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

All right. Well, thank you, everybody, for joining us. I'm Patrick Donnelly, the tools and diagnostics analyst here. We have Thierry Bernard, the CEO of QIAGEN. He is virtual today scheduled to be here, but wasn't able to make it. So we do -- we have him on the Zoom here. So Thierry, thanks for joining us. Thanks for being here in a virtual setting at least.

Thanks for the invitation. And I apologize for not being able to be with you in New York, sincere apologies, yes.

Not a problem. So maybe we can start just fresh off 4Q. I know a lot of the companies are just kind of rehashing what happened there to start things off. You guys reported a pretty clean beat, kind of gave the initial '23 guidance. But maybe we can start just talking through some of the moving pieces of that 4Q, that non-COVID business came through pretty well. I know you guys are focused more on the non-COVID than COVID. So maybe just start with some highlights there, and then we can dive in.

Thanks. I appreciate the adjective that you are using, you said clean, I always try to stay away from superlatives. And so yes, I think that the performance in Q4 and the performance 2022 was clean and solid. It's encouraging for the coming months. So on Q4, specifically, as we have seen, we exceeded again the guidance that we gave to the market. But what is really, really encouraging for us is that 75% of the beat was coming from the non-COVID clearly. So this is why also we gave that guidance for 2023 where we believe we can execute once again on a double-digit growth percent on the non-COVID business. So what were the drivers here? First of all, we had a good quarter of placement of instruments. If you look at QIAstat, if you look at QIAcuity, if you look at some of the sample tech instruments. EZ2, our latest launch, for example, all this was very healthy, and it's obviously preparing the consumption of consumables for the coming weeks. So number one. Number three -- number two, I'm sorry, obviously, not driven by COVID, but we had respiratory big demands on flu and RSV. And this helped obviously, the growth of QIAstat, helped the growth of NeuMoDx, no questions about that. At the same time, QuantiFERON continued to perform very well, extremely good performance on conversion of QuantiFERON towards DiaSorin automation and LIAISON and with premium price, both in Europe and both in the U.S. So that's very encouraging. In addition to that, if you look at what is non -- 5 pillars of growth, good performance in next-generation sequencing, obviously, outside of COVID, good performance, good closing on companion diagnostics as well. So this allows me to a [indiscernible] perhaps I made a mistake or my English was not good enough when I presented the strategy around the 5 pillars of growth some years ago because I believe that perhaps some people in the market understood that if I was saying 5 pillars of growth, it meant that the rest of the portfolio was not growing at all, what we call the core business. And it's not true at all. It's true not at all. Obviously, not everything is growing at the same rate in our core business, but just a couple of examples. Pre-COVID, our universal next-generation sequencing activity, both chemistry and bioinformatics had a double-digit growth. It's not going to stop post-COVID. You saw we announced the acquisition of Verogen in January for HID. Many people probably did not know that, but QIAGEN has been in human identification for criminal or police investigation for many years with sample tech. We are now with Verogen and QIAGEN, creating a bucket of revenue, which is significant for us, which means around $100 million revenues, definitely double-digit growth profile. Companion diagnostic now that we have PCR offers to pharma company, NGS offers to pharma company and also now a digital PCR, double-digit growth profile. So just to insist that all this was also quite healthy in Q4.

Yes. No, that's a great place to start and a good baseline. Flowing from that, you guys gave the '23 guide. You talked a little bit about it after 3Q. I don't think people were necessarily believing that it was going to be this nice double-digit growth on kind of the non-COVID piece. You guys reiterated that after 4Q. Maybe just talk about the confidence level and the ability to deliver that double-digit growth, the visibility you guys have. Again, I think a lot of life science companies are kind of having a slower start, right, 1Q is the trough and then we ramp. So maybe just talk about the cadence that you guys are expecting, and then again, the visibility as we work our way through the year there.

Yes. That's a very fair question. Why did we say '23 we believe we can also execute on double-digit non-COVID. There's a couple of elements? It's with -- first of all, the context is considering our global and current read of the economic situation, financial situation, geostrategic situation. Clearly, I don't know what's going to happen really on inflation. I don't know what's going to happen in some part of Southeast Asia. But what we do as a company, we multiply the kind of control towers everywhere in the world to try to be extremely agile. We proved that last year when we immediately passed a second price increase, when we immediately reacted on the situation on Russia and Ukraine. So we try to manage our [expenses]. But the global context is volatile clearly. But as I said before, the beat Q4, 75% of it is coming from non-COVID. Then we have a very precise look of our pipeline of instrumentation. What do we have in the pipe for QIAstat, QIAsymphony, NeuMoDx, QIAcuity, EZ2 and it's pretty encouraging. Third, obviously, is the instrument performance of '22, which is normally due to bring consumption of consumer. And this is why we said that, and we believe we can execute on it. We take also a more cautious stance on Q1 because clearly, the market is a bit in a wait-and-see attitude. You see post-COVID with, I mean, uncertainties, especially regarding their financials, we see labs basically thinking about their investment. I said last year -- I don't think that suddenly there will be a decrease of instrument placement. I think that what's going to happen for at least the coming 2 years, is that placement or leasing are going to be more important than capital sales, but we are used to do that. So it's business as usual for it. So yes, again, cautious in 2023 Q1, strong belief that it's going to accelerate during the year. We strongly believe that we can execute on double-digit on COVID. We have good growth expectation as you have seen in our guidance because we detailed that for the 5 pillars on QuantiFERON, on QIAcuity, on QIAstat. We stayed at the same level on NeuMoDx, but it's already a good performance because take into account that in the U.S., we still do not have the revenue that we have in Europe and U.S. was mainly COVID. Last year, we said that 80% of NeuMoDx was COVID. So it's a good performance, too. And we are back to what we told the market for sample tech back in December of 2020, which is basically mid-single digit. As I said before, HID should go double digit, universal next-generation sequencing should go double digit. Companion diagnostics should go double digit. Liquid biopsy should go double digit in our oncology portfolio. So this is what is behind our guidance.

Okay. That's helpful. Yes, maybe we can kind of run through a few of them and the kind of focus on the 5 pillars of growth there. In the sample technologies business, a big chunk of the revenue, obviously, coming off a pretty good 4Q. Can you just talk about, I guess, what that looks like in '23 in this post-COVID world? What kind of lab activity you're seeing? Is there stocking out there? I know that's always a fear for people at labs, particularly given the supply chain disruption, bought up a lot last year and are now kind of working their way through it. So maybe just talk through that segment and what you're seeing there?

So to your first point on stocking, no, not at all. Not at all for a simple reason, is that most of our sample tech products are also shipped in dry ice, you see, so there is no stocking here, no inventory, not really possible. What we found very interesting in the performance '21 and '22, especially of the non-COVID sample tech is that if you remember, at the height of COVID in '20, some analysts were telling us do not you think that you are going to be more and more challenged in your leadership position for sample tech because others are coming. No arrogance, but basically, we are growing faster in '21 and '22 non-COVID sample tech than we were pre-COVID. So it's encouraging. It shows again that we were right to also not only continue to launch new application, microbiome, soil analysis, plant analysis, QIAprep, but also upgrade our instruments. QIAcube became QIAcube Connect. EZ1 became EZ2, and we are still working on the development of the upgraded version of QIAsymphony. So we'll continue to invest. At the same time, we see that in the current now normalization market, this business will come back to a mid-single-digit market growth. If we can be above that, that's perfect. We see between 3% to 5%, I want QIAGEN to be able to deliver 5%. That would be the objective.

Okay. That's helpful. And then maybe we move to QuantiFERON. You've been putting up really nice growth there, another year of kind of a double-digit growth ahead. Maybe just talk about where we are in the cycle there. Again, it seems like that's one of the biggest growth drivers for you guys. Maybe just kind of flesh that out a little bit for us.

So kudos to the team, first and again, no arrogance. We are now a way above $300 million franchise. So for a company of $2 billion revenue, a bit more than that, it's significant, and it's still growing at 10%. So kudos, kudos to the strategy, the fact that we decided to both protect and expand QuantiFERON back in 2016, way before the market was talking about the arrival of competitors with our agreement with DiaSorin was the right thing to do clearly. And it's part of the driver. The fact that we are able to convert current QuantiFERON customer to DiaSorin automation, it's one of the growth driver, because every time we are doing that, we do it with a price premium. But let's be clear, last year, especially in 2022, the growth of QuantiFERON is still coming more from volume than price. So what's the reason for that? Because beyond Oxford Immunotec and PerkinElmer, beyond bioMérieux and Vidas, beyond whatever, there are still roughly 60 million worldwide, 6-0 million, skin test, which is our main competitor. And in the U.S. alone, it's 16, 1-6 million of skin tests per year. So we still have a lot of room here to grow. So of course, are we going to be able to grow at 15%, 20% when we are close to $350 million. No, it's going to be more difficult, but maintaining low double digit is the target, and this is what we wanted to. Also, because we continue to extend the geographic presence you have seen, for example, probably last year, the FDA approval of our 4G generation in China. You have seen 2 years ago that in Brazil, there was a new guidelines where healthcare people had to be tested for [latency]. All this is thanks to our efforts; it doesn't come like this. So we have a good automation, understand the price premium. We continue to expand in geographies and for the overall QuantiFERON franchise, we have new development as you have seen, for example, Lyme, once again, with DiaSorin. I always say, Lyme will be not relevant revenue-wise for our portfolio before '24 to '25. Why? Because it takes time to educate, because we need to get reimbursement in Europe, especially in Germany. And we are still not in the U.S. We expect the approval in the U.S. for 2023. Now as you can understand, a very good surprise for us would be to have Lyme approved in the U.S. before the summer, for obvious reason. It's a summer disease or summer challenge. If it's after the summer, we have lost a year. But over the long run, this will be a good relay of growth for QuantiFERON. And you will see probably in the coming months that we will announce all the developments for QuantiFERON from an application standpoint because the menu can be larger than that.

Okay. And then you kind of mentioned the competitive landscape, less concerned with competition versus just converting over that skin piece. Have you seen any change in the competitive landscape? Obviously, you mentioned a competitor or two changed hands. Maybe just an update in terms of what you're seeing out there. I know obviously, the biggest opportunity is just convert skin, but...

Not really. I mean, obviously, we have a tremendous respect for PerkinElmer. We have a tremendous respect for bioMérieux. We know that the product of bioMérieux has been withdrawn in France and in the U.K. a few weeks after being launched. So we'll see what happens here. We see sometimes some very localized competitors. We have always disclosed that in some specific geographies, such as China, but they are very local. And it has not prevented us from becoming the #1 in China over the last 3 years. So no arrogance here. We have a good product. We have an incredible number of publication. It's by far the latent TB product with the highest number of publications. We have the trust of many organizations, Stop TB, WHO and many others. We need to continue to execute, humble and execute.

Okay. Then maybe we can balance the QIAstat-DX there. I think you guys did 600 placements in '22. The GI panel in Europe seems to be doing well, a little more. So I guess maybe talk about '22, I think you laid out, I think it's $95 million in terms of the guide this year. Can you just talk about how you're thinking about the instrument piece, the menu expansion? I know U.S. is a focus. Maybe just talk about plans there and what you're seeing.

Yes. So for the current year-to-date situation, we are above 3,500 placements, above that year-to-date. I'm talking with the beginning of the year. So -- for me QIAstat is very simple. It's a positive frustration, positive because in Europe now, we have basically the menu to compete at least everywhere we need to compete. With GI, meningitis and respiratory. And when I look at the growth rate of GI and meningitis in Europe, I'm very satisfied. When I look at the kind of customers we are capturing now, especially in the northern part of Europe, it's very satisfactory. Frustrated because, of course, it's not good to be on a market like the U.S. market with only 2 panels, which is the respiratory non-COVID or respiratory with COVID. And we are really waiting for our GI approval in the first part of this year. So we said that normally, we expect the approval of GI to come at the end of Q2. Obviously, I cannot speak on behalf of the FDA, but that's the objective. And we want to submit meningitis in the U.S. at the end of 2023. So that's in '24, we would have also that for [planning]. Let's not forget that in the U.S., also what we will do we will transform the current EUA for the respiratory COVID into a 510(K). So we are going to submit that also to the [indiscernible]. So QIAstat is a good instrument. You would think, of course, he's saying it's a good instrument, but let me give you a very, very clear example here. The other competitive systems are telling you, yes or no, you have a respiratory pathogen, whatever, flu, RSV, yes/no. QIAGEN tells you this but gives you what we call the CT values. And COVID has demonstrated the value, and you will hear more and more as time goes by. Because when you were tested for COVID, if you had a PCR positive, you had a small number, which was a CT value, which was giving the clinician a very good indication on how contagious you were and how high was your viral load. It's a fantastic differentiation. I don't even comment on the fact that it's the only system with no sample tech. I mean, basically, you put the swab in the [cavities], the cavities in the system and run. But -- so it's a good system. The strategy has not changed, bring, bring, bring new menu either in geographics or every year new menu. So we have BCID already researchers only at the moment in Europe. We continue our development on something that is going to be unique when we are going to launch it, which is the CAUTI. There is no syndromic test currently on complicated UTI. Let's not forget that urine is one of the most used sample in laboratories. So yes, I give this a double-digit growth profile. And then you were right in saying that we target 95 million in the country -- in a situation where still 6 months of the year, we'll have just 1 panel in the main market of the world. So it's a good performance, I think.

Yes. So I guess on that point, how contingent is the guidance on getting things like GI through in the U.S.? Or is it assuming -- maybe just talk through what goes into that assumption? Is it assuming a smooth approval process and there's some chunk of revenue tied to that? What's the right way of thinking about it?

You always try to weigh some risk in your assumption. Let me give you an example, and I'm being very transparent here. Last year, GI in the U.S., costed us $8 million revenues that we couldn't do. We were planning also to launch it in the second half of the year. So it was basically 2 quarters that we missed. So we had to mitigate. But mitigating you see sometimes bad surprises is our business. Last year, we had to mitigate $15 million to $16 million of sales in Russia, Ukraine and Belorussia. We did it. That doesn't mean that we always have, but we try other actions planned to try to launch new activities and go over our expectation on some other activities. So obviously, we try to factor some risk. Let's not forget that it's not [the majority]. You have the new European framework, what we call the recast, the IVDR, it's the same. It's the same. The relation with the notified bodies in Europe is much better now. We work mainly with the [chief] as far as QIAGEN is concerned, much smoother, but still, we factor up to sometimes 1 year to be IVDR. We take into account in our submission, the current backlog at the FDA. You know that there are backlogs and therefore, delays for 510(K) approvals, PMAs. So we try to take a credible stance that shouldn't be too conservative, but should not be basically just aspirational.

Okay. It makes sense. And I guess just that approval -- yes, approval pathway, to your point, it's always difficult to figure out what and when the FDA is going to act. But what are the kind of steps you guys have to take, if any? Or is it just kind of a waiting game and seeing what the FDA does with GI?

No. We -- I respect the agency too much to say that there are steps. The main step is to be credible in our submission. That's very clear. Very good clinical data because it's about clinical data. We have seriously invested into regulatory firepower over the last 2 years during the pandemic, seriously, new Head of Regulatory, a new management team, many people coming very experienced from years of relation with the FDA. That's what we -- it's to be credible and serious; that's it. I mean that's the main proof of recipe.

Okay. Maybe we could jump to QIAcuity, calling for some pretty good growth from that business this year, good market. Maybe just talk about the assumptions, whether it's installed base growth, whatever it might be. And then what do you think that market is growing? Obviously, there's a big -- a larger player out there that you guys are kind of competing against a little bit. But again, early innings, another one where it's probably market conversion more than competition, but maybe what you're seeing in the market and then just expectations as the year goes here.

So first of all, we respect our competitors a lot, so kudos to them because they created the market. They have been 10 years into it. So that's good. We have been 2 years, but in 2 years, we have placed already more than 1,000 placements. I mean the market should look at that. I mean 1,000 placements in 2 years that were COVID years where laboratories had their heads into other priorities. And as you know, the impact on COVID on QIAcuity is very minimal. We just had the wastewater for COVID, but it's not a lot of revenues. It's good to have it. It is not a lot of revenue. So this, first of all, performance of placement gives us optimism. Second, we have created new market opportunities since July of last year when we launched the first half of our biopharma venue. Before it was a market where we could not compete against that main competitor. We could not. We didn't have -- now we can. It's an interesting market. Why? Because it's a big market, but more importantly, it's a market dominated by big biotechs, big pharma companies. So the instruments you're going to sell there are the highest throughput. In our case, it's what we call GI plates -- GA plates, I'm sorry and the consumption, the pull-through per system is obviously much higher. So that's why we are also confident. So the market, to your question, we believe that the market currently, pure digital PCR is $400 million, $400 million market. We believe that over the coming 3 to 4 years, this market will probably be $1 billion. So foreseeable future, we see a $1 billion. Total theoretical market is around $3 billion because it's the QPCR market. But foreseeable, I would say $1 billion. So percentage-wise, QIAcuity will be the highest growth driver of QIAGEN for the years to come, clearly, percentage-wise clearly. Do not forget that we have already started to invest also to make this instrument, which is currently a research and academia instrument to make it a clinical system. So we are planning to submit to regulatory authorities between the end of 2023 and early 2024. And so that is going to obviously help the growth here. And we said that we would start with oncology. So when I see our win rates against competition over the last 2 years, when I see the development of new menu, when I see the dynamic of this market, when I see the added value of our [outperform] compared to the main competitor, why we should go below a substantial growth rate, and we should drop our ambition [in fine] to be #1 in that market. That's the goal. That's the target.

Okay. And you mentioned the biopharma piece. I mean how do you think about the different pieces of the market as you kind of grow it, to your point, from $400 million to $1 billion, maybe $3 billion? How do you view kind of the higher growth piece of the market as it kind of matures here over the next 5, 5-plus years?

Biopharma will be one of the main growth driver and clinical as well, clinical definitely because activities and application in clinical are still very limited. More and more people are talking about infectious diseases and digital PCR, but there is not a lot of product available. We are looking at it. Some people are looking at a post-transplant testing and digital PCR. We are looking at it. And oncology, obviously, which is going to be our main point of entry. So that's going to be basically for me, biopharma and clinical application. Those are the 2 main great targets for the market.

Okay. And you mentioned in terms of kind of win rate or whatever it might be, what is the feedback you hear in terms of when you do win over competition, what's the customer feedback in terms of choosing your instrument and consumables over others, let's say?

I mean one of the key feedback is the simplicity, because for the other competitors, you need to piecemeal different instruments and components to run your workflow. Qiagen is 1 box, sampling, result, 1 box. And we have 3 different workflows available -- 3 different throughput, I'm sorry, available for customer, 1 plate, 4 plate, 8 plate. So that's number one, ease of use, ease of simplicity, one-stop shop for the suppliers. Second, because of this is obviously the total cost of ownership, the total cost of using QIAstat -- QIAcuity compared to another solution. Third is flexing capacity -- flexing capabilities. There are more flexing capabilities, thanks to our technology, which is not a droplet technology. So we capitalize on that.

Okay. Maybe we can jump over to NeuMoDx. Another one of the pillars there, some COVID impact as the years went there. Can you just talk about, I guess, the non-COVID utilization, I know that's a metric people kind of focus on how you guys look at that, the conversion rate maybe from EU customers, the COVID customers into kind of the non-COVID piece as we hopefully move past that and look at other volumes.

I mean the non-COVID is obviously the priority. Now you know that we have a significant menu, which is allowing us to compete in most of the tenders, if not all the tenders. We have out of COVID, 15 -- 14 assays are regulated in Europe that we need to bring to IVDR, obviously, but we will, we are doing it as we speak. At the same time, it's balanced by the fact that in the U.S., we don't have that menu at the same time. So we gave preference over the last 2 years in stabilizing the platform, which was a new platform. And now we are in a situation where we can start again submitting in the U.S. And we will see that this year with some sales like [CTMG] and others. So in the guidance that you see into 2023, you shouldn't forget that when it looks flat compared to 2022 in the non-COVID it's growing by more than 50%. And flat is mitigating a situation where in the U.S., we are basically 100% COVID now. That's a 90% COVID, 10% LDTs, laboratory developments. So it's a good performance to keep it at $80 million guidance. And as I said, the non-COVID part is expected to grow at 50%.

Okay. That's helpful. And maybe just taking a quick spin on the geography side. China, a big focus for people near term here just given the COVID impact there, big impact on volumes in general. Can you just remind folks, I guess, your exposure there and how you think about the recovery path coming out of it. We had the New Year. We had COVID being pretty heavy in December and January. Maybe just what you're seeing there and expectations in that region?

First message that I would like to share, I know that -- I hope that it's not going to bother anybody that -- it's typically the example for me where we need to keep a cool head. What I mean by this is that remember, 5 years ago, you would be considered absolutely stupid if you were not heavily investing in China. Two years ago, it's that, you would be considered quite stupid to be too exposed in China. It's a market. It's a big market. It's probably the #2 market in the world, U.S., China, Europe, Japan, but it's a very specific market, very specific. It is the first time, I think, that we see a market spending so much effort in localizing this market, in giving preference to local Chinese company. For many years, it was absolutely not impacting Molecular Diagnostics. Why? Because they started with what was easy clinical chemistry, immunoassays, but it will come to molecular diagnostic. After all, BGI, MGI, he is one of the biggest players in the world in next-generation sequencing. We are a bit more protected, but still -- if you want to get an approval to the Chinese equivalent of the FDA, which is the NMPA, if you are a local Chinese company, it's going to take you between 1 year and 1.5 years. If you are a foreign company, now it's more than 3 years, gives you another example. So you need to localize. Like many other companies, on this we are no different; we localize because we have a side R&D and manufacturing in Shenzhen, which is 100% QIAGEN. Where we might be a bit more flexible than other companies is that we also have a second brand in China, which is completely separated from our QIAGEN products. It's another name. It's another sales team, another management, another marketing team. QIAGEN is headquartered in Shanghai. That second brand is headquartered in Beijing. And so overall, this combination of good molecular product, especially in life science, localization, second brand, gives us good expectation on an exposure which is rather limited at the moment; it's much less than 10% of our revenues. At the same time, it's still an important market, so we will continue to invest there. But before COVID, and you know that QIAGEN has this also changed to have executive like Phoebe, who is with you in the room, myself who have been living and working in China. So we have seen it. We have seen part of the movie. Before COVID, I would have told you for the coming years, the [indiscernible] the market growth profile for diagnostic is 10-plus percent, 10%, 12%. Now because of COVID because of the impact on prices, the pressure on foreign companies and so on, I see it between mid- and high single digits, 6% to 8% is even more precise. So this is what we should target from a QIAGEN perspective. Very simple.

Okay. That makes sense. And just in terms of recent trends coming out of -- well, hopefully coming out of the heavy COVID impact there in December and January, again, the Lunar New Year, are you guys seeing any -- I guess what's your expectation in terms of just the curve of that recovery, particularly on just the volumes?

So it's very difficult, obviously, to know everything because it's China, but we try to read a lot. Obviously, talk with customers, talk with our team. We see a slow Q1 because many customers are still -- either still impacted financially by the big lockdowns of last year. And so they need a bit of time to basically come back on cash flow and acceleration to the end of the year. But once again, for me, this market is not a double-digit growth market anymore, at least for the foreseeable future. It's rather a mid to high single-digit growth market.

Okay. Understood. And then maybe Europe quickly, you guys always have a pretty good handle there, given where you are. Just general thoughts; it seems like it's trended a little bit better. Everyone's talked about the mild winter, energy wasn't quite as bad as everyone feared, 3, 6 months ago. So maybe just a quick update what you see in there and expectations.

Again, cool head, we are talking about a big, big market. So as you see, sometimes the growth rates are less exciting than other emerging markets. But overall, I mean, given the size, I mean, even at a lower growth rate, you still have a significant amount of revenue that we should capture. What we can see now, what we can say, academia was weak in 2021, came back in 2022. Clearly, clearly, we were concerned at the point and we disclosed that to the market end of '21, early '22 academia is slow. It is now behind us. We haven't heard so far about cut into healthcare funding. We haven't heard so far about cut into research organism in Europe. The move to IVDR, the new regulatory, is getting better. It's not perfect. It's a frustration for many other companies. We are all sharing the same. It's a bit too slow, but it's improving. So we'll get there. So I would say I see Europe life science clearly a 3% to 5% market growth. And I see clinical molecular diagnostic a 5% to 6% market growth. This is how I see -- and I see no reason for this to go really down.

Yes. Understood. Just a few minutes left, so I want to maybe rapid fire a little bit. Just in terms of the margins, obviously, Roland is not here, but we could talk a little bit about it. You guys have the moving pieces there with some of the pricing increases you've taken, some of the inflationary pressures. Maybe just talk through the moving pieces there, confidence level in the margins. And again, how we think about pricing. I think you guys took a big increase midyear last year, another one to start this year. So just the strategy there.

So first of all, the strategy is that price increase are nothing exceptional in QIAGEN. Every year, we start preparing that in November, and we pass price increase in January every year. The slight evolution since I took over is that I'm like a dog on that, because I've been doing that for so many years when I was directly much more operational in sales, so I pay a lot of attention. But let's say, on a normal basis, every January, between 2% to 3% pricing, normal pricing, depending on the geographies, obviously. What I tried to improve also since I took over is make sure that we do it everywhere on freight, on service, on spare parts. You see not just on product clearly. Last year, because of the environment, we passed a second one in July, which was much higher, between 6% to 7%. At the same time, I always told the market never consider a 6% to 7% direct impact because between customers who are locked in purely annual contract geographies where you cannot go to that level and many other factors. We are not here to kill our customers. I mean academia customers, they have a fixed budget. So -- but okay, you expect net-net [indiscernible] between 30% to 50% of that objective. And this is what we are monitoring at the moment. If inflation is not going down this year, we will probably not hesitate to go back to our customers at a point in the year to discuss price again. I don't know at what level. If it's going down, we will keep the one that we did in January and that should be okay. That's the first element on the margin. Keep that agility to try to answer. It's not greed; it's sharing the burden with our customers. Second, let's not forget that we are still investing in our 5 pillars of growth and other parts of the business. Some parts of that 5 pillars, namely QIAstat, QIAcuity and NeuMoDx, they are not at the optimal level of ratio between volumes and cost of goods. So NeuMoDx is not there yet, for example, but QIAstat start to improve, and you see the positive impact of QIAstat in 2022. That should continue in '23. So this is why we have given the fact that we should be between the high 66% to high 67% of gross margin. And we said for the EBIT margin better than pre-COVID, obviously, and we need to see us between 27% and 29% overall and continue to push the company in the direction of 30%, but not for this year, obviously.

Yes. And maybe a very quick last one just on the bioinformatics piece. Maybe just kind of thoughts there. I know there's been some noise in the market. So maybe quickly address that.

So first of all, we are not divesting. I don't know who said that, but we just said it's normal management thinking to say how can we optimize the growth of a given activity and try to create shareholder value. QIAGEN is structured around 3 business units: life science, clinical diagnostics, bioinformatics, $1 billion, $1 billion, roughly a bit more than that, $100 million. We are convinced that having a foot in bioinformatics is key. We are convinced. We are also convinced that there is something strange. Everybody is talking about the power of data driven by the number of data coming from genomic activities, yet the #1 on the market, QIAGEN, [present] #2, SOPHiA, present #3 [Piran], altogether we're seeing more than $200 million. So my reflection is we have not broken the code of monetization of this know-how and therefore, we need to do something better. Therefore, we have opened the door to a potential alliance with a partner. At the same time, we might decide to do it at the end organically. That's the rationale behind that.

Understood. Okay, Thierry. We'll have to leave it there. Thank you so much for joining us on the webcast there, and we'll talk soon.

No, no, thank you. Thank you for your time. Again, thanks a lot. Thanks. Bye.

All right. Take care.