HIKMA PHARMACEUTICALS PUBLIC LIMITED COMPANY (HIK) Q2 2026 Earnings Call Transcript

So good morning everyone and welcome to Hikma's 2026 interim results meeting with our CEO Syed Darwaza and acting CFO Arab Kurdi and we also have Susan Ringdahl and myself Guy Featherstone investor relations. Before we start I would like to remind you that any forward-looking statements or projections made by Hikma during this call are made in good faith based on information currently available and are subject to risks and uncertainties that may cause actual results to differ materially from those projected for further information please see the principal risks and uncertainties section in hickner's latest annual report and with that i'll hand over to say for opening remarks before we head to q a thank you thank you so much so just quickly a few things to say obviously so the results uh sales are up i think what's very exciting is that EBIT and EBITDA are up by almost 8%, EPS is up by 5%, and when we met last time,

we said we had like four targets this year. One is to stabilize the business, and so we're talking about the injectable business. The other two businesses were doing well, and I think this has been achieved. We talked about making the company more agile, quicker decision-making, and we have two taken tons of decisions and now the way the company is structured i think very much supports this quick decision making supports the senior management of the team to take quick decisions and to take quick actions and reactions where they are needed we said we will invest for the future we have done a lot of investment in in in people i think is most important in talent and people we have done investment in equipment and of course R&D spend as you can see is up so we are really setting up the company for the for the future so we hope that you know again we feel extremely comfortable to reiterate fully your guidance as we have seen MENA done extremely well exemplary good I've always told you this company has three engines to drive it and I always said that even when one of the divisions or one of the engines is facing some headwinds the others can can you know make make it up and move it faster so MENA is doing extremely well and we obviously we have big ambitions for the MENA to continue injectables we have as you see that we have as we said we have stabilized the business. And Rx is delivering very good margins compared to where it was just a few years ago. So these are like the background. Again, I think we should always remember it. This is a company that's been driven, that has three businesses. And if you look at historically, we've always had one of the businesses push the company forward if the others were lagging behind. And if you look at the Kager of the last 10 years, and of course the first six half of this year. We'll see that every year there has been growth both in sales and in profitability. I think Kager for the last 10 years was 8% for sales and 6% or 5% for profitability. We hope to start driving the injectable business next year to start growing the profitability top line and bottom line there as we continue to move the other divisions forward so with that we rm is here with me also and we are ready to take your questions if you could just wait for a microphone and then please please say james yes please james gordon from barclays and thanks for taking the two questions the first question was on on the branded business so in terms of phasing so you had a strong h1 both on the top line and the margin and i think for the full year you said you'll be at

the better end on the top line but how much of the h1 strength was this one-off factor or the phasing factor and also how much of the costs so what would h1 look like on a clean basis how much more cautious do we need to be about h2 that would be the first question please and then the second question was generics i think although you've reiterated the guidance overall i think you the margin before was around 20 and it's now approaching 20 so what if anything has changed there and is that a big difference or just a minor difference please you want to take them in terms of sales james this is the normal trend that we see every year this there is a trend in tender business so there was many tender businesses delivered in the first

half in terms of sales uh also we've seen some good demand especially at the beginning of the war some governments started to stock up although we see this is this has normalized at the end of the of h1 but also importantly we had many sales and marketing events and expenses that were either intentionally postponed due to the situation or we had to postpone them because you know there was limitations on the travel etc so we will see those events happening in the second half are you able to quantify that are you able to say broadly how significant those are if we're

trying to do like a clean model for h2 so i would say h1 would be 50 55 percent weighted in terms of sales uh and more weighted towards ebit in the second half so obviously you're also taking consideration that things haven't settled down yet and you know there's a lot of uncertainty in the region, which historically has been helpful to Hikmah, but it's always be, you know, it's wise to be careful about, you know, about the plan for the second half. The RX division, you know, we said that we would push the margins to where they are now. Sodium exacerbate has done very very well we have seen a little more competition for the generic advert but we also as we've said before we do have big plans for cmo we see cmo business picking up there so any kind of headwinds that let's say sodium observate will will face uh will be picked up by their cmo business hello zainabraham japan morgan thanks for taking the questions first question is on Tizervan.

If you could provide us maybe a bit more color on how that's performing relative to your expectations. I think you said the 80% of Anchor Ready customers have now switched or partially switched on to Tizervan. So how does that compare versus your expectations at the start of this year? And what underpins your confidence in an acceleration in the second half of this year for Tizervan and into 2027? That's the first question. Second question is on RX launches. I think you've had quite a strong launch so far with Dependidol. So more broadly, are there any other relaunches that we should be excited about in the next 12 to 18 months? And what's the latest on epinephrine nasal spray, Philo?

Okay. So for Tarzavan, it takes a long time for the formularies of the different buying groups to take it on, and even after they say we will, it takes some time for the different hospitals to start stocking and using it. So we have been seeing a pickup month by month, and we feel very comfortable that for the second half of this year that we will continue seeing this increase month by month. I think the last three months of this year should be very indicative to give us a full idea of how it will be doing next year. So many of the hospital groups that we were trying to get them to take the product have taken it. so we will be seeing the benefit of that the second question was the pentadol is going very well i mean we're authorized generic uh on that and it's just been a good launch but i think more broadly the question was around launches the launch environment and then actually that then probably goes into epi nasal yeah but for the epi we we have i mean The submission has been done. We're waiting for, obviously, for the FDA to accept the submission, and that would give us a clearer idea when we get the approval. In the meantime, we have approved the plan for the product. Obviously, it needs major investment in promotion and hiring people and so on. So we will start, we'll begin this as soon as the FDA accepts the submission.

So I have two questions, please. The first one is in terms of the U.S. injectable generic injectables business outside of Taiwan. Can you give some comments on how the rest of the business been trending and especially what are you seeing into the momentum carrying into the second half of the year? And my second question is looking at your full year guidance, which you have reiterated clearly first half performance has been very good. granted but also the margins that you have got in injectables in rx despite all the increased investment etc so what would you want to see to be able to increase um the guidance for the year thank you yeah as we said a lot of a lot of work has been put into stabilizing the business in in hiring people across all levels actually it's not just senior people but across all levels including operators for the plants, bringing in the equipment, making sure the bottlenecks are taken care of.

We've invested heavily in supply chain, both internally and we brought in external consultants to help us. And we are seeing that we have now, as we say, safety stocks. We haven't had safety stocks for a long time. these are very important because they give us the ability to react to the market when there's a need when there's a shortage and there's obviously it's much more profitable selling those so we have been started building building up the safety stock and i believe that all these measures that we are taking increasing the number of units that we are manufacturing we've always had an issue of supplying the market this hasn't been the issue of demand so now i think we have much better supply for the market in terms of of r d expenditure for the for the injectable business there is a huge increase there we have a big team in croatia and we have been giving that team everything they need in terms of personnel in terms of equipment or whatever they need trying to you know expedite things move them as fast as possible for the submissions i don't know how many submissions, if we've given out any numbers, but we will be seeing an acceleration of submissions there. And clearly, those submissions will be driving business 28 and further. So we're very optimistic about the future of the injectable business, Petrus.

Hi, Petrus Fevin from Berenberg. Thank you for taking my questions. But I had a couple on the kind of CMO business. You noted that you expect CMO revenues to pick up in h2 for injectables um could you just clarify what level of visibility you have on this and then on the hikma rx segment the cmo side you've obviously got your target out there for 20 cmo revenue contribution by 2030 for the segment could you give an update on where you're tracking relative to that and what level of visibility you have and then just a quick one on um cost inflation you noticed you absorbed the impact of the cost impact in h1 um what what cost impact do you expect from inflation in H2? And looking further out, thank you.

In terms of inflation, we've been able to absorb all the inflation that we face so far. The team has been doing really great in navigating all the cost increases, and this is evident by the margins that we have. And we believe we will be able to continue to absorbing the inflation in the second half um in terms of the cmo rx we're trending well we're we're we're doing good in terms of the plan um and we will start commercializing next year for for the cmo in terms of the target that we set we we still feel comfortable that we can achieve 20 percent of the rx revenue from cm over 2030 so we have one as we've we've talked about some of the contracts that we've won um but we continue to um talk to new partners sign new new um agreements

so we are we are gradually building that business there's there's a lot of uh again there's a lot of demand we're talking to many companies about that and there has been some serious investment in the in the Columbus plant and serious expansion that is coming on board. And as that comes, we will be able to take care of more of that business. So we still are very optimistic. That's actually the only thing that we still haven't done from all what we said is hire a top CMO, a commercial guy. We still very much are looking for that, and we hope to have that filled before the end of the year.

In terms of the confidence and injectable CMO in the second half, it will be similar to last year. Last year, we had indicated that the CMO would come largely in the second half. That's really down to the timing of when we decide to fulfill those orders. And so we will see that come in the second half. We have good visibility. But as we said at the beginning of the year, the CMO will be slightly lower this year than it was last year. So nothing has changed.

We're going to go to Victor and then question.

Great. Thank you very much for taking my question. Victor . So maybe two questions on my end. One on potential U.S. tariffs and one on mid-term targets. So on potential U.S. tariffs, so you were quite keen to highlight your continued ambition to invest into your U.S. capacity a few weeks ago. So we're just wondering whether you've spoken with the U.S. administration since then. One of your competitors has been arguing yesterday that this tariff represented actually an opportunity for them, even though they don't have a local capacity in the U.S. So just interesting to get your take on that. Does it change anything in your strategy? And if you have any feedback from the U.S. administration would be nice. And the second one on midterm targets. So it looks like the business is doing well, and it looks pretty much in track to deliver the guidance of this year. But we still lack mid-term targets. So I was just wondering, what do you still need to see before being able to set up new mid-term targets? Is it about capacity, business trends, or help us understand the key moving path there? Thank you very much.

I'll take the tariffs, and Arab, you can take the mid-term guidance. I mean, on tariffs, we are one of the largest domestic manufacturers for generics in the U.S. So we feel that we are in a very strong position. We have invested a lot over the years in our U.S. manufacturing, and we continue to invest in U.S. manufacturing. So we feel that, you know, we have a strong position. We have very good relationships with legislators in the U.S. We are in Washington very often and, you know, we believe very strongly in building strong domestic manufacturing in the U.S., so we do think that we are well positioned there. And the majority of the products that we sell in the U.S. are made in the U.S.

I mean, RX is almost 100% made, 90% in the U.S. and for injectables we have obviously we we are increasing capacity in Cherry Hill and we said in 28th the Bedford plant will come which is purely injectable also so increase the but you know we think about it seriously there are I don't think there is any country in the world that taxes imported pharmaceuticals also tariffs become it's something that we've heard a lot but we haven't seen and

i really doubt that you will see it this is my personal uh but as as saeed and susan said we're we have the foundation in the u.s we invested in the u.s we're committed to invest in the u.s there is really no change to our strategy we're already committed plus maybe saeed you can mention a few words about you know our commitment to ohio also date and we got some yes we We have met with the development agencies in Ohio State.

I was there a few months ago, and I met with the governor of Ohio. And they are very pleased with the amount of investment that we are making, both in manufacturing and R&D. And we have committed that we will continue the expansion there. So we received like $50 million of incentives from the state of Ohio. that will be something like five million over ten years so five million every year to up to 50 million so this is the first time we do this kind of you know let's say PR and working with the with the states but I believe that Hikma because it has such a made a big made in the USA footprint we have been invited actually to Washington we've invited to the White House we we I think we work with the committees there regarding you know pharmaceuticals made in the USA so our profile has really been significantly say more emphasis on that actually I joke I was the first Jordanian to be allowed to have the global entry is given the global entry visa to the earth and the ex-secretary of what was her name the one that of security homeland security she actually came to jordan personally to give me the big thing in jordan yes it just it's it's it's a way to show that that hikma's profile has has you know been really um in you know much more now important than before and obviously also the very important news we had was the case comes here with us the amarin case where rarely have you seen the all the supreme court both in the same way so that was also a big win for us and a big win also was good for our reputation but was a big win for obviously for the whole generic industry uh in terms of the mid-term guidance we want to focus on on currently we want to deliver on the current year and we want to keep investing in the in the r d and you know fixing the foundation in terms of the our commercial capabilities so no change again the drivers for growth is it's very simple we always say it's not rocket science having the the manufacturing machine being well established and having well balanced lines and we have worked very very hard on that we have given you know the supply chain we said last year we had 90 million of products slow-moving inventory which we don't want to repeat at all if we just do the normal you know 40 million of those would have been profits so we want to make sure we don't have a repetition of that so supply chain as I said we have been working internally and externally on improving that and we see big improvement and that will be very helpful having the safety stocks will be very helpful and R&D we are putting a a lot of emphasis, a lot of effort there, both in terms of bringing in the right number of scientists and the right qualified scientists, which we have done. I believe we are very well there. Again, we will be seeing how fast the submissions will be accepted. All these things will be indicators of when and how fast the business will start growing fast again. And finally, is acquisitions. I think we have to be a bit more aggressive in acquisitions. In Europe, I think there are a lot of opportunities for company acquisitions and the US is still very difficult. But in Europe, there is a lot of opportunity for company acquisitions. And in the USA, we should be more focused on product acquisitions, especially for the specialty part of the business, the promotion. We have invested significantly in the promotion team. And, you know, Tyazivan is just the first of those products that are ready to use. We want to also enhance that with other products. So these three things together will be very, you know, will be the engines of growth. That's for the U.S. and the injectables. And the MENA, you know, we always underestimate the MENA. The team is doing simply superb there. I keep meeting people everywhere and wherever I go in the MENA and say, oh, we're using this product of Hikmat, it's amazing, you know, we're using that product. They have been launching products in almost every category. And in oncology, we have become the number one oncology in the MENA, both in terms of the products we manufacture and the products that we're licensing. And so the profile of the company there is really fantastic. And the MENA itself is growing very fast. Do you have any information on how fast the MENA is growing? The MENA is growing very fast. Saudi Arabia is growing very fast. Algeria is growing very fast. Egypt is growing very fast. So we are very well positioned to capitalize on that and to continue to grow the MENA. The RX, as we said before, we believe the engine for growth obviously will be R&D like epinephrine and products like that. But also the CMO, as you said, will be a major part of that.

Got it, Chris. And then we're going to go to the line before we take the second question.

Thanks. Yeah, Christian Lennie with Steve Hall. The first one would be actually coming back to an early question around guidance. So to understand the weighting here, so you talked about on the revenue side, 2% to 4% for a year. You were at 4% for this half. You talked about it being slightly second half weighted. And similarly on operating profit. um you did 405 million in the first half you talk about it being broadly equal weighted uh across the year um but yeah you've maintained your guidance at the two to four uh on the top line you maintained your 720 to 770. so what what is it that you know kind of implies that there's you know you're well ahead of those track you're tracking well ahead of that so is it a question of being prudent at this point maybe in the context of you know what happened previously or is there something other things to be aware of particularly in the second half I think we've been very clear that that that investment will continue a lot of investment continue R&D investment

in the second half will be higher promotion investment in the MENA will be higher we still have as I said a few more high-profile people that we need to add to the to the to the business we feel that all these things will you know we that we need to do this and they will sort of weigh down I think you know again the business is doing well things are moving in the right direction and that's why we feel no we feel fairly very strong to reiterate the guidance and as I said before we also feel very strong that the injectable engine will start to grow starting next year so we

hope you know significantly okay and then the follow-up would be um sort of touch on on capital allocation uh particularly so 503b you talked about divesting that in last time we spoke i think sounded like there was quite a bit of interest there was some sort of tangible thing any update on that process and then as it relates to what you just said around you know opportunities that may be in europe what sort of things might be incremental to your business in europe just so have an idea of what sort of things you look at in the past we only looked at we were all looking at uh increasing the uh let me let me again talk a little bit about more europe so we have

manufacturing we have manufacturing in portugal and that's where we have been really investing the most right expanding continuously then we have manufacturing in italy and germany which somehow we haven't been really investing in because we were always thinking that eventually we will be closing those down and moving things over. The reality is we are finding out that both those sites are extremely important for Hikmah. We had the full European team come visit us a little while ago. We sat with them for about a week and they're extremely excited. They feel that there's a lot more that we can do just by expanding manufacturing capacity, by expanding our footprint. So we have taken decisions to go ahead and expand as fast as we can in Germany and Italy, update the equipment. Some of the equipment is a bit older to updating the equipment and expanding there. And we feel that that by itself will help us grow significantly. We've also now said for the BD team and the MA team, don't just look for injectors, let's look for, you know, it could be ophthalmics, could be ointment, could be some other things that we can add to expand because we feel Europe would be easier, you know, we will not have the U.S. in Europe, it's less there, so we believe that we, and because we don't have other products so it's easier to do these things that's why we and as I said in the U.S. it will be probably more of product acquisitions but also there are opportunities for you know doing things like animal health or or whatever also in the USA so that is the so Europe expansion will be a big driver of that the demand is there the profitability has been much much better than we expected before we see a lot of countries there adopt that it's not just prices that you want to look at we look at prices we look at quality look at history of delivery all these things are coming into play so and as I said we are now the fourth largest company and injectables and that's why we feel emboldened that maybe we should be not just injectables in Europe but to go into uh other opportunities there so to add to saeed also point we are also expanding into in different markets as well so we're expanding in france and spain those are still new opportunities

but they have really good growth um 503b um we we believe it we when we started we believe this was a good strategic fit but we realized that this was a distraction for for the rest of the team and it was really a small contributor actually it was loss making so far so we thought we want really the injectables team to focus this was part of the priorities that Saeed had to review at the beginning of the year and look into the like what improvements we can we can make to the to the to the injectables process as a whole the compounding in the US you

You really have two providers, you have the smaller pharmacies and we have seen actually the FDA has given them more authority to compound the peptides now and so on. Then you have the bigger companies. When we first started, the regulations were much less or at least the FDA had not been very involved in regulating that market. But since we started, not just, I mean, it just happened, the timing, they have become much more active and the FDA is still trying to figure out how they're regulating. So you have seen a lot of warning letters go out. You have seen a lot of companies had to shut down or are not doing well. And really the overall, let's say, big market of compounding hasn't really materialized. So we figured that there would be, we would need to invest a lot of money. it would be very distracting we thought we'd be better off concentrating on the businesses that that we have especially since we know that by investing more in our manufacturing capacities and bringing and obviously the the that bedford plant will be very important so that's why we sort of said let's give it up and in terms of execution it's according to the plan we're unwinding the business and it's up for sale and we have we see good interest as well in terms of selling the business to other parties we're just going to go to the line now i think we have a

at least one question there so i'll hand over to the operator then we can come back to the room thank you to ask a question on the phone line please signal by pressing star one on your telephone keypad or pause remember to assemble the queue you have a question from the line of Kane Slutskin from Deutsche your line is open to be honest most has been answered but just a quick follow-up on the injectable second half ramp I'm just wondering how much of that is dependent on sort of ties and then conversion versus sort of improvement in the broader underlying injectables business and then just on the CMO side you know how's that pipeline of sort of potential

opportunities changed over the last maybe six months particularly given growing interest in u.s manufacturing capacity thanks so again as we said for for five there's been a lot of hospital buying groups adopting the product taking it on instead of the older product there was still a significant amount of supply of the ready-to-use vanco that obviously we had to the hospitals had to use and that's why we say we feel first of all we see the ramp-up is going up now month by month but we are much more optimistic that towards the last quarter of this year we will be seeing some big strides as the new hospitals the new buying groups that have been converted will start using the So, again, I think by October, November, we will have a much clearer idea of how fast and how big the product will be, but we obviously are extremely optimistic. We have invested significantly in the marketing and sales team there. I think a year ago we were talking about three or four people, now we're probably talking about over a dozen people working there. we have brought in a new head of marketing and promotion out of commercial for that team so we've done a lot to you know to make things go in the right direction and obviously we feel very comfortable that we will achieve that in terms of CMO for again we have CMO for the two businesses for the sterile and for the rx the rx we said that there's a lot of uh um you know there are a lot of demand actually for both businesses there's a lot of demands so it's really a question of our capacity and how fast we can you know be able to take in those but we do have i think significant cmo for the injectables scheduled for the second half of this year thank you your next question comes from line of Myles Dixon from Peel Hunt.

Your line is open.

Good morning, thank you. And sorry to labour the point and return to the guidance and the second half waiting, but there is a clear statement that says revenue and operating profit are weighted to the second half in the release, but I'm hearing, certainly I thought I heard about the second half additional cost in R&D. What is it that I'm missing about not even moving to the upper end of guidance on core operating profit for the full year? Thank you.

So, I mean, I think it's best to take it segment by segment, to be honest. So, for the RX segment, we feel very comfortable that we should see a similar, you know, broadly similar performance in H2 versus H1. The branded is what we've said, even if you go to the top end of the range for branded, that does mean that it is, you know, much lower in terms of revenue and operating profit in the second half of the year. And then that's offset by the increase in revenue and operating profit in the injectables. So on balance, it is, you know, it's going to be for the group, I guess, a slightly lower second half if you you know primarily because of the branded business and the and the very strong weighting of operating profit for branded in h1 versus h2 also let's bear in mind thank you on the mina and injectable uh on mina and branded you know the situation in mina is unstable and there's a war going going on there so we prefer to be cautious as well on our projections throughout

the h2 understood thank you as a reminder if you wish to ask a question on the phones please press star one there are no further questions on the conference line i want to hand back over to the hikma team thanks thanks james and barclays maybe just to follow on to your comment there which would be i i noted the comment about um being cautious on h2 because of the situation in the mina region but so far it sounds like uh at least for hikma's business it hasn't actually been a bad thing because actually there's been some extra sales and less spending so what is it that could

be bad for hikma's business as a result of this situation in the second half we said that that there was a lot of uh you know usually when when when there is uncertainty there's a lot of stock filing so stock filing means that will take time for it to be used so the stockpiling has been made so clearly that kind of sales will not happen in the second half and then you need to reduce the use the stockpiles so that um there's always the issue of currency stability there's always the issue of supply chain uh disruption it's it's you know again it's uncertain yeah really The uncertainty, you know, it's tough to plan, tough to plan for that.

But we've been in this region for decades, and I think we're really well positioned, compared to all our competitors, to capture any opportunities. And we've seen this in H1. I think the big issue is the stockpiling, because governments were buying a lot of money. plus you know bear in mind that we're going to also spend more in h2 for the future growth as well so that's the balance but then can you quantify the stockpiling a bit so that we can try and model that properly i i as i said in the beginning uh we saw a stockpiling at the beginning of uh of the war and in q1 but we saw this uh normalized uh towards the end of of h1 so i i wouldn't really put so much weight on on the stockpiling but our tender business is always h1

weighted and the historical trend of our sales are always h1 awaited good i mean it could do better of course obviously we would like it to um thank you sound from city and i have um maybe two follow-up questions one is a small follow-up point on the compounding business is is there a timeline that you could communicate to us as to when this process you're looking to wrap up and in relation to that I think previously the guidance for other was to break even and now with you know the compounding business being unwound um are we looking at better than it than break even for the year so that's the first question and then the second question is in terms of buyback you've made

significant significant progress um would you rule out further buyback this year or do you need any further board authorization if you want to continue for a new program thank you the buyback is almost it's almost finished the buyback zone i think there's very little probably 20 million dollars or something like that left so 230 million have been so the buyback is almost done i think so far we've acquired about 11 million shares in the buyback close yeah close to 11. so it's almost uh done so i think for this year that that you know that's that uh obviously the issue of the buyback every two years there is a revision we take a look at that and then see but we'll take that when it comes the compounding we are in discussions for uh somebody to take it over should be fairly soon it should be soon we've classified this as health for sale in the financials which means you know it should be it we expect it to be sold within 12 months but we expect this to be much sooner we've never I mean it was always put along the others and when it came to sales it wasn't put under anything else and on the others you're right I think we will slightly you know we'll we'll make but I wouldn't allocate so much profit but we'll make profit in

the other segment thank you chris richardson from jefferies just a quick one again on the branded margin as you mentioned there is quite a material fall off in the second half and even though there was a similar h1 waiting at the top line in 2025 the margin stayed relatively sort of even how should we think about sort of mid-teens as an exit rate into 2027 if financials sort of s&m or sales and marketing expenses are staying relatively consistent h2 versus h1 how is that fall off happening and how should we think about it progressing into the midterm yeah margins for

the branded as as we continue to adopt more advanced products the margins are better but keep in mind that most of those products are under licensed and so you have to split the So I think, I mean, the margins we've achieved this year, we are at, what, almost 30, you know, they're quite high. And it would be, I mean, clearly we would like them to stay there. Do I think there's a scope for improving? I don't think so, because as I said, the more products that you license, you know, the margins there are you know will be around that um but the the business is growing and it's growing very nicely so i believe that you know for the next few years it will continue to outperform and will continue to do extremely well so a mid a mid to a high single digit top line growth rate with mid-20s margin for that business is sustainable yeah zayner and japan morgan thanks for checking follow-ups um first follow-up is just on price erosion just if you could comment on what level of price erosion you saw in the injectables business and in the rx business in the first half and how we should expect that to develop going forward for the injectables i think it was relatively yeah it was it was relatively i think the i think the fda is being a lot tougher They are really ramping up their inspections and they are sort of enforcing new regulations and new requirements that is forcing everybody to be level-headed when it comes to pricing. So we haven't seen significant price erosion. I think for us it's a question of ramping up our production capabilities. As I said, the demand is there, and we really, for the last few months, we really missed out on the opportunities, the shortages and so on, because we didn't have. So by doing that, the safety stocks will help us tremendously because of the open opportunity. And it will open up the opportunity for us to do more CMOs. Again, there is a lot of demand to do CMO in the United States, obviously, but also in Portugal there is demand. So by free, you know, by increasing capacity, it will help us. For the RX, the oral part of the RX, I think everybody is suffering. There is, you know, there is still, you know, erosion.

It's probably mid-single digits, which is what we usually expect. are pushing we are our sales are becoming more and more inhalation eases and so on which are suffering much less than the uh solid dosage makes sense and then the other question was a follow-up on cmo so you said that crx i think there's going to be quite a significant contribution next year from the contract that you have which sounds like it's ramping up well um but how should we think about injectable cmo next year um given that you had the headwind from losing one of the big contracts at the end of last year and now you have that capacity available and you mentioned the strong demand. Could we see you potentially backfill some of that capacity as early as next year or it might take a bit longer depending on tech transfer times?

I think we'll be seeing some increase in CMO next year but obviously the major increase will come when we have the bedfall plant operation which will be in 28.

Thank you.

One last question. uh christian with with steve for uh thanks for the follow-up um maybe just check in on that um large rx cmo contract um in terms of the status of that product uh if you can say and also um a bit more sense for the 2027 potential tailwind or benefit from it if you can articulate that a little bit more and that'd be helpful so so the the things are on track we have done a lot of work in terms of the preparation in 2026 and as a result we've generated good service revenues for

that contract and that um you know meant that we as expected we're seeing a step up from 2025 in terms of the contribution from that contract um we do expect that in 2027 we'll have a full year of commercial production from that contract. So, yeah, I would say it's going well.

I'd like to come to the others. Again, sorry to your question. We expect, we guided towards a break even and we still expect it to break even. The 503b was really a small, small contributor to it.

Okay, thank you very much. Thank you everybody. Thank you.