Hello, welcome to the Media and Analyst Conference. Today, we're going to be presenting Bachem's full- year results for 2020. My name is Nikki Parsons. I work here at Bachem, and I have the pleasure of being the moderator for today's session. Joining me here today are Thomas Meier, our CEO, and Alain Schaffter, our CFO. Due to Corona, of course, we couldn't do this event in person this year. I hope you understand. Luckily, don't worry, we have a great virtual setup for you today. We're actually in one really big room, we have plenty of space between the other panelists and me , luckily, we can then talk to you without masks, all completely compliant with Corona regulations. Just before we get started, we have a couple of housekeeping rules.
The first is that if you ever have a technical issue or a technical question, you can always write us in the chat at any time. My colleagues are standing by, and they'll be happy to support you. If you have a question you'd like to pose to one of our panelists, it's absolutely welcome because we're going to have lots of time at the end of the session, and I'll be happy to put your questions to the panelists. Just write us in the Q&A at any time, and then we'll have that time at the end of the session.
The last thing is, of course, Zoom is used very prominently nowadays, but if you are new to Zoom, you can, of course, change how you see the system. You can move the speaker pictures around in case something is covering an important graphic. Not to worry. Again, if you have any issues, just write us a message in the chat, and we'll be happy to help you. With that, I will turn it over to our CEO, Thomas Meier, for a welcome introduction.
Thank you very much, Nikki. Welcome everyone to this afternoon's session here in Switzerland for the full -year results of Bachem. I'm together with Alain Schaffter. Welcome, everyone, to this full year result of Bachem. We put around 25 slides together. It will take us about 20 minutes to go through that, then we have time for Q&A. 2020 was a Corona year. The pandemic hit us as a business. We had to adjust the way we operate, and it brought a lot of hardship to many people's lives. One year back, I remember very clearly, on the 13th of March, it was the day when the government in Switzerland decided to close the schools, and we presented our results of 2019.
In the room, of course, there was a good mood about the good results, but there were also questions about the pandemic. How are we going to do? How long will it take that we get a vaccine? How will it be when our kids don't go to school anymore? Luckily, today, we have answers. We do have a couple of vaccines, and at least in Switzerland, the kids are allowed to go to school again. Today, Alain and I want to deliver answers on how we achieved this excellent result in 2020. When the year started, the leadership team here at Bachem sat together, analyzed the facts, and analyzed the forecasts. We came to the conclusion that we can break out of our usual growth pattern and deliver more growth than we have seen in the years before. We did.
This clearly is the result of many years of preparation, of many years of investment in our technology, in our capabilities, and that beared this wonderful result. When you look at this result, you should also always consider that over the last nine years, nine consecutive years, every year, Bachem has grown in the top line. This year, we accelerated even more in 2020, and for the first time, we had sales over CHF 400 million. If you look at that from a relative perspective, we have seen growth of 35, 34% in local currencies, which then turned into a growth of 28.1% in CHF.
The reason for that is that we consolidate in CHF, but in 2020, more than half of our sales were in the U.S., and most of them were paid in U.S. dollars, while a larger part of those sales was produced in Switzerland, and the costs were in CHF. That's the reason why the number in CHF is somewhat lower. This growth is volume growth. That means it was achieved with relatively stable pricing, and it was achieved as we do all business here in our company. We are working in manufacturing shops, in laboratories, and we have infrastructure that we use, and we need people to execute that business. It's really a remarkable growth for a CDMO business, and everybody in the team at Bachem is very proud of what we achieved in 2020.
Furthermore, and I will highlight throughout the presentation, this growth is a broadband growth. It's not on one product; it's not on one customer. It's really across the board in product categories and in geographical segments. I have to adjust the camera. We have an issue with the camera. All right. Apologies for that. Hope this is any better. In addition to the categories and segments, we also had a strong pipeline development. We currently have 14 drug substances in phase III clinical trials or under review. Growth, per se, is not what we are looking for. We want profitable growth here at Bachem. I'm even happier to report that the EBITDA at CHF 122.6 million is an increase of 40.5%. We stepped over the 30% EBITDA margin, which was one of our goals.
EBIT was at CHF 96.7 million, a plus of 55%. In local currency, we would add another CHF 12.8 million. The EBIT margin in Swiss francs is now at 24%, a substantial increase from 19.9%. Net income is CHF 78.1 million, a plus of 44.1%. At Bachem, we are always thinking long-term. We want to create value in the long term, and so we were for all stakeholders. It was even more important for us that we were declared essential businesses in all manufacturing areas, and we were allowed to continue production even through the lockdowns. In addition, we invested CHF 76.4 million in future investments for our growth, mainly in manufacturing equipment and installation. We created 272 new jobs, of which 201 are in Switzerland. Looking at the key figures, it is really a very nice development in the growth.
If we go back to 2018, we were at CHF 287 million in revenue, in 2019, CHF 313.7, and now CHF 402 million. This led to a very high capacity utilization, which in turn influenced all profit marks positively, as we just explained. We have reached the earnings per share of CHF 0.0558, and we generated an operating cash flow of CHF 115 million, a plus of 79%, which is very welcome to pay for the investments. Our total number of employees at the end of 2020 was 1,529 , which is converted to 1,475 FTEs. I said this is a broad growth, and so it's a growth in all product categories. The API business is continuing to be the strongest business, and it grew with 30.3%, whereas the research chemicals business has a growth of 12.2%. API growth was driven by selected products and projects.
While research chemicals growth was mainly driven by bulk sales and by API-related custom synthesis. We are geographically balanced. All geographic regions participated in the growth. We had a growth increase in Europe of 15%. In Asia, we have seen 28% growth. We added new customers in Japan, South Korea, and also in China, helped by the local sales office in Tokyo. In North America, we had the best sales performance with almost 50% growth. On this slide, we talk about customers and products. You see three years, 2018, 2019, 2020, for customers and products, and in each graph, you see the top 5, the top 10, and the top 20.
You see that there's not so much of a development, clearly indicating and proving that there is not just one customer, not just one product that brought these excellent results and growth, but a whole lot of good products and good customers with strong relationships that have driven our numbers and our earnings. Coming back to COVID. COVID, as I mentioned last March, was a lot in flux. Many actions had to be taken, and that was also the case for Bachem. Of course, we set up a global task force and all local sites had an emergency team that took care that workers were always safe, that we had the necessary protection regime prepared, and that employees were safe while they worked.
At the same time, we got the essential business status in each manufacturing site, so we secured work during the lockdown period, and we could help customers and ultimately patients who needed our drug substances in very dire situations. For that, we ramped up our shift systems. We turned to a 24/7 shift for one product that was in high demand. In total, we had some work to do. We added complexity to how we act and how we proceed; we also had positive effects of the pandemic. Mainly, it clarified once again how important our work is. For each and every one of us, it motivated us to do that work and to help the patients. In addition, we have seen growing sales due to additional demand. We estimate that sales will be less than 5%.
At the same time, we have to balance that out. Of course, we have also seen delays in clinical trials, delays in drug approvals, and slower launches of products because of the pandemic. Overall, we say it's a net zero impact on our result, and we think it is more impressive that we achieved the growth we had and also the profitability we could achieve in 2020. Bachem has a worldwide presence. We produce in Torrance and Vista in California, in St. Helens, non-GMP material, and in two GMP sites in Switzerland. In addition, we have a sales office in Japan, and together we are the global Bachem team. For me as a CEO, it is very rewarding to say that on all four manufacturing sites, we add additional capacity, because this is in demand, and we have the need to add more capacity.
The mission of Bachem is very clear. We are the leaders in peptide drug substance manufacturing; we aspire to become the leaders in oligonucleotide drug substance manufacturing. For me as CEO, it is, of course, a great honor to lead that very strong team and to present those great results. Even more, what really energizes and motivates me every day is to see the potential we have in that company, the potential for a future business that is profitable and sustainable, and the potential to work together with pharmaceutical companies to make modern and very precise medicine that helps people in need. This energizes the whole Bachem team. On top of that, oligonucleotides and peptides are very complex molecules. They're among the most complex molecules produced by chemical synthesis.
Our process chemists are world-leading when it comes to producing them. We combine that knowledge in process chemistry with equipment and installation that are tailor-made for oligo and peptide manufacturing. Together, that adds value for our customers and is very rewarding to see what we can achieve with the customers and with the chemistry we do. That energizes me and gives the power to the entire team, and lets us achieve those great results. With that, I turn to Alain, who looked further into our numbers and will explain them in the next few minutes. Thank you, Alain.
Thank you, Thomas. As a new CFO, it's of course a pleasure to present such good numbers. As a quick reminder, these are the key figures that Thomas showed already at the start, and I want to go a little bit deeper on some of them. First of all, the EBIT margin increased from 19.9% to 24%. What are the key drivers? First of all, it has a big impact on our COGS. It's driven by our constant review and optimization of our processes, and it's what we always try to get the scaling effect out of it. Marketing and sales, the contribution, we need to be careful. It was a year, the 2020, where we were not able to travel that much. We had less road shows, we had almost no exhibitions and fairs.
The R&D part is showing our commitment to invest in our own pipeline, in our growth strategy, and always to be sure that we try to fill our pipeline in this year, especially on the oligo side. On the G&A, it's our goal, and we take all measures to ensure that we have a stable G&A number, and it's always proportional to our growth in sales. On the cash flow, we increased our operational cash flow by 79% to CHF 115 million in 2020. It's mainly driven by two factors, which are offsetting each other more or less . One is the inventory. We have produced a lot of products to make sure that we can deliver our products on time to our customers. There, we have a higher number in the inventory. On the other hand, due to the growth, we also had to purchase more material.
This reflects in a higher number for accounts payable, also a higher number from our prepayments from the customers for 2021 products. The CHF 115 million, what have we used it for? It's on one part, it's the investing, the capacity. It's roughly CHF 70 million that we have spent to support our growth. There is another CHF 43 million, which is mainly driven by the dividend we paid out in spring 2020 for the business year 2019. This in total leads us to a cash increase, cash on hand increase, by CHF 2 million. We have third-party loans in our books, and we can see here that we were able to keep it stable at the same level. The loans are covenant-free, and we pay an average annual interest rate of about 0.35%.
Traditionally, with Bachem, we have a stable and high percentage on our equity ratio. Coming to my last slide, the overview of the investments over the last five years, we can see here that it's the commitment to invest in our future. We have the CHF 76.4 million this year, and we also plan to invest another CHF 400 million over the next five years into our capacity to support our growth strategy. With that, I would like to give it back to you, Thomas, for the outlook 2021.
Thank you, Alain. Very impressive numbers. Indeed, 2020 was a very successful year for Bachem. What's the outlook for 2021? We are optimistic it's going to be a good year for Bachem again. On top of that, 2021 is a special year for everyone at Bachem. Bachem is celebrating its 50th anniversary, and we are looking back on 50 years of success. Peter Grogg founded the company together with his wife in Liestal, which is around 10 miles from here, with CHF 50,000. You can see where we stand today. Those first 50 years, they are a guide for us who work at Bachem for the next 50 years. We see this company growing substantially and sustainably based on several facts. I listed a couple of facts here that I believe will help us to grow. I will touch on a few.
Our initiative to produce oligonucleotides is very well received by the market. There is a strong demand for oligonucleotides out there, and we feel we can bring a lot of our qualities that we have developed in the peptide synthesis and API space to the oligonucleotide field. At the same time, we are growing our capacity to produce via investments, and we use synergies from peptide manufacturing, be it in infrastructure, in knowledge that we have for analytical testing, and also for regulatory, and the full service package we typically deliver with peptides. Also, what we see out there is an increasing demand for synthetic work. Synthetic manufacturing of products that were previously done by recombinant manufacturing, whether for generics, is now done synthetically, and that plays into our strength.
Also, complex peptide or small protein structures with unnatural amino acids to improve half-life or the medicinal chemistry part are not accessible by recombinant manufacturing, but are accessible by synthetic manufacturing. We take pride in being capable of doing that, and we are the best at making those complex molecules as peptides. In addition, we see oligonucleotide synthetic work because those molecules, for which chemistry is not applicable for recombinant manufacturing, will stay in the realm of synthetic manufacturing. On that strength, we want to build, we want to invest, and there is no group larger and more committed to that process chemistry than the Bachem Group. External factors, we have the demographics. We see an outsourcing trend in pharma. We have market expansion for existing peptide drugs, and we see many new applications, many new ways, pathways that can be influenced by peptide drug substances.
On top of that, we see new formulations, we see oral and nasal products replacing parenteral drugs and being more convenient for patients to use. Those are all very strong factors that make us believe that our plans and our ambitions are very much in our reach. How does the 2021 ambition look? As always, we will give clear guidance in our August call on the half-year results.
For the time being, we can say that we see sales above CHF 500 million in 2022. We will invest over CHF 400 million within the next five years. Those investments they are already started. They're in the planning. We see the demand. We will double-check. We will check our business plans every year, but right now, we are full steam ahead. We see a % growth of the profit above the % growth of the sales. With that, we are at the end of the prepared presentation, and we are happy to take your questions.
All right. Well, thank you, Thomas. Thank you, Alain. We already have some questions here from the audience. For the rest of you, remember, put those questions in the Q&A section, and I'll be happy to put your questions to our panelists. The first question here from Daniel. "You mentioned in the annual report that your new Molecular Hiving technology is very attractive. Can you be a bit more specific? What is so special about that?" Perhaps Thomas, you could shed some light on that.
Thank you, Daniel. That's indeed a great question, and we are all excited about the Molecular Hiving technology. The Molecular Hiving technology is a technology that kind of combines the good worlds of the solid phase chemistry and the solution phase chemistry. In practice, you can build up your molecules in solution without a linker, but with a soluble linker. That helps us to be more green, to reduce volumes, and reduce costs. We are happy that we could enter this agreement, and we see a large potential for this technology.
Thank you, Thomas. We have another question here about a kind of technology area. You also mentioned you plan a large-scale production of small molecules. Are you now entering this segment as well? Thomas?
Yeah. Thank you. Thank you for the question. I do not remember that I mentioned that. I would say that we have an existing small , and they work on selected small molecules very successfully, and we like to keep it that way. Let's put it that way. They are very successful. They are specialized. They are world leaders in some substances they produce, and they do that very successfully.
Thank you for the answer on small molecules. Next question from the audience says, "I know it is not easy to answer, but your best guess for how many peptide approvals do you expect in 2021 and 2022?
Okay. Yeah. The approval rate is the holy grail of our industry. That's for sure. Right now, it's even a little bit harder to discuss because there's a certain backlog, and people can't travel, so it doesn't make it easier. We are hoping for more than one approval in the first half of 2021. I'm happy to report we already had one, where we were involved, and we will see how that pans out. The same is true for 2022. There's a plan, and we will see what the success rate ultimately is.
Perfect. Thank you. We have a question from Patrick. "How should we think about capacity expansion plans from AmbioPharm, others, et cetera? How tight is capacity now versus demand in the industry overall?
Yeah. I don't have those numbers ready. All I know is that we have a good demand on our side, and we work on our investments because there is additional demand we would like to fill. What our competitors are doing, I cannot really comment on.
All right. Thank you. I think we've reached the end of the Q&A. In that case, if you do have any last-minute questions that you want to get in there, because we have plenty of time left over. I have a comment here saying one more. That's probably a comment coming. Let's give it 30 seconds and see what comes on the line. Probably an audience member furiously typing away, let's give him a moment. Okay. A question from the audience. "Technically, how much growth can you handle?" Good question. Thomas?
Technically, how much growth can we handle? Yeah, that's a good question. We, of course, handle growth in a structured way, in that we plan together with our customers. We have forecasting systems, we have supply agreements. In that matter, we handle the growth as it happens, and we build always around one or two years ahead of what is needed.
Okay. Thank you. We now have a question from Maria. Thank you, Maria. "Could you elaborate on the opportunity for oral solutions versus subcutaneous, and the impact on API volumes needed?" Thomas?
Yeah. The answers there are pretty clear. Typically, an oral bioavailability is in the range of 1%-5%, so you need 100x - 20 x more drug substance than what you need for a subcutaneous or IV formulation. There's a demand ramping up due to the reasons that those oral and, mainly, oral products are getting into the market. It will be interesting to see how they perform in the market. I think the first launches were up to a pretty good start.
All right. Thank you. We have another comment here saying, "Hold on, one more question coming." Let's see. I think we have some very interesting audience members, which I hope means it was a good presentation so far.
Thank you.
Okay. Another question on geographical impact here, it sounds like. "China, Japan, Korea, you mentioned. Could you describe the picture there? More generic or NCE?" Thomas?
I think it's a mixture of both. We are strong in the NCE business and we also do generics.
I think with that, we've come to the end of the Q&A session for today. I want to thank you so much for your questions for our panelists. If you do have any more questions that you think about later on today, not a problem. Please go ahead and shoot us an email to ir@bachem.com, and our team will be happy to get back to you. In that case, from my side, thank you so much for joining. Thank you to our panelists, Thomas and Alain. With that, we wish you a great weekend. Thank you so much for joining us.
Thank you very much. Have a great weekend.
Thank you very much.
Bye-bye.
Bye.