 million and is the fastest-growing segment in the Ostomy market, double digits. So our current offering in the marketplace is not sufficiently competitive. And in addition, the product is manufactured externally. So with this new product, we expect a much more competitive offering and also one that will have a better margin when scaled. Now going to the center of the slide, you can see ConvaFoam. This is another new platform launch for us. It's an important one. Given that the foam segment of Wound Care is valued at roughly $1.6 billion and growing faster than the overall market. Our current product is not sufficiently competitive. And consequently, our market share today is roughly in the mid-single digit. So just to give you a perspective, our market share in the antimicrobial segment of wound care is 30%. So with this new product that we are launching later this year, we expect to come out with a very competitive offering with some of the key features being the fluid, the wound exuded handling capacity as well as Extended Wear. Longer term, there is obviously the potential for us to use this platform to leverage all the internal know-how and technologies in anti-biofilm and anti-infection technologies. Finally, there is GC Air female. As some of you know, this has been a long journey for us as a company. We have been talking about it since our IPO. If we were to kick this project off today, I'm very confident that it will only take 3 to 4 years. The strategic rationale for this product is the same as the male compact, enabling us to enter the attractive compact segment and expand our presence in Europe with a more comprehensive portfolio. We currently have a pilot launch going on in the French market. And as I mentioned earlier, in the presentation, this product suffered from a poor design for manufacturing. However, I'll share with you the patient feedback on this -- from this pilot has been very good so far. And this new version will provide improved user experience as well as, importantly, we'll be able to produce it more effectively. And the reason is we have done this by reducing the number of components in the product, roughly by half. And consequently, we expect to scale this better, both to deliver the volumes needed and also improve margins. And finally, a few slides to summarize why our confidence is growing. Hopefully, I've conveyed to you how over the last couple of years, we have increased our capabilities and our pipeline has grown, thanks to the leadership, expertise and governance we have put in place. At this stage, I want to hand over to Karim shortly. Before I do so, let me share 3 key takeaways. First, with the key 8 new project launches, we are clearly pivoting and delivering, while building the important innovation muscle tissue across the company for the future. Second, as we look forward, we now have a more substrate to choose from, from the pipeline, and therefore, the potential to drive even more strategic value, our pipeline is developing well. And finally, we are also pleased to have begun to step up our inorganic efforts, partnerships, licensing acquisitions. In the future, both organic and inorganic innovation will be critical and enabling for us to achieve our ambition and help us transform as the company. With this, I'd like to hand over to Karim to make the closing remarks. Karim?

Okay. Thanks, Divakar, and thanks, Jonny. Really appreciate that deep dive. And really one overarching thought I want to share with you here in conclusion. I think what's very, very clear and very evident is that the innovation capabilities at ConvaTec have clearly been strengthened, and we will continue to strengthen them. I think what's equally clear is that we have a robust pipeline, and we're in the midst of launching some new products. The practical implication for all of us, frankly, is that we are pivoting to sustainable and profitable growth. And when I talk about sustainable and profitable growth, what you need to be thinking is, first, you can count on reliably and consistently that ConvaTec will develop and deliver, more importantly, top line organic sales growth of 4% to 6% or mid-single-digit. In addition as we leverage, these innovation capabilities and drive and launch our new products, you want to expect a contribution from margin expanding medium, long term. At this point, I'm going to say a big thank you to all for your active involvement and participation. But what we'd like to do is to go ahead and start opening it up for questions. The way we're going to go ahead and do that is 2 ways: One is if you'd like to dial in, we'll be able to hear you live here in London. You can see that we posted some toll-free numbers for you to dial into. On the other hand, if you would rather just type in your question, please note that there's a tab on the right of your platform. And if you type it in, we'll go ahead and take your questions. Kate Postans, our Vice President of Investor Relations, is also with us here today. She'll be reading out the questions for us. And then myself and Jonny and Divakar will try to answer them. I would just kindly ask you, please identify yourself when posing your question. Thanks, again.

[Operator Instructions]. Our first question today comes from Paul Cuddon of Numis Securities.

Can you hear me?

Yes. Hi, Paul.

I just sort of had 1 just to start off with on the efforts you've been making to improved kind of R&D process. And we focused a lot today on the new products. But the existing portfolio, are you finding anything kind of that you've done on kind of real-world trials, comparative studies that can enhance the growth of the existing portfolio before I suppose the new ones come?

Sure. So I think the question is, is there anything that we've been doing to go ahead and maybe improve the performance of some of our current portfolio. So maybe I'll pass that question on to Divakar.

Yes. Thank you, Karim. So I think in terms of question, yes, we're definitely working on our existing portfolio. One of the big things from a process perspective is we had a sustaining engineering team, again, which was most focused on, I would say, right to operate projects that we call internally, which is when there are new regulations, new suppliers, so it's a sustaining engineering group. So one of the big changes we've actually made this year is after stabilizing the ship in terms of the new innovation pipeline, the new product launches. Organizationally, we have actually moved the sustaining engineering teams to be part of the overall R&D teams. And that is really to ensure that we are continuing to work with them seamlessly. That is R&D is a continuous process, all the way to products, so to speak. So that's what we have done from a process perspective. In terms of the clinical evidence generation, the first thing in hand is we've been handling the EU MDR regulations piece. So our entire portfolio had to be reassessed. We had to generate clinical evidence for the entire portfolio. We started with the Ostomy products, and then we move to Wound Care. And that, I would say, have to report that across all categories, we are doing exceedingly well, generating the evidence, running the studies, collecting evidence from the marketplace. We have done that well. And then currently, we are also running some additional studies for some of our exciting products in the Wound Care, such as infection prevention. Hopefully, that helped, the answer.

Paul, did we answer your question?

Yes, absolutely. But specifically on kind of comparative studies, are there sort of -- is there more you can do just to get data on kind of 50 patients and sort of promote that, give it to the sales reps and go out and sell it harder with the products you have?

Yes. So absolutely. Look, very eager to do that. As you can imagine, during COVID, trying to get studies done in a clinical setting was extremely challenging. Recruitment rates have been at a historic low. Now we are recovering. But that said, we didn't stay sort of idle, so to speak. We have done a lot of comparative work at the lab scale, where we have actually generated. Most recently, as I was talking about the FeelClean technology, we actually -- in some of these studies, we actually try to get it done independently, so that it is also objective. So there's a study done at University of Belfast, actually comparing our FeelClean technology with competitors' products. And that kind of study actually showed that, look, when you use these catheters and actually, the removal force -- when you use our product, the removal of force is 40% lower than all other products in the marketplace. So Paul, what we have done is, given the constraints of COVID and all the clinical, we kind of focus more on studies we could do and also try to do it in an objective way, but absolutely very keen on comparative studies now that we are -- COVID is becoming more of an endemic versus the pandemic.

Our next question today comes from Graham Doyle of UBS.

Just on the sort of targets you've talked about of the 30% refresh rates in terms of products over a 5-year period, if we can pay that on a run rate scale, that sort of implies new products maybe worth sort of 2% to 3% of sales individually. So is that what we should be thinking about when we look at the next 8 products that are coming through the pipeline over the next 2 years? And maybe we can run that through our models. And then just a follow-up. When we look at the Esteem products, what would you say are the key technical highlights that you would be getting your sales force to recommend and point out when talking to nurses, in particular?

Yes. Let me take those 2 questions, and Divakar, please feel free to jump on in. I think, look, on the vitality index, the way I would think about that, really, Graham, is fundamentally, what we want to do is to ensure that year in and year out, we can deliver organic sales growth of 4% to 6%, right? So I don't know that it would make sense to go ahead and say this one specific product or this level of this other product is going to give you X, Y or Z. I think looked at as a portfolio, I think what we're saying is that we've identified that a 30% vitality index is the basis to give us confidence that we'll be able to deliver that mid-single-digit organic sales growth. So that's the way I would tend to look at that. In terms of Esteem 2.0, what I would say is, clearly, we're leveraging a lot of the human factor design capabilities and really trying to understand from a functional perspective, from a social perspective, from an emotional perspective, how can we ensure that we have a very competitive offering. I think it'd be premature today, frankly, to be commenting on specific features and benefits. As you can imagine from a competitive perspective, that probably would not be prudent to do. But what I will tell you is that, that initiative is progressing very, very well at pace, and we're very committed to it. I don't know, Divakar, if you'd like to add.

I think Karim as you mentioned, look, in terms of the 30% new product vitality, clearly, we've done a lot of benchmarking. So we didn't just come up with this. This is considered like a really industry-leading benchmark. I think in terms of the new products, some of them will be absolutely products that do not replace our current product, and some is considered part of the healthy refresh of it. So I think you've got to factor that both in before you just sort of do the math, so to speak. The second one, I would say, is in terms of Esteem, look, we've been talking to health care providers, we've been talking to patients. Look, they really love our adhesive, right? This is -- what else to say, I think this is the gold standard. ConvaTec Adhesive, we are really proud of them, right? I think the product, as Karim said, really, we are focused a lot on the social, emotional needs, the need for discretion. And I'll leave it at that. I'll keep you guys guessing, but we're really excited about it. I'm eager to share more details about it, very good product.

Can I just add, It's a slight tweak that first question then. Your vitality index has gone up over the last, what, 3 years, by quite a bit, and so has your organic sales growth. Can we think of those 2 things as pretty interlinked?

Yes. No, for sure. Look, I think the essence of being a successful medtech company is we need to execute well on the commercial front. We need to execute well in terms of quality and operations. That's just a right to operate, right? But then if you want to sustain and ensure that you have profitable growth, right, because we need to be growing the top line consistently year in and year out, mid-single digits and expanding the margin. And so we need this vitality index to impact the top line, but also help expand our gross margins as the mix changes. I think that the vitality index is very much linked to those 2 financial levers. That's the way I think about it, Graham.

Next in the queue, we have Charles Weston of RBC.

I just wondered if you could talk about the launch journey for the catheters and the handover process from R&D to commercial and then iteration back to the technology and innovation function. Obviously, you said you're starting in France. So how does it roll out? And how quickly can you iterate depending on that feedback?

Sure. So Charles, great to hear from you. And I think I'm going to pass the baton on to Divakar. So I think the whole idea is how do we have this sort of feedback loop and cycle through and continually improve. And I think you spoke a little bit about the marketplace orientation, but maybe you could give us some color Divakar.

Yes. So look, as I talk about it, there are 2 products. One is GC Air Male, other is GC Air Female. GC Air Female, we did a pilot. And on a monthly basis, the commercial partners, the R&D partners, we do one joint R&D review. So we get the feedback directly about how these products are going. And so, in fact, I can't share more detail, but I'll share with you that we learned so much from that pilot launch in France. And so while I emphasized what we are doing in terms of design for manufacturing, scales, I believe the product we are going to be launching will be even better than the pilot we launched in France because of that rapid feedback. On the GC Air for Male, I'll share with you, I mean, this is really R&D without borders, right? The idea -- when we started that, we were thinking about a 4-year journey, new platform, the usual stuff. We got feedback from the market, first, in terms of the user groups from Home Services. They were providing rapid feedback and we were like checking on this on a regular basis. So what I'm trying to share with you is it's a very agile process. It is not some linear process. We use the monthly check-ins to actually get that feedback integrated. And this idea to take this approach of rapid iteration actually came from a finance person. He's the one who came in and said, hey, can we do this? And then immediately, the R&D teams in Slovakia, the Boston Technology Center, we immediately iterated different ideas, put it together, and that's what you did it. So when you ask me about the process, I guess, I have only one word, it's agile. And it is Home Services Group, our Slovakia operations and our R&D centers, all 3 having one check-in on a regular basis and driving feedback. And I'm really excited about it. I hope I have answered your question.

Charles, did we answer your question?

Yes. It is. It is. And it just leads on to my second. Moving to those financial metrics that were described. Given how slow moving market share dynamics are in this space, what does success look like from a measurable perspective in a relatively near term basis, 1 to 3 years. So how quickly are you expecting to hit return on capital hurdles and things like that for a launch of a product like this?

Yes. Maybe I'll give you some color, and maybe Jonny wants to add a little bit more to it. But the way I'll tend to think about it is twofold. One is I think the ultimate measure of success of a new product is adoption. So innovation, frankly, is based on what do customers think and more importantly than what they think, what do they do? So adoption rates is really what we're obsessed about. The higher the adoption, the quicker the adoption, the deeper the adoption means you've done a better job, right? So it's really innovation is in the eyes of the customer, right? The second thing Jonny alluded to, some of the metrics, but I think both he and I will tend to look at metrics like [ IRRs ]. And obviously, he mentioned we'd like for them to be in the teams, but frankly if they have a 2 or 3 in front of them, so much the better. And I don't think it surprised you if we said, look, we've got a payback period of less than 2 years, like Divakar, like, let's get on with it, what are we waiting for, right? On the other hand, if it's 2 to 4, maybe we think about it a little longer. And if it's beyond that, hey, it's got to be really compelling. But may I let Jonny comment a little bit more because he's part of all these discussions, and I know he's very focused on the whole idea of return on invested capital.

Yes. And there's no hard and fast rule, Charles. Obviously, the projects vary in terms of size, newness. I think I mentioned in my remarks, we look at the speed, the risk associated how much of a new market are we trying to break into here? What's the size of the opportunity we're going after? That said, with the recent acquisition of Triad, now called Advanced Tissue Technologies that we made, we said that we'll be earning above our cost of capital by year 3. And that's a typical sort of a profile. Fast ones might be a bit quicker, slow ones perhaps a bit slower. But it's in that single year's period that we would be looking for these returns to come home.

Charles, did we answer your question?

I suppose it leads to just 1 final one, which is that if you -- if your key metric is adoption -- early adoption and trending adoption, are you going to be able to share some of that data with us as the product roll out?

I think the short answer is yes. Look, we'll try to give you a sense of what are the adoption rates, right, and penetration rates. I think like I tell folks is, you don't launch a new product in a matter of a month. My experience frankly tells me that to successfully launch, you need 3 years, that's the reality, right? You got to see how it works out in the eyes of the consumer, how does it work out in the eyes of the provider, how does it work out in the eyes of the payer. And there are different market dynamics in different geographies, right? And so I think it's important to be thoughtful when sharing these adoption rates, right? But fundamentally, I think it will be important to share that with you because we'll be assessing ourselves. And frankly, the better the adoption, the quicker and faster we'll get to 30% plus vitality. And frankly, if there aren't good adoption rates, boy, it's going to be really hard to get to a 30% vitality index, right? So you can see how adoption, frankly, links to the vitality index.

[Operator Instructions]. We have a question from Sam England of Berenberg.

The first one, you talked about the improvements you've made around design for manufacture, recently. I was wondering how we might see that flow through in terms of margin improvement over time, and particularly sort of how big is the opportunity to drive higher gross margins through better designs? Or is the focus just on making sure product a more suitable scale manufacturing and avoiding sort of product [indiscernible]?

Yes. I'll let maybe -- well, either one of you, Jonny or Divakar, I'll start off with Divakar and see how you want to comment, but I think on a macro basis, conceptually, I think it's fair to say that design for manufacturing looks at both quality and efficiency. I think it's important to understand that because we're making high-quality, high-volume single-use consumables, right? And therefore, you see us investing in increasing our investments in capital and driving the whole automation agenda. But I think the key element of how it contributes to our margin story is really by a gross margin. And I think that gross margin expansion is an important lever for us as we continue to strive to get into the mid-20s, medium to long term, in terms of EBIT margin. So I think we've been pretty open that we're looking to drive that top line in the mid-single-digit organic sales growth and then to gradually medium, long term, expand that margin and increase that margin. But I don't know Divakar or Jonny, would you guys like to add something?

Yes. I mean let me take a crack at it from the question of, look, design for manufacturing, as Karim mentioned, really 3 drivers. Complaints, look at them and see what can we do. Second is cost, how do we do that. And also speed, how quickly can we make these changes. So our approach is to try to do as much of the design for manufacturing before you cut steel and put the high-speed lens because once you do that, it gets more expensive to do it. So in the case of GC Air for Women, that's one where we said, hey, we got to cut steel, but before we cut steel, get the design right. So that's why we went through the pilot. We didn't sort of talk about a big launch because that -- margins on that wouldn't be attractive. So that's what we did. That, unfortunately, was a big platform change. That's what we did there. But when you think about design for manufacturing over the life cycle of the product, there's a lot you can do. You start with the instructions for use, start with the secondary packaging, the cartoning, there's also a sustainability player. So I think there's a huge opportunity to be looking at it systematically and prioritizing. As Jonny mentioned, it's all going to be driven by the finances, right? So we think we can do a lot there. Now as you go into the secondary -- the primary packaging. What we mean by primary packaging is for the products that have to be sterile, you actually put a package around it and then you sterilize it. So those changes, you can't just flip a button and do it. You actually have to go back and show that the sterility is validated, you've got to get shelf life data and all that. That takes a little longer. But are we doing that? Absolutely, we're doing that. The third one is, I would say, is the big changes because of regulatory reasons, cost reasons. And some projects can happen fast and some can take longer. And it's that insight that we need to be looking at design for manufacturing over the entire life cycle of the product that actually cost us to more sustaining engineering back into R&D because the type of change can be either super complex or super simple. And based on that, we'll find the right teams and go through that. Did I answer your question, Sam?

Yes, that was great. I'd say a follow-up around that. How much is reducing waste that focus in the design process at the moment? I mean, obviously, is there a sort of single use -- don't probably have the recycling opportunities other companies might have. So how much is just reducing the amount of waste you create a focus?

So look, sometimes, I'd like to talk in terms of specifics versus general. I shared the example of Mio Advance Extended Wear. Per patient per year, it's approximately 2 kilos of plastic waste being eliminated because of extended wear. I mean that's the sort of design change we are able to do through a major design change, right? So that's something I'm really proud of that we have done. ConvaFoam, let us look at how the uptake happens, what actual clinical practice is, but we've extended the wear time of those dressings by double. But I don't want to prejudge exactly what the wasting you actually need real-world clinical use type data to drive that. There's a lot you can do in terms of -- a lot of this is actually being handled by our operations teams. And when you talk about waste, it's not just product waste. We're also looking at our overall carbon footprint. Can we go into solar energy, et cetera. And I don't want to steal the thunder for my partner here, John Haller. He is actively looking at that, and we'll be happy to share more of that in a more comprehensive way later on. Jonny, any comments you would say?

Not much to add. Just, I guess, confirm to the margin point that you mentioned earlier on. On our journey towards mid-20s margin, there are I guess, kind of 4 main buckets. Operating cost efficiency is clearly one. We've got price and mix as we focus into the richest areas of the chronic care markets. There's some operating leverage, but then efficiency within gross margin is certainly a significant lever. And so we will see that contributing to the overall margin expansion over the next few years. We haven't broken out those components at this stage, but they're all important.

We have no further questions on the conference call. So I'll turn the call over to Kate Postans for questions from the webcast.

Good afternoon. Just one question has come through on the chat, and that's from Craig McDowell at JPM. You've spoken a lot about the organic R&D pipeline process. But could you explain more about the process for the inorganic pipeline. How are the opportunities identified? Is it top down or bottom up? What areas or technology gaps do you see as attractive from an inorganic perspective?

Yes. Look, so you can imagine, it's always delicate to comment on sort of how we approach the whole inorganic aspect of it. But I'll try to give you an answer in terms of conceptually, how do we approach it. I think it's fair to say that the inorganic strategy we look at both top down and bottom up. It's a combination, right? Each one of our business units does develop their own strategic plans. And obviously, we have a corporate strategic plan. And so you blend the 2, trying to understand how can you strengthen your competitive position. I think we've been very open and very transparent to say that fundamentally, we are not interested in transformative deal making when it comes to M&A. Fundamentally, we're focused on bolt-on acquisitions. And these bolt-on acquisitions, in essence, look to strengthen our competitive position. They could be commercial in nature, technological in nature or capability in nature. These are the 3 basic buckets. And so when you look at a more commercially-oriented type of bolt-on acquisition, I would highlight the Cure Medical situation, where that significantly enhanced our competitive position in the U.S. marketplace as a manufacturer. We got a security complementary product portfolio and frankly, have a very, very strong presence in the U.S. Continence Care marketplace. When you think about Triad Life Sciences, that was really a technology play, right? This is here. We're talking about biologic treatment for very difficult-to-treat wounds. It's a porcine placenta. We were very deliberate in wanting to be in xenograft, very deliberate to wanting to be in the whole space to porcine placenta from a cost perspective, from a regulatory perspective, from a performance perspective, a lot of discussion at the business unit level, at the corporate level, key segment we want to be in, and we've aggressively pursued it. And I think it bodes very, very well in terms of growth prospects. So hopefully, you're getting a sense that there's a balance of what I'll call, corporate and bottom up when it comes to the acquisition side. But then again, and Divakar can comment more on this. We also have what I call a radar up and running, where we're always scanning. It is discovery without walls across the globe. And frankly, whether the new technology happens to be developed in Tel Aviv or whether it's in Bangalore or whether it's in Boston or frankly, here in London, we're agnostic, honestly. We'll chase it down and try to figure out is there a win-win opportunity. Divakar, do you want to add?

Yes. I mean I want to go back to the IDEAL process that we have. We actually have pitch decks as part of the ideation process, which really sort of encourages the frontline people to sort of come up with ideas, and the pitching process is sort of R&D, commercial, medical, everybody sort of discussing that. I give a lot of autonomy to my R&D VPs to sort of make the final call and push it. So that is the bottoms up. The top-down approach, really our strategic planning process helps quite a bit. When I think about BlueWind, this was a strategic plan process that at that point, it was Kjersti Grimsrud, who was running the Continence Care business and I. We were partnering and saying, okay, how do we do this, take a top-down approach and drive it. And that drove that. I think the frontline project, there's a lot of licensing collaborating work we're already doing. We're right next to MIT and Harvard in Boston. I can't talk about everything. I mean, are we collaborating? Yes. But in terms of technologies, look, regenerative medicine is always going to be exciting for us. We'll look at it very thoughtfully. Mechatronics and digital is another one and advanced materials. So systematically looking at it, and we're going to be putting more emphasis there in terms of external partnering from my side on the technology side.

Super. Any more questions? Okay. I'm getting a signal from Kate that we don't have any more questions from the chat function. I don't think there are any more questions online. So I think at this point, I'm going to bring the session to a close. Just a huge thank you to all of you for having participated in the technology and innovation event. It was a real pleasure. Stay tuned. And we look forward to, hopefully, seeing you very, very soon. All the best.

Thanks very much.

Thank you.