Jon Snodgres: Yes. We have not been seeing pricing pushback of significance. We did finish ’22 with just above 5% price achievement as we had indicated we were gunning toward. So that wasn’t a major issue. For 2023, we definitely have raised prices again, working with our customers with the intent to cover inflation, and we expect for 2023 that we should be able to get 4% to 5% price achievement this year.
Puneet Souda: Thanks, guys.
Tony Hunt: Thanks, Puneet.
Operator: The next question will come from Marta Nazarovets with JPM Chase . Please go ahead. The next question will come from Liza Garcia with UBS. Please go ahead.
Elizabeth Garcia: Hi, guys. Good morning. Thank you for taking the questions. So let’s start with cell and gene therapy. Obviously, those accounts, it seems like over 20 now doing a million — generating $1 million. The order book feels pretty good. Can you maybe talk to kind of how to think about the cadence across 2023 in your assumptions for the growth there? It seems a little bit kind of lower than the order book at the moment? And I know obviously tough comps, but it would be great to dig in there.
Tony Hunt: Yes. So cell and gene therapy, a great year last year, no doubt about it. But like every other business we have, right, we saw orders slowdown in the second half of the year. I think what people forget is that 50% of our cell and gene therapy revenue comes from CDMOs. And so we’re telling and calling out that CDMO order book has been really light, and it’s got to pick up. So when you think about our cell and gene therapy growth and any upside in cell and gene therapy, it’s going to come from the CDMOs coming back to where they were in the early part of 2022.
Elizabeth Garcia: Great. Thanks. And then maybe just new product introductions and how to think about the cadence for this year? It’s obviously 10 this year. It was in the 9 to 12. It would be great to kind of dig in there and understand a little bit better kind of what you’re hoping for?
Tony Hunt: Yes. So one of the big things we’ve been doing for the last three-plus years is really focused on increasing the cadence of bringing new products to market. And as I said in my prepared remarks, right, we had a really good year last year. 7% of our revenue came from products launched in ’21 and 2022. And if you go to this year, you add in the products going to get launched this year. Overall, the products then launched 2021, 2022 and 2023 will be around 14%. That’s exactly what we want to see, right? We’re investing at a level of 5% into R&D, 5.5%. And you can see based on the traction we’re getting in the marketplace with our new products, we’re more than covering the cost of running R&D at the company. So we’re really thrilled with how well our R&D programs are going, the products that we have in the portfolio and it’s exactly what you would want from a disruptive, innovative company like Repligen that our R&D products are actually gaining traction and they become a catalyst for growth.
So maybe back to I think — I’m not sure it was Puneet or Jacob about are we standing behind long-term growth. This is where the extra 5%, 7% is going to come from on an annual basis. It’s going to come from what we’re doing on the R&D side and that’s why it’s so important to us to continue to, even in a tough year like 2023, maintain our investment in R&D, get the products out because they are the stepping stones and foundation for the next five-plus years.
Elizabeth Garcia: Great. Thanks, guys.
Operator: The next question will come from Matt Larew with William Blair. Please go ahead.
Matt Larew: Hi. Good morning. Obviously, the biggest top line delta outside of COVID is chromatography, as Tony you called out and going from 45% in ’22 to 10% in ’23. Could you help us maybe if resin availability was not a problem, what would growth look like? In other words, what does the demand look like? And at this point, is the issue more on customers — you’re waiting on customers to accept the new products or are you still actually waiting on the raw material availability, the resin availability and then the product will be accepted by customers?
Tony Hunt: Yes. So maybe a quick synopsis of how we manage our chromatography business with back comps. If you went back five years ago, Repligen was procuring resins to pack into our chromatography column. So the interaction was directly with the suppliers of resins. But we made a conscious decision really in 2018-2019 to really move away from Repligen procuring to the customers shipping us the resin or having it dropped shipped from the supplier. So it’s not our conversation or our interaction with the main players on the resin supply. It’s actually our customers. They’re not getting the resins fast enough. And so we have quite a large order book. And if we were — if there was no limitation on resin, I think we would be right around that 25% mark in terms of growth.
And so when you’re at 10, right, and you just — your resin supply is not coming in at the pace that it was even coming in, in Q3 and Q4, it’s definitely disappointing. It’s outside our control. And therefore, we know capacity is coming online. We’ve had those conversations with the various players. But I think there is an acceptance piece that also happens where people have to qualify in a new manufacturing location so that it starts to get used. So I do think it’s going to improve as we go through the year, but it’s definitely much lower than we were anticipating even back in January.
Matt Larew: Okay, that’s helpful. And then, Jon, just on the facilities and depreciation headwind. I guess as we think about how that should pace throughout the year and then ’24, obviously ’21 and ’22 were CapEx heavy years, you talked about 69% for ’24. I presume that should begin to sort of moderate in the back half. But just as we’re building out our gross margins, if we could — you could help us think about one half versus two half, again, understanding the comments to Dan’s question about op margins having a low in Q1 and building from there. But any initial help particularly on the depreciation side would be helpful.
Jon Snodgres: Yes, sure. So the 60 million of CapEx that we mentioned is a ’23 number, not a ’24 number, just to be clear on that one. As we look at the facilities and depreciation costs, they will — I would say from a gross margin modeling perspective, maybe you start at the lower end of the overall gross margin at the beginning of the year and then scale it up as we go through the year. That would be my recommendation for the current time.
