Ypsomed Stock

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.

Good morning. Welcome, everyone, to Ypsomed Half Year Results 2025-2026 Earnings Conference call. Today, with CEO, Simon Michel; and CFO, Samuel Kunzli, we would like to go over our first half year results. We'll go over the key achievements and the financial drivers for this first half year. After a short presentation, we will open the floor to questions. Thank you for joining us again, and a warm welcome to all.

Without further ado, I'll pass on then to Simon. Please.

Thank you very much, Sam, for introduction. Good morning, everybody. Great to take the time for us here this morning. We have great results. You have seen it this morning. Let us deepen it. I will do a channel overview and then hand over to Samuel for the financials. And as you know me, I always start with our purpose. This is why we get up every morning. Ypsomed is making self-care simpler and easier. And those 4 are our structural growth drivers, therapy go home, drugs have to be injected, more and more biosimilars are available, and the large new class of GLP-1 incretins that is giving Ypsomed a strong push.

So we profit a lot. We have a lot of tailwind that supports Ypsomed in its growth. And we are really well set up. Ypsomed is a pure-play injection specialist. We are a leader in innovation. We have our operations under control, and we have very robust financials. I will deepen now with you the first 3 pillars, and then Samuel will go with you through the financials.

Let me start with the injection specialist focus. As you all know, we have done our homework. We have finished the transformation after 3 years, a very clear path, selling DiaExpert to Mediq in '23, selling Pen Needles to MTD in '24, selling Diabetes Care to TecMed this year, and selling Ypsotec last week to Callista. With that, Ypsomed is now really clear setup, really focused self-injection specialist, focusing on the high-profit, high-margin self-injection B2B business. So the new Ypsomed is a delivery systems only company. I will not further deepen the figures. I will leave that on to Samuel in a couple of minutes.

Innovation leadership. Ypsomed is strong with by far the broadest portfolio of devices, the auto-injectors to the left with the YpsoDose for larger volumes, the pens to the right and the digital assets. And as you may have read, we have received FDA approval as the first company at all with a digital device in America to support clinical studies, clinical trials with smart devices.

We're also very proud that we were able to launch and present 3 new platforms to the community in our industry, YpsoDot, YpsoFlow, and YpsoLoop. YpsoFlow is a FlexTouch-like device, it's a spring-driven disposable device for insulins for GLP-1s. YpsoDot is a GLP-1 optimized device, a click, very simple device. And YpsoLoop is the next-gen auto-injector. And what is in common for those 3 platforms is that they are all recyclable. They consist of 1 or maximum 2 different plastic parts. They used to have 7 different plastic types.

Now we are down to 2 different plastic types, and that makes them recyclable. And that's our new technological S-curve. And it gives us at least 4, not even 5 years of advantage towards competition. We are really, really much further now here in the new cycle. And big pharma biotech, they want to order devices that can eventually be recycled. So it's YpsoMate NetZero, YpsoMate Zero, the first version to reduce by 22% and YpsoLoop now is reducing 64%, remaining us at 85 grams of carbon equivalent. And this, of course, then in the end we can offset and will further work on in the recyclable scheme. So the main focus of Ypsomed on the innovation is sustainable devices for our pharma partners.

We have launched 12, 13 new products. We just mentioned 3 here. We are very proud to be the partner of Innovent with mazdutide. That's a GLP-1 incretin, the first of its kind in Mainland China. We had a very good start. We are producing both out of Switzerland and out of China now, and we will move, of course, the volumes there to deliver out of China 100%. We have a client for Alzheimer out of Japan, you may know, and we have a Japanese client here as well on a new innovative autoimmune therapy in the space of psoriasis. So very high-value drugs that we present here, especially in the 2.25 mL format.

I mean a very important topic probably is how we are set up. And you always hear Ypsomed's dependency on GLP-1s. We have indeed over 30 deals in the space of incretins and GLP-1s, absolutely. But they make only, at the moment, a small part, much less than 10%. Overall, we have not one client that is delivering more than 15% of revenue. And that's important. It will stay. Even in the foreseeable future, next 5 years, not one client will make more than 15%, and that's very important. So we don't have this clump risk, this risk of being too dependent on one client or one molecule, really broadly set up with 130 clients, 230 projects, 70 in the market, 160 in the pipeline. This is how Ypsomed is set up.

And this shows also -- this graph here how broad we are active. So we work in a large range of indications, in a large range of therapy areas, as you see here on this slide. Ypsomed is not a diabetes company. Ypsomed is not an obesity company. We are very broad. We are injection systems, injection therapy company. That's what we are doing for all kinds of therapies, and many more will follow in the coming years.

And Ypsomed is winning not only because of its unique platform portfolio, we are also winning because we do excellent service, because we pick up the phone after 3 times ringing, because we answer e-mails in 24 hours. It's the way we work with our clients, the way we listen, the ability to customize devices, but still have to manufacture on the same lines. So we have now a setup that really lets us to accelerate, really lets us to profit from what we have been installing over the past years.

Let me give you a couple of insights on the operations side. So what has happened? I mean the main topic, obviously, is our big plan to move to 1 billion device capacity to the end of this, beginning of next decade. 1 billion installed capacity. Today, we are at 350-ish million. So we'll almost triple the capacity in the coming 3 years. It doesn't mean that we will deliver 1 billion devices end of the decade, but we are ready to deliver, in a 5, 6, 7 days model, such volumes. And you see on this graph here where this is going to happen.

So Switzerland is remaining an important place. Switzerland here in Solothurn, we are moving old contract manufacturing out and we move new auto-injector YpsoMate in will still be a very important site with roughly 1/4 of the total volume. But the main site, obviously, is Schwerin with tripling our current installation, our so-called Schwerin 2 program. And then also China, Changzhou, which had an excellent start in the team there, and Holly Springs near Raleigh, which we are going to sign this week and then really start installing the factory.

So Ypsomed is becoming a much more global company. We have a footprint closer to our clients. This makes sense from a client perspective. It makes also sense from an ecological perspective. We have much less freight, much less cost on that end. So this is how Ypsomed is going to be positioned in the future, China for Mainland China, U.S. for North America, Switzerland and Germany for EU and rest of the world.

As I just mentioned, Solothurn remains a very important place. Diabetes Care business now moved out. So we have some office space left. We are going to fill that over the time. This is not the first priority. The main priority is manufacturing. We're installing a new high beam warehouse. We are installing a new tool shop, as you know, and we are installing tool lines for auto-injectors.

In China, we had opening in June, a great team, really ready, really proud. The team wants to succeed. They want to show us how it works. We want to learn from our friends in China. I have a very good feeling here that they will succeed.

In Germany, we had the topping-out ceremony with the Minister President Schwesig, a couple of weeks ago. You see here just a small glimpse on the new warehouse for 15,000 pallet places. This is now being built. It will be 40 meters high. It gives you an idea on how large this site will be, tripling basically in 2 phases, our current Schwerin 1 site, which is going to be full by end of '26.

And North America, in the research triangle, so we decided for North Carolina, a bit more south on the East Coast, a great area, fastest-growing state in America, Raleigh, third fastest-growing city in Northern America. Raleigh, the research triangle with most big pharma being very close to our site. Holly Springs, a small town. We are able to buy here, acquire a finished building, 15,000 square meters. It will take us now 18 months to install our equipment in to install first lines in and then to be live end of '27, deliver first devices '28 for our customers in America. It's very important that we have now this message out there since SHL also delivered the site in America. We are now also present, and that's important now that we are really close to our clients, and this is no longer an argument for our customers that we are not in America. So very proud we found that spot.

I was there last week. I have a very good impression. I met the Governor, I met many chancellors of universities. Also on the people side, with the community colleges, the apprenticeship programs they have, they acquire 150,000 people per year that move to North Carolina. So I believe we will have not an issue here finding good staff, well-educated people to ramp up our site in the course of '27.

My last slide before I hand over to Samuel, this gives you a glimpse on the people side. As you see here, we are still growing a bit in Switzerland, but the main growth is now happening, obviously, in our manufacturing sites in Germany and in China. And that will also be the case in the coming years. Switzerland will only grow slightly some specialty functions in R&D here and there, but the main growth of colleagues here is going to happen in Germany, China and then in 2 years in America. In Germany, we are going to move from 500 people to 1,000 people over the course of the next 3 years. So this is where the music is going to play. This is where we're going to manufacture, but we don't need more people in overhead, in admin, in R&D. So the main growth now is happening on variable side, on volumes, on factory side.

780 people, as you see here, moved out now last week. They are now part of the TecMed Group, roughly 250 in Switzerland and 500 in the countries. It's no longer part of the Ypsomed family, but many of them are nearby in Burgdorf.

So with that, I would like to hand over to Samuel, who will give you an insight on where we are on the financials and how we are set up financially. Samuel, please?

Thank you, Simon, and a warm welcome also from my side. I will give you the highlights of the semiannual result in the next 10 to 15 minutes. Let's start with the top line. We reported sales of CHF 363 million in the first half year. On the left side, you see the breakdown. I do start with the green part, the Diabetes Care business. CHF 75 million of sales the infusion pump business realized in the months April to July. You remember, end of July, we had the closing of that business. Then CHF 21 million, that is in the red part, this is all discontinued operations, and this includes Ypsotec. You heard, we sold that business end of October. So in the first 6 months, that was fully included. This includes also still the phaseout of the Pen Needle and BGM business. And this includes now also what we started for Diabetes Care, the contract manufacturing for infusion sets and reservoirs.

Now let's focus on the core business, the remaining business, the delivery system business. Here, we had sales of CHF 267 million in the first half year. Let's deepen that. You see we grew from CHF 220 million last year to CHF 267 million, so a 21% top line growth in the core business. So we are on track with what we guided. You remember, we said we will grow in the core business around 20% in the business year '25-'26. What is especially a good sign and what I want to highlight is how the project revenues developed. We grew from CHF 43 million to CHF 52 million, so around 20% growth in the project business, pen and auto-injectors together. And that is a very strong signal that we have a good pipeline, because those project sales, so the clinical devices we sell, the customizing we do for our customers, they translate into midterm commercial sales, and this is the future then for the commercial sales.

Now the commercial sales, there we also had a very strong development. The main growth drivers were the auto-injectors. They grew by 46%. Now what did we earn? What did -- how does the profitability look? We reported EBIT in the first half year of CHF 152 million. And that EBIT is high. It needs some explanation because we had certain one-off effects. And I want to highlight that. Let's also have a look on the left side of this graph. The Diabetes Care business in those 4 months in which it was consolidated in our P&L made a loss of CHF 5 million. So that business was not yet breakeven.

Now in other, we report a profit on EBIT line of CHF 70 million. The main driver was the book profit we realized from selling the Diabetes Care business. This profit was CHF 75 million. Some of you expected a higher profit from this sale. We were reading numbers in your reports from CHF 90 million to CHF 100 million. Therefore, I want to explain why we have now the CHF 75 million profit.

One important factor, and we mentioned that when we sold the Diabetes Care business is the earn-out components. So the earnout depends on the sales of the business we sold for the next 3 years. When you value earn-outs in the balance sheet, you always have to assume an uncertainty, because the competition in that business, Insulet, Tandem, they are not sleeping. So from this total possible earn-out of CHF 90 million, you see that in our books, we took CHF 45 million in our books. The second point I want to mention why this profit is maybe not so high as some of you expected, have in mind, we sold a business which still was also at the closing not breakeven. So we had still minus CHF 5 million negative EBIT. And this, of course, does also not help for this book profit.

Now let's focus on the core business. In Delivery Systems, we earned CHF 87 million. This is an EBIT margin of 32.4%. Let's have a look now at how we make sure that we also grow and that we are profitable in the future. For that, we did the investments, and these are mainly growth CapEx. You remember, we have our growth plan to reach this 1 billion device capacity by the beginning of the next decade. For this, we want to invest around CHF 1.5 billion until end of the decade. This program, we started already last business year. Partially, this is financed also by customers. Have that in mind.

What you see here very well, we are on track with those investments, with the fixed assets. Simon showed you the investments we did in Schwerin. So from this CHF 126 million, the biggest part, roughly CHF 120 million went to the core business, to the Delivery System business. And yes, Schwerin is a very important side now we invest. We invest in Solothurn, but we invest also in China, in Changzhou. That were the main drivers on the fixed asset side.

The intangibles as well, we develop the future platforms, the pen, auto-injector platform, Simon showed you the YpsoLoop, the YpsoDot, and the YpsoFlow. And we have invested around CHF 20 million overall, roughly half of it is for the Delivery System business. When you compare that number with the previous year for the intangibles, you see that in the previous year, we capitalized CHF 39 million of intangible assets. And the main driver was that the Diabetes Care business in the previous year was 6 months included and was heavily investing at that time. So it's not that we invested less in R&D in the core business.

Now could we finance the growth CapEx with the operating cash flow? For this, we look now at the cash flow statement. Let's start with the operating cash flow. Again, have in mind, this is the operating cash flow for all the businesses, including the Diabetes Care and the discontinued operations. The CHF 130 million is for everything. If we just look at the core business, that number is even slightly higher. We would be above CHF 140 million cash flow we generate from the operations, and that is a very strong number.

Then the cash flow from investment activity needs an explanation, because you just saw we roughly invested CHF 150 million. So why net, we are here positive? The reason is we sold the Diabetes Care business and received a little bit more than CHF 300 million already now in cash. So that makes this cash flow from investment activity positive, roughly CHF 160 million. So the free cash flow, around CHF 290 million. So even if you take that extraordinary cash we got from TecMed for the sale of the Diabetes Care out, you see we are only slightly negative. So we nearly managed to finance with the operating cash flow, our growth CapEx. So having in mind that the operating cash flow from the core business is even a little bit higher. So we would nearly finance that with the operating cash flow.

What did we do now with this money? We paid back our short-term financial liabilities. So we deleveraged, and I'll come to that. So the net cash amount on our bank accounts end of September was roughly the same as it was end of March. Now since we are in a capital-intensive industry, we have to look also at our balance sheet. And for us, not only EBIT margin counts, for us counts the capital efficiency. And we measure that with the return on capital employed. And for us, a very important number is this ROCE in the core business. So we realized, again, the created value. We realized a ROCE of around 21% in the core business, and that shows that we create value for our shareholders.

Then the second point I want to mention, our balance sheet is very solid. We have an equity ratio of around 67% and the ratio, net debt-to-EBITDA from the last 12 months is 0.3x. So the last 12 months EBITDA was CHF 245 million, and that is a very high and important number. The last 12 months EBITDA, CHF 245 million. So as you see, we are well set. We are on track to finance that organic growth, growing up to 1 billion device capacity, investing in total this CHF 1.5 billion with some co-investment from customers, with our own cash flow and our own resources.

Now let's finally look forward. We confirm our guidance for this business year. I mentioned already the top line. We expect to grow around 20% with the sales with the Delivery System business. And the EBIT, remember, in the first half year, we had now CHF 87 million. So mathematically, we are not on half, but you need to have in mind that for us, typically, the second half year is stronger than the first half year. So we are also comfortable to reach that EBIT range between CHF 190 million and CHF 210 million.

In the last slide, I want to even look further in the future our midterm ambition. Many of you followed our Capital Market Day, and you saw our midterm announcement. We want to grow with our sales between CHF 900 million and CHF 1.2 billion. So that is basically when you look at the Delivery System sales of '24-'25, which was around CHF 500 million, that is basically doubling the top line. We want to reach between CHF 280 million and CHF 340 million of EBIT. We also want to clarify, so this time we wrote it also that the EBIT margin stays above the 30%. I last time only mentioned it in the oral way. So we want to really clarify this. This is our ambition. And the capital efficiency should stay on the level we have now, around 20% ROCE.

With that, I want to finish the presentation, and we want to open the floor for questions, and I give back to Sam.

Thank you, Samuel. Indeed, strong financials, great performance for the first half year. Simon as well, thank you for going over our key achievements.

We will now open the floor for questions. [Operator Instructions] So now we have on the screen, number one, Sandra, I believe that will be you. Please feel free to unmute and ask your questions.

I have 2 on the gross margin and one on the pen segment. I think maybe we go one by one. So first on the pen segment. Can you comment on the current growth rate of your pen business? You mentioned that commercial sales of the auto-injectors grew 46%. So the overall segment grew 21%. So that implies that commercial sales from the pens might have declined. Does that interpretation make sense?

And then what do you expect from this segment going forward, especially with the new platforms such as the YpsoFlow and YpsoDot that should support the pens midterm outlook? So that would be my first question on the pen segment.

So indeed, we have been flat on the pens. Maybe Samuel you can explain why this has happened, and then I can give a couple of comments on the new platforms.

So it's the right observation, yes. So the pens were more or less flat. And have in mind with pens, there is quite a wide portfolio. So the pen sales are heavily driven by product and customer mix. But your observation is right. For now, it was flat. And the second part, when we look forward, yes, we assume a growth rate for the pens as well. But for you, it's fair to assume that the growth rate for the auto-injectors, also when you look midterm, will be higher than what we expect from the pens, but we expect also the pens to grow, especially having also our new platforms in mind. And Simon, please add from your side.

Sure. I mean the main growth on UnoPen is still happening, on the disposal pens is still happening on UnoPen. So we have new clients in China, and we have new clients in the Western world on GLP-1s. But those GLP-1s will only launch in '28, '29, '30. So these 3 years in between now, we are basically bridging with Chinese volumes. So this is going to start as of now-ish. Therefore, we are going to fill the capacity and then swap steadily with higher-margin Western products. That's for UnoPen. So this platform is still very much alive. YpsoDot and YpsoFlow are new platforms. We have presented them now at PDA and CPHI the first time. We are now discussing and starting the dialogue. So this is something we will see the first revenues in 3 to 4 years from now. It's a new platform.

Okay. Very helpful. Just to clarify, so the commercial sales were flat. You're not talking units, but rather sales?

There's a mix. We have also a couple of older products in pen, as you know, which declined a bit, but in total volumes on UnoPen, we had a slight increase. In Swiss francs, we were flat.

Okay. Super. And then my second question is on the gross margin. So the H1 gross margin has still been diluted by noncore segments, the 41%, I think it was. What would be a reasonable assumption for the gross margin of the core YDS stand-alone business? And how should we expect that to evolve given the factors such as price pressure and lower ASP from high-volume contracts, but then also potential efficiency improvement and positive mix effect from higher auto-injector shares. That would be very helpful to have some guidance there.

Gladly. I want to give you, let's say, calculating backwards view on how you can imagine that gross margin developing midterm. If we say midterm, the EBIT margin is still above the 30%. So then it's for you fair to assume that a little bit more than 10% will be needed for SG&A and R&D. So what you need to realize still is a gross margin of at least 45% that you still end up above the 30% EBIT margin, just ballpark numbers. And again, I tried to speak for a mix, auto-injectors, pens, project business, as you know, many factors influence that, but just to give you a rough idea on how we think of that number.

Maybe a comment to the profitability since Sandra is asking on that. Yesterday, we have launched YpsoFit. It's a fitness program that we have rolled out over the whole company. We believe it's the right moment, not that we really are under pressure, but it's the right moment since Diabetes Care is leaving us now. So we see some potential for stranded cost improvements that we take out elements. We have 4 programs in the space of organization, space of procurement, IT data and systems. So this is a program that we rolled out in order to really also work on the cost, on the bottom line to achieve those margins.

Thank you, Sandra, for your questions as well. Now we'll move to the second person, Odysseas.

So my first question is on the Solothurn plant organization. Could you give us a feeling on the full year '26, '27 impact on the Delivery System sales growth and EBIT? I mean, is high single-digit growth for Delivery Systems likely in that year? Or am I being too conservative here?

I mean, I'm not sure just like the question, I got right. So for '25, '26, the Delivery Systems segment and which growth rate you were speaking?

'26, '27.

So '26, '27, we don't really guide there, but it will be a bit below. In the end of the day, we have those waves. We have also months sometimes. We cannot really predict. It depends a lot on a couple of large launches. We will talk more about it in May. But yes, in the end of the day, you have to see this 1 billion that we look at end of the decade. This is where we are heading to. And so it might be a bit -- a smaller one since we have now had a bit of stronger one on the 20% area. Overall, we will be in this 13% to 17% growth, right? And so it can be a bit softer one. We have certain indications, but for us, the important element is the 2028, '29 time frame where we are heading to.

And if I may add to that one, Simon correctly said, look, we have this 1 billion you see midterm, which is the midpoint of that guidance, which implies this 15% CAGR year-on-year top line. And when we look now at next year, of course, the launches, the individual contracts, but one important factor you need to have in mind, we have also the phaseout of the contract manufacturing, which is going to end next business year. So just roughly from that, not having this contract manufacturing business within the Delivery Systems. So if you just have CHF 20 million, CHF 30 million of sales less from that, this automatically gives you a lower top line growth rate. But as Simon said, we will do the guidance for '26, '27 when we present the annual results in May '26.

Understood. Very clear. And my second question, have there been any changes to your Novo agreement announced in September '23 in light of the CagriSema readout in Q4 and given some pipeline reorganization with the company?

No. Zero change. We are fully on track installing the capacity here in Switzerland and in Germany, everything is on track.

And now we'll move to Daniel Jelovcan.

Hello, do you hear me?

Yes.

Excellent. So 3 questions, if I may. And I just ask one by the other. So the first one is, would you be willing to share the dilution to the still very good 32.4% EBIT margin for YDS. I mean, how big was the dilution of the ramp-up with Novo and Innovent? Because I have no idea, is it 100 bps, 200 bps, 300 bps or more?

I think it's a good one. Let's talk a bit about the comparison, 35%, 36% to 33% now. That was 2%, 3% points in EBIT. Maybe you want to start with it, Samuel?

Good question, yes. So it's right, in the first half year '24, '25, the EBIT margin in the core business was rather around 36% on EBIT margin level. So yes, now we report the 32.4%. And I want to highlight a few points. First, have in mind, we sold a business area, the Diabetes Care business. And of course, we used certain functions for both areas. So it's normal to have a certain dyssynergy, a certain stranded costs Simon mentioned, that has for us a high focus. We have an internal cost optimization program, the YpsoFit going on. So we want to really be on top of that.

Then, yes, we talked about the pen business. So I mentioned product, customer mix. So that, for sure, does also not then help to keep that level. And your assumption is right. Yes, we have new contracts ramping up, Innovent and also Novo. So that, of course, is also a factor to be considered when you want to explain why, in the core business, the EBIT margin goes down from 36% to around 33%. But I also want to highlight what we announced in May this year when we did the full year guidance, if you take the midpoint from this full year guidance, you are on 33% EBIT margin.

So we expected that already. We at that time already guided it in that way for the first half year, because for those who observe us closely, they know that in the first half year, we rather have a little bit less sales, and that means in the first half year, the EBIT margin is rather a little bit lower, because the distribution of the indirect cost is a little bit worse. So I hope that explains those main deviations.

Simon, feel free to add from your side.

I think it's also good to assume that in general, now speaking, that when you install new capacity, you will always have some cost until it's full. You can also assume that Solothurn is now really optimized. It's full. So you don't have cost lying around. It's really used, fixed costs are all covered. The same for Schwerin 1. It's almost full. It's really used. But now we put Changzhou online, and this is now just one part, maybe 1/3 a bit more is now running, and we have space left that is generating cost. And we will now put in -- end of '26, you will see something like 3 months of Schwerin 2 going live. It's huge. So we will have 1 or 2 lines in when we start in '27 step by step. So we will have a bit cost there, fixed cost there that need to be covered. And then the same thing will happen 1 year later in the U.S.

So that's why it's probably right to assume that this idle capacity costs us something like 2% constantly, and therefore, you will not see a 36% EBIT anymore. So that's why we actually guide in this direction above 30%. Samuel just made the mathematics on it, but that's a very good question. And we take a very close look at that, but we have to do big steps, and we cannot do whole, whole, whole. You have to build a building and then you install. So it's a very important topic where we put a lot of attention on.

Yes. That's very clear. And yes, the dyssynergy point is actually a good point as well. That's at least -- yes, that's good that you highlighted. The second question is, I mean, the 20% growth in project revenues. I mean, at the CMD, you said it will rather be stable or decline a bit. And of course, I'm happy to see 20%, because it's very good for the future. But why is there such a big deviation basically?

I'll start, and feel free to add then, Simon. So the project business by nature has a higher volatility, because that is the business. What we invoice there is we do customizing for our customers of those devices, and we sell clinical devices. And by nature, you have there -- if a clinical trial starts, you might have a higher delivery of clinical devices, you might reach certain milestones. So by nature, you have more volatility.

I mentioned we are also positively -- let's say, we are pleased that we have that 20% growth. But I stay with the opinion what we said at the Capital Market Day. It's not something we can just assume to grow in parallel with the commercial sales. We have new platforms coming in, adding to the project business, but we have also platforms which are getting more mature. So the main statement stays, it stays more or less stable and only grows a little.

Simon, feel free to add from your side.

That's great. And the last question, I mean, the Alzheimer's -- do you hear me?

Sure.

The Alzheimer's device caught my attention, of course, a hot topic. But Alzheimer's probably isn't that important for you because the volumes are probably not that big. I mean, this one device now, is that in a commercial drug for Alzheimer's? And if so, how often do you need the auto-injector for Alzheimer's? I have no clue. Is it also weekly like obesity or -- yes, thanks.

So it's LEQEMBI drug, Eisai and Biogen, and it has launched in the U.S., but I'm not sure about if it's once weekly or -- I think it's once weekly. But it's just starting now. So it's slow. But we are launching it now. We are delivering now. We are just delivering.

But we don't talk about huge volumes.

Yes, it's a maintenance therapy. I think probably if we look at their communication, it's probably best to see how they see the future of this particular therapy.

Now we'll turn to Pallav from Barclays. So Pallav, if you hear us, you have to click on the mic. Unfortunately, Pallav, we cannot hear you. So that's okay. We'll move to Sibylle and come back to you in a moment.

Good morning, everybody. Does it work now?

Yes.

So I was quite happy with your development in YDS. But in there, you have also the contract manufacturing for the French customer. Is it still correct that this part of the business is not growing and you will end production in November '26? Or has anything changed because they ask you to produce longer for you? And what does it mean afterwards, then you will have a couple of months no production there because you have to move the production facilities out and the next in. So will this mean that end 2026, '27, you will have less sales due to that?

Thank you very much, Sibylle. So as Samuel said before, and then I'll let you answer the question on the amount. So yes, absolutely. So that's what we said before. That will have a slight impact on the growth rate for '26, '27. We will have roughly actually almost half a year less. And then we do it in 2 phases. The first line, SoloStar, we took out already. So there is no manufacturing at all anymore. We manufactured last SoloStar in the summer. So we are now installing the first auto-injector line.

And then the same exercise will start half a year later in spring when we move out -- or summer-ish, we move out to [indiscernible] and then we install that one. So we have, twice in a row, something like 4 to 6 months no manufacturing on one floor. So therefore, you, of course, will see -- then in the same time, we are ramping up. I mean, for the auto-injectors, we don't manufacture from day 1, 5 shifts, 7 days. So you also ramp up. So that will have an impact on the auto-injector growth rate '26, '27. But maybe you can add some -- give some more flavor on the contract business.

Yes. Gladly. I can give you, Sibylle, a little bit more that you understand the numbers. So in the first half year now, this business made a little bit more than CHF 20 million of sales, so in line with what we saw in the previous years. In the previous years, it was roughly CHF 40 million for the full year. So now we have a half year around CHF 20 million. For the second half year, it's for you now fair to assume that it goes slightly down, but not yet significantly. So we still might see around CHF 15 million of sales in the second half year now of this business year.

And your assumption is right, in November '26, it's going to stop. That means we have in the next business year, still a little bit more than 6 months. So if you take the October and November as well, so you might have 8 months. So you might still end up also again having around CHF 15 million of sales of this not continued contract manufacturing business. And I think, Simon, you explained very well what the challenge is. And, of course, that is a reason why we have next business year a challenge with the top line growth.

And then the second question is about the broadening of your portfolio. You mentioned it in Schwerin with the Capital Market Day. Any news there on possible acquisition targets or in what direction you could go?

So we are really doing our analysis. We have a lot of launches, a lot of dinners, and we continue to understand our space better. We are in such an excellent position. We have such a great opportunity ahead of us in our core business. And this is our main focus. We are focusing on delivering the capacity, on delivering the device to our clients. And at the same time, we do our homework. We listen, we talk a lot. We also look at the market specifically with some consultants. They help us to understand better margin profiles, et cetera, but we are not there yet to explain you our next steps.

Thank you, Sibylle, for your questions. Perhaps we'll have another trial. Pallav, if you can maybe try again to unmute or type in your question into the chat and I can read it for you.

Good morning. Can you hear me now?

Perfect. Yes.

Sorry about that initially. So 3 questions. I'll take it one by one. Firstly, on your 20% revenue growth for the full year, given the second half is traditionally stronger versus the first half, are you being conservative here? Because your H1 growth is already touching 21%. Or are there some moving parts which I'm missing?

I start, and Simon, feel free to add. Yes, the 20 year around -- sorry, the 20% growth for the full year is our guidance. When you now look at the second half year, which we now basically compete or compare against for what is ahead of us, you need to keep in mind that we had, in the last business year, a very good second half year. You remember, we had even some pharma customers anticipating tariffs. So we even had very strong deliveries in February and March. So for you, it's fair to assume that it will be challenging to also overtake this already strong second half year, which we showed last year, by 20% or more percent. It's fair to assume that this will be more difficult to reach. And that, of course, you can make then the conclusion also for the full year. I think that is important here to notice and gives you a little bit of flavor.

Feel free to add if.

Feel free to add if...

No, sure. I mean we compare half year with half year, so fully on track.

Sure. Second question. So there's a lot of discussion around GLP-1s now over the last few months. And now the expectation is that pricing is going to be lower. So how are you thinking about the impact of that on your volumes? And also, how are you seeing the risk of oral GLP-1s in your medium-term ambitions that you laid out at the CMD?

So I mean, we are just a device deliver. We deliver devices according to contracts, and those contracts are set in stone. They are rock solid for the next 5 to 10 years. So there is no impact on Ypsomed side. We just deliver the devices. We have 47 contracts in GLP-1. We closed all the large deals out there. We cannot give you the names, but we are well set up. Now this is not a topic at all. We have no risk with Novo or any other company. We are just delivering our volumes and we will profit from GLP-1.

As I said very clearly, we will not do more than 15% with any client in the future. So we have a clear broad spectrum. Out of our 130 clients, we have roughly 30 in the space of GLP-1. Mainly China will be interesting, actually more interesting in the next 2 years than Western world.

Orals for us, it can -- orals will play a role, of course. But as I said again, we deliver such a small volume of the overall GLP-1 opportunity out there. If you look at what Lilly is manufacturing themselves with their 5 or 6 contract manufacturers, and when you see what Novo is doing as SHL next to us, we are just all growing. And of course, oral will play a role, but oral will play a role eventually together with the injection. For some patients at the BMI of 30, 35, they will take a shot, one pill therapy. There are new formats coming. And then we wait for the new molecules coming, the new molecules that are less problematic on the muscle. So we have so much things going on. So for us, this is not a risk at all. It's a huge opportunity for Ypsomed, and we will profit from GLP-1, and we are not dependent on Novo. So...

Sure. And lastly, just to fact check, any impact from FX in the numbers in the first half, if you could quantify? And what should we expect for the full year?

FX, yes.

Yes. I gladly take that, Pallav. So really we have -- the huge majority of our contracts are in Swiss francs. So the currency we are reporting and the currency in which our stock is listed. So we do really have very minor FX impacts on the top line and also on profitability. So for modeling, you can really ignore that effect, and we'll also stay for the second half year that way.

We'll now move to Peter.

Okay. Can you hear me fine?

Yes.

Okay. Great. A couple of questions, please. The first topic is just on some of the ramp-up of facilities. And as you've highlighted, you closed the first part of the contract manufacturing over the summer. You take 6 months or so to put back new machines in. Does that mean, say, around Easter time, you'll start to ramp up again on the first phase of the Solothurn part?

Yes, absolutely.

Okay. So you'll start to ramp up from around Easter. Okay, good. And you're meeting the rest of the sales out of inventory, I presume?

And from existing clients. So we have obviously also installed capacity in Schwerin. You talk about auto-injector now, right?

Yes.

Yes. Of course, we have installed capacity in Schwerin. As you know, we are a platform company. Also, Novo is on a platform, so they run on the same line. So we are quite flexible here to deliver volumes for the ramp-up phase. Especially, now we have this machine learning phase where all those final assembly lines have to be installed. And therefore, we can deliver these also from different lines.

So the first part of Solothurn will start to ramp up and the beginning of Schwerin 2. You said a couple of lines will be starting in H2. So they will also start to ramp up in the fiscal first half -- from early fiscal first half, yes?

So exactly in '26, in the first half, one large line will ramp up a bit before Easter here in Solothurn. And the second line will only ramp up in the beginning of '27, because we finish to [indiscernible] until October, November on the second floor, and then we need again those 4 months of redoing, putting paint on the wall and put 40 plastic molding machines in and the big micron line and then it will take another 4 months. So we will start in March-ish. Maybe we'll see 1 month more from ramping up '27 for the second line, a large line here in Solothurn. Is that answering your question?

Yes, it is. And then the other part was just on the U.S. facility since you're able to buy a completed building and you can start putting machines in. Can you give a sense as to when the first sales you would expect would come out of that as you start to pick that in phases?

Peter, this is really brownfield. I've been there last week. It's a building, but it's just a shell. There is soil on the ground. We are actually now deciding -- I mean, we are ramping it up now. We are probably -- I think we are signing today the contractor. We have to do the flooring in. We have to do the engineering in, the cooling, the pressure. We will put there the granulate system, et cetera. So the building will be handed over, including everything which is technically relevant to operations, to manufacturing, in fall '27. So in roughly 20 months from now. And then the team will take roughly 6 months until they have installed the molding machines and the first lines. So the first goods will leave Holly Springs in Q1 '28. That's realistic to assume that is where we have to plan together with our clients in the U.S.

That's great. And then I had 2 questions just on the cash flow statement. One is you have a significant prepayment from customers for the first time that I can recall. I was wondering if you could give some background to that and to what it relates. I guess it's maybe ramp-up of the new facilities. But if you could talk a bit about how that's coming through and how that impacts cash flow.

Gladly, I take that question, Peter. So it's true that we have co-investment, co-financing structures with our customers. And there is 2 elements I want to describe, which we also mentioned at our Capital Market Day, of how customers participate. Yes, the one thing is they make the finance equipment. So they really pay advance payments for those equipment dedicated for them. And the other element we have are capacity contribution. So they somehow reserve and co-finance platform capacities, which we build up. And you will see that now more often in our cash flow statement, because of this CHF 1.5 billion we're going to invest, roughly CHF 400 million we expect with co-financing from customers. So you will see that now more often such co-financing advances are coming into our balance sheet, and this will help, yes, the operating cash flow. These are the 2 elements there.

Okay. And then last question was just on the intangible CapEx. I think you said of the CHF 20 million, about half related to the Delivery Systems business. And is that more or less the run rate going forward now?

I think it was all of it. It's actually half of the CHF 39 million -- half of it Delivery Systems, yes.

But Peter was talking of the CHF 20 million in the actual year.

Yes.

That is right. Roughly half of it is the Delivery Systems business and the other half was still -- because we had still 4 months of Diabetes Care business in our business here. So we capitalized that. And you might not like that answer, but the decision when you capitalize, that depends always at which stage you develop something. And there is, like I told about the projects, a certain volatility, there is because whatever -- it's not always that you're constantly just developing and capitalizing new projects. There is a certain volatility in those capitalizations. But you will see that going forward very clearly because we are now a pure-play B2B company for the Delivery Systems business. And you very clearly see what is capitalized and what is expensed.

But it's probably right to assume that this first half year is not a typical year because we had a much larger amount in the P&L. We were putting more money in the innovation phase for YpsoFlow, YpsoDot, YpsoLoop. So if you are in the innovation phase, we put it directly into the P&L. And now we are moving those platforms over to the product areas. And now it's going to be capitalized to finalize the development before they are then industrialized. So now in H2, you will see a higher amount of capitalized R&D, maybe it's CHF 15 million. And then overall, we don't give a guidance here, but it will probably be a bit above CHF 20 million in the long run for R&D capitalized.

In the interest of time, maybe we'll ask to ask a few shorter questions. Julien, please feel free to unmute yourself and ask your question.

Hi, can you hear me?

Yes.

Thank you and congratulations on the strong performance in the first half. I just have a question on the sale of the Diabetes Care to TecMed. Since this is the company controlled by the founder, Willy Michel, I just want to ask about the risk of contagion between Ypsomed and TecMed. So this would be helpful for us also to analyze the consolidation scope.

So there is no consolidation happening. It's absolutely separated organization. TecMed is a company 100% under control of my father and Ypsomed is a stock listed company where the Michel family has roughly 70% of the shares. Or did I misunderstand your question?

No, no, this was the question about the risk of contagion because this is a special construct.

I mean, I think it's not really a special contract. It's just different investments. We have investments in other industries as a family. We have a very clear contract manufacturing relationship between Ypsomed and TecMed for the Orbit reservoir and the Orbit infusion sets. We manufacture those 2 devices in Schwerin in our clean room. This contract lasts minimum 3 years, maximum 5 years. Both parties have an interest to move it out as early as possible because we charge too much for them and we earn not enough. We would like to charge this dilute to our overall margin. Obviously, that's why we put it into Others. And we will need a clean room as well in roughly 4 years for our YpsoDose ramp up, our large volume injector. So it is a very clear, very transparent logic contract manufacturing relationship, very alike of the Sanofi relationship we had. So it's not even covered by product management, it's all done in operations directly in a very lean manner.

We'll move to Ed, please.

My question is just on Holly Springs. I think you said this is set to open in Q4 '27. And you mentioned that labor is available. But could we talk about the gross profit margin here compared to European facilities? What's the pull and pushes on this? Is this anything from automation to sort of premium prices for onshoring in the U.S.? That would be really helpful to understand.

Thanks, Ed, for the question. So Ypsomed is installing the same equipment in Germany, as we do in Switzerland, as we do in China, as we will do in the U.S. So the manufacturing setup with ENGEL on molding, and with our partners, Micron and ATS on assembly, and eventually ASIC is remaining identical. We have a lower energy cost in America than in Germany, massively lower energy cost, but we have higher building cost than in Germany. We have lower people cost in America slightly than in Germany, although a bit the same, but of course, in China, they are lower. So if you compare all the 4 sites, America, Germany, Switzerland, and China, then America will, of course, be more expensive than Mainland China, but I mean, we talk a range of all sites of less than 10% difference on the cost of goods. But the logic is identical how we work.

Would you like to add something?

Absolutely fine, summarized.

We'll move to Daniel.

Yes, just a quick one. Holly Springs, I mean, do you all have fixed contracts with some customers? Or you just build it at the moment?

No, we have contracts. Good question. So that's actually why we waited another year. We wanted to have the ink. We have a couple of customers where we have contracts that we will deliver, we will move, and other customers are really new. So we want to ramp up the U.S. step by step, of course, but we have to fill this large site. And so yes, no, we have contracts, not just the building.

So the risk is relatively limited as we can probably say?

Yes. I mean our team really proved that we can industrialize in a different place. I mean when I look at Schwerin, we're now just installing ASIC 10, the 10s line of its kind. And this is a very smooth program. The same teams come together with the builder, the contractors, we move it in and we ramp up. It's really smooth. And we are going to do the same thing now in China and in the U.S. In China also, the first 2 lines, they went just online. We didn't have it once in the Executive Board. I assume the same thing will happen in America. Obviously, we have to train the people. We will get them also to Switzerland. We train them for 3 months. They will get to know to their lines. They will go back to America and ramp up their lines.

And I had an extremely good impression when I was there last week. I was in several community colleges. We work very closely with those colleges to get staff that have a basic education. So America, what I have seen in North Carolina is much further than what we think here in Europe in terms of education. We have certain areas where the government really knows that biopharma, pharma, med-tech and specialty industries need people with an education. So those community colleges go to the high schools, they grab the students, they take them into the colleges, and together with the companies, they make 4 day in the company, 2 days at school, they make those joint programs. And these programs run in North Carolina for 5, 6 years. So I'm really confident we will find the people.

Also, if you look at the wage level, it's way below Massachusetts up in the north. So we are in the area of below $60,000 per operator. So we are actually even below the German level. So from that perspective, I believe we have made a very good selection.

Then I wish you further good progress.

Thank you, Daniel. We'll move maybe last but not least, Anna, please feel free to unmute your mic and ask your question.

Perfect. Can you hear me?

Yes.

Okay. Maybe just a quick follow-up on that. I guess, outside the U.S., you're obviously expanding in Germany, but how much of your overall capacity that you're coming online between now and 2030 is already contracted?

And then just another follow-up. The auto-injector growth of 46%. Maybe just how much of that would be just driven by GLP-1 versus capacity coming online or just broader growth trends. Maybe if you could just talk about the 46%, if that would be a sustainable growth rate.

Sure. So I will have you specify, Samuel. But GLP-1, again, it is just about to start. So it's a smaller part of the 46%. We grow on various platforms. We can give a bit more flavor to GLP-1 just in a minute. On your other questions, we basically try to fill 5 out of 7 days. So when you ask us how much we have contracted, obviously, we have not contracted yet the full 5 days today of the capacity we are going to have by 2030, '31. But what we see in the pipeline and from our past, we closed roughly 35 deals per year, roughly 25, 27 survived. If you look back and we assume and we look at our pipelines, we have quite a good overview on global pharma pipelines, not only of new molecules in Phase II and Phase III, where we are in with devices, but also in emerging markets with biosimilars. So this gives us a high level of confidence that we are going to close certain contracts that will lead us to a 5 out of 7 days.

Now this is very important. Now obviously, in an optimized setting, you want to manufacture 7 days, but we need to have the spare capacity. And this sometimes hurts a bit. But we had situations in the past where customers just needed more devices, and we were always able to deliver, and this is still our promise. This makes us special compared to others that we are always able to deliver. And this is also why customers pay a premium at Ypsomed, because we can always deliver, and that's why we will always have some spare capacities. But when you look at the weekend shifts in Germany, the 6th day, I mean, you pay 25% more. Switzerland, the same thing; Sunday, 50% more. So from a cost of goods -- and of course, we want to run them as much as possible, but it also makes a bit more expensive. So overall, you can assume that we don't build capacity without contracting behind.

Yes. If I may add to that one, we are lucky to be in an industry in which you have a very good visibility of the volumes. Our devices serve people with chronic conditions. So we get those customer forecasts for drugs where we are already selected. With switching being very difficult in our industry, we really have a very good visibility. And based on that visibility, we industrialize. And yes, Simon mentioned, a certain idle capacity we assume to have the flexibility for those customers. So we industrialize with visibility.

Then to your second question about the auto-injector growth, the more than 40% top line growth. The main drivers, these are now these platforms, the 1 milliliter and the 2.25 milliliter, which are now in a growth phase. So have in mind, we start now still on a low basis. So in percentage, that's always a lot of growth. And now, yes, incretins are kicking in, not yet being significant, but you start from a very low basis, the incretin sales come on the top. But relate that now to the overall top line growth we said midterm when the overall top line growth is a CAGR of 15%. And yes, I said that auto-injectors grow stronger than pens. Nevertheless, it's also fair to assume that this growth rate a little bit comes down. We grow in auto-injectors, but not year-on-year always by 40% and more. That gives you a little bit color on that one.

And when you look at overall GLP-1, that makes for the full year clearly below 10%. But this is customers in China, customers in Russia. We have Victoza, liraglutide out there. So we have a whole bunch of GLP-1 products out there. And then slowly, of course, certain volumes for our Danish customer. So I mean, it's a smaller part that is gradually increasing.

Perfect. Thank you very much, Anna, and thank you all of you for joining us today. Thank you, Simon and Samuel, for presenting our great achievements, the great financials, and we will be very much looking forward to continued discussion with you. Thank you all.

Excellent. Have a great week.

Thank you.