Ypsomed Holding AG ($YPSN)

Good afternoon. Welcome to Ypsomed Full Year Results Presentation for the 2025-2026 financial year. We're delighted to have you all here with us in Zurich in person and for all of those online. Before we begin, please note this presentation contains forward-looking statements that naturally comes with a certainty. Turning to today's agenda, our CEO, Simon Michel, will open with our strategic priorities, go over our business and operations update. then followed by CFO, Samuel Kunsli, with a review of the financial results. We will then open the floor to your questions. First to the people that are joining us here in person and then online. and -- also note, the presentation is recorded, and we will make the recording available after the session online. And without further ado, I will now pass on to Simon, please.

Thank you very much, Sam. Good afternoon from my side as well, and a very warm welcome here in Zurich. We look forward to spending the next hour with you. I would like to start with making 3 points before I dig into my strategic slides. Number one, -- we can really say this company has delivered. We have delivered on our financial targets. We have a record win of new projects, not only new projects, also new innovation on IP side. So a phenomenal year, number one. Number two, the transformation that we went through over the past 4 years, selling off the B2C business, selling diabetes care is done. This is now a pure-play company, very focused, a company that we will all have a lot of fun with. And number three, this is also a very disciplined organization. When I look into Ypsomed, how we are set up, how we take lean as a serious measure, our IpsAIT program, and Samuel will deepen that is core to us. We spent a lot of money on IT on our new manufacturing operating model. And in AI, we have a huge AI program. It's not just copilot. It's actually very deep in our roots. It's very deep in our operations. We try to be more efficient with new technology. So these 3 points being said, let me start. And as always, we are starting with our purpose. This is why we get up every morning. We make self-care simpler and easier for people with chronic conditions. And we are good at that. We do that for 40 years, and customers trust us. They come to us because they know we deliver a couple of years where they have to show them every single time. We have a lot of tailwind therapy go from hospital to home because it makes sense. It makes sense from a health care perspective. It makes sense from a patient perspective, IV therapies go subcu because it's cheaper and better. Number two, more drugs have to be injected because the molecules are too big, they cannot be swallowed. The stomach, the acid will destroy them. GLP-1 is a small exception. We will deepen that today. But all other drugs have to be injected also tomorrow. Number three, biosimilars, the golden age of biosimilars is here. hundreds of millions of new drugs reaching the market in areas where they have not been these possibilities. So it's about access. It's about the responsibility. And this met is not only delivering to originators but also to biosimilar organizations. That's our promise. And number four, of course, the incretins, this new wave that will help the society by making life and life quality better by losing weight and not being affected by all those consequences that you have with obesity. The transformation is now history. For us, it was a lot of work. But when I look back those 4 years, selling the needle business, selling the expert the trading business, stopping PGM, selling the pumps, we have done the right thing. This is not a company which is easy, much easy to lead very clearly focused, very clearly structured. Our focus is operational excellence. We will deepen that today as well. This is a company that has 1 focus to make self-care simpler and easier by providing best packaging for pharma and biotech. That's our mission. It's a B2B story, high margin, fast growth, clear story. So when we look at how we invest our money, we always have those 3, 4 things in mind. Number one, the platforms. We are and remain a platform company, and we will shortly introduce to use 3 new platforms that will bring us to the next S-curve. Innovation. So we continue to invest significant amounts of money in innovation, operational excellence lean, lean, lean every meter, every second, every square meter is money. We get rid of it, and this is a standardized program we have within the group. And the financial, the responsibility towards you and the shareholders is at the core of how we work, so cost and ipso fit is an element which is deeply rooted, and we will have to deepen that with you today. So have a look at the platform. This is our portfolio. And I think the important thing here is that we are the only organization out there that offers both a complete auto-injector portfolio for syringes and pens for cartages. So this is 1 core reason why. So SL only has the old injectors. We have both platforms, and that's core. We have our the first clients who buy from us for the same molecule to platforms. Look at Innovent, they launched much to diet incretin in Mainland China. They have launched it in Autentector, and now they got the approval 2 weeks ago for the UnoPen. So these companies come deliberately to us because they can breathe with us. They may not know how successful autoinjectors. So they are happy to be able to have flexible deals with some -- so if they need less auto crackers, they will buy more UnoPen and they have flexible contracts. And that's a huge U.S. piece. More and more molecules will be available in both formats. -- trajectory and what we have achieved. This is a record. We have never had more than 40 dealers in a year, 44 deals when I deepen a bit those deals, then about half of them are on biosimilars. So you see these drugs being more successful, but only 1/3 in emerging markets. So the developed markets are still in the lead and then look at the different fields of therapy, it's very broad. So it's 15 out of those 44 is incretins, different formats of GLT-1. 15 is different autoimmune diseases from polyarthritis to Morbus Crown to lupus very diverse. We have a couple of very new interesting drugs against mid to severe psoriasis. Then you have drugs for oncology, neurology, hormone therapy. So it's very broad. So this is an important message today. We have a very broad spectrum. And with over 130 clients, we have no real risk. The largest client for us makes not even 15% in revenue. The top 10 customers together make less than 50 in revenue. And we add more and more clients every day and over time, obviously, this will even grow. When we look at the spectrum of different indications, we are products launched 80 devices in the market on the left side, the pens and the auto-injectors syringe-based. Apart from the 80 approved ones, we have 180 in our pipeline. So in total, we look at 260, 80 in the market, 180 new ones that we work with. Of those 180 million that are in the pipeline in those indications and new ones, roughly 70% will hit the light. Our hit rate is 2/3 to 70%, which means 70% are reaching the light will actually lead the market. Some of them, obviously, will be stopped because they are sold, because they don't reach the output in a clinical trial. But out of the 10 million roughly 2/3, 120-ish will actually reach the market in the coming 2 to 5 years. So there's a huge flow of new products reaching in order for us to deliver the growth that we and you expect. So the platform logic is still the basis for our success, but we want to grow and we want to build upon this platform logic. So that's why we continue to invest in innovation. And the 3 new innovations we have presented to the world last November at the large conferences is Ipsolup, Ipso Dot and IpsoFlo. Ipsoluop that's the green device here to the right, that's a new generation auto-injector. What is in common to those 3 platforms, they are all recyclable. They are from 1 to 2 plastic types. They can be recycled. It's a totally new domain. When you think back how we create, how the industry created products, we were always looking at the function, the device needs to bring drugs in your body. Then we have looked at automation, how can they be automated in a big line. Then the focus was on usability, so people don't make a mistake because nobody reads IFUs. And now suddenly, it's a new domain in engineering. It's called engineer to recycle. And we have taught our organization 6 years ago with the ecodesign guidelines how to do that. And we are now creating every new innovation must be based on this lodging. And this is not just because of Brussels or Paris or whoever, it's because we are convinced the world will need to loop the existing goods. We need to loop the raw material as high as possible. We need to stay in the loop and not down cycle. It's easy to form a chair out of our pens, but our vision is to form a pen again, a pen into a pen into a pen. So we will build the basis with those new platforms that customers can recycle if they want. And because big pharma decides today for the next 10 to 12 years, they will probably think twice if they have the choice of a recyclable or a nonrecyclable platform. And when we talk to our customers, they are really willing to look at those 3 new platforms. So it's a new auto-injector and it's 2 new pens. The Ipsoot in the middle, it's a GLP-1 optimized device for injection, click, click. I think we have a demo device over there. And the IpssoFlow is a spring-driven pen like the FlexTouch that you all know from Novo. So these are our 3 new innovations. We won a couple of prestigious awards. This is the new platform generation that will bring our patent cliff from 2034, 2036 to the 40s. As you know, our S-curve from an IP perspective in the Western world, not in China. In China, we have competition. Outside of China, there is very, very, very few competition. We have to bring our clients from the existing level to the new S-curve to the new technological S-curve with the new IP protection until the 40s. So this is our work and what we have to do over the coming years to convince our clients, but I believe we have hit the trend. And not only in Europe, also in the U.S., people are looking very carefully into the Eco-Design logic. The EcoDesign logic is not just device. It's very deeply rooted in our DNA, responsibility as a corporate value. We reduced the supply chain carbon emission by by pushing out our pressure down to our 500 most important suppliers, we give them clear targets to deliver less carbon. And we have decided to zero every building. So once we open a factory, once we open infrastructure, we net zero them with certificates, and we have less CO2 in our products. And this has benefits because it reduces dependencies, more sources on the granulate. We meet the customers' demand today and especially tomorrow because they will be forced to deliver less Scope 3. And in the end of the day, this leads to lower cost of goods. It leads to lower utility costs. If you can build better building, you have a lower energy bill, and we are a very energy demanding industry. So we have a lot of benefits also from from a monetary perspective. It's not just an ecological logic. Apart from our innovation in the space of ecology, we have the innovation in the space of services. We have decided to look very carefully in the customer journey. And it's not only the product, it's actually the service. And one key element on the customer side is time to clinic. So while in average, it took us 18 months from time to clinic in the past with the new program, Car to clinic, we are down to 6 months. Large pharma are usually well planned, but this is not only large pharma. There are many clients out there who at some point in time, oh, yes, we need a pen. And now we are ready to deliver a device in a couple of months to go into clinic, and that's a huge benefit for small biotechs. And as you know, small biotech invent, big pharma by small biotech. So we want to be in the pipeline of the small biotech to then end up in the hands of pharma. So our CleartoClinic program saves a lot of time by pre-document, pre-validate, verify and to be ready from a product perspective. So there's much, much, much less testing, much less paperwork and then makes life easier for the customer. Platform innovation and the third piece before I hand over to Samuel is operational excellence. Operational excellence, obviously, the core and what is in interest to you is our footprint and where we are. And Ypsomed is becoming more and more global. You have read the news over time. Let me just introduce a couple of the achievements in the last 12 months. We have opened in Soatun our new and second tool shop. We have now a capacity of up to 100 plastic molding tools per year, which makes us much, much less dependent from third-party suppliers. We are employing roughly 100 people in Burdorf, and we are now ramping up with a second tool shop about the same size for our own plastic molding tools. In Solatun, apart from plastic molding tool, we have a huge program. We call it Hermes. This is basically moving out the old contract manufacturing business and moving in our new Ipsomate lines. This is a program in 2 phases, and it's delivered until end of '26. Very important to us because it delivers demand and capacity and work for people for the next 10 to 20 years. A huge upgrade. We invest over CHF 200 million in Solatun. Currently, the project is well on track. Also well on track is China in Changzhou. As you know, we have opened in June. We are operational since end of last year and deliver devices both to clients in India at the moment, Russia and also in China. Main focus, obviously, will be China for China. At the moment, we want to fill a bit capacity, so we deliver products to clients outside of Mainland China, but it's a China for China factory runs very well. Highly pleased on the cost of goods. So they are already below every other site after half a year, very motivated, highly motivated, very eager, very professional team. The team tells me every day, we want you to learn from me. So very pleased with how China works. Apart from China, we have our large program in Suarin. So this is Suarin2. This is where we invest a large chunk of our CapEx. You see on the right side -- on the left side, the existing factory, the 250-meter long building with 200 plastic molding machine, which is full now. Some of you have seen the site. And then this huge cube in the middle, that's a 40-meter high 15,000 pallet warehouse with 10 trucks delivery lots. And then you see this building Phase 1. This has capacity for roughly 250 million to 300 million devices, and then we can add another such building with another 250 million devices in '29, 2030. We have to see where we prioritize that we prioritize in China with the second factory that we prioritize in the U.S. or whether we build a second factory here. This will be something that we have to decide in roughly a year from now. But what you see here is the new building, which is a drone picture from before yesterday. So -- somehow we want to ramp up this in October. So there's some work to do, but we don't need the trees. I know we can start ramping up without the trees and grass. So it will be fascinating how we ramp up the first lines. Then we have a nice inauguration in April for the site, which will deliver products for mainly Western Europe and with a huge growing demand. And then the next and newest program in infrastructure for us is Holly Springs. As you know, we have decided for North Carolina for many, many reasons. North Carolina is the fastest-growing state in the U.S. It has a very high density of universities and community colleges. So they have a functional apprenticeship program. They have learned a lot from former President Schneideraman. He has been one of the forces in the states to actually implement apprenticeship programs, which is really in place, and you can go to desks and demand for people and they support you. So I'm quite positive to find the people here. The program is up now. This is a finished building, but it's empty. So we are now staffing and moving in the material. So by end of '27, we will be ready to deliver to the clients. With that, I already come to the end, ladies and gentlemen. And just a short picture on the development of our staff headcount. Obviously, almost 800 people left us. They went from Ypsomed to MyLife Diabetes Care with the pump business. We have sold Ipsotec, as you know, and we have added 245 new jobs. So we are roughly at 2,100 now. For the new year, we see roughly 150 new functions, roughly 50 in Switzerland and 100 abroad. Obviously, it's less. We are able to profit now from the operational leverage. We are able to profit now from the installed capacity. We are able to profit now from the platforms that we have delivered. With that, I would like to hand over. I can tell you you made a wise decision to spend some time with us. This is a great company, and thanks for the trust. And I hand over to Samuel, please.

Thank you, Simon, and welcome also from my side. I will now walk you through the financials '25, '26. Let us start with our top line. The transformation into a self-injection specialist to a pure-play company is now also clearly visible when we look at our sales split. We reported CHF 731 million of sales. And out of it, more than 80%, CHF 601 million is delivery systems, our core business. CHF 75 million is from the Diabetes Care business in the months April to July in the time the business was still with us. And CHF 56 million is -- in the other segment, this is mainly the contract manufacturing we still do for Diabetes Care, then the phaseout of the pen needle business and BGMS business and as well Ipsotec, which was with us from April to October '25. Let's look at the core business at the delivery system business. We achieved our goal. We reached 20% growth in that business. We grew from CHF 501 million to CHF 601 million. What were now the main drivers of that growth? When we look at our platforms, the main driver were the auto-injectors, especially the 1 milliliter and the 2.25 milliliter. When we look at the therapeutic areas, one driver was incretins, roughly 1/3 of the growth. So think of it like CHF 30 million to CHF 40 million out of that CHF 100 million growth is coming from GLP-1s, but you see it's not the main growth driver. All our other therapeutic areas are still heavily contributing to our growth in the core business. Project revenues are on high level. They are above CHF 80 million, CHF 86 million we reported in '25, '26 compared to CHF 88 million in the previous year. For those who follow us closely, have in mind that we now don't show the capacity reservation fees. The sales from that, we don't show anymore in the project revenue, but in the commercial sales. Have that in mind when you -- especially when you look at the previous year. Now let's look at the bottom line. Also on EBIT level, we reached -- we achieved our goal. You remember our guidance here was to be between CHF 190 million and CHF 210 million. We reached CHF 196 million of EBIT. That represents a 33% EBIT margin. And we had -- in the 4 months, Diabetes Care was still with us. We had a loss there of CHF 6 million, and we had a profit of CHF 56 million in others. The 2 main drivers of that profit was, on the one side, we had a profit from CHF 68 million when we sold Diabetes Care. And on the other side, we had a loss of around CHF 12 million when we sold Lpsotec that were the main drivers. Let's compare also with the previous year. In the previous year, '24, '25, we reported CHF 113 million of EBIT. Now CHF 246 million, so more than double as much. in EBIT. In the center of that slide, you see the growth of the profitability in Delivery Systems. So we grew by roughly CHF 30 million from CHF 167 million of EBIT to CHF 196 million. We not only doubled our EBIT, we also propose to our AGM to double the dividend. We stay with our policy that we want to pay out roughly 35% of our profits to our shareholders. Let us now focus on cash. exceptionally strong was the operating cash flow that shows us how well our business is generating cash, more than CHF 300 million operating cash flow. Looking at the cash flow from investing activities, we should have 2 things in mind. On the one side, we look at our growth investments. I come to that on the next page. And on the other side, we divested Diabetes Care. And from that divestment, we got CHF 307 million in. So net in the cash flow from investing activity was only roughly CHF 30 million. So we ended up in a free cash flow of CHF roughly CHF 80 million, and we used that money. As you know, on the one side, we bought shares back, CHF 150 million, and we reduced our loans. Where did we invest the money, the growth CapEx? You saw the pictures which Simon showed, mainly in fixed assets, CHF 295 million went into our factories. S being a big part of it, but as well in Switzerland, in Soatun and as well the U.S. site, you saw the building in Holly Springs and the site and also our factory in China in Changzhou. We keep innovating. We also invest in intangibles in R&D. We invest a total CHF 28 million. When you compare that with the previous year, yes, it's significantly lower. But have in mind, in the previous year, the Diabetes Care business was still part of those intangible investments. In the actual business year '25, '26, we invested roughly CHF 20 million is roughly capitalized development costs for the delivery system business. And you saw we launched 3 new platforms. When we put that investment, that growth investment into the wider context, those who follow us for many years, they know roughly 2 years ago, we announced our growth investment program of CHF 1.5 billion. Now being 2 years in the program, our actual planning shows that we will spend roughly CHF 1.3 billion in those 6 years until end of the decade. One key driver of that was our operational excellence program, our IPs of it, and I come to that later. We have the goal, as Simon mentioned, to increase our utilization rate to improve our OEs, and we work every day on that. We have a strong focus in building a flexible and modular manufacturing system. And we have a strong focus on capital efficiency. In the business year '25, '26, we realized a ROCE return on capital employed of roughly 20%. So we created clearly shareholder value. Co-financing stays a key element of that big CapEx program. Roughly 30% is co-financed by our customers. And the main instrument we use there are capacity reservation fees. You see that, that amount now also growing in our balance sheet for Newlook at our report. And now we are still having a year with high CapEx ahead of us. You see that in this illustrative simulation, '26, '27, CapEx are still high comparable to the year we had -- in 2028, we expect them already to be a little bit lower, and we expect them to cover with our operating cash flow in '27, '28. So we expect to be in '27, '28 free cash flow positive. Now we look at our robust balance sheet. We have more than 55% equity, and we have a very low debt level. Net debt to EBITDA is on 0.8, so below 1. The number I also want to highlight because it shows how well the delivery systems business is generating cash is the EBITDA from Delivery Systems, CHF 278 million. That's a very strong result and that balance sheet and that cash flow generation allows us to fund our organic growth with our own balance sheet. That's the message here. Before we now come to the outlook, I want to illustrate a few important elements of our resilient business model. As you know, we have very long-term contracts, typically up to 10 years because a drug stays with us until this drug loses the exclusivity. So for that time, it's bound to our device. What is, of course, also common when you have long-term contracts that you have indexations -- that is especially now important looking at the current geopolitic situation in which you can have also inflation pressure. So it's crucial that you have an instrument that you can hand over those costs also to your customers. And we have indexations for our main cost blocks, so for plastics, the granulate, the energy and as well labor. And this mechanism is also aligned with our supply chain with our suppliers. When it comes to potential downside protection -- 2 elements I want to highlight. First, the capacity reservation fee. That's something a customer pays independently if then this capacity is used or not. So in case customer wants less volume, this money, we still have then also the volume-based pricing. Also that protects us from volatility in customer demand because that means simple, if a customer orders less than the price per device is higher, and that is a very important downside protection for us. Then the Swiss francs, yes, we're a west-based company and a lot of functions are in Switzerland, a lot of R&D but we have a natural hedge, majority of our contracts are in Swiss francs. So that's nothing we have to to worry about. And I have also in mind our device in the FDA master file. So that makes it difficult for our customers to exchange us as a supplier. We are not in an industry in which you have typical dual sourcing. We are the single source the single supplier to our customers, and that is an important element of our business model as well. The second topic I want to touch before we come to the outlook is our Ipsit program. So we want to get fit for the growth, and we also want to be lean because yes, we also want to protect our margin. We have also to work on our cost base. And we have 4 pillars defined on which we work. The 1 operational efficiency, you heard already the goal is we are in a capital-intensive industry for us with a high operating leverage, so to have as much OEE as possible, that is key for us. And on that, we work with different initiatives. Then as an organization, we are growing, and we still want to be fast because also our competition, especially in Asia, is fast. So we want to take decisions fast. We want to take them where the decision should be taken at the front line close to the customer at the shop floor. And for that, we also have initiatives running. Then yes, you hear that from many companies. But of course, we also want to take advantage of AI. We want to have a competitive IT cost base, that's something where we feel we can also differentiate ourselves and where we can save costs. And where we hope for the biggest saving is actually in procurement because procurement also when you gain scale, when you grow, as we do, you have a certain volume, you buy, you get a certain negotiation power. So we want to use that better. We want to do more dual sourcing and take advantage of better prices. Now let's finally look forward. We guide for the next year, a sales growth of 12% to 15% in delivery systems with own devices -- what do I mean now with these own devices? The CHF 601 million we reported CHF 25 million, CHF 26 million that includes still around million contract manufacturing for pens. As you heard from Simon, that is something we face out -- so we take that away. And the starting point for that guidance for the new 1 is the CHF 560 million, which you see here on the left side. So from that growing 12% to 15% would mean a midpoint of roughly CHF 635 million. Now the contract manufacturing for the pens that is phasing out, and that still will be EUR 15 million to EUR 20 million. So add that and also add another EUR 50 million for the contract manufacturing we do for diabetes care. -- the infusion sets and the reservoirs. So the reported EBIT will still be around CHF 700 million. Looking at the profitability, we guide an EBIT between EUR 210 million and CHF 230 million. There, you can take as a starting point more or less the EUR 196 million because the contract manufacturing for the pens, as you know, is a cost-plus business. And now if we can profit in there. We want to stay above 33% EBIT margin in the next business year. Now in the last page, I want to even look out further. We announced our midterm ambition in September 25 at our Capital Market Day. And from there, -- we want to grow with sales in a range between EUR 0.9 billion and CHF 1.1 billion until end of the decade with our core business, the Delivery Systems business. You see by then everything is phased out, also the contract manufacturing for the diabetes care -- and the EBIT should stay between EUR 280 million and CHF 340 million, always above 30% EBIT margin -- and I mentioned we have a strong focus on capital efficiency. The ROCE should stay all over these years around 20%. Now we look forward to your questions, and I hand over to Sam.

Thank you, Samuel. Thank you, Simon, a remarkable year indeed. So now we'll open the floor to questions. So feel free to raise your hand and then you can ask a question Civil from Fanta, would you like to start operating your mic?

I have a question about the pens -- you talk a lot about all injectors, which are obviously your growth drivers. But when I calculate my estimates, it seems that you're growing also in pens again after you had the capacity were full. Is this the reason China which is supporting pens? And second, could you give us any hint how many units you have produced in 2025 -- is it more than 350 million units?

So I have to deliver the answer to the last question. I don't have the figure in mind, frankly speaking. On the question on the pens, it's also the U.S. 2 glargine molecules have received FDA approval in our UnoPen, so it's 2 Chinese insulin manufacturer that achieved FDA approval in our UnoPen. So 1 driver is biosimilar in the U.S. in a Chinese -- from a Chinese manufacturer. That's 1 main driver. Then we have growth in all other emerging markets, we have growth in China, in Russia and in other markets. But the main driver for the next 24 months is the launch of the glargines.

Xan Wen from Citi. Nitin.

I have 2 questions, please. So the first 1 is on it. half year on, could you give us an update on how it is tracking by each of the 4 pillars. And any chance you could quantify the expected benefit from Ipso fit to gross margin and OpEx over time? And the second question is, if you could talk to the building block for the EBIT margin outlook for '26/'27. Specifically, can you talk to the drivers of gross margin for the fiscal year.

Good. I start maybe with the IPs of it, quantifying that. In the next 3 to 5 years, we expect a low double-digit million amount out of that program hitting our P&L accumulated over those years. Then talking about the gross margin also in the next business year, what you what you see that in our business, we have around 15%, 1-5% between gross margin and EBIT. I simplify here a little bit. So think of it like that also in the next business year when we say 33% EBIT, you would reach a gross margin around 50%, 5-0 percent. Feel free to add Simon out.

Thank you. Sandra Dieci from Octavian.

I have also 2 questions. So the first, on the midterm guidance. So your midterm guidance at the midpoint implies a sales CAGR of 15.7%. And -- so this year, it looks like you have a sales growth below the average with the guidance of 12% to 15%. How should we think about the trajectory in the years to come? Is it a catch-up above-average growth next year? Or is it more a linear development you would assume? That's the first question. And then the second, on the new platforms. Have you already signed a contract with any of the new platforms or what proportion of the contracts you will -- or your ambition to sign this year, are you targeting to sign on the new platforms

Thank you, Sandra. So on the -- so we have not signed any deal on the 3 new platforms. These platforms are -- they have passed stage design maturity. They are now in the industrialization phase. So we will have the first devices ready for clinical trials in roughly 1 year on the clinical volume perspective, we would -- if we would say on a hit rate of 40 deals this year, we tried to reach 4, 5 deals. So in this year, the real ramp-up of signing those will be in '27 or '28, number one. And number two, on the midterm ambition. Basically, it is -- when we look out into the next -- it's pretty linear -- it's pretty linear. We have -- we are a bit slower in '26, '27, and we will catch up a bit in 2028. But overall, we try to flatten a bit. with certain means. We try to optimize a bit. So it gives a more straight line. But the CAGR of 15% is quite on plan of what we see today in our latest forecast over the next 4 years. That helps.

Tony Hanzlik from UBS. Also 2 questions, please. One is, can you make any comments if there's been any changes to expense plans for the Novo agreement and how we should think of the contribution midterm, how it affects maybe recent the midterm guidance? And then second question is on just the geopolitical issues in the where is there anything to highlight the impact for Ypsomed? You mentioned the indexation, but maybe also customer decision-making changes.

Sure. On Novo, we cannot give you details. We are all on track. So we ramp up the 2 lines in Solan we ramp up. We have ramped up the line in Merin. It's fully up and functional. The automated spring manufacturing with the Wafi supplier is fully attached and validated -- so we are ready to deliver. We have no indication for lower volumes. We are ready to deliver according to plan. And we have no implication any so on the midterm view. Everybody obviously waits for December '26 when Karisma should be presented, but we all stay full on course with our client. On Iran, we are lucky that we have both on the shipment and on the supplier side than our homework already after the set issue, we have decided to ship everything around the Cape of -- good Hope. So we are not affected by Hormuz. And from a granular perspective, Samuel mentioned a couple of elements. We have now on most granulate second or third sources. And for those where we have not yet, it's cumbersome work to actually bring in a new plastic type because you have to reverify your product. We put up higher stocks. -- no, we are not affected from that perspective. And if I look on a geopolitical perspective, 2 years ahead, we will be not affected at all because we source locally, we manufacture locally, we deliver locally. So we solve the problem by localizing for our clients. if I may add to the first one. I have also in mind that we said also midterm, no customer is making more than 15% of our sales. And on profitability level, that is even less. So I have that also in mind when you yes, simulate your assumptions? Of the 260 programs we have, of which 8 are launched and 180 are in the pipeline. -- we have something above 50 incretin, so it's roughly 1/5. And as Samuel mentioned, so this is in the area of end of decade, 31 on the revenue and on the EBIT way below because larger volume contracts. So there is no single risk. We have very broad scale of clients and makes us robust contrary such part of 2 questions from my side, please. Number one, this impairment of EUR 10.1 million in development costs did that go into this EUR 195.5 million EBIT from IDS.

And the second question is, you gave this outlook on sales for of EUR 15 million to EUR 20 million for Tenet EUR 50 million. Can you talk about the EBIT impact of these businesses? Because I guess, TecMed is a mid-single pointed range of EBIT. Is that still valuable? And I guess from you have negative impact. Can you clarify a little bit.

Absolutely. I take those to and then you can add, Simon. So Yes, you saw rightly, we had a write-off of intangibles. You see that in our -- in our table in the appendix. Have in mind that we had that in the previous year as well. So every year, we go through our intangibles and write off those things which are not any more variable. And yes, these numbers are included in the EUR 196 million, and they were also in the SEK 167 million in the previous year included. Then about the EBIT impact of the discontinued operations. So for you, it's fair to assume that now phasing out the contract manufacturing for the pens that is rather making a loss. So but think of a single-digit million amount. And on the other side, the EUR 50 million, again, contract manufacturing for diabetes care, which is cost plus think of that as a profit single-digit million amount. So -- so maybe also a little bit your question. The reported EBIT at the end is more or less what you also see as a guidance for the core business because those other 2 effects, the basically offset I hope that helps.

Donlin -- just simple questions. The back consolidation effect. You mentioned one. So both companies have to build HR, et cetera, et cetera. That was, I guess, already expense? Or can you quantify this effect, the buildup costs for the headquarter I mean I think you guys would you know what Yes.

I can start and you add Simon. So of course, when you take business with 2 divisions a part, you have certain dissynergies. And actually, that dissynergies we addressed also with our IPsoft program to minimize that. And for us, that means basically also just not growing in those indirect costs so that we now grow the business. And as Simon said, take advantage of the operating leverage because we have IT and overhead installed, and we want to grow now in those functions. -- clearly under proportional. But yes, we had an effect. It was not 0. Feel free to add side. I mean it's less than 1%. So of 2,000 people, maybe 20 position are doubled such as the executive team, obviously, the standard team, quality system responsibility. So -- and these 20 people, they will remain able, but it's actually all soft. So -- after the closing, we have known exactly who goes where and who -- so this has been solved with the Mercury program. So when we got the part, this was already solved.

Okay. And regarding the Swiss franc contracts, which is well known and it is very good for you. But if I will be a U.S. customer, I have a certain pressure by saying, "Hey, if your price is so high for me as a U.S. guy because of the dollar, then I also have -- has an alternative, which is operational now in the U.S. Is that a bit is.

So there's 2 answers to that. So most U.S. clients are today sourcing through their European sites. So most of our U.S. customers are buying the product through their French or German or Dutch facility in euro or in Swiss franc in Swiss francs and I'm shipping it themselves to America. That's number one. And number 2 is with North Carolina in 18 months. If you bring this to the table, you basically stop discussion. Our contracts are very, very robust. There is no possibility to on that end. And they all know it will be solved in due time. So it's actually not a topic with Americans. We have it with some Europeans that are getting a bit demanding on the euro side, but we remain very firm on that. We might now do some contracts in euro because obviously, we have higher cost in euro as well now, which we're in. But we try to be -- if you look at our financials below the line we try to be naturally hedged. And we manage that very closely and you give us clear guidance. I think for sales, it's clear to stay firm on our policy.

And if I can add to that one, I have also in mind our industry has those long-term contracts. So everyone who has a contract in euros or dollars has a different inflation. So for the customer. If you have a dollar contract, it gets for you automatically every year, 4%, 5% more expensive. Yes, that is then somehow translated into the exchange rate. But through the mechanism, I mentioned before, for us, when you have a Swiss franc indication, those price increases are not big, but you feel that price exchange in the exchange rate. That's why, yes, we -- but we work on that, that we keep our contracts in these francs as much as possible.

Last 1 to sneak in. the maintenance shutdown of Sanofi. I mean, in theory, your guidance ex of 12% to 15% would have been more because you also have the unused capacity when Sanofi takes out the equipment, you see my point. So you could have more sales. If Sanovi will not be busy with taking out the equipment. So you see the point.

No. So we don't have a capacity issue. I mean an obvious old lines, but you cannot use this space. That's true, yes, but they have enough space in Guerin. So we never had an issue. So this is an important topic. So we always have overcapacity on space. And over the past 2 years, we have invested heavily in infrastructure on the line side. So we never had an issue on that. So this is, of course, adds to the ramp-up cost. We have stranded cost on this Hermes program because 1 shop floor is empty for 4 months, 4-5 months. And this is a fact that has a pressure -- had a pressure also on the cost will have a pressure on the profitability next year, but very, very minimal. I mean in the end, it will be taken up by new projects. But we could not have been more efficient. This is -- it's not a box and shop like Formula One in a second. It's quite a big project. You have to move out to soccer fields of infrastructure out and then move in and then the other one. But we will be very glad to do a day together next year once we open it, then we can show the magnitude of the new lines.

I think we've got the gentleman in Brown. And then we'll take some questions remotely on.

Dominik Feldges from -- not Susan. I have first 3 questions. Actually, you've said that the competition, obviously, in Asia is very fast, I have to watch it. carefully. Are there any new kids on the block maybe merging -- or is the situation the competition is still the same? You've mentioned Russia 2 or 3x. Do you pay any taxes in Russia? And then -- how about the tariffs? Have you paid any tariffs during the last financial year? -- then maybe a very last question. What about these pills, which are now getting on the market being picked up fast. We see it with Novo Nordisk and Eli it -- does that concern you in any way that there might be less demand for injectable GLP ones.

Thank you very much, Mr. Feldges for the questions. I start with China. We have a handful of small metric companies that are able to manufacture medical devices, insulin pens, autoinjectors, on a similar quality or even same quality as some -- what keeps them away from reaching Europe is IP. Their IP would infringe our IP of other players in the market until 2034, 2036. -- depends on the platform. So that's why they are not a competition for our main business. They are locally strong, but based on our size and the operational leverage that we have the large tools, the large lines from a cost of goods perspective, we are still below them. They are, of course, I'm happy to deliver at 0 margin. We are not -- at the moment, we are looking very carefully which deal we have to win, which we don't have to win. We know the space in the Chinese pharma world for the past 20 years now very well. We know very well which clients we have to keep and which we may not need to keep -- so at the moment, we are on top of the things, but we watch it very closely. We also interact with those players. I think there's also a possibility eventually in the future to collaborate with some of them for the local or the regional market. for Russia, we have -- that's public. We have 2 clients in Russia. They are picking up the goods in solar or they pay 100% upfront and they pay in Swiss banks. So it's a we pay no taxes in Russia. It's Gerofarm and form standard. It's 2 big pharma companies that by UnoPen for the insulin from us for over 10 years, a very robust relationship, and that's all sycoproofed. This is all according to the standards and agreements that Switzerland has with the European Union and Russia. And then the question on tariffs. As I mentioned before, we have been very lucky that we have not been affected by tariffs since -- we work almost 100% ex work or ex factory. So customers pick up the goods at our factories in Switzerland, in Germany, they do the import from Europe into the U.S. That's for the majority of contracts where we will see an effect or may see an effect is in the delivery of the plastic molding tools because we manufacture the plastic molding tools in Switzerland in an existing and a new tool shop in or and Solotone. -- and there is a 15% tax currently expected, not a 50% because it's deal, yes, but U.S. doesn't have any plastic molding companies left. So they realize they cannot tax the 50%. Otherwise, they get no tools from Europe. So they apply the lowest possible tax tariff, which is currently 15%. That's what we factor in. And that's what we will feel in '27. But all in all, this is maybe CHF 1 million or CHF 2 million in tariffs. And the last question on the GLP-1. Lilly and Novo report steep trajectories on the start of the pills for GLP-1. That's a good sign. It actually shows that this therapy of taking medicine for losing weight, get traction. -- not only in lifestyle, but generally also in society, which has in generally a positive trend towards injections because don't forget, this pill delivers 10% to 15% weight loss. It's more a lifestyle thing, whereas injections is for severe obesity, our depositors for people who really have to lose weight because they have a BMI of 35, 40 and more. If they don't lose weight, it's life-threatening, that's why WHO also supports these therapies. So -- your question is very relevant to us. Mr. Feltes, we watch at the GLT-1 trend very well. At the moment, we see a positive trend towards this class of therapy. Maybe you want to add something sample to those 4 topics. -- maybe only to the orals, which is, of course, a common topic also in the market and among investors. So we observed it carefully.

And yes, it it grows the overall market. So it's -- as Simon said, it's another target audience, which takes it. And it's even for many people, let's say, first contact to that drug category and could -- and it leads them also later to take those those semaglutides and other molecules. So we don't see that as a competition. It's a coexistence, which helps also our business, our subcu device business. Other than that, nothing to add.

Bilenker much -- we'll now take the next question online. Jeremy, if you may, on mute to the next person. Kanai's John Amantran Barclays.

Right. I have a couple of questions, please. The first 1 is just a follow-up on the ExoFit program. You mentioned low double-digit million out of the P&L over the midterm. Does that include the lower D&A expected from the lower CapEx you've announced? And is that low double-digit million amount included in the midterm EBIT guidance of EUR 20 million to EUR 30 million -- or could it be upside to that number? That's the first question. And the second question is about the mix of pens versus auto-injectors. So you spoke about how customers are kind of because you have both. But -- how should we think about potential headwinds from you selling more pens versus autoinjectors -- because in GLP-1, for example, a pen can replace 4 auto inductors -- and presumably, there's a different margin profile between the 2 products. So if you see a big uptick in pen demand, what impact could that have on your midterm EBIT target?

Are we taking the first one? I start with the first 1 and then hand over for you for the second one. The Ipsofit program, this double digit million amount I mentioned, yes, that would also include the improvements we have through operational excellence, less investments less depreciation. And for you, it's fair to assume when we do a midterm ambition that a certain amount we include, we have a as a realistic target. But of course, Ipsofit can also provide actually an upside to that midterm profitability goal if we execute well. And as I mentioned, 1 key factor there will be procurement savings. So that is a potential upside. And the question depends on not inject the hand back to you, Simon.

Sure. It's a very relevant question to us. What is the trend in GLP-1. I mean it's a GLP-1 thing where it's possible to use both an open check their and the pen for some of the molecules. Many GLP-1 molecules are not liquid stable. You cannot put them in a pen, they will rest in an auto injector. But let's take semaglutide, for instance, and the biosimilars of it, you can put them in a pen. So yes, we feel a slow trend towards device, but every biosimilar company is watching what Novo and Lilly are doing. So when no 1 really are launching all the check in some markets, they would also go for North and check if they go for a pendalso go for a pen. It's actually more sticky to what the 2 incumbents the originators are doing and then biosimilars are following the good messages. Jonathan, for us, the good message is that we have both product platforms in our portfolio. and this makes us hugely unique. And as I mentioned before, we can really shift with classic and there look, if you don't know yet where you allenceck the volumes you land, you can get the pens from us. And indeed, it's less lucrative for us because it's less volume. -- of course, but we can give the freedom and we can keep the customer with us. So for us, it's a very valuable trend, and I don't see it as negative. I see it as natural. It's also less plastic waste, by the way. But -- it's not so much the cost. It's much more what the 2 originators are doing in the market and that it can apply the trend for Ypsomed.

We'll take the next question online Jeremy.

It's duties from BNP Pariba. First, Liam, could you please confirm or the group EBIT for the year is expected around 20, 23 well, like core YDS, I'm just getting mid-single digits below, so I wanted to confirm. Secondly, -- could you please help us understand what commercial sales growth for YDS was excluding the capacity reservation fee for the second half of this year just to get a cleaner number of the commercial exit rates in the last fiscal year? And thirdly, -- could you also give us a comment on phasing for this year's guidance. I mean, given the contracts you mentioned some on the ends in H2, is it fair to think you'll see higher growth in and any comments around margins.

Thank you. ties. To your first question, you understood right. So EBIT guidance is EUR 210 million to EUR 230 million with the delivery system business with own devices. So midpoint would be EUR 220 million. And as I mentioned before, the other EBIT effects, they more or less offset the EBIT which is coming from contract manufacturing, diabetes care which is positive, is offsetting with the slightly negative EBIT from phaseout of contract manufacturing pens. To your second question, how is the growth dynamics of commercial sales. So when you analyze, you see that it was last year, in the business 24-25 a little bit more than EUR 10 million of capacity reservation fee revenue and now in the business year 26 million, it was around EUR 20 million -- so you can take those 2 sums away, then you have the full year dynamics -- when it comes now to what you mentioned, H2, let us that pick up separately, happy to have them in a separate analyst call I look at that dynamic. And phasing the third question. As many of you know, we historically have rather stronger second half year. So we had that also now in '25, '26. And we expect that also for '26, '27, so for that business year, the rough estimate you can take is roughly 45% of sales in the first half year and then 55% in the second half year. Feel free Simon to add something.

We'll take the next question online, if that's okay.

Yes. It's Fin chatter from Deutsche Bank. I have 2. So first of all, could you please explain again why the growth in '26, '27 is a touch slower than in the previous year and then also compared to what you expect for '27, '28, is this simply a timing question of new capacity coming online or is there maybe also a connection to the expected ramp-up of Novo volumes? And then connected to that, could you remind us how much GLP-1 revenue you eventually had in fiscal year '25, '26, I think you pointed to around 10% at some point in the past, a confirmation here would be great. And also just to confirm, is there already meaningful Novo volume in there? Or is this expected for this fiscal year, it has just begun. So it's probably fair to assume given the launch is early '27 that over just the fiscal year that has just begun no volumes will probably start to ramp up for you.

I start. And I know so the growth compared to previous years. Yes, when we look at delivery systems in the past, there was also a slide which we showed at our Capital Market Day that there was 20% growth in that business. But have in mind that was also on a much lower base. And we also tried to explain you in the capital market day from which teapot areas that growth was coming and is coming in the future. And you might remember, main growth drivers are autoimmune, growing double-digit ships, then we have the GLP-1 incretin space also growing neurology. We have rare diseases growing very fast, but we have also one important terapoitic area, which is expected to grow slower than in the past, and that is insulin, and that was in the past, growth rates, of course, still a driver. The second question, the ramp up. Simon mentioned, it's more or less a linear growth we expect until end of the decade. Of course, a certain phasing when certain drugs are launched, this is natural. But we don't have somehow a specific element, which would now, let's say, make this grow now slower and then in the future faster. So it's -- think of it when you model it as a linear growth more or less towards the end of the decade. The third question about how much is incretins today of our sales at the number you mentioned is right around 30% of the sales, '25, '26 were related to incretin customers. And sorry, 10% in the last year and 30% in the midterm. Thank you. And Novo, the question -- for you, it's fair to assume that, of course, Novo is building up the supply chain before they launch. So it's fair to assume that we already have certain sales already for Novo. yore to add.

Yes, it's ramping up, but it's not significant. The majority comes from other companies in China and around the world that we just announced, such as Sun Pharma and 1 company we also announced is invent in Mainland China. So this is a real significant double-digit million volume devices that we ship. So it's quite broad and then, of course, also project revenues with those 50 projects in GLT1.

We have 2 more questions online, and then we'll well.

Perfect. Just a couple on KPIs and then on Holly Springs. I mean, firstly, if we look through the KPIs in terms of disease areas, and originated drugs, it surpassed your target, but on the biosimilar side, it was lower than expectations. I was wondering if you could talk to this particular phenomenon. Is there a catch-up in biosimilar projects expected? Or did you prioritize certain originators and then maybe just another KPI that you've commented on the past, but don't disclose now about equipment effectiveness. You had a target of 70% for the previous fiscal year. Could you talk quantitatively how this looks today versus those original expectations?

You take the second one. I'll take the first one.

Okay. I can start with the second 1 with the OEs. That is -- and I mentioned it in the Epsof program. So the 70% is overall still a go, we have certain lines which need to have higher OEs where we are also today above the 70% I think I want to highlight here, what, of course, is crucial in ramp-up phases that you reach those target OEEs as fast as possible. And you might remember the slide also, I showed at the Capital Market Day, so that for us, ramping up and especially coming to target OEEs that can take can take a year. And there is where we have a clear focus on it. So just because we don't report it anymore, it doesn't mean that we have it as a focus. It's a clear focus because it's 1 of the main cost drivers, the OE, the first one. overall.

I'm not sure if I fully got your question. If I don't answer correctly, feel free to ask again. So on biosimilars, basically, we -- of the 44 deals we have signed last year, 21 were biosimilars. So I think we have quite a healthy spread. We have never guided or mentioned any targets on biosimilar versus originators. No, we are very happy. We are closing or 7 out of 10 deals in the Western world. We are closing a bit below 5 deals in China, I guess, that's pretty difficult for us to figure out because they are very -- are a lot of small shops that is difficult for us to really prioritize. But then generally, I mean, we are fully on track with the overall trajectory on deals. But maybe you want to want to concretize your Biosev question.

Yes, just on the annual report, I mean it's on Page 23, there's a target that talks about injection systems for biosimilars in numbers. So in terms of the target that was in and the number you're quoting is 47%. And in terms of originators, the target was 31% and you looking like you're serving 36%. So I just wanted to try and understand, is there a pull-forward of maybe higher value contracts in originator or vice versa or any dynamics there.

So first of all, I'm impressed how detail you read our reports, thanks a lot. So these are targets that have been set 4 years ago. So obviously, it's quite difficult to -- no, I mean, there's no signed or trend it is we close what we can close. We try to prioritize every deal below CHF 5 million annual revenue. We look at very carefully. Every deal below EUR 1 million. We don't do. So they are, of course, by similar deals that we don't do because it's they're too small. But no, this is not a trend. This is a figure now. Basically, we're adjusting to. We are setting new targets now for the next term, 4 years. And for the nonfinancial and the financial reporting guidelines and -- so we'll be very careful on setting a target there.

Perfect. I think we have 1 more question online, and then we'll close the call.

Yes. This is Anna. I'm Sapkowski from KeyBanc. Congrats on the great results. I have 2 questions. The first is around the record number of new projects. It looks like it's pretty balanced between both incretin and non-incretins as well as originators and biosimilars. Do you think you could just remind us how the existing projects you have in place and give us a sense of whether these customers are motivated by your new launches of your devices and like what makes these devices better for next-generation therapies? And then I have a follow-up, but maybe we can start there.

Thank you, Anna, for the 2 questions. On the -- on the 44 projects, 15, 1-5 have been incretins. And if we do the maths correctly, 29 is non-incretin -- of the 80 launch projects, only a handful are incretins. The majority are outside of the space. Of the 180 overall projects in the pipeline, roughly 1/3, roughly 50, 5-0 are incretin or somehow GLP-1 related which will, if you now take the line, it will end up to something like 30%, 1/3 of the overall revenue in 5, 6, 7 years will be GLP-1-related on the devices, our competition is excellent. We have a great colleagues with the other companies, they manufacture and develop excellent products as well. In the end, it's always a package. And what we have seen over the past many years that the trust and the track record and the fact that we are known in the industry to deliver that we pick up the phone after onetime ringing that we answered the e-mail in 24 hours that we delivered the project on cost, on time, that these things in the industry are really known. And many pharma clients choose us because of those values. -- but other companies in Taiwan, for instance, they are doing a great job as well. And we are motivating each other to invest more in innovation. Today, -- we are clearly ahead of them. We are clearly #1, but we have to stay awake and keep up the good work. Can we do that 101, your question? Let's stop it here, okay?

Thank you very much. We'll close the recording. Thank you.

Thank you very much for coming, and we have some more time outside for some one-to-one. Thank you very much.

Thank you from my side.