Uniphar plc (UPR) Earnings Call Transcript & Summary

Good morning or good afternoon all, and welcome to the Uniphar Interim Results 2024 Conference Call. My name is Adam, and I'll be your operator today. [Operator Instructions] I will now hand the call to Allan Smylie to begin. So Allan, please go ahead when you're ready.

Good morning, everyone, and welcome to Uniphar plc's interim results presentation, which covers the period from the 1st of January '24 to the 30th of June '24. I'm Allan Smylie, and I look after IR here at Uniphar plc. Presenting our results today is Ger Rabbette, our CEO; and Tim Dolphin, our CFO. We're also joined on the call today by Brian O'Shaughnessy, our Chief Commercial Officer; Dermot Ryan, our Chief Operating Officer; and Seamus Egan, who heads up Corporate Development. Before we begin, I would like to remind everyone that you can access the presentation either on our website under our latest results and presentations or via the link sent to you when you registered for the conference call. The results presentation will last approximately 20 minutes and will be followed by Q&A. Please note the interim results presentation may contain certain forward-looking statements, beliefs or opinions, which are based on current expectations and projections about future events. Actual results may differ materially from those expressed or implied in such forward-looking statements. I would now like to hand you over to our CEO, Ger Rabbette.

Thanks, Allan. Let's start on Slide 5, which gives an overview of the group. Uniphar is a global provider of specialty services into the health care sector. We operate across 3 divisions, working with over 200 of the world's leading pharma and medtech manufacturers. We serve over 150 countries worldwide and now have operations across Europe, North America, APAC and MENA. Our group revenue for the half year increased by 10% to EUR 1.4 billion. And we were particularly pleased with the strong growth to deliver gross profit, which also increased by 10% to EUR 207 million. And if you look at each division, Supply Chain & Retail increased gross profit by 8%, Medtech grew by 3%, but Pharma was a standout performer with a 21% increase in gross profit. If we move to Slide 6, we outline our financial highlights for the period. Overall, we saw good growth across each of our 3 divisions, which delivered an EBITDA increase of 6% to EUR 56 million. Our leverage decreased to 1.5x, and our EPS was broadly flat due to higher interest rates. Adjusted free cash flow remained strong at 69% with a return of capital employed of 15%, which is at the upper end of our range. So apart from the impact of higher interest rates, the group delivered another strong set of results. From an M&A perspective, our 2 acquisitions last year have now been fully integrated and as ever, we're focused on building and monitoring a very active M&A pipeline. Without a significant acquisition in the period, we've been able to demonstrate our ability to deliver strong organic growth across all divisions as we focus on growing our existing business, converting to our new business pipeline and traveling with our customers into new markets. As you know, we've set a new growth target last year to reach EBITDA of EUR 200 million. And while this is an ambitious goal, we are confident that we are well positioned to double our business again in the medium term. On Slide 7, we outline the continued progress we're making on initiatives across our 5 sustainability pillars. Sustainability remains a key priority for the group. We are following our group sustainability road map, which was approved by the Board last year, and we're gaining great traction right across our business. We continue to focus on developing ED&I across the group. And we're delighted that our female representation at Board level is now 37%. Our science-based targets were formally validated this year, with an ambition of at least a 50% reduction in our absolute Scope 1 and Scope 2 emissions by 2030. We've also remained engaged with our suppliers, focusing on responsible sourcing and activities to ensure that we work together with our partners to reduce our collective impact on the environment. And finally, we became the key sponsor to a brilliant initiative, to plant 100 million native Irish trees over the next 10 years, and we've already sponsored the planting of 200,000 trees. So we continue to make great progress in measuring and improving our impact in terms of sustainability, and this is now reflected in improved external ratings. To move on -- each division's progress during the year. On Slide 9, we highlight our strategic objectives. Starting with Supply Chain & Retail. We see this as the foundation of our business. We've maintained and grown our leadership position and increased our margins steadily since IPO. Because of our great market position and the investments we are making, we see more scope to grow share, margin and profits in the years ahead. Looking at Medtech, this business has very attractive margins, and we believe we can continue to deliver high single-digit gross profit growth in the medium term as we leverage our existing platforms and work with our partners in new geographies. And in Pharma, we're expecting double-digit growth as we leverage our global commercial platforms to do 2 things: one, bring a comprehensive range of services to manufacturers across product life cycle to leverage this platform, to provide sourcing solutions to both HCPs and manufacturers on a global basis. If you turn to Slide 10, you can see that in Supply Chain & Retail, we are the clear market leader with a 54% share in Supply Chain and best-in-market service offering of over 400 pharmacies. This management team has evolved the business from being a pure wholesaler into a vertically integrated platform that touches every point in the value chain from manufacturer to patients. And what excites us going forward is the opportunity underpinned by our significant investments in infrastructure and technology to increase share and margin further. The build of our new high-tech distribution center in Greenogue is now complete, and we're in the middle of the fitting out stage, and we're on track for a 2026 go-live. If you look at Slide 11, you can see that Supply Chain & Retail has performed well with revenues of EUR 890 million and gross profit increasing by 8% to EUR 95.3 million as we continue to grow share and outperforming the markets. And what's really pleasing for us is that since IPO, we've doubled our gross profit margin percentage to 11%. If you move to Slide 12, Medtech, to recap, this division delivers an integrated agency model, managing the entire sales, marketing and distribution value chain on behalf of our partners. Europe, as you know, is a very fragmented marketplace that poses considerable challenges for specialty manufacturer through which to enter. We remain committed to building out our Pan-European platform in order to offer our clients a one-stop shop for Europe. As you can see from Slide 13, this division continues to scale. Revenues now EUR 133 million, with gross profit increasing to EUR 54 million. Our growth strategy is really well received by our partners. We now look after 73 clients across 2 or more countries and 17 across 3 or more countries. We fully expect that this division will deliver high single-digit organic gross profit growth in 2024. On Slide 14, we talk about our Pharma division, where we're building a global capability to help HCPs and manufacturers to source and supply medicines which are unlicensed or in short supply; and secondly, to manage the release of specialty medicines to specific patients on behalf of manufacturers before and after approval. On the right, you can see that we've added significant capability in recent years. We can now offer a full end-to-end service offering. We continue to invest in this platform as we seek to enhance our service offering further. On Slide 15, we illustrate how our services play out across the product life cycle, supporting pharma and biotech manufacturers and all of the key pressure points. On Slide 16, you can see that our Pharma division grew strongly with revenues of EUR 340 million, (sic) [ EUR 344.2 million ], a 21% increase in gross profit to EUR 58 million. In Pharma services, we are now focused on specialty, moving up the value chain, investing in our service capabilities across pre- and post-launch. We've had an excellent 6 months in terms of new business with a strong pipeline for the rest of the year. And as we look forward, we continue to see very significant opportunity for both our on-demand and our pharma services business due to the high growth in specialty and the challenges that manufacturers and government face in helping patients to access these often complex and high-tech treatments, both pre and post commercialization. I'll now hand over to Tim to provide you with more color on our financials.

Thanks, Ger. I would now like to take you through the financial highlights for the 6 months to June 2024. I am pleased to say that the group has delivered a strong performance during the period, with gross profit growth across all 3 divisions. At an overall group level, we generated gross profit of EUR 206.7 million, up 9.9% from the prior year. The group delivered strong organic gross profit growth of 7.4%. EBITDA has increased by 6.3% to EUR 55.9 million, demonstrating the underlying strength of the business. Adjusted earnings per share increased modestly to EUR 0.081 from EUR 0.08. This has resulted in a return on capital employed of 14.7% at the top end of our medium-term guidance of 12% to 15%. Leverage for the period was 1.5x. Just moving on then to have a look at gross profit. Gross profit and gross margin percentage are the key financial metrics we use to track profitability at a divisional level. Uniphar Supply Chain & Retail delivered reported growth of 8.1% and organic growth of 3%. This division has strong recurring revenues plus a stable and robust gross profit profile. In terms of volume, we once again outperformed the market. This division represented 46% of group gross profit for the period. Its gross profit margin increased during the period from 10.6% to 10.7%, reflecting the full consolidation of the McCauley Group. Uniphar Medtech continued to grow during the period. The division delivered reported gross profit growth of 3.4%, all of which was organic. This was below our guidance of high single-digit growth due to a strong comparator last year. We remain confident in delivering on the expectations for the full year. This division contributed 26% of the group's gross profit for the period, and its gross profit margin increased during the period from 40.2% to 40.4%. Uniphar Pharma delivered reported growth of 20.5%, almost all of which was organic. This reflects a strong performance across both our on-demand and our pharma services platform. Our guidance for this division is for double-digit organic growth over the medium term, and we also expect to deliver this in 2024. Uniphar Pharma represents 28% of group gross profit. The divisional gross profit margin decreased slightly from 17.2% to 16.8% due to the business mix. Just moving on to the balance sheet in and having a look at net debt. At a high level, we finished the period with a net bank debt position of EUR 143.6 million, driven by an open net debt position of EUR 149.9 million, strong EBITDA of EUR 55.9 million and a working capital inflow of EUR 31.2 million, offset by CapEx, including strategic CapEx of EUR 35.4 million, acquisition-related deferred consideration payments of EUR 9.7 million and other items of EUR 35.7 million, which included exceptional costs, tax, dividends, finance costs and lease payments. Our strategic CapEx reflects the significant multiyear investments we are making in our new distribution center, Greenogue 2, and our new SAP platform. Our reported free cash flow for the period was EUR 80.4 million and I'll take you through the details of that on the next slide. Just on the look at free cash flow then. Here, we outline our free cash flow generation and our free cash flow conversion for the period. As you know, we define free cash flow as EBITDA less investment in working capital less maintenance CapEx. And our medium-term guidance for free cash flow conversion is 60% to 70%. This translated into a reported free cash flow conversion of 143.8%. Adjusting for timing difference of EUR 41.8 million, our adjusted free cash flow conversion came in at 69.1%, which is within our target range of 60% to 70%. Just moving on then to Slide 23, and look at capital allocation. Capital allocation has and remains a key focus for the group as we adopt a very disciplined and balanced investment approach. As we have always said, we will invest in organic and inorganic opportunities across each of our 3 divisions, which support our strategic objectives and deliver a return on capital employed at or above our hurdle rate of 12% to 15%. We maintain a prudent approach to leverage and aim to keep our net bank debt to EBITDA ratio below 2.5x over the medium term. I'll hand you back to Ger now to finish on our investment case.

Thanks, Tim. Slide 24, we're now going to talk about investment case. We're going into next stage of growth with a much greater number of capabilities than we had as IPO. We have demonstrated a strong track record [indiscernible]. We know this industry well, and we will follow the money. There is a company market opportunity, a very favorable market backdrop, plenty of scope for growth in each of our 3 divisions. Each division has an attractive competitive moat, and we have a company plan in place to grow and deliver on our ambitions. Slide 25 shows our strong record as a listed company. We've doubled our EBITDA, increased our margins and delivered very substantial growth in areas of share. This has resulted in our share price increasing by over 120% since IPO. If we look to Slide 26, we outlined our ambitious targets to deliver EUR 200 million EBITDA over the medium term. We will achieve this target through robust organic growth across all 3 divisions, made possible by our investment in technology and infrastructure, complemented with strategic M&A. Our expected organic/inorganic splits going forward will be 70-30 as we leverage our platforms, and we remain confident that we can double our business again in the medium term. Thank you for listening. I will now hand back to the operator for Q&A.

[Operator Instructions] Our first question today comes from Colin Grant from Davy.

I have 2 questions. Firstly, just on the Pharma division. You had really strong growth in the first half of 20% organic growth in your gross profits. And I'm just wondering if you can give us some more details on some of the actions that you're taking to drive that level of growth in H1? That's the first question. And then the second relates to your Supply Chain & Retail division. And you had it looks like around 5% growth in gross profits just from M&A in the first half, which would include the McCauley acquisition. And I'm just wondering if you can give us some details on how that's going? And just an update really on the progress you're making on your strategy to grow market share and the number of pharmacies within the broader symbol group that you have there?

Thanks, Colin. I'll take the first question before I hand over to Dermot. So really great H1 for Pharma, very strong, and that's across both on-demand and pharma services, and both grew double digits. We [indiscernible] on demand is driven by the expansion of BModesto offering into new areas and also the revenues we delivered as part of the wider on-demand platform. In pharma services, this is all driven by expanded access business. We said last year that we were strong on mid-term within our pipeline, and that's come to fruition in H1. And when you look back when we acquired Durbin post-IPO, that was a focus on smaller programs working with smaller companies, and we've been working hard over the last several years to get into the bigger problem with the bigger companies, and that's what's coming through down after 4 hard years of work. It's great to see that improvement and showing the strong results. Dermot, do you want to take the Supply Chain & Retail question?

Yes. So the main reason, as you've outlined there, Colin, is the McCauley transaction, I think it was the end of January last year when we finally got to complete it. From an acquisition perspective, I suppose there was a couple of ICPs that we closed out in quarter 4 of last year. So there's a timing difference there. On the McCauley acquisition, it's gone really, really well. We've now combined as well the management teams on the retail side of our business. So we have one retail team managing the business. And I think in terms of the integration, in terms of systems, people and I suppose the trading strategy, that's all well on plan. And we've made substantial progress towards the end of last year, and that's continuing into this year with the business. I'm very happy with that.

The next question comes from Charles Weston from RBC.

I'm asking 3, please. The first is just a follow-up on the exclusive access programs. That is obviously going very well now. But have you got a sense of what the market backdrop is here in terms of market growth and how -- and what level your market share has got to? My second question is on operating leverage. Sometimes your EBITDA grows faster than gross profit, sometimes less fast as you invest in the business. I just wanted to understand perhaps what your sort of plan of driving operating leverage on that OpEx line in particular? And then lastly, and this is a bit more forward-looking, please. It relates to the scale and the timing of benefits and return on capital from your new distribution center and ERP system. I appreciate this is still some way off, but if you could just sort of talk about how you think about the potential long-term returns from that or cost savings or revenue opportunities, that would be great.

Brian, you might take the ERP question, please.

Yes, of course, Ger. Thanks, Charles. Great questions. So as Ger mentioned, in the last question, Charles, when we acquired Durbin, it was mainly focused on biotech and small to medium-sized pharma. So 4 years on, we've made significant progress now working with big pharma, working with 5 of the top 10 pharma companies in EAP. So one of the biggest benefits of this is a pipeline of the larger companies, so gives us a strong position to work on multiple programs with these clients. So one example is one of our large clients, we've won 5 programs since working with them. The other significant growth in this sector is within cell and gene, where even companies that have traditionally more programs in-house are now outsourcing these programs, and Uniphar has developed a reputation now for being the experts within cell and gene for expanded access. And we've launched a specific cell and gene business unit to support both EAP and into commercialization services. But as you noted, the sales cycle here is long. So it can take 2 to 3 years to infiltrate some of these accounts and even with the biotechs we're talking to them as early as Phase II or early Phase III with programs of getting to late-Phase III or even post FDA approval. So our market position from our perspective we're the market-leading service but it's still competitive, but we made significant progress over the last 4 years.

Tim, please cover the operating leverage question.

Yes. As Ger said in the presentation, we've invested about EUR 4 million and growing an organic platform [ AMA ] in the U.S. and in Europe. So we're expanding out our Europe commercialization platform, and we're also taking some initiatives in the U.S. to expand the business organically. This has, as I said, about a EUR 4 million drag on profitability in 2024 and also in '23, and we would expect those businesses to move into profitability next year.

In relation to Greenogue 2, Charles, we see -- it's a multiyear project. It was 4 years of planning, now in implementation stage, which is 3 years. We've a target go-live date of Q3 2026. So it's going according to plan, but it's a very substantial project for us, and we'll start to put cash again post go-live in '27.

Can I just follow up on that? And will there be a time when you're going to be running -- well I guess there will be a time when you're running through distribution centers at the same time. Is that likely to cause a blip in the -- in margins, maybe around '26 or '27?

I think from progress, we see this as a huge opportunity because we can do this in our line of environment to mitigate any risk. So that's why we're so confident that we get this in without any risk. But there is a cost for a period of running both systems, Charles, yes. Tim?

Yes, there will be a cost [indiscernible] obviously having the 2 distributions centers going on for a period of 3 to 6 months [indiscernible]. But we built that [indiscernible]. It's something that we've been planning for, and it's something that we try to make sure that we [indiscernible] as much as possible.

Okay. But there's no quantification of benefits just yet?

Pardon?

You're not providing any quantification of the potential benefits yet. Are you waiting a bit -- for a bit until they happen -- until you do that?

Yes. Like everybody has asked like what's the impact of G2 going to be? And as you can imagine and as we said previously, it's going to reduce our cost to serve by up to 50%, [ AMA ]. So that's going to have a huge impact going forward. It's also going to give us an excellent [ AMA ] capability to increase our gross margin. So between the operational efficiencies, the excellent [ AMA ] opportunity, it's going to be a huge inflection line for the company, but we were not in a position yet to quantify if the [indiscernible].

The next question comes from Paul Cuddon from Deutsche Bank.

I've got 2 questions, if I may. If you could start by helping me reconcile the 8% wholesale kind of volume growth within Supply Chain & Retail with the 3% kind of reported gross profit growth? Is there some sort of pricing dynamic, consumer spending pressure, mix impact that's sort of affecting that?

No, the [ AMA ] -- I think that one, [ AMA, ] Paul, the 8% growth in Supply Chain & Retail has been driven [indiscernible] due to the acquisition of the McCauley, which is fully consolidated this year. It was only in from February of last year. There's also been some acquisitions last year in the ICP area, which will have also impacted that. So we bake that impact out [ AMA ] reconcile it back down from the 8% to the 3%.

No, sorry, Tim, the wholesale volume growth, I'm specifically referring to.

No, there is not like AMA -- there is not AMA pricing impact and the wholesale -- the wholesale market has grown at 3% to 4% AMA. Our volume growth has gone up by 8%. And you see our market share has increased slightly from 53% last year to 54%. So there is not any change in pricing mechanism. If it's anything, AMA, we've been driving our margin AMA in the Supply Chain & Retail area, and we would see an enhancement in our gross margin later on the year. So while our gross margin would have slightly fallen in the first half of the year, we expect that to recover in the second half of the year and to be stable for the full year.

Okay. And second question, I mean, you've specifically highlighted the benefit of GLP-1s presumably to the Supply Chain & Retail. Just thinking longer term, if these kind of medications do sort of deliver the benefits across obesity, diabetes and sort of other disorders. Is there potential risk they cannibalize other sort of medications and potentially also expand into the Medtech business as well?

That's a very tough question. I think -- Brian, will you really [indiscernible]?

So there are definitely, Paul, people more qualified, I think, to speak about the exact breadth of diseases that GLP-1s will ultimately treat and the impact on the sector. But fundamentally, when you look at the investment in research and development across the pharma industry, new therapies and the breadth of diseases that these are treating, in particular, the renal rare disease and cell and gene, it certainly gives us confidence that they will be continued for our services across both Pharma and Medtech.

The next question comes from Christian Glennie from Stifel.

I guess to start off with on pharma and the EAP, but particularly this concept of the pull-through to be able to then not just run that EAP program but then ultimately win more of a sort of commercial service contract on -- as a result of that. Just to articulate a little bit about in terms of how you're progressing there and what should the expectations be in terms of converting a building pipeline of these EAP and some wins into commercial contracts?

Brian, you want to take that?

Yes. Thank you, Christian. So ultimately, our goal is to connect open and we are connecting with that whole life cycle and working with all of our pharma services businesses to cross-pollinate opportunities and work with our clients throughout the life cycle on EAP gives us a really strong position for that. So if you think about what we are doing with EAP is, we are the first trusted partner that are delivering these really sophisticated high-tech therapies to patients in the real-world setting. So really well placed to continue those services into the commercial world. So our investment, organic investment in those commercial services in Europe, it's a long sales cycle, but a big focus is working with our EAP clients to demonstrate our capabilities of leveraging everything the infrastructure we build through EAPs and the benefits of that in terms of the commercialization, small patient population. We're working with the key opinion leaders in all the countries of working with the EAPs. We set up the commercial infrastructure for delivering into the hospitals, enrolling patients, institutions, doctors, having order to cash. So there's huge benefits to be gained by our clients continuing that service. But 50% of our pipeline on the commercial services are coming from EAP. As mentioned, it's an organic investment. We're starting to scratch, and we built up a really good reputation, really strong conversations, but there's a long sales cycle, which you're absolutely right, EAP is a core focus in terms of converting those clients into broader services.

That's a strategy yet to play out. I guess I'm trying to fully understand it's not yet in play but it will take a couple of years to play out.

It's absolutely in play in terms of the conversations that we have. But as mentioned, it's an organic investment that we have made here. And so if the pipeline in terms of conversations we're having with the commercial services, 50% of them are coming from EAP but still to converge. But it's not just on the -- for European focus, but there's also broader geographies that we can service for those commercial services for EAP, but that organic investment will take time to come to fruition.

And then on Medtech, please. Just a couple of things there. There's obviously been some reasonably material sort of shift phasing of this medical equipment sales of strong benefit in the first half last year. It was a headwind this year. Is there something going on in that market that you continue to expect this volatility? Or should that smooth out over time? Just to understand maybe something going on in the wider market. And then in terms of the sort of white space that's still there in Europe in some of the key markets, France, Spain, Italy and the like, the plans to tackle those markets, please?

So a little bit of metric, it's a great business. I mean huge amount of recurring income. So we have very clear visibility of where we are this year and next year. There is a capital element, which can be bulky and that's reflected. But if you look at the comparators at 9.8% organic growth last year, we're on track to do high single digits this year like -- so I think it's just part of the business. The lumpy part is in the capital equipment, which is really controlled within H1 or H2. But the business is going very strongly. The growth over the last 2 years, it's driven very well. From a geographic focus, I think our area -- our short-term focus is to harvest what we've already invested in Northern Europe and really grow that business in Southern Europe, it's definitely an opportunity for us in the longer term. But in the next year or 2, we'd focus on in Northern Europe and drive [indiscernible] platforms and continue to drive the double-digit growth that we see for the business.

And then just finally, if I can, just maybe push a bit on the EUR 200 million EBITDA target over the medium term. Just to understand, you obviously talked about this as an ambitious target for the business. Does that -- how should the market interpolate? Does that mean there's a stretch target in your eyes? Or is this something that actually should really be reasonably achievable?

I think, as a business, we're very ambitious. So it is an ambitious target, but we believe it's completely within our ability to deliver it. Like we've said, the split organically and inorganic is 70/30. Within the medium term, we can get there, and I think we're very comfortable. When we look at where we are today that we can get to EUR 200 million EBITDA. So we don't see it as a stretch target. We see it as achievable.

[Operator Instructions] The next question comes from Brian White from Shore Capital.

I've got 2. The first one is again on EAPs. I guess whenever we speak to small biotech drug developers, they're very aware of the potential for early access. Just given some of your commentary on your activity with big pharma, your specialization in the highly complex field of cell and gene therapy, is there a risk that given all this activity, you become resource constrained. I don't mean in terms of numbers, but in terms of the complexity of the offering that you have? And then just secondly, on -- you've given some commentary on the Medtech acquisition strategy. And I guess looking at the Pharma division that you seek to enhance and broaden some of the services that you offer, particularly as you move into commercialization and services. Are you seeing pretty much everything as earlier? I just know in a few -- and if you are missing thing, is it purely financial? Because from our perspective, Uniphar is like a go-to partner, particularly for the Pharma division.

In terms of the resource constraints, so great questions, Brian, on the complexity, like there are long lead-in times here. And obviously, this something that has been -- we've been talking about now for quite a while on that organic investment. So it's -- the strategy is in place, the organic investment is in place, and the programs as they ramp up, there's a long lead in terms of our ability to further invest in order to deliver on those programs. But you'll also see that some of the services we're offering are outsourced. So what are the complexities of being able to commercialize the product in Europe is the number of partners that you need to actually put in place. So it's easy or easier for big pharma because they did infrastructure in place. For small biotechs, if you look at the structural drivers, over the last 10 years, only 60% of FDA-approved products have launched in Europe because of the complexity. So unless it's going to be licensed out to big pharma, they have to look at means of being able to do themselves. But in order to do that, you need at least 60 to 100 part of people in place for full commercialization across Europe from market access, regulatory, medical affairs, supply chain and CSO. So what we have done is we've invested in the core services in-house, but we've also put in place MSAs for some of those services that we can outsource to give a full service solution. So it's not just about Uniphar delivering all of these programs and all of these services; we have partners in place throughout Europe in order to support us and augment our services. And then if you can just repeat the second question again, Brian, if you don't mind?

Yes. It was really on the M&A front for the Pharma division. And were you seeing [indiscernible] the year and a few missing things, why is that? Or are you not missing anything, I guess?

I don't think we're missing on things. So as you know, we work hard on M&A. So having closed close to 25 deals since the IPO. And most of those are coming from just our own pipeline. So we don't wait for, I suppose, the deals to come to us. We've got a database of over 3,000 companies we've profiled, having conversations. But fundamentally, it's to make sure that there's a strategic fit, culture fit and absolutely delivering a return on capital employed for our investors at 15% -- 12%, 15%. So we make sure that it's sort of achieving all of those things, constantly having active conversations. One of the things we have called out is market access is an area of focus for pharma services. But we're also at a point now where we can invest organically, that people can see the Uniphar platform, and we're attracting really strong talent from this sector to build some of these services organically. And I think that's demonstrated in the most recent results in terms of the strength of the organic growth across the business.

The next question is from Sam England from Berenberg.

So firstly, it's a year on from announcing the rebrand and resegmentation of the company. Can you talk a bit about the benefits that you're seeing from those changes so far? How they've improved the go-to-market for the company and how customers have reacted to those changes so far? And then secondly, now that acquisitions like BModesto have had time to integrate, can you talk a bit about the commercial synergies that you mentioned in your presentation? How much has been achieved on commercial and revenue synergies? How much is there still to go? And exactly what areas you're benefiting from?

So the rebrand really has benefited our Pharma Services business and how we show up to meet our customer base. Medtech was all in the standalone business, branded separately. Same as Supply Chain & Retail, but Pharma Services, we've seen a big improvement in how we show up and present the service offering to our Pharma clients. Brian?

Yes, thanks, Ger. So we're seeing significant improvement, I suppose, in the recognition within the pharma sector of Uniphar as a global trusted brand that's committed to our client success. And a core part of that is turning up with that brand of expertise under one brand. So we've got a lot more capability than sometimes we give our sales credit for internally across our teams and certainly that we are going to market with. So by combining these services and the way it is even with our own people to see opportunities across the sector is seeing service offering, we're seeing benefits now in that cross-pollination of services. So the rebrand and continued investment in our services, it improves that sort of ability to work with our clients from one service to another. And as mentioned, a good example is 50% of the pipeline of our commercial service is coming from our EAP clients. We all see continued benefits within our drug development and clinical services, supporting our ability to win EAP programs in the U.S. with a lot of U.S. programs being won. So -- and turning up as well and seeing the opportunities together, our BD team is working together, and we're seeing -- starting to see good benefits.

Dermot, [indiscernible].

Yes. So Sam, I think the first thing on the recent acquisitions and on-demand are really that strengthened our management team in on-demand. So we've brought some really good people into the business. I think the big thing for me now in terms of on-demand as we build out our global platform is our sourcing capabilities. And I think those capabilities have allowed us to expand into new markets. So we're expanding geographically in terms of launching new service lines to BModesto in Central Europe. We've launched our PI offering in the U.K. to complement our existing business there with Durbin. We've had a really strong performance in Asia Pac, [indiscernible]. And we've strengthened our position, marketing position in Ireland with PharmaSource, particularly in our hospital business. So you can start to see the synergies really coming through now, and it's exciting, I suppose, to see that post the integration of those recent businesses that we've acquired.

We have a follow-up from Charles Weston, RBC.

Brian, you mentioned this pipeline of -- sorry, the sort of network of partners you've got across Europe to help with the commercialization side. Would the ultimate goal be to fully own and consolidate all of those capabilities over time once you sort of reach critical mass? And does that mean that you might see some of those partners as part of your M&A pipeline?

Yes. I think you've seen our formula before, Charles, where we absolutely do like to work with people first before acquisition, I suppose. It just proves out the acquisition case, establishes the relationships, lets us get to know them. So with some of those services, Charles, we could see that happening, particularly in the area of things like market access and regs, but there's also services that we don't necessarily need to own within that as well as broad service offering. We don't necessarily need to have distribution capabilities in every single market. It's small. These tend be very small patient populations and will be always that we can manage that and all the things like CSOs. Some services may not have high enough value for us to enter into. So it goes back to the point around ensuring that we're continually focused on being to deliver on the target return on capital employed, 12% to 15%. But there are absolutely some of those services that are high value and would augment well into our service offering and working with pharmacies first proves -- helps establish that investment case.

[Operator Instructions] We have no further questions, so I hand the call back to the management team.

We appreciate our shareholders' support over the last several years, and we look forward to having -- delivering a very strong H2 for our shareholder base. So we'll crack out and keep driving shareholder value. Thanks for listening.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.