President and CEO, Essity
Essity Capital Markets Day 2024 | Health & Medical
Led by Ulrika Kolsrud, then President of Health & Medical and now Essity’s CEO, this session outlines our ambition to scale our Health & Medical business. Together with senior leaders, the team shared insights on market growth, innovation, and unlocking future potential.
About Ulrika Kolsrud
Ulrika Kolsrud, President and CEO of Essity, reported the company’s second quarter 2026 results, highlighting positive organic sales growth driven by volume increases in three of four business units: health and medical, personal care, and professional hygiene. She noted that consumer tissue experienced lower sales. Kolsrud stated that profitability margins remained healthy but were slightly negatively impacted by geopolitical factors causing increased cost inflation. She said the company has implemented some price increases and agreed on others that will appear in the third quarter, adding that compensating for cost increases is a top priority and that Essity has a strong track record of doing so over time. Kolsrud discussed several strategic initiatives, including a reorganization into four business areas with end-to-end accountability, a cost-saving program, and a sharpened innovation agenda. She also mentioned an acquisition in feminine care in North America and a strategic review of the consumer tissue business. Regarding the review, Kolsrud said the company is examining all options—divestiture, separation, or retention—and that the goal is to create the best conditions for both the consumer tissue business and the rest of Essity to develop to their full potential and maximize value creation. She cited the UK’s NHS introducing value-based procurement guidance for medical technology as a positive development for Essity’s holistic solutions.
Transcript (7 segments)
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Ulrika Kolsrud0:23
Thank you so let's dive into the health and medical business which stands for 20% of Essity sales and we are a global business with a broad presence across the geographies. Incontinence care accounts for a bit more than half of our business and then wound care, compression therapy and orthopedics stands for 20%, 10% and 12% respectively. Since 2019 we've grown this business 28% and also strengthened our profit margins. One thing that is behind this positive development is that we have managed to, after getting negatively impacted by the pandemic, we've managed to grow Medical Solutions for 14 consecutive quarters. What's also very pleasing to see is that we are now back to growth in incontinence care after stepping out of some low margin business in the past year. So looking now at 2024 we are growing 4.2% and if we exclude the exits I just talked about, on top of that we have strengthened our gross margins and we have strengthened our profit margins by as much as 5.6 percentage points.
So what's behind this performance? Well, it's a lot about excellent price increases of course, but that is in combination with market shaping because that's absolutely fundamental in our business that we work with the payers in the healthcare system in order to enable price increases in our regulated business. Then a prerequisite for us to be able to raise prices is our differentiated offers. We have stayed focused on driving innovation and leveraging our superior technologies throughout these volatile times and we have also had some acquisitions to support and strengthen our offer further. One is securing the Sorak technology through the Abigo acquisition and some of you might recall also the waterproof casting that we got through the Aqua Cast acquisition. Another part of our success recipe is cost saving and especially in our incontinence care products we've managed to take cost out of the specification without impacting product performance. So that has been good and we've done that through smart material choices and also through technology shifts and we have restructured our unit to make us simpler to operate and also reduce our operational cost, making us fit for the future. And then if we look to the future and moving forward, we are in a very good position to continue on this positive profitable growth journey.
We have some really strong positions to grow from, not least our number one position in incontinence care, in compression therapy and infusion management which is part of orthopedics. We as you heard Sahil say we expect to grow some three to four percent and the drivers behind that growth: one is the prevalence of the chronic conditions, the high prevalence of the chronic conditions that we serve, and the other one is the growing aging population that Sahil also talked about. Now this demographic shift is not only driving the demand of our health and medical products, it's also driving demand of healthcare and healthcare systems around the world that I think most of us experience also is struggling with constraints in staffing and constraints in funding. Also what this is doing, of course a consequence of that is price pressure on us but another consequence is also that some care is moving from institutions to the home care environment. Another trend that we see as many other industries is of course the increased demands on sustainability both from regulation as well as from customer requirements. Now some of these trends might imply that we have some business challenges but more than anything they offer business opportunities for us because for us our holistic superior offers that provide health economic benefits become even more relevant in this environment. One example of that is the services that we provide to incontinence caregivers that help nursing homes to deal with the lack of staff. I'm talking digital solutions and trainings and so on. Another thing is the solutions we bring to prevent infections in surgical wounds and in chronic wounds and that is mitigating the massive burden and cost on healthcare that comes with infection. So our solutions become even more relevant. Also the combination that we have with medical expertise and consumer knowhow and the broad channel presence that we have is making us very well equipped to capitalize on this trend towards home care. And then not least we have R&D capabilities, strong R&D capabilities to continue to innovate so that we continue to differentiate and premiumize even further but also improve sustainability and cost position. And this is not least true in our incontinence care business where we continue to lead and shape the market, strengthening our number one position further. And we do that by continuing to innovate and commercialize our Tena Total Care offer and that consists of a wide range of products to meet individual needs, digital solutions for care efficiency and services and tools for the caregivers. And we have some really hard evidence that this makes a difference to healthcare. We have done for example a study together with an NHS trust in England where we looked at prioritizing individual care over cost per unit of the products and the results were just overwhelming: better care, reduced workload and a staggering cost save of 500 million. That's what I call a really compelling proposition.
So we have a lot of benefits from this holistic solution that we have in incontinence care. Then in wound care, here we have strengthened our position over the years and we aim to continue to outgrow the market and build scale in this category. And we aim to do that by focusing on our competitive advantages, our unique technology. And one of them is the winning technologies that we have in infection management and prevention: Cavid, Sorak and Hydrofera Blue. Another one is the fast growing skin sensitive range that we have which is based on our superior technology for adhesion. So many examples of that. Then if we move to compression therapy, I would summarize the strategy here by that we are winning through delighting all the different stakeholders. So consumers being one stakeholder, they wear compression garments 24/7. What are they looking for? Comfort. So we bring superior comfort and enhance that with sustainability and fashion in this category. Then we have the customers, another stakeholder, they want this to be as easy as possible to put patients in the right garments, to order products, to access after market services. And we aim to be the easiest one to work with. The third stakeholder, payers in the healthcare system, and for them we bring health economic benefits. And in fact now in the US the authorities have recognized that the benefits that come with diagnosing and treating lymphedema, so that has resulted in the Lymphedema Treatment Act that some of you might have heard of, so the coverage of insurance for compression therapy has increased. Then orthopedics, here we focus on where we have the strongest right to win. We have a very strong right to win in the cast room where we are the recognized experts. We also have a very strong right to win in pharmacy channel especially where we can cross sell with Tena and Locoplast. And an example of that exactly is what we did in Poland where we launched the Actim braces and sport some three years ago and that is the example here to the right that is showing that we already now have reached a number two position. So this is not a big business in isolation but I think it shows what we can accomplish with our fantastic assortment. A bit bigger business then is the home delivery business in the UK for Tena where we have grown 11% and one driver behind that growth is that study that I talked about recently. Then the strong growth rates that you see here in Sorak and Hydrofera they are a testament to the competitive advantage that I mentioned when it comes to infection management but also I would say a proof point for our ability to integrate M&A because both of these are coming from M&A that we did in 2021. Then the fourth case of these selection of success cases that I brought is the fact that we have gained more than our fair share of the increased demand coming from the Lymphedema Treatment Act in the US, so growing lymphology in US with 16%.
Now what's common across these categories and Sahil was mentioning that is that we see a lot of potential growth in the business we are in, nurturing the core. And in order to succeed with that, two very important areas are commercial excellence and innovation. And if we start with commercial excellence, we continuously work to enhance our sales capabilities, to improve productivity in our sales force. Also it's absolutely important for us to have the most effective and efficient go-to-market in every channel and category combination that we have. We are also transforming our go-to-market and I would say that we are in the forefront of using digital tools, new digital tools to make sure that our customers get a seamless omnichannel experience from us. We are also in the forefront of market shaping to make sure that we get paid for the value that we bring both today and tomorrow. And with me to talk about how we do that is our vice president for sales and marketing in region UK, Ireland and South Europe, Ida.
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Ida11:22
Thank you. As you have heard we are innovation leaders and we have superior solutions but as Ulrika said it only makes sense if we're able to get value for what we create and that's why market shaping is a very critical thing for us to do and something we do very successfully. If you think, I told some of you yesterday already, but if you think about it like an iceberg, only the top of the iceberg is visible above the water. It's the same with many chronic conditions and the cost of that. If you take incontinence care, only 4% of the total cost is linked to the product, the 96% is linked to managing the condition as such. That could be changing the product, that could be leakages, that could be laundry. So that's really a significant part of it. We have become a really important partner for our customers in coming up with new future-proof solutions for the care and also for procurement models that really consider these hidden costs, the 96% that you don't see. We promote what we call value-based healthcare, that is a model that looks at outcomes rather than the cost per piece, and we engage with both policy makers and procurement functions to discuss how can we do that in a good way and show them that quality products can actually give better patient outcomes, it can reduce the total cost of care, and for us of course it allows us to sell higher margin products. I will share a couple of examples with you. And the first one already mentioned, the one from the UK with NHS with incontinence care where there is a significant saving for them, there are significant benefits for the patients using better quality products, individualized care, and for us it means that we can sell better quality products, higher margin products, and longer term have a more profitable business. Another example I want to share with you is our Locom Soulback product, that's a wound care dressing, and we use that with women who had cesarean section in the UK where we did this pilot. The project showed a 38% drop in surgical site infections and related to that it showed around 30% reduction in readmissions and in the usage of antibiotics. So that is really really significant. And with them we pioneered the first ever value-based procurement case study in wound care. So this product is a very differentiated product and that means that we can actually get paid for the value we create with it, pricing it differently in tenders. So these projects demonstrate the power of market shaping and what it can do, and they have actually inspired the NHS to change their purchasing methodology and new procurement methodology so that going forward it will reduce the share they allocate to price in tenders to only 40% with the remaining 60% dedicated to value in terms of patient experience or outcome. In markets where our customers are not as advanced as NHS, because this is really at the forefront, but in other markets we advocate for what we call multi-supplier tenders. That could for example be in Sweden where that kind of tendering allows them to have both low-cost suppliers on the tender and us with a higher price tender products, and that allows both the procurer and the patient to get the products they want and it allows us to get paid for the value we create. Thank you. I think and I hope that this gave you a view on how important this part of market shaping is for us and a part of our commercial excellence to make sure that we get paid for the value that we bring and also to support healthcare on their journey. Now the other part, the other strategic priority in order to grow for us is clearly innovation. And some examples here: one example is Tena ProSkin that we have which is a fantastic range that is designed not only for superior protection but also for superior skin health with some really advanced features to secure that. And you can learn more about this innovation and all the other examples here when you visit our exhibition in the canteen during lunch. But for now let's spend a few minutes to dive deeper into the innovations that we have in wound care specifically and we will do that with our vice president for Global Marketing and Innovation for medical, Anan Chandarana. Thank you.
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Anan Chandarana15:53
Thank you. Just to reiterate something that Ulrika said earlier on, we are the fastest growing among the large wound care players globally and that's something we're very proud of. And not only do we want to continue that growth but we'd actually like to accelerate from here on out. That's a strategic imperative because wound care is accretive to our margin mix, it's one of our high margin categories in health and medical but also across Essity. And so the way in which we're going to grow and accelerate our growth is by strong commercial excellence as Ulrika alluded to, but of course innovation for the future. And in wound care our heritage is and our leadership is in adhesive fixation. So I could say perhaps it's an unbiased opinion but we are industry-leading when it comes to adhesive fixation. We have perhaps the best technological capabilities here and this is fundamental in wound care because you need to produce products that stick to skin and can come off without causing pain and trauma. Makes sense. So that is something that we will double down on and we will continue to innovate with and that's been a heritage of ours. So that's functional adhesives. Historically we've focused on developing our wound care portfolio to be sort of a full line portfolio, so fulfilling all the big gaps to allow us to have something which is a strong clinical offering across all key wound types and across all phases of wound healing, and commercially so that we can have strong positions on contracts and formulary and GPO listings. And that is something that has brought us to the strength of position that we have today. Recent efforts and recent innovation has focused on where we believe we have the right to win and we have the highest uniqueness with our technologies, and that is exudate management or fluid management important in wound care, and infection management. So the namely the technologies that I'm alluding to here are Sorbion technology and Sorak technology. And with Sorbion we have an unparalleled performance when it comes to fluid absorption and fluid retention, and what we've tried to do is to get that technology into as many platforms and wound product types as possible so it can get to as many patients as possible. And what you'll see in the exhibition today and you see it up on the slide previously is a dressing that we've designed recently which is Sorbion Carbon Plus, and that is with an odor neutralizing technology with the carbon. And we hope to do more with expanding Sorbion to more and more platforms and technologies. When it comes to Hydrofera and Sorak technology for infection management, I don't think it's an overstatement to say that we've changed the game. So unlike traditional anti-infective products which kill bacteria, our products bind, inhibit and remove bacteria safely, non-cytotoxic, and that is helping in the fight against antimicrobial resistance which is becoming a real threat. So what we want to do with those well-appreciated technologies, which by the way allow us to grow some 20% year on year, what we hope to do with those technologies is to expand usage, to expand the claims so that they get on as many patients as possible. And then going forward we have exciting technologies beyond functional adhesives and beyond infection management where we really want to look into wound healing, where we want to look into sensorized dressings, and those are areas that insights suggest that there are unaddressed challenges and we really believe that we can meet them. So we'll do that through a combination of internal competence and expertise as well as external partnerships and M&A.