Qiagen N.V. (QGEN) Earnings Call Transcript & Summary

Good evening -- Good afternoon, everyone. Welcome to Bank of America's Global Healthcare Conference. I'm Derik De Bruin, the Senior Life Sciences and Diagnostic Tools Analyst. Our next company today is Qiagen. From Qiagen, we have CFO, Roland Sackers; and we have Head of IR, John Gilardi. Gentlemen, thank you for being here.

Thanks.

I guess to start, what -- sort of like, any opening remarks? It's like -- everybody is obviously worried about demand, say, the businesses, just like any -- you want to sort of like summarize what you saw coming out the second quarter? There was a lot fears in China, there's a lot of fears of stuff like this. Do you want to do some open remarks, so we can start the inquisition?

Yes. Let me kill it off. And yes, probably not too much scares so far on these. It's quite obvious that we had a good start into the year, and also the second quarter actually went better than we guided for. And at the end of the day, it was driven by both by -- on the one hand side, a very good start into the year on our COVID business, but it's probably more important that the non-COVID business continued with a double-digit growth rate. And we haven't seen any sign of slowdown. I do think our strategy on focusing since 2019, around 5 growth drivers is still working out very well also in the second quarter, by the 10% non-COVID growth rate. If you have in mind that we actually in the second quarter last year, had a $20 million one-time license revenue. Adjusting for that is actually a 14% growth rate. I think that is something that speak for itself. We also do believe that, that double-digit growth rate continues in the second half of the year. We haven't seen any sign of slowdown here. I would say that overall, there's actually a good trend in -- within diagnostics that on the one hand side, clearly, a lot of things which were either delayed or pushed back are still getting done, but there's still an ongoing trend also for normalization. We see that, for example, in our latent TB franchise, in TB testing, which has now, I don't know, I think, the ninth quarter of double-digit growth rate, that there is now an ongoing conversion from the traditional skin test, which is 120 years old. It's literally 120-year-old and still being 60% of the market share into the more or less chemical-based testing. And that these kind of trends are continuing because at the end of the day, molecular-based test becomes a new standard. Same is true also in other areas, we clearly have seen that the overall COVID situation was very helpful for us, and clearly, also for other company placing instruments. I think the benefit we had is that we actually literally, before COVID started in 2019, changed the focus of QIAGEN. We stopped the development at that point in time which was developing our own sequencing machine, rather focus on 3 PCR platforms. Mid-throughput platform, one for decentralized solutions and one digital PCR platform. And all 3 got clearly a significant tailwind with COVID, well knowing that, of course, these machines do a much broader menu. So we're seeing now that our customers are actually trying to do both more or less increasing their volume away from COVID, and again, with trying to utilize the platforms to a larger extent. But also having now a much more educated, I would say, population, much more sensitive to prevention and to diagnostic in general, also increasing demand in general.

So a lot to unpack there, but let's start with the first question that we keep getting a lot. A lot of people bought instruments, a lot of labs bought instruments. And I think there's this general fear of too much PCR capacity, too much stuff out there. And then when the contracts people signed rollover, there's going to be this massive either turn in or come out with it. So like how do you sort of see -- is there -- I guess, is there much -- is there too much diagnostic equipment out there post-COVID, and there could be a fallow period for a couple of years?

I would say, so far, we haven't noticed that. Again, you clearly see that still, instrumentation level is actually quite healthy. But I would say also QIAGEN is in a specific situation because the benefit we're having is with the 3 machines adjustment name. So again, the QIAcuity digital PCR platform, QIAstat decentralized solution for our testing. We do, for example, in emergency rooms or so, [indiscernible] onboarding so just was a mid-throughput machine. There is no old system because they all got launched in '19. So if you think on our customer base, this -- they all bought equipment over, I don't know, the last 5, 10, 15 years. If they decide to take out equipment, it will not be a QIAGEN machine most likely. It will be something that you bought 5 or 10 years ago. So there might be some reallocation in terms of consumers to different instruments, I don't think it will be necessarily away from QIAGEN solution because these machines are, hopefully state of the art, they're quite new and have also the menu you need.

And when you look at like menu development on the QIAstat and on the NeuMoDx, it's like, what are some of the upcoming product launches?

I think we had a big step for us, was actually a couple of months ago when we launched the Gastro panel on a QIAstat. So that in Europe, we have now respiratory gastro, meningitis, there's more or less 3 panels you need. They're probably doing, I don't know, 80%, 90% of the overall market. That's key. In U.S., we are -- we filed Gastro with FDA. We're still waiting for the approval. We all know that the FDA right now probably takes a bit more time than usual, so hopefully, it will be sometime in the first half of next year. Then we also there have a full menu that will probably be another opportunity for us because right now, of course, there's a number of tenders where we can't participate. Of course they ask you for 3 of them. So I do think that, that is another positive news for us once we get that approved. On NeuMoDx, the mid- to high-throughput solution, the situation is slightly different. Here, we have a complete menu as of Europe. Since June, we have now, we have now [15, 16 ] units, panels, which more or less all what you need. In the U.S., we are rather limited. We have, I think, 4 or 5 panels, so more to launch here. It's probably something that goes into -- well into the year '24. Nevertheless, U.S. is also a nice market opportunity for us because our machine has one feature which customers love a lot, which that they can run LDTs, Laboratory Developed Test on it, and it's the machine in a market where you actually can run both, approved test plus your own test on it. And most people forget that LDTs is probably still somewhere between 40%, 50% of the total market. So there's a significant need for actually labs to automate that. And the NeuMoDx machine has significant advantages. So for example, most peers in that volume class have a turnaround time for 4 hours, we do it in 1 hour. We have continuous layer loading. We have random access, so it's clearly a state of solid solution.

Right. So the -- I think the only platform in the U.S. that might do that would be the BD platform, right, that sort of does some of that LDTs...

That was the system, but it comes nowhere near the capacity where we're offering versions that can do 98 or 288 tests in any 8-hour shift. And you're talking about a platform that's we're not able -- they're not able to compete at that role.

And on the syndromic panel testing with QIAstat, so what's changed in terms of number when the competitive landscape since Roche bought GenMark, right? And what's going on with BioFire in that sort of area? And then has there been any sort of like change in sort of like sentiment towards reimbursement? Because I know there was some pushback in the States pre-COVID on sort of like booking inpatient, outpatient for a syndromic panel. So does that change? Has the market gotten more accepting, and what's the competitive dynamic?

Let me take the first part, and John, you add on the second part, please. I think the competitive market, I don't think has really changed too much. Yes, there is more market entries, but I do think we clearly have one market leader. And I think QIAGEN is now probably a solid #2 in that market. We're placing on about, let's say, an average of 200 systems on a quarterly basis. I think it's actually quite stable. Clearly, again, COVID was helpful, but I think it's also important news to share that since in the first quarter, first time ever, we had more non-COVID revenues than COVID revenues in that particular class, and non-COVID is actually delivering, since a couple of quarters, a sequential growth in the double-digit area. So we see a normalization of that. Nevertheless, if again, that is -- we don't have an answer to that, but there's clearly a larger group of people that was expecting a bigger flu season. If that is going to happen, syndromic testing will be probably get another one because everybody wants to know is it the flu, is it COVID. And so again, for us it's important that we are prepared, that we are able to deliver on that. That's what we are aiming to. But of course, that might get spikes again in the mix.

When you look at what we're offering, we're offering NeuMoDx for clinical lab testing. This is more in a hospital environment. Then on the syndromic side, which is more of a point-of-care point of need test, we offer the QIAstat-Dx system. Again, you're testing a patient. The big 3 areas would be respiratory, gastrointestinal or meningitis situations where the doctor doesn't know what diagnosis is and needs information fast. They're going to get the results in 45 minutes to an hour. 2/3 of this market is in the hospital, so it's covered by DRG, for example, in the United States. So we're not having, in the industry, reimbursement discussions on that side. If you think about someone that comes into the hospital, especially an infant, they're having severe diarrhea, dehydration type issues, the doctor wants to know quickly what's causing the gastrointestinal issues and then be able to decide on treatment. You think about a meningitis scare, what can be done in terms of treatment? Or like Roland was mentioning, respiratory. You have somebody in an ICU or in a very serious condition, you want to know is it a viral, bacterial or fungal infection that's affecting the patient. You hear more of that coming with COVID these days. Just had a colleague where he was out for 2, 3 weeks. They thought he had COVID and you're like, well, he had COVID, but he also had a very severe bacterial infection that wasn't being picked up until they actually did a QIAstat-Dx test. So in that 1/3 of the market that's outpatient, that's an area where the industry is still trying to navigate with payers. Do you move towards these smaller panels that have 5, 6, 7 types of markers that could be unblinded for that test? We'll have to see how that develops. But again, the push here is into the clinical area for this testing into the hospital environment.

Well, I mean, the other issue is, I think, previously, they were trying to code stack all these panels and sort of like charging ridiculous amounts because they were doing 20 things. I mean, so there was a little bit of...

We can't control the customer.

Yes. So there was a little bit of not ethical behavior in terms of like how they're trying to do anything in the business. So just to sort of round out COVID, because I'm sure we're all sick of talking about it, what's embedded in the second half for your guide, and your initial thoughts on 2023? I mean, how much of a headwind would be for next year?

Just to remind you, I know, Derik, of course, that you know that we clearly decided end of last year that we take, I would say, a conservative view on what we're going to guide for COVID and was only included in our guide, but it's more or less very visible on hand. . So for this year, for example, when we just -- again, we increased now twice this year our guidance, and the last time increased our guidance. The assumption for COVID was around about $450 million in revenues. Have in mind that all of the $450 million, we had always stock on constant exchange rate. We had already $360 million within the first 6 months. You can see there's literally, I would say, a conservative assumption. Particular, if you have in mind, that's very specific to QIAGEN, that we had already in 2019. So pre-COVID, $150 million of COVID-related revenues because we're selling RNA sample preparation before COVID. And as we can't tell where customers are going to use it, that's where we just picked up product groups. So if you take that away, we have this year most likely, at least what is in our guidance, $300 million incremental COVID revenues. And as we all see, COVID is still around, might be more. Now looking now into next year, I think also year, to be very clear, we will continue with that kind of assumption in terms of -- and again, for just last word on 2022, we still believe, and again, no change here as well that non-COVID will be double digit for us this year as well, so also to the second part of the year. Now looking into '23, we will again taking a conservative view on COVID, which, again, we will see early January then how it goes. But most likely assumed drop compared to this year and probably a better starting point is also, again, looking on how we have given guidance for '22, then again, looking on the actual basis for this year. We continue, again, that the non-COVID business will be quite strong. If that now leads to a guidance which is high single or low double digit, we will tell. We clearly, again, want to keep some flexibility there as well. But overall, I would say that is good. In terms of profitability, if you assume that COVID, again, at least guidance-wise, we take a conservative view, therefore, will come down quite significantly. And even if you assume that non-COVID goes up double digit, it probably means that the absolute dollar amount revenues will be lower than this year. And actually, that probably puts us in a profitability somewhere between, again, pre-COVID, we had a 27% EBIT margin. This year again, if you do your math, you probably have around 30% EBIT margin. So we will be somewhere in the ballpark clearly trying to be more on the right-hand side than the left-hand side, but we have to see how currencies, inflation, other factors are coming in....

And that regards to my next question on -- Obviously, we're getting a lot of questions on energy costs being a big issue, not only for you but [indiscernible]

Are you talking to a John guy?

Yes. But it is -- I mean, it does come up as one, so people are worried of that. But also from a customer standpoint, if we could shut down labs and have some issues on that. And then we have just wage inflation, and just everything else going on. So please help us sort of like contextualize FX, and sort of like [indiscernible].

Yes. I think first and foremost, I think because, again, as I just -- we're saying that being in journey right now, clearly, overall supply is important. I think the good news is for a couple of weeks ago, we are now -- QIAGEN doesn't need gas for production, but we clearly need [indiscernible] on gas for heating for our main site. We are now actually in a situation that we actually can switch more or less daily between gas, oil and wood pellets, so we invested $15 million or so. So it's quite a significant investment that it's done. So we have the flexibility so at least we are not swept by any shortage, which again, is clearly a situation which might happen, or might not happen. We will see. In terms of prices, as I said, we don't need it for production. Therefore, I don't think it's overall larger or cost of goods sold factor for us. We clearly have energy costs, I would say, in the high single digits. But again, the incremental step up is something that we can measure because I think looking from a different perspective, the benefit of QIAGEN has we have significant gross margins, right? And we clearly did our price increases, a normal one earlier this year and a larger one in the middle of this year, which is rolling in. So we don't have to do price increases more or less or even above inflation to cover the inflation-driven cost, because there's clearly a factor with that which is being helpful for us. Still preparing another price increase earlier this year, haven't this -- for early next year, we haven't decided if we put that through, depends also what the market is going to do. But I would say, so far, I would say, customer sentiment was again okay with that. So no larger pushback, which I think is a fair behavior. Other costs which are material for us is actually freight. Unfortunately, our industry did an outstanding job in educating customers whatever you all or you can typically ship in 24, 48 hours. For us, the good news is that we get roughly 60% of our freight costs reimbursed from our customers, but not 100%. And clearly, a single biggest factor for us is compensation. For this year, we will, for sure, do something for -- rather on the below average computated people. As you know, in Europe, there are certain tax-free programs government initiated, so you can helps them to get something out of that. And for next year, we'll push so we believe there will be an above-average compensation [indiscernible] required.

Right. And so when you look at the -- I mean, when you look at the -- and on top of this, you're also investing in the business, obviously. Like, you're saying more in R&D, so like this. So when we think about the margin trajectory, sort of like given all these and sort of when you look at the longer-term plan, if we look at QIAGEN 3, 4 years from now, where does the margin sort of [indiscernible]?

Starting with gross margin. I probably expect the gross margin probably next year somewhat flattish, and then from there, going up. Main reason for that is not only pricing, but it's actually better utilization. As you know, we made significant investments into production equipment, so -- but in the hindsight, it's now also smart in terms of inflation-driven cost, but we are probably down with the utilization build out for the next, I don't know, 4, 5 years. So I think that's good news. But we still have to go into that, particularly when it comes to STAT and NeuMoDx. That's one point of it. Second part is on the operational side. I think there's still leverage opportunities for us about SG&A. We -- I don't think there's larger needs on that front other than, again, some of this compensation work we have to do. On the R&D side, we're still debating, and again or starting to debate what is the right selling here. On the one hand side, we want to get our menu expansion as quickly as possible done, because I think it's also a competitive advantage. Of course, we do believe keeping the growth rate on the high single-digit ratio has significant advantage as we have it right now. So I would say that's probably the inflection points. As I said, overall, I don't think that will be a next year north of 30%. Offset any larger COVID situation, which might change the picture, of course.

Got it. And so you thinking about R&D, I mean, obviously, you've spent a lot of money on internal development. But you do have a very acquisitive history, and so as things sell off and these companies who thought they were going to be $5 billion market caps are now $500 million or $50 million, in some cases. How do you sort of think about the M&A landscape?

At the same time, most of them have also not really a cash-generating business.

Exactly. Yes.

I'm not sure that is a particular focus for us. But I would say -- it's fair to say that we have a net debt-to-EBITDA ratio of 0.6 or so, clearly also aiming to another record operation cash flow situation for this year. And probably most important that also, instead of focusing on what we just discussed, addressing COVID, wrapping up our own production, there was some management capacity to look at what I would call bolt-on acquisitions. I think that is clearly a focus for us as well right now. Again, I don't think that we are going to exclude large acquisitions. But I think in terms of likelihood, we really [won't] looking for enhancements of our portfolio. Something [indiscernible] all machines or a database which fits nicely into our bioinformatics business help to do that. If there's another QuantiFERON now, and yes, it gives us $200 million in revenues. [Building] we have to shy away for that. Unfortunately, not too many targets out there.

Yes, yes. But I guess the bigger question would be that I've gotten from investors is like where you would focus would be on your current 5 pillars of growth versus new adjacencies?

I don't think we need another platform.

Got it.

It's just instrument -- it's a leverage on an instrument if there's a certain leverage on the sales force. I think that is beneficial for sure.

Got it. . And so thinking about what sort of a segue on the acquisitions. I mean, obviously, you've repositioned your NGS business, and you've had to redo some of your companion by pursuing diagnostic stuff to retool that for that. Where are we in sort of the retool of the NGS business? And when should we start thinking about those products starting to contribute?

Well, our genomics business, remember, we report results in terms of product categories. So we had the first one is sample prep. And then you have diagnostic solutions, which includes QuantiFERON, QIAstat and NeuMoDx and our companion diagnostics business, and our PCR-based regulated approved companion diagnostics that we're selling. Then we have a bucket called Genomics, and then we have a bucket called Life Sciences PCR products. In that Genomics bucket, you have the NGS panels that we're selling to all users around the world for use on any sequencer. And then also our QDI, QIAGEN Digital Insights, our bioinformatics business. So that's what we're combining together in terms of our Genomics offering along with Sample Prep. And it was interesting to look at some of the industry surveys being done on a hot topic like liquid biopsy, and QIAGEN is the only company that we can find that can supply the entire workflow. From the blood collection tube, which comes from our PAXgene joint venture with Becton Dickinson, through to the QIAGEN kits that are used to do the sample prep. Moves to the library pet panelists that we offer that can be used by customers. We're also going to be able to offer digital PCR as well. And then through to the bioinformatics you need to be able to do the analysis and interpretation of the data. So that's where we're really positioning QIAGEN, is that we can support customers with these platform-agnostic, technology-agnostic workflows and be able to let them make these decisions. What sequence do they want to use or do they want to switch to digital PCR as well. Because that's what we're going to see as a trend too in this area in terms of -- especially in terms of clinical companion diagnostics work. In Genomics, again, we are now have the partnership with Illumina. That's going very well in terms of the companion diagnostic work. We're starting to move beyond cancer as well with some of the partnerships that we're working on. And the next step is going to be to see, do we start to expand to other instrument platforms out there. But right now, we're working with Illumina, and that's the key role for us.

Can we talk a little bit about the digital PCR market? I mean, it's always been a technology that's intrigued me, but it also seems like it's still waiting for the right applications to sort of drive it. It still seems very early. So 2 questions on this. It's like one, what is the killer app for this? And I don't think it's sewage testing -- tasting -- testing.

Not sure what you're doing over there.

So what -- so I don't think it's wastewater testing. And so what's the killer app there? And what's the competitive dynamic between you and Bio-Rad, and -- because, I mean, they acquired the RainDance assets, and they were doing some of this digital PCR in -- for sort of like this idea of focusing on exactly where you want to take it in terms of like where is a positive substitute for NGS, it's why we're doing this more deep, but they never really got off the ground. So it's like, just help us sort of understand the market opportunity here, like that.

Let me kick it over and John, happy to fill it up. Right now for us, the majority of our current placement and revenues [these days] academic environment, and the reason is because it's where we had the first panel. We just since literally a couple of weeks had the first biopharma. Panels are going to expand on that. We just -- for sure, probably for the next 2, 3 years, a single biggest opportunity. So I think biopharma is probably where we see, particularly in the research environment of pharma companies, significant interest, significant demand. And that is where we actually also, in terms of placements and other incoming on for instruments, see already a good reaction. So I think that's good news. I think mid and long term, there's clearly a lot of questions around the clinical market, and I do think that is probably also a fair comment. Nevertheless, I do believe, given also the regulatory settings, that probably will take some time.

Maybe think about what digital PCR can do as the next generation of PCR replacing quantitative PCR. You're looking at a system that can move to absolute quantification. Instead of -- you're able to find targets, very rare needles in haystacks is the way that we market it to customers. The challenge that's been in this industry with this technology is that the first systems in the market were 6 figures to buy. They are cumbersome. You had 3 different workstations with the primary competitor system out there. Now they've automated it, but all they've done is put the 3 systems all together under one hood. And what we've done is we've come up with 3 versions of the system. Think of this as like an Airbus airplane system, because they all work on the same underlying technology. But we have the first platform where you can use one plate, the second system where you can load 4 plates at a time and the third, you can load 8 plates. Our approach is to democratize this technology and to be able to give customers a viable, competitive event, yes. A viable, competitive advantage to using qPCR at similar price point, but still, dCR is obviously in a premium pricing per sample compared to where you are with qPCR. So the killer app, we're going to wait and see what comes. But where Roland said, the first market we went to was academia. The second market, we're going into biopharma. Key areas, QA/QC control for manufacturing processes. Also verification of NGS targets, all the talk around translational medicine with minimum residual disease. There's a lot of interest in this area, and that's where we're seeing a lot of uptake from pharma companies in these, in terms of classical R&D work that's being done there. So eventually, this is going to move into the clinic. If you think about exactly what you said, this fits between the gap between qPCR where you're doing one gene at a time. We're doing an NGS panel of 5, 10, 50, 500 genes or the whole exome, and that's going to take days or weeks to get the results. Think about the 5 gene panel that you're going to be doing on something for surveillance testing on, say, a leukemia patient who you want to be able to check, have they gone into blast phase for chronic myeloid leukemia. You're only looking at 4 or 5 targets. That's the perfect area for clinical applications.

Got it. You briefly mentioned, I mean, you're obviously not -- obviously, your balance sheet looks great. You don't have any leverage issues and interest exposure per se that you got to worry about. But how do you think about balancing, share buybacks in M&A?

Again, given what we just talked about, I do think we can do both at the same time. And again, you might have seen that we just got an approval for another share buyback on our AGM. . Clearly, also the fair comment right now with raised interest rate environment. You have, of course, also just keeping the cash has also some benefits, right, because, again, there's leverage by itself. So again, we are looking on all these different opportunities. But again, I do think we can do both at the same time.

Great. Any questions from the audience? No. So QuantiFERON has been one of your more successful acquisitions. Any sort of change since PerkinElmer acquired Oxford Immunotec? Any -- and how has the world of the Lyme disease going? And I guess, how can we think about expanding further the QuantiFERON portfolio beyond sort of like TB in line?

First of all, we are very pleased with the performance. I think there's no question. Again, I still recall that we both even discussed in 2012 when I acquired the franchise that has $20 million revenues, the new [indiscernible], could you pay $300 million for that. I think today, we are both quite happy how it worked out, and so we're all both too long in the business. And so I think that's good. But in a more serious note, I do think clearly, we have seen particularly now this year and the year before, really a good traction guidance for this year. It's $310 million in revenues. It's quite obvious that they're growing nicely beats it. We haven't updated the pillar growth guidance for this year, but that will be clearly above that. So another double-digit performance. I think it's fair to say that clearly also this year, there was clearly some benefits we had from the refugee situation in Europe, so I think that is something that probably will normalize. Again, we hope that will normalize in general, but that is something that we have to factor in. But in general, of course, it is a nice market opportunity because first and foremost, there is still a 60%-plus skin test out there waiting for penetration, and the market itself is growing because there's more and more mandatory testing, which is required for TB. Like, again, in the U.S., first time responders, health care of our customers to get mandatory tested. If you go -- immigration is typically a mandatory testing, and I think we all can argue that outside of refugee situation, the global integration is not there where it was pre-COVID, so let's see if there's a normalization. There's another market, as you just said, which is aligned, which is more or less we just got the approval in Europe. We're still waiting for that in the U.S. That's probably happening, I don't know, end of this year, early next year. So again, it's something what we distribute with our partner. There is a win, as you recall, as they have a leading line franchise. The plan is to bundle along product with their offering. They sell it, therefore, I think there is another opportunity, probably a couple of millions next year. Nevertheless, it's overall a $300 million, $400 million global market, so we'll probably see nice momentum coming year '24 and beyond. So overall, I would say the QuantiFERON technology is -- it's really delivering quite nicely, also good margin contribution factor. To answer your question on the competition. Oxford, which got acquired later on, as you just said, was always a good competitor. Always similar growth rate as we had, but we have a factor 8 to 10 bigger than they are in terms of test volume. I think that hasn't changed, probably would make the case that right now, we are probably stronger than we ever had been before. There was another competitor coming in that market, as you know, bioMerieux, this virus three platform. I don't think also here, they haven't gained traction. So I would argue that our market shares is well that increasing not decreasing.

And so speaking of the competitive environment, obviously, the start of the pandemic, there was a crunch on sample prep capacities. Other sort of companies come in into the RNA sample group space. Can we talk a little bit about it? I know your bread and butter is more DNA sample prep. I mean, certainly, we had to convince our -- we got to convince our PIs to switch from ultra centrifuge to QIAGEN kits, and that is a big thing and people there that doesn't move. But can we talk about sort of like the competitive dynamic in the sample prep market and pricing in that market, and sort of like your general thoughts?

Sure. The commercial market for Sample Prep, again, this is the step where you're taking your sample, whether it's blood. It can be serum, it can be hair, it can be a blood stain in the carpet, it can be a swab off a door, it can be a bone fragment found in a war grave, and you're trying to get nucleic acids out of that and be able to analyze that downstream with different types of technologies. And that's what QIAGEN is really known for. That's where our company maybe uses a verb to QIAGENize the sample. About 3/4 of that market pre-COVID was based on DNA sample prep. And you can beat in this market, you need to be able to handle probably what, you tell me, Derik, you're the scientist, 35, 40, 50 different types of samples to be able to get -- to be able to process it. Every QIAGEN kit for sample processing runs on the same procedure. Once you learn how to use one of our kits, either manually or on our systems, you can use really any of our kits in terms of the steps. And that's what we're seeing, and that's what -- to back up what you're seeing, is what we're seeing back from customers. Yes, it's great if you're doing high-throughput RNA sample prep, which is pretty much an easy sample to process, but that's not the way labs work. One of the things that's interesting about the sample prep business is that easily, maybe up to half of the business, if not more, is still done manually. If you think back to when you were a cheap college student, doing sample prep, that's the kind of customers. They also don't work in big batches like what you saw during COVID where they have to process 10,000, 15,000 samples a day. You're talking about 5, 10, 20, 50, 100 in terms of what labs have to do. And that's why our business is about kicking boxes out the door. Customers are always ordering those kits as they need them, that's what we're shipping as a big UPS customer. And that's what gives you that heterogeneous build of that business and where QIAGEN continues to do well. We see market growth somewhere in the low to mid-single digits. That's a very steady year in, year out type growth rate that we see in that business.

Yes, and that's -- that makes sense. I think we're coming up on time. Any other final -- any other questions behind us? So I guess a couple of -- got a couple of QIAGEN questions, I guess. One, what do you think is misunderstood about QIAGEN at this point? And to say the other question is it's like where, at this point in time, is QIAGEN going? Are you determined to go alone, or are you still...

Why I'm so surprised by that question? And -- no. First question. I would say people still have to learn more about the strength of our 5 pillars of growth because at the end of the day, it's really a portfolio approach, right? And that even other areas, which you touched on like Genomics and Bioinformatics and others, clearly all actually poised for high single -- might be in low double-digit growth rate. So I think it's actually a broad portfolio, and again, we're not even going to argue that everything will be every quarter as strong, right? There's always certain things which is more volatile. You have a larger pharma deal in that quarter, which again makes your life more difficult in 12 months. So I think that situation is obviously going to happen. But I would say, overall, we actually had, in 2019, quite a significant change. We had clearly 60% until then of R&D money going into one product which literally hit the wall. Then we allocated that, and there's still more and more coming out of it as we talked about pipeline of launches. So I think that is still something that probably will carry us for quite some time in a nice growth momentum. I think most people do not argue about our profitability. We have an industry-leading profitability, and I don't think that is going to change dramatically. Anyway -- but clearly, we all have to learn that COVID is going to sell in. As you do not give us any credit for that, we do not give any aggressive guidance on that. I think that's the right thing to do as well. So I would say that is probably what also makes us believe that QIAGEN today is a much stronger shape than 2019 when clearly, we were in M&A talks. But I think we have proven at that time that we are seriously discussing these kind of opportunities and things. Nevertheless, we do believe that we are a strong company as well.

And with that, right on time. Thank you, everybody. Thank you for listening. Have a great day, great conference.

Thanks for taking time.