Ypsomed Holding AG

Good afternoon. Welcome to Eastermed's 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 come 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 Künzli, with a review of the financial results. We will then open the floor to your questions, first to the people that are joining us here in person and then online. 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 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. I really 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. So phenomenal year, number one. Number two, The transformation that we went through over the past four years, selling also 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. When I look into Ipsomed, how we are set up, how we take lean as a serious measure, our Ipsosit 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. 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 40 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 tailwind. 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. 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-1 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 this 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. 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 eye expert, the training business, stopping BGM, selling the pumps, we have done the right thing. This is now a company which is easy, much easier 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. 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 IPSO 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 cottages. So this is one core reason why. So SHL only has the auto-injectors. We have both platforms, and that's core. We have now the first clients who buy from us for the same molecule two platforms. Look at InnoVent. They launched mat-to-diet incretin in mainland China. They have launched it in the old injector, and now they got the approval two weeks ago for the Unopen, the pen. So these companies come deliberately to us because they can breathe with us. They may not know how successful old injectors are or when pens kick in, so they are happy to be able to have flexible deals with Ipsomet. So if they need less auto-injectors, they will buy more Unopens, and they have flexible contracts. And that's a huge USP. More and more molecules will be available in both formats. When we look at the trajectory and what we've achieved, this 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 GLT1. 15 is different old-immune diseases, from polyarthritis to morbus crown to lupus, very diverse. You have a couple of very new, interesting drugs against mid to severe psoriasis. 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 260. 80 in the market, 180 new ones that we work with. Of those 180 that are in the pipeline in those indications and new ones, roughly 70% will hit the light. Our hit rate is two-thirds to 70%, which means 70% that are reaching the light will actually leave 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 this 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 innovations. And the three new innovations we have presented to the world last November at the large conferences is IpsaLoop, IpsaDot and IpsaFlow. IpsaLoop, that's the green device here to the right, that's a new generation autoinjector. 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 created, 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 big line? Then the focus was on usability so people don't make a mistake because nobody reads IFUs. 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 logic. 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 10 to 12 years, they will probably think twice if they have the choice of a recyclable or a non-recyclable platform. 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 GLT1 optimized device for injection. Click, click, click. I think we have a demo device over there. And the Ipsoflow is a spring-driven device. 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 40s. As you know, our S-curve from an IP perspective is In the Western world, not in China, in China we have competition. Outside of China there is 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. But I believe we have hit the trend. And not only in Europe, also in the U.S. 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 our pressure down to our 500 most important suppliers. We gave them clear targets to deliver less carbon emissions. 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. And this has benefits because it reduces dependencies more sources on the granulate. We meet the customer's demand today and especially tomorrow because they will be forced to deliver less Scope 3. 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 buildings, 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 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 Time2Clinic. So while on average it took us 18 months from Time2Clinic in the past, with the new program, Clear2Clinic, we are down to six months. Large pharma are usually well-planned, but this is not only large pharma. There are 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 of pharma. So our clinical program saves a lot of time by pre-document, pre-validate, verify, and to be ready from a product perspective. So there's much, much, much less testing, much less paperwork, and that 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 IpsMed 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 12 months. We have opened in Solotun 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 Burgdorf, and we are now ramping up with a second tool shop about the same size for our own plastic molding tools. In Solothurn, apart from plastic molding tools, we have a huge program. We call it Hermes. This is basically moving out the old contract manufacturing business and moving in our new Ipsenate lines. This is a program in two phases, and it's delivered until end of 26. Very important to us because it delivers demand and capacity and work for people for the next 10 to 20 years. A huge upgrade. We invest over 200 million Swiss francs in Zolotun. Currently, the project is well on track. Also well on track is China in Changchun. 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. 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 site 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 Schwerin. So this is Schwerin 2. This is where we invest a large chunk of our CapEx. You see on the right side, on the left side, the existing factory, the 250-meter-long building with the 200-passing 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 250 to 300 million devices and then we can add another such building with another 250 million devices in 29, 20, 30 we have to see where we prioritize where we prioritize in China the second factory where we prioritize in the U.S. or whether we build a 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 it will 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. And then the next and newest program in infrastructure for us is Holy 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. 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-Ammann. He has been one of the forces in this state 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 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 27, we will be ready to deliver to the clients. 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 IPSMED to MyLife Diabetes Care with the pump business. We have sold Ipsotech, as you know, and we have added 245 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 from the operational leverage. We are able to profit now from the installed capacity. We are able to profit now from the platforms that we have delivered. 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, 25, 26. 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 report that 731 million Swiss francs of sales, and out of it, more than 80%, 601 million Swiss francs is delivery systems, our core business. 75 million is from the diabetes care business in the months April to July, in the time the business was still with us, and 56 million 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. We achieved our goal today. We reached 20% growth in that business. We grew from 501 million Swiss francs to 601 million Swiss francs. What were now the main drivers of that growth? When we look at our platforms, the main driver were the auto-injectors, especially the 1 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 million. Out of that 100 million, growth is coming from GFP1s. 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. Project revenues are important. On high level, they are above 80 million Swiss francs, 86 million we reported in 25, 26. compared to $88 million in the previous year. For those who follow us closely, have in mind that we now don't show 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, 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 190 and 210 million Swiss francs. We reached 196 million Swiss francs of EBIT. That represents a 33% EBIT margin. we had in the four months diabetes care was still with us, we had a loss there of $6 million, and we had a profit of $56 million in others. The two main drivers of that profit was, on the one side, we had a profit from $68 million when we sold diabetes care, and on the other side, we had a loss of around $12 million when we sold Bibsotec, that were The main drivers. Let's compare also with the previous year. In the previous year, 24-25, we reported 113 million Swiss francs of EBIT. Now, 246 million. So, more than double as much in EBIT. In the center of that slide, you see the growth of the profitability in delivery systems. So we grew by roughly 30 million from 167 million of EBITs to 196 million. We not only doubled our EBIT, we also propose to our AGM to double the dividend. We stay with our policy that we want 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 million operating cash flow. Looking at the cash flow from investing activities, we should have two things in mind. 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 307 million Swiss francs in. So net in the cash flow from investing activity was only roughly 30 million. So we ended up in a free cash flow of... 280 million Swiss francs, and we used that money. As you know, on the one side, we bought shares back, 150 million, 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 million went into our factories. Schwerin being a big part of it, but as well in Switzerland, in Solothurn, and as well the U.S. side. You saw the building in Holy Springs and the site, and also our factory in China, in Changzhou. We keep innovating. We also invest in intangibles in R&D. We invest a total of $28 million. 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, 25-26%, We invested roughly 20 million is roughly capitalized development costs for the delivery system business. And you saw, we launched three new platforms. When we put that investment, that growth investment into the wider context, those who follow us for many years, they know roughly two years ago, we announced our platform. our growth investment program of 1.5 billion Swiss francs. Now being two years in the program, our actual planning shows that we will spend roughly 1.3 billion in those six years until end of the decade. One key driver of that was our policy. 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, 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 25-26, We realized a row C 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. And now we are still having a... a year with high capex ahead of us. You see that in this illustrative simulation, 26, 27 capex are still high, comparable to the year we had. In 27, 28, we expect them already to be a little bit lower, and we expect them to cover with our operating cash flow in 27, 28. So we expect to be in 27, 28, 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 1. The number I also want to highlight because it shows how well the delivery system business is generating cash is the EBTA from delivery systems, $278 million. 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. As you know, we have very long-term contracts, typically up to 10 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 is that you have indexations. That is especially now important looking at the current geopolitic 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 indexation for our main cost blocks, so for plastics, the granulates, the energy, and as well labor. And this mechanism is also aligned with our supply chain, with our suppliers. 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. Then also the volume-based pricing, also that protects us from volatility in customer demand, because that means simply 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&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. 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 IpsoFit program. So we want to 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 we work with different initiatives. Then, as an organization, we are growing, and we still want to be fast, because also our competition, especially in Asia, is fast. So we want to take decisions fast. We want to 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 want to take advantage of AI. We want to have a competitive IT cost base. That's something where we feel we can also differentiate ourselves and where we can save costs. And where we hope for the biggest saving is actually in procurement. Because procurement also, when you gain scale, when you grow as we do, 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 12 to 15% in delivery systems with own devices. What do I mean now with these own devices? The 601 million Swiss francs we reported, 25, 26, that includes still around 40 million 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 million Swiss francs, which you see here on the left side. So, from that, growing 12 to 15 percent would mean a midpoint of roughly 635 million Swiss francs. The contract manufacturing for the pens, that is phasing out, and that still will be 15 to 20 million. So add that, and also add another 50 million for the contract manufacturing we do for diabetes care, the infusion sets and the reservoirs. So the reported EBIT will still be around 700 million Swiss francs. Looking at the profitability, we guide an EBIT between 210 and 230 million Swiss francs. There you can take as a starting point more or less the 196 million 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 in the next business year. Now in the last page, I want to even look out further. We announced our mid-term ambition in September 25 at our Capital Market Day. And from there, you know, we want to grow with sales in a range between 0.9 and 1.1 billion Swiss francs 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 process. for the diabetes care. And the EBIT should stay between 280 million and 340 million Swiss francs, always above 30% EBIT margin. And I mentioned we have a strong focus on capital efficiency. The ROSI should stay all over these years around 20%. Now we have Look forward to your questions, and I hand over to Sam.

Thank you, Samuel. Thank you, Simon. Remarkable year indeed. And now we open the floor to questions. So feel free to raise your hand, and then you can ask a question. Sybille von Fontenot, would you like to start by bringing your mic?

Thank you very much, Sybille Bischofberger from Fontenot. I have a question about the penance. You talk a lot about open jets, which are obviously your growth drivers. But when I calculate my estimates, it seems that you're growing also in pens again. Also, you have the capacity where full. Is this the reason China, which is supporting pens? And second, could you give us any hint how many units you have produced in 2025-6? More than 350 million units. Thank you.

So 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. Two glargine molecules have received FDA approval. in our UNOPEN, so it's two Chinese insulin manufacturers that achieved FDA approval in our UNOPEN. So one driver is biosimilar in the U.S. 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 24 months is the launch of the Glargins.

Thank you.

Thanks, guys. Zhang Wen from Citi. Nice to meet you in person. I have two questions, please. The first one is on Ixofit. 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 Ipsofit 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 26, 27. Specifically, can you talk to the drivers of gross margin for the fiscal year? Thank you.

Good. I start maybe with the Ipsofit, quantifying that. In the next three to five years, we expect a low double-digit million amount out of that program hitting our P&L accumulated over those years. They're talking about the gross margin also in the next business year. What you see that in our business, we have around 15, 1.5% between gross margin and EBIT. I simplify here a little bit. So think of it like that. Also in the next business year, when we say 33% EBIT, you would reach a gross margin around 50, 5, 0%. Feel free to ask, Simon. No, it's fine.

Thank you. Sandra Diage from Octavion. I have also two questions. So the first on the midterm guidance. So your midterm guidance at the midpoint implies a sales character 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 growth. And the new platforms, have you already signed a contract with any of the new platforms or what proportion of the contracts you will or you envision to sign this year? Are you targeting to sign on the new platforms? Thanks.

Thank you, Sandra. So we have not signed any deal on the three new platforms. These platforms are past the stage design phase. 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, if you would say on a hit rate of 40 deals this year, we tried to reach four or five deals. So in this year, the real ramp up of signing those will be in 27, 28. number one, and number two on the midterm ambition. Basically, when we look out into the next day, it's pretty linear. It's pretty linear. We are a bit slower in 26, 27, and we will catch up a bit in 27, 28, 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 Henslick from UBS. Also two questions, please. 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 mid-term, how it affects maybe recent news, the mid-term guidance. And then second question is on just the geopolitical issues in the Iran war. Is there anything to highlight on impact for Ipsenet? You mentioned the indexation, but maybe also customer decision-making changes.

Sure. On NOVA, we cannot give you details, we are all on track, so we ramp up the two lines in Solostun, 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, 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 mid-term view. Everybody obviously waits for December 26th when Karisema 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 granulate second or third sources and for those where we have not yet it's cumbersome work to actually bring in a new plastic type because you have to re-verify your product 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 first one, have also in mind that we said also mid-term, 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.

Of the 260 programs we have, of which 80 are launched and 180 are in the pipeline, we have something above 50 in critines, so it's roughly one-fifth. And 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.

Wisconsin Research Partners, two questions from my side, please. Number one, this impairment of 10.1 million in development costs, did that go into this 195.5 EBIT from YDS? And the second question is, you gave this outlook on sales for Sanofi 15 to 20 million. for TechMed 50 million 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 valuable and I guess from the north 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 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 anymore valuable. And yes, these numbers are included in the 196 and they were also in the 167 in the previous year included. about the added 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. On the other side, the 50 million, again, contract manufacturing for diabetes care, which is cost plus. Think of that as a profit, single-digit million amount. So maybe also a little bit your question, the report that 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 that. I hope that helps.

Just simple questions. The tech consolidation effects you mentioned once, so both companies have to build HR, et cetera, et cetera. That was, I guess, already expense. Or can you quantify this effect? The build-up costs? for the headquarters. I think you guys know them.

Yeah, I can start on you, Simon. So, of course, when you take a business with two divisions apart, you have certain dis-synergies. And actually, these synergies we addressed also with our Ipsofit 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 IT and overhead installed and we want to grow now in those functions. Clearly underproportional. But yes, we had an effect. It was not zero. Feel free to add, Simon.

I mean, it's less than 1%. So of 2,000 people, maybe 20 positions are doubled, such as the executive team, obviously. Yeah. standard team quality system responsibility so and this many people they will remain double but it's actually all solved so after the closing we haven't known exactly who goes where and who so this has been solved with the Mercury program so when we got apart this was already solved okay thanks and regarding the Swiss franc contract

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 SHI as an alternative, which is operational now in the US. Is that a bit a risk? So we have two answers to that.

So most US clients, are two days sourcing through their European sites. So most of our U.S. customers are buying the product through their French or German or Dutch facility in Euro or in Swiss francs and shipping it themselves to America. That's number one. And number two is with North Carolina in 18 months. You know, if you bring this to the table, you basically stop discussion. Our contracts are very, very robust. There is no possibility on that end, and they all know it will be solved in due time. So it's actually not a topic with Americans. We have it with some Europeans that are getting a bit demanding on the Euro side, but we remain very firm on that topic. We might now do some contracts in Euro, because obviously we have higher costs in Euro as well now, which we're in, 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. That's why, yes, but we work on that, that we keep our contracts in Swiss francs as much as possible.

Thanks a lot. I want to sneak in. The maintenance shutdown of Sanofi, I mean, in theory, your guidance X Sanofi 12 to 15% would have been more because you all have the unused capacity when Sanofi takes out the equipment. You see my point? So you could have more sales if Sanofi would not be busy with taking out the equipment. So you see the point?

Oh, no, so we don't really have a capacity issue. I mean, Sanofi is old lines. But you cannot use the space. That's true, yes, but we have enough space in Tverin, so we never had an issue. So this is an 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, adds to the ramp up cost. You have stranded cost on this Hermes program because one shop floor is empty for four months. four or five months. And this is a fact that has a pressure, had a pressure also on the cost, will have a pressure on the profitability next year, but very, very minimal. I mean, in the end, it will be taken up by new projects. But we could not have been more efficient. This is not a boxing shop like Formula One in a second. It's quite a big project. You have to move out two soccer fields of infrastructure out and then move in and then the other one. But we will be very glad to do 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.

Dominik Feld, guest from Neue Zürcher Zeitung. I have three questions. Actually, you've said that the competition, obviously, in Asia is very fast. I have to watch it. carefully, are there any new kids on the block, maybe emerging, or is the situation, the competition still the same? You've mentioned Russia two or three times. Do you pay any taxes in Russia? 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. Feltjes, for the questions. I start with China. We have a handful of small medtech companies that are able to manufacture medical devices, insulin pens, autoinjectors on a similar quality or even same quality as Ipsamet. What keeps them away from reaching Europe is IP. Their IP would infringe our IP, IP of other players in the market until 2034, 2036. 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 the 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 look 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 20 years now very well. We know very well which clients we have to keep and which we may not need to keep. 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 markets. For Russia, that's public. We have two clients in Russia. They are picking up the goods in Zoloturn. They pay 100% upfront, and they pay in Swiss francs. So it's safe. We pay no taxes in Russia. It's a zero farm and farm standard. It's two big pharma companies that buy Unopens for the insulin from us for over 10 years, a very robust relationship, and that's all sicko-proofed. This is all according to the standards and agreements that Switzerland has with the European Union and Russia. 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 a new tool shop in Urdorf. And there is a 15% tax currently expected, not a 50, because it's deal, yes, but U.S. doesn't have any plastic molding companies left, so they 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 27. But all in all, this is maybe 1 or 2 million Swiss francs in tariffs. And the last question on the GLP-1. Lilly and Novo report steep trajectories on the start of the PILs for GLP-1. 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. Because don't forget, this pill delivers 10% to 15% weight loss. It's more a lifestyle thing, whereas injections is for severe obesity, adipositas, for people who really have to lose weight because they have a BMI of 35, 40 and more. If they don't lose weight, it's life-threatening. That's why WHO also supports these therapies. Your question is very relevant to us, Mr. Feldgeist. We watch at the GLP-1 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 is, of course, a common topic also in the market and among investors. So we observed it carefully, and yes, it is. It grows the overall market. So it's, as Simon said, it's another target audience which takes it. And it's even for many people, let's say, a first contact to that drug category and could leave them also later to take those drugs. those semaglutides and other molecules. So we don't see that as a competition. It's a coexistence which helps also our business, our sub-Q 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. Again, it's John Unwin from Barclays Yeah, I can hear you. Great. I have a couple of questions, please. The first one is just a follow-up on the Ipsifit programme. You mentioned low double-digit million out of the P&L over the mid-term. Does that include the lower DNA expected from the lower cap that you've announced? And is that low double-digit million amount included in the mid-term EBIT guidance of 280 to 340, or could it be upside to that number? That's the first question. And the second question is about the mix of pens versus auto-injectors. So you spoke about how customers are kind of fatigued because you have both, but how should we think about potential headwinds from you selling more pens versus auto-injectors? Because in GLP-1, 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 will that have on your midterm EVET targets? 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 Ipsafit program, this double digit million amount I mentioned, 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 mid-term ambition that a certain amount we include, we have as a realistic target. But of course, Ipsofit can also provide actually an upside to that mid-term profitability goal if we execute well. And as I mentioned, one key factor there will be procurement savings. And so that is a potential Upside and the question for pens and auto-injector hands. Back to you, Simon.

Sure. It's a very relevant question to us. What is the trend in GLP-1? I mean, it's a GLP-1 thing where it's possible to use both an auto-injector and a pen for some of the molecules. Many GLP-1 molecules are not liquid stable. You cannot put them in a pen. They will rest in an autoinjector. But let's take semaglutide, for instance, and the biosimiles of it. You can put them in a pen. So, yes, we feel a slow trend towards device, but every biosimile company... is watching what NOAA and GLE are doing. So when NOAA and GLE are launching auto-injection in some markets, they would also go for an auto-injection. If they go for a pen, they would also go for an auto-injection. On a 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 try to reach four or five deals. So in this year, the real ramp up of signing those will be in 27, 28. number one, and number two on the midterm ambition. Basically, when we look out into the next, it's pretty linear. It's pretty linear. We are a bit slower in 26, 27, and we will catch up a bit in 27, 28. But overall, we try to flatten a bit. So 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 Henslick from UBS. So two questions, please. 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 Ipsomed? 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 Solothurn, 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, 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 mid-term view. Everybody obviously waits for December 26th when Karisema 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 granulate second or third sources, and for those where we have not yet, it's cumbersome work to actually bring in a new plastic type because you have to re-verify your product. We put up a higher standard. 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 locally.

And if I may add to the first one, have also in mind that we said also mid-term, 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.

Of the 260 programs we have, of which 80 are launched and 180 are in the pipeline, We have something above 50 in Cretins, so it's roughly one-fifth. And 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 a very broad scale of clients and it makes us robust customers.

Wisconsin Research Partners, two questions from my side, please. Number one, this impairment of 10.1 million in development costs, did that go into this 195.5 EBIT from YDS? Yes. And the second question is, you gave this outlook on sales for Sanofi 15 to 20 million, for TechMed 50 million. 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 valuable? 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. 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... but think of a single-digit million amount. And on the other side, the 50 million, again, contract manufacturing for diabetes care, which is cost plus, think of that as a profit, single-digit million amount. So 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. I hope that helps.

Just simple questions. The tech consolidation effect, you mentioned once, so both companies have to build HR, et cetera, et cetera. That was, I guess, already expense or can you quantify this effect, the build up cost for the headquarter? I mean, I think you guys know what I mean.

Yeah, I can start and you add Simon. So, of course, when you take a business with two divisions apart, you have certain dis-synergies. And actually, these synergies we addressed also with our Ipsofit 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 IT and overhead installed and we want to grow now in those functions. Clearly underproportional. But yes, we had an effect. It was not zero. Feel free to add, Simon.

I mean, it's less than 1%. So of 2,000 people, maybe 20 positions are doubled, such as the executive team, obviously. standard team quality system responsibility so and these 20 people they will remain double but it's actually all solved so after the closing we have known exactly who goes where and who so this has been solved with the Mercury program so when we got the part this was already solved okay thanks and regarding the Swiss franc contract

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. 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 U.S. customers are buying the product through their French or German or Dutch facility in Euro or in Swiss francs and shipping it themselves to America. That's number one. And number two is with North Carolina in 18 months. You know, if you bring this to the table, you basically stop discussion. Our contracts are very, very robust. There is no possibility on that end. And they all know it will be solved in due time. So it's actually not a topic with Americans. We have it with some Europeans that are getting a bit demanding on the euro side. But we remain very firm on that topic. We might now do some contracts in Euro because obviously we have higher costs in Euro as well now with Schwerin. 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.

Indeed. 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 four or five percent 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. That's why, yes, but we work on that, 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 X Sanofi 12 to 15% would have been more because you also have the unused capacity when Sanofi takes out the equipment. You see my point? So you could have more sales if Sanofi will not be busy with taking out the equipment. So you see the point?

No, so we don't really have a capacity issue. I mean, Sanofi is old lines. But you cannot use this space. That's true, yes, but we have enough space in Tverin. So we never had an issue. So this is an important topic. So we always have overcapacity on space. 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, adds to the ramp up cost. We have stranded cost on this Hermes program because one shop floor is empty for four months. four or five months. And this is a fact that has a pressure, had a pressure also on the cost, will have a pressure on the profitability next year, but very, very minimal. I mean, in the end, it will be taken up by new projects. But we could not have been more efficient. This is not a boxing stop like Formula One in a second. It's quite a big project. You have to move out two soccer fields of infrastructure out and then move in and then the other one. But we will be very glad to do 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.

Dominik Feld, guest from Neue Zürcher Zeitung. I have three questions. Actually, you've said that the competition, obviously, in Asia is very fast. I have to watch it. Carefully, are there any new kids on the block maybe emerging or is the situation, the competition still the same? You've mentioned Russia two or three times. Do you pay any taxes in Russia? And then how about the tariffs? Have you paid any tariffs during the last financial year? And then 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. Feldges, for the questions. I start with China. We have a handful of small medtech companies that are able to manufacture medical devices, insulin pens, autoinjectors on a similar quality or even same quality as Ipsamet. What keeps them away from reaching Europe is IP. Their IP would infringe our IP, IP of other players in the market until 2034, 2036. Depends on the platform. So that's why they are not a competition for our main business. They are locally strong, but, you know, based on our size and the 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 look 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 20 years now very well. We know very well which clients we have to keep and which we may not need to keep. 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, that's public. We have two clients in Russia. They are picking up the goods in Zoloturn. They pay 100% up front.