Before we start, can I just ask if there are any non-Swedish speakers in the audience? In that case, hand up or shout out. Okay, so we'll do the presentation in English. No worries at all. Warmly welcome everybody to our Q1 presentation. I hope you all had a lovely, lovely summer here. Maybe some of you are still on summer break, ready to start off the autumn. Today I will go through the results of our first quarter and tell a little bit more about what is happening in the company right now. First of all, looking at the financials here for the quarter, it was a really strong start to our new year and our new five-year period. We had a sales growth of 30%, which translates to a revenue of about SEK 107 million compared to SEK 82.8 million in the same quarter last year.
This 30% is actually exactly in line with the trajectory that we aim to be on now for the coming four years here, actually up to 2028, 2029. We're very happy that we managed to get on sort of that trajectory here immediately in the first quarter. The gross margin was 43% compared to 45% in the same period last year. This is still negatively affected by this Red Sea situation. We are trying to do other mitigation actions to see how we can improve gross margin while still sort of suffering from this Red Sea situation since there is nothing we can do to impact that. EBIT increased by 34% to SEK 20.5 million compared with SEK 15.2 million in the same period last year. Solid increase in EBIT as well. It's great to see that EBIT is increasing more here than sales is increasing.
This one is maybe the one that I'm personally most satisfied with, that EBITDA margin was 24% in the quarter compared to 19% in the same quarter last year. Remember that the target now for this upcoming five-year plan is to, in the first half of the period, stabilize EBITDA on 25% and thereafter above 25%. That we are already very, very close to the 25% stability level is quite a sign of strength in my view. The capital expenditure in the quarter was significantly higher than in the same quarter last year, SEK 23.6 million compared to SEK 7.7 million. This is a completely conscious decision by the company, driven by a much, much larger pipeline, as we will see. We have added a massive amount of products during this 12-year period.
The general CapEx strategy now of the company is to add as many new products as the cash flow allows for, which means that capital expenditure is likely to keep growing here. We want to keep investing into the future here and more growth initiatives. Growth outlook for this full year remains at around 30%, and the current leverage is 3.7x EBITDA. Remember that we have said in the five-year plan that our target is to steer the business towards 2.5 x EBITDA and to never go above 4.0x. As we have said before, we expect leverage ratio to be closer to 4.0x than to 2.5x here in the foreseeable future in the coming couple of quarters due to the Medilink acquisition that we completed early in 2025. Regarding business development, we added one new niche generic to the portfolio in the quarter.
For the key strategic products, a Memprex deal was signed for BeNeLux with a company called Goodlife Specialty BV. As you all know, or the ones who have been following the company, we signed Dr. Pfleger for Germany quite early on, and we signed Majorelle for France quite early on. It has been some time since we managed to bring on another partner for Memprex for Europe. We are very happy and proud to be able to present this. Goodlife seemed like a brilliant, brilliant company in women's health and also having really strong abilities in sales and marketing. BeNeLux is a significant region in terms of population, 40 million, 45 million people, something like this, and a strong market for the product. We also had the first approval of Memprex in a non, let's say, Nordic country.
We have it approved in the U.K., of course, since earlier, but it was now approved in France. This is a great relief, of course, because you can never be sure whether you're going to get the approvals or not. Now we had it, and we expect launch early 2026. Maybe to the point that is, at least in my view, in the long term, most exciting. We have taken now the first steps for an internal organic growth initiative for other regions than Nordics. We have selected Germany and the Netherlands as our first countries here to go to, basically with the same idea as for the Nordics, to identify unexploited niche products and to bring them to market, basically utilizing the same logics that we have done in the Nordics. We view this on a broader level as the first step to a European rollout of EQL .
I will come back a little bit to that later. We will EQL-ify more countries here, and first to be EQL-ified will be Germany and the Netherlands. We say congratulations to those two countries. Other things here, we have a really heavy focus on the pipeline still, Special Generics, of course, which we launched here in March with a lot of exciting things going on. Germany and the Netherlands, of course, where work is in the startup phase, you can say.
Also, since we have started a lot of projects during the year, we focus very much in the team now on ensuring that these projects are successfully carried forward and that there are no delays and so on and so forth. We are also strengthening and working a lot with the organization and the team to optimize this OpEx over sales since we are suffering a little bit on gross margin right now due to geopolitics. I think to me, it wouldn't feel good to just lean back and relax and accept that. We are trying to do everything we can to bring up profitability, even though these things happen. We work very actively now in all the different functions to see how we can keep or even improve quality in the work while reducing costs.
For example, we have further increased the number of people working from our Bangalore office. We are actively hiring people in Croatia in regulatory affairs, pharmacovigilance, quality, and we are always striving to find better ways to do the work. This will be really important in the project of building EQL Pharma here to a leading European pharma company to really capture the scalability and the platform advantage. Moving on to some, let's say, financials on the high level. What you see here in front of you is the rolling 12-month sales for a very long time. We have divided the picture into three sort of segments here, representing the three different five-year plans that EQL has published and delivered on. The yellow line here, that is what we are supposed to deliver in relation to what we have promised externally.
In the first segment to the left here is 30%. Then in the middle segment, if you remember, the last five-year target on sales was 40%. Now it is again 30%. That will take us to what I say, SEK 1+ billion here, SEK 1 + billion . We have now taken the first step here in the right segment. We are, as we always do, going to keep following that with growing green bars here that will hopefully take us to the target in quarter four, what day, 2029. Looking at the portfolio and pipeline, we currently have 46 products in the market compared to 40 products in quarter one last year. Six new products launched. Additionally, for the pipeline, we have 45 products in the pipeline, meaning that the pipeline is really where we have done, in my view, a really good job during the year.
The total amount of products here going from 71 - 91 here, if my math is not completely wrong. That is an increase of 20 products in total, which we are very proud of, of course. We need to take responsibility for all those projects that we have started up. On the right side here, you can see a little bit how the pipeline distributes itself in terms of products during development, 26, products in review phase with authorities, 11, and products in launch phase, eight. On the bottom of the picture here, you can see the current snapshot of how we expect the launches to fall out in the coming couple of years. This picture here, we started with in the last quarter IR call. This is to track how geographic expansion is going.
This is geographic expansion both in terms of internal initiatives, such as we are doing now for Germany and the Netherlands, but also in terms of out-licensing and strategic partnerships. Basically, the new territory added here since last time, the orange territory here is BeNeLux, where Goodlife will support us. We keep working also on non-European territories for the products where we have global rights. We hope to, here in the coming years, be able to add also more territories outside of Europe. I wanted to dig in a little bit extra into these, let's say, organic growth initiatives. The reason for that is we have now, for quite many years, been identifying and launching niche generics in the Nordics, and we have done so quite successfully, I would say.
Sooner or later, the amount of niche generics in the Nordics is going to not run out completely, maybe, but at least we're going to discover new niche generics with a lower frequency. To be able to keep a really nice growth trajectory, not only in this five-year plan, but when we all meet in 2028, 2029 here and conclude that that five-year plan was successful, we want to have bullets in the system to be able to launch a new, really aggressive five-year plan. To do so, we need to increase our total addressable market. We are doing so in several dimensions. Firstly, if you think about it, Germany and the Netherlands, which are these two countries where we are now launching internal growth initiatives, have a combined population of, yeah, let's say roughly 130 million, give or take. Nordics, combined population of roughly 25 million.
Based on these 25 million people in the Nordics, if you take all the products EQL has in the portfolio and in the pipeline, will take us to, let's say, about SEK 1 billion when everything is launched, you know, plus minus, given certain things, but to keep the numbers simple here. That means that these new territories that we are now adding on, they are about five times larger than the existing territory where we have been digging our existing growth universe. In my mind, we have expanded our growth universe by 5x , given, of course, that there is a similar amount of niche generics to be discovered in these countries, which we believe that there are. This, to me, gives a very calming feeling in the stomach because the growth universe, I mean, it's like hunting grounds for us.
Our current hunting grounds, we have been hunting quite a long time. We need to find new, new good hunting grounds where fat and nice stags will be able to be identified. Also, the reason, we have evaluated a lot of different markets and approaches here in the last couple of months. We finally selected Germany and the Netherlands as the first step on a European rollout. The reason for that was, number one, these markets, they are fundamentally price-centric. They are technically how you do everything with approval, interchangeability, winning tenders, and so on. That differs from the markets we are used to. Really, that is basically, that is just noise.
As long as they are price-centric, meaning that the actor with the lowest price will get the majority of the volume without active sales and marketing, then our hypothesis holds, and we think that we can be successful there. That's why we selected them. On top of that, we have done studies regarding how many other players are doing this niche strategy in these markets. Our view, as of now, is that this niche segment is quite unexploited in these markets. These two things together are making us comfortable enough to launch a growth initiative in these countries. What we have done then is that we have recruited senior commercial experts for both countries, one that will start in September in EQL and one that will start in October. These are people who have done this before, basically, and who understand EQL's strategy and the EQL approach.
When they start, their first task will be to identify a sizable initial portfolio for these countries. Let's say 15- 25 products per country, and then that we do a really solid work in validating that these products are actually the ones to go for. In parallel, of course, we will evaluate if there are products in our current pipeline or portfolio which will be suitable for these countries. We will start working with the whole team to get the rights to the products, get them registered, and get them launched. I'm very, very excited about this initiative. On top of the Dutch and German hunting grounds, we like our Nordic hunting grounds as well. This is why we launched a Special Generics business unit here in March 2025.
The logics with this is that we know the Nordic markets quite well, but we feel that we need something else than niche generics to be able to keep growing. It cannot be something that is too far from niche generics or identical. It needs to be an adjacent business vertical. We evaluated several different approaches, and our selection fell on this, what we call Special Generics. These are generics where there is no interchangeability. Even though patent expired many, many years ago, there is basically no generic player. The original player still basically controls the market. We think that we can bring a large, let's say, socioeconomic value by launching products in this segment, but also obviously a large commercial value. Our aim is to launch the first Special Generics products during 2026.
Since that is a different business model from niche generics, it still remains to be seen, but that is the target as of now. Finally, I would just like to repeat the targets for EQL Pharma. In March 2025 here, we launched our new five-year targets. Prior to that, we successfully delivered on two prior five-year plans. First five-year plan was 2015 to 2020 when we wanted to grow by 30% as a CAGR, and we managed to grow by 34%. That was a slight over-delivery there. Second five-year plan, we wanted to grow by 40% and have an EBITDA margin of 25% in the end of the period. That five-year plan we also managed to deliver on. Now we are taking on a new five-year plan here where we want to grow on average by 30%.
On profitability, we have selected EBITDA for operational profitability, and we want to first stabilize EBITDA on 25% in the initial period, initial half of the period, and then stabilize it above 25%. We want net leverage to remain in the segment 2.5x- 4.0x. That is basically it from my side. I want to open up for questions, and I will stop sharing. We can do it as we usually do. You either raise the hand or you post your questions in the chat. Arvid, you were fast with your hand.
Thanks, Axel, and good morning. Thanks for taking my questions. It was a pretty good quarter outside of Scandinavia. How should we interpret this? Is Q1 setting a new floor for branded going forward? When do you sort of anticipate you taking the next step sales-wise in this segment? I'll start there.
Yeah. No, I noted that as well, gladly. This is the B2B flows, as we call them internally. When we are selling to partners, this is basically growing all the time, not necessarily quarter on quarter like Q1, Q2, Q3, but it should always grow in comparison to the comparison quarter. My view is that Q1 was not exceptional in terms of where we are right now. I would, on average during the year, expect that sort of level. There can always be timing effects in terms of these, since this sales is based upon a relatively small number of deliveries. That means that if one delivery is one week late and it falls over to the second quarter, it has a large impact. I would say that this is a representative level for where we are right now.
Great. Thank you, Axel. Just one more, if I may. R&D CapEx was roughly SEK 24 million. Second Q1, if we annualize that, is that representative of the expected run rate going forward?
Yes, I think so as of now. It depends a little bit on how many new opportunities we find and what we can see. Basically, I don't want to constrain myself too much in terms of exactly what CapEx is going to be. CapEx will be as much as it can be based on what the cash position will allow. We are in a phase now where we want to invest into the business as much as possible, basically. Right now, I don't think it's not at all impossible that CapEx will be $80 million- $100 million in this year. That can absolutely be the case. If that is the case, I will be very happy because it means that we have identified a lot of products and we have been able to finance them. That's a good sign for the future.
Great. Thank you, Axel. I'll jump back in a few.
I will go to the chat here. I saw a couple of questions from Anders here. I just need to read it quickly in Swedish to be able to translate. First question. (Anders) has noted that a few of the products that we had recently approved are of a little different character than, let's say, typical EQL products. For example, Testonur and Bimtim, where the patent was expired relatively recently. He wonders if I can explain how we are thinking there and if we can expect more of that type, let's say, newer products. I agree with that. I would say the reason why it has become that way is that we have added on much more colleagues in business development and we are able to assess and evaluate much more products. We are learning a lot in terms of deciding what products we want to go for.
The fundament of EQL will still always be that we are looking for the old patent expiry with very limited competition, but we are making exceptions. For example, we have also, in a few cases, gone for patent expiry where we think it makes a lot of sense. For these products, for example, there are certain characteristics that make us fundamentally believe that the competition will be limited for the foreseeable future. When we go to Netherlands and Germany now, obviously, we will start by looking for the older expiry. As those markets mature, we might need to sort of change the approach a little bit there and be more creative in our thinking. Second question. I will take all the questions, Anders, and then you can just write in the chat if you want me to clarify something.
The second question is regarding the cooperation with Qilu Pharmaceuticals in China. It was stated initially that seven products are part of that cooperation. Is that still the case, or has it expanded to more products? If not, is there potential to expand that cooperation? To my knowledge, one or two of the initial products with Qilu have been removed, and one or two products have been added. To my knowledge, we still have roughly seven products that we work with together with them. Theoretically, of course, it could be expanded, but since Qilu doesn't focus on the traditional, really, type of niche generics that we like, their type of products are more, let's say, icing on the cake for us or being able to offer a broader hospital portfolio. Right now, I don't see a strategic point in really expanding that, but we always assess on a product-by-product basis.
If they develop good products, which we think have a commercial potential in our geographies, we will, of course, act on that. There is one more question here. I just need to read it in Swedish. Connected to the business unit Specialty Generics, Anders perceives it here that we will do active sales and marketing, similar to what we did in Mellozzan for a while when it was launched. The launch of Mellozzan in Sweden was not completely successful compared to the total potential. Can you describe why you will succeed better with the launches within specialty generics? Yes, I think that's a fair question. Always when there is sales and marketing involved, and you have to make assumptions regarding your market share, that is, of course, extremely difficult.
I see a fundamental difference here, and that fundamental difference is that this model with Special Generics to, let's say, not have a formal interchangeability, but to work with, let's say, informal interchangeability, that has been done successfully before, and more specifically by the people that we have in the team. They know they have relationships with the most important stakeholders here and have worked with this several years before. That is one thing. Second thing is that whenever there is, let's say, a socioeconomic or a health economic rationale for something, it tends to go a lot easier. What we are speaking about here, it's actually a largely, let's say, dysfunctional point in the pharma system where you have a patent expiry, and then 10 years or 15 years later, there is still no generic. You still have an originator selling at the high originator price.
This means that when you do things like this, that will bring down healthcare cost. You have authorities on your side, and as long as you can prove that your product is safe and, let's say, equal or similar enough, you sort of tend to get the decisions that you need. I am very optimistic regarding this business unit. As you rightfully point out, Anders, whenever it comes to active sales and marketing, it is difficult to make assumptions regarding market share. Next question. Have you won any tenders for the hospital products that are in launch phase, meaning ensured launch during the current fiscal year? Yes, we have. As you know, the tender season in the Nordics is basically that the contract starts January to April, May. We have several tenders that will start in January, February, March, some that could start in April.
Many of the hospital products that are in launch phase will be launched in that period. One final question. I cannot comment on this, actually. He notes that he has seen that Majorelle has gotten Altaromin approved in Denmark. What is the logic with this? According to earlier communication, they will be a distributor in France. Yes, Majorelle will be a distributor in France. We are making a small initiative ourselves to treat methenamine as one Special Generic product in Denmark. It has a certain OTC status in Denmark, which makes it difficult to launch as a normal niche generics, but we are trying to launch it as a Special Generics. There could be that there is some regulatory approach that Majorelle has the MA, but I'm sorry, I will have to look into this because this I cannot answer. I'm sorry. I will have to look into this.
If you want any more details on any of the questions, just comment in the chat, please. In the meantime, any other questions or comments here? Anders is happy with the answers. It seems there are no other questions. In that case, we have Viktor. Go ahead.
Hey, Axel. Nice to hold on on the match results, and thanks for taking the question. Just wanted to understand, based on your leverage, you know that seems to be a bit of a ceiling and a constraint you're getting a bit closer to, and yet you're speaking to a very attractive growth environment and pipeline. What could maybe change your mind and the board's mind as you grow on that kind of leverage ceiling? Because when you look to some other private players in your space that are granted a little bit larger, you know they feel comfortable running at much higher levels of leverage given the attractive cash profile of these types of products and businesses, especially as you get more diversified. Just a feeling on what could maybe change your mind there or what type of opportunities even.
Also perhaps on that, the Medilink acquisition was, I think, a pretty nice template for you guys. Could you perhaps give us some color on if there's anything in the M&A pipeline and is that just an opportunistic thing you're willing to flex or is that something you have a genuine pipeline for still right now?
Okay, thanks. Good questions. First of all, in terms of what sort of leverage span we feel comfortable with operating within, that can, of course, be debated back and forth. I know that different companies and different investment companies have very different views. We, however, feel like this: we have traditionally been relatively low leveraged. Now, with the Medilink acquisition, we significantly increase our leverage. Not to, let's say, with industry standard or based on the robustness in our cash flow, not to a very high level, but compared to where we have been before, it's a high level.
We feel that we need to prove to ourselves, to our bond investors, to our equity investors, to our partners that we can handle this in a good way and feel comfortable on this level. We also need to show that the forecasting that we are doing in terms of leverage, that it will be here sort of in the higher three for a while, and then it will keep going down again, that we are actually right about that. In such a scenario and into the future, it could be absolutely that we decide to change those parameters. I think we, as we say, need to learn how to walk before we start running, so to say. I want to really make sure because high leverage adds also a systematic risk to a business that we haven't historically had.
I want to take it sort of step by step there. That also connects, I think, to your second question there, Viktor, about M&A. What we want to do is to fundamentally be an organic growth project with mergers and acquisitions as sort of icing on the cake when we find good things that really fit at good multiples and when the timing is right. This connects basically to our leverage ratio. We have communicated that we want to not go above 4.0x, and we want to steer towards 2.5x. That means that when I see that there is a clear momentum towards 2.5x, then I think it starts making sense to look at the next acquisition. As it looks right now, I hope that leverage will be on that level sometime during 2026. Obviously, we always work on keeping our M&A pipeline warm.
Since we just made the Medilink acquisition, we are integrating that, and we are in our own mind a little high or in the higher end of the leverage span. We don't feel that it's time for a new acquisition quite yet. Any more? Any follow-up questions on that or any further questions from anyone?
As we just were mentioning it, on the Medilink deal, are you seeing that integrate into your existing kind of CMO infrastructure in India and everything as you'd have expected? Is it better than expected? Can you perhaps just give us some anecdotes or some color there? That would be nice.
Yeah, absolutely. Everything is going to plan, to quote a famous politician. Sales, according to plan, for the Medilink portfolio. The focus in the first year will be to take over the administration of the products. That is the first thing we do. Now we are taking over the MAs, we are taking over the stock, we are taking over the pricing and the relationship with the suppliers and so on. As a second serve, or actually that is done in parallel, but it will come a little later, we start to optimize the supply chain and, let's say, consolidating API production, tablet production, and so on. It's always like step one, take control, step two, consolidate, optimize, and step three, grow. We are obviously doing everything a little in parallel.
We are also looking for these products to try to out-license to new markets and grow them into new segments as well. I feel very comfortable with that, but it takes a little bit of time to take over such a portfolio. Further questions or comments? Anders here, he's on fire today. As of now, since these guys haven't even started in the company yet, I don't want to, let's say, tie myself to a time plan when the answer is I really don't know. What they will start doing is that they will start identifying good portfolios. We will try to identify a greater number of products, a significant portfolio here, and be aggressive and daring in that sense. It's not that we will not pick two or three products and then make a really careful pilot.
We feel comfortable that this is the right decision to go here, and we will identify significant portfolios. The timeline will depend on a lot of things. If we identify a portfolio of 15 products, if we can find licenses for some of these products, then we can launch them a lot faster. If some of them are even approved in other European countries already, then we can launch even faster. The ones that we will have to develop will be a little slower. I think that in the end, it will be a sequence where some products might be launched a little faster and some a little later. I think it's premature for me to comment on that. It will be selecting the portfolios, then getting the rights to those products, then getting the projects registered, and then launching.
I will come back to a more, let's say, realistic timeline once these guys have started working and we see a little bit how the work is going. More questions? In that case, we can start wrapping up. I am very, very happy with the start of this year, and we feel that it will be a nice growth year, as we have stated, and it couldn't have started better. I hope you're all happy also with the quarter here, and you'll follow us for a really exciting year. I wish you all a really nice end of the summer here, and hope your autumns start well. Thank you.