Good afternoon, ladies and gentlemen, and welcome to the SKAN Group AG Half Year 2025 Result Conference Call. My name is Yusuf, the carousel operator. I would like to remind you that all participants will be in listen-only mode and that this conference will be recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and then zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Thomas Huber. Please go ahead, sir.
Thank you very much. I would like to welcome you to the Half Year Figure Presentation 2025. You can see the agenda on the screen. I will start with an overview. Burim Maraj, our CFO, will then talk about the financial results more in detail. I will then close with an outlook for the end of 2025 and maybe the upcoming 2026 and future. We would be happy to answer some questions from you. Starting with the overview, I think we can positively mention that the order intake has really increased significantly, basically supporting the pharmaceutical market growth or basically the injectable drug market growth with 20% growth versus half year one and actually also versus half year two last year. We are here again on a very good level. At the same time, the order backlog is at a record high of CHF 386.4 million.
On the net sales side, we are 17% behind plan. The reason for that is mainly the postponement of projects. Here we see two major reasons. One is that we have many, several filling line projects that are used, actually are designed for syringes for vaccine filling. Those lines were basically ordered after the COVID hype and are now at the sites, basically deprioritized, waiting until the need for vaccines will go up again. On the other hand, we also have one big project postponement on the GLP-1 side, basically, which kind of, I would say, caught us by surprise in half year one. If you look at the EBITDA, the EBITDA is a little bit positive. The EBITDA margin is very low as well, basically due to the missing top line. Obviously, logically, the EBITDA is not as good as it should be.
On the investment side, we have continued to invest CHF 21.5 million, mainly into pre-approved services. This project continues to be on track. When we look more into details on the equipment and solution side, here we have a very strong order intake in the first half year of 28%. You see a lot of projects that have not been decided last year have now been decided. I think I can say that the good order intake has continued also into July and will continue into August. Here we are looking very positive into the future. The net sales, the lower net sales, right, and the negative segment EBITDA, basically due to the postponement of those projects. We have invested, we continue to invest 8.9% of sales. Obviously, this number is now higher because of the low number of sales into R&D developments and also not into standardization.
If you look at service and consumables, we have a steady order intake. Here we have to say that the order intake in half year one 2024 was very, very strong due to closed vial sales that we have not seen happening in such numbers in half year one 2025. This is where actually the, let's say, the steady situation comes from. The installed base is growing, and so also here we have a very positive outlook that we can catch up. The development of pre-approved services, as I have mentioned, is still on track. We plan to be able to do media fill end of this year and go into regulatory approval in quarter one 2026 and start the commercial production in the second half of next year. If you look at the SKAN landscape, you might recognize some new bubbles there.
We have done, or we have completed, two acquisitions: ABC Transfer for Betabags, Medtronic for MES software, and maybe not as easily to see, but if you look at aseptic technology, here we have the location in Gembloux, and new also in Aalst. Aalst is about 20 minutes from Gembloux, also in Belgium, where we have now integrated an injection molding company. The other sites are still, let's say, the same. I would say we have the headquarters in Switzerland. We have the two manufacturing sites in Stein and in Görlitz, Germany. We have sales and service organizations in the U.S. and in Japan, also in Brazil. Basically, this footprint is continuously growing. I will focus more on the acquisitions on a later slide. When we look at the acquisitions that we have done, Medtronic and ABC Transfer, basically, we always said, and we will still say, and we still do merger and acquisition by opportunistic M&A strategy. Basically, if we buy something, it has to match with our market. We want to stay within this niche. If you look at the two companies, and if you look at our strategy slide that you can see on the screen at the moment, you see in pillar three, we want to increase exposure to aftermarket service consumable revenues. We also say we want to expand our offering to include software and digital integration. This is clearly met with Medtronic . And bullet point number three, further development of innovative consumables, closed vials transfer system filling kits. With ABC Transfer, we bought a company that is big in Betabags, which is a consumable with a very big lock-on effect.
Once in a validated process, you need those consumables to run the machine. In pillar four, also here, right, with the whole digital transformation, with the MES system, we now have a proprietary system and that keeps us independent from other suppliers. Of course, we can still work with other suppliers, but we still have an option here. The vision industry 4.0, this one button release, basically the paperless GMP compliant documentation, definitely with Medtronic, we have made a big step forward here as well. Looking at Medtronic in detail, Medtronic is a leading provider of software for digitalization, automation, control of production, and building management processes. The majority of the business is in the pharmaceutical industry.
Compared to their competitors, they have a very modular proprietary system that allows much easier upgrades because it's modular and it does not need any special programming if you want to adapt some type of equipment. Imagine the MES system combines 70- 100 single equipments in one facility to generate one big batch protocol out of the data from all those machines. Now, those 100 machines will come or do come from potentially 100 different suppliers. It is very important that this modular software is able to adapt to all this type of equipment. There is a proven expertise. There are more than 100 life science clients, including Novartis, Sandoz, and Stada, which are basically the big ones in their portfolio, and they have more than 1,000 completed projects. They have an extensive expertise in their software, basically process automation, IoT integration, and energy management.
The management is still involved, right? We have acquired the majority, but not 100%. Basically, the current management will continue to run the company. The company has been run very successfully. There is no need for us to involve ourselves on a management level to think we can do it even better. They're headquartered in Ljubljana, Slovenia, with about 150 people. They have a subsidiary in Zagreb in Croatia with a few people as well. Their main focus is really on the Eastern European markets. This is where the synergy with SKAN comes in, that we can open them the doors to the Western markets and basically have a win-win application for both of us. An MES system, as I have already mentioned, right, combines all the machine data in a pharmaceutical production to, in the end, a digital batch protocol.
The batch protocol is basically the paper record or the paper printout in the end that you need to release the batch. Medtronic is several many years on the market. They have really an established footprint and they have a lot of experience. The nice thing for us is also that they have won some very nice orders with key people, blue chip companies, blue chip pharma companies, mainly because of their modular approach and then the much easier, let's say, software upgrade. If they run on a Windows environment and Windows comes with an upgrade, then Medtronic can easily adapt versus other competitors have more struggles there. Now a few words about ABC Transfer. ABC Transfer is actually a company that was founded by the former CEO of Lacolin, our French competitor, isolator competitor, and RTP manufacturer. ABC Transfer is specialized in transfer systems.
The stainless steel port that you see on the picture is actually a door that allows to bring material in and out of a sterile environment without breaking the sterility. On one hand, we have this double- door, this alpha- beta port, as we call them in the industry. On the other hand, we have the bag with, for example, stoppers in there that is steam sterilized or gamma sterilized that allows us to transfer sterile stoppers into the isolator without interrupting production. They have sold more than 200 alpha ports. They have sold more than 5,000 Betabags. The business is still in the ramp-up phase. The development has been completed. They have now already quite a good footprint and they are already standard in other blue chip companies like GSK, Sanofi, Lilly, Merck, so significant customers of ours as well.
Also, ABC Transfer will be continued to be run by the guys who founded the company, who have the know-how and it's headquartered in France. If you look at the details or the technical details they're offering, on one hand, there is the alpha port. The alpha port is the door that you see on the left side, which is actually built into the isolator wall. On the inside, the alpha port is on the clean side. On the outside, it's the dirty side. On the left side on this slide here, you see beta containers or Betabags. Basically, this is a closed containment, either stainless steel to be steam sterilized or a bag to be steam, gamma, or heat sterilized. Basically, this beta container is then connected with the alpha container, allowing a sterile transfer of those goods.
As I mentioned, for us, most interesting, the reason why this makes sense for us is because the business here is consumable-based. Betabags, if you are in aseptic production, you need several bags per day or even per hour to feed to your machines. This is a very nice consumable. Once validated in an application, there is actually, yeah, then you have a very good lock-on effect. Both these acquisitions match perfectly to our strategy. The reason why we closed both now is actually coincidence. It was a good opportunity on both sides. I think with these acquisitions, we can bring SKAN closer to this total picture where we want to be in 2030. Now I would like to hand over to Burim to give you more details on the financials.
Thank you, Thomas, and hello everyone also from my side to this half year one financial result presentation. Looking at the order intake, already mentioned, we had really a strong order intake with 20.2% growth at CHF 213 million. It was strong, but even if we compare it with the second half year of 2024, we grew with around 17%, which shows really a nice growth. The main driver for this growth was or were the demand on ADC filling lines, which are dedicated for special cancer treatments. Of course, we had also some nice orders from GLP-1, but the vast majority of the order intake is the ADC filling lines.
When we look at the book-to-bill ratio, 1.6 gives us a very good visibility for the future development of net sales, meaning that the second half will be on a higher, on a faster growth compared to the first half year. Also, the order pipeline here mentioned continues to be on a high level, and we reached a win rate which exceeds 40% compared to in the past that we had around 30%. When we look today, it's end of July or beginning of August, we are already at 50% win rate, which shows also our technology leadership in that niche, in the market where we are in. When we look at the regional base, Europe increased with around 41%, which is a strong increase. The reason for this is mainly the capacity expansion of our customers here.
Also, the U.S., it's slightly with 10% below previous half year, but here we had at the beginning, as you all know, some of the political or the geopolitical circumstances, the customers were a bit more cautious in decision making. Looking at the order intake in May and June, which really boosted to this CHF 66 million, we expect that the second half year will continue that we get more orders in the Americas. Asia, also here, we see a strong demand. It's on a low level with CHF 20.8 million, but here the driver are single larger orders, which fluctuates from one half year to the other. The development is really very, very nice also here.
Now on the next slide, before we are going through the remaining figures and providing further insights into SKAN's overall performance in H1, I would like to elaborate a little bit the dynamics of our project business and the associated financial fluctuations a bit in more detail. On the left side, the graph shows an illustrative overview of a normal project progression in terms of revenue recognition, the financing of a project, but also the profit recognition, which is based on the different milestones and project phases. The blue curve shows the revenue progression cumulatively across the different milestones. The green curves show the cash in of a project, and the gray area here highlighted shows the margin realization per project phase. We can clearly see that in the first three milestones, only about 10% of net sales and also margin is generated.
In the middle phase, where we have the steel work and FAT, which is factory acceptance tests, where we deliver or pre-delivery of the machine, the sales and margin contribution is overproportionally with about 75%. It flattens out again in the two final phases to approximately 15%. The reason for this effect is that we evaluate our projects using the cost-to-cost percentage of completion method. That means that the project does not contribute linearly to the sales and profit over the entire project or project lifecycle. It generates, as we book the cost to or allocate the cost to the project, we recognize then the net sales and profit.
Accordingly, the highest cost will or incurred in the milestone of steel work and FAT, where we again, or where we book the majority of the material, and this increases also the net sales and margin realization as a result of this effect. That being said, in H1, we had a lot of projects in the completion phase, where we generate only about 15% with low value generation. We had an impact of postponements, as mentioned from Thomas at the beginning, mainly vaccine filling lines, which were different reasons for the postponements. For example, the building on the customer side was not ready, lack of resources, or deprioritization driven by the currently general vaccine assistance. Therefore, about 20% of net sales and margin has been shifted. For H2, we are planning further progress on this shifted project.
What is more important is that we plan in the second half that more projects will come in the high sales and high margin production phase, which will lead to a faster growth in the second half of the year. Therefore, we are convinced from today's point of view that we can reach the guidance for 2025 in terms of sales growth, but also EBITDA margin. Thomas, we'll elaborate at the end a little bit more on the guidance. On the next slide, when we look on the next slide or in the context of the explanation of our project business, on the left side, we have the decline of net sales from CHF 163.7 million to around CHF 135 million, so around 17.8%. Adjusted for currency effects, the decline was only 16.9%.
The main effects, as I mentioned, are the project postponements and also that we had a lot of projects in the low value creation phase at the completion phase. What is really positive is the order backlog, as you see, it's a record high. It was never that high in the SKAN history, so around CHF 390 million, a growth of 21%, which gives us a very good visibility for the rest of the year, but also beyond the second half of this year. When we look on the next slide, as mentioned, the EBITDA is also impacted due to the missing top line. You see a decline from CHF 21 million in the previous year to CHF 0.9 million. This is mainly driven from the non-linearity, as I explained before, of the value creation of our project business.
On the left side, some cost elements, and we see clearly, as mentioned again, the material costs are below prior year levels, and this is driven by the timing of the projects. We expect that as more projects will come in the second phase, in the second half year, in the value intensive production phase, the material will increase, but also will drive the net sales growth and margin growth. In the middle, the personnel cost, we have hired about, or we have hired 33 employees. When we look on the cost side, it's on a lower level compared to the previous year. The main reason is that the requirements for provisions are not given based on our current result that we show on the half year.
Other operating expenses rose from CHF 22 million- CHF 26.1 million, and this is mainly with higher travel activities, increased maintenance in IT-related costs, but also we continue in our expansion of our operational activities. What is also really important to understand is, or with a significant impact on the EBITDA, is that we continue, nevertheless, that the top line is missing, we continue to invest in our strategic initiatives. The ratio is about 9.8%, and we always said that we will invest between 7% - 8% in the future, which means in our strategic initiatives. Looking on the next slide, on the segment, a little bit more in detail, here we show a very strong growth year over year from CHF 124.9 million-CHF 160.4 million, which is a growth rate of 28.4%. Also, compared to the strong half of 2024, it's a strong increase over 23%.
Net sales, the impact already mentioned, driven by the lumpiness of our business or the phasing of our project business, has an impact, as you see here, 24% decline in net sales. If the top line is missing, the cost base is given. That's why we have here a negative EBITDA margin. On the next slide, we have the service and consumables business. We have here a stable order intake, but also a stable net sales, which is mainly driven from a comparison to the previous half year, 2024. There we had the extraordinary performance in aseptic technologies, but also strong orders or single orders in the spare parts business, which increased the baseline of 2024. On top for the net sales, we had also here the timing effect of maintenance contracts and retrofit projects.
They have or they are scheduled to be completed in the second half year, and that's why we will have a faster growth also in the service and consumables segment and increase again also the EBITDA margin, as currently is a slight decline from CHF 12.6 million to CHF 10 million and will increase in the second half of the year. On the next slide, when we look at the cash situation, we are stable more or less on the same level as previous year at CHF 53 million. The moving parts here, as you see in the left graph, is the operating cash flow.
We were able to generate around CHF 23 million, and the main driver for this cash generation is the structure or significantly negative net working capital, which is driven again with our non-linear project business and with a strong order intake that we showed in the half year, which generates a high volume of advanced payments from customers. Investing cash flow is at CHF 13.4 million. The difference between the investment that we showed at the beginning is that we have a fixed term investment here about CHF 8 million, but the investment in our assets is about CHF 21.5 million. The difference is this CHF 8 million fixed term investment here. The free cash flow increased last year. We had - CHF29.5 million, and it increased to CHF 9.2 million, which is again a positive effect, as mentioned, driven by the strong order intake or cash generation.
Financing cash flow is driven from the payout of the dividend in May that we did. On the next slide, when we look at our finance structure, our balance sheet, it remains really solid. We have a net cash position of around CHF 43 million. Equity ratio is at 48.1%, which gives us a solid basis also for the future growth. As we have announced that we have done these acquisitions, even with these acquisitions, the financial structure post-acquisition remains on a solid basis or remains strong, also to support the future growth of SKAN. I would like to hand over to Thomas to give you some outlook.
Thank you very much, Burim. Let me give you a short outlook of what we are expecting for the rest of 2025 and for the future. When I look at the market development, we still operate in a growing market.
Basically, our pharma customers are still growing. The underlying growth of the global pharmaceutical and biotech market is definitely there. We can see that in the order intake, and we also can see that in our order pipeline that again is continuing to grow. We also see that this trend toward injectable drugs is continuing. We still see, specifically in Asia, the shift from clean rooms into isolation technology. This is also helping us. The whole reshoring, that the reshoring, let's say, from Asia to the West, maybe from Europe or from Asia to North America, it wasn't that strong in the first half year because of the political situation. Here we see a strong catch-up taking place actually in these months and the months to come. Basically, as a consequence, we see that the need for aseptic filling is continuing to be there.
It looks like, when I look at the order win rate, that we are still able to defend many of those projects and win them for us. If I look at the business outlook or business development, yes, we have a cyclical nature of our business. It's this lumpy business that we always talk about. Because of the accumulation of postponements of projects, now the lumpiness is specifically strong in this first half year. As we mentioned, we are optimistic that we can catch up in the second half year. The reason why we think we can do that is, on one hand, that we had and we still have a very strong order intake that again fills our order backlog and that gives us more flexibility in filling gaps.
On the other hand, these postponements that we had, they opened some gaps in the first half year, and we have used those gaps to go into pre-production of standard equipment. From that point of view, we do have already pre-produced equipment that we are now able to deliver faster to the market, and that can generate significant revenue in the second half year. Together with Medtronic , we can now offer our customers a more comprehensive solution along the whole value chain. This is also definitely a very good signal and a very good driver for the future. A big question is always tariffs. How do tariffs impact SKAN? First of all, it's very important to understand again, right, we still do not have any local competition in the high-end segment of isolators. All our competitors are exclusively German.
Thanks to the fact that we have our production site in Görlitz with more than 350 employees, we can actually produce 100% of the U.S., let's say, destination isolators that will go to the U.S. in Germany. From that point of view, our customers will see a 15% tariff, at least for the moment, and that is absolutely on the same level as our competitors. From that point of view, we do not have any disadvantage. Thanks to our service hub, sales and service hub with more than 150 people in the U.S., we are actually very well positioned. I would say even better positioned than many of our competitors in the U.S. market from a service perspective. From that point of view, I think we have a very good position. To be frank, the last strong order intake that we have seen in June, July underlines that.
If I look, or let's say the only point where actually we are, let's say, challenged is when we are selling spare parts to our customers through SKAN U.S., because then SKAN U.S. becomes the importer and actually is linked to the tariffs. Now, we have to understand that spare parts are typically, for example, sensors or components that we do not make by ourselves. We acquire them. Actually, the minority of those sensors really have a Swiss origin. Many of those sensors have Asian origin. From that point of view, the taxation is even, or the tariffs are even worse. On the other hand, if we can have Swiss origin or even German origin spare parts, then obviously they would be only under the current tariffs there. What we have done to compensate that, we have generally increased spare part prices.
We do not tell our customers now the price is X plus tariff, and this is your purchase price. We just say due to additional cost, we had to increase prices. So far, we have not seen any negative feedback there. What is also very important to say, due to those tariffs, actually, our equipment becomes more expensive in the U.S. So far, we have no signs from our customers that they would rethink their decisions or that they would try to invest into different equipment. This is mainly due to the fact that there is no alternative from a local sourcing point of view. From that point of view, we stay pretty much relaxed with the tariff situation. Is it 15% or 39% or whatever the future will bring? In the near future, we will not have local competition.
I'm not saying this is not possible in five to ten years from now. Very important is also that we are continuing our initiative to build up or to ramp up manufacturing in North America. You remember, we have this on our strategic planning already prior to the current administration in the U.S. there. This is also to be clear, if we want to keep our quality level, the know-how transfer is actually the most challenging task in this. Therefore, this will be a slow ramp-up with small isolators in the beginning. It will not have a significant impact in the near future. We also have to understand that Swiss origin or German origin can be achieved with about 60% value creation in the country. For U.S. origin, you need 90% value creation in the country.
Therefore, it is very difficult to get U.S. origin also if you might assemble or qualify the machines in the U.S. Now to the last slide, the guidance. As you have read this morning, we are confirming our full-year guidance to mid-teens and to 14%-1 6% EBITDA margin. We still continue to guide that we will gradually increase this guidance. Now, how is this possible with, let's say, a weak half year one that we have seen so far? I think here again, it's very important to understand that we have used those gaps, those postponements, right, those unexpected postponements. They opened some production capacity slots in our company, and rather than sending people home and doing nothing, we went into pre-production with equipment. This is not a new thing for us, right? As we have this lumpy business, our organization is actually designed in such a way.
It's just that currently, this half year one, the accumulation of this vaccine and GLP-1 postponements was kind of more heavy than we are used to. From that point of view, we think, or yeah, today we see our planning says that we can reach the guidance. I also want to clearly state this will not be a walk in the park. We cannot digest many more postponements, right? So far, we have no indication, but if many more projects would be postponed, it would become challenging. The big question is also, or a big question for you might also be, will we be able to achieve the guidance on the organic with our organic growth, or will it only be possible with the recent acquisitions?
So far, I would say the scenario says it's possible with the organic growth, but there is not much room for failure anymore. The Medtronic acquisition definitely gives us more comfort there. That's the end of the presentation. Thank you very much for listening, and we are happy to answer your questions now.
Ladies and gentlemen, we will now start the Q&A session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to only use handsets while asking a question. Anyone with a question may press star one at this time. Our first question comes from Patrick Rafaisz, UBS. Please go ahead.
Thank you, and good afternoon, everybody. I'm stepping in for Tanya. If I may, can I ask three questions? The first one would be a clarification on the guidance. Can you specify how much of M&A contribution from Medtronic in particular you expect for the remainder of the year and whether the guidance for the growth is including or excluding currencies the way it stands?
Yes, I'm happy to do that. I think I just tried to explain that on my last slide. Basically, we think we can achieve the guidance with organic growth, and acquisition of Medtronic will give us more comfort on reaching the guidance. We do not yet say how much, and you can, I mean, you can estimate based on the purchase price, no, not on the purchase price, on the revenue that we have published, what would be the Medtronic impact.
Today, the plan says that it should also be possible to reach with organic growth. As I mentioned, it will not be a walk in the park, so it will become a challenge, and there is not much room for more projects to shift.
The currency is included or excluded in this?
We never disclosed or said that it will be now in local currency. We said the currency has an impact, as you see, as you've seen in the first half year. We were guiding on a general level and saying, okay, mid-teens is possible. Mid-teens has a wide range. Yeah, and that's what we were guiding. That's Swiss francs, so yeah.
Yeah. Okay, understood. Thank you for these clarifications. Still related to this, my second question would be on the standard isolators pre-production. How much of revenue contribution would you pencil in here for the second half, assuming you can sell all that you've pre-produced?
I mean, we are not pre-producing isolators that we do not think we can sell in the first half year. Luckily, we have some types of isolators that are more standardized that we are selling dozens every year. Here we went into pre-production, basically with a very high, let's say, safety that we can also sell them. I don't think that we took a big risk. If the gaps would have been bigger, we would have probably had to decide if we would want to take more risk. If I look at what we have now pre-produced, we should, unless in a World War III scenario, be able to sell them. To be frank, actually, after seeing the sales activities in North America in June and July, I'm actually much more confident to confirm that.
This will again help for the second half to, if I may add, to this overproportionally growth to be able to achieve the guidance that's mentioned.
Right. Those pre-production isolators currently are cost, right? Zero revenue, only cost, and they will turn into revenue and profit once we get the PO. From that point of view, that's why we can catch up so quickly or why we can catch up so much in such a short time.
Okay, okay, thanks. The last question will be on services and consumables. Any chance you can quantify that large closed vials order from last year?
No, I cannot quantify it. I mean, you know, if you look at the closed vials, we still are in this niche of cell and gene and in related areas where you need the very cold, either nitrogen cold drugs or very cold drugs. The revenues there are still linked to some, let's say, single customers that buy a lot of vials. As I think we mentioned before, those vials unfortunately have a shelf life of three years. If they buy a lot, then they have enough for the next year. That's unfortunately also, it's a consumable. It's still kind of lumpy. We were lucky in the first half year last year that we had very big orders. Now this customer is working on the clinical data, and this takes time but doesn't need more vials for the moment. That's why we have this fluctuation there.
Okay, great. Thanks both for answering these questions.
You're welcome.
Our next question comes from Konstantin Wiechert , Baader-He lvea. Please go ahead.
Yes, hi. Thank you so much for the presentation and for taking my questions as well. I probably would start to ask for a couple more details on the ABC acquisition if possible. Maybe if you could give some indications what the revenues of the company are today and how you expect them to develop over the next years, maybe also in comparison to how you would have expected them to develop on a standalone basis. Maybe I take the questions one by one as easier.
Yeah. Basically, the ABC acquisition is still, from a revenue point of view, a very small, let's say, non-relevant acquisition. ABC is at the point where now they have the products. They have validated those products with major customers like GSK, as you have seen on the slide. They are now at the point where they have to ramp up production. This is why they were looking for investors, and this is why we actually came into the game. We have some synergies there since we can produce those Betabags in our facilities in Belgium, as we already do for closed vials. There are some very nice synergies that we do not have to invest significantly. Literally, they did not have the money themselves to go for this next step, and this is why we are in the game here.
All right, perfect. Thank you so much. If I could come back to these postponed projects, two things that I would be interested in. First of all, just a clarification. Are those then still included in the backlog that you've shown right now, or are they to a certain degree discounted for the likelihood or something like that? Are there any further projects that you at least think could have a lower probability of being called in time? What would be the sort of delay that you would accept until you would probably not show it in the backlog anymore?
Yes. The rule we have is very, very clear. As long as a project is not canceled, it will show, it will be shown in the backlog. We have about 60, 70, no, 60 projects, right, that have been postponed, five of which have been canceled. Those are no longer in the backlog, but five projects out of 270 projects that we are currently having is also kind of a normal rate. That's not more than a normal. If a project is canceled, typically we can charge cancellation costs, so the financial impact of a canceled project is not necessarily too negative. Now, a postponed project, to be frank, we have never seen the accumulation in such an amount. Project postponements always happen.
All the vaccine projects where we had a significant order intake back in 2021 or 2022, they are literally all now at the customer sites, and they are all more or less at the same time deprioritized because the need for vaccines has been reduced significantly. Obviously, our customers are also not putting too much effort and manpower into finalizing those projects. This is basically delaying the last 10%- 20% of the revenue, which is in the backlog and which we expect. Obviously, we talk to our customers, and there is, in most of the projects, a very open and clear communication. We expect about 1/3 of those delayed projects that are in the last stage of the project to come back in 2026 and 2/3 in 2027. From that point of view, this backlog is kind of pulled into length, if I may call it like that.
The other big postponement that in the end had a big impact because it was supposed to be in the revenue-intensive phase in production now in half year one is a big GLP-1 project, which is officially postponed into 2027. We have in the order backlog of these CHF 380 million, about CHF 40 million of backlog that is delayed due to those projects that we expect to happen, a portion of it in 2026, most of it in 2027.
Okay, I see. Just on a clarification, because I think I've seen on your slide that you wrote on slide 18, like I don't know if you also mentioned it, approximately 20% of the sales was due to shifted revenues. I think you said rather CHF 40 million, this 20% would be rather something like CHF 22 million. Is it really the CHF 40 million, or have you planned to not grow in the first half even without these postponements?
No, no. I mean, initially, in the beginning of the year, we were not knowing about these postponements, and we were planning that they would all happen and the growth would continue. This is also why we have continued to hire people to ramp up staff to be able to do that. Now these postponements actually, yeah, they came in at the end of Q1 and until, I would say, June, and have summed up to the situation where we are today.
Okay, I'll leave it like that for now. Thank you so much.
As a reminder, if you wish to register for a question, please press star and then one. Our next question comes from Estelle Bétrisey at Berenberg. Please go ahead.
Yes, hello. Thank you for taking my question. I just wanted to come back on the North American business to hear a bit more what you are, since you're saying that you are looking a bit further, a bit more details on the project there. Is it now more a Greenfield project, or have you maybe found something that is already built? If you can give us a bit more color there. Thank you.
Yes. In the beginning of the year, we have seen hesitation on the U.S. market. We had a lot of, let's say, projects ready to decide, but there was no decision taken. We basically referred that to the political situation, to the uncertainty that was coming up from the current administration in the U.S. We have now seen this, let's say, this jam to be opened again as of June, June- July. Those projects are all Greenfield projects, fairly big projects, mainly ADC-related projects, investments that have been planned and that were, I don't know, delayed for a few months. Now we see that the activity is going up.
When I look at what our customers, our global customers, announce what they're going to invest in the U.S., if I just take the Swiss companies, but if I take other companies as well, there is supposed to happen a huge investment wave in North America to basically meet those promises that at least those companies currently announce. Therefore, we expect a huge growth in the U.S. in the coming, let's say, order intake in the coming month and revenue in the coming years.
Okay, thank you. Thank you for this.
In my opinion, this is also driven by the pressure that President Trump puts on medication prices or the tariffs that he wants to put on drugs. Actually, if you don't produce in the U.S., it will be very, very hard to compete. Therefore, we see the demand to invest in the U.S. is quite significant. I'm not saying everything will happen this year on the order intake side. I'm sure this will be spread out over the next one, two, three years, maybe, but it should actually fuel the business again.
Okay. What about the facility you were looking to invest there? Have you?
Yes, the facility, we have looked at different opportunities. We have actually not yet decided which ones are none of the existing facilities that we are. You might remember, right? We were looking, we were actually at the point to buy a piece of land close to where we are today in Raleigh, and then we found PCB contamination in the ground. This opportunity was then deleted from our landscape again. We were looking into existing facilities. Nothing was really matching. At this very moment, some of my colleagues are in the U.S. to look into other opportunities. The goal there is to ramp up slowly. We want to rent a small facility, ideally, where we can start to assemble small isolators to transfer know-how and then slowly get into bigger isolators.
Please be aware that this is a process that will take years and not weeks to happen to meet our quality needs, right? We have this reputation of being a high-quality supplier, and we cannot afford to waste this reputation due to a quick ramp-up.
Okay, thank you very much.
Ladies and gentlemen, that was the last phone question. I would now like to turn the conference back over to Mr. Huber to proceed with written questions.
Written questions. Okay. Thank you. We would like to maybe group them a bit, continue with the questions about project postponements. There is one from Rupen Boyacan from Financial Wirtschaft, who is asking, how big is the risk that some of the vaccine projects will be further postponed or even canceled? He's arguing that maybe demand for vaccines is not picking up again.
Yes, I mean, that's a very good question, right? Yes, maybe our customers bought too much, and now they don't need it anymore. The good thing is, or let's say, when I look at filling suites in general, you either have an aseptic drug or you have an aseptic toxic drug. If you have an aseptic drug like a vaccine, which is not toxic to the operator, you can do vaccines, you can do GLP-1s, you can do any drug on that machine that is not toxic, right? As soon as you go, for example, into cytotoxics or into ADCs, which are highly toxic for the operator, then you need a different setup of machines. Vaccine lines are typically for non-toxic applications. They are typically designed for pre-sterilized syringes.
A few of them are designed for vial filling, and they could be used for other types of drugs which are non-toxic and which need to go into similar containers. From that point of view, I cannot exclude that some of these projects, and we talk about 30 projects here that are on hold, that some of them might be canceled. To be frank, if they are canceled, then we can charge cancellation fees. From that point of view, it might not be attractive to our customers to cancel them. On the other hand, it's not just a machine sitting in a warehouse. It's a machine sitting in an aseptic manufacturing building, right? The machine is just one little cornerstone or one little piece of the whole investment. Those customers have typically invested CHF 200 million into an aseptic filling suite and all the equipment there.
That's why they deprioritize it, right? Imagine if you want to commission such a line, you need probably 50, 50 people, highly skilled experts on the customer side to make this happen. They bought typically what they would buy one line at a time. Now they bought three lines at a time, and they would have to triple their staff, which they would have done if COVID would have continued, but which they have now not done. In my opinion, those customers, they have now acquired lines, and they probably don't need to buy another syringe line in the next one or two years. The good thing for us is that the trend to ADCs is picking up so strong.
Actually, aseptic toxic lines, this is also the majority of our order intake this year, where, first of all, we are an expert and we are, yeah, we are quite good against our competitors as well. That's why the order win rate is also very good there. We are kind of independent from the vaccine market. How big is the risk? Yes, of course, there is always a risk that they will be canceled, but will it have a big impact? Not too much, right? We are shifting revenue into the future, and if this never happens, we currently, the order intake is big enough to compensate for that.
We have a question from Dale Robertson from Chelverton and Asset Management. He's asking about these GLP-1 postponements, if we could give some more context about that.
Yeah, I mean, I have to be careful not to give any confidential information here, right? We know that there are companies out there that struggle with GLP-1, let's say, production ramp-up. One of our customers is such a customer. Studies show that other GLP-1 drugs have a higher efficiency. Therefore, this company basically also, they bought a lot of equipment. They bought mainly from our competition in the beginning, and they only bought from us actually last year when competition was kind of already sold out. Now everything is kind of slowed down there. That basically includes the lines. It caught us by surprise because, I mean, yeah, they told us everything is postponed by two years. We haven't planned for that, but yeah, you need to act and react and be creative to make sure that this is not having a huge impact on the result.
We have a question about the guidance from Lars Knudsen from SEB. He's wondering if we would have kept the guidance if we hadn't acquired Medtronic.
I think, as I already said during the presentation and in the first question of UBS, we will be able to meet the guidance with the organic growth from today's point of view. There is not a lot of room for further postponements, and Medtronic gives us more comfort to achieve the guidance, the range of the guidance that we are guiding today.
There are no more questions in the webcast, so please Operator be back to you for a last round of conference questions.
We have a follow-up question from Konstantin Wiechert, Baader-He lvea. Please go ahead.
Yes, thank you. Thomas, you already touched a bit on the pricing pressure you currently see in the U.S. markets on drugs. If you look a bit more on, I mean, the very expensive cell and gene drugs, how do you expect the pricing pressure on those to kind of affect maybe order intake in your equipment business? Maybe more importantly, is that in your view having any impact on your closed vials in, let's say, maybe if we look down one to two years, looking at the maybe also funding cuts that we see on the Medicaid, Medicare, probably that's not where you're looking for in these kind of drugs. In general, just your thoughts about that would be interesting.
Yes, I'm happy to give you my thoughts, right? I can only give you my thoughts. In the end, I don't know. What we all see, right, is that Mr. Kennedy is not too much a fan of cell and gene therapy. Is he going to continue BARDA funding and so on for those companies? That's probably become a little bit more tough. That means probably in the U.S., less new drugs, let's say new molecules, will come into, let's say, interesting phases where they would buy closed vials. On the other hand, we see a lot of actually a ramp-up in China, to be frank, the need of closed vials because China is, in my opinion, also making big progress on cell and gene. Our vial has a disadvantage that it's uncompetitive.
If I say there is not really a competition for that vial, and it's not that this vial is specifically designed for cell and gene. It's specifically designed for cryogenic storage. Cell and gene happens to need that, right? Therefore, we are in this market. If I look at the drugs that are developed in our vials, if I look at the vials that we're selling, right, we had this peak last year, which we do not have this year. This one customer peak last year, which we do not have this year. Obviously, the vial is a very attractive margin product. If I look at the total numbers of customers that are buying little quantities of vials, that still looks very promising.
As you talked about these, I mean, this customer apparently has purchased the vials last year while being clinical s tage, I mean a few of your products or a few products that use your vial are really in the commercial stage right now. How is sort of the share of revenues in the consumables part of the business that you generate with clinical trials versus with commercial products? How do you expect that to change over the next few years?
I mean, currently we sell more vials into clinical stages than into commercial phases, because there are only a few, let's say, commercialized drugs out there, and there are still many in clinical stages. It very much depends if we talk about autologous drugs or allogeneic drugs, right? Is it one drug, one patient, or is it one drug, many, many patients? Currently the autologous drugs are kind of, we have more autologous drugs in our, let's say, our, not we, but our customers have more autologous drugs in our vials, but we only need one or two allogeneic customers to change that, how do you say that, that ratio? From that point of view, again, we are not communicating those numbers, not because we don't want to talk about it or because it's a secret.
It's just lumpy, still lumpy, and we don't want to generate too much excitement or too little excitement on your side by giving you these lumpy figures.
All right, understood. Thank you so much. Maybe a last one, just also to get a bit more sense of what you expect in terms of order intake in the second half. Given that you expect your revenues to ramp up significantly in the second half again, should we expect your backlog to remain broadly stable or even declining again in the second half? What are sort of your thoughts around that?
If I may answer it like this, from today's point of view, we have a book-to-build ratio of 1.6, and our targets for healthy growth are always to have it between 1.1- 1.2 to be able also to support the future growth. Currently, as we are growing on a higher level with 20%, we do not see signs that it will go drastically down. We are expecting to keep this book-to-build ratio in that range, what we are guiding or what we are seeing for us as for the future healthy growth of SKAN without compromising the quality that we are required or which is needed. Between a book-to-build ratio between 1.1 and 1.2 is, which is, our little fussy.
Okay, thank you so much.
Ladies and gentlemen, that was the last question, and this concludes today's Q&A session. I would now like to turn the conference back over to Thomas Huber for closing remarks.
Okay, thank you very much. Thank you very much for listening in. Thanks for your questions. I think we will see probably one or the other, one of you guys, tomorrow and the day after tomorrow in the one-to-one calls, and we are happy to answer further questions. As we said, we are in a lumpy business, right? Now the business is lumpy, so this is project business, and we still, as I said, we are confident that, yeah, this is our daily business. This is what our company is designed for, and now we challenge the situation, and it looks quite promising. Okay, thank you very much, and have a nice day.