Galenica AG ($GALE)

Ladies and gentlemen, welcome to this Media and Analyst conference call for the Galenica Group. We are very happy that during the spring day, you came here to Zurich to join us here and I also welcome everybody, all the guest, [Technical Difficulty] live stream. My name is Iris Muller, and I'll be your host in the coming hour [Technical Difficulty] today. We will start with the financial results by our CFO and then we will have moderate discussion 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, Julian Fiessinger.

Thank you. Thank you, Iris, and also a warm welcome from me to all the guests here in Zurich and all to those taking past via the webcast. We can look back on a successful year 2025. Galenica grew strongly by 5.5%, both in the Logistics and IT segment with 4.8% and especially in the segment Products & 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 pharmacy and the physicians segments. The strong growth in the Products & 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 CHF 234.8 million in 2025. And this positive development was supported by positive special factors totaling CHF 6.2 million. These resulted from 2 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 comparables 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 Products & Care segments, the return on sales increased from 9.4% to 9.6%, supported by the strong organic growth and the successful acquisition of Labor Team. 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 & 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 & 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 & 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 the Logistics and IT segment despite the ongoing ERP changeover at Galexis in Logistics, part of it comes from the pre-wholesaler Algifor, which has already mastered the ERP changeover and the efficiency potential can now be realized already. Now as to the adjusted net profit, it rose by 3% to CHF 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 CHF 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 CHF 61.1 million 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 projects -- ERP project excuse me. 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 CHF 135 million 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 CHF 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 CHF 30 million to CHF 245.7 million. 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 CHF 188 million remains with -- which a good portion of the acquisitions could be financed even after payment of last year's dividend of CHF 115 million. Given the positive result, the Board of Directors will propose a dividend of CHF 2.50 per share at the General Annual Meeting. That is to say 20% teams more than in the previous year, which corresponds to an increase of 8.7%. 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% and an increase in adjusted EBIT of 6% to 8%. Adjusted for the special factors of 2025 of CHF 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 Bichsel's 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 midterm guidance that we published today. Last year, there were significant changes that were not reflected in the previous midterm guidance, for example, the expected closure of the pharmaceutical production at Bichsel and the acquisition of Labor Team. And now when it comes to the ERP changeover in logistics, we are now regarding the efficiency 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 hypercare 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 & Care segment, we will increase on Bichsel's focus on the home care area and the successful integration of Labor team will mean an increase of the EBIT margin of over 10%. And overall, and this is the key element of the midterm guidance, it is decisive that Galenica will achieve an EBIT of CHF 270 million in 2027. However, there are other points that are unchanged compared to the previous midterm guidance. We have the growth assumption in the 2 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 results. 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 Werner.

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 the Swiss health care market even further. We 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 3 items that I'd like to mention. Now the -- we further strengthened our basic care, both in brick-and-mortar and online. The 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 or home care, and also expanding our network acquisition of Labor Team and entering the diagnostics market, which was crucial, of course.

Now let's drill down on these 3 topics. Let's start with expanding basic care. Now net 5 locations were added in 2025. In total, there are 381 pharmacies that are part of the Galenica now. Now health and consultancy services are growing. How important is that for further growth?

Crucial, absolutely crucial. Now consulting plus that really an offer that has increased markedly. In total, we carried out 370,000 fee-based health care 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 cooperations with since the beginning of the year, KPT and Helsana, 2 important health insurance have joined our network. So there's 10 health care insurance that we're working with, and they support us to position pharmacies as the first port of calls.

Now that can be built also by the health insurance. So 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 Sun Store and by the end of the year also in Coop Vitality. But we already have fee-based consultancy services as we speak. The consultancy plus will be rolled out to 100% at the end of the year. And the interesting thing is the goods basket. Our services amount to about CHF 80, 1/3 is consultancy and 2/3 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.

Now let's remain with pharmacies. They have done quite well. You've done quite well in the digital realm. What can we expect in the future?

Now the omnichannel strategy was investments to [indiscernible] that were launched in 2020, and we're now reaping the awards. Several elements that go with that. For instance, take Click & 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 2025. 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 lives easier as they have more than one prescription, a permanent prescription that need to be filled. So that customer retention will be boosted and customer satisfaction will be boosted apart from that. So I have a look at the online market. We have the Amavita strategies that have 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 a topic for years. What are the latest forecasts and how is Galenica prepared?

Well, we do not expect liberalization before 2030 or even 2031, specifically given the current political discussion in Switzerland that will warehouse. So the discussion has not been launched to that bigger churn. But it's quite important to see what that entails. Now OTC legalization 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 Galenica pharmacy sale. But there are 2 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 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 will be quite slow from brick-and-mortar to online channels. Now why did we start that online strategy 5 years ago? That was with a nod to that. And that's my second aspect. We are leading our customers to the digital channels. That's why we have been advocating said liberalization because we're convinced that we are prepared.

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 the 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 margins. 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.

Galenica, 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 are in a scaling business in logistics, pharmacies, product 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 SAP change in Ecublens. What about the project? What are the next steps?

Well, 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-Ecublens at that side. What we had to learn is that this is not IT project. It's business projects that we're talking about, change projects really, where the stuff have to be taken along because a lot of stuff 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 had to take along our staff. It's really a transformation journey say we will do that also need a Niederbipp when we switch to SAP. And we took the lessons learned from the past and we can built upon our knowledge from the flagship site Niederbipp and also certainly make headway there. Julian, he also mentioned the artificial intelligent 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 an article, in the warehouse and 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. Our digital is 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 is 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 '25 -- with those CHF 61 million was at a low level. Certainly, we -- the investment volume will be higher in the next 2 years that also depends upon the headquarters in Bern, the head office renovation, there is a core building and we will remodel it and there's something coming up in the coming 2 years. So we have an investment volume in mind of CHF 80 million to CHF 90 million, which we already communicated with the -- following the acquisition of Labor -- Labor Team.

Let's continue with the expansion of the network. As you said at the beginning, Marc, diagnostics business was a major milestone. What about Labor Team and Galenica, do -- 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 stage -- 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 3 weeks ago, we communicated that Galenica intends to close production at Galenica, Marc, can you explain the reasons for this?

Well, we acquired Bichsel 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 2/3 of Bichsel'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.

Home care, as you mentioned, will continue. And last year, there was also a modification life stage and home care Bichsel, they really focus on that market segment, there is some additional growth plan. What is the plan?

Well, Bichsel home care, the sales organization where they have a lot of know-how in clinical nutrition, and we combine that with live stage solutions because we felt there's a lot of potential, the customer groups. That is to say the on-site -- 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 6 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 slow 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 the 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 the last question to you, Marc, 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 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 #1 or #2 in the Labor Team part, maybe not quite yet, but clearly, we do not want to keep #4. We want to make sure that we are among the top 3 players and we won the bronze medal really. So we want to create value added for our partners. It starts with our staff. We want to create wonderful job environment. So because we can attain or retain good staff that also guarantees market success. We want to make 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, Marc. Thank you, Julian, for this talk. 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 forward to the Zoom call and can ask your questions. So let's get started with the questions here in the room.

I'm with Zürcher Kantonal, but 2 questions that I have for you. First, on personnel cost efficiency. You mentioned that, that was increased massively above all pharmacies. I think that is quite impressive that 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 lower growth of personal vis-a-vis sales? Then my second question on Bichsel and on closing at Bern. Now Galenica stands for stability for me and also security and safety in health care. Now as an outsider, I've always felt that Bichsel was relevant for infusion IV 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 whether there could be subsidies in the future? So that's the 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, personnel costs. Efficiency in pharmacies is a huge topic. You have to see it in a holistic way. On the one hand, sales growth that is driven by more expensive prescription on drugs that, of course, require less consultancy and that's where part of the personnel cost efficiency comes like quite apart from that, one of our talks -- 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. So of course, we're trying to be efficient at all times. And 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 we -- just to make that clear, we 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 before and also for confidentiality reason, 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 or supply. That was one of the prime topics and we talked about that on the Board and with the administration because that was a clear cut challenge. Bichsel today has about 40 customers, and there are about 250 hospitals. So you can buy product sales where, of course, in part, a broad upstream. In the 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 introducing products for the Swiss market it's an illusion to believe that we can go a long. 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 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 closed down Bichsel.

All right. So more questions here in the front, please.

I'm with UBS. Two questions, if I may. Step up in debt coverage, so that's the upper end of your range of plus minus 2. So what's the potential to improve that? And as you said, you want to get the brands 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 are temporarily higher and that doesn't because we have a strong cash flow generation, where we have potential far-reaching measures to really drive debt ratio down. We continue to believe that in our midrange guidance up until 2027 will end up at the [ Factor II ]. Of course, that hinges on the option of future acquisition that takes me to the second point.

Yes, we are quite well known for our competence that we manage organic growth, but we also have clearcut goal when it comes to additional inorganic growth. That's the 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 or whether it's logistics, diagnostics, we intend to grow. But quite obviously, we keep our appeal. If we find an exciting target that fits 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. [indiscernible]

Very briefly a question, the associated investment of CHF 2.4 million 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 and IT, the 1.7% until 2027, which will remain at 1.7% until 2027 and then 2% in 2028. So Niederbipp will be -- really have made some headway in 2029. 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 step acquisition with Puravita, 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 -- to that CHF 2.4 million. And -- when it comes to the adjusted EBIT and the operating value added and the operative performance of Galenica, 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 not too much here what that really means. In the adjusted EBIT, this amortization was muted rely 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 Ecublens, we've seen that the hypercare phase has to be considered, and there's also an after go live. There has to be the 2 ERP systems in parallel, and that will continue to operate like that until 2027. So we're a little more well, hesitant regarding hazard 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 Niederbipp want to also work in Switzerland, the German pharmacy that is? And the second question is regarding Redcare. We -- 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. They're German competitors, they want to be active in Switzerland. But we've seen that there are strong competitors. [indiscernible] 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 2 partners in the market, they are really in the drugstore area, of course, there are 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 are in a good position. We have a good footprint in Switzerland. We are always on the top shelf really also in inorganic growth -- organic growth. The growth gains will be continuing, I think. Redcare. Well, Redcare, 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 Redcare 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 get-go, there's a high volatility range that we also expected. Now we are hit high by the development certainly, but we see that this will also develop in a different direction. What we can say very clearly in all the countries where you are active, you are clearly the #1. They go into markets and when short period of time, they are the #1 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 Redcare. There are different changes in the Board, 3 people left the Board. The 3 came now and joined them. Were you also questioned -- would you like to join?

No, no, and we don't want to be on or they either.

I'm with Bauerfeind, Galenica, when it comes to product and brands, you're opting for attractive margins. In how far a parallel imports versus security of supply are decisive for you?

When it comes to products and care, you mean products and brands? Well, we have our own product 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 that doesn't have to do with our parallel imports. It's our own products that are being manufactured there or 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 company. Do you intend to parallelly import them to have a nicer margin and not use a Swiss manufacturer and that opposed to security of supply, that, of course, what 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. 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, it's -- 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, Well, 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 means to an end and we could help drive an costs?

Well, the cost pressure will remain with us. The discussion will remain with us have been like that for and it will remain. It's 11% of the GDP today is in health care. So whether that's a lot or whether that's little, well, that's discussion for the society really. How much are you willing to invest in health care. 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 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 all of these are societal success that are not talked about as much. So we have 400,000 staff in health care. 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 of that you would view healthcare as a cost factor, but they failed to see that 400,000 people work usually not 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 will 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 the 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 profitable for large-scale corporations. We'll have to see the effects of that. We have Swissmedic, we have 3 languages. It's a small market for big pharma. We will have to remain attractive so that they bring their 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 in Switzerland.

All right. Are there any more questions in the room or else would switch over to the web stream. Let me repeat clicks the 3 times, first live call then request to speak. And then join, and you may ask your question or you ask a 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. Well, we have quite a few questions from chat, but none in the call, but let's wait for one minute maybe. 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 income in 2026 and 2027? Question 2, Bichsel. Are you expecting never take results or effects on your home care business? Or are there competitors who offer pharmaceutical production and home care. And third, the GLP-1 antagonists for 2025, what are your expectations for 2026? And when would you expect a saturation of the market? Well, Redcare regarding the positive outlook on Redcare pharmacies, are you open to increase your shares that you have currently?

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 Galenica 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 Bichsel, well, we do not see a negative impact. The synergies between home care and pharmaceutical production was 0. So these are 2 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, GLP-1, 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 medication. So the situation will differ, and I agree with Julian, the market will not grow as quickly. And then the last question, Redcare. 10% we said that the 10% we hold a little more because there was a dilution regarding information program. 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. Yes. The next one is from UBS Sebastian Vogel.

There are 3 questions. The first one, the net working capital. And then the question whether the ambition for 2026 is a headwind or a tailwind? Another question refers to Bichsel and EBIT guidance 2026. The question is, why do you not include Bichsel, 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, net working capital. We believe that last year -- over the last years, and we think that this is a very positive development, we had negotiations with the suppliers on the supplier 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 net working capital will really be seen as a sustainable one going forward. When it comes to Bichsel 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 revise the definitions. We want to have an adjusted EBIT that is testament to the operative performance of Galenica. And in the past, there were 2 elements that were a little a distortion from accountability point of view. And now the performance, the reliability were a little reduced. As I've said, the changes of the values regarding the equity participation that did not really reflect the real situation. And then the amortization of Labor Team, which was a virtual one. It didn't have anything to do with real value performance. And the third aspect refers to Bichsel and the effects from the intention of the production site 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 Bichsel because it's not that important. We do not have that in the annual report as a separate issue or item, so we just want to have an increased reliability regarding the operating losses, and we just excluded them then. And the CHF 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 5 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.

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 sort of the land. I'm not sure I understood you acoustically the demand.

Well, in 2026, we had a lower flu season than on the previous year. So if you have a look at the graph, you will see that quite clearly. And of course, we sense that too, in terms of the frequency of flu and colds and essentially the sales of the product that are related to amount. 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 question from Dimitri [indiscernible]. Question number one. The diagnostics business, net sales of CHF 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 Vefora or products and some brands. How did Vefora do as opposed to the market? Now how does the -- what are the elements of that growth?

I don't get the second question. Are you talking about AI? The artificial intelligence is not what you're talking about? So when and where Will you specifically implement AI in the Galenica Group? Now first is diagnostics and net sales. Yes, the CHF 40.7 million are in line with the sales of Labor Team since being acquired at September through end of December. So that's just pro rata sales. And I've mentioned it before in logistics, in the warehouse forecasting capacity planning, that's where we have AI pilots and marketing, of course. So all the logical branches where you use AI, talking to customers, they are smaller projects, 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 guidance -- guidelines that we've defined on how to deal with AI. There is ongoing training for our surface on that topic, so that AI becomes part of regular business, regular processes of digitization. But we do not want to do things for their own sake, with upgrading added value. So we have pilots working according to the principal pilot, see whether it's worthwhile and then take a decision. And now product 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 a growth given a new distribution procurements 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.

Right. Is there a question on the call? Yes, we have a question by Adrian Hobbs. [indiscernible] and has said that closing down Bichsel is a security policy risk, how would Bichsel respond? And second, would Galenica offer to stakeholders to take over the production sites of Bichsel. 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 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 consultation 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 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 all those questions on Bichsel. 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 your questions, your interesting question. And 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 would be -- we would invite you to have lunch with us. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]