Galenica AG (GALE) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the conference call of Galenica Group. At our customers' request, this conference will be recorded. [Operator Instructions] May I now hand you over to Felix Burkhard, CFO, who will start the meeting today. Please go ahead, sir.

Ladies and gentlemen, good afternoon. I cordially welcome you to the telephone conference on Galenica's Result 2019. In the first part, we will present you the highlights and the key figures. After that, we will be happy to answer your questions. With that, I hand over to our CEO, Jean-Claude Clémençon.

Thank you, Felix. Ladies and gentlemen, in a challenging market environment, Galenica, once again achieved a successful and sustainable development. 2019 was another challenging year, again, characterized by the drug price reduction by the authorities. However, we are continuously working on measures to compensate for such factors, and it's working. Group sales grew by a strong 4.3%. Adjusted EBIT increased by 8.3%, and we realized the comparable net profit of CHF 134.2 million. This means we have significantly improved our result and can propose a dividend of CHF 1.80 per share to our shareholders at the Annual General Meeting, an increase of 5.9%. Let me quickly step into organizational changes at Galenica. The Board of Directors will propose Pascale Bruderer as a new member of the board at the coming Annual General Meeting in May. Pascale Bruderer was a member of the National Council for the Social Democratic Party of Switzerland from 2002 on and was its President in 2009-2010. From 2011 to 2019, she was a member of the Council of States. She's very well networked throughout Switzerland, both in economics and in health politics. We are looking forward to this reinforcement of the board. After more than 40 years with the Galenica Group, Fritz Hirsbrunner has decided not to stand for reelection at the Annual General Meeting. At this point, we would like to already thank him for his extraordinary commitment, and we wish him all the best for the future. And as already communicated last year, I will be taking early retirement in mid-2020. My successor, Marc Werner will take over as CEO of the Galenica Group on April 1. Together with the Corporate Executive Committee, he will continue to implement the adopted strategy based on the 3 strategic development access: expansion, innovation and efficiency. An excellent basis to help shape the future of the Swiss Health Care system. At the top of our agenda is omnichannel, thanks to our networking along the entire value chain from industry to the end customer, we are ideally positioned to implement omnichannel in Switzerland in the upcoming years. We can reach our customers and patients through all channels, whether on-site in the pharmacy, via our online shops or directly at patients and customers' home. We make targeted use of the knowledge gained from the B2C business to support our independent customers, the pharmacies, drugstores, doctors and hospitals. Let me give you an overview of our progress and achievements in 2019, followed by a short outlook on 2020. I will start with expansion. By the end of 2019, we were already able to count 513 pharmacies to our network, 356 of them are our own. The offer in our online shops was expanded from 40 to over 60,000 products. This means that our customers will soon have access to 10x more products online than that are on stock in an average local pharmacy. Moreover, they can get informed about all those products wherever and whenever they want. Customers can have all these products delivered to the pharmacy and pick them up by our Click & Collect during opening hours, including Saturdays or at central locations even on Sundays. No other provider has this excellent position in Switzerland. At the same time, it is important to expand the home care offer. In May 2019, Galenica acquired the Bichsel Group, thereby strengthening its position in the home care market. The integration is going according to plan. Bichsel's patients receive individual manufactured medicines and products and are provided with home nutrition and home dialysis services. Thanks to the products manufactured by Bichsel, we now have a more direct access to hospitals. This opens up new potential for collaboration in the medium term. We also strengthened our home care business with the acquisition of CURAREX SWISS. CURAREX is a Swiss organization specialized in the therapeutic support of patients with advanced Parkinson's disease. We will continue our expansion strategy in the retail business sector in the future by growing by 5 to 15 pharmacies a year, while at the same time, closing and integrating locations. At the same time, we will continue to expand our online offerings. This supports our long-term vision of omnichannel. At the beginning of 2019, Verfora was able to expand the partnership with Proctor & Gamble. Vicks and Metamucil products have been distributed in Switzerland by Verfora ever since. At the same time, we launched our own Swiss manufactured dermocosmetic line under the name, Dermafora. 2020 already started well for Verfora. Since February, we are distributing the Omni-Biotic product from Allergosan in Switzerland. And at the beginning of the month, we have launched Veractiv. Veractiv is a hot drink, rich in vitamins, minerals and plant extracts. Finally, we have a further success to announce. Waiting was worthwhile. The well-known and popular Vita-Merfen disinfection and wound-healing cream will come back into Swiss pharmacies and drug stores by the end of 2020. Referring to innovation, the Documedis e-medication module from HCI Solutions is establishing itself step-by-step in Switzerland. Among the many doctors and pharmacies as well as the hospitals in the canton of St. Gallen. Since 2019, hospitals in the cities Thun, Ipil and Lucerne are also using Documedis. From autumn 2020, Swiss hospitals will be obliged to make the electronic patient dossier available to their patients, which will support the use of Documedis in hospitals. Finally, we now come to the third development access, efficiency. Efficiency is one of the most important fundamentals for implementing the omnichannel strategy. The 2 major projects in the Services Business sector are key to this. The first one, the new ERP solution will ensure that Alloga and Galexis will be connected to the digital future. Pilots with business partners will be running until mid-2020. We are investing around CHF 45 million over 5 years. The second one, the modernization of the Galexis distribution center in Lausanne-Ecublens started in the second half of 2019. We will ensure that this platform too will be fit for the future in terms of requirements and volume. Moreover, we will increase the level of automation from 30% to up to 70%. The investment for this project amounts to around CHF 30 million over 3 years. As you can see, we have achieved a lot in 2019. We continue to grow and were able to increase efficiency once again, a strong year 2019. Let us now have a look at the regulatory environment, which continues to be on the move. The price reductions round from 2017 to 2019, have now been largely implemented. Felix Burkhard, our CFO will show the effects of the price reduction in his presentation. Further price reductions have been announced as of December 2020. Practically completed is the category change of OTC products with no major impact on our businesses. The Federal Counsel extended the tariff agreement from the service-based remuneration of pharmacies, so-called LOA until the end of 2021. The process of assessing and aligning the various proposals for redesigning the distribution margin of the Federal Office of Public Health, the Pharmacist Association Pharmacies and the Health Insurance Association is ongoing. The aim is still to eliminate existing false incentives. Implementation is not expected before 2021. The proposal for a reference price system to regulate the prices of generics is discussed in the spring session of the parliamentary debate. All players and associations have indicated their opposition to the proposal of the Federal Office of Public Health. Consequently, a possible adjustment is not expected before 2022. We will continue to face challenges. Challenges from authorities, which continue to put pressure on prices and margins, but also with regard to increasing security and quality requirements. We know these challenges and to meet them with respect, the Galenica Group is solidly established and well equipped, a promising position. In the coming years, we will continue to focus on the 3 development access: expansion, innovation and efficiency, so that we can achieve sustainable growth and further development despite pressure from the market and the environment. Our long-term vision of omnichannel will support us in this. In summarizing, 2019 was another successful year for Galenica. We have seen that we are ideally positioned to master the political, regulatory and other challenges. We are convinced that we have set the right focus with omnichannel and that we have the necessary preconditions and capabilities to turn our vision into a reality in the long term. Cross-divisional projects as well as the ability to implement these plans are one of our key competencies. With omnichannel, what counts on the one hand is our specialist and consulting expertise, unique logistics and master data. And on the other hand, our range of products and services, which we are distributing across all channels and locations for the benefit of everyone in the health care sector. There are challenges, but we have even more opportunities. The team under the leadership of Marc Werner will continue to make use of them in the future. That what I'm absolutely convinced of. Finally, I take the opportunity to express my sincere thanks to all of you as well as to the entire Galenica team for the confidence and the fruitful collaboration I have been privileged to experience over the last few years. I wish all of you the very best for your professional and your personal future. With this, I hand over to Felix.

Thank you, Jean-Claude. Ladies and gentlemen, I'm pleased that I can once again present to you very good results. The 2019 results showing the good results achieved by the Galenica Group for many years, both before and after the IPO. In 2019, we have continued to expand dynamically, achieved pleasing growth and gained market share. We achieved above average increases in operating profit and generated a strong cash flow. Once again, we have clearly exceeded our targets. The long series of good results fits well with this image. For many years, continuous steady climb. No jumps, no sprints. We are not tracking field at leads, rather mountaineers, step-by-step upwards. Before I comment on the results of the Galenica Group, I would like to give you an overview of the market development. On the left-hand of the slide, you will find the market development in value at ex-factory prices. On the right-hand side, in volume, the number of packages sold. Despite significant price reductions, the overall market grew in value by 2.8% in 2019. In terms of volume, on the right-hand side of the slide, the overall markets developed flat at 0.3%. In addition to the price reductions, the market was again characterized by the strong development of high-priced medicines. This development is clearly visible in the hospital and doctors channel with disproportionate growth in value compared to volume. The pharmacy channel in dark blue, lost 0.2% in value compared to the previous year. This was due to the sharp fall in mail order sales declining by 7.5%, the light blue part. In addition to price reductions, a massive decline in volume for hepatitis C therapies, in particular, led to this loss of sales. The market for stationary pharmacies grew by 0.6% with stable volumes. The price reductions imposed by the authorities continue to put pressure on market development. What can we expect next in this respect? At the beginning of December 2019, the third and last reduction round for this cycle was implemented far right on the slide. IQVIA expect annual savings at public prices of CHF 92 million. This does not include price reductions that can still be expected after the conclusion of various ongoing objection procedures of pharmaceutical company. From this third round of price reductions, we therefore cautiously estimate that price reduction effects in the 2020 financial year will be comparable to those in 2019. In 2020, the 3-year cycle of price reviews of the Federal Office of Public Health of the drugs on the specialties list will begin again. The price reductions on the first cert of the medicines are scheduled for December 1, 2020. The extent of these price reductions cannot yet be estimated at this stage. However, due to the development of the exchange rate over the last few years, we expect a smaller impact than in the last cycle. In addition to price reductions, the growing share of generics also slowed market development in 2019. At 5.9%, generics are the fastest-growing group of reimbursable medicines in the pharmacy channel, the orange part in the pie chart. The substitution rate remained at 57%. By comparison, the substitution rate for the Galenica Group pharmacies in 2019 was a high 70%. At 9.1%, the number of generics sold also grew faster than the market. With this high proportion of generics, the pharmacies of the Galenica Group, again, contributed to 2019 to a reduction in health care costs of over CHF 60 million. The specialty in the Swiss market is the very high proportion of 27% of products with expired patent protection without generics, the light blue part. This is a clear indication that the small Swiss market is not attractive enough for suppliers of generics, despite higher prices compared to other countries. In addition to the regulated pharmaceutical market, the consumer health care market is also relevant for Galenica. The consumer health care market grew by 1% in 2019, thanks to the OTC products. The nonmedication ranges in pharmacies and drug stores in the patient care, personal care and nutrition segments declined slightly by 0.7%. Well, how did the Galenica Group performed in 2019 in this market environment? Very good. At 4.3%, Galenica grew faster than the market. The Retail Business sector grew strongly at 6%, primarily thanks to dynamic expansion with an impact of 5.6%. More than half of this, around 3.2% came from the acquisition of the Bichsel Group. Around 1% was due to 0.5 year of [ CURAREX SWISS ] and the remaining 1.4% came from the expansion and optimization of the remaining pharmacy network. With 11 acquisitions, 8 openings and 8 restructurings, the 2019 financial year was extraordinarily dynamic. Price reductions imposed by the authorities had a negative impact on growth of 1.8%. Nevertheless, we achieved positive organic growth, 0.4%. The Products & Brands Business sector achieved strong growth, both in exports and in the Swiss market of a good 11%. In Switzerland, Products & Brands grew, in particular thanks to the launch of its own dermocosmetics brand, Dermafora and the transfer of distribution of the Vicks and Metamucil brands from Procter & Gamble. Despite price reductions with an effect of minus 2.3%, the Services segment grew by pleasing 2.9%. Without price reductions, growth would have been at the high 5.2%. New customers were acquired in the pharmacy market. In addition, the expansion in the retail business sector also had a positive effect of around 0.8% on growth in the Services Business sector in 2019. Let us move now from the sales figures to the results. At plus 69% and plus 50%, both EBITDA and EBIT developed extraordinarily well. This was due not only to the positive development of the operating results, but also the IFRS accounting effects. After 2018, results were burdened with a CHF 41 million due to the reorganization of the pension fund because of the IAS 19 standard, the first-time adoption of the new leasing accounting standard IFRS 16, improved EBITDA by CHF 50 million in 2019. This corresponds to the majority of rental expenses, which must now be booked as depreciation of the right-of-use assets and that interest expenses on these liabilities. At EBIT level, on the right-hand side of the slide, IFRS 16 resulted in an improvement of CHF 2.7 million, which roughly corresponds to the calculated interest on the lease liabilities. An overview of these accounting effects can be found in the new chapter on alternative performance measures, starting on Page 92 of the 2019 annual report. The comparable adjusted results, we expect to reflect our operating performance have developed very well. Group EBIT increased by 8.3% to CHF 166.9 million. EBIT margin rose by 20 basis points to 5.1%. This impressive result was possible thanks to strong growth in the Health & Beauty segment with a higher EBIT margin than in the Services segment. However, Health & Beauty itself also succeeded in increasing EBIT much more than sales by 12.1% and thereby improving the EBIT margin by 40 basis points from 7.2% to 7.6%. And this, after an increase of 50 basis points already in the previous year. The dynamic expansion in the Retail Business sector including the Bahnhof Apotheke in Zürich main station and the Bichsel Group contributed to this result, but also the optimization of the pharmacy network with various restructuring measures had a positive effect. The promotion of generics and owned products, strong growth in the Products & Brands Business sector, but also weak growth of specialty pharmacy MediService, with high-priced, low-margin medicines, further improved the EBIT margin, not to forget the continuous improvements in efficiency in the Retail and Products & Brands Business sectors. The Services segment improved EBIT by 1.1% despite the ongoing intensive ERP project and the start of the project to modernize the distribution center in Lausanne-Ecublens. Let us now move on from the operating results to the financial results on the left-hand side of this slide. The higher financial expenses compared to the prior year are mainly due to the new method of accounting for rental costs in accordance with IFRS 16. The slight increase in comparable adjusted financial expenses, the blue part, is due to the strong acquisition and investment activity in 2019. The tax expense on the right-hand side of the slide is also not comparable with prior year due to one-off effects. Due to the Swiss Tax Reform, including the evolution of the cantonal holding privilege, provisions for deferred taxes has to be revaluated end of 2019. This resulted in a net one-off tax expense of CHF 8.4 million. In the previous year, the final tax assessment of an internal restructurings led to a one-off effect of deferred provisions, tax provisions of CHF 56.2 million. The tax rate, excluding these one-off effects, increased slightly compared to the previous year from 17.6% to 18.2%. Due to the tax reform and the reduction of income tax rates in various cantons, we expect a slightly decreasing tax rate in the medium term. The one-off tax effects and in the previous year, a significant effect of IAS 19 due to the reorganization of the pension fund, make it difficult to compare the reported net profit. Adjusted for these one-off effects, comparable net profit improved by 7.7% to CHF 134.2 million. We also continued to invest in the future in 2019. Investments increased slightly by CHF 3 million to CHF 53 million compared to previous years. Despite the high project intensity, especially in the Services segment, investments of 1.6% of net sales are in line with the medium-term guidance of approximately 1.5%. Let us move on from investments to cash flow. The cash flow is also artificially inflated by the new accounting treatment of lease payments according to IFRS 16. Adjusted for this effect of leasing payments of CHF 47.6 million, operating cash flow before changes in net working capital improved by CHF 8.8 million to CHF 189.8 million. Adjusted operating cash flow even increased by CHF 29.3 million to CHF 202.8 million, thanks to the decrease in net working capital. This decrease in net working capital of CHF 13 million is seasonal and resulted from the exceptionally strong sales in December 2019, with lower stock levels at the end of the year, and high cash inflows in December. In addition to the investments of CHF 57.8 million, intensive acquisition activities led to a cash outflow of CHF 77.1 million. Nevertheless, a positive free cash flow of CHF 67.9 million was generated. Thanks to the positive free cash flow, net debt increased only slightly despite the payment of the dividend of CHF 83.8 million. At CHF 326 million, adjusted net debt corresponds to 1.5x the adjusted EBITDA, unchanged from the previous year. If we add the lease liabilities, net debt increases by CHF 231 million to CHF 557 million and debt coverage to 2.1x the EBITDA. We leave the medium-term guidance for debt coverage at plus minus 2x on an adjusted basis without including the lease liabilities. As a result, we continue to have a strong balance sheet and a high degree of financial flexibility for the future. We have continued to create enterprise value in 2019. At Galenica, we lead at all management levels with value-based key figures. In the 2019 annual report, in the new chapter on alternative performance measures, we are transparently disclosing this for the first time. As a result of our intensive acquisition and investment activities in 2019, we have increased invested capital by around CHF 100 million to CHF 1.4 billion. On the other hand, we improved our NOPAT, net operating profit after tax by 7.5% to CHF 133.3 million. ROIC after return on the invested capital, increased by 10 basis points to 9.8%. The Galenica economic profit, GEP, is the most important management performance indicator for us, and the basis for the target assessment of variable remuneration. The GEP corresponds to the NOPAT, reduced by the costs on average invested capital, calculated with a WACC of 6.25%. In 2019, the GEP was raised by 9% to CHF 48 million. We were therefore able to create additional enterprise value. Thanks to the good results, we also want to increase the dividend. We are pleased to be able to propose a 5.9% higher dividend of CHF 180 to the Annual General Meeting. Due to the tax reform, we are now obliged to pay at least half of the dividend from ordinary reserves. For this reason, we are proposing to pay out CHF 0.90 from the capital contribution reserve, tax-free for private Swiss investors and CHF 0.90 from the retained earnings. We remain confident and optimistic for 2020. Despite further price reduction effects, we expect consolidated net sales to grow between 1% and 3%. As in previous years, we aim to grow adjusted EBIT more strongly than sales in 2020 by 3% to 6%. In addition, we plan to leave the dividend at least at the previous year's level. Like the mountaineers on this picture, we continue to climb step by step. We have come a long way in recent years, [ but ] we are still far from the [ summit ]. We are convinced that we will be able to climb further in the coming years, continuously, solid step-by-step upwards. Thank you for your attention. Now we are happy to take your questions.

[Operator Instructions] The first question received is from Catherine Tennyson from Bank of America.

I have 3, if I may. So my first one would be on coronavirus. Have you seen any change in activity in your stores as a result of the outbreak of the virus here in Europe? And what are your contingency supplies or plans in preparation for a potential spread in Switzerland? My second question would be, if you could just talk us through your M&A strategy for the following year. I appreciate you've given us numbers for a number of stores that you would like to bolt-on. Where else in your portfolio do you see there are gaps that you could flash out that aren't just bricks-and-mortar stores? And finally, could you just give us a number for -- of your total sales? What proportion of those are now currently online? Where that was in 2018? And where you think that might get to in 2020?

Thank you Catherine for these questions. I'll start with the second question. Our M&A strategy. So our guidance regarding pharmacy acquisitions, we keep at plus 5 to plus 15 additional pharmacies a year. That means new acquisitions and openings of pharmacies. On the other hand, we will continue to close pharmacies in restructuring measures, to merge pharmacies, to relocate them, so the net amount of new pharmacies will be in the range a little bit low between 5 to 15 pharmacies. On the other hand, we continue to look for acquisition opportunities for new products in the Products & Brands Business sector, OTC products, cosmetics products or other in the range of consumer health care product. If we find other opportunities, online businesses or other services to acquire, we would also be interested in. Your third question regarding online sales. Let's first start with MediService. MediService, our specialty pharmacy, continues to make sales above 10% of the consolidated sales of the Retail Business sector. In fact, the sales are closer to 20% than to 10%. That's the size of the mail order sales down by our specialty pharmacy MediService. The online sales of our web shops. They grew fast, i.e., 200% to 300% last year and they were in the range of a large pharmacy that means between CHF 5 million and CHF 10 million. And we expect that the growth will continue to be strong in the next years. Now to be very honest, the first question, I didn't understand. Could you please repeat the first question?

It was just, have you seen any change in your stores in Switzerland in anticipation of perhaps a greater number of coronavirus cases? Have you seen any change in buying patterns or anything like that?

Thank you. It's clear you asked the effect -- impact of the corona crisis. I didn't understand the word corona crisis -- excuse me. So currently, since 1 or 2 weeks, we see massive increasing sales in our pharmacies and in our wholesale businesses. It's obvious that, on one hand, the patients and customers are building up reserves for their medications or other products. And the same situation we find in the business customers that means pharmacies, physicians, hospitals, we see that they also built up stocks. This is currently really increasing sales, but we believe that over the year, over the whole year, this will be compensated. That's our assumption to date.

[Operator Instructions] And the next question we received is from Falko Friedrichs of Deutsche Bank.

I would have 3 questions as well, please. And firstly, what is the expected level of investment in 2020? Secondly, how much is now left in your capital contribution reserve? And how much longer is that roughly going to last for dividend payments? And then thirdly, could you elaborate a bit more on the mail order pharmacy business that you plan to launch at Amavita, Sun Store and Coop? And how big this opportunity can be going forward?

Thank you, Falko. I will answer the first and second question, and will, after that, hand over to Jean-Claude for the third question. Well, investments, CapEx, you know our guidance is around 1.5% of net sales. Last year, it was 1.6% despite the important projects in the Services Business sector. These projects will continue to be important in the next years. On top of that, as you just mentioned, you have investments in the mail order pharmacy. But nevertheless, our medium-term guidance for CapEx remains the same around 1.5% of net sales. It's possible that it's slightly higher next year. But in midterm, the guidance for CapEx remains unchanged. Regarding the capital contribution reserve, end of 2019 capital contribution reserve was CHF 396 million. Now, we will pay out CHF 0.90 per share. That means a maximum cost of around CHF 45 million. If we would continue to pay out CHF 0.90 per year, the capital contribution reserve would last 8.8 years. That was the second question. Now for the third question, Jean-Claude, please.

Thank you for the question. For mail order, as we see in other businesses, there is a trend towards digital businesses. That's why we like to complete our stationary offerings in the pharmacies by online offerings to complete our omnichannel offering in the coming years. And that would mean that we are now completing the logistics services by the mail order pharmacy in Italy, which is directly connected to our different pharmacies in the form of Amavita, Sun Store and Coop Vitality.

[Operator Instructions] And the next question is from Mrs. Bänziger of Vontobel Asset Management.

I have 2 questions. One is related to the Service Business. And so how long -- can you repeat maybe how long the investments will continue and maybe be a bit of drag on the margin? And should we expect that after these investments, the margin is -- could possibly increase? Or do you see these levels now as sustainable? And the second one is on the mail order. Numbers you showed for the market where volume and values were down quite a bit. Can you maybe comment on MediService, how this business behaved in this harsh market?

Thank you, Carla, for these questions. Let's start with these investments in the projects in the Services Business sector. The ERP project that we set around the CHF 45 million over 5 years, the project started in 2017 and will last until around 2022. The second important project is the modernization of the Lausanne distribution center. There, our guidance is around CHF 30 million over 3 years. We started last year the project and plan to finalize it end of 2021. In terms of EBIT margin, to be very clear, we are very happy with the results of 2019. Despite this intensive projects and the related costs, we were able to increase the EBIT slightly. If we look into the next years, during the project phase if we can keep the EBITDA at this level, if we can keep the EBIT margin at 1.8% to 1.9%, we are very happy. What will happen after we have finished this project? It's clear that we expect the efficiency gains after the realization of these important projects. And we always said that in long term, our ambition in the Services Business segment is 2% EBIT margin. Then regarding the mail order sales, which declined in the market quite importantly. Unfortunately, we don't disclose separately the MediService sales, but I can say that MediService developed better than the mail order market. But it's also clear MediService didn't realize growth last year. It's okay, the answer?

Thanks a lot.

And the next question received is from Sebastian Vogel of UBS.

Can you hear me?

Yes, we can hear you.

Perfect. And I have got 3 questions. The first one would be with regard to IFRS 16. Was 2019 rather a normal year? Or were there any specials that we need to consider that will likely change in the future? The second one would be also on the mail order side. You mentioned hepatitis C, that was, of course, a drag for the industry and also for you. Is it fair to assume that it won't be a drag anymore in 2020? And the last one would be the staff cost per employee. I saw you had a -- you had also a note in there in your annual report, but if I would exclude all the stuff like the reorganizationship as compensation and pension, I still see that the number has been materially increased. Can you [ give us ] a couple of thoughts or add a couple of thoughts to that point as well? That would be my 3 questions.

Thank you for these questions. Well, let's start with IFRS 16. I would consider 2019 as a normal year, even if it was the first time that we applied this new standard. It's clear, the impact will depend on the renewal and extension of existing and new rental contracts. And this is difficult to predict or forecast. But nothing special in this regard. Then the decline, that was the second question. Decline, the market decline of the hepatitis C therapies. We really assume that this will -- the decline will be stabilized. And so these patients are cured now, and it should go in a normal level of sales. So we don't expect that this sharp decline will continue to have an important impact on the market development. But for all these high-priced therapies, we continue to expect, let's say, fluctuating sales, market sales because the impact of one additional or one falling therapy is quite important on this market. Then regarding staff cost per employee, nothing special to report in this regard. So average cost per head shouldn't have increased materially. So I haven't done the calculation. You have done, but nothing special to report in this regard.

[Operator Instructions] If there are no further questions, I hand back to the speakers.

So with this last question, we close our call. If we were not able to answer your questions during this call, or if you have further questions, please contact us via e-mail at [email protected]. We thank you all for your active participation and your interest in Galenica. Goodbye, and have a good afternoon.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.