Investing in Central and Eastern Europe

Guillaume Duparc:
Hi everybody. Thank you for taking a seat. If you're interested in Eastern Europe, I'm very pleased to have the chance to have a great panel with me to talk a bit about the region and how investors and providers think about its attractiveness or how to operate. We as a firm had the chance to work extensively with leaders from the Baltics to the Balkans, and whereas there are a number of similarities between the West and Eastern Europe as markets, there are also I think distinct features and specificity of some of the models of providers who participate in the region that are very interesting and we'll come to this in a bit.

To introduce my panel, I'm going to start on the... Oh, I can see we're not sitting the right away, but let's start with Ana-Maria, who is from Regina Maria. She is M&A Director at Regina Maria, and she's worked in private healthcare for about 12 years. And before Regina, she was a hospital director of Ponderas, which was a hospital bought by Regina Maria. And she got such a great deal added that the company put her in charge of M&A. And she's done 43 acquisitions for the business in that position. And she's particularly looking into Romania of course, but the business now is also in Serbia.

So that's the provider perspective if you like. And then we're also joined by Pawel, a partner at MidEuropa, who's a leading private equity, a fund based in the region, does a lot of healthcare, if not exclusively. And over his seven years at MEP, he's been involved in Regina Maria, but also at Diagnostica who was recently successfully IPO'd and Optegra, and he's now co-head of healthcare for MEP. Anything you guys want to add about your descriptions? Ana, Pawel, you want to say a few words about your-

Pawel Malicki:
Maybe just for those who are not familiar with MidEuropa. But just in a few words, we are a mid-cap private equity investor focused on central Europe originated from the region, so area of expertise, anything from the Baltic states down to the Balkans. Normally, we do tickets of 50 to €200 million equity per one platform. As Guillaume said, we do have quite a lot of healthcare investments. Apart from that, we also do consumer and business services, but healthcare is one of the main verticals where we invest in, and have been lucky to have some success stories behind that.

Guillaume Duparc:
Thank you. Apologies, I finally understood how the clicker works. So we really want to touch on two main topic. One is how attractive the region is, appreciates there are multiple countries in the region, there'll be national differences. But a few salient facts that create commonality and some distinction with Western Europe. I'll set a few points of context. And then zoom in more on a type of provision model which is not necessarily completely unique to Eastern Europe, but we see much more in this context or this region. I think we have some Nordic people in the room that recognize aspects of these models. So I'll just set the scene, and then you'll hear more from the more interesting people here in the room.

So how does the region compare? Very high level and stylized. We're just comparing three countries from Western Europe and three countries from Eastern Europe. Aging is definitely a common topic. Population is a bit older in the West but fairly old as well. In the East it's not a major difference. The underlying demographic and populations are however different. There is a faster underlying population growth in Western Europe compared to Eastern Europe, which is maybe one of the main reasons why where from a fundamental attractiveness point of view, the West is a bit better on that sense.

There is higher spend in Western Europe compared to astern Europe. We expressed here as a share of GDP. We read this at LEK as a big catch-up potential and as a share of GDP spend is increasing faster in Eastern Europe. And that's in a context where there is, and that's one of the most interesting aspects of the region. a very high degree of private pay to use healthcare services. So we'll talk more about this, but if you think in the West the population is disillusioned about public sector, well go to Eastern Europe and people have been in that situation for a very long time. It is a long tradition to pay private, whether out of pocket or we'll talk more about employer sponsored subscriptions as well.

So there is a broad acceptance of the private sector. And there is clearly a need for investments, here it's expressed that perspective on quality, but certainly the region has a need for more capacity to be invested. People recognize the need to improve quality. They associate the private sector with more quality than the public sector, and that for us gives good underlying rationale for why we do like the region. So some points of context scenes, but I wanted to basically put the question I was just asking directly to Pawel, who's been investing in the region for very long. So we have a few points on the page, but Pawel please, let's hear it from you directly.

Pawel Malicki:
Yes, thank you Guillaume. I think first of all, as you said, the overall macro trends are very similar for CE as for Western Europe, with aging society and growing needs for healthcare services. What is quite unique I would say, is the higher level of acceptance of the private pay model, which is clearly visible in CE. And it goes back to the fact that publicly funded healthcare was underserved for many years, and therefore the society was forced to accept this private pay model, both in the subscription part and also fee for service. And we have some quite sizable success stories behind that. This is the trend that have built Regina Maria, but also Diagnostica and Optegra as companies.

And this trend overall, I would say for us as MidEuropa, we see investment thesis behind businesses in CE as convergence of average per capita spent towards Western European averages. And this applies both to consumer retail, but also to healthcare. And with healthcare provisioning also in the private part, this is not only the discretionary portion, but also the medically necessary procedures which are more resilient, which create additional attractiveness. You had a very nice slide before on the GDP share of healthcare as a spend. You can see for example Poland here at 6%. I can tell you that just a few years back, three, four years ago, it was more of a four to 5%, and now the target is actually until 2027 to reach 7%. So there is a very steep growth of healthcare spend and this catch up that we do towards Western Europe, but still quite some room to go to the levels of Germany or the UK.

So we see this as an attractive market giving very positive dynamics, but also quite resilient. And in this dual model, which actually for us for years have been the underlying driver for growth of our businesses being the private pay part of the business, now we see that actually increasingly we can go into more of the public pay procedures which have been unlocking due to the higher budgets from the public payer. So this creates a totally new field for us to explore and have more diversification, not only in the private pay, but also in the public part which we are actually engaging in all of our businesses.

Guillaume Duparc:
Yep. And that's a slightly more recent feature of these markets. And probably Poland first, Romania just 24 months behind, but the increase in public funding to deliver services has been very significant since COVID. But the public sector is still very constrained in terms of investing in capacity. So there's a lot of that public pay funding that's actually accessible to private providers. And whilst I'm generalizing a little bit about the region, generally speaking level of discrimination between public and private providers is low. It is almost non-existent in secondary care and diagnostic imaging. Tertiary care depends a bit country by country. It's difficult in Lithuania for instance, but the rest of the region pretty well. Primary care you can't consolidate everywhere or not easily. But through the bulk of the market there is very limited discrimination between public and private providers and the tariffs are the same.

Pawel Malicki:
I agree. And I would say, that on top of that it's the increased public spend. It's not balancing the private part. So they coexist, they address different verticals. So still, we have big private pay component which is there for the other part of the market than the public pay is now exploring and opening up. So for example, you get oncology treatments, cardiology and even some of the specialized verticals like ophthalmology, which are seeing increased budgets, but they're not jeopardizing the budgets that were spent and are still stable in the private pay part of the market.

Guillaume Duparc:
Yeah. Ana, do you want to come in on Romania in particular with some of the aspects you really like?

Ana-Maria Pascu:
Yes, we read this slide with similar optimism, let's say. Not only because of the catch-up potential but also dissatisfaction with the public system creates an opportunity for us from two perspectives. There's a €20 billion market in Romania, 30% of it is out of pocket. So this is where we come in with the private services. People are used to pay for healthcare services. Second, we focused on quality. So we get all the international accreditation, we focus on quality and patient safety, and we actually compete with the public system. So this was our opportunity and in a market that has been growing 15% every year we outpace it by at least five to 7% every year. So yeah, we read it as an opportunity.

Guillaume Duparc:
Yeah, as a very interesting feature. And actually, one thing you could spend maybe a touch more time on is to describe a little bit the subscription model, which is again quite unique to Eastern Europe, which has similarities but is not an insurance product, and that's sold by providers.

Ana-Maria Pascu:
Sure. It's not an insurance product, it's a prevention product. So actually, we released these subscriptions 25 years ago in Romania and we have over 50% market share at this point. So Romania is a market of subscriptions and not private insurance. Out of the 5 billion market in private healthcare services subscriptions fund around €300 million, they are actually paid by companies, by employers for their employees to have access to private healthcare for outpatient services and prevention services. This was our opportunity to actually offer an alternative to the public insurance, which in Romania covers mostly inpatient services. So the money follow the patient and the patient actually benefits from the public insurance when he needs inpatient services. The alternative is the private subscription.

Guillaume Duparc:
Yeah. And so I think that's one of the key... And obviously there are a number of people from the region who know all of this very well, I can see in the room, but from a context of looking into Eastern Europe, from Western Europe, we talk about private sector as an alternative, as substituting the public sector. That's not exactly the typical narrative when we talk about private sector in the West. That's certainly more pronounced. And whether it's from subscription or nowadays that public pay tariffs are more attractive in Eastern Europe, a clear opportunity that you at Regina Maria are leveraging and more broadly is thinking about cross-sell and upsell between public and private space. Because as a private provider you can deliver care for publicly funded and privately funded patients. And people are increasingly thinking about, "I can start offering services on a private pay basis, but maybe it becomes cancer care or a heavy cardiology intervention, so I can try to switch my patient on a public pay basis and still capture that patient in network."

Or vice versa, as we are starting to see more in Poland from smaller mums and pops shops, but even the likes of [inaudible 00:15:11] Medicover offering a public pay capitation model to residents in the country with the clear view of benefiting from that revenue stream, which is at least attractive enough nowadays, but also with private pay upsell. So it becomes compared to my experience at least in Western Europe, the range of revenue streams and how you think about patient value is more profound. I'll probably get us to the next page, there are clearly differences country by country.

Maybe I'll just mention one point about Poland that I particularly like, is for public pay tariff. There's basically a mechanism where it's going to be very unlikely to face staff costs going faster than tariff increase. I think that's a key feature of the Polish market. It's been very attractive in recent years for private providers. Won't be quite as much in the future but still positive. We like a lot the ability to top up co-pay in Czech Republic in particular, which is quite distinct. Which means for a lot of procedure the public sector is covered X, and a private provider can charge Y on top for that procedure. That's for instance, not the case in Poland. In Poland, you're either fully private or fully public pay. I'm simplifying just a little bit. And Lithuania we particularly like, because you can also consolidate primary care and integrate primary care secondary and diagnostic into a comprehensive offering. So you can see for some of the patients it starts to feel like, "Well, do I need the public sector?" Well, probably if you need a very high-end procedure but for very large chunks of your needs, maybe not.

So we have a lot of successful providers in the region including models that everybody's quite familiar with. So you have some hospital-specific provider or those who have most of their activity in hospital. And you have some primary care and you have some typical, not necessarily single vertical, but quite focused diagnostic imaging lab, et cetera. And then you have this category in the middle which is not entirely unique to Eastern Europe but more prevalent, with what we've labeled here as integrated healthcare providers. And that's what we want to spend a little bit more time on in a second. Ana will talk a bit more about the Regina Maria model.

I won't dwell on this and I have to redact on a bunch of numbers on the left here. So you can't necessarily see the maturity of everybody who's listed on this page. These businesses are sizeable and they generate money and they are growing, and they offer a wide range of services. They all have a digital enabled component. Digital enabled is a lot about patient engagement, it's less about doing online consultation or asynchronous chat consultation in Eastern Europe, but engagement to book, rebook, see your benefits. Regina Maria tells you how much you saved if you use Regina Maria than not, for instance. There's a high degree of digitalization. Ana is going to do a better job talking about Regina Maria than myself. I'll let you-

Ana-Maria Pascu:
Thank you.

Guillaume Duparc:
... take over and talk about your model. Thank you.

Ana-Maria Pascu:
So Regina Maria is a healthcare services network with revenues of around half a billion euros, just over filling. I think the key word here is integration, so it's not actually a collection of healthcare facilities. You see here we have 60 clinics, six hospitals, 30 imaging centers, around 200 labs and blood collection points. We have all the services from IVF to oncology, but that's not the key element. The key element is that they are all integrated. So there is one brand, one system, and one digital patient pathway.

We focus on digitalization, we focus on quality and patient safety. Three of our hospitals have JCI accreditation. And also we look at the market very fragmented. So there are 42 counties in Romania, but we only make money in five of them. So we know exactly what's the strategic region, where we're supposed to go, where the market is. We also map it against human capital, we know where the doctors are. We also have our own academy of nurses and our own surgical training center. We grow our own nurses and doctors to be sure that in the long term we have enough human capital to support the growth. And we are present in the market for 30 years. We have become an actual alternative to the public system.

Guillaume Duparc:
Next page?

Ana-Maria Pascu:
Yeah. A little bit about the market, so what I mean about integration is out of the half a billion euro in revenues, more than a hundred million are actually the 40 targets we acquired in the past eight years. But the important thing is you don't know which is which. So out of the hundreds of facilities that we have across the country, you can't tell the difference between the ones that we bought and the ones that we actually built as a greenfield project. So for patients and for doctors, they look exactly the same, they have the same brand. So our strategies, we fully integrate everything we acquire. That gives me a headache, as you can imagine, because I first need to pitch integration to any target that I might have. And only then, after he or she agrees with the integration, then proceed with the actual process.

And also, it would have been so much easier for me to just acquire 51% and consolidate the numbers, just buy the cake and let them have the recipe or something like this. But yeah, no, we actually fully integrate and integration creates value. What we do, is we go through the process and then we have a very strict integration plan. We deal with the mess from the very beginning. We change the system, we change the brand, we change everything. There's a headache for everyone for the first three to six months, but then everything is fully integrated. Again, that creates value for doctors, that creates value for patient and we have a unique digital patient pathway in the network.

And in order for us to be able to do that, we have a platform that is very stable and very mature and it's perfect for add-ons. Right now, because our organic growth is very robust, so we grow organically with more than 10% a year. We only do M&A for strategic add-ons. As you can see, our funnel is very general, so the market is very fragmented still. Even though we're the largest player, we have barely 10% of market share. So in a market of €5 billion actually our playground, our funnel is around €1 billion with more than 200 players, we only acquire five to 10 players a year. So we have a lot of work to do to consolidate the market for the next five to 10 years.

Guillaume Duparc:
And before you move a little bit to the broader region, one thing that's I think worth... There's many things, but one thing I found particularly striking with your model is the level of operational and clinical KPI and at the degree of detail you track it. So you'll do a better job of describing that a little bit, but I think of it quasi real-time clinician by clinician tracking. That's productivity, but that's also onward referrals, other referrals in network. Are there good reasons for not referring in network and quality indicators? But the list is how many KPIs do you... I mean, its in the dozens.

Ana-Maria Pascu:
Yes. Yes, we're so focused on quality for so many years now that we're very confident on our patient outcomes. So we actually display them. We're very transparent and we display our patient outcomes on the website, all the platforms, we actually communicate them. So us and Mayo Clinic, I think we look up to them and whenever they add a new patient outcome, we actually follow their leads and we measure that as well. It's important to say that our app contains around almost 2 million patient portal accounts, 1.75 at this point patient portal accounts. So we have a big community of patients and doctors with whom we communicate very transparently everything that is related to quality and patient safety and outcomes.

Guillaume Duparc:
And for all of these patients you have their medical records?

Ana-Maria Pascu:
Of course.

Guillaume Duparc:
And they visit you not exclusively, not necessarily purely with Regina Maria, but a large part of their needs will be addressed by you. So you have very strong visibility on what patients use, what they need, and effectively you have a massive CRM database that is helpful to think about what other services we can offer. And of course, from a data commercialization perspective that also offers very significant opportunities. I think you wanted to say a few words beyond Romania, and some of your colleagues from Serbia are also in the room.

Ana-Maria Pascu:
Just a few words of a success story that we actually accomplished in the past years outside Romania. So Serbia is part of the family. And actually the business in Serbia mirrors the one that we built in Romania. So they're an integrated healthcare network. They offer all the services as we do. And because Serbia was not a subscriptions market, we actually introduced subscriptions with Regina Maria know-how and the sales strategy. So we're doing pretty good and we're writing a new success story in Serbia. I will not comment at this point on other regions in Europe, but of course we're mapping the market and we know what market resembles Romania. For example, Poland is very similar to Romania, twice in size in population and market, but very similar as the healthcare services market. And there are other examples where the public and the private system collaborate quite in the same manner as we do in Romania. So yeah, we keep an eye open on the region. And we'll see each other again at HBI with news.

Guillaume Duparc:
And you will comment more on the topic as well?

Ana-Maria Pascu:
Yes, yes.

Guillaume Duparc:
Thank you. So we might come back a little bit to how to think about international expansion in a minute. So I wanted to flash these themes. We've discussed some of this point also with you of course, Ana and Pawel too, to outline a little bit more some of the growth levers that are accessible to these integrated providers that are a little bit, I think at least more numerous than existing in most of Western market I'm familiar with. And of course, we're very interested in perspective from the audience. I've already mentioned the ability to straddle public and private pay. That's quite different from country to country, because in some you can top up, in some you can't.

But fundamentally speaking, for a lot of providers nowadays, it's not about, "Am I just going to be private pay or public pay focus?" It's a lot about how to combine both. And maybe at different stages of care you can be very public pay, high-end procedure for your inpatient activity, but try to have the outpatient a network attached to it, which should be much more balanced public and private pay, maybe a slightly more hospital-led model familiar with in Poland. I also very much like the effort that providers make to really work around helping clinicians to refer in network. So this aspect of capturing the demand within my network because I'm offering the right amount of services. And that the clinicians are confident to refer I think is also very important. Pawel, I'm sure there are other elements, you also find interesting.

Pawel Malicki:
Yes, thank you. Thank you, Guillaume. I think what Ana said about the community that you're able to build around the brand is hugely important for the further success. And the higher leverage you have, the more integrated you are.

Guillaume Duparc:
Yeah.

Pawel Malicki:
So here we are as an investor. We are also a big believer of the integrated models. We are trying to avoid a loose federation of companies just put together for the sake of building a larger group. We believe that actually the synergies that you're able to extract are coming from the community, that you build the trust to the brand and the additional verticals that you can add. So Regina is also benefiting from that, that you can then further consolidate not only organically, that's also one of the ways to move forward with a slightly longer horizon with the greenfields that you can establish in different verticals. But also the M&A model and buy and build strategy if properly executed with a good follow-up and integration-

Guillaume Duparc:
And control, yeah.

Pawel Malicki:
... and control over the pathway of the patient then gives you the ability to actually convert all the base of your patients, of your loyal customers, especially in the private pay model, that you can convert them into other verticals, and ultimately increase the share of wallet, let's say, of the individual patient.

Guillaume Duparc:
And think in terms of lifetime value. There are a few businesses in... I mean, also a few in Eastern Europe, we think in terms of lifetime value. But this is a concept that's actually being used much more in Eastern Europe than in the West, save a few exceptions. And I think overall it's back to this point of the public sector is so much more absent, that provides so much more room for private providers to exercise a bigger role and enhance more space for brands and integrated offering that span the care continuum.

We are done with the slides and content in terms of some of the key themes we wanted to communicate. But I was very keen to hopefully have a bit of a debate with the audience and possibly give the chance to ask direct questions to Ana and Pawel. I have a few handful of questions to get us going, but I'd be very keen for the audience to engage, and hopefully they find the topic interesting enough topics to ask. One thing I think we can get reasonably quickly over the line, is what about staffing? How staffing, finding the right staff, it's a worry for every provider everywhere. But if you had to qualify a little bit how you see this in the region, are you worried about clinicians going to the West? Is the private sector much more attractive than public? Can they work across both? That'd be a topic I'm sure a number of people are interested in.

Ana-Maria Pascu:
I will surprise you with the answer. So it's not at all such a big challenge as it is in the rest of the region. So we're just a little bit below the European Union average in number of doctors and number of nurses per 1000 population. And as I said, we map the country, so out of 42 counties more than 15 are actually above the average. So we adapt our strategy, our greenfield and our M&A strategy on the counties that have enough human capital. And as I said, we have our own nurses faculty. We actually train our own nurses. It's a three-year program that we support for the nurses. And they stay and work with us. So we actually fund their school.

And then we have a training center, a surgical training center that has also a da Vinci robot for example. So for advanced surgery, any kind of surgery that you see right now anywhere in the world, we have it in our training center and we train our own surgeons. So yeah, we've been doing a pretty good job. So there are of course part of the country that has a lack of human resources where we have adapted. Yes.

Guillaume Duparc:
And maybe you can add a sentence or two on liberal practitioners versus employees?

Ana-Maria Pascu:
It's a very good system. So public and private system in Romania are in a competition, but in a healthy one. Actually, we don't have any law that says that a doctor needs to choose between the public system or the private one. So they can actually work in the public system and in the private. Our model is more for the doctors, it's more our hospital is your home, so we try very hard. More than 90% of our doctors are actually full-time in Regina Maria. So we have this ambition that for the hospitals at least they're full-time.

But again, there is no restriction in Romania that they cannot work in public and private. So we're complimentary, we're complimentary in the funding, in subscriptions and the public insurance. So we also have a co-pay, for example, so for hospitals, there's a legal co-pay for the patient to be able to actually benefit from public insurance and pay an extra charge to the private hospital, in order to have better access to treatment, or maybe let's say, lower waiting time and so on. So yeah, the system works quite well actually.

Pawel Malicki:
From my side, I can comment that indeed we have seen a brain drain over the years of people leaving to Western Europe, looking for engagements in healthcare. Currently, I would say, and we are also fortunate enough to work with market leaders who are having fantastic corporate culture, so are able to attract more talent. But I would say, on the adjusted basis for purchasing power, also the region became back more attractive to retain talent locally, but also to even have the trend reverting.

Guillaume Duparc:
So people are coming back? Yeah.

Pawel Malicki:
So definitely, it is a topic that needs to be addressed and handled properly. But in the recent years we see definitely more positives than 10, 15 years ago.

Guillaume Duparc:
And presumably quite a marked change since COVID, with public tariffs, increase in medical wages, substantially increase. I think you know Lithuania has committed for another 8% increase for 2026, that's fundamentally speaking to help pay more wages. As I said, in Poland the public tariff is anchored around how much you're going to increase public sector salaries. So that dynamic is much less worrying since COVID than before.

Pawel Malicki:
Correct.

Guillaume Duparc:
And nowadays, you have some people coming back, have seen models elsewhere and want to develop the region.

Pawel Malicki:
Yep.

Guillaume Duparc:
And turning to the... Here we go. Perfect. I think microphone is coming, so we can all hear you.

Speaker 4:
Hello? Oh, there we go. There's been some quite obvious instability politically in Romania over the last six months or so. Very interested in each of your views on Romania and Poland respectively, in terms of political risk, both today and over the next... Well, the coming years, I suppose.

Ana-Maria Pascu:
Let's just say, it's not different than most countries in the region. On a serious note, so our strategic position for NATO and our border with Ukraine actually makes us a strategic point for Europe defense and for the region defense. So we are optimistic that we have the right alliances to not have any kind of....

Guillaume Duparc:
More incursion attempts?

Ana-Maria Pascu:
More incursion attempts, yes. Yes. [inaudible 00:38:04].

Speaker 5:
[inaudible 00:38:04] political discussions [inaudible 00:38:04] and changing governments, change of regime?

Ana-Maria Pascu:
So internally, yes, we had elections, we have a new government. For the first time in our history, but not the first time in other European countries history, we canceled the election after the first tour and we have elections again in May. The list of candidates looks very good right now, so we don't believe we have any other threat as the one that we had last year that led to canceling the elections.

Guillaume Duparc:
And I have my perspective, Ana, but I think the audience wants to have a sense of when the government change, is there a change in healthcare policies? And do you need to worry about everything at every turn?

Ana-Maria Pascu:
Yeah, no.

Guillaume Duparc:
My answer is mostly no, but I'll let you...

Ana-Maria Pascu:
It's actually, no, we have a very stable regulatory environment for the healthcare and we have no information... No, on the contrary, we have definite information that things will not change for the next five years.

Pawel Malicki:
And I can give a reference point from the Polish market, and we have been through a few cycles of change in the governments, and actually the entire attitude of the left, right wing. And there were quite significant concerns about law and justice, previous government implementing some unfavorable changes, especially for the private operators within the public sphere of the healthcare. But actually, what we have observed is that this part of the market and healthcare provisioning is such an important socially topic that some changes that were implemented were actually surprisingly positive as for the overall attitude towards the private providers. So the system was more clear, more transparent with promoting of the providers that provide complex services, which enhances their tariffs and their profitability if they do not cherry pick. So actually, the entire environment is consistently switching irrespective of the actual government that is running the country towards more transparent, more visible and also better funded public healthcare.

Guillaume Duparc:
I think you have things like IVF, that is a topic, I'd be quite careful, for instance. And here that's the one big change that came in Poland with the coalition, but we took calls at LEK and were like, "Oh, new government coalition, Poland is going to be way more attractive." We're like, "No, no, no. Poland is already attractive. The change of government is not going to make a big difference," and it hasn't. IVF, that's obviously a topic that's a little bit different.

Pawel Malicki:
IVF is, but it's a specific one. And indeed the current changes are very favorable. But previously starting from oncology through cardiology, even ophthalmology, where we are present with Optegra, changes were only positives. Limits have been lifted, imaging, diagnostics, also one of the verticals where one of our portfolio companies Diagnostica entered into a few years ago, these are the areas where limits have been lifted, tariffs have been increased to make it more accessible for the patients to address these important verticals.

Guillaume Duparc:
And fundamentally speaking, it's an environment where there is not enough public sector capacity, and there's no investment in public sector capacity of any greater scale. And so this is not something your ministry of finance is going to tell you directly. But they're very happy with private pay and public pay privately delivered because it's more efficient. The Ministry of Health, depending on its constituency, doesn't necessarily have quite the same perspective. But generally speaking, I would qualify policy makers as pragmatic. And of course, the private sector needs to deliver value, operate efficiently and deliver quality, but it's a permissive environment. The questions, we're short on time, but I'm sure we can fit one or two more questions. Klaus, I'm sure you're going to ask digital questions.

Klaus:
Yes, I'm going to ask digital. I was going to say, given already at Regina Maria, you're doing a lot of great digital things, as I hear from my colleague Guillaume. I was just wondering, do you see further or any digital M&A on the horizon as well, in terms of maybe digital therapeutics, telemedicine, any of those efforts?

Ana-Maria Pascu:
Vertical integrations you mean?

Guillaume Duparc:
Mm-hmm.

Ana-Maria Pascu:
For sure. So what we've seen in the past year, the changes that were brought by digitalization and AI, I'm very sure that we will have this in our strategy for M&A as well. Yes.

Klaus:
Thank you.

Guillaume Duparc:
We'veh maybe one minute left. I think Pawel, we talk a lot about healthcare services, but you might want to say a few words of what other sectors in the regions you think are attractive.

Pawel Malicki:
Sure, happy to. Indeed, healthcare services was a big chunk of our portfolio historically, and we feel quite comfortable in the healthcare services space. Currently, the other verticals where we look into are, let's say, more pan-European or global opportunities with categories like MedTech or pharma, with some opportunities still under review with one of our recent investments in the CDMO space with pharma production. These are businesses where the local aspect is less relevant. It's a hub for actually providing products or services more on the pan-European or global scale, which also expands your addressable market quite extensively. So these are, let's say, the other two verticals where are currently focusing our attention in healthcare.

Guillaume Duparc:
Thank you, Ana. Thank you Pawel. Thank you all for having joined us. We are at time. And thank you again.

Ana-Maria Pascu:
Thank you.

Pawel Malicki:
Thank you.