Galenica AG (GALE) Earnings Call Transcript & Summary

Dear ladies and gentlemen, this is your conference call operator. Welcome to Galenica's 2021 Half-Year Financial Results Conference Call. [Operator Instructions] You'll find the dial-in details in the press release or on the website, www.galenica.com, under Investors, conference call and webcast. [Operator Instructions] Your presenters today are Marc Werner, CEO of Galenica; and Felix Burkhard, CFO of Galenica. I now hand over to Felix Burkhard.

Ladies and gentlemen, good afternoon. I cordially welcome you to the telephone conference of Galenica's Half-Year Results 2021. In the first part, we will present you the highlights and the key figures. After that, we will be happy to answer your questions. By we, I mean our CEO, Marc Werner; and myself, Felix Burkhard, CFO. With that, I hand over to Marc.

Thank you, Felix. Ladies and gentlemen, dear analysts, during the first half-year 2021, our net sales raised by 9% and the EBIT by 21.3%. That's strong growth, despite the fact that the first quarter, in particular, was negatively impacted by the various effects of the COVID-19 pandemic. Business picked up considerably in April. The following 3 main factors contributed to the successful performance in the first half-year: first, our offers to combat COVID-19; second, strong expansion; and third, gains of market share. Let's start with COVID-19. How did Galenica help combat the coronavirus pandemic? Our logistics companies, for example, are supporting the vaccine logistics in various cantons. And when the Federal Council made the extremely sudden announcement of COVID-19 self-test distribution, we promptly put a separate inventory and sales logistics in place. 4 million self-tests were then delivered to pharmacies in the first 4 weeks alone. And the pharmacies themselves had already begun offering COVID-19 antigen and PCR tests in late 2020. In 2021, we then added self-test distribution and vaccination administration to our portfolio. Pharmacy staff received special timing for this, and the pharmacy premises were adapted. However, the varying requirements, approvals and processes of the cantons have created a lot of additional organizational work for us. And yet, by the end of June, our pharmacies had already performed 80,000 tests and administered nearly 40,000 vaccinations. The COVID-19 offerings and services show that our strategic programs are starting to be upfront.Thanks to the good and the disciplinary cooperation, we have been able to link the offerings of the online and online world very quickly. For instance, with online registration forms for COVID-19 tests and vaccination appointments and subscriptions for COVID-19 self-tests. All these activities have further strengthened the pharmacies as first point-of-contact for health care issues. A further contribution in digital field has been made by HCI Solutions. The Federal Office of Public Health has approved Documedis as a reporting solution for coronavirus tests and vaccinations. HCI Solutions has programmed corresponding interfaces for the software connection. Pharmacies and medical practices can record patient data for vaccinations and tests in a simply digital manner, print out confirmations and transmit the data at the touch of a button to the relevant authorities. We also grew, thanks to strong expansion activities, especially in the B2B market. In 2020, Verfora included new partnerships and products to its portfolio as Thermacare from Angelini Pharma or the OmniBiotic from Allergosan. Furthermore, we integrated the Hedoga Group with its attractive and complementary product portfolio. All these new products have performed well and showed up in the results for the first time in the first half of 2021. Added to this are the range of therapeutic products from Dr. Wild, which was acquired in May this year, as well as the integration of Spagyros, which will follow in September. These activities allow us to expand our offering for the specialist trade, and consequently, also to strengthen our position as an attractive partner for pharmacies and drug stores. The online business, too, has continued to grow. And consequently, invested in the infrastructure to be able to deliver the increasing orders in due time. Including COVID-19 self-test subscriptions, sales of Amavita and Sun Store mail-order pharmacies doubled in the first 6 months of 2021. Even without COVID-19-related products, they still rose by more than 30%. In consequence, many more orders were shipped. To enhance customer experience also in the online business, we have invested in additional new logistic capacities. Thanks to this new infrastructure, we are now able to deliver around 30,000 articles within 24 hours. And finally, as I've mentioned in the beginning, we have also grown off our own drive. Galexis gained further market share in the physicians segment, and Mediservice achieved strong growth with new drugs for rare diseases. The growth potential in the home care market is also reflected in the increasing demand for home care services in the field of clinical nutrition and infusion therapies. In order to meet future demand, Bichsel increased its capacities with the addition of a new, more modern filling plant for solution in bottles. Before we get to the outlook, let's take a look at some important business that is currently on the political agenda. The service-based remuneration V called LOA V, the National Council has approved the motion entitled evaluation of compensation for services provided for pharmacies, which will now be addressed by the Social Security and Health Committee of the Council of States at the end of August. The motion is increasing the pressure on the Federal Council to approve the adjustment of distribution margin and the tariff agreement of the service-based remuneration V at the same time. The tariff partners wished service-based remuneration V to enter into force as of July 2022. However, we assume that January 2023 is more realistic. Reference price system for generics. As part of the measures to reduce health care costs, the Federal Council has proposed the introduction of the reference price system for generics. The National Council has rejected the introduction of reference prices. The Social Security and Health Committee of the Council of States will address this dossier also at the end of August. It is to be assumed that the articles of law proposed by the Federal Council, but rejected by the National Council will be recommended anew by the Social Security and Health Committee of the Council of States. It remains open as to whether they will gain majority on the committee. And finally, direct imports. Also as part of the cost-reducing packages, the National Council has decided to introduce so-called parallel imports for generics. However, these do not actually confirm parallel imports, which are already possible. The idea is for it to be possible for all medicines to be imported directly without inspection and approval by Swissmedic. The danger with this proposal is that medicines would then be approved for sale in Switzerland without national approval. National battery costs would no longer be possible, and overall patient safety would decline. The National Council has approved correspondent solution. And the Social Security and Health Community of the Council of States will debate it at the end of August. Both the Federal Department of Home Affairs and Swissmedic clinically reject the import. The federations are also in favor of the Council of States rejecting the solution. Let's come back to the Galenica story. Many new initiatives such as the offerings to combat coronavirus pandemic arose from our strategic programs. They are instruments to implement our strategy in a focused manner, and thus, to further develop Galenica and our customer promise. That means, supporting people even better at every stage of life on their journey towards health and well-being. We are on course, and we will continue to work consistently on the implementation of our strategy. For example, new partnerships like the one with onlinedoctor.ch. Our pharmacies offer people with skin problems an expert initial consultation and treatment with onlinedoctor.ch. In more complex cases, they can move the professional support of onlinedoctor.ch on-site, and the patient gets directly an additional diagnosis from a specialist. Furthermore, online doctor can also immediately issue any prescription for medicines. The pilot project is being rolled out at 110 Amavita pharmacies throughout Switzerland in the second half of 2021. Comprehensive health advice on-site at the pharmacy is also offered by the ApoDoc Pharmacy in Zürich. Since July, ApoDoc is part of our network. ApoDoc has its own medical basket on its premises and is considered a pioneer in integrated patient care. A certain example of how pharmacies are moving towards integrated care and comprehensive health advice. These are examples for new offers in favor of our patients and end consumers. The recent acquisition of Lifestage Solutions is a strategic initiative with focus on the professional, meaning an enlarged offer for the B2B market. Lifestage develops and operates a fully integrated digital trading platform for home care organizations and care homes, which simplifies every day processes for its customers through digitalization and state-of-the-art technology. Lifestage perfectly complements our offering. We will add our existing range of products and services platform. In this way, we can offer attractive added value for home care organizations and care homes, and in the end, of the patients, too. With our digital developments, we also create -- added value for both professionals and patients by making processes simpler, faster, and especially, safer. I will give you 2 examples. The electronic transmission of medical prescriptions has been permitted in Switzerland since last year. However, prescriptions continue to be written out by hand or printed on paper and signed with a legally valid signature. Together with Medi24, Switzerland's leading telemedicine provider, HCI Solutions launched the e-prescription pilot project with the goal of a reliable and secure electronic transmission of prescriptions. The Medi24 team issues an electronic prescription, and the patient selects his or her pharmacy, which then receives encrypted e-prescription. Amavita, Sun Store, Coop Vitality and the specialty pharmacy, Mediservice, are currently participating in this pilot project. The e-prescription is an important driver for the mail-order pharmacy because it enables the entire procedure to take place digitally. Furthermore, it marks a major step-forward in terms of patient safety. Another example of how we contribute to patient safety and support digitization in health care is the clinical decision system for medical communities. The Cantonal Hospital of Lucerne systematically make use of this for dispensing all medicines. Whenever a medicine is dispensed, the system shows how significant it is to the patient and his entire medication. The effect of alternative medicines can be simulated in the event of serious problems. This just not only enhances patient safety and treatment quality but also facilitates a time saving for both, the medical professionals and the patients. Information does not need to be requested and entered again in the system. All data are available digitally to all parties involved in the treatment. At the Cantonal Hospital of Lucerne, around 1 million CDS checks and 6,000 medication plans are issued each month when patients are discharged or transferred to other wards. When leaving the hospital, the patient knows that all providers of follow-up treatment will also have identical and complete data, which likewise represents an efficiency gain for all parties involved. The priority in the next few months is to integrate the newly acquired companies, products and services fast and in such a way that they are able to quickly develop a full potential. The gradual linking of the online and offline realms continues; further development of our e-shops; the ongoing extension of digital functions, operations such as with onlinedoctor.ch; and projects such as the e-prescription are all initiatives, which we aim to drive forward and support the digitalization of Galenica and the health care sector of Switzerland. On top of this, we are investing in transformation of the Galenica Group itself. This does not only includes new technologies and concepts intended to offer more added value to customers and partners. But in the current phase, particularly also new forms of collaboration between or all involved in this. It is also leaving its mark on the culture and working practices of Galenica. I am impressed by the progress that we have made in the last few months. Time and resources are still required before we are able to reveal specific implementations, but I'm already looking forward to this today. Thank you, ladies and gentlemen. With that, I hand over to Felix.

Thank you, Marc. We almost achieved double-digit growth in the first half of 2021, 9.9%, an extraordinary growth. For once, we were not only negatively impacted by COVID-19, 4.2% of our growth, in absolute numbers, CHF 70 million, was realized with measures to combat the corona pandemic. Testing, vaccination, but especially, the distribution of COVID-19 self-tests to the population. But even without these largely one-off additional sales, growth was very high at 5.7%, especially when we take into account that we lost an estimated 1.8% due to the lack of flu and cold early this year. Especially in the Products & Care segment, the former Health & Beauty segment, growth was exceptionally high at 13.6%. But also the Logistics & IT segment, the former Services segment, grew at an above-average rate of 7.4%. Before I dive into the various business areas that realized this growth, I would like to briefly explain the new reporting structure. In the 2 operating segments, Products & Care and Logistics & IT, we report sales according to customer focus. In Products & Care, we distinguish between retail, with the business-to-customer business; and professionals, including the business-to-business, business. For both segments, we further improved transparency by disclosing additional sales details. Let's start with the retail business area. The retail business area achieved a very strong sales growth of 14.4%. In particular, the pharmacies at home sector grew exceptionally by 30.9%. This sector includes all business-to-customer formats that deliver or bring products and services to customers' and patients' homes, mail-order pharmacies, web shops and home care services. Within the local pharmacies sector, meaning the stationary business, sales increase was also high at 9.6%. The expansion effect of 2.9% results from the acquisitions in the course of the 2020 financial year. In the first half of 2021, the consolidated pharmacy network of Amavita and Sun Store remained stable with 1 acquisition and 1 restructuring. Including Coop Vitality, the pharmacy network was expanded net by 1 location. We acquired the expansion activity compared to the extraordinarily dynamic years 2019 and 2020. Comparable organic growth was 6.7%. This positive growth could only be achieved, thanks to the COVID-19 initiatives. Adjusted for these largely one-off additional sales, comparable local pharmacy sales declined slightly by 0.8% compared to the previous year due to the absence of the seasonal flu with an estimated impact of minus 1.4%. In addition, sales in our pharmacies at high-frequency locations continued to be significantly below pre-corona levels in the 2019 financial year. Adjusted for the largely one-off additional turnover from COVID-19 initiatives, sales of these pharmacies in the first half of the year were still around 30% below the comparable pre-pandemic figures. Nevertheless, the monthly difference narrowed from around minus 35% in January to around minus 25% in June. The locations are recovering, but only very slowly. The nonstationary business-to-customer business, the pharmacies at home sector achieved an excellent growth of 30.9%. This increase resulted, in particular, from the specialty pharmacy business of Mediservice, which achieved additional sales of around CHF 44 million with new therapies for rare diseases. This development accounts for 26.5% of the total sector's growth. Experience shows that sales in these very expensive special medicines are very volatile, which is why we expect lower growth rates in the second half of the year. In addition, margins as a percentage of sales are very low in this area. The online sales of Amavita and Sun Store doubled in the first half of the year to over CHF 10 million. This includes COVID-19 self-test sales of around CHF 3.5 million, which were sold on a subscription basis, thanks to the new mail-order pharmacy. Bichsel's home care business also grew encouragingly by 3.6%. The business-to-business, business in the Products & Care segment, the professionals business area, achieved growth of 5.4%. In the services for professionals sector, we had to accept a slight decline in sales of 1.5%. Sales decline at Winconcept and the lack of extraordinary COVID-19-related production at Bichsel compared to the previous year could only be partially offset by the high sales growth of 7% at Medifilm. In the second half of the year, this sector will develop faster, thanks to the acquisition of Lifestage Solutions. Due to Verfora product portfolio, the Products & Brands sector was particularly hard hit by the lack of flu season last winter. Nevertheless, a pleasing growth of 9.1% was realized, thanks to the expansion of the product portfolio with acquisitions and new distribution agreements. The expansion effect of the new products integrated into Verfora in mid-2020, such as Carmol, Osanit, Vita-Merfen will be missing in the second half of the year, whereas sales of the newly acquired products from Dr. Wild, and starting September, the products of Spagyros will be added. Excluding expansion, sales were down sharply, minus 22.9%. In the Swiss market, the comparable products without expansion lost 16.1% in sales. Comparable market sales at street prices of Verfora products in pharmacies and drug stores declined less sharply at 4.2%. Due to the corona pandemic, the specialized trade, obviously, still had full stocks. In comparison, the consumer health care market in Switzerland lost 3.7%. These figures are adjusted for COVID-19 self-test sales, which otherwise distorts the market comparison. The OTC category lost 6.3% with subcategories such as cough, cold or sore throat down over 30% due to the absence of flu. The Logistics & IT segment grew by a pleasing 7.4%. The logistics & IT services sector grew by 4.4%. Alloga, HCI Solutions and internal IT services contributed to this growth. In Wholesale, we were able to grow with all customer segments. The strongest growth was with physicians with an increase of 10.5%. We gained market share, particularly with specialist doctors. Sales to pharmacies grew strongly by 6.9%, in particular, thanks to the sale of COVID-19 self-tests. Without these largely one-off additional sales, the pharmacy channel would have grown only slightly with sales up 0.6%. The lack of flu epidemic had a negative impact on the wholesale development as well. The lack of flu epidemic has also left its mark on the development of the pharmaceutical market. In terms of volume, that means the number of packages sold, on the right side of the slide, the entire market lost 7.5%. This can clearly be attributed to the strong decline in relatively low-priced OTC medicines due to the lack of flu epidemic. This was particularly pronounced in the drug store channel with minus 70 point -- 17.1%, but also in the stationary pharmacies with minus 8.5%. In value, on the left side of the slide, growth of 3.4% was achieved due to increased sales of high-priced drugs. With 18.9%, the mail-order pharmacy channel grew the most, driven by the extraordinarily high sales growth at Mediservice. With the strong growth in sales combined with cost containment, we were able to realize an even stronger EBIT growth of 21.3%. Accordingly, the consolidated EBIT margin increased in both the whole group and both segments. The COVID-19 initiatives had a significant impact on the EBIT growth with an estimated CHF 20 million. Without these largely one-off additional results, the operating result of the group and both segments would have remained roughly at previous year's level. Considering the lack of a flu epidemic at the beginning of the year, with an estimated consolidated negative EBIT impact of around CHF 10 million, this is a very pleasing result. Thanks to stable financial and tax results, the comparable adjusted net profit developed similarly to EBIT and increased by 20.6% to CHF 82.5 million. The picture is the same for the adjusted operating cash flow before changes in working capital, with an increase of CHF 19.6 million or a plus of 20.8%. As the level of net working capital has not changed compared to the end of 2020, the operating cash flow has risen sharply by CHF 73.3 million to CHF 113.8 million compared to the same period of the previous year. In the end, even after M&A investments of CHF 38.4 million, a strong free cash flow of CHF 55.9 million remains. Thanks to the strong cash flow, adjusted net debt was reduced by CHF 11 million to CHF 395 million despite dividend payments of CHF 89 million in May. Debt coverage was reduced from 1.9 to 1.6x EBITDA. Thanks to the good result, equity was also referred to strength. The good results in the first half of the year allow us to raise the outlook for the full year 2021 once again. We now expect sales growth between 5% and 8% and adjusted EBIT growth between 10% and 14%. This updated guidance is based on a cautious assessment of the uncertain developments related to the corona pandemic. On the one hand, we assume that there will be no new severe official measures to further restrict mobility. On the other hand, we expect that sales in pharmacies at high-frequency locations will continue to recover only slowly and will still be significantly below the pre-pandemic level at the end of the year. Regarding colds and flu rates, there are different scenarios from experts. Some expect a sharp increase, others predict continued low levels. We assume that due to ongoing hygiene and protective measures, cold and flu incidents will remain at a relatively low level next winter. This concludes my comments on the half-year results. Thank you for your attention. Now we're happy to answer your questions.

[Operator Instructions] We have the first question coming from Jan Koch, Deutsche Bank.

I've got three, please. Firstly, coming back to your -- to the antigen tests, how many self-tests do you currently distribute through your stationary pharmacies? And how many via mail? The split would be interesting. And you mentioned in your press release that you witnessed declining demand for these tests from May onwards. Did that also affect those delivered by mail? And in relation to this question, how much positive contributions from COVID in the second half of 2021 actually baked into year-on-year guidance? And finally, the Lifestage platform looks like a good fit to your home care offering. Could you elaborate on the margin profile of this business and speak a bit about the revenue synergies you expect from the acquisition?

Thank you for these questions. I have some additional information regarding the distribution of self-tests. First of all, we disclosed the sales in the first half with the COVID initiatives. More or less, something more than 90% of these sales come from the distribution of the COVID self-tests. That's the first additional information. The other regarding split between stationary pharmacy and online pharmacy. We did CHF 3.5 million sales via subscription in our Amavita and Sun Store mail-order pharmacy with self-tests. Perhaps and after the additional information, with regards to the seasonality, let's say, of these self-tests, of the whole sales we did on the consolidated level with these self-tests, more than 60% was already down realized in April. So it was really a huge peak in April and then the sharp decline. And now we, clearly, continue to sell these self-tests, but at a really much lower level than in the first half of the year-end. This low level, we believe, it will continue to decline, but we will still sell these self-tests also in the second half of the year, but as I mentioned, on the -- on a much lower level, and this is integrated in the guidance. And the next question was with regards to the outlook for the latest acquisition of Lifestage Solutions. There, we mentioned in the press release that last year, Lifestage Solutions realized sales of around CHF 9.4 million. It's a young company, founded some years ago. And it's clear we expect important growth over the next year. So it's clear we count this as a double-digit growth of this new acquisition over the next year. And even if short term, we can't expect any important EBIT contribution of this new acquisition. But midterm, we expect that Lifestage Solutions and all the synergy -- positive synergy effects should strengthen our EBIT margin in the Products & Care business sector. I hope that answers your question.

Second question coming from Gian-Marco Werro, Zürcher.

First of all, my highest respect for this impressive work of all your employees, and also of clinical and fight during this pandemic. Really amazing work. I have two questions, if I may. The first one is in relation to the governmental price reduction. If I remember correctly, earlier, you mentioned that this year, we might see something in the similar range affecting your total revenues as last year, so something around 3%. Now I see in the first half of this year, we only saw a negative impact of around 1.2%. Is there some more to come in the second half of this year? Or is that somehow the impact that we should expect also for the full year? And then another question is also in relation to your outlook and your targets. You also mentioned that you want to further expand also your business with doctor field services with Verfora. Can you maybe elaborate a bit more about where it stands there? And what are your next steps, please?

Thank you, Gian-Marco, for this question. First, regarding the price reductions -- the official price reductions on medications. You'll find details on the investor presentation on Page 44. And we already announced with the results 2020 that the Federal Office of Public Health had some delay in implementing the price reductions end of 2020 -- in December 2020. By the end of last year, only about 55% of the planned price reductions were realized, and it was announced that the remaining 45% will follow the beginning of this year. And it's obvious that the lower impact of these price reductions on our sales is due to this delay of the price reductions. Unfortunately, we have no new more actualized information from the government where they are with these price reductions. But we assume that they are doing now step-by-step, these outstanding price reductions. So we expect a slightly higher impact of price reductions in the second half than in the first half. Then the field -- the question regarding the physicians field force. There, we acquired a small field force with the acquisition of the products of Dr. Wild. And it's clear that we started to use this field force also for our other products, it's the first synergy of this acquisition. And depending on the development, we also plan to expand this field force in the future. And this would also bring additional sales for some of the products in our portfolio.

Next question coming from Maja Pataki, Kepler.

You have given us a short overview on where we are on the regulatory discussions. And with regards to low-earned distribution margin, we're not that far away from an implementation, obviously. So could you share with us what are your initial thoughts on the impact of your businesses from some of the changes being proposed?

Thank you, Maja, for this question. So if the proposal -- the common proposal from curafutura and pharmaSuisse would pass somewhere in the future, we estimate that for, let's say, an average pharmacy, that means for our, let's say, stationary pharmacy business, this should be more or less neutral to our earnings. We will lose some margin on the product. And this loss should be compensated with additional tariffs with the new service-based remuneration contract, LOA V. We will face some challenges for Mediservice as all other mail-order pharmacies in the market in the past, and then, still today, they don't charge the service fees to the health insurers. And with the new model, it's clear they would only lose the distribution margin on their product and wouldn't be compensated with higher LOA fees. And there, we are preparing an adapted business model for the case if this new remuneration model would pass because it's clear that the current business model would be sustainable. But we are already in -- also in discussion with health insurers that we would then adapt our business model in order to avoid losses with Mediservice.

And can you maybe share with us how is the reactions from the health insurer side? Is there a lot of pushback? Or is there a lot of understanding that you need to change the pricing just to kind of get a feeling of what we should expect going forward?

No, we are in discussion. It's too early to give you a clear answer in this regard. We don't see any reason for health insurers to try to punish here mail-order pharmacies because it still makes sense also from a health insurers' point of view to support the mail-order pharmacy model. So we are optimistic that we will find good solution.

Your next question, Daniel Jelovcan, Mirabaud.

Just on the next year '22, I'm, of course, aware that you don't have a guidance out, but I got some questions from investors as well here. What can happen? I mean you have the high base this year, and you have provided this insight about positive and negative COVID factors and lack of flu and travel medicine. So is it fair to assume that next year maybe you will still have this lack of flu season because flu is over maybe because people are -- will have another vaccination round? And the other thing is, do you -- will you have more vaccination next year? Because the big test centers are probably reducing their efforts as it is the case right now. And then you will have a shift maybe selling less self-tests, but many more vaccination tests, sorry for a bit complicated question, but I think you know what I want to get.

Thank you for this question, even if it's really a difficult -- very difficult question to answer right now. First of all, if you remember what we published in -- at the beginning of the year, we said that last year, we had a negative EBIT impact of CHF 8 million to CHF 10 million, mainly in the second half of the year because of COVID-19, mainly because of the missing flu and cold seasons in second half of 2020 and the lower footfall in our high-frequency locations. Now in the first half of this year, we haven't recovered from this situation. In contrary, we have another, let's say, about CHF 10 million negative impact of COVID-19. So let's estimate on an yearly basis, it's around CHF 20 million negative impact we have in our base results on an yearly basis of COVID-19. And on the other hand, we have the positive impact of these COVID initiatives, mainly thanks to the distribution of the COVID self-tests. Now it's clear we can assume that beginning next year, we will start, it's clear, on a lower level, then. We can't expect again this CHF 20 million one-off additional EBIT contribution with distribution of self-tests. It's clear, perhaps depending on the evolution, we will do more vaccinations. We will perhaps do other testings. We don't know, and this can also influence then the result of next year. And with regards to the flu season, there is really a crystal ball, we don't know. There are really experts, they predict a very strong flu season. And others say, no, no, it will remain at a low level. And we are cautious in our outlook and expect a low level. But -- and it's clear, there is an upside that potentially if flu season would be tougher than expected from our side. Have I answered your question, more or less?

Yes. Just a follow-up. Just to be very sure, you said 90% of your COVID-19 initiatives were self-tests. So of the CHF 70 million extra sales, it's CHF 63 million. So it's only CHF 7 million with vaccination. Is that correct? Or did I understood it the wrong way?

Then, it's a -- yes, it's right. It's vaccination, but vaccination is smallest part because there, we have only a fee for services -- between CHF 24 and CHF 25 per vaccination. And then the other contributor are the antigen tests and the PCR tests in our 86 pharmacies who offer testing. And all together, it's in the range you said, like it's consolidated figures. So the self-test is clear. They were sold through Galexis. So through our wholesales to the whole market as a wholesale sales. And then it's clear, they were sold in our pharmacies to the public. So the CHF 70 million is consolidated figure on the group level.

It seems that there are no more questions. [Operator Instructions] And there we are, we have a next question coming from Virendra Chauhan, AlphaValue.

Marc, and the Galenica team, Felix, I have one question around your outlook. And so the growth and margin outlook does come across as conservative even after we factor in that you're already guiding for the current updated outlook, expecting a weak flu season. So -- and hence, we might have some kind of an upside to that in case the flu season does recover in the next 6 months, especially in the last quarter. Now the question is that this guidance does imply a very -- either a flattish or soft H2 '21 if we -- even after we exclude the H1 tailwinds of COVID-19, which I, from the presentation, gathered was around CHF 10 million positive impact overall. Now could you just explain why this is something that you are kind of expecting? Because this does seem to be a bit counterintuitive to the historical seasonality in the business. So that's -- it's from my side.

I'm not sure if I really understood all parts of your question, but I'll try to answer. Then if I answer in the wrong way, please give me a feedback. So first of all, you're right, it's clear. Our assumption as a basis for our guidance is again, a low level of flu and cold incidents in the next winter. As I mentioned, we have no idea if this is the right assumption or not. We just took a cautious assumption in this regard. And you're right, we should have an upside potential, as I mentioned, for this -- end of this year if the flu season would be harder than expected. So there, we fully agree with you. Otherwise, if we look -- if you look at the guidance and you look what we have realized in the first half, then it's clear if we compare the second half of this year with the guidance and we compare it with the second half of last year, I would say it's a similar basis. It's a normal growth compared to the second half of last year what we expect. And I think that's a -- it's a realistic cautious outlook because last year, we had also the impact of COVID, wasn't as hotter in summer and autumn than this year. And that this year, we didn't have any flu and cold season. That's what we also expect for this year. So we really think it's a comparable basis, the second half of last year, but it's clear we expect a normal growth compared to last year. That is more or less the basis -- the basic assumption for our guidance for the full year 2020. Did I answer your question or not really?

Yes, that was helpful. And -- so the second question was on the margin driver in the first half. Now even if I like exclude the CHF 21 million -- or rather CHF 10 million impact -- positive impact on EBIT from the COVID-19 impact, now the margin does come across as a bit stronger than what was historically the case. So is there anything at play here other than just volume or leverage -- operational leverage that you're seeing? Are there any other factors?

So it's clear, first of all, as I mentioned, the beginning of the year when we saw that you will start very difficult, it's clear that we took measures on the cost side. As I mentioned in my presentation, cost containment was really very important mainly in the first quarter of this year, and this helped us to support the EBIT margin in the first half of the -- then on top of that, it's a mix -- a question of mix. We had a strong growth in the Products & Care segment with a higher EBIT margin than Logistics & IT with a lower EBIT margin. These were the 2 main reasons for the stronger margin in the base business, let's call it like that.

Okay. So -- and just one final question on the cost. So the cost savings that you've seen in H1, are these kind of sustainable? And should we be looking at them as sustainable from a modeling perspective?

We just adapted the cost level as good as possible to the lower sales, to the lower footfall we had in the first months of the year. But it's clear if sales goes up again, we need staff, we need to finance the growth. So I wouldn't calculate really with -- for the future with a sustainable lower cost basis. It's -- on the other hand, we have always delays in adapting the cost level. If you grow, your cost grows slower, but if you lose sales, you are only able to reduce costs with some delay. So I think that's normal in every business.

Next question coming from Gian-Marco Werro, Zürcher.

Just a follow-up from my side. Coming back again to your, I think, really interesting acquisition, Lifestage. There, you also mentioned that you see a meaningful synergy potential by also distributing medicaments or medicines. I think that's an enormous potential as a lot of those people working in this sector need to distribute and also directly dispense to the people that they are caring about. So do I understand correctly that before you now took over this Lifestage platform, Lifestage did not really distribute medicine? And maybe what was the reason why they didn't? And is it now really easy for you as you have, for example, now all the regulatory requirements in place to just use this platform? And then start distributing all the medicine over this platform via the care workers.

Lifestage Solutions had already, let's say, agreements with other pharmacies to support their customers. And they will -- now, we take over. We integrate step-by-step; and step-by-step, we will try to integrate our pharmacies in this support from Lifestage to their customers. So step-by-step, we believe there should be a material potential for additional sales for our pharmacies and also for our mail-order pharmacies to the patients of these Swiss tech organizations and homes from Lifestage. As well as, as Marc mentioned, other synergies, we have other services, home care services from Bichsel. We are also able to offer over this strong platform from Lifestage Solutions. And we should also be there -- should be possible to extend our customer basis for these services.

[Operator Instructions] Seems not to be so. So let me hand back to Felix Burkhard.

Before we close our call, I would like to draw your attention to our next event. We will organize an Investor Day for you on 14th of October. Based on the current situation, we are planning to hold the event live. That means to invite our guests on site. We will take all necessary measures regarding COVID-19. The 2021 Investor Day will be held in Interlaken with presentations of current strategic projects, a guided tour of the big laboratories, and of course, the opportunity to meet the management on site. We will also offer the possibility to follow the presentation part virtually. Invitation and registration for the event will be sent out in the second half of August. For organizational reasons, we would be grateful if you could then reply as soon as possible. We look forward to welcoming you soon in Interlaken. If we were not able to answer your questions during the call or if you have further questions, please contact us via e-mail at [email protected]. We thank you all for your active participation and your interest in Galenica. Goodbye, and have a good afternoon.