Q2 2022 Organon & Co Earnings Call
Break out the change in revenue according to key drivers and I'll highlight some of the more significant impacts.
The impact of loss of exclusivity or low.
During the second quarter compared to the second quarter of last year's approximately $10 million is primarily related to <unk> in the United States we.
We didn't have any low impacted as downs brands this quarter.
The most significant low spacing the portfolio washed out prior to the spinoff, we expect only modest new low exposure going forward.
Since the spinoff in 2021, we have been expecting a generic entrant in the U S for delay era that did not happen in 2021 and has not happened thus far in 2022.
Continuing to read across the waterfall chart the impact from volume based procurement in China was negligible in the second quarter, which is also the case year to date as the implementation of the next rounds of GBP had been delayed.
Moving across we saw an approximate $60 million impact coming from price in the second quarter, which is consistent with our expectation that we will see low single digit price erosion on a companywide basis. This is mostly coming from established brands where products are subject to mandatory price reductions in some markets.
We had good volume growth in the quarter you may recall, we had some one time favorability and established brands last quarter, we continue to see some benefit in Japan, where certain competitors are out of the market because they didn't receive.
Good manufacturing practice or GMP certification.
But the impact of that in this quarter is about half of what it was in Q1.
In addition to volume growth and established brands. We also saw volume growth from our key growth drivers, including the China retail sector Biosimilars and Nexplanon.
The other bucket primarily represents supply sales to Merck and other third parties, which consists of lower margin sales of pharmaceutical products under contract manufacturing arrangements.
For the quarter supply sales were down about $25 million year on year and is consistent with our view that we expect volumes under these arrangements to decline.
And finally foreign exchange translation continues to be a headwind for us and FX represented about 500 basis points of headwind for the quarter, which is not really surprising given the fluctuations in the global currency markets and the composition of our business with approximately 80% of our revenues derived outside the United States during the second quarter.
<unk>.
Briefly on slide seven this depicts the geographic mix of our revenues as Kevin mentioned all of our geographic regions grew versus prior year at constant currency and you can benefited from volume growth in the established brands franchises, most notably from respiratory and cardiovascular products.
Strong performance from rent flexes and entrepreneur drove growth in the U S. Along with increased Nexplanon sales in the quarter.
Asia Pacific Japan, as we mentioned earlier had some help from a near term competitor supply issue, however to a much lesser degree than last quarter.
In China growth in retail as well as the recently repatriated brands Marvel <unk> line offset the decline in fertility that was due to strict protracted COVID-19 lockdowns.
Finally, the La Metro regions showed strong results on a constant currency basis, primarily from growth in nexplanon as well as benefiting from the timing of an order of entre is on in Brazil.
So now let's take a look at performance by franchise and we'll start with women's health on slide eight.
Our women's health business was down 2% as reported but up 1% at constant currency in the second quarter.
<unk> grew 8% ex FX during the quarter and that strong performance was partially offset by Nuvaring, where we continue to see pressure from generic competition.
Fertility was down low single digits. This quarter that was due to the impact of Covid Lockdowns in China.
United States <unk> had some unfavorable channel mix this quarter, but that was partially offset by other products in the fertility portfolio.
Year to date fertility is up mid single digits on a constant currency basis, we expect the fertility business to deliver double digit growth in 2022, driven by recovery in China and strong demand across our markets.
Turning to Biosimilars now on slide nine.
Biosimilars grew 39% as reported and 42% ex FX.
We are in flex this grew 39% ex FX in the quarter driven by strong performance in the U S.
Infliximab market continues to grow and Biosimilar adoption for Infliximab also continues to grow with Biosimilars now representing close to 40% of the influx of <unk> market share in the U S.
<unk> was up 61% driven by continued uptake in the United States since its launch in July 2020, as well as the timing of a government contract in Brazil that hit the second quarter this year compared with the third quarter of last year.
And those factors were partially offset by competitive pressures in Europe .
Turning to established brands on slide 10 revs.
Revenue for established brands was down 2% as reported but up 4% ex FX during the quarter.
As Kevin mentioned this franchise is performing very well, it's a sizable and stable source of revenue for US. In addition, the sequential revenue trend in this franchise is fairly steady as you can see on slide 18 in the appendix.
In the second half of the year, we expect that we will see impact from next rounds of <unk> in China, but still with minimal low risk expected until we see a generic entrant for declarer together with the strong performance year to date, we now expect that revenue for established brands will be flattish for full year 2022 at constant currency.
Now turning to our income statement on slide 11, our GAAP income statement for the second quarter is available in our earnings release and I encourage investors to look at that important information.
Here on slide 11, we will be looking at our non-GAAP income statement for the second quarter for.
For gross profit we are excluding from cost of goods sold purchase accounting amortization and one time items related to the spinoff.
Making these straightforward adjustments in the second quarter of 2022 non-GAAP . Adjusted gross profit was 1.0 $4 7 billion on revenues of 1.5 dollars 5 billion representing.
Representing a gross margin of 66, 1% up from 65, 6% in the second quarter of last year.
Year to date 2022 gross margin is tracking a bit ahead of the prior year period on both an adjusted and as reported basis and underlying that is really product mix, we have less lower margin supply sales in 2022, as we expected would be the case.
There were also allocated costs related to the spin and the 2021 financials that are not in 2022 and impact apples to apples comparability as I mentioned at the outset.
Adjusted EBITDA margins were 32, 3% in the second quarter ill draw your attention to the R&D line in the P&L that $203 million of R&D expense in the second quarter includes IP, R&D and milestones of $97 million related to the Biosimilars transaction with Shanghai <unk>.
<unk> biotech so as Kevin mentioned that would be $97 million that in prior quarters, we would be adding back to our adjusted EBIT calculation driving adjusted EBITDA to $609 million or <unk> 38, 4% margin on a like for like basis with prior quarters.
SG&A costs were modestly higher in the second quarter of 2022 compared with prior year, primarily due to standing up organized as an independent company as well as commercial expenses associated with business development transactions completed in the last year.
R&D expenses increased in support of a growing pipeline for example, <unk> six to 109 and <unk>.
Spending of this kind to develop new products support new product launches and to build capabilities, they're going to be drivers of our adjusted EBITDA margin in the intermediate term.
On that topic, it's important to take another look at the business development slide that Kevin showed.
As Kevin mentioned, we're looking for balance in our BD program that includes adding immediately accretive or imminently accretive deals to the portfolio.
Together those commercialized deals that we've done to date shown in the first column of this slide they're expected to contribute about a point of revenue growth in 2022.
Our pipeline assets in the second column are longer cycle and require years of investment in order to realize they are significantly larger commercial potential relative to the immediately or imminently accretive deals that we've completed so far.
Our goal is to construct a suitably sized portfolio of these longer term pipeline projects to enable organon to sustain attractive revenue growth well beyond the five year planning horizon, when we need to be launching new products that can more than offset any revenue declines we might see related to <unk>.
All of our business development projects, whether near term accretive or pipeline compete for capital. We analyzed all of these opportunities on a risk adjusted basis set against the baseline. The next best use of capital, which in our case is reducing outstanding leverage and that happens to be a good lead into the next slide.
As we look at debt capitalization and leverage on slide 13 as of June 32022, we have bank debt of $8 9 billion net.
Netted against cash and cash equivalents of $545 million.
Our bank covenants allow us to add back of acquired in process R&D and milestones to our LTM EBIT calculation, which is consistent with how we've been showing you leverage on prior earnings calls.
And on that basis net leverage was about three five times as of June 30 <unk>.
Recall that at the spin off in 2021, we had a pro forma leverage ratio of about four times and we said that we were targeting a leverage ratio of less than three five times on a sustained basis.
We've made solid progress on debt reduction and that was aided by another voluntary $100 million repayment of the U S term loan b during the quarter. This is the second voluntary repayment of debt that we've completed since the spin off $200 million in total.
Our capital allocation priorities remain consistent with past communications. Our first priority of course is servicing the dividend, which we're targeting at a low twenties percentage of free cash flow, which we believe strikes an appropriate balance between reinvesting for growth and delivering near term value for shareholders.
Our second priority is organic growth, which would include lifecycle management opportunities for existing products within our portfolio supported by capital deployed in our manufacturing plants on the latter we expect to see annual Capex in the range of 3% to 4% of revenue on an ongoing basis, excluding separation costs.
So because these first two priorities are not big absorbers of capital that leaves significant self generated cash flow for our third capital allocation priority, which is really a tie between execution of external growth plans to develop a portfolio of new product opportunities balanced against discretionary debt reduction just like we did this quarter.
<unk>.
We're committed to maintaining our double b b into parent rating balancing debt reduction with capital deployed for externally source growth initiatives.
Turning to revenue guidance on slide 14, now here, we bridge our expected revenue change year on year.
<unk> with our last guidance update the biggest difference on this slide is the FX translation impact, which has gone from an approximate 2% to $300 million impact or a headwind of 300 to 475 basis points to an approximate $350 million to $400 million impact are now 505.
Three to 650 basis point headwind based on where FX spot rates are today.
Accordingly, we are adjusting our guidance range for full year 2022 revenue from six one to $6 4 billion.
To six 1% to $6 3 billion.
Consistent with the movements, we've seen in foreign exchange.
We feel comfortable maintaining the low end of the previously guided revenue range because of the view on a few of our key drivers has improved modestly for example, low.
But given the volatility in currency markets, our employee language here as I did last quarter and signaled that if exchange rates don't improve from here, we would likely be at the lower end of our revised guidance range.
For LOE at this stage of the year generic <unk> is looking unlikely. So we expect low impact for 2022 will be less than the approximate $100 million full year impact, we communicated last quarter and that remaining exposures mainly tied to nuvaring.
For BBB in China, the implementation of around 7% and eight have been delayed. So again, we've not had any year to date impact from GBP. This year, but we think that remains are likely to occur in the second half, which could result in approximately $50 million of impact in 2022.
We continue to expect about $200 million of price erosion in 2022 in line with the historical pricing trends for global markets that we've been selling into for many years.
And for volume, we're tracking to $600 million to $700 million.
Our volume growth for the full year. The majority of that volume increase has been coming from our multiple growth pillars, Nexplanon biosimilars fertility, China retail followed by favorable onetime items like that competitive issue in Japan and to a lesser extent recently completed business development transactions.
We do expect net volume growth across our product portfolio and established brands as well, which is well supported by our first half actual performance.
Turning to other guidance metrics on slide 15, as I mentioned, we are recasting our revenue range to incorporate the continued strength in the U S. Dollar the other range that we're modifying this quarter as for adjusted EBITDA margin operationally there are no changes in our outlook in fact on an absolute dollar basis EBITDA is less impacted by.
Foreign exchange relative to revenue so if not for these adjustments, we and our industry peers are making to incorporate in process R&D and milestones, we would be keeping our full year margin range identical to prior guidance, but.
But giving effect to the now approximate $110 million of IP R&D. We now have a view for 2022 that impacts margins by just under two percentage points. So we are adjusting the range accordingly from 34% to 36% to 32% to 34% and by the way that approximate 110.
$10 million nudges, our R&D expense as a percentage of revenue into the upper single digit range from mid to upper single digit range.
And to remind you our criteria for inclusion of an IP R&D estimate attached to a business development transaction will be to have a signed contract.
Business development is a strategic priority for us and future M&A activity that involves upfront and door milestone payments could impact our guidance ranges and while we will work to provide details on those relevant payments when we announced the transaction, we do not plan to update our guidance between quarters based solely on those associated.
Payments alone.
Wrapping up the financial discussion on a constant currency basis. The business is doing very well operationally the business is performing as we'd expected. We believe biosimilars in women's health should deliver solid growth in 2022 paired with our revenue trajectory within established brands, that's meaningfully better than we expected prior to the start of the year.
Year.
And at this point I'll turn the call back to the operator for questions.
At this time I would like to remind everyone in order to ask a question. Please press star one we'll pause for just a moment to compile the Q&A roster.
Our first question comes from Jason Kolbert.
With Bank of America. Your line is open.
Hey, guys, good morning, and extra taking my questions.
Just one for you first just in terms of.
The business model it seems like.
More likely than not going to do a couple of license deals per year. So should we be thinking about this year is kind of EBIT margin is more likely to go forward EBIT margin I am seeing street at like 35% next year, but it seems like may be prudent to kind of factor in some some deals and then just secondly on the commentary about the <unk>.
<unk> of the ROE decision just curious.
Is there any work just looking at states, where there's automatic trigger lives.
Banning abortion, if youre starting to see women embraced contraception at a higher rate just curious I know that was sort of flagged as a tailwind, but if theres anything tangible that you could tie to that that'd be helpful. Thanks.
Thanks, Jay So I'll take the first part of that question.
Kevin can take can take the can take the second so we've been saying since even before the spin.
The.
To position the portfolio for sustained revenue growth beyond a five year horizon, we would need to be reinvesting that reinvestment would show up not just in cash outlays, but it would be showing up on the P&L in our R&D line as well as our SG&A line, specifically for commercial expenses to support so.
So when when we think about.
The long term trend in margins it would be below the 35% full year number.
We were that we have been guiding to on a pre IP.
Randy basis, and so I think if you look at the implied.
The implied second half performance versus our full year guidance as compared to our year to date results that might be more representative.
What the near term future might look like beyond 2022, and actually the numbers that we see in fact said pretty much reflect that.
Yes, Jason its Kevin.
Thanks for your question in regard to the change or the change of the landscape post post Dol.
We don't see any effect in terms of overall view of how contraception is going to go forward right now it's still up in the air you saw what happened in Kansas, a couple of days ago in terms of what's going on and so as a result of that it's far too early to determine what exactly is going to happen. What I can tell you, though is we're getting more and more interest.
By consumers as well as health care professional asking a lot of questions about la long acting reversible contraceptive about trying to get more information you can well imagine that if you're a physician right now and what you consider to what you termed the trigger state youre going to start to be much more careful in terms of your counseling of your patient in regards.
To make sure you do not have an unintended pregnancy related.
And I made that comment earlier about the fact that my opening that there's almost a 50% unintended pregnancy rate around the world and 40% of those was actually folks are women on some form of contraception. So as a result of that you can see the inconsistent or inaccurate or incorrect use of contraceptives and so as a result of that I think that the.
Our focus going forward will definitely be an efficacy efficacy should and I believe will rule. The day at the end of the day in terms of getting women all the kind of options they need to make sure that they do not have an unintended pregnancy.
Great. Thank you.
Your next question comes from.
Palmer <unk> with.
With Evercore your line is open.
Guys. Thanks for taking my question I guess first.
I'm just trying to understand the next long growth trends better.
Im a little puzzled by sort of.
Performance in the first half.
Especially in the context of the broader landscape around our bushnell et cetera. So I'm just curious in general what's going on there and should we reasonably expect this product to be growing sort of mid teens, which is how folks expect it to be growing in 2022, 2023 et cetera. The second one is I was quite intrigued by the circle deal for the vaginal gel.
But I was not quite sure sort of what was the.
Thought process around differentiation versus a lot of the other.
Ph raising vaginal gel that are out there I was just curious if you could share your thoughts there and then finally maybe quickly Kevin.
I feel like in the.
In the branded.
And the branded sort of innovative product territory for pipeline assets.
Looks like there is a very large swath of biotech that's looking to raise capital or collaborations whatever the case may be.
It might be a very opportune time for you guys to be more active and it seems like between the two.
Last December and then this new one with circle as well.
They are very early stage very early stage to the point where for the next two to four year horizon, they're not needle moving from a numbers perspective, and I am curious, how youre thinking about sort of branded biotech drugs in a more mid to late stage as well. Thank you very much.
Well, thanks, Newmar and great to hear your voice again and hope all is well and I just wanted to first of all let me address some of these questions that you have regarding ethanol so.
It's been a little bumpy in terms of the comparator quarters.
Last year, our year of spin there was a number of things that were happening in terms of pricing movement in some of the issues around kind of name changes and other things that were going on in terms of our spin logistics and right now we feel that right now going forward youre going to get a much more predictable pattern of demand right now, but we can see is that every.
Month post <unk>, we had a large buyout ultimately in January and February but every months subsequent to that.
We have actually seen an increase in demand and we're seeing very very strong increase in demand in July double digit increased demand in July .
That's going to be a significant quarter, but keep in mind. There are two things that are really important with regards to understanding X. One as I mentioned to you almost a year ago, we expect the international business to grow faster than the U S business and that has held true we see robust double digit growth going forward with the international business. It is now it started out at $75 25 contribution.
Now, it's more like $65 35, and Thats moving in the favor of faster growing ex U S market, but within the U S. We do see some things I think that they're coming in our favor I mentioned earlier, Jason we feel that theres going to be more of a focus on efficacy more of a focus on convenience given the fact that.
You are talking about a three year efficacy.
And ultimately we're outperforming the market for large right now are in decline.
Single digit.
High single digit kind of we're growing so I feel very confident as I mentioned earlier in my opening that we're going to see double digit growth of Nexplanon this year globally.
Ultimately over time, we will settle things down in the U S. As things start to clear up in regards to the kind of ROE V. Wade.
Decision in terms of going forward. So we're very confident about next long going forward. We've got all cylinders are kind of moving in the right direction. There in terms of your second question in regards to circle. We believe there is a distinguished distinguishing nature here because of the preclinical work that we've seen.
This is a kind of a dual mechanism of action that this product has.
Which at least in the initial trials that we've seen has at least in animal trials have shown nearly 100% actually 100% efficacy. So.
So much so that we really wanted to collaborate with them in order to be able to understand whether there is a possibility because as you say some of the other agents on the market today don't have that type of that.
That type of efficacy were looking for exceptionally high efficacy products in this space <unk> always been focused on non hormonal on demand, but I'll, let sandy jump in after I finished the last.
The last point with regard with regards to BD, especially in the biotech space as you say.
Clearly as I've mentioned and as Mac mentioned Newmar, we are taking a very.
Balanced approach to our business development capital allocation strategy think about the deals we've done and when you include the circle deal. It's been balances been probably four commercialized or near to be commercialized assets and there are three kind of earlier stage assets that we'll report out as you say in the later period as we go forward we're done.
Definitely going to be doing will continue to be doing more business development, because we see some really interesting assets out there for us to act on.
We will definitely be looking at continuing that balanced approach in the way that we generate accretive deals in the near term and then ultimately for the longer term. We're looking at some blockbusters I mean I'll come back to $600 nine from Brenda we believe that could be a significant mover in the long term a real catalyst for us, but Andy did you want to add anything.
To the circle deal.
That would be great Ken and thank you for the opportunity to respond and we do believe that with todays currently available on demand and non hormonal products and there is room for improvement for women in wanting increased efficacy and may be.
Differences in just some of the product characteristics and so we think that this is a very interesting opportunity, albeit it's very early and we're looking forward to the partner and collaboration that we have with circle that basically as Kevin mentioned, it's a two pronged approach.
In the product, it's a chitosan that creates a barrier that prevents sperm from entering the cervical canal plus the ph modulator that Mobilizes experiment. So we're really focused on augmenting our contraceptive portfolio with such an on demand non hormonal approach and so this is just the first.
One that we're tucking into our pipeline and we look forward to finding other opportunities to expand the differential product offerings that we can have for women on as they proceed along their reproductive journey and decide how to do their family planning when it's right for them.
Thank you.
Yeah.
Your next question comes from David <unk> with Piper Sandler Your line is open.
Hey, Thanks, So just just a couple.
So number one.
Wanted to get your thoughts and I apologize if I missed this but your thoughts on on China just with.
Lockdowns in our emerging from Lockdowns, how youre thinking about the risks of those events.
Mix of hospitals versus retail and just the overall trajectory.
Of that business.
And then secondly, just on the theme of business development, what is the extent to which you would do something.
Transformational I know you said you are sensitive to to leverage and the credit rating, but is that something you are willing to revisit it if the prices right, particularly in the context of asset prices, having come down just wanted to get your thoughts philosophically on that thank you.
Sure David.
I'll address the first 0.1st question regards to China. So currently look.
We've got a good outlook for China right now there are two things happening in the Lockdowns that are just finally easing up it affected our our fertility business clearly because the clinics were closed down but it also slightly affected our established brands business, but remember that right now in terms of our year to date.
Our business versus prior were essentially 8% growth in the overall market, 13% on the retail sector and by the way now retail for June was a 50% of our established brands business is coming through the retail channel. So it is as I've always said that we've done the right things to really invest in the retail channel is expanding quickly.
So.
So the headwinds were essentially in.
In the area of fertility in some established brands with the tailwind of the fact that they delayed some of the rounds of the GBP, specifically around 7% eight timing had been delayed a bit. So ultimately we feel that the <unk> business, which is one of our biggest cardiovascular products will happen much later in the year versus our original anticipate.
In terms of the DPP update so I look for a positive outlook for the remainder of the year, we're continuing to invest in retail our women's health business now is starting to unlock because fertility is coming back clinics are open as well.
Marvelon birth alone acquisition or repatriation back from Bayer has started out like gangbusters in doing exceptionally well in the women's health space. So we feel very strong in the China and the Chinese sector, Matt do you want to take the second question, Yes, yes. Thank you, Kevin and Jeff just to close out on China, China is an important geography for us we have well.
Over 900 million.
Revenue in China.
Over 1000 people there. So it is a key geography for us in terms of growth for the future, but moving to moving to BD. So David we're not out hunting for those big deals, but we certainly are assessing the landscape and the possibility for them.
As a potential part of organized future.
Right now, especially as we're standing up the company fully separating from American putting all of our own systems in place these smaller deals.
<unk>.
Digestible.
And with the high degree of probability of value creation, so that makes sense for now.
Yes.
And once we get across the other side of all the agreements that we have in place with Merck with most of them have about a two year.
Duration to them.
The potential for larger deals just becomes wider.
But as I said.
We're not out hunting for them, but we are planning for their possibility.
Okay. Thank you.
Yes.
Your next question comes from.
Sorry, you dropped off we didn't hear you.
Coming from.
Your next question comes from Chris <unk> with Goldman Sachs. Your line is open.
Hi, This is Dan on for Chris Thanks for taking our questions. Just two from US first I guess does your commentary on next one on the large market suggest youre taking share from iuds and if so can you maybe talk a little more about the drivers of that and if you expect that to continue.
And then second just looking at your volumes year to date. It looks like you are tracking ahead of the $6 million to $700 million guidance.
You touched on this but could you talk a little more maybe about the outlook for volumes in the second half and maybe how much of a benefit in first half was from some of the Japan dynamics and establish grant. Thank you.
Sure Dan I can take the first question in regards to Nexplanon.
We do we don't have data.
Our TV data in terms of the overall market is not very robust because we <unk>.
The direct to physician buy and bill type of phenomenon happening, but what we can see is that.
There is obviously in terms of larks iuds or are moving in terms of the decline.
Section and essentially next long is moving up so I think youre right, you've clearly seen that what's.
What's happening in terms of the fact that although albeit at MIT.
For the quarter at mid single digit growth, but nevertheless, all the signs are pointing to the fact that we're going to see continuing robust growth going forward for this product and we're doing very well outside of the U S. But our focus really is on.
Combined oral contraceptive pills that essentially the biggest area for us because that's the area that will ultimately that is most used and our focus again is on reducing unintended pregnancies and so really we need to go where the greatest need is which is essentially.
Conveying the information and educating physicians on the benefits of <unk>, we feel good about that product for the future.
Matt One quick second question, Yes, sure. So Dan if your intuition says that we're running a little bit hot in the first half on what our full year volume guidance would be I think you are right about that and I can point to a few things I'd say none of these are particularly large individually though.
But for example on a timing basis, we had more entresol volume in the first half actuals that we had thought might come in the second half.
Some one time favorability for the Japan competitor GNP issue that happened in the first half is likely to be.
Transitory in nature and then.
We've been anticipating since the start that that the.
<unk> would be more of a backend loaded phenomenon for 2022, we thought we might see some of it in the first half but that number actually.
Turned out to be really really de minimis because of the delays so.
On a full year basis, we still feel very good about.
The volume growth in the business, but we did have a little bit of ultimately front loading.
Of it per your question.
We're ready for the next question operator.
Yes.
Yes.
Your next question comes from Greg <unk> with <unk> Securities. Your line is open.
Good morning, guys. Thanks for taking the questions.
<unk>, you mentioned visibility on customer buying patterns and ask you to help us with how to think about the potential benefit from those patterns in the third quarter and the fourth quarter.
Also on Thats not other important.
It gets when youre working to secure reimbursement that could be an important future growth drivers.
And then just one on the fertility business.
You can just speak to that.
Yes, the quality products based on your prior experience and challenging macroeconomic conditions that would be helpful.
Yes, so in terms of buying patterns when I made the comment in my introductory comments, it's really about looking at understanding the tenders that we see outside of the U S. We know when they're coming through we know what.
The sale of what the what the level is and we know what what to expect and so when we think about for example, Canada is still a launch market with sales doubling from one to $2 1 million public access coverage has been obtained across all provinces. Fran additional sales reps have been put on and ultimately we're seeing double digit growth in France, as well as U K R.
Largest business outside of the U S is doing well and then Mexico, our third largest.
<unk> market globally has a very strong sales with over 100% growth.
So we're doing we see just overall across the board really good ex U S business inside the U S. What we see as opportunities in terms of as I mentioned earlier that we continue to see more and more interest in locks and especially for next one all we see more and more visits to.
Our next one on Dot com.
Specifically increasing.
And we are certifying more and more physicians and health care providers by the day on the successful insertion and removal of next month. So again like I mentioned, that's our key product for Oregon on.
It has patent protection until 2027 with a five year indication hopefully coming in the near in the near term, we'll be able to extend that to a few years longer than that and we feel very good about the solid growth of this product going forward.
In regards to.
I'm, sorry, I didn't get the question regards to fertility you wanted to understand the kind of robustness of fertility going forward in terms of whether we can.
Deliver the double digit growth that I mentioned earlier.
Alright.
Asking more about.
Thanks, Tim that business and demand for those types of products could be.
Sort of a recessionary environment.
Well one of the things to keep in mind that two thirds of our fertility business is outside the U S and one third is in the U S and both are growing very nicely.
Think I believe what I can tell you is that the demographics in terms of the tail tailwind for us right now.
We are currently seeing significant demand.
Across the World There is clearly as you start to see.
Things from Covid in terms of the Lockdowns, you still see a rebound.
These couples irrespective I believe of the of the recessionary pressures that we potentially might feel are very motivated and extremely committed and passionate about starting the process and then you see also more and more governments like Japan.
Investing in essentially reimbursement for IVF therapies for bore.
Starting at the beginning of the year and you see other countries during the thing so.
I think that what youll see is that ultimately more and more they're going to be more and more tailwind behind the fertility business. We feel very we feel very good about it and we'll continue to have double digit growth going forward.