Hypera Sa S/Adr

Good morning, ladies and gentlemen, and welcome to Ipera Pharma's conference call, where we will discuss our earnings for 2022. We have with us Mr. Breno Oliveira, CEO, and Mr. Adomario Couto, IRO. We'd like to inform you that this event is being recorded. You may access a recording of it in the company's investor relations website, epera.com.er. We'd like to inform you that all participants will be in listen-only mode during the company's presentation. After that, we will begin the questions and answers session when further instructions will be given. Before we continue, we'd like to underscore that some of the information in this conference call may refer to projections or statements on future expectations. This information is subject to known and unknown risks and uncertainties that may make them not come to pass or to be substantially different from what was expected. Now, we'd like to give the floor to Mr. the company's presentation. Mr. Brito, over to you. Good morning, everyone. Welcome to our earnings call for 2022 and for the fourth quarter of 2022. Last year was a very special one for Ipera. We reached all the guidances that we had published for the year. We grew our market share in retail. We advanced our strategy for the institutional market. We concluded the acquisition of the Sanofi brands, and we launched several new products across all of our business units. I'm going to start this presentation discussing our growth on slide three. Our sellout growth was 12% this year, a record for the company. It was 2.5 percentage points above market average growth in 2022. Our sellout grew organically above market rates for the second year in a row. And this time, it happened across all of our business units. This is a result of the initiatives that we used to boost our sustainable growth, especially increasing the pace of launches in the last few years, expanding our production capacity, and especially investing in our leading brands. It was a year of record marketing investments, which are essential to strengthen our irreplaceable portfolio of leading brands and boosting the growth of our new launches. Our advance in the institutional market this year was also a highlight, as I'll mention in slide four. The institutional market contributed with over 380 million Brazilian reals to our net income in 2022 versus 145.6 million in 2021. This is due to the initiatives implemented by the new business unit created in 2021, which contributed to a 70% growth in our existing product portfolio in this segment, and also an additional income from a non-recurring cell of the immunoglobulin, representing about 130 million BRL last year. We also concluded the investments in our new injectable plant in 2022 in Annapolis, and we continued creating our new innovation center, our new pilot plant, and an oncological product plant to support our growth in the institutional market, which should be concluded still this year. We currently have a pipeline of 87 new molecules to be launched in the next few years in the institutional segment. And in 2022, we have already launched our first antibiotics, cefepime, cefuroxime, and Baxulfatrin. a record organic growth in retail sellout, in addition to the contribution from the Sanofi brands acquired in the first quarter of 2022. And our sales going up in the institutional market allowed us to have a net income of 27% growth in 2022. We also reached record EBITDA levels for our continued operation and the highest cash generation in 2022. our history, and Adomario will mention this soon. We had significant operational and financial advances this year, and we maintained our commitment to sustainable growth, to paying our shareholders, and to maintaining our stakeholders' well-being. We speak about innovation on slide 5. We launched over 90 products this year, and we made record investments in research and development. totaling about 520 million euro in prescription products. We are working in new markets such as contraceptives and cannabidiol. We were the first to go into the Epixaban market after the patent was broken, and we launched ONDIF for the treatment and prevention of nausea. In consumer health, our highlights were Engov Up, a new extension of the Engov brand line, and further line extensions for Myrtillate, Epoclare, Buscopana, and Neosaldina. In biosimilars and generics, the company advanced a strategy to increase its coverage in generic molecules. Ladies and gentlemen, please hold while we reconnect.

ladies and gentlemen please hold while we reconnect

Hi, everyone. I'm not sure if you can hear me.

We got disconnected, but I'll go back to the innovation slide and start over. So, as I was saying, we launched over 90 products this year, and we had record investments in research and development, 520 million Brazilian reals. in prescription products. We went into new markets, such as contraceptives, cannabidiol. We were the first to go into the Apixaban market after the patch was broken, and we launched OnDiff, an oral formulation for the treatment of nausea. In consumer health, we launched N-Gov Up, a new line extension for the N-Gov brand, and other line extensions, such as Mergelakti, Apoclair, Buscopan, and Zidane. In biosimilars and generics, we increased our coverage of molecules from 49% in 2021 to 58% in 2022. And in skincare, we also launched significant line extensions for Episol and new products from Simple Organic and BioAge. I'd like to reinforce that the company still has a significant innovation pipeline with about 450 products to strengthen our industry. presence in the Brazilian pharma retail industry for the next few years. Moving on to slide six. In 2022, we also announced the acquisition of a site that produces escopulamine to supply the main input that we need to produce buscopan. We approved a new investment to expand production capacity in solids And we also approved an expansion for our distribution center in Annapolis that should be concluded next year. We also paid out interest over our own capital, R$ 779 million, or R$ 1.23 Brazilian reais per share, for the fiscal year of 2022. We also significantly advanced our ESG agenda this year, implementing several initiatives in social, environmental, and governance fronts. These initiatives contributed to an increase of 21% in our ESG score at Standard & Poor's. And we also received a note in the S&P Global Sustainability Yearbook which lists the best ESG performance in 2022. Only 20 Brazilian companies were listed there. Our CPD score went from C to B, which places us above the global average for the pharma industry. We were also selected for the first time to be in the EC Portfolio at B3 for 2023. So these were major achievements that EERA made in ESG, and it reflects the efforts that we've been making in this area in the last few years. I'll pass it over to Adel Mario now, who's going to tell us a little bit more about this year's results, as well as the next quarter. Thank you, Bruno. Good morning, everyone. Last year, we saw organic sell-out rose significantly across all of our business units. There were contributions from the institutional market and the acquisitions for the Sanofi brands, which boosted our revenue. It was above 7.5 billion Brazilian reals, and it's above the guidance that we had established for last year. About two-thirds of this growth is related to our volume expansion, which was driven especially by the launches made in the last few years. In 2022 alone, we launched over 90 new products, which represented 30% of our volume growth for the year. Most of that took place during the second half of the year. So we expect that these products will continue to contribute to our net income, excuse me, our net revenue in 2023. This year, we will launch over 100 new products. And differently from last year, we should see more launches in the first half of the year. Considering the institutional market, We had sales contributing 381 million BRL, a large increase versus 2021, and many of them came from the non-recurring cells of immunoglobulin. Our revenue growth increased. was above the sell-out and our retail stocks were replenished. When we look at the last 12 months, our sell-in was close to our organic sell-out without considering the institutional market. The production of the sell-out rate in the last quarter versus the other parts of the year is due to the strong demand that we had in the end of 2021, which affected our comparative faces. That's when the company grew above market rates. Our gross income was above $1.3 billion in the fourth quarter, with a gross margin of over 62%, and $4.8 billion BRL in 2022, with a gross margin of 63%. Growth, profitability was impacted by the mix of products sold and increased the institutional market share and a growth in generics. With that, Our continuing operation EBITDA grew nearly 40% with a margin expansion and with a dilution of marketing expenses as a percentage of total expenses. The company's power brands grew in consumer health, prescription products, and skincare. We also saw synergies captured by integrating the recent acquisitions. Despite this higher relevance of financial expenses and a higher level of debt, our net income reached 1.7 billion BRO in 2022, which is in line with the guidance established for the year. Continuing with our cash flow on slide 8, as Bruno said, we had a record cash generation in 2022, above 2 billion, with an important increase in EBITDA conversion into operational cash flow. This cash generation allowed the company to invest significantly in CapEx this year, expanding our production capacity, new lines, increasing our R&D structure, and also making smaller acquisitions. The company also made significant investments into intangible assets, including especially paying for the acquisition of the Sanofi brand and investments in innovation to strengthen our product portfolio. With that, the company's free cash flow reached $205 million this year, and after new debt issues and payments of interest over our own capital, our net debt was 6.8 billion EUR. When adjusted for the GCP paid in early January, our pro forma net debt was close to 7.5 billion EUR or 2.5 times the EBITDA expected for 2023. As Breno said, we had robust financial and operational results in the last year. We reached all of the guidance's and we increased our operational cash generation, which is essential to continue to invest in sustainable growth. I'll pass it over to Breno for his closing remarks. Thank you, Adalmario. Well, I'm very pleased about these results for 2022 at Ipera. We made significant financial and operational strides And this is due to the dedication of our more than 10,000 employees, our clients, our consumers, and medical community as a whole. We still believe in the Brazilian pharma market and its potential to grow, and we're the company that is most prepared to capture these market opportunities on the short and long term. We have the main brands in the market, and we're the only ones that have a significant position across all segments, prescription products, different counters, generics, and skincare. We have a strong innovation and production capacity which will allow us to strengthen our footprint in the retail market and will also allow us to go into new segments like we have been doing with the institutional market. I'm very confident for 2023, especially with the performance of our recent launches. That's why I'd like to share the guidances that we made for this year. Our net revenue is expected to be around 8.6 billion BRL, adjusted EBITDA from continuing operations, excluding others, 3.05 billion, and the net income from continuing operations around 1.85 billion Brazilian reals. Thank you, and we'll now pass it over to the Q&A. Thank you. We'll now begin the questions and answers session for investors and analysts. If you'd like to ask a question, please press the raise hand button. If your question has been answered, you may lower your hand. Please hold while we collect questions. The first question will be asked by Gustavo Miele from Goldman Sachs. Go ahead, Mr. Gustavo Miele. good morning breno and adal mario thank you for this presentation i have two questions for you the first is about this guidance for 2023 i'd like to ask you to give us uh some more details on the top line and your margin so this 14 percent growth that you're proposing for this year? If you can tell us about how much it's expected to come from the market, how much share you expect to gain in 2023. And when we look at margins, there's been a growth year on year, but it's relatively flat. So what are you considering for your mix and how much room is there to dilute SG&A? I also have questions about your results in the working capital line. So what has affected your inventory days like? We know that this is changing with every quarter. So I'm wondering if you're just building up some safety inventory or is it a logistical issue? So if you can tell us that, thank you. Hi, Gustavo. This is Breno. So I'll answer about the guidance and Adamario will discuss working capital. As you said yourself, the guidance refers to a growth of 14%. As a reminder, we don't see the same positive effect that we had from immunoglobulin last year. So if you look at the saying basic was a bit higher than that. And this is implicit. We expect to have above retail growth, above retail average growth, which is about the same that we got in the last few years. There are market expectations, or the last ones that we heard are about 11%. So, We expect to grow above that. And the main driver here are new launches. So about 50% of our growth should come as a result of launches that were made in 2022 and the launches we will make in 2023. So we're very confident about this figure. Concerning margins... Margins are basically flat here in comparison to the previous years. We suffered some foreign exchange pressure last year, and as it remains stable, we're able to control it. And inflation has been catching up So we've been able to increase our prices to gain some margins. So we don't have the effect of immunoglobulin, which affected our growth, but we will see better growth margins and a better EBITDA margin. I'll pass it over to Adal Mario, who's going to talk about working capital. Hi, Gustavo. So we're continuing on the same strategy we mentioned before. So having more safety inventory than we had in the past. But when we compare the third quarter to the fourth, we didn't change our policy in the last quarter. But the main effect was a deceleration of sellout. So with that, we had a higher increase, especially in finished goods. And we believe that As we launch new products, all the launches that were made will reduce inventory. But as we launch new products in the next months, it will tend to stay flat. Another point we've been discussing in the company is maybe reducing our inventory levels. Since things are normalized now between China, India, and Brazil, we don't see any disruptions on the horizon when it comes to logistics and freight. So we believe that there's some potential on the medium term to reduce our inventory to pre-pandemic levels. But this is a long-term thing. I think our biggest concern right now is to avoid any sort of product stockout. Last year, for example, there were some periods in which we saw unexpected demands and we were able to make use of those opportunities since we had a higher inventory. So the guidance for the next months and quarters is to have a lower inventory line. So just to add to Adalmario, our business is a little bit different from retailers, which I think is most of our coverage. Our margin is quite high. The EBITDA gross margin doesn't have so much operational leverage, but it's very high. So we try to avoid of course, without wasting working capital, we try to avoid product shortages because that's the worst scenario possible for us, being stocked out. Because then we would leave, you know, 65%, in some cases up to 90% margins on the table. So we're looking at that, as Omar said, but it's... a gradual thing so that we can avoid product shortages. Great. Thank you, Bruno and other Mario. Next question will be asked by Caio Moscardini from Santander Bank. Go ahead, Caio. Hi, everyone. Thank you for taking my question. Thank you for this presentation. I have two questions here. First, about the guidance, your expected net revenue. What CELIC rate are you considering for this guidance? And regarding G&A, if we look at the last quarter or the third quarter, we can see that it's been going up. So I'd just like to understand if your headcount is complete, if you already have a full team, or if you still need to hire. Do you think that this GNA will reduce? Hi, Caio. Let me answer your question. Net income guidance basically implies the SELIC of about 13.75% for the entire year of 2023. We know that if we were to look at it three or four months ago, our expectation was that it would drop more, but considering the latest projections, we have been conservative and decided to consider a stable SELIC rate with no reductions over the year. Obviously, if during the year it goes down, it will have a very positive impact to our results, considering the leveraging levels that we have. And we have some room to review it if it changes. But we decided to be more conservative right now and work with the same Selic index for the rest of the year. When it comes to GMA, we did increase our headcount in the last quarter. And this is in line with our budget, considering the number of new launches that we are having. We ended up hiring more people in the fourth quarter. And for next year, we don't expect to see a significant expansion to our team. So I think this G&A line will have some potential synergies. You mean for next year or for 2023? I meant for 2023. We don't expect to expand our team significantly this year in a way that would impact our GNA. Great, thank you. The next question will be asked by Leandro Bastos from Citibank. Go ahead, Mr. Leandro. Hi, everyone. Good morning. I have a couple of questions. The first is, if you can tell us a little bit about how you see the market doing this year. We saw that sellout went down in the fourth quarter, and you said that it was a tough comparison. And I understand that it continues for some molecules up until February. So I'd just like to hear how you're doing. The second question. Since sell-out grew less than sell-in, your inventory levels went up. So I'd just like to understand how you see it and how you think it will be balanced for the future. That's all. Thank you. Hi, Leandro. This is Breno. I'll take your first question about the beginning of the year. You said it yourself, and we hadn't mentioned this on our call last year. 2022 had started strong. We had an off-season spike in COVID and flu cases. So, We had a growth of 23% in the first quarter. In January, we had grown over 40%. But that comparison is tougher now. So we had expected lower growth levels in the first quarter, but this was already seen or considered in our guidance. So the first quarter will have weaker growth, especially because it's a tough comparison to last year, especially the first part of the first quarter where we had significant growth. But from then on, I think we have a normalized comparison for the remaining quarters. But this has all been considered in the guidance we published just now.

Hi, Leandro.

Yeah, so when we look at the difference between sell-in and sell-out for the fourth quarter, it's quite natural to see some volatility with each quarter. So just to give you an example, in the second quarter of 2022, organic sell-in growth had been much lower than sell-out, about 8 percentage points. And this quarter, the fourth quarter, we saw that inventories were built back up again and industries. And also, there were some concentrated launches in the third and fourth quarter, which have a positive impact to sell in at first. And then, as we invest in marketing to promote new launches, we see that sell-off goes up. along with it. So for 2023, we will probably see the first quarter with sell-in above sell-out. But for the remaining quarters, as was said by Breno, our expectation, according to our budget and guidance, is that sell-out will perform. So just to look at some figures, last year, retail sell-in growth, meaning excluding the institutional market and also excluding acquisitions, was about 22%. And sell-out was about 19.2%. So it's a very small difference, which is in line with the last 12 months. Great, thank you.

Thank you.

The next question will be asked by Joseph Giordano from JP Morgan. Go ahead, Mr. Joseph. Good morning, everyone. Breno and Adalmario, thank you for taking my question. I actually have three questions. I'd just like to understand this guidance For the year, it's a bit erratic because there were some seasonal effects with the flu spike, with Omicron and globulin. I'd just like to understand from you how it should be spread throughout the year, the sell-in. The second point is to look at the pipeline. You have over 400 launches So I'd just like to understand what contributions will come from these launches in your guidance. So I'd just like to understand how much the legacy is growing apart from the launches. Finally, we have many discussions on M&As in the industry. So you still have many opportunities. And What strategical and transformational opportunities do you see in the industry? Thank you. So considering the guidance and how it's distributed throughout the year, If you consider growth and sell-in, since we had a strong comparison basis in the first and second quarter of 2022, we will probably see lower growth levels in the first quarter this year, especially because of our sell-out, which was a bit lower. But... it will tend to remain flat for the rest of the year. If you look at the comparison in 2022, in the second half, we also had lower growth levels. So our growth level this year should be higher than last year. But we're not perceiving any changes in the seasonal pattern. So if you look at 2022, there were some changes to the regular seasonal pattern, especially when we consider sell-ins. Obviously, our portfolio has some categories that are a bit more seasonal, like food that usually impacts our sell-in in the first and second quarters. And we'll have to see how that plays out this year. At the same time, what we're seeing is that there is a strong demand volume growth above historical levels across several categories. Another category that was difficult in the last few years is sunscreens, and it's a very important category for us. It's been performing very well. In fact, the entire skincare portfolio has been performing well since the end of last year. When we look at each category, there is a seasonal pattern, but it shouldn't change much in general terms from what we've had in the last few years. And to tell you about launches, well, we've been increasing the number of launches. So last year, we had 92 new products launched. This year, we expect to launch about 120 new products. And these contributions have also been going up. They've been contributing to the company's growth. So what we considered in this guidance is an increase of over 1 billion in revenue this year, and about 500 million out of that should come from the products that were launched in 2022 and 2023 alone. So it's significant, as you can see. And we've been working hard to continue to expand our pipeline so that this contribution from new products becomes even greater for the next years. Brenna will answer your third question. Yes, considering M&A's, Joe, that's a no. A part of our growth strategy in the medium and long term is to invest in that. But on the short term, we're focusing on launches, growth, innovation for our portfolio and on deleveraging. So our leverage is at a healthy level, but with the current interest rates and without any short-term reductions expected, we're focusing on generating cash to reduce debt and financial expenses. As this happens, so as debt starts to go down, then we'll take a look at what opportunities there are in M&A. Great. So if I can just ask a follow-up question, you mentioned your capital structure and how you're focused on deleveraging the company. So how is your cash generation policy considered, especially since there was this level of growth recently? How do you think it will continue this year?

Thank you.

Well, Joe, in... Within our shareholders, we have people who are seeking dividends, so it's important to have a good balance. What we did this year, and what we will probably do in 2023, is to maintain nominal payout levels. Profits go up. Our payout has been reducing in the last few years, but we intend to maintain the nominal payouts. Thank you. And according to our calculations, even with... some expansion in our investment capex, our leverage will remain at this level, about two and a half times, which is what we are currently at. The next question will be asked by Mauricio Cepeda from Credit Suisse. Go ahead, sir. Hi, Breno and Adalmario. Good morning. Thank you for taking my question. I have a couple of questions, actually. First, I'd like to insist on the G&A issue as you answered it before. And I understand that you were growing in scale and administrative expenses also went up. So you had to expand some areas. So I'd just like to know what kind of additional administrative support you need right now with this new reality of low retail. If you're working on anything specific or if you intend to capture this scale growth that you had had before. My second question is about product development. You said that you increased provisions for R&D in the fourth quarter, so I'd just like to hear some more details on that. If you're changing your development pipeline in any way, and what can explain this growth in the fourth quarter, specifically in product development? And I'll also insist on gross margins. You mentioned costs. and mix, but I'd like to ask you about your revenue. Since you're not listing what units you're having each sell-out levels and not even each plant, if you have been having channel discounts on factory prices, if that's been going up in retail or non-retail, and if that's impacting your gross margins. That's all. Thank you. Hi, Cepeda. This is Breno. So just to add to this matter of G&A, Adomario had answered this during one of the first questions that we had To expand our team, to have a better structure, in the fourth quarter, it was about 4.5% of our net revenue used for GNA. And there were some other factors here. Basically, we had more investments in IT, which are in the release. So we had some additional spending in cybersecurity to get ready and make sure that we are prepared. There was some spending in our IT infrastructure, so we were improving it. And there were also higher expenses just from the fact that we were going back to normal. During COVID, we saved on travel, but now this is returning. So these expenses tend to return as we go back to normal. But we don't believe that, well, we believe that it will remain at 4%, 4.5% or under 5%, between 4% and 5% of our revenue. Okay.

Yes, I think that this reduction in innovation products in the fourth quarter is normal.

I think we're always reassessing projects. We have several checkpoints to assess if the business case is still standing, if their assumptions are still valid. And this is a part of our innovation and development project. So this is very common for our business. So we have significant investments in R&D, as I've said. And in the past, we also had some of these reassessments. Fourth quarter of 2020,

were very similar to what we had just now.

So I think that's just business as usual for the company. I had another question on gross margins, if there were impacts to discount levels. No, we don't. In fact, the main factor was institutional mix But we also saw a higher percentage of generics and biosimilars, especially in the fourth quarter, which grew above the average in the company. And that leads to a lower gross margin. But again, we're always looking at the contribution to the margin. So In the institutional segment, in generic and similars, gross margins are lower. But the margin was basically not impacted or had a marginal impact. So gross margins are lower and there's a dilution of other expenses with marketing. Which, for our business units, is not such a significant expense. In fact, I'm looking at the margin per product. And we want to gain market share or profitability. We don't want to do any crazy things in the market to grow above market levels. This has been reflected in our numbers. We're growing above market rates. and the EBITDA market, excuse me, the EBITDA margin for the company is still at a healthy level. Great, thank you. Thank you, Sir Pedro. The next question will be asked by Luca Marchesini from Itaú BDA. Go ahead. You can ask the question. Thank you, everyone. Thank you for taking this question. About the institutional market, we know that throughout 2022, Immunoglobulin had a temporary license that benefited the company. But thinking about the future, do you expect to get a definitive approval for it? And if so, can you tell us when this is expected to happen? Also, if you could tell us about your... plan to launch new products and how it will ramp up over the year. That will be very helpful. Luca, considering immunoglobulin, we've mentioned this in previous calls, we're attempting to get it approved permanently, but We can't really share when that will happen because it will depend on the regulating authority and visa. So we're not sure when that would happen. But this was not considered in our guidance and our budget. We're not expecting it to be approved this year. We're not expecting to sell immunoglobulin this year, at least not in our guidance. And if I understood your second question about how the institutional market will ramp up. Well, as expected, we imagine that this effort into launching new products will start to pay out in 2024. So basically, the 70% growth that we mentioned excluding immunoglobulin, was based on the current product portfolio, meaning products that we already had, that we were already using, especially generics. And we also expect some relevant growth for 2023 based on these products. So we're starting to see some new launches. I mentioned, for example, in my presentation, some antibiotics that have been launched. We also have new launches on the way for 2023, but most of the pipeline will be launched from 2024 onwards, as was expected when we created that business unit. Great, thank you. Thank you. The next question will be asked by Wellington. Santana from Bank of America. Go ahead, Mr. Wellington. Good morning, everyone. I have a couple. The first is about the first quarter. As you said, you have a difficult comparative basis because last year you had the Omicron wave and a high flu season. But I'd just like to ask what you're seeing in consumer health, biosimilars and skincare for the first quarter. If you expect any surprises that will offset this lower sales of anti-flu medicine. Also, you mentioned the cannabidiol market. So I'd like to hear a little bit more about that. If there were any changes in the expected addressable market for this kind of product. especially considering it was approved to be used in São Paulo and some other areas of Brazil. You had mentioned 40 million for last year, and I'd just like to know if there were any updates to that expectation. Thank you.

Hi, Wellington.

Let me answer your questions here. For the first quarter, the growth we're seeing in the market is weaker. We have data from January. We still don't have any data for February, but we have been seeing lower growth, a reduction in volume, especially. But once again, our comparison, which is January last year, is difficult. I think other categories besides Flu products and respiratory products are still receiving the same demand and the same volume last year. Of course, there are some areas that are doing better than others. As I said, dermatology products are doing much better. But the remainder, generics, biosimilars, and other consumer health categories have lower volumes. But once again, we only have data from January. We don't have any data for February or March. So we'll have to see how things go in the future. About CBD and cannabidiol, we... We started this category at the end of last year by launching the first product. We've launched two additional concentrations for CBD full spectrum. So it's a category that we really believe will have a lot of potential, especially when you look at markets around the world. And our attempt is to expand our product portfolio in this category and also to start medical visits. This will require a lot of medical education. There are a number of indications for CBD to be used. We're starting clinical trials for one of these indications and We believe that it will expand significantly in the next few years. The recent news on the state of Sao Paulo, including CBD as one of the products to be used in the public healthcare system is very positive. And of course, we're working hard to better understand the details of that. So which products will be purchased by the system, And of course, we want to participate with our portfolio and with the products we have on our pipeline. I hope that answers your questions. Thank you. As a reminder, if you'd like to ask a question, please click on the raise hand button. If your question has been answered, you can lower your hand. Please hold while we collect questions. The next question will be asked by Gabriela Ferrante from Safra. Go ahead. Your microphone is open. Hi, everyone. Thank you for taking my question. It's a very quick one. R&D investment, how much do you intend to invest in 2023? Thank you.

Hi, Gabriela.

In our budget, we expect to invest 400 million Brazilian reals in R&D in 2023. So slightly above what was invested in 2022. And as a reminder, a part of it will be capitalized, but a part of it will not be. So it will be about 400 million Brazilian reals. Great, thank you. This concludes our questions and answers session. We'd like to pass it over to Mr. Bruno Oliveira for the company's closing remarks. Go ahead, Mr. Bruno. Well, I'd like to thank everyone for listening to this call, for sending us your questions, and I'd like to make our investor relations team available if you have any additional questions. Enjoy your weekend and enjoy Carnival here in Brazil. This concludes Ipera Pharma's conference call. Thank you for listening and have a great day.