Specialist
Former senior executive at Ambu AS
Agenda
- Pandemic tailwinds for single-use endoscopes vs reusable products and FDA innovation push
- Post-pandemic outlook on single-use uptake across specialties such as bronchology and ENT (ear, nose and throat)
- Ambu’s (CSE: AMBU B) portfolio expansion, assessing new product releases such as the aScope 5 Broncho
- Financial performance across geographies, discussing cost-reduction programme and Mexico facility build-out
- Competitive positioning of Ambu’s single-use products vs those of Boston Scientific (NYSE: BSX) and Olympus (TYO: 7733)
Questions
1.
To what extent has the pandemic favoured the growth of single-use endoscopes, and do you think this growth is sustainable for the next few years?
2.
You mentioned that the FDA has done various studies on the perks of reusable endoscopes, including the one from August 2019. A consequence of that has been a lot of investment into reusable endoscopes to make them better. How much of a threat or advantage is the FDA push towards safer endoscopes for companies such as Ambu?
3.
How is market adoption of single-use endoscopes trending across specialties, so bronchoscopes, duodenoscopes and so on?
4.
How much further along the line is reusable endoscope innovation vs single-use innovation? Do you foresee market adoption of single-use products losing some points because of that?
5.
You mentioned the CAPEX that goes into reusable endoscopes. Once a customer has paid that expense for a reusable product, could it be harder for Ambu and competitors to win that customer?
6.
You suggested hospital adoption of single-use endoscopes stood at around 25% in the US. Let’s picture a European hospital that dedicated CAPEX to reusable endoscopes pre-coronavirus. Then, because of coronavirus, it decided to purchase the aScope 4 from Ambu, with which it gained a lot of market share during the pandemic. What do you think will happen to those customers in 2022-23? Will they go back to reusable scopes or stick with Ambu or competitors?
7.
Especially in Q3 2022, Ambu saw post-coronavirus growth in areas such as anaesthesia, patient monitoring and diagnostics. How should we think about the rest of the company’s core portfolio? From my understanding, we’re talking about roughly a 50/50 split between the single-use endoscopes and these other areas.
8.
What’s your outlook on Ambu’s product mix in the next 2-3 years? How should we think about the declines in the bronchoscope numbers and perhaps the continued uptake of the cystoscope as well as the duodenoscope that the company launched recently?
9.
Ambu recently revised its guidance and reported 8% organic growth revenue in Q3 2022. Revenue grew organically in North America by roughly 16% vs only 4% in Europe. Why do we see such organic growth in the US despite intensifying competition even while Europe has slightly declined relative to last year?
10.
OPEX increased by 13% in Q3 2022 with higher distribution costs being a main cause. Gross margins also reduced around 56%. How should we think about Ambu’s margins? How can the company efficiently bring them up again?
11.
Do you think opening up the new facility in Mexico will completely resolve Ambu’s inventory issues, or do you think those will persist for another 2-3 years?
12.
Ambu announced a cost-reduction programme in August 2022 to strengthen the company’s free cash flow. It said that approximately 60% of reductions will be concerning its global workforce. How could this affect the company, especially given your comments about sales reps going into hospitals? How should we think about that given the new product launch too?
13.
How much of an issue could the voluntary recall of the Ambu VivaSight 2 DLT represent for Ambu?
14.
How important is the FDA clearance for Ambu’s aScope 5 Broncho product? I appreciate we’ve talked about it a little bit throughout the Interview, but how significant is it in terms of innovation, and could it represent a significant competitive advantage vs Boston Scientific?
15.
You said the aScope 5 Broncho product could open up an extra two million procedures. Given the adoption rate of single-use endoscopes and the education needed in the market, how many of those procedures do you think the scope will actually be targeting? How do we think about adoption in this case?
16.
Could Ambu have higher margins for the aScope 5 given it’s used for a more important procedure, the endoscope itself is more complex and we’re talking about interventional bronchoscopy instead of ICU?
17.
Could there be any cannibalisation of the aScope 4 now that the aScope 5 is out?
18.
Competitors such as Olympus and Boston Scientific have their own ICU single-use bronchoscopes, eg Boston Scientific’s Exalt. How should we think about Ambu’s competitive landscape in bronchoscopy vs those competitors?
19.
How does Ambu compete on price vs Olympus, Boston Scientific, Verathon and so on?
20.
Could new market entrants come in and manufacture scopes at lower costs? Is this a risk, or would this be difficult to do given the technological development required to put together single-use endoscopes?
