Q3 2022 Qiagen NV Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by.
In theory your P G I call operator.
Welcome and thank you for joining Qiagen Q3, 2022 earnings conference call webcast.
At this time all participants are in a listen only mode.
Please be advised that this call is being recorded at Qiagen request and will be made available on their internet site.
The prepared remarks.
He will be followed by a question and answer session.
If you'd like to ask a question you May press star followed by one on your Touchtone telephone.
Please press the star key followed by zero for operator assistance.
At this time I'd like to introduce your host John <unk>, Vice President head of corporate Communications and Investor Relations at Qiagen. Please go ahead Sir.
Thank you operator, and welcome to our call. The speakers today are chief Executive Officer enrolling Soccer's, our Chief Financial Officer also joining us from the Investor Relations team.
Please note that this call is being webcast live and will be archived on the investors section of our website at www Dot com.
We will first have some remarks from Terry enrolling and then move into the Q&A session.
Presentation with details on our performance is available in the IR section of our website along with the quarterly release, we will not be showing the slides during this call.
Before we begin let me cover as usual our Safe Harbor statement. This conference call discussion and responses to your questions reflect the views of management as of today November eight 2022.
We will be making statements and providing responses to your questions that state our intentions beliefs expectations or predictions of the future.
These constitute forward looking statements for the purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected.
Qiagen disclaims any intentions or obligations.
Any forward looking statements.
Information please refer to our filings with the U S Securities and Exchange Commission, which are also available on our website.
We will also be referring today to certain financial measures not prepared in accordance with generally accepted accounting principles or GAAP, all references to EPS refer to diluted EPS or earnings per share.
A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is available in our press release and the presentation.
Both are available on our website I would like to now turn over the call to Terry.
Thank you Joe and good morning, good afternoon, and welcome to our country one score today and thank you to everyone for joining.
We are very pleased to report a strong performance in the third quarter of 2022.
Indeed, so solid ongoing market trends with broad based demand for both our molecular research and clinical diagnostic solutions across the business.
So let me get right to the top messages for today.
The board, we're getting exceeded our quarterly outlook for net sales growth and adjusted EPS.
This was driven by the top performance in our non core portfolio and also higher than expected sales from products used in Kobe <unk>.
Net sales for the first quarter of 'twenty two were $533 million.
E R and exceeded our outlook for $510 million.
These results were largely unchanged from sales of $535 million in the fifth quarter of 2021.
Oh, Hi, Covid testing demand.
Our non core product groups delivered 18% CER sales growth over the third quarter of 2021 and represented more than 80% of our total sales.
Adjusted diluted earnings per share were 55 cents.
And about the outlook for at least 48 times.
Those results demonstrate that our portfolios are performing very well in.
In fact, this is the seventh consecutive quarter of double digit CER growth in our non covered portfolio.
This clearly underlines the strength of our business and execution mindset across KBR.
Second key message our teams have been delivering on key goals as we advance our five pillars of growth.
Performance for the nine months of two folds in in 'twenty to underscore the strength and agility of Qiagen in a very dynamic macro environment.
I am definitely very proud of our teams they have done an outstanding job. This year remaining proactive in staying focused on executing our five pillars of growth strategy.
This is creating a very solid foundation for sustainable growth in the future.
All of our five pillars of growth are on track to achieve and some are even likely to exceed significantly the sales goals, we set for 2022.
Our sample technologies product group is benefiting from a new wave of instrument upgrades.
This is helping <unk> to leverage our leading position in sample prep.
First step in a neat molecular biology lab.
We are driving consumables growth in non coding application, which is the larger portion of this business and by far remember.
Remember that G&A and non viral related <unk> make up more than 70% of sales in this group with Kobe the relevant viral Edwin it keeps making up about $150 million of sales in 2019.
The quality pivotal in TB.
<unk> tuberculosis testing is.
Performing very well as well with year to date growth well above our target for more than $310 million.
The demand for <unk> is on the rise as noted in a recent report by the WH Shaw that TB depths and disease prevalence rose significantly during the COVID-19 pandemic.
Toward our integrity clinical PCI 15 platform through new test will launch for using areas such as transplant diagnostic.
These bring the CE IBD menu now to 16 test on your <unk> one of the largest available from any competitor.
We are tracking well on system placement and seeing encouraging indicators on the transition from Covid two loans to non COVID-19 utilization.
Yes.
Peak hour.
We're offering <unk> testing the <unk> teams have responded to the monkey pox outbreak with the rapid development of the chaos.
Viral vehicular permit.
Placements are continuing to grow worldwide and it is worth noting that more than 50% of sales for chaos.
Now for non Covid application.
In terms of cash equity.
We're offering for digital PCR, We recently launched 15, new Biopharma asset.
He is an extremely important step in our entry into the Biopharma area of the market, where we see as an important customer segment involving pharma companies around the world.
And it creates a strong base for future growth in Q4 hundred 23.
So as you can see we are making great progress in our five pillars of growth.
Defeat this fits very well into the overall strategy to maximize the value of our portfolio.
Our ability to address a broad range of customers and the continuum of lifestyle loans to mortgage <unk> agnostic.
Third key takeaway message for today.
We have increased our outlook for the full year to 422 based on another quarter of solid results.
We are now expecting sales of about $2 $25 billion for the full year of 2022 with the reaffirmation of the goal for double digit CER growth.
Non covered portfolio.
As for EPS, we are.
No we're expecting about $2 44, adjusted EPS and this is up from our prior outlook for at least $2 and 30 P.
Oh.
As always we will stand ready to support their needs for COVID-19 testing and civilians and this also goes for ozone public health emergencies like we are seeing for monkey pox.
As for Kobe trends 15 volumes have dropped significantly in most countries around the world. We are continuing to take a very conservative view of demand trends for coffee, but.
But as we have said before <unk> agenda remains relevant for <unk>, but we are not dependent on those assets.
Indeed, we continue to believe it was the very right decision to decouple, our performance from Kobe trends and <unk> was in fact, among the first if not the first to do so.
But our overriding focus remains on advancing our strategy based on a well known coffee portfolio, while continuing of course to have our eyes open to the changing macro environment rollout.
<unk> will be providing more details on the outlook later on this course for now.
Let me hand over to him for a financial update on the quarter.
Thank you Teri.
Hello, and thank you for me as well for joining this call.
Before I start with a review of our results how does that ever come back later to discuss our outlook.
It drops off net sits at excellent rates declined 7% in the third quarter on a year over year basis, two 5 billion U S dollars. This.
This was due to about six points of currency headwinds in light of the strong U S dollar against the Euro.
Currencies such as of yet.
This hits result at constant exchange rates with 533.
3 billion U S dollars at ahead of the outlook for at least five for about $10 million.
Oh.
We had a much better than expected performance of our non core product groups, we see sales up 80% CER.
Colgate product sales were also better than expected, even so sales for dawn, 43% over the year ago period.
Sales of consumables and related revenues at all <unk> instruments.
Changed at constant exchange rates.
Excluding the COVID-19 headwinds for consumables and related revenues were up 17% while.
While instrument sales.
Faster pace about 20% CER.
It drops off sales amongst our four product groups, let's start with <unk> technologies, which represents about what sort of taught let's say it's.
Here, we saw solid double digit C. Alcohol, it's a non covered portfolio represented 75% of sales for the third quarter of 'twenty two.
However, the significant decline in COVID-19 testing demand led to the overall decline of about 2% at constant exchange rates or was it a year ago period.
Diagnostic solutions, it's our second product group and this represented about 30% of sales.
The key driver behind the growth of this group was quite the film franchise.
For the court to say I want to be tests towards 14% CER in the third quarter with double digit gains in all regions.
Taking into account the sales for the first nine months of 'twenty two we're at $256 million at constant exchange rates. We are clearly set to exceed the full year target for over $10 million.
Oh.
In fact, we have now seen seven consecutive quarters of double digit CER growth for quite a few of them.
Sales trends for the chaos that Barbara X clinical PCR testing system continued in line with our full year expectations.
The tubs of kind of start to X, we are seeing increasing demand and new customer interest. Following the launch earlier this year opposite CE IBD met a guy this is Pat.
The addition of <unk> has established a strategic critical mass in terms of menu that is necessary for adoption by many customers in this region.
Is it PCR nucleic acid amplification product group sales declined 5%. This third quarter, we saw strong contrasts with significant double digit CER growth is it not corporate product.
Hey, kids likewise significant double digit CER decline as a corporate product groups.
The genomics and she asked product group, which represents about 10% of call. It sits deliver sales growth of 6% at constant exchange rates as COVID-19 related revenues continued to be soft.
Moving onto sales on a geographic basis.
The Europe Middle East Africa region, led with 3% corporate constant exchange rates for the third quarter.
Amongst the top performing countries, where France, Germany, Netherlands.
Kingdom.
Bye.
Driven by sales and non Covid product groups.
And that make us not corporate product group sales force with a robust double digit CER rate, especially due to quantify each of them and expansion of the carrier acuity franchise.
Was it offset the significant decline in Covid sits that drops that proceed across all areas of the corporate portfolio.
The Asia Pacific, Japan region at constant exchange rates were down 9% from the third quarter of 'twenty one.
This region, we saw lower sales in a number of countries that had COVID-19, since the year ago period, such as Thailand, the Philippines and Indonesia.
Yeah. This.
This weighted on the overall performance of our shadow double digit CER growth in Australia and India.
Sales in China declined about 3% CER. This.
Third quarter.
But to have risen at a mid single digit C. I'll wait a year to date basis.
We continue to see good underlying trends, but are closely monitoring the situation as the pandemic evolves.
Moving down the income statement.
The adjusted operating income margin came in at 28, 7% offsets.
This was mainly due to our decision to accelerate investments into the business in light of the highest sales trends.
This margin compares to 38% in the third quarter of 'twenty, one which was clearly a period is exceptional Seth Woolf for Covid products.
So I think through the components adjusted gross margin rose by one percentage point to 67, 6% of kids.
<unk> grew up here yet.
This included favorable margin developments for chaos that the X due to higher utilization and improvements in consumables production, that's about as contributions from product mix due to the softer technologists and genomics and <unk> product groups.
D investments Austin night, but 8% of the third quarter up from 9% the year ago period, that's to be accelerating these investments during the second half of 'twenty two.
They had some marketing expenses also rose in the third quarter of 22, well housing about one eight percentage points to 22, 9% upset from the shipyard in 'twenty one.
As mentioned, we have stepped up investments into the five pillars of growth in light of the strong results of 22.
Like others. We are also facing higher freight costs and also higher commissions like this a strong sales performance.
It drops off general administrative expenses.
About one percentage points to six 2% offset this is mainly due to investments into our systems and cyber security.
Adjusted EPS for the third quarter was 55 cents at constant exchange rates and again at Buffalo outlook for at least 48 cents, because all that extra where it's about 53 cents due to the strong currency headwinds.
The adjusted tax rate was 18%.
And after which we had set for about 17% to 18%.
Continue to expect our full year rate of about 18% to 19%.
Turning to cash flow, we saw strong trends in the third quarter of 'twenty, two and continuing the trends from.
Oh, yeah and drops of boss.
I think cash flow and free cash flow. Thanks to the solid business expansion operating cash flow was 34% to $5 $91 billion over the first nine months of 'twenty one.
Free cash flow.
Even faster 67% pace in the first nine months of 'twenty two over the year ago period. This was due to lower purchases of property plant and equipment at 22. Following the completion of important investments through 2020, one to expand production capacity.
These investments fell to five 2% sales in the 'twenty two period from eight 3%.
First nine months of 'twenty one.
It dropped off our balance sheet, our total consolidated net debt stood at 400 tube.
102 billion U S dollars at September 22, compared to compared to $876 million at December 31st 21.
This has decreased due to the cash cash equivalence and short term investments.
Got it.
The end of the third quarter based on this our leverage ratio stood at four <unk>.
Time's net debt to adjusted EBITDA at the end of the third quarter.
For your information during the month of October we have used $480 million of our cash balance to repair a number of debt maturities from the U S. Private placement issued in 2012, and it's a short Sean issued in 2017.
Yeah, if you're in different ways to put the balance sheet to work and continue to take a disciplined view on capital deployment.
This policy has been in place for a decade and has served us well and it evolves both targeted bolt on M&A ideas, along this share repurchase program.
Is that I would like now to hand back to <unk>.
Thank you all and please allow me to go over some of the key updates our teams have made and the progress of advancing our five pillars of growth within our overall growth strategy.
Starting first of all in central tank.
Here, we are working in tandem to update our instruments and automation system in combination with new kids to further develop application in key areas.
Just as an example in the third quarter, we released a new workflow leveraging the new easy to connect instrument with the <unk> digital PCR instruments for liquid biopsy applications.
This workflow combines the key features of these two platforms the very high quality sample prep easy too.
Cash equities high sensitivity.
Order to handle the demands of a high volume liquid biopsy samples.
This unique power of <unk> offers optimize detection and quantification for successful biomarker profiling.
<unk> also built on Jane's comprehensive liquid biopsy portfolio in fact kgs.
<unk> is one of the only providers able to muster all liquid biopsy analytes.
Those include circulating DNA.
<unk> tumor cells and Exosomes.
Our teams have also expanded the range of <unk> connect instrument that is used for quality control and analysis.
Those new keeps make <unk>, even more attractive for analyses of DNA and RNA in next generation sequencing application.
Our second growth pillar in both quantity I want you to be the modern gold standard for detection of least contribute okeydokey.
We remain extremely committed to bringing TV testing solution to as many countries around the world as possible.
Okay you reach the test version launched earlier this year for high build in low income countries I will partner.
Has recently entered insolvency proceedings.
We still are working on your options for this product and are also very much open to new solution to improve TB testing in emerging countries.
But keep in mind that the carrier rich.
Sales expectation have no impact on the midterm quantity on growth plans.
As we got to get diagnosed.
Diagnostic.
I mentioned, the new panel for viral vehicular detection. This is a panel for detection of monkey pox and all the viral pathogens for research and epidemiological surveillance <unk> confirmed once again, our ability to remain extremely HIV and respond.
Two public health needs.
It is another example of the flexibility we have with the chaos that diagnostic system and the growing use of <unk> 15.
During 2022, we have added dominion's spending to the CE IBD menu in Europe , and we are.
Now able to offer along with the respiratory and Gi partners as.
You know we already offered the respiratory panel in the U S and have submitted the gastrointestinal panel to the FDA.
We are expecting a decision during 2023.
<unk> is planning to be is planned to be submitted to the U S approval in 2020 as well.
In terms of placement, we are seeing solid trends for carriers that diagnostic modules and in particular, a very good interest among European customers for the higher throughput chaos that rides version.
So even after the demand during Covid, we continue to see very encouraging placement trends.
So on <unk>, we launched two new CE IBD test during the third quarter of tests for the extend by virus.
And the test for human health a virus six.
We can now first 16, CE IBD test on the new module system and this addition, strengthens our offering for transplant patients.
And those are the achievement was.
Whereas the certification of the numerous X platform under the new European Union in vitro diagnostic medical devices regulation.
<unk> replaced the previous IBD rules and is impacting companies across the healthcare sector with additional R&D and regulatory costs.
And in terms of placement.
We are also continuing to see robust demand around the world, especially given the ability of blast of labs to use numerous <unk> to automate the processing of Adt's laboratory developed tests.
In the PCR and nucleic acid amplification group, the new Biopharma assays for cash equity are being where do we see in the market <unk>.
<unk> equity systems are increasingly adopted to enhance drug safety and efficacy in order to leverage the higher level of sensitivity and accuracy offered by digital PCR technology.
This new group of cash equity assays are designed to address key application areas, especially for cell and gene therapy topix.
<unk> equity platform is proving to be popular in those customers' application as well since it delivers high throughput capacity not offered by all the platforms.
Finally.
In genomics and Engie S. A new group of carriers seek partners has been launched we expand our offering involving universal NGL solution.
This portfolio can be used to prepare and analyze centers on Amy sequencing system.
The new partners are designed for rapid processing to cut library prep time in half and to enable you Trust NTT violence in medicine.
New kits a confirmation that we are continuing to launch innovative chemistry to help customers optimizing mgs workflows worldwide.
As part of this strategy, we continue to partner with sequencing instrument provider to ensure access to our solution.
At this point, let me hand, it back over to hold on for more details on our new 2022 outlook.
Thank you.
Based on the better than expected results in the third quarter and also the solid outlook for the fourth quarter. We have increased our full year sales outlook to about 2.25 billion U S dollars at constant exchange rates.
This is an increase from the pie out outlook for at least $2 2 billion U S dollars and compares to $2.2 billion of sales in 'twenty one.
In the first three quarters of 'twenty, two we delivered 14% growth at all.
Non corporate product groups and expect double digit CER growth to continue into the fourth quarter, putting us on track to our heat off where you're going.
We are maintaining our conservative view on Covid testing and for these sales in 'twenty two to be below the 21 level of 704 million U S dollars.
The first three quarters of 'twenty, two we had $427 million of corvid product group sales at constant exchange rates.
Our latest planning is for cobot product group sales to be about $5 billion at constant exchange rates.
But clearly if you're also able.
To absorb within our full year outlook.
Pact of losing about 1% of annual sales due to the Washington invasion of Ukraine, That's a suspension of our business in Russia.
In terms of profitability, we have upgraded our outlook for adjusted EPS could be about $2.40 at constant exchange rates.
Increase of 10 cents from the prior outlook for at least $2 30, and this compares with our initial 22 outlook for adjusted EPS of about $2.05 at CER.
The progress at our business, however is increasingly impacted by adverse currency movements against the U S dollar.
Based on exchange rates as of October 31st 22 currency movements against the dollar and now expect it to create an adverse impact of about six percentage points and that's it.
That was headwinds are also expected to reduce adjusted EPS at extra weight by nine to 10 cents per share.
At extra words does imply sales of about 2.1 billion U S dollars.
Adjusted EPS of about $2 30 to $2.31.
For the fourth quarter, we have set the outlook for sales to reach at least five for about $20 million at constant exchange rates.
Adjusted diluted EPS of at least 50 sets also at CER.
It takes into consideration the acceleration of investments in light of the strong performance and also our decision to make one time payments to support Qiagen and players in light of the cut high inflation environment.
We expect currency headwinds in the fourth quarter to have an adverse impact of about seven percentage points on an sits at about three cents on adjusted EPS.
Extra weight does it play sets of at least $483 million and adjusted EPS of at least 47 cents.
I would like to know how it back to you.
Thank you all and thank you all for your attention I think it's time to go through a quick recap of our key messages before we move into the Q&A session.
Our results exceeded the outlook for the third quarter of 2022, driven by the 18% CER growth from our non Covid product group and adjusted earnings per share of 55.
E are well above the previous outlook of 48.
Second our teams remain fully engaged and continue to execute on our five pillars of growth strategy.
And lastly, we have increased our 2022 full year outlook to reflect the better than expected sales and profitability in the third quarter.
With that we are reaffirming our commitment for double digit growth our coffee portfolio in 2022.
And as we look into 2023 based on what we see to date. There is no reason why KJ Jin non coffee product groups should not continue at a double digit CER growth rate in the new year as well.
I now would like to hand back to John and the operator for the Q&A session. Thank you all.
Ladies and gentlemen at this time, we will begin the question and answer session.
When do you wish to ask a question May press star followed by one on their Touchtone telephone.
If you wish to withdraw your question you May press star followed by two.
To ensure we can accommodate as many people as possible. Please limit yourself to only one question and if necessary one follow up.
Microsoft will also be muted after you finish asking the question.
Anyone who has a question May press star followed by one at this time.
One moment for the first question please.
And our first question comes from RBC, Atlanta as Darin Greg.
Please go ahead.
Thanks for taking my questions I've got two please.
First of all I think <unk> been communicating at high single digits.
Low double digit growth in the non core business potentially rolling on.
Add to next year I wanted to ask the dynamics here between different divisions, particularly your growth pillars.
Would it be fair to assume mid term guidance growth.
For example, double digit growth for all growth pillars, except sample prep for next year.
And secondly on.
<unk>.
Could you please.
And she.
Give us a confirmation of whether you're still planning to launch the Gi meningitis and PCI.
In the U S for next year.
<unk> plans to <unk>. Thank you.
Thanks, a lot of D C and.
For your first question first on the let's say mid term growth profile. So first of all I'd like to highlight that we are not in the in the mid term basically guidelines, but as we said.
Based on the result that we are seeing today based on our knowledge of the current environment. We see no reason indeed to see the non COVID-19 portfolio of carriers. They are not growing at double digit next year and if you want to focus on the five P. Loves you are perfectly right, we see indeed quantify them okay.
Yes that new mortgages.
Cash equity continuing to grow at double digit and as we said.
Back in December 2020 in the carrier Gin Investor day.
We see our sample take portfolio growing at mid single digit indeed.
Now to the question on <unk> stock.
We have submitted.
Hi.
For U S approval, we expect as I said before an approval in 2020.
Our plan is to submit.
D and maintenance spending.
Before the end of 2023.
You also mentioned <unk> P&L is not planned to be submitted in 2023, we want first to launch it in Europe .
And then we just submitted in the U S, but probably around the end of 2024.
Operator, let's move to the next question.
Okay.
Thank you. The next question comes from Casey Woodring of J P. Morgan Casey. Please go ahead.
Hi, guys. Thanks for taking my question.
How should we think about the setup for 2023 is the strong performance this year, creating a tough non COVID-19 comp for next year and then how.
Should we think about the moving parts to gross margins next year as well with Covid assay revenue rolling off and higher input costs.
I think that out with that pricing can.
Can we expect gross margin expansion next year. Thanks.
I think we can take this whole R&R and I will ask one onto chime in also on the gross margin on the overall <unk>.
Active <unk> program.
We have raised our guidance for Kobe sales 2022 to around $500 million.
We continue to take a conservative approach on Covid evolution post 2022, we do not want to have our P&L, depending on coffee is volatility and therefore, we expect basically does Kobe sales 2022, or 23, Im sorry to decrease by <unk>.
More than 50%.
This is our current assumption this being said our focus is on the non COVID-19 part of our portfolio and these are repeat based on what we have enhanced to date, we see no reason to have that nonprofit non COVID-19 part of our portfolio growing at less than double digit for 2020 is being said I would like to invite all along.
To comment on the gross margin.
Yeah, and that's how you set the fourth we have clearly noted that the guidance calls or whatnot for 'twenty three.
Nevertheless, I think what we are willing to reconfirm today is so you talked about the revenue side I think it's also fair to say that the comments we made before on profitability is still very valid which means that you know if you all have a set that'd be want to be post COVID-19 are strong. Because then people are pretty cool, but then you would call it that.
Pre COVID-19, we had the adjusted EBITDA margin of 27 plus 6%.
And we clearly do believe that also now moving into.
'twenty three we should be nicely above the 27%.
Well look exactly is clearly also a question or so things are moving from price increases to inflation overall.
I would say are the twin to widen over the last couple of weeks ago. It was a positive so it will be the move quite strong into the year 'twenty three.
Yeah.
Our next question comes from Derik de Bruin of Bank of America. Sir. Please go ahead.
Hi, good morning, Thanks for taking the question Hey, can you talk a little bit about your genomics portfolio.
Typically the demand that you've seen for sample prep in coming here.
Panels and such there's obviously been a little bit of Choppiness in the genomics market because we started seeing some results.
So what's your feeling there and just your overall thoughts on how you can do in Europe .
And demand there.
Going into the end of the year and into 2020. Thank you.
Can you repeat the second part of your question on Europe . Please I didn't get that your voice was a bit tougher.
John .
Sorry, Yeah, sorry about that just basically what's your expectations are for Europe as you look into the fourth quarter and into 'twenty three it's sort of like do you expect it to be that region softening.
The headwinds thank you.
Okay. So firstly addressing the genomics.
Obviously, we follow carefully the evolution of the market with photo views leader reporting and publication of our where our competitors I'd like to remind our audience today that qiagen since 2019 has chosen.
Clearly platform agnostic.
Strategy.
Our kidney threes, universal and that will value informatics is universal and can be used on.
Any different kind of platform be them illumina, there more element <unk> origins.
So I believe that not being involved into the platform sales, we are less exposed than potentially some other companies because of the market evolution at the moment.
Out.
Our universal.
<unk> consumable saw a single digit growth against high sales in the third quarter of 2021 and.
And if you remember we have these kind of small base effect because last year in Q3 of 'twenty, one we had the double effect.
First there was a higher consumption of normal <unk> customers were coming back and at the same time.
We had government still investing.
In sequencing of positive PCR for Covid to try to detect the evolution of the mutation of the virus.
So this is why we are in Q3 in that single digit growth.
That being said overall.
We do not see a reason.
And then to go lower than double digit growth for our <unk> portfolio as we did by the way pre COVID-19.
Second your question to Europe . Once again, we are not in.
In the guidance call or in the 2020 call you have seen that Europe Middle East Africa add kind of leading growth in Q3.
We have strong basis, there we have direct subsidiaries in most of the countries. We are obviously extremely extremely attentive to the economic situation Europe is part of the geography, where we have.
And we are passing a second set of price increase in July of this year, we will now pass the fifth set of price increase starting January 2020. So this is what I can say at the moment very attentive to the economic environment at the same time very solid in our organization.
In this geographic area.
The next question comes from sounds good sorry, Greg.
Deutsche Bank Telco. Please go ahead.
Thank you good afternoon two questions. Please firstly can you quantify the price increases that you pushed through this year for us and what do you expect for next year on top of the once you pass through this year and then secondly on digital PCR, where you showed a pretty good performance again, how do you see that market developing going forward and to use heroes new.
So this is a bit of a risk to your device. Thank you.
Thank you so much hardcore in very quickly and obviously, if you want to chime in on the price increase obviously feel free so we always explain that we have no mall.
Established policy of a yearly price increase that happens normally.
In January of every year between December of the previous year in January .
This year starting July we have decided in light of inflation on a selected number of countries to pass a second price increase and we disclose in our Q2.
<unk>.
<unk> that we were targeting overall lease price.
6% to 7% price increase for that second wave.
Now obviously once this objective set we negotiate customer by customers to see what we can obviously achieve.
Net net.
And we are still basically living through that at the moment.
We explained to you as well.
That when we say, 6% to 7% price increase you should not consider on the total base of customers why first of all because as we said on selected geographies, obviously in our main market, but also because we are in.
Contract <unk> contract with some customers and therefore in those priority annual contracts, we have a guaranteed volume that normally prices are already.
Look for one two or three years.
Nonetheless, as I disclosed also in our Q2 call I said that given the specificity of higher inflation issue. We are also visiting dose per year on your customers to try to negotiate something.
So it's too early to give you a definitive impact what I can tell you is that obviously, we have a net net positive impact of those price increase for next year. We are working on the increase we take into account of you see what we have passed in January of 'twenty. Two what we have passed in July and then we determined the best number.
Placebo together with our customers.
For how long would you like to add something on the price increase be right.
As you know trustworthy.
On the digital PCR, we continue to see that market growing you remember I felt good that we said that.
332 cents you at this moment this is probably a $350 million to $400 million market, but the market we need to consider the total accessible market is rather the total Q PCR market, which is a.
Well 3 billion, so we see as a very growing market dynamic market.
Especially for Qiagen, because we believe that with equity we have a highly differentiated solution I remind you <unk>.
Three different workflows.
<unk> completely integrated boxes, whereas with competition at this moment you have to piecemeal basically a workflow to get your final digital PCR result, and this is the case of Roche.
We obviously observe the trends of Roche in that market. It proves once again that this market is dynamic we believe that Roche will help us grow in the interest of customers in digital PCR, but I must say they come with an offer which is not fully integrated which is made of two comp.
So I never criticise competition, but I still believe that given its specificity cash equity is well placed to take a leading position on this market.
The next question comes from Hugo <unk> with BNP Paribas. Please go ahead.
Hi, Hello, Thanks for taking my questions I have two on.
<unk> Chen.
So long as your appeals are being impacted by a shortage of electronics and chips.
Second instrumentation.
Is the situation for pension at the moment.
It does not seem to have an impact on instrument for life science customers.
Yeah.
Very good thank you Hugo on the supply.
I think also discussed that extensively during our Q2.
P reps unlike other companies.
We have been prepared of tight supply situation by Covid, you remember that at the beginning of Covid in 2020 and on 2021, there were extremely difficult supply situation in some key components, such as biologics or plastic.
What does it mean it means that they will company.
We're supplying purchasing team.
Is extremely prepared and extremely on the ball I would say for more than two years now on those supply issues.
We have taken some very specific measures such as not hesitating for example to take.
Purchasing commitment we suppliers overall of around a one year, because we don't want to put our customers in a difficult situation.
So I do not want to say that.
Hello, well don't supply 70 reps.
Troy on semi finished good and I think that's a very helpful. Right now because in all fairness most of the challenge as a company.
Now when we go moving to your second.
And like you have seen with 80 new system on the market. There is always a period of work where when you improve the stability of the system and this basically was given the priority by carrier.
And also led to delays in FDA handling submission.
At the end of 2022, we are now back in a position to dedicate more resources more emphasis more focus on developing the U S test menu in the coming years and you will see more submission starting again in 2023.
And <unk> on the system at the same time in a random way and this is unique and this is why we can still continue to sell in the U S. Even before obviously, we have less revenue than in Europe for the moment.
Okay.
What we're doing for our employees and in the fight.
Do you want to think finding people do you want do you want to take that one before I move to China sure No, let's let's do that no I think what I was trying to say on the.
In our prepared minutes is that Qiagen decided.
Countries.
That inflation challenges I go into corn.
So.
Results wise as we have said today for the first nine months of 2022, our sales are up 4% CER over 2021 same period, but in Q3, we saw a sales decline of 3% it was completely factored in there.
Our new guidance that we gave already in the Q2 call.
We continue obviously to see opportunities in the China market, let's never forget that whatever the challenges it's still the second market in the world from a size standpoint, but compared to probably the pre COVID-19 period, we see those opportunities at a lower rate than before 2019.
Okay. Thank you very much Terry even with that we want to end the call here. We appreciate your interest in <unk> and do you have any follow up questions or topics to discuss please reach out to <unk>.
To help you out thank you very much.
Ladies and gentlemen, this concludes the conference call. Thank you for joining and have a.
Goodbye.