Coloplast: Reimbursements, Innovation & Local Operations

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You mentioned that with some countries it works out, and with others, it doesn't. In a technical process like this, how does that come about?

In Germany, insurance companies need to decide if they want to pay for products that aren't currently used. For the Heylo, nobody's using a leakage detector yet. You need to show that there are fewer complications because patients have less leakage, so they visit hospitals and specialized nurses less often. Collecting that evidence takes time. I know more about the UK because I was there when they worked on it. The approach involved looking at a big cohort, which is beneficial with insurance companies. It's not double-blinded but randomized control to show that the overall cost for the healthcare system or insurance company is lower if you offer this product because the patient doesn't go back to a doctor or nurse. That's the kind of evidence you want to collect.

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Yes, if I think about the financial terms, Coloplast is highlighting a strong product cycle and a productive pipeline lately. The guidance has been between 7% and 9% top line and increased to 8% to 10% with the Kerecis acquisition. That results mathematically from the accretion of Kerecis growth. It seems there's no growth premium from this innovation. Obviously, it's a broad range, 8% to 10%. Internally, would you account for growth premium with this innovation and product introduction cycle, or is it part of normal business, potentially cannibalizing own products with new ones without providing incremental growth to the long-term average?

When I came to the UK, you could see that the UK had stepped up. It really depends on what the innovation is. As a general manager, your main concern is to avoid cannibalizing and merely substituting, as this can deteriorate the growth profit. Many new products are more expensive than the old ones. That's why the incentive system for general managers was changed back to being based on margin contribution. Initially, it was just on top line and not spending more than allowed locally. They changed it back to margin contribution and top line growth to manage this effectively. Otherwise, you just focus on growth without considering the impact.

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