Getinge AB (publ) (GETIB) Earnings Call Transcript & Summary

Welcome to Getinge Capital Markets Day 2021. Today, we will boil down the most interesting and exciting things to happen in the coming years. My name is Lars Mattsson, and I'm Head of Investor Relations. Today, you will meet Mattias Perjos, our CEO; and Lars Sandstrom, our CFO, who you know very well by now. You will also meet Carsten Blecker, heading Global Sales; Jens Viebke, heading Acute Care Therapies; Stéphane Le Roy, heading Surgical Workflows; and Harald Castler, heading Life Science business area. You will also meet our team supporting organization with our ambitious sustainability agenda: Lena Hagman on quality; Anna Romberg on ethics and compliance; and Magnus Lundbäck, Head of Sustainability overall. There are some practicalities for today. We will have a Q&A session by the end of this Capital Markets Day. And you will find the dial-in numbers down below on the screen when we come closer to the Q&A session. There is also an information package, an information slide deck available on our web page under the Reporting and Presentations section on the IR deck. Now let the fun begin. And of course, we kick this off with listening to Mattias Perjos, our CEO. Welcome, Mattias.

Thank you very much, Lars, and thanks, everyone who have decided to join us today. We're excited to host this Capital Markets Day. It's been 3 years since the last time, and a lot of things have happened, of course, in the world around us, in our industry and not the least here at Getinge. I will be mostly forward-looking and talk about the future today, but I would like to start with a brief recap of the main developments since 2018. We have achieved more than 4% organic growth since 2018, and we have also closed the gap in terms of EBITA performance with our benchmark peers. In addition to this, and even more importantly, in my opinion, we have improved customer satisfaction. We have improved employee engagement. We've launched new offerings into higher growth areas. We have finished the remediation that we committed to do under the Consent Decree with the FDA. And we've also launched the most ambitious sustainability agenda in our industry. So a lot of great developments that really serves as a good platform for the next phase of our journey. So let's move on and talk about the future then. We have today announced updated financial targets. We will grow with 4% to 6% organically in the coming years through 2025. We will improve our earnings per share with more than 10% per year in the same time period, and we're also keeping our dividend policy intact. Do we really feel comfortable then raising the bar like this? And my answer is absolutely yes. There are so many good things going on in our company and in our industry that makes me comfortable saying this. And we will use most of the Capital Markets Day to focus on some of these things and initiatives. I would like to highlight 2 things, though, 2 strong fundamentals that we have in place as a result of the good work done in the last few years. The first one is customer satisfaction. If we go back to 2018, we had a Net Promoter Score of 27 at the time, which was already really good because our competitors were at 0 in 2018. When we concluded the last survey now in October of 2021, we were at 39 Net Promoter Score. So a really good improvement and good evidence that we are on the right track here with our customers. The other key indicator that I would highlight is employee engagement. Here, we had a much more difficult starting point back in 2017. We were below relevant peers and certainly below our own ambition levels. We put a lot of effort into this in the last few years, and we are now at a level which is above benchmark peers and above the target that we set back in 2018 as well. So combining that with the good momentum that we have in our company right now makes me really confident about our ability to achieve our goals in the coming years. But what about the external world then? No one can swim against the tide for any longer periods of time. What do the macro trends look like and how we set up -- are we aligned with these trends? And I -- also here, I would say that we are more aligned than ever with the main trends. If you look at things like cardiac disease, it's still the #1 killer in the world. It kills over 18 million people every year. We have hospital-acquired infections, and we have the general challenge of raising productivity in the health care system. So all 3 areas, we are in a unique position to really add value to our customers and make a difference in health care. We also have some other specific trends. If you look at the shift in drug manufacturing processes, for example, this is an area that Harald Castler will talk more about in his session in Life Science. We have digital as an overarching theme, both in terms of supporting and improving our own productivity, but also in what we can do for our customers and the value that we provide to them and everything from remote monitoring to decision support and so on. So we're really well-aligned with a lot of our trends. And I think one piece of evidence of this is that if we look at our portfolio, the proportion of sales today, it has gravitated towards higher-growing areas with higher margins as well. So we enter this next phase of development at Getinge as a stronger company than ever, both in terms of market positions, customer satisfaction, employee engagement and the overall momentum that we have in our business and of course, also in terms of financial strength. If we then look at the strategy to capture these opportunities and really capitalize on the trends and the good momentum here, the -- I would like to take you through this. And the easiest way to talk about this is in the form of our 6 strategic focus areas. And here, we have quality and sustainability as the #1 priority. When it comes to quality now that we've been able to finalize the remediation, we can be much more proactive in the way we work with quality, become more of a learning organization and much more patient- and customer-centric as well. Sustainability is a key theme with a lot of energy around, a lot of interest from customers as well. This is becoming more and more an integral part of our business model, and we're weaving into this -- into the value that we provide to customers as well. Because even if the -- our own CO2 neutrality target has received the most attention externally, it is really the impact that we can make for customers that is important. And I'm talking about things like reduced water consumption, energy consumption, the consumption of chemicals, for example, and also allowing customers to treat more patients without using more resources. So these are really great examples of the impact that we can have. When it comes to capturing growth, we really have a well-working recipe already. So we will continue, for example, our therapy expansion rollout, which has had good results in the last few years. We will continue to work with our service program. Even though we've made great progress in the last few years, we have really only scratched the surface here. And there's much more work to be done in this regard. There's a theme as well in terms of growth when it comes to our own business models using the right channels and so on that we are continuing to upgrade and work with and then back to the whole also productivity challenge for our customers, which Carsten will talk more about in his session. I also want to highlight that we are not done when it comes to productivity even if it's -- it has generated some tremendous results the last few years. I want to remind everybody that when it comes to, for example, our footprint rationalization, this has been an investment so far. It's really from now and in the years to come that we will see the benefits from this. And we will share some examples later on as well. My favorite initiative when it comes to productivity is probably quality value engineering, something that Stéphane will talk about in his session. This is really the gift that keeps giving. So every time we address a portion of our portfolio, we are able to bring down the unit cost with over 10%. We are able to make it a better product for the customers and a simpler part of the product range for us to work with as well. So really good examples here. We're also working a lot with modularization and platforming across our different portfolios. And you will see some powerful examples of this as well later on here in the session. So still plenty of do -- plenty of things to do when it comes to productivity also. I've said in other context that one lasting effect of the pandemic is that our brand awareness has been significantly raised. And this is a momentum that we will continue to use. You will see a lot more from Getinge when it comes to continuing to raise brand awareness. And this is especially important in our industry being a trust business in reality. When it comes to our offerings, a lot of focus going in there to make sure that we have long-term competitiveness as well. So digital is a key theme across our different business areas. Here, we can provide additional value to customers in terms of remote monitoring, decision support and even better clinical outcomes of many of the therapies that we deliver. There's also a number of interesting technology areas that we will continue to invest in here as well. If you then look at the last area here, it's more of an enabler actually for everything else that we want to do. We've had a good journey when it comes to engagement so far. And we will continue the successful rollout of competence development programs, leadership development, talent management and so on and also the implementation of our smart workplaces concept that is in full swing right now. Here, the overall aim is to achieve better productivity for Getinge, more engagement among our people as well and also make a positive impact on our sustainability ambitions in the coming year. So when you look at everything that we have on our plate and all the opportunities ahead, it's really now that the fun begins in this more forward-leaning phase of the development of Getinge. And one important principle that we will bring with us from the last few years into the future is the way we allocate capital. We decided back in 2018 to be a lot more deliberate about how we allocate capital towards higher-growth and higher-margin categories. And you can really see this portfolio rotation from 2018 to 2021. And this is a momentum that we will continue to build on in the coming years as well. And this is really an integral part of our strategy. So if I summarize then the Capital Markets Day in 1 minute, we've had a tremendous journey since 2018. We've outgrown our addressable markets. We have closed the EBITA performance gap with our peers. We have made great progress on customer satisfaction and on employee engagement. We have macro trends that work in our favor as well. We have a sound and proven strategy that now moves to a much more forward-leaning phase. We have new financial targets of 4% to 6% organic sales growth per year. We have an earnings per share target of more than 10% growth on average during the time period as well. And a logical consequence of this EPS target is that we will also need to not only achieve the growth target, but also move our business to a level over 21% in terms of EBITA performance. In addition to these organic targets, we, of course, have M&A as an opportunity as well. Our journey so far has been very much focused on our own organic developments, operational improvements and so on. But we are in a very active phase when it comes to mergers and acquisitions opportunities right now. We know the areas that we are looking for. We're looking, for example, for disposables in Cardiopulmonary and Critical Care. We are looking for consumables to the Surgical Workflows portfolio, generally expanded U.S. presence for Surgical Workflows. We are looking at interesting niche players to support our biopharma customers. And there's a general digital theme when it comes to M&A priorities as well. And we are in better operational shape and have also the financial capacity to act on these opportunities. So with that summary, I suggest that we move on to the more detailed sessions of our Capital Markets Day, and I really prefer to start with customers.

Thank you, Mattias. Exciting journey ahead of us for sure. Now let's move over to Carsten Blecker, who is heading the global sales organization. Carsten, Mattias presented a financial target for us to grow 4% to 6% organically net sales in the coming years. What's your take on that?

Lars, good to see you as well. I feel very positive and confident about the guidance which Mattias has provided. Over the last 3 years, our performance has been sustainable and improving progressively. And there are several drivers which will continue helping us fuel above-market growth, such as a strong position in high-growth and high-margin segments such as ECMO therapy and Sterile Transfer, a go-to-market model which is well adapted to changing market dynamics with continuous fine-tuning adjustments, ongoing pricing and service excellence and last but not least, increasing focus on online connectivity and a transformational business model.

If we zoom out a little bit, look at this SEK 200 million market that we are active upon, what are the key drivers for growth?

The key drivers which one can observe in health care are an aging population, which drives constant trends for increased costs and the need to mitigate the latter while also facing increasing health care personnel shortage. Our offering at Getinge matches extremely well the mentioned trends and needs as we focus on solutions that provide clinical and operational efficiency, both from a product performance and process redesign support perspective. Furthermore, our new branding campaigns are not only product-related, but also address well the emotional feelings and concerns of patients and staff such as increased backlog and waiting lists of elective surgeries caused by COVID and in general.

What does this mean for market conditions?

The market is moving towards a higher level of GPO concentration and more ambulatory care activity in order to provide better health care at the right cost. For that reason, we are adapting our go-to-market model constantly and in a smooth way, avoiding large restructuring efforts. For example, in the United States, we have been strengthening our corporate account approach. And we are setting up distinct inside sales and ambulatory surgical center sales channels.

Any promising results so far?

Lars, we start to see good traction, but I predict that this is only the tip of the iceberg, and that our mentioned go-to-market fine-tunings will deliver incremental impact throughout the coming years.

So Carsten, almost everyone talk about digitalization in health care. How can we provide added value to customers here?

Lars, this indeed is a very important focus area, and Getinge will provide value through our Getinge online service offering. It provides cost efficiencies and improved uptime, which is very beneficial to our customers and also allows us to move away from classical transactional service contracts to a risk-sharing model. Another example would be the online monitoring of the anesthesia gas consumption across different surgeries and the possibility for clinicians to fine-tune their protocols in the benefit of patients, economics and sustainability considerations.

What role does COVID play here? How have we changed interaction with customers due to COVID?

First of all, I would like to highlight that I'm extremely proud about the commitment of our sales, service and installation staff, which has been serving our customers throughout the pandemic without any interruption and always keeping the need of patients in mind. While we promote virtual interactions for environmental and other evident reasons, we will remain extremely flexible and consider that customer is king. And as such, we will operate as per customer preferences. Let me give you some examples of where we see face-to-face meetings adding value. These would be, first of all, service visits, which cannot be done remote; secondly, hands-on product demonstrations; or thirdly, as a third example, on-site inspections to well define the scope and manage turnkey projects. On the other side, I also would like to share with you typical or examples where meetings can take place in a virtual setting such as the first place, internal or customer trainings or visits to our new virtual experience center; in the second place, certain parts of factory acceptance tests by Life Science customers; or thirdly, for example, discussions between Getinge experts and key opinion leaders.

Sounds great, Carsten. But how much of the cost that you have saved now during the COVID will come back? Around half?

Lars, in general terms, yes, I would agree this is a good assumption.

So are there any specific aspects that you want to highlight from a commercial strategy perspective?

Sure. I would like to highlight 3 areas which have worked especially well: first, pricing, service and working capital excellence; secondly, patient-centric product allocations when facing product supply shortages, thanks to our global sales operating model, which has been especially important during this pandemic; and third and lastly, adapting and anchoring a new way of working which had started prior to the pandemic and has been catalyzed and well implemented during the pandemic with positive impact on the environment, work-life balance and financial KPIs.

Are there any huge opportunities out there that we haven't talked about, Carsten?

First of all, the areas which I mentioned before, of course, represent ongoing opportunities and upsides. But I also would like to highlight 2 areas as per your question, where we are less advanced being the opportunity to further develop and successfully market our online connectivity value propositions; and secondly, the opportunity to insist on pursuing a true breakthrough with our Surgical Workflows business in the United States. Regarding Surgical Workflows, we have made numerous people changes while also working on aspects like improved service offering where we show great results, launching inside sales support, appointing distinct ambulatory surgical center sales leadership or improved project management. Consistent focus and progress in these areas will be needed while we continue to look out also for inorganic opportunities in the field of Surgical Workflows related in particular to North America. Regarding digitization and online connectivity, we need to leverage the latter to provide a unique service experience. Our digital health solution team is restlessly working on an attractive, scalable digital offering, which serves well different customer interests and needs.

What about the customer satisfaction at this moment?

We recently did a new customer survey in the same markets as last time and could observe that the percentage of consultant customers, who would advocate to others to work with Getinge moved from a relatively high 27% in 2018 to a much higher 39% in 2021. You need to remember that 0, 0% would be medtech average. The good thing here is that we still have a huge amount of untapped potential and that we have clear actions in place to further improve customer satisfaction.

Could you please give me 3 concrete reasons why we reached these levels, and what this actually could mean for the future, the coming years?

Our customer satisfaction survey entails many aspects, but we specifically have scored very highly on the following 3 areas. First of all, related to sales staff, our customers consider that we have come a long way in being able to provide total solutions and consider total cost of ownership while also ranking very highly the appreciation for us assuring timely deliveries. In the second place, related to service staff, our customers have expressed that they appreciate high expertise of our service technicians and us assuring minimum downtime. And thirdly, related to product offering, our customers have ranked very highly our reliability and clinical performance.

Sounds like we have something really good going on here. Carsten, we have 25,000 customers out there, and we do a lot of good things for them. But if we zoom in on the top 100 hospitals around the world, what is outstanding?

Yes, we have a relatively sophisticated market intelligence tool, which allows us to track our position among the top 100 ranked hospitals globally. We currently hold a very good position among 17% of these top 100 accounts, which, of course, also implies that we have the opportunity to further increase our position significantly among the remaining 83%, and this is our daily focus.

It sounds like we have a good potential for further growth. But Carsten, could you please summarize everything for us there?

Lars, thank you for the final opportunity. There are 3 areas, which I would like to highlight, which I believe are critical for our future success. First of all, doing even better on what we are doing well, such as excellence in pricing and service while continue ensuring customer satisfaction, which will allow us to continue gaining market share as we have been experiencing across most product segments. In the second place, strong focus on connectivity and associated incremental and differential value propositions. And lastly, continue adapting our go-to-market model to market needs, ensuring both a customer-centric and cost-efficient approach.

Thanks a lot, Carsten. See you later at the Q&A session.

Thank you, Lars. See you all later.

As you know, sustainability is key for us, and the responsibility lies within the business areas and the sales organization. But we also have supporting functions. And we are going to meet the 3 people responsible for these support functions here and now. We actually will listen into discussion they had a couple of days ago. It's Anna Romberg, heading ethics and compliance; Lena Hagman, heading quality; and Magnus Lundbäck, responsible for sustainability overall. Please go ahead.

Thank you, Lars. So now we are going to talk about sustainability and what that really means for us. And with me here today, I have my 2 esteemed colleagues, Magnus and Lena, and my name is Anna. And I am super excited about this discussion. And I wanted to open up a little bit what sustainability means for us. And it is not one part of our strategy. It is really the foundation of our strategy. We want to be a long-term sustainable company, being it in the eyes of our investors, owners, employees, the environment, the society, our customers. We really want to have a stakeholder perspective on what we do. And to make sure this is as concrete as possible, we have divided our sustainability work into 4 pillars. And it is very simple. It is first and foremost about who. It's about the employees, having engaged employees that have a passion for what we do. It is about what, our products, making sure they have the highest quality. And we have patient safety at the core of when we make our products. It is about where, the societies where we operate, the environment. And then it is about how, how we do things to make sure we do business in an ethical way and really act as responsible leaders in everyday activities. So this is what it is for us in a nutshell. And to open up, Magnus, I have a question for you to start with that's really relating to a very ambitious target that we set for ourselves a year ago relating to environmental sustainability. Could you open up a little bit more what -- yes, what we have committed to?

Yes. We're committed to become CO2 neutral by 2025, which is, to my knowledge, we are having the most ambitious target in our industry at least. You might find another company here and there that have such an ambitious target, but it's a bold statement we have done. And it's a statement. It's not something that we have put in a piece of paper. It is like we want to show our customers, our stakeholders and our employees that we mean -- we are serious when it comes to environment and our environmental -- our impact on the environment. So if you are a customer to Getinge, you should always know that we are developing our product using eco design principles, which is where everything starts. And then when they are manufactured, they are manufacturing it using renewable energy sources. And they are shipped to the customer in the best possible way available in the marketplace. So we still don't have electrical trucks, but when electrical trucks will be available, we will sign up for them and make sure that we transport our products using them. So that's the main thing on the sustainability journey. But it's also like you all know, what gets measured gets done. So it's not that we just took a decision to become CO2-neutral 1 day to another. So 1 year before we took the decision, we set up a structure. We made sure that we can actually measuring the data that we have, so we can see our progress towards the target. So 1 year before, we put out a structure in place. And then we are -- so we make sure that we are working towards the target, and we can make -- take the necessary decision to reach this target.

And what has been the most challenging thing then in relation to this target?

I think it's when you work with people and when you put up ambitious targets, it's always can we do it? And since we took the -- since we set the target, it has been a lot of discussion. Is this possible? Is this doable? And we have really proven for ourselves that it is. We will reach this target. We will work hard. And sure, it's a lot of hard work that comes before here, but we will reach it. And we are all convinced that we will do it. So that would be the, what I would say was the kind of the hardest, the biggest challenge to -- when you put up an ambition target like that. I think we have seen it all of us here.

Yes. So sort of the mindset thing to really believe in what we are doing at.

Exactly. Believe in it and buying into it and actually doing it.

Yes. Yes. And what's then like a success, something that you are particularly proud of?

There are many things that I'm proud of or we can be proud of in our company. But I think one thing that sticks out, obviously, is the employees, the passion they have around this, the activities they do, the initiatives they are taking because making -- becoming a CO2-neutral company, it's not something you can decide from the top. That will never work. So we need to get the employees in this together with us and really the people that do the daily work that they instead of taking the plane to somewhere to take the train if that's possible. And they think twice before they go in internal business trip, for example. So in the small things, turn off the lights when you leave the office in the evening and not using more energy that you actually use. So it's the small things as well as the big things.

Yes. So it's all about the people, right, and making sure all -- everybody buys into it, so to speak.

Yes, I believe so. I believe so. You can't do anything like it if you don't have the people on board.

Yes. Yes. And I guess another area, Lena, where people really is critical is when it comes to quality. And now we talk a lot about like a quality mindset of really ensuring we have quality at the heart of everything that we do. But it's truly been a quite long journey for us. And I think we should be humble and honest that we have had a lot to do within this area. So could you open up a little bit sort of why quality is so important for us and what we have achieved so far?

So I think to be in this industry where the quality compliance is on the baseline to be in the industry is super important, of course. But just to take us back a little bit where we are coming from is that you know that we were entering the Consent Decree with FDA back in 2015. We were then setting up remediation plans for how we should actually go back and redo the work because when you are in remediation, it means that you have failed to do something, and you need to redo it. So as you may also know that the remediation is in 2 phases. The first phase is when you do the remediation, you upgrade your quality system, make sure that all your processes and procedures are up to date to the regulation and the standards. And you make sure people are following the system. From that moment of time, you are in compliance. But then the second phase of the remediation is when you need to go through the product documentation. And there, you need to look into the documentation to see that you have identified all the product risk, and you have mitigated them, you have evidence that you have done all the testing and verification and validation that is needed in order to support that your product is safe to sell. The first phase, we completed already back in 2018. The second phase, we actually completed the Q3 this year. So it has been a tremendous long journey, but it was a very happy moment at the time when we were finalizing our remediation work. So now we're entering the next phase of our quality journey, where we're looking more from a more proactive way of working, where we are putting the quality mindset, building the quality culture. And there is where we're building in quality into sustainability and the sustainability framework because sustainability is absolutely for me is that we have a long holistic and long-term thinking in what we do. And that's, of course, also applicable for quality. So the 3 main areas in the sustainability framework is clear roles and responsibilities and processes, but it's also continuous improvements because that's the baseline that will build the foundation to be sustainable. And of course, that is built on our company values and to become a learning organization, where we learn from history and the mistakes we do and also learn from each other because I think that's the key for success to be sustainable moving forward. But as you know, we have also tried to be a little bit proactive during this journey when we are finalizing the remediation. So we have set a quality system that is global in order to make sure that we -- as soon as the coming new regulation as the European MDR, we just updated, we make sure all the sites will be in compliance, not only the Consent Decree sites, all the sites within Getinge at the same time. So that has been also a very good milestone during this journey as we have done. And we have also moved to less [indiscernible] bodies in order to facilitate our implementation on the European MDR because that's a huge effort required in the industry to move into the new regulation for -- to do the CE Mark for the European market. We have also tried to make some efficiencies in the way we are doing. We have implemented an automated complaint system. In the past, the service technician had to have 9 different systems to enter complaints. Now it's only one in order to be more -- get it faster and listen to the customer in a much better way. But we have already entered through the second phase of this project where we try to make, is more automized and also to simplify to make it more efficient as we go. So that's the next phase of what we would like to enter now in Getinge when it comes to quality.

That's exciting. I'm looking forward to that phase. But you talk about the quality mindset and quality culture. And how would you describe that looks like? If I go out to a factory and meet my colleagues there, how does quality culture or mindset look like there?

I think when you -- everyone needs to take the ownership for quality, what they are doing in the daily work, like you do, like I do. Everyone needs to do that. And quality is built in all the processes we are doing. And quality is divided in 2 parts, as you know. Compliance is one, but then is product quality. There is more connected with the safety of the devices or the products and services we are selling. So it's the ownership of each individual in what they are doing, following the different processes we have, but also to raise the voice or the hand to say, "I can see that here, we have a risk. This is not looking good." And there to stop and do because that's the way we learn, and we can be proactive and avoid that we actually have issues in the field in the future. So it's ownership for each individual. And that's what we have been talking for some years now in our Getinge strategy that quality should be an integrated part in what we do every day, everyone at work.

So Magnus, as we hear from Lena, it's all about the people, our colleagues, the employees. And this last year, 2 years has been quite extraordinary. And we have had extraordinary achievements from the people of Getinge. Could you talk a little bit about the employee perspective?

The year has, to say the least, been a very challenging year for all of us, I think. We have all lost close ones and have had relatives and friends being severe sick. And to be a company that actually can be a part of the solution of the problem has been, of course, something that I think every single employee in Getinge has appreciated very much. And you could actually see the passion our employees have in the company during the pandemic. So one example is that the sick leave rate was actually lower in the middle of the pandemic than it was before the pandemic in some of the production sites we have. We had service technician renting motor homes to be able to go through customers and serve them, and that's passion. You can't explain that in any other way. So that's passion. So I think -- but that has learned us as executive in this company that is the power and the passion our employees have for the company and our products and really what they do for society. Then when it comes to learning stand and leadership, we have all been experienced a quite unique situation. Suddenly, just over a couple of weeks' time, we had our -- the whole employee was working from home, except for the production employees then. And of course, that puts new demands on you as leader. So we need to learn new ways of doing things. So we've put together a series of seminars together with Harvard Business School, where we discussed and -- topics like how do you create psychological safety? How do you speak up? How do you motivate? How do you engage people in the settings where they can't meet, having a coffee, having a lunch, they're sitting in front of a screen. So we worked a lot with that. So we had thousands of people participating in this seminar. So we learned a lot of that -- from that. And we will also take a lot of these learnings going forward as a company, as organization. The other part is how we did things, that we also realized quite early that we can do things much more efficient and effective by doing it slightly different than we did before. It actually works as good or better many times to do things remotely. We can reach more customers. We can have better dialogue with people internationally. So we have learned a lot on the way we do things as well. And this was -- all the learnings have been packaged into a concept, which we call smart workplaces. This concept is more about how we work, how we integrate with each other, how we -- when we pick up the phone and we actually do a business trip and we need to do that, and we need to meet colleagues physically because we need to do that as well. And especially, we need to meet the customers, of course. But some of the trips that we did perhaps before the pandemic, we have realized we don't need to do them, not in the same extent at least as we did before. So this whole concept is also created and rolled out as we speak in the organization now.

It's really fascinating to see the journey that we're on. And also for me, it's important working with legal and compliance to make sure that we have a culture where we want to do the right thing instead of being afraid of doing the wrong thing. With sort of a mindset shift, what is the driver? Are we afraid of breaking the law or do we want to do what is right and to create that kind of positive drive around how we think about our decisions, the consequences from our decisions and how we run our operations basically. So yes, and it's a cross-functional effort. So thank you, Lena. Thank you, Magnus and over to you, Lars.

Now it's time to move over to our 3 business areas to take a look under the hood. We start off with Jens Viebke and Acute Care Therapies. Good to have you, Jens. You have a target of 4% to 6% organic growth from 2022 to 2025. Can you please explain how you will achieve this in your 3 segments, the ICU setting, the cardiovascular surgery setting and the vascular intervention setting?

Sure, Lars. For the ICU segment, I think ever since the Capital Markets Day in 2018 and even before then, we've been advancing a number of very important product development projects through our development pipeline. And until 2025, we will have launched quite a number of new hardware products. This is across our extracorporeal life support, ICU ventilation and hemodynamic monitoring. And all of these devices really have one common denominator. They will really bring significant improvements when it comes to key parameters such as patient outcomes and hospital efficiency, but they will also lower the Getinge production costs compared to sort of the current devices. So the first launches in this suite are already announced. We have the Rotaflow II ECLS device. We have the [ servo-c ] ICU ventilator. And we have the NICCI noninvasive hemodynamic monitoring device. And I'm very happy to say that we are quite encouraged by the earlier customer feedback that we get on these devices. And when you're talking about the growth in this segment, Lars, I think that you cannot, not mention the ECLS disposable products. And as you know, until recently, we've been quite capacity constrained, which has led to an order backlog. We have invested a lot in our manufacturing capacity, and the constraints are now removed. So that will, of course, be a significant contributor moving forward. And this is -- we really expect this to be one of the strongest growing revenue and profit generators in all of Getinge for the coming years. So for the Cardiac Surgery segment, the growth really comes from a mix of different things. Firstly, we have new products such as the recently launched heart-lung machine HL 40. But we're also working on a new endoscopic vessel harvesting device that we are planning to release during this period. Secondly, we will continue to expand our geographical reach in both EVH, anesthesia and vascular grafts. And also in this segment, we have very recently implemented strong capacity expansion in our factory in La Ciotat, France. And this is really to satisfy the strong ramping need that we see for vascular grafts from customers in Asia. And then thirdly, we have our cardiovascular interventions customer segment. Here, we expect to receive our premarket approval for our coverage strengths. And we're also forging a couple of very interesting strategic partnerships. And in addition, of course, we have intra-aortic counterpulsation, where we're launching a new type of balloon catheter. And this is very much satisfying a strong and unmet customer need for patients that are waiting for either VAD implants or heart transplantation. And then towards the end of the period, we're planning to launch both new hardware, but also new disposal products in the IAC segment, which we believe will have strong impact both on revenue and profitability. And some of these products on the disposable side, we really have the potential to stretch into the pVAD segment, which would be usable on a significant share of our extensive installed base for balloon pumps.

Wait a little bit. I mean tell me -- please tell me a little bit more about that because that's really interesting.

I'm really sorry, Lars. This is -- this could be some truly revolutionary stuff, and we really need to keep this to ourselves for now, all of the details around this.

But basically, you're talking about utilizing the installed -- the huge installed base we have in intra-aortic balloon pumps or...

No, that is correct, Lars, and that's really the strategy when it comes to stretching into that pVAD segment to utilize that installed base. It's going to make us very strong.

Yes. So great. Really encouraging. If we take a look at the ICU setting, we have performed tremendously well during these last couple of years, but what's the view on the coming years?

Well, when we talk about the ICU, it's very important to remember that, of course, COVID-19 was a big game changer. But there are also a number of underlying trends or challenges, if you will, that existed before COVID-19. And I think that the pressure in this segment was really building for decades. And this is really due to the sheer technical complexity of a state-of-the-art ICU today and also the info overload that this produces that really requires highly skilled healthcare professionals to take both accurate and timely treatment decisions. And as we all know, COVID-19 really stressed this whole system way beyond these limits. And it didn't only highlight the urgent scarcity of trained HCPs, but it also really highlighted the need for new medical device innovations. And we also have an advantage here because quite a lot of clinicians and service technicians from Getinge was really on the front line helping hospital staff to treat the critically ill COVID-19 patients. And I think we learned a lot of valuable lessons here, and these lessons are now going into our product development. And then it's important to say also that long before COVID, we were very much focused on developing technology, which is designed to really provide support in clinical decision-making. Examples of that would be our automatic lung recruitment tool and also our Guide platform. And we've also early understood the importance of connectivity and interoperability of medical devices. And we have invested a lot in building these types of solutions. And examples of that are our quiet ICU and Getinge Online. And when you talk about our quiet ICU concept, it really demonstrates a very important principle. And both me and I think everyone at Getinge -- in Getinge is convinced that this would be very important, and that principle is open communication standards, so not to create sort of suboptimal lock-ins for clinical users. And our strategy here is to absolutely not try to dominate or control the Internet of Medical Things. Instead, our strategy is to become the most attractive ecosystem partner in the ICU and in the OR. So moving forward, we will be investing even more in this area. There's just so much to be done. We need really a robust infrastructure -- an IT infrastructure we need sort of to ensure that cybersecurity and the patient data privacy is in place, remote capabilities and then sort of AI-based decision support tools that really help clinicians to save patients' lives. And we intend to do this with a mix of internal development acquisitions, but also with partnerships with some leading medical research institutions.

Extracorporeal life support product, ICU ventilators, advanced ICU ventilator studies, these are 2 product categories that received quite a boost throughout the pandemic on sales. What's your take or your expectations going forward?

Well, Lars, if we start with ECLS, this has really accelerated in the pandemic, and there were a lot of learnings made among our customers for how to try this therapy more successfully. And I think we did a lot of learnings as well being part of this. But similarly to the overall ICU situation, there were already before COVID a number of underlying trends. In COVID-19, the main application for our ECLS products was really to treat ARDS or acute respiratory distress syndrome. But beyond this indication, we see a number of new indications now developing rapidly. One example is eCPR, which is a combination of ECMO and cardiopulmonary resuscitation. Another example is cardiogenic shock caused by AMI, acute myocardial infarction. And here, you really need to treat this successfully. You really need like a combination of ECLS and intra-aortic counterpulsation therapies. And then also, over time, we've seen an increasing number of hospitals that add ECMO capability to their portfolio. We see a sort of new training programs popping up and we also see a strongly increasing activity in academic conferences on this particular topic. And as I did mention earlier, we have made some significant investments in this area. And actually, since we met at Capital Markets Day in 2018, we have tripled our capacity for HLS set, which is our most important ECLS disposable. And we've also doubled the capacity for ECLS hardware manufacturing. And then as I said, Rotaflow II was recently launched, and we're also planning to add some significant innovation to a future version of our flagship ECLS product, the Cardiohelp. And then we're also actively searching for different types of tuck-in acquisitions to sort of complement our portfolio in a good way. Then if we talk about ICU ventilation, and I think I mentioned a lot of the things already, things like innovation to help clinicians treat patients better and more efficiently and -- but beyond that, it's really about capitalizing on our installed base. So COVID-19 really boosted our installed base. We now have more than 100,000 ventilators that are operational in the field. And we have always had like a large potential for aftermarket sales on our installed base of ventilators, but it's been quite far from fully utilized historically, mainly due to, I would say, the hardware selling cycle. It's really both on our sales force side, where our sales force for ventilators is mainly focused on selling hardware, but also on the customer side because they do a big sort of acquisition of ventilators and then there's not much budget left to buy other things. So I think that the big game changer here and what has really changed in the last few years is really connectivity because this will really make it easier to capture more aftermarket revenue. So if you think about what connectivity really means, apart from increased computing power over several different platforms, it also means remote downloads of software. It means potential for e-commerce of the sticky kind. It also means streams of both machine data and clinical data. So we will be changing our customer offering more and more. And some examples of that is, for example, proactive service notifications that will have a huge impact on device appetite, but also on service efficiency. You have treatment protocol adherence that's very important, both for patient outcome but also for lowering treatment costs. Then you have immediate ordering of things like disposables and spare parts or clinical software options or even training when you need it the most. And then, of course, you have the whole piece around advanced clinical decision support.

This sounds both encouraging and inspirational, so really interesting basically. If we switch gear a little bit and look at the cardiac and vascular systems, you expect quite a significant hike in both sales and margins in the coming years. Could you please tell us a little bit more about that?

Well, if we start off with Cardiac Systems, I think I've already mentioned some things like the new products for EVH and IABP. But I think that -- and then also, of course, the geographical expansion that will drive growth. But when it comes to the projected margin accretion, it's -- this is really about diligent work with production costs for both current and future products. And then also not to forget our footprint reduction project in New Jersey. Then of course, it helps that our remediation projects against the sort of warning letters are largely completed, which means -- and that also contributes. And on the site consolidation project in New Jersey, this has really been a true success. We've gone from 3 sites into 1. And we have also clearly beaten our financial outcome expectations for that one. And of course, aiming to lower production costs significantly, we already do that in all product development projects. But it's not always so easy to achieve in products that are already out on the market. But we have one great example of this, and that is the move of the Acrobat production line to getting a factory in Suzhou, China from New Jersey. This is something that has lowered production costs with close to 40%. If we continue with Vascular Systems, as I already mentioned, the PMA is, of course, very important. Also the capacity increase in [ lesser time ] will drive growth. And then we also actually have a new superior stent technology under development that we also believe will drive growth in this period. Then on the margin side for Vascular Systems, apart from sort of the increased overhead absorption that comes into play with increased revenue growth, here, we also expect lower remediation costs since we are more or less done with our remediation projects. Then one thing that has been important for Vascular Systems is that as we are preparing for EU MDR, we're working very diligently with portfolio pruning, sort of weeding out some of the less important and less profitable products. And I think this will also, particularly in the case of Vascular Systems, help to improve margins.

So Jens, here are the targets and financial targets for you for the coming years. What is your take on that?

Well, sort of summarizing things, I would really -- what I would say is that we're just so well positioned in the mainly highly attractive life-saving product segments, and we're working very hard on new product developments that will hit the market quite soon. So these will really sort of reinforce or even improve those market positions, which I think is going to be very important. We also believe that digital will play a crucial role in many of our market segments, so we're paying special attention to innovation and investments in this area. And as you know, we have also been super busy since the last Capital Markets Day with improving our productivity. And what is really interesting in our organization is that it's almost like we have adopted a completely new way of thinking. Today, it's like in everything we do, productivity thinking is involved. So it is really a true cultural change in both Acute Care Therapies, but I also think in the rest of Getinge. And I think that both from the growth and from the margin perspective, I think this bodes really well for our future development.

Sounds great, Jens. A big thank you, and see you later in the Q&A session. Now let's move over to Surgical Workflows and Stephane Le Roy. Hi, Stephane, good to have you. Back at the Capital Markets Day in 2018, you had laid out this great plan to get growth going and improve margins and then came COVID-19, throwing a spanner into things. So could you please elaborate a little bit on what happened?

Sure, Lars. Good to see you as well. Of course, we had built those plans before COVID. And like anyone else who were hit by the storm and of course, we had to adapt. But in a way, I would say that the fundamentals of the plans have not really changed. One could even say that it was a bit of a catalyst for some of the changes that we wanted to do because when, of course, your revenue drop and you have less products coming out of your factories, it makes some of the changes even more urgent. And that's what I really like about the financials that we published a couple of weeks ago, is that even though we're running about 15% below pre-pandemic levels, we have already improved the profitability by about 3 percentage points, which I think illustrates the efforts that we've made on productivity improvement, but is also a hint of the potential of that business unit when somehow the revenue trajectories goes back on track.

Sounds great, Stephane. On that note, order growth seems quite strong at the moment. Isn't that right?

Yes, absolutely. We had 2 good quarters of double-digit on order growth versus prior year, but I also want to say that, of course, 2020 was a low base. And it's not only higher than last year, I want to say that the order book right now, as it was at the end of September, is actually higher than it was in 2019. So we are really seeing a recovery. And what's important that our viewers realize is, of course, there is a bit of a catch-up effect in a way that hospitals had been postponing investments. They were pushing a bit the life cycle of their equipment. But you can only do that for a while, right? So I think now there is a demand coming back a bit because of this catch-up effect, but it's not only that. I'm really convinced that in these businesses, there are a couple of drivers of growth enablers that will continue to support the business going forward.

So what are these drivers, these trends?

Yes. we have basically 2 areas where we do business in Surgical Workflows. This is the operating room, and this is a sterile reprocessing department or the SPD. And in the OR, I would say that this is actually in a way the heart of the hospital. It's very core for the hospitals, both from an operational perspective, medical, reputational and financial perspective. And we're seeing big changes in the OR. We are seeing more and more minimal invasive procedures, more imaging during the procedure with hybrid ORs. We're seeing a continued shift towards ambulatory care and of course, more and more demand for digital integration of the different parts. And all of this is creating a need for hospitals to constantly adapt and modernize their infrastructure to be able to propose to their patients the best standard of care. So that's supporting the operating rooms activity in a way.

So do we have a good enough offering here?

No, I think we do, absolutely. We're well positioned, and I will come back to that in a minute when I talk more about the offering specifically, but -- and I would say that in the infection control side of the business, we also have strong changes that are pushing this hospital infrastructure as well. There is a continued fight against hospital-acquired infections. And there are more and more regulatory or efficiency gains possible for hospitals, and they need to modernize their sterile reprocessing units. They need to have more automation of the workflow to make the work conditions of their employees better. So we're really seeing here as well some tailwinds in the infection control business.

So what's your ambition given this context?

Yes. So overall, we see these businesses, Lars, growing mid-single digits as a market, and our ambition is to grow with the market by -- also by improving the profit. We are well positioned to do that. In a way, we have strong offerings. We have truly global market reach and good customer relations. So I believe that we have a good position to reach this ambition.

Could you please be a little bit more specific on how to succeed with this?

Yes. Lars, our -- it's a good point. Our growth ambition is really based on 2 components. The first one is, yes, I'm convinced that we can grow what I call our legacy businesses, which is somehow capital equipment and service sales towards operating rooms and sterile supply. And I'm convinced that there is more that can be done here. And -- but definitely, we also need to also transform the gravitation of the portfolio. And that's why beyond this legacy growth, we are really actively trying to have a shift of our revenue structure towards new segments that are stronger opportunities for us. And they're also good from a financial perspective, like infection control, consumables, digital healthcare sales in a way.

So I take your words on that, that there is still opportunities in the legacy part of our business, like through differentiation, that is right, isn't it? Like with the Visionaire light that we recently launched?

I think that's exactly one example of what I believe that there is still quite a lot of opportunities in the traditional capital equipment businesses. The only way to differentiate ourselves in these segments are by innovation and by stronger sales execution. And I think for innovation, what I really like is that even though we have kept a strong grip on our expenses in the last years, we really have protected our innovation engine in a way. And the example you gave is a good illustration of that. This is a new feature for our surgical light that is enabling surgeons to keep the surgical light on when they are performing fluorescence-guided imaging. And I think it's a good example of how innovation, customer centricity can help us somehow protect that competitive moat that we have on some of the equipment businesses.

So let's shift from legacy business to the value segment. What's your take on that?

Yes. We talked, of course, about this last time at the last Capital Day and I think we're executing well on that plan. It's another area where we can differentiate ourselves. We are very mindful not to be trapped in this premium technology segment offering. We know that even more so after COVID, our customers are looking for affordable solutions. They don't always want the best of the best. They want sometimes simple solutions. And I think we're doing good here. We recently launched the Lyra, the new table or the new Solsus sterilizer. Both have been designed and are assembled in China, and they really found their space in the market. They are growing. And what I really like about this is they are not really cannibalizing our offering in the premium segment. It's actually quite the opposite. They are somehow protecting our portfolio differentiation. And I think that's why we have in the pipeline, another couple of these product introductions in the value segment, and they are a good enabler for growth.

Stephane, you have singled out infection control consumables as one area where you see great potential going forward. Could you please tell us about that?

Yes. So really, the thing is we believe that we can take a bigger share of this market, thanks to our installed base or good relations with our customers. I think it would allow us to have a more comprehensive offering to our customers. And also from a pure financial perspective, we think that this is an attractive segment to be in. But our margin is also more recurring by nature. So I think we can do a lot here. And this is not a new thing for getting an infection control consumables. We already have a business of about SEK 600 million of revenue here. But I really want to increase the focus on that and maybe a little bit more disciplined in our ambition to gain more space in this market. We're doing that both internally, organically, working on improving the portfolio, working on building up some safe channels in some countries. But we're also doing that inorganically, Lars. And I'm sure you saw that we acquired 2 companies in the last month. The first one, Quadralene, based in the U.K., is now a center of excellence for chemistry and disinfection globally. And it has really helped us gain a lot of know-how in the field of chemistry and disinfection, and we are already seeing the effects of that. And the most recent one, we acquired biological indicator technology from a company in the U.S. called Verrix, and we are very positive about that. This will allow our Center of Excellence in Denver to really become a full solution provider in the field of Sterility Assurance from chemical indicator to biological indicator. So I would say both internally and externally, inorganically, we're building on the plan to be a more consumable-centric company.

Sounds great. So what about the low-temp sterilization offering in all of this?

I think it plays a big role in that, to be honest, because it's important that our viewers realize that low-temperature sterilization is not like just a new capital equipment. Low-temperature sterilization even much more so than steam sterilization, has a very high attachment rate of consumables. You have sterilant and indicators. And I think this is going to be a true game changer in the gravitation of our portfolio, actually, when we go to market with that. And I'm very pleased with the progress that we are doing here from R&D perspective. We have promising results on our prototypes. I hope we go to market latest in 2023 with that. And when we do that, I'm convinced that it will be a true game changer in our portfolio structure.

Looking forward to that, Stephane. So you acquired 2 companies basically in the last 12 months, Quadralene and Verrix. Are you going to make a step change here now with M&A?

Always hungry. We screen a lot of companies every year. A lot of incoming opportunities. There has been a lot of activity even during COVID, even more so during COVID, I would say. We're reacting to incoming opportunities, but there are a couple of areas where we are proactively building the funnel of opportunities. And these are, for instance, consumables, I just talked about it. Digital Healthcare is one of the areas, digital solutions in our core hospital departments like the OR and the sterile reprocessing department. And I would say maybe, Lars, any opportunity that has a strong footprint in the U.S. market, we are actively looking at.

I would like to stay a little bit with the digital healthcare offering. Could you please elaborate on that?

Digital is key for us. Of course, it's a key element of our growth and productivity journey. But there is one thing I would like to say first is that for us, digital is not only a promise or a vision. It's already a reality. Today, what is it -- or hospitals is that sometimes you have a good local solution, but it's very difficult to globalize it because the healthcare systems are so different and the way of working. And there is one good example of where we were successful with that is actually TDOC, our, I think, industry-leading sterile supply management software. It is used today by more than 800 hospitals around the world to manage their production. And I think it's a great success. From a financial perspective as well, you need to know that about SEK 500 million of revenue comes from digital today, it's growing double-digit year-on-year. And actually, already about 1/3 of our financials today, 1/3 of our revenue are already recurring by nature from service level agreements or Software as a Service. So definitely a reality as well as a promise.

And the order book is growing quite nice there, isn't it?

Yes. We have right now all the orders in the book for a bit more than 40% before pre-pandemic level. So definitely, we can see good momentum. And we are quite optimistic about the future as well. There are new solutions coming in. We're also growing our sales channels. So definitely, the ball is rolling. Let me give you a couple of examples on that. The first one I can name is Torin where we try to do a little bit similar to what we did with TDOC. Torin is our OR scheduling solution. It's already a quite successful software in the German-speaking countries, and we are now starting to internationalize this solution. We sold the first site, 1 in France, 1 in Japan. So we see the progress of that, and we are very hopeful that it will again increase opportunities for us in the digital space because OR management is a key topic of the moment, of course, you can imagine post pandemic. Another good example of that is what we call Connected Equipment. You might know, Lars, that we already have 4,500 machines connected every day to our Getinge Online portal. And the key thing in the next years would be to increase the value of the data coming from our equipment, both for us, like service management information on the usage, but also for our customers, utilization, productivity and clinical information. So Getinge Online is definitely an area where we want to grow, not only to offer solutions, but also to monetize this data and make a profitable revenue stream out of that as well.

Great. So let's shift to productivity. And this is an area where you have been performing really well, right?

Yes. I mean it has been at least a great focus, I have to say. When we were together at the last Capital Day, I was pretty clear that a lot of the transformation journey for Surgical Workflows would have to come from disciplined action on our cost base, which, to be honest, have been drifting for a while and had become a little bit in-adapted to our revenue and to our market conditions in a way. So we really started in 2019 to do pretty standard cost-out rightsizing activities in the sales and service side of the business, in the industrial and in the support functions. And we can really see the effect of that already. If you look at the year-to-date financials, you can see that we are operating more than SEK 400 million below the 2019 level. And I think that's a good sign of this achievement. Of course, it will pick up a little bit when we go to a more post-pandemic world, hopefully. But I can tell you that the vast majority of these savings are actually structural and are not coming back.

So did we do more than these structural changes and improvements?

Yes. So after this somehow cost-out activities, we really entered the more difficult work, which is continuous productivity improvement. We did a lot on service. Service is a people and process business. So you have to work on improving the training of your engineers, you have to work on improving the processes in how you dispatch them with more tools to do service remotely, in how you manage your spare parts, and we have made good progress here. We also worked quite a lot on the product cost to improve the material cost and the assembly efficiency of our products. And actually, a lot of it started with the portfolio work because if you have a bit of a messy portfolio with -- which is sometimes the case when you're built over time by acquisitions, you have redundancy in your range. Then there is only so much you can achieve in terms of productivity gains. So a lot of what we did was to take the portfolio, rationalize the offering. And just to give you an example, on sterilizers, we will move over a couple of years from 18 models to 6 models and only 2 manufacturing sites. So I think it's very promising, also a long-term enablers that we have done to really simplify our different platforms in all the offerings.

So this is really impressive, I must say. Where will this take us from a financial perspective then?

Yes, if I want to summarize the financial trajectory, I would say, mid-single-digit organic growth, with all the things that we described before. Disciplined continuous profitability improvements year-on-year, and that will take us to double-digit EBITDA performance. That's where we think this business can go. And then on top of that, focused, disciplined M&A strategy targeting or strategic priorities.

Beautiful. So any final words?

Yes, Lars, maybe I'd like to take the time to recognize the teams a bit for what they did. I'm very impressed by the drive and the resilience of our teams. We were hit by a pandemic. We were managing operational firefighting and even while doing that, they were delivering on a quite ambitious transformational agenda. And I can say that I'm very impressed and very proud of them. So I would like to maybe say that words about them.

Important, for sure. A big thank you, Stephane. Now let's move over to our Life Science business area and Harald Castler. Hi, Harald, good to have you. These last couple of years have been quite something, haven't they?

Yes, Lars. We have had a really good growth ever since establishing the business area. We've been working with aligning sales and supply chain processes. We have put a very clear growth strategy in place, and that has been to focus on recurring revenues. And within recurring revenues, we have seen, for instance, our single-use DPTE-BetaBag has had a net sales growth in the last 3 years of 40% year-over-year.

And some margin improvement on top of that, right?

Yes. Back in 2018, we were at an EBITDA of 13%. And now we can see in the last 12 months, we are up to 19%. So this is, of course, a combination of several things. The good growth, the volume increase has, of course, helped, better factory utilization. But also the fact that we are moving more into single-use products is -- has had a good effect on our product mix. Also, we have seen a better OpEx utilization efficiency.

So if we look at the product mix side of things, you have quite a strong growth in the biopharma product segment. Why is that?

Yes. We are focusing on 2 parts. So one is the research of new drugs, and the other one is, of course, production of these drugs. Our offering covers bioreactor systems, cleaning and sterilization and then we have what we call the sterile transfer where you find the BetaBags. The areas that have been growing the fastest in the last year, that is in sterile transfer and -- but also now in recent years, bioreactor. It is, of course, an effect from the pandemic. We can see that there is an increase in both interest and of course, need for vaccines, but also for other drugs. And the interesting thing here in the vaccine production is that new technologies has been used and that fits perfectly into our offer. And this has made our sales in the last years actually to go off the chart. So we don't expect that to continue in the same way. So from now and in the next coming years, 2025, we will move more into normal growth rates. But nevertheless, single use will continue to be very important in our offer. And by 2025, we believe that single use will represent 50% of our net sales.

Harald, how much of our sales comes from vaccine-related business and demand?

Yes. If we say directly vaccine production, we estimate that 10%, maybe 12% of net sales this year is directly related to the COVID vaccine. And the main part of that is, of course, BetaBags. And our estimate is that we will see a good growth in demand. We believe that next year actually the production of vaccine in the world will continue to grow a little bit. But then in 2023, it will be more a plateau and from there may be declining a bit. But there is also an underlying demand from other types of biopharma drugs, and this area has historically been growing for about 20% per year. So the interest hasn't gone down, rather the opposite. We see, for instance, new development and breakthroughs using the mRNA technology that looks very promising in -- for instance, in cancer treatment.

So what's your expectations on growth for BetaBags and sterile transfer for 2022?

We believe that BetaBags will grow roughly 30%. And one important task is, of course, to secure that we have capacity to deliver on these demands. And I'm happy to say that we are just at the finish line in setting up our next production line in New Hampshire in the U.S. And we are planning to shift the first products by end of the year. So with that, basically, we're going to double our capacity. Obviously, it will be a ramp-up during the first half year next year. But we basically double our capacity of DPTE-BetaBags.

Harald, back in -- at the Capital Markets Day in 2018, you mentioned that BetaBags was your golden nuggets. But what about the Alpha port? Why is that so important?

Yes, it's a quite simple answer. To use a BetaBag, first, you need to have an Alpha port because these 2 products are sort of docking to each other. So once we have an Alpha port installed in an isolator it's basically only our BetaBags that can then fit to it. And so there is a strong correlation between BetaBag sales and Alpha ports. And we believe that in average, an Alpha port is installed in filling line application consumes about 3,000 BetaBags per year. And we have also seen when we go back and look at those numbers that is actually growing also from there. So there is a very strong correlation. It's like a razor, razor blade business model.

Given what you just said, what does the Alpha port sales look like at the moment? .

Yes. First and foremost, we have a large installed base of Alpha port. We are the industry standard when it comes to this technology, and we have a strong market-leading position. And then we can see that we have, in average, over the last year has been at the 25% CAGR on Alpha port. And in particular, we can see now in the last years that sales to China is increasing a lot. And we are so far selling very little of BetaBags. So this is very promising.

For sure. So it seems like everyone wants to go with the sterile transfer solution that we have at the moment. Why is that?

Yes. If you look back, I would say, 10 to 20 years, the traditional way of putting a filling line that will be in a clean room, but a clean room requires people and it's quite expensive to run, and there is also a risk for contamination. So what has happened in the last 10 years is that filling lines are moving into isolators. And then you need to have -- and then you have a sterile barrier that you need to then put things in and out. There are 2 ways of doing that. One is using reusable stainless steel equipment and the other one is using stainless steel, plastic bags or could also be plastic containers. And this has proven to be a lot more efficient. So time to market, you don't need to do validation, these kind of things. So it really is boosting your productivity. And now especially during the vaccine development that was done in an incredibly toughest time, the only way to go was to use single-use solutions.

Is there any way for us to expand the market, expand the usage?

Yes, all types of in and out transfer of an isolator require some kind of sterile transfer technology. And the biggest application is moving stoppers and caps for the ampules, but you also have the liquid, for instance, and there we see a fast-growing area. We are working very close to partners like Merck Millipore, Meissner and Pall, and we see really good growth and opportunities in liquid transfer. Then there is also other transfer applications further up in the manufacturing line up in the downstream area, where also sterile transfer is key and having control of sterility and particles is vital.

What about the R&D pipeline? Do you have anything interesting going on there?

So in the next years, we will be launching some very exciting DPTE products. And we have -- now will become next year. It's a completely new port and bag solution, allowing customers to dispatch components into the filling line isolator without using those gloves that you normally see in an isolator. And because typically, you don't want to sort of interfere into the isolator and disturbing laminar flows and things like that. We are also looking at new solutions for really high-capacity filling. So we have also new products that are sort of dedicated for this type of high-speed filling that is typically the case in vaccine.

Sounds great, Harald. Really looking forward to that. Basically, it sounds like your biggest problem is to decide on when to go at the next production line and where to build it.

Yes. So I would say that we need to take a decision in the next 12 months, where we're going to put the next extension of capacity. It could either be, which maybe a natural choice to put it in France or in U.S. where we already have today manufacturing of DPTE-BetaBags, but another alternative is to put it in China because we have seen the big growth now of Alpha ports. So the volumes will come and Getinge has in Suzhou a clean room facility that can easily be rearranged for pharmaceutical applications and would be an alternative for next line.

Let's shift gear for a while and look at the other part of your biopharma business offering, bioreactors. What has happened there lately?

Yes, in bioreactors in the last 12 months has been really something. We have had a 30% growth in the last 12 months. And this is due to the increasing focus on pharmaceutical drugs. In bioreactors, what makes us unique is that we have a very user-friendly software making it easy for scaling up or actually also scaling down from pilot scale up to production scale and also making the yield higher, and those things are what counts in the end of the day.

So 30%, that's quite something. Is that doable over time?

No, 30% is unrealistic. We believe that the market growth of bioreactors will come down to, let's say, the low 10s. But we also see a good opportunity actually to capture some market shares and given our strong offering that we have today, but also quite an interesting R&D pipeline.

Let's stay with that pipeline for a while. Do you have something on single-use bioreactors in there?

We do. We are going to launch 6 new single-use bioreactors in the next years to come.

Will there be different sizes catching both the laboratories and the production?

Yes. In 2022, we will complete our offering of single-use lab-scale reactors. And that will also include a [ DMP ] version for a small-scale pharmaceutical production. And then in 2023 and '24, we will also launch our mid- and large-scale production reactors.

So what you clearly are saying is that we intend to grow in single-use items. How does that fit with the environmental agenda that we have?

It's very easy to believe that single use is not environmental, but if you look at the energy consumption in running a manufacturing plant with stainless steel solutions, you can actually see that single use is considerably reducing the CO2 footprint. And the reason is that you get, of course, a higher productivity, so a higher throughput, but also that you can skip large energy consuming sterilization and cleaning procedure. So I would say that the single use is actually reducing the footprint -- CO2 footprint.

That's good to hear. So we have been talking a lot about organic growth here. But of course, there is this part of M&A acquired growth as well. Do you scout actively at the moment? And yes, what's going on basically?

Yes. So you can say that when we acquired the bioreactor company, Applikon 2 years ago, we have been quite busy in the integration work, but that is now to the end. So in the last half year, we have sort of ramped up our activity in scouting for new opportunities. And where we are really looking is in single-use applications, of course, that's something we want to grow. We are looking in the areas around the bioreactor to strengthen that offer, and of course, in the fill and finish in the last step. But there is also an area between the upstream, the bioreactor phase and the fill and finish, and that is what they can call downstream. That is filtration, analytics and these kind of things. And there we are also looking for opportunities to see if we can find sort of niche players that fits into our portfolio. So niche is the key word when it comes to bottoms.

Sounds great. So have you seen in on anything on the radar?

We have a lot on the radar, Lars, but I can't really talk about that here.

No worries. So what about the price levels? I mean, is that a problem?

Yes. Price levels are, as you probably have noticed, quite elevated in the last couple of years. So that is a problem, of course. But if we find target that has good potential and really fits into our strategy, even if the multiples are high, for sure, we can sit down and discuss about the deal.

Lastly, we need to talk about the financial targets presented here today, organic growth, EBITDA margin improvement that is quite significant. What's your take on this?

Yes, Lars. I'm quite confident that we will succeed with this. And we can see how the pandemic has actually been like a catalyst for intensifying development of biopharmaceutical drugs, and that is fueling the growth even further. We also see strong market trends in single-use. Now we have secured capacity to capitalize on that growth, both in bioreactors and in BetaBags. We also have a strong R&D pipeline that will drive our market shares. And in addition to this, we are -- as we talked about, actively scouting for attractive bolts on to strengthen our position in the biopharmaceutical segment even further. And then on top of that, of course, we will work with productivity improvements throughout our supply chain.

Thanks a lot, Harald. Really encouraging to hear your thoughts on this, and thank you again. Now let's move over to financials and our CFO, Lars Sandstrom. Good to see you, Lars.

Thank you.

So could you please summarize what has happened within financials for Getinge it since 2018?

Yes. But if you look at the period here, we are talking about 4 years. And when we came into '18 at the Capital Markets Day, we had a period where we could see a slow improvement when it comes to order intake. And this was the result of a dedicated focused work on getting top line in order first to reinvigorate growth, really looking through the different product categories, the different geographies we are active in and really ensure where are we strong, where we're weak and dedicate activities and resources to really get this back on track, so to say. And then the next step, which was really important was on the productivity side, to get our gross profit margin moving in the right direction as well. And this also, here a lot of work on the full supply chain to get better results through the group. But also, what we have seen here during the last years, a very dedicated work when it comes to service and getting the service profitability in place, which is also a good contributor to the gross profit. But not only gross profit, but also when it comes to our operating expenses, also here, productivity has been a very important area of focus during this period. And we can see the results coming through. we have had dedicated investments in operating expenses, like quality system, compliance area, et cetera, to get that foundation in place, but that has not hindered us to have a very strict cost control as well.

Is that actually enabling growth and [indiscernible].

I think it's a risk thing, especially to give the organization the foundation to do and conduct better business. And that is, so to say, enabling growth for the future. Absolutely. But all in all, this has then delivered a solid EBITDA margin improvement during this time.

What about capital effectiveness or efficiency there?

That's well quite important coming into '18. And during this period, we have had quite a focused work on the working capital. You have seen that in -- we have reported that every quarter. You have seen the working capital days improving from mid-'18, up until today from some 138 days down to well below 100 at the moment. And that has, of course, contributed significantly to freeing up cash from the balance sheet, some SEK 2 billion here in the last 2 years has come through the cash flow. And of course, investments as well, having quite focused, dedicated mindset when it comes to what are we investing in, having clear business cases in place before we make decisions, really put the money where we see the best growth, but still being somewhat below the depreciation rate, which has also improved the efficiency of the capital, resulting then in an improved return on capital employed for the period here.

That's really good to hear. And if we look at the left part here, the improved profitability aspect, we clearly have closed the gap towards peers on the margin side. How much of that is coming from the COVID effect, the so-called COVID effect?

But of course, we have had a positive impact during '20 and also this year, 2021 from the pandemic. But we should remember, we also had quite a negative impact in other areas that has impacted us as well. So all in all, yes, there is a net positive impact here. But looking through the period, we have had an EBITDA margin improvement of 1 to 2 percentage points per year, and that is where we are. So they have been organically during this period. And even if I look through, I'd say, the pandemic impact.

Well, negative from the pandemic is the freight, the price is going up, delays and so on. What do you see when it comes to these things?

I think the pandemic started and then we have a economic recovery now happening all over the world and impacting all industries, including us then. And that is then seen now in the supply chain disturbances, increased raw material, lack of components, et cetera, et cetera. And we are not immune. We have done a very good job in handling it, I think, and we are having a good focus and good track on it. We measure and follow the material cost to all our sites to ensure that we can track and trace which suppliers do we see cost increases, which materials and then take action to act upon it, both towards the supply chain together with our suppliers, but also then when it comes to pricing to offset part of this impact.

So clearly, a good development on profitability and assets. What's the next step?

That is what is coming now up until 2025. And I think one answer is that we're going to actually continue on the profitability route, ensure that we capture growth opportunities and to drive productivity measures through the whole company. But of course, then it comes to profitable investment side here, we have through the good years here now and the increased stability when it comes to profitability and financial position, we can now step up a bit on the investment side.

So we are now talking about R&D, organic growth and M&A. What's your take on R&D?

If you start with innovation, R&D, innovation is more than only M&A, but it's, of course, also the whole solution selling, et cetera, where we are. But yes, I think we will invest more. But it's not -- we have that will happen through utilizing actually, we have spent a lot of resources into remediation during the last years. And now we can dedicate more and more of these resources to be fully focused on innovation.

Yes. So one should expect some 5% to 6% of new sales?

That is what we can say, around 6%, I would say, going forward.

Yes. Then if we look at sort of say, the M&A part of this, how much dry powder do we have?

Yes. A question very often get, of course. And when I look at the balance sheet and the simple answer is to take one number. I don't think it gives a perfect picture. But just to give you an answer, I would say we have some room to invest some SEK 15 billion as it is today in M&A activities. But I'd rather look into how to do this and what it actually means. And just take one step back, yet, thing is the combination of some 7 acquisitions up until 2015. Then up until 2017, '18, '19, there was nothing. And now the last 2 years here, we have done investments of around SEK 1 billion or SEK 0.5 billion a year the last 2 years. And that pace, I think it's time now to step up to some SEK 5 billion a year. I think that is what we see and would like to go forward.

That's quite a step change.

Yes, from the historical levels, the last years here, of course, but I think we are ready now. We have 3 solid business areas in place with solid management teams. We're able to find good opportunities, but also to bring them in and integrate them into their organizations. And then, of course, the financial, the profitability and the financial stability to do it.

And this is where we will allocate capital basically because other types of investments we are on a good level, aren't we?

Yes. When it comes to normal investments that you will say, going into fixed assets, machinery equipment, IT systems, et cetera, I think we are in a solid place there. Of course, there can be investments if there are specific needs for capacity increases, like we are doing now in the U.S. when it comes to the BetaBag, for example. But normal capacity increases, we should be able to handle by driving the productivity rather than more big investments.

Sounds great. So this takes us to the financial targets. What's your take on the target?

Well, the targets, as you know, we have communicated now today, top line, 4% to 6% organically. Adjusted EPS increase 10% per year and then a dividend of 30% to 50% of net income. And to reach this, we need, of course the growth. And I think we are well in line with the market growth here. And when we look at the different product segments, how we are gravitating into good product segments and geographies where we have a good position with good underlying growth. The 4% to 6% seems very reasonable to me. And then the 10% EPS that will require that we move towards an EBITDA margin when we come out of the period here of above 21%. And I see that also fully feasible with the growth together with the continuous productivity measures we do, that is fully possible.

And this will take us to a return on invested operational capital above 20%.

Yes. That is what I see. We have had a bit of a boost now during the pandemic, but looking at underlying and the profitability improvement we have and in capital efficiency, we continue to drive, that will be about 20% is what we are seeing.

So all of this is also organic, right?

Yes, exactly.

So M&A will come on top of this?

M&A is on top. That is -- and as I mentioned, investment of around SEK 5 billion a year during this time period we are talking about today that would add 1 to 2 percentage points on top line. That is what I can see.

That sounds great, Lars. Great. So thank you a lot, and thank you for taking the time. Now we have Mattias coming in soon, wrapping things up before we go into the Q&A. Mattias, it's time for a wrap-up before we go into Q&A, isn't?

Absolutely, Lars. Thank you very much. So I would just like to conclude with saying that we're entering into this next of continued growth and productivity, getting with better momentum than ever before. We have updated our financial targets. So organic growth of 4% to 6% per year on average through 2025. We have an earnings per share target improvement of more than 10% per year throughout the time period on average and a logical consequence of this is that we will not only need to reach our growth target, but also deliver an EBITDA performance of above 21% for the end of the period. Our momentum when it comes to portfolio gravitation, will of course, support in this. We have, as you've seen, from a strategic perspective, many good initiatives in place to really support this development. We have macro trends working in our favor as well. And I really appreciate you taking the time to listen to this. So let's move to the Q&A, please start dialing in right now, and we will see you in a couple of minutes.

Thank you, Mattias. With me, I have Mattias and Lars, but also Magnus, Anna, Lena, Stephane, Jens, Harald and Carsten, of course, and we are ready for your questions. And by the way, team, thanks for a great performance today with the presentation. And please dial in, you see the number below and why it's doing so, I see that there are some incoming calls here. Operator, you can put them through, please.

[Operator Instructions]

Whilst waiting for the questions to come in, I would like to ask you, Mattias. When you look at the targets that we have presented, is this something that you're really confident on?

Yes, it is absolutely. I think we've looked at the end market growth in the coming years. We've tried to see through all these moving parts that COVID has thrown up and we're quite confident now that even if we're not really at the end of the pandemic in any way, we do have enough visibility to look at growth and also make an assumption about our own specific categories and how this will evolve. So we're really comfortable that this is a good level to put the bar.

Sounds encouraging. Operator, do we have any calls in coming?

The first question comes from the line of Victor Forssell from Nordea.

I'll just start with a question on acute care therapies, please. And that is when we look upon your sort of conceptual graph here in terms of the gross margin improvement. So the question is really tied to the 26% or more than 26% that you aim for in this period of time. Does that really imply that your OpEx has to grow at a very fast pace. Is that how we should look upon it?

All right. Thanks, Victor. Thanks for the questions. I will hand that over to Jens Viebke, and since it was the specific acute carrier therapy question.

Thank you, Victor. I mean, our OpEx would need to grow somewhat, but not at the same pace as revenues, of course, in this case. But we will, of course, make different investments in terms of OpEx for sure.

And then just looking at sort of the COVID tailwinds that you had on margins here in the last couple of years. I know that you aim to grow fast in the e-com business line and Cardiac and Vascular Systems should improve the at least from depressed levels in the next year and so forth and perhaps a decline in ventilators. But overall, is there any reason that the gross margins should be declining short term here and in the coming years?

We should probably not to comment too much on the details. But I think you can see in the graph that overall moving forward, they are sort of growing from this level where we are sort of today.

Okay. And I'll limit myself to one more here. Now that you have this large potential of upgrading your installed base of ventilators in terms of software, et cetera. Could you comment a bit around how much of a software service is attached to your current sort of incremental ventilator sales? And if that has the 30% historically, what type of number is that on new sales today?

I mean that's, I think, 30% -- 20% to 30% is probably sort of a good estimate all it has been historically. I think what is really the key here moving forward is going to be our digitalization and sort of the connectivity and the type of opportunities that, that will give us. And that will really make it possible to sort of add on more things, both because of our sort of the inherent data streams that we can get from that installed base, but also for different types of sticky disposable, et cetera, and how we can sort of attach that to the [repletion] installed base. I think it's so important to remember that to be able to connect the ventilators, we also need to see a turnover of ventilators moving forward. And that will, of course, take a little bit of time since the average life length of ventilator today is between 10 and 15 years. So it's going to take a while to replace older machines that cannot really be connected. So yes, there will certainly be an upside, but it will take a bit of time until it along comes.

And the next question comes from the line of Scott Bardo from Berenberg.

Thanks for the new targets communicated today. So the first question, please. Obviously, you've been performing pretty strongly on the profitability side for the last few years. Obviously, we don't know how you closed this year. But in keeping with your progressive margin expectations by 2025, can you share some thoughts about next year? Would you expect progression next year? Or could margins dip actually, maybe some sense of the phasing of this ambition would be helpful, please? And the second question really to a couple of the divisional heads. I think you talked about moving into single-use bioproduction for higher volumes. And I think in surgical workflow, talked about low temperature sterilization as a future growth area. These are both markets that have been served by strong incumbent for a very long time. So I wonder if you could help us understand what is it really that you have that is differentiated that can capture in these already solidly developed markets?

Great. Thank you, Scott. I'll take the first question and while Stephane and Harald prepare mentally for the second one. So when it comes to the guidance for next year, we will wait until we've closed out 2021 and see where we end up both in terms of revenue and in profitability. And then we will come back on the outlook for 2022. So it's a little bit too early today to go into that. And I guess we can move to the second question, and then I'll hand it over to Stephane to begin with.

Thank you, Mattias. And on the low temperature sterilization, Scott, I think you're right, they are incumbent players, but we think there is room for more players actually. We're confident that our product can really be very competitive in that market. So I think we have a both the role to play from a product perspective, but also we have one of our core strengths is that we are a full provider of the SPD today. So we have the ability to provide full CSSD solutions, including steel sterilization and now we'll have as well low temperature sterilization. So I think that project and commercial reach that we have is a key differentiator for us when we enter to market.

Thanks, Stephane. Over to you, Harald, similar question. You're muted Harald.

Sorry for that. Bioreactors, of course, as you are saying, served by some strong competitors. I would say that the vessel itself, the bag is becoming a bit of a commodity me-too product. where we try to differentiate ourselves with our offer is more into the software. We have -- we talk very often about this with scaling up and down between lab and production scale. And in software, user friendliness and being able to compute or data in order to optimize processes, that's where we believe we have an advantage.

Thank you, Harald. We'll take the next question.

And the next question comes from the line of Peter Östling from Pareto Securities.

Yes. Two quick ones. On one of the pages you showed where your strengths were regarding different hospitals. Is it possible to -- I think it's on Slide 28, you think present that top 100 hospitals globally, 70% very high, 24% high. Is it possible to elaborate a little bit and talk how this very high, high and the potential strictly geographically how that looks?

Yes, absolutely. I think the first thing to remember as well, I want to add on to the information is that we do sell into all the top 10 hospitals in every market. And then, of course, there's a bit more to say about the graph that we showed here. And I'll hand it over to Carsten to explain a little bit more about the potential that we see based on this.

Okay. Yes, my pleasure. So first of all, we have a pretty sophisticated market share tool that is, generally speaking, focusing on the product segments. We, of course, also consolidated that for the top 100 ranked hospitals. And here, we separate between, are we strongly positioned with our range of surgical workflows? Or are we strongly positioned with our range of acute care therapy offerings? When you see on that page that we are saying that 17%, we are extremely well in strong position, it means that we are positioned very well for both Acute Care Therapies and Surgical Workflows. And then you will see that I think it is another 24% where we are only strongly positioned. That means that we are either on one or the other ones feeling that we have a dominant position. I'm not sure if that answers your question.

It was more on the geographical side. Of those 17%, is that more tilted towards Europe or?

It is really -- no, it is really across the board. If you're going into this ranking is by Newsweek, you will see very quickly. I don't know by heart how many of the top 100 ranked hospitals up located in the United States, but there is, of course, a wide range of number of hospitals among the top 100 that are U.S. based as well. So it's really like across the Board.

Okay. Great. And my second question, the 8 percentage point improvement in EBITDA margin since 2018, can you say anything and divide it into cost efficiency, productivity and top line volume growth? And how do you see that split from SEK 21 million to SEK 25 million?

Yes, thanks for the question. I think the short answer is probably no, that we're not disclosing that. It is -- we have a good understanding of this ourselves, but it's not something that we disclose in detail externally here.

Okay. And not for the future, either?

We can contemplate it now that you asked, but we hadn't in our plans, of course.

And the next question comes from the line of Kristofer Liljeberg from Carnegie.

Yes. First, I wonder, given that you sound pretty optimistic about the group potential in all 3 business areas. So could you maybe explain a little bit about the lower end of the sales growth range? How are you thinking about that? Then I wonder about the margin -- the margin target for ACT about 26% considered that you are already at 28%. And you're talking about continued improvements. Is that COVID effect that we have to take into the calculation? And then my final question relates to what you say about the integration manufacturing sites and surgical workflows. Does this mean that manufacturing will close in the [indiscernible]. That's all for me.

Yes. All right. Thank you, Kristofer. I can answer the first one that when -- we do, as you know, have a rather broad portfolio, there are a number of categories with very different growth rates. So when you talk about the lower end of this, this depends, obviously, a lot on the comeback of elective surgeries, for example. And there's also something around capital that we just need to be mindful of. But we have said initially, we are comfortable about where we've put the bar and we're certainly leaning more towards the higher part of this plan, I would say. And then I'll hand over the Acute Care Therapy question to Jens and the Surgical Workflow one to Stephane.

Kristofer, good question. But of course, there is a little bit trailing effects until Q3 of COVID. I mean it's just a look around in the world, and you see that there are several -- several parts that are sort of affected by COVID still. But if you sort of recall where we were in '18 and '19, we sort of just reached 20% limit there going from '18 to '19. And -- but also, I mean, COVID has been there, but we've also managed to do a lot of good sort of productivity work during that period. So yes, 28 is lot higher than 26 for sure, but 26 is a lot higher than 21 where we were in '19. So we are on our way, but it's sort of a continuous improvement journey over that time period.

Okay. But should be on top of this as you think there is a risk that margin in ACT will be -- will go down in coming years and a positive ventilator effect is there?

I think you should interpret that as that -- of course, there are some tail effects of COVID right now. Then on the other hand, there are -- there is some more to be had, of course, of elective surgery is coming back. And don't forget that some of our elective surgery products, of course, had really, really nice margins.

Thank you, Jens. We move to Stephane for the other part of the question.

Yes, Kristofer on the steam sterilization, the illustration of the visual was about steam sterilization. And we have made the modifications that we wanted to make to the footprint already and they have been made in the last 24 months. You might recall that we have closed our operations in Ankara in Turkey and that we have transferred all of our health care sterilizers, assembly from Getinge, Poznan somehow the target footprint has been reached here when it comes to steam sterilization. So nothing to expect here in the short future.

And just to clarify that, then we're not closing the Getinge site. That is our life science site. So we've made room for life science in that part of our business.

And the next question comes from the line of Rickard Anderkrans from Handelsbanken.

So to accelerate the journey here towards more high growth and high-margin areas, should we anticipate Getinge it to participate in divestitures in the other areas as referenced on Slide 16 to sort of claim down the portfolio even more? Or is it something that gets the foot into the door for you guys, so to speak?

Yes. Thanks for the question. There's no plans right now to do any major divestment here. We're happy with the categories that we are present in, and we expect that to stay this way. This is a -- we've factored in into our planning and the new targets.

All right. Great. And another one on the Acute Care Therapies, the Cardiovascular segment there. So a lot of things going on in product launches that seems to be quite exciting. You mentioned China as particularly strong region there for vascular graft, et cetera. Can you talk a little bit more about that opportunity and why China stood out in the reference there?

Yes, happy to do that since that's more of a market thing maybe Carsten, want to have a stab at answering the market dynamics in China when it comes to vascular?

We had some competitor facing certain challenges on the one hand, and we have been taking over that space. And at the same time, we have been ramping up very timely our manufacturing capacity. So we have been serving customer needs in a segment where we where we are extremely well placed and where we have been growing faster than competition regardless. So it's a matter of combining some very good positive drivers really.

All right. And just a final one. So surgical -- on the Surgical Workflow side, if I didn't misunderstand, roughly 1/3 of revenues currently of a recurring nature. What could it be? And can you talk a little bit more about the initiatives? Is it primarily internal development there? Or will it be more coming in on the recurring side from acquisitions, you think?

Yes. Thanks. We'll hand that over right to Stephane. You won't get a number from him, but he can talk about the dynamics of this.

Yes. The comment during the presentation of the third was about the digital part. So today, our recurring revenue is essentially service agreements, technical service and digital service agreements as well as consumables. So as I explained, I think there is really an intention to grow the recurring revenue share of our portfolio. And I think the biggest driver here will be the progress that we intend to do in the field of infection control consumables. We don't want to be in every segment of the market, but we have identified a couple of areas like chemistry, like sterility assurance indicators that really are for us a potential to grow significantly in that space. And as you know, of course, these are recurring revenue. They are used in each time you process a load at SPD, so I would really highlight this one initiative as a key driver to our recurring revenue progression.

And the next question comes from the line of Karl Norén from Danske Bank.

So 3 questions from my side. First, on the -- you mentioned on the ambition to reduce quality cost by 10% by 2023. I'm just wondering if it's possible to say what is the current cost for quality within the group as of today?

All right. Thank you, Karl. I'll hand that over to Lena to talk about then.

Yes. So thank you for the question. I think when it comes to the quality cost, I will not, of course, share that at this moment of time because I think it's important to bear in mind that there is not a clear benchmark in the industry today where you're actually setting up what quality cost actually is. But what we have tried to use in our internal calculations is that we are using the McKinsey benchmark report from 2017. And that's what we are looking at, and what we can see is that we are below the benchmark today. So there is -- unfortunately, there's not a good way of putting this. But when we look at our data and how we will have all the initiatives and how we will work with efficiencies, we believe that we can reduce this for 10%.

Okay. And then maybe a question for Stephane. If it's possible to say anything about the net sales within Surgical Workflows, you seem to have a quite strong order momentum with orders above 2019 levels now in Q3. So I was wondering if it's possible or could you elaborate a bit on when do you expect net sales to be above 2019 levels again?

Yes. That's really the golden question because as you can see, the trajectory of Surgical Workflows really depends on our ability to get back on the revenue track that was the prepandemic level. It's a bit early to answer specifically that question. As you know, our revenue conversion cycles are between 6 to 9 months in average. Now we have to -- will depend on the ability of the customers to receive our goods. We also have some supply chain challenges as well. So it's a bit hard to make a prediction on when really we hit the 2019 mark, but hopefully as soon as possible.

Okay. And then a last question on M&A. Just how we should read this, Lars, you mentioned SEK 5 billion. Is that on average, what you would expect to invest in M&A during the time period?

Go ahead, Lars.

Yes. But looking at that, I think we say SEK 5 billion a year, just to give you a clear indication on that we need to do a step up here to really make an impact here compared to what we have been doing last years here. And I think what we are doing in the last year is really to test -- do some really good acquisitions here and really work on getting all the integration through, bringing them into the business area, but also then on the sales side, et cetera. And I see that it works really well and it is time to step up. And that's why we indicate now a SEK 5 billion a year in the coming years. And as you know, M&A is -- it is a bit opportunistic as well. But what we would like to see is to grow on this pace with successive acquisitions and not maybe one big one because those are more tricky to do, but rather several acquisitions during the time period and consecutive over the coming years, actually.

The next question comes from the line of Ed Ridley-Day from Redburn.

So my first question relates to the cardiac systems business and IABP. You appear to be more confident on that business. And can you speak a little bit more color on how you see growth going forward, particularly as it relates to our competitive position with Abiomed? And also, if you could give us any more color at this stage on the innovations you're looking at for the new IABP system that would be helpful? And my second question will be around guidance. I fully understand that you do not want to speak to group guidance for next year. And certainly, thank you for the detailed update today. In terms of the Acute Care business and the Life Science business, there are also moving parts, obviously, next year. I'd just like to confirm on Life Sciences that you do still see growth in 2022 on '21. And in acute care, given the soft comps this year, could we even be looking at a double-digit growth in acute care next year?

Yes. All right. Thank you. When it comes to the guidance questions for next year, you will have to wait until we've closed out this year. When it comes to the Cardiac System question, I'm happy to hand it over to Jens to elaborate a little bit here, but again, without giving guidance for next year.

Of course. No, but I think when it comes to sort of the innovation of the pipeline, et cetera, I think you have -- and I think I also mentioned that in the interview that there is sort of disposables innovation, both in the shorter term and in the longer term and in the shorter term, it's really about basically products that are supporting current indications in a slightly better way than we do today, which is exciting. On the longer term, we really feel that there is -- I mean we have a fantastic installed base, and we want to utilize that for further sort of consumable growth or disposal growth. And that will likely take us into sort of the pVAD space in terms of mechanical circulatory support. On the actual balloon pump itself, we are working on a quite exciting platform that can both observe several different segments in different parts of the world right now, where previously had sort of multiple platforms doing that, so that would be a big productivity win. But that platform will also be able to sort of serve some of those disposable innovations that may take us at least towards the pVAD space.

And just some quick follow-up, if I may. Just related to Abiomed and Impella, Clearly, over the last few years, company has made a lot of noise around its indwelling pumps. But it seems to me the -- obviously, there have been some -- it seems to me that the competitive environment has slightly shifted back to IABP more generally. Is that a fair comment, if you could speak to that?

Yes. I think that's a fair comment without giving too much details on how we see sort of Abiomed.

We have time for 2 more questions, and then we are -- have been continuing the half hour Q&A session. So 2 more questions or 2 more quarters, please, operator?

The next question comes from the line of Scott Bardo from Berenberg.

Just really a point of clarification from Lars, please. Because as I look to your divisional targets, and weight those according to the growth trajectory that you've just given. That implies a group margin less than 20% by 2025, assuming corporate costs remained similar. So I just wonder if you can clarify that there seems to be a little bit of a disconnect with the divisional targets and the overriding group target.

Yes. Thank you. No, I think there is not. So I think we're happy to share and sit with you and talk a little bit on that more in detail. But when we look at the growth and the movement we see in productivity and moving into the more higher growth areas. This is where we end up on this profitability level when it comes to the EBITDA level, where we say that we will come above 21% at the end of the period here. So we feel, as I said, and we have said today, we feel pretty confident about that for sure.

And actually, that was the last question. I just heard that in my -- from the control team here. So -- and we will have plenty of time, many years talking about the plans that we have been presenting here today. So we are looking forward to that. So a big thank you to Mattias, Lars and the rest of the team, brilliant. And most important, of course, you watching this. Thank you for taking the time, and we really look forward to discuss this more in detail going forward. Thank you for today.