ALK-Abello A/S
CSE:ALK B
Earnings Call Analysis
Q4-2023 Analysis
ALK-Abello A/S
The company has continued to establish a strong foothold in the allergy treatment space, with a particular focus on expanding its tablet sales globally. Impressively, close to 1 million people used its digital services to find a doctor in 2023, underscoring its digital engagement success. Europe witnessed a resurgence in tablet sales while a robust partnership in Japan with Torii expanded the company's reach. Notably, ALK's allergy tablets are expected to maintain double-digit growth specifically in North America. Efforts are also underway to launch the house dust mite tablets in China, indicating a strategy for global expansion.
2024 is anticipated to be an exciting year for ALK with expectations of 9% to 12% organic revenue growth. This optimistic view is driven by the forecast of continued global tablet sales growth, especially in Europe, where growth will surpass last year's levels. Although Japan faces some supply constraints, the company is working on solutions. ALK is also priming for an improved EBIT margin, ranging from 17% to 19%, which can be attributed to revenue growth, scale benefits, and reduced external costs in R&D—a clear sign of effective operational management and strategic financial planning.
The company is carrying forward the momentum from the previous year into 2024, with patient engagement being a key factor in this success. ALK has strategically found ways to connect patients with doctors more efficiently, contributing to their expectation of a consistent growth trajectory without significant obstructions. The robust initiations, well above the 10% mark, hint at continued positive momentum for the company, underlying the firm's operational strategies paying off.
The path to achieving a 25% EBIT margin by 2025 is being pursued, albeit with caution, given some economic pressures such as inflation and the integration costs of AllerQuest in the U.S. While these factors are presently dampening the gross margin outlook, ALK remains focused on efficiency gains to counterbalance these pressures. The emphasis on increasing sales, particularly of high-margin tablets, and curbing capacity cost increases play pivotal roles in reaching the margin target.
Japan has emerged as a growing market for ALK, despite current supply limitations with CEDARCURE. Optimism abounds as ALK is striving to resolve these challenges—efforts that are expected to come to fruition in the next few years. The collaboration with Torii is aimed at optimizing capacity to cater to the increasing demand, setting the stage for more robust growth opportunities in this market.
With European tablet sales surging by 14% in Q3 and 12% in Q4, ALK is bullish about their performance surpassing the previous year's growth. Patient initiation rates well above 10% further bolster this confidence. Despite not providing exact guidance numbers for growth, the company is optimistic and stays committed to a narrative of expansion that is 'well above' past achievements.
You don't have any saved screeners yet
Hello, everyone, and welcome to this presentation of ALK's 2023 Results and the outlook for ‘24. Thank you all for joining us. Let's turn to Slide #2 with an introduction to today's speakers and agenda. My name is Per Plotnikof , I'm Head of Investor Relations. With me today are CEO, Peter Halling; and CFO, Claus Solje . First, we'll share highlights from Q4 and the full year, and then we will go over to market trends and financials. And we will also provide a strategy status before we cover the full year outlook. We will end the presentation with a customary Q&A session. And to get started, I'll hand over to Peter in Slide #3. Please go ahead, Peter.
Thank you, Per, and thank you all for joining this call. So during the Q3 call in November after only 2 weeks as CEO, I plan a few priorities for the near future. First and foremost, we should keep full focus on building business momentum, sales momentum and keeping the overall momentum for the company. Secondly, we should continue to prioritizing resolving the challenges we were facing. These were important previsit prior to turning our attention to ALK's long-term development. Now I am actually very positive that we did maintain momentum in Q4 and navigated the challenge as well. Consequently, Q4 revenue was up 10% on growth in all regions. Global tablet sales grew by 19% and European tablet sales exceeded expectations slightly with 12% growth driven mainly by new patients, which again further creates good momentum and a good foundation for the growth in 2024. Looking at EBIT. In Q4, it was up 37% to DKK 194 million higher sales and efficiencies. Results were in line with the most recent forecast and outlook, bringing the EBIT margin up to 14%. Now during the Q3 call, I also shared a few personal observations regarding ALK. I'm glad to say that these observations still stand after 3 months in the office. ALK is uniquely positioned to transform the allergy market and become relevant from millions of people. Our people are talented and passionate and the organization is truly tuning on growth. Now looking ahead, we have ample opportunities to strengthen ALK's market position, sustaining top line growth and further improved earnings. However, we must pursue these opportunities in the right order, at the right pace and with the right allocation of capital and ban power. To ensure this, we are currently conducting a routine review of the business strategy, which I'll come back to later. Now let's turn to Slide 4, and then I'll head up on a full year highlights. Full year revenue was up 9% in local currencies despite the headwinds we were facing from stagnating European tablet sales in the first half of the year. The significant shortfall of Jext sales caused by the supply challenges that were well known to the market. The ongoing inflationary pressure and the one-off rebate increase in our main market, Germany. Considering these challenges, we are satisfied with the level of solid growth we saw last year. On a full year basis, the EBIT result increased by 50% to DKK 666 million, with an EBIT margin of 14%. Since 2019, earnings have improved by close to DKK 700 million. While we remain committed to deliver on our short-term priorities, we are equally committed and focused on pursuing strategic initiatives to safeguard the long-term growth of the company. We made progress on many of these topics on our strategic agenda in '23, particularly with the efforts to extend the reach of the respiratory tablets to new relevant markets and additional patient groups, especially children. 2023 also saw progress on our sustainability agenda. We have set our new science-based CO2 reduction targets in line with the Paris agreement, and these have further been confirmed by the science-based targets initiative. By 2030, we aim to reduce emissions by 42% at own facilities with further reductions from our suppliers. Finally, looking ahead, we expect to see continued top and bottom line growth in 2024. We'll detail this further in the presentation. But before then, I'll hand it over to Claus and the market trends on Slide 5.
Thanks, Peter. Let's start with the recent trends in European separate sales. You are all familiar with the background. Sales growth stagnated in the first half year after a soft 2022 initiation season where we enrolled fewer new patients than expected. In response to this, we launched a series of initiatives to rebuild sales growth, and these initiatives started showing the effect in Q3. Q4 added to this momentum. European tablet sales were up 12% in Q4, so that sales growth in Europe for the second half year reached 13%. This was particularly attributable to a higher inflow of new patients. We estimate that a number of new patients on tablets in 2023 increased well above 10%. We have been able to mobilize more patients digitally. We have broadened the prescriber base and increased prescription depth. And we have worked with doctors to extend the initiation season to mitigate conflicts with common respiratory infections and other epidemics. The disease burden remains well recognized and market access is improving. We still have a lot of work ahead of us, and we must be certain that we have drawn all relevant conclusions from the soft 2022 initiation season. But we are on the right course and growth prospects for 2024 are promising. Now let's turn to Slide 6 and the global sales trends. Overall sales in Europe were impacted by the 2 temporary factors which Peter referred to. The supply shortage of the Adrenalin pin Jext and the mandatory rebate increase in Germany. Fortunately, Germany has lifted the rebate increase here for ‘24 and Jext Supply is normalizing as planned. Despite this, revenue in Europe was up 6% driven particularly by SCIT while tablet sales regained momentum in the second half year. We solidified NSK's position as market leader after growth in most markets, except for the U.K. and Spain that Jext shortages, lower sales. Sales in North America increased by 9% on growth across all product lines, which I will come back to in a minute. Revenue from international markets increased by 23% after double-digit growth in product shipments to the region's largest markets, Japan and China. In market shares in both markets also grew by double digits. Now let's turn to the product categories on Slide 7. Global tablet sales increased by 11% on double-digit growth in international markets, 6% growth in Europe and 26% growth in North America tablet sales. Canada saw robust double-digit growth throughout the year, while sales growth in the U.S.A. picked up in the second half year, driven by increased volumes from existing prescribers and improved realized selling prices. Global sales of SCIT/SLIT-drops, sales were up 12%. SCIT drops sales increased slightly, while SLIT sales saw double-digit growth in both China and Europe. European growth was driven by improved pricing and market share gains, especially in the Venom segment. North America SCIT sales grew 7%. Finally, sales of other products declined 9%, mainly due to the tax issues in Europe. Now let's move on to Slide 8 and the full year financials. Overall, revenue was up 9% in local currencies and 7% in reported at DKK 4.8 billion. A gross profit of DKK 3 billion yielded a gross margin of 63%. The margin benefited from higher sales and production efficiencies, but this was partly offset by higher shipments to Torii at lower margins. Since 2019, we have raised the gross margin by 5 percentage points and further improvements remain a top priority. Reducing the capacity cost to revenue ratio is another focus area. Capacity costs include R&D, sales and marketing and administration. This ratio is down 10 percentage points since 2019, and there is still room for further improvement. Last year, overall capacity costs increased by 3% to approximately DKK 2.4 billion. Sales and marketing expenses were up 5% in support of various growth initiatives. R&D expenses were down 7%, reflecting the completion of large-scale clinical trials of the respiratory tablets. Finally, administer cost increased 20%, but this was mainly reflected the one-off cost due to the leadership changes. EBIT was up 50% in local currencies and 42% in reported at DKK 666 million. The EBIT margin improved from 10% to 14%, reflecting higher sales, improved gross margin and a lower capacity cost to revenue ratio. Finally, free cash flow improved to DKK 292 million, driven by increase in earnings, but also some timing of payments, including taxes. A decent set of results despite a difficult year. This year has been ALK's best performance so far. We will now move to Slide 9, and I will hand it over to Peter for an update on ALK's progress in 2023 and clear priorities for 2024.
Thank you, Claus. Let me start out by providing a brief update on ALK's progress in 2023. After having grown for many years, the patient base was stable in '23 with around 2.4 million people on treatment with ALK products, a net increase of approximately 200,000 AIT patients. It was offset by a similar net decrease inject patients due to the limited product supply. The efforts to connect digitally with patients also progressed. Close to 1 million people used our digital services to find a doctor in 2023. As Claus mentioned, we saw and are very pleased with the success in same restoring growth in tablet sales in Europe. The partnership with Torii is performing well, and we saw good growth coming from Japan. The scope has been expanded to include ALK’s grass allergy tablet. This comes in parallel with the ongoing work to further expand the supply chain and manufacturing capacity to meet the increasing demand for existing tablets, particularly the tablet against Japanese cedar pollen allergy. We also saw double-digit growth in tablets in North America, where we focused on building new prescriber groups, especially among children doctors. Good sales saw double-digit growth in both China and Europe, and preparations for the launch of the house dust mite tablets in China are ongoing. We continue to strengthen the organization locally and expand the subscriber base, while we are awaiting the outcome of the regulatory review of the Grazax. With regards to children, we have submitted the first regulatory filing based on last year's success with pediatric trials with the house dust mite tablet and the tree tablet. The European regulatory filing for Grazax for young children was accepted for review by the authorities the week before last. Moreover, the development of the tablet for peanut allergy progressed well, as we reported 3 weeks ago. In addition, we made a provisional decision to extend the ongoing trial to examine the tablets efficacy. Now let's turn to Slide 10 and look ahead. So looking ahead in '24, our key strategic must-win dams will probably not come as a big surprise to many of you. We need to keep momentum and help more people with allergies to better life and in doing so, thereby, we'll grow our revenues and improve earnings. Key to this will be sustaining double-digit growth in tablet sales with growth in all of our sales regions. More we must succeed with the regulatory filings for children use in Europe and North America and adult use in China. As mentioned, we expect the Grazax to become available for young children in Europe sometime ’24, ‘25 and in North America in '25, again, subject to regulatory approvals. Likewise, we expect the tree tablet to become available for young children in both Europe and Canada in ‘25. These product launches are important catalysts for future revenue growth, North Eastern Europe. Furthermore, we still see a possible approval of Grazax in China in '24. Overall progress in the wider allergy space is also expected in '24 with further results anticipated from the clinical development of the peanut tablet. Regarding the development of new adrenaline auto injectors, there's much going on in this space and ALK's anaphylaxis strategy is, therefore, under review. We still see an untapped potential for Jext, but we need to further refine our anaphylaxis strategy. Stay tuned and more to come later on. ALK has overall a strong foundation and the strategic direction for the company remains unchanged. The current framework with the 4 well-known focus areas was established in 2017 and has been unchanged ever since, except for the addition of the new horizons priorities and China in '21. The time is right for service check of the strategy. As I mentioned during my introductory remarks and as we mentioned a number of times in between. Without preempting the outcome, we particularly look into 3 things: about prioritization, simplification, resource optimization. At first, will ensure that we have the right economic foundation to pursue ALK's many strategic policies. We face a vast opportunity space and is key to secure that we progress things in the right order at the appropriate pace and with the correct allocation of capital and people. Careful prioritizations will allow us to pursue 2 high potential growth levers while other initiatives will be given lower priority. Secondly, we're looking into how to best streamline and enhance the business platforms and operations, aiming to increase scalability and thereby positioning ALK for solid long-term growth. And thirdly, we will be identifying ways to free up financial resources and manpower to fund initiatives to sustain ALK growth, not only in the short and midterm, but also after 2030. Improving earnings is crucial. It creates a strong foundation for the company that allows us for investing more in R&D, sales and marketing activities while also rewarding shareholders. Finally, I would like to emphasize that we do not expect to change ALK's all financial ambitions following this review. We continue to target annual organic growth of 10%. Likewise, we continue to improve earnings and our ambition of raising the EBIT margin to a level of around 25% remains unchanged. It will not be easy, but the review is expected to change or not change, sorry, the ambitions, the review is meant to support these ambitions. We expect to share the outcome at an upcoming Capital Markets Day during Q2, where we also intend to share new long-term strategic aspirations towards 2030. With these updates, I'll hand it over to you, Claus, on the full year outlook on Slide 11.
Thanks, Peter. We expect revenue to grow by 9% to 12% organic growth in 2024 based on the following assumptions. Global tablet sales are expected to increase by double digits. European sales are rebounding and growth in Europe is expected at a level well above last year. Likewise, North America and international markets are expected to deliver continued sales growth of tablets, although growth in Japan will be somewhat lower due to in the medium capacity limitations Torii . Combined SCIT/SLIT-drop sales are projected to grow driven by SCIT, albeit at a somewhat lower growth rate than last year where improved pricing, fuel growth in Europe. Sales of our products and services are expected to resume growth led by Jext. All in all, broad-based growth across all product groups and all sales regions. Moving to earnings. The EBIT margin is expected to improve to 17% to 19%, up from 14%, which can be attributed to revenue growth, scale benefits and lower external costs in R&D. Our gross margin is expected to improve slightly because of the product mix, but also because we are facing some inflammatory pressures on the cost base. The capacity cost to revenue ratio is expected to further improve as we capitalize on existing platforms to enhance efficiencies and reduce R&D spend. R&D expenses are expected to decline to around 10% of the expected revenue versus 13% last year. EBIT achieved expenses are expected to decline slightly, while sales and marketing costs are expected to see single digit increases. Throughout the year, we will give particular attention to optimizing and prioritizing initiatives, enabling us to strategically allocate resources to fund future growth. To sum up, we expect 2024 to mark the 6 consecutive year of revenue growth and improved earnings. With this, I would like to hand it back to you, Per on Slide 12.
Thank you, Claus, and thank you, Peter. And this concludes the main part of the presentation, and we will now move on to the Q&A session. And we will take questions in the order in the system. Please limit your questions to a few before rejoining the Q &A so that everybody can have the opportunity to ask the questions. Operator, please go ahead.
[Operator Instructions]. Today's first question comes from Jesper Ilsoe with Carnegie.
A couple of questions on European tablet sales. So we are soon entering the real pollen season. You are still stating these 10% or more initiation trends. Can you just confirm that the trends you saw in the Q3 report has continued into Q4, so that it still see the same more than 10% increase in initiation. And also on that topic, has there been any issues on the patient doctor initiations like you saw at the last initiation season. I just want to make sure that suddenly we have a couple of good quarters right now with derisking on tablet sales, but then you run into the similar problem. Any insights on that?
Jesper, Claus here. There's no doubt that we are very happy with the momentum being back here in like we also saw in Q3. And at that point in time, of course, we talked a lot about which initiatives we have been driving. And especially, is about making sure that the patients could get earlier to the doctor than what we have been seeing before. For now, we are seeing initiations, as you said, well above the 10%, which should keep the momentum into '24. And right now, we do not see any complications or matters relating to patients or doctors or pollen seasons that would change the momentum that we are expecting right now and seeing right now.
And our next question comes from Martin Parkhoi with SEB.
Also a couple from my side. Firstly, on the gross margin, which you say is flat to slightly up in '24 is your expectation. If we look into your 2025 ambitions of going somewhere up in the neighborhood of 25%. With the development we're seeing on the margin and the component of the market development ‘24, are there any difference in how you expect to reach the almost whatever, 25% next year as you have less impact from the gross margin at least this year? And then just on Japan, on the supply limitations you're seeing on CEDARCURE this year. Maybe you've already said it, but maybe I missed a couple of results today. But then where are we? When should we expect this to be back on track? And what kind of growth rates are you expecting to be able to see in Japan in this year and then maybe also next?
Martin, Claus here for the comments. I will take the first one and then Peter will take the next one. Related to how to reach the 25% or as you say, approximately, also especially related to the gross margin, where we more say it's going to be to be flattish or a bit above. And there are a few elements. First of all, we got a little bit more out of ‘23 than what we had expected, which was good. In '24, we have a few things working a bit against us. We both have some inflationary pressures, but we also have the integration of AllerQuest in the U.S. that are also impacting us a bit on the gross margin. We are still continuing working its highest priority to still find efficiency gains in our factories and manufacturing. So we hopefully can maybe compensate for some of this that we are seeing right now with inflation in AllerQuest, but it's too early to say something about that. Related to what else will drive it? And are we then seeing any changes on kind of the components that will help us to reach 25%. That is the same that we are seeing also today. So 10% or above on the total sales, very well driven by the tablets with a high margin that will help us there. And then quite low, you would say, capacity cost increases during both ‘24 and ‘25. And especially, as you know, the R&D going down from the higher level that we have seen in the last couple of years. So it will still be the same metrics that we are looking at and working with. And despite that, we now see our gross margin being, I would say, slightly less improvement than maybe what we have hoped for, then we will continue working finding efficiencies in the factories. I hope that explains.
So Martin, if I got your question right on Japan. So basically, we expect growth to continue in Japan. I think what you were referring to is the supply challenges that has been with the CEDARCURE. This is ongoing, and this is something we expect to resolve in the coming years. We are working very closely together with Torii in terms of resolving it, optimizing and getting enough capacity because the demand is there in Japan, which is obviously exciting. We still expect to get a pretty decent growth in Japan and especially international markets overall, and we'll continue to see that also going forward even though we're waiting on the capacity. So I think all in all, it's positive. Just so you know, Torii will come with their results tomorrow and also provide guidance there.
And our next question comes from Michael Novod with Nordea.
A couple of questions as well. So first of all, on the European tablet sales, not to continue to dig into it. But do you try to sort of quantify what well above means 13%, 17%, 20%. Just so we get a feeling you often were able to give a bit more clarity to this. And then a question on the anaphylaxis strategy, can you already now talk about what this means to review of the prior potential time lines that were given? Or should we just say we factor out this completely and then just await what kind of strategy you will then update us on the CMD.
Michael, Claus here. I will take the first one and then Peter will take the anaphylaxis strategy. You're right about the EU tablet there we are saying well above. And you're also right that we have before guided more precise on the tablet sales. We have decided this time not to be precise guidance in what we are coming with here. So we are staying with the well above. And you are right, that can then very high. But of course, it has to be within reasons. We are quite optimistic when you look at the Q3 and Q4 uptake now the 14% in Europe in Q3 and 12% in Q4. And also with the well above 10% new initiations of the patient side. But for now, we would like to stay with the 10% and it's going to be well above than what we did here in '23, but that's what we would like to guide for when it comes to the tablet sales.
And just on the anaphylaxis, overall, we made no decisions yet, as I stated its part of our ongoing strategy with you. So we'll be able to talk more about it sooner when we are ready at the CMD. So I think that's what I can say at this stage in terms of where we stand on and places.
And our next question comes from Peter Stansted with ABG.
I also have 1 or 2 questions. My first one is actually on the increased adrenaline costs here in Q4. In Q4 report you really don't mention any specific one-offs for Q4. So the paranoid analyst would suggest it is part of ongoing operations. And my immediate suspicion falls on the strategic review, any of those costs associated with that. Having a background in private equity, you have probably also used consultants, et cetera, in the past. So first of all, since the amount is very, very big, can you confirm that this is the case? And if that is the case, since the amount is very big, it sounds like more than just a 360 review of the company, but 760 or whatever, 720 in-depth with you? And can you also tell us if that will look at the Americas, et cetera? And I have a potential follow-up question for that.
You're completely right. There are some one-off costs that we have seen in action in several of our quarters during the year for adrenaline, both in Q2 related to the exit of former management and also some extraordinary costs here in adrenaline costs in Q4, also related to some of our activities in U.S. and so on with AllerQuest and so on. But that's what we have right there. Related to the strategy comments, I will leave it to you, Peter.
So it's always difficult, Peter, when you get questions on what does it mean? Strategy review it, it is a 360. As I said early on, the strategic direction remains unchanged. The intent is to ensure that we support delivering on the ambitions. And this is basically what we do in the strategy review. We want to find the necessary growth levers both for top and bottom line, we want to ensure that we are set to go to deliver on our ambitions overall. So what you put into that, I'll leave it to you, but we are, of course, ensuring we get the help we need to get things done.
My follow-up question would pertain to the previous comment you made about prioritizing on 2 high-growth projects and then deprioritizing another one. Is it fair to assume that one of the high prioritizing areas is the peanut allergy study? You could put here some comments about the release you put out earlier around the project comment? And secondly, could a future another high priority growth area be related to the announcement that was out yesterday, I guess, it's not since it's very, very early stuff, but nevertheless, just to get some insights on that.
So this is Peter. I'll try to answer. I don't think I said a number of projects we would prioritize or down prioritized, first and foremost. But I think what you allude to is obviously, it's key that with the filings we have now on the pediatric side that we ensure that we are ready to get in the market when the time is why we don’t get the approval. So that's obviously a big priority and that goes for Europe that goes for Canada and the U.S., obviously. What you mentioned in terms of yesterday, I think you believe you're mentioning basically that we got the nice and exciting news that there are certain discovery around a type 2 memory B cell for [indiscernible] was discovered, and that ALK is part of it. It's very early stage, and this was not what I was alluding to, even though we are tremendously excited that our researchers are really doing some groundbreaking work. So I'm excited about that. So I think that's it, then you could say on the peanut side, we are happy about the initial results we saw. We are going to await the Phase I results and then hopefully, we will come out positive and we can accelerate from there. But let's see.
Just a follow-up. I know it's 3, but perhaps you could squeeze it then as it relates to the Phase II extension. I guess your ambition is to go directly to Phase III if everything looks fine. That is the plan with that, right?
Claus here, that's too early to say right now. But of course, you are right, we are very ambitious on the peanut trial that if we have an opportunity to speed something out, then of course, we would love to look into that. But that also comes, as Peter is saying, capital allocation, what kind of funding do we have, what we would like to use it for. So that will be a part of that prioritization process. But of course, we're very eager if we can get that closer to patients as soon as possible to help them that would be fantastic.
Just to be clear, we need to see the results, and this is what we're waiting on. But we are positive at this stage.
And our next question comes from Ben Jackson at Jefferies.
This is Ben Jackson from Jefferies. Just wondering if we can push you slightly further on that, a follow-on from the peanut energy program. Are there any potential timing that you could give to us on that? And then more so, how are you thinking about the commercial opportunity? And is there anything else that you have to consider during this program?
Maybe I can help a little bit on the timing of the program that we're currently running. So the next part of the Phase I component of this study, we expect to see results in the fall of this year in the second half of '24. Then if everything goes well, we will then progress into the Phase II part of it, which will run through 2025 and have its data readouts in the beginning of 26, if everything goes well. And then on the back of that, coming back to Claus' question, then we need to decide in terms of Phase III, et cetera, et cetera. So it's still some years out. On the commercial potential, we know it’s one of the allergies that is involved in severe anaphylaxis. So it's a potentially life-threatening allergies. We know that there are 2.5 million kids in Europe and U.S. suffering from peanut allergy. We know that a large proportion of those have severe peanut allergies and live a very restricted life and those are the patients that we are trying to help with this product. It's still early days. The peanut AIT market is still underdeveloped as there are limited products available. These patients rely on strict avoidance and of course, carrying in an auto-injector. So it's also a market that needs to be developed and matured as we move along, but there's a significant number of patients that are in need of appropriate treatment options out there.
Our next question comes from Thomas Bowers with Danske Bank
So just 2 questions here from my side. So you have been talking a lot about the potential price increases for the tablet. So is this part of the ‘24 guidance to the high end and is there actually likelihood to see this materialize in the near future. So any color here would be appreciated. And then on OpEx and you're sticking to this 25% EBIT outlook for '25. So should we be looking at a flat OpEx development now also with a more bumpy gross margin outlook? And how should we actually think of the SG&A investments into potential new regions, which you also have been talking about the last year. So I guess whether this imply that rather we should see rather limited investments G&A wise until we are beyond 2025?
Regarding your first question, at least I will take that one on the price increases. There's no significant real price increases baked into our forecast. We are constantly working on price increases in many markets and we also constantly faced, of course, with demand to lower them and see rebates about 24% as one year, we are not really expecting any significant other price increases or decreases, and it's also not baked into our numbers. So if anything is coming there, it will be positive. On the OpEx part, related to ‘25, I can just add here. We are still aiming for that is still approximately 25% in '25. We believe we have a good plan for that. We believe that with the momentum we see on the top line, both in general, but especially in our tablet business, high-margin business. If we can get that to continue into '25 also, and we can maintain the investment level as we have planned for now, then it should be doable to get close to those 25%. I'm not saying it's going to be easy, anything like Peter also said before. It's not a walk in the park to jump so many EBIT points year-on-year. But of course, we will make sure to maintain a reasonable investment level at the same time because we also had the pediatrics coming up in '25, '26 and so on. And of course, we want to continue to invest in that. So we will make sure that we balance our resource allocation that we make sure we take the right choices. And as Peter said before, then during the strategy review, then we're also looking in to see if we can find up some free funding that we can move around into different areas of the investment.
And our next question comes from Sushila Hernandez with Van Lanschot kempen.
Has the supply of Jext already normalized? And also my second question is how much upside do you still see in terms of tablet sales growth in Germany given the changing landscape?
So I can start out on Jext. As we also commented on in Q4, basically, we expect to see improvements in supplier of Jext. We are seeing that normalizing. It's getting close to where it needs to be. But, given the backlog, we need to ensure that things are running accordingly. So the expectation is that Jext supply will normalize for the cartridges throughout the year and that we can then pursue the opportunities that we also communicated about. I think on the second question, do you want to jump in there, Claus?
That was regarding the [indiscernible] in Germany and if there's still any kind of upside related to that. There's no doubt that Germany is one of our key markets like Nordic and some of the mid-sized markets in Europe. We still had high expectations to those markets also to Germany. It is a market where the value evidence-based medicine and also within allergy. So that basically means that both the doctors and the authorities, but also the insurance companies are very much supporting exactly what we are offering, which is, of course, medicine based on trials and evidence. So we are still expecting Germany to be a key market for us and still see significant growth there over the years to come.
[Operator Instructions]. Today's next question is the follow from Jesper Ilsoe also with Carnegie.
So given the Catalent Novo deal, can you just decide the comments you've made in media articles following the deal? Can you just highlight potential changes, if any, to your collaboration with Catalent. I believe you both have technology but also supply agreements with Catalent perhaps going to talk with sites you are collaborating. Is it one of the ones involved in transaction? And do you need to switch side?
Jesper, this is Peter. So I'll just comment in general. So first and foremost, we've had more than 20 years of collaboration with Catalent. We have an excellent collaboration. We've been in contact closely, and there are no outlook for change. So basically, we expect that everything will continue as up and until now and that we'll continue to expand the collaboration with Catalent also going forward under the new ownership. I can also confirm that the 3 sites that Novo Nordisk acquired are not related to our business with Catalent. So we are quite confident in terms of the continued supply.
And ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to the management team for any closing remarks.
Thank you very much, operator, and thank you all for all the good questions. And before we end today's call, please have a look at Slide #14 with the upcoming news and events. Most events will be available on our investor side, and we'll provide additional info on the Capital Market Day as soon as possible, and we hope to see you at one of those events. As always, you're welcome to give us a call if you have any additional questions. And with this, I will end today's session and wish you all a good day. Thank you, and goodbye.
Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day. Good day.