Laboratorio Reig Jofre, S.A. (RJF) Earnings Call Transcript & Summary

Thank you very much to everybody for coming today. We have a lot of people with us and the presentation, I think is worth listening to. Reig Jofre is one of the companies right now, which is creating a lot of interest. And I can see a lot of analysts in the room, and that's what it's all about today to talk about the company with the analysts. I'd also like to thank the stock market. This is perhaps the most appropriate place for talking with and about companies. And of course, thank you to the team from Reig Jofre led by the CEO, Ignasi Biosca. We also have Laura Martí, the CFO, Chief Financial Officer; and Inma Santa-Pau, the Director of Communication and Investor Relations. We would like to say thank you again to the company. It's been many years now. And the CEO, we were actually just talking about how many years we have been presenting the company's results. I think it's 8 now after it was launched as Reig in 2015. This is a sign of trust and analysts appreciate this, particularly because a presentation of results is very relevant, both for companies and for analysts, obviously. This is something essential to good practices in the markets. And I think that Reig is an example of good practices in their contact with analysts. And we have to say that their presentations are very comprehensive and offer great quality as we will see. And one last comment that I would like to make is that well, the company is of great interest. It awakens great interest. You offer value to the market, which combined sectorial elements, social elements, which are important right now. And for this reason, I think these are really appreciated by the financial community and the share price reflects this. Without any further ado, I would just summarize how things are going to work. We are going to hear from Inma Santa-Pau, first of all; after that then Ignasi will take the floor, Ignasi Biosca, and he will talk in general terms about the company over the year; after that, we will hear from Laura, who's going to tell us about the figures, the numbers. And then we'll come back to CEO in order for him to give a summary of future prospects for the next year. Okay. I think Inma is going to coordinate the questions. These may be questions from in the room or online. Ignasi, it's a pleasure as always to be here. Here we are again. And thank you very much for your commitment with the analysts.

Thank you, Javier. It's a pleasure having shared all of these years with you. Thank you. It's a pleasure to welcome you to the presentation of results for the year 2023 for the company, the pharmaceutical company, Reig Jofre. We are pleased to see you here in the room this year. We are broadcasting live via webcast in English and in Spanish. And this year, we are also on LinkedIn and the webs of the Spanish Analyst Institute and [indiscernible] So welcome to the people who are following us online. As Javier said, the presentation will be given by Ignasi Biosca and Laura Martí, the CEO and the Financial Director, CFO. It will take about an hour. And after the presentation, we will answer questions that are asked in the room and questions sent via streaming. If we don't have time to answer all of the questions online, we will answer them afterwards via e-mail. So I give the floor to Ignasi Biosca, the CEO.

Thank you very much, Inma. Thank you, Javier. And thanks to the Spanish Analysts Institute for their support in organizing these events. To present the results of 2023 for the Laboratory Reig Jofre. Well, last year, we said that at the end of 2022, it had been the best year in the history of Reig. But this year, it's actually been better. And this is basically because we have followed our plan and done things well. Reig has continued to work during 2023. It's continued to work to strengthen the social aspect and to make available to the society in which we live, solutions with a scientific basis because this is our ultimate objective, but also solutions which are essential when it comes to improving the health of everybody with international worldwide visibility. What characterizes us as a company in Reig Jofre? Well, we can talk about 95 years of history. The fact that since 2015, the company has been listed on the Spanish Stock Exchange. And we have majority shareholding of the family. We have a mix between the family aspect and the professional listed company. We have a diversified product portfolio, and we'll hear all about them. We are characterized by a mix between the products, 85%, which are developed by ourselves and 15% of our revenue comes from services provided by third parties in development and in manufacturing. We are characterized by this kind of production. And I always like to talk about our technological production, which is specialist with entry barriers. And that's the DNA. We're talking about clean European sustainable technology and this is harder and harder to defend sometimes above all in the political spheres. We are characterized by 1,323 people employed by Reig Jofre, all of their knowledge and experience, their enthusiasm and commitment, and we are characterized by our long track record. Spain is one of the many countries in the international scope of Reig Jofre. We're very happy with the end of 2023 with results. It's what we promised. It's not been easy. And above all, we are happy because we have seen growth in all of the business areas. We've seen growth in all of the countries within the perimeter of Reig Jofre. Last year, we were happy because we had exceeded EUR 250 million in sales. But this year, 2023, we have achieved EUR 316 million. We've beat the barrier of EUR 300 million. We've overcome the limit of EUR 30 million in EBITDA. We've actually reached EUR 35 million this past year. The general increase in costs, in energy and raw materials has been important, and we have had to absorb that growth in costs. We have had a year in which we reduced financial debt to EBITDA ratio. From last year, it was approximately 2x. And now this year -- this past year, it has achieved 1.6x financial debt -- net financial debt to EBITDA. So we're very comfortable with that. We have approximately 5% of our revenue in R&D. And we invest mainly in Spain. And we still have an investment policy in CapEx, which over the last 5 years has been over EUR 100 million, approximately EUR 115 million, and that's what characterizes us and makes us unique amongst pharmaceutical companies, which are listed in Spain. Today, we'd like to talk about 2023 on the one hand, and we'd also like to talk about why we think that 2024 will continue with this growth despite the fact that it's a complicated year and why we think that we are well positioned in strategic terms to face 2024 and the following 5 or even 10 years talking about the profitability and the growth of Reig Jofre in the medium term. If you allow me to talk about our history without going into too much detail, we could say that 95 years, well, this backs us up. And I think we can look forward for the future project and some of the characteristics would be that we could highlight -- in 1978, Reig was already investing in freeze-dried and injectable products with a trend that has been recognized by the market, they recognize and acknowledge our understanding of the aseptic manufacturing of injectable products and the use of lyophilization. Back in the 1970s, we were already starting in this business. In the year 2000, we invested in antibiotics with the acquisition of the Toledo plant, the former plant, which belonged to GSK. In 2009, we took our first international step. Until then, it had been international in terms of exports. And in 2009, we acquired a business in Sweden. This was by a plan. And we began to have international teams within the structure of Reig with reporting in English and development to be able to work and operate in different markets, then the U.K. And then in 2015, we had a merger with what was formally called Natraceutical. This took us to the French and Belgian markets as well as the Portuguese market. And it took us into consumer products and food supplements. And also indirectly, we were -- went on to the Stock Exchange and the company had been 100% family-owned and this was when we were opened up to shareholders, and you gained the possibility of joining us in this project. In 2019, we acquired, well, it was the last big movement in this regard. We moved into osteoarticular projects. And in 2019, we began to invest in an industrial way, looking towards state-of-the-art technologies, injectables and in Toledo and antibiotics, that was in 2018, 2019. And then with the pandemic, we found that we had done our homework, and we had a plant which was ready in Spain with high capacity, high productivity and high quality in order to produce injectables. And as you know, during the pandemic, everybody focused on the vaccines and vaccines were precisely this kind of product. And our plant became visible in Europe and in the world. In 2020, during the COVID pandemic, we focused on essential products. In Europe, we had a lack of masks and protective equipment and there was a great need for all of these materials, but there was no lack of medicines because there were companies such as Reig Jofre and others that have the capacity to produce within Spain, within Europe, we could produce these essential medicines for people in the hospitals and in the critical care units. In 2021, we announced the signing of an agreement. The signing of the agreement with J&J for production of their Janssen vaccine in Europe. During the pandemic, at the start, it wasn't clear, which were going to be the winning vaccines: mRNA, Janssen, AstraZeneca. We chose the J&J one in the end and made ourselves available to them in order to be able to produce the vaccines that they needed. And after signing the agreement with Johnson & Johnson in 2022 for the production of vaccines, in 2023, we were acknowledged by the European Commission with what we call EU FAB. This is an agreement by which Europe is reserving strategic capacity within the perimeter of the European Union for future emergency situations, as they call them, in order to be able to react very quickly to any possible threats. And this is something that's done by the European Commission and they have trusted in Reig to participate in that. If we talk about the 3 business units. At the end of '23, we can see that the 3 units grow and they're growing with double-digit figures in sales. The pharmaceutical technologies unit is where our -- well, we have our technologies for production and development and industrial scalability. It's grown by 11%. And we'll go into a little bit of detail later on. If we talk about specialty pharma care in dermatology and pain, osteoarticular pain, this has grown by 31%, and we'll see where that comes from later on. It's mainly osteoarticular. And then we have consumer health care products, which are focusing on consumer health, growing by 10%, above all in the French market and also outside of the European Union in China as well as 13% growth inside Spain. We'll go into the details a little bit later on about those different business units. But first of all, I would like to highlight the international situation, our international footprint in Reig Jofre. We currently work in 70 countries. We are present in 70 countries. So our products are available in all of them. In 8 markets, we have our own teams and staff of Reig Jofre with direct presence. And as we can see, if we look at the top on the right, we can see that we have the rest of the world outside of Europe. This represents 12% of the turnover. It's grown by 47% outside of Europe. This is basically in Asia. And we could highlight as well growth in Japan, particularly led by our pharmaceutical technologies. This allows us to reach the entire world in the broadest sense. Europe represents 43%. It doesn't include Spain. It represents 43% of turnover, has grown by 8%, particularly in Poland and some other markets, which we'll see later. We have considerable growth in Specialty Pharmacare. And lastly, I would highlight that Spain represents 45% of total turnover of Reig. It's still growing. The Spanish team is really pushing on with great strength because we have to maintain these levels of growth everywhere. I would like to highlight one particular thing. Regarding 2023, this is our relationship or our presence in the Japanese market, which is particularly complex and complicated not just in terms of regulations, but also in terms of relations with Japanese companies. In 2013, we began -- well, we had already begun to develop an anesthetic product in Spain. It had a short life and was fast-acting. We had developed it here in Spain. And we began to market this in different European countries. But we contacted a Japanese company that was looking for product in anesthetics, for critical care units in Japan, and they were looking for a product like the one that we had. And they were looking for a good partner in terms of quality and production in Japan and supply from Europe to the Japanese market. There were regulatory issues, it's psychotropic and it's a controlled substance. And so it really was well viewed by them to have a partnership with Reig Jofre. We worked with them for 3 years on this project. And in 2016, we launched the product, the first unit in the Japanese market. And 2 years later, we were talking about 5 million treatments using this anesthetic product. There were 5 million patients who had received that treatment for complicated operations. And the Japanese company, well, they invited us to a celebration and 7 or 8 people from the team went there. We were there in the Akasaka Palace. We can see the photograph on the left. It was a very big celebration, and we felt very satisfied that our Japanese partner, client distributor wanted to have a big celebration of this kind. In 2023, we reached 15 million treatments in the Japanese market. And so we invited the Japanese team to Barcelona, and we had a celebration. We had a very nice event and a dinner with representatives of Japan and we celebrated that with them. We're talking about long relationships that we create in Reig and these allow us to have a solid base for our business and to continue growing with these kinds of partners who accompany us along the way. If we look at Pharmatech, as I mentioned before, we have a growth of 11%. This represents 44% of the total turnover of Reig Jofre. There are different aspects to this. We have antibiotics, and we also have injectables using lyophilization. The injectables, to give you an idea, within the pharmaceutical world, these would be like the champions. We're talking about oral products absorbed through the stomach. And there are other methods. We can have topical administration, but we also have direct administration into the blood as used in the hospitals. And then we have all of the new treatments that are appearing, new therapies, with biological products, emerging and advanced therapies. And these are administered intravenously. So having a good mastery of this technology since the 1970s means that we find ourselves in a good position to accompany this future growth in the pharmaceutical industry with our own products, but of course, also offering services to start-ups or consolidated and innovating companies that want outsourced services of a specialist nature. If we talk about antibiotics we have in this business, well, we've seen growth in the antibiotics market, basically recovering the market, which -- well, due to the use of masks during COVID actually dropped, we saw a lower level of bacterial infections. But in 2023, this has gone up again. We're returning to pre-COVID levels. But what we're also seeing is that during COVID, we saw a drop, we saw up to a 30% drop in the use of antibiotics because of the use of masks. And other companies have closed plants. And as a result, we are very active in terms of volumes. If we look at sales, they are going up, margins are not high and raw material costs have gone up in this area. So it's complicated. The EU is realizing that these medicines are strategic. They understand how important it is to produce them in Europe. So they are beginning to take steps to defend them. And we hope that they will indeed be protected in terms of prices. In Spain, we're starting to see some steps as well, which will have a positive impact on us and will allow us to continue supplying the Spanish and European market with these kind of essential antibiotics. Investments in Reig in this field are looking for capacity and productivity, basically to reduce costs and to maximize the margin per unit. If we talk about injectables, this represents the other 48% in this sector. EUR 66 million in 2023 in injectables and lyophilized products. And we had the last year, that was prepandemic was 2019, and that was the last year when we implemented the new plant of Reig Jofre in Barcelona when it began functioning. And then during 2020-2021 that plant was still reserved for vaccines, such like -- and this year, 2023 has been the first year when we have had a full year of full use of this plant for injectables in Barcelona. Right now, well, at the end of 2023, we were talking about 67% capacity. And so we are still looking at the possibility for growth in this field. And we are completing capacity with a focus on products which offer greater added value and greater margin leaving behind the other projects that have a lower margin. If we talk about Pharmatech, it's basically present throughout the world, 22% of the business is services offered to third parties in development and production afterwards. And besides, what we can see is that we have a growth of 29% in 2023 in these services. So we expect these, well, services to attract -- later they are -- companies will be able to capture greater margins with this. The other 78% of turnover are products developed by our company itself. We work with partners internationally and 1/3 is distributed by our own network in the 7 markets where we are present ourselves. In 2023, we progressed with our commitment to the project that we have with a joint venture with Syna Therapeutics for biosimilars and their development. We are continuing to progress with biological products in their development as well as their manufacturer. We've also launched and opened during 2023, services for research companies in advanced therapies, and we are looking to offer very specific services in order to progress with companies which are working in research projects. We've also invested in consortium projects normally with financing at European level for R&D. So we are sowing seeds for the future of this division, which we believe will very positive. In 2023, we changed leadership in our teams in order to give it an extra push over the next 5, 10 years and adapt to the current situation. We have the EU FAB project, which is all about reserving strategic capacity led by the European Commission. HERA is the Health Emergency Preparedness and Response Authority. This is the European agency set up after the COVID pandemic in order to be able to face possible health emergencies. There was a tender with many companies involved. We've gone through the different phases, and we already announced in July 2023 on the 1st of July, we announced that we had reached an agreement for 4 years with a possible extension of a further 4 years. This was with HaDEA. And we have the Zendal Group working in Galicia and we have a consortium agreement so that the Zendal Group is committed to producing the raw material, the antigen, for possible vaccines and Reig Jofre is committed to doing the fill and finish at an industrial scale for that possible vaccine that could be needed in Europe in the event of a health emergency. The tender was open to the whole of Europe. And in the end, there is a poll in Ireland, also one in Belgium and one in Holland. And then in Spain, we have this consortium with, as I said, Reig Jofre. And in [ Girona ], there's a strategic location for the European Union. It's a great agreement for Reig Jofre in strategic terms and financial terms. From the strategic point of view, it gives us acknowledgment and visibility for clients and partners and even for the teams of Reig themselves. Our commitment is to reserve 30% of this new capacity in the new plant for what we call ever worn capacity. Ever worn capacity is reserved capacity, but it has to be used. In other words, we have to have it functioning. We have to have the teams ready and functioning but if there is an emergency situation, that capacity has to be available up to 30%, has to be available to meet any possible needs arising in the European Commission. The agreement covers associated preparation costs for teams, et cetera, but it also covers the opportunity cost for the reserved capacity calculated at an average profitability rate that we have in Reig Jofre. It's a great agreement in strategic terms. The second unit is specialty pharma care where we are talking about medical recommendation products. Above all, it grew by 31% in 2023, which is very healthy. And we have 39% growth in osteoarticular and above all, internationally in Europe -- in East Europe, sorry, and in Poland. We can see that the osteoarticular business since we acquired this in 2019, we've gone from EUR 16 million to EUR 67 million at the end of the year 2023. And therefore, we have considerable growth in osteoarticular sales. It was initially Spanish business, and we have made this international, and we hope it will continue to grow internationally. If we talk about dermatology, it grew around 12%. We saw a launch in 2022 and in 2023, it was a full year in dermatology for ungual treatments and therapy, we have Ciclotech, using this technology and working with San Diego, the Compostela University. I would highlight the growth that we have seen. If we look at the top, we have 88% of products developed by Reig Jofre. We have licensing and distribution agreements that have gone up by 160%, EUR 13 million. But we are growing a lot with licensing of these products that have been developed by the internal teams in Reig Jofre. And now that we have relations at an international level, we are managing position ourselves in the market and registering the products and achieving this important growth, in this case, 160%. Specialty Pharmacare, I would like to highlight the growth here of our 2 operations in Sweden and in Poland. We have always opened up markets led by one of the business units, the one that has the greatest potential in that market. And then once we have the operations set up in Sweden or in Poland, then we launch the other 2 business units in the markets, and we can make the most of advantages and synergies with our commercial structure that we have, so that we can reach these countries. This is the way that we grow internationally. And here, we have these 2 units, and we can use these synergies. In Sweden, we have 98 people. Growth in Sweden has been 21% in 2023 compared to 2022. So the market is growing. And above all, in dermatology, with growth in services offered to other companies. We have a project using gels, enteral gels, and for the production of creams, skin creams of a pharmaceutical nature for other companies beyond the commercial growth in Nordic countries because in addition to Sweden, we are also reaching Denmark and Finland and Norway and selling our products there. If we talk about Poland, we created the operation in 2021 during the pandemic. In 2023, it grew by 79% compared to 2022. And we have a team of 35 people, and we are introducing the other business units in addition to SPC, and I am very happy with Poland, and in fact, we want to use it as a model for growing in other markets, focusing in East Europe. Consumer Healthcare. The 1/3 of the divisions. This is for consumer products and parapharmacy. We saw a 10% growth in consumer healthcare. This market, which has become consolidated after the pandemic, after the pandemic, consumers, citizens, while society has realized that it's not just important to be able to cure people after an illness, but it's important to have a strong immune system and to be healthy. And they value natural products as an alternative to medicine. So we have consumers looking for natural products and who are concerned about looking after their health. The EU market is growing. It grew during the pandemic, but we've seen that after the pandemic, it continues to grow, and we are particularly present in the French market, where we have this focal point. Spain represents 25% of Consumer Healthcare. And in Spain -- well, in France, we work with Forté Pharma above all, and we sell -- or we sold EUR 60 million around the world last year in Forté Pharma. If we talk about OTC products, OT, sorry, and T -- disinfectant products, we've grown by 17% and growth during the pandemic was very high for this kind of product. If we talk about Forté Pharma, this brand in France, well, we have 131 people working in France. And a couple of months ago, we invited them all to Barcelona to create a stronger feeling of belonging. And we've renewed the leadership in France in 2023 with a generational takeover and Forté Pharma is the top brand in parapharmacy in France. It's the eighth when it comes to food supplements. And we can see in the chart, Forté Pharma grew from 2017, Reig ended in 2015, '16. And we can see the growth here, recurring growth, a CAGR of 15% per year over these past years. It's reached almost EUR 60 million compared to EUR 25 million in 2017. We are satisfied of how -- with how this is going. And in February, we've seen the French market and food supplements in general, continues to be very strong. So after looking at the different business units, we have the financial data, Laura Martí joined Reig Jofre, joined us this year in 2023 to strengthen the financial team, and she will talk about the financial figures.

Thank you, Ignasi. Good morning to everybody. If we start by taking a look at the year 2023 in figures, we wanted to highlight the wonderful behavior and results of the company, thanks to all of the things that Ignasi has mentioned. If we look at income, at the end of 2023, we had EUR 316 million. That's a growth of 17%. I would remind you that income has gone up in all of the business units with double-digit growth also in all of the geographical regions with international growth. And they have also grown in own products as well as CDMO products. So this is very positive growth in general in all areas of the company. If we talk about gross margin, we have EUR 182 million at the end of the year, which represents a 15% increase compared to the previous year. This gross margin is 58% of the sales, which is slightly lower than last year because, as Ignasi already mentioned, we have suffered due to inflation in the cost of raw materials, above all in antibiotics. This is a trend that we already began to see in 2022, and we have continued to see it in 2023. We can also see the remuneration to employees, which grew by 14% and well, as a result, we had EUR 35.1 million in EBITDA compared to EUR 30 million in the previous year. So the growth in EBITDA has been very good with 15%. Our profitability EBITDA to sales stands at 11%, which is similar to 2022. At the end of the year, if we look at the consolidated results, we have EUR 9.4 million, showing a growth of 16%. I would like to highlight a reduction that we have seen in financial expenses at the end of 2023 due to improvements in the exchange rate and management of the hedging of exchange rates. So we have this consolidated result, profit of EUR 9.4 million, a 16% increase. And in this figure, we have consolidated the JV with Syna Therapeutics with who we are codeveloping biosimilars. In 2023, this gave a result of EUR 2 million and we have consolidated 50%, which is EUR 1 million, which is in this result. If we move on to look at the balance sheet. If we start off looking at the assets. As we can see, we closed with EUR 198 million in fixed assets, a growth of [ 11% ] compared to the previous year due to D&A of our assets. We have working capital of EUR 69 million. This working capital is higher than last year, EUR 14 million higher and gives us a margin of 21.6% over sales, which is slightly higher than the ratio last year. And this is mainly due to the increase in stocks in order to allow sales growth. Nonetheless, I would like to highlight the good cash generation in the company because we've needed more working capital for our sales and for our business activities, but we have generated EUR 19 million in operating cash in 2023. We're talking about EUR 3 million more than in 2022. So this is very positive. Of those EUR 19 million in operating cash that we have generated, EUR 7 million were used for paying off debt and the rest for investments in assets. If we look at these investments, we have EUR 12.5 million, EUR 10.6 million CapEx -- industrial CapEx. This is very similar to the levels in the previous year and are in line with the strategic investment plan that we began in 2019 with great growth. These investments have mainly been for improving capacity and productivity in our plants. I would highlight, for example, that we began in 2023, an investment in our plant in Toledo, investing in a new line which produces 4x more output than the line that is currently being used. So we are going to increase profitability above all in an area such as antibiotics, where we are suffering an increase in raw material costs. Liabilities. We have EUR 204 million in equity. Obviously, this has gone up due to the consolidated results from previous years. And financial debt of EUR 56 million, net financial debt, which is lower than the year 2022, EUR 7 million lower. As you know, in 2023, we have continued to pay back debt on the main investments made in 2019. Here, we're talking about the injectables plant in Barcelona and the purchase of the osteoarticular business. So with this evolution and developments in CapEx, which have been lower than those of 2019, the level of financial debt, both gross and net, has been reduced. And we have a very healthy result. We have a debt-to-EBITDA ratio of 1.6x, which is very healthy and improves upon the 2x, which is what we had in 2022. Referring to gross debt, EUR 61 million. This has been reduced compared to 2022. I would just remind you that we have financial debt, which is mostly at fixed rate, and the debt with credit institutions and public bodies stands at EUR 51 million, EUR 8 million of which are with public bodies and the rest are with credit institutions. And they mature -- most of them mature in 2025 because they are investments from 2019 with a duration of 5 to 7 years. So now we're reaching the end of those debts. To finish off, we would just like to look at the financial figures for the last 10 years. Ignasi, at the start of the presentation, talked a little bit about the history of Reig and the strategic milestones of the company. Here, we wanted to reflect these results in financial figures. These are very good, quite impressive figures. If we start off looking at sales. Over the last 10 years, we have increased sales by EUR 200 million. Here, we can see EUR 213 million in 2018 and up to EUR 316 million. This is an increase of the CAGR of 10%. And I wanted to highlight also the growth during the years 2018 to 2023. Because if you remember, in 2019, that was when we had the last capital issue. And since that, our growth has been 12% of an annual rate. If we compare this with the chart below, looking at EBITDA, we can see that we have gone from EUR 13 million in 2013 to EUR 35 million now at the end of 2023 with a growth of 10% over those 10 years. And over the last few years when we've had investments and the -- we've seen 16% growth. So we talk about the annual growth rate. We're talking about an increase in the profitability of our sales. If we look at the charts in the center, you know that we invest approximately 5% of our income in R&D. Here, you can see the evolution of spending and investments in R&D during the recent years. You can see that they continue in line with growth in sales, and we had EUR 16 million at the end of 2023. Underneath that, we can see remaining investments, which is not R&D. And you can see an important figure in 2019. And that spike corresponded to EUR 20 million for injectables plant in Barcelona and EUR 50 million for the purchase of osteoarticular, which, as we saw earlier, has seen significant growth over recent years since its purchase in 2019. To finish off, if we talk about net financial debt, we already saw that it's falling. And over the last 3 years, that's the case. If we talk about net financial debt EBITDA, we have EUR 1.6 million in 2023. As you can see, this is something that we hadn't seen since 2018. And now we are at the same position as we were before we made the big investments in 2019. And with that, I'll give the floor back to Ignasi.

Thank you, Laura. I would just like to say one thing about sustainability. If we talk about environment, social and governance, I would just like to highlight 2023 as a year during which we integrated the strategy and the operations for sustainability, both in the Board and in the corresponding committee to such a degree, we have given greater visibility to sustainability in all of its different aspects. We've done this internally because that's what we feel will create the commitment that we want for all of the 1,300 people in the team in Reig. In terms of the social aspects, if we talk about gender equality in Reig, 49% of the staff are women. I would highlight also Isabel Reig, our Chairwoman is, of course, a woman. And I would highlight our commitment with industrial doctorates, these are people who are doing their PhD in the company. They bring a mixture of deep scientific knowledge but also a deep understanding of the industrial world. This is something that we understand to be very positive for the company. And in this case, I would highlight that in Catalonia, we have a high level of industrial doctorates. Reig Jofre is the company, which has the second highest number of industrial doctorates after [indiscernible]. We have indefinite contracts which has increased 7%. And we have projects for the use of electricity, renewal electricity. Here we can see the glass facade of one of our buildings in Barcelona. These are solar panels, which are integrated. It gives shade inside the building but also generates electricity, which is very sustainable. So we are investing in our own installations for sustainability. If we look to the future then, just a few indications. I would like to explain why we understand that current trends will continue and why we are in a good position for coming years. Some time ago, we said that after 2015, Reig implemented an investment plan with investment of EUR 150 million in products, acquisitions and industrial installations between 2015 and 2019. And then from 2020 onwards, there was a 5-year period for increasing profitability or -- Reig is one of the companies which has been strengthened after the pandemic, both in terms of experience and knowledge and reputation and size, I would say. So right now, in strategic terms, we are looking forward after 2 years during which we have reduced our borrowing and controlled investments. Right now, in 2024, we feel that we will be able to take up investments again. These will be well chosen investments, but they will help us to increase productivity. But above all, they will help us to expand our business. Reig has always and is still looking to possible nonorganic opportunities. Every now and again, according to our experience, this can be a good experience. So we will keep our eyes open for any nonorganic growth opportunities in the future. If we look at 2024 in specific terms, we like to think that the operating business, the organic business should grow. We will continue to focus on gross margin and in the longer term to increase our added value products. Right now, we are in a transitional period moving towards greater added value products and services. If we talk about antibiotics, we expect 2024 to give us continued growth in sales. And we hope to achieve some acknowledgment by European and Spanish authorities when it comes to the prices, particularly for highly valuable product families. Our installations right now are fully operative. We have state-of-the-art plants. And this means that we can gain access to products with greater added value and better margins. If we talk about dermatology, we will continue to grow continuing on in ungual treatments for nails, and in 2024, we're going to try to expand from national to international. And in osteoarticular, we expect to continue growing internationally, opening up the markets above all in East Europe. But despite the fact that there is some risk in terms of price pressures, we do hope to improve and developing the generics market as well. If we talk about consumer products, consumer health care, the market continues to grow in Europe. So our challenge for 2024 is to grow more than the market. We don't want to follow the market, we want to grow more than the market. And with regards to the capacity reserve agreement for the European Commission, before I mentioned that it was announced on the 1st of July, 2023. So it's already been in place for 6 months. And in 2024, we will have 12 months with that agreement in place. Right now, we are implementing adaptations and specific measures to prepare ourselves for any possible health emergencies. And we have the income on an annual basis. Besides prices, we can talk about budgetary pressure in Europe, but above all, in Spain, there is a possibility of price pressure, but we also have inflation and we're talking about medicines, which -- well, they don't have any mechanisms for increasing prices to reflect inflation. So we have to offset inflation in productivity and in growth. And as a result, we have risks related to raw materials, the Asian market, transport. Energy is more stable right now. But above all, we have a considerable impact in 2024, which is related to industrial chemistry and the pharmaceutical industry is integrated within that and is obliged to reflect adjustments in CPI, above all, following a period of significant inflation and adjustments for the year 2024, which we are going to have to absorb through growth and productivity. Lastly, I would like to look beyond 2024 and to explain why we are in a good position and why we feel that we will be able to continue taking our health solutions to more people all around the world. We continue to focus on this. We are focusing on internationalization and growth. We are open to international growth. And in the past, we have taken on board, distributors in other countries so we don't start from scratch. We have created joint ventures with distributors. And once we begin operations, we extend it to our other business units in the market in question and in that way, we have greater margins and growth. As I said before, we will be focusing on East Europe, which is an area where we understand that we can continue growing. On the other hand, we will also focus on profitable growth. So far, we have invested in teams, installations, know-how at a certain level. And we understand that we will be able to move towards more profitable products and markets. We are going to be working to gain this increased profitability. We want to work on vertical integration. In Reig Jofre, we have offered fill and finish as a pharmaceutical service. We haven't been involved in the chemical -- on the chemical side. Right now, the world is biological, and we're talking about gene therapies, RNAs and Reig wants to start with small projects that will give us a future in these advanced therapies. We want to serve innovative companies working on these emerging and advanced therapies. We also want to have vertical integration in biological products in order to cover the chain from production, from raw material biological product right through to the finished product. And we understand that this will allow us to reach products and projects with greater profitability and greater margins. We're going to invest in productivity and capacity and reduce debt, increasing our cash generation with a good international position, good acknowledgment amongst our international and strategic partners. We understand that Reig Jofre is in a good position. so that over the next few years, we will be able to continue with the growth that we have seen so far. And that's all. Thank you very much for your attention. And now we will answer any questions that you may have.

Now we will answer any of the questions you may have in the room. Any questions?

[indiscernible] I just have some questions for Ignasi Biosca. Congratulations for those results and for this presentation. With regards essential medicines, you are in a privileged position with your 2 plants in Barcelona fully functioning. And you've had lots of MEPs visiting recently, also with the plant in Toledo and with a European agreement. Recently, in Europe, we have seen documents discussing what will be considered essential medicines, whether they will be generics or not? So if we refer to a Reig Jofre as a company that's going to be there, whatever happens, I would like to ask about the regulatory issue in Europe and in Spain, particularly. And how Reig Jofre will be able to make the most of the situation with surprising things such as what we've seen yesterday with regards to advanced therapies. I expected to see Reig Jofre in that recently announced agreement. And perhaps -- well, how could we analyze this? If we look at European Spanish regulations with these leaps, such as the one that we observed yesterday?

Thank you very much. With regards these subjects, the initial issue of essential products. In Europe, they talk about critical medicines. And first of all, we could talk about the interest that we're beginning to see in the political world. And yes, we had visit from an MEP, a visit from Spanish MP, taking interest in these matters. They are wanting to understand all of this better. When the European Commission identifies critical medicines, they are talking about critical medicines for European citizens. So Europe has to find a way to ensure strategic independence. We mustn't have to depend on third countries, third parties. Until now, we've seen just in time in exchange for a reduction in prices, well, we could get the medicine from anywhere. But I think the European Union is saying, "Hey, these are critical medicines. They are important. It's interesting for us to produce them here." And perhaps -- we shouldn't just have this just in case price saving sense, but perhaps we should pay more in order to have -- sorry [the speaker says sorry] we should go from just in time to just in case. We perhaps should make sure that the price covers that additional margin in order to make sure that we have guaranteed supply in Europe. This requires changes in regulations in Spain, in Europe with all of different mechanisms. But this can do a lot of harm, a lot of essential medicines and antibiotics. In January, February, March, in 2023, we saw that there was a lack of pediatric antibiotics in the Spanish market for the Spanish children. In the end, these are products that have prices in 2020 well below what we would consider the minimum price, which we would say is EUR 2. So okay, they're critical. They're essential. They're necessary. But at the same time, we have a price, which is the same price as we had in 2000. But in 2025, '26, '27, this will be a situation which will not be possible to maintain. So we need to think about what we want to do. And with regards to the other issue, the acknowledgment, recognition of the European Union Commission with regard to vaccines. Well, the commission says, I'm willing to pay, so that if there's a health emergency, we will have strategic independence for the European citizens. If we talk about regulations in Europe, I'm a great defender of innovation in Europe. We've been talking about changes in regulation. And there is the risk that we may harm in researching start-ups for projects. And perhaps if we're talking about companies such as ours that can work at industrial levels, there is also the patent process. Companies need to recover their investments. If we put it at risk, this [ chain ], then we are putting innovation at risk in Europe because we've got China, the United States, where they're really pushing forward. So it's risky if we don't look after this chain. Obviously, the European Commission has certain needs and needs to offer health solutions to society as a whole. They have to find a balance which will allow them to ensure innovation and also health services to the European society.

Thank you. There was another question here in the second row.

Congratulations for those good results. Three questions. First of all, regarding antibiotics. You've said that the prices are stable and your -- well, saying there's pressure for an increase in basic necessity prices and perhaps that could also be for antibiotics. I understand the raw material pressure. I don't know whether that's lessening up or now that there are fewer competitors, you said that some have lost capacity, perhaps now you have more pricing power because you have a more -- or an increased market share, or do you have to achieve everything through increased efficiencies? And secondly, with regards freeze-dried and injectables, should we replace the CDMO to replace the own products or can both grow? Can they grow in parallel? Could you remind us of your capacity, how much is idle? And help us to understand how the business might develop from now on? And the last question about capital allocation. Now it's a good time for reaping the rewards of past investments. I'd like to know about your priorities and improved efficiency in antibiotics, maybe more capacity in injectables. Will you be looking to buy product portfolios for specialty or consumer? Within this, what would capital allocation be for shareholders in terms of dividends, et cetera?

Thanks, [ Alberto ]. If we talk about antibiotics, this is where we have the greatest tension when it comes to margins. And capacity or ability for negotiating improvements exists, but it's not very realistic because upstream, the providers, well, many processes have gone to China. And it's still very highly concentrated. It's not easy to negotiate. So I think that if we have just in time, just in case, it's dangerous because to get this extra cent, we concentrate things upstream, and we don't realize that we have just very few players concentrated mainly in China and some in India for these critical medicines. What I see is that in Europe and Spain, we need to recognize the value of these kinds of medicines. Antibiotics are a paradigm when we talk about critical medicine. With very low prices, they've been trivialized but they actually are hugely valuable to society. And in developing countries, in fact, the prices are very much higher than we have in Continental Europe. I'd like to think that we have to fight with productivity. We hope that we will also see changes in prices to accompany this. The bad thing with these products is that the margins are very tight. But when there are not enough antibiotics in Spain, we -- it's on the news and in the newspapers. If we think of pediatric products last year, pediatric antibiotics, penicillin, there was a price increase, which was necessary in Spain, just to be able to ensure their availability in the hospitals. If we talk about freeze-dried and injectables. Yes, CDMO will replace own products. So if you ask that question, I say the answer is no. In the market, what we're seeing is that as we have biologicals, as they move towards emerging therapies, there will be a need for injectable products in the world. We identify also the whole issue of products for diabetic people and for weight control. And we're seeing considerable growth and this is leading to growth in injectables. So we do expect that there will be a need and we will need capacity. Above all, also, we will need know-how about how to formulate and stabilize these products. This is not something which is easy because they are volatile, so stabilizing them in a vial or in a syringe in order for them to last for a couple of years in a hospital is very complicated. And in Reig Jofre, we have that knowledge. Not only can we manufacture, but we can also stabilize molecules. I expect to see that CDMO will go up, but I don't see any immigration from own products to CDMO. There'll be balanced, although CDMO will increase its weight. If you talk about capital allocation, obviously, that's a million dollar question, of course. There are certain issues that give short-term return regarding efficiencies, productivity and antibiotics, which I think are necessary, and they will give fast returns, but not in the medium to long term. The capacity of injectables. Well, we have installed 2 big freeze dryers, and we have space for a third machine. This is something that we will be able to do and this means that we will be up to date with regulatory requirements. On the one hand, it is expensive, but it also creates entry barriers against competitors and it means that you can have less competitors. With these kind of investments, we will be looking for strategic product purchase possibilities or possible commercial operations, which could contribute to Reig. And of course, we also have the possibility of remuneration for shareholders. We have script dividends, allowing the shareholder to choose whether to receive the remuneration or to reinvest. But we are thinking in the long term. As Reig has more cash flow and more profitability, we do anticipate possible remuneration with a cash dividend for the shareholder. If we talk about the share buyback. Right now, it's very tempting because the share is very cheap. I think we have volumes comparable to 2018 when the company was half what it is now and did not have such a good strategic position. Now is a good moment for buying shares. But in the end, we have to balance capital allocation. And for the moment, we're not going to be moving in that direction.

Any other questions?

I'm [indiscernible]. I'd like to ask a question. If we talk about -- above all the pharma sector market, it depends on innovation and R&D. If we talk about projects, we've had about some in collaboration with the university, but could you talk about where you will be focusing your new developments? And also, if you could indicate if you talk about your increase in revenue and turnover, how much comes from new developments? And what will you expect in the future?

Thank you, [ Jose Ramon ]. Reig Jofre is a pharmaceutical company sometimes does not compare well with others in the sector. It focuses on specific products and product franchises of Reig has -- well, it's a company that focuses on technology, which is half of the business and the other half is composed of 30%, 20% in the other 2 units. Besides consumer, we have -- well, innovation is a quarter. And quarter of the business is specialty pharma care, where innovation is stronger. We continue to invest in internal development of products that can be solutions, which may be essential, can be sold internationally, and we could grow here in terms of dermatology and osteoarticular, where we are well positioned at an international level. We have products and projects which we are developing internally. And what's true is that the development of new drugs and radical innovation are investments that are sometimes distant from companies. If we're talking about the development of new drugs, this is becoming something which is just done by the very big companies. So we need to find our area for growth in incremental innovation, which is using, maybe existing molecules, looking for innovation for patients, for the system, for doctors, which will give us a competitive edge when it comes to introducing these products into the market. So we're looking for more incremental innovation compared to radical innovation. And the other main area for investment in innovation is something that's not always so evident, but it's technologies and processes. We want to offer services, as I said before, in advanced therapies or biological products. To do that, we have to have know-how and knowledge. So we have internal development projects which will allow us, on the one hand, to push for a product or a project, but also to develop our internal knowledge and know-how. But this isn't a specific pipeline of a new product for a particular specific kind of cancer. But rather, what we're looking for are projects that will allow us to offer an advantage or a solution to the market, for example, with biosimilars; for example, the development of a biosimilar, which is a process using analytical techniques, which is complex. It's a considerable investment with considerable potential returns. But at the same time, this allows Reig Jofre to increase its knowledge. And so in the long term, it will be able to participate in CDMO with other companies that need that knowledge. So our investment in R&D is around 5% of total turnover. And we have osteoarticular, derma incremental innovation projects and food supplements with sufficient credibility and evidence in order for us to take them to the market. And we have this part of investment in innovation, in technological processes and development processes to go from chemistry to biology and to emerging therapies in own solutions and owned therapies as well as growing in services to third parties.

Thank you. Any other questions? We do not have a lot of time, but we have one question that we received online. And we've heard a lot of questions about the European project with the European Commission. So what is the repercussion of EU FAB for the company? Could it have any impact on other projects for the plant? And how is that capacity remunerated?

Basically, as I explained earlier, the value of the project will be strategic and financial. Strategically speaking, I think it's clear. It's the stamp of the European Commission. This is the location in Europe. It could have gone to Sweden, Poland, Italy, Germany, but it came to Spain. I imagine there's a mix of knowledge and cost and price, which matched up within the context of the European Union. But that acknowledgment is something that we have and our clients are pleased and satisfied that we are a partner together with [indiscernible], it's very important. If we talk about the agreement itself, in this agreement, we have to be prepared to react very quickly in a matter of months to make this capacity available. We have reserved 30%. If it was 100%, that would have an impact on us. But if it's 30%, well, we know that we have 70% capacity, which is used for our criteria, but the other 30% for which we know that in a matter of months, if there was a health emergency in Europe, we would have to open up that capacity. And it's a maximum capacity. If we take into account the capacity of Reig and everything we have right now, I don't think that this would really limit us. And they are paying us to reserve that capacity. They would -- they pay the cost of opportunity. So it's a good deal. We've got 30% of capacity with a contract. And if it was activated, it would trigger a new supply contract with its own terms and conditions. This is just a strategic capacity reservation contract for the European Commission, if there was an emergency situation and if they needed production capacity in Europe. If it wasn't necessary, it wouldn't even be activated. But what the European Union wants is to avoid the situation we saw at the start of COVID, where we had products being produced in other parts of the world outside of the European Union, and we experienced this. If you remember, during COVID, there were issues with vaccines produced in the U.K. That was just coincided with Brexit, that January, and there were some things that couldn't leave the U.K. or the U.S., India cut off the supply -- sorry, cut off -- closed their borders. So if we have a supply chain, which flows, there's no problem, but if there were problems in the arrival of products from other parts of the world, then Europe has its own structure set up. And this is from a financial point of view, its capacity, which is sold, it's not just reserved.

That's it then. Thank you very much. I would just like to say that we have had maximum of 120 people connected during the session and a recurrent figure of 97 people attending. Thank you very much, and we hope to see you again next year. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]