Ypsomed Holding (SIX Swiss: YPSN) Q4 2026 Earnings Call

0:00 Good afternoon. Welcome to Ypsomed full year results presentation for the 2025, 2026 financial year. We're delighted to have you all here with us in Zurich in person and for all of those online. Before we begin, please note this presentation contains forward looking statements that naturally comes with a certainty. Turning to today's agenda, our CEO, Simon Michel, will open with our strategic priorities, go over our business and operations updates. Then followed by CFO, Samuel Kunzli, with a review of the financial results.

0:51 We will then open the floor to your questions. First, to the people that are joining us here in person and then online.

1:00 If you'd like to ask a question, please raise your hand, state your name and the company you work for, and then we'll unmute your mic or bring you a mic if you're here in person. Also note, the pre presentation is recorded, and we'll make the recording available after the session online. And without further ado, I will now pass on to Simon, please. Thank you very much. Sam, good afternoon from my side as well and a very warm welcome here in Zurich. We look forward to spending the next hour with you. I would like to start with making three points before I dig into my strategic slides. Number one, we can really say this company has delivered. We have delivered on our financial targets. We have a record win of new projects, not only new projects, also new innovation on IP side.

1:50 So phenomenal year, number one. Number two, the transformation that we went through over the past four years, selling off the B2C business, selling diabetes care is done. This is now a pure play company, very focused, a company that we will all have a lot of fun with. And number three, this is also a very disciplined organization. And I look into Ypsomed, how we are set up, how we take lean as a serious measure, our Ypsomed program, and Samuel will deepen that, is core to us. We spend a lot of money on IT, on our new manufacturing operating model. And in AI, we have a huge AI program. It's not just co pilot. It's actually very deep in our roots. It's very deep in our operations.

2:39 We try to be more efficient with new technology. So these three points being said, let me start. And as always, we are starting with our purpose. This is why we get up every morning. We make self care simpler and easier for people with chronic conditions. And we are good at that. We do that for forty years. And customers trust us. They come to us because they know we deliver. And as you all know, and some of you have seen these slides now for a couple of years, but I have to show them every single time. We have a lot of, we have a lot of tailwinds. Therapy go from hospital to home because it makes sense. It makes sense from a healthcare perspective. It makes sense from a patient perspective. IV therapies go sub q because it's cheaper and better.

3:29 Number two, more and more drugs have to be injected because the molecules are too big. They cannot be swallowed. The stomach, the acid will destroy them. GLP-one is a small exception. We will deepen that today. But all other drugs have to be injected also tomorrow. Number three, biosimilars. The golden age of biosimilars is here. Hundreds of millions of new drugs reaching the market in areas where there have not been these possibilities. So it's about access. It's about the responsibility. And Ypsomed is not only delivering to originators, but also to biosimilar organizations. That's our promise. And number four, of course, the incretins, this new wave that will help the society by making life and life quality better by losing weight and not being affected by all those consequences that you have with obesity.

4:26 The transformation is now history. For us, it was a lot of work. But when I look back those four years, selling the needle business, selling the IA expert, the training business, stopping BGM, selling the pumps, We have done the right thing. This is now a company which is easy, much easy to lead, very clearly focused, very clearly structured. Our focus is operational excellence. We will deepen that today as well. This is a company that has one focus, to make self care simpler and easier by providing best packaging for pharma and biotech. That's our mission, the B2B story, high margin, fast growth, clear story. So when we look at how we invest our money, we always have those three, four things in mind.

5:16 Number one, the platforms. We are and remain a platform company, and we will shortly introduce to you three new platforms that will bring us to the next S curve. Innovation. So we continue to invest significant amounts of money in innovation. Operational excellence, lean, lean, lean. Every meter, every second, every square meter is money. We get rid of it. And this is a standardized program we have within the group. And the financial, the responsibility towards you and the shareholders is at the core of how we work. So cost and Ypsomed Fit is an element which is deeply rooted and we will have to deepen that with you today. So have a look at the platforms. This is our portfolio. And I think the important thing here is that we are the only organization out there that offers both a complete auto injector portfolio for syringes and pens for cartridges.

6:16 So this is one core reason why the FHL only has the auto injectors. We have both both platforms, and that's core. We are now the first clients who buy from us for the same molecule, two platforms. Look at Innovent. They launched mactodide incretin in Mainland China. They have launched it in the open chapter, and now they got the approval two weeks ago for the UnoPent, the pen. So these companies come deliberately to us because they can breeze with us. They may not know how successful open checkers are or when pens in, so they are happy to be able to have flexible deals with Ypsomed. So if they if if they need less open injectors, they will buy more UnoPens and we have flexible contracts. And that's a huge US fees. More and more molecules will be available in both formats.

7:06 When you look at the trajectory and what you've achieved, it is a record. We have never had more than 40 deals in a year, 44 deals. When I deepen a bit those deals, then about half of them are in biosimilars. So you see these drugs being more successful, but only one third in emerging markets. So the developed markets are still in the lead and they look at the different fields of therapy, it's very broad. So 15 out of those 44 is incretins, different formats of GLP-one. 15 is different autoimmune diseases from our polyarthritis to Morbus crown to lupus, very diverse. We have a couple of very new interesting drugs against mid to severe psoriasis.

7:57 Then you have drugs for oncology, neurology, hormone therapy. So it's very broad. So this is an important message today. We have a very broad spectrum. And with over 130 clients, we have no real risk. The largest client for us makes not even 15% in revenue. The top 10 customers together make less than 50 in revenue. And we add more and more clients every day and over time, obviously, this will even grow. When we look at the spectrum of different indications, we are now at 25, 80 products launched, 80 devices in the market. On the left side, the pens and the auto injectors syringe based. Apart from the 80 approved ones, we have 180 in our pipeline. So in total, we look at two sixty, 80 in the market, 180 new ones that we work with.

8:56 Of those 180 that are in the pipeline in those indications and new ones, roughly seventy percent will hit the light. Our hit rate is two thirds to seventy percent, which means seventy percent are reaching the light will actually lead the market. Some of them obviously will be stopped because they are sold, because they don't reach the output in a clinical trial. But out of the 180, roughly two thirds, 120 ish will actually reach the market in the coming two to five years. So there's a huge flow of new products reaching in order for us to deliver the growth that we and you expect. So the platform logic is still the basis for our success, but we want to grow and we want to build upon this platform logic. So that's why we continue to invest in innovation.

9:46 And the three new innovations we have presented to the world last November at the large conferences is Ipsaloop, Ipsodot, and Ipsoflow. Ipsaloop, that's the green device here to the right, that's a new generation auto injector. What is in common to those three platforms? They're all recyclable. They are from one to two plastic types. They can be recycled. It's a totally new domain. When you think back how we create, how the industry created products, we were always looking at the function. The device needs to bring drugs in your body. Then we have looked at automation. How can they be automated on a decline? Then the focus was on usability, so people don't make a mistake because nobody reads IFUs.

10:36 And now suddenly, it's a new domain in engineering. It's called engineer to recycle. And we have taught our organization six years ago with the Eco Design guidelines how to do that. And we are now creating every new innovation must be based on this launching. And this is not just because of Brussels or Paris or whoever, it's because we are convinced the world will need to loop the existing goods. We need to loop the raw material as high as possible. We need to stay in the loop and not down cycle. It's easy to form a chair out of our pens. But our vision is to form a pen again, a pen into a pen into a pen. So we will build the basis with those new platforms that customers can recycle if they want. And because big pharma decides today for the next ten to twelve years, They will probably think twice if they have the choice of a recyclable or a nonrecyclable platform.

11:40 And when we talk to our customers, they are really willing to look at those three new platforms. So it's a new auto injector and it's two new pens. The Ipsodot in the middle, it's a GLP-one optimized device for four injection, click, click, click. I think you have a demo device over there. And the Ipsodot is a spring driven

12:03 pen like the FlexTouch that you all know from Novo. So these are our three new innovations. We won a couple of prestigious awards. This is the new platform generation that will bring our patent cliff from 2034, 2036 to the forties. As you know, our s curve from IP perspective in the Western world, not in China. In China, we have competition. Outside of China, there's very, very, very few competition. We have to bring our clients from the existing level to the new S curve, to the new technological S curve with the new IP protection until the 40s. So this is our work and what we have to do over the coming years to convince our clients.

12:48 But I believe we have hit the trend. And not only in Europe, also in The US, people are looking very carefully into the Eco Design logic. The Eco Design logic is not just device. It's very deeply rooted in our DNA responsibility as a corporate value. We've used the supply chain carbon emission by pushing out our pressure down to our 500 most important suppliers. We gave them clear targets to deliver less carbon. And we have decided to zero every building. So once we open a factory, once we open infrastructure, we net zero them with certificates and we have less CO2 in our products.

13:34 And this has benefits because it reduces dependencies, more sources on the granulate. We meet the customers' demand today and especially tomorrow because they will be forced to deliver less scope three. And in the end of the day, this leads to lower cost of goods. It leads to lower utility costs. If you can build better building, you have a lower energy bill. And we are a very energy demanding industry. So we have a lot of benefits also from a from a from a monetary perspective. It's not just an ecological logic. Apart from our innovation in the space of ecology, we have the innovation in the space of services. We have decided to look very carefully in the customer journey. And it's not only the product, it's actually the service. And one key element on the customer side is time to clinic.

14:29 So while in average, it took us eighteen months from time to clinic or in the past with the new program, clear to clinic, we are down to six months. Large pharma are usually well planned, but this is not only large pharma. We have many clients out there who at some point in time, oh, yes, we need a pen. And now we are ready to deliver a device in a couple of months to go into clinic. And that's a huge benefit for small biotechs. And as you know, small biotech invent big pharma by small biotech. So we want to be in the pipeline of the small biotech to then end up in the hands of pharma. So our Clear to Clinic program saves a lot of time by pre document, pre validate, verify and to be ready from a product perspective.

15:18 So there's much, much, much less testing, much less paperwork, and then makes life easier for the customer. Platform innovation and the third piece before I hand over to Samuel is operational excellence. Operational excellence, obviously, the core and what is in interest to you is our footprint and where we are. And Ypsomed is becoming more and more global, you have read the news over time. Let me just introduce a couple of the achievements in the last twelve months. We have opened in Solothurn our new and second tool shop. We have now a capacity of up to 100 plastic molding tools per year, which makes us much, much less dependent from third party suppliers. We are employing roughly 100 people in Bordorf and we are now ramping up with a second tool shop about the same size for our own plastic molding tools.

16:12 In Solothurn, apart from plastic molding tool, we have a huge program, we call it Hermes. This is basically moving out the old contract manufacturing business and moving in our new Ipsomed lines. This is a program in two phases, and it's delivered until end of 'twenty six. Very important to us because it delivers demand and capacity and work for people for the next ten to twenty years. A huge upgrade to invest over CHF 200,000,000 in Solothun. Currently, the project is well on track. Also well on track is China in Changzhou. As you know, we have opened in June. We are operational since end of last year. And we deliver devices both to clients in India at the moment, Russia and also in China.

17:01 Main focus, obviously, will be China for China. At the moment, we want to fill a bit capacity, so we deliver products to clients outside of Mainland China, but it's a China for China factory. It runs very well. Highly pleased on the cost of goods. So they are already below every other side after half a year. Very motivated, highly motivated, very eager, very professional team. The team tells me every day, we want you to learn from me. So very pleased with how China works. Apart from China, we have our large program in Zuerine. So this is Zuerine two. This is where we invest the large chunk of our CapEx. You see on the right side, on the left side, the existing factory, the two fifty meter long building with the 200 plastic molding machine, which is full now. Some of you have seen the site. And then this huge cube in the middle, that's a 40 meter high 15,000 pallet warehouse with 10 trucks delivery lots. And then you see this building phase one. This has capacity for roughly two fifty million to 300,000,000 devices. And then we can add another such building with another two fifty million devices in twenty nine, two thousand thirty. We have to see where we prioritize.

18:23 Will we prioritize in China as a second factory? Will we prioritize in The US? Or whether we build the second factory here? This will be something that we have to decide in roughly a year from now. But what you see here is the new building, which is a drone picture from before yesterday. So somehow we want to ramp up this in October. So there's some work to do. But we don't need the trees. I know we can start ramping up without the trees and the grass. So we'll be fascinating how we ramp up the first lines. Then we have a nice inauguration in April for the site, which will deliver products for mainly Western Europe and with a huge growing demand.

19:09 And then the next and newest program in infrastructure for us is Holly Springs. As you know, we have decided for North Carolina for many, many reasons. North Carolina is the fastest growing state in The U. S. It has a very high density of universities and community colleges. So they have a functional apprenticeship program. They have learned a lot from former president, Schneider Amman. He has been one of the forces in this stage to actually implement apprenticeship programs, which is really in place and you can go to desks and demand for people and they support you. So I'm quite positive to to find the people here. The program is up now. This is a finished building, but it's empty. So we are now staffing and moving in the material. So by end of twenty seven, we will be ready to deliver to the clients.

20:01 With that, I already come to the end, ladies and gentlemen. And just a short picture on the development of our staff headcount. Obviously, almost 800 people left us. They went from Ypsomed to MyLife Diabetes Care with the pump business. We have sold Ipsotec, as you know, and we have added two forty five new jobs. So we are roughly at 2,100 now. For the new year, we see roughly 150 new functions, roughly 50 in Switzerland and 100 abroad. Obviously, it's less. We are able to profit now from the operational leverage.

20:46 We are able to profit now from the installed capacity. We are able to profit now from the platforms that we have delivered.

20:56 With that, I would like to hand over. I can tell you, you made a wise decision to spend some time with us. This is a great company, and thanks for the trust. And I hand over to Samuel, please. Thank you, Simon, and welcome also from my side. I will now walk you through the financials 2526. Let us start with our top line. The transformation into a sales injection specialist to a pure play company is now also clearly visible when we look at our sales split. We reported

21:42 million of sales, and out of it, more than 80%, CHF601 million is delivery systems, our core business. CHF 75,000,000 is from the diabetes care business in the months April to July, in the time the business was stable with us. And CHF 56,000,000 is in the other segment. This is mainly the contract manufacturing we still do for diabetes care, then the phase out of the pen needle business and BGMS business and as well Ipsotec, which was with us from April to October 25. Let's look at the core business, at the delivery system business.

22:31 We achieved our goal.

22:34 We reached 20% growth in that business. We grew from CHF $5.00 1,000,000 to CHF $6.00 1,000,000. What were now the main drivers of that growth? When we look at our platforms, the main drivers were the auto injectors, especially the one milliliter and the 2.25 milliliter. When we look at the therapeutic areas, one driver was incretins, roughly one third of the growth. So think of it like 30 to 40,000,000 out of that 100,000,000 growth is coming from GLP-1s, but you see it's not the main growth driver. All our other therapeutic areas are still heavily contributing to our growth in the core business.

23:31 Project revenues are on high level. They are above 80,000,000, CHF 86,000,000 we reported in twenty twenty five-twenty twenty six compared to $88,000,000 in the previous year. For those who follow us closely, have in mind that we now don't show

23:52 the capacity reservation fees. The sales from that, we don't show anymore in the project revenue but in the commercial sales. Have that in mind when you especially when you look at the previous year. Now let's look at the bottom line. Also on EBIT level, we reached we achieved our goal. You remember our guidance here was to be between CHF 190,000,000 and CHF $210,000,000. We reached CHF 196,000,000 of EBIT that represents a 33% EBIT margin. And we had in the four months diabetes care was still with us, we had a loss there of CHF 6,000,000,

24:40 and we had a profit of $56,000,000 in others. The two main drivers of that profit was, on the one side, we had a profit from $68,000,000 when we sold Diabetes Care. And on the other side, we had a loss of around $12,000,000 when we sold Ipsotec that were the main drivers. Let's compare also with the previous year. In the previous year, twenty four-twenty five, we reported CHF one hundred and thirteen million of EBIT, now CHF $246,000,000, so more than double as much in EBIT.

25:25 In the center of that slide, you see the growth of the profitability in delivery systems. So we grew by roughly 30,000,000 from 167,000,000

25:37 of EBIT to 196,000,000. We not only doubled our EBIT, we also propose to our AGM to double the dividend. We stay with our policy that we wanna to pay out roughly 35% of our profits to our shareholders. Let us now focus on cash. Exceptionally strong was the operating cash flow that shows us how well our business is generating cash, more than $300,000,000 operating cash flow. Looking at the cash flow from investing activities, we should have two things in mind.

26:25 On the one side, we look at our growth investments. I come to that on the next page. And on the other side, we divested diabetes care. And from that divestment, we got $3.00 7,000,000 in. So net in the cash flow from investing activity was only roughly CHF30 million. So we ended up in a free cash flow of CHF280

26:55 million, and we used that money. As you know, on the one side, we bought shares back, 150,000,000, and we reduced our loans. Where did we invest the money, the growth CapEx? You saw the pictures which Simon showed, mainly in fixed assets. 295,000,000 went into our factories, Schwerin being a big part of it, but as well in Switzerland, in Solothun, and as well The US side. You saw the building in Holly Springs and the site, and also our factory in China in Changzhou.

27:36 We keep innovating. We also invest in intangibles in R and D. We invested total $28,000,000 When you compare that with the previous year, yes, it's significantly lower. But have in mind, in the previous year, the Diabetes Care business was still part of those intangible investments. In the actual business year, twenty five-twenty six, we invested roughly $20,000,000 is roughly capitalized

28:07 development costs for the delivery system business. And you saw, we launched three new platforms. When we put that growth investment into the wider context, Those who follow us for many years, they know roughly two years ago, we announced our growth investment program of CHF1.5 billion. Now being two years in the program, our actual planning shows that we will spend roughly CHF 1,300,000,000 in those six years until end of the decade. One key driver of that was our operational excellence program, our Ips of it, and I come to that later. We have the goal, as Simon mentioned, to increase our utilization rate, to improve our OEs,

29:07 and we work every day on that. We have a strong focus in building a flexible and modular manufacturing system, And we have a strong focus on capital efficiency. In the business year twenty five-twenty six, we realized a ROCE, a return on capital employed of roughly 20%. So we created clearly shareholder value. Co financing stays a key element of that big CapEx program. Roughly 30% is co financed by our customers. And the main instrument we use there are capacity reservation fees. You see that amount now also growing in our balance sheet when you look at our report.

29:58 And now we are still having a year with high CapEx ahead of us. You see that in this illustrative simulation, 2627 CapEx are still high comparable to the year we had. In twenty seventwenty eight, we expect them already to be a little bit lower, and we expect them to cover with our operating cash flow in twenty seventwenty eight. So we expect to be in twenty seventwenty eight free cash flow positive. Now we look at our robust balance sheet. We have more than 55% equity and we have a very low debt level. Net debt to EBITDA is on 0.8, so below one.

30:47 The number I also want to highlight because it shows how well the delivery system business is generating cash is the EBITDA from Delivery Systems, $278,000,000, that's a very strong result. And that balance sheet and that cash flow generation allows us to fund our organic growth with our own balance sheet. That's the message here. Before we now come to the outlook, I want to illustrate a few important elements of our resilient business model.

31:24 As you know, we have very long term contracts, typically up to ten years, because a drug stays with us until this drug loses the exclusivity. So for that time, it's bound to our device. What is, of course, also common when you have long term contracts that you have indexations, that is especially now important looking at the current geopolitics situation in which you can have also inflation pressure. So it's crucial that you have an instrument that you can hand over those costs also to your customers. And we have indexations for our main cost blocks, so for plastics, the granulates, the energy, and as well labor.

32:09 And this mechanism is also aligned with our supply chain, with our with our suppliers.

32:17 When it comes to potential downside protection, two elements I want to highlight. First, the capacity reservation fee. That's something a customer pays independently if then this capacity is used or not. So in case a customer wants less volume, this money we still have.

32:39 Then also that volume based pricing, also that protects us from volatility in customer demand because that means simple, if a customer orders less, then the price per device is higher. And that is a very important downside protection for us. Then the Swiss francs. Yes, we are a Swiss based company and a lot of functions are in Switzerland, a lot of R and D. But we have a natural hedge. Majority of our contracts are in Swiss francs, so that's nothing we have to worry about. And have also in mind, our device sits in the FDA master file. So that makes it difficult for our customers to exchange us as a supplier.

33:28 We are not in an industry in which you have typical dual sourcing. We are the single source, the single supplier to our customers, and that is an important element of our business model as well. The second topic I want to touch before we come to the outlook is our IPSO FIT program. So we want get fit for the growth, and we also want to be lean because, yes, we also want to protect our margin. We have also to work on our cost base. And we have four pillars defined on which we work. The one, the operational efficiency, you heard already, the goal is we are in a capital intensive industry for us with a high operating leverage. So to have as much OEE as possible, that is key for us. And on that on that, we work with different initiatives.

34:24 Then as an organization, we are growing, and we still wanna be fast because also our competition, especially in Asia, is fast. So we wanna take decisions fast. We wanna take them where the decision should be taken at the front line, close to the customer, at the shop floor. And for that, we also have initiatives running. Then, yes, you hear that from many companies, but, of course, we also wanna take advantage of of AI. We wanna have a competitive IT cost base. That's something where we feel we can also differentiate ourselves and where we can save costs. Hence, where we hope for the biggest saving is actually in procurement.

35:10 Because procurement also, when you gain scale, when you grow as we do,

35:15 you have a certain volume you buy. You get a certain negotiation power. So we want to use that better. We want to do more dual sourcing and take advantage of better prices. Now let's finally look forward. We guide for the next year a sales growth of 1215% in delivery systems with own devices.

35:46 What do I mean now with these own devices? The six zero one million we reported, CHF 25,000,000, CHF 26,000,000, that includes still around CHF 40,000,000 contract manufacturing for pens. As you heard from Simon, that is something we phase out. So we take that away, and the starting point for that guidance for the new one is the $560,000,000, which you see here on the left side. So from that, growing 12% to 15%

36:22 would mean a midpoint of roughly million. Now the contract manufacturing for the pens, that is phasing out, and that still will be 15,000,000 to 20,000,000. So add that and also add another 50,000,000 for the contract manufacturing we do for diabetes care, the infusion sets and the reservoirs. So the reported EBIT will still be around million. Looking at the profitability, we guide an EBIT between CHF210 million and CHF230 million.

37:10 There, you can take as a starting point more or less the CHF 196,000,000 because the contract manufacturing for the pens, as you know, is a cost plus business and now in the phasing out, so there is no significant profit in there. We want to stay above 33% EBIT margin

37:38 in the next business year. Now in the last page, I want to even look out further. We announced our midterm ambition in September 25 at our Capital Market Day. And from there, you know, we want to grow with sales in a range between CHF0.9 900,000,000 and CHF 1,100,000,000 until end of the decade with our core business, the delivery system business. You see, by then, everything is phased out, also the contract manufacturing for the diabetes care. And the EBIT should stay between CHF280 million and CHF340 million,

38:27 always above 30% EBIT margin. And I mentioned we have a strong focus on capital efficiency. The ROCE should stay all over these years around 20%.

38:42 Now we look forward to your questions, and I hand over to them. Thank you, Samuel. Thank you, Simon. Remarkable year indeed. So now we'll open the floor to questions. So feel free to raise your hand, and then you can ask a question. Bischoffberger, would you like to start by bringing your mic?

39:06 Sigve Bischoffberger from Bischoffberger. I have questions about the pens. You talk a lot about old injectors, which are obviously your growth drivers. But when I calculate my estimates, it seems that you're growing also in pens again. Also, you had the capacity were full. Is this the reason China, which is supporting the pens? And second, could you give us any hint how many units you have produced in twenty twenty five-six? Is it more than three fifty million units? Thank you. I have to deliver the answer to the last question. I don't have the figure in mind, frankly speaking. On the question on the pens, it's also The U. S.

39:55 Two glargine molecules have received FDA approval in our UnoPen. So it's two Chinese insulin manufacturer that achieved FDA approval in our UnoPen. So one driver is biosimilar in The U. S. In a Chinese from a Chinese manufacturer. That's one main driver. Then we have growth in all other emerging markets. We have growth in China, in Russia and in other markets. But the main driver for the next twenty four months is the launch of the Glargine. You. Guys. Zhang Nguyen from Citi. Nice to meet you in person. I have two questions, please.

40:43 The first one is on ipsofet Half a year on, could you give us an update on how it's tracking by each of the four pillars? And any chance you could quantify the expected benefits from Ypsomed to gross margin and OpEx over time? And the second question is if you could talk to the building block for the EBIT margin outlook for 'twenty six, 'twenty seven? Specifically, can you talk to the drivers of gross margin for the fiscal year? Could I start maybe with the Ypsomed Holding Quantifying that, in the next three to five years, we expect a low double digit million amount out of that program, hitting our P and L accumulated over those years.

41:37 Then talking about the gross margin also in the next business year. What you see that in our business, we have around 15%, one-five percent, between gross margin and EBIT. I I simplify here a little bit. So so think of it like that also in the next business year when we say 33% EBIT, you would reach a gross margin around fifty, five zero, percent. Feel free to add Simon or something from it. Sandra Dietschy from Octavian.

42:25 I have also two questions. So the first on the midterm guidance. So your midterm guidance at the midpoint implies a sales CAGR of 15.7%. So this year, it looks like you have a sales growth below the average with the guidance of 12 to 15 how should we think about the trajectory in the years to come? Is it a catch up above average growth next year? Or is it more a linear development, you would assume? That's the first question. And then the second on the new platforms. Have you already signed a contract with any of the new platforms? Or what proportion of the contracts you will or your ambition to sign this year are you targeting to sign on the new platforms?

43:18 Thank you, Sandra. So on the so we have not signed any deal on the three new platforms. These platforms are they have passed the stage design maturity. They are now in the industrialization phase. So we will have the first devices ready for clinical trials in roughly one year. On a clinical volume perspective, we would if you would say on a 40 on a hit rate of 40 deals this year, we tried to reach four, five deals. So in this year, the real ramp up of signing those will be in 2728, number one. And number two, on the midterm ambition.

44:04 Basically, it is when we look out into the next day, it's pretty linear. It's pretty linear. We have we have we are a bit slower in 2627, and we will catch up a bit in 2728. But overall, we try to flatten a bit with certain means. We try to optimize a bit, so it gives a more straight line. But the CAGR of 15% is quite on plan of what we see today in our latest forecast over the next four years. Tanya Hencic from UBS. So two questions, please.

44:51 One is, can you make any comments if there's been any changes to expense plans for the NOVA agreement and how we should think of the contribution midterm, how it affects maybe recent news, the midterm guidance? And then second question is on just the geopolitical issues in the Iran war. Is there anything to highlight on impact for Ypsomed? You mentioned the indexation, but maybe also customer decision making changes. Sure. On Novo, we cannot give you details. We are all on track. So we ramp up the two lines in Solothuon. We ramp up we have ramped up the line in Schwerin. It's fully up and functional. The automated spring manufacturing with the Wafio supplier is fully attached and validated.

45:44 So we are ready to deliver. We have no indication for lower volumes. We are ready to deliver according to plan, and we have no implication any so on the midterm view. Everybody obviously waits for December 26 when CACIZMA should be presented, but we all stay full on course with our client. On Iran, we are lucky that we have both on the shipment and on the supplier side done our homework already after the Suez issue. We have decided to ship everything around the Cape Of Good Hope. So we are not affected by hormones. And from a granulate perspective, Samuel mentioned a couple of elements. We have now on most cramulate second or third sources. And then for those where we have not yet, right, cumbersome work to actually bring in a new plastic type because you have to reverify your product.

46:47 We put up higher stocks. So no, we are not affected from that perspective. And if I look on a geopolitical perspective, two years ahead, we will be not affected at all because we source locally, we manufacture locally, we deliver locally. So we solve the problem by localizing for our clients. And if I may add to the to the first one, have also in mind that we said also midterm, no customer is making more than 15% of our sales. And on profitability level, that is even less. So have that also in mind when you simulate your novel assumptions.

47:33 Of the two sixty programs we have, of which 80 are launched and 180 are in the pipeline, we have something above 50 in creatine. So it's roughly one fifth. And as as Samuel mentioned, so this is in the area of 30% end of decade, 31 on revenue and on the EBIT way below because larger volume contracts. So there is no single risk. We have very broad scale of clients and makes us robust. What's going to say such about these two questions from my side, please. Number one, this impairment of 10.1 win 1,000,000 development costs, did that go into this EUR 195,500,000 EBIT from YDS?

48:23 And the second question is you gave this outlook on sales for Sanofi 15,000,000 to EUR 20,000,000 for Techmed EUR 50,000,000. Can you talk about the EBIT impact of these businesses? Because I guess Techmed is a mid single pointed range of EBIT. Is that still available? And I guess from Sanofi, you have a negative impact. Can you clarify a little bit? Absolutely. I take those two and then you can add, Simon. So yes, you saw rightly, we had a write off of intangibles. You see that in our table in the appendix. Have in mind that we had that in the previous year as well. So every year, we go through our intangibles and write off those things which are not any more valuable.

49:12 And yes, these numbers are included in the 196, and they were also in the 167 in the previous year included. Then about the EBIT impact of those two discontinued operations. So for you, it's fair to assume that now phasing out the contract manufacturing for the pens, that that is rather making a loss. So think of a single digit million amount. And on the other side, the $50,000,000 again, contract manufacturing for diabetes care, which is cost plus, think of that as profit single digit million amount. So to maybe also a little bit your question, the reported EBIT at the end is more or less what you also see as a guidance for the core business because those other two effects, they basically offset.

50:14 I hope that helps. Daniel Liefdahl, ZKB. Just simple questions. The debt consolidation effect you mentioned once, so both companies have to build HR, etcetera, etcetera. That was, I guess, already expense. Or can you quantify this effect? The build up costs Mhmm. For the headquarter? I mean, you you I think you guessed it. You know what I mean? Yeah. I I can start on you you had Simon. So, of course, when you take a business with two divisions apart, you have certain dis synergies.

51:02 And actually, that dis synergies we address those with our Ipsomed program to minimize that. And for us, that means basically also just not growing in those indirect costs, so that we now grow the business. And as Simon said, take advantage of the operating leverage because we have IP and overhead installed, and we want to grow now in those functions, clearly under proportional. But yes, we had an effect. It was not zero. Feel free to add, Sai. I mean, it's less than 1%. So of 2,000 people, maybe 20 position are doubled, such as the executive team, obviously, the standard team, quality system responsibility.

51:48 So and this many people, they will they will remain double. But it's actually all solved. After the closing, we have no one exactly who goes where and who. So this has been solved with the Mercury program. So when we when we the part, this was already solved. Okay. Thanks. And regarding the the Swiss franc contracts, which is well known and it's very good for you. But if I will be a US customer, I have a certain pressure by saying, hey, if your price is so high, for me as a US guy, because of the dollar, then I also have SHA as an alternative, which is operational now in The US.

52:33 Is that a bit a risk? So we have two answers to that. So most US clients are today sourcing through their European sites. So most of our US customers are buying the product through their French or German or Dutch facility in euro or in Swiss franc in Swiss francs, and then shipping it themselves to America. That's that's number one. And number two is with North Carolina in eighteen months. You know, if you bring this to the table, you basically stop discussion. Our contracts are very, very robust. There is no possibility to on that end. And, they all know, it will be solved in due time. So it's actually not a topic, with Americans. We've had it with some Europeans that are getting a bit demanding on the on the euro side, but we remain very firm on that.

53:36 We might now do some contracts in Europe because, obviously, we have higher costs in Europe as well now with Sverine, but we try to be if you look at our financials below the line, we try to be naturally hedged. And we manage that very closely, and you give us clear guidance. I think for sales, it's clear to stay firm on our policy. And if I can add to that one, have also in mind, our industry has those long term contracts. So everyone who has a contract in euros or dollars has a different inflation. So for the customer, if you have a dollar contract, it gets for you automatically every year 4%, 5% more expensive. Yes, that is then somehow translated into the exchange rate. But through the mechanism I mentioned before, for us, when you have a Swiss francs indication, those price increases are not big. But you feel that price exchange in the exchange rate.

54:33 That's why, yes, we but we work on that, that we, yeah, that we keep our contracts in Swiss francs as much as possible. Thanks. Last one to sneak in. The maintenance shutdown of Sanofi, I mean, in theory, your guidance ex Sanofi 12% to 15%. Would have been more because you all have the unused capacity when SunOwf takes out the equipment. You see my point? So you could have more sales if SunOwf will not be busy with taking out the equipment. So you you see the point. Oh, no. So we don't we have a capacity issue. I mean, old lines Mhmm. But you cannot use this space.

55:21 That's true. Yes. But we have enough space in terrain, so we never had an issue. So this is important topic. So we always have overcapacity on space. Sure. And over the past three years, we have invested heavily in infrastructure on the line side, so we never had an issue on that. So this is, of course, as to the ramp up cost, you have stranded cost on this Hermes program because one shop floor is empty for four months, four, five months. And this is a fact that has a pressure also on the cost, will have a pressure on the profitability next year, but very, very minimal. Mean, in the end, it will be taken up by new projects. But really could not have been more efficient. This is a it's not a boxing shop like Formula One in a second. It's a quite a big project. You have to move out two soccer fields of infrastructure out and then move in and then the other one.

56:11 But we will be very glad to do to a day together next year once we open it, and then we can show the magnitude of the new lines. Brilliant. Thank you very much. I think we've got the gentleman in brown. And then we'll take some questions remotely on that. Dominic Vailgek from Nordea Social Title. I have three questions. Actually, you've said that the competition, obviously, in Asia is very fast. You have to watch it carefully. Are there any, new kids on the block maybe emerging, or is it is the situation, the competition still the same? You've mentioned Russia, two or three times. Do you pay any taxes in Russia?

56:57 And then, how about the tariffs? Have you paid any tariffs during the last financial year? And maybe a very last question, what about these pills which are now getting on the market being picked up fast? We see it with Novo Nordisk and Eli Lilly, does that concern you in any way that there might be less demand for injectable GLP-1s? Thank you very much, Mr. Perlkes, for the questions. I start with China. We have a handful of small medtech companies that are able to manufacture medical devices, insulin pens, auto injectors on a similar quality or even same quality as Ypsomed.

57:50 What keeps them away from reaching Europe is IP. Their IP would infringe our IP, IP of other players in the market until two thousand thirty four, two thousand and thirty six, depends on the platform. So that's why they are not a competition for our main business. They are locally strong. But based on our size and operational leverage that we have, the large tools, the large lines. From a cost of goods perspective, we are still below them. They are, of course, happy to deliver at zero margin. We are not. At the moment, we are looking very carefully which deal we have to win, which we don't have to win. We know the space in the Chinese pharma world for the past twenty years now very well. We know very well which clients we have to keep and which we may not need to keep.

58:40 So at the moment, we are on top of the things, but we watch at it very closely. We also interact with those players. I think there's also a possibility eventually in the future to collaborate with some of them for the local or the regional market. For Russia, we have that's public. We have two clients in Russia. They are picking up the goods in Solothurn. They pay 100% upfront and they pay in Swiss banks. So it's saving pay no taxes in Russia. It's DeroPharm and FarmStandard. It's through big pharma companies that buy UnoPens for the insulin from us for over ten years, a very robust relationship, and that's all SEC approved. This is all according to the standards and agreements that Switzerland has with the European Union and Russia.

59:35 And then the question on tariffs. As I mentioned before, we have been very lucky that we have not been affected by tariffs since we work almost 100% ex work or ex factory. So customers pick up the goods at our factories in Switzerland, in Germany. They do the import from Europe into The U. S. That's for the majority of contracts. Where we will see an effect or may see an effect is in the delivery of the plastic molding tools because we manufacture the plastic molding tools in Switzerland in an existing and the new tool shop in Urdhof and Solothon. And there is 15% tax currently expected, not a 50% it's deal, yes. But US doesn't have any plastic molding companies left.

1:00:31 So realize they cannot tax the 50%, otherwise they get no tools from Europe. So they apply the lowest possible tax tariff, which is currently 15%. That's what we factor in and that's what we will feel in 'twenty seven. But all in all, this is maybe CHF 1,000,000 or 2,000,000 in tariffs. And the last question on the GLP-one. Lilly and Novo report steep trajectories on the start of the pills for GLP-one. That's a good sign. It actually shows that this therapy of taking medicine for losing weight gets traction, not only in lifestyle, but generally also in society, which has in generally a positive trend towards injections.

1:01:18 Because don't forget, this pill delivers 10% to 15% weight loss. It's more a lifestyle thing, whereas injections is for severe obesity, are depositors for people who really have to lose weight because they have a BMI of thirty five, forty and more. If they don't lose weight, It's life threatening. That's why WHO also supports these therapies. So your question is very relevant to us, mister Felskes. We watch at the GLP one trend very well. At the moment, we see a positive trend towards this class of therapy. Maybe you want to add something, Samuel, to those four topics? Maybe only to the orals, which, yeah, is a is, of course, a common topic also in the market and among investors. So we observed it carefully. And yes, it grows the overall market.

1:02:08 So it's as Simon said, it's another target audience, which takes it. And it's even for many people, let's say, contact to that drug category and could leads them also later to take those those semaglutides and other molecules. So we we don't see that as a as a competition. It's a coexistence, which which which helps also our business, our subcu device business. Other than that, nothing to add. Brilliant. Thank you very much. We'll now take the next question online. Jeremy, if you may unmute the next person. Hello. Can you hear me? It's John Unwin from Barclays.

1:02:55 Yes. I can hear you. Great. I have a couple of questions, please. The first one is just a follow-up on the IXYSIP program. You mentioned low double digit million out of the P and L over the midterm. Does that include the lower D and A expected from the lower CapEx you've announced? And is that low double digit million amount included in the midterm EBIT guidance of $2.80 to $3.40 or could it be upside to that number? That's the third question. And the second question is about the mix of pens versus auto injectors. So you spoke about how customers are coming to you because you have both, but how should we think about potential headwinds from you selling more pens versus auto injectors? Because in GLP-one, for example, a pen can replace four auto injectors and presumably there's a different margin profile between the two products. So if you see a big uptick in pen demand, what impact could that have on your midterm EBIT target?

1:03:58 Thank you. Are we taking the first one? I can start with the first one and then hand over for you for the second one. So the Ipsomed program, this double digit million amount I mentioned, yes, that would also include the improvements we have through operational excellence, less investments, less depreciation. And for you, it's fair to assume when we do a midterm ambition that a certain amount we include, we have as a realistic target, but of course, Ypsomed actually an upside to that midterm profitability goal if we execute well. And as I mentioned, one key factor there will be procurement savings. So that is a potential upside. And the question depends on auto injector.

1:04:46 Hand back to you, Simon. Sure. It's a very relevant question to us. What is the trend in GLP-one? I mean, it's a GLP-one thing where it's possible to use both an auto injector and a pen for some of the molecules. Many GLP-one molecules are not liquid stable. You cannot put them in a pen. They will rest in an old injector. But let's take semaglutide, for instance, and the biosimilars of it, you can put them in a pen. So yes, we feel a slow trend towards device, but every biosimilar company is watching what Novo and Lilly are doing. So when Novo and Lilly are launching open check-in some markets, they would also go for an open check. If they go for a penta, would also go for one year. And in development

1:10:08 costs, did that go into this 195,500,000 So we don't really have a capacity issue.

1:17:06 I mean, Sanofi's old lines.