Galenica AG (GALE) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you so much for having come to Landesmuseum of Zurich. We are so happy to welcome all of you here. Welcome to the Media and Analyst Conference of the Galenica Group. Thank you for taking the time to join us here or via call in to take a look at the past here with us. Joining me on stage for the first time is today Julian Fiessinger. I don't think I need to introduce him much. Many of you will know him from his previous year as Head of Investor Relations. As of the 1st of January, Julian is at my side, and I'm so grateful for that. And I'm really happy to be able to lead you through the conference with you for the first time. Julian?

Thank you, Marc, and welcome from me, too.

This year, for the media analyst conference, we have come up with a new format. We will have a discussion around about the financial statements, the main drivers of the financial statements and subsequent to this, you will have the opportunity to ask your questions. And for the participants here, the entire Board will also be available for discussions at the lunch that follows. Our Head of Corporate Communications, Iris Muller, will be taking part for the first time and will be leading the discussion. So thank you for that.

Thank you, Julian. Thank you, Marc. I would also like to give you a warm welcome to our guests here in Zurich and to everyone participating by phone. We will have a guided discussion for about some 20 minutes time, and then we will open the discussion and opportunity to ask questions from your side. Question to you, something is new than different from the former media and analyst conference, you stand personally for development. What are the most important developments for Galenica 2024?

Well, basically, we can say it was a great and eventual year, and it was a successful year. Internally, too, we have changed the few things. We have switched a little bit on the management Board. There are new colleagues that were welcomed. There are some colleagues also in the back of the room, we have some new faces in our management board, and there are some wonderful business developments that we've seen also in the area of home care. We have seen some organic growth also, which is really important for our business as a whole. And what we can also see, we have really consistently pursued the expansion of market share. The health care business has really grown in Switzerland. We have worked together with our partners, with our network, and I am really very proud of that every time that we managed to do so. And this is certainly also an analyst conference. Last, but not least, we are successful in what we're doing. Also financially speaking, we will see that also in the financial figures, and Julian will go into more details.

Now before we go into the details and figures, Julian, what about you from the financial perspective, what was in the forefront last year?

From a purely financial point of view, 2024 was a year of consolidation. There were no significant transactions and we had a clear focus on our core business. We were able to achieve strong organic growth in all areas and continue to gain market share. In addition, in the second half of the year, we focused on efficiency issues, in particular, in the area of personnel costs. And as a result, we have very clear figures. We continue to have a strong balance sheet, good profitability and cash flow.

Continuity is really important from a financial point of view. Marc, what about you? What were the topics where Galenica was focusing on last year?

Well, there are 3 items that are really important: Consultation plus has been established in the pharmacies. That is part of our advice offer. And then the home care business, we have also really set the path for it, so that we can be even better placed on the market. And the digitization, in particular, when it comes to the [indiscernible] area, and we will certainly come back to that tomorrow.

Now as to the market environment, Julian, the pharmaceutical market has seen a growth rate of 3.5% last year. What about the main drivers for that?

Well, yes, in 2024, we saw lower market growth than in previous years. It's a combination of different drivers or factors. On the one hand, the new innovations and the GLP-1 products, for instance, against obesity and diabetes have been strong drivers for growth via the doctor's channels, but also via the pharmacies, plus we had an extra sales day due to that leap year, that was also an additional driver. And then there were 3 factors that had a dampening effect increase in generic substitution with that promotion as of the 1st of January 2024, then we had a weak flu season at the end of the year. And thirdly, the price reduction round was particularly effective. So the high turnover medications were included in the review, especially in the field of oncology. And there was also the currency effect of the strong Swiss franc, which meant pressure on the market. So there were great many differences of dynamics resulting in moderate growth of 3.5% in the pharmaceutical markets by -- we had a 1.1% of the CHC, the consumer health care market. The OTC segment grew by 2.2% and while the non-medication segment declined by 0.8%.

Well, sales of Galenica were -- have seen a good growth, given the market environment. We have published the figures in January. But what about the individual segments?

With a sales growth of 4.7%, we have significantly outperformed the market. It is also positive that those segments contributed to this growth. On the one hand, logistics and IT was 5.3% and Products and Care segments have also seen a growth rate of 4.4%.

Well, what about the segments? Let's start with Products & Care segment, so advice, consultations, customer orientation, that's always been a focus for Galenica. So what is the focus of consultations in Galenica as a company?

Well, consultations, consultations plus, as you see on the slide, that's still a small share of our value creation today. You see some 30% of growth. And I think that's really very important for us. The -- well, roof of the first point of contact, that's what we want to be in pharmacies, in health care matters. And we can only do so after consultations. Customers come to the pharmacy because they want a consultation. Simply purchasing products can also be done online. But consultation for health care issues that's something that is really something that is up to the human contact, human to human. And we also see that in the insurance companies, the health insurance companies estimate or appreciate that they recognize the added value that we provide. We have a cooperation model with 11 insurance companies. And we also invest in the professional development of the personnel. They just love it to get their know-how across to the customer that really strengthens the career and also this is also something that refers to the staff that we have.

Julian, we've seen a 4.4% increase in the area of pharmacies, what about the acquisitions for that?

Acquisition is really an important cornerstone of our strategy. And I'm very happy that in 2024, we were able to acquire effective locations. We have seen a net total of 10 locations added to our network with Amavita and Sunstore pharmacies. But the organic growth is also very positive with 2.7%. 70% of our sales with medications is generated, and we will generate the remaining 30% of sales in non-medications segment where we declined by 0.8% last year, but we have gained overall market share.

What about the future, Marc? Of course, we can see some growth through services and consultations in the pharmacies. Looking ahead, what offers could be provided in pharmacies?

I think we have to make a step. We have to physically accompany the customer. The Swiss person who comes to us, they do not really want to have many surprises. So what can we do? If I know I go into a store and I buy some with a self-checkout, I can take my mobile phone and I pay for it. That's not something that we do in pharmacy. So we would like to see that there are certain aspects that can be done in pharmacies like that, but then there are other products that need advice, counseling, I have a prescription, I want to step by in a pharmacy, and I want to purchase it there. So we have that aspect, we want to be a pioneer in that way. We want to also pursue new paths in pharmacies. We want to have that future of an omnichannel. We want to make sure that the purchases can be do very much easier. So the first brick-and-mortar pharmacy will be shaped anew. We will test things how things work out. And throughout the second half of this year, we will be able to show it, and I'm really looking forward to that project.

Well, we are looking forward to that, too. Thank you. We have seen a few examples already what will lie ahead of us omnichannel, as you've said. Julian, this is a really important topic, in particular, the online shops that were launched in pharmacies in 2023. Where do we stand today?

Well, the sales of our online shops are still at a very low level today. This is also due to the fact that only the nonmedication range may be filled online. In 2024, the turnover of the online shops has also developed flatly. However, the pure figures of the online shops are only half the story. We are also focusing very much on the click and collect journal, which has seen a major growth last year, and this turnover is reported in the local pharmacies, as we say. But this is not the end. We want to make sure that we have greater frequency in our online shops, and we want to integrate them in our online channel. People inform themselves online before they go into a brick-and-mortar pharmacy and buy things.

One prerequisite for online shops to work is that e-prescriptions must be able to be redeemed. Marc, what about the importance of e-prescriptions in the strategy of Galenica? What is already possible?

That is really the decisive factor. E-prescriptions are an important piece of the puzzle in our omnichannel strategy, all the stakeholders involved as the patient, pharmacy, doctors, other health care services, that everything works smoothly digitally. The e-prescription is already typically available. Many doctors -- the majority of doctors has it in their system. So you can redeem it in every Galenica pharmacy. Well, sometimes there are some doctors that do not want to write down e-prescriptions. That's what we have to work on together with the associations that we increased the number of e-prescriptions that will certainly be the future, but we need a behavioral change, maybe that requires some time. But again, we will see an increase here. So next time you go to a doctor, maybe you can say what about an e-prescription. And can you write me an e-prescription rather than one on paper? I'm looking forward to your reaction.

Well, thank you. What about the development in product and brands? Julian, the Swiss market saw a flat development in 2024, what were the reasons for that?

Yes, you're right. The Swiss market saw a rather flat development in 2024, as you've said, dampened certainly by that mild allergy season and the mild flu season at the end of the year and the mild allergy season in the spring. But in the pharmacies themselves, in the drug stores, we've seen an increase of sales of 4.2%, so which is a higher growth than the consumer health care market, and we've gained some market share there.

So let's talk about Home Care. You mentioned it, Marc, in the beginning. Now Home Care has outperformed the group over the past 2 years, which contributing factors are there? How important will Home Care be in the future?

Now it's a clear cut growth segment for us. So we have quite a few trends that we have demographics, we have older people, we have an increase in health costs. So we want to have the patients back home again and later on, they want to see home care. So these are trends that really speak out in favor of that segment. We have an excellent offer already. So we have Medifilm and the blistering. So we have [ Bichsel ] for therapeutical and clinical nutrition. And we have Emeda with the home medical doctors. And these are services taken separately are already crucial for many [ career ] organizations. And However, it's more because we've interconnected these services more closely over the past few months. So we'll be clearer in the market. And I think we're going to see more and potential growth even in the future. It's a crucial topic because it's important for both Galenica and for the national economy, given the challenges that we're faced with.

Now another growth engine is wholesale. What were the drivers for this growth -- strong growth?

It's true. Wholesale was once again a driver for growth. And now I should underline the growth in market share, especially when it comes to our doctors channel, 7.8% growth versus 5.7% in the market overall. But also in pharmacy, where we saw close to 4% [indiscernible] the market of 3.5%, so wonderful emblem of the synergies that we've seen.

Now one of the biggest projects that Galenica has seen is the switch over of the ERP system. Now there was a bigger milestone last week, I should be saying, when you switched over to SAP, in Ecublens. What's the added value mark?

Well, it went wonderfully because our team is here so they're not needed there right now. So that was a huge launch in Ecublens and we've all seen SAP launches in our lives. So it's not usual about everything going well from scratch. So we're now in the scale-up phase, went well and we're quite proud of that. So in fact, and thanks a lot because that has really been an outstanding project. It's not just phasing out the technology really. It's an investment into the future going forward to be stronger to be faster, to be more resilient in reacting to change in the logistics centers. So of course, that is excellent for our customers in West Switzerland.

Now boosting efficiency and driving brand complexity, that, of course, was the moto why you founded the joint venture with Planzer a year ago. Health supply is the name. Where are we now?

Well, recently celebrated the first anniversary of joint venture. So it's still a baby. But we're quite happy with the development. We already have a head count is about 200. And now the background was that we had 7 external partners. So that was difficult to manage within the network. So it's an in-sourcing project, so the transportation corporation were bracketed together with Planzer and now we only have 2 companies with health supply and with our own transportation services, which has facilitated the entire logistics. So I believe it's an outstanding success that project is. We've reached our goals, and we really are going to see strong growth over the coming years.

Now let's complete the individual segment and let's have a look at the rest of the key figures. Let's start with profitability, Julian. The gross margin has seen stable development, what does that mean specifically?

Well, we have a stable gross margin of 27.5%. So gross margin has remained stable, although the low-margin wholesale business has grown more strongly than the products and Care segment, but due to a combination of 2 factors. Now wholesale business, the margin has remained stable. And in the products and care business, we managed to increase the gross margin. We profited from an increase in generic substitution and the sales of low-price medication more than attractive margin and as well as from a better product mix.

Now you managed to slow down the increase in cost of personnel in the second half, what was the decisive factor?

Well, in the second half, we managed to reduce our personnel cost in the first half, both in absolute figures and in relation to sales. That means that in 2024, we have same share of personnel costs as previous year of 14.9%. In the first half, we were still at 15.5%. Now 2 factors I should underline. In the wholesale, we still have challenges in the first half, worked hard on that to boost efficiency for the second half. And of course, the additional sales volume in second half helped. When it comes to pharmacies, we managed to drive down the cost of external stopgap times to almost 0. So we're really happy because that's not only got a positive effect on personnel costs, but also in stability of teams.

Now let's have a look at net profit. Now net profit adjusted was at 13.4%, even higher than the adjusted EBIT growth, will this trend continue, Julian?

Well, unfortunately, we have one-off factors in their financial income, given the new evaluation of earn-out obligation in connection with acquisitions taken, we generated about CHF 10 million, an extraordinary income that [ won't ] come back in the coming years. And when it comes to tax expenditure in 2024, that was extremely low, given tax effective write-offs on investment. We managed to reduce tax rate to -- we see that tax rate of 18% to 19% is sustainable.

Now cash flow, how did it develop?

Well, in 2024, we generated in the high operating capital, which has to do with our good results, but also with a strong focus on managing our net working capital, that's paid off. Now the free cash flow is at CHF 61 million and without the CHF 61 million strategic investment in Redcare because if we counted that, then free cash flow would have totaled CHF 122 million, that means that we managed to finance the dividend and regular pharmacy acquisition from operating cash flow.

Now let's maybe fast glance to the future -- market growth for the future, what you expect for 2025?

Well, we expect a slightly higher market growth than 2024. We continue to believe that new innovations will determine market growth, and there are several medications that will probably continue to drive growth, GLP-1 [ brings to mind ] And of course, the flu season, the beginning of the year will drive market growth, especially for hospitals and medical doctors. So 2 factors will have a dampening effect. One, there is one sales day less and we'll see that in the first half and the second factor is the substitution of [ Xarelto ] that started up in 2024. Now [ Xarelto ] really still has a share in 2024 of 1.3%. So that in effect we will see.

Regulatory affairs. Marc, do you see regulatory changes that will impact the activities?

Well, lots of things are always going on in Bern, but in 2025, I do not expect major topics or major legal changes. So what is letting me sleep at night if I look at my team, so I see the colleagues here in the back. We have a very strong team in that segment. They continuously liaise with the relevant authorities. So we have a close proximity to that. So we're fully aware of what is going and that gives me a good feeling because we have close proximity to the new processes in Bern.

That almost takes us to the end, 2 last questions, one last each. Julian you go first. What are the financial goals for 2025?

Well, for 2025, we expect growth in sales of 3% to 5%. For EBIT, we expect a slight increase in profitability and 4.6%-plus in EBIT and we are also opting for sustainable and strong dividend. We plan to keep at least the dividend from last year.

Now Marc, 2025 is ongoing, so what's on for the year?

Well, Our focus is clear. We have a clear-cut strategy. We have a clear cut Galenica story, and we are implementing that consistently. Now of course, there will be a few topics in 2025, we intend to boost market shares in pharmacies. We want to drive up profitability, we want to interconnect our home care business and also in wholesale, we are not going to boost efficiency. We are creating impetus to automate processes and boost efficiency overall. But there will be more digitization, and that will take us to artificial intelligence. AI is going to help us to be even quicker to be even more easier to deal with. And at the end of the day, it's clear that we want to continue to develop health care for Switzerland. Switzerland is an outstanding health care with top of the line, but we want to improve it even more. As Galenica together with our partners, we're an important player in this market and we want to take on our role and want to create value -- added value for our staff, quite obviously for our patients who are our customers quite obviously, for our shareholders and investors and for society overall. That's what we intend to do for society in these difficult times, where we've seen the wonderful country that we live in, so we want to make a contribution.

Thank you so much, Marc. Thank you, Julian. So that takes us to the end of this first part and we'll open the round for discussions. And we'll first take the questions locally here in Zurich.

[Interpreted] [Operator Instructions] So we would like to start with the first question here in Zurich.

[Interpreted] I'm [indiscernible]. The first question, impressive growth when it comes to consultation, 39%. Can you give us some ratio? I just tried to imagine how many people really go into the pharmacies, how many prescriptions are redeemed in pharmacies to see what kind of share does it might mean for the volume or the work, that would be really of help? And then at that home care, elderly care nursing home part, there's a broad range that you offer. Can you give us a feeling what about the market share? For instance, the senior citizen homes or the different home care options that you have on the market so that we have a feeling for that? And last question, 2 or 3 times you mentioned the flu situation in the fourth quarter of 2024. Q1 was rather strong, I think. So when it comes to the flu season. So to what extent does that feed into your guidance? The 3% to 5% seems to be a rather low estimate, even if we consider the 1-day plus for the leap year, in terms of sales.

[Interpreted] Well, thank you. Healthcare services, as you mentioned, the share of that, it's really difficult to estimate it. It's a small share. Even if we see some growth, we started a few years back to define this product as a product to sell them like that. And if you consider, say, a pharmacy, that's my personal experience and Daniele Madonna probably knows better than myself. If you go into a pharmacy, and there is not 20 cases in a pharmacy, it's just a few cases per pharmacy. So there's a major growth potential today. There is no major share of, say, staff and the pharmacies who are committed in that field. So it's still great to see what we can do with the existing personnel, what they can do in future because it can be integrated in the course of activities in the pharmacies, and they will grow. So to continue the work we lead in the past and add a service, a service that can be also cashed in. And very also people need a prescription and medication. So that's a trigger to sell another medical medication. Sometimes also a prescription drug, but the share efforts in pharmacies are rather small or positively speaking, well, there's still some room for improvement. Daniele, did I say something wrong?

[Interpreted] No.

[Interpreted] So the home care area, the second question, that's a broad spectrum, major market demographics certainly helps there. It's difficult to analyze because we do not have official market figures. In the past, we had a rough estimate, and we reduced that we have some market share estimates of 10% here. So compared with our other activities, we are not really well represented, although we have a growing market here and via our integrated service offer, we can also in a position to gain market share in that field. The fourth item, the flu season that certainly was a major topic. And for 2025, in particular, when we take a look at the curve, we have a higher development than in the last year. But if you take a look at flu curves and analyze them, we have a good comparative situation to the previous year. So it's a fair analysis, but the curve the influence of viruses really is really driving our pharmacy sales. So all the flu rhinoviruses, for instance, so it's not the strong illnesses where people have to go to a hospital right away. In 2025, we saw that there were some strong cases and that was also represented in the sales. And in French speaking of Switzerland, small children were also very much hard hit and the elderly and in children, people like to go to the doctor very soon right away to make sure that this is really a matter of importance to the parents. And if we take a look at the market figures in January, the market as a whole has seen a 6.1% increase. So the market really benefited on the flu season, but that was really the doctors, the pharmacies have seen a growth rate of 5.2%. They benefited in French-speaking Switzerland, where there were no self-dispensing doctors available, but the OTC area only to a growth rate of 3.1%, for instance. So what we would expect that the OTC, over-the-counter medications would see a strong growth was not the case. This is a trend that we can also see in Galenica. So positive effects as a general rule, but not to the degree that we see that the entire outset has to change. Next question.

[Interpreted] Gian-Marco from the Zürcher Kantonalbank. The question refers to the cost. In the second half year, the gross margin was a little weaker than compared with the rest of the year, did that have to do with the adjustment of the operative margin or are there other effects or for the first half year do we also have to consider counter effects regarding the gross margin? Overall, the administrative costs and marketing costs went down, that is good for you, but what about the sustainable aspect of everything or do you have something for 2025 that you could comment on? And then the tax rate that Julian referred to 18% to 19% more or less. And if I take a look at the last 2 years in 2022, in 2023 and 2024 also, we were at some 17% or 15%. Why do you have that conservative view of the tax rate here?

[Interpreted] Thank you, Gian-Marco. As to the growth rate, the operators margin, we said, well, the -- this is -- has a neutral effect on our gross margin really. And that we can confirm if the gross margin went down in the second half of the year. Well, there were different aspects in the wholesale area, for instance, where we saw a lot of growth in the second half of the year. And that changes correspondingly the effect on the gross margin, but the operators margin, for instance, well, we don't really see a reason why the gross margin would change that greatly in the future. Second, administrative costs and marketing costs. These are the onetime factors last year. Administrative costs, as I've said, due to the micro cases that we had some CHF 6.8 million of a burden and we will not have that yet this year. So the profit calculation will that be benefiting this year. We had some adjustments made in particular, CHF 6 million for the doctors centers. And then it's really difficult to compare. So you have to consider all these effects together and we have a better comparison here. And also we've seen some good cost management. So special effects, we have a 2% growth which is better than the top line growth. And the last item, the tax rate. You're right, in the past few years, we did have special effects that we benefited from. And in 2024, what we've seen is additionally to the effect that mentioned, there were the onetime earnings we had that we also had in the previous year that are not taxable really, and that means they have a positive effect on the tax rate. And in the previous years, we've also seen that from acquisitions, onetime use of losses that were depreciated. So these special sectors in future will be fewer. So we will have a tax rate of 18%, which will be rather sustainable. Anything else, then we'll move on to the next question.

[indiscernible] Capital. Maybe a first question on the wages and salaries. What kind of salary increases do you expect for the ongoing year?

[Interpreted] Well, basically personnel cost management, that's a large focus for us. So it's not like a few years ago. where we have those massive increases in order to remain competitive in the job markets. So we've no longer lagging behind. So internal, we are seeing -- we have communicated a plus 1.5% for 2025. And there won't be a guidance on individual items in personnel costs, but we can't see the ratio changing.

[Interpreted] And Julian, the past few years, net growth for pharmacies were 1 or 2, now we have 10 additional ones. What's the basic effect for 2025 going to be?

[Interpreted] Well, in 2024, we had an effect of 1.7 on top line, given the acquisitions in 2025, we, of course, hope that we will be in a position to acquire more attractive locations and have a positive effect for the top line overall. The effect, of course, has been integrated into our guidance.

[Interpreted] Now on that guidance, now market will grow a bit more 4%, so your guidance is 3% to 5%. But you tend to outperform the market. And of course, you have investment effects that have been logged in and will take effect this year, but of course, there is minus 1 sales day. You might want to remind me how much that costs for you? But it's quite an ambitious guidance. Any idea as on that?

[Interpreted] Well, we believe that the guidance is ambitious. Yes, so of course, I'm happy to hear that you believe in the strong performance of Galenica, but it's quite obviously has 2 different segments. One is logistics and IT with excellent growth in the channels for medical doctors and pharmacies as always been positive, quite obviously. We had a strong market share growth in 2024, and we continue to do that. But that's not going to be all and so we cannot expect that to continue year-on-year. When it comes to pharmacies, as you just said, of course, we need acquisitions also because we have a nonmedication segments that generate an important part, and we're in a slightly declining market. So without we wouldn't be able to reach the plus 3% to 5%. And in that combination, we see 3% to 5%, even though we have 1 sales day less and that was 0.4% effect on the entire year last year. So that's an ambitious guidance, true, but still we're going to do everything to really hold our run. Now the increase in medication prices and drug prices are there. So we have looked of new costly and of course, that helps pharmacies grow and quite obviously. It looks like the past few years. That's one of the drivers for market. Without that part, the market wouldn't have grown. If you have a look at the relevant markets with original medication with at least 1 generic drug continuously receding market. So the market is under pressure as a you can also see the effective measures will boost the generics part without the patent-protected drugs the market would be in decline. Thank you very much.

[Interpreted] And one question on the EBIT or the net profit. Now just for the sake of clarification, so we have CHF 7 million special costs that are no longer there, so that's the onetime thing you mentioned, is that correct?

[Interpreted] The one-off effect that CHF 9 million in 2023 and we're no longer there in 2024.

[Interpreted] Okay. And CHF 10 million in revenue are no longer there where we had CHF 10 million a year, is that correct?

[Interpreted] Yes. So both in 2023 and 2024, we have CHF 10 million per year, that's the earn-out duties that are no longer there.

[Interpreted] [indiscernible], Zürcher Kantonalbank. Just to be a bit more specific in 2024, you saw a year of consolidation or that's what you call it. And is that also true for 2025 and '26 or do you have other plans? And could you tell us how much investment will total and personnel costs just to sum up what we've already heard, the shortage of skilled labor, whether it's been the pharmacies in the pharmacies or is that still there or not?

[Interpreted] Let me take that first. If you compare it 3 to 4 years ago, when that was a permanent topic every other week we really had to face that issue. So we invested massively in making the workplace more attractive. So we changed the entire executive leadership structure more skills within the pharmacy and so on. So we have better roles, pharmaceutical assistance with new role without the pharmacies more responsibilities and also a higher salary for assistance. And all of that, of course, have had factors, it's -- but there are also external factors. It was not due to us. But that the topic is skilled labors is not that much in the foreground. It's always there, but it's not the drastic situation that we saw a few years ago. So -- then on your first point, the year a consolidation that this the CFO said now the M&A activities, of course. Now we have a few pharmacies, but basically, but we had fewer acquisitions on a whole, you can't always schedule for that. It's an important topic for Galenica, of course, we want to grow further. We do not only want to grow organically. So we have our eyes peeled constantly in the market so we are trying our very best for growth. But you can't always plan for that. And last year, it will be a year where that wasn't the case, which was also good in a way because there have been so many acquisitions before, so many companies that were added. And if I look to the segment that you have to integrate that, you have to have clean-cut processes. And of course, what you also need is a year where you don't acquire all that much, but strategy is clear. We also intend to grow outside of organic growth. Yes, the investment of course, has always, totaled CHF 70 million to CHF 80 million. Last year, it was CHF 78.8 million, so that's quite high. So for this year, we have CHF 72.8 million, so we believe that corridor of CHF 70 million to CHF 80 million is a good figure also for the coming years.

[Interpreted] So I have here in the center.

[Interpreted] Urs Kunz, Research Partners. Just on personnel questions overall again. So you have below 93,000 consultations with 40 pharmacies in '25 will be added and you're saying that there is an enormous potential left without you having to do anything with personnel. Do you have a ballpark figure as to how much personnel can handle? And basic health insurance we're not going to take that over you 11 health care providers already on that you cooperate with, is there additional potential there? And then logistics and IT. In the first half, the margin was going down, if we take the one-off effect out. The second half was clearly better. Can I have an extrapolation already in terms of the margin for logistics and IT for the current year? So the 2%, I believe, won't come up before 2026 and then 2027. So these are my questions.

[Interpreted] So Consultation Plus, the 2 colleagues can correct me if I'm wrong. Consultation plus is basically already available everywhere, the 40 plus 24, that's a concept of infrastructure. So if you go to the bottoms up, we take in Zurich for instance or you look at the entire concept is integrated in the infrastructure with new consultation rooms have in concept with more quality. So it's 40 plus 25 pharmacies. But basically, all the pharmacies offer these services. So the 379 or whatever number it is, so the push potential is really great. Also, with the existing personnel, that's quite clear. To make sure that we can do so with the existing personnel, I'm convince as I've said the pharmacist in the pharmacist channel, we need some efficiency potential for using different options in today's pharmacies, if you go to be pharmacy you see a lot of paper, a lot of folders, things that are not digitized quite yet, if you take a closer look in the back of the pharmacy. So I think -- this is something that we will improve upon in the future, there will be some things that can be done in the background, certainly. So there's major potential I'm really convinced thereof. Now as to the basic insurance. Well, that's really a topic that we will have to take a look at together with politics also. There were some very clear targeted discussions going on in politics that more performance can go from the basic insurance to the pharmacies. There is the discussion going on. We know the processes, they will not come around out right now. Daniele is also in the pharmacy Swiss sector association, and he's really very much focusing on this aspect we really managed to even talk about the models to date with the insurance comes company today. And I do not expect that they will have a major push. Of course, we want to go in that direction but we want to make sure that our performance can be presented to the insurance companies so that they can really adjust to our models and insurance companies have already joined us our endeavor and that's not a small one, but the major one. And then the margin in the IT and logistics area, of course, we can estimate that extrapolate the efficiency area has seen a major growth in the second half of the year. But we've also seen that the logistics projects, while there might be temporary inefficiencies. There's a project that continues until 2026. The midterm guidance has communicated that margin push will take place in 2027 only probably.

[Interpreted] Sebastian Vogel, UBS. The pricing review, what are the expectations for 2025 after the impact that you mentioned for 2024? Then the net working capital, you said that you made some major progress there. Question is, do you really continue or are you at the cruising speed where you find that you are in a good position? And third, 3% average growth was also due to the EBIT growth. That's not in the new guidance. Why is 2025 weaker than the long-term push that you usually saw?

[Interpreted] Thank you, Sebastian, for that question or those questions. Pricing review. You're right. In 2024, as mentioned, we had a major impact due to the sales intensive products that were in the review. We cannot really estimate what the future will hold for the next year. But we do assume that we will not have as high an impact as in 2024. So that we are roughly back at the 1% to 2%, but that's my rough estimate. Working capital, again, we have seen some major progress in 2024. We had intensive talks with creditors, we with suppliers really, but also from the customer side to reduce the payment deadlines. And I think we have reached a sustainable level that we want to stay at. Of course, we want to improve, that clear. But again, we have fewer options maybe. And as to the EBIT guidance, it is true. Historically, we have seen the stronger growth, but we also have to consider that in future too, the ERP project in logistics continued. We have a similar spending structure in the area of digital infrastructure. So basically, when it comes to our cost structure, nothing really will change basically. And we are really within the range of our midterm guidance where we have a stable development of ROS forecast and then we will have a longer margin increase only afterwards. If we take a look at today's guidance and forecast and take a look at the forecast at 2027, we will reach at CHF 244 million. So we have a gap of CHF 6 million compared to the CHF 250 million, and we just have to increase the efficiency here.

[Interpreted] Are there any further questions from this room? Otherwise, we would -- no, there's a last question from the room.

[Interpreted] Stefan Schneider, Vontobel. we saw that 2025 -- well, nothing special as expected, but what is going on and then we will see what will happen there. And you are Swiss company, but you politically, economically, the world is changing. Is there nothing that we have to think about in this respect?

[Interpreted] Well, yes, first question, burn. Of course, there are certain aspects that are focused on that's the territorial principle. This year, we will certainly have discussions in burn and parliament, and we try to get a point of view across that's what we work on offensively. And the colleagues in the back. What are the topics -- you have to wait for the microphone. Well, certainly, the cost reduction packages is certainly a topic, but that will also have an impact to the territorial principle, the consultation that we have. These are the 2 major issues that we talk about [indiscernible].

[Interpreted] So it's really clear, as you've said, there are new topics time and again, and they require some time. And then there is the OTC deregulation topic that remains to be seen, but will take place in '28-'29. We do not expect major overhaul before that. The second topic, however, the macroeconomic geopolitical topic can be talked over lunch. But basically, let me state the following. It's a little bit the case sometimes we see ourselves as a local firm. Sometimes we consider our size on a global scale, but at the moment, it's really nice to be a Swiss company. So the global upheavals around us do not really concern us that much, but we are not an island, of course, Switzerland is not an island, is on an island. But basically, we can stage -- of course, market changes can change market situations can share change globally, but we are not that much concerned. Sometimes we not really happy about the regulated business. Sometimes we would like to see less regulation, but regulation is also a positive effect for us. We have a certain level of stability that's great for Switzerland also. If the health sector remains stable also in these kinds of upheaval because our performance health care, well-being for the population here in Switzerland is in a -- at a good level with fewer upheavals and offsetting developments. That's really great for Swiss people to realize that. Have I forgotten something?

[Interpreted] No.

[Interpreted] Perfect. But again, as you said, it's a broad and very interesting topic indeed.

[Interpreted] So we can come to the questions on the line.

[Interpreted] There are no questions online. So I would like to pass the floor back to you in the Landesmuseum.

[Interpreted] Okay, great. Maybe one last question if there is a last question. Yes. At the front of room.

[Interpreted] [indiscernible] from The [indiscernible]. Questions regarding the portfolio of locations of pharmacies. Well, the original strategy was to expand these locations, do you have an adjustment trend or do you see that there is a duplication of certain locations or the choice, the selection of locations? Will that be a stricter interpretation? Do you include it in the portfolio? Can you explain a little further?

[Interpreted] It's an adjustment. It's not only about buying pharmacies we make joint ventures, we optimize. We have a location optimization, so some pharmacies might be so also -- so it's not a question of acquiring and closing right away because maybe there's a better location somewhere else. So it's a continuous process. It's not an industrial development. It's in the DNA of people. It's not about acquiring only, it's about optimization of the network. -- and the acquisition is just a side effect really. We want to have good locations. We have -- want to have certain sizes. We do not want to have my mute pharmacies that do not make a lot of sales. We will close those and invest in large pharmacies.

[Interpreted] Okay. So we would like to close the Q&A. And if you want to, you can continue the discussions over lunch, of course, and I would like to pass the floor to Julian for last words.

[Interpreted] Thank you, point out the 10th of April, which is our AGM. And then we also have our Investor Day in October 28. We will get the details to in good time. That concludes the special part of this event here Zurich we'd be happy to invite you for lunch and everybody on the live stream, thank you for listening in. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]