Fresenius SE & Co. KGaA (FRE) Earnings Call Transcript & Summary

Good morning, everybody. I'm David Adlington, Head of the European Research Team for MedTech for JPM London. It's my pleasure to introduce Michael Sen, CEO of Fresenius SE. It will be a presentation and a slightly longer Q&A session, I think. But Michael, thank you very much.

So can you hear me?

Yes.

Thank you, David, for the introduction, and welcome, everybody, to this year's conference. I think it's not too late to still say Happy New Year. I'm going to hit it off by showing you a few charts so that we have enough time for Q&A. And I want to take you on the journey -- on the journey we, as a company, embarked on roughly 2 years ago when I had the privilege to take over 2.5 years ago. And the journey we embarked, we called FutureFresenius. And if you did follow us, you will have realized that we did not only comprehensive, but also deep changes with and for the company, and we always had the shareholder in our head in our mind. And with that, let me get started. I will skip over the safe harbor statement. It's fair to say, and everybody knows that being at a health care conference, that health care is a very attractive sector because it is underlined by a few secular trends, megatrends, really structural trends driving the whole industry. We should not forget this in these days, especially when it comes to investing vis-a-vis other sectors. But what I do want to say is that those trends underpinning health care, they are very dynamic, and they are changing as we speak, and they are changing and have changed over the course of the last 2, 3, 4, 5 years. So it is a lot of technological progress advancements. It is also that patients as such play a different role. And obviously, the demographic is changing. And everything comes together, you have these things which are outlined here on the chart. But what I do want to pin out is that there is this rising prevalence of chronic disease. So if you are active in a very growing and dynamic market, we believe it is important to be as close as you can be to exactly these trends. And sometimes they are conflicting. On the one hand, everything is rising and health care spend is rising. depending on from which view you look at, the rise is obviously for politician and regulators sometimes a topic to act. And it depends highly how you navigate and position yourselves vis-a-vis these trends. And we believe all of these trends will short, mid and long term leads to the growth of procedures, really medical, clinical procedures. And the closer you are to this procedure growth, the better you're off. And this is the company we now manage today. If I had you -- had shown you Fresenius as a company 2 years, 2.5 years ago, it would have looked differently. The feedback we received from the market when we took over was that we are very complex, complex in decision-making, intransparent, maybe losing the focus on performance, and losing the focus as such. And this is a company which we call is now a simple company. It's a focused company. And the most important thing, it's a stronger company. And we have 2 so-called operating companies, but it is more important to look at the individual businesses. And when you look at the business at Fresenius Kabi, and I'll go into more depth in a minute, it's a pharma business. It's an IV generics business, IV generics and IV fluids. So it's specialized pharma, specialized IV generic sterile injectables, exactly targeting the critically and chronically ill patients. So this is a disease pattern. Biopharmaceuticals, biosimilars, new business coming, growing, will play a bigger role as we move forward. Clinical nutrition, a very important business because we know clinical nutrition plays a much bigger role going forward when we also think of superior clinical outcomes. And then the medical technology business with infusion pumps and transfusion systems. And then we also have our own network, our own delivery systems, which is the hospital, the #1 hospital system in Germany and the #1 hospital system in Spain. And if we look at it, all of these businesses, if you center them around not in a corporate organization chart, but center them around the patient, the patient journey or specific disease patterns, you find out that not only are we close to procedure growth, we are really there where the critical points of a patient journey or during the course of a specific disease where it's critical, where it's relevant, this is exactly where we are. And that's why we call it the businesses are wrapped around these so-called platforms. And with platforms, we mean that we have a business within that space, for example, oncology or within the space of infusion systems where we are not only relevant, we can play in an ecosystem, but concurrently provide exactly at the critical points of the patient journey. And of course, you do that with a holistic Care Provision platform when you talk about having your own system. Now we talked about these long-term secular trends, which drive structural growth. If you double-click on that one, it is highly important, and we believe we need to gear the businesses towards what we call the driving forces within the health care industry. And that is, of course, a multifaceted health equity, let's say, claim. Health equity will play -- is playing a bigger role as we speak everywhere. It means at the end, access to innovative medicine and affordability, as we know that health care spend in terms of GDP is rising. I don't know you probably -- during the conference have seen that the latest data in the U.S. has been released only a couple of weeks ago. And the U.S. has seen, again, the biggest rise in health care spend. I think it was 7.5% in the last couple of years. So therefore, this whole topic of having your population, getting access to affordable medicine is clear. Integrated therapies, this is exactly where the platforms come to play, multimodal therapy, looking at it from a disease pattern, not only looking at it from a drug perspective, but from a customer -- patient's perspective or from a disease patterns perspective. And then, of course, AI plays a very, very big role. And in our setting, since we are in the midst of the patient journey or we do the total care delivery, we say, even though we are advancing patient care with technology, science, AI, it is the human-to-human touch, which plays a role. And you have -- we depicted a few examples, a few proof points that you see. This is exactly where our businesses are, in a way, paying into these driving forces. Now if we go a little deeper, these are the businesses. These are the businesses of what we call, Fresenius Kabi, our -- sometimes I call it a more industrial business. It is the pharma, or the IV generics and IV fluids. You see that we have leading market positions also in this country, but all around the globe on IV drugs, on sterile injectables. It is a capability-driven business. You need to know how not only to develop those drugs, but also to produce them, sterile manufacturing. And obviously, IV fluids, we have seen in the last couple of months also with the shortages, which have been occurring after the hurricane, how important that is a EUR 3.8 billion business with great leading market positions in many countries and being very essential. With IV fluids being in shortage, we saw that nothing is doable possible. No surgery procedure is doable if you don't have the fluid. So you cannot do, let's say, a $10,000 urology procedure if you don't have the fluids. That tells you how essential this part of the business is. Clinical nutrition, we can dissect it into enteral and parenteral nutrition. And it is getting relevant by the day because there's more and more clinical evidence studies that having the right nutrition is actually relevant for clinical outcome. And it's also a nice market structure. There are only few players. It has high barriers of entry. So that's why this is one of the businesses. It's north of EUR 2 billion, EUR 2.3 billion, where we have leading positions in also different geographies and feel very comfortable. Medical technology, really wrapped around the infusion therapy, infusion therapy systems. And on top of it, we have a transfusion business, also active in cell and gene and plasma, and also a market which is very nice, oligopolistic structures and therefore, EUR 1.5 billion business. And the latest kit in the club is our biopharmaceutical business, where it is biosimilars and a CDMO business, which is picking up, and we'll talk about that in a minute, probably in the Q&A. it's going to be very exciting in 2025. And we call this 3 plus 1 strategy. The 3 growth vectors, as we call them, is nutrition, medical technology and biopharma. These businesses are really geared not only to grow in top line, but also grow in earnings, and even show margin expansion, while the pharma, one, we call it the one business is a very stable business. It is growing by the rate of 2% to 3%. It has a margin of 20%. It is very stable. It's highly cash generative, and that's why it's a highly attractive portfolio. Going into 2025, what we are really excited about is that our biopharma business from haven't been an investment case for the last couple of years, 2 years back here, everybody was asking me, when are you getting out of red numbers? The last fiscal, which we are still closing, we are in the midst of closing the books for 2025. We said the biopharma business is going to be EBITDA breakeven. By Q3 of last year, we were EBIT positive. So we were already beating our own target of being EBITDA breakeven by being EBIT positive. Nothing is going to change in Q4. And this year, going into 2025, this is really the time where this is evolving into a real business. And one of the drivers where we are really excited about is Tyenne. Tyenne is the biosimilar for Actemra, and we are first to market. We're first to market in Europe. We're first to market in the U.S., with the IV solution and the subcutaneous solution. So with, I would say, attractive target profile. We see this molecule, if you so wish, picking up in Europe anyways because we started a little earlier. But also in the U.S., we have contracted with PBMs, IDNs, good payer coverage, and we are very excited when we look at the pipeline. So Tyenne is one of the drivers, which is driving the biopharma business into becoming a normal business and a more mature business in 2025 and beyond. Now when we talk about the U.S. of one of the not only biggest market, but leading market, and we know we all are in front of a new administration, a new President taking power in a couple of days. One of the questions I get day in and day out in this conference, and nobody has a crystal ball, as to what is going to happen when the new government is taking power. Well, the one -- we don't know. We don't have a crystal ball. But the one thing we can say is what is our arguments we bring to the table. And our argument is that with everything we do all over the world, but also here in the U.S., we are system relevant. We are critical. System relevant, I gave you the example of the fluids. When you're in shortage there, the U.S. is still in drug shortage. There is the drug shortage list or the so-called essential medicine list of the FDA. We cover roughly 70% of the essential medicine list of which the FDA publishes. So it is very essential of what we do. Again, getting access to affordable medicine, we play a major role here. We have a lot of value add in the country, roughly more than 70% is produced here in the U.S. And it's not only produced in the U.S., we also have the whole supply chain, the logistics system, the warehouses so that there is with our customers, which are primarily GPOs on the pharma side, so that there's a seamless process integration also into the hospital, into the pharmacy of the hospital, into the warehouses in order to keep everything afloat. We are a relevant player. We have roughly 4,000 people here, and we invested more than EUR 1 billion over the course of the last couple of years. And the whole topic of affordability also comes into play when we talk about biosimilars and biopharmaceuticals. So very relevant and only 70% of the cost. And these are our arguments because I think -- we believe that every administration will also have the patients in mind. And if you have patients in mind, these are strong arguments. And obviously, we're also in touch with the transition team with our local team here in the U.S. Now what have we done in the last 2 years on that FutureFresenius journey? We have been delivering exactly on what we've been saying. And what we've been saying from the very beginning was that we need to structurally simplify. We need to sharpen the focus on the portfolio, focus on the businesses I was just alluding to. And of course, we needed to accelerate performance given where we were. And we delivered. We deconsolidated Fresenius Medical Care. So Fresenius Medical Care is an independent company. It's a leading company in their space. We are a key investor with 32%, but we are an investor. So it's an investment company. Deconsolidated Fresenius Medical Care in less than 10 months. And if you did follow the company for many years, you tell me whether that was feasible or possible to even think of that we could deconsolidate. And both companies have been doing better ever since we did this. We took a lot of portfolio measures, went out of several businesses. There was one business in Austria, which was even building hospitals, constructing hospitals all over the globe. We went out of this one. We went out of the fertility business. So we focused the portfolio. And then it was all about performance, and I'll show you in a minute what it means enhancing the performance, but you could see it quarter after quarter, 7 quarters in a row that we delivered on what we've been saying or even sometimes outdelivered on what we've been saying. By the same token, we have strengthened the balance sheet in terms of returns and on leverage. And this is how we do it. We call it the Fresenius Financial Framework. This is a very -- it looks like a chart, but it's actually a very powerful performance tool. The way we apply this is that you see for our businesses, we have growth targets, growth targets for the top line. All those growth bands and margin bands are derived by looking at best-in-class competitors. When we launched this 2 years ago, we looked at competitors at a basket and said, you, as a business, need to grow by 4% to 7% or 4% to 6% and deliver within this margin band through the cycle. So this is something which is operationally can be broken down for operational managers. So this is what the operational businesses have to deliver. And then at the bottom piece, you see the balance sheet. You see return numbers. This is what the Management Board is taking care of. Capital allocation, where do we deploy capital? What is our aim. And the leverage ratio, it is quite interesting because when we started, this was completely out of whack. And that ratio of 3x to 3.5x has been a target for the company for 7 years. And for 7 years, the company did not manage to get in that corridor. But only last year, 2024, still inclined to say this year, only last year, in 2024, we managed to be exactly in that corridor and actually approaching the lower end of that corridor when we talk about year-end closing. So at Q3, we were at 3.24, and we said we're going to even improve. And when we go out end of February to give you the outlook for 2025, this is already a little precursor telling you we will revisit exactly that leverage target. So you see on the right-hand side how this has been stacking up. And this is the result. Fiscal year 2022 revenue growth, all the businesses because there was no focus. There was no operational focus, no commercial focus. The growth rate for the overall portfolio as we have it now was 3%. Look at Q1 to Q3 in 2024, 8%. EBIT margin for the overall group, 9.8%, now 11.5%. Earnings per share, minus 13%, now plus 7% and the leverage, that's the only thing which needs to go down, which also went down, 3.24x. And I said it's going to improve as we speak about the year-end close. So on our journey, FutureFresenius, when we took over this deep and comprehensive change, we needed a few weeks to come up with our strategy. We call it Reset. Reset means we needed to look at everything. The first 2 years coming from health care, we call it Revitalize. The first year was primarily driven by structural changes, decomplexing, getting rid of portfolio items we did not want to manage anymore. The second year was we call it the year of financial progression. You saw in the numbers that there is clear progression. There is clear improvement. And now Rejuvenate, means everything gets younger. So new things, new innovations will contribute. 2025 is very, very exciting because the lion's share of the increment of the revenue growth we expect in 2025 will come from new products. And this is the pathway which will keep us busy for the next couple of years. With that one, that is our mission and vision. This is where all of our businesses when you come from a patient point of view are rallying around. It is improving or saving human lives with, again, affordable, accessible, and innovative health care products and services, having the product piece and the services piece. And with that one, we even came out with a new brand. This is the new brand. We introduced it last year in 2024 to also not only have a new look and feel, we have great momentum within the company. We have great new hires, people who want to join our management team to be on that journey, on that successful journey also going forward, want to contribute and our new claim -- brand claim, as you can see here, is Committed to Life. And with that, David, I'm all yours.

Thank you, Michael. You mentioned that you've been CEO of the group now for just over 2 years, and there's been a lot of change. You're exiting Vamed, you sold off some noncore assets, restructured Fresenius Medical. On top of that, you made substantial operational improvements in the 2 core businesses, Kabi and also -- say, Helios. So first question, actually, I suppose two questions. You've achieved a lot in the last 2 years. What was the most significant challenge you faced? And where do you still see the biggest opportunity?

Well, I think -- can you hear me? Yes. I think given the state of the company, there was not one challenge which can be singled out. It all came together. It was the perfect storm. If you go back 2.5 years, given the state of the balance sheet, when I was here at your conference 2 years ago, the leverage was going beyond 4. Leverage was going beyond 4. We did not earn our cost of capital. you saw the top line growth was at 3%. The margin as such was not only at the 9.8% or 7% I showed you, it was trending down. And so everything came into one spot. And concurrently, the war in Ukraine started, so inflation, it was clear that we're going to go into a high inflation environment and everybody knew that the interest rates are going to rise and the leverage was beyond 4. So it was the perfect storm. We tackled everything by saying we need to decomplex. We need to focus and we need to drive operational efficiency. In our first call, Sara, our CFO, sits in the first row and myself said, no matter what we do strategy-wise, the first parameters are structural productivity. That means the businesses need to cater more productivity as they go into a high inflation environment because we need the volume. We know in generics pricing is always competitive, and you need to -- in other businesses, you need to be innovative. So structural productivity, taking costs out, and we have been -- I didn't show this here, over delivering over the course of the last 2 years in cost savings and then focusing on returns. And if you focus on returns, obviously, then you focus also on cash flow, and that's why we managed to delever. So everything came into places. The biggest challenge was getting everybody along that journey and creating the momentum. I'm proud to say that now we have the momentum within the company. So what is left is that actually, it's an exciting time going into the next phase, the Rejuvenate. Given the stage of the portfolio of the businesses we have, this is now exciting as they are maturing. I told you biopharma is in '25 will be a real business. It's not an investment case anymore. And I will come up or we will come up in February when we -- you saw the margin target of Kabi 14% to 17%. So in February, we will qualify how the biopharma business is stacking up vis-a-vis that 14% to 17%. And if I say we are EBIT positive last year, pick a number, whether it's 1%, 2% or 3%, and we say we qualify it vis-a-vis 14% to 17%, we don't expect the business to be at 5% or 6%. So nutrition is a very interesting platform where we build out the platform here in the U.S. We want to grow on this one. So strengthen further these businesses based on innovation, that is Rejuvenate means new products, and Rejuvenate means also new management team because we have a lot of new management team members. And if we keep on doing this based now on that growth and innovation, you will see even more financial progression and shareholder return.

Perfect. And following on from that, obviously, a combination of the operational improvement and some of the asset sales, you got that leverage down, I think, quicker than most people expected. You'll probably finished the year just over 3x versus that 3x to 3.5x range. You're going to update us on that. And I suppose just with respect to capital allocation, are you looking to continue to delever? Or are you getting to a stage where actually we're in a potential to invest a bit more maybe on the M&A side or elsewhere?

Yes. I think given the state of the company where we have been very disciplined and stringent on executing in the last 2 years, we want to continue that path, only on a better maturity level. We are more trained to do that. So we will continue to -- on capital allocation to focus on organic growth. The reason why we chose those businesses you just saw, there is a portfolio reason because they are all attractive businesses. There is a clinical reason. They are all centered around the patient, but there is also a business reason. All of these businesses have the potential to organically grow if you do the right thing. So the first parameter in capital allocation is that we focus on organic growth. The second thing is that if we say we're going to adjust the leverage corridor, we will probably not adjust it to having 3.5x to 4x. If we have 3x to 3.5x now, expect something which has a band below 3x. And that is a clear token to show to the market, but also to our managers within the company that we need to be disciplined on capital and also on the capital deployed, for example, net working capital management and continue the path of the last 2 years to focus on cash flow generation so that the earnings, which you saw in the Financial Framework in a cash conversion will be generated into real cash. And then we will think about what can we give to shareholders. We stalled the dividend for a year out of regulatory reasons. So we will pick it up again. So there will be a payout. We call it a progressive dividend policy. When we stalled the dividend, we said we're going to probably start again where we left it. So this is a little bit of reference point. And this is what you can expect in capital allocation also vis-a-vis shareholders, next to investing, obviously, in CapEx and in R&D.

Perfect. And then obviously, you've got your core assets, as you call them Kabi and Helios now, running down Vamed. You still have 30-odd percent stake in Fresenius Medical, which I think there's an expectation there that you'll look to divest that stake at some point. How are you thinking about both the timing of that and also potentially the structure?

First of all, we are investors now. We don't run the company operationally. It's an independent company. We like the company. We got 32% anchor shareholder. We, as an investor, like everybody else, we are interested in that asset or in that share, in that currency, in that monetary item, however you may want to call it, that it appreciates in value. And there is runway for value appreciation. Helen and her team are also at the conference. They will tell you how they will do it. We will not comment on how they will do it. We only expect them to create value. The margin target, the margin band Fresenius Medical Care has is still something which they receive when they were still in the conglomerate, part of the conglomerate when it was a conglomerate, not a focused company. So there is upside for value creation. They are doing a great job on new products coming to market. There's another player here in the biggest market in the U.S. where I think there is potential to -- you also beat that player. So if you take all of these things together, there is a value creation upside, and this is what we are expecting and banking on. In a way, it is an opportunity cost. To your question of capital allocation, I said the primary objective now is on organic growth and to keep those platforms growing, which I showed you. At some point in time, we may reach a maturity level where we believe that those platforms are strong. The company is in a maturity level, in an organizational shape that it may be able to digest, also an innovation path, which comes inorganic. We're not there yet. But it could come. And when it would come, then we would not need to go against the balance sheet having that currency.

Understood. And then maybe just to wrap up on the strategic side. You've got these 2 assets left, quite different assets in terms of Kabi, more growth, better margin, better returns. Hospital business is always lower growth, but very defensive, low returns. Maybe you could talk about the synergies between the 2 businesses and have you ever considered one further step of simplification?

Yes. Look, -- to say it first, there are synergies, but we don't pronounce those synergies vis-a-vis the capital markets because this is nothing which you could put in the model. But there are synergies where you have an advantage having your own network when it comes to product development, for example, on the medical technology side, when it comes to cell and gene therapy, when you're in the product of initial phase, when you have a network where you apply cell and gene therapy, then you know what you're working on the innovation pipeline. Also when it comes to biopharma, we have the asset mAbxience, which is a CDMO, mAbxience needs to do clinical studies for launching and developing biosimilars. Clinical studies are time consuming and are costly, and you need to find the right partners. Now both assets are in Spain, Quirónsalud and mAbxience, so they can work together. But that's nothing I pronounced in the capital markets. The strategy here is rather that we are a health care company. We're not a pharmaceutical company, not a medical technology company, not a service company only. We're a health care company where it makes sense, wrapping it around the patient and the patient journey or the specific disease patterns. But you could also say it is actually a very good portfolio mix. You call it defensive, which is true. which is true. I could say it's a regulatory business, which is very stable. It is very stable. It is very reliable. And if you manage those businesses right, the earnings equal cash. So it is somehow a funding machine where these service businesses, these hospital businesses take all their cash flow they generate and give it to the shareholders, which is us and thereby strengthening the balance sheet. Whilst the Kabi businesses, which I sometimes call more the industrial businesses, they are the actual value catalyst, value kicker because they are placed in markets where you see clear growth, where you can outperform the market when you manage them right, when you have the right innovation, when you have the right commercial strategy. And therefore, there, we do not only see organic growth like we also see in the hospital business, but we also see that there is room for margin expansion. On the hospital business, you should not forget that both in Germany and in Spain, we are the #1. So being the #1 means that we are the margin leader. So stable, reliable cash flow generating and the other one is the catalyst.

Perfect. Okay. We haven't got a lot of time here. So I'll just pick up a couple of other points I just wanted to focus on. Firstly, just on nutrition. China has been a bit of a challenge for you there. Just it's a question I've been asking all conference. How are you feeling about China and the outlook there?

Yes. I'm not very optimistic on China. I've never been for the last couple of quarters, end of '23. I think I was the first one saying, we, as a company, we are not very optimistic on China on many reasons on volume-based procurement, then the general economic situation, but also then there was this, let's say, regulatory topic or anticorruption or what have you. That changed now it's called now hospital budgeting, by the way, but we still see China being soft. And therefore going into '25, as we are excited for the overall portfolio, we are not banking on China. We are actually expecting that the 10th NVBP will take place in March. We also received the paperwork for that one. So not banking on China.

Okay, short term. And then just on biopharma and biosimilars, obviously, a very, very strong growth area through last year, really starting to harvest the investment you put in over the previous kind of 2, 3, 4 years. Any particular products you'd like to pull out that drove that? And that's still to come that you're particularly excited about? I know Tyenne has been a strong launch in Europe, but I think you're expecting the U.S. to be a bigger contributor in '26 and '25.

Yes, yes. First of all, yes, we are beginning to harvest that one. That's why I said it's now becoming a more mature business and a real business. And I said how we want to qualify it against the margin band. And if you expand this one, if you prolong this one for beyond '25, '26, '27, you see these are pretty attractive businesses in the overall portfolio with IV generics and fluids being at 20%. I always said nutrition is highly margin accretive. So it's not 14%, it's not 15%. It's maybe even beyond the range. And then that business has the potential midterm to be coming close to that profit pool. So for '25, we are excited on Tyenne. The U.S. is going to contribute materially on that one for the later piece of Q2, Q3, Q4. Two other molecules are coming, ustekinumab, we call it Otulfi and denosumab, which is coming as well. One is on the autoimmune, ustekinumab is also on the autoimmune side. Denosumab is more a little bit oncology and osteoporosis. So also clear indications where it is attractive. Yet, we got to say with those 2 molecules, it's more a normal industry structure where there are other players as well. So we are one of those players. But we're going to leverage on everything we already make inroads in with Tyenne where we are first to market. So 3 molecules on that one hitting the market, pretty exciting. On mAbxience, don't forget we have mAbxience as a CDMO last year, and you have been asking the question a couple of times with the milestone payments. We've been alluding to those milestone payments. They may shift from a quarter to another, but this is the recurring business model of a CDMO that you get milestone payments. And we do expect in '25 to again have milestone payments. mAbxience has great partners they work with, great household names who are also part of this conference and therefore, working in that ecosystem. All these legs are contributing to '25 and beyond.

Perfect. And then maybe just on Helios, you've got 2 quite different geographic exposures in Spain and Germany, quite different markets. How do you get the synergies between those 2, what are the percentage between those 2 businesses?

Yes. First of all, since this is more -- this is a provider business, like a provider business like an energy utility or telecom infrastructure, it needs to be very geographically. That in itself, that's why we stopped conquering other geographies. We said it's going to be it, Germany and Spain. We don't want to go to other pieces on the planet, other geographies and building it up because first and foremost, with infrastructure assets, and this is what it is, an infrastructure asset and then you provide services. It is about the utilization of the asset, the best use, you need to be strong in your geography. This is what they are doing. The system is different, but you have synergies there, obviously, on the digital platform, on the data layer, on the digital platform, on the whole clinical layer because how you treat, not the regulatory, the clinical treatment, how you treat oncology, how you do a thrombectomy when having a stroke is the same in Spain, as is in Germany, as is in one of the large IDN in the U.S. and this is where you can learn from one another. And building on the data platform going forward, we got 26 million patients in the whole system in Spain and in Germany. And this is where they can bank on going forward in order to then increase workflow efficiency and get to better clinical outcome and better quality.

Perfect. And then just to wrap up, one of the biggest questions I get into 2025 is around the margin headwinds in Germany because you've got some energy support rolling off. You also got some quite nice reimbursement uplift in Germany as well. As we're thinking about the moving parts of margins for Germany in 2025, how should we be thinking about that, please?

Yes. Good one that you mentioned it, but we flagged it, I think, on the front foot that we said the energy relief fund is going to fade away. That will not be compensated by the inflator you get by the reimbursement. That means that we said they need to work on structural cost savings that we can deliver structural cost savings we showed with our Kabi management team and also at corporate where we have been hammering out and bringing home real structural cost savings. Now in the hospital setting, it's a little different. It's not an industrial environment. So cost saving looks a little different, but there needs to be structural topics to be taken, what we call cluster concept, which means in Germany, the further specialization of hospitals that you have full service provider hospitals where you do the complicated cases. And on the ambulatory side, you need to work on your cost structure. So they need to diligently work on their cost structure to get to the same level as they were with the energy relief fund. And there might be a little time lag. So there is a little stress on Germany going into 2025. But over, let's say, the course of 2 years, I'm confident that they will make it up.

That's perfect. Great. I'm afraid we are out of time.

Thank you, David.