[Foreign language] All participant lines listen only. This conversation will be recorded. Good day, ladies and gentlemen, welcome to the first half year 2019/20 Ypsomed earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at the time. I would like to introduce your host for today's conference, Mr. Thomas Kutt, Head of Investor Relations. Sir, the floor is yours.
Thank you. Good day, ladies and gentlemen, thank you for joining us for our half year figures 2019/20 earnings conference call. Joining me today are Simon Michel, CEO, and Niklaus Ramseier, CFO. Our press release report and presentation discussing our half year 2019/20 results and financial year guidance are also available in the media and investor section of our website. With that, I will turn the call to Simon.
Thank you, Thomas, for the introduction. Ladies and gentlemen, it's my pleasure to comment our first half year results for business year 2019/2020. There are three main messages. Number one, Ypsomed is on track in its transition phase. Number two, we have a very strong YDS H1 with 10 product launches. We're going to show you that in detail. Number three, we have a slightly weaker than expected H1 in YDC because of currency effects and a slower start in Canada. With that, let me start and go to slide number five and talk directly about our highlights. When we look at our main focus, this is a long-term strategy, we focus on expansion. What are the main elements? As I mentioned, the phenomenal 10 launches of products. Number one, our strong expansion into China, until end of March, around 12,500 users on YpsoPump.
On the innovation side, we have signed with i-SENS, a second partner on BGM side with virtual options for CGM. Very important, we have signed with Glooko in order to have the connections, cloud-to-cloud connection in Europe into all clinics for the therapy management software. We have also started our SmartDru program in combination and together with the Baker Institute in Australia. We are going to ship the pumps before end of the year to start the clinical trial. We have a concept start in our digital product line for smart pen, SmartPilot. We're going to deepen that later on in the presentation. On our third part, where we focus operational excellence on our production side, we have a very important message that we are on track on MDR.
This is not to underestimate, as Europe is moving ahead. We have moved our notified body from Switzerland, SQS, to Süd. This gives us the freedom and flexibility to be operational long-term, and we are on track on that. Number two on operational excellence, we have a clear commitment towards the circular economy. We drive this sustainability program towards zero carbon footprint in the future. Going to deepen that in this presentation as well. In August, we have officially opened our site in Schwerin. With that, I move to the figures, and I start with some key figures. We have a turnover growth on the continuing operations of 21%. That is the business growth, taking away all Omnipod effects, 21%.
This is the phenomenal element on the injection system side, a sales growth of 55% based on our own developed and own manufactured products towards big pharma biotech. On YDC side, we are focusing on YpsoPump. As you know, we have added 8,000 patients year-on-year. In combination altogether, we have an EBIT growth of 71%. Going to show you that in more detail right now. When we look at top line, of course, it's a lower year-on-year comparison on sales. If you look at the continued business, we see a growth of 20.8%. This is taking away this CHF 100 million missing top-line sales from Insulet, partially out of this one-time compensation. The last quarter of sales we have still in the first half-year, 2018/2019.
You see here on this slide, both segments show a nice growth, 13.9% on YDC, and then the 33.8% on Ypsomed Delivery Systems with a slightly weaker on others, Ypsotec. Ypsotec is our metal company, which has a slightly smaller revenue, mainly due to the tough environment in automotive. When we go and move into more detail and look at the three segments, YDC, YDS, and others, am I going to explain that a bit in more detail. We see our YpsoPump 18% in plus. DiaExpert slightly ahead. We have a slightly lower revenue on pen needles. This is mainly because of Walmart, slightly less deliveries into America. This is mainly because of Q4. They try to empty bit their stocks. We expect larger orders again beginning of the new calendar year. We have around the same turnover in test strips.
This is very important now, we have a negative FX effect of around CHF 3 million. We have calculated and planned and guided this half year in a EUR to CHF 1.17. The proposition of the banks and the content of the banks has been 1.19. We have then decided for 1.17, as you know, we are now at 1.10. Much lower, this has this negative effect. We move on to YDS. We see a similar effect here of around CHF 2 million. All in all together, CHF 5 million currency effect from EUR to CHF that we have a year compared to our guidance. When you look at YDS, very important, I mentioned this 55%, the tremendous growth on injection systems. We have a slightly lower revenue on contract manufacturing.
This is our Sanofi business, the SoloStar and Toujeo business, as you know, 10.1%. Around 6% of this 10.1 is a currency effect as we charge in EUR towards Sanofi, and around 4% here is slightly lower sales, but this is just a month-to-month stock topic. With that, let us move to the bottom line, EBIT, of continuing operations increasing 70.8% to CHF 9 million. This is a bit below our guidance. It's around CHF 1.5 million below our guidance, and this is exactly the foreign currency effect. The increase of sales in injection systems and the license income that we have had compared to the year before is offsetting the missing sales in Canada. I'm going to deepen that in a minute. This loss of around CHF 900,000, roughly CHF 1 million, on Ypsotec.
Ypsotec stands for the other segment. The increased sales and injection system is really offsetting it. What we see now here on the bottom line is, in essence, the currency effect out of the CHF 5 million less revenue on the exchange rate EUR CHF. With that, we communicate the adjusted outlook. We go from CHF 415 million to CHF 400 million. This CHF 15 million reduction in turnover is purely a fixed currency effect, CHF 5 million H1, CHF 10 million H2. If we see a 1.10 currency exchange rate from EUR to CHF. In total, CHF 15 million, because we believe that pen business is offsetting the YpsoPump slightly lower off of uptake in Canada, a bit delayed uptake in Canada and lower results on Ypsotec side. Also, of course, on EBIT, we are adjusting. We are adjusting from CHF 25 million to CHF 30 million to CHF 21 million to CHF 25 million.
We make the band a bit narrow, a bit more narrow, but we take away this effect of roughly CHF 4 million, which is the currency effect for the full year. With that, we are more or less on track, just a bit sad that we see this currency shifting here. Let me explain this once more on the next slide. This waterfall graph shows you a bit the history. We see the compensation payment here, the CHF 49.8 million-CHF 50 million, which has been a significant part of the EBIT from the past year. We also see the CHF 12 million contribution from the last quarter of Omnipod distribution, which led to this CHF 11.4 million. You remember the continued business that we delivered into the last business year. On top of that now, we see the CHF 25 million-CHF 29 million growth for this 2019-2020 business year.
From that, we are deducting the uncovered costs from distribution, from sales, marketing, which have been carried on by Omnipod in the past and now are the burdens to be carried by the YpsoPump. We have to deduct these CHF 6 million. We have an expansion program. As you know, this is Canada, Australia, Eastern Europe, mainly around roughly CHF 5 million. We see this currency effect, which I have just explained to you, of roughly CHF 4 million, leading to our new guidance of CHF 21 million-CHF 25 million. I hope this helps a bit understanding where we come from. With that overview, ladies and gentlemen, I would like to move over to the business segments. We are starting with Ypsomed Diabetes Care. As you know, this is our four main product areas. It's the YpsoPump, which is the center.
It's the system, the center of the proposition. We add the blood glucose monitoring devices around and the software, which is an important integral part for patients and doctors. We take the needles, the roughly 500 million pen needles along with it. I would like to remember what the type 1 market is. We talk roughly worldwide on 15 million type 1 patients. Only 10% are on pump. That's an important message. In Europe, we have a penetration of roughly 20%-21%. In America, a penetration of above one-third. When Europe is growing around 10+% and America slightly below, you see two interesting markets, which are, of course, important for us. Europe is our home territory. This is where we are active in 20 markets. This is where we know how to operate, and we have to make the move now also to Northern America.
With that, I would like to move over to Canada. What happened in Canada? We have received approval, as you know, but we have no real sales. A couple of pumps we have on the product. We have no real sales yet. This is mainly due to administrational missing approvals for reimbursement. We have underestimated the situation there. We have had eventually the wrong team. We have exchanged the local CEO 2 months ago, and now a new responsible person. We have kept the team, we have changed the person there. We now understand better what we have to do, and our full focus is now on reimbursement gaining in Ontario, Quebec, and BC. These are the main provinces in Canada which have to be looked at.
We have a rough delay of seven to eight months here if we calculate all in all that we see here. In the U.S., we have decided to upgrade the product. Basically, we have been convinced to launch the regular pump as we have it in Europe, so without CGM. We understand now that when we look at Tandem and Medtronic, America is more into a combined product proposition. Tandem is really pushing CGM as well. We are convinced if we want to be successful and want to spend the money on marketing and sales in our own organization in the United States, we must have a competitive product. That's why we are now working on the collaboration with one of the two CGM companies.
We hope to be able to communicate that in the coming couple of months, in order then to integrate the product over the coming 10 to 12 months into our system, so we can then resubmit by Q4 2020, with an expected approval around 12 months later in mid 2021. This is a bit disappointing, of course, but on the other hand, it gives us security. We know we will have a much stronger proposition. It gives us the focus to focus on Europe now. It will, of course, take a bit burden away from the bottom line in the business year 2021, as we don't start in America yet. It's important also to evaluate the right partnerships in America, the right connections, the right sales success with the product, that we're going to have a real competitive proposition.
When we look now at where we are on Slide 19, we are still much faster than we have been back then in 2012, 2013 with Omnipod. If you remember, Omnipod, after two years, we have had around roughly 12,000 patients. After three years, we had 19,000 patients. We are expecting now to have 18,000 after the end of the second year being live with YpsoPump. We are still faster, we are still ahead of the curve, and I think that's normal also. If you look in the history, you always need some time to explain the product to get the confidence of doctors and professors that it's pushed. We see some markets now, Germany, France, for instance, where we have been in from the very beginning. We see this uptake coming.
We have the younger markets like Spain, Italy, Eastern Europe, where we need some more convincing. That's normal. It's a trust element as well. From that perspective, we are here not worried at all. We reduced a bit from 20,000 as maybe being a bit too optimistic, down to 18,000 users on the product by end of March 2020. The arguments are still valid. Its simplicity, its size, its quality, and our customer service. We have really few complaints only. It's a really robust product, and the patients love it. It's small, it's touchscreen. The prefilled cartridge from Novo works perfectly, and it's a real and a strong proposition towards a Medtronic product. When we continue now on the mylife Diabetescare portfolio, we have three, four messages I would like to make today.
Number one, I talked about this initially, it's our partnership with Glooko. Glooko, as you know, has acquired Diasend, and Diasend is the therapy management software here in Europe. It's mainly strong in Northern Europe and Germany, but an important product. If you do not have access to the Glooko world, to the Diasend world, we'll have a tougher job to do to bring product into the larger clinics. We are the first company to have a cloud-to-cloud connection here. Cloud-to-cloud connection that is exchanging the data directly from the pump to the app into the Glooko world, so there's no cable connection required or special connection to Bluetooth wiring required in the clinic. Which makes life, of course, much easier, much quicker for our doctors. On the glucose monitoring side, I mentioned that we have signed with i-SENS. It is the leading South Korean CGM company.
They are roughly number four, number five in the world, with around 2 billion strips per year. They have a very strong CGM program as well. This is one of our two, three candidates in the future after a partnership to have an own CGM eventually, if we think it makes sense. Today, of course, we believe that we must focus on a strong partnership with one of the existing CGM providers. Also would like to make an update on the mylife Loop program. As you know, we are updating YpsoPump and open the product. We are now starting with Baker Heart and Diabetes Institute in Australia, our first clinical trial with the open product. We open it controlled. It means that our partners can exchange data with our product. We give access to algorithms to our pump.
We give access to CGM, to our app, and to our product, so we can learn on individualized elements. Also work like Dexcom is doing, like Medtronic is doing, like Tandem is doing, and where Insulet is heading, to go and work on the closing of the time in range. Our objective here is to learn, and to optimize the product, so we have then a clear proposition towards mylife Loop. Also to be ready for a regulatory pathway in around two years from now. The fourth element I would like to mention on the mylife side is the smart pen. We have been working on that product for quite some time on the concept development team. It's a separate program. We are basically using our existing ServoPen, which we are manufacturing for eight years and sell it quite successfully, China, Asia, and other markets.
It's a high-value reusable pen, a metal housing. We are now adding digitization here to the product so it can be working in our ecosystem. This is a very nice example how we collaborate between the two segments. We see this conversion of the YDS segment and the YDC segment. YDC, it's Ypsomed Diabetes Care, is one of the first customers for YDS. It's med delivery systems for that pen. We believe this pen has its own proposition in combination with the pump and the BGM/CGM chain. It belongs into this ecosystem. It is a backup pen for a type 1 pumper. Is it an MDI patient who wants to deliver the data into the cloud, et cetera. There is a new product that we are working on, where we are quite motivated here to add more synergies in the mylife Diabetescare world.
With that, I would like to change to the delivery systems environment. As you know here, it's all around our pen system, auto-injectors, patch injectors, and now smart services. One of the key slides today is the next one. Here you see this wide platform array, the 10 market launches we can communicate over the past six months only. This graph shows that our platform strategy, where we are working on for roughly eight, nine years, is now really paying off. Over the past six months, we have launched 10 products. It's the two auto-injectors for GSK and AstraZeneca. It's the Fasenra and the NUCALA asthma product. We have the [inaudible] product here launched now. We have the osteoporosis PTH launched for Asahi Kasei Pharma. We have the PTH ServoPen launched for Gedeon Richter. We have launched the HDBT diabetes insulin launching product for China.
It's a low-cost insulin pen. We are launching, or we have launched two diabetes pens, UnoPens, one for Russia, Pharmstandard, one for ACI Limited, and two other fix pens also for PTH. One for Mochida Pharmaceutical again, and one for Penex, [inaudible] Europe, and America. What this shows you here is really our broad spectrum. Our broad spectrum motivated through our platforms, auto-injectors, and pens, which is now really showing the fruit from what we have started so long ago. Going to show you also the pipeline in a minute, let me just explain in a bit more detail what we are doing on the auto-injector side. This targeted personalized therapy is really something where we see a lot of traction coming. We have more new drugs that have to be injected at home.
They move from IV to subcutaneous medication to reduce costs in the healthcare system. For that reason, we are investing in two further assembly lines. We have now three in place, two in Burgdorf and one in Solothurn, three in Switzerland. We are adding two more and install them in our new site in Schwerin, in our new site in Northern Germany. Auto-injectors is a really critical product, one of our key platforms that we are driving. What happens in China? China, we are there for over 10 years. We have long-term relationships, we can report that we are strengthening them. We have signed another five years with Dongbao Group. We have signed with five other Chinese players. They are all mostly in insulin. They are all now moving also into other drugs.
It's important to announce that we will soon be launching our first UnoPens, disposable pens in China. We are expanding our local team, especially in the regulatory environment, and we are also investigating whether it will make sense to invest in a local production site, mainly for packaging for the Chinese standard to be quicker in the Chinese market on a regulatory level. An important and very motivated topic. With that, I move over to our pipeline. This is a very impressive slide. It shows what happened over the past 12 months only. Basically shows our pipeline. You have seen this graph before. Here on the very right side, you see the marketed products. This is in total roughly 30, 35, 34 pens and auto-injectors. This is what we have in the market here in dark red and dark blue.
You see roughly 10 products in the registration phase by our pharma partners. You see this large amount of products currently in the customization phase, roughly 90 products. You see how many auto-injectors here. The pipeline, over 90 products in our pipeline that are now moving into this funnel, into this pipeline. All in all, you are seeing 230 device projects here on the map. It's a lot of work ahead of us, but operationally, we have done our homework. We are ready with the production level. We have two more sites to install. We have enough capacity on UnoPens. We have a lot of work to do now to move these products through the funnel. One or two out of 10, of course, will not see the end, but it's important to understand we have many options.
On PTH, for example, we work with a handful of customers, not only with one or two, with adalimumab, HUMIRA as well. We have different options, different partners. If one is more successful, we are the delivery device partner of choice. We will be successful. Doesn't matter who of the device partners, of the pharma partners will be successful. Apart from the current pipeline of the current existing products, auto-injectors and pens, I've introduced quickly YpsoDose on the main slide, and we have conducted a couple of studies. First of all, the user acceptance of our YpsoDose is very high. As you know, there are about 10 customers who tried 10 pens, suppliers who tried to move into the segment. In essence, it's really BD and West and Ypsomed now that will eat most of the cake. This is a very interesting new segment.
It's all about volumes, 2 to 10 ml, so larger volumes that do not fit into an auto-injector. It's a new class of products with medicines and drugs that have to be injected over a period of up to 30 minutes. We have a couple of feasibility studies ongoing with large pharma clients, we are starting our first clinical study together with a pharma company. We are delivering the devices into a clinical study in a couple of months in Q1 2020. A very interesting new platform here, patch injectors, YpsoDose, how we call it, and we will be reporting on that in the future more and more. We will also try to show it in the pipeline graph in the future. The last slide for today in the area of Ypsomed Delivery Systems, it's the expansion of our smart services program.
Apart from the Ypsomed, so the product that is bringing the data from the auto-injector, the SmartPilot for Ypsomed, which is bringing the data for the auto-injector into the cloud, we are now introducing the SmartPilot UnoPens. Also for insulin and growth hormones, we are going to be able to send the data through the phone into the YpsoCloud and from there towards the doctor, the patient, or the pharma company, which has better means then to negotiate in a world where outcome-based payment is more and more important to actually negotiate with the large insurance groups. I can tell you all big pharma are interested in that. It's a big topic. They are interested in data, and we are at the moment trying to find also our pricing mechanism. How are we going to charge pricing in this world?
A very interesting time we are in, and we'll definitely be able to report more in six months from now. With that, I hope I've been able to give you a good overview on where you see diabetes care business with our pump efforts, with our YDS, with our tremendous launch of new products. With that, I move over to a couple of Ypsomed Group topics. We are still hiring. This year in total, we are going to hire over 150 people again. We have hired so far roughly 66 people in Switzerland and a couple of people in our new site in Schwerin. We're adding more people, especially in the area of software, hardware. We are growing the team in-house, but also through near shoring options in the future. We have decided to grow our sustainability program.
As you know, we are not only focusing on the economic part. We are convinced that we can only be long-term successful, that we can only drive the long-term profitability if we also focus on our ecology and our society responsibility. For that purpose, we have decided to deepen the circular economy approach. Circular economy approach have been explained by the Ellen MacArthur Foundation and McKinsey about four or five years ago, it basically shows how you can bring waste and carbon out of your organization. It's all about regeneration, sharing, optimizing processes, keeping product in the loop, virtualizing certain elements, so no longer make physical but virtual studies eventually. Exchange goods, exchange components, exchange raw materials to a more environment-friendly sources.
For instance, we have been exchanging our complete heating system in our main factory in Solothurn from oil to using the heat that we use in our machines, that we generate from our machines, from our production machines. We are now analyzing bioplastics not based on oil for future products. We are trying to loop the trays. Many trays that deliver the products to our customers are only used once. That's insane. We have to reuse them. Many topics here we are looking at to lower our carbon footprint, which is a topic not only now with this Friday for Future here in Europe, but it's really a topic which has followed us for three years now. The last two slides, it's about Schwerin. We have opened our new site.
This picture here shows the political people here from Germany, healthcare minister, and the president of Mecklenburg-Vorpommern, Ms. Schwesig. You also see on the next slide our new site in Schwerin. We are really motivated. We are going to upload the movie in a couple of days on our website. It's a 26,000, 27,000 sq m sized production site. We have here enough capacity. At the moment, we are installing our Orbit infusion set line, a 10 million infusion set line for YpsoPump infusion sets. We are delivering the two YpsoMate autoinjector lines. We are preparing the space for YpsoPump, our own patch pump, and further YpsoMate or UnoPen product. We have enough capacity here for the next six, seven years. This gives us freedom of thought, and we can focus on the delivery of our products and of our projects.
To summarize, ladies and gentlemen, we have had a spectacular half year on YDS. We have over 12 launches ahead of us of new products in the coming 12 months. YDS is the key driver to the bottom line. YDC with YpsoPump has shown that it's a product which is very accepted. We have had a slow start in Canada. We are trying to make good for that again. We have decided to move America for one year, but in total, I think it's a wise decision to be already in America with a good product, a competitive product, and this gives us time to focus on the European market. With that, I would like to end here and hand the word over to Thomas. Thank you.
Thank you, Simon. Thank you for your explanations and comments. Operator, please open the line for questions.
Certainly. Thank you. Ladies and gentlemen, in order to ask questions, please press star 14, star 14. I will open your line one by one. Thank you. I repeat, for any question, please press star 14 on your keypad. Apparently, everything was very clear. Nobody has questions.
Excellent. Thanks, operator. I think we can close the call for today. Thanks for joining, and we look forward to our full year business earnings call.
Thank you very much.
The conference recording has been stopped. Dear participant, your conference call has come to an end. Thank you for attending. Goodbye.