Virbac SA (VIRP) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to the Virbac Full Year 2020 Results Conference and Webcast. Hosting the call today are Manuela Rodriguez, Investor Relations; and Sandrine Brunel, Head of Corporate Communication for Virbac. We will be joined by Sébastien Huron, our Chief Executive Officer; and Abi Bran Danier, our Chief Financial Officer. Before we begin, I will remind you that the size and additional financial materials have been posted on our website in the Investors section, and a replay of the meeting will be available after the conclusion of this webcast. [Operator Instructions] And with that, I will turn the call over Sebastian and Habib. Habib, you may begin.

Thank you. Good afternoon to all of you. My pleasure to start this presentation of our 2020 results and perspectives as well. So we are going to cover, first, the financial results. I will then hand over to Sebastian who will take us through a little bit of the past couple of years, what we have achieved up until 2020, we'll then focus on the priorities of 2021 and look back on the years to come as well. So let's start with the financial results. So as usual, I will first give you a highlight of the main elements, points, take away from our financial results that have been posted for 2020, and then we will go a little bit into more details. To start with, I'm very pleased to share with you that we have had excellent sales performance with a growth rate of 5.7% at constant rates. And this despite both the COVID-19 crisis as well as our internal disruption in the supply of vaccines following the issue that we had at the mid-year 2020. So this good performance is linked, obviously, to the engagement of our teams throughout the world as well as the resilience of our sector, the animal health industry. And we can say as well that we have had growth in mostly all the regions that we are covering with the exception of the U.S. that has been more or less stable. And Sébastien will say a couple of words on that later on. From a current operating income before depreciation of assets linked to acquisitions. We have also had a very strong performance. We have added EUR 17 million at constant exchange rate leading to an EBITDA ratio to sales of 14.4%. This is due to 2 main elements, factors. The first one is the operational performance, top line growth as well as the margin improvement in all regions. And the second element is the limitation of expenses in the context of the COVID-19. Some of it was voluntarily, we've been very cautious, especially at the beginning of the prices, the first part of the year. And some of it is non voluntarily. It's linked to limitation of expense that we had, linked to the travel ban, postponement of some meetings, congresses as well, marketing expenses that have been pushed and as well as R&D studies that we have to stop or postponed. Final comments on the operating income is linked to our ForEx impact, which has been negative, as you can see on the slide, the bottom of the slide, we have had a negative impact on the top line of EUR 35 million and a negative impact on the EBITA level of EUR 10 million. So the bottom line is also a dilution of our EBITDA ratio to sales. I mentioned that it was at 14.4% in 2020 at constant exchange rate, so using the exchange rate of '19. Using the exchange rate of 2020, it is at 13.8%. So we lost 0.6 points of EBITDA ratio linked to the negative evolution of the exchange rates. Very briefly, we have shared with you here the evolution of the average exchange rate between '19 and '20. We can see that many currencies devaluated versus the euro, especially in Latin America and Asia, such as the Brazilian real, who lost 25% between the 2 years. Let's continue to go down our profit understatement. I mean to say a couple of words on the net profit that have increased significantly, moving from more than EUR 50 million in 2019 to EUR 142 million in 2020, so a significant improvement. It's linked to essentially 3 elements. First one is the operational performance and the OpEx savings or limitation linked to the COVID-19 situation that I mentioned earlier. Second element is the nonrecurring items. You know that we have divested SENTINEL in 2020. So as a consequence of this divestment, we have recorded a net capital gain of around EUR 66.5 million, which has a direct noncash impact on our net profit in 2020. The third element is a decrease of the net cost of financing linked to the cash that we got from the SENTINEL divestments. We've been able to reimburse some of the credit line that we had and which translated into a lower cost of financing. We moved from around EUR 20 million to EUR 10 million in 2020. If we look at now the net debt evolution, you see that we had a very significant decrease of our net debt by more than EUR 400 billion, which is a combination of 2 elements. First one, obviously, the divestment of SENTINEL. We got a cash-in of $410 million, which translates into EUR 363 million, a direct impact and enable us to decrease our net debt. And at the same time, we also had an operational decrease of our net debt at constant exchange rate and scope. So without the impact of the divestment of SENTINEL, of about EUR 72 million. So the combination of those 2 elements as well as a slight evolution of our working capital needs, enable us to move from a positive net debt situation at the end -- at the beginning of 2020 of EUR 368 million to a negative net debt situation or a positive cash situation of EUR 63.4 million at the end of 2020. Finally, on this slide, you can see that we have taken another major step in our journey to deleverage our company, Virbac. And we have reached a negative level of our net debt on EBITDA ratio at minus 0.29 which is obviously well below our covenant -- bank covenant commitment of 3.75 for the end of the year. Let's look at very briefly the latest perspective or guidance that we have shared with you and what we have achieved. We said that we would end up 2020 with an EBITDA ratio to sales or to revenue at constant rate of around 14%. We have finalized our P&L profit and statement with an EBITDA ratio of 14.4%. So very well in line with what we communicated. We said as well that we will be cash positive. And as I mentioned, we are cash positive by EUR 63.4 million at the end of 2020. Let's have a look at our consolidated sales. We have posted consolidated sales of EUR 934.2 million in 2020, which is slightly below 2029 (sic) [ 2019 ]. However, with 2 main impacts. First one is exchange rates. As I mentioned, we lost EUR 34.5 million linked to the exchange rate as well as a change in perimeter, which is the divestment of SENTINEL. So at constant perimeter and at constant exchange rates, we have had improvement, the progression of our sales by 5.7%, which is one of the best performance of Virbac over the past several years. If we look at now where these improvements on the sales I mentioned is coming from, you see the 2 red block, which, again, focus on exchange rate negative impact as well as the U.S. with SENTINEL divestments. But beyond that, at constant scope, and exchange rate. Again, we've been able to add EUR 50 million, 5-0, between '19 and '20, so a very strong performance. A good portion of that has been realized in Europe we have added EUR 22 million of sales in our European region, which is a 5.9% -- a very solid 5.9% growth, which is coming from several countries, subregions that have contributed to that. Northern Europe has done very well. Central Europe as well has performed very well. France has had a very strong year especially on the companion animal pillars with a very strong performance of our pet food sales, for instance, in France. Spain has performed very well as well during this and has recovered after 2019 that has been more difficult, if you remember. So a lot of countries and regions have done very well in Europe. The only one exception, I should say, is U.K., which has seen a decrease of it sales between '20 and '19 by around 8%, which is essentially due and linked to the COVID-19 situation and impact which has been very difficult in this country. The rest of the growth is coming from rest of the world, which is adding another EUR 29 million versus 2019 at constant exchange rate. And for us, the rest of the world is essentially 4 regions: Latin America, Pacific, Asia that have grown an excellent 7%, each of them -- close to 7%, around 7%, as well as Africa/Middle East, which has posted a growth of 4.5% comparing to last year. This is due, obviously, again to the engagement of our teams in all those countries as well as to the resilience of the sector. We have had also some very good performance on our existing product. We have benefited as well from a couple of product launches, such as selecting platinum in Australia as well as the geographical extension of some of our product, good illustration being the launch of Suprelorin in China. It's also interesting to note that among the top 10 country in size in these all of them have grown with the exception of Chile, and we're going to come back to that later on. And the lowest growth has been Japan and Australia, but those 2 countries have still grown by more than 4% comparing 2020 to 2029 (sic) [ 2019 ]. Finally, the highest contributor has been India. If you remember, the beginning of the year, the first part of the year has been quite difficult in India with some consequences, economical consequences as well and sanitary consequences linked to the COVID-19 pandemic in this country. We are very happy to see that our activities as rebounding fantastically well during the second semester. Our local team have been able to restore very quickly our supply and we've been able temporarily to take market share to competitors. We have had a very good performance in India for the second part of the year. Very quickly if we look at the sales growth by segment starting with companion animals, you can see that most of the segments have posted a growth with the exception of biologicals, the vaccines. You know that we have suffered from the stop of our production for several weeks due to a pipeline rupture in our worldwide sites, production site for vaccine, dogs and cats, which translated into a decrease of our sales comparing 2020 to 2019 by the EUR 12 million that you can see on the slide. Apart of that, all segments have grown, the first one being parasiticides. It's red because of the divestment of SENTINEL, but as you can see on the side, excluding SENTINEL, we have posted a good -- we have added EUR 7 million sales with product notably on products such as Milpro that have performed well. 2 other segments that have grown double digits, very in line with the historical trend we had the specialty segment as well as the pet food segment. As you can see, pet food having reached now EUR 60 million -- more than EUR 60 million of sales overall. So a very good performance on companion animal, which has grown close to 6% at constant rate, which is the same for food producing animal as well. And you see that the picture is quite similar, a lot of green. We have grown in many segments with the exception of aquaculture with a more difficult situation on cold and warm water fishes, and we're going to come back to that. Other segment that has been stable, are part of that. All the segments have grown. The top growth being -- vaccines as well as right vaccines in Europe as well as Latin America, antiparasiticide have been grown in -- with many different products as well at that growth. And finally, antibiotics. We mentioned that on the long range, we don't necessarily expect to see growth on this segment. But some years, linked to the situation with the PDM, we can see some growth. It's a very cyclical also segment, and it has been a part a good years with the sales of antibiotic, especially in Latin America and Asia region, Pacific region, Asia Pacific region. The sales breakdown by region and business has not fundamentally changed with the exception of the divestment of SENTINEL, which translated into a slightly lower share for companion animal that is now below or slightly above 57% as well as North America was weighed as a slightly decrease following the sales of SENTINEL. Before moving to the profit and loss statement, I wanted to cover one of the main events in terms of impact on our financial statement for 2020, which is obviously the SENTINEL divestment and the related accounting impact. So as you can see, the net value of assets that has been sold, and thus, away from our balance sheet, amounted to slightly less than EUR 300 million. The sale amounts which is the cash that we received amounted to EUR 363 million. And thus, we have recorded a capital gain of around EUR 70 million gross before tax and EUR 60 million after tax. If you remember, we have had some tax assets, deferred tax assets tax losses carried forward, which were in 2017, impaired, so taken away from our balance sheet. We have impaired those in application of the IFRS rules. But still, we've been able to use them against the capital gain that we had related to the SENTINEL sales. So the majority of the capital gain has been done without any tax impact or we've been able to use our historical deferred tax assets. Let's move to the profit and loss statement. I covered already the top line, the net sales. You see that we had, had net expenses comparing 2020 with 2029 -- 2019. It's essentially linked to 2 elements, essential impact, obviously, which has had an impact on this line, as well as the cost expenses, reduction or limitation following the COVID. And also, it's quite difficult to assess it precisely sort of waive scenario. We have estimated at around EUR 15 million for the entire year. So as a consequence of all of that, a very good performance -- operational performance that we had on the top line, on the expenses. You see that our current operating income has grown significantly comparing one year to the other. And despite the SENTINEL divestment which impacted that. And we mentioned that it translated into a 1 point EBITDA impact linked to the SENTINEL divestment in 2020 versus 2019. The amortization of intangible assets rising from acquisition have also decreased, which is the consequence of the divestment of SENTINEL only. You see then our other noncurrent income expenses. On this slide, we have essentially in 2020, 2 elements. The gross capital gain, so before tax of our SENTINEL divestment as well as the impairment of CaniLeish that we already shared that has already been accounted for at the end of June, and we shared that in September for EUR 4.4 million growth and EUR 3 million net impact. You see the net financial expenses that have decreased significantly between 2020 and 2019. And finally, on the income tax, it has grown, which is linked to the very good performance that we had obviously. Our effective tax rate has more or less remained stable, we moved from. We were slightly above 28%, and we are now slightly low 28% in 2020, but it's more or less the same. So all in all, a very good year, very nice improvement of our net result moving from slight above EUR 50 million group shares to EUR 137 million in 2020. If we look at now breakdown of EBIT adjusted evolution between '19 and '20, you see that Europe and rest of the world have contributed significantly to the improvement. Obviously, the U.S. has contributed negatively linked to the divestment of SENTINEL that we shared as well as some one-off impact. We had a one-off profit last year, if you remember, with the sale of our headquarter. And we have recorded some one-off expenses this year linked to the impairment of some obsolete industrial equipment as well as intangibles. Final comments on this slide, which is on the corporate block, you see that we have a slight improvement here, which is linked to the limitation of the expenses, obviously. We had also a one-off impact for EUR 3.6 million, which is a profit linked to the vaccine related insurance. And this is an insurance reimbursement that we received linked to the issues that we had with our vaccine site. But we don't see this impact when we look at the evolution from '19 to '20, because if you remember last year, we already had a one-off profit, which was linked to the pension fund reversal for approximately the same amount. Evolution of cash flow have been very positive, both at the operating and net dimension with, respectively, 15.3% and 9.5% growth comparing the 2 years. The evolution of free cash flow as well. So we have decreased the net free cash flow generation between '19 and '20. This is essentially linked to the increase of the CapEx spending. We have spent around EUR 30 million in 2020 as well as to the increase of our working capital requirements in 2020, which is linked to the increase of our inventory, also an increase of our receivables linked essentially to the factory. We have decreased the amount of factoring between the beginning of the year and the end of the year by around EUR 20 million. And all of that has been compensated by an increase of our accounts into the increase of activity during the second part of the year and the end of the year as well as the end of year rebates, have also increased and have played favorably on our working capital requirements. So overall, a net free cash flow of EUR 77 million has been generated. Evolution of net debt if we look at the opening position, I mentioned, we were at a net debt position of EUR 368 million. We are now in a positive net debt or cash positive situation of EUR 63 million. I already commented the net cash flow generation, the CapEx as well as the working capital, you see that the next very big item is the other items. And there, have the benefit of the $410 million of cash generated through the sales of our SENTINEL assets in 2020. So at constant rate and without the benefit of this $410 million or EUR 363 million the improvement of our net debt would have been around EUR 72 million comparing the beginning of the year and the end of the year, which is still a very positive operational improvements. Let's have a look quickly, our balance sheet analysis. You see some -- used to be very stable from one year to another. And this year, it has changed significantly. The #1 impact is obviously the SENTINEL divestment, which translated into a decrease of our assets linked to the sale and the fact that we have taken away from our balance sheet and transferred the SENTINEL assets, goodwill as well as the intangible and some tangible with stock, for instance. The working capital has remained more or less stable at the balance sheet level comparing 2020 and 2029 (sic) [ 2019 ]. And on the capital employed section, you see that the main impact is obviously linked to the net financial debt, which is moving from a positive to a negative position. We can go very quickly through our financial ratios. They have improved significantly over the past 3 years. Most of -- all of them are now negative linked to the SENTINEL divestment and especially the net debt and operating cash flow, as I shared with you earlier. Final slide on the financial section of this presentation is a shareholding structure. As of December 31, 2020, you see that nothing has materially changed. The Dick family continues to a percent of shares and close to 2/3 of the voting rights. I will now hand over to Sebastian for the next section of our presentation. Thank you.

Thank you very much, hello, everyone. So we are going to cover different points. The first one being the ability to execute and the main 2020 achievement. In fact, as you know, we have defined a strategy back in -- we have defined a strategy back in 2017 -- at the end of 2017. But as I frequently explained, the most important it's not only the strategy, but the ability to execute. And I have to say that we are quite proud to have been able to execute so well over the last 3 years. And for us, it is something really important to really work the talk and to be able to perform at the level of expectation and deliver on results. And so you see that we are not only focused on financial performance. We are also focused on social performance and environmental performance because we strongly believe in the fact that this is a balance between the 3 elements and that these 3 elements are really important to the sustainability of the performance. And we are, as we always explain, because we are family-owned company. We are looking for the long term, and we are in the sustainability of the performance and in the long term. So we really care about the social performance. We have developed many programs over the last 3 years related to health and safety and the environment. We have developed a great place to work program 2 years ago that we are rolling out and where I will comment a little bit later. And we have taken true measure and true objective in order to improve the performance on waste reduction, gas emission reduction, electricity consumption and things like that. So we really are working on the 3 dimensions. And you see from 2017 to 2020, the last performance of our last 3 year performance. And you can see, I'll let you look line by line. Of course, the sales, the top line does seem very impressive. It's 8.4% growth. But as you know, we had had some impact from the exchange rate, and we have had mostly and more importantly, the divestment of SENTINEL, which was our #1 product. So this performance is after the of SENTINEL, which, of course, remains an overall good performance where we organically have beaten the market growing faster than the market year after year, over the last 3 years. We have improved the EBITDA ratio and the EBITDA amount very significantly, and we improved 4.5 points -- despite here again, the exchange rate, 4.5 points over 3 years. The group profit include the divestment of SENTINEL, but you can see that it has been really a turnaround. And in terms of return on capital employed and return on equity, we also have a much, much higher ratio than we had 3 years ago. And the debt, I don't comment it because Habib already explained that in detail. Say very briefly, we are quite proud of the last 3 years' performance. And it is important for us to look a little bit longer-term than just quarter-over-quarter. Here, you have not the financial performance but the main elements, which we do not describe so much in detail which, in fact, explains the financial performance, you have many of the decisions, which were a long term decision, like the divestment of the logistic platform in [ Bisu ]. We had the closing of the Brazilian manufacturing site. So we have decided to reallocate some other resources we are trying to improve performance in all the dimensions, including manufacturing sites. We had the successful transfer of the SENTINEL spectrum production in St. Louis, as you know, to fulfill the manufacturing site. We keep the manufacturing despite the SENTINEL divestment. We keep the manufacturing in St. Louis, and we'll produce today for Merck. We launched -- think very big plan in China because China is the second biggest market in the world. And for us, it was a very, very small affiliate. So we wanted to make it more important to us. We have, and we keep continuing in opening new affiliate in new growing market where we believe there is a perspective in the future, et cetera. I will not list all the points, just to say that over the last 3 years, we have really executed well, many, many structural things important decision, which are really setting us in a much better shape for the coming years. And it's not only divestment of some element like the side of the platform, it's also the investment in R&D labs, in Taiwan, investment in R&D labs in Uruguay, where we have a huge level of capacity for vaccine development, et cetera, et cetera. That is not only '18 and '19, it is also 2020. So in 2020, we have kept a good strong annual performance at 5.7% gross on freight and scope growth, which is above the market. So it's another year where we have been in the market over the last 3 years. And EBITDA, Habib explained it. So I will not describe it in detail, but we have improved it by 1.4 points at constant rate to 14.4%. That is due to the strong sales. We know that the business model is very depending on the level of sales growth. So, of course, when Europe is performing to close to 6% and when the group is performing close to 6%, we have a significant way to deleverage and to improve profitability. And as I tend to explain when the growth is around 3% or 4% is more difficult when the growth is on 5% or 6%, it's much more easy. And when it is above 6%, then it is really almost automatic. We have a strong operational cost reduction linked to the COVID impact. No traveling, no congress, no event. That is, of course, impacting the 2020 account and helping us. And we had some delays in my, catching up in the second part of the year. It was a much, much more impact at the end of the first semester. And we have spent much more and catch up part of the delay in the second half of last year. But overall, during the year, we saw a little bit of reduction of expense in R&D, but not with too many impact on the main program. The debt reduction has been covered, and the return on invested capital at 14.7% and the return on equity at 24.1%. I will not spend too much time on the -- you main focus. You have many of the activity. Just to say that it was a very particular year. It was requiring a lot of efforts, a lot of investment from our teams people have really been really engaged. We did a really good job in terms of managing the production, the supply despite the COVID, the restrictions, the extending restrictions. We have been able to work from a remote position. We have really done a good job on that. The SENTINEL divestment has been a clear cornerstone in our strategy to reallocate our portfolio. So the reason of the divestment are clear, we were clearly overweighted in parasiticide in the U.S. We had too much of our margin in only one segment, one specie, one country, which was a heartworm dog U.S. and Heartland dog U.S. was way too much in terms of proportion of our sales and portfolio, and we wanted to transform our portfolio in the U.S. to make it look much more like what we have in other countries, what we have in Europe, for instance, with a broader diversity of products segments. And that's why you will see later, we will keep -- we will launch pet food, for instance, and we are launching other products. So the project vision was to divest one product and reallocate resources in order to build on a stronger base and a more diversified basis, the U.S. business. We are consistent in trying to execute as well, our long-term strategy, among which it is aquaculture. So we have acquired -- it's a very small business that we have acquired business with tilapia vaccines. Tilapia is the most important species in terms of tonnage of aquaculture production. It's a very important species in warm water species, and we have acquired a portfolio of vaccines, both some of them are already commercialized in one country. So the intention is to extend them to other countries to make a geo extension. And we have acquired a pipeline with 3 projects in the R&D programs. We have also secured companion animal product from Elanco in Mexico. And the rest is listed. I'll let you read it. But among which we are quite proud is all the great place to work initiative where we are really working with the employee in order to get maximum engagement from their side in order to perform well. And in long-term vision, the wet lab and aquaculture, diagnostics center in Vietnam is also quite important, as it will give us a platform in the middle of Asia, close to the consumer, to the customer, to the fishes in order to be able to quickly make diagnostic and develop new vaccines and new product. In terms of main achievements, when we look at the geographies, as Habib explained, we have -- the top 5 growth country you see are India, France, Brazil, Mexico and China. So you see the emerging markets like India, Brazil, Mexico and China, for us, are the main emerging market. Here again, very much in line with our strategy and what we try to achieve. And we had a very good year in France as well. 10 as 10 zone have grown at double digit. Of course, Brazil and China, which I mentioned frequently because it's the second largest and the third largest market in the world. But you can see that it is very diversified across the different geographies of the group. In terms of the buster programs, they have kept quite resilient. So the Petfood is growing double digit, close to 27% this year again. And that, despite no geo extension, we had planned to launch it in China. And as I explained, it was delayed. So there has been no launch in China and no launch in the U.S. in these figures. This is mostly organic growth of the Petfood, so 27%. The regiment has been growing 17% outside of the U.S. The truth is this is one of the product category, which has been the most impacted by the COVID, but also from a base effect because we have large a new formula in '19. And of course, when we launch a new product, you have some stocks that goes into the channel. So in the year '19, we had a very good year with the regiment. And the combination of the COVID impact with less visit to the better alliance, and this is less of a necessity product, let's say, in a time of COVID, combined with the fact that we had a very strong 2019 year, made that in the overall, the product has been almost flat, 1% down. Suprelorin, growing 17%. So doing very well and becoming each time bigger product for us. It's an implant for the dog reversible sterilization, which is an untapped market, really an unmet need, where there is a lot of room for growth in the coming years. And here, again, we are not really in China. We were supposed to launch in China in 2020, but the launch was supposed to happen exactly in March when the COVID happened. And so all the launch plan was stopped and put on hold. And we are not yet in the U.S. with the main indication, which is dog indication. As I mentioned below, Petfood, Suprelorin, especially in China, in fact, most of the product launch delay have been in China have been impacted by the COVID. In terms of geography, I will move fast because we covered it already quite a lot. Just to say that the performance has been mostly around SENTINEL because, of course, all the team was fully dedicated to Sentinel in the first half of the year. We had a very good sentinel sales in the first half of 2020 with $39 million which was growing versus the first half of 2019. That's why the impact has been estimated around 1 point only in terms of EBITDA at group level when we look at the overall year performance. But a lot has been done around this. And of course, because of the consignment because of the lockdown because of the type of product, we have been in the U.S. more impacted than in other market by the COVID. We are very proud of the successful return of market of Easotic. Easotic is doing very well. We have the launch of synergy, which is selamectin generic. Generic of revolution of tool. Stronger is Zoetis brand in Europe and revolution in the U.S. So it's a significant market, and we have launched a product last year. And as mentioned before, dental antibiotics have been more affected. China has not been a very good year last year, in fact. Despite a growth of 17%, this is way below what we normally do. And we have been strongly impacted by the COVID. As I mentioned, Suprelorin launch was delayed, and we plan to relaunch a product in 2021 to relaunch it this year. The Petfood launch was postponed. That was due to the bird flu. 2 years ago, it was due to the African swine fever, the delayed. We move back -- we moved the production to another site. We changed the formula to our chicken meat and with the workflow, we have been forced to delay it again. So the plan now is to move the production to China in order to not have any more buyer of entries in terms of importation from Europe for any country outside of China. So the plan is to move production to China, that will probably take around 2 years to execute that before we can launch in China. So that's a bit of disappointment with regard to China growth plan. But despite that, we still have grown 17% last year, and we are in the top 4 in companion animal in China. So here again, the other part of the plants are being executed quite well. We have many product and telestration and we try to bring new products and new innovation in order to keep growing and to keep growing very fast in China as well as developing the market access for digital platform because in China, the Internet is really helping a lot in booming in order to sell directly, including to peter, certain products. Chile, as explained by Habib, was strongly impacted by the COVID. So it was a flat performance in 2020 despite a very good job of the team. That was due to the fact that with the COVID, the restaurants were closed. And so the salmon consumption has been much weaker. The price has been dropping, and the industry has been already affected. So we had a 2020 flat performance due to that. We have -- despite that, continue to invest in R&D in order to be up to speed with the new regulation. As you know, there is a change of regulation to register the vaccines before the vaccines were authorized to be put on the market for one year, and it was an automatical renewal. Now with a new regulation by 2022, the vaccines will have to be registered forever. Forever, meaning for a long period of time, not renewal every year. But with that, there are new requirements, new efficacy requirements, new testing requirements. And so we are reinforcing the R&D plans in order to be able to re register with to register these vaccines, and there's a new regulation by 2022. We have successfully renewed the major third-party distribution agreement. That is important because a significant part of our business was also made of third-party distribution agreement. Just because we are the #2 player in the market, we are a very attractive player for smaller players and smaller company. So we have access to many products. And it was important for us to renew it, and that has been achieved. And we keep working on a manufacturing competitivity program in Chile. As you know, we have an R&D site locally and the manufacturing site, which make us highly competitive. But we want to improve our margin, and we want to focus on improving productivity and margin in this country. The minority share acquisition will be discussed -- is being discussed currently and will be communicated by mid-2021. And we will inform you what we decide to do in the mid year. That was for the ability to execute and the main 2020 achievement. Now if we look at the company priorities and the 2021 update, what we have explained in September was that we were going through a kind of transition phase for 2 years. By transition, it means part of what I already explained. First, the divestment of SENTINEL, which is a really important element to take into account, which will allow us to reallocate our portfolio. So to us, it's a very positive thing. It's it's free us from the debt. It gives us many more -- much more room to maneuver. But the idea is to reallocate the portfolio and to have a much more the diversified portfolio and also something that will allow us for faster growth. Again, as you all know, SENTINEL was dilutive in terms of growth. We had a negative growth from SENTINEL for many years. So the fact we have divested SENTINEL should help us grow much faster than what we used to do in the past. We have mentioned that with -- in the past, it was impacting more or less 1 point the graph of the group. So by the divestment of this product, we should be able to reallocate that portfolio and keep growing even faster than before. We had the opportunity now with the situation to significantly invest in manufacturing and informatic system. That also we have explained why and we have communicated. We want to digitally transform the organization, the company. We have started 3 years ago. We have changed with G-Suite and Google, all the e-mailing system and the communication system to accelerate the collaborative work between the company. We have installed human resources information system this year in 2020. And now we are doing the ERP, the MES, which are all the manufacturing system. And the laboratory system in order to improve data management, productivity and information that should improve our productivity and overall performance. Because of that, historically, the normative level of CapEx was around EUR 40 million. And we have said that over the next 2 years, we should be around EUR 60 million with all these investments, assuming no more delay because, as you know, sometimes there are some delays, which are not due to us, like last year and since most of the CapEx were delayed because of the COVID and the overall situation. On the OpEx front, the transition phase is more linked to the fact that we are entering 2 new markets. Really, it's new market. It's Petfood in the U.S. and food producing animal in the U.S. So these 2 new markets are really -- will become transformational to Virbac over the years, but there will be some market cost entry at the start, of course. FPA, it's a totally new market for us where we have to build a very small organization that we have to build an organization in order to enter it. We will maybe take a partner for part of it, but for some segments, we have decided to go it on our own, so to build the organization. And on pet food, it is more -- we have a commercial organization in place. So it's more marketing, A&P and training and technical training. But there are costs, of course, when you launch a range of Petfood. So that will merit some significant investment in the coming years. And until we can get the critical mass we expect on these 2 ranges, but it is very positive for the long term. And that's why when you look at the 2023, 2025 and beyond, the boost U.S. performance will come also from this part, fast-growing, we expect at least the fast-growing FPA business with launch of new products that will complete the launch of the first product this year. And we hope that we will be successful and managed to impose our Petfood range in the U.S. It will be a difficult market. It will be a very difficult market because we are playing on the backyard of the 2 largest players, which are well canyon and hills. But we think that we have a nice positioning for the petro range to be successful. And so we will keep doing what we have done over the last 3 years. It is focusing on organic growth. We want to create value. And to create value, we know that this goes from organic growth first. So we want to keep growing above market rates, and we have delivered like that over the last 3 years. So we expect to keep doing that. We expect to keep growing above market rate organically, gaining market share. And of course, we are now capable of adding on top of that, what we call programmatic M&A, it means we are not looking for a huge deal or transformational deal. This is not what we want to do. We want to acquire smaller business or smaller company or pipeline or things like that, that will be accretive to our business. That will make sense that will allow us to digest this acquisition that will allow us to capture the value of this acquisition and build on it in order to create maximum value and help the group keep growing faster than the market, of course, and improving profitability much faster as well. And all that, with the growth of the top line should help us leverage the different commercial investment we have to be able to get back to the target of 15% EBITDA. So you remember, we have said that we were supposed to arrive around 15% around 2022, that was the initial target before the divestment of SENTINEL. As we have explained, SENTINEL was supposedly impacting us around of EBITDA on the pro forma level at the full year at the time of the divestment. So it means that we set up a target of 15% EBITDA now, it's equivalent to what would have been 18% before. So we have not yet defined when we will do that, but we have structurally organizing the company in order to be able to get back to this level of 15% even after the divestment of SENTINEL and with everything I just explained. Among the priority, number one, people. We really believe that as a midsized player the number one competitive advantage of Virbac is the level of engagement. It's not just a person or the people. We don't believe we have smarter people in Virbac. But we believe they are more engaged, much more engaged anyways. There is more collaboration, maybe for being a midsized player, and we really believe this is a competitive advantage. So we want to keep that. And we want to have the best and the most engaged people of the industry. And I will not detail all the bullet points, but you have many initiatives we do, including we will build this year Virbac 2030 project in which we will define altogether, the purpose of the company the why of the company. And we will keep pushing on the programs like the Great Place to Work and Participating Management, thinking of how we can learn from the COVID and really keep some of the new behaviors and learning post-COVID, so that some of the savings we have been mentioning before could be sustained and maintain post-COVID. We also try, and that's part of the transition phase to simplify and digitalize the company. So here, we are investing and everybody investing in manufacturing and lab system for the long term. But also in key processes, I mentioned the HRIS system, but in finance, in purchase, we are also digitalizing the company, trying to simplify the process as much as we can and make them more productive. And we are using a lot of digital investments in market access to reach a customer, to improve the margin to get direct to them. And that is being quite good results so far. And the organization is quite part of the recent initiative we are doing in this dimension. As illustrated by the divestment of SENTINEL, we also try to better prepare better prepare the company for the future. And we have a process of reorganizing, reallocating the portfolio. When I mentioned portfolio process of reorganizing [Audio Gap] and improve the EBITDA ratio. I make a quick update on the situation of the COVID in March. It's one year later than the continent. So we see a much higher level of confinement. So we see a much higher level of adoption of dog and cat then. And that is making the market overall very resilient. The uncertainty that we are still looking at is linked more to the supply issue. What we see that there is a bit of disruption in certain country linked to sometimes human call it vaccines. But we know that there is some tension on plastics and different type of material components. So we have anticipated as much as possible everything in order to not be impacted by that. But depending on the evolution of the disease and the resurgence of second and third wave of COVID, there could be certain lockdown and there could be certain impact also on the supply of the product and on the price of certain composite and material. So that's the level of uncertainty we have to deal with at the current stage. Last but not least, I would like to conclude on the 2030 strategic plan. First, to say that we think it's the right moment to project the company at 9, 10 years and try to design what we intend to do over the next mid, long term. And so I will not detail it, but just to share with you, we have started the project this year. We will be building that with the teams, bottom up. We have developed 9 stream and activity, 9 kind of plants and workshops where people will be working on this vision of what we want to do for 2030, starting with the purpose of the company. But most importantly is to ask the right question. And among which is, are we well positioned? Is our portfolio well positioned in terms of product, segment, country? So we want to discuss for instance, it's much easier to perform when we are on vaccines for poultry over the last 5 or 10 years and when you are in antibiotics for swine. So we want to analyze these kind of things. Are we on the right segments? Are we well positioned? And how can we improve our position strategically over the next 5 to 10 years? And we will discuss about how to generate accretive and profitable, sustainable growth through 2 types of moves, what we call portfolio related moves which is a rebalance between what I mentioned being pharmaceutical, biological and Petfood and pet care. Of course, we will keep focusing on the strategic pieces. And we are not going to start in the new spaces where we have no competency. So we'll be focusing on company animals, bovine, swine and aquaculture. But how do we want to reorganize a bit our portfolio among these segments and these species? And we will discuss about performance-related moves linked to innovation. I mentioned it before, how to accelerate innovation. We have many ideas. I don't want to share that. They remain part of our strategy and what we want to do differently from the others. But we have many ideas on how to accelerate innovation and how to improve competitiveness in manufacturing and how we can also be even better in programmatic M&A. What it may be important is to look at the picture of today. At the top of the chart, you have the market today. It's, of course, estimation, it's internal estimation, but you have a clue of what the market is more or less today. And at the bottom, you have the proportion of sales of Virbac in each category. And you can see that at 26%, almost 1/3, a bit less, a quarter, more than a quarter, is -- on the market is biological, vaccines. And for us, it's only 12%. So among what we want to do, we want to double the category of biological. We would like to be much more in line with the market, much closer to what the market is in terms of vaccines. And you will see, I will explain, on the right side of the chart, that we want to focus on vaccine that this becomes a priority for us. As explained why. You have why on the side, it is -- first, it is our history. We are back from biology and Actel. We have started there. We need to remain there. It is a market with very high buyer of entry. There are very, very few players. We have many animal help companies, but most of them are doing pharmaceutical. You have very few key player in vaccines and biology. And the fact to be among the top 5 and the very few, make you have a very significant and very good position strategically. There is high level of technological buyer, high level of CapEx. It's linked to technology to new platform. And so it is not for anyone and the buyer of entry are very high. It is, of course, the fastest-growing segment. And the nominal market in animal health, when you look at food producing animal, which is somewhere where we want to keep developing ourselves. And it's a very high-margin segment. So when you're in food producing, it's a very high margin. We know that because we are in aquaculture. We know how profitable the vaccines are for salmon, for instance. And more importantly, maybe from the strategic standpoint of view, it is where most of the new disease, the new markets, the unmet ID will emerge. I mentioned [indiscernible] because it's an evident one, but not only. There is room for technological innovation, and there are many new emerging disease. We saw it with the bird flu. We saw it with Africa swine fever. Like in human with committing, there is emerging new disease, and so this is a very attractive market and strategically for this reason and this ability to grow, we want to focus much more on vaccines. The second pillar of Group will be petfood and Pet Care. You see that here, we are very well positioned. We are almost at double size of what the average market is, but we want to accelerate because here, we have a very good competitive advantage in terms of product. In terms of formulation composition. We have a very unique positioning in terms of medical, scientific and veterinary positioning. So we have a huge legitimacy, a huge credibility, help start with nutrition. And so that's the reason why we want to go there. We think we have a competitive advantage, which is a very sustainable one. And it is very financially attractive. It's less R&D. It's a much faster R&D. It's a shorter cycle. It's highly profitable because of that, it is a very high-return on capital employed because it's less CapEx in terms of manufacturing. And it's less risk because shorter cycle of development, less disruption, less risk of disruption. So less market challenges. So all these reasons make it very attractive. And there, the buyer of entry are very different. They are not so much technological. They are much more commercial by inventory. So it takes a long time to get there. But once you get there, normally, you remain there for a long time. So it's really accumulated growth and accretive growth over time. So it costs to get in. But once you get in, you get it for a long time. So it's quite complementary and quite good with vaccines. It's quite at the opposite, but this could be 2 major axis of growth for the group. And for pharma, we will keep developing pharma. We are very well positioned, as you can see, but we will try to focus more on specialty, to try to search for additional differentiation and uniqueness in order to improve margin and be more profitable. We come to the end of the presentation. I want to share the pipeline. This is a classical chart. I used to update every presentation. So there have been some move over the last 2 semester because of some delay due to COVID, as I explained, and some R&D programs, which are delayed by nature. It's R&D. So there are always a lot of uncertainty. And with certainty, it will be some delays or some projects which been stopped or not. But overall, we have been able to deliver quite nicely. The pipeline is very consistent, very consistent with what we have explained over the last few years. We are still with a good arrival of new products it is true that it's a bit unbalanced between '21 and '22 between companion and food producing. Food producing, it is the main product we mentioned in the U.S. for this year, for instance, which is of public information, the launch of the [indiscernible] in the U.S. But for the rest, you see the pipeline is quite good. It's going to reach. 2023 should be a very good year. 2024 should be a very good year as well. We have not defined the value at the bottom chart because it's still very uncertain based on the product profile and this, and we don't want to put a figure. We could not work the talk or be shared. And to conclude, just to say that the guidance as of today is between 3% to 5% at constant rate, which means, in fact, this is constant rate and 0% to 2% at constant rate and actual scope. So the first 3% to 5% is constant rate and scope. And with the actual scope is 0 or and in term of EBITDA, revenue, we are at between 10% to 12% at constant rate. And we explain that the CapEx will be probably around EUR 60 million this year. There is a negative impact of the exchange rate of around EUR 10 million on the top line, as we have expected, but no material impact on the EBITDA. And the last comment is to say that we expect a payment of dividend will be proposed at the next annual shareholder meetings and the payment proposed will be a dividend of $0.75 per share. Thank you very much, and we can go to the questions.

Thank you, Sebastian and Habib, then we will go to the questions. Thank you to the participant because we have had several questions. The first one is linked to the acquisition of the products from Elanco. So we have some detailed question regarding the price pay for the product. The margin expected and why we don't think that there will be an effect on the margin. And the last question regards the production of those products, will they be internalized or not?

So many questions in one question. The first point is what we have acquired is 2 things. One is R&D pipeline or program of new paradise. And of course, that was not planned in our R&D. So that will mean further investment in R&D. And so we have negotiated to finance with R&D. We need it Elanco to -- I should have explained first that Elanco was forced to divest that with the European Commission linked to the Bayer acquisition. And they were searching for a home for this R&D program. And when we have discussed and negotiate, the fact was to say that we say, yes, it is a very interesting program. But it is very heavy and very expensive to develop. It's parasiticide. So it means many studies on different projects, and things like that. And we have negotiated that to take it. We need to pay a milestone. They will need to financially contribute to the cost of R&D, and they will need to give us some product to -- by the margin acquired for the products, also finance only. So all that has mean that we got a very good deal. But we didn't pay for it. So all that was free. And that's what I can say. The manufacturing will be -- on the margin and thing like this, I do not comment. We do not give this level of detail. But of course, we are in a strong position to negotiate good products. So we believe they are very good products. One is complementing very well our dermatology line. The second one is very well adapted to the welfare of the animal. So it's too very nice product for companion animal. It's global products, global rights. So that's very, very nice, in fact. And manufacturing, one of them will be very likely transfer to our manufacturing site in St. Louis, so it will help fulfill the manufacturing salaries. The second one is produced in a third party, and we are currently discussing whether we keep it in the third-party or not. It is not defined at this stage. And it is possible that I would say in the third party, we have to analyze that.

Okay. A question regarding the dividend, which seems light in view of our balance sheet. So they understand that we have to reinvest in CapEx, but are we keeping a maximum capacity for M&A?

Yes. In fact, 2 things. First, it's not higher decision we propose, but not our decision to define the level of dividends. It is the majority shareholder and the general SMB. So that is not our decision. But the reason -- the written beyond the weak level, as commented, is yes, to keep a maximum level of capacity for M&A and be able to be well positioned and reactive in case there are things that we want to acquire. And as I mentioned before, it's part of what we want to do to try to boost M&A.

So regarding on M&A, what would be our targets -- our prefer targets for M&A?

Yes, it's very simple. We -- first, we need to be true to measure M&A and be true to -- somebody has to want to sell. So we could discuss about what will make sense for Virbac. But in reality, we are very pragmatic because between the fairy and what really happened is not like that. So what I can say is the 2 main geography where it will make sense for us is U.S. and Europe, very clearly because we have commercial teams in place. And whatever we put in the top line will go to the bottom line. So there are maximum level of synergy in Europe and U.S. So if we had the choice, we will probably look at these 2 geographies first. But then we are looking at pipelines because many now a large company are not for sale. Consolidation has already happened a lot. So it's more smaller organization, smaller company. It could be pipeline. It could be original things like market access or business model that we could look at. So there is not one single thing we are targeting. I mentioned in the past that China was something we were looking at in order to have a better market access as well. So China, maybe a third one. But there is no -- we are listening. We are open. And what we want to do before anything else is a good deal and the good deal is to pay the right price for maximum value.

Thank you, Sebastian. Another question regarding the growth ex SENTINEL, which was very weak in the U.S. Do you have some explanation on that?

Yes. I think it's related to 3 things. Number one is the fact that the team has been really, really focused on SENTINEL, no matter what, until the end of the divestment. So the first 6 months have been really fully dedicated to SENTINEL. And when we were focusing on that, we were maybe doing less of the rest. Because of the divestment. Second, we were really impacted by the COVID. We may have forgotten that, but the U.S. were among the most treatise country in terms of probit management, and there have been many, many issues and curbside and the reps were not allowed to visit the clinics. We had no ability to talk to visit the best. So it is always difficult to push your product in this condition. And it is true that when you have a very strong brand and a very well recognized product among the top of air category. You do not need to push them to sell. It is a bit recurrent sales, but when you have a bit of weaker brand recognition, you need to keep pushing in commercial deal in the eye. So probably that would explain a part of it. And last but not least, the nature of the portfolio, which is dental, dermatological shampoo in this where less necessity product. They were not a prescription product, and you know that most of the visit to the vets were restricted to urgency or emergency. And so when you have a sick animal, you treat it, but when it's prevention inhales necessity, we have seen that. And then all the other reason I explained, which was, for instance, the fact that '19 was a very strong year on dental with the base effect. So all this has probably explained the flat performance of the U.S. out something else.

Okay. And regarding the returns, we understand that Easotic returned to the market. And how do you see the outlook for the market for 2021? And is there any additional legacy products to return?

Easotic has been returning very well. We are very, very happy with Easotic. So we don't communicate at product level, but what we expect is the growth to continue and the product to do very well in the U.S. this year. There are no more legacy product of significant importance. The only one which was supposed to come or Qualcomm one day was Soloxine. This is the last and big one which has not come back. But so far, we have no solution and no timing. I had explained in the past that for Soloxine, it was required to make some significant CapEx because of the safety merger for the production people. It's hormone, it's live perfin. And so we have to have paper million of companion in the air. So the air conditioning system and all these things have to be -- are very costly CapEx. And so we are not we are not equipped for that. So we search for a CMO. And if we can't find one, we will not come back with this product. So at this stage, no timing.

Thank you, Sebastian. So some financial questions for Habib. Regarding the corporate tax for 2021 and 2022, what should we expect considering the decrease of the CVAE?

Yes. We don't see a change in the effective tax rate, which shall remain globally at the same level, around 28% as we've had in the past, except, obviously, there are some strong evolution of the local corporate tax in some countries. We know that it's being discussed in some countries. But in the current situation, we don't expect changes.

Okay. Thank you, Habib. And financial expenses. How much should financial expenses decrease, taking into account the net cash position?

Yes, we will continue to have a decrease of the financial expenses by several million euros in 2021. We have had 6 months with a significant level of debt 6 months without any debt in 2020. And obviously, we will most probably modular possible M&A, but we also said that it would be a small to medium-size M&A. But we will most likely be in a much more positive situation in 2021. And thus, we can expect to have several millions euro less in the net financial expenses.

Thank you, Habib. Returning to the U.S. Can you tell us how the developments for food producing and petfood segments are going?

For the petfood, it is more or less according to plan, which means it is a large plan in the second semester of this year. As of today, it's always like that with launch and new products until it is done, it is a bit of a certainty. But as far as we know and based on the current knowledge, it is still planned for the second semester, and it's up and running according to plan. So for pet food, there is no change. And for SPA, for food producing animal never versus what I explained a few months ago, we have launched Tularemia, which is the generic of vaccine of the Zoetis product. The patent has expired worldwide now, but with different timing in Europe and the U.S. in Europe, we launched very quickly after the patent experience. And so we have been able to catch good market share to see that we performed quite well. In the U.S., I had indicated that I believe it will be good to launch in March after the patent expiry. Our products being manufactured in a CMO because we need a sterile injectable FDA site, which we do not have. It was made with a partner. And this has been a bit delayed. So we, as of today, don't have the restoration of the product. It is not yet register. And we know that 2 products have been launched in the U.S. So we are still planning a launch as the second part of the year in the second semester. But it is difficult to say how well it will perform because it's not the same thing to be first generic and to be number three or number 10. And we know that 15 to 17 companies are working on this. So -- but in Europe, we have been able to execute well. You cannot as well. In the U.S., we are, at the moment, planning for S2 launch, second semester launch.

And do you expect to gain market share from the current product range in the U.S., outside of petfood and FPA?

Yes, of course. Well, I mean, we just work for that. So all the team are on that for that. So on Easotic and our dermatological range, it is very likely that it will happen. On the dental, I really believe we'll have a good year because last year was bad, so I expect this year to be quite good. It's a bit more challenging on the positive side because here, we only have -- we are missing a strong [indiscernible] side, and there is a lot of bending from the competition. So it's more challenging and difficult on the positive side. But yes, we are doing everything we can in order to gain market share, of course.

And can you comment on companion animal market growth in Europe coming into 2021? And whether you can gain market share near-term in Europe?

The only thing I can say is over the last few years, we have gained market share in Europe overall. We have gained market share. We are growing at 5.9% last year so way above the market as far as we know. So there is no reason why it will not be the same this year. But again, we don't know what the competition will launch as new product. We don't know how much the market growth will be this year. We have no prospective data or clear data what the market will be. So to action that it is impossible, but we are doing everything we can to keep in the market. And we have been growing faster than the market over the last few years. And there is absolutely no structural change to that. So there is no reason why it will not be the case. Petfood, for instance, is still growing very fast. And we are growing double-digit in petfood over the last 3 or 4 years, above 20%, and we do not see so far a reason why this will change. So I will say that at the moment, we are in good track.

Thank you, Sebastian. Turning to India, the Indian market. Can you comment on the competitor dynamics? And do you expect we can sustain the strong 2020 performance?

I don't have a crystal ball. What I can say is that the first semester of 2020 was very bad and very weak, one of the weakest we had. The second semester was one of the best we ever had. It was very strong. We try to understood why. Among the explanation we got from the teams and from the subsidiary was the fact that there was a disruption of our smaller competitor for the logistics and due to COVID. We didn't know whether this will last 2 months, 3 months or more. It seems that I lasting, at least we see a strong growth still now. So -- but how long you will last, it is not possible to say. But the fact is the market is also quite good, but supportive. So the dynamics, the overall market dynamic is good. In fact, that's what I tried to explain. We believe, I believe as of today that between globally speaking, not in only, but between adoption for companion animal and the overall trends versus last year, we have to remember that the world is coming from pandemia in swine with African swine fever is coming from bird flu in poultry. And COVID disruption, we have a base effect, which will probably help 2021 in terms of analysis. So even for food producing, we expect probably a good year. And so in India, it should be the case. But I don't have a crystal ball, and I cannot assume that. I'm just guessing.

Thank you. So moving to Chile because we have all the geographies. So we have 2 questions. The first one is how do we see the market in Chile? And the second one, what are the option to purchase the minority shares of Centrovet?

If there's one country where I can have a better crystal ball, it's Chile, because it's one of the country where the market is dominated by a long cycle pieces. What I mean by that is poultry, swine, cattle is as true, but poultry and swine are short cycle. So the market will go up and down much quicker. But in Chile, salmon is 2.5 years, 3 years production. So you know how many salmon will be put in the water for the year after. And we know that last year, he has been less smolt in the water. So it means we have 10% less adult salmon in the water this year versus last year. So we know the market in volume is theoretically down around 10%. It's December to December. So I don't know exactly the average, but the market will be in volume, very likely down this year. What Virbac will do there is difficult because it's depending on our ability to gain market share, to capture market share from the competition to increase price. So we will try to execute as much as we can, but we know the market will be very difficult, and the volume-based business will be down probably around 10%.

And the acquisition of the minority share?

We will discuss that in -- or communicate on that mid-year. In fact, as explained, we are in the middle of discussion with our partners. Of course, we have very good relationship with them. And we have been working with them for 8 years. I have explained the reason why we decide altogether what we will do. And this decision will be communicated very -- not very likely, it will be communicated at the midyear. In fact, we needed to have the closing of the account at the end of March to be able to know what is the exact pricing. And that's why the discussion has not started much before, it was a theoretical discussion until we have the final closing of the account and the calculation of the price which has happened now. And this is now that we are really discussing on true figures and value to discuss what we do and to agree on what we will do.

Thank you, Sebastien. One last question regarding the pipeline potential revenue metrics and the slope, does it give an idea of the slop and dynamics of growth year after year?

No. I don't think so or not enough. The graph in Virbac is coming -- the organic growth -- organic growth is coming from 3 things. Price increases, volume increase of the base business, and new products. And there is no one metric per year. It is, of course, depending the after year. But on average, roughly, we can say that 1/3 of the growth is coming from price increase, 1/3 is coming from volume increase and 1/3 is coming from new products. So the variation of new products is only impacting 1/3 of the overall potential growth of the whole way we can go. And of course, on top of that, we'll be adding in licensing, which help in terms of OI. So the pipeline is only the internal pipeline that we can add licensing product. We have many agreements every year, where we partner with other companies. This is not in the pipeline because these are deals that could be materializing in 2 months, 3 months, 6 months, so they will not be anticipated when we do these templates. These templates are just reflecting the R&D pipeline. And M&A, of course, on top of it.

Okay. And one last question because I did not see that. So one comment on the excellent work that has been done those last years. So thank you for that. Your most complicated challenge now isn't it to find the right acquisitions at the right price?

No. I don't think so. The most difficult challenge now is to remain focused on what we have been very good at doing over the last 3 years. Now in the mid of the COVID and when the COVID will go away to keep the discipline to take advantage of the learnings and not get too much enthusiastic about that. And also, now that we have a lot of cash. A lot of cash. We become cash positive after many years of being tight on cost and expenses is to keep the discipline and the ability to keep executing well in order to perform above market average and create more value and extract more profits. So that's not the challenge, but that is among the things that we need to be very focused on. Of course, M&A part of it as well, and we will do everything we can. But as I mentioned, M&A will depend on the opportunity as well. So it's not only depending on the first element only depend on us.

So and one last question that just to ride regarding what do you think about the zone nose on the -- in Spain on all season? And what could be the impact for Virbac?

Zero impact for Virbac or very detail impact. He has many restructuring on many things. But it is not a strategic species for us. We have a very big product there, a positive side product, [indiscernible], but we don't expect any impact from that at group level.

Okay. Thank you, Sebastian and Habib, and thank you to all the participants. This is closing today's session.