In times of geopolitical distress, in times of great difficulties, in times of financial uncertainties, we present you a company today that stands out, that is on track, with no surprises, independent and growing. A very warm welcome to all of you here in Zurich and to our roughly 50 guests online. We do this hybrid today and try to accommodate for everybody's agenda. We have an interesting program ahead of us. Before I dip into the slides, I would like to give the word to Samuel, our CFO, for a short intro. Samuel, please.
Thank you. Simon, also welcome from my side. You know, it's always nice to present good numbers, and today we can present good numbers. We overachieved in our key metrics: top-line sales, we overachieved on profitability, EBIT, and as well in capital efficiency. I will focus today, when I present the financials, on the impact of our transformation into pure play on our financials. With that, back to you, Simon.
Let us start with the deck. The story remains the same. This is why we get up every morning: self-care, making SIMPRAN easier. We want to make life easier for people with chronic conditions. Our growth drivers remain the same that you all know. We profit from self-care, the fact that therapy goes home. We profit from biologics, that more and more drugs have to be injected. They can no longer be swallowed. The parenteral way is the way for drug application. We profit from the fact that more and more drugs can be copied, biosimilars, because through biosimilars, more people have access to modern drugs and new, chilled ones. Chilled ones obviously will give us a lot of tailwind, a lot of support in the next decade.
We are focusing, and we are on this transformation pathway, and we are very pleased that we were able to announce a couple of weeks ago that we now finally can start unlocking our full potential, that diabetes care is leaving Ypsomed, is becoming independent and outside of Ypsomed, and Ypsomed is fully focusing on its core, on the B2B business, to become a fully focused self-injection specialist. We believe that TechMed is the best possible owner. It's an owner that can support patients. They support the condition, the collaboration with doctors, and obviously also for our employees. Not a lot will change. They move more or less from one factory to the other building in town. It guarantees stability, and together with the patch pump program, TechMed will have a great future.
This transformation has started four years ago when we have decided to divest DiaExpert, our trading business in Germany. We have stopped and sold our pen needle business, the BGM business. We have decided to sell diabetes care. We have started this Mercury program to carve it out as a separate entity to bring it to the market. We have decided now to sell Ipsotech, as you know, and we have discontinued our contract manufacturing. We are in the last months to do so in Solothurn, to make space to move in auto injectors. Ypsomed is becoming a pure play injection system specialist. I think that's the key message in this year's annual figures, something we have been working to for many years, and now we are there.
This also shows in the figures, the new starting point, and Samuel will deepen that, of course, with you, is the CHF 500 million. That's our core, our continued delivery systems business top line. In the future, we will now be a pure play company, sales only coming from delivery systems. We believe we plan a closing by end of September, 1st of October. Let me give a couple of insights on where we come from, where we are heading. These are our 11 platforms that you know. On the left, you see our auto-injectors in different volumes: one, 2.25. The third one is the auto-injector for higher viscosity. You see the 5.5 mL, and then the SmartPilot to have the data transmitted to the cloud. In the middle, you see the Ipsodose. That's a 10 mL, up to 10 mL patch injector.
On the right side, you see the pens, disposable pens and reusable pens. This is where we build on. This is our platform portfolio, and this is also what we are continuing to invest. We have decided together with the board in February that we are going to add two new platforms to that: a new auto injector platform that has a high level of recyclability, so product we can keep in the loop. That is a new auto injector platform. We will present it to you in our Capital Market Day in Schwerin. On the right side, you see the pens. There we will add a GLP-1 pen, an optimized pen for GLP-1s, simplified. Also a new platform that we are going to present to you at the Capital Market Day latest for the semi-annual figures. This is the reason why Ypsomed is successful.
That's the graph that explains our platform logic. We start early on, take a lot of money in our hands in R&D. We invest the money in a new platform. We think, we know, we try to learn what the market needs. It has taken us almost two years now to come to that decision in what new platforms we are investing. We are building the concepts. We are building the models. We are testing them. We are securing the IP. We ensure that we do not infringe third-party IP, obviously, and we built the factory. The moment the factory is there, the volume is there, the platform is ready, this is when we talk to clients. From that moment on, clients have no longer on the risk. They do not have the time.
They can profit from a short one-to-a-year development cycle to go into the clinic, and it's just a variant. It's no longer a new development. It's really risk lowered. This is the reason why Ypsomed is so successful. Only two companies are successfully executing with that model globally. All the others try, but they are not really getting there. As I mentioned, Samuel is going to deepen the figures, but you see here this tremendous growth. You also see the project business. We reached CHF 100 million, so 1/5. It is roughly what it will be also in the future. We see it a stable amount, more or less CHF 80 million-CHF 100 million. You see this tremendous growth, 30% on all injector, 50% growth, an excellent result. With 36 new projects, we have a record result on new projects, again, clearly above 30.
Where are those new projects, those new device deals coming from? You see now, first of all, that commercial sales, auto injector clearly overtook pens. That is also an important message. Over time, until the end of the decade, this is most likely going in the direction of three quarters of our overall revenue in delivery systems is going to come from auto injectors. When we look at the acquisition, those 36 deals that we have acquired, three quarters come in auto injectors. It supports that move, number one. Number two, we also see that a large amount of the programs and the projects come from existing clients. We are now working with 130 pharma biotech companies worldwide, all the big ones. If they order a new device, they just more or less call us and they get a new device.
This is, of course, moving that piece makes it extremely efficient for both parties. This is just a small selection of new devices that have launched that we are able to talk about. As you know, we are only able to talk once it's really on the market. On the left side, you see a PTH pen, a program for Schilddrüsenunterfunktion in an UnoPen version. Then you see the two Ipsomates, 1.0, 1 mL, Ionis, a company. This is for specific diseases. The one at the bottom is for Raynopathy and for numb legs, which supports the pain also in the legs, especially in the space of diabetes and also obesity.
The 2.25 mL devices on top from CSL Behring and on the bottom from Leo Pharma, two new drugs in the space of autoimmune diseases, also orphan drugs, very high efficiency, making life easier for people with atopic dermatitis in the Leo case and with diseases that really let your skin swell. People that receive a new life with such drugs, they can leave home again and can live a proper life. Game-changing medicines. I think those five examples that we have selected show very well that this is not an insulin company. It's also not a GLP-1 company. It is a company very diverse in drugs. It also shows the areas where we are active. A lot of disease areas, more and more, we are adding more or less one to three new areas every year, both in pens and in auto-injectors.
Of course, GLP-1s are going to be important, but today Ypsomed is not making $1 revenue with GLP-1 sales. We make project revenue, but this is important. When you look at our case, do not link us to Novo or some other companies out there. This is an independent company, very broad. Obviously, GLP-1 will play a role. We have closed close to 50 deals so far, but there are, of course, many deals in China all over the place. It gives us a large, enormous growth potential, obviously. Since we cannot bet on what company will be successful in the end, we just try to close all of them. That is basically our philosophy at the moment. We are clearly ahead here of the market. I believe we are closing three quarters of the GLP-1 deals out there, and the quarter goes to our friends from Taiwan.
This again shows very nicely our broad scheme. You know, we have 69 products in the market, 69 devices in the market, and 230 that are waiting to be launched. We guess that roughly 1/5 will not reach the market for strategic reasons, for clinical trial reasons. More or less, you see here 200-ish devices, so tripling our current market presence in the pipeline over the next five years in a very broad scope. You see here very clearly that the high-value autoimmune devices I mentioned before, five such cases, are actually still the most important domain in our portfolio. Another trend, which is interesting, is higher devices. I have shown you before the platform portfolio. Ypsomed is the only company out there that offers all versions: the 1 mL, the 2.25, the 5.5, and the 10. No other company is offering that.
That is very important because it can really offer the full portfolio. If large pharma comes to us, they often do not know yet whether they achieve bringing it into a 1 mL or 2.5 mL. They are very happy to collaborate with a company that can offer it all. That helps us at the moment tremendously closing those large deals because pharma tries to simplify their supply chain. They try to work with one partner that can offer all of it. That is a key element that we have seen over the last 12 months. Obviously, all those deals have an effect on our volumes. This is just the start. We have explained to you that CapEx is increasing as we speak over the coming five years, and Samuel will deepen it in a minute.
We have added over 100 million additional capacity, leaving us now at the capacity of over 300 million devices. We have added 38 injection molding machines. We are now at 250-ish, and we have added four new assembly lines. Where is this happening? This is Schwerin 1. We all welcome you and invite you to visit the site at our Capital Market Day in Schwerin in fall. Hall D is now being filled. It will be fully equipped and up and running in 2026. It is enormous, the whole building now fully up and running.
We have broken ground for Schwerin 2 in June, in April, a site that we are going to build in two phases: 26 phase I, 28 phase II, based on demand as well, with a large warehouse with almost 20,000 pallet space, full automatic internal logistics system, very modern infrastructure also from an IT level, and we connect the two buildings together so we can work efficiently. We have been groundbreaking together with the responsible lady from the state of Mecklenburg-Vorpommern and the governor. Changzhou 1 is ready to be opened as well. Basically, the lines have been moved in already since January, but we said we want to cut the rope when the grass is nicely laid and the lawn is cut and the flags are in place. Very proud for this project. It is basically already filled up.
That's why we have built, we have bought the land to the left. That's why we also call it Changzhou 1. We haven't taken the decision yet, but we have now a very good possibility to grow also in China, for China. When you go through those offices and when you go through those factories, it's identical to Swiss and Swiss standard and German standard. We work with the same infrastructure angle, the same partners, ASIC, ATS, and Micron. We have the same level of equipment with modern office environment. Last but not least, the U.S., we have decided, as you know, two years ago that we are going to make the step to North America. We have made a macro analysis. We have looked at Middle America. We have looked at Canada. We have looked at North America. We have decided to go East Coast.
It will be either North or South Carolina. The definite place will be announced in July, August. We are in final negotiation with the two states. You can imagine now we have a certain leverage also to negotiate with the states. I think it's important. We feel it's the right moment to do so. It's the right moment to also prove and show to our partners that we are going to be local. It ensures supply chain. It lowers carbon CO2. A lot of arguments and also in the current administration definitely helps when you have a manufacturing locally. It will be the same logic again. We more or less copy what we do in Germany and China. We copy it. For us, this growth is plannable and manageable. Ypsomed, by the end of the decade, is really a global company with a global footprint.
We have our factory in all relevant places, close to the client, close to pharma, which makes us resilient and which makes us able to deliver the volumes that the global market demands. This, of course, does not work without people. We have added 364 new positions, half of them in Switzerland. Very proud of it. You see that 744 people, the green, are leaving us now. That is a diabetes care unit, which is going to lead to TechMed October 1st. We start again from the figure there and grow steadily and slowly our organization. We are happy that we find talent in Switzerland. We have a good brand, a good employer brand. We have no problem. We look at roughly 12,000 CVs per year.
We are able to select the talents, and we are going to ensure we are able to continue that in the future as well. With that, I would like to pause for a minute. I'm handing over to Samuel. He's going to deepen with you the figures and trying to lead you through those effects.
Ten to 15 minutes, I will show you the impact of growth and focus on our financials 2024, 2025. We do start with the big picture. On the left side, you see the sales mix. You see two thirds, roughly CHF 500 million out of the CHF 750 million, are coming from the delivery system business, our remaining business. The other third is the diabetes care business and Ypsomed. Ypsomed is red marked on that slide. On the right side, you see the profitability.
The delivery system business realized an EBIT of CHF 167 million in the business year 2024-2025. Diabetes care improved the profitability overall, but still had a loss looking at the whole business year. The other, which is Ipsotech, there we realized a big loss. We did a write-off and impairment there. I come to that later. We see at the very right side the reported EBIT, which is the CHF 113 million. Let's now have a closer look on how the top line, how sales developed. We start on the very left side with the reported sales in 2023-2024, roughly CHF 550 million. If you take out the pen needle and PGM business, we have a starting point of roughly CHF 509 million. You remember we guided a growth of 25%.
When you compare now the black pillar on the right side, the 702, then you see we grew by 37%. We overachieved that growth. In that growth, we said the pen needle and PGM business is not included. Where did that growth come from? You see the blue pillar, that is the delivery system business. That growth was driven by the strong growth of auto-injectors, around 50%, and also the strong project business. You see the green pillar, the diabetes care, the infusion business. Also close to CHF 80 million growth in percentage, even more impressive. In percentage, it was an 80% growth. Yes, we had a small decline in the Ipsotech top line. I want to focus also now what is on the right side of the CHF 702 million. You see we still had sales of the pen needle and the PGM business.
For those who follow us closely, will remember we did the closing of that transaction in July 2024. That means we still had four months of sales for this business. We did still a contract manufacturing also for the pen needle business. We had also some further sales from there. The TechMed contract. For those who follow us, they know we do the patch pump development. You saw our announcement a month ago. We exit diabetes care. We exit also the patch pump development contract. As it is in such contracts, you give a commercial incentive to the company who develops something that is afterwards a success. If you then have an exit scenario, you get also a certain compensation. That compensation became now likely. That is why it is in our books, end of March 2025.
You will see that effect later on also on the bottom line. Now let's have a look at the bottom line. We start with the previous business year, the year 2023-2024. We reported there an EBIT of CHF 86 million. If you take out the losses from the pen needle business and PGM business, you have a starting point of roughly CHF 100 million EBIT. On profitability, we guided CHF 140 million. Also, again, not taking into account the pen needle and PGM business. You see we reached above the CHF 140 million slightly. You also see here the same picture. The delivery system business contributed and also the Ypsomed pump business made an EBIT contribution while Ipsotech had a higher loss in the business year 2024-2025. I want to focus now also on the numbers right of this CHF 141 million.
You already saw in our half-year results, we already showed a big loss of the pen needle and PGM business. Roughly CHF 30 million, mainly non-cash items, recycling of goodwill, write-offs of fixed asset intangibles were driving that loss of around CHF 30 million. Ypsomed, you heard from Simon, we want to divest that business. Of course, you always do an evaluation on the value also of such a business. You check how the outlook is, and it is a very cyclical business. We did book a write-off, an impairment of around CHF 14 million. This is mainly writing off fixed assets of that business. I just mentioned before, the impact of discontinuing the patch pump development goes directly also to the bottom line. It has also the full impact on EBIT. That is how this reported CHF 113 million came up.
Now, how does it look when we look at cash? You saw there were a lot of non-cash items, now especially at the right side of this CHF 141 million EBIT. It is not surprising. The operating cash flow was very strong, close to CHF 150 million. We managed well to translate the EBIT into operating cash flow. Yes, we are in a growth, in a hyper-growth phase. Our top line grew 37%. That is why it is not surprising we have a lot of growth investments, close to CHF 270 million we invested. I will deepen that later. That means, yes, we invested more than we earned with our operating cash flow. We had to finance that. We financed that with a promissory note. You will see that in our balance sheet.
We try also to align majorities by having also long-term financing. Now let's look where we invested that money. We invest the money there where we have our competitive advantage. Let's look at the fixed assets. You saw some pictures. Yes, we invested in the expansion of our site in Schwerin in Germany. As well in China, we installed 120 million additional capacity, mainly for our main platforms, the Ipsomates and the UnoPens. That is our future, and that will help us to be successful to have that capacity. The second pillar is innovation. We want to be an innovation leader. That's why, yes, we invest in R&D and we invest in intangibles. You see that 70 million there. We invest in the future platforms of pens and auto-injectors and as well in our digital services. We want to invest smart.
We want to make sure those investments pay back. Since we are entering now in a really strong growth phase in that market, it's crucial to have the focus also on capital efficiency. The delivery system business in the business year 2024-2025 realized a return on capital employed of roughly 20%. That business clearly created shareholder value. That we want to keep doing. We have a big investment program ahead of us, CHF 1.5 billion until the end of the decade. We want to make sure that each expansion step is very well aligned with the demand we see in our mid-range plan, the demand we see from our customers. We have a good visibility. We align those steps. We have also in mind a big part of this financing is done by the customers.
Of this CHF 1.5 billion, CHF 300 million-CHF 400 million will be financed by our customers. What is also important to remember when we look at our growth financing, roughly a month ago, we announced the divestment of the diabetes care business. We mentioned the number up to CHF 420 million we will receive for that. The big part is in cash. More than CHF 300 million will be in cash at the closing. That money we plan to invest in the growth of our delivery system business. We do not use it to pay a special dividend. Another important factor when we look at our growth, we have a very solid balance sheet. We have more than 50% equity ratio. When we look at the relation between net debt and EBITDA, we are on 1.4. We are very solid.
Just to also give you the absolute number, the EBITDA from continuing operations is CHF 233 million. You see how much cash we generate. That cash we want to use to finance our organic growth. We will be able to do that with own resources and we will not need a capital increase for that. What does it now mean when we finally look forward? Of course, a company who does so much growth investments expects also a good top line growth. Yes, we do expect that top line growth. We expect to grow 20% in our delivery system business. Remember the slide we showed before, delivery system business is around CHF 500 million. 20% on that, we grow on roughly CHF 600 million in that business. We expect to increase also our profitability. You saw we were slightly below CHF 170 million of EBIT.
We want to increase that EBIT in a range between CHF 190 million and CHF 210 million. With that, I hand over to you, Simon, for some final remarks.
Insight in our figures. We'll definitely have time to deepen the questions before I give my final remark, just an announcement. Betül Susamis will no longer stand up as a member of the board. We are very pleased that we have been able to win Marie-Pierre Zerr . She has been all her life in automotive. She has spent 20 years in Mercedes-Benz and now with Stellantis, one of the largest car manufacturers in the world. She really understands operations. She has led hundreds of operations. This is exactly where we are heading. Apart from our large innovation budget, which we have shown, and the new two platforms, our main focus is growth, is automation, is process.
We are sure that with her, we have also this capacity now in our Board of Directors. She will be elected at the AGM. With that, I come to an end to just give a couple of final remarks. Overall, all targets achieved. We have signed the sale of diabetes care, which is a very important milestone for us. We have achieved our top line targets. We have achieved our bottom line targets. We have achieved our capital efficiency targets. We have achieved our investment rate, which is also important, but we have to spend the money in order to actually fuel the growth of the company. Looking to the future, the next years, there will be few surprises. I do not see any. It is a clear growth trajectory ahead of us with a continued growth in the area of 20%.
With that, thank you very much for your presence. We open now for questions. I give the word to Sam. He will explain to us how to do so so that we also can have our guests from online with us.
Thank you very much, Simon. Thank you, Samuel. Remarkable year indeed. We'll now open the floor to questions. First, for people who came here to visit us in Zurich, and then for people who logged in on Zoom. Feel free to raise your hand. I saw Sandra and Sibylle, you were very quick in your instructions already. Sibylle, would you like to start?
Thank you very much, Sibylle Bischofberger from Vontobel. I have a question about the outlook for the current year. You gave us an outlook for the, let's say, adjusted sales and EBIT. Could you say something about also CapEx, how much will you invest, only your part of CapEx investment, and also how much sales will be generated with non-core, meaning Sanofi, needles, and Ypsomed pump until everything is divested? Thank you very much.
I gladly start, Simon, with that one and you add. CapEx, you saw with the fixed asset investment of this year, with this roughly CHF 200 million, we created around CHF 100 million device additional capacity. We want to have that growth going. You can for sure expect us to have to build up this capacity in the same way. Do not expect that fixed asset CapEx to go back. It will rather be driven by what you just heard and saw. We have impact of now this building expansion in Schwerin. That is something and also a potential then investment in the U.S.
There you have somehow bigger CapEx chunks, which might occur already in 2025, 2026, which will rather have it higher, make it as an overall higher. That's my comment regarding CapEx. Non-core activities, yes, we guide the delivery system. Simon mentioned we expect the closing of the diabetes care business. We expect that closing only end of September, say beginning of October. Those people will have the new home. Half a year of that sales. You saw that business makes now close to CHF 180 million of sales. Half a year of that growing business, you will see us reporting that in the half year results in November. The same valid for Ypsomed Hack. Also there, there is no timeline yet there. You will have those sales still in our books. Simon, feel free to add.
Looking forward after this half year, this transition year, we will see CHF 40 million-CHF 50 million of sales in infusion sets for TechMed. This is a contract that will last roughly three years. We want to move out of it, but obviously it makes sense that we continue. You cannot just move out those Orbit lines out of Schwerin, but we will need the clean room in Schwerin in roughly three, four years for Ypsomed Hack growth. We will make a smooth transition. That is then looking forward, especially when you model your second half. It should take roughly half of this CHF 40 million-CHF 50 million on infusion sets looking forward. Needles is low single digit. We just finished. We stopped the lines. We are no longer manufacturing needles. We stopped them two weeks ago. Sanofi is 20-ish, 25-ish.
You can model it, but it is also then moving out in two phases. One line is stopped before Christmas and the other line is stopped in spring. That is the current plan.
Brilliant. Thank you very much. Maybe we will go to Sandra, yes?
Yeah, hi, this is Sandra Skeete from Octavia. Thank you for taking my questions. I have two. The first one on the new platforms you talked about. You said you are planning to develop an auto injector that is recyclable. Is it about having fewer different plastic elements in such a device to make it so you can separate them and thus recycle? Or what is this device about? On the second, the GLP-1 specific device, that is a pen, you said. Is that correct? Not an auto injector?
Yes, very good questions. Our auto injectors now consist of six different plastic types, 13 parts, six different plastic types. If you want to recycle it, if you crush it, the best you make out of it is chairs or cups. It will never be a device again. We have to stay in the loop. We have to get rid of crude oil. If you really want to get down to a reduction of our scope three, CO2, then we have to keep the device in the loop. We basically were able to design a device over the past four years, research out of two plastic parts. There is a disassembly line which will click on the back and it will fall apart. The two springs will fall out, the glass will fall out, the two plastic parts will fall out.
The two plastic parts can be collected and then delivered to one of those big plastic companies. They crush it and we buy it again from them. That's the current process. It will take roughly 10 years from now until this process is really in place because obviously the first products on the market will be in roughly four years. You have seen the platform development, four years, and then the clinics, and then until the first devices come back. We have time, but the whole industry is transforming in this direction. We have the big companies, Novo, Sanofi, Lilly, Merck, the big ones also change. They are all installing global take-back service programs. That will not be our job. We will not collect devices in the country. We will basically enable the recyclability in design.
We will buy the recycled plastic again from our current suppliers. That is what we do. In between, we facilitate, we support. The auto injector, yes, recyclable in the sense you can disassemble. The device, the pen, is basically a click, click pen. You want to get four doses out of a pen so you can save device cost. Today, out of a device of auto injector, you bring out one dose. Obviously, that is quite expensive, especially for GLP-1s in emerging markets. They will go, they will try to go, and most molecules will go. CagriSema will not go. Good for us. Many drugs will go into devices that are where you can bring multi-doses out.
It is a simplified, optimized device that simplifies the use of GLP-1 because today, with the devices from Lilly, Novo out in the market, you have to always turn. It is not so simple to actually find the correct dose. Mistakes can happen. In our case here, mistakes cannot happen. That is the reason why we focus so much on a GLP-1 optimized device, where we presented in details in the fall.
Thank you very much. If I may, a second question on the margin. The delivery systems had a very strong margin, EBIT margin of 33%, but it was still a bit below than last year. Maybe you can talk about the elements driving down that margin. Is it pricing pressure, large volume contracts, or also the dilutive impact from project sales? Then also going forward, if I take the midpoint of your guidance, you assume largely flat-ish, slightly declining margin. What would be the outlook on the margin for the delivery systems business?
I gave a general remark on the outlook, and then I let you answer how it is deriving. Basically, you are absolutely right, a 33%, but we stay on it. I mean, the midpoint of 190-210 would be 200 on 600 would be 1/3 . This is basically where we see it. If you look to the end of the decade, and we do not guide that, but 30% is a realistic long-term EBIT target for Ypsomed. Maybe you want to give some remarks on how this is deriving and.
Yes, gladly. I mean, maybe to the first question on the actual margin, have also in mind when you really look at EBIT margin, this is also always impacted on how much you spend also on R&D. And when you read carefully our financial statement, you will see that we had also a write-off of certain capitalized R&D costs. That gave an impact on this 33% just purely comparing it to the previous year. Yes, we had the ramp-up. Installing 120 million capacity on an overall capacity of 300 million, that has a big impact because you're not directly running on normal capacity with those lines. There is production under absorption. That is a challenge when you grow so fast. Yes, midterm, the guidance shows this midpoint.
You see the business year 2025, 2026, there we stay with roughly this 33% EBIT margin, having in mind, yes, that we still have further ramp-ups. Ramp-up in proportion to the whole capacity is getting smaller. Simon also mentioned the contract manufacturing is being phased out. You have there a business leaving, which is margin diluting. Yes, on the other side, we have also big customer contracts which have pricing models in which part of the CapEx are financed by our customers. I mentioned from this CHF 1.5 billion part of this CapEx is financed by customers. In such a model, a customer, of course, pays a lower price since he is paying CapEx. That is why I also want to really focus not purely on EBIT margin. It is natural to have a certain dilution from that business model now slowly kicking in midterm.
I want to point out that once again. We have more and more a focus on the capital efficiency. When we look at such big contracts, we want to make sure we create value that the capital costs are covered. Yes, that effect will be margin diluting midterm.
Ramping up is a bit has a slight negative effect. Large volume deals have a slight negative effect. Keep in mind, and if you have looked at our pipeline, 230 assets, there is a lot of high-value stuff in there. We should move it up again. Contract manufacturing leaving up again. That is why we can stand here today and give you confidence in our bottom line. Maybe EUrs Kunz?
Yes. Hello, Urs Kunz from Research Partners. Again, to kind of the guidance, this 20% growth in YDS, that is including a shrinking business from Sanofi. Is that correct? Is that implying also a flat project revenues, which would imply that underlying commercial growth would be a lot more than this 20%? The other question is regarding the U.S. opening of the U.S. plant in the second half of 2027. That does not mean that you produce already auto-injectors in the second half of 2027 because it is kind of a really short timeline. Is that correct?
Do you want to start with?
I take the first one and then hand over to you. Regarding the guidance on delivery systems, yes, Sanofi is also a delivery system. It is pen manufacturing, so it is included there, and you are right. Sanofi is flat or declining. That means the commercial business with the own devices is growing over proportional to that 20%. The same is valid for the project business.
The project business does also not grow with 20%. You see the core with pens and auto-injectors is rather slightly growing higher than those 20% because you have those two dilutive effects included. For U.S., I hand over to you, Simon.
Absolutely right. We roughly work now on the logic of 24 months. The lines itself for America, they are ordered, so the line will not be the problem. It is the building. We see the relevant revenue in 2028, 2029. Starting in the, we will have maybe one quarter of first revenues in 2027, 2028.
Okay.
Tanya Hansalik from UBS, I have three questions. You showed the 47 deals in GLP-1s. It is still a quite consolidated market. What number of these do you expect to be large contract deals, greater than CHF 100 million? If you could say, what percentage of your portfolio will be related to GLPs in the midterm? That's the first question. The second question is, anything in the pipeline in phase three set for commercial launch this year other than GLPs that you would like to point out? Third, do you see any pull forward in demand related to tariffs, meaning more poster closing, anything you saw in April and May?
Can you give me the second question again?
Yes. The second question was, anything in the pipeline in phase three set for commercial launch this year other than GLPs you would like to point out?
All right. I try to start with the GLP-1s. It's a bit difficult, and we have to be a bit careful to answer your question. There are not so many deals out there with the potential of over 100 devices, but it's more than one and less than five that we have signed that we are working on, number one. And you're absolutely right. I mean, there are also obviously older molecules under those 47. If we are a bit careful, it's not all the Ozempics and biosimilars and so on. There's also biosimilars from first generation GLP-1s, the daily ones, which are still relevant in some of the countries like Bangladesh, India, China. They're not all launching in once-weekly applications. On the pipeline phase III, we cannot give insights. All I can give you is that we see a launch again of roughly two dozens of devices. We give you some sneak, some ideas on what we do. We are only allowed to announce based on an agreement with the client.
What we could do, though, is actually on the capital market day, we could give you more insights and really show you what clients in what indication are now on the market. We talk more about the 69, the launched ones, give you insight, and then you can give you a bit of feeling on where it's heading. It is only a handful of GLP-1s in this year. It is very broad, again, especially in autoimmune disease and also very high-attractive orphan drugs. Tariffs for Ypsomed, we are in a good position. As you know, our revenue to the U.S. is clearly below 10%. It is now in the area of 6%. It will move up a bit, obviously, when Diabetes Care is leaving Ypsomed. More importantly, is that our clients are picking up the goods at our warehouse.
It's an FCA Incoterm deal, ex-work Incoterm deal. Ypsomed is in no case responsible for import. Our clients import the goods from Switzerland to the U.S. Obviously, discussions may arise. We are all looking forward to the good negotiation skills of our President and her colleague, Guy Parmelin. We are in the middle of that. Switzerland is, as you know, handing over the letter of intent in a week. There is a chance that we go below 10%. At the moment, we calculate, obviously, with 10%. That probably makes sense that you have to look in this direction. As Ypsomed, we are in a safe position, and our industry can afford, can live, could live on 10%. Our contracts put us in a strong position here.
Hello. Daniel Jelovcan , ZKB. I am three questions. I'm personally a bit skeptical about the U.S. plans. I mean, we just learned this week from another Swiss company having a C&D where the CEO said U.S. salaries in California and Boston where the healthcare hub is, apart from North Carolina, the costs are X times more than in their operations in Görlitz, also Eastern Germany like you. And the skills are two times better in Eastern Germany than in the U.S. Actually, a nice headline for a newspaper. I'm personally very skeptical that you can properly execute this exercise, not because of you, trusting your skills, but because of finding good labor. First question that I asked, the other one.
Thank you. Very good question. Obviously, it's something we have been looking at intensively when we started this program from a macro perspective. We have deliberately not chosen the Boston area.
We really move south to North and South Carolina, and there you really have average salaries. You are a bit above Texas and the South South, but you are like one third below the Boston area. We talk in the area of CHF 57,000-CHF 60,000 for labor, and that's approximately what we pay in Germany. We are pretty much in line with salary when you compare salary to salary. Obviously, we are one third below Switzerland as we are in Germany, but you asked the German comparison. Now, labor skills is a big, big topic, but also in the pharma triangle where we focus, we have a very high level of skills. And Ypsomed, as we did in Switzerland, also now in Germany, we're also intending to educate people in Germany. Now we are ramping up to 60 people that we educate.
We employ an apprenticeship model together with the local authority. We are now at 100 apprenticeships here in Switzerland. We are growing that model to do the same thing. It will take time, and it may pay a bit more in the beginning. I tell you, we have been very successful now having the people sent to Switzerland from Germany. There were 30-40 people with us for three months. The same from China. We had 20 people over from China. We educated them on their lines. They go back, receive their own lines, and it works. You have to do the education. It's a cost topic. It's something that Samuel mentioned. It's part of the ramp-up cost, obviously, but that's part of the game. I'm personally pretty optimistic that we will be able to do it.
I have some feedback from what SHL is doing at the moment in South Carolina, and they have no issue on that behalf.
If I may add to that one, I mean, have in mind in our cost of goods sold, the direct salary is really the minor part. What is for us, the expensive thing is the machine, hourly rate. We are in a CapEx-intensive industry, and that is actually when you look at our global footprint, we are not in the countries with the lowest salaries. It is important, but it is not that crucial for the overall cost.
Very important adding, Samuel, at the 100 million unit factory size, if you are thinking those 100 unit batches, cost of goods labor is in the area of 7%-9%. It is clearly below 10%. Absolutely, I mean, it's not so relevant in the overall context of cost. It's much more important how effectively we run the lines and how good we negotiate with our assembly line partners.
Last question. In China, where your inauguration is taking place next month, you often talked about your local Chinese competitors. What is your observation there? I mean, are they meaningful, or are you just as competitive as those local Chinese guys? I absolutely trust you that you don't underestimate the Chinese.
Yeah, that's a good question. We look at the market very carefully. There are over dozens of Chinese device manufacturers that try to enter. Obviously, the majority of pharma companies is enormous. We talk about over 200 relevant potential clients. We have now 25 relevant deals working. We are a bit more picky in China than the rest of the world.
The rule is not to get every deal in China as it is in the Western world. We see two companies in China that have the potential to actually compete with us on price level. At the moment, they cannot because they have much smaller tools. They cannot, clearly not. We are still cost leader. Also, when we look at the, of course, now it is a calculation base, but since it is the same material, the same lines, since it is a lower cost of goods on labor, the business case is quite safe. We have to be careful. We have to be careful not to allow a local device manufacturer to become big, big because they think cost plus, and we think, what can you pay? We charge. It is a bit of different philosophy and pricing.
At the moment, we have not lost big deals. We have lost local deals where often a pharma company tries to design a device themselves. This happens, but when they realize what it costs them and what they would pay us, some of them are moving to Ypsomed. It is something you have to look very, very carefully, obviously. We also have to be ready, and I mentioned that before, to actually lower the price in such areas, mainly on pens, less on auto-injectors, to prevent locals from becoming big.
If you have an online guest, you may be free to ask your question. Hello, Marianne. Would you like to add your question or speak up? You are now on mute.
Okay. Yeah, perfect. Thank you for taking my questions. I have two on the delivery system part of the business. For next year, you're guiding for 20% growth in delivery system. I was wondering if you could help us understand a little bit of the building blocks behind this growth, how much is coming from volume to the capacity expansion that you have coming up next year, how much is coming maybe more for mix, having more auto-injectors. My second question is also on delivery system. From yourself this year, what percentage was coming from treatment for diabetes and obesity versus other applications? I know that in the midterm, you're guided for around 45% of your group sales. Just wondering where you're standing today versus that target. Thank you.
Thank you. Marianne, I'm taking the second question, then I hand over to Samuel. Today, we have no sales revenue.
Sorry to cut you off. I don't know if it's me, but it seems like you're on mute.
Yeah, not just you.
Okay. I don't know if they feel like they can't hear me.
The growth drivers for this top-line guidance of 20%. Have the two points in mind, which we mentioned, that yes, the contract manufacturing business is not growing at that speed, and also that the project business is not growing at that speed. That means volumes in pens and auto injectors, they clearly grow above the 20%. Between the two of them, you saw the big project intake also historically, and those are the growth now is coming from auto injectors. It's fair to assume that auto injectors grow a little bit faster than the pens. That insights I can give you that you understand better those drivers for the overall 20% growth of the delivery system business.
Okay, thank you. Thank you very much and apologies.
No, that's okay. It's good. It's good. We have time. Is there any more questions in the room? I think I mean, we have time, 15 more minutes if you like.
Please, Tania.
Yeah, one more question with the NovaCare signal for auto injector demand in the U.S. Maybe you can give some detail on what you think about this and how you think about the form factor of auto injectors developing in the U.S.
I will not go into comment statements from Novo Nordisk, but what we can and what we're obviously discussing intensively is the split of auto injectors versus pens. Generally said, you can say America is an auto injector market, Europe is a pen market, very much simplified. Obviously, some of those molecules do not go into a pen, like CagriSema.
They launch in auto-injectors globally. That is a simplified answer. Generally, you can assume that pens will become more important again, especially in the space of GLP-1s because it is cheaper to get four injections out of a device versus one injection. This puts Ypsomed in a great position because we are the only one that makes pens. SHL has no pens. That is very important to consider. SHL has no pens. They have only auto-injector technology. They stopped that. We have BD in the game, but they are closing one or two deals per year, if so, moving out, and that is it. That is it. That puts us in a very interesting position. That is why we are growing deliberately the portfolio around pens again. Around UnoPen, FixPen, we add a third GLP-1 focused device. That is for that exact reason.
We are following it, of course, carefully. I believe this trend puts us in a very favorable position in the coming years.
Sorry, if I could just follow up on the question on the U.S. tariffs. I appreciate your thoughts on that. I want to ask, since the end of March, are you seeing anything worth calling out in terms of demand going into the U.S.?
We had clients making big orders before it went into act. We had some clients who had big orders before the tariff was launched. That is the only effect we have seen. We have seen a couple of pallets or containers more. That is mainly maybe also that last year, March was a bit stronger than expected because we really had to ship a lot in March. That is the only real effect we have seen.
As of now, it's absolute normal business. I mean, pharma needs those devices. We are a B or C component from their cost perspective. Never forget that, a B or C component. They need our device. Otherwise, the whole supply chain stops. So we have not seen any other effects so far.
We have one more question online, or maybe Daniel first, please here.
Thanks. Just out of the GLP-1 projects, you flagged originator drugs and biosimilars. Can you give us a bit more flesh on the bone about the size? I mean, is biosimilars potentially bigger than originators apart from your big contract, or is it very specific per each GLP-1 contract? You see my point.
Sure. So actually, today, or let's say in the could you move to the GLP-1 slide, please, Sam? In fact, we are launching this year a new client in China with a biosimilar GLP-1, which will do in the first year over 30 million devices. We have interesting new launches in the biosimilar space now coming up in GLP-1. This is really important. I mean, there are some banks out there and analysts that compare us with Novo. That's wrong. Very wrong. Very wrong. I mean, we, of course, we love Novo. We profit from the future success of their pipeline. We are not a Novo company. It's very important. The launches we see in the coming 12-18 months are especially in the biosimilar space where we see in emerging markets product launches in significant volumes.
I cannot give you many more information because some of the larger deals and the new molecules obviously are only going to launch end of the decade, 2028, 2029, some of the new stuff in the pipeline from originators. We are primarily now profiting from those copies.
When we talk about some, let's say, from your big customer in the future, as you know, this customer will lose some patents in Canada and so on soon. Isn't that a risk that you provide a biosimilar to a company which is going to do a biosimilar for tetrapeptide? You know what I mean, the risk of that your customer on the originator drug side, isn't that the muse?
We are just a device manufacturer.
Yeah, sure.
We are just a device manufacturer like there are glass manufacturers, device manufacturers, and we have never made a difference between originator and biosimilar. That is very clear. Obviously, originators have much more requirements around services. They require us to support them in clinics. It's a much more intense relationship versus with biosimilar. It's ship a device. It's a very different business. I wouldn't see Canada as a first priority. Our biosimilar clients are really in emerging markets. Innovent, the Chinese company launching a molecule in China, we can name the company name because we do officially business with them. It's a domestic Chinese company. You have many of those domestic clients out there in countries like insulin. You remember 10 years ago when I was explaining to you that we launch all those insulins in Indonesia, in Bangladesh, in Malaysia, in Mexico, in Turkey.
This is because the countries realize they have to do it themselves. Because if they do not, their costs in healthcare explodes. It is a very similar thing that is happening now around GLP-1. Those countries realize if I do not get the hands around my drug, I will have an issue in my healthcare spending. That is why we see those mushrooms coming. That is a bit of the situation where we are at. We have another question online.
Yes, hello. We have Gurav online from Barclays. I will unmute and please feel free to ask your question.
Good morning. Can you hear me?
Yes, we can hear you. Thank you, Gurav.
My two questions are, one is clearly a very exciting growth pipeline that you are highlighting between now and 2030. What would you say are the biggest risks for you? That is one. Second, your report in Swiss franc and the currency has been strong, and you have given a pretty neat sort of Swiss franc EBIT guidance. How does FX work for your company, both in terms of hedges as well as translation and transaction FX? If you could just shed some light on that, that would be huge. Thank you.
Thank you for your question. I think the currency question, you can take. The first question was around a wish list. Did I? Risks. Okay. I can take the risks. There are literally no true global risks anymore. When I look from an enterprise perspective, we have solved the topics. The last big risk was the pumps. We have solved it. We have sold it. Now we are a company that is pretty much in its portfolio safe.
The risk which we always outlined is assembly lines coming late. That is the topic we talk about. You have seen in our CapEx spending, we are spending more money than we used to, and we are ordering earlier. The first two lines for America are already ordered. We have not even decided on the site yet. I think we do our homework on that end to mitigate because this is not in our control. SHL, for instance, has an own assembly line manufacturing company in-house. We do not. That is why we rely. I would flag this as one of our pieces. We get our hands quite well around them, and we have our people sitting in their factories as well. That is number one. Other than that, obviously, there will be molecules and trends coming and going and up and down. That is normal.
The size now is giving us resilience and stability, really. You see the broads and the widths of clients and molecules. Maybe a question on the currency because I think it is quite relevant to understand our company.
Absolutely. If I got the question right, it was rather about yet a risk we have potentially for currency translation since we report in Swiss francs. Yes, for us, the Swiss franc is important. We have a good pricing power. We want to make sure that most of our contracts, they should be in Swiss francs. We have a big cost elements also in Switzerland, the whole innovation, R&D, the tooling, also machinery of us. We care about doing natural hatching with that Swiss franc.
That means we do not have big translation risks also in the midterm since our main contracts, they are in Swiss francs. Also, our financing costs are in Swiss francs. We want to make sure like this that this risk is mitigated.
It is really a healthy, natural hedging that we have in place. In China now, for instance, the contracts with our Chinese clients, we are going to negotiate in RMB, so in renminbi, in order to mitigate also the China to China business in order not to have translational effects. Thanks for the question. Shall we take a last one? Otherwise, we close for today. Sam?
Online, we do not have further questions.
Fine. All right. Excellent. I do not want to end up this story here with the GLP-1 slide. Can we go to the last slide, please? No, but thank you very much for joining today.
I believe we have made our comments. This is a company independent from geopolitics, from trade issues, from financial disturbances. This is a company which has a clear mission, a clear path. We are very privileged that we can serve people with chronic conditions, that we are going to do that also in the future. Thank you very much for joining. We have a small apero already for you. If you have time, please join us. For those online, thanks for coming. This is all recorded so you can see it again if you like to get the details out of what we said. Thank you so much.
Thank you.