Euroapi S.A. (SAN) Earnings Call Transcript & Summary

Good morning, good afternoon and good evening to everyone. I'm Arnaud Delépine from Sanofi IR team. It's a pleasure to welcome you to this Capital Market Day dedicated to Euroapi. You can find the slides or these figures on the investor page of the IR section of the website of euroapi.com. Let me start with a few logistical details. [Operator Instructions] So next slide. I would like to remind you that information presented in this call contain forward-looking statements that involve known and unknown risks, uncertainties and other factors and may cause actual results to differ materially. I refer you to the Euroapi listing prospectus approved by the IMF and Sanofi's Form 20F document on file with the SEC and also our document [French] for a description of those risk factors. Let me briefly take you through the agenda. Jean-Baptiste de Chatillon, our Chief Financial Officer, will start with an introduction, and that will be followed by a Q&A session focused on Sanofi. Questions will be addressed by Jean-Baptiste. Then Karl Rotthier, Euroapi Chief Executive Officer, will share the Euroapi strategy and growth. Bruno Laforge will present the organization, culture and ESG of Euroapi. Vincent Touraille will outline the market overview and positioning of Euroapi. That will be followed by a short break. Then Kai Rossen and Eric Berger will present Euroapi technology, R&D and manufacturing capability. Cécile Maupas will disclose CDMO; Laurent Alexandre, API Solutions. Then Laurent Alexandre and Antoine Delcour will discuss the Euroapi customers. After that, we have a second short break. Then Antoine will follow with the financial performance, then Karl will make closing remarks, and we'll have a second Q&A session focused on Euroapi. With that, I'd like to hand over to Jean-Baptiste.

Thank you, Arnaud, and thank you to all of you for joining us today for this great milestone, having this step was not an easy ride, but if you've been a great teamwork, I'm really happy to be with you to comment on it today. But first, on -- let's go back to where we are in our journey at Sanofi. Our Play to Win strategy was published in December '19, you remember. And I must say that we are ahead of time on most of our KPIs being growth, being replenishment of our portfolio, being free cash flow generation has been a great journey so far, and we have a lot to do ahead of us. But amongst -- within this journey, that was one important milestone in the simplification of the group. It was to create Euroapi. So on our next slide. You see the journey we are in has been quite rich on many steps for those 2 years of preparation. And it's quite interesting to see that when we announced the decision to create this new leader of the industry of API in February 2020, it was mainly to get a more simple, more focused company as Sanofi was concerned. Then we moved on with the carve-out and Euroapi became stand-alone at the end of 2021, and is now managed by Karl Rotthier and his team with a strong API industry experience. Euroapi is a strategic supplier to Sanofi. And we signed it in October '21, a 5-year manufacturing supply and a CDMO contract with Euroapi. This is, of course, an important milestone in our future relationship. On May 3, we will submit to our general assembly this Euroapi share distribution as a special dividend. And if approved, the first day of Euroapi share's listing will occur on the 6th of May on the distribution of shares to Sanofi shareholders will occur on the 10th of May. Next slide. What can we do to set up Euroapi with optimal condition for success? That was really our focus from the beginning. And this spinoff was never about the financials of Sanofi. It was not about a cash entry or it was not about improvement of our P&L. It's really about the simplification of our own industrial setup. It was about strengthening and improving our API sourcing. And that may be the most important thing. This industry is in short supply in many components: quality, security of delivery, independent sourcing is key for success for a pharma company. We know also that it was not best positioned within Sanofi. And easily, by benchmark, we could tell that there was a huge margin for improvement. And to be a competitive and solid API supplier, you need to be in your field with the competition on being able to supply the broader market, and you need to be equipped to do it. And that's what we decided to create because it's key for the success of Sanofi, that Euroapi goes on a successful journey. And that's what we believe, and that's what we decided to do because not only we want a strong supply on API, but we want also to build with a strategic relationship, a CDMO relationship with Euroapi for the long term. So we need those capabilities. And that's what we are setting up with a Euroapi standalone, which, of course, will be able to develop this growth journey with full independence as we decided to set it up with a very limited governance interaction, it's all about the commercial relationn on the strategic supplier to client relationship we are entering to. On the next page, you will find the main structure of what we're announcing today. Euroapi shares listing will be done through an exceptional dividend. And you could ask why not doing an IPO as we planned initially and there are 2 and reason for that. The first one is when we announced in December -- in February 2020, the IPO of Euroapi in 2022, we had in mind that our free cash flow generation would improve by 50% in 2022 versus 2018. And as you remember, maybe in 2021, we were able to declare that we were beating this guidance already with free cash flow improvement versus 2018 of 100%. So our balance sheet has improved and entering into an extra dividend with a very solid balance sheet we have today is, of course, a consideration that we didn't have in mind in 2020 -- at the beginning of 2020 when we presented initially the operation. The second reason to do it is that you've understood that the indemnity of Euroapi to build a successful journey of growth with multiple clients, is a key success factor is its independence. And we wanted to give certainty to the process on -- the certainty is achieved with the spinoff versus IPO. So that's why we took that route to make sure that our Euroapi was from now on, if approved by our general assembly on the route to success with a certain time table and with no uncertainties linked to the volatility of the market. We had also a chance to see that we have the backup of Bpifrance in our journey, Bpifrance will enter the capital of Euroapi, which is an important step to have a cornerstone apart from Sanofi, which will be mainly in its sort of clients. So we were very happy to see that within the spinoff, we will have the participation of Bpifrance. Maybe we go to the next slide, where we can see the retained parity. So we can see 1 Euroapi share for 23 Sanofi shares. So the distribution will be representing 58% of the share capital of Euroapi and will be distributed as I said before, as an additional dividend decline. Remember, EUR 3.33 per share for Sanofi, this is not modified. That's our proposition to General Assembly. And on top of this cash dividend, we would have this dividend in line with Euroapi shares, 1 Euroapi share for 23 Sanofi shares. And for the details -- the technical details for those who want to access it, we have our French IMF prospectus, which is online on our website. Next, we see that the Euroapi ownership structure is quite simple and very easy to read. Of course, Sanofi remains a shareholder at 30% exactly as we announced at the beginning of the operation. You see also that we have Bpifrance France which will be at 12% for being, of course, a long-term shareholder. And the Sanofi shareholders will receive 58%. What is quite interesting is that if you sum up, you see that as a very stable base of Euroapi shareholding will represent with more than 45% of Euroapi shares in the hands of shareholders committed to a very significant lockup to give a full backup to the birth of this new company. Next page. It's important that you really get what we want to achieve as Sanofi is concerned. Of course, we can see -- we can talk about the governance. And we make a clear choice that we were not going to try to influence the company both through the governance and through the commercial contract. Our priority is our commercial contract. How to obtain the best performance on the best results and the best quality to really have a sound long-term relationship that we can develop and grow over time with Euroapi. This is what we want to achieve, and this is our priority. It's the last ticker of this list, which is the most important which means that in terms of governance, we have only -- we have only 1 board position. And we don't -- we will not have in the bio of the company double voting rights, which means that our 30% are really just a minority share in the governance of Euroapi. So a particular picture is the commercial relationship for us that we want to build over time with a governance, which is super simple. And we want to have -- we don't want to be part of any conversation -- not missing any commercial discussion with governance as it has to be done. We're committed to Euroapi's long-term development, and this contract of 5 years, as you know, is contractual terms are by law and you cannot exceed out 5 years. But of course, our view is to work early and start to contract much after those 5 years because having Euroapi sourcing in Europe with a level of quality, diversity of Euroapi and work on CDMO is a great asset for Sanofi. Next page. With whom should we compare Euroapi? So here you have a sample of the peer group, you could have in mind. But for us, clearly, Siegfried is the main comparable of the company. And you can see and make your own math in terms of valuation and the performance. And when I was telling you that we were not the best owners of Euroapi, it reflects in the current or previous performance. But the turnover has already started, and the team is already delivering an incredible job, and you see the commitment of EBITDA margin for 2020. This is very exciting because when you see the peer performance, there's a margin for improvement that we truly believe is going to be delivered for the benefit of Euroapi but also for the benefit of Sanofi. So here gives you the fundamentals on the potential of its EBITDA improvement in the future. Next page. Sanofi impacts are exactly as planned and exactly as I declared it would be when we announced in February 2020. Of course, it's a simplification of our industrial network. It's a new improvement in our ratio of a number of headcount or salary cost to sell. It's slightly accretive to our BOI margin and it will be already in 2022. But I repeat, those are impacts, which under the core of the topic, the core of the topic is building a strategic supplier with the right strength and ability to work with for the long time. Next page. Yes. To summarize what I said about the way we are going to distribute those shares. Remember, we are to our commitment of progressive dividend, Sanofi with a significant improvement in 2022 for dividend of 2021 with an increase of $0.13 to the ordinary dividend that to bring it to EUR 3.33. It's a distribution of EUR 4.2 billion around this figure. And on top, we will distribute roughly 58% of the value of Euroapi to our existing shareholders, the rest being what is retained by Sanofi or invested by Bpifrance. Through this transaction, we clearly also recognize that with the strength of our balance sheet, we're happy have this investor-friendly way of creating and floating Euroapi, which gives certainty of execution and allows our current shareholders to become, if they want, also shareholders of. Thank you very much. And we'll take your questions on there.

Thank you, Jean-Baptiste. We'll open now the first question. I think the first question will come from Richard Vosser from JPMorgan.

Just 2 quick questions. Slightly accretive to the BOI margin. Does that mean we should anticipate a BOI margin for Sanofi slightly above 30% for 2022? And just a housekeeping accounting question. This will become -- or a question, will this become an associate that will go into your associate line of BOI margin to contribute going forward and the performance to contribute slightly to Sanofi's performance?

Thank you, Richard, for the question. So it means absolutely no change to our current guidance for 2022 because as I said before, everything which contributes to improve the profitability of Sanofi, we are not trying to beat our target of 30% BOI, but we are looking at reinvesting science in R&D to accelerate the development of our pipeline. So that's the first point. And to your second point on all the accounting implications of the deal. We'll have -- I think, Arnaud, we will have a specific call to give you information. There will be a -- we'll be losing the sales from the listing date, of course, ongoing, roughly what it represents, but we will give you the exact figures our forecast what it represents for '22, and we will go on consolidating an equity consolidation of Euroapi, which will participate somehow to the performance of Sanofi also.

We have a second question from Peter Welford from Jefferies.

So just 2. Firstly, just -- I apologize if this will be covered later. I guess just with regards to the capital structure of Euroapi, how much cash and capital is Sanofi putting into Euroapi from the point of view of it being able to then independently pursue a growth strategy, I guess? And how do you think about that in regards to Euroapi being actually funded to the, I guess, future opportunities. And then secondly, just on the similar line. Do you think -- when you think about this supply grid, do you think about -- is this a 5-year or longer term agreement for some supplying your current drugs, as they're obviously currently contractually manufacture for you? Or does this go broader? And should we think about this as well that potentially new drugs to get to the market, this will be a natural choice of manufacturer of all those new drugs? I guess, I'm thinking small molecules like to tolebrutinib, for example, amcenestrant, those sorts of drugs. Or is this defined relationship in your existing general medicine products. And we shouldn't necessarily think of them as a natural manufacturer of some of Sanofi's small molecules in the future?

Yes. Thank you very much. Particularly, I didn't repeat what we said at the beginning in our first announcement and I should have, so thank you for answering the question. Because we are not reaching any debt on Euroapi. So that's the capital structure of -- on the balance sheet of Euroapi will allow to finance its growth and fuel its growth, even though you will hear from the team afterwards, they have already a lot of room to increase from the current faction they're in. So yes, we are floating the company with no debt, which is a clear -- a good position to be in to start the journey. On your second point, I would say that the 5-year contract, as I said, is a purely legal piece, but it's a very good duration. It doesn't reflect at all. So when you have a strategic partnership, you are thinking long term when you're industrial and you're developing drugs, which are very long-lasting, sometime, project. So we are -- as we speak, discussing with Euroapi, some products, CDMOs activities on long-term projects. of course, go beyond this time period. But currently, we have this contract. We have this exclusivity period, which is a great way to launch activity, but we are looking far beyond this. to really build a long-lasting relationship as long as Euroapi is performing, of course, which I'm pretty sure will be the case.

Jean-Baptiste, it was very clear, we have no more question for Jean-Baptiste -- now we will move -- we have another one, I'm sorry, Richard Vosser.

So you flagged that the Euroapi spinoff's going to help with simplification of your manufacturing network. Can you just talk about where that leaves you in terms of the overall Sanofi manufacturing network? I just wondering whether there might be further opportunities going forward to improve simplification and whether the looking your exploring.

It's a continuous journey. As you know, we are in a journey where we're doing acquisitions permanently. There are many in the past years. And this optimization of rationalization of our industrial footprint is ongoing. But there's nothing important as this in our plans, and we will go on as in the past, rationalizing and finding some new improvements for our network in a normal way. So no specific announcements or information related to that. We will go on doing continuous improvement, which I remind you was quite significant in the last 10 years in terms of concentration of our manufacturing in performing sites to serve as many patients as we can all over the world. So we will stick to the same strategy.

The last question from Simon Baker from Redburn.

Just a follow-on from Richard's question. In terms of the opportunities for Euroapi that have come from the retrenchment of global supply chains post COVID and in light of the situation in Ukraine at the moment. I just wanted to know on 2 sides. How has that changed your view of the growth potential for Euroapi because it looks like there'll be a lot more manufacturing in your part, which plays to Euroapi strength? And also, how does that impact Sanofi's own manufacturing network outside of Euroapi?

Yes. So I will let Karl answer on how it impacts Euroapi. What I can tell you is that the global crisis we were experiencing in terms of supply chain, and we are, of course, impacted by this situation in many places in the world. It's certainly pushing us at Sanofi to review and work on how to build a higher level of security on our global supply channel sourcing. And it makes even more important the long-term success of Euroapi for Sanofi. You can read also through the participation of Bpifrance and the interest in terms of regional sovereignty and development. It's not just interest of France, it's interest of the whole Europe. And I'm sure this will also benefit to the growth and development of Euroapi. So as Sanofi is concerned, things have gone worse since we decided the project in terms of pressure on supply chain and sourcing, making even more compelling the success of the leadership we hope Euroapi is going to develop. But I can tell you, it's not changing dramatically what we are doing in the rest of our industrial footprint, but it's helping us to think and review how to improve the security of sourcing all around the world. Thank you very much. I think that was less interesting or less important part of the journey because what we want to hear is really what the Euroapi team is going to do to build the leader of the industry. Thank you very much.

Thank you, Jean-Baptiste. So we have a second Q&A session after the presentation. Now I would like to hand over to Karl.

Well, thank you very much, Jean-Baptiste. One of the most important architects, I think, in the foundation of Euroapi as well. So my gratitude is already there. Good afternoon to all of you. Shortly introduce myself. I joined exactly 1 year ago in full COVID time, everything was closed in Paris. But my God, time flew by because the plan was in need to be separate, be independent from Sanofi around this time. We never ever communicated really an exact point in time, but around this time. Well now -- we are very happy to announce on this historical day that on the 6th of May, we indeed are going to be listed. So that is already quite an achievement, I would say. So before that, I was 10 years as CEO of Centrient Pharmaceuticals, which was actually the old DSM anti-infective division. We caused it out from this. So here you see the similarities coming a bit. In the API field, antibiotic statins. And before that, I was active in the CDMO activities of DSM, which are, of course, now taken over [ fission ]. So I have to say that we have -- I have quite some experience in the CDMO field/API field. And I really joined because my opinion, this is the most exciting API/CDMO project in the entire world. And that is what we are going to explain to you all this afternoon. So what are we going to do? We will take you through who we are. I think that's always very important. What we want to do and how we're going to do it. I am not going to do this alone, of course. You will see and they will introduce themselves in -- when they present their story, of course. I am privileged to work with a very experienced management team. And I think indeed, it will come back. We have here a very, very solid combination of Sanofi legacy, very strong of quality, regulatory operations. But indeed Jean-Baptiste already mentioned, the commercial strategy was somehow somewhere a little bit missing. So the first priority that we really did was focusing on making that ideal blend, that ideal mix of people inside the management team who really have the experience in the API/CDMO world, because believe me, it's quite a different ballgame than being an innovator. So because of that, because of that difference in business model, I think it was a very, very sound strategic reasoning that Sanofi deployed to really say, we should set this business separate in order to let them grow and in order to maximize the value of this company. Who are we? Before we go there, I think I would like to share with you that perhaps without realizing it, I don't know, I wasn't there. But Sanofi created the #1 in the small molecules world. And there, I already need to explain you a little bit in the active pharmaceutical ingredient business, you have 2 larger buckets. You have small molecules, meaning molecules, which are produced chemically and you have larger molecules, biologics. We are not in biologics, although that will come back. We are also in -- and sometimes it's a gray zone. Is it small molecules? Is it large molecules. We are also in oligonucleotide type. So we are there with the turnover that we are going to realize this year of circa EUR 1 billion, the #1 in the world. That is a very, very good starting position to really leap forward now. Secondly, I think it is very important to mention that we have the widest variety of technology in CDMO companies that I have seen up till now. And there, I already talked now about CDMO because that was not the past. In the past, there were indeed contracts, commercial contracts developed by Sanofi to indeed fill some spare capacity. But if you really go into the CDMO activities, you need to be close to the innovators, you need to be closer to the biotech companies. You need to be close to the competitors of Sanofi. And now, really, we have that chance to go there. And I am very pleased that also Cécile will talk later about the different proof points that we already showed you on being successful in this market. Thirdly, some people might think you're in a small molecule world, API world, that's all commodity, all generics and all goes to India and China, but you do it here in Europe. But also here, I need to tell you, this is not completely true because we are primarily active in highly differentiated molecules, molecules which are very, very difficult to manufacture, complex chemistry. I'll give you 1 example. What we do in Hungary is producing Prostaglandins. There, it takes more than 60 chemical steps, more than 1 year to produce a couple of kilograms. I would hardly call that a commodity. So I would like to really state here that we are not in the high-volume commoditized generic business. And this is also important if you take it through. And then unfortunately, we have a global business. We are present in more than 80 countries, global sales force, but we have our manufacturing sites in Europe. And indeed, we see also the entire discussion even before COVID already happening on the security of the supply chain. And I also dare to say that, that is not only an API discussion because some of the biggest hiccups that you see in the value chain is caused by the lack of intermediates. And here, I'm also very pleased to say that we are very, very backward-integrated, meaning that we are sourcing some of the raw materials that we need, but which are, in principle, readily available on the market. We do not need registered starting materials or intermediate because people use that ourselves. Now we see that indeed in that supply chain, a lot of hiccups came from the lack of these intermediates coming primarily from China and India. And I also think that we can play a very important role there in the entire repatriation discussion is ongoing and where I also, of course, will come back in detail. I needed to say that because stating here some facts is pretty obvious, but you need to know that background, right? So indeed, we are going to achieve circa EUR 1 billion in sales this year. We have a wide portfolio of APIs, 165 in the API Solutions part and 35 in the CDMO part already. We have 3,350 people working primarily in Europe because we have our 6 manufacturing sites in Europe. And you see here on the map where these are located exactly. I think also very important to mention of all the people that we have. We have a very big base in R&D, and we intend to grow that even further in the future. Here are 3 different areas where I would like to quickly take you through because that is what we have been doing actually the last couple of months because 2 years is 24 months, it's not a long time. Before the announcement was made in February 2020, indeed, focus on operations, top-notch quality, top-notch regulatory affairs, reactive commercial strategy. What we have done since the announcement is to work on the carve out. The carve out is now done. Some people here in the room have worked very, very hard on the carve out as well. But indeed, we also put together a new management team. with that ideal mix like I already mentioned, between legacy of Sanofi and the new commercial expertise that we needed to get in-house because it's quite a different animal, selling APIs or going into the market, selling a service, which is the CDMO, knowing all the technology that is behind it instead of indeed, focusing on developing new molecules, completely different business, meaning also that we need to create a different culture in this company. So there, I would like to come back to you in a couple of seconds. Short term, what we're going to do is really relentlessly focus on execution. We have indeed written with the entire Executive Committee, a very ambitious business plan, organically grow, especially in the CDMO part and in the business to third parties on the API Solutions part, focus, focus, focus. Yes, indeed, also in the midterm, we are also going to develop ourselves. And we have indeed mentioned just a couple of seconds ago, and I'm trying to elaborate much further on that on our capital structure the 3 is indeed the way that we are going to be listed. We have indeed also already agreements on RCFs, et cetera, meaning that in the midterm, if interesting opportunities come by for add-ons, I would indeed like to really have a deep look at those. But the key message I want to repeat it is now focused on the execution of the business plan that we have written organically because we have still quite some untapped potential in this company. Culture change is needed and is already ongoing. What I mean with that is we need to be much clearer. We need to be able to really listen to the customer what he wants and react very quickly to the customer what he wants as well. We call that a CDMO mindset. You need to respond in maximum 2 weeks, for example, in the RFPs or on the RFPs, which come our way. You cannot just say, yes, we will have a look at it. And 6 months later, you come back to it, impossible. That is a culture change that needs to start here in the headquarters. And that is rather easy, I would say. Well, a lot of these people are also willingly, unique joining this project or have come from the outside. I think one of the most important challenges is also still on the sites, but that goes also in a very quick way right now because we now see indeed what are the turnover figures that are necessary for the site as well and that we keep on pushing each month for achieving these numbers. And that used to be different in the past. Here are our 2 foundations, our pillars. On the one hand, the API Solutions portfolio, #1 in a small molecule field, highly differentiated. That is currently still the largest part, of course, you can say, half-half is off of Sanofi; half is already third parties. So based on the past, there was already quite some work done in developing this portfolio, yet even without a real defined commercial strategy. And that is now key going forward. So in absolute terms, we will indeed grow above market in the third-party business API Solutions, below market in Sanofi, above markets, API Solutions. In percentage then, of our total portfolio, this will go down because then I turn to the right-hand side of it, I turn into the CDMO part. And here, we can now, for the first time, focus not only on the commercial contracts which are out there to grasp of noncompetition of Sanofi. No we can also now focus on preclinical Phase I, Phase II, Phase III development projects that we are going to obtain from the other innovators and from the other biotech companies. Why? Because we have this wide variety of technology presence. We have all these R&D presence. There is -- in this business, it is very rare to find really a one-stop shop. And that is something that we can offer. Also with technologies that were present already a long time, appetites already since 1976, but actually never used in the market. for logical reasons because that was not the priority. Remember, the difference of business model. So this is what we are going to really do. And this is also what we wrote in the business plan until 2025, meaning also that we move into higher-margin business. And this is indeed mentioned on the next slide. Actually, this is a very simple strategy. The 3 first or -- if you go from left to right, the 3 first ones are all commercially related. The fourth 2 is cost related. Because here, and I need to mention it to you, we still talk about a primary carve-out. A primary carve-out indeed has 2 advantages. You really can develop the business much further. And here, I mentioned exactly the CDMO part on the left-hand side, which, and I'm only going to scratch the surface here because my colleagues will go much more in detail of this. We have, indeed, only 6 sites in Europe, all are different technologies. We have there all the R&D people working. We have complex chemistry. We have oligo and peptides, cortisol hormones, even Vertolaye, the biggest spray dryer in the world in Haverhill with a potential that is still really underutilized. We have these highly differentiated APIs, high potency APIs that we have. That is all -- in fact, in my opinion, if you know a little bit the market, something that you really can go after in a very quick way. And then I don't mean that you will see this next month, right? We are not -- we are in a highly regulated business, it takes indeed time to get approved, et cetera. But all these leads are there. And next to that, of course, not only on the CDMO part, but also on the API Solutions part, we see there a lot of opportunities coming by for demand of product that we currently have in house or where we do not have enough capacity, where we are sometimes the only Western player left, vitamin B12, the pricing strategy, cross-selling. And here, I also want to touch upon indeed, and we did not take that into account at all in our business plan in the different initiatives that are currently taken. And for example, I mentioned here, it can be important projects of common European interest in order to see what kind of intermediates, what kind of APIs would indeed be better to produce in Europe in order to really secure the supply chain. These are projects where we are actively participating in, but not, and I repeat it, not in the commoditized high-volume API or intermediate in the complex chemistry. And there, you talk again about our innovation potential, our R&D potential to fully utilize that to the max. I think as a company, we are ideally positioned to grasp these opportunities as well. Fourth, and yes, I think that is going to bring us the fastest margin uptick. Yes, it is a primary carveout, meaning that we are now going to focus for the very first time also on investments, which are for our business, meaning that we are going to improve also the variable costs in this, meaning that we also indeed have had a look already on the fixed cost structure. And since 2020, when the announcement was made, hard work was done to really write detailed performance improvement plans. These are currently all ongoing. And we see here, if you think about margin uptick, what Jean-Baptiste shortly mentioned, we see that as a first element coming in into our P&L. The business, the mix, the moving to CDMO is the second part, of course. So this is a little bit how we are going to do it. So I shared with you who we are, new kids on the block. I must say, but with 150 years of experience behind us, top-notch on quality, regulatory operations part, now also very strong on the commercial part, shift of portfolio going to happen from API Solutions more to CDMO with a very appealing commercial strategy and also being a primary carve-out, reaping the benefits of variable FX cost improvements. Why would you now invest in Euroapi? And I think I would like to quickly take you here to 3 elements in the market. It's a position that we take in the market. And of course, this needs to be translated into financials as well, let's face it. The market, the competitive landscape. I told you already that we are #1 in the small molecules. Here you see in our opinion, what is a competitive landscape at this point in time. Lungs are clearly the biggest. No doubt about it. Everybody is lodging this in the industry. Yet, they are primarily in biologics. If you just only look at the small molecule field, we are indeed #1. Yet, what you also see here is this is a highly dispersed market. The market shares are not 20% or 30% or 40%. And this is also for logical reasons. In the world, you have around 5,000, 6,000 APIs, not one company will be able to make all these APIs at once, not one. So you always need these different kind of technology. So the technology is always putting you on the forefront of your competitiveness. And I think indeed, if you look at only the small molecule market as such that we can indeed play here kind of a consolidated role as well. On the right-hand side, you see more the CDMO fields. And perhaps it's a little bit black and white, what I say now, but without even having focus on this business, we already had a #7 or #10 position, but #7 the ambition to become indeed a #5 player by 2025 with the focus that we are currently having on it and with the first time having a real dedicated team on it is, in my opinion, a very realistic one. The market is a big one. It's more than EUR 70 billion and growing at a pace in principle, 6% to 7%. Yet what we all see during COVID, there were some effects from 2019 to 2021, you see also a lower growth in this market, which we see now picking up again. Too early to say whether that will go to 6% to 7%, but that is under a normalized picture because you have indeed a lot of growth areas. In those COVID years, certain therapeutic areas were really hit. And then we have also the look at we have a big diversified portfolio. But if you would only be in, for example, antibiotics, that would not have been a very wise idea because then nobody got sick and nobody need took the medicine for that where all the customers stocked up in 2020, not knowing what's going to happen with COVID and hopefully, it would be gone in a couple of months. We are still in COVID. So there are quite some areas, which I heard, but this will recover. These will recover again. Then also, what I want to share on this slide is the small molecule world is still the biggest one. And you might indeed perhaps have that judgment in your mind that this is your commodity and I already said it is not that this is something that is perhaps not that attractive as the biologics business is because that's where the future is. In the complex chemistry, we are indeed playing a crucial role to link the large molecules also together with the small molecules. And Kai, our Chief Scientific Officer, is much better placed in a much better position to give you the very simple explanation on why that is indeed the case. The position that we have in the market in the areas where we are active in, there we have leading positions. I already mentioned at the right side, you see here the high potency APIs Prostaglandins, but you also see that in the complex chemistry, but we are in the steroids and the alkaloids, Sartans there are quite in a leading position. And then I really wanted to highlight this here as well. The market of oligos, oligonucleotide and peptides are growing at a high base. They're growing at a much higher pace than the capacity that is being installed. But also there, with the focus that we are going to have it, but also with the competence that we have in Frankfurt, where it started in 1976, we can indeed show you already quite some proof point contracts, which we also obtained over the last couple of months in this very important area that we want to focus upon. Because why do we do this and then you come back to the R&D part. You come back to the technology part. In all the sites that we have, we have indeed these dedicated R&D people, more than 330 sites, of which more than half having also PhDs. And that is also an area where we are going to heavily invest in because that is also the future of this business. And that, of course, is then the reasoning why we can focus in the API Solutions business also on developing the portfolio with the technology that we have in-house and we call it line extension, but there are other words that you can also invent for that. But that is also an area where we are focusing upon for further growth. And then, of course, with the technology that you have in-house and the sales force running around not only in Europe, but also in U.S., Japan regulated area because we are primarily active in the regulated areas, split like that. We focus then on the deployment of that. And this is what you see where we would go to and what I mentioned to you before, from the 25% turnover that we currently see in our portfolio to 35% by 2025. With dedicated persons, teams, and also we need, that culture change, never ever forget it, that is essential, where we are currently already full on it to really bring that home. The API solutions business fix important growth pillars because also here is a little bit the start of what we call the new commercial strategy. We are going to invest indeed in those assets where we see demand increasing, but where we do not have enough capacity. We are going to do that in our B12 facility in Alba. We are going to do that in our prostaglandins facility in Újpest in Hungary. And we're also going to do that here in France in the new hormones building in Vertolaye. In total, last year, when I gave the first interviews, we said from 2021 to 2025, we're going to invest EUR 580 million. So now from 2022 to '25, we are indeed going to invest EUR 500 million because we need to deduct '21. Going further, that is all confirmed. We indeed gave the first present reviews last year, those investment figures are all confirmed and they are primarily focused on increasing that capacity. We are also going to have much more cross-selling, meaning that we can sell much more APIs to the same customers being indeed now able to offer that one-stop shop. Price increases. Indeed, we need to have a proactive price increase. We need to know where the customers of our customers are selling. We need to know in which regions that exactly is. But not only that, we are in a position and you might raise the question also in the Q&A. In the current situation where you see increased raw material prices, increased energy prices, we are in a good position to also work with [indiscernible] through clauses in the contract business. And you see that we have here 30% under contract. But in the other part, the 70%, which is on spot, more than 76% there is actually mono sourced. So also there, if you see the stickiness of this business and see that before your API is approved to your customer, you are 3 years down the road and you cost you at least EUR 1 million to get another API approved. Now here you see that also that pricing strategy coming by in our current portfolio and of course, going further in our future portfolio as well. New customers, of course, we're going to deploy that. Also, some of the molecules which were exclusively for Sanofi, where we're now able to indeed offer to the market as well. Also listening here to the same constraints as what I just mentioned. We did not put that in our business plan already for next year. No, we also need to take time because it takes time, 2 to 3 years, but we can do that. And then last but not least, these repatriation projects. I think a couple of weeks ago, I also participated in a roundtable here in Paris, where actually 14 countries indeed signed the agreements on IPCEI. I repeat it one more time because it's a difficult abbreviation. Important Projects for Common European Interest, it will happen. It will happen. A lot of funds have been made available to really participate in the security of the supply chain because that's what it is. And I think also as a company, we can really play a very, very important role in this. I, of course, also need to take care of my biggest customer, Sanofi, and already mentioned by Jean-Baptiste, we have contracts in place. What is very important for me is that as a company, this gives me visibility. Gives me visibility on what exactly is there. Give me cash to put it like that. But also what is more important, and there, if I want to make it a little bit more clear on what Jean-Baptiste did, we are also a privileged partner for the different new molecules that Sanofi is going to develop. We have made development contracts. And we, of course, are in a very good position to really offer our technology for those molecules, which are going to be crucial for Sanofi going forward as well. This is a long-term relationship. That's what we're here for, and that's where we are going to support our biggest customer with. This needs to be translated into financials. So we gave you a little bit of flavor of who we are, what we do, the position in the market, where we think we can grow. We have had sales last year of EUR 902 million. Our guidance for this year is that we will reach circa EUR 1 billion. And the reasons for that are going to be explained in detail by Antoine. Above-market growth for CDMO and third-party business for the APIs below market growth for the Sanofi business, API, but also if you want to make a distinction, CDMO will be above market. Overall, we would be in line with market then. But here, despite because you see that also in the financials coming by, despite that, the turnover dropped in 2021 compared to 2022, the margin already grew. And this is a direct line where I mentioned in the past or in the past couple of minutes ago, that the first benefits of the cost improvements are also going to be there and that you will see first. And then also from this year onwards, but certainly then also going further to the period of 2025 in our business plan, you will see the business opportunities and the business mix coming by as well. And that indeed would give us a core EBITDA margin above 20% by 2025. Governance I think it speaks for itself that you need to have quite an experienced team to do this. Nobody can do it alone. And here, you see the team that is actually here present. And where, of course, some of the members are going to go much more in detail on some of the topics later on. For the first time, a complete dedicated management team. But more important for the first time also a complete dedicated Board. I'm very pleased that Viviane Monges is here. Viviane welcome again. She is going to be the Chair of our Board. So as of the 6th of May, Viviane if I can hear it well, it's really up to us. We were also the last couple of months in the middle of composing this Board because there is one keyword, and I'm very glad that Jean-Baptiste also started with it, it's the independents. We need to be an independent company standalone. So the majority, indeed 7 versus 6 because we will have 13 members, including employee representatives will be independent. And that is also going to guarantee us the way forward because that is also going to guarantee how the market will look at us not being dependent from one big shareholder or not being dependent from one big customer. That Board will have 3 committees, the 2 traditional ones, I would say, RemCo and Audit Committee, but we will also have a very important ESG committee. Then also, I would like to take you one step back. In my days when we were with DSM. DSM always took the #1 or #2 position in the Dow Jones Sustainability Index. We really have sustainability, everything related to safety, diversity in our genes. And I was very, very pleased when I came here and when we looked and visited the site, this is the same. And I think it is not mentioned enough, that's why Bruno is going to do this when I finish talking, how actually we already have a very, very good route towards all environmental goals, energy, diversity, governance, et cetera. So I'm very pleased that we indeed took the decision that we are going to have the dedicated ESG committee because going forward, it is also very important for the company. [indiscernible] I had the opportunity to kick this off. I hope I gave you a little bit of a flavor of who we are, what we want to do. Again, we go much more into do the details now. Starting with a very important element on organization culture and ESG. Bruno, I would like to ask you to come to the stage, and I will be more than happy to after answer whatever questions that you might have later on. Thank you very much.

Thank you, Karl. Good morning, good afternoon, everyone. Let me introduce myself in a minute. So I'm Bruno Laforge, Corporate Affairs. I have been with Sanofi for 10 years. I started to work almost 30 years ago in different industries such as automotive industry, nuclear, pharma as well with G&G and prior Sanofi and LBO in oil and gas, in charge of HR and M&A as well. I'm very pleased to make the bridge between Karl's presentation, I would say, and the business this afternoon. And I'm going to focus probably on certain topic such as culture, talent management and also ESG, which are quite the foundation of the transformation that we have to complete in Euroapi. The first one that I would like to focus on is definitely the culture and talent. We need to endure any transformation and a big transformation in this company to make sure that we're going to create something which is quite agile, flexible, changing the mindset, having also an entrepreneurial mindset and focused on the CDMO activities. So this is quite an important journey. In this context, for sure, I mean, talent management is also a key topic, meaning that we need to figure out what type of competencies that we would like to recruit in the near future, so meaning that we need to attract and to retain talents. We need to develop capabilities to set up some succession plans in the future and everything is based upon our mission, values, journey that has been set up recently by [ GXCom ] as well. The second topic, which is also important is the compensation and policy -- compensation and benefits policy, which is totally linked to the strategy of the company, to the growth that we are expecting. So I'm going to focus on 2 aspects. The first one is the short-term one, and the second one is a long-term incentive scheme. The first one is to say that we have already reshaped all bonus schemes focusing on key financial metrics of your API for sure, but also focusing on central function, adding certain components such as the CDMO piece for all sites, which is quite important and especially to develop this transversal corporation as part of the organization. And last but not least, which is quite important as the ESG objective that will be extended by '23 to the entire organization as well. Regarding long-term incentive plan, I mean, really, the objective is to involve our employees to the future of the company. We are putting in place a best-in-class and very competitive LTI plan, which is going to be focused on a certain group of people in the organization and also a shareholding employee plan that we're going to be set straight after the listing in the course of May or June. And for executive, especially really the idea is to involve people into that game. So meaning that we are putting in place a kind of skimming the game to make sure that people are contributing to the value and to the growth of the company. So meaning that we have an LTI program, obviously, for executives but which is splitted between performance shares and stock options, matching plan matching performance, matching plan for the CEO, so for Karl. And we have also 17 executives that are rewarded in performance shares as well, which is quite important. If we are moving to the ESG part, this is clearly an opportunity for growth. and especially representing a strong differentiating factor in line with the premium customer service positioning. It's still in progress. So that will be probably validated by the ESG committee for sure. But we have -- in a nutshell, we have 4 elements to be considered. The first one is the Sanofi legacy, which is quite strong, obviously. The second one is relative to the benchmark of our competitive landscape with a mix of listed and nonlisted companies, so that was quite efficient, also to have another view about what's going on in the market. The third topic is relative to the risk profile because we do consider that environment can also mitigate some risk certainly for us from an environmental standpoint. And last but not least, we have also the ESG survey, which has been performed last year. So we interviewed with something like 1,200 people, and it's also a clear guidance to set up some strategic components. On the right part of the slide, you can see that we have some main concerns, I would say, on which we need to focus on and on which we have a positive impact for the future. So first is relative to the medical needs, which makes a real difference by offering a portfolio of more than 200 molecules in many therapeutic areas and including essential medicines. It's true that supply chain also is quite important, and we need a resilient supply chain and also due to the COVID-19 situation. And the third point is related to the energy program that will allow us to better control our impact and anticipate future regulation. And the fourth element is regarding the secular economy. If we are focusing on environment and I would say, environment and energy as well. We have a good track record in terms of health, safety and environment policy. We already started to reduce or gas emission, thanks to key initiatives. So on the left side of the slide, you have some of them. And we're going to launch, for instance, a biomass boiler to reduce gas emission in [indiscernible] so which is quite an important and innovative initiative as well. We have key objectives, which are quite very challenging for us. The first one is that all sites will be certified by the end of 2023 for ISO 50001. So Energy Management, this is quite an important aspect. Second one is that 100 sustainable electricity supply for all sites by '25 will be performed. Next objective is to decrease our gas emission by 30% by 2030. And the fourth one is that quite challenging as well, I would say, is a net 0 carbon emission by 2050, which is probably one of the key objectives that most of the company have on the market. The last component I would like to focus on is definitely social and governance matter, which represent a core priority at Euroapi. Employees engagement and mobilization is key, including, well, caring for people, for sure, as well as the respect of the communities we live in. We have also a good track record in terms of employees' health and safety. But having in mind that we have also strong and clear targets to be completed in the next coming years. The first one is that by '23, all sites will be certified ISO 14001. The variable pay linked I was mentioning before that we would extend the objective of ESG to the entire organization next year. The employee share ending plan I was mentioning. And there will be, I mean, no compromise with safety. So we have a 0 target -- target 0 accident ambition. Our targets are 1.5 for the lost time injury rate, 2.5 for total recordable injury rate by '25. So those objectives are quite important as well. And the last one that I would like to mention is about diversity. We have some efforts to be done. Obviously, we have clear targets around this topic and especially if you want to reach the 30% but probably ahead of time of schedule that will be by end of '25 for the extended leadership team we are currently at 23%, and we expect to be at 30% very soon. So as a conclusion, you can see that the road map is very ambitious. ESG is something that we want to embed in all what we are doing on a day-to-day basis. So this can be a driver of mobilization for employees contributing to the Euroapi culture as well, values as well and a real competitive advantage. So I guess that we are on that way for the next coming years. Having said that, I would like to thank you very much, and I hand over to Vincent Hingot to give you some marketing strategic insight. Thank you.

Thank you, Bruno. So let's present this API and CDMO market. I know a lot of you know this market already, but there is so much to say on this market. First, I'm Vincent Hingot. I joined Euroapi on October 2020. Before that, I've been for more than 20 years, [indiscernible] in the CDMO activities, Fine Chemicals as being CEO of [ Picat ], for example, for 10 years. So let me present to you this market. And you will see that it is -- on CDMO, it's a very big market, more than EUR 250 billion including drug substance, drug products and packaging. For Euroapi, our target is on the noncaptive, which is accounting for 59 for small molecules and 13 for large molecules. On the right part, you will see that there is the growth indication. This market, and I -- is -- I repeat is a very complex. It's a market with a fragmented structure, but what is very interested in this market is its growth. So on the growth, you can see that there is a big growth in large molecules more than 8% and small molecules, 5%, 6%. And if you split that, as we have explained with Karl between the 2 pillars we've got CDMO and API solution. You can see that we are performing with the CDMO, something which is more than 8. We hope to overperform that because we will focus on certain field of activity in CDMO such as [indiscernible] and peptides, which are even higher or [ HP API ]. And we will do that on top of the growth of the API solution activity, which is roughly 5%, 6%. As it has been said, you will nevertheless notice that the COVID crisis had the exceptional consequence in '21 to reduce significantly this growth at a level of roughly 2% due to the worldwide lack of demand for non-COVID medicines, and it has been an exceptional effect. Concerning the market on small and large molecules where we are working on, new drugs approval, which means the drug that has been approved by the authorities by launch on the market. Our majority -- the majority is small molecules. It will be equally shared in the future, we believe, at 50-50. In number, the small molecule are then remaining very important. Note that the small molecule are becoming more and more complex. Karl said about prostaglandin that it is a large number of steps. We are coming from a world where the small molecules were done by 5, 10 chemical steps have to know -- you've got, for example, some medicine like the fantastic anti-hepatitis C in the past that has been launched recently. It's more than 40 steps, 40 chemical steps. I mean that the small molecule are becoming very, very complex on top of the large molecules, which are also complex production. So Euroapi technology fits very well with that. And you will see that we are covering roughly 80% of the new drugs that will be approved in the future by our technology. And with this leading position in small molecules and development launch on peptide, oligo, [ HP API ], we are addressing the big part of what will be the market of complex molecules in the future. What APIs can bring to that? We own all categories specific to the success of this market. First, we've got long-term and sticky relationship with our customers, built by more than 10 years of activity with customers out of Sanofi. We've got the right scale in our plans required to hold seldom technologies and the ability to honor large contracts. We've got large sites. It's enabled us to respond very rapidly to customer in terms of large contracts. We've got a large level of expertise and wide range of technologies in high regulated markets and [indiscernible] . And we've got the ability to implement high CapEx to grow the project or projects and the projects of our customers. Euroapi is also able to respond to the market trends. The further is this demand for premier API, as we said, complex premium. And also this ability, which is very important to respond to high social responsibility, the trend for more environmental requirement and the compliance in quality, which are the strength of the European manufacturer. This also trend, which has been explained by Karl, for example, for repatriation. It's something which is very important. The regionalization of our sales is important, and there is a lot of study done in U.S., in Europe to support this repatriation. [indiscernible] has been one example. The recent [ LCK ] has been won. And Euroapi, as we said, it's not in our BP, but is a very good European vehicle as being -- as having a strong European footprint for making this sort of API. What is the supply chain we are working on? API is the drug substance, which gives the property of the drug. We start as Euroapi at the product development phase after the discovery phase, and we go up to the drug substance manufacturing. We can provide also -- just after that, and it's the first step going to the drug product, we can provide particular engineering, spread drying, micronization for the best solid form enabling the drug product manufactured to suit the best biological availability for this final dosage form. We've got this ability to develop new molecules from early product development. We've got laboratories on each site, [ KiloLab ], pilot plant for the launching of a manufacturing unit, ability to handle -- we've got the ability to handle all technologies based on manufacturer of more than 200 product already. With strong presence in complex, highly differentiated niche and complex molecules, but also we are dealing with a large range of essential life-saving drugs. Take the case of opioids, for example, corticosteroids [indiscernible]. And they are all based on some technology that has been developed on our site and its strong technology platform. Among the other we are a focused player, but maybe we've got certain difference with some other of our competitor in the sense that we've got a huge, large API solution range of products. When most of our competitor in this focused player field are more on CDMO. And it is also a challenge for us to increase the CDMO part to grow our business. Some of our competitors, we can call them integrated players, Lonza, Siegfried did explode over the last year -- the last decade, I would say, some capabilities in drug product and packaging where we are not at the moment. Pharma company actors, which are the third group are still present as CDMO, and they are covering the whole range of the supply chain. In terms of small molecule, what is -- why are you -- are we in a unique position and leading this small molecules area? [indiscernible], Lonza is the biggest one, but in small molecule, we are #1. First, you will notice that we are operating in a very, very fragmented market, large numbers of companies, large number for actors serving the worldwide market. And the biggest I've got few percentage of market share. For competition also, you will notice is worldwide, China, India, Europe, U.S. And Euroapi holds in this field a leadership position. Based on this existing platform, historical, technical segments such as steroids, opioids, [indiscernible] fermentation, B12 anti-infectives. That's where we stand as #1 in small molecule. By creating Euroapi, Sanofi has created the worldwide leader in that field of activity. And this will count for our strategy of developing CDMO. If we are looking at what is the CDMO field of activity, as we said, we are already in top 10. And it's because of our historical platform. And with a limited amount of effort and with some successes, good successes we had in the past, we did obtain this position. You will notice that in this very fragmented also CDMO market, even more fragmented maybe than the API solution one, the CDMO actors are mostly Western companies. You got -- you may find some Chinese or Indian but much more European by history. And also because in CDMO, you develop a new drug for your customer under secrecy with quality, with regulatory compliance. You commit on a reliable supply chain when you will launch the manufacturing and your customer needs trust. He needs with this chosen partner, and we will be the partner, he needs to develop and manufacture its new product his baby for in certain biotechs. And Euroapi offer without any limited -- without limitation of Sanofi chemicals that we were in the past, we are offering this possibility right now. And we have the critical size. We've got the technologies, and we've got a track record to become the leader in CDMO. That's what I wanted to say on the market. And of course, on this fantastic market, there's much more to say, and I'm there to respond to some of your questions after the presentation. Thank you. And maybe it's time for a break. I believe, and I will queue the place for it. Thank you.

Thank you, Vincent. Now we have a break. short break, only 5 minutes, then we will move to the second part of our Capital Market Day dedicated to Euroapi with an in-depth review of the business. And I think we have a short video . [Presentation] [Break]

Good day. I'd like to hand over now to Corey Robertson, who will review Euroapi technology.

Good afternoon, ladies and gentlemen. It's a pleasure that we introduced you to the heart of Euroapi, which is its technology, its R&D capability and manufacturing. And I and Eric are going to present this to you. But before we go into media phase, let me just briefly introduce myself. I have been in the business of preparing and developing science and chemistry for APIs for over 30 years. I started out in big pharma, in Merck and [ Rowa ], also worked at Sanofi. I have worked in a small-sized pharma company, Lundbeck in Denmark, but had also been a few years in the CDMO business at [indiscernible]. And in addition, I am the Editor and Chief of the one scientific journal that discovers this topic and is published by the American Chemical Society, organic research process and development. So you've seen the left part of the slide already, and it essentially shows that the pharmaceutical industry has a spectacular ride of success in the last couple of years of bringing new drugs to the patients. And the focus of the pharmaceutical industry is clearly the discovery of new drugs that help the patients. And the industry has become modality-agnostic, essentially any modality that works is acceptable and is used. And if you see that pie chart, it is impressive how many types of approaches are being used and is also impressive how complex these molecules are becoming today compared to 10, 20 or 30 years ago. And we are in the very fortunate situation at Euroapi that we have the knowledge and the technology to make about 80% of the types of modalities that are moving into the market. The antibody drug conjugates, we are not focusing on monoclonal antibodies but we can make the linkers, and we can make the cytotoxic compounds connecting to the linker and to the monoclonal antibody. So it is an incredibly wide portfolio of what we can handle and if you look on the right side, we can do complex chemistry. We are able to handle highly potent compounds. We are able to ferment, which is very useful and important skill looking at the complexity of new compounds going on. And one of the key assets that we have is we're able to do oligonucleotides, peptides, lipids, and conjugate those together as need arises from the discovery of the pharmaceutical industry. Because the next thing that one has to think about is what does it take to really drive the business into the future. And there is clearly a lot of need in innovation for discovery but there's an equal high level of need and opportunities for innovation in the actual production of APIs. And that is where you first need to have an underlying principle and an understanding what you want to achieve -- and what we want to achieve is more sustainable and greener processes in order to make the APIs and bring them to the patient in the end. And that is synonymous with better economics, that is synonymous with cheaper processes and is thus totally aligned with both the environmental goals but in line also with the economic goals of it. Complex chemistry, It is getting more and more complicated. So this is a great fit for us and that we are happy to see that the new development compounds are more and more complicated, peptides and oligos. We are state of the art that we have in addition the chemistry knowledge so we can also build the linkers. We can build the pieces that are attached to that to make the next generation of drugs, which are the more complicated conjugates. And when we talk about next-generation drugs, it's clearly evolution in the RNA field that is bringing a lot of new entities to the market. These are hinging on components that are necessary to allow delivery, the lipids are one of them. We are making not the genericized commodity lipids but we are making very specialized, very difficult to make lipids in order to enable mRNA delivery. And so that is clearly something that we see as good combination of the needs and our technical capabilities. Innovation hinges on people and we are in a very fortunate situation of having a very strong team, a very experienced team of about 330 scientists that are well organized in centers of excellence around our sites and supporting the respective sites with the needs that they have. So Frankfurt is our hallmark for the peptide and oligos, going back to the history of that site that has developed this type of chemistry for often decades, while we focus on small molecule chemistry and development at our Újpest site, but this is not to forget the other ones with spray drying in Haverhill technology and Brindisi and Elbeuf fermentation technology. So that is a good description of where we are. And I think it's now time to hand over to Eric who will explain to you our manufacturing platform that is then able to put all those nice discoveries into the vessels that produce the products.

Thank you very much, Corey. I think yes, the right period of time at the end to connect all we have talked about regarding the business, regarding the development, regarding the innovation into the industrial operation network. Let me introduce myself at the beginning. I am Eric Berger, I'm the Chief Operating Officer in charge of the industrial operation. I'm an engineer by education. I earned my degrees in Canada, and I had the opportunity to earn my career in different countries, starting by Canada, France, Germany, U.S. and Canada, France again. My background is very much on the drug substance part. I've started in biologics, moving to API vaccines and having also some experience in injectable drugs. What we're going to check now is get to know the value, clearly brought at the end by this industrial operation and network at the end to the company. And if we move on this slide, we'll separately check a couple of things. We're going to talk about the size by talking to review also the footprint. We are going also to move forward a little bit more on the technology capacity and also the contribution of the sites to the development of the company. What is very important at the end, and that's probably [ adding ] that we have to address and tackle at the beginning. If you see on the left-hand side, you see that Euroapi is the biggest API manufacturer. At the same time, Euroapi industrial operation network is only 6 sites. And that's something very important because we all know that the API business is a very regulated business. You need to have a lot of capacity facility to manage the handling of the raw materials, the manufacturing and the management of the waste. At the same period of time, we had also got tough capabilities to manage properly the regulatory context. Regulatory context is very much about quality, very much also about environment and safety. And having 6 big sites, sites bigger than the competition and having among these 6 sites, Frankfurt as the biggest API site is definitely very strong competitive advantage for Euroapi. Let's move forward now maybe on the capacity and capability of the site from a technology standpoint. CDMO is going to be a key objective for the company, and all our sites are going to be equipped with CDMO capabilities. As presented by Kai, our different sites will have R&D centers able, at the minimum, to transfer process, transfer products, improve also the products with 2 main hubs in Ujpest and Frankfurt. Very important to consider also that our different sites will be equipped to manage from small to big batches. If I come a little bit more on the technology, and without going into detail, you see on the top of the slide the 6 sites: Frankfurt, Ujpest close to Budapest, Vertolaye and Haverhill, and our 2 fermentation sites in Elbeuf. If I come back a little bit on the technology, I need to highlight for Frankfurt the peptide and oligonucleotide as well as the ability to manage high volume chemistry. For Ujpest, the high potent product manufacturing, highlighted by the manufacturing of prostaglandin. Vertolaye was also complex synthesis with hormones and corticoid. Or information, Vertolaye is also going to be a center of excellence, so known for their solid chemistry, mainly focused on micronization. And for Haverhill, we have to highlight 2 key technologies, flow chemistry and spread spray drying. Coming back on the fermentation part, our 2 sites are fully equipped at the end for high-volume fermentation and industrial downstream processing. I would like also to highlight for Brindisi the ability again to manage high-potent products. Very important elements, I would like to share with you all the technologies we need at the end to deliver our business plans are already in-house, are already managed by our teams, and we have also the capabilities to manage these different technologies. When we talk about industrial operations, we're also talking about condition of the equipment, condition of the facilities. We need to recognize on this one that there was a very [ wide size chunk ] investments managed by Sanofi in the last years, providing us at the end of the journey facilities in very good condition. If I come back a bit on what's going to be an important driver for the future, our rate of utilization is, for the time being, close to 70%. A little bit more regarding dedicated facility, a little bit less regarding multipurpose facilities that could come back, clearly to help us at the end to manage and to develop the CDMO business. Very important also to consider that all the sites are fit for purpose. When I mean fit for purpose, we are still moving forward with the different products with the different technologies. We are developing peptide and oligonucleotide in Frankfurt. We are moving forward with a full road map with prostaglandin in Ujpest. We are moving also with a new hormones building in Vertolaye. And that's the end of the story. Spray drying is going to be a key topic with the development of a full range of services in Haverhill. We plan to launch a new process of B12, giving us the possibility to extend the production as well as limiting the industrial -- the environmental footprint. And we are thinking also on the strategy to continue to develop our complex antibiotics in Brindisi. I talked at the beginning of my presentation about a very regulated environment. In this business, you are nothing if you are not top notch at the quality level. And on this domain, we are doing well, meaning that if you take into account the results we have on the last inspection. And I [ thank ], for this presentation, the 2 main probably regulatory bodies in FDA and EMA, we have done very well. No critical findings [ study end ] for all the different inspections. And on the top of that, if you take on the left-hand side the FDA inspection, 5 out of our 6 sites have been able again to deliver their inspection without any 483 form, meaning without any noticeable events. On top of that, I think that it's not only that quality and regulatory is not a burden for EUROAPI, it's a competitive advantage. Because when you think about what we have done with the client audit, we are very confident at the end to provide the right level of service to our customers and probably to help our customers to build their future from a regulatory and new product standpoint on the regulatory parts and for our CDMO activities and for their new products. And just in a nutshell, I think that 6 sites, well equipped at the right scale, having the critical size, having also the right technology to move forward again with the industrial plants, top notch from a quality standpoint. And I need now to move and to Cécile to check a little bit how these sites could contribute at the end to the CDMO and commercial journey. Thank you.

Good morning, and good afternoon. My name is Cécile Maupas. I'm leading the CDMO business at EUROAPI since October 2020. I have been in this industry for more than 20 years, acting at several position in business development. In the last 10 years, working for CDMO like Novasep or Pierre Fabre CDMO in the small and large molecule API and drug products. So clearly, from outside, the uniqueness of such carve-outs combined with the potential of being an API champion and to develop the CDMO business made this project very attractive and fascinating for me. And that's why I'm here, and that's why I will have the pleasure to present you the CDMO section. So first, let's take a deep dive into EUROAPI's CDMO offer. EUROAPI has the largest CDMO technological panel in small molecule. And as you can see, this is particularly true in comparison to Siegfried, Bachem or PolyPeptide. We are the only company which has a development and manufacturing know-how in both oligonucleotide and peptide and small molecule by complex chemistry. And this will be a key differentiator in our oligonucleotide and peptide strategy that I will disclose later. We have one of the largest scale for fermentation. We are able to develop and produce highly active molecules like hormones for [ prostaglandin ] or highly active molecule for oncology and especially the cytotoxic one. We can propose greener innovative and cost-efficient processes using flow chemistry or biophysics, for example. And on top of the API production itself, we can offer technology for particle engineering that gives our customers a one-stop shop approach. In the future, after oligonucleotide and peptide, we ambition to expand more into the large synthetic molecules like peptide, lipids, plasmids or other future new modalities. Having the largest CDMO technological panel in small molecule is a strong value proposition for our customers, along with scale, quality and availability. And we already have some great examples of customers working with us who are interested in several technological platforms. So now let's look at our approach to create a best-in-class CDMO. Before I joined EUROAPI, CDMO activity was very opportunistic and absolutely not structured to apply new clients. As you understood, it was not a priority for Sanofi. Since I joined October 2020, I have 3 main priorities. The first one was the creation of a dedicated CDMO business development team. In less than 1 year, I have managed to build a top-notch CDMO business development team covering all regulated areas, Europe, U.K., U.S., Japan, with strong expertise to support the CDMO business growth. The 15 team members are all CDMO commercial specialists that are coming from the top 10 of our competitors, and they decided to join EUROAPI for the same reason that I do. They have a local network. They have a very good understanding of the competition landscape and also they know the market trends. My second priority was the implementation of the CDMO Strategic Committee with the aim of analyzing all CDMO opportunities in a timely manner and to allocate the right resources, the right amount of time to the most promising project for the company. We are looking systematically at the list of criteria to facilitate this selection process. And among this list, some are key, like the potential business opportunity at short, mid and long term, the alignment with our strategy, the access to innovation and also the alignment in terms of technology and industrial fit. My third priority was, and is still, the infusion of the real CDMO mindset through a systematic consideration of prices competitiveness and ability to meet time lines for each of our customer projects. Our plan is to attract customers to grow our CDMO business with the ambition to be part of the top 5 by 2025 and to achieve this portfolio shift towards CDMO as per Karl presented in introduction. And to achieve this, we are capitalizing on our broad technological offers already in-house, our panel of 6 Innovation Center of Excellence and our quality and regulatory excellence already well recognized. Now I will share with you our EUROAPI CDMO strategy. Our CDMO strategy is built upon 5 key platform technology covering all our manufacturing sites. The first one is peptide and oligonucleotide. This is clearly an important driver of growth that we are addressing via an extensive prospection in Europe, in U.S., in Japan, with a top focus on biotechs, where the innovation in such market is rich and promising. And our primary targets are the following: first, the preclinical and clinical phase 1 project, where the biotech company are looking for their first CDMO partner, and we can play this forward, capitalizing on our best-in-class technologies and the flexibility of our capacity. The pharm target is a clinical phase 2 project, where the company are looking for a well-established CDMO partner with potential scale-up in their manufacturing capacity. And we are well positioned with our existing capacity to move forward with such projects. And the third target, which is very important, is the most complex and customized molecule, and I will present some case study later. The second pillar of the strategy is complex chemistry. You understood from Kai's presentation that there are and there will be many opportunities in small molecule in development in API, but also intermediates, especially regulatory starting material, produced under GMP conditions, that the large pharmaceutical company would like to produce in Europe for obvious supply chain reasons. It's a very low-risk business for us as we master almost all type of chemistry and also we have large volume reactors in Europe. And we will benefit from our backward integrated model to incorporate also intermediates and regulatory starting material to secure the supply chain of our customers and to reach cost competitive solutions. We will also benefit of our European-based manufacturing footprint with development, pilot and large scale capacity available. We will also benefit from our strong knowledge to develop innovative processes and to gain cost competitive advantage in a sustainable way. The third pillar of the strategy is fermentation. We have the capacity to execute large volume fermentation projects, either in Brindisi in Italy or in Elbeuf in France, and we can start such projects in Italy in our pilot scale. We are addressing also adjacent markets such as synthetic biology to produce interesting molecule like enzymes. And we are developing some expertise in semi-synthesis with fermentation, including for highly potent API. And highly-potent API is the fourth pillar of the strategy. Highly potent API have a huge potential, and this will be an important pillar for our long-term growth ambition. This manufacturing technology has been mastered in our facility for prostaglandin of [indiscernible] and with the creation of a dedicated pilot plant in Ujpest in Hungary. Mid-2022, we can capture new HP-API in development for oncology and especially cytotoxic payload and linkers used for antibody drug conjugates. And I will develop some case study also later. So highly potent molecule will be a big driver for us after 2025. The last pillar of the strategy is particle engineering with 2 key technologies that we can offer to our complex chemistry customers as a one-stop shop approach on particle engineering. And there is a real interest for our customers to develop or improve the particle size of the API. Worldwide [indiscernible] even, we are one of the only API player able to offer from small scale to very large scale, and we have the largest spread wire in the world. My connection with the Center of Development in Vertolaye in France, that could be also interesting for our nano-particle opportunity. Our objective is to be recognized as a European one-stop shop leader in API and in particular engineering. Now I would like to share with you that having attractive technology, the right people, a clear strategy and an efficient processes in place have already generated impressive results. With our systematic and focused approach, we are now able to answer to RFPs, request for proposals, in less than 2 weeks, which is a solid benchmark for CDMO. You can see the CDMO activity has been booming since 2021 compared to previous years. Thanks to the proactive commercial push done by the team, we are already well connected with potential customers. And you can see on the graph how it translates into the number of RFP received. Clearly, the number of meetings with customer or prospects has been multiplied by 5, the number of RFP received multiplied by 3, and the number of offer sent multiplied by almost 4. So we have generated a huge interest in our 5 key pillars in CDMO. First, with the biotech in Europe and in U.S., as this company typically outsource most of their manufacturing activities. And since summer 2021, we are gaining momentum with large pharmaceutical companies. Looking at the share of the RFP coming from the large pharmaceutical company or the leading biotechs, this is clear evidence that after summer, we have had an acceleration in terms of attractiveness to innovators. This is something that wasn't possible while we were branded at Sanofi. And now that we are about to be autonomous, the innovator are keen to work with us and they don't need to be convinced about the high level of our quality and compliance. It's also important to highlight that the brand development and awareness will give an even more visibility and credibility in the market. Now let me show you some outcome of the CDMO activities in the implementation of the CDMO strategy. CDMO pipeline is based on 22 historical projects, mostly commercial products coming from legacy projects retained from before carve-out, and I will highlight one of them during the case study. And 26 new CDMO project won after the CDMO strategy implementation October 2020. These new projects are covering all stages of development from preclinical, clinical and commercial phase. These projects are also well distributed over all type of technologies, peptide, oligonucleotide, fermentation, highly potent API or complex chemistry. And we have a very large panel of innovative molecule in complex chemistry such as nanoparticles. 10 of the 26 projects are with Sanofi, which is an important customer for CDMO, as you understood from a previous presenter. And for the other, we have a 50-50 existing customers and new customers. It's important to capture that the potential net sales coming from the evolution of this pipeline already enabled us to secure a portion of our top line trajectory for the coming years. And that will depend on the clinical success of each program. That's why we continuously feed the rolling pipeline with new opportunities, early stage, but also late-stage to limit the risk of attrition during clinical phase. Now I will give you the flavor of the CDMO activities through 5 case studies. The first case study is related to a U.S. biotech without any production capacity. They wanted to develop an innovative molecule to treat an unmet disease. This molecule is an oligonucleotide, which is composed by 4 customized building blocks which are chemically sensitized. The biotech transfer to Frankfurt, the lab-scale processes of these 4 building blocks for optimization, scale-up and industrialization, and upon successful results of both partners, which means the product pass all step of development and [indiscernible] produce clinical material along all steps of development. The customer decided to co-invest to extend and adapt 4 of our production line in Frankfurt. The drug has been approved by the [ elf ] agencies. And after 11 years of fruitful collaboration, we have signed a 5-year contract to secure their supply chain on this drug. The second case study is around oligonucleotides. [indiscernible] Biotech developing GalNAc-conjugated oligonucleotide, a complex one. One company was in preclinical and the other in Phase I and Phase II. They all decided to work with us because of our tremendous expertise and experience in that particular field. The more they are progressing, the more they are requesting additional quantity for further development and the more we can extend our collaboration. This shows their satisfaction on the quality of our services and the competitiveness of our prices. One of them bring us an another project for another site, complex chemistry. And another one just inform us that they will work with us on 2 new programs of development. Looking at the case study #3, it's a success story that started last year with a Belgium women's health biotech, which has signed with us a binding term sheet to manufacture for several years a double-digit turn on the micronized hormone, just approved on the market on its first indication. Why did we win this deal against competitors? First, our location in Europe. That means, for this company, proximity and quality. Second, the ability to micronize the hormone on the sell side that we can present. Thirdly, the fully-FDA-approved industrial network that derisks their regulatory steps. And for sure, more obviously the necessary expertise to produce such a project, and this project is supporting an investment in Vertolaye, which will benefit also for our API solution portfolio as well as versus the CDMO [indiscernible]. The fourth case study is linked to a European biotech developing ADC with an innovative linker. They were looking for the best partner to produce the linker and the cytotoxic payload for Phase II clinical trials. How did we manage to win the race against 6 established players? Our know-how in complex chemistry and the upcoming capacity for highly-potent molecule has been demonstrated by the team during several virtual meetings. And the customer was so impressed by the level of technical expertise by the team that it took its decision to work with us without any site visits. And this project will be transferred just at the opening of the facility mid-2022. The last case study I would like to talk about, the partnership that we have with Sanofi Pasteur. This collaboration started around a specific lipid last year. This lipid is used to encapsulate mRNA into lipid nanoparticle. We have produced our first GMP batches used for the clinical trials of Sanofi Pasteur. And this collaboration will continue and even expand into other modality linked to the mRNA multiple target vaccine from Sanofi Pasteur. In 2022, our plan is to implement similar collaboration like the one with Sanofi Pasteur. And in order to achieve this, we are opening the door to other companies developing mRNA-based vaccine technologies and more globally to the RNA medicine world. Now we will focus on oligonucleotide and peptide business, which are key technologies and important for our growth strategy. And EUROAPI is strongly positioned to capitalize on peptide and oligonucleotide market opportunities. The main reason is that we already have a strong past record and proof points. Indeed, [indiscernible] was a pioneer in peptide, was already in solid place [ entered this ] in 2004, first with peptide and 2 years later with oligonucleotide. So we can claim that we have a strong regulatory experience. That are reassuring our customers, especially the biotechs. And also, we have clear technological differentiation. We combine strong peptide and [ oligonol aid ] with chemistry rotates in addition to our strong know-how and capability in conjugation and innovative linkers and our ability to offer highly customized solutions and post-synthesis customization. So we offer this one-stop shop services and we offer these services at a competitive price. For biotech, we have limited resources to manage large number of CDMO. It makes sense to have this one-stop shop approach, including analytics validation, different scale, and we offer competitive pricing, even if it remains possible to further improve our pricing, driven by the optimization increase of the capacity utilization. To conclude, you will discover our ambition for peptide and oligonucleotide. By 2025, we want to be in the top 3 of the CDMO worldwide for oligonucleotide and the top 5 for peptide. We want to be the European market leader for conjugation, capitalizing on our complex chemistry leading position. We ambition to be the European market leader for linkers, focusing on our ability to develop innovative complex chemistry. And we will have a strong position for our customer on customized building blocks. Our ultimate goal is to achieve maximum customer retention via this one-stop-shop approach. As you know, those markets are growing fast. We ambition to take this leading position, ambitious but realistic position based on our technological heritage and our capacity and business development strategy. Thank you for your attention. And I will hand over to Laurent to present the API Solutions business.

So thank you, Cécile, for having clearly explained our CDMO activities and our strength in this domain. And I will now talk further about the API Solutions business. So my name is Laurent Alexandre. I'm the Chief Commercial Officer. I joined EUROAPI in the fall last year. So maybe the last commercial executive team, and I'm bringing 20 years of experience in the API business, having worked in company like PCAS, SEQENS and Johnson Matthey. So EUROAPI is a strong position with around 165 APIs. We are offering a large API portfolio and a deep expertise on large spectrum of differentiating segments. We are not a high-volume player with commoditized API like Teva, for instance, nor close to a company like SEQENS or PCAS or Johnson Matthey that only can -- that can offer only limited technologies compared to us. We are present on niche and highly differentiated molecules. We do offer a large range of essential and life-saving drugs. Based on the strong technology platforms, as mentioned by Karl and Benson, we are the #1 for small molecules. And with our development pipeline, we also aim to continue to expand our API portfolio. Only few companies are such a differentiated range over a large portfolio. Therefore, we do not consider having only one competitor in this very fragmented API and CDMO market, making EUROAPI unique in the industry. The sales organization is supported by several technology platform, pushing our API family and our APIs. And you can see on the slide that we rank in most of them in the top 3 worldwide. We're addressing also more than 500 customers, so a very large customer base. And I can say that we work with all companies -- pharma companies that count in our industry. Once again, I repeat, we are not in the commoditized API generic business. We are selling niche where we have no or very limited low-cost competition like Asian producers. We are offering highly differentiated APIs, which requires scale in production with efficient processes and dedicated installation. In average, we need more than 20 chemical steps to produce our APIs. And I can illustrate this differentiation for most of our API family where EUROAPI stand as a worldwide leader. With the fermentation platform and the [ umpteen cities ], we are manufacturing complex on [indiscernible] molecules like pristinamycine or second generation macrolide. We are not at all in the [indiscernible]. Even in B12, we're today the only Western supplier for this complex molecule, and we are the only alternative source for Chinese production. We have also a large historical range of product, an important development pipeline for prostaglandin in our Ujpest site in Hungary. Regarding alkaloid, we are the only authorized supplier on the French narcotic market. And I will just provide the last example regarding the hyperphosphatemia family, where we manufacture one of the largest marketed API, which is similar in U.K. at our other Haverhill site. And it's an interesting case because we do -- we use a continuous process and solvent-free, meaning all solvent has been replaced by water. So it's a continuous technology allowing lower energy consumption and eliminating the using of solvents, having, therefore, a contained impact on the environment. So strong differentiation with complex and continuous process, certainly greener than our competitor. So our ambition, of course, will be to grow further on niche and highly differentiated product, currently selecting products from our portfolio, but also coming from our development pipeline. As said, we are a manufacturer of complex and differentiated APIs. If you look overall, we estimate that 55% of our sales are done with highly differentiated APIs. The 45% remaining are less differentiated molecule, but still complex to manufacture. But looking also on other mature segments, we do have as well API considered highly differentiated. We developed differentiation through technology deployed, high-quality level or being also [ property ] back-integrated. And I can give an example with opioids, where we start from the growth of the potential. We have also developed micronized or inflectable qualities, giving us a clear advantage in bringing value and solution for our customers. And I can give an example with one API coming from our corticosteroid platform where we have developed a very particular PST, particle size distribution, allowing our customers to use this API and address the complexity of using this API for inhalation device. So we'll quickly focus on the families on the right side of the slide, where we have the most differentiated family and where we'll invest further with capacity building to follow the increasing demand from the market. Vitamin B12 and fermentation technology, very heavy in terms of CapEx for someone who would like to enter in this business. You would need several years to develop the strain and being able to scale it up to production and commercial capacity. So we talk here about an investment of hundreds of million euro and more than 5 to 6 years to develop only one molecule. Prostaglandin, I think it has been also mentioned several times, is another good example. You need around 60 chemical steps, manufacture one batch of one or a few kilos. So we are really here talking about very complex molecule. So I hope I convinced you that we manufacture sophisticated molecules. Regarding the commercial strategy. So we have a strong ambition, of course, to grow of -- our IP portfolio and you want to go above market to maximize the value of our catalog. The goal in the past was clearly to support Sanofi production by leveraging the cost in increasing volumes. But we have a new sales organization in place since seeds last year, where we switched from a business unit to a regional approach while we were also strengthening the team with newcomers. We are definitely much closer to our customers and the market, much more in a proactive mode than a reactive mode. We are now focusing on developing our portfolio based on market and customer demand. This is continuous market demand regarding vitamin B12 and prostaglandin, and we will use the project we started in terms of increasing the capacity to also have additional sales for those very interesting APIs. We want also to increase the cross-selling activities, so cross-selling meaning really to increase the number of APIs sold by customer. Today on average, we have 1.9 APIs sold by customer. We want to be above 2. But when you look really at our customer base, a big part of them are still buying only 1 API. So being a one-stop shop, we want to increase this number and we want also to increase and use the relationship we have with our customer to get CDMO projects. Regarding the pricing, I think it's a very important topic. I would say that our pricing were very stable over the past years with no real commercial excellence in place. So a strong pricing initiative has been started end of last year based on client segmentation in order to catch up to market pricing with a premium level considering our high quality of our product, the European footprint and the fact that we are selling niche and highly differentiated molecules. Today, our sales are done through 2 kinds of relationships, under contract for 30%, where we have, in most cases, pass-through clause for the raw material energy cost increase or inflation. And we have the spot orders for 70% where we have 75% of our customer [ money source ], meaning we are the only API supplier in the [indiscernible], so they have to buy from us. So as you can see, we have a very strong price power, allowing us to pass the raw material energy cost increase, especially nowadays. in protecting our margin. We have also, as I said, new people in the team, the regional network so we can address emerging markets in less regulated regions and catching then new customers. We can also count on the unlocked Sanofi APIs. So it's some APIs that were manufactured only exclusively for Sanofi that we are now allowed to sell to third parties, so bringing a clear strength and advantage of the market, given that we -- it's a unique opportunity for our customers to have access to the production of the former innovator. And also with the importance nowadays of the healthcare sovereignty, we're welcoming non-European-based manufactured product. We do have some already ongoing projects in France and Europe that would support this important trend. And Karl and Vincent talked already about API. So as you can see, we have 6 strong levels, a clear commercial strategy in place to support the goals. But what we do without customers? So let's have a quick look on our customer base. Today, we can differentiate 2 subdivision, let's say, Sanofi, of course, our main customer today, but also the other CDMO API solution customers that we put all our name third party. I will talk about those customers and then I'll go to Antoine for the Sanofi. So we're addressing a large customer base with more than 500 customer worldwide. We are covering each of the global top-10 pharmaco innovators as well as promising and well-managed biotech actors. I could name companies such BMS, Roche, Daiichi Sankyo in Japan, but also fast-growing biotech in the U.S. By combining significant difficult insights with world-class manufacturing, scientific expertise and process excellence, we can help them to deliver new and innovative medicines. We aim to become listed as their preferred supplier in order to receive more RFP and being able to select the best CDMO projects. Also being a one-stop shop, we can work with generic company, generic players such as Teva or Viatris, allowing them to simplify their supply chain by reducing the number of suppliers. We also work with company focusing on the animal health, like MSD, Boehringer Ingelheim or Ceva. We are bringing expertise in high-quality products in this domain. Thanks to our unique position and selector for vitamin B12 in Europe, we have also established long-lasting partnership with consumer health and nutrition company like DSM or Procter & Gamble. And also thanks to our diversified portfolio and our ability to be very close to our customers to local affiliates in the U.S. and Japan, we can address the need of our customers well spread across the entire pharmaceutical landscape. So we have Sanofi as a main customer. Of course, it's bringing some security, but what about the rest? It's very diversified. As you can see on the slide, our customer base showed low concentration and risk for EUROAPI. Excluding Sanofi in 2021, our top 10 clients represent only 24% of our sales. And if you look on the right part of the slide, you will see that 80% of our sales are done with only 87 clients, so showing again that we have a lot of room to develop further our cross-selling activities for both API and CDMO. Our customer are very loyal. You can see on the left part of the slide that in the top 20 clients, 60% of them, 12 of them are working with us for the last 20 years. Some success stories has been really built together, and we have accompanied them along their growth and market demand over that period. We are also proud to say that over the period to 2020, we have a very low average churn per annum below 1%, showing once again the trust of our customers towards EUROAPI and our strong and reliable supply chain, which is the most critical point in the pharma industry. And as I mentioned earlier, we do have a high percentage of customers which are monosource, around 75%, and this for several reasons. We are selling niche and highly differentiated APIs. We are also in a very highly regulated world where for our customers, complex, time-consuming and costly to switch to another supplier. But it's again the confidence and the trust that our customer are putting in our supply chain, but as I said, bring us also a strong pricing power. I will now pass the baton to Antoine for financial. Thank you.

Thank you. Good morning, good afternoon. So my name is Antoine Delcour, EUROAPI Chief Financial Officer. I've been in that position for 2 years. I started my career in finance 20 years ago at Unilever, then moved to Schlumberger before joining Sanofi 8 years ago. So on our relationship with Sanofi, what is important to understand is that it's a reciprocal partnership between the 2 companies. Sanofi will be and is already our main customer. And on our side, we'll be the first supplier of Sanofi. So we have tried this relationship with 4 main contracts. The first one is a manufacturing supply agreement under which we provide 86 APIs to Sanofi. And this contract includes a few mechanisms to protect the volume on EUROAPI's side with an exclusivity on all the APIs which are currently monosourced by Sanofi and capacity reservations on the APIs which are currently dual sourced. On the pricing itself, in order for us to remain competitive and to protect also our margin on this contract, there are a few clauses which have been negotiated with Sanofi: raw material pass-through, energy cost compensation clause, which are important in these days of high inflation, but also price volume corridor or performance-sharing clause with Sanofi in order for us to remain competitive over time. We are also providing Sanofi with CDMO services, and we are currently managing 10 CDMO projects for Sanofi. Sanofi is also a supplier to EUROAPI thanks to the reverse manufacturing supply agreement we have signed with them, covering 35 APIs for which we provide starting material at Sanofi, they convert them to API, and then we sell them to the clients. the IP of these APIs is owned by EUROAPI. It's an important point. On the other hand, we also distribute 22 APIs which are currently manufactured by Sanofi in their plants. What is important to understand also is that all these contracts have an initial duration of 5 years after listing date, which means that it will run until 2027, and they are renewable, meaning at the end of the duration. I think it's time for a short break.

Thank you, Antoine. So it's time for a very short break, 5 minutes. After, we move to the third part and the last part of our Capital Market Day with Antoine on the financial performance of EUROAPI, Karl with closing remarks and the Q&A dedicated to EUROAPI. [Break] [Presentation]

Okay. So welcome back to the third part of our Euroapi Capital Markets Day. And I would like to hand over to Antoine for the financial performance.

Thank you. And so before I start to present the historical performance of the business and the ambition. I would like to summarize on this slide how the strategy we have developed will enable us to unleash the value of the assets we have on hand. In terms of sales, the growth will be mostly driven by the CDMO activity. Thanks to a stand-alone commercial organization, which was set up by Cecile, and also the development organization we inherited from Sanofi. We have broadest portfolio of expertise and know-how. The sales line growth will also be fueled by the commercial excellence strategy we developed on API solution part of the business. We'll be able to improve the core EBITDA margin, thanks to procurement optimization and cost-savings initiatives, but also thanks to the growth of the top line and also an improvement of the mix with a higher contribution of the CDMO activity on total sales and the shift of the API solution portfolio towards more complex APIs. So we focused developing our strategy on P&L but also on balance sheet, and we improved also the free cash flow conversion, thanks to the margin expansion that I've just explained, but also thanks to inventory reduction program. There was clear focus on the inventory level at Sanofi, which will enable us to free up cash. This cash will be used to finance the CapEx we need in order to fuel the growth for the company. In terms of capital allocation, so our main focus will be on fueling the growth of the company and financing this growth in the upcoming years. As mentioned by Jean-Baptiste and by Karl, we'll be debt-free at IPO time, which will give us the firepower we need to finance this growth, and we have also negotiated a multipurpose revolving credit facility of EUR 451 million, which will give us the firepower to do M&A acquisition when there would be opportunities. So before I start to present the historical performance of the business, what is important to understand is that I will present restated numbers. These restated numbers are reflecting the contractual terms we have negotiated with Sanofi and the target organization we have set up in order to manage the company on a stand-alone basis. So the goal with this set of numbers is to show what would have been the performance of the company if we have been stand-alone from 2019. So on this slide, you can see the historical performance of the business from '19 to '21. And you can see that in terms of top line, we had a growth which is overall in line with the market under COVID condition at 1% CAGR between '19 and '21 when the market grew by 2% during this year. I will explain a little bit more in detail in the next slide the evolution of our top line over the years. In terms of core EBITDA margin, we can see -- you can see, sorry, that we are able to improve significantly the core EBITDA margin from 9% in 2019 to 12.3% in 2021, despite lower sales during that year. So in terms of top line, so we will communicate and we'll provide guidance on 2 dimensions in terms of top line, the breakdown between our CDMO and API solution and also the breakdown of our top line between Sanofi and other clients. On the evolution of our CDMO activity, you can see that this grew over time, 20% CAGR between '19 and '21, 35% growth between '19 and '20 and 7% between '20 and '21, knowing that '21 was impacted negatively by lower demand from Sanofi on pristinamycin due to lower prevalence of respiratory disease in 2021, which is a COVID effect because of the protective measure we had during that time. So this is definitely above market growth, and it's a clear proof that we can grow that business, and we continue to grow it over time. On the other hand, API solution growth, meaning we grew the business on that one slightly between '19 and '21 -- '19 and '20, sorry, knowing that in '20, our API solutions sales were held back by 2 exceptional shutdowns in prostaglandin [indiscernible] test because we had to stop the workshop in order to increase the capacities. And also for the hormone business, where we had to stop for regulatory reasons because of the change of classification of our products, and we have to upgrade the workshop in order to comply with new regulations. These were exceptional elements, and you will see in next slide that we are able to recover most of the sales. In 2021, our sales decreased from EUR 955 million in '20 to EUR 902 million in 2021, mostly driven by API solutions. Main effect is COVID as for the market where we had a negative impact of almost EUR 30 million between -- negative impact between '20 and '21 due to COVID situation, low prevalence of some disease but also postponement of nonessential surgeries. Also, an inventory reduction program at Sanofi impacted us negatively in 2021. It's a one-off event which will not be recurring in the upcoming years. And there was also a lower demand from Sanofi due to a loss of tender by Sanofi in 1 country, which impacted us negatively. When you look so then on the right part of the slide, you can see that for the sales to other clients, we are able to grow above market 3% CAGR between '19 and '21, which is mostly driven by the increase of our CDMO activity and which was also impacted -- partially offset by lower demand due to COVID situation. On the other hand, as I've just explained, you can see that our sales to Sanofi decreased quite significantly between '20 and '21 due to COVID inventory reduction program and the loss of tender from Sanofi. So on this slide, you can see the breakdown of our sales by technology. We'll report this dimension on an actual basis but will not provide any guidance on it. Large molecule, which is mostly driven by oligo and peptide, this segment is rather small today. And the reason for that is that it was exclusively used for Sanofi only in the past. We foresee a future growth potential, which is quite important and material, driven by the CDMO activity, as explained by Cecile. And this is the reason why we are making some investments to increase our capacity of oligo and peptide downstream in Frankfurt. For biochemistry molecules, this is rather stable over time in terms of sales historically. Reason for that is that it is capped by vitamin B12 capacity as of today. We're not able to answer to the market on it. And this is the reason why we decided to invest on this specific API in order to increase our capacity. But also the historical sales were impacted by lower demand on antibiotics produced in Brindisi. And we decided then to start transformation of the site towards a CDMO activity and with an investment on a new pilot scale unit in Brindisi in order to support the future growth of the CDMO activity on biochemistry and fermentation. Complex clinical synthesis and molecules, which is our biggest segment in terms of technology today, it encompass CDMO activity, but also most of the products we are making for Sanofi. And so you can see that it was historically rather stable mostly because of the portfolio we have with Sanofi, which is mature and generics. But this will go over time on complex chemistry and synthesis, thanks to the CDMO activity development, and so when Sanofi will continue to provide, I would say, a rather stable volumes in the future on this segment. Highly potent molecules. And so this one it's capped also by our capacity production. It decreased slightly between '19 and '21, mostly because of the capacity upgrade we had to do in Ujpest for prostaglandin and hormones but we partially recovered in 2021. There is still strong demand on the market on these 2 segments, and that's why we decided to invest on prostaglandins and on new hormone building in [ virtual line ]. So the future growth of potential will be driven by the CDMO activity. And as mentioned by Cecile, we have already signed since the implementation of a new commercial team 26 projects, and we'll continue the prospection in order to secure future growth for the company. But also this growth will be fueled, thanks to the commercial strategy, which was defined on the API solution. Looking at the level of profitability of these different segments, API solution, CDMO and different technologies we have on hand. By definition, for API solution, the mostly differentiated APIs are generating more margins than the less differentiated one. And so -- and we are planning to grow the business, as I've mentioned, on prostaglandin hormones, which are mostly differentiated and so which will enable us to improve the mix of the company. The less differentiated molecule are still very important to us because they are providing large volumes and which help us to have a good absorption of our fixed cost baseline and to remain competitive on the overall portfolio. CDMO itself by definition, is generating more margin, more profitability than API solution. Peptide and oligo, today, we are at the same level of profitability than our key competitors on this market, which is fast growing. And we have also capabilities on complex chemistries but also linkers and payload in ADC which are higher-margin products. The other molecules, many will grow thanks to the different levels of growth we have defined on the CDMO activity. What does it mean strictly in terms of core EBITDA margin? So as I mentioned, we are able to improve significantly the core EBITDA margin from 9% in 2019, 11.3% in '20 and 12.3% in 2021. This improvement is coming from the better mix of products, higher contribution of CDMO activity on the total sales of the company, but also thanks to the performance program we initiated back in 2020 which generated EUR 8 million savings in 2020 and an incremental EUR 8 million savings in 2021. This program is relying on more than 100 initiatives at site level and will continue to bring incremental savings moving forward and will contribute to the core EBITDA margin improvement moving -- in the upcoming years. In terms of CapEx. So the key message here is that we started to invest for the future growth of the company. You can see that in '19, we invested EUR 84 million CapEx, so acquisition CapEx, EUR 82 million in cash CapEx. This increased to EUR 93 million in 2020 and to EUR 112 million in 2021, with a ratio of 30% focused on growth and performance CapEx and 70% on maintenance and regulatory. We are planning to continue to invest to fuel the growth of the company. So we are planning to spend EUR 500 million in CapEx between '22 and '25, continuing to maintain the level of CapEx for maintenance at a sustainable level, but spending 50% of CapEx on growth and performance. And so on this slide, you will see a few projects which have already been mentioned by my colleagues, oligo and peptide's capacity increase, B12, also hormone capacity increase, prostaglandin capacity increase, but we are also investing on the development capabilities in order to support the future growth of our CDMO business, and for example, with the pilot unit plant in Brindisi to support the fermentation development business in CDMO. In terms of target for 2022, we plan to deliver overall EUR 1 billion in sales, with CDMO activity contributing 25% to 30% of the total sales of the company when we'll start to reduce our dependency to Sanofi. This will continue, and I will present it later. We'll deliver core EBITDA margin at 14% or above 14%, having a CapEx plan at -- representing around 12% of our total sales. We will not pay dividend in 2022. And as I mentioned, we'll be debt-free at the listing time, sorry. As of today and to the best of my knowledge, it is also important to note that the current geopolitical situation does not affect our capacity to deliver this guidance. In terms of outlook. So with a starting point at EUR 902 million of sales in 2021, with 25% of this coming from CDMO and 49% from Sanofi. So we plan to develop our CDMO activity double-digit, above market growth, thanks to the strategy we have developed. And also, we are able to justify this growth because this was definitely not a core priority for Sanofi, CDMO. It was more managed on the [indiscernible] practice. And thanks to the commercial team we have set up and the capabilities we have in terms of development, technology and know-how that we can support this growth in the upcoming years. This growth will come from other clients, but also from Sanofi on the ongoing 10 projects we have with Sanofi but also the future one we'll get from Sanofi. API solution to other clients will go above market, thanks to the strategy -- commercial excellence strategy, which was developed since the announcement of the project. When on the other hand, API solutions to Sanofi will grow below market. This, our volumes from Sanofi, will provide us structuring and stable cash flow that we need also to find and fuel the growth of the company and the development of the CDMO activity and API solutions to our clients. Overall, we plan to grow the top line, in line with market, 6% to 7% on average on a yearly basis, with CDMO business representing 35% of our total sales by 2025; and Sanofi representing 30% to 35% of the sales. In terms of core EBITDA margin, with a starting point at 12.3% in 2021, the top line growth will contribute to the core EBITDA margin improvement, thanks to the better absorption of our fixed cost base line. The mix effect coming from the increased contribution of CDMO activity, but also the shift of our API solution towards more differentiated APIs will also contribute to the improvement of core EBITDA margin when the operational performance program also will contribute to this improvement. This operational program implies a 2% cost reduction on our cost of goods sold on a yearly basis. Thanks to these 3 levers, we'll deliver a core EBITDA margin above 20% by 2025. To conclude, the capital allocation framework we use will be as follow. As mentioned, our key priority is to grow and develop the business another stage. And this is the reason why we will not distribute dividends in the first year post listing, and we will start to distribute dividends subject to M&A spend and additional CapEx on a progressive basis starting 2025. So investments will be mostly focused on supporting the growth and the performance of the company. The fact that we are debt-free and that we have negotiated a multipurpose revolving credit facility will also enable us -- will give us the firepower to do disciplined M&A in the upcoming years. M&A and repatriation, I didn't mention it, are not included in the guidance that I have just provided. In terms of core free cash flow conversion, we plan to be -- to deliver core free cash flow conversion in low 50s by 2025. And now I hand it over to Karl for the closing remarks.

Thank you, Antoine. Friday afternoon. You're still all with me? Well, I think we have taken you through our journey up until now. But what I first would like to say is also we wouldn't be standing here actually if we wouldn't have received the visa of the AMF yesterday evening. And for that, I thank not only the people, of course, at the AMF, people over here have worked tremendously on finalizing everything. Also bringing all these press releases really fine-tuned. And then you also see sometimes that there are a lot of cooks in the kitchen and that there are a lot of mails fly by still very late. But -- at least, I think this is a very important milestone, right? Because without the visa of our prospectus, which is indeed publicly available, you can read all 350 pages in the weekend. Without that, we wouldn't be standing here. Let's face it. So without that, we also -- we're not able to proudly announce that we are going to be listed, indeed, on the 6th of May. Now what we are going to do is, hopefully, very clear now to you because we shared with you that we have a leading position in a growing market, which is quite important. But more important even is that the variety of technology is there to be used. And we are going to use that because that is the basis for the organic growth, both in the API solutions portfolio and in the CDMO business. Transformation of the portfolio is key, and we are on track. I hope we indeed shared with you that these are not hollow words that we put on paper in the strategy, but that also the proof points, which were clearly shown by Laurent and Cecile, on the business part as well mean that it is actually in execution. And I think that is key. Combining that with the full focus on this organic growth, certainly for the short term, is one of the key messages that I really would like to share with you. Take that home. We relentlessly focus on what we wrote in the business plan. Ensure, in the midterm to longer term, we will, of course, have a look at opportunities which might be there in the market. And that might be new technologies, adjacent technologies in other regions. You mentioned that we are -- you saw that we are primarily active in the regulated area, so it might be well there. So -- but that is on the mid- to longer term. For the time being, what I really think and would like to stress again, a lot of you guys, because we are, I think, more with 350 people online virtually as well, if I'm not mistaken, Arnaud? So some of you we already met in December, January in all these early look meetings, Zoom meetings, et cetera, et cetera. I think you will also see that the story that we have indeed shared with you there is not only confirmed, but it's already strengthened. And that is in a very short period of time that we were able, indeed, to show you what we can do once you get really started. So I'm very glad also that Antoine shared with you, we indeed confirm our guidance, both for this year and also for the midterm. And I think that we have a very exciting journey ahead of us. So with that, I think, Arnaud, we can move to a little bit of action on a Friday afternoon and some Q&A. I think, Antoine, perhaps you might join me there.

We have already several written questions and oral questions. So let's start with Credit Suisse, Jo Walton. So Jo, please go ahead.

My questions were I wonder if you could tell us a little bit about the cost breakdown. So how much is staff, energy, et cetera, so that we can try and think about the costs going forwards? Can you tell us a little bit about the IP freedom that you have in your program on linkers? You say that that's an important area of growth, but I think there's a lot of intellectual property in this area. Does that stop you growing? And the final one, you mentioned specialized lipids in mRNA. Is that largely internally with Sanofi? Or is that for other mRNA players? And how does Sanofi feel about you sharing that sort of technology externally?

Okay. Very good questions. Thank you very much. I would like to start, first of all, is there a microphone that -- Jim, could you take the IP question on the linkers, please? Because I think that's a very important one. Perhaps, shortly introduce yourself.

I'm Jim DeYonker. I'm the Chief Legal Compliance and IP Officer. To answer your question, most of the work within the linkers field would be with CDMOs, CDMO clients. So in that sense, we would be working with their IP. So there would be no blockage from us to go and do that. Of course, anything that we have as novel linkers, we would have the IP on. So there is no current roadblock to working with third parties in terms of the linker technology.

Okay. The lipids and the mRNA, Cecile. Is that primarily Sanofi? Or are we also going to...yes.

So we started first initially to work with Sanofi, but then now, as I explained, we are now opening the door with other innovator in that field. And there is also no blocking point for us to work with such a new company and new development in mRNA field, and it's a huge one.

Very good. Thank you very much. And last but not least, your first question on the cost, of course. We are not really giving it all away. But Antoine, what can we give away?

Yes. So we are not communicating on the cost breakdown of our cost of goods sold. What I can tell you in terms of energy is that we have a strategy to cover the energy cost. And that, as of today, 95% of our '22 energy costs are fully covered, and so we do not foresee any material impact for us on this one. And we continue to cover the cost in order to minimize this impact of the action volatility of these prices on the business moving forward.

Yes. Thank you. So we have another question from Richard Vosser from JPMorgan. So Richard, please go ahead.

One question, Karl, you mentioned -- and I think at the end, you went back to it, but you mentioned acting as a consolidator and saying in the midterm that you would look about M&A. Maybe you could just give us a little bit more preciseness on that. Are we thinking M&A in '24, '25 or beyond the current planning horizon? And then size of deals, you have capacity up to EUR 450 million. How would you think about deals bigger than that or are we not thinking about that sort of thing? And I suppose second question would just be -- just coming back to the gas supplies or energy supplies. I understand from your comments that you're probably very well hedged on the pricing. But what happens if we have -- the taps are turned off and there is complete disruption. Is that something we should worry about?

All right. Thank you very much, Richard, excellent question. So let me take the first one. The inorganic growth that we envisage is there in the mid- to long term, like I mentioned. I really want to repeat the focus of the short term. It is only on the execution of the organic growth that we have written both in API solutions and in the CDMO [ book ]. Now it would be very disruptive to go for transformational M&A when you still did not use the full potential of the company. So transformational M&A, I dare to say that at this point in time, it's not on top of my agenda. There are, on the other hand, midterm to, indeed, longer term. And then I do speak -- within the boundaries of the business, so not beyond 2025. So midterm, there are indeed opportunities possible in the market to go for adjacent technologies. When we see that with the current technology that we have in-house, we would miss certain important CDMO assignments or that we would miss, indeed, opportunities seen in the API solutions market. For that, the RCF of EUR 450 million, is that enough? Because, Richard, is that's indeed a very good question. The energy, and I will give you the floor in a second, the energy and the gas, Eric, I would like to -- you to tackle that because indeed, it's also on top of our agenda, and we have a very clear answer on that as well. But first, let's go to the EUR 450 million or EUR 451 million.

EUR 451 million. And so our target leverage is 3x core EBITDA margin, up to. And so as I've explained, we'll increase. So the current guidance, meaning for 2022 is almost in line with the RCF we have negotiated, but this core EBITDA margin will increase over time, thanks to the growth of the top line and the improvement of the core EBITDA margin over time. So which means that we'll have enough levers to finance future M&A acquisitions.

Thank you. Gas, 2022, 2023, Eric, we indeed discussed it at length of. Of course, it's also very high on our agenda. What can you share, please?

And for 2022, we are fully covered regarding the policy we put in place. We had a 3-year hedging strategy moving forward at the end to make sure that we will secure 30%, 50%, 90% moving forward in the 3 years. Of course, in case of large shortage, the situation is pretty different from a country to the other one, but we need also to recognize that some of our sites are clearly critical assets for the different countries and we'll have priority supply on gas.

Okay. Thank you very much. Thank you, Richard. Arnaud?

Guillaume has received 2 written questions.

One question on Asia exposure. Some of your peers, especially Siegfried, have relied quite heavily on Asian sites to be cost competitive. So what is our hedge? How much Asian production do we need to get similar margin? And can we live without Asian exposure? That's one question. And we had also a second question with regards to peptide and oligo. So peptide and oligo, which represents 3% of the business in 2021. How many projects are outside Sanofi?

Can you repeat the last one? How many...

How many projects are outside Sanofi?

Okay. Cecile, can you start with that? Because you mentioned that explicitly also how many of the peptide and oligo projects are outside Sanofi, and then I will come back to your Asian exposure question.

Yes. Today, we have 3 projects on peptide and oligonucleotide with Sanofi. The other ones are with external partners.

So and the other, 5 or 4?

That's 5.

Exactly. So you saw in the presentation that there were indeed 8 new projects, 3 Sanofi and 5 for third parties. Asia. Well, a very interesting question. Yet we do prove every day that you really do not need an own production in Asia. The reason being is that the assets that we have in Europe are quite of scale, which gives there a cost advantage, but also we are far backward-integrated. So the only real issue that you need to control is that you have indeed access to your raw materials and to some of the registered starting materials that you would need. Do we source in Asia? Yes. We clearly also stated that only 28% of the raw materials that we need to source are coming from Asia. The rest we source in Europe or we produce ourselves. So I also do think that with the scale, the first part of the question is also answered because that also gives you the cost competitiveness, okay?

Thank you. So we have another question from Falko Friedrichs from Deutsche Bank. So Falko, please, go ahead.

Hello, can you hear me?

Yes.

Excellent. I have one question, please, and it's on your CDMO business. And I'm just wondering how you plan to compete in the CDMO business against the more integrated players like a Lonza or a Siegfried who can obviously also help the pharma company with their APIs while also helping with the drug product formulation, for instance. And whether one sort of way to compete there for you is to go with a lower price. That would be very interesting.

Well, before I give the floor to Cecile again, I think perhaps I didn't make one thing very clear. And then you also talk about strategy going forward. We indeed do not intend to move forward down the value chain and to produce drug products. So we really are a focused company on small molecules and what we have in-house on the API. There is, in my opinion, with the slight experience that we have, a huge difference in the CDMO business for APIs and the CDMO business for drug products. So I also do not always see that it would be an advantage to go to innovators or biotech companies offering the technology that you have in-house if you also would not have the drug product CDMO activities. But Cecile, perhaps, if you want to add something to this.

We are used to work with a player who select separately API and product manufacturer. And it seems to be their way of selecting their partners. So it doesn't make any sense for them to really get the same people. As soon as we are specialized, and this is the case on API, we can offer very technical solution for them. And this is where we saw the one-stop-shop approach because we can under all the API, but also the intermediates and the conjugation, when it's molecule which is conjugate, are very complicated to produce.

On the refinance question, on the margin gap between your API and the peers. So the fact that the peers are above 20%. Meaning that is it just related to Sanofi? Or are there any other factors explaining the margin gap today?

Yes. Well, the key word here is what we mentioned. That's the primary carve-out, right? When you don't have focus on the business, when you don't have focus on the cost, which make really part of that business, then you indeed need to start from a different level. And this is exactly what happened because 2 years ago, this company did not exist. The 6 sites also did not know each other. So now we are, indeed, having had to carve out with a lot of work focusing for the first half of this business. There is also logic that you indeed start from a lower level. But I think we made that also clear, we will be moving up much quicker at a much faster pace to the benchmark levels than eventually other companies could do. Do you want to add, Antoine, something?

Yes, I just would like to add something. It's a question. It's primary call out, so which is a question on focusing on the cost structure of the company but also on the strategy itself. For example, price announcements for the API solution, there was almost no price increase, which was implemented in the past. And so focusing having a clear strategy defined on API solution and also increasing our mix toward the CDMO and the niche products and API solution will make us more comparable also to the other peers on the market.

We have a question from Simon Baker from Redburn. So Simon, please go ahead.

Just going back to the question I asked to Jean-Baptiste beginning on the pace of repatriation. It would be good to get your views on how that's changed in light of the pandemic and, more recently, the Russia-Ukraine situation. And is there are any specific areas where there's a particular opportunity, the one I was thinking of in particular, was the sartans where about -- I mean, for something like irbesartan, nearly 80% of the approved manufacturers in Europe are from India and China. I just wonder what the growth opportunities are there. On CDMOs, your win rate looks pretty good, but obviously, nobody wins everything. And I just wonder if you could give us an idea of why you are unsuccessful when you are? I'm guessing these things come down to either cost, quality or time. I can't imagine you lose much on quality. So I just wonder if you could give us some ideas of what are the reasons for being unsuccessful as well as being successful. And then finally, a more specific question on Haverhill. One of the things that emerged early on in the pandemic was that Moderna had a dry powder -- dry formulation of their vaccine but couldn't pursue it because there was insufficient global capacity for lyophilizing it. You've got the biggest spray drying in the world at Haverhill. I just wonder how much additional capacity you've got for future dry formulations of vaccines for pandemics or other use? And what the commercial opportunity of that is to you.

All right. Well, very good questions. Thank you very much, Simon. Eric, may I ask you to start eventually with the last question and to make it perhaps more concrete indeed what opportunities do you see from a capacity perspective in Haverhill for the spray drying and also for the other opportunities which are there?

Yes. I think the reference has been made on the vaccines, and there's maybe a misunderstanding on the technology. When we talk about vaccines, we are talking about lyophilization. We don't have any lyophilization capacity, but we're talking about jet -- spray drying facility. We see today probably limited application of spray drying on a couple of biological products, but that's going to be very, very limited for the time being, and maybe Cecile can complete a bit this answer. But if I take, for example, the dry form products, we have large capacity moving forward over label at the end for the industrialization. But in my opinion, Simon, there is maybe a misunderstanding on the technology at the beginning.

Simon, no feedback on your side?

Ask your question, Simon, because -- is he still -- could you please? Simon?

I'm sorry, I haven't been unmuted. I am now -- thank you for the answer to the first question. Did you want me to repeat something?

No, no, no, no. But I think -- was it an answer on your question on Haverhill because...

Yes. No, that's fine. No, I understand that. I mean spray drying and lyophilization are slightly different things. So that was very [ helpful ].

Okay. No problem.

No problem. No worries. Why unsuccessful sometimes in the CDMO part, I think, of course, I focus much more on the positive things. And my first question, of course, is always indeed, can we, after only being 6 months, now 9 months, on full force with the team, can we be indeed, without quoting figures, be on the benchmark of what you get from contracts based also on the RFPs that you receive? And there, also with the experience that we have in the market, that benchmark is already reached. But I think it's an excellent question. Cecile, if you could just answer, what's with the RFPs where we did not succeed in getting it in a contract? What were there? The main reasons because I think that's quite usual to do.

So unfortunately, we cannot win every time. We know it. The main reason is very often there is already shortlisted CDMO and pre-referenced CDMO with a large pharmaceutical company, for example. So they first select the one with they used to work. They are pre-audited so it's facilitated their solution. So for a new player, we need to sometimes step in the list of the top priority for the company. So it takes time. It's ongoing. And really, we see now the changing in that piece. And we are more and more competitive, so that's...

So I think I would like to add here 2 things, if you don't mind. And the one is already related to your first question, Simon, on repatriation. What we see also happening in the CDMO business is that we receive more RFPs for, for example, also intermediates and the registered starting materials from innovators who originally were outsourced to China and India. Those RFPs really now come our way. And that is also, for me, to be seen in the bigger picture of repatriation because also, especially in those intermediate field, you need to really also secure the supply chain from the very beginning. The second part, and perhaps Cecile did not really openly dare to say, but the fact that we were still -- Sanofi also hindered us to really become successful in some of the quotes that we answered to because sometimes even the Chinese wall was a little bit questioned. And we do act on our own, but it was not really seen in the market. So that is now going to be solved. I hope I was allowed to say that. Repatriation as such, I really want to bring the message, do not think that it's about getting a 1,000 tonne products from China or India and just plug it here. That is not what repatriation is about. Repatriation, and what we are also discussing with a lot of partners, is all about, can we invent innovative processes, which are greener, start with that, more sustainable, that are innovative so that we can really guarantee also the supply chain in Europe. That is a work that is not done in 1 or 2 years. So everything related to repatriation, from our point of view, needs to be seen under these kind of circumstances, nothing more, nothing less. And there, we do play an active role. Is that going to happen next year or in 2 years from now? No. Let me also be very clear on that. Because it is not that we are going to have here, let's be very open, a subsidy of EUR 2 million or EUR 20 million or EUR 200 million and to produce 1,000 tonnes of a product, which is better produced somewhere else. That is not what repatriation is about, all right?

We have our last 2 questions.

So 1 question on the profile of customers on API solutions. So ex Sanofi to understand what is the profile of those customers? Is it mostly generic companies? And the second question on margins, but this time, forward-looking, to understand how we are going to reach the targets that we have set for 2025. Does it mean that we will -- how we will change the structure of the business and would this involve reducing or growing the workforce?

Okay. That second question is for Antoine. And the first question, Laurent, I think it's an excellent one to really tell us a little bit of really what is the profile of the customer base in the API solutions.

So -- you hear me Yes. So as I said, we work with more than 500 customers, so it's very large. Of course, we work with some generic players. But not only we -- as I said, we work also with companies specialized in the animal health. We have also even if we are talking here about of patent APIs, you have also some biotech working on new indications with all molecules. So it's not only generic players. I would say, we cover all the typology of customers, events from innovator that could use also off-patent molecules. So many players make sense but it's not only.

Yes. I think -- what I would like to add is just a couple of key figures, which also make it very clear, 80% of the APIs that we are selling is prescription drugs. It is not only that it's just sold over the counter. So -- and that brings me to the following: more than 55% of all these API that we sell might be off-patent, but they all belong to the essential medicine list of the WHO. So these molecules are there to stay. It is not something that because it's generic, it is not interesting anymore, far from it. So I think -- and that gives you then also the profile because if you look at prescription drugs, right, that gives you a little bit also an idea on the profile of the customers that buy our API. The margin question, Antoine.

So on the margin expansion, as I explained during my presentation, are focusing on 3 levers, mostly increase of our top line in terms of volumes to -- meaning which will enable a better absorption of our fixed cost, and so will drive margin up as a consequence, improvement of the mix of products towards CDMO activity and more complex products on API solution and pricing enhancement also which is one of the key strategic lever of the API solution, and then the operational performance program. These operational programs -- operational performance program is relying on 100 projects at site level, as I've said. And what is important to understand is that we are talking about a growth story, top line, change of mix. And so for me, when we are seeing a changing or restructuring, it's reorienting the strategy of our sites towards CDMO activity and the more complex APIs. But at this period of time, we are not planning to do any massive restructuring plan in our plants.

It is a clear growth story, right? Let's put it very clear on the table as well. Kai referred to, and I did as well, to the 330 scientists that we have. If we want to develop our CDMO business and also our innovative API pipeline business, we indeed have plans there to go to more than 600 scientists. So it is a real growth story. And that is also the beauty of it because we can start from that technology base that we have and tailor make it to what we really need to achieve in the market. Good. Well, let me say perhaps 3 closing remarks, if you allow me. First of all, Eva and Arnaud, I really want to thank you because you are Sanofi Investor Relations, but I take here the opportunity to also introduce Guillaume Rosso, who is the API Investor Relations, who I hope that you are going to meet very soon in the upcoming also roadshow that we are still going to pursue as well. One of the top talents that also made the trip to Euroapi -- one of the top talents of Sanofi, I mean. So I think it's always good that, that is shown in the market as well. Secondly, I really would like to thank my entire team and more than my entire team because some people here in the room who I also consider to be my team sometimes because they also work very, very hard. And last but not least, I really want to thank you for your active participation and listening on a Friday afternoon to what I think is a very, very exciting story, of course. And I hope indeed that we were able to share with you where we stand right now, being a primary carve-out on the path indeed to our future success and growth. And I really hope that, yes, we will meet each other soon physically now and not virtually anymore. So thank you very much for being with us here on a Friday afternoon, and I'll speak to you soon, okay. Thank you. Thanks.