Good morning, ladies and gentlemen, and welcome to Grupo Panvel's conference call, where we will discuss the results for the fourth quarter of 2025. This conference call is being recorded, and you may watch it on the company's investor relations website. The company's presentation is also available for download there. We would like to inform you that all participants will be in listen-only mode during the company's presentation. After that, we will begin the questions and answer session when further instructions will be given. We have translations into English and Brazilian Sign Language. You can access them through the interpretation button. Before we continue, I would like to underscore that statements about the future are based on the company's beliefs and assumptions and on the information that is currently available for the company.
These statements may involve risks and uncertainties as they refer to future events, and therefore depend on circumstances that may or may not occur. Investors, analysts, and journalists should take into account that any conditions in the macroeconomic scenario, the industry, and other factors may make these results differ materially from those expressed in these forward-looking statements. We have with us Mr. Júlio Neto, CEO, and Antônio Napp, CFO, and Investor Relations Director. We will now begin with Mr. Júlio Neto. Go ahead, sir.
Good morning. It is a pleasure to be here with you again. Less than a month ago, we had our Panvel Day in São Paulo, and probably most of you attended. So it is a pleasure to be here again to talk about our results referring to last year. Last year was a very good year.
It was a year in which, in my opinion, we were able to demonstrate that it is possible to continue growing at an accelerated pace and at the same time manage our cash in a very conservative way, which I think is required by the current situation in Brazil. It was a year in which we grew our sales by 17%, and it was also the first year of a 100% clean operation without wholesale. So from now on, it will be much easier to compare. The first quarter of 2026 will no longer include wholesale and only retail. We are reaching close to BRL 6 billion in gross revenue in 2025, and this has been heavily leveraged by our growth in digital. It reached 54% in the fourth quarter and a sales share of 28.5%.
Evidently, the growth drivers in the pharma industry continue to play an important role at this. The aging population also continues to boost the pharma industry more and more. With GLP-1 pens, we also find another important driver in sales growth. In 2026, we understand that this will accelerate even further. Probably in June, we will see Ozempic generics coming into the market, which will increase the addressable market for these pens in drugstores. To give you an idea, there is a parallel market or contraband, which is three times bigger than the formal market. So generics will make this market more formal, and there will be a huge opportunity in 2026. But speaking about the fourth quarter, we had exceptional sales. We had 18.2%, and mature stores grew over 14%, and we reached a market share in the south of nearly 14%, 13.9%, in fact.
This shows that our strategy to consolidate a specific region has been correct. The pharma channel depends on being focused in a geographical region so that stores are not dispersed into different states, and so that the base is strong. This is a market in which your brand is extremely important, but also convenience. This has been demonstrated by our growth. This is the 23rd quarter in which we are increasing our market share in the region we selected to work in, which is very important in Brazil. It is the wealthiest region in Brazil if you add up Paraná, Santa Catarina, and Rio Grande do Sul. We see a huge opportunity for growth. At the average, we are also having very high average sales. This is an indicator that we really take into consideration because it shows the productivity that we are having.
Sales expenses get diluted as average purchases go up. Panvel products are a driver of growth, and they continue to be very important. We understand that as a strategy in the current market, where consumers have numerous alternatives to buy hygiene and beauty products, retail must have brands that stand out and that make them be chosen in that location. Panvel represented nearly 20% of Hygiene and Beauty sales. It reached 8% of our total revenue in the fourth quarter. It is becoming a very significant competitive edge for Panvel from now on. Looking at historical data, we can see that after the follow-on in 2020, we started having a very different type of growth than we had been having previously. We are going from a CAGR of 11.6% to 17%.
If we look at the fourth quarter versus the other fourth quarters in the last six years, we see that the CAGR reached 16.8%. This accompanied a significant improvement in results. Our EBITDA in 2025 was at 5.4%. Our goal, our target this year is to go over 6% EBITDA for 2026. These are significant figures that show that we have a solid strategy. We are expecting to have continuous growth and at the same time, not putting the company's financial health at risk. We finished the fourth quarter with a net debt to EBITDA position that is better than in the last three or four years. It is possible to grow. We can have good results, we can open stores, and we can continue investing in digital and at the same time have a healthy company.
Looking towards the future and especially digital, this will be a significant differentiator for Panvel. It has always been. Even before the COVID pandemic, we had already been working with digital for a long time. We have a lot of know-how. We participated in sales and about a 10% share of our sales, and we have been improving with every year the consumer's experience in the app and on our website as well. Especially we have been improving our delivery experience. We have an operation in which you can click and pick up, and that has a participant share of 55%. It increased because of GLP-1s. There is an industry incentive to buy products at a higher discount in digital, but this is not the company's strategy. Our strategy is not to use our digital tools as payment methods in our stores.
We understand that the future protection to pure digital players is due to being able to deliver quickly. Digital consumers, most times, just want total convenience. They want to get the product at home. We have been specializing in this area. We now have 431 stores that deliver to consumers' homes. We are getting closer and closer to them, and we are becoming more efficient in inventory management, optimization, and agility. We do maintain our strategy of keeping mini DCs, which are advanced operations. We have two in Eldorado and Curitiba. These are our major ones, but we have our mini DCs, which have a much bigger assortment than a conventional store, but with the same level of convenience and agility as a conventional store, which gives Panvel a competitive advantage.
Buying from Panvel on a digital environment is usually a very gratifying experience for consumers. We have a market share in the South, which is basically twice as high as our physical market share. Our app users, 46% of them use the app on a monthly basis. We have a very good retention with our consumers using our app. We will focus on this more and more. With CRM and a loyalty strategy, we are starting to use the app to give in-store clients some benefits, but without requiring them to purchase in the app, because we understand that that is friction when they are in a store. We are going to use the app for a discount, but our clerks will be able to continue servicing consumers and selling in the store, which we believe is much more efficient for them. An essential differentiator at Panvel.
You know that we are a healthcare company, but the cherry on top is beauty. Panvel, without a doubt, is the best-smelling pharmacy in Brazil. We have the best position in beauty in Brazil, not only for the store environment, which does stand out, but because of the product mix that we have and also our own brand. We are trying to make our stores more attractive for Beauty consumers without, of course, forgetting that we are a drugstore. That is an important level of care because our core business is still to sell medication, but we do believe that there is some room for beauty in a corner of the store with some great launches that is attractive. We try to be the company that brings in launches to our stores. Whatever is new, we hope comes to Panvel first. We are also focusing on specific services.
We have over 300 beauty consultants working in our stores. We have training events for them, so they are prepared not only to sell products and to explain what each product gives, but also to help our consumers to try products out. We believe that brick-and-mortar stores are very good for that. Of course, the digital environment does not provide for that. We have been investing more and more at that. We cannot leave our digital part behind. We know that visual merchandise needs to happen at the physical store and at the digital store. It should not be ugly and not have the charm of beauty products. It can have a significant beauty look.
Our suppliers are major partners because they normally produce a lot of content for the digital environment, and we're making use of that so that the digital experience can be more instructive, can have more information, and can charm consumers who buy Beauty products in the digital environment as well. Our own brand has always been a significant differentiator for Panvel. No one does anything similar to what we do. We don't even look at the pharma industry with our own brands. We look at other companies as a benchmark. We've been developing some limited products like Milkshake, which was an absolute success in social media. These limited lines usually have as a target, an audience of between 13 and 15, which means that not only are we increasing loyalty and margins, but this is also a very important factor in making the brand younger.
We have young consumers, and if you have a survey with young people, like between 15 and 16, usually Panvel is the pharmacy of choice for them. With that, we're building a consumer for the future. Aging population is an important topic, but building the future is always very important. The Panvel brand is as old as I am. I will be 53 this year. But I don't think it looks 53, and hopefully, it continues looking young. I think Panvel products are what makes our entire strategy tangible, our brand that we have. To show you some of the recent launches on the next slide, just by the look, you can see that it's completely different from what everyone does. We do go beyond our own brand. So it really is very charming, and that's something that we can have at Panvel.
I'll hand it over to Napp, who's going to go over the financials specifically, and we can answer any of your questions afterwards.
Thank you, Júlio. Continuing with our presentation, we're going to go into details about our financials. Júlio has mentioned our highlights, but when we look at sales, what's worth seeing here is that we saw an 18% growth for the fourth quarter. What are our main highlights in comparison to our competitors? Most of this growth continues to take place in Services in sales volumes and amounts. So we have been bringing in more clients, and we're making them buy more and more. Of course, the average ticket is also growing. You can see this in the fourth quarter of 2025 data. Our tickets grew 26%, but this means health, and this is a differentiator for Panvel.
Another important detail is that we have increased our average sales and we've purged the less productive area. Only 1% of our stores, and as a reminder, this includes new stores, have sales up to BRL 300. Starting in 2026, we will start seeing these numbers without this bar. We're going to look at this bar only, looking at BRL 500,000 and below, because we don't have any stores that are selling less than BRL 300,000. So we're very happy about these stores as they represent nearly 60% of our base versus 43% in the past. So that was a major gain. To conclude, still speaking about average sales, when I look at IQVIA data and compare Panvel with other players in the South region, it's also clear that we have been distancing ourselves in average sales.
You can see that the competition is constant, and we have been able to split ourselves apart from that. What is behind that? One of those elements is, of course, good or optimal performance of our basis and same-store sales. We grew by 14.7% in same-store sales and nearly 12% in mature stores, far above inflation. Again, we have a strong comparison because in the previous quarter, we had also grown nearly 15% in owned stores and 12% in mature stores. There is also an important thing here, which I think is clear when we look at our sales mix. What do these graphs show us? Panvel obviously has grown faster in medication, and this, of course, includes the effects of GLP-1s and continuous use, and obviously, this matches our focus on health. Look at how balanced our growth was across all categories. Hygiene and Beauty grew over 16%.
Generics have been growing strongly. It is important to look at these moments between 2020 and 2025. We grew nearly 17% in Medication, and HB grew nearly 16%. You can see how balanced this is. This matches a couple of things we will see during this presentation. First, we are maintaining our margins. Panvel is the only company that has grown with a lot of balance in beauty and in health. As Júlio mentioned, these are our differentiators, and we are focusing on that. Secondly, this also matches our growth in customers. This is not limiting our potential to bring more people to the stores. Balance is a very important word here. When it comes to customers and mix, we need to talk about our loyalty efforts. This slide translates what we showed before when it comes to growing in services carried out by Panvel.
We have been making a good effort activating and adding loyalty to our customers. Our active customer space went up nearly 8%, and loyalty customers, the ones that buy at least two times a month, is growing even faster. How did we manage to do that? We have been making a lot of good work in digitalization, as Júlio said, with CRM. Here we have some CRM data showing that since last year, we have improved the quality of our customer segmentation. This was done through an effort in data, and we are using our products in more segmented campaigns that are tailored to the customer's needs. It was a world in which 60% of our campaigns were only promotional in nature, and now we have segmented campaigns.
That in itself made our CRM revenue go up 140% from the fourth quarter of 2024 to the fourth quarter of 2025. There is still a lot to do in 2026. We have been working with market segmentation, and we created our prime customers. They are our best customer base, the one that is the most frequent, that comes to our store very often with high average tickets. When we start to identify them and offer exclusive advantages, we have been seeing very important gains in scale and sales and retention. We are going to go deeper into this in 2026, because we believe that with 29 million customers registered, we have a wealth in sales and in consumption that we can still capture. It is not very difficult to become a Prime customer. It is BRL 150 per month for three months. This needs to match our service.
This is a goal for each of our stores' managers. We continue to have a very high NPS in our stores, in our apps, in our digital channels. From the digital perspective, we are the digital store that has the best ratings at Apple and Google. We are also the best one in Google reviews. This is a constant concern that needs to match everything we mentioned, and it also needs to match this data, market share. As Júlio said, we are at nearly 14% market share in the fourth quarter of 2025, with very good growth across the three states, including Rio Grande do Sul. This is important because we grew 0.7% in Rio Grande do Sul, and there is still a lot that we can do in Santa Catarina and Paraná. I have a couple of pieces of information on this slide that also matches our presentation.
This market share growth is not only distributed across states, but also across product categories. Our market share was gained in Medication and Hygiene and Beauty. We have some open data on the upper part of the slide from IQVIA, and we can see the format in which we grew versus the other franchises or the other chains. We see more balance. We are growing in volume. We are growing more than our competitors when it comes to average price or average ticket or units sold, excuse me, not the ticket, but units sold. Average price matches our ticket, and in our expansion in new stores, we have also been growing more. No player can find this level of balance. Again, we have been very consistent in our management across the different growth pillars, and we have been successful. This also is reflected in our gross margins.
What we are not missing here are pressures. This is a very competitive market. As GLP-1s grow, they also put pressure on our percentage gross margin. Branded medication is also being pressured here. What has Panvel been doing that was not different in 2025? We have been using a number of levers to balance this out and maintain our gross margins at a high and healthy level, and that includes industry negotiations, growing in generics, a good effort in Hygiene and Beauty. We cannot forget one thing, the value of the brand. In the south region, we built a very strong brand with Panvel that represents quality, and this brand value also allows us to do very good pricing. Everything we are creating here is also being transformed into a brand that helps us with this lever.
When we look at the group's margins, this will be the last quarter in which we still have an impact from wholesale. That is why these margins will go up. As we conclude our wholesale operation, which had a lower margin, we get only the retail margin, and that creates a mathematical effect. This is the same thing that happens in our expense management. This is another highlight for the fourth quarter of 2025. We have the lowest expense level for sales across the year, and we have been making very good efforts in our logistics and changing some initiatives to dilute expenses, and all companies grew far less than our growth in retail. This is just a small exercise, but if we removed wholesale from the base, expenses with sales would have gone down one percentage point in 2025.
When we look at administrative expenses, this would be exactly the same effect. Now, in 2026, life will be much easier in drawing a comparison between these figures, but we are confident that there are many other opportunities in productivity that we can find in expenses, and we are very happy with what we have obtained so far. Everything I am saying will be reflected in our results indicators. The first is retail EBITDA. This is equivalent to the contribution margins from stores. These are results from stores only. We had a growth of nearly 20% in these results in the fourth quarter of 2025 versus 2024. When I look at this indicator over some time, we have sustained constant growth above 19% a year. Our famous CAGR, far above the sales growth at Panvel, which was 17%. What we have to highlight here are two things.
First, this matches our ROIC from our stores, and we are also very happy with what we did over the years opening stores. Here we have some more data about that. In each season, we have been getting better results, better EBITDA for all, and we are very happy with how many of our goals we reached. Here we also see a breakdown per state. In each state of the South, plus São Paulo, there is a different story. Of course, the expansion is deeper in Santa Catarina and Paraná. These are much newer. There are two takeaway messages here. First, we are very proud of the fact that from 2020 to 2025, in all of our expansion regions, with no exceptions, we improved our results significantly, including Rio Grande do Sul, which is our more mature base.
But in Santa Catarina, we did our homework very well, as well as Paraná and São Paulo, which went from 0% to 7.5%. The second important message is that we have a very relevant base that is still maturing. We have stores in maturation that did not reach three years spread across these states, and this definitely will open some doors so that we can continue improving our results for the next quarters. Stores will continue to be an important lever for good results as they have to be. When we look at the Group's EBITDA, we reached a record high. In the fourth quarter, it was nearly BRL 105 million, a growth of 28% versus the previous quarter, and a record percentage of 6.6%. In the fourth quarter of 2025, we really started changing our levels. We have been closer to 6% for about one year.
At the end of this year, we are at 5.4%, and the Group's EBITDA has been growing at around 20% a year after year. This is very good, and this means that our EBITDA was increased two and a half times versus what we had in 2020. When it comes to net income, this is not different. We are very happy that it grew [audio distortion]. Excuse me, at 2.7%. Our adjusted net income grew 35% versus the fourth quarter of 2024. But the operating results were even higher, and this matches our strategy. We doubled our income across these five years, and we want to more than double it from now on based on a lot of operational discipline and financial discipline as well.
This table is a major highlight because we talked about our differentiators in health, beauty, digital, and own brand, but we also have a differentiator in cash management. We regulated our cash cycle in 2025, so we are working very well with inventories, with terms for our suppliers, and we are at the best position we have been since 2020. This improvement in our cash cycle and our working capital matches our cash generation directly, so we were able to align strong growth and results with working capital. With that, we generated BRL 266 million in operating cash flow in 2025 and over BRL 106 million in free cash flow in 2025 as well. Sustaining investments. Our investments have basically been the same as we had last year. What does this mean? This means that Panvel has reached a size in which it is financing itself.
We are a conservative company when it comes to cash management, and we can see this in our indebtedness. We finished the year with a much lower level of indebtedness than in the fourth quarter of 2024, and this really makes us stand out. We are at a better position in comparison to our competitors. We are also working on the cost of debt. Obviously, we do not like high interest rates, but we can be below the CDI index, and this is important when interest rates continue to be high, and they will probably continue high for some time. We believe that the financial space that we have will open doors for us to continue to invest, allocate capital efficiently, and grow above the market level. I would also like to take this opportunity to thank all of our employees, all of our team that helped us get here.
Thank you very much if you are watching right now. Ismael, our neighbor, everyone has been watching us, so thank you for being here with us. What I would like to remind you is that this was great, and recently we had the opportunity, we had our Investor day. During our Investor day, we spoke to the market, we spoke to many of you, and were able to talk a bit about our cycle in 2025 and shed some light on what we expect for 2026. You know this very well. We accelerated our growth. We brought the company to a new level. We invested in logistics, and we prepared the field so that we could continue growing. This was translated into a very important guidance.
We have a clear vision of the future in the company, and we designed a strategy that is going to take us in the next five years, and will make us double in size.
We want to be a company that, in 2030, will have at least BRL 12 billion in revenue. We want to have at least 1,000 stores, and we hope to increase our margins every year to reach 70% EBITDA. How do we pursue that? This is what we mentioned during the presentation. These are some things that make us stand out. It is an accurate view of the future. When we look at sales, and I know that many of you keep up with this closely, we have many favorable elements. We have the GLP-1 market, which is far from reaching its limit. We have a lot that we can do when it comes to creating loyalty and digitalization. A lot. It is like fishing in a fish tank. We have a lot of space to grow in Beauty, Panvel products.
There are growth levers here to a numerous extent, and this market will continue growing. We also have some great levers to continue sustaining a healthy gross margins. We can grow in generics, OTC, Panvel products, Hygiene and Beauty, and we can use a lot of AI to continue pricing things in an intelligent way. Of course, this will continue to mitigate natural pressure for prices, but when we look at expenses, we are very optimistic. There is still a lot that we can get in diluting store sales. With our technologies, we can evolve in reducing red tape and everything that happens in the store. Pharmacies are a very bureaucratic space by nature, and this is due to regulatory issues. There is a lot that we can do to simplify our lives, and we can continue growing in sales.
When it comes to logistics, we have had very strong investment years. The next two or three years won't require this much time. We are very confident with that as well. We will continue to expand the company without requiring high investments, and this will also help us. Although we are at a benchmark in administrative expenses, I think we can still dilute this even more. Reviewing our process, adding intelligence, especially with AI. As sales grow, we have everything at hand to continue growing in productivity. One last element, this is why it is so good to work with pharma retail, because this is a market that has many potential avenues that are not even reflected by the plan, because there are still many uncertainties. In pharmacy, we still believe that we are still going to grow a lot.
There's a lot that we can do in partnerships with health plans, retail media. We're also far from our limits, and this is a market that has more products for Health and Beauty. Why do we still believe in this brilliant future for Panvel? Well, it matches pharma retail. We really believe that this market will consolidate around major chains. This is something that is being accelerated by GLP-1s. Panvel really stands out in this world because we have excellent differentiators doing the basics very well. Operating well with health and beauty, working with our store spaces, selecting good positions. It's what you heard from me and Júlio during the presentation. I'll wrap up and thank you for listening, and we will be available for your questions. Thank you.
We will now begin the questions and answer session for investors and analysts. If you'd like to ask a question, please click on the raise hand button. If your question has been answered, you may click on the lower hand button. The first question will be asked by Mr. Kelvin Dechen from Itaú BBA. Go ahead, sir. Go ahead, Kelvin.
Hi, everyone. Can you hear me? Thank you, Júlio and Napp. Thank you for taking my questions. I would like to start with the GLP-1 supply dynamics. You talked a little bit about this. There was a restricted demand this year, but when we look at import data, it seems that some of it has been contained there. Also, I would like to ask about your gross margins. You were able to keep your gross margins flat even with this mix pressure in GLP-1. Looking towards the future, what do you think will happen? Will this be enough to offset your mix? Thank you.
Talking about GLP-1s, we still see some supply restrictions, especially when it comes to Mounjaro, but this is definitely more stable now. Without a doubt, we are at a very balanced level. This can still happen. We know that other molecules will come into the market, but right now we are not seeing these restrictions. We are seeing that stores have been supplied. Yes, Eli Lilly knows that the Brazilian market will be the second biggest in the world, so the lab is focused on that, understanding that aesthetics in Brazil are a bit different from other countries. We will probably see a higher priority for Brazil than other parts of the supply chain. Generics will make a big difference this year. The addressable market for
counterfeit products is three times bigger in unit terms than the formal market. Since people cannot afford the originals, they take a chance with these options that, of course, have lower quality and a higher risk. I think this is going to be changing this year. Without a doubt, this is going to be a bigger driver than in 2025. Yes, without a doubt and When it comes to gross margins, Kelvin, and we can talk about how we start 2026, we have been successful at mitigating GLP-1 effects. We might see some pressures, but this has been offset by the diluted expenses that we have been seeing. Yes, growth in generics. Panvel products have also been growing. This is a very important element. Retail media has been making a difference in profitability.
Generics have been growing 20%.
Correct. We are very comfortable with our gross margins, Kelvin.
The next question will be asked by Danniela Eiger from XP. Go ahead.
Thank you for taking my question. Good morning, Júlio and Napp. Congratulations on your results. I have two questions. This is a follow-up question to the question asked about GLP-1s, but from a different angle. We see that other players are giving us a better understanding of how representative it is for them in their revenue. I would like to know if you can share with us an indication of that and also connect to where you think this will land, considering generics that you mentioned yourself, Júlio, as being transformational. Do you think that this category will be a category in itself? Also, if you can tell us a little bit more about how negotiations have been going with generic labs. The patent was dropped today officially, so of course, there still needs to be some approval from Anvisa.
What do you know about this, the profitability dynamics, timing? That would be great. Also working capital. This was a highlight this quarter, but there are some effects which I think prevent us from understanding what the recurring level might be. If you can tell us what we should consider about working capital. GLP-1s will probably face some factors that will continue to be similar, but then you have generics. If you can help us think along those lines. Thank you.
11%. GLP-1 represents 11% of our sales. This question is a little bit difficult to answer. Itaú said that it will be at 20. It will continue growing above the company average. We do not want to guess where it will land, but it will be higher than this 11% for sure. We are also having GLP-1 X because as a target for our stores, we do not want to lose sight of our total mix. I think that was one of our highlights for the fourth quarter. Of course, we cannot fall in love with GLP-1 for it to be the only growth driver for the company. When it comes to generics, the month will be June.
I think that this will be the lab that will get their first MS. They were here yesterday. When it comes to prices, they defined it very well. It depends on Novo Nordisk's position when it comes to Ozempic. It needs to be cheaper, but they do not know yet to what level. The patent was dropped today, so we do not know how Ozempic will position itself. The negotiation is much easier than when you are talking to a supplier that has a brand that is produced by themselves only. We should probably see a high margin expansion.
Danniela, when it comes to working capital, we captured many gains in 2025, especially when it comes to inventories. The end of wholesale has helped us with our productivity, and GLP-1 is also helpful because it has a quick turnover. In our projection, we finished at 86 days, and it will probably fluctuate around 90 days in inventory. The stability point will be closer to 90 some days than 86 or 85. You know that this varies quarter by quarter. When we look at our suppliers, we continue having some space to improve. We had a stable year when it came to our suppliers, but I have to highlight one important thing.
In accounting, suppliers are really stable, but we know that they depend on the accounting balance and the supplier account. We got many clients, and this should have impacted our suppliers, and it hasn't because I've started to capture some gains there, and we believe there will be additional gains in 2026. When it comes to the collection terms, our flat date is 30 days. High average ticket products like GLP-1s put a pressure on installment plans, and digitalization also affects that. This is the level we should be at. We're comfortable at this level, but we will continue to see a more efficient cash cycle than we had previously.
Excellent. Thank you.
The next question will be asked by Mr. Tales Granello from Safra. Go ahead, sir.
Good morning, Júlio. Good morning, Napp. I have two questions. The first is about GLP-1. Out of this gray market for GLP-1s, how much do you think will be converted to generics and biosimilars considering the industry's capacity of supplying that on the short term? I know that you talked to MS yesterday, so you probably have spoken to Hypera and other pharma industries. I'd just like to get your take on the capacity because I think the demand will be very high. The next question is about your working scales. There have been recent discussions in Brazil about reducing the number of working days in Brazil and also reducing working hours. Have you taken part in this discussion with Congress and with other associations, and what do you expect from this? Thank you.
Well, it's hard to estimate how much of the market will appear, but besides counterfeit, we also have compounded medications, which is an addressable market. Penetration there is more difficult because there is a consolidated chain when it comes to this type of sales. I think counterfeit, a huge share of that, and I was impressed by the fact that it's three times the formal market in unit terms. I think a large amount of that will be converted, but it's hard to say. When it comes to working days, we have been having a good experience based on this pilot, which was 120 stores. We decided to accelerate the implementation of 5 by 2. That allowed us to attract more employees as well, people knowing that they'll have two days off during the week.
When it comes to reducing working hours, we think that the numbers should get to some middle ground there. It won't be the 36 that they're requesting, but it will probably be closer to 40 weekly hours. Of course, this will reduce productivity, but not only for us.
Everyone will have to adapt to that. I think it will take some time to adapt to that. It will not happen overnight, but my perspective on this, from a personal perspective, I think it is a pity. Instead of talking about productivity gains in Brazil, giving people the freedom to work when they want, we are banning people from working as much as they want to. I think it is a pity, and I think that this is a setback for Brazil, but I think it will be 40 hours and there will be some time to adapt. We think five working days for two days off is good. It is having a positive impact for our employees.
Great. Thank you.
Thank you, Tales.
This concludes the company's question and answer session. We will now hand it over to Mr. Júlio Neto for his closing remarks.
Thank you everyone. Like Napp said, we have 12,000 souls working with us every day to make the company grow, and we will see you in May, in a very short while. Thank you everyone. Thank you for your questions and we will remain available. Have a great weekend.
This concludes the company's conference call. Thank you, and have a good day.