Galenica AG

Ladies and gentlemen, welcome to this media analyst conference of the Galenica Group. We are very happy that this spring day you came here to Zurich to join us here on the live stream. Everybody is welcome. We will start with the financial results 2025 by our CFO and then we will have a moderated discussion, a brief one regarding the strategy and priorities.

And there will always be sufficient time for your Q&A here in the room, but also from the live stream, of course. So I would now, without further ado, pass the floor to you, the CFO, Jan-Jan Vlesinger. Thank you. Thank you, Iris, and also a warm welcome from me to the guests here in Zurich and all to those taking part via the webcast.

We can look back on a successful year 2025.

Galenigra grew strongly by 5.5%, both in the logistics and IT segment with 4.8%, and especially in the segment products and care with a growth rate of 6.8%. In logistics and IT, we benefited from the strong market growth and grew in line with the market in terms of value in both the pharmacy and the physician's segments. The strong growth in the product and care segment is a combination of a strong organic growth and successful expansion. we were able to see organic growth in our market share in the pharmacy segment and also acquired additional attractive locations. One highlight was certainly in 2025, in September, the acquisition of Labor Team, which accounted for around 1% of the group's overall sales growth. The strong growth also laid the foundation for a positive development in profitability. EBIT rose by a strong 11.3% to 234.8 million francs in 2025. And this positive development was supported by... positive special factors totaling 6.2 million. These resulted from two competition proceedings in which the penalties were significantly lower than originally thought. Overall, Galenica reported a ROS of 5.7% in 2025. Adjusted for one-off factors, the ROS was 5.5%. The comparable ROS in the logistics and IT segment remained constant, which we expected, given the ongoing conversion of the ERP system in logistics. Until the project is fully completed, both ERP systems have to operate in parallel. which means that no efficiency gains can yet be realized. Now, when it comes to the product and care segments, the return on sales increased from 9.4% to 9.6%, supported by the strong organic growth and the successful acquisition of LaborTeam. Let's now take a look at the main drivers of this margin increase. Galenica's operating result is essentially driven by the gross margin and the personnel cost efficiency, and both key figures developed positively last year in 2025. The gross margin increased by 0.2 percentage points in 2025. In logistics and IT, the margin increased by 0.1 percentage point. in particular due to price increases. In products and care, the margin fell slightly from 46.5% to 46.2% due to the product mix, in particular due to the pharmacies. And due to the strong growth, however, the products and care segment also had a positive impact on the development of the gross margin at group level. Now, when it comes to personnel costs, efficiency were increased slightly in products and care, the personnel cost ratio fell significantly by 0.4%. This was mainly due to the development in the pharmacies, which were able to significantly increase their personnel cost efficiency. Personnel cost efficiency also increased slightly in logistics and IT segment, despite the ongoing ERP changeover at Galexis in logistics part. of it comes from the pre-hole sailor Ologa, which has already mastered the ERP changeover, and the efficiency potential can now be realized already. Now, as to the adjusted net profit, it grows by 3% to 189 million. The lower growth at the net profit level is due to the financial result in taxes, which are significantly less affected by the one-off special factors in 2025. In the financial sectors, we had some 10 million in one-off income and with the reversal of earn-out obligations, and there were In terms of taxes, the tax rate was reduced to 14.1%. In 2025, we have a tax rate at a sustainable level of 17.1%.

Investment.

We had 61.1 million Swiss Francs investments which were at an exceptionally low level in 2025. This was due in particular to the decrease in investments in the IT developments as a result of the progress made with the ERP project. Galenica continues to have a strong balance sheet. Equity decreased slightly compared with the previous year. due to the loss in value of the investment in RedCare of 135 million Swiss francs in 2025. The current share price performance of the investment is also disappointing for us. We do see that the investment in RedCare can be considered a major important element of our strategic partnership with RedCare, and we are convinced that the value of the investment will recover. Now, when it comes to net debt, it increased by 251 million due to the acquisition of Labor Team in September 2025. The debt ratio as at 31 December 2025 was at a factor of 2.3, which is slightly above our target value of the factor 2. Now, it was very good to see the development of cash flow. The operating cash flow increased by 30 million to 245.7 million Swiss francs. This growth was driven by the good result, but also by a strict focus on the net working capital. In negotiations with suppliers, we were able to agree better payment terms in the long term, which eased the burden on net working capital accordingly. After investments, a free cash flow of 188 million remains. with which a good portion of the acquisitions could be financed even after payment of last year's dividend of 150 million. Given the positive result, the Board of Directors will propose a dividend of 2.50 Swiss francs per share at the general annual meeting, that is to say 20% more than in the previous year. year, which corresponds to an increase of 8.7 percent. The increase in the dividend also reflects the strong cash flow generation and the positive outlook. Now as to guidance. We are positive about the future. For 2026, Galenica expects sales growth of 5 to 7 percent and an increase in adjusted EBIT of 6 to 8 percent. Adjusted for the special factors of 2025 of 6.2 million, this corresponds to a high increase of 9 to 11%. In addition, the adjusted EBIT is now more geared to the operating EBIT, and the costs of the planned closure of Bixels production division, which will incur in the first half of 2026, is now reflected in the adjusted EBIT. Now, we've also seen an adjustment of the mid-term guidance that we published today. Last year, there were significant changes that were not reflected in the previous mid-term guidance. For example, the expected closure of the pharmaceutical production at Bixell and the acquisition of Laborteam. And now when it comes to the ERP changeover in logistics, we are now, regarding the efficient gains, we also have a greater visibility now. In the logistics and IT segment, we expect Due to the ongoing ERP project, we expect the hyper-care phase and the subsequent reduction of the project organization, so we expect a stable development of the EBIT margin to remain stable until 2027. However, expectations regarding the efficiency potential are really high. We continue to expect an increase in the EBIT margin of up to 2%, which will occur in 2028 in the products and care segment we will increase on pixels focus on the home care area and the successful integration of the board team will mean an increase of the ebit margin of over 10 percent and overall and this is the key element of the midterm guidance It is decisive that Guerlinica will achieve an EBIT of 270 million Swiss francs in 2027. However, there are other points that are unchanged compared to the previous midterm guidance. We have the growth assumption in the two segments of 3% to 5% per year. That's unchanged. So we are therefore still in a very good market environment.

Thank you so much, Julian, for giving us a detailed insight into the financial result. We'll now look at where Galenica stands in implementing our strategy and where upcoming priorities are. We'll do that over 15 minutes in a moderated conversation together with Galenica's CEO. Please join me in welcoming Marc Rahner. Oh, Marc, we've heard it. The financial results have been quite pleasing. What is your personal bottom line? Well, it's a positive one. As Julian said, in 2025, we were consistent in driving our strategic goals and implementing them. And we've continued to strengthen our strong position in this health care market even further. We've also made headway when it comes to transformation and customer centricity, I feel. And what specifically have been the biggest milestones in the implementation of our strategy? Well, there are three items that I'd like to mention. Now, we further strengthened our basic care, both in brick and mortar and online. I mean, digitization was developed further and efficiency. And that's a decisive point for us. Our growth strategy was pursued consistently. If you have a look at pharmacies, if you have a look at logistics, home care, and also expanding our network acquisition of Lebotium and entering the diagnostics market, which was crucial, of course. Now, let's drill down on these three topics. Let's start with expanding basic care. Now, a net five locations were added in 2025. In total, there are 381 pharmacies that are part of the clinic now. Now, health and consultancy services are growing. How important is that for further growth? Crucial, absolutely crucial. now consulted plus that's really an offer that has increased markedly. In total, we carried out 370,000 fee-based healthcare and consultancy services, amongst them 93,000 vaccinations. So the pharmacies are now the port of call. for these services and we have new cooperation partners that we've concluded co-operations with. Since the beginning of the year, Capiti and Alsana, two important health insurance, have joined our network. So there's 10 healthcare insurance that we're working with and they support us. to position pharmacies as the first port of calls. Now, that can be billed also by the health insurance consultancy. Plus, is that available in all pharmacies already? Not yet. But by the end of June, we'll offer consultancy plus in all our pharmacies in Amavita and Sunstorm. By the end of the year, also in Co-Pratality. But we already have fee-based consultancy. uh services as we speak the consultancy plus will be rolled out to a hundred percent uh but the end of the year the interesting thing is the goods basket those services amount to about uh 80 francs one-third is consultancy and two-thirds other products So that means that every consultancy, of course, comes with selling a product to kick off the therapy that goes with it. That's an important point. Now, the second important point is that starting in 2027, vaccinations will be built via health insurers. And that's, of course, an important boost for our pharmacies. Now, let's remain with pharmacies. They've done quite well. You've done quite well in the digital realm. What can we expect in the future? Now, the omnichannel strategy and investments to Gatun were launched in 2020, and we're now reaping the rewards. Several elements that go with that. for instance take click and collect so our customers will get their information online but they might even buy it but they pick up the product in the pharmacy that's important for us that's taken off nicely and it's a wonderful holistic process for the sake of our customers what i'm quite happy with it is our prescription manager that we launched in 2020 five is so the management of the prescription is really done well and it meets with an enormous demand. So we've seen a significant growth base because it makes the customer's lives easier as they have more than one prescription, a permanent prescription that needs to be filled. so that customer retention will be boosted and customer satisfaction will be boosted. Apart from that, if I have a look at the online market, we have the Amavita strategies that have been communicated that show that our omnichannel online network that will be continued further so for the digital drugstore and OTC assortment. Now, let's have a look at the regulatory environment. Maybe OTC liberalization has been the topic for years. What are the latest forecasts and how is it going to be prepared? Well, we do not expect liberalization before 2030 or even 2040. 2031, specifically given the current political discussion in Switzerland that we're all aware of. So the discussion has not been launched to that big a tune, but it's quite important to see what that entails. Now, OTC liberalization would affect all the OTC products that are not part of the specialties list of the federal government, which amounts to about 13% of our clinical pharmacy sale. But there are two things that we need to take into account. And namely, it's a topic that keeps on recurring. And now in countries that have undergone the liberalization, Germany and Sweden, so they are far ahead of us. If that liberalization comes, that takes a bit of time. So customers do things online. So the market shift, it will be quite slow from brick and mortar to online channels. Now, why did we start that online strategy five years ago? That was with a nod to that, and that's my second aspect, leading our customers to the digital chance. That's why we have been advocating said liberalisation, because we're convinced that we are prepared.

Julian, what measures does Galenica take to ensure long-term profitability?

Price pressure is already high, and it's right, yes, you're right. The decline in gross margin in pharmacies is a logical factor. The main element comes from the pharmacies, really. It's really about the decline in the gross margin, which is a logical consequence of the shift in the product mix towards a higher proportion of prescription medicines. including GLP-1 weight loss products, for example, and they will water down migrants. However, this is not necessarily just the negative development. It's also positive. In the pharmacies, it makes it quite clear they are less dependent on seasonal fluctuations. Ultimately, what we also have to see is, and that's the point, we have to take a look at the absolute margin with a positive margin. And in 2025, we saw that despite a gross margin, we had a gross margin increase despite certain levels that were not as good. Julian, you mentioned, is constantly working to improve cost efficiency. Is there a potential for further efficiency gains, Julian? Yes, of course. There's always potential for efficiency improvements in all business sectors. We're in a scaling business, in logistics, pharmacies, products and diagnostics business. With turning increases in turnover, and that's what we assume, it also means that there's potential for further efficiency gains. There's innovation, new technologies. Also by using artificial intelligence, that's where the potential for efficiency gains comes from. The main efficiency potential certainly lies in wholesale and logistics, And after the successful ERP system project, we expect there to be the potential for growth. Well, let's take a look at that keyword, Marc. We had a milestone with the SEP change in Equiblanc. What about the project? What are the next steps? Like all major SAP conversions, it's always a big project and it's a lot of work. We are very proud that we were able to close that project and finalize it and that we have a wonderful automation degree of more than 70% at Lausanne-Écublan, at that site. What we had to learn is that this is not IT projects, it's business projects that we're talking about, change projects really. where the staff have to be taken along because a lot of staff have to contribute. It's about the work processes that very often are focused on paperwork and now they go in the direction of automation, paperless offers and we really have to take along our staff. It's really a transformation journey say we will do that also need a bit side at when we switch to SAP and we took the lessons learned from the past and we can built upon our knowledge from the flagships site in NIDABIP and also certainly make headway there. Julian, he also mentioned the artificial intelligence part that's also an efficiency driver and the ERP changeover that certainly also the basis to use artificial intelligence. What about Galenica and AI and automation? Well, we see that AI readiness is very important and it has proven to be that case over the past year. We need strong processes that serves as the basis so that afterwards we can even optimize further AI processes, make it more efficient. be it in article, in the warehouse, in capacity planning, wherever. The basis is good digital processes. And we see that also in other areas, in marketing, in the pharmacies, where these processes are digitized to a very strong degree, and depending on that, the processes can even be made more efficient via AI and the drivers that we use. I think we are in a good position. We have a good team available. But again, we must make sure that AI is not just a keyword, but we want to be conscious. Where does it make sense to invest? Where can efficiency be gained? Not just because there's AI on the label, we say we want to do it. Then further digitization, it also means further investment. Julian, you mentioned cash flow 2025 in a high level. That also came about because we invested less than earlier. And this low investment volume, is it a sustainable one? Well, yes, the investment volume in 2021 with those 61 million was at a low level. Certainly, the investment volume will be higher in the next two years. That also depends upon the headquarters in Bern, the head office renovation. There's a core building and we will remodel it and there's something coming up in the coming two years. So we have an investment volume in mind of 80 to 90 million Swiss Francs, which we already communicated with following the acquisition of Labor, Labor Team. Let's continue with the expansion of the network. As you said at the beginning, Mark, diagnostics business was a major milestone. What about Labor Team and Galenica? Will they create an added value together? Well, what is important? And when we did the acquisition, we felt very clearly when we are on site, it fits in strategically and culturally. They really fit in into our network. We feel that when we work together, the collaboration is great, and we also see it on the customer side. In the first phase, we have to focus on the medical doctors. And Labor team makes sure that we have a broader range of options. We have a better, more intelligent networking going on. So the second stage, and that's really consciously the second phase, is the innovation in our pharmacies. But first of all, we want to focus on the medical doctor side. And in addition to this expansion, there's also a focusing on the network. Three weeks ago, we communicated that Galinica intends to close production at Bixel. Mark, can you explain the reasons for this? Well, we acquired Bixel in 2019. primarily to really focus on the home care sector. And the home care sector has really seen a very positive development and good growth. It makes up some two-thirds of Bixell's business. The pharmaceutical production, on the other hand, was not profitable. The existing production facilities, we took a look at them. We did not find a way in which to make sure that production facilities can be sustainable in the long run, and that's why we had to take this decision. Homecare, as you mentioned, will continue, and last year there was also a modification, LifeStage and Homecare Big, so they really focus on that market segment. There is some additional growth plan. What is the Well, Bixell Homecare, the sales organization where they have a lot of know-how in clinical nutrition, And we combined that with life stage solutions because we felt there's a lot of potential. The customer groups, that is to say the onsite, the out of hospital care organizations, they really function well. We've seen that. The home care organizations under one roof, they can be much more stringent in their market drive. Let's stay with another question about products and care, namely products and brands. What about the development there? Julian? Well, in products and brands, we have a strong strategic priority. In the past six years, we've seen strong growth in this area, and in this period, sales were doubling in the area. Growth is currently, we've seen an artificially slowed down procedure due to the regulatory change in the EU. and the high level of bridging stock but we also see that we have an attractive and high margin profile there so there's a lot of potential so this concludes the content part last question julian 2025 was a very successful year from a financial point of view what about these horizon for 2026 as i've said We are positive when it comes to our outlook for 2026. We are in an attractive market environment. We focus on the strategic goals. They focus on sustainable, profitable growth. And that is also reflected in our guidance. And a last question to you, Mark, the outlook. What is the focus 2026 and what about the strategic milestones? Our focus, our strategy is clear and unchanged. We have a clear strategy. We want to focus on the Galenica story that we were successful in the past and we continue with it. Labor team is a good example. It shows how flexible the strategy is, how we can develop the network within the strategy. We want to strengthen our market position in all the areas. We want to be the clear number one or number two in the laboratory part, maybe not quite yet, but Clearly, we do not want to keep number four. We want to make sure that we are among the top three players and we want a bronze medal, really. So we want to create value added for our partners. It starts with our staff. We want to create wonderful job environments so because we can attain or retain good staff, that also guarantees market success. We want to make sure sure that the partnerships, the customers gain value. And we want to make sure that Galenica creates growth for the society, for our country. We have a wonderful country, and in the end of the day, we also want to create shareholder value. That's our drive. That's what we stand for. Thank you. Thank you, Mark. Thank you, Julian, for this So now we come to the questions in the room. So if you could wait.

So please make sure that you wait for the microphone to come your way so that everybody may hear you. And for everybody on the call, if you want to ask a question, you can either do that in the chats or press request to speak and then you'll be forwarded to the zoom call and can ask your question so let's get started with the questions here in the room thank you uh i'm with the zurich cardinal but uh two questions that i have for you first on uh personnel cost efficiency You mentioned that that was increased massively above all in pharmacies. I think that that is quite impressive that first the figures went up and then the cost efficiency. So how much of the leeway do you still have? And maybe you have some example. What is possible for 2026? Do you expect a slower growth of Personarchos vis-a-vis sales? And my second question on PIXL and on closing that, Dallin. Now, Galenica stands for stability for me and also for security and safety in our healthcare. Now, as an outsider, I've always felt that PIXL was relevant for infusion, IVs, topics that are relevant in a natural disaster scenario, say. for our country. Now, before you took the decision to close down, did you talk to the government about that, whether there could be subsidies in the future? So that's a question from an outsider. Now, in the context, how would you analyze the situation for Switzerland? Is there enough capacity? Would you like to take on the first part? well thank you for your question of personnel costs efficiency in pharmacies is a huge topic you have to see it in a holistic way on the one hand you know sales growth that is driven by more expensive prescription and drugs that of course require less consultancy and That's where part of the personnel cost efficiency comes from. And quite apart from that, one of our top focal points is that we remain fit and efficient when it comes to personnel costs. And that will remain a focal point for the coming year too. Of course, we're trying to be efficient at all times. Now, the FTI increase, that is a holistic one, but that results from IT because there were external consultancy costs that we've internalized because that's more cost efficient in the long run. Now, on your second part, thank you so much for that question. Now, just to make that clear, we've announced we were going to close down that part. So the question is, no, we didn't talk to the government or to the authorities beforehand, also the confidentiality leader, but we now are. in a process where we're talking to everyone. We've announced the closing down, and we're discussing that with all kinds of stakeholders, with personnel, with Works Council, what have you. So that's the phase that we're in. And what lies in the future, we'll see. Now, security of supplies, that was one of the prime topics. We talked about that on the board and with the administration, because that was a clear challenge. Pixel today has about 40 customers, and there are about 250 hospitals, so you can buy products elsewhere. Of course, in part, abroad. That's true. In a case of crisis or emergency, normally we wouldn't have a problem, but in crisis times... You have to see that in Switzerland, we are producing products for the Swiss market. It's an illusion to believe that we can go on alone. So it would be an illusion to believe that there'd be government subsidies for that. I believe we had that discussion during the pandemic where everybody said we have to produce everything in Switzerland, but nothing much has happened. But there is a certain consequence from now. These supply chains are global. They were so in the past. They will remain global in the future. But we really looked into that intensively, and we are of the clear opinion that there will not be a shortage of supply in Switzerland when we close down Dexel. All right. So more questions here in the front, please. Thank you. I'm with UBS. Two questions, if I may. Now you want step up in debt coverage. So that's the upper end of your range of plus minus two. So what's the potential to improve that? And as you said, you want to get the bronze in the lab market. How are you going to do that? Organically, inorganically? What do you think? Would you go for the first one? Now, when it comes to debt ratio, you're correct. That is a factor of 2.3 right now, and our target value is factor 2. Now, we're temporarily higher, and that doesn't disquiet us because we have a strong cash flow generation. where we have a potential for far-reaching measures to really drive the pressure down. We continue to believe that in our mid-range guidance, up until 2027, we'll end up at the factor two. Of course, that hinges on the option of future acquisition. That takes me to the second point. Thank you. Yes. We are quite well known for our competence that we manage organic growth, but we also have clear-cut skills when it comes to additional inorganic growth. exact mix that makes Galenica, and that is something that we are also going to see in the lab business. So we want to grow, and so what we estimate is our own efforts, so whether it's logistics, diagnostics, we intend to grow. but quite obviously we keep our eyes peeled if we find an exciting target that fits our bill nicely culturally also then we are going to drive growth in that respect too we come to the next question here in the room the microphone is coming

Kurzgesagt, very briefly a question. The associated investment of 2.4 investment, what about it in concrete terms? Can you comment on that? And then the amortization in Labor Team, what about 2026? What do you expect there? And then the logistics in IT, the 1.7%. until 2027, which will remain at 1.7% until 2027, and then 2% in 2028. So NIDABIP will really have made some headway in 2029-2030. Why not have a positive effect in 2027? And do I have to say 1.7 in 2027 and in 2028 almost 2%? I don't quite understand that. Thank you for that question. The loss in the context of the value shift towards associated companies, well, that really has to – take a look at the step acquisition with Mervita that we take a look at future oriented businesses and then take a look at possible potential acquisitions later on complete acquisitions and the majority share was we were able to get the majority share and then There was a price adjustment from 2.4 million. And when it comes to the adjusted EBIT and the operating value added and the operative performance of Kalenic, these step acquisitions really are typical for us. That's why we did them. Another item was the expected amortization from labor team acquisition. To be quite honest, I'm asked too much here what that really means. In the adjusted EBIT, this amortization was neutered really to make sure that the operating performance was better presentable. In 2025, we had that amortization. The PPA has not really been finalized so far. and it will be finalized regarding 2026 semester. In terms of logistics and IT, it is quite correct. Until the efficiency gains can be realized, it will take a little longer. Originally, we were a little more ambitious from the get-go. It's always difficult to assume. But in Écubelon, we've seen that the hypercare phase has to be considered, and there's also an after-go-life. There has to be the two ERP systems in parallel, and that will continue to operate like that until 2027. So we're a little more... well, hesitant regarding efficiency gains. Of course, we hope that we can realize some of these efficiency gains in 2026, but the full potential of efficiency will certainly be realized in 2028. Okay, are there any other questions from the room here, second row, middle? ZKB, Patrick, what about the competitive situation in pharmacies? And I'm talking about the drugstores in Germany or the Mikro that want to also work in Switzerland, the German pharmacies, that is. And the second question is regarding red care. You mentioned the annual result and there was some drop. Why do you think that this will go in the opposite direction again? Well, in the pharmacy sector, thank you. No, it was really good. We are in a good position. We have a great job done in this area and I believe that we will continue to do so. Competition is good. There are German competitors. They want to be active in Switzerland. But we've seen that. There are strong competitors. Mikko also. Strong competitors. That's not surprising. Julian also mentioned it briefly earlier. Our share in the Rx area has also improved in the pharmacies, despite the competitive environment. The two partners in the market, they are really in the drugstore area. Of course, there is some strong competition, but not since yesterday, but for quite some time already. And it will also continue in the future. In the pharmacy business, we think we're in a good position. We have a good footprint in Switzerland. We are always on the top shelf, really, also in organic growth. The growth gains will be continuing, I think. Red care. Well, red care... We still believe that the investment will be profitable in the end. We see it in the collaboration with the Board of Directors and Mediservice. We have good cooperation. We can learn a lot from Red Care, also from the experiences drawn from Germany when it comes to the e-prescription introduction, and you were really a pioneer there. And we believe they have the right strategy. They were not really confused when it comes to the focus. We are really convinced of the joint venture, and we think that the investment will recover. What is clear, and we knew it from the get-go, there is a high volatility range that we also expected. Now, we are hit hard by the development, certainly, but we see that this will also develop in a different direction. Well, we can say very clearly in all the countries where you are active, you are clearly the number one. They go into markets. And within a short period of time, they are the number one in the pharmacy sector. So we are really deeply convinced. Of course, okay, they are in a negative phase right now, but in the long term, we believe that the market position will prevail. In Germany, Austria, Italy, France, they are everywhere, and they are very strong. well let's remain in the room but for those in the live stream you can already announce the questions and maybe precision first you click on the live call button under the live image and then you click on request to speak there's a button an extra button and then you can join So you have to click join at the very end. And I hope that this will work. You can announce questions, but for the time being, we remain in the room. There is one further request. A question to Red Care. There are different changes in the board. Three people left the board. The three came now and joined them. Were you also questioned? Would you like to join? No, no, and we don't want to be on the board there either.

I'm with Bauerfeind. Galenica, when it comes to product and brands, you're opting for attractive margins. In how far parallel import versus security of supply are decisive for you? Now, when it comes to products and care, you mean products and brands? Well, we have our own products there, and in our sourcing strategy, of course, we have manufacturers from the EU in order to have a well-balanced mix. So that's a benign production environment for us. It doesn't have to do with our parallel imports. It's our own products that are being manufactured there. Am I misunderstanding your question? Would you please wait for the microphone so that everybody may hear you? Now, I mean the brands that you buy from companies. Do you intend to parallel import them to have a nicer margin and not use a Swiss manufacturer? And that opposed to security of supply that, of course, Swiss companies will be able to provide. Well, I would say we have a reasonable mix when it comes to negotiations. Quite obviously, we have strong Swiss partners that we've worked with for years and years, and we have mutual respect and cooperation. But of course, there is a limit to everything. And we're discussing what is there in the offer of our partners. And once in a while, we also have the direct imports. But still, we want to keep our partners in Switzerland and have good business with them. But again, at the end of the day, it's about a good deal. And there was a question in the front. AVT, if I'm not mistaken. Well, that's a political question, really, because we keep on having that discussion about the increase in health care costs. Will that slow down your growth in the long run? Or is the pharmacy a means to an end and could help drive down costs? Well, the cost poster will remain with us. The discussion will remain with us. It's been like that forever and it will remain. 11% of the GDP today is in health care. So whether that's a lot or whether that's a little, well, that's the discussion for society, really. How much are you willing to invest in healthcare? So 27% of GDP are invested in social affairs. So what you can reach with those 11%, if you have a look at that, that's an enormous societal success because we have a quality of life that is enormous. The average age in Switzerland is quite high, that you can reach is quite high. and how often people are available for the labor market and not ill. All of these are societal successes that are not talked about as much. So we have 400,000 staffs in healthcare. They're doing an excellent job every single day so that people in the country get healthy or are healthy. Now, when it comes to politicians, it's not always a fear that you'd view healthcare as a cost factor, but they fail to see that 400,000 people work there and usually not at a top salary with a lot of working hours and a lot of effort that they have to put in. So politicians should think about that. Now, the pressure We'll continue, as I said, but we're living with that. It's part of our business. Of course, that's a cost, pressure on the costs for drugs, what have you, that pressure will remain with us. Certain developments, quite a lot of drugs that have not been there in Switzerland for several reasons. but we have to deal with that. We are 9 million people in Switzerland and if prices develop where it's no longer possible profitable for large corporations, we'll have to see the effects of that. We have Swiss Medic, we have three languages, it's a small market for big pharma will have to remain attractive. so that they bring the products to Switzerland or else the patients in Switzerland will pay the price and that shouldn't happen. So we should have a balance between price pressure but also security of supply and the quality of life for the people of Switzerland. All right, are there any more questions in the room or else we'll switch over to the web screen. Let me repeat, click the three times, first live call, then request to speak and then join. And you may ask your question or you ask your question in writing on the chat. So my question to my colleagues in charge of the chat. Are there any questions from the chat or the webcast? We have quite a few questions from the chat, but none in the call. But let's wait for one minute, maybe. All right, let's start with the chat, possibly. Now, let's start with the chat. Jan Koch, Deutsche Bank. Now, it's about the diagnostics business. Can you give me the expected price reductions in that business and the quantifiable influence on prices? the income in 2026 and 2027. Question two, Bixel. are you expecting never take the results or effects on your home care business or are there competitors who offer pharmaceutical production and home care and third the GLPI one antagonist for 2025 what are your expectations for 2026 and one would expect the saturation of the market.

Well, Red Care, regarding the positive outlook on Red Care pharmacies, are you open to increase your shares?

Thank you for the questions.

Thank you for the questions. Now, as to the diagnostics business, price reductions expected, as you mentioned. In 2026, we have that revision taken, and the impact for Englandica will be a neutral one. That is also reflected in our guidance. Now, as to the future, the revision of the analysis is a project of the Federal Office of Public Health. We do not know about the result of the revision. We do not expect any changes for 2026, 2027, so this is also reflected in our guidance. Now, as to Bixil. Well, we do not see a negative impact. The synergies between home care and pharmaceutical production was zero. So these are two different business segments. We do not see an influence and no changes in the competitive situation. I'm sorry. I wanted to look in the camera, really. Well, PAT1 here, the growth drivers, we assume for 2026, GLP-1 will be growth factors drivers. And apart from that, I do not want to do any market prognosis when it comes to GLP-1 weight loss products. We assume that there is a similar growth dynamic in the coming years. That's to say growth rates of 3 to 5% in both segments. Innovation. The market is still on the get-go. There will be new products. There will be pills that can be swallowed. There will be generic medications. The situation will differ, and I agree with Julian, the market will not grow as quickly. And then the last question, Red Care, 10%, we said that the 10% we hold, a little more because there was a dilution regarding formation programs. We know it's a major element in the strategic partnership. However, we do not want to increase the 10% stake. We want to keep our 10%. There is another question, Florian. Yes, the next one is from UBS, Sebastian Vogel. There are three questions. The first one, the networking capital. And then the question whether the ambition for 2026 is a headwind or a tailwind. Another question refers to Bixell and EBIT Guidance 2026. The question is, why do you not include Bixell? Last year, the 6 million tailwind were included. And the third question refers to... the EBIT or the adjusted EBIT. And the question is, will it not even be more difficult to read the adjusted EBIT because other elements have also been included in it? Thank you for those questions. First, networking capital. We believe that over the last years, and we think that this is a very positive development, we had negotiations with the suppliers, on the suppliers' side, and agreed on better payment terms. Of course, we try to continue to negotiate well, but we think that this is a sustainable level that we've reached so far. To that degree, the networking capital will really be seen as a sustainable one going forward. When it comes to Bixel and the adjusted EBIT, that's a good point. And that was the core issue when we thought about the adjusted EBIT and when we revised the definitions. We want to have an adjusted EBIT that is testament to the operative performance of Galenica. And in the past, there were two elements that were a little a distortion. from the accountability point of view. And now the performance, the readability were a little reduced, as I've said. the changes of the values regarding the equity participation that does not really reflect the real situation. And then the amortization of labor team, which was a virtual one. It doesn't have anything to do with real value performance. And the third aspect refers to Bixell and the effects from the intention of the production side closure. In 2023, we had the situation with the Mediservice. That is to say, if you give up on business areas, that they were listed separately. We did not have that in Bixil because it's not as important. We do not have that in the annual report as a separate issue or item. We just want to have an increased readability regarding the operating losses and we just excluded them then. And the 6 million tailwind in 2025, you've mentioned them, from the competitive proceedings and it's really clear and we were very transparent here. One item. These expenses had been considered in the operating EBIT and listed separately, but we will not start to go into every one-off item one by one and separately mention them. We have a clear separation, the adjusted EBIT, with the five elements that are adjusted accordingly. There will be one-offs apart from that, but we will separately mention them, and they are included in the adjusted EBIT. Still, we think it's important to have a clear, strong definition of the adjusted EBIT. Thank you. Are there any questions? Maybe an oral question?

Well, Sebastian Vogel has a follow-up question. In terms of the year 2026 and the demands and how the year has started in terms of demand, I'm not sure I understood you acoustically, the demands. Well, in 2026, we had a lower flu season than on the previous year. So if you have a look at the graphs, you will see that quite clearly. And of course, we sensed that too in terms of the frequency of flu and colds. and essentially the sales of the products that are related to it now. As I said before, when it comes to sales and income, we're not that dependent on seasonal fluctuation, but as I said, the flu wave or the flu season was lower than on the previous year. Any more questions? Next three questions from Dimitri Osokhin. and question number one the diagnostics business the net sales of 40.7 million is that in line with the total sales or is it September to December 2025 only then the AI strategy When and where will AI be implemented specifically and the Vufora or Project Enzyme brands? How did Vufora do as opposed to the market? What are the elements of that growth? I didn't get the section question. Are you talking about AI? The artificial intelligence, is that what you're talking about? So when and where will you specifically implement AI in the Galenica group? Now, first there's diagnostics and net sales. Yeah, the 40.7 million are in line with the sales of Labortin since being acquired. That's September through end of December. So it's just for data sales. And I've mentioned it before and now in logistics, in the warehouse forecasting, capacity planning, that's where we have AI pilots and marketing, of course. So all the logical branches of way to use AI, talking to customers and they were smaller. as I said before, so this is a learning curve. We intend to build know-how, we have great people on board, and we have a clear-cut guidance, guidelines that we've defined on how to deal with AI. There is ongoing training for our staffers on that topic, so that AI becomes a part of the regular business, regular processes of digitization. but we do not want to do things for their own sake without creating added value. So we'll have pilots working according to the principle, a pilot will see whether it's worthwhile and then take a decision. And now on products and brands and its development, now... We detailed that in January. We published that. Now the development was more or less in line with the market. So we saw growth given a new distribution agreements with Cuba. And now the detailed publication of price and volume growth is something that we haven't published and that we're not publishing, but we've used all the synergy effects that we can. All right, is there a question on the call? Yes, we have a question by Adrian Hopf. No, Farmas has said that closing down PIXL is a security policy risk. How would Ryskalinka respond? Would Galenica offer to stakeholders to take over the production site of Bexel? Would they offer that to the stakeholders? Now, I've answered the first question, but I'm happy to repeat that. No, we don't see that as an issue for security of supply or a security policy topic, because we've carried out the conversation, so there are other opinions on that. and as i said this is a a consultation uh a process a standard process so you announce what you are going to do and then there is the phase where negotiations are ongoing negotiations with other partners could be part of that uh And that's the phase that we're in right now. And that will be completed in the coming days. But I cannot give you any idea about the outcome of that. All right. Thank you for those questions on VIXO. Are there any other questions? Right now, there are no other questions on the call. So I'd open up... the mics in the room if there are any further questions but that does not seem to be the case so then let's complete the let's conclude the q a and thanks a lot for the for your questions your interesting question and uh Julian, you have the floor for concluding remarks. Thank you very much for coming here. Thank you very much on the webcast. And thank you for your questions. We'd now like to say goodbye. Now the participants here in Zurich, we would invite you to have lunch with us. Thank you.