West Pharmaceutical Services, Inc. Aktie

Okay. Very good. Well, we're all set to get started here. I know we're towards the tail end of the day. So thanks, everyone, for sticking with us. Thanks for joining us for the West management presentation. My name is Matt Larew. I cover West here at William Blair. Pleased to be joined this morning by CEO -- afternoon -- by CEO, Eric Green; CFO, Bob McMahon; and John Sweeney from Investor Relations.

A couple of things to mention. First, the breakout session is in Maher upstairs, if you want to join us. Second, for a complete list of research disclosures or potential conflicts of interest, please visit our website at williamblair.com.

Finally, as many of you may know, Eric is retiring in August. And Eric, you've been a loyal attendee at our conference over the many years. So I just want to thank you for always taking time to come visit with us in Chicago and wish you the best in the next chapter of life. So again, very pleased to have West here, and I'll turn it over to Eric.

All right. Good afternoon, everybody. Thank you, Matt, for the introduction. And it's a pleasure being here. We had excellent one-on-one meetings all morning and afternoon and looking forward to the session but also Q&A following. Before we get started, I just want to -- I'm sure I can get this to work. There we go.

So I want to reference the forward-looking statements also located at our website, westpharma.com. You can find the -- under Investor Relations, this particular statement is published. Also, the full presentation is available.

A lot to talk about, West. For some of you, it's probably a new story. So I do want to talk about when you think about the markets that we serve, it's -- the health care market is an attractive market to be in, and the space that we play in is the injectable medicines. It's a very attractive high-growth area. One of the subsegment of growth on injectable medicines is the biologics, which we have a very strong participation rate in.

The 5 things I want to talk about today are listed on this chart here about the investment thesis of West. The second is around the moat of the business. As you think about the regulatory barriers, the quality, the scale, the complexity, long-term duration of relationships with customers over the decades that West has enjoyed with our customers across the globe.

The third key area I will focus on is really the thesis around high-value product components growth. It's really delivering the 7% to 9% organic growth rate long term with margin expansion. The key drivers that we'll talk about, one, is around the biologics and biosimilars. We're going to talk about the GLP-1s that West participates on. And the third is around Annex 1. So regulatory change around higher-quality products to support our customers on the journey of European Annex 1.

The fourth area I want to talk about is around the management team has been rebuilt of the executive leadership team over the last 18 to 24 months. And you'll notice a lot of new faces on the slides, and we'll talk further about additional changes, especially the recent announcement last night.

And the last is around our strong cash flow. I'm really proud about how we have built up the cash generation engine of West and also the capital deployment under Bob's leadership that we are deploying here at West going forward.

I want to start with a little bit about who we are at West. So we produce over 41 billion components a year. And it's really broken out into 3 key areas. I talked about high-value products and standard components. These are what you'll find in injectable medicines around stoppers and plungers.

Secondly is around delivery devices. These are auto-injectors, wearables that you'll find with more complex drug molecules being delivered to patients across the globe.

And the third is less than 20% of our business is what we call West Vantage. It's our contract manufacturing. We will produce pens and auto-injectors in that particular unit. We service the global pharmaceutical and the biotech industry and all around the injectable medicines space. And we touch all therapeutic classes, and we're basically agnostic to any particular drug in the marketplace.

Our current market share is roughly over 70%. In the biologics space, we're -- we participate in about 90-plus percent of all new approvals in the marketplace with biologics and biosimilars. Why does this matter? We have a meaningful impact in health care. The purpose of our organization, the culture is making an impact on patient lives and delivering critical products for injectable medicines across the globe. We are the #1 provider of primary containment in the injectable medicine space.

We have a diverse portfolio. I mean when you look at the portfolio of geography, products and markets we serve. Over 55% of our business is outside the United States. Our product portfolio consists of high-value products of delivery devices, and also of components is roughly around 60% of our business. And then the markets we serve, the largest market we serve is the biologics market, is about 40%. And with 26 global manufacturing locations across the globe, we're touching approximately about 100 million patients a day with the products that we are producing.

These favorable macro trends that are supporting the growth, not just in the near term, but the long-term growth of West. Think about -- we talk about the injectable medicine space, very attractive space to play in. When you think about the subsegment within the injectable medicine space, the fastest-growing area is biologics. And the majority of the approvals are around the biologic molecules.

And the third is our customers continue to invest in research and development to develop new discoveries and innovations to advance therapeutic drug molecules, which is driving towards the highest end or high-value product drug category products to build support.

The regulatory changes are also a key macro trend for West, as regulatory requirements and quality and safety for our customers and the patients continue to be on the rise. And then lastly is a lot of our customers are now nearshoring or onshoring their manufacturing capabilities. So it's important that our 26 manufacturing sites across the globe are co-located with our customers to be able to support their needs on a daily basis.

It's a very resilient, durable business model that we have developed over the years. As you think about, there's really 5 key areas of West with our customers. Number one is when they select a product to be used in the primary containment, this is pointing towards a drug master file when they're filing. So the durability and the stickiness of the business with our customers is very long term. As our customers have more complex molecules, there's more risk around the compliance, and we're able to support our customers through risk mitigation and provide them with high-value products around the more complex therapies.

The growth accelerators of the business continues to -- very long term, we talk about biologics, talking about Annex 1, GLP-1s and also our capacity expansion to be able to stay ahead of the demands of our customers. And these are very long reoccurring revenues. Once you're on the drug molecule for the most part, you're on the duration of the drug molecule in the marketplace. And this could be 10 to 30 years of duration. This all drives sustainable growth with -- of top line but also margin expansion.

I want to first talk about one of the key growth strategies of the business. It's around the biologics and biosimilars. It's one of the fastest-growing areas of new molecules being approved in health care. Our participation rate, as mentioned earlier is greater than 90% on both biologics and biosimilars. This tends to use the highest and high-value products. FluroTec, NovaPure, those product portfolios are used in -- to support our customers for the commercial launch of new molecules in the marketplace.

We continue to grow the HVP components. This drives higher ASP and natural mix shift margin expansion for the company. And this is an area -- as you think about the number of new molecules in the pipeline continues to be more around the large molecules, West is very well positioned to be able to capture that growth going forward.

The second area of growth, long macro trends and growth strategy for West is around the GLP-1s injectable space. We participate on most -- all the GLP-1s in the marketplace in multiple modalities, whether it's vials, prefilled syringes, auto-injectors and also pens using our elastomer components.

And also, in our contract manufacturing business, West Vantage, we're able to manufacture the auto-injector and also pens on behalf of our customers. Today, the business represents about 18% of the total sales of West. About 10% of that is in our elastomer components and 8% is in our West Vantage, very well positioned. It's a fast-growing area of the market, and we're diversified across all drug molecules.

What's fascinating about the GLP-1s also is that there's new biosimilars being launched. And our participation on those new biosimilars in certain geographies is very high. We also see new indications and also expansion of the GLP-1s as markets are opening up because of price reductions and also accessibility and availability for patients. And therefore, we are really dependent on the volume supporting our customers across the globe.

The third area of growth is really around Annex 1 regulations, and this is fueling our HVP components. So let me frame this up from a demand perspective. As I mentioned, we produced 41 billion components a year, of which if you take the West Vantage products out of that equation, proprietary is roughly around 35 billion, 36 billion components a year. Out of that, if you take the HVP components out, you're down to about 25 billion components.

Right now with the Annex 1 regulations, which is really heavily focused in the European market, we feel there's about 6 billion of those components that we consider standard products can be converted to high-value products components in the marketplace. We're in early innings with this transition. Roughly around 15% of that 6 billion, we've already converted from projects into commercialized product.

I think when you also think about the opportunity outside of Europe, we're seeing more demand and discussions with our customers of having similar capabilities of upgrading from standard to high-value products in the United States and other mature markets. We see this as an opportunity to continue to deliver at least 200 basis points of growth on top of the total revenue of West. And the opportunity long term, this is a multiyear opportunity for the company to support our customers.

And the last area of investment growth strategy is around capacity and utilization of our HVP plants. We have 5 plants strategically placed in the U.S., Europe and Asia to be able to support our customers and be co-located to their end markets that they are looking to serve long term. These sites are able to support the growth drivers around the biologics, around the Annex 1, around GLP-1s with capacity to continue to expand.

A lot of the capacity that we put in place for COVID is fungible into these growth drivers as we see today. The additional capacity that we need to put in to support the growth is around HVP processing, leveraging the existing footprint to be able to drive additional growth around HVP.

These sites, we believe, in aggregate, has about 60% capacity utilization. 1 plant that we have been working, very focused on in Eschweiler, Germany to continue to drive more efficiency and productivity. And we saw ourselves cross that line at the end of Q1, build to support the balance of supply and demand for HVP components in Europe.

We break this out from a revenue and also a growth -- top line growth opportunity. The HVP components is the fastest-growing opportunity for West. It's roughly 47% of our business. It's growing double digits. First quarter, we obviously grew faster than that. It's around 18%. And also, the HVP delivery device is about 13% of the total revenues, and that's growing at mid-single digits.

The standard packaging business is the fuel or the pool of opportunity as we think about transferring from standard to HVP due to Annex 1 regulations. And therefore, that is about a low single-digit grower, but we'll see that continue to transfer into the HVP components, and the balance is 20% -- less than 20% is our West Vantage.

The runway of HVP components is very attractive. In 2025, about 47% of our business was HVP components. As you think about the number of units that we are producing is roughly 27% of proprietary products are actually HVP components. Said differently, as we convert more into HVP, we have tremendous runway of growth and double digits growth for the components. And we do believe this is a multiyear opportunity for West to continue to expand the HVP. This not only drives the top line growth but also gives us the ability to achieve our 100 basis points plus operating margin expansion year-over-year.

This is the leadership team in place today. Last night, we had an exciting announcement to announce the new COO of West that will start at the end of August, August 31. Michel Lagarde will -- he is from the -- last role he had as COO at Thermo Fisher. Before that, he was at Patheon, truly understands the space around CDMO pharma services, which fits very well with where we are headed at West and built to support our customers more of value creation. Could be excited about his ability to scale complexity as he transfers into West as the new CEO.

We have several new leaders that you see here with the executive team. Obviously, Bob McMahon here with me today as the CFO of the company and also a number of new additions to the organization. So as you think about how to scale for the next growth trajectory for West, this team is in place to give us the ability to achieve those aspirations.

The long-term construct of our organization is 7% to 9% organic top line growth while also expanding margins by 100 basis points per annum. The major driver of the margin expansion really is around mix shift. There are other opportunities that we're capitalizing on through productivity gains, utilization of our facilities and assets and also price that we're able to pass on to our customers.

We believe that this will continue to generate very strong double-digit EPS growth and ultimately result in a very strong balance sheet, which I want to talk a little bit further on.

The strong cash growth generation that we saw last year, strong double digits of 16%, which translated with strong free cash flow as we are looking at capital expenditures going forward between 6% to 8%. Historically, during COVID time period, we were roughly between 10% to 13%. And we believe the assets we have in place and the utilization and the ability to leverage those assets more effectively going forward with the growth that we expect, we do believe we'll be able to stay within the 6% to 8% corridor. Disproportionate of our capital investments will be around our HVP components more so than other parts of our business as higher returns, obviously, faster return of our investments and also to be able to support the key growth drivers that we just talked about in great detail.

Turning our attention a little bit. Recently, the Q1 results, very strong results driven across the entire enterprise. The top line growth was roughly around 15% organic growth rate. The leader of that growth was HVP components. Those both GLP-1s, roughly a little over 40% growth. And also, the non-GLP-1s was high teens, about 18% growth in Q1. Again, what drove the non-GLP-1 growth was the biologics and the Annex 1 conversions and the projects we're working out with our customers.

This drove very strong HVP growth, drove a healthy mix shift, about 350 basis points of operating margin expansion and obviously, roughly around 47% EPS growth. Across the board, the business continues to produce very good results in Q1. And we anticipate continued growth as we have given guidance in that -- in the Q1 call.

To capitalize on the key growth drivers across our business, what's exciting about the biologics is that we continue to see the win rate of greater than 90%, both in biologics and biosimilars. We do have the capacity and capabilities in our HVP components manufacturing sites that will support that growth.

The Annex 1, the number of projects we had, we're about 700 projects that -- a good portion that were converted to commercialized revenue, and that continues to grow. And that will continue to drive about 200 basis points of top line growth across the whole organization.

And then we have very strong GLP-1 growth opportunities, not just in our components business, but also in our West Vantage growth, contract manufacturing across the globe. And we're levering our capacity expansion to be able to drive service, quality and scale for our customers across the globe.

Our guidance for Q2 and also the full year is now a top line growth of about 7% to 9% growth, driving a healthy margin expansion, implied about 150 basis points of operating margin expansion and obviously, healthy EPS growth throughout 2026.

So to summarize on the growth drivers and the investment theme of West, the fastest-growing part of health care in the injectable medicine space, we participate as the #1 primary containment provider for global drug companies across the globe.

We have -- the moat to run the business is quite significant. It continues to get enlarged. The regulatory barriers, the quality barriers, the scale, the complexity, able to be co-located with our customers are all attributes to why the moat continues to allow us to be the key leader in the primary packaging containment for injectable medicines.

The growth drivers we talked about, the biologics, the Annex 1, GLP-1s, all these macro trend multiyear growth drivers are fueling the higher end of our portfolio of growth, not just near term but also long term. We have a very strong management team in place and it's been fueled by the recent addition of Michel, which will be in 3 months. And more importantly, the strong balance sheet and the cash generation that this business will continue to generate for a number of years to come is very impressive.

It's a very overall business that is driving every day to build impact patient lives. And that is what we're very proud of at West, and we're excited about the future. And I appreciate your time and look forward to the Q&A session following this presentation. So thank you very much.

I think we're good. Guys, we have a few minutes. So if anybody wants to come up and chat with Eric before we head upstairs, we'll probably cut through [indiscernible], but you're welcome to come out and ask some questions with the management.

Great. Excellent. Thank you.

Okay. Thank you.

My name is Mike Ryskin. I'm on the Bank of America Life Science Tools and Diagnostics team. And we're excited to be hosting West Pharmaceutical Services for our next chat, joined by Eric Green, President and CEO; and Bob McMahon, Chief Financial Officer.

Eric, Bob, thanks so much for being here.

Great. Thank you for hosting us.

Of course. Thanks for being here. Format will be a fireside chat Q&A. As usual, if you've got questions, feel free to raise your hand, and we'll incorporate you in. Standard opening question, but we're going to pivot a little bit, just given the 8-K last night on the cybersecurity issue. I kind of have to lead off with that. Just curious what's your response to that and sort of give us a quick rundown of the situation.

Yes. Let me start with this, and Bob, if you want -- so last night, we did issue an 8-K and what has happened is back last -- early last week, we had noticed that intrusion into our systems. We followed protocol, quickly shut down all our systems across the globe so that we can better understand the situation that was at hand.

On May 7, which is last Thursday, we identified that it was -- identified the intruder, identified that they had access to some of our data and were able to extract a portion of the data. We want to -- obviously, before that period of time, we already secured external support around the cybersecurity forensics. We brought in a well-known agency called Unit 42 out of Palo Alto Networks, who have been working with us side by side to do the forensics to understand the situation.

Since that time, we -- so obviously, we wanted to make sure we got an 8-K, in particular to that reason alone, is that we felt that data was -- ensure that wasn't compromised. We know that data was encrypted, a portion of it, and we were able to, at this time, de-encrypt the data and also ensure that there was no additional data loss to the organization.

At this time, we're able to -- all operating systems are up. We're able to do shipping and receiving for our customers. We're also able to -- all our ancillary systems are operating appropriately, and several of our sites are manufacturing and operating, including Eschweiler, in our global network. There are several plants that we are currently working on to bring up, but it's a very methodical, systematic process to ensure that we harden our systems at the sites that we are bringing up but we're making excellent progress.

We believe that -- we feel that we have secure systems going forward as we are getting all our sites up across the globe as soon as possible. It's important for us because our #1 focus is to be able to support our customers to ensure that we're able to get materials to them in a timely fashion. And if -- and therefore, we are prioritizing our sites accordingly.

Maybe just two other quick things. We did take -- we made measures to ensure that the data that had been exfiltrated is not going to be disseminated. So we feel good about that. And then we're still finalizing the plans of when the sites are coming up.

As Eric said, we've got a number of sites already up and manufacturing in addition to shipping and receiving. And we're not in a position right now to determine the financial impact, if in fact there is any impact. So we are making very good progress here, and you would expect to hear from us as the events unfold in the near future.

Yes. I mean, on that point, Bob, so May 4, that means that some sites were down for a couple of days up to a week. Some are now down for a week longer. As you said, you're bringing them back online. Can you talk about ability -- for the time that things were down, ability to catch up some of that either in the near term, meaning in the next month or two for 2Q or over the course of the year, inventory on hand that can help offset some of that downtime? I know you can't finalize, put a number on it, give us direction.

Yes. Do you want to take that? Yes. So as you know, our facilities do have flex capacity, and we will be running 24/7 to be able to do that. The demand is still there. I think one of the things that's important and why it's so important for us to work with our customers is these are proprietary products that are associated with the drug. And so that demand is still going to be there. Those revenues will not go away.

And so we've still got several weeks in the quarter as we're moving forward. And so we are going to be putting a full focus on bringing back better, our sites hardened and up and running to be able to support our customers. And so -- that's the work we're doing right now. We do have the ability to actually increase capacity, given that we don't run 24/7 across all of our sites, and I'll leave it at that.

And when you talk about data being infiltrated, is that customer data? Is that -- is there any IP around that? Or is it...

Yes. All I would say is we're probably not at liberty to say what's that kind of data, but it was a material data breach, and we've taken measures to ensure that that data doesn't get out to the public.

And the last question, I guess, you said that 8-K this yesterday, I'm assuming you've now engaged with all of your customers that were impacted one way or another by this, which is a lot of -- so just any sense on how those conversations have gone? Any early feedback from them? Is it just -- what's the response then from the customers' side?

No, that's an excellent question because that's our primary focus. It's the first area that we focused on, reaching out immediately to our customers, had engaging conversations. We gave them an understanding of where we are, what has occurred and what we are going to be doing and also give assurance that we are -- we reached out to some of the best in the industry to support us on this process.

And frankly, our customers have been very supportive. They understand -- we understand with them the criticality of our products, and they understand that we are working diligently to get the sites up and running in the near term.

Okay. All right. I want to pivot to talk about everything else in the business, but glad we kind of got some time to touch on that. So let's turn to a little bit better news. First quarter result, how the quarter came in relative to expectations, very strong, very broad strength across the board.

I feel a lot more constructive about the year outlook. I mean, very positive surprise, frankly, relative to what we were expecting, to what a lot we were expecting. Can you kind of just give us a quick rundown of how the quarter played out relative to your expectations? Why was it so much stronger sort of...

I'll start here on this one. It was a great start to 2026. I'm very pleased on how the team has performed, but this is a continuation of the work that we were doing in 2025. We knew that the key area of growth that we knew the demand was there was around HVP non-GLP-1 components. We had very strong double-digit growth in that area. This is really driven by -- fueled by biologics and biosimilars. Our position in that area continues to be very high and participation rate is greater than 90%.

The second area we see continued success and growth in are Annex 1. This has -- this opportunity for West to be a critical partner with our customers to take existing molecules in market to support them on their strategy through the Annex initiative has been very positive.

Our total number of projects that we're working on with our customers continues to grow. And as they convert to commercialization, that continues to grow also. And the third area is the underlying growth of the market continues to be attractive in the injectable medicine space. So a very strong start to the year, particularly around the HVP components.

Yes. I think the one thing to just add to what Eric is saying, one of the things we're really proud of is really a broad-based beat. Every one of our major product lines did better than what we anticipated, led, as Eric was saying, by our HVP, both GLP-1, which I'm sure we'll talk about, and non-GLP-1. So nice momentum going into the year. That continued through Q1.

One of the things that we talked about was supply or demand outstripping supply at the end of the year. We are building an additional capacity in our Eschweiler plant. That really came online quite nicely, better than what we anticipated. As they were ramping up, the team has done a fantastic job there. And by the end of the quarter, demand and supply were more in line. And so -- and demand continues to be robust. So we feel good about kind of where we are for the year. That was probably one of the biggest areas, just better execution from us and continued robust demand in the marketplace.

Yes. I want to touch on that a little bit. You called that out during the call a number of times was just being able to bring on additional capacity in line. If you think of CapEx expansion or capacity expansion in this field, it's multiyear project, multiyear investments, it's the heavy lifting. This seems like it was a little bit more on the execution side than on the CapEx side. Can you talk about that, how meaningful it was, sort of how long that was in the works and how you were able to fine-tune it to get that uplift in 1Q?

Yes. Actually, the benefit we saw in Eschweiler was really an expansion of number of team members being added to the organization. Over the years, we've added tremendous amount of capacity in our HVP plants, the five plants around the world, particularly on the HVP processing steps such as washing, sterilization and vision inspection as an example.

And so throughout the end of 2025, we started to ramp up with a number of new team members into the site, the training, getting it prepared. So as you think about Q1, at that particular site, we saw a sequential improvement throughout the quarter. So we exited Q1 at a very strong output rate of productivity with the resources we have on site there that is now more in line with the supply and the demand equilibrium.

I also would say that, just to be clear, that Eschweiler is also a site that feeds into Waterford. So we saw a benefit -- net benefit with more output supporting our Waterford plant, again, another HVP finishing location, to be able to support our customers.

The third key initiative around outside of just adding resources is around level loading our operations and working with customers to validate a secondary site for HVP on particular SKUs for particular drug molecules in market. And that is going well. And we want to continue to do that to open up, free more capacity in Eschweiler as we have the capacity already available in Jersey Shore in Kinston as an example.

Bob, maybe to a point you brought up in terms of sort of equalizing demand and supply exiting the quarter, I just want to be clear. So you had demand outstrip supply last year. You're bringing this capacity online, so expanded your ability to handle that. Was 1Q a benefit of sort of just like a onetime burn through of that excess? Or is this the new run rate going forward?

Yes. If you think about it, there wasn't any onetime -- there was -- I'll talk about it from an HVP standpoint, which we're talking about right now. There wasn't any onetime pull forward or kind of bolus in the numbers. And I think if you looked at kind of how we're thinking about Q2, it's very consistent with that kind of measurement.

In full transparency, the one area that we did outperform in HVP delivery devices, about half of that outperformance was a result of our partner for SmartDose 3.5 ordering more than what we anticipated in anticipation of the transaction. But even if you took that out, we still -- that was about $10 million-plus greater than what we anticipated. So even if you took that out, very strong HVP, what we were talking about before, and then even the overall total company, very strong performance.

Yes. I think you quantified that as a 100 bps tailwind. So organic growth would have been 14%.

Exactly.

Okay. The other -- I mean the other question we had was -- the other expectation for the quarter was oil input costs as far as it relates to resin, the Middle East conflict from late February through March, could that have had an impact on numbers? Just sort of -- did you see that impact demand? Was there any stocking related to that? Was there any change in customer purchasing patterns? Sort of how have those conversations played out since then?

Yes. We really didn't see anything. The conflict started late February. That's well within our manufacturing lead times. And so even if there was a bolus of demand, it wouldn't have shown up in revenue, and we didn't see anything like that. And so we're seeing just continued strength, but not any stocking in anticipation of that or in anticipation of trying to get ahead of potential price increases or cost increases associated with the price of oil.

Sure. And now it's been a couple of weeks since you reported earnings. It's been a couple of months since the conflict broke out. In your 10-K and your filings, you talk about you have a little bit of a buffer built in, in terms of your hedge on oil. But...

Yes, one of the things we...

They remain elevated, right?

Yes. Yes. One of the things we did say in our Q1 earnings is we forecasted in our updated guidance roughly a net impact of single-digit millions for the full year. So we do anticipate being able to recover a large majority of the cost increases. I can tell you we've already communicated that that is a potential going forward as part of what we would call a surcharge.

And so yes, you've relayed that to your customers. Sort of what's been the feedback? I mean, I guess that's as expected and not really much to say about that, right?

Right, yes.

It's built into contracts to begin with, yes?

Correct. This is over and above the normal contractual increase. I mean we've seen this in the past when we had inflationary aspects back in -- a couple of years ago, same mechanism. So we're deploying that, and we typically have good recovery from that standpoint. And one of the things we're going to do is be very judicious about doing that, working with our customers as opposed to trying to take advantage of the situation.

All right. And then let's talk about the implications of the first quarter beat, sort of how that flows through for the full year guide. So 1Q, 15% organic growth. You're guiding about 8% in the second quarter and you have the full year at 7% to 9%. So the implied second half is more of in the mid-single-digit range. Just talk through the moving pieces there and sort of what are the underlying assumptions for that?

Yes, I think, first of all, first quarter there's an element of prudence in there as we think about going through the first quarter of the year. Now that being said, we do have the CGM contract in our contract manufacturing, our West Vantage business that ends the end of June. And so that's about a $40 million headwind in the second half of the year that's not showing up in the first half of this year.

Partially offsetting that is what we've already talked about with this drug handling. That's about $20 million for the full year. That's probably about $15 million in the second half of the year to help offset that. That's one. And then I think we're well positioned to kind of -- to continue to execute going forward.

But anything you can talk about in terms of degree of conservatism in the guide, or are you...

No, I would just say it's prudent.

All right. We'll take that. Let's dive into some of the subsegment performance and then the results that you've seen. Eric, you touched on HVP components as being a big driver of the growth, really strong in the first quarter. Given the size of the business and how important that is to the company, that was a big part of the beat, both GLP and non-GLP. You've had a little bit of an easy comps dynamic there, but still very, very robust results. Anything to say in terms of what's driving that besides the capacity expansion and some of the other things we're talking about there?

Right. No, Bob covered that quite well on the capacity expansion, which allows us to be able to respond to our customers quickly and efficiently, and also improve productivity. But I do think the #1 driver of growth in that sector, the HVP area, is around the biologics and biosimilars. We continue to see a number of new launches that are occurring not just in North America or Europe, but also outside the region that continues to leverage our products and services that enable them to launch and keep in the market for a long period of time.

I think the second area that we see is around the Annex 1. What I'm really proud about there is that there's really a pull effect. Our customers are bringing us into the discussions real early when they start developing their contamination control strategies and leveraging West's experience and capabilities really around primary containment, which is what is -- what was the change in, I guess, August of 2023 that we're benefiting from.

But it's -- there's a number of customers that are looking for us to provide those solutions. And what's really unique about this opportunity is that as we take existing formulations that are on their molecules in the marketplace today by providing that washing and vision and sterilization capability, we're able to help them support on that -- their strategy going forward. That is giving us at least 200 basis points of growth over the total business.

We're also seeing drivers around that, as historically it's been around the European Union as far as end consumption of those drug molecules. We're starting to have conversations with our customers where they're looking to simplify their supply chain to be able to support them in other parts of the world. So it's kind of a broadening effect.

And we're also seeing more regulatory audits being done, particularly in the United States that are -- there's more observations around this area around contamination control strategy. So those conversations are starting to build up and that we participate in with our customers.

I guess when we started framing the opportunity, we talked about 6 billion components out of the 25 billion components we produce every year. We do believe that could enlarge over time as the expectations of the regulators and of our customers outside of Europe require the same type of solution.

You talked about the GLP-1s a little bit earlier. It's another growth driver for us. And we're excited to be able to participate on all the GLP-1s in the marketplace. We're also excited about the new biosimilars that are being introduced in the market that we participate on and also the pipeline. And there's a number of new developments in works that we are -- we have visibility of, and we're very proud to be able to support them as they go through their clinicals and eventually into commercialization. So we feel really good about our position in GLP-1s.

I think earlier in the year, there was -- we were cautious because of the oral introduction, but what we're seeing happen there is that it's expanding the market versus cannibalizing the injectable space. So we do believe there's growth opportunity both for oral and the injectable space where we play on GLP-1s, not just near term, but for long term. So yes, many different excellent growth drivers in that part of the business.

Okay. Since you brought up GLPs, I'm going to bite and go after that for a little bit. We estimate -- you have $150 million of GLP-1 revenue in the first quarter. Yes, $100 million a year ago. 4Q was $137 million. So even quarter-over-quarter, it still grows nicely, goes to your point on orals.

Just as the quarter played out, was there any change in conversation? You have a very, very close relationship with the major GLP-1 drug manufacturers. As they saw oral uptake over the last five months, has there been any change in those conversations in terms of future demand? I imagine you have very long-term conversations with those customers about future trajectory?

Yes. I'll stay away from conveying on behalf of our customers, but I'll say that from our position, -- we are -- as you know, we're involved with all the injectables within GLP-1s, multiple customers. And we built the capacity and capabilities to be able to support the growth we believe that will happen with injectables. I mean we modeled long term that potentially the orals will be about 30% of the market.

Now if that plays out that the initial introduction of orals may not have taken on the same path to get to the 30%, but we still do believe there will be a portion of the -- the whole overall market will be orals. But the injectable space is very still attractive on growth. We're very well positioned to be able to support them. But what we're finding is that different products are growing faster than others, but the sum of the whole is still very attractive growth, which again we play in, on the whole.

Yes, I think the only thing I would add to that, Mike, is if you look at -- the way we were modeling it, and we went into depth about that at the end of the year, it's playing out exactly what -- as we expected. It's still early days, as Eric was mentioning. But when you look at -- you can look at the Scripps data, 8 out of every 10 people who are on orals are new to the market as opposed to being switched from an injectable.

And that is pretty consistent when you hear the others talk about kind of the expansion of that market opportunity. So we still see GLP-1s, both in the near term. We haven't seen any -- in aggregate, very constructive, continues to be. We actually took our guidance up for the expectation for the full year to high teens in that from roughly the 10% that we had before.

And I think there's opportunities to continue to grow beyond that, not only this year, but if you think about all the other things that are coming in, in terms of increasing access here in the U.S., lowering price is actually really good for us because we're a volume play. And then you think about kind of the next-generation opportunities around indications that are still in the clinical trial pipeline, and then the biosimilars and generics that are outside the U.S. right now.

And so that's a very small piece of our business today, but holds a lot of promise. And we're taking, I would say a muted view of that only because we want to make sure that we see that uptake going forward. We have a very strong participation in those products as well. And so -- and we're preparing for faster uptake than what we've built into our numbers.

Yes. I mean to that point, Bob, you just touched on it. I think when you were starting the year, you talked about 10% GLP growth year-over-year in HVP, it's factored into your guide. You took it up post-1Q, but your 1Q growth was so strong that it still feels relatively conservative. Is that the prudence you were talking about earlier, or...

Yes. I think if you looked at -- if we -- if the market continues to do what we're seeing and doing and expecting it to do, there's upside there. There's an opportunity for beating that. And we've got to execute, and it's going to continue to go that way. Obviously, the second pill hadn't been launched. Again, early days, but it's tracking the way the first one on the market is as well.

Okay. All right. I kind of want to take a step back and just think about how the year -- your latest year view is in the context of the longer-term algorithm, right? Where you raised the guide, guiding to 7% to 9% organic, that's also the LRP effectively, right? So for the last couple of years, it has been a story of getting back there, getting back there, getting back there.

After one quarter, you suddenly kind of jump back into it. There are a lot of moving pieces in terms of how this year is playing out. You also talk about CGM headwinds. You've got divestments, the extra capacity coming online. But just from a high level, is there any reason I think that this isn't sustainable going forward or that there are any things that would be moving pieces as we head into next year and beyond?

Let me start on this, Bob. If you think about the market itself, the fastest-growing area of healthcare is injectable medicines. And then the subset of injectable medicines is biologics and biosimilars, where our participation rate is very high. So we feel really good about long-term trajectory on this business around the core of the company.

And when HVP components are growing, we saw this in Q1, we've seen it historically. We had a tremendous margin expansion in our business, so we can reinvest that back into the capital investments back into our facilities. So I'm feeling really good about it from a market perspective and position us very well.

We do know that the market roughly in injectable medicine space is 1% to 2% of the volume just in general across the whole sector. We do see if you kind of build it up from a base 2% to 3% on price, and the balance is really the growth areas we talked about. It includes mix in there.

So I think looking long term, the tailwinds or the secular macro trends that we're seeing, particularly around the biologics, but also the Annex 1, the regulatory changes that are occurring, these are permanent, and they are multiyear events or event that will take place. And we're very well positioned for this because of our market share, but also more importantly, because of the technology and capabilities we bring to the table.

So we see that as a very long-term growth algorithm for us. And then you have the GLP-1 aspect there, too. So I'm feeling really good about -- if you think about building it from the back, what are the trends that are allowing us to get to that long-term financial construct, those are the key drivers into that 7% to 9%.

The only thing I would add is, as you think about where we are, we've got a very strong market share. And when you think about the participation in those areas of growth, our participation rate is even higher than our current market share. And so that's a very good leading indicator for us to continue to be able to take our -- help drive the market ourselves and take advantage of those market tailwinds.

Okay. And then kind of same question on 2026 margin expansion versus long-term construct margin expansion. You've got a lot of moving pieces this year in terms of the divestment, mix shift, CGM headwinds, oil price around war, but still seems to be very strong margin expansion year-over-year. Previously, you talked about, at 7% to 9%, you're getting 100 bps. Are you kind of locked in into that?

Yes, we feel very good about that. And actually this year, obviously, when you look at it, we're guiding to higher than that. And volume really helps drive a significant amount of that margin -- or excuse me, volume and mix shift.

And so when you think about the long term, at 7% to 9%, I feel very confident that we have several years of opportunity to drive 100 basis points or more expansion, not only in terms of being able to drive that mix shift that we've been talking about from a revenue perspective, but then if you add on the efficiency efforts that are ongoing in the plants, things like automation, the level loading that we were talking about before, getting back to our 6% to 8% CapEx construct will help drive incremental gross margin expansion.

Pricing is a lever that I think we have an opportunity to continue to develop over time to really make sure that we're pricing for value across our portfolio. And then you look at it even longer term, things like procurement and other areas where we can kind of bundle our spending and drive efficiencies with fewer suppliers, increased quality, lower price and so forth.

So there's a number of things -- steps over the near and medium term that feel good about on a gross margin basis. And then with that 7% to 9%, reducing our spend or not having our OpEx spend at that same level through AI and other efficiency opportunities will help drive additional margin expansion.

I think the only other thing I would add, and I know we're running up against time, is in Q1, we started driving below-the-line leverage as well, whether that be through improved tax rate as well as the capital deployment. And so I think those are two levers that haven't been fully contemplated as we go forward and certainly something that I'm very focused on.

I want to ask one last one for you, Eric. It's been a great run. Thanks for coming to our conference all those many years. It's been a pleasure covering you. Any updates you can give us on the CEO search or just maybe your plans post-retirement?

No, I'm excited actually to be here, so thank you again for the invitation for West. It's a great story. It's a great company. We're on track. Looking at second half of this year to do a seamless transition, and the company is operating extremely well. The strategy is very clear, and we have a phenomenal executive team. So I'm very confident that there will be a smooth transition and a lot more success ahead of us.

Yes, thank you.

Thank you so much. Really appreciate it. It's been a pleasure. Thank you, everyone.

Good day, and welcome to West's First Quarter Earnings Conference Call. [Operator Instructions] Please note, today's call is being recorded.

I would now like to turn the call over to John Sweeney, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to West's First Quarter 2026 Earnings Conference Call, which has been webcast live. With me today on the call are West's President, CEO and Chairman; Eric Green, and West's Senior Vice President and CFO Bob McMahon. Earlier today, we issued our first quarter financial results. A copy of the press release, along with today's slide presentation containing supplemental information for your reference has been posted in the Investors section of the company's website at investor.westpharma.com. Later today, a replay of the webcast will also be available in the Investors section of our website.

Before we begin, we'd like to remind you that statements made by management during this call and the accompanying presentation contain forward-looking statements within the meaning of U.S. federal securities law. Please refer to the accompanying safe harbor statements in today's press release and in addition to other disclosures made by the company such as our 10-K and 10-Q regarding the risks to which the company is subject.

During the call, management will also report on certain non-GAAP financial measures including organic net sales, adjusted operating profit, adjusted operating profit margin, free cash flow and adjusted diluted earnings per share. The accompanying disclosure statement as well as reconciliations of these non-GAAP financial measures to the most comparable financial results prepared in conformity with U.S. GAAP are provided in this morning's press release, and in today's presentation materials.

I will now turn the call over to our CEO, Eric Green. Eric?

Thank you, John, and good morning, everyone. Thanks for joining us today. I am pleased to report the year is off to a strong start with outstanding performance in the first quarter revenues and adjusted EPS, with both metrics coming in well above our expectations. It is clear our growth strategy is delivering.

First quarter revenues of $845 million were up 21% on a reported basis and 15% on an organic basis. Adjusted operating margins in the quarter were 21.4%, expanding 350 basis points as compared to prior year, and adjusted EPS came in at $2.13, up 47% compared to prior year. As announced in the press release today, due to our strong first quarter performance and the expected ongoing momentum in our business, we are increasing our revenue and adjusted EPS guidance for full year 2026. We now anticipate full year organic revenue growth back to our long-term construct of 7% to 9%, up from our previous guide of 5% to 7%, and adjusted EPS increased to the range of $8.40 to $8.75. Bob will go into more detail shortly.

Now let's take a closer review of each of the businesses. Starting with HVP components in our proprietary Products segment, which represents 48% of our company's total net sales and continues to be the key growth driver for West. HVP components grew 23% on an organic basis in the first quarter. This growth was led by strong performance in both GLP-1 and non-GP-1 revenues. HVP components GLP-1 revenues grew significantly and contributed 10% of total company sales consistent with the previous quarter. While it is still early days in the adoption of orals, the trend is playing out as we expected and have previously communicated. That is orals are expanding the market.

Our view remains unchanged for long-term growth in both injectable and oral GLP-1 markets as overall adoption of these products continues to increase. We continue to believe there are a number of factors that leave us optimistic about the prospects for our GLP-1 elastomers in the future. These include the expansion of insurance coverage, FDA regulatory decisions on compounded GLP-1s, reduced drug prices and the introduction of GLP-1s for new indications, as well as next-generation products. In addition, the launch of generics in several countries outside the U.S. should drive additional demand in the coming years.

Non-GLP 1 HVP components revenues increased in the high teens in the quarter. This growth was driven by durable growth drivers, including biologics, HVP upgrades, including Annex 1, and underlying core customer demand growth. The better-than-expected HVP components performance in the quarter can be attributed to market growth and tremendous execution of our operating unit strategy, and scaling up production, particularly in Europe.

Recently, I met with our team [indiscernible], Germany to see firsthand the operational improvements that we are leveraging across our HVP components manufacturing sites. There are 3 key aspects to this operational excellence initiative.

First, we accelerated the process of onboarding new employees in the second half of 2025, which benefited production this quarter, and further increased output by temporarily redeploying our team members from other European sites. Second, we continue to optimize our global network. This includes working with our customers to qualify second sites, enabling us to increase production output. And third, a significant benefit of this initiative is the transfer of knowledge and implementation of best practices, which will result in ongoing enhancements throughout our global manufacturing network.

Turning to our largest market, biologics. This business continues to be a strong growth driver for our HVP components business and delivered 26% organic growth. We continue to have strong win rates for biologics entering the market with solid growth at NovaPure, which is increasingly being selected for its attributes and quality by customers who are bringing new biologics to market.

We're also benefiting from many biosimilar launches. Growth in this market is being increased by easing regulations and reduced testing requirements. When a biosimilar is introduced, [ it is usually ] results in expansion of therapy use. This generally allows us to maintain or even increase overall volume demand after biosimilars are commercialized. And we see a continued ramp in HVP conversion in Annex 1. We are experiencing strong conversion of standard products into HVP components, and this mix shift is improving revenue and margin performance. We continue to have strong growth in Annex 1 related projects, which increased sequentially and is up 66% as compared to this time last year. Annex 1 is anticipated to be a multiyear tailwind to our business with an expected revenue growth contribution of 200 basis points in 2026 from Annex 1 and HVP conversion.

Moving on to our HVP delivery devices, which comprises 15% of company revenues. We delivered strong organic growth in the quarter, up 28% compared to prior year. This was driven by increase of SmartDose 3.5 revenues, which were requested in advance of the transaction, which we continue to expect to close midyear. The non SmartDose parts of the business represent more than half of the revenues and were up double digits in the quarter, led by SelfDose and Crystal Zenith.

Standard Products, which represents 19% of our business, were up 0.5% on an organic basis during the first quarter. Standard products are an important funnel as they convert to HVP components over time, which provides value to our customers and generates incremental revenue for us.

Turning now to West Vantage, the new brand name for our Contract Manufacturing segment, which represents 18% of our business. Revenues increased 6% organically in the first quarter. I was in Ireland a couple of weeks ago to participate in the official opening of our new Dublin West Vantage site, which is now fully operational and producing commercial product. This milestone marks a significant step forward in strengthening our global capabilities. This site incorporates our drug handling business, which is more profitable and less capital-intensive than our legacy contract manufacturing. While we are in the early stages in building our drug handling business, 2 days [indiscernible] business is meeting our expectations. The site also supports growing customer demand for high-volume injectable therapies, including treatments for diabetes and obesity. These aspects reinforce West's role as a critical partner in helping to secure patient accents to these essential medicines.

Now I'd like to turn the call over to Bob to discuss the financials and guidance in more detail. Bob?

Thanks, Eric, and good morning, everyone. This morning, I'll provide some additional details on Q1 revenue and take you through the income statement and some other key financial metrics. I'll then cover our updated full year and second quarter guidance.

As Eric mentioned, we had a great start to the year as revenues of $845 million increased 21% on a reported basis and grew 15.3% organically, exceeding our expectations. And the performance was broad-based as all segments were better than expected and price contributed 3.5 percentage points of growth in the quarter. Our HVP components business was a standout, delivering $409 million in revenue and growing 22.6% organically. This was driven by robust growth in GLP-1s, HVP upgrades, including Annex 1 and overall continued improving performance in biologic revenues.

As Eric mentioned, our team is executing at a high level and ramping capacity faster than planned while demand continues to be strong. Our GLP-1 HVP components business had another very good quarter of growth, and we expect continued growth throughout the rest of the year for all the reasons that we've previously talked about. And the HVP components business outside of GLP-1s accelerated nicely, growing in the high teens in the quarter and contributed over 2/3 of the HVP outperformance in the quarter.

In HVP delivery devices, revenues were $124 million in the quarter and up 27.5% year-on-year organically. This was driven by growth in SmartDose 3.5 as revenues increased in anticipation of the expected midyear closing of the transaction, as well as good performance in [indiscernible] and SelfDose. In Standard Products, revenues of $161 million were up 0.5% on an organic basis, partially driven by [ NX-1 ] related inversion to HVP components. And our West Vantage segment delivered $151 million in revenue, growing 6.2% on an organic basis. Segment performance in the quarter was driven by an increase in sales of self-injected devices for obesity and diabetes.

Now let's take a closer look at the rest of the P&L. Total company gross margin was 35.1% in the quarter, up 190 basis points year-over-year. The year-on-year increase is primarily driven by the positive mix shift of HVP components and price contribution. We did not see commodity costs have a material impact on our Q1 results. I also wanted to highlight that our West Vantage gross margin, while down slightly year-over-year as we ramp our Dublin facility, recovered sequentially as expected. Adjusted operating margins of 21.4% were 350 basis points up compared to the prior year, driven by the gross margin expansion and leveraging our SG&A and R&D across a higher revenue base. And below the line, net interest income was in line with our expectations, while our tax rate was a better-than-expected 18.3% for the quarter, and we had 72.4 million diluted shares outstanding. Now adding it all up, Q1 adjusted earnings per share were $2.13, up 47% versus last year, and up 45% above the midpoint of the guidance we gave on the last earnings call.

Now before moving into our updated 2026 guidance, I did want to highlight a few other additional financial metrics. In the quarter, we delivered operating cash flow of $90 million. While down year-on-year due to the increase in AR related to our strong sales performance and the 2025 bonus payout, it was ahead of our expectations. Capital expenditures were $43 million, down from $71 million in the prior year as we continue to drive a focus on increased capital spending efficiency. And we remain on track with our expectations of $250 million to $275 million for the year, even as we increase our revenue guidance, which I'll talk about shortly.

In addition, during the quarter, the Board of Directors authorized a new $1 billion share repurchase program given our strong financial position. In Q1, we repurchased 1.2 million shares for $298 million, paid out $16 million in dividends as an additional means of returning capital to shareholders. Our cash flow and strong balance sheet position well as we look to deploy capital for growth and deliver value to shareholders. And we ended the first quarter with $521 million in cash on our balance sheet.

In summary, we had a very good first quarter that exceeded our expectations, and the momentum we saw coming into the year is continuing. And now let me turn to our updated guidance. And before getting into the numbers, I want to highlight a few important factors driving our outlook.

The macro environment continues to be dynamic, and so we will remain prudent with our forecasting, given we have 3 quarters to go in the year. Most importantly, we've increased our growth expectations for the injectable market driven by the underlying trends Eric talked about earlier. HVP components, both GLP-1 and non-GLP-1s are the primary driver for our increased outlook. Our assumptions around the GLP-1 market continue to hold and the non-GLP-1 market continues to improve.

We've also incorporated rising oil and commodity prices into our updated thinking and are working to offset these costs through various means as we have with tariffs and other inflationary costs. We expect to have a net impact of single-digit millions after the mitigation efforts. Importantly, our operations and supply chain have not been affected.

We continue to expect to close the SmartDose transaction midyear. As a reminder, we generated $55 million in SmartDose sales in the second half of 2025 and have adjusted our full year 2026 expected organic growth rate to account for these revenues. For the year, we now anticipate revenue to be in the range of $3.295 billion to $3.35 billion, up $78 million at the midpoint. This reflects an increased organic revenue growth range of 7% to 9% for the year. Reported growth is 7.2% to 9.0%, with our assumptions around FX and the SmartDose divestiture unchanged and roughly offsetting. The increase reflects strong Q1 performance and an improving demand environment for the remainder of the year.

In the Proprietary segment, we expect HVP components to continue to be the primary driver of revenue growth. We now anticipate this business to grow low to mid-teens organically for the year, accounting for about 7 points of the total company growth at the midpoint of guidance. This is up from our previous expectation of roughly 5 points of total company with at the midpoint. Importantly, both GLP-1 and non-GLP-1s are contributing. Non-GLP-1 HVP components are expected to grow low double digits and make up just over 5 points of total company growth, while GLP-1 HVP components is expected to be in the mid- to high teens. We also expect better performance in our HVP delivery devices, while our expectations for standard products in West Vantage are consistent with our previous guidance. The positive revenue mix is helping us to further expand our margins even as we see increased costs, and we have incorporated some below-the-line contributions in the updated guidance. To help with your models, we are now projecting $7 million in net interest income, a 19% tax rate for the full year and roughly 71.5 million diluted shares outstanding for the full year. This results in an adjusted earnings per share to be between $8.40 to $8.75 for the year, up 15% to 20% year-on-year.

Now for the second quarter, we expect revenue to be in the range of $830 million to $850 million. This is a reported increase of 8.3% to 10.9%, and an organic increase of 7.0% to 9.6%. And we expect second quarter adjusted diluted earnings per share in the range of $2.05 to $2.12, up 11.4% to 15.2% year-on-year. In summary, we're very pleased with how our business is performing, driven by our key growth drivers and are optimistic about the future.

Now I'd like to turn the call back over to Eric for some closing comments. Eric?

Thank you, Bob. To summarize, the broad-based nature of the results we reported today continues to reaffirm that our growth strategy is working as expected. We have a strong, resilient business which delivers unique value to our customers. We remain focused on our critical growth drivers of biologics, GLP-1s, Annex 1 and other HVP conversion and leveraging our global infrastructure. The long term, many durable macro trends underpin West's growth trajectory as the global market leader in the injectable medicine space. Finally, I want to thank our team members for their commitment and reluctance focus to serving our customers, which allowed us to achieve these strong results.

Operator, we're ready to take questions. Thank you.

[Operator Instructions] Our first question comes from Patrick Donnelly with Citi.

Maybe one on the non-GLP, nice results there in particular. Can you talk about the acceleration you saw there? It sounds like, Bob, I think you were talking about low double digits for the rest of the year on [indiscernible] Can you just talk about what you're seeing? Is it [indiscernible]? Is it biosimilars, biologics? Would love if you just break that down a bit more because the growth there was pretty notable.

Yes, Patrick, thank you for the question. I think as we look at the HVP non-GLP-1 area of our business [indiscernible] the components, we're really pleased in how the market is starting to -- market demands continue to increase, particularly in biologics and biosimilars. We mentioned that we grew 26%. We believe -- for the balance of the year, we'll have very strong double digits in that area. And this is mostly on already commercialized drugs in the marketplace.

While we do continue to have a very high win rate on new launches and new molecules being approved, most of the growth is coming from the commercialized drugs. Annex 1, as you asked about that particular area that continues to meet our expectations. We have -- we've seen a sequential improvement over the prior quarter, and it's up 66% over the first quarter of last year of a number of projects that we have taken on. And this is actually -- as you think about volume doesn't change, but the ASC and the margins do improve, it will continue to focus on that area.

That is actually expanding as we think about -- it's not just [ E-regulations ]. We're starting to hear more about the expectations outside of Europe, particularly in the United States and also in Asia.

I think the last area I want to just comment on, and that's why we have confidence in our guidance is really unleashing some of our operational excellence in our HVP manufacturing sites. The work that we're doing in Europe is fungible, transferable to other sites, which will give us the ability to leverage the existing capacity, higher throughput, higher output, [indiscernible] need a rise in demand of our customers.

Bob, would you like to add?

Yes, I would just say, Patrick, and thank you for the question. As you see, this is a continuation of what we saw in the second half of the year of this real continued momentum in the HVP non-GLP-1 components business. And to Eric's point, what we've seen is a real combination of not only demand, the benefit of the positive mix associated with upgrading to [indiscernible], and we expect both of those things to continue as well as the continued market development of the biologics business. And so feel very, very good about where that direction is going. If you recall, in Q4, we talked about demand outstripping supply. We're continuing to ramp and feel good about the team's ability to continue to meet that demand for the rest of the year.

Okay. That's helpful. And then, Bob, maybe on the margin side, obviously, when AUPs are growing 23%, it helps on the mix side. Can you just talk about how we should think about the margins for the rest of the year between the mix shift piece? You mentioned the manufacturing excellence there. I know the footprint is an area for help. It doesn't sound like the commodity side is going to be much of a negative offset. So maybe just talk about the moving pieces there. And then obviously, the mix shift is helping quite a bit here.

Yes. What I would say is mix shift certainly does help, but we're also being benefited from the great operational execution by the team, which helps absorb the plant costs and so forth. And so if we think about where we were in Q1 at 21.4% margin, that was a significant improvement over last year. Q2 will probably be roughly in that line and then second half will [indiscernible] despite increased cost, our expectation is that we...

[Technical Difficulty]

Ladies and gentlemen, please standby. Your conference call will resume momentarily.

Again please standby. Your conference call will resume momentarily.

Patrick this is Bob. Sorry, we got disconnected. Let me finish my thought. As I was saying...

I think [indiscernible] when you drop there.

Yes, yes, exactly. That wasn't a dramatic pause. So I apologize to the folks on the call. What we're expecting actually in the second half of the year is an extension, or an expansion of our margins despite the incremental costs associated with higher fuel and logistics costs. And so if we look at the full -- some of that's a benefit of continued margin mix and strong performance on the revenue side.

If we look at our full year from last guide to this guide, probably another 50 basis points improvement year-on-year. So a very nice expansion.

Our next question comes from Michael Ryskin with Bank of America.

Great I'm just -- and obviously, congrats on the quarter on the guide, I'm just curious, did you notice anything unusual in terms of ordering patterns, or acceptance from customers? We are just wondering maybe as a result of the Middle East crisis and the spike in oil, if any of your customers did any prebuying or stocking ahead of time. Just [indiscernible] of price increase or maybe supply [indiscernible] in the second half. Just wondering if you saw any weird dynamics in March once the conflict broke out?

Yes, Mike, this is Bob. Thanks for that question. I'm glad you brought that up because we've actually done a lot of analysis on our results, and we did not see any pull-forward associated with the conflict in the Middle East. As we mentioned in the call, we did have greater-than-expected revenue associated with SmartDose 3.5, but that's a result of in anticipation of the transaction. But there was no pull forward associated with the conflict.

All right. That's very straightforward. And I guess kind of just staying on the same topic. You mentioned some of the offsets and some of the mitigation you're putting in as a result of that. I was wondering if you could talk through that, like whether it's price increases? I know you guys have a hedge on oil. You called that out in the Q. Could you talk about that? Could you talk about -- I think that's only a couple of months' worth, but anticipation of price increases in the second half, maybe some supplies [indiscernible] moving around sort of like how you're adjusting to that and how that's going to play out? And related to that you can...

Yes. Thanks, Mike. Yes, what I would say, we have multiple tools at our disposal. Certainly, we do hedge a portion of our costs associated with that, but that certainly is not going to be the only way that we have the ability to mitigate. And similar to what we have done with tariffs and so forth, we'll look at multiple tools. Probably it's premature to kind of explain all the details there, but we feel good about our ability to recover a portion of those costs.

Our next question comes from Paul Knight with KeyBanc.

Eric, a lot of this quarter sounds like capacity coming on line for West. So my question is around are there any bottlenecks that you see right now?

And second, how easy is it for customers to move from one site, or use another site's capacity does it take a month, a year to get that qualification done?

Yes. Paul, it's a multistep process. So first of all, on the capacity expansion, the teams have done a great job on additional capacity utilization of the existing facilities. And this initiative we launched in the second half of last year, but we're seeing -- we saw the benefits in Q1 and we'll continue to see that throughout the year. So higher throughput on existing capacity. We will always continue to layer in new capital equipment to be able to continue to expand basically around HVP finishing processing, which really is being fueled by the Annex 1 transition.

You're absolutely correct. The second lever that we're working with certain customers is qualifying multi-sites. That process does take time. So it could be anywhere between 6 to 12 months for a transfer to occur effectively and another site to be validated. But that's on ongoing, and we'll continue to leverage that across our network, so we can level load more effectively. And I would say that that's additional benefit we will see throughout 2026, going into 2027.

Paul, this is Bob. Just the other thing that Eric mentioned that I want to reiterate is around taking the learnings and the application of what we're doing in Europe and applying it to other plants, particularly our HVP plant, to be able to get ahead of some of that continued demand. And so not only are we doing the things, Eric was just talking about, which will help us not only in the mid and -- in the far term. In the near term, we're being able to leverage the existing assets that we have. So really nice work by the team.

Our next question comes from Matt Larew William Blair. [Operator Instructions] Okay. We'll go to our next question, which comes from Kallum Titchmarsh with Morgan Stanley.

Maybe just following up a bit more on Annex 1, just checking in on the flow of new customer conversations and conversions there. Any refreshed view on the duration of this tailwind? Whether customers are maybe facing issues not upgrading their components? And just how to think about what can be relatively captured from the TAM you framed up before?

Yes, Kallum, it's -- this area of opportunity for us is actually very attractive, and we're gaining momentum. What we're seeing right now is the number of projects our customers we're engaged with, has increased and continues to increase. We're able to convert from a project status to commercialize product going into the market. I'm very pleased on the progress that we're making on [indiscernible] fronts.

The conversations are actually more -- I would say, it's increasing because the regulations and our customers are looking beyond just Europe. And so therefore, there's more of a pull effect and having us participate on upgrading certain products in market today and commercialize drugs really run our HVP finishing processes. Which, again, going back to what Bob mentioned earlier about unlocking or unleashing the opportunities to expand our capacity capabilities in our HVP plants. That's going to enable us to continue to grow nicely.

The growth that we believe that we will continue to deliver on 200 basis points per annum for multiple years. So we're early innings, I would say, we've identified at least 6 billion units that are targeted to be converted, and we're early in that stage. So we do think this is a very long-term growth opportunity.

Kallum, just to add to what Eric is saying and to emphasize a couple of points. The regulatory environment does continue to increase across the globe, particularly focused on contamination. And I think we are uniquely positioned to be able to take advantage of this given our market position on existing products. So we're very optimistic about this.

Appreciate it. And then I realize it's kind of less than 10% of the group. I would love to hear a bit more about the underlying demand environment in APAC. Pretty strong 29% growth in Q1. So just wondering if that's being underpinned by anything notably different than your U.S. and European growth drivers? And how we should think about investment into that region in the future?

Yes. No, we continue to look at Asia Pacific as an attractive market for us. Geographically, we support that region in twofold. One, local for local consumption, but also export that is going to the global markets. So we rely heavily in other locations, [indiscernible] feed finished products into that region.

I would say that we are seeing an increase, particularly in the biologics of the biosimilar space, which we have a very -- we continue to have a very attractive participation rate. And that's actually very attractive for us as you think about leveraging our higher end over HVP portfolio. So more to come, but we're pleased with the team's execution in region to support customers. But we are seeing an increase of CDMOs, small biotech firms looking to build a branch out into the Western markets.

Our next question comes from Justin Bowers with Deutsche Bank.

Eric, can you provide us with an update on the demand profile for some of the manufacturing space that you now have available in Dublin and in the West Coast? And then two, just also an update on the GLP-1 market. What are you seeing in terms of other indications outside of diabetes and obesity? Is there -- are there programs growing in that part of the market as well?

Yes. Justin, you're right. At least for the first question you asked about the CGM business in Dublin that will be finishing up at the end of second quarter of this year. We're pleased with the progress we're making with new customers and contracts, to be able to backfill once the equipment processing lines are extracted from that facility. We are going to be installing new equipment from our customers to support them on their own new commercial launches, particularly around drug handling in the non-GLP 1 area. That's an area being attracted by our customers with the less Vantage strategy and the value proposition we're bringing. So I'm very pleased on the progress, more to come, but we do need to close out and finish on the current customer by the end of the second quarter, and then we'll do the transition in the second half with new customers.

With regards to the GLP-1s, other indications other than [indiscernible] and diabetes, those are full projects in the pipeline that we're supporting. Actually, if you think about not just other indications, but other types of molecules that are being targeted for that market. We are obviously a very strong player -- and in the pipeline, it's very attractive. As you know, they're looking in combination molecules, or looking at other types of biologics. So we're very well positioned, and we do think that will be an extension of growth in that particular area for a number of years to come.

Got it. I appreciate that. And then just a quick follow-up. On the drug delivery device strength that you saw and the transition there. Was that mostly volume driven? Or was there any incentive payments there? What were, sort of, the contributors to the strength there?

Justin, this is Bob. Yes, the good news is it was all volume. There weren't any incentive payments associated with that [indiscernible] if you look at it, was roughly split evenly between SmartDose and the non SmartDose business. And so we feel really good about kind of the performance going forward.

Our next question comes from Matt Larew with William Blair. [Operator Instructions]

Yes. Let's move on to the next caller, please. Thank you, operator.

Our next question comes from Daniel Markowitz with Evercore ISI.

The first thing I wanted to ask on the [indiscernible] called out NovaPure as a positive for the first time in a while. And backing up, I think mix shift is such an awesome part of the story and NovaPure sort of stands out as being at the high end of the high-value components segment. So really nice to see that. I just wanted to ask what sort of drove the strength there specifically?

Yes, Daniel, that's driven by market demand of commercialized molecules in market already. While we are continuing to see a number of new approvals in the pipeline we're feeding it with NovaPure. But that particular growth that you're seeing, and we expect biologics continue to grow quite nicely throughout 2026 is being fueled by NovaPure.

Yes. It was one of the several highlights in the quarter, Daniel, and I feel good about the ongoing momentum there going forward. And so we had very nice growth in NovaPure year-on-year.

Great. And then just a follow-up. As I look at the full year guide after a really strong quarter and a nice 2Q guide, the full year now looks more first half weighted versus what's typical. Is there anything to call out that's causing a decel in the back half? Or is this more conservatism?

Yes. I'm glad you brought that up, Daniel. A couple of things. One is we are at the beginning of the year. So we are prudent. We're kind of taking it 1 quarter at a time. But we do have the roll-off of the CGM contract in the back half of the year. That is, as a reminder, is about a $40 million headwind in the second half of the year. That's no change from the original guidance that we had provided. And that also comes into play. But what I would say is we're prudent with our guidance and feel good about the ongoing momentum of the business.

Our next question comes from David Windley with Jefferies.

I wanted to ask Eric about, or maybe Bob too, about incremental margin as good as margin expansion is year-over-year, I guess I would come at it from the standpoint of it still seems like there's quite a bit of opportunity there. Looking back in the model, revenue look to be at a record level, you're rebalancing capacity to open some new capacity, the NovaPure call out by Daniel. There's a number of factors that being positive margin was better year-over-year but down sequentially.

I'm wondering if there were issues like labor ramp-up that you mentioned burden from commodity costs or perhaps the way of the SmartDose volume that came through in the quarter that might have shaded what would have otherwise been even better margin. Can you flesh that out for us?

Yes, David, that's a good question. Let me start, and then I'm going to turn it over to Bob. But I think you've hit on the key points.

We believe the HVP components business will continue to drive margin expansion. As we think about the biologics business continue to grow, you're absolutely correct by pointing out NovaPure and its strength of that particular business, which drives very attractive margin expansion. We also have the continuation of the Annex 1, and that's a multiyear journey. And as you know, we're basically moving an existing product in the market from a standard core level to a HVP, which brings very attractive margin expansion.

And then I don't want to underestimate the impact of the leveraging our HVP sites more effectively with operational excellence. We've learned a lot in the first quarter. There's more to be done and also spread to our other sites, which we've actually seen as we went to those sites a few weeks ago. And we're very optimistic that we will be able to get more out of the existing capital that's in place today to produce HVP. So I do agree that there is opportunity for further margin expansion based on the HVP components

Bob, do you want to add?

Yes. And David, just a couple of other pieces of data. You're right. If we think about Q1, we were ramping throughout the course of the year. So that March had a much better performance than January, and that will continue to expand as we go through the rest of the year as those individuals were ramping up from a capacity standpoint. We did have a very good incremental, but I think it can be better.

SmartDose did have some impact on that. And obviously, if -- to the earlier question around quarterly cadence. That's one of the reasons the second half of the year, we, in fact, on an operating margin basis to be pretty heavily above where we are in the first half of the year. And so a number of, I would say, positive opportunities for us to continue to expand margin not only this year but going into next year as well.

Great. And if I could just quickly follow up, Eric, I'd like to believe, based on my own age that you're still a pretty young chicken. You've made the decision to retire. Could you talk to us about that, please?

Thanks for that. I'm pleased that you recognize that I'm still young. I feel it. No, I -- look, I think this is an outstanding organization. A lot of legacy, but a great future ahead of us, and I'm very proud of how the team is operating. I'm extremely proud of the executive team that we put in place, one of [indiscernible] next to me right now. And I do think this team is performing at a very high level, and will continue to do so.

The business is operating very well. The strategy is very clear. the global leadership team is aligned and executing. And I think as I think about the successor coming in, when appointed, we'll be in a very good position to continue to take this business forward. So I'm excited about where we are at West, but I'm more excited about the future. And I couldn't be more proud about the team across the globe on how they are executing today, but more important in the future of this business.

Our next question comes from Larry Solow with CJS Securities.

Congrats on the quarter as well. And just a follow-up on Dave's question there. Eric, we're going to miss you. It sounds like nothing imminent, but just curious how the search is going? Any kind of high-level time lines you can share with us or any thoughts there?

Yes, Larry, thank you. So we are active in the market as we speak, and we anticipate that my successor will be appointed in the second half of this year. So [indiscernible] be informed as we make progress. But again, as I mentioned earlier, to David's question, this is an [ unbelievable ] company. And I think it's going to be -- once we have somebody appointed, we'll be in a very good position.

Yes, absolutely. You've done a great job enhancing the company's outlook. Just a couple of follow-up questions. You mentioned NovaPure. Most of the growth there has been driven by [ current products ] in the market. Just curious on the Annex 1 what folks are kind of shifting towards? Is it more towards the lower end of the curve there, like the [indiscernible] and then maybe [indiscernible] could go up a little more on the [indiscernible] side? Or do you see some of those -- of the $6 billion potential components, some of them eventually even inverting to some of the higher level -- high value services there?

Larry, it's going to be a mixed answer for you. It really depends on the customer and the molecule itself. We have -- you're right, I would say, if you look at a weighted average more around the [ Westar ] and then leveraging [ Envision ], pharmaceutical washing, sterilization. We do have a few cases where they're going all the up to the high end of the spectrum of HVP. But it is more about the midpoint of that portfolio.

And as a reminder, we're starting up -- many of them are starting off at the standard legacy products. So again, either case is very positive. We do also have some shift from the lower end of HVP going to the higher end. So it's a combination of both. So I gave you, kind of, a widespread of answer there, but it's -- that's why it's exciting. It's -- it's leveraging our global HVP finishing processes.

Got you. And then just quickly, I may just one last one. Just on the West Vantage. I guess you're calling that now. So I guess the cadence, should we expect for the rest of the year, do we expect a little bit of a dip? You had obviously a really nice strong quarter towards the [ middle back ] half of the year as the rest of the continuous [indiscernible] next piece comes out. And then sort of a rebuild in '27. And along those lines, does the more -- how should we view the margin profile of this segment as we go out the next couple of years?

Yes, Larry, I'll take that question. And you're right. There is a kind of front half weighting associated with that just given what we were talking about before with the CGM contract exiting. So we -- our forecast for the year remains unchanged at roughly flat. It will be up in the first half and then maybe slightly down. Q3, I would expect to be the trough because if you remember, the drug handling is kind [indiscernible] up throughout the course of the -- throughout the year, as Eric mentioned, is on track. That's $20 million of incremental revenue. Most of that will be in the back half of the year.

And as we've talked about the benefit of that drug handling is that's a higher-margin business than what it's replacing. And so from a margin profile, I would expect margin profile to be roughly consistent across the year.

Got it. Okay. And then eventually, does the drug handling have higher margin as you build that out?

Yes. The drug handle margin -- and it's important, two other things. The drug handling business, while it has $20 million this year, that is certainly not at ramp at peak. It's probably 3x that much, which we'll continue to see ramp throughout 2027. And from a margin perspective, it's well at least twice as much on a gross margin basis as our current business.

Our next question comes from Brendan Smith with TD Cowen.

In terms of the 200 basis point contribution related to [indiscernible] is most of that baking in Europe-based upgrades? Are you seeing any customers upgrade, you mentioned the U.S. and Asia as next logical geographies? But are you seeing customers upgrade in parallel? And could that present any upside to that current expectation?

[Technical Difficulty]

Please stand by.

[indiscernible] can you hear us?

Yes.

Yes, in terms of the 200 basis point growth contribution related to [ NX1 ], you mentioned the U.S. and Asia as next, sort of, subsequent geography seeing upgrades. Is the current expectation baking in pretty much just Europe? Or are you seeing any customers upgrade in parallel across geographies? And could that represent some upside opportunity there?

Yes. There's two factors that have happened, Brendan. I mean, good question. And one is, our customers that are looking to upgrade for the European market are also looking at their portfolio and making more global decisions and being consistent. So we are -- we are seeing that as one factor.

Another factor we are seeing, we're being brought into conversations with our customers even in the United States with the FDA making observations around sterility and the strategy around of their manufacturing processes. And therefore, there's opportunity to upgrade even in the U.S. market. So we're seeing a factor of both. And we'll see how this plays out in the near term, and that might be a potential opportunity.

Brendan, I think the other thing to think about is a potential accelerant here is, as we think about all the work that's happening from the [indiscernible] standpoint. That's actually -- a lot of that is actually coming from Europe into the U.S. and what our pharma customers are wanting to do is standardize on a consistent product and process. And so that hasn't been fully baked in because a lot of that work is still ongoing. But that has the potential to kind of accelerate and expand our Annex 1 opportunities well beyond Europe.

That's great. And in terms of the operational excellence plan. Can you speak to maybe like a cadence of executing that across sites or some time lines? And are those improvements baked into the [ raised ] guidance?

Yes, the cadence is -- we're live right now. We're actually transferring some of the [ learnings and knowledge ] into other sites and particularly in [ Kinston ] and Jersey Shore, outside of our [indiscernible] and Waterford plant. So that is in process, and that will continue to occur throughout the year. As Bob alluded that, we were -- we saw a nice margin expansion within the quarter because of these efforts. So we are still in the buildup mode. We should see the expectations of additional benefits throughout the next several quarters.

Yes, and we have baked some of that operational improvement in the forecast.

Our next question comes from Tom DeBourcy with Nephron Research.

I was just wondering on the HVP delivery devices and I guess you host the divestiture of SmartDose [indiscernible]. Just how you think about that business? I know you have the secrete platform and how you think about, I guess, adding to that portfolio and whether that's still, obviously, I guess, a core part of your offering to customers?

Yes. No, absolutely. So within that portfolio, we have administrative systems, which is a very attractive market that continues to expand and grow, particularly in the hospital market. We have the Crystal Zenith, which is container alternative to glass that is really targeted to the highest end of biologics in cell and gene therapy. And then also you have the other alternative delivery devices like SelfDose that the demand and volumes are continuing to increase. And we have other versions and volume doses that we're able to offer our market.

So we believe delivery devices is natural in this area as primary container as a natural extension from our elastomer business. We'll continue to invest around new product development and manufacturing capacity expansion because it's a very attractive growth profile and a margin opportunity.

I'm showing no further questions at this time. I'd like to turn the call back over to John Sweeney for closing remarks.

Thank you very much for joining us today on our First Quarter 2026 Earnings Conference Call, and we look forward to updating you as we move through the year. Thanks very much, and have a good day.

Thank you for your participation. You may now disconnect. Everyone, have a great day.

This is Paul Knight, the analyst covering life science at KeyBanc Capital Markets. With me today is Anne Snopkowski, who's on my team as well. we'll be running some Q&A. And then we have, of course, Bob McMahon, the Chief Financial Officer of West Pharma; John Sweeney, Head of Investor Relations.

But that kind of pops into my first question, Bob. Agilent, of course, very, very well-known firm, I followed it since the '99 spin, I believe, from HP. What do you like about the West business now that you've been here a little bit?

Yes. Yes, Paul, Great. Thanks to you and Anna for having us. We really appreciate it. And what I'd say is the thing that's really super exciting about West is I think it's a business model that's fairly rarely matched in the industry. And when I think about that, a business that's got a very strong market share 70% to 75%, kind of, market share with even more opportunities ahead of us as we move into kind of biologics, where we have even a higher participation rate and the durability of the business long term.

So when we think about the competitive moat that we have once we're spec-ed into a product, we are on that product for the life of that product. And so it's very rare that we lose a molecule. And so whether that be a branded molecule or even a generic molecule. And so the nature of the long-term secular tailwinds behind us, the strong market position and the competitive moat that we have gets me super excited about this. And then as I look forward, those things are still there. And then I think we have an opportunity to continue to drive even better execution in the marketplace and even more margin expansion. Now that I've been here for 6 months. And so I'm really happy to be here with the West team.

Anna, I'll let you start with some questions.

Okay. Sounds good. And thank you, John. Thank you, Bob, for both joining us today. We really appreciate it, and we look forward to this conversation. But I thought maybe before we jump into 2026, we could just take a look back at what we've seen this year. I feel like we saw a bunch of dynamics, including vials starting to normalize. GLP-1 is accelerating, but you also have a customer loss on the contract manufacturing side. So do you think you could just level set with investors where we sit today and how you feel entering into 2026?

Yes. It's -- 2025 was a really, I think, really an important transitional year for the company. And as you look through kind of where we started the year versus where we ended we made a tremendous amount of progress. The second half of the year, we really started seeing the momentum on a number of different fronts come through. Not only on GLP-1s, but on our core business going forward.

And we exit 2025 with, I think, some really good momentum. At the beginning of 2025, we talked about a number of things that we wanted to get through. One is destocking on our high-value components business. We feel like we've gone through that. We talked about rectifying the economics around our SmartDose product. We exited this year with the announcement that we made in January a few months ago. of transitioning that business over to AbbVie. And I think that's a win for them and a win for us. And then we're in the midst of transitioning our contract manufacturing, the CGM business and really ramping up our drug handling business, which I'll actually have better economics going forward.

And so on a number of different fronts, I think we made very good progress throughout 2025, and we exited 2025 with a lot of momentum, exceeding expectations and actually demand was greater than our supply on our non-GLP-1 business. And so we sit here in start of 2026 with, I think, a really solid momentum, and I'm sure we'll talk about 2026 and kind of how we think about it. But really pleased with the progress that we have and I think a lot of those things are behind us, and we're really starting to see the business shine and what it's capable of.

Absolutely. That's really good insight on, kind of, what we've seen in 2025 and it seems like most of those headwinds are behind us at this point. But that brings us maybe to the 2026 guide. I think you guys are going to 5% to 7% top line growth. But I think there are a couple of conservative assumptions going into that guide. You mentioned the 50% GLP-1 growth in '25, I think you're guiding to 10% in '26. So, obviously, there's also the non-GLP-1 component we'll get into, but could you just walk us through your framework for setting your guidance and visibility you have today.

Yes. Yes. Thanks, Anna. And it's the beginning of the year. So I'd characterize our guidance as prudent to start the year. And that 5% to 7% top line growth. Really, there's a couple of components and the majority of that growth is actually going to be coming from our non-GLP-1 business. And so if we think of kind of just the midpoint of that guidance is 6%, 5% of that points are actually coming from our HPP business, which is -- will be over 50% of the total company, so call it, high single-digit, low double-digit growth there.

And to your point, we're baselining GLP-1 at 10% or 1 point of that growth. Now that's coming off a growth of 50%. Quite honestly, we'd be disappointed if that's all we did. That -- and so we have probably more bias to the upside from that standpoint. But we obviously also recognize there's a number of variables that are coming into play there with things like oral GLP-1s, and I'm sure we'll talk about those as well.

But we wanted to make sure that people understood kind of the underlying business is very healthy with the high single-digit, double-digit growth that's really driving that. And so when we think about that 10% oral GLP-1 growth, that's actually a much more aggressive impact of GLP-1 orals than what we're expecting. We still believe that by the end of the decade, it's roughly going to be 30%, growing both injectables as well as orals. That 10% would indicate roughly 40% to 50%. So a more aggressive or conservative forecast from where we think the numbers are and where we're planning. And so we think we're well positioned to come into the year with continued momentum, and we'll see how things play out, but we like where we're starting.

Yes, that makes total sense, and I think a smart way to frame the GLP-1 outlook. But you mentioned your non-GLP-1 business, I think that saw strong demand in 2025. So could you walk us through some of the drivers behind, I think, you're guiding to high single-digit to low double-digit non-GLP-1 growth in '26? And then I know you mentioned supply versus demand situation. So are you seeing more of that capacity ramp support that?

Yes. Yes. It's probably a good way to kind of take a step back and look at kind of how that progressed throughout 2025, as we were talking about before. In Q1 of last year, that was down double digits. It was down slightly in Q2. And then the second half of the year, both Q3 and Q4, we were up mid-single digits. So you saw that momentum throughout 2025, really show up in that non-GLP-1 business. we're forecasting high single-digit to low double-digit growth going into 2026. And the reason is a number of things.

One is actually, we are actually seeing demand stronger than supply. We saw that in Q4, and we are building additional capacity, adding more labor into our plant in Germany and Europe. And we think that, that will benefit us in the first half of this year. And then you think about kind of the ongoing products that are coming on market with the biologics, we exited 2025 with greater than a 90% participation rate for the products that were being approved. And then that capacity expansion is just kind of part of the story because we continue to actually be very positively benefited by Annex 1. And so at the beginning of last year, we said Annex 1 was going to be roughly 150 basis points of our growth. It ended up being 200 basis points, and we're expecting for another 200 basis points here in 2026.

And that's really taking products that are currently on the market and upgrading them to high-value products. So it doesn't really add more volume, it adds more value to our customers and so forth. And so when we look at the order book and the momentum that we have, as well as kind of the underlying drivers around biologics, Annex 1 and then we talked about GLP-1 before. We really feel good about the ability to kind of continue that accelerated growth in '26. And we talked a little bit about this in -- throughout 2025, ordering patterns suggest that, that's one of the reasons we saw the demand continuing to grow. We're expecting that to continue to happen here in '26 as well. So I think we're well set up.

Do you feel like Annex 1 is now starting to hit the demand side of the equation as companies comply and transition?

Yes. It's a good question, Paul. And we are seeing a -- what I would say is, it certainly has spread beyond Europe. For those who probably may be not as familiar, Annex 1, it was a regulation that required certain levels of particulate in contamination, lower levels of particulate in contamination, which required kind of higher levels of standard products from us. And so we've been on this journey of upgrading kind of standard products to HPP products. And while it was a European regulation, what we're seeing is other -- our customers adopting it for non-Europe uses.

And so I do think that it is something that is helping drive kind of overall revenues beyond just kind of that 6 billion unit opportunity that we have. And we think this is a multiyear opportunity, Paul and Anna, not just a kind of a onetime, one and done. And so when you take -- these are existing products and then you add on HPP and biologics, which are typically high-value products already, you've got a kind of a multiplier effect, which is pretty exciting.

And I think two follow-up questions just on that Annex 1. You mentioned -- you said 6 billion units. I think your standard value or your standard components, there's 25 billion units. So could you help us understand why 6 billion is the right way to think about it? And then -- oh, sorry.

Go ahead. No, no, go ahead.

I was just going to mention you said Annex 1 has spread outside of Europe. Is that a recent trend? Is that the back half of '25? Or when did you start seeing?

Yes. Yes. It's exciting. Sorry I was interrupting. I get so excited about Annex 1, I wanted to jump right in. Because I think, again, this is one that we're kind of uniquely positioned given our position in the marketplace. And so the 6 billion, think about -- your numbers are right, the 6 billion is really only the European opportunity. So the 25 million would be kind of our global number of standard units. Not all of the standard units would fall under the category of Annex 1 requirements. We do have some lower regulatory barriers.

But if you think about that, if you just looked at our revenue, you could say that the entire population, if the U.S. would go that way, could double that opportunity. So we do have kind of bigger runway. And to your point around the U.S., while there's not a specific regulatory requirement for this, what we are seeing is and we saw it throughout the course of 2025 and probably picking up through the back half is more companies being cognizant of it.

Actually, what we're seeing is FDA is when they were going in to do audits and so forth. They were calling this out as an opportunity for improvement in observations more than they had in the past, which will help accelerate some of that opportunity in the U.S. And then if you think about kind of the other events that are happening with more of the onshoring opportunities, what you want to have is kind of a standard process across both Europe and in U.S. And so we see a number of things that are kind of helping you create kind of a spillover effect into the U.S.

Now what could accelerate that is if, in fact, the FDA created a formal regulation. We haven't seen that yet. But we are seeing companies look to simplify their supply chains and have kind of one product across multiple products or manufacturing sites, which is actually very good for our business.

Seems like there's a lot of areas of upside to the Annex 1 assumptions just given everything you've been saying with onshoring.

Yes. We certainly think so, Anna. And one of the things that we've seen is that when we look at our pipeline, our pipeline of opportunities within this continues to grow. It's not something that's going to all happen all in one year. It really is somewhat dependent on. Because there is -- there are resources that are required from not only us but our customers to be able to demonstrate equivalents with the different procedures and processes with this -- it doesn't open up the drug master file per se. But it does -- they do need to do the appropriate level of testing and so forth. And these projects can last anywhere from 6 to 18 months. And so the nice thing about this is we believe that this is going to be a multiyear opportunity for us as opposed to kind of a one-and-done opportunity.

So the FDA, are you able to edit your drug master file and go to a higher-value solution. I feel like that would probably be an easier process than vice versa. Is that an opportunity?

Yes. It certainly is easier to upgrade than downgrade. It would be -- we don't see that for sure. I would say though that customers are generally hesitant to open up that drug master file just given -- particularly for something like this. And so what we do is we work to make sure that it's -- there is a consistency between the processes and so forth, so that there isn't any difference so that they don't have to do that as an amendment to the file as opposed to opening up the drug master file. And so that's kind of how that process is working.

And I just wanted to circle back on an earlier point you made about non-GLP-1 [indiscernible] '25. I think you said it was down in the first half, up mid-single digit in the back half. When we look at biologics, they're growing, I think, 10.5%. So what's the discrepancy between the muted first half you saw versus what we view as market growth? And is that just over spell of some destocking that was happening?

Well, there certainly was -- in the first half of last year, there certainly was still the remnants of destocking, and we saw that in kind of the non-GLPs. Our biologics, when you look at that aggregate that also includes GLP-1s, and so that certainly helped drive that. We were talking about the non-GLP-1 piece here. And if you looked at our HPP business in total, last year, it actually grew 9%. Now that was largely on the benefit of GLP-1.

But now what you're seeing is rather than the non-GLP 1s, which was roughly flat, maybe a little high across that. we're actually seeing that also contribute to growth, which is actually one of the things that's really exciting about 2026 and beyond.

That's great. And we touched on a couple of drivers. You mentioned Annex 1, but we're also seeing, obviously, biologics is driving growth, but biosimilars is starting to be a topic of conversation. So is that starting to show up in your revenue at all?

Yes. Yes. We -- when we talk about biologics, we actually include biosimilars into our numbers as well because they're largely the same kind of economics for us. when we talk about kind of a 90% kind of participation rate in '24 as well as '25, that also includes biosimilars. And so when we see more of these opportunities come down the pipe, it's actually a big benefit for us because what we just see as kind of the volume shift from maybe a branded to a biosimilar because we still have the same level of participation.

And the economics for us are generally the same. You don't see a biosimilar, kind of, downgrade to the earlier point that we were just talking about, their primary containment they're looking for the fastest way and the least risky way to get product on market. And so -- and we're still a relatively small piece of the overall COGS of that drug. And so what we see is a real opportunity there. First in -- across the entire biologic portfolio as some of those products do come off patent over the next several years, I think we'll continue to see traction. And then even in GLP-1s, where you're seeing outside the U.S., some opportunities for generics. So that's another area where we think we have an opportunity for -- we've put very modest growth expectations in 2026 there. And so we think that there's probably more upside than downside for the potential uptake of some of the generic GLP-1s in places like China, Brazil, Canada, et cetera.

Okay. That's very interesting. Thinking about the generics opportunity. I feel like usually just mentioned about biosimilars, but interesting point. And then maybe my last question on the non-GLP-1 part of your business, your core business is high single digit to low double digit, a good way to think about this business growing at just in a normalized environment.

Yes. We really do believe so. When we think about -- and there's a couple of things. We've obviously talked about Annex-1 at length. That's a big growth driver that we think will continue here to be able to drive just positive mix shift that will help the high-value products. In addition, the number of biologics that are currently being developed or in the clinical pipeline. That should benefit that as well and then you have underlying volume demand.

And so this high single digit, low double digit for HBP, non-GLP 1s, we're certainly guiding to that for 2026, but we think that that's a good way to think about that for a longer-term growth algorithm as well.

And maybe I think we've talked about the non-GLP-1 growth drivers. If we could just quickly pick on GLP wines. How much of your outlook, I think, 10% in 2026 is supported by these long-term contracts? And can these orders be canceled? Just trying to understand the structure of these contracts and how insulated you guys are?

Yes. That's a good question. And so I feel the underlying market demand or the -- what I would say, the customer demand, the way I would frame it is if we only did 10%, we'd be disappointed. I would say that the requests are higher than that. There is for -- we have high participation for the two largest players in the market today. There are an element of kind of take-or-pay or minimum volume requirements there. So if -- there is a change by molecule or what have you. We do have the ability to continue to get revenue.

And then what I would say is we've been -- when we think about our guidance here, one of the things that we've done is that, okay, we understand kind of the orals are coming in. We think we've taken a very conservative or prudent approach to kind of how that is. The data that we've seen continues to support the 30% or less kind of oral cat penetration. It's really bringing new patients to the market as opposed to switching from injectables to orals. Certainly, since the oral of Adobe has launched. We think that, that will continue that way so that both will continue to grow. You think about a couple of areas.

Medicaid, the pricing there, that really hasn't come into play yet. We haven't built a whole lot more access into our numbers. So we think that there's an opportunity there. And then if you look at even employer pay right now, roughly only 50% of employers are covering GLP-1s for obesity. And so as the price comes down, it will be more affordable to employers, certainly in the U.S. And so that should increase access. So volume should be a very good benefit, we should be a beneficiary of that volume.

So I kind of went in probably a little longer than what you said. We do have kind of minimum floors, but I think that there's also other things that are there that would suggest that those numbers could be better than the 10%.

Yes. That makes total sense. And we just hosted a GLP-1 panel, but it seems like volumes could even be higher than mid-teens. But it seems like your assumptions right now, you're assuming.

We'd all be happy. When and if that happens, we'll be happy to supply our customers with that incremental volume. We are planning our level, loading our capacity for higher than that number. Let me just put it that way.

And while we're on the topic, we have an investor question. Just about generics with GLP-1. So given we're seeing semaglutide rolling off patents rolling off in India, I think in the coming weeks then also China and Brazil in the coming months. Are you seeing any elastomer ramp-up for the generic GLP-1 launches? And are you exposed to generic GLPs.

We do participate with them. So we have a very good participation rate with the generic companies. And we have seen some of that. If you looked at our GLP-1 business just in 2025, just for reference, 90% of it was still branded, but roughly 10% was other than the two largest players, but that was the fastest growing piece, some of which -- a large piece of that is, in fact, preparing for the generics and so forth. So -- and we've not assumed an outsized growth there, but we are seeing the request and demand for that, and we're on those drugs for the large -- in large part.

Okay. So 90% was still branded in '25. Is that -- and that's where you saw the most growth? Or was that the non-branded?

The non-branded grew faster than the branded. And so -- and we would expect that -- certainly, there's an opportunity for that to continue as these products come on. So that is a real nice opportunity that we really only had very modest expectations built into our numbers.

I think Paul, if you have...

Well, CapEx is what this year? And what is maintenance now, do you believe?

Yes. So yes, we've continued to -- we had invested over the last couple of years pretty heavily. Our CapEx forecast for 2026 is $250 million to $275 million. About 40% of that would be considered maintenance and 60% kind of growth CapEx. That's down from -- I think we did $285 million and roughly $285 million in 2025. But if we think about kind of where we have capacity, we -- our capacity constraint that we were talking about in Europe, in our German plant has been labor. It hasn't been CapEx.

And so we'll continue to invest for growth across our business with a disproportionate part towards HBP, but we're also doing these tech transfers as well, working with our customers because, again, thinking about the onshoring. They want their products, some of these -- their supply chain closer to where they're manufacturing and so forth. And so we have the ability, we probably have more capacity in the U.S. than we do in Europe.

And so being able to work with them to transfer some of the products to the U.S. has the benefit of not only supporting our customers and lowering their tariff rates, but it also has the benefit of kind of level loading our factories even better. That's a multiyear kind of journey. But we expect to still be within that kind of 6% to 8% kind of percent of sales framework for the next several years, Paul.

I'm guessing that customer, it takes probably, what? More -- somewhere around 3 years to bring capacity online?

Yes. From their standpoint, yes, yes, because that's a good -- we have a good approximation for that, not only history, but also our own CM business, when we think about kind of the drug handling as an example, that's kind of back the back end. Our drug handling business is coming online. In fact, we are shipping commercial batches right now, but it's going to take us. It took us a couple of years to get that product planned up and running. And then we're saying that that's a $20 million opportunity here for our contract manufacturing business this year in '26. But that's not at peak. And so '27 and '28 will even be higher than that is probably going to be at peak 3-plus that potential. But that will take a couple of years to ramp.

And you've had some glucose monitoring contracts, obviously, they're rolling off and at a role of I'm assuming you're trying to fill that capacity over time, correct?

That is correct. Absolutely. Yes. And we -- we've got a number of opportunities that we're in discussion with. Nothing to kind of announced yet. But we're actively working to kind of fill that capacity as well as continue to look for opportunities in other places as well and gain new business. Drug handling is a perfect example.

Okay. And then one question we get, it's always a new one every other month, but it was auto injectors versus pens. So I think there's pen announcements, but our view on a pen, right, would be maybe a pen does last 4 weeks or a month. But that also includes -- could include the "elastomer and the plunger", right? It's two components in a pen, is it not? And then...

That's correct.

What are your thoughts about this trend of pens or is it...

Yes. So we think it has the opportunity, first of all, where we are in the GLP-1s business, it's so underpenetrated today. We expect both will grow. So we don't think that this is going to be one or the other. You're absolutely right, Paul. There's two components in a multidose pen versus an auto-injector or a single dose pen today. We -- and in the U.S. the auto injectors are so ingrained. We do think that there will be some transition, but it will happen over time.

It's not going to be an immediate. And as we expand market access, there's an opportunity for both of those things to really grow. For all the reasons that I was just talking about in terms of whether it be Medicaid, employer pay, the reduction in price and all these things, I think, have the opportunity to do that. And so -- and then I would just say the last thing, they're currently bound by capacity constraints. So there was a tremendous amount of capacity that was being built sterile to finish as well as kind of the production capacity of the auto injectors and pens, that installed capacity is not fungible, unlike our business with elastomers where you can move products from it.

That is an auto-injector. You can't move that product to make it a multi-dose pen. And so there is a multiyear kind of ramp up to just to get to the capacity that we have in auto-injectors in the U.S. as well. So we think that there will be multiple formats of this, and we will participate on both auto injectors as well as multi-dose pens. And we don't think it's an either/or, it's either or demand.

Right. And then Lilly announced this $3.5 billion program in Lehigh Valley, your backyard, basically. When do you think a company like that would start to have discussions with West about things they need from you? Is it three years before they have a facility build or one, what is the time line out of curiosity?

Yes, it is for a company, we have good discussions with them. and to have good ideas of kind of what they're building in a factory like that already today. So we'll have some of those discussions early on as part of their overall kind of demand planning and helping us make sure that we have the demand and the capacity to help support them when their factories are coming up.

And so for us, when we do have to add new equipment, it isn't like we can just add equipment. It does take 18 to 36 months -- or 18 to 24 months to mature the equipment and install and validate. So we do need some lead time. And companies like Lilly are great partners for us and help us with understanding of how we need to level load our factories. And that just speaks to the ongoing demand of injectables, not only in the U.S. but around the world. So we're excited to help support them on that journey.

With that, we are out of time. Really appreciate your time, John, Bob, thank you very much.

Thank you, Paul. Thank you, Anna.

Thank you.

Great. Good morning, everybody. I'm Luke Sergott, I cover Life Science Tools Diagnostics here for Barclays. With me, I have Eric Green, CEO; and Bob McMahon, CFO; and we have John Sweeney over there as well. So I guess we can just kick off. You guys a little bit of -- a little press release last night.

So just kind of walk us through the decision, the strategic plan here and how you feel like you're leaving the business off to the next generation, if you will.

Excellent. Thank you, Luke. And again, thank you for the invitation for Bob and I to participate today at the health care conference, fantastic venue and turnout. Yes. Last night, we had a press release. It was to describe my intent to retire once we have identified the right successor for West going forward. I had the honor to be the CEO of this great company for the last 11 years, and it's been a personal decision on the next stage of my life.

Timing was important for me personally because you come really close to the organization, but it's the right time when you think about West is in a very strong operating position in the market. I think our strategic direction that we're going is extremely clear and it's informed by the macro trends that are occurring in the industry. And again, we're very well positioned for that. And third, I have to really say that we have a phenomenal executive leadership team that's been in place.

We've finalized it last year. Obviously, my colleague to my left here, Bob has been added to that list. And we do have a very, very strong team that can continue to execute for a number of years to come. So it was the right timing. And also, we wanted to make it public working with the Board so that we have the best opportunity to bring in the next leader, the seventh CEO of West for this fantastic organization. So I will be here clearly full pedal down until we have a successor appointed and smooth transition, and then we'll go from there.

Okay. And internal, external both on the table at this point?

Well, we are going to engage with the external executive recruitment firm, and we'll be looking at this holistically, taking the opportunity to see what's in the marketplace today. So I think we're taking the right approach.

Great. Great. And on those macro drivers and kind of where you're leaving the business right now, significant GLP-1 ramp across the market, the elastomer business, high-value components, right? You just have a lot of good growth drivers right now with biologics coming back, biosimilars, there's -- like I said, there's a murderers row of good things coming from a tailwind perspective. But as we think about the near term and some of the noise or headwinds that we always get asked about like orals on the GLP-1s, given they're sizable of your business, plus the shift to the multi-dose side, like walk us through how you see and think about this stuff longer term playing out within the next 2 or 3 years?

Yes. Well, first of all, I'll start and then Bob can add.

Yes.

I think we want -- we need to stay the course. So you absolutely articulated very well. The macro trends you think about IV to subcu, we're very well positioned. They're not just in the wearable space, but the auto-injectors and multi-dose pens because our components are necessary for those devices to function properly, the primary containment.

You think about the rise of biologics and biosimilars, we benefit West here in that category with over 90% of new approvals. West participates on those new approvals. You think about the onshoring effect that's happening in North America. There isn't a another firm in the space that has the footprint we do to build, support our customers across the whole globe with our 25 manufacturing plants.

And then also think about the rise of the GLP-1s. In our criticality of West to participate in multiple modalities, whether it's in a vial, auto-injector, multidose pen configuration, we participate in all and above, right? So to start off, the macro trends are very favorable for us. These are long-term trends that we can drive.

I think specifically around the GLP-1s, we're in a very formidable position. We're able to support the current customers in the marketplace. We do think that's more -- that growth we'll see into the end of the decade to build support because the market is still new. It's still growing. Orals is bringing new patients into the market. So the market is expanding with orals versus cannibalizing, we believe. We also hear that publicly from our customers. So we're very well positioned to support that growth. Bob, do you want to add?

Yes. The only thing I would say is, as you think about the clinical pipeline for GLP-1s, there's a lot of exciting opportunities that are continuing to come. We're really in the first generation of these products right now. And so as we think about throughout the course of the rest of this decade, we are expecting GLP-1s to continue to be higher than the company average growth. Now not at what we had in '25. But what we're seeing is a kind of a convergence to that HVP growth rate of high single digits, low double digits.

And given the penetration, the increasing access today as well as the upcoming biosimilars and generics, we think there's going to be a significant expansion of market opportunity for GLP-1s, and then you couple that with all the other growth drivers that Eric was talking about, including things like Annex 1 as well, we feel we're very well positioned.

And as that market expansion, as you think about like GLP-1s going generic in pretty sizable markets, let's just say, put it lightly. How are you guys thinking about like where are you positioned there? Is that your HVP components? Or is that going to be standard components just as you're thinking about the generic opportunity?

Yes, it's interesting in the biosimilar space in generics, many of the new approvals are used in our HVP portfolio, and -- which is exciting for us. So as you think about the biosimilars for the GLP-1s, particularly you think about China, India, Canada, Brazil, I think now in Turkey. These are all markets that we play in. So the expectation is for us to continue to have participation.

We can leverage our existing assets to be able to manufacture those products, very similar to the branded GLP-1s in the marketplace, and we do have the capacity and capability to support our customers in that. So it's an additional growth driver for us in that category.

Okay. And as you see that playing out from a single-dose versus multi-dose, how do -- like -- I guess how do you see that playing out, I guess, is the question?

Yes, we see that it's historically multi-dose is quite prevalent in the European markets, not as so much in the North American markets. Just to give you a little bit of background, we do have great lens on what type of delivery devices are being used in the market because of our contract manufacturing business.

As you recall, we have expanded significantly in Grand Rapids, Michigan. We also expanded in Dublin, Ireland just for those types of products. These are installed capacities are on auto-injectors and multi-dose pens. So we have a lens, and they take about 2 to 3 years to get the assets up and running and start commercializing.

So as you think about the next 3, 4, 5 years, we do have a lens what type of demand is starting to be installed. So there will be some multi-dose pens in North America, but it's -- the auto-injector will be the dominant delivery device, we believe, for the rest of this decade.

Okay. And then from a demand or order perspective, like how much lead time do you guys need outside of the contract manufacturing. So if you're coming out and is it like do they order with you every 2 twice a year? Or is that like almost as a just-in-time basis?

Yes. In the GLP-1 space, specifically, it's pretty consistent with other therapeutic classes with other drug companies, particularly the larger blockbusters. We have a lens of multiple years, but then we have ongoing regular monthly, sometimes weekly discussions adjusting forecast. So our lead times could anywhere between 10 to 14 weeks for manufacturing of high-value products, sometimes a little bit longer. So all that's taken into consideration when we will look, book with our customers. So there is -- but that conversation is active.

It's dynamic because the portfolio of our customer might shift from one molecule to the next, but still in the same category, and we're able to pivot and support them as we go forward. But overall, the demand continues to increase.

I think the other thing, Luke, that's important and exciting about our manufacturing footprint is our assets are fungible. And so you have the ability to pivot products in the manufacturing facilities depending on what our customers need. And our customers also know that it takes 2 to 3 years to get a piece of equipment up and running.

So we do have those long lead time. They're not POs, but forecast. They help us inform what our capital forecasts are going to be looking like as we look at our manufacturing network. But then on a more frequent basis, we do have those updated supply plans, and we're able to move things around to manage and ensure that we're delivering to our customers.

And with that in mind, I mean, on 4Q, you guys had a little bit of an issue from the supply-demand dynamic, particularly in Europe. Kind of walk us through what the issue was? And is this like something that -- basically, is there a risk that some -- because they weren't able to supply it, like a secondary supplier or tertiary came on and kind of ate that share? Are you going to get that back?

Yes, I'll start with the latter part of the question first. No, there's low risk because we are working with our customers and making sure that we can adjust our lead times or deliveries to support their campaigns. But you're absolutely correct. We -- in 2025, we started to have a bottleneck in our German plant. And it was really around labor, not assets because as you think about the destocking effect that happened after COVID, we actually adjust resources appropriately, and now we're back up in the ramp-up phase.

So I'm actually quite pleased on the momentum we have coming in -- with new labor team members coming on site in our facilities. But we're also seeing demand increase outside of that particular facility into other high-value product locations, both in Europe and the United States. So it really is a labor planning perspective. It was a faster ramp-up of demand than we anticipated in 2025, which we're working through as we speak today.

Yes, I was going to say, I think that's the important piece. When you look at what that plant was able to deliver in Q4 versus Q1 of '21 -- or excuse me, '25 was significantly higher. So we have been ramping capacity. It's a good problem to have, I guess, demand has increased even faster than supply. So we're actually adding additional resources into that plant in order to satisfy that demand. And as Eric was mentioning, that demand is still in our order book. We expect that to normalize throughout the course of 2026, and it's not going -- it's not lost business. It's just a greater-than-expected backlog coming into 2026.

Okay. And at what point are you going to need to -- because obviously, if demand just keeps coming up faster than what you're forecasting, you might need to invest a little bit more CapEx in the facility. Like talk about kind of the runway you guys have there?

Yes. I think if you look, particularly in our high-value product plants, this is where most of the demand is coming in at a faster clip. And we do have capacity from an asset perspective in the HVP processing. That's pretty much -- what you're seeing is 2 effects here. One is we already anticipated the biologics and biosimilars ramp up. Then you have the GLP-1 ramp-up, but also the Annex 1, which is relying more on our HVP finishing processes. And so a lot of the assets are in place.

We believe, based on the new capital allocation plan that Bob and team have rolled out is that we believe we are comfortable at the 6% to 8% of our sales corridor for capital expenditures for our facilities, and this portion of that is going to be in our high-value product components. And the way to think about it is roughly around 60% to 70% of that spend is going to be around growth orientation, and the delta is around infrastructure and maintenance. So I think we've talked about how we had significant investments over the last 3 or 4 years, particularly around the COVID period of time.

As Bob mentioned earlier, a lot of those assets are fungible. While they were with the COVID vaccines, now the HVP processing is able to used for Annex 1 for biologics, biosimilars and also GLP-1s. So we do have head space with our capacity. The constraints more recently has been around team members or labor, and which we're normalizing at this point in time. But we do believe that corridor of 6% to 8% will have a comfortable growth to ensure that we get that long-term growth construct we talked about.

I think the other thing, Luke, as we think about kind of -- if we take a step back and look at what's happening in the macro pharmaceutical industry, what we're seeing is actually a lot of onshoring, moving out of places in Europe into the U.S., and we actually have more capacity in the U.S. And so we're actually working with our partners and the customers on actually what we call a tech transfer. So actually moving some of the formulations out of Europe into our U.S.-based plants that does 2 things. One, it helps reduce tariffs and do the local for local, which is what our customers really want, and it helps to level load our capacity.

And so we think we're well positioned to be able to do that. We'll always continue to invest in capital expansion, but I don't see -- foresee a huge capital expansion like we saw during COVID, at least in the next several years.

Great. And then thinking about ex GLP-1 -- sticking on the high-value components piece here. After all the destocking, that's really started to come back, strong exit to the end of the year. And as you think about it, and how that factors into your overall guide, it seems like there's a little bit of conservatism considering the 4Q jump-off point. So just kind of walk us through the puts and takes that you guys are baking in there from an upside downside perspective?

Yes. We would call our guide a prudent to start the year, but we are entering 2026 certainly with momentum. When we think about the growth rate of 5% to 7% on the top line, at the midpoint, most of that growth is going to come through our HVP components business, which is our most profitable business as well and fastest-growing. 80% of that growth is really the non-GLP-1 business. So we feel good about the opportunities there.

As we think about kind of where we're set up, we have probably more bias towards the upside, particularly on GLP-1s. We talked about at that midpoint, GLP-1s only growing 10%. That would be a significant step down. And quite honestly, we're expecting more than that. And so I think we're in a good spot from that standpoint. We continue to see that demand grow in our non-GLP-1 business which is good to see. And then we're expecting continued performance in the rest of our business as well. And so I think we're set up well to continue to execute here in 2026 and have a good year.

And as we walk down the P&L, I'm thinking about the margin side, considering that ramp or kind of sustainability...

Yes. The beauty of the business today is our high-value products helps with product mix, as I mentioned. So we've built into our guidance greater than 100 basis points of margin expansion. Some of that as a result of -- in the second half of the year, the divestiture of the SmartDose business. But a lot of it is also just the fundamentals of mix and then being able to fill the factories. And so the nice thing is as you get more product through these factories, given the fixed asset base, it actually drops to the bottom line quite nicely.

And on the SmartDose sale, you're talking about that being in the second half. You walked through the strategic optionality and like full review on that one. Kind of walk us through why better as a sale, it couldn't -- from a margin perspective, is it just -- you couldn't get it up to where you guys needed? And then we kind of assume basically if the sale happens, let's say, June 1, like right into the second half, probably about a 20 basis point tailwind to margin, if we're thinking about that right for the year?

Yes. For the full year, it would be closer to the 40% to 50%, or 50 basis points in the second half of the year. So your math is good as you know.

Yes. And let me add to this. The strategic rationale, what we looked at, beginning of the year 2025, we had 2 key messages that we were saying about SmartDose 3.5. That's one, the team was to drive cost out of the system and really improve the profitability of that product. They actually made some significant progress. I'm very proud of what they have accomplished, whether it's through more lean initiatives that are put into the site, more automation, higher quality, higher yield. It was a very, very strong presence and movement in the right direction.

Now when you think about the market itself for the 3.5, it is a limited market. The wearable market is actually much larger, but it's the larger -- when we talk about IV to subcu, you're talking about larger volumes, and the 3.5 is limited based on its size. So 3.5 represents 3.5 mls as max. And so you start thinking about auto-injectors and other delivery modalities that start encroaching on that. And so we have a very -- we had an important customer with significant patients on the device.

We want to make sure that we are able to support those patients, ongoing patient adherence, patient adoption and user -- ease of use was very high. And it's proof of point that these wearables are actually going to be part of the future in the market. So we made the strategic decision as best to be able to divest this for our customers and now focus on larger scale, but with all the learnings that we've had over the last 10, 15 years of the previous products. So we do have new technology focused on a larger -- much larger scale, larger market, more customers, more molecules that are in the marketplace today. And we'll continue, but we'll be very focused on making sure it's the right economics for West. We're not going to repeat what we have done in the past.

That's great. On the -- I want to talk about -- a little bit about the standard products. And like as we're thinking about strategic rationale across the different businesses. I understand that that's -- that's the legacy business that you foothold into the lot of the door. But as HVP components and Annex 1 and all these other regulations start rolling out and pretty soon, HVP components are just going to be your standard components. And so as I think about from a time perspective of when that becomes very [Technical Difficulty] ultimately, is there a strategic reason to even keep that business at that point? Or...

The short answer is yes. But you're absolutely correct that there will be a natural transition from the standard products to HVP and to supplement that is our innovation, our R&D group is focused on the next generation, which will elongate the curve for HVP components that we provide in the market, plus we're obviously getting to a total combination device like Synchrony, but its recent launch, we'll put that to the side for right now. But the whole thesis of elongating the high-value product portfolio in the spectrum and more added services and capabilities with those products. But getting back to the standard products.

If you think about it in the proprietary area, the elastomers and primary containment, about 70 -- a little over 70% of the volume is standard products. The delta is high-value products. But from a revenue point of view, it's inversed. And so you can't assume that 100% of the standard will become high-value products. There's several products in the marketplace that aren't -- they don't have the regulatory aspect to it as we've been talking about Annex 1. But majority do. And so this Annex 1 regulation change, regulatory change has been one catalyst that we think will be multiyear and will expand.

So what we're seeing today is out of about 25 billion, 26 billion components we produce that are standard products, roughly around 6 billion of those components are really targeted as great candidates to transition to HVP. To remind everyone, these are existing drug molecules in the marketplace today. And so as we transition to whether it's in vision inspection, washing, sterilization, what that does for us, it keeps the original formulation on the drug molecule. So we don't have to reopen with our customer, the whole FDA file.

And therefore, it's an easier transition, but it does create better economics for us, higher quality for our customers and allows them to keep the drug on the market much longer. So yes, as regulations change, as our customers looking at the global aspect of their portfolio and not try to earmark just for the European region, you'll see that 6 billion become larger -- right now, we're roughly just slightly over 10% of that 6 billion has been converted into commercial revenues as we speak today. But the -- so there's a long runway ahead of us. And we're ready to take this on because we have the assets in place, particularly around our HVP processing.

And last year, last minute, I would say. As you think about -- and just going back to your '26 guidance, just thinking about that roll on, it's more about as the drugs get approval, it's just going to be a slower burn. But can you remind us what happened because we haven't seen a lot of approvals right now in the first quarter of the year, right? So -- and there's a thinking that you're actually going to see this kind of maybe weigh on your growth trajectory for the year.

And remind us what you have baked in from a guide perspective. How meaningful are like the mid-single-digit type approval growth that we've seen in the past for -- to hit your guide? Or is that more of just an out year like this kind of continues? This is going to be more of a headwind to the out year?

Yes. One thing to take a look at, I'll start here and Bob want to add is that if you think it's focused on the biologics, biosimilars, the number of approvals last year were 55-plus there, and our participation is very, very high. We're still -- that's still very healthy. So we're really confident, but that's more long term. It takes a while for that to ramp up, but I don't know if you want to...

Yes. I was going to say our -- Luke, our guidance for 2026 has been independent on the number of approvals I think that's more of a long-term opportunity for us. And as we think about it -- and again, it's not just the U.S. We have to look globally because we are the global leader there as well. So we feel well positioned.

Yes. That's okay. Had to ask it. Thanks. Excellent.

Thank you.

Thanks, Luke.

Good day, and thank you for standing by. Welcome to the West Pharmaceutical Services Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that today's conference is being recorded.

I will now hand the conference over to your speaker host for today, John Sweeney, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to West's Fourth Quarter and Full Year 2025 Earnings Conference Call, which is being webcast live. With me today on the call are West's CEO, Eric Green; and CFO, Bob McMahon. Earlier today, we issued our fourth quarter and full year financial results. A copy of the press release, along with today's slide presentation containing supplemental information for your reference, has been posted in the Investors section of the company website located at investor.westpharma.com. Later today, a replay of the webcast will also be available in the Investors section of our website.

On the call, we will review our financial results and provide an update to our business and outlook for FY '26. Statements made by management on the call and the accompanying presentation contain forward-looking statements within the meaning of U.S. federal securities law. These statements are based on our beliefs and assumptions, current expectations, estimates and forecasts. The company's future results are influenced by many factors beyond the control of the company. Actual results could differ materially from past results as well as those expressed or implied in any forward-looking statements made here. Please refer to today's press release as well as other disclosures made by the company, such as our 10-K and 10-Q, regarding the risks to which the company is subject.

During the call, management will make reference to non-GAAP financial measures, including organic sales growth, adjusted operating profit, adjusted operating profit margin, free cash flow and adjusted diluted EPS. Limitations and reconciliations of non-GAAP financial measures to the most comparable financial results prepared in conformity to GAAP are provided in this morning's earnings release and today's slide presentation.

I'd now like to turn the call over to our CEO, Eric Green. Eric?

Thank you, John, and good morning, everyone. Thanks for joining us today. I'm pleased to report we delivered another solid quarter, with fourth quarter revenues, adjusted EPS and cash flow coming in above our expectations.

Before I get into the details of the quarter, I would like to take a moment to reflect on what we accomplished in 2025. We returned to growth and had many notable achievements. Our performance in the year underscores the effectiveness of our growth strategy and our team's relentless focus on execution to deliver for our customers, and we enter 2026 with momentum. Our company surpassed the $3 billion mark in net sales, achieving year-over-year organic growth of over 4%. We also expanded operating margins, delivered 8% adjusted earnings per share growth and grew our free cash flow by 70%.

Our growth was fueled by increasing demand for high-value product components as we continue to meet the evolving market and customer needs. Our growth in that business is driven by 3 key drivers: the rise of biologics and biosimilars, the increase in global regulatory requirements, such as Annex 1, which continued to drive HVP conversion and the expanding GLP-1 market. These are long-term secular growth drivers that we believe West is uniquely positioned to capitalize on.

We continue to address the needs of our customers through scientific support and innovation. A recent example is the launch of the West Synchrony prefillable syringe system. Synchrony marks a significant shift in drug delivery solutions by offering a full verified platform from a single supplier. Designed specifically for biologics, this system sets up a new standard in drug delivery by accelerating syringe selection through its comprehensive performance and regulatory data packages.

In early 2025, we announced our intention to conduct a comprehensive evaluation of the SmartDose 3.5 ml business. After our portfolio review, we announced last month the sale of the business, which aligns with our ongoing commitment to our customer development pipeline and patient-centric approach for large on-body delivery devices to drive durable and profitable growth. We expect to close this transaction midyear.

For our Contract Manufacturing segment, we continue to scale up operations in Dublin for drug handling. And I'm pleased to announce that just earlier this month, we commenced commercial production on this program. This remains an exciting and long-term growth opportunity for the CM business.

Finally, we strengthened our executive leadership team in 2025, with 5 out of the 10 members having joined in the last 12 months. This seasoned leadership team is already making meaningful contributions to our organization.

With that, I would like to turn to the fourth quarter performance. Revenues of $805 million exceeded our expectations and were up 7.5% reported and up 3.3% on an organic basis. Adjusted operating margins in the quarter were 21.4% and adjusted EPS of $2.04 was up 12% compared to prior year. Free cash flow in the fourth quarter was $175 million, more than double the prior year level.

Let's take a closer review of each of the business segments. First, HVP Components in our Proprietary Products segment, representing 48% of our company's total net sales and continues to be the primary driver of revenue growth and profitability. This business grew over 15% in the fourth quarter and was up 9% for the full year of 2025. HVP Components have been tracking on a strong recovery throughout the year to align to the market demand. This business is a key differentiator for us because of our quality, scale and technology. And once customers are specked into our products and reference our drug master file, there is a dependency there that makes it highly unlikely that customers will change partners.

Growth was led by strong GLP-1 performance and continued recovery in our non-GLP-1 business. We continue to see increasing demand in this business and continue to ramp capacity. Bob will talk about our outlook in more detail, but we're expecting 2026 will have a more broad-based growth profile, driven by our non-GLP-1 HVP Components growing high single digit to low double digits.

Moving to HVP Delivery Devices, which represents 14% of our sales. As expected, fourth quarter revenues declined compared to prior year, driven by the incentive payment we received in the prior year quarter. However, performance was better than we expected as we saw strong growth in Crystal Zenith and an improvement in admin systems revenue growth.

Standard Products, which represents 20% of our business, declined 1.7% on an organic basis during the fourth quarter. Standard Products are an important funnel as we convert Standard Products to HVP Components over time, which provides incremental value to our customers and generates incremental revenue and margin expansion for us.

And lastly, Contract Manufacturing revenues increased 1.9% organically in Q4. As I mentioned, we commenced commercialization of our drug handling business at our Dublin facility, and we expect this ramp up throughout 2026. Our drug handling business is more profitable and less capital-intensive than the legacy contract manufacturing business.

Moving into 2026, we have robust momentum as we are well positioned to advance our strategy supported by our growth drivers of biologics, Annex 1 and GLP-1s. In biologics, inclusive of biosimilars, we continue to have great success partnering with our customers early in the pipeline, resulting in a strong participation rate of greater than 90%, which is a key indicator for future HVP Components revenue growth for this market.

For Annex 1, we're well positioned to support our global customers' contamination control strategy and container closure integrity requirements, outlined in the European regulations that were adopted in 2023. For West, this is a multiyear opportunity of currently 6 billion less components to be upgraded that support on-market injectable medicines. I'm pleased with the progress to date, with over 700 Annex 1 projects initiated, over half of which have been completed and now generating revenues. This represents less than 15% of the 6 billion components. We completed 65 projects in Q4 of 2025. With 325 Annex 1-related projects currently underway and more in the pipeline, we anticipate these projects will drive additional revenue growth in 2026 and beyond.

Now let me spend some time on oral GLP-1s and injectable formats. GLP-1s will continue to support our growth in 2026. As many of you are aware, oral GLP-1s have entered the market, and I want to share our view on their potential impact on the overall market. To provide context, I'd encourage you to listen to publicly available remarks from the 2 leading companies that are producing GLP-1s and their expectation that orals will expand and not substitute injectables in the marketplace. Both companies have noted that 8 of 10 patients using oral GLP-1s are new to the market, suggesting that orals will not cannibalize the injectables market, and that several new injectables are about to launch.

We expect growth from GLP-1 elastomers in 2026 and beyond for the following reasons. First and foremost, the adoption of GLP-1s is still in the early stages, with penetration of potential patient population in the low single digits by many estimates. Market access is continuing to expand, driving volume. The available clinical evidence continues to show meaningful efficacy advantages for injectables. Historically, oral formulations show higher rates of GI adverse events and treatment discontinuations than injectables.

With regard to auto-injectors and multi-dose pens, we believe that there will be multiple injectable formats based on customer preference. We expect any mix shift will happen over multiple years, given the installed capacity and investments that our customers have already made. The upcoming launch of injectable GLP-1 generics in Canada, China, India and Brazil represents incremental business for us.

In addition, there is an exciting clinical pipeline of GLP-1 molecules in development for obesity, diabetes and other metabolic conditions. While many of these GLP-1s that are similar to what's currently on the market today, there are also new combination molecules, which potentially offer increased efficacy, improved tolerability or therapeutic benefits for adjacent comorbidities.

Finally, there are a number of exciting new GLP-1 molecules serving indications other than obesity and diabetes that are projected to come on the market over the next several years. These include MASH, sleep apnea, chronic kidney disease, heart failure, pediatric obesity and cardiovascular risk reduction, with 5 of these 6 indications being treated exclusively by injectables. These indications represent potential multibillion-dollar therapeutic class. As a result, we continue to believe that both injectables and oral formats will continue to grow.

Let me turn to our operations. With our strong reputation for quality, scale and operational excellence, we are poised to capture growth from these 3 key drivers as we leverage our global manufacturing network. We are actively hiring and training employees who are installing and operating new equipment to optimize our European facilities and respond to strong customer demand. We utilize tech transfers to help our customers balance production across the network, enabling West to drive future growth. We entered 2026 with momentum and are starting the year with guidance of 5% to 7% organic revenue growth and 10% EPS at the midpoint of the range.

Now I'd like to turn the call over to Bob to discuss the financials and guidance in more detail. Bob?

Thanks, Eric, and good morning, everyone. In my remarks this morning, I'll provide some additional details on Q4 revenue and take you through the income statement and some other key financial metrics. I'll then cover our full year 2026 and first quarter guidance in more detail.

As Eric mentioned, we exceeded our expectations in the fourth quarter with revenues of $805 million. Q4 revenue increased 7.5% on a reported basis and grew 3.3% organically. As we mentioned last call, Q4 of '24 included a $25 million nonrecurring incentive fee, which reduced our organic growth in the quarter by 360 basis points. So a very good result to end the year.

Now a few more details on what drove our growth in the quarter. Our HVP Components business was a standout, delivering $390 million in revenue and growing 15.1% organically. This was driven by robust growth in GLP-1s, HVP upgrades, including Annex 1, and overall continued improving performance in biologic revenues. The business outside GLP-1s continues to recover nicely, growing mid-single digits in the quarter, while demand outstripped our supply. As Eric mentioned, we continue to ramp capacity and expect stronger growth in 2026.

In HVP Delivery Devices, revenues were $110 million in the quarter and up $11 million on a sequential basis. The quarter was down 18.1% year-on-year organically, driven by the incentive fee in the prior year. Excluding the incentive fee, revenues would have been up slightly in the quarter.

In Standard Products, revenues of $162 million were down 1.7% on an organic basis, partially driven by Annex 1-related conversion to HVP Components.

And lastly, our Contract Manufacturing segment delivered $143 million in revenue, growing 1.9% on an organic basis. Segment performance in the quarter was driven by an increase in sales of self-injected devices for obesity and diabetes, partially offset by a decrease in sales of health care diagnostic devices. And in the quarter, our CM segment revenue and profit performance was negatively impacted by a temporary production disruption due to a burst water main at our Arizona facility. The facility is back up and running, and we expect CM to return to mid- to high teens profitability in Q1.

Now let's take a closer look at the rest of the P&L. Overall gross margin was 37.8% in the quarter, up 130 basis points year-over-year. This strong result was due to the positive mix impact of HVP Components growth and better-than-expected performance on our HVP Delivery Device business outside of SmartDose. This proof point demonstrates the earnings power of our business strategy as we continue to upgrade customers to our high-value products.

Adjusted operating margins of 21.4% were down 30 basis points compared to the prior year as we increased investment in R&D and add higher incentive compensation year-on-year. And below the line, net interest income was in line with our expectations, and our tax rate came in at 18.9% for the quarter, slightly better than expected. And we had 72.7 million diluted shares outstanding in the quarter. Adding it all up, Q4 adjusted earnings per share were $2.04, up 12.1% versus last year and $0.20 above the midpoint of our guidance we gave on the last earnings call.

Before moving into 2026 guidance, I did want to highlight our cash flow performance. In the quarter, we delivered operating cash flow of $251 million and our full year operating cash flow was $755 million, up 15.5% compared to the prior year. This is a very strong result and a testament to the West team. We are also continuing to drive increased efficiency in our capital spending. Capital expenditures for the year of $286 million are down $91 million year-on-year. And we expect another step down in 2026 to a range of $250 million to $275 million as we move back to the construct of spending 6% to 8% of sales in CapEx. A combination of strong operating cash flow and the lower CapEx drove free cash flow to $469 million for the year, up 70% year-on-year. And we ended the year with $791 million in cash on our balance sheet. So in summary, we had a very solid fourth quarter that exceeded our expectations, and we're entering 2026 with momentum.

And now let me talk about our initial guidance for 2026. Before getting into the numbers, I want to highlight a few important factors that help frame our thinking in setting our guidance. First, we anticipate the injectable market to continue to improve throughout 2026, driven by the underlying trends Eric talked about earlier. In addition, we've assumed the tariff landscape will remain at the current levels globally, and we have effectively covered that impact. And we are assuming that we will close the SmartDose transaction midyear. To help you with your models, we generated $55 million in SmartDose sales in the second half of 2025, and we have adjusted our full year 2026 expected organic revenue growth to account for these revenues. That said, our end markets remain dynamic, and we could see a range of outcomes. So we're being prudent with our forecasting to start the year.

Now let's get into our full year guidance. For the year, we anticipate revenue to be in the range of $3.215 billion to $3.275 billion. Reported growth is 4.6% to 6.5%, and with FX and the SmartDose adjustment roughly offsetting to get to our organic growth range of 5% to 7% for the year. From a segment perspective, we expect HVP Components to be the primary driver of our revenue growth. We expect this segment to grow high single digit to low double digits organically for the year, accounting for just over 5 points of total company growth at the midpoint of our guidance.

Given the focus of GLP-1 elastomers, we thought it would be helpful to provide some additional details on how we established our initial guidance framework. First, we expect the non-GLP-1 HVP Components to drive the majority of growth, accounting for 4 of the 5 points of growth. This is driven by continued recovery in the biologics market, where we have a very strong position, Annex 1 HVP upgrades, which we expect to deliver growth in line with 2025, ramping capacity and price. We continue to expect GLP-1s to grow in 2026, albeit at a slower pace than in 2025.

To get to our midpoint, we'd expect GLP-1s to grow roughly 10% year-on-year to deliver that [ 1.0 ] growth. To put this in context, this represents a greater than 30% oral GLP-1 penetration by 2030, which is more aggressive than our current expectation. And to frame the low end of our guidance, GLP-1s would need to be flat in 2026, which we view as unlikely, for all the reasons Eric talked about. And it's important to note, this would free up some capacity, which would be absorbed by our non-GLP-1 business, so the impact to overall growth would not be a full point reduction.

To help round out the rest of the proprietary business, we expect mid-single-digit growth in HVP Delivery Devices after accounting for the SmartDose divestitures, and Standard Products to be roughly flat for the year. We also expect CM to be flat for the year as drug handling revenues of $20 million and other program growth will help offset the CGM contract that we exit starting in July of this year. We expect to expand margins over 100 basis points, with margins increasing over the course of the year, driven by HVP Components and the SmartDose divestiture. Adjusted earnings per share is forecast to be between $7.85 to $8.20, representing double-digit growth at the midpoint.

And lastly, a few below-the-line items to help you with your models. We are assuming roughly $10 million in net interest income, a 20.25% tax rate for the full year and 72.7 million diluted shares outstanding for the full year.

Now moving on to our first quarter 2026 guidance. We expect first quarter revenue in the range of $770 million to $790 million. This is a reported increase of 10% to 13% and an organic increase of 5% to 7%. And we expect first quarter adjusted diluted earnings per share in the range of $1.65 to $1.70, up 13% to 16% year-on-year.

We exited 2025 in a good place, and we are seeing positive momentum to start the year, driven by our key growth drivers, and we are optimistic about the future.

Now I'd like to turn the call over to Eric for some closing comments. Eric?

Thank you, Bob. To summarize, the solid financial performance reported today continues to affirm that our growth strategy is working. As we build our momentum in 2026, we have a strong business which delivers unique value to our customers. We remain laser-focused on our critical growth drivers. For the long term, the macro trends support West's growth as a global market leader in the injectable medicine space. Finally, I want to thank our West team members for their commitment and hard work, which allowed us to achieve these strong results.

Operator, we're ready to take questions. Thank you.

[Operator Instructions] Our first question coming from the line of Michael Ryskin with Bank of America.

Great. I appreciate all the color you guys gave on GLP-1. That was really helpful in terms of framing it both for 4Q and 2026. But I want to dig into it a little bit more. You ended the year on a good note. You've had sort of really steady dollar ramp in Proprietary Products throughout the year, just no real deceleration. Looking at what you talked about in terms of 10% at the midpoint of the guide for 2026, 10% growth, that seems relatively conservative given recent trends. So I was just wondering, has anything changed in your conversations in recent months with your major GLP-1 customer, especially Proprietary Products? Is there any change in demand or tone as the orals have launched a ramp? Or just sort of -- anything else you could say in terms of the level of conservatism you've embedded in that because we could see some pretty decent upside there.

If I could squeeze in a follow-up right away, sorry. But just in the prepared remarks...

Michael, yes, let me jump right in. Thanks for the question. Glad you brought that up. And you're spot on. We have not seen any changes in our customer behavior. What I would characterize that is a very conservative start to our initial guidance. We continue to believe that the adoption is going to be 30%. In order for us to achieve 10%, it would have to be greater than that, which we don't view as a likely scenario.

And so what we're trying to show is that the strength in the business is more than just GLP-1s and that we can get to our guidance with a lower-than-expected GLP-1 number. And I feel good about kind of the continued momentum that we see not only in GLP-1s, but the rest of the business.

Awesome. Can I squeeze in a quick follow-up, sorry. On the free cash flow, you touched on operating cash from free cash flow in the PR a number of times. You had strong free cash in the quarter. You've got solid cash balance. You also got the proceeds from the SmartDose coming midyear, I think about $120 million to $130 million. Your CapEx is moderating. Are you entering in something? And historically, we haven't really seen West do a ton of M&A. But I'm just wondering, are you thinking about share buybacks, maybe doing a little bit inorganic, just sort of what are you thinking there?

Yes, Michael, this is Eric. Yes, thanks for the question. So when you think about the opportunities, our capital deployment, our first priority, just to be clear, does not take our eye off the organic growth. And we'll continue to invest the business disproportionately towards our high-value product components.

But that said, if there are technologies that would be of interest that we could bolt on, to our existing portfolio, particularly around how we can accelerate our HVP Components business, while enhancing -- when you think about the further differentiation of our product offering to our customers, that may be of interest, and would have to be accretive, but that would be the focus in that area.

And Bob, do you want to cover that?

Yes, just on the last piece, regarding returning cash to shareholders. That is something that we're actively discussing. I view that as upside our plan. It's one of the beauties of these businesses that we've got a tremendous cash flow business here. And I'll just leave it at that.

[Operator Instructions] Our next question is coming from the line of Daniel Markowitz with Evercore ISI.

On the high-value components ex GLP-1s in 4Q, it's nice to see mid-single digits. That number keeps moving in the right direction. But you mentioned that demand outstripped supply. Would you be able to give some color on what the delta was? How much of the demand outstrip supply? And when you're expecting to bring on the incremental capacity to service that demand?

Yes, Daniel, let me touch on the capacity and also the demand that we're seeing build in our HVP Components business outside of GLP-1. We've commented previously that we had some constraints with our operations in Europe in 2025 that we were expanding capacity, both labor and equipment. That has continued. And the demand continues to outpace our supply.

As you think about the end of 2025 going to 2026, we feel really good about the order book. We feel really good about the demand that we're seeing from our biologic customers, in particular, the work that we're doing in Annex 1. So the areas outside of non-GLP-1 continues to ramp up compared to what we saw the first part of 2025.

Yes. And Daniel, just to add on to what Eric is saying, we're not going to give you the details of what that gap is, other than to say our capacity, if I looked at what Q4 was versus Q1, it grew substantially in our European operations, but demand is growing faster. So we're continuing to add capacity beyond what our expectations were, I would say, this time last year. And so that's a good sign.

And a final point for you there, Daniel. If you noticed in our prepared remarks, we said high-value product components, excluding GLPs, are going to grow high single to low double digits in '26. So that's part of the acceleration there.

Our next question coming from the line of Justin Bowers with Deutsche Bank.

John, you just answered a question that I was going to get clarity on. But Eric, did want to talk about some of the new GLP-1 molecules that you talked -- that you are seeing in the pipeline and then some of the newer [ diabesity glips ] as well. Are those molecules -- the basic question is like, are they specking in on a different type of HVP Component, i.e., like NovaPure or a FluroTec or just a different configuration of some of the late legacy programs? And is there potential for similar ASP from what you're seeing in the broader portfolio?

Yes, Justin, it depends on what part of the portfolio. There are consistency of new molecules being developed that would use similar elastomeric HVP Components that we currently supply for the GLP-1 space. We also see new combination molecules that would require some barrier coating that would move it towards FluroTec, the proprietary technology that we have with our partner, Daikyo, and also NovaPure. So it is a mix. And as we see the pipeline evolve, particularly in that space, there'll be more different combinations that will be used. And again, just to remind ourselves that it's not just one format. We see [ bio ], we see prefilled syringes and cartridges. And we're in a very good position to support all modalities.

And just a step further, when we look at the other parts of the portfolio and the pipeline outside of GLP-1s, it's very exciting. As I mentioned in the call, the win rate in biologics and biosimilars is consistently what we've always have seen. But what I'm encouraged about is its broader geographies for West, and we're able to respond accordingly. So that's why it's important, what Bob highlighted is that the capacity expansion, although it's larger than it was in the early part of 2025, we still need to expand capacity to keep up what's currently in hand, but also in the pipeline.

Yes. And just to add to what Eric is saying, if you think about the future fast forward, I think it's fair to assume that the pricing today for the future will either be to -- what it is today or higher, given that positive mix.

Our next question is coming from the line of Paul Knight with KeyBanc.

Congratulations on the quarter Eric, Bob and John. The Grand Rapids and the Dublin sites, where are they in kind of ramp-up stage? Are they at 10% utilization, 40%? Can you give us some color on that?

Yes, Paul. I would characterize those 2 sites differently. Grand Rapids, Michigan, that's a little more mature in their ramp-up. So they're, what we call OEE, is closer to what we would say is peak volumes in the first part of 2026. While there's still some room for improvement and further output, we're really pleased with the progress and what they're able to deliver for our customers.

In Dublin, it's really 2 different messages there. One, we're still in the ramp-up phase of auto-injectors and multi-dose pens. And as I've mentioned in my prepared remarks, we just literally commenced commercial drug handling operations which will ramp up throughout 2026, but well into 2027. So we're excited on both fronts. And it is going to be a ramp-up phase, an aggregate, I guess, over the next 12, 18, 24 months.

Yes. And Paul, just to add to what Eric was saying for that -- the latter piece that he was just talking about with the drug handling, we talked about it being a $20 million opportunity here in 2026. That's going to ramp throughout the course of the year. So the second half will be larger than the first half. And then it's going to be even bigger in 2027. So that certainly is not the annual opportunity for that program. It's significantly larger than that. And so we're really excited about that going forward.

And our next question coming from the line of David Windley with Jefferies.

You, I think, exceeded our margin and maybe the Street's margin expectations in proprietary products pretty nicely. It sounds like -- or it looks like utilization, maybe mix, but utilization is probably also improving. You've commented on capacity a little bit already. I guess I wanted to understand how your tech transfer activity and kind of the rebalancing of capacity is progressing in the context of some comments that you've already made about demand outstripping supply and comments about needing to add capacity. I guess I just want to understand that more comprehensively about whether demand is outstripping everywhere? Or if you still have imbalance of demand is essentially where I'm trying to get to.

Yes, Dave. I was focused on the HVP Components because that's what's driving the mix shift and from a margin expansion perspective. And you've seen this historically for West is when we start driving HVP Components close to that double digits, the mix shift effect on margins is quite pronounced. And we will continue to see that. We are expectations to still have a mix shift effect moving forward as we continue to drive, as I mentioned earlier, biologics, Annex 1 and even GLP-1s offers that mix shift effect for us.

Our capacity -- when we talk about capacity expansion, it has been heavily focused in Europe, which we're alleviating as we speak. But we're also ensuring that we're ahead of the curve in our U.S. HVP Components operations because we're seeing demand increase, frankly, in all HVP plants across the globe, which, as you know, we have 5 of them. And so we'll continue to invest. Fortunately, at this point in time, a lot of the investments is more around labor -- and versus extensive capital around facilities, and then we'll drop in new equipment and extend the lines when necessary. So we're very well positioned, but we need to get ahead of the curve, as Bob was mentioning earlier, the demand outstripping supply right now, which we need to get caught up.

Yes. I think it's fair to say, David, that we are looking at tech transfers throughout the course of 2026 will help alleviate some of that imbalance. We've been on that journey already, and Eric mentioned that in his prepared remarks. So it's a combination of both. And we feel like we'll be in a -- we're in a better position than where we were a year ago. And in a year, we're going to be in a better position than we are right now.

The next question coming from the line of Patrick Donnelly with Citi.

Bob, maybe for you on the margins. It sounds like over 100 bps expansion in '26, which is nice to see. Can you just talk about the drivers there, the mix piece? And then maybe on the multi-dose -- it's helpful, Eric, to hear you talk about kind of that gradual shift. What does that mean on the economic side? And again, maybe just the confidence that, that is a gradual shift, maybe given your experience in Europe or whatever else you might be able to point to.

Patrick, thanks for the question. I'll take the first one, and then I'll turn it over to you to Eric to talk a little bit about some of the economics. But yes, if we talk about the -- your math is, as usual, is spot on. We're delivering over 100 basis points of margin expansion or expect to in 2026. And a large piece of that is really a result of a couple of things. One is that continued demand within the high-value product components, which is driving better utilization within the plants, which is helping with our absorption, but then also the mix shift. And I would say it's a good combination of both of those.

In addition, we continue to generate positive price, but I would say it's the first 2. And then really one of the focuses that we've had over the last couple of years is really around the conversion through Annex 1 in the regulatory requirements. And we see that as a continual multiyear journey, as Eric mentioned earlier, and we've got a long runway in our belief to be able to upgrade some of the standard components to those HVP Components, which will also help with the margin. We see some of that in here as part of that positive mix. So it's really both. And then we're continuing to leverage our OpEx is what kind of below the gross margin line to get to some of that, but most of it will be in gross margin.

You want to talk about the...

Thanks, Bob. And Patrick, in regards to the multi-dose and auto-injectors, particularly in the GLP-1 space, just to kind of frame it up real quickly, there's 3 different ways we look at from the elastomer point of view. One is we do support files with the stoppers. When you think about the auto-injectors, it's really -- there's a component, but also a plunger that we provide, which is -- and then in the pen system, you look at a plunge and also line seal on the cartridge. And I would say the plungers are not equal between the 2. And it is correct that multi-dose pens are approximately 4 doses per one single-use auto-injector.

There's 2 factors to look at when you ask about timing. And you're right to say that we have good lens on this part of the market because our Contract Manufacturing business is exactly working with our customers in this space to do mass scale manufacturing of auto-injectors and multi-dose pens. What we see is, as you know, there's a higher dependency on multi-dose pens in Europe than in the United States, where the U.S. is more a single dose. So these are significant installed capacity that our customers invest in into our facilities, and these are long-term commitments, and it takes multiple years to get up to ramp.

As Paul asked earlier, how we're ramping in Grand Rapids and Dublin, these are multiyear journeys to get to peak volumes. And so we do see this as a one, installed capacity investments of our customers. Still, we don't see this as a quick shift if that would occur. And secondly, really, it's a market acceptance and patient acceptance. They're very different experiences. And so those are the 2 factors that we see, but we see it as a multiyear journey, particularly with the lens we have with CM and also the investment order patterns we see with our elastomer business to support it and the primary containment.

Yes. Patrick, the only other thing that I would add is, if we think about the future, many of the things that Eric was talking about in terms of multiple indications and new molecules are on single dose in the U.S. as well. And so that also speaks to the, I'd say the consistency and the stickiness of the auto-injector as we see it looking forward.

Our next question coming from the line of Matt Larew with William Blair.

Eric, for years, you had talked about the device opportunity as something West was excited to participate in and would be potentially growth and margin accretive. And then, of course, last year, with the SmartDose saga, I think that narrative got derailed a little bit.

Now announcing Synchrony -- I know you announced it at CPHI and sort of launched it commercially last month. But maybe give us an update on where you're excited about the device opportunity going forward? Do you still see that as a big [indiscernible] opportunity for West? And then whether the portfolio of products you have today, you think is the right one to attack that market or if there's more, either product development or inorganic growth opportunities that might help supplement the capabilities you have today?

Yes, Matt, it's a multipronged approach when you look at our proprietary business, particularly around our elastomers. So first priority is continue to look at line extensions and new formulations that are adopted in the marketplace for our customers. And as you think about the new molecules in the pipeline, they're more complex. And therefore, we have to continue to innovate with our customers with new formulas around elastomers. So that is our primary focus when we think about R&D investments.

The second area that you touched on is the launch of West Synchrony prefillable syringe. And this is truly unique in the marketplace. And this stems from the elastomer business. This is where our customers have been looking at how can West support them on full characterization to build -- provide all the data packs that allow them to file the FDA and simplify. Because as everyone knows, these prefilled syringes have to be approved with the drug molecule as a combination device, not as individual components. So we're basically taking that work from our customers, and we're providing the complete solution with this offering that we have with Synchrony.

It's very close to our elastomer business. The economics are very attractive. What I would articulate -- it's a long-term journey, by the way. It is really pipeline. I will say that I'm very pleased with the team's recent launch. It occurred a few weeks ago in Italy as an official launch, and we already have orders. So I'm pleased with the initial progress. But it will take time, like any other new launch we had like NovaPure and other elastomer components.

But I would look at this as an extension of our HVP spectrum that we have articulated and showed graphically on how we're moving up that curve for our customers. And I would disassociate that with the drug delivery devices that we have in the other units like SmartDose 3.5, very different economics, very different growth profiles. And excited about where we are, but it's a long-term journey.

Our next question coming from the line of Dan Leonard with UBS.

I could just use some help clarifying the growth assumptions for HVP in 2026 and how they compare to 2025. So you mentioned that the GLP-1 growth will be 10% at the midpoint. What was that growth number in 2025? And then the non-GLP 1 HVP is high single to low double for 2026. What was that comparable number in 2025? I just want to know what kind of a ramp upside in non-GLP-1 and kind of conservatism in GLP-1 that we're all assuming here?

Yes, it's a good question. I'll give you kind of ranges. We're not going to get into the specifics, but GLP-1s for the full year grew in excess of 50%. And if you looked at the non GLP-1s, it was roughly flat, with mid-single-digit growth in the second half of the year. And so we're expecting acceleration on the majority of the non-GLP-1 business into 2026 at kind of that mid- -- or high single to low double-digit growth.

Our next question coming from the line Brendan Smith with TD Cowen.

Actually, I wanted to ask a bit more about the Annex 1 cycle upgrades that you referenced. You noted, I think that, that has been completed, about 15% of the total opportunity. In the deck, you mentioned that West has met its 2025 goals. Wondering if you could maybe speak any more granularly to West's 2026 goals in this area? And I guess what really drives some of your visibility into those assumptions over the coming year, just given that -- I'm guessing some of those decisions are ultimately coming from the partners.

Yes. Great, Brendan. Great question. Thank you. When you look at the Annex 1, we see this as a multiyear journey. So when I talk about the 6 billion components, just to put that in perspective, in proprietary, we do about 36 billion components a year. This is a subset of the total company, of which when you think about the HVP, it's called roughly about 10 billion of that. The delta of 35 billion, 36 billion -- I mean I'm sorry, 25 billion and 26 billion is what we call standard, and as subset is 6 billion. So just to put it in context of what portion of the business from a unit volume perspective that we're speaking to. And so far, to date, less than 15% of that has now been commercialized.

So a lot of the projects have rolled off, we mentioned [ 65 ] in Q4. Those start -- they start being commercialized throughout 2026 and beyond. So now the customers change their ordering from the previous product that would procure for -- from West to the new product, which is now an HVP product going forward. So those revenues will start building in 2026.

To summarize, we believe the continuation of about 200 basis points going into 2026 will be driven by Annex 1, and we believe that's sustainable based on the pipeline. So there will be products rolling off into commercial and new products being added, and that's what we're seeing throughout 2025, we expect the same in 2026.

Our next question coming from the line up Thomas DeBourcy with Nephron Research.

Just wanted to touch on just Contract Manufacturing and I guess, refilling the demand pipeline for the second half. I think you mentioned relatively flat growth for Contract Manufacturing, which reflects, I guess, refilling that demand. But just wanted to see kind of the opportunities you're seeing there? And then just also on reshoring of U.S. customers, whether that's an incremental opportunity or you just support them as -- depending on where they want to manufacture their products?

Yes. I'll start with the second portion first, on the onshoring of customers. And it's interesting because those conversations are ongoing. In 2025, when this announcement of new investments, we're already at the table having conversations how we can support them in the supply chain. So there could be incremental volume coming from our customers due to these investments or it could be a shift in their manufacturing strategy.

The fortunate part about West is that we have the assets that are able to support them, whether it's in Europe or the United States or even in Asia when you think about our HVP manufacturing plants. So therefore, we'll continue to add capacity to be able to support them. But the fortunate part is we do currently have volume in these sites. Any additional capacity to be more around labor and equipment versus new facilities.

On the Contract Manufacturing side, looking at the business that's [indiscernible] in end of Q2, that space will be -- our intent is to have that reutilized by new customer as we move into later part of 2026. It will take time to ramp up to install the new capacity, new equipment from our customers. But we're in several discussions right now. And we will communicate once we have everything finalized. But we feel good about where we are able to utilize that asset and build to support other customers and other products, while other investments will ramp up, particularly around the other Dublin site and also Grand Rapids, Michigan.

Our next question in the queue coming from the line Doug Schenkel with Wolfe Research.

You did a really nice job in your prepared remarks talking about the outlook for GLP-1s and the impact of orals on your business. If we keep those comments in mind and ostensibly your efforts to be conservative as you talked about the inputs in 2026 guidance and then also the longer-term framework for GLP-1s, I'm wondering if we kind of get at maybe a midterm outlook. If it's fair to say you're comfortable with your GLP-1 framework, combined with the recovery you're seeing in non-GLP-1 HVP, which of course, includes the impact of Annex 1. If we're -- if you're comfortable saying as built, even in a conservative scenario for GLP-1s, that your revenue can grow at least mid- to high single digits over the next several years.

Yes. Doug, thanks for the question. And the short answer is yes.

We have a follow-up question from Daniel Markowitz with Evercore ISI.

I'm curious just framing the Annex 1 opportunity ahead. It seems like there are reasons to be excited and potential for accelerating benefit to the business. Can you talk about what you're hearing in customer conversations that suggests this could be a greater area of focus for customers going forward?

Yes. No, you're absolutely correct. Engaging with our customers, there are certain events that occur, particularly with -- in the supply chain when they're having contamination control issues. This comes up during the audits and inspection by the regulatory bodies, particularly in -- obviously, in Europe but also with the FDA. And while these are becoming more front and center with our customers to prevent any potential delays or stock-outs of drug molecules or frankly, 483s or warning letters, these conversations are becoming more active for us.

And the fortunate part is we have the resources, we have the regulatory and quality organizations in place that really support our customers to make those decisions and then build -- provide a final solution with the product such as our washing technology, in vision technology, even through sterilization. So when we -- when we think about what we offer our customers, this is a great opportunity. And so yes, we're heavily engaged with our customers, and they're making a decision to they look at -- can they actually handle that process internally and most of the time, what we're seeing is no, let's have West take care of the expectations to meet the regulatory requirements and the quality requirements. So we believe this is a long-term opportunity and it has multiyear impact for us, and it fits really well with our HVP Component strategy.

Dan, just to add to what Eric was saying, just a couple of things. We've sized that opportunity of $6 billion -- or 6 billion units, excuse me. There's a potential that, that could be even more. As we think about things like reshoring. If you're reshoring something that is already spec-ed in, in Europe into the U.S., that is an opportunity to automatically upgrade. And what we're hearing from customers is in order for them to simplify their supply chains, they don't want to have multiple components that have different specs across their network. And so -- and as the regulatory scrutiny continues to grow,outside of Europe, there is a desire to kind of standardize across this. And so not only do we see the opportunities that Eric was talking about, there's a potential that it could even be bigger over time with some of these other dynamics that are in play across the industry.

And ladies and gentlemen, that's all the time we have for question-and-answer session today. This does conclude today's conference call. Thank you for your participation, and you may now disconnect.

As drug development teams finalize molecule optimization, packing development begins. Often a time-consuming process of evaluating multiple components, suppliers and test results. For prefilled syringes regulated as combination products, ambiguous requirements and extensive verification can add months to clinical time lines with no guarantee of full risk coverage.

Today's session introduces a new approach to prefillable syringe systems, a fully harmonized solution integrating the syringe barrel, plunger and a needle shield tip cap from a single verified supplier, West Pharmaceuticals. We will be led by Dr. Bettine Boltres, Director of Scientific Affairs, Integrated Systems with West. She will share how this integrated system reduces complexity, minimizes testing burden and enables emerging biotechnology companies to accelerate readiness for clinical fill while conserving time and resources.

I'm your host, James [indiscernible] with Pharmaceutical Online. I'd like to thank you, the audience, for attending today's event. This is live, so we do encourage your participation. Take a moment to get comfortable with the tools on your screen. Bettine's contact information is to your right. And below me, you'll see a question box. Please share your thoughts with us during the presentation. We will answer as many questions as possible. And any we miss, I'll pass along for follow-up after the event. This question box can connect you with me if you run into any trouble, but please try refreshing your browser first as it will fix most common issues.

Finally, today's event will be available on demand. You'll receive an e-mail with a shareable link shortly after we conclude.

Now without further ado, let's begin today's presentation. Welcome, Bettine.

Thank you very much, James, for a nice introduction. And good morning, afternoon and evening, everyone. Also from my side, a big thank you very much for joining our webinar today.

As a leader in the containment and delivery space for injectable medicines, having very close relationships with all our global customers, we've been involved in countless exchanges with them and also with the rest of the industry. And I have to say that we, as pharma industry are already doing a really great job bringing medicine to the patient and continuing to develop and improve. However, in the course of all these discussions over the past decades, it became very clear that the challenges and pressures have become harder and more cumbersome, and it became a real struggle to design a PFS system out of components.

We all know it takes around 10 to 15 years with an investment of around $1 billion to $2 billion to bring a medicinal product to the market. Everyone is trying to secure patents. So the faster you get to the patent filing, the more time you have to still earn from it. But typically, with the lengthy development and regulatory time lines, effective market exclusivity is often reduced to only 7 to 12 years. So since 2016, the time from first patent to launch has shortened from 16 years to an average of 10.6 years for -- especially for larger pharma companies. And that is a difference of 5 years, 5 years. And a single day of delay can already result in losses of around $500,000 in sales, especially in high-value therapeutic areas. And while the average daily revenues per product have declined by around $80,000 to $100,000 in recent years.

And the constant drive to reduce supply chain complexity, especially since COVID time, just adds to the global pressures to keep medicines affordable and accessible. And so between the cost and complexity of development, the long regulatory time lines, constrained patent protection and today's global pressures to keep medicines affordable and accessible, efficiencies in development and rapid market access are critical for pharmaceutical companies.

And so that's why I would be very curious to know from especially the pharmaceutical companies here in the webinar, which of the 3 mentioned pressures is the heaviest for your company? Is it increasingly complex global regulations? Is it more time and resources needed for device development? Is it increasingly complex supply chain? Or is it all 3 to a similar extent? So you should see a window that is opening up individually from the webinar now. And I'm asking, obviously, specifically the pharma companies online, as you are faced with these pressures and challenges, what is your opinion? What's pressuring you most? Increasingly complex global regulations, resources needed for development or the supply chain or all of those to a similar extent. I'll give you 5 more seconds.

[Voting]

And then let's take a look at that. So 50% of you say all 3 to a similar extent, yes. But then we see device development. If you chose one, then the time and resources needed for device development is outpacing the regulations and supply chain. So yes, thank you very much for that. So we see that actually this is real pressures and challenges out there.

So being regulated as combination products has added an immense complexity to the entire development and regulatory process. Historically, syringes have more been treated like container closure systems, like the immediate packaging and thus as part of the drug. So it was sufficient to just fulfill the pharmacopoeia requirements.

Now based on the fact that syringes are not only holding the drug, but they're also used to deliver the drug, the classification has shifted towards being evaluated as a device as well. And so this means the empty syringe as the device constituent part has to now also fulfill device regulations. And adding to that, if you want to launch globally, you have to deal with multiple regulatory agencies, and I don't think I have to elaborate more on that. And especially in Europe with the stronger integration of the notified bodies, this has become particularly complex. And so this requires companies to constantly add personnel and budget.

As mentioned, being a combination product now also has to be considered in the development process. This means that they not only have to fulfill pharmacopoeia requirements such as USP 381 for elastomer components or 660 for glass container, but also device component requirements that are given in ISO standards, such as the 7881 series for elastomer components or 11040-4 for the glass syringe. And another obvious trend that has crystallized over the past years is the shift towards thinking as final systems and not only as components that are being bundled together. And this can be seen in the increased development of chapters and standards that evaluate the final finished product such as in USP 382, 1207 and 11040-8. Another very obvious area is the biocompatibility with USP 87 only for elastomer components whereas ISO-10993 is for the entire final product and with completely different requirements and approach.

So in an effort to try to be in control of all of these requirements, companies are again adding personnel, resources and budget to the development teams. And it bears the continuous risk of missing information that is only realized during the submission review by regulatory agencies. And going even one step deeper, development teams have to create the system from individual components coming from individual suppliers. And just to give you some examples of the complexity, right, the current approach is for development teams to scout the market and get in touch with multiple suppliers, like supplier A for the rigid needle shield, supplier B for the glass syringe and supplier C for the plunger. Then they request samples from all of them. They test all possible combinations to find a good match.

And then before they even do their design verification, they need to develop their system specification for all the component specifications. For example, if we look at particles, that is given as percentage of USP 788 for the glass barrel. And it's given as x per number per size range per 10 square centimeters for the plunger, which is not including the silicon oil.

Looking at silicon oil as is given as milligram per barrel for the syringe barrel, but milligram per square centimeter for the plunger. Break loose and glide force is kind of tested for the glass barrel, but which plunger are they actually using? They're using whatever plunger they have available, which is most likely not the plunger that you are going to use in your final product. So you have to repeat the test. It's informative. It's nice and interesting, but it's not super relevant for you. And for the plunger, for example, it's not tested for release. There is characterization studies, again, with certain chosen syringe barrels out there.

Endotoxins are given as endotoxin unit per square centimeter, per milliliter or per piece. So it's all over the place. And then obviously, once you're approaching regulatory submission, you need information that you put into your ECTV. So you're having out talking to all of these component suppliers, collecting information that you receive in various PDFs, individual PDFs that you then have to put together into one coherent document. And then I was talking about samples, requesting samples. If you order samples with individual suppliers, they would come at different lead times and they would come with their own specific minimum order quantities, which are typically not matching the ones that you actually need.

And so I would be very interested again to know from you, all pharmaceutical companies online, do you know this struggle from your development? Yes or no? Do you encounter this? Is this an issue? Or is this a challenge that you're faced with as well in your development? Or do you say no, actually, in our development, everything runs super smoothly. We have everything under control versus reaching out, translating all the different numbers and data into one is kind of cumbersome. So there's a new window again that opened up. I'm going to give you a few more seconds. This should be a straightforward question to answer.

[Voting]

So the poll is still open, but let's look what the results now say, okay, an overwhelming 92% say that they know this struggle from development. But to be honest, I would love to get in touch with the 8.1% saying they don't see this from their development because obviously, they know a secret that the 92% online don't know so. I would be very curious to learn about that. Wonderful. So thank you very much for your answers.

So apparently, we see that somehow this process is working. But as we see -- as we've seen just with a really large invest in resources, personnel and budget. And often with the involvement of consultants or external lab organizations, you're forced to navigate, coordinate and interpret multiple component data sets and services to create your system-level performance data for your PFS selection or you could choose manufacturers that offer expensive and time-consuming onetime data packages through customized services.

So you work with your various component suppliers for each individual component in an attempt to compile and reformat what you believe is needed for a regulatory submission. And you manage multiple component suppliers with restrictive minimum order quantity options and varying quality levels. Although well intended, these approaches unfortunately have consequences, all of which can delay product launch and increase risk and cost. This can include missing a critical element of performance testing, forcing you in the end to go back and repeat that testing, a delay in the regulatory approval process and an inability to deliver the quality and quantity of prefilled syringes needed to achieve your milestone. While it's obviously still possible to make progress, these risks can cause you to miss critical milestones and/or run out of time and resources.

The reason for this is that many emerging companies believe they must assume the time, risk and expense of coordinating multiple PFS components and may make the wrong assumptions. But your primary objective actually is to achieve critical milestones in your development process. So I can proudly announce now that West has come up with a solution to mitigate these challenges and help you reach your goals faster and smoother now with our integrated verified prefillable syringe system. Specifically, this means that you will save time and money using a single integrated already design verified prefillable syringe system consisting of a glass syringe barrel stick needle on Luer lock and the matching plunger. You will save time and money streamlining your regulatory submission by using one accountable source for all required data, and you will save time and money establishing a reliable supply chain with the quality and quantity you need from one single source.

Starting with West Synchrony S1 PFS system means starting with an integrated verified PFS system that enables you to overcome those exact 3 challenges: designing a syringe system out of components, navigating a complex regulatory process and avoiding supply chain setbacks. With the Synchrony S1 PFS system, West has redefined what a system is. Our prefillable syringe system is an integrated offering that was designed and is released and delivered as a system. As we, West have designed the entire system from scratch, we West own the entire development process. So you don't have to communicate with multiple suppliers anymore. We've also performed the entire design verification process to prove the system, and we are sharing this so you don't have to purchase it and wait for the results. And as appropriate for a real system, we are testing it as a system upon release so that you don't have struggle with multiple incoming inspection tests anymore. And because it all comes out of one hand, we're shipping everything in aligned quantities on the same pellet.

Looking further into how we aim to save you time and budget in your development process, we streamlined all the information sharing into 4 major packages. The scouting info package gives you all the information you initially need to assess the system. With the onboarding package, we ensure a smooth and streamlined onboarding of both you and Quest into our SAP systems. The verification data package gives you all the necessary data from our DB testing to ensure you have a solid scientific justification for your choice. And finally, once you approach submission, you get our regulatory package where you can copy paste all content directly into your eCTD file. And all these packages are for free and immediately available as per your milestone in your journey.

And to support your confidence in the system and to save time and decrease complexity in your incoming inspection and surveillance process, we have developed one system-level specification, meaning for each of the attributes, you will get one data point for the entire system, one particle specification, one silicon oil specification, one endotox inspect and one break loose and glide specification for the entire system. And all of these will be given on one quality certificate.

West has made the entire customer journey transparent, simplified and streamlined. And apart from the system-level data that you will get for each and every batch, you will still also get all the component-related data on one quality certificate. And I mean all the measurement data of the glass syringe, the closure, needle shield or tip cap and the plungers on one quality certificate. I wonder where you get that level of detail and compactness right now. And as we, West, own the entire system, it has one item number only, and it comes with matching minimum order quantities on the same pellet at the same time.

Our intention was to accompany you throughout your journey and support you with exactly what you need at every step. Where you start with scouting the market and searching for the best components, we give you the scouting info package with all the information you initially need to assess the system. After careful evaluation, you optimally decide to go with us and we onboard you in an efficient and smooth way. Then we have the exact right quantities for you, the flex quantities to order to perform your drug-dependent testing to prove the system with your drug. You don't need to do any of the drug independent testing anymore as we have done everything for you, and you get all the data within the verification data package.

For any commercial fills or potential engineering runs, you will order the standard quantities. And once you are approaching the time to file your regulatory submission, you will receive the regulatory package from us containing all the information you need that you can copy, paste all content directly into your eCTD file. And because we own the entire system, we put it all together under one DMF. So you just need to request LOA from one company. And even after you receive your marketing approval, if you see complaints from the market or have any other topics, you need to just coordinate everything with one company. So no cumbersome 3-way CDAs, no passing the buck because no one wants to take on the responsibility. It's our system, so we have to fix it.

Again, our main goal is to streamline your pathway to commercialization as much as possible. So let's take a look at our data packages throughout your journey again. The scouting data package is a technical overview with key product highlights. Within its 67 pages, it contains the system overview, the master specification, including system level specifications, chemical and physical data of all the components, compatibility overview with needle safety device and auto-injector and fill/finish equipment, quality and regulatory information, packaging, shelf life and the different quantities per pallet, drawings and the list of item numbers and more stuff. So really everything you need for your initial evaluation.

Then the onboarding package contains all the information both you and we need to get set up in our system quickly. For example, how to place a PO, receiving and shipping information, our SAP item decoder, information on quality agreements and audits, the quality certificate and much more. Then you will love the verification data package because within its over 80 pages, it contains our entire DB approach, explaining how we choose the sample sizes we choose or why we choose the sample sizes we choose, the bracketing approach and it gives all the results of all of our DB tests. For example, needle pull-up force, needle pullout for needle penetration, flange breakage resistance, break loose and gliding force, needle pull up as I mentioned already, different CCI tests, deliverable and residual volume, but also characterization work such as biocompatibility and extractables.

And to save the toughest part for us, our regulatory package aims to support your submission, especially in non-DMF regions such as Europe, where you have the MDR and its GSPRs. In that package of 80 pages, you will find all the information needed that you can copy paste directly in your eCTD file. And again, all of these documents are for free and readily available as per your milestone. And all of these documents are controlled documents. So they undergo our official change process. They're all peer reviewed, they're all revision controlled. So it's a single source of truth that is always up to date.

And because we wanted to make this a drop-in solution, we have designed the West Synchrony S1 PFS system to fit into the pharmaceutical ecosystem. We are already working with a global CMO network that has the system prequalified on their lines ready to go. So you can even save the engineering runs. And we truly mean global. We're working with CMOs in every region, in Asia, in Europe and in the U.S. So no need for you to spend time on searching for a CMO, ordering the individual components, waiting for them to arrive at different time points, coordinating with all suppliers. The CMO is already set up. The syringe system is coming at the same time on one pallet ready to go.

Then obviously, all of our components are compliant with all regulatory requirements. We're using SCHOTT FIOLAX glass, which everyone knows is type 1 compliant with USP 660, EP and JP. And all our syringe barrel dimensions are according to ISO 11040-4. So there is no changes, no difficulties there.

And lastly, we've run our systems on all relevant fill/finish lines, again, saving a considerable amount of time. I'll get to that in a minute. And we've also tested our syringe systems with leading needle safety devices and leading auto-injector suppliers.

So as mentioned, we have worked together with the 2 leading auto-injector suppliers, and we have verified that our Synchrony S1 PFS system works with both their 1 ml auto-injectors. We have tested cap removal force, injection time, dose accuracy, dimensions and break loose and glide force. And that was with filled syringes with water for injection and further tests are planned down the road.

Then we've worked together with the 4 leading fill/finish line manufacturers to ensure that our Synchrony S1 PFS system can run smoothly on their lines. We've tested debagging and deliding of the syringe barrel assemblies, the handling during IPC, the sorting efficiency in the feeder bowl and the sorting tracks and the compatibility with both then tube and vacuum placement. All manufacturers are very well aware of our offering and have the respective parts there. In case you want to run the system on your existing lines, I would suggest, obviously, you reach out to your line manufacturers. As I said, they're very well aware of our offering and can help you out quickly. And again, should you want to work together with a CDMO that has our system already prequalified, you don't even need to go through any of this yourself.

Now the very important question. We have more than 200 validated systems for biologics and vaccines applications, ranging from 1 ml long steak needle, 2.25 ml staked needle, 1 ml standard steak needle, 1 ml long Luer lock, 1 ml standard Luer lock and 2.25 ml Luer lock. So the entire variety of choices. We have different needle gauges and wall thicknesses, 27-gauge thin wall, 29-gauge thin wall, which is kind of a standard in industry. Then we also have for the 2.25 ml staked needle, the 27-gauge special thin wall. We have rigid needle shields, soft needle shields and integrated tip cap available. In terms of flanges, we have small round flange, large round flange and cut flange. And as for the plungers, we offer, obviously, our NovaPure plungers, which are the standard for biologics, but then also our FluroTec plungers and the unlaminated plungers as well.

To make it really clear to you what we mean by one system, let's take a look at the supply chain. So you can see in the center of the slide that our manufacturing plant is the plant in Waterford, Ireland. So the needle shields or tip caps are assembled by our glass syringe manufacturer. And both the plungers and the syringe barrel assemblies are stored in our warehouse in Ireland. This is especially true for our make-to-stock items. I'll get to that in a minute.

So once you order a system, a representative amount of the parts, the syringe barrel assembly and the plungers are sent to our lab in Waterford, where they are assembled on a small filling line and then tested against our system specification, right? You remember, endotoxins, particles silicon oil and break loose glide force. And only if they pass the system specification release testing, will we send them over to you on one pallet at the same time with matching quantities. And we will print the results on the quality certificate, so you will get all the results of the individual parts and the system data on one single quality search.

As mentioned, we have more than 200 validated systems for biologics and vaccines applications that were all designed with a holistic product and quality mindset to find whatever is best suited for your application. And to make the platforming approach even easier, we have created 2 signature systems that we have in a make-to-stock option, right? So make-to-stock means that we have those -- the components that make up the system on stock in Ireland waiting for you to pick up the phone and order them. So we only need to test them against our release specification and then off they can go directly into your manufacturing plant. And the 2 signature system options are the one in a long staked needle with rigid needle shield and 27-gauge or 29-gauge thin wall needle, half inch, with a small run flange. And for the plungers, you can decide between the NovaPure plunger and the FluroTec plunger. The barrels come in 10x16 configurations. And the minimum order quantity for flex quantity is 12,000 systems per pallet or per order and the standard quantity is 48,000 systems per order.

And the other signature system is the 2.25 ml staked needle that also comes with a rigid needle shield with 27-gauge thin wall, small round flange, the NovaPure plunger and the FluroTec plunger, again, you can choose from, and it's coming in a 10x10 nest, obviously, flex quantity is 7,500 systems per order and standard quantity 30,000 systems per order. So those are the 2 signature systems make to stock, waiting readily available for you to call and order.

All right. So by starting with an integrated verified PFS system from West, you will accelerate the selection of a PFS system designed and verified for form, fit and function. You will streamline your regulatory submission process and you will establish a robust and agile supply chain for your PFS, for your prefilled syringe with a quality and quantity you need.

Now I'm very curious what do you all think? So now it's for everyone, everyone can vote not only the pharma companies, what do you all think how cool is this offering? Do you see a benefit in this approach? Yes or no. You should see again a new window opening up. I'm super curious to hear what you think about this. And I think also as this is quite a straightforward question, I'm going to proceed to the next slide.

[Voting]

Well, look at this result, I love it. Thank you so much. It's like 100% of everyone who voted says it's a cool approach. I love it. Thank you so much. With this beautiful, wonderful feedback of yours, I'm actually done with my presentation, and I'm super happy to take any questions that you have. And yes, James, over to you.

Thank you so much for the excellent presentation. Before the Q&A begins, I'd like to remind our audience, you can connect directly with Bettine. Her information is located on the side of your screen. We see a lot of great questions coming in. Thank you so much for that. Please keep submitting those via the Q&A box below me. We're going to address as many as we can. And the rest, I'll pass along to Bettine and West Pharmaceuticals team to follow up offline.

Our first question comes from Ashwin asking, does West also offer a needle safety device that works with the PFS system?

So we do not offer a needle safety device that you can buy from us, but we can provide you with the compatibility testing that we have done with the respective mentioned needle safety devices and then you can decide for yourself. So needle safety device is not part of our offering. Yes.

Thank you, Bettine. Our next question, do the syringes come in a nest or tray or both?

Yes. So they come in a nest and tough configuration. And as you've seen the 1 ml long syringes, our signature system, 1 ml long stick needle syringes, they come in a 10x16 nest configuration. And then the larger ones would be 10x10, obviously. So nest and tough configuration and in anticipation of the next question, they are ETO sterilized.

Excellent. Thank you. Our next question is from Cecilia asking, do you qualify your syringe system for leachables and extractables?

Yes. So leachables is out of our scope. As probably most of you know, leachables is something that is measured in conjunction with the drugs. So the leachables, you can only evaluate with the drug product. So we cannot do leachables testing. But what we have done, and that is part of our verification data package is extractables testing. So we've done extensive extractables testing in conjunction with biocompatibility testing as it is -- it can go hand-in-hand for the components. So yes, extractables testing is available and is shared in our verification data package for the entire system.

Our next question is from Emily asking, given the extensive design and verification testing already performed, what do you recommend is required in the design verification testing filled with your drug?

Okay. Yes. Yes. So basically, there is 2 parts that the DB testing is typically done. You have the drug independent testing where you have, for example, the needle shield pull-off force, the needle pullout force, then flange breakage. These are examples that are independent of the drug product. It doesn't matter what the content is. Those data should not change basically.

We also have done CCI testing that is on the empty syringe system. So for example, container closure or closure system, liquid leakage we've done. We've done liquid leakage at the plunger using an Instron device. So that is also drug independent testing, obviously. And then we've done container closure integrity at the plunger and at the tip with helium leak testing. So those would be drug independent, but then CCI testing is something that, for sure, you have to repeat with your drug product because there is -- there can be influences of the drug product and particularly also the handling, then you have to see, as I mentioned, handling flange breakage. So depending on how the syringes are treated in the process, flange breakage is nothing that is drug product dependent, but process dependent. So how you treated your syringes, how many quality -- how many surface defects you introduce in the process that might lower the strength of the glass, for example.

And then obviously, also break loose and extrusion force. So we have done the break loose and glide force that is on empty syringes typically to prove the silicon oil lubrication, how well that was done, how well distributed the silicon oil layer is. But then you have to test the extrusion force with your drug product individually because if you have a higher viscosity product, for example, you might have -- you will have a higher extrusion force as compared to the glide force. And the break loose and extrusion force, they belong to the so-called EDDOs that the FDA has picked out particularly as a specific part of outcomes of design -- not outcomes, of design outputs that FDA particularly wants to see.

So CCI is definitely, you have to repeat that. Break loose, extrusion force are examples of that. And then depending on your drug product might be deliverable volume as well. But then you have to see the [indiscernible] depending, just examples. And we can discuss more. So always anyway, happy to set up meetings to discuss and look into your individual case if there's something different. And then yes, obviously, if you go into an auto-injector, you have to evaluate break loose and extrusion force differently anyway together with your auto-injector. Yes.

Excellent. Our next question is a follow-up to this presentation, how can we get any literature? I'd like to just remind the audience that you will receive an on-demand version of this entire presentation to the e-mail that you registered with if you'd like to share it with any colleagues. But in addition to that, what literature can the audience find? Sorry, specifically, the question is what follow-up literature can the audience find or how can they get follow-up literature for the presentation?

Sure, sure. So if you go on Google, at Google westpharma.com or just put it into the browser, westpharma.com, then you will see we have a page dedicated to West Synchrony S1 PFS systems. On that page, you will already find a good bunch of information. And on that page, you can click on contact us. So if you're not yet already connected to an account manager from West, then feel free to use the route via the home page. And then you can -- you will be connected to one of our super talented technical people and account managers or you just drop an e-mail to that e-mail address that you see on the screen there, and I connect you with the respective people. So we do have brochures, we have info sheets. We can send you the scouting data package. That's what it's meant to be for. So happy to share.

Excellent. Our next question is from Brandon asking, is it possible to order the components separately? Or is it required to order both the syringe cap and plunger stopper?

Yes. So the sole meaning purpose and advantage of this whole thing is that it is a system, right? So the system only works as a system. So of course, you can just go to West online store and order the NovaPure plungers as such because we're using the exact same NovaPure plungers as we use -- as we're also selling separately. So you can go there and buy the components individually, no problem with that.

But the system offering only works as a system. So if you buy the components individually, then you have to do all the work that we've already done for the system, you have to do all that work yourself, right, because it's components. You don't know what you get. You get the specification, the release testing, incoming inspection, everything is different and individual if you order it individually. So you have to invest all of the time and budget, money, resources and brain work into creating a system if you order components. So that is why one item number is for the entire one single system. And the system is not meant to be broken down into components. So that's it.

Excellent. Our next question is from Pascal asking, are all your rubber formulations part of the platform or only the 2 listed on the slide shared?

Yes. So rubber formulations, we obviously picked the best quality for all of our items that we used in the syringe in the West Synchrony PFS system. So the 2 rubber formulations that we use in the system are the 4023-50 and the 4432-50. These are our 2 most modern leading rubber formulations out of which especially the NovaPure plunger with the 40-2350 is the one used in most of the biologics out there. So those are the 2 formulations we chose for the system.

Thank you. Our next question, did you consider sustainability in your development approach?

So the current offering is a drop-in solution to the current market. So that's what we wanted to bring out there, and that's what we wanted to start off with. But in the background, as you can imagine, we're already working on further developments, which will definitely include all possible sustainability aspects. So we're already scouting. We're already looking into all possible options how to include sustainability into our design of the next development. Yes.

All right. Our next question, did you do CCI testing as part of the DB? And is that given in the DB package?

Yes. Yes. So we did do CCI. I think I mentioned a little bit, probably the question came in before I mentioned already. So we did do closure system liquid leakage. We did do liquid leakage at the plunger, which is both using Instron devices. And then we did CCI at the plunger and CCI at the tip using helium-leak. And all of these 4 tests are described in the verification data and given. So yes.

All right. I'm going to -- now go to the next question. What happens if you have a recall or other quality issue with one of the components?

Yes. So the typical way how you will handle it right now is let's just say you have something on the market, a drug on the market and the market comes back with break loose glide issues, right? It's too hard to push. The glide force is too high or the break loose force is too high. Now the reason for that could be multiple, right? And unfortunately, with this case, like with several other cases as well, like particles, for example, multiple component suppliers would potentially be involved because one of the reasons or one of the parameters influencing the BLG force is silicon oil, right? And you have silicon oil on the syringe and you have at least the FluroTec lamination film and B2 coating with some kind of lubrication on the plunger as well. So it could be both or it could be your process.

So what typically happens is you try -- you as a pharma company, try to discuss with the glass barrel supplier, with the plunger supplier and everyone's like, oh, no, that's not my fault. It's their fault. We're within spec. We don't know what it is. So everyone is passing the buck and you're kind of stuck in the middle and no one feels responsible. With the West Synchrony S1 PFS system, you have one source that you get your system from. So there is no one that we can pass the buck to, right? We cannot not take responsibility. It's our system, so we have to fix it.

And that is for you, this is a huge advantage. You just call your account manager and say, I have an issue, fix it. And so we have to fiddle in the background. We have to try to find out where the problem came from. But you just have to pick up the phone and call one person, no 3-way CDAs, no passing responsibility or anything. So that's really -- we see one very, very big advantage of the system approach.

Great. Our next question is from Brandon asking, do the components have independent shelf lives? Or is it one shelf life for the whole system?

Yes. So because of the system offering, there is a system shelf life and the system shelf life is, as of now, 2 years because that's the shelf life of the component with the shortest shelf life, so to speak. So they do technically have different shelf lives, which is why we decided to go with the one that is shortest, and that is 2 years shelf life for the entire system then. Yes.

Great. Our next question, does the particle specification include subvisible particles?

Yes. So the particle specification depends on the plungers that you are choosing. So as some of you might know, we have the NovaPure, which is our highest quality offering. And then we have the FluroTec plungers, which come in a Westar Select quality level. So both of these plungers come with subvisible particle specifications, but the NovaPure plunger because it's our highest quality offering has a lower particle specification as compared to the FluroTec Westar Select, which is also already low, but the NovaPure is just the lowest. And we specify particles from 10 millimeter and 25 millimeters. So yes.

All right. Our next question, did you test the auto-injectors with different viscosities as well?

Yes. So the ones that I just mentioned on the screen quickly, that was with water for injection. So that was just 1 cP of viscosity. But then we've also tested with 15 cP of viscosity, everything worked out well, and we're actually planning further testing with different parameters also and also the 2.05 ml as well. So yes.

Excellent. Our next question is from Tywon asking, how do you reconcile different risk profiles of different products with your design verification?

Different risk profiles of...

Different products with your design verification.

Different -- say it again, different risk profiles of -- the beginning.

Yes. How do you reconcile different risk profiles of different products within your design verification?

Risk profiles of different products. I'm not 100% sure I understand that question. So let me just answer how I understand it. So for the design verification approach, you obviously need to do a risk assessment, right? We did an FMEA. And within that FMEA approach, you have to assign risk scores. And obviously, as a supplier, because we don't know the actual application in the end, we cannot assign a risk score based on the actual usage and intended use application in the end. So we assigned the risk scores based on our knowledge of the drug independent part, so to speak. So the risk scores might not align. They might align, but they might also not align with what you individually have in your company.

Also anyway, every company decides that differently. So I think if we compare FMEAs from 20 different pharma companies, we get 25 different results on several of the aspects, I assume. So this is probably a topic that we can very nicely discuss in a technical meeting where we go through the verification data package and take a look at how we categorize the different test parameters. Hopefully, that kind of answered the question. If not, drop me an e-mail and we can discuss it.

Absolutely. All right. Our next question, are the system level specifications based on pharmacopoeia requirements?

So yes, so we had to adjust the methods a little bit to accommodate our system approach, right, using the fluid path because it's a system and we're using the fluid path. We had to adjust the methods a bit. So the particles method is following USP 788, where we're using a particle counter. The silicon oil from the entire system fluid path, again, is dissolved and then measured using AES, which we had to develop. And then endotoxins is per nominal volume of syringe system where, again, also we dissolve the endotoxin from the fluid path in the [indiscernible] solution, and then we measure them using a Charles River reader. I think that's standard. Everyone is doing that. And break loose glide force is just straightforward using an Instron device. Yes.

Perfect. We have time for two more questions. So have there been any discussions on PFAs and long-term replacements, assuming the coating is fluoropolymer.

Yes, a very obvious question. So yes, of course. So of course, the PFAs discussion is all over the place. Everyone is looking into it. So I don't think there's a single company in this world that is not looking at it. So we're obviously also looking at it. And also just like with the sustainability, this offering we currently put out in the market to that as a drop-in solution to the current market. But in the background, with our new developments, we're obviously also working on solutions answering the PFAs discussion out there, so coming up. Yes.

All right. Final question from Ken Roy. Does your package include transportation and shipping validation data?

Yes. Yes, it does. So the verification data package does include transportation and shipping validation data and -- or the transportation and shipping reports, summaries. And we've also done that prior to our DB tests. So yes, it contains, and we can -- happy to go through that.

All right. That was a quick one. So I think we can sneak one more in. This one from [ Chenzu ]. If we use the West system with a 2-year shelf life, then is the drug product shelf life limited to 2 years as well?

So the drug product shelf life is not related to our system shelf life. So the system shelf life means that the product is sterile for 2 years if you keep it in your warehouse, cool, not too much heat and humidity just sitting around for 2 years. Then after 1 year and 364 days, you can still -- you could use it, it's still sterile. So that is basically the claim. There is nothing really happening to the rubber. So it's not neither the rubber nor the glass break down after 2 years and you cannot use them anymore, but it's more the sterile claim.

So whenever you open your package, the syringe barrels and the plungers and feed them into your filling line, then actually your calculation starts new. Because you put your drug product on stability studies, which you have to do, you cannot, right, you have to do that for submission for regulatory submission. You have to give stability studies. And in the course of these stability studies, you're proving that both the glass syringe and the plunger are performing the way they should according to their intended use. And so you're extending your shelf life based on your stability studies. So it's two separate things.

That's excellent. All right, everyone, that is all the time that we have left for today. Don't worry if we didn't get to your question. I'm going to pass them along to our presenters and the West Pharmaceutical team to follow up offline. I'd like to thank Bettine and West Pharmaceuticals for providing their expertise today and to you, the audience. We appreciate you being with us and hope to see you again soon. Have a wonderful rest of your day.

Thank you very much. Bye-bye.

Good morning, all, and welcome. My name is [ Fazi Kash], and I'll be moderating today's session. It is my pleasure to introduce Eric Green, President, CEO and Board Chair; Bob McMahon, CFO; and John Sweeney, VP of IR of West to the JPMorgan conference. And without further ado, I'll hand it over to Eric.

All right. [ Fazi], thank you so much for the introduction, and thank you for the invitation for the JPMorgan Conference. Happy New Year to everybody, and it's a great start to 2026.

Before I get started into the West discussion, I want to just reference the safe harbor statement that's found on this presentation, also found at our website at westpharma.com.

I'm going to talk a little bit about West. It's a phenomenal story over several decades of where we are today, but more importantly, where we're going. If you think of from an investment portfolio perspective, we are the global leader in the injectable medicine space with what we provide each and every day. We have developed a significant moat around the business that has given us competitive advantage, continue to drive performance, particularly around our proprietary solutions, our reputation in quality, reliability and scale on a global basis.

We have an attractive business model that drives long-term construct growth of 7% to 9% organic growth and also margin expansion. Majority of that expansion is driven by mix shift, which I'll explain shortly. But the underlying drivers of that growth is really evolving around our high-value product components. It's being driven by really 3 key areas is the rising of biologics and biosimilars, our participation on those molecules, the development of GLP-1 injectables in the marketplace. And also, there's increasing regulatory requirements such as Annex 1 in Europe that positions West very well to be able to support our customers with unique solutions, existing molecules in the marketplace.

The fourth area is around the management team, has a success track record, and we recently strengthened with key additions to the organization, which we'll touch on. And lastly, but also very important is we have a very strong balance sheet and cash generation with this business model. So overall, very healthy business model that's unique in this space and it has given us the opportunity to continue to be the #1 player in the injectable medicine arena.

Let me get into greater details in each of those areas. First of all, what we do. We have a portfolio that's pretty robust. We produce over 41 billion components a year, of which is broken out into the high-value products and standard components. These are the typical elastomer components that you'll find in primary containment, whether it's a stopper, a prefilled syringe or a cartridge. And we are participating with the elastomer components on those drug molecules. And that's the majority of our business.

Secondly, we also participate in high-value drug delivery devices. This is the areas of administration systems that you'll find in a hospital setting for vial to bag or a vial transfer device for health care professionals. We also have containment systems driven by our Crystal Zenith through our partnership with Daikyo in Japan. It's a 50-plus year partnership, allows us to contain some of the most complex biologic molecules that are being developed as we speak. And also, we have a wearable platform of multiple different products, whether it's an auto-injector or an on-body injectable device that is in the marketplace today.

The third area of our business is contract manufacturing. And this is where our customers bring us their IP around an auto-injector or a multipurpose pen to be able to design, scale and mass manufacturing on behalf of our customer and we have this business located strategically in Europe and the United States. So from a perspective of portfolio perspective, it's pretty broad. It's pretty -- and it's servicing basically a very diverse group of customers, small, medium, large global customers across the globe in the areas of generics in the areas of small molecule and obviously, in the areas of large molecule, both biologics and biosimilars.

Just look at the top 30 pharmaceutical companies in the marketplace, we're working and serving those top 30 customers on an ongoing basis. And how does that translate from a market perspective? Our elastomer components is on roughly about 75% of the injectable drugs that are in-market commercialized today. And we aim to continue to strive for that level of performance.

At the end of the day, our focus is aligned with our customers. We are focused on patient outcome and the highest quality, best service reliability to build support our customers in the market long term. If you think about we are -- as I mentioned before, we are the #1 player in this space with $3 billion of revenue approximately, that was in 2024 and about 20% of operating margin. We have 25 manufacturing facilities that are able to produce the 41 billion components per year.

If I want to translate that to a number of patients that we touch is approximately 100 million patients a day. And so when you think about quality, you think about the culture and the purpose of the 10,000 team members we have across the globe, that is our focus to support our customers and able to provide high-quality products to our customers -- to our customers and ultimate to the patients.

The portfolio that we serve is quite diverse from a geographic point of view, from a product portfolio point of view and also market. If you think about geographically, we're really well positioned to be able to support our customers in the markets where they're servicing the end patients. And you think about our $3 billion of revenue, in 2025, we estimated the gross tariff impact on West is roughly $20 million.

Yes, we took steps to mitigate those tariffs. But more importantly, the reason why we're able to keep that number where it's at is because we are manufacturing in market for most of our customers, and we have the capability to tech transfer from one region to next and enable our customers to grow. The portfolio, specifically around high-value components. If you think about, again, as I mentioned around the elastomer components. HVP components is roughly in the third quarter of 2025 is 48%. That continues to grow. It's our largest part of our portfolio.

It's a fast growing -- it is in our long-term construct. It is our fastest-growing part of the portfolio, and it's actually the most profitable. And think of from an end market perspective, the biologics, we are at the 40% level. And only 5 years ago, we're at 25%. And we all know the factors behind that. The new molecules are being introduced in the marketplace, both the innovators and biologics, but also the biosimilars.

So again, a very diverse portfolio. We're very well positioned to be able to support our customers on a global basis. And more excitingly, we're able to support our customers on the most complex molecules that are being developed for the next generation of therapeutics. The macro trends that favor West are quite remarkable. When you think about the injectable market space, it is a fast-growing element within health care. In a subsegment of the injectable medicine space, I would say, is the biologics and the biosimilars. And that is also on the rise.

If you just think about the number of new approvals that are going through the FDA with BLAs is on the rise compared to other types of molecules, whether it's small or ANDs with generics. The pharmaceutical companies that we support, their spend has increased, but you think about the injectable medicine space actually the fastest-growing part of the portfolio double digits.

And I mentioned earlier about the complexity of new therapeutics that are coming into the market, our high-value product portfolio, particularly the higher end such as NovaPure is very well positioned to support our customers when they think about the primary containment needs on those new molecules. Another macro trend that is occurring is the regulatory trends continue to -- and the quality expectations continue to elevate. And we're very well positioned to support that.

With our new products that we're launching, the new processes we're putting in our manufacturing facilities, we are constantly challenging ourselves to drive higher quality to be to meet the new regulatory requirements that are being introduced across the globe will increase safety and quality for in patients.

And we're also very well positioned as mentioned before, when pharmaceutical companies are looking to onshore to the United States. If you think about our portfolio of manufacturing facilities, we can support that growth with existing assets and with controllable amount of spend needed to continue to grow those facilities. So a number of many macro trends that are supporting West future growth for a number of years to come.

What's unique about this business is that there is a durability and resiliency of the business model. There are going to be peaks and troughs that we did occur. If you think about the COVID vaccine time period where we were brought in to build to support the elastomer components. Basically, every dose that has been delivered and the seals also across the globe.

If you think about the -- if I go left to right on here, what's really unique about the business model is that when we work with our drug customers, they're identifying what is the optimal primary packaging solution for that drug molecule that they want to get approved and launch in the marketplace.

Once we are -- our technical teams work together and decide on the right formulation, the right configuration. Then our product is written in the drug master file that is our IP at West is written into the drug application with the FDA. Once approved, we're now on that molecule for the duration of the molecule. So it's a great opportunity for us to win early in the pipeline and see the benefits for a long term.

There's increasing compliance and also our customers are looking at ways to reduce risk. And that's why our high-value product components business has historically grown considerably over 10% and last 5 years, a number of years, and we expect that to continue to be high single to low double digits going forward. That's our belief in the market.

There's powerful growth accelerators happening today that we're able to respond to, you think of biologics, thinking about GLP-1s you think about the regulatory changes in Europe with Annex 1 and the capacity expansions required to support those growth and how we invested supports that growth driver that we're currently seeing and we'll see going forward.

Interesting, when we look at our business model, these are long current reoccurring revenue streams for existing molecules in the marketplace for a number of years is for the duration of the drug in the market. And that ultimately gives us sustainable growth when you think about market and margin expansion through a mix shift effect with high-value products and allows us to look at platforms and new product approaches through innovation to continue to sustain that growth for many years to come.

Let's go into deeper in a couple of the areas. Number one is biologics. We know our position. We participate over 90% of the new approvals of biologics that were in 2025. This is about 40% of our revenues, as I mentioned, and it does require the most complex part of our portfolio that we continue to expand and grow. If you think about the injectable reason why it's so attractive, as you just think about the growth of the biologics approval process is far greater than the other, the small molecules recently and over 85% are injectable medicines. Again, this is one of the key drivers of our growth for high-value product components for both biologics and biosimilars. And just to reiterate the biosimilars and the biologics product will use the same configuration and same economics for West and working with our customers.

The second area is around GLP-1s, how do we participate? How does West participate? We participate on the elastomers, whether it's in a vial configuration with the stopper. If it's in an auto-injector, it's a plunger and we also participate with a multipurpose dose delivery device that would be a plunger and also line seal that we provide at the end of the cartridge.

We also, from our contract manufacturing business, we do participate with partnership with our customers are taking their IP and scaling up to do mass manufacturing of auto-injectors and pens, both in Europe and the United States. So we -- in both parts of our -- both segments of our business, we're able to support this growing market and to be able to support our customers as they expand in new markets and also with new patients adopting the GLP-1s.

These are multiyear commitments with our customers. And we're able to leverage, particularly in the elastomer business, the investments we made during COVID in our high-value product plants to produce the products that are used -- high-value HVP products used with the COVID vaccines. Those assets are fungible for biologics and also for the GLP-1s that we're supporting our customers with.

Our elastomer business, our participation with GLPs, with elastomers is roughly 9% of our total business. In our contract manufacturing business, it represents about 8% of our total business. That should give you context of where we are with the GLP-1s. It's part of our portfolio. It's not the only part of our portfolio. We're very pleased will support our customers on this growth that we anticipate going forward.

The third area I want to touch on briefly is the Annex 1 regulations. This is a multiyear opportunity. If you think about the 41 billion components we produced every year, you take contract manufacturing on the equation, proprietary products is roughly around 35 billion components a year, of which 25% of those units are high-value products. About 70-plus 70%, 75% of the revenues are high-value products. On the flip side, 75% of the volume we produce in our facilities is standard products. And again, about 25% of the revenues.

So therefore, there's 6 billion components that we feel with our working with our customers of molecules in marketplace today. Commercialized molecules have been in market for a number of years. They are using our elastomer components, specific formulations that we're able to support our customers on the documentation and start raising the quality expectations to be able to meet the new Annex 1 regulations that came in play end of 2023. That now includes the primary packaging with elastomer in glass.

So our position to support our customers with elastomer is be able to continue on this journey. It's a multiyear effect, about 6 billion units today of the $26 billion that we produce, $25 billion or $26 billion we produce in standard. And as our customers adopt for the European market, we'll see how that evolves from a more global perspective.

This does drive revenue. Enhancement through ASP increases. Obviously, HPP has a higher ASP and a higher margin. And therefore, we're seeing that benefit in our organization in 2025 for the first 3 quarters, we talked about 200 basis point growth on the entire business has contributed to Annex 1. This does strengthen the customer relationship. And we continue to -- we will continue to drive this forward for, as I mentioned, multiple years.

Lastly, I want to talk about the growth strategy around investments that we've made. This support, we've made significant investments in proprietary for a number of years, particularly around the COVID time period. Following that, we made material investments in contract manufacturing to support the growth and specific contracts with customers that we're very pleased to be support with in both auto-injectors and multipurpose pens both in the United States and in Europe.

Those assets are in the rise of utilization. We're ramping up in those facilities. And we're also able to start not just producing the device, but now we're moving into drug handling, not fill finish, but drug handling, assembling the final packaging of the cartridge into the device to support our customers. As we think about going forward, we're very well positioned on the growth drivers we talked about, the biologics, GLP-1s and Annex 1s and our laser business by leveraging these 5 high-value product plants that we have, both in Europe, U.S. and also in Asia and Singapore.

Our capacity utilization right now is roughly around 60% on average. Now in the United States, it's less than that. In Europe, it's higher than that. So as we think about onshore in the U.S., we think about growth across the HVP platform. We have the capacity to continue to grow. That's why you'll hear more from Bob about our capital deployment, we believe, firm in our belief that we should be able to get our CapEx back to the 6% to 8% of sales going forward starting in 2026.

Again, very well positioned for growth, and we're geographically spread to build support of customers in any market they want to support. If you look at the portfolio from a size and revenue contribution, as I mentioned, HVP components is the largest element of 48% of our business, double-digit growth and I just mentioned all the key drivers. HVP delivery devices is 12%. There was an announcement on Monday. I'll talk about it in a moment.

But without SmartDose 3.5, it's about 8% and the growth of that unit is roughly around mid-single digit. The standard packaging, I mentioned is a significant amount of volume. But from a revenue perspective, and the growth rate is low single digit. And some of that is due to, obviously, moving up to high-value products where we want to go with that portfolio. But also that is more legacy product in the marketplace.

And then the balance of 20% is our contract manufacturing. Again, long term, we believe that's a mid-single-digit grower for the organization. From a profit point of view, it is very clear the high-value product components, 48% of the revenues in Q3 of 2025, greater than 70% of our gross profit. So again, our focus of investments, our focus on go-to-market is disproportionately towards the HVP components going forward.

This is another depiction of how HVP components have evolved over time. In '19 -- in 2019, we're about 42% of our business. We mentioned in Q3 of last year 2025 is 48% and we believe that will continue to grow for the number of years ahead of us. Again, multiyear opportunity and the volume perspective, it's only 1/4 of what we produce today. And this is the driver of the mix shift effect.

When we talk about mix shift, each and every quarter, this is the driver of that growth moving forward. I do have to -- I would like to comment about the team. And there's a number of new faces on this executive team that I'm very proud has joined the organization. I believe we have had a great run for a number of years at West. And I think we're embarking on another opportunity ahead of us.

If you think about one of the transitions we did earlier this year is that we moved from global leadership that we've had for about 8 years, very effective when we're much smaller as an organization. But we have transitioned about a year ago to the operating unit structure that has allowed us to create 2 businesses, proprietary segment and contract manufacturing segment.

What this allows us to do is drive more P&L down into the organization, into operating units, subsets within proprietary as an example. Accountability of leadership, speed, velocity to be able to respond to our customers and be more specific around innovation and R&D investments that actually accelerate a benefit to our customers and payback for return on to the company.

A couple of names I'll just mention here, you're going to meet Bob. Many of you actually do know Bob McMahon. You came from Agilent. It's a great company. And also joined a great company also and has been a great partner for the last 5 months. But he's been able to really relook at our financials and how we engage obviously with the market, but also how do we think about the investment thesis for West going forward. More to come from him.

I do want to comment that Aileen Ruff-Patry is our contract manufacturing leader doing a fantastic job and also Shane Campbell, who has 20-plus year veteran at DuPont, who brings that discipline running businesses to West and is on the ground running. Obviously, on the innovation side, I'm very excited that Devesh Mathur has joined organization has deep material science, coating technology and device manufacturing experience with a number of companies, is bringing that capability, innovation pipeline development to our company from an enterprise perspective, but more importantly, aligning and having our operating units more focused on where we can get the best return on our investments.

So more to come. Great team. I don't have enough time to go through everybody, but I'm very proud of where we are. All that accumulates into what I believe is a really compelling story of what we believe long term of 7% to 9% organic growth in the top line with all the factors I spoke of earlier.

With the mix shift effect very comfortable with a 100-plus basis point of operating margin expansion, a majority of that is going to be in the gross margin area. This will drive attractive double-digit growth for EPS. And we have a very disciplined capital allocation that Bob new to the organization is relooking at our approach, but -- and I'll talk about that in the next slide here.

So we do have a strong cash generation. We have a disciplined capital allocation process that I will speak to. So the operating cash flow, the first 9 months last year grew roughly 9%. And if you think about the free cash flow because the CapEx we're bringing it down somewhat in 2025, but going forward, you see the free cash flow grow around 54% the first 3, 9 months of last year.

So we do believe that the levers around higher growing businesses, higher profitability, lower CapEx into the market will drive free cash -- improving free cash flow going forward. As I mentioned, we have a strong balance sheet with a net cash position. We're going to continue to invest in organic growth is portionally in our high-value product components business.

Again, CapEx is roughly around 6% to 8% going forward. The cash flow far exceeds capital expenditure requirements. We do believe there's some attractive capital deployment in the pipeline, again, being very disciplined and accretive to where we are today, but more importantly, able to provide more capabilities to our customers around our high-value product portfolio. And obviously, looking at how we can continue to drive return capital to our shareholders.

And if I want to spend one moment on the SmartDose transaction that was communicated Monday morning. This is a -- it was less than 4% of our sales. We reached an agreement with AbbVie. We'll be transferring the IP and the manufacturing capabilities to them. It's a dedicated facility, so it's a very easy transition. Great customer. We're really excited about what they're doing with the product today in market with their -- with one of their drug molecules. And it's a very good win-win situation for our customer.

And obviously, we work with them on a number of fronts. But this particular one, we decided it was -- whereas a two-pronged approach to drive down costs. The team is doing a great job on driving cost out of the system and automation is coming online. But as we think about long term, the limitation of the market to a customer. We felt it's best to divert our focus and attention in other parts of the portfolio versus on SmartDose 0.3, 0.5. More will come from our -- in our February 12 call on how that leads into our -- in our guidance.

And lastly, I just want to reiterate, phenomenal great business. Long term, macro trends support the growth, #1 player in the marketplace. We have a pretty robust strategic moat around the business that we'll continue to expand and build upon. We do believe in the 7% to 9% organic growth and margin expansion, long-term business model, great team in place and excited about the future for this team. and we have a strong balance sheet and cash generation. So on that note, thank you very much. We'll transition to Q&A. And again, thanks for your time.

Great. Thanks, Eric. So firstly, West has an attractive business model. Why do you think that West can return to its long-term growth rate of 7% to 9% organic revenue growth and margin expansion?

Do you want to?

Sure. First of all, it's great to be here and really excited to be part of the West management team, really leading -- helping lead the next chapter of growth for the company. As Eric showed we've got a lot of, I'd say, powerful secular growth drivers that I think we are uniquely positioned to win in.

If you look at -- first, I would talk about kind of the biologics, as Eric mentioned, the number of biologics that are in the clinical pipeline today are greater than they've ever been. And if you think about our participation rate, we talked about a really strong market share position of 70% to 75% across the entire market. But in biologics, we actually have 90% participation rate. So as more biologics come to the marketplace, not only are they the higher value products, which helps drive that mix shift, but you also have higher participation rate for West. And I think that speaks to our consistency around reliability, scale and ability to partner with our customers across the globe.

I also think Annex 1 is a powerful growth driver that will really help drive 200 basis points of growth going forward. And as we think about the increased requirements from a regulatory perspective, we expect to see more and more companies adopt the high-value products and actually tied into the onshoring phenomenon that we expect to see here in the U.S. with Annex 1, those products are being moved to high-value products.

As those products then move back to the U.S. there's an opportunity, I think, for us to take those high-value products and move them into the U.S., so that there's actually resiliency in the supply chain. And so that -- and then coupled with pricing opportunities as well as GLP-1s, I know there's -- I'm sure we'll get into some questions about GLP-1. I'd rather be part of the GLP-1 phenomenon. We think it's durable than not. And if you think about not only the existing products that are on the market today, but the pipeline of opportunities there as well, we're well positioned to continue to grow that business going forward.

Correct. And the highlight from the third quarter was the HVP components. We're up 13.3% on an organic basis. Can you tell me a little bit about what drove that performance? And how do we anticipate this business to trend in the fourth quarter?

Yes. The HVP components business, as we mentioned earlier, we believe it's a high single to low double-digit growth. And the key drivers of HVP components today has been around GLP-1s is one of the key drivers and also continuation of new launches of biologics and biosimilars in the marketplace. And we're seeing the uptake of Annex 1. We originally said when we begin 2025, roughly 100, 150 basis points.

I think in the third quarter, we mentioned it's roughly around 200 basis points. So a little bit stronger than we anticipated. So if you look at all those 3 factors, that's what's driving that performance. And these are long-term growth trends that we were feeling really comfortable. And we do have the capability to continue to grow with our customers as the markets expand.

Yes, I'd just add one thing. I think if we look at that 13%, one of the things that's really very comforting gives me optimism for the future is if you look at ex-GLP-1, our core business in HVPs continue to grow. Obviously, we were dealing with some destocking as well as the rest of the marketplac in last year.

We've largely passed that. We're behind that now. And we actually have seen that in our business with improved performance in our HPP business, GLP-1 improving growth rates throughout the course of '25, and we expect that to continue into '26.

Correct. And if we go to GLP-1s. GLP-1 elastomer business grew from 6% of revenues in 3Q '24, to 9% of revenues in 3Q '25. That's up about 50%. Do you see growth continuing for GLP-1s in the future?

Yes, not at that pace. I mean, we obviously are able to respond to our customers' needs on the demand, and it was probably a little more than we had originally anticipated, but we're able to respond to support them on the elastomer side of the business. We do believe it's a strong -- it's a double-digit grower of the market, and we'll continue to support them. But at the 50%, that laws large numbers is a little more difficult to continue at that clip and with -- as the market expands, there's probably been other factors that will come in that our customers are driving and we'll support them.

So if prices change if it becomes access to the drug is more available to a bigger population of patients. We'll be able to support them because we are focused on volume. And so yes, it will be still a double-digit growth for us at West, but not at the 50% clip.

Yes. Maybe just to build on what Eric was talking about. When we think about this, obviously, we believe we're still in the very early innings of GLP-1 in the adoption. And I think probably some -- there's been a fair amount of discussion in other rooms about that, and there's probably some confirmation of that as well.

If we think about what's happening in that marketplace, not only is there a rush to kind of lower cost, lower price for consumers to actually increase access certainly here in the U.S. with the administration agreements with the 2 large players there. You're also seeing more indications being investigated and interrogated throughout the clinical piece and then you have the opportunities in biosimilars around the world in certain markets. And so we think that the opportunity to kind of expand the pie and continue to grow with our customers here is pretty strong.

And how will the introduction of the oral format of GLP-1s in fact GLP-1s, HVPs revenues going forward?

As you know, we don't participate in oral. So as we look at it, we've had -- we've been pretty open about how we've been looking at the market of GLP-1s going forward. We do -- we've been modeling for our own investment thesis around 30%. But we'll let the -- our customers have those -- bring those numbers to the table.

But we think it's -- as I said about the different pricing in the injectables side, we also think that the orals will definitely open up new markets in new geographies. So we don't believe it's going to be cannibalizing. But we do believe it will -- from our vantage point, it would be growing the market as a whole. So -- and again, very well positioned on the injectable space, and that's where we're going to continue to focus.

And what are you seeing with regard to destocking? Is destocking now over?

Yes, it's pretty much over. We're always going to have a struggle here and there due to working capital by our customers periodically. But in general, yes, destocking is over.

And the big news this week is that you're selling the SmartDose business, what was the thought process behind that decision?

Do you want to go for it?

Yes. I think we were very open about kind of looking at a two-pronged approach there. One is we needed to get the cost down. I think the team has done a good job of doing that throughout the course of 2025. But we also -- we're looking at, hey, are we the right owners for this asset long term.

And I think the team is very proud of what they've been able to accomplish over the last several years and really helping support drugs on market with that technology. But when we looked at the opportunities going forward, we felt that we have better opportunities didn't hit our profitability thresholds, and we think that AbbVie is a better owner long term than we are we think that we can then redeploy kind of the time and resources that it's been taking to drive that business and the cost down to a higher growth opportunities, such as our HVP components as an example.

So while we were making progress and we'll continue to make progress in reducing the cost, we've got a good relationship with AbbVie, and we've developed that was a win-win for both us as well as AbbVie most importantly, patients to continue to have this product on market and drive, I think, additional, not only opportunities for us to redeploy those resources into faster-growing opportunities for our shareholders.

Great. And maybe one last question before I leave you with some closing remarks. What is your capital deployment strategy?

Yes, it's one of the things that I think really attracted me to this company is it's a great business with a durable recurring revenue stream that generates a significant amount of cash, cash. We've been overinvesting in capital to take advantage of some of that growth for the future, certainly with COVID investments.

As you saw with free cash flow growing much faster than our operating cash flow getting at CapEx back to kind of the 6% to 8% range. It gives us an opportunity to deploy our capital to continue to grow the business. Certainly, first off is organic growth, continuing to invest disproportionately in our high-value business.

But then with that I think we're looking at opportunities to -- where we can actually augment our high value -- our core business with potentially new technology. So looking both organically and inorganically. But then at the end of the day, we're also looking to deploy in a more systematic approach returns to shareholders, right? Expect to hear more as we continue to dive in and throughout the course of this year.

Eric, any closing remarks?

Yes. First of all, thank you again for the invitation. Very effective -- really productive discussions we've had with the investment community. We're excited about our future at West. We talked about the macro trends. We're very well positioned. We are the key player in the marketplace is critical with our customers. We know we have to earn it every day, and we will continue to do so. But I'm really pleased on where we're going. We have the right team. And I believe there's more to come. So thank you very much, and have a good day.

Thanks, everyone.

Thank you, everyone, for joining us. I'm Patrick Donnelly, the tools and diagnostics analyst here at Citi. Happy to have Bob McMahon from West with us today. And I thank everyone for being here.

So Bob, maybe just to start high level, you've been there 6 months-ish?

4.

4. Okay. Yes. Maybe just your initial kind of views coming into West. I know we chat at the beginning, felt like there was a big margin opportunity, not only the mix stuff, but maybe some other low-hanging fruit. But maybe just your initial take after 4 months here in the seat and the opportunity ahead.

Yes. Thanks, Patrick, and it's a pleasure to be here. And I couldn't be more excited to be part of the West team. Eric Green, the CEO, my boss and the rest of the kind of leadership team. It's a really exciting time to be at West. And as you said, I've been here for a little over 4 months now, had a chance to tour many of the facilities, talk to a lot of customers as well as our employees. And I've come away even more excited about the opportunities in a couple of areas.

And as I think about kind of the opportunities that are in front of us, we have a great business. We've got great market share in an industry that has very nice tailwinds behind it in the injectable medicines area where we are clearly the market leader. But that being said, I know we can do a lot better. We can do a lot better in terms of operational improvements, being able to drive more growth faster as well as, as you mentioned, on the margin side.

And after 4 months, I'm actually even more excited about some of the things that I'm seeing that the team is undertaking and that we can undertake together to drive even more profitability and improvements going forward. And I'm sure we can talk a little bit about some of those things. But we enter here in Q4 with some nice momentum coming out of Q2 and Q3 and are excited about that continuing into '26.

Yes. Yes. And I know we've known each other a long time. I mean, do you think -- when you took your guidance philosophy, I think we joked -- you trademarked the word prudent from Agilent. Has that changed at all in terms of how you approached both 4Q? And then obviously, we'll talk '26 a little later. But even with the 4Q guide, I think the margins are down sequentially, which we can dive into. But how has your guidance philosophy changed, if at all, and how you're approaching things with West?

Yes. It's a great question. And yes, I can't change my spots, Patrick. And so I would say that, that comes with it. And I think we want to -- it's not lost on us that we need to build back some credibility as well. And I think we've been doing that over the last couple of quarters. As we look at me just kind of getting a chance to get under the hood, so to speak, in terms of understanding kind of what's going on and what's driving the business, I think there's some real opportunities to further interrogate the business.

We're seeing that not just looking at talking to our customers, which we do a fantastic job of, but also looking at analogs outside the -- and just really understanding the marketplace a little better. And we're seeing that, and we're just going through our business planning process right now. And I see a step change in here, a step change in function just around the amount of analytical rigor that we're going through. And I think that will make us a better business that will allow us to make better decisions, allocate capital more effectively and then ultimately improve shareholder returns.

Yes. And I know that's one thing when you came in, it's the visibility and the projectability of the business was something you wanted to clearly improve. And again, the execution was a little choppy before you came in. I mean, is that something that takes some time? Is there simple changes that you made? And again, where are we on that visibility journey in terms of how you're feeling about?

Yes. I'm feeling incrementally better, but it is a journey, Patrick, as you said. I mean I think one of the things that we're doing is we do a good job of looking at internal data and as I mentioned, talking to our customers, but one of the things that we're doing right now is building out some more capabilities around looking at the marketplace, not just our market but analogs. An example would be bioprocessing. That's a very good, I would say, leading indicator to our products because they're upstream or downstream. And so as we think about that, we had looked at it, but more institutionalizing that, understanding the funnel, looking at kind of metrics around delivery dates and so forth.

So I wouldn't say we're done yet. I don't know if we're ever done from that standpoint, but we are improving that rigor. And I think one of the things that really got me excited about coming to the company, and I think it's underappreciated from the investment community is something that Eric did in moving to the operating units. So we've got an operating unit proprietary that represents 80% of the business. That's where our high-value component products are, and that's where the bulk of the -- both revenues and profits are. And then you have Contract Manufacturing. That's 20% of our business, the remaining very different from that standpoint in terms of kind of the operations and kind of how to execute.

And so what that's done is actually allowed us to really focus on the uniqueness of each one of those businesses, drive accountability and faster decision-making, which I think is ultimately helping support our customers better, but also execute better from the standpoint of -- on a quarterly basis. Now one of the things that we are doing from the kind of the visibility is continuing to improve not only the internal analytics, but also the external, as I mentioned before. And as we're going through this business planning process, just scenario planning so that we can be able to react faster to changes in the marketplace if we need to, but then also have what's plan B and plan C.

Yes. Okay. Yes, maybe we can dive in on the core business. So I mean, last quarter, you called out customer ordering patterns are normalizing, market conditions are healthy. I guess what's the confidence level, again, before you came or maybe the first quarter, there's still some of the stocking issues. Is that fully behind us, the confidence level there? And maybe just kind of an overview.

Yes. Our confidence is increasing every day when we look at kind of the ordering patterns across our various end markets. And I would say it's largely behind us and expect it to be fully behind us here in this quarter. And as we think about kind of the momentum that we've seen across the 3 quarters, of this year, we've seen increasing improvement.

And so not only looking at our own internal performance, but also looking at some of our external metrics as well. We're also hearing other companies, as we were saying before, saying that, hey, stocking is -- destocking has improved kind of in the rearview mirror, which is great for our business and moving into the momentum that we have into '26.

Yes. Yes. Okay. And maybe quickly on delivery devices. I think that was flat if you take out the incentive payment. Maybe just talk about what you're seeing in that market. You have the SmartDose piece that seems well understood, but maybe we can talk about that a little bit too.

Yes. Yes. Our drug delivery device business, about 14% of the total company. As you said, it was down year-on-year, but flat if you take out the onetime incentive payment last year sequentially consistent Q2 to Q3. There's 4 main pieces into that SmartDose and then 3 other products, Crystal Zenith, SelfDose and then our admin systems. And they're performing very well. We'll take SmartDose in a second because that's one of the things that we've been really working on over the course of this last year in terms of improving profitability.

But those remaining parts of that business have grown year-to-date and have very nice margin profiles. And we are expecting that business to grow mid-single digits we've just added, and I'm sure we may talk about it, the Synchrony launch, a prefillable syringe opportunity that kind of fits in that area. We've kept it separate just for focus and so forth, but it's in that same genre of product opportunities and very nice margin profile and fits a nice product need for our customers, we believe.

Yes. And on SmartDose, I think you talked about all options still being on the table. Where are we on that front? And is there a way you can kind of break down the profitability of SmartDose? I know there's a little bit of a debate in the market about that.

Yes. I will try to give you at least some flavor. probably won't go into all the details around the kind of the profitability other than to say that SmartDose is about 4% of that 14%, it's about 4 percentage points of total company sales, just to kind of give a frame for it. And we've been on a two-pronged process. It's dilutive to the company margins. We can and need to do better from the standpoint of profitability. We have improved profitability every quarter through some real tough work that's been done on the shop floor, improving yields and waste and productivity and so forth.

And we're investing right now in an automated line that's scheduled to come online in Q1 of next year, which should help a real step change in cost improvement. And so we've got a good path in terms of that, but we're also looking at are we the best home for that. And what I would say is, I have high confidence that which either path we choose for that business in '26. '26 will be a better year than '25. I would say that ultimately, we expect to make that decision fairly quickly. We are moving with a sense of urgency and hope to have a decision made before we give formal guidance early next year.

Okay. And I guess as you invest in these automated lines, what's the right way to think about as those come online, what that means to whether it's profitability or the overall business in terms of that piece.

So the automated line is a real -- if you think about where we are today, we have 2 lines that are largely manual. We have one that's fully manual and then one semi-automated. This takes that automation to kind of full automation, so to speak. It not only increases our capacity, so our ability to manufacture and scale up, but it also reduces costs once it's fully ramped. Think about 2026 as kind of a transition year because you're ramping it up and -- so we still have the automated lines. But when that would be up and -- or excuse me, the manual lines, when that would be up and fully up and running, we would be able to reduce some of the manual lines.

And so -- if all goes as planned, what it would enable us to do is get our profitability margins more in line with the overall high-value product components business. That's likely a '27 line just because of the transition time it would take to ramp that product or that product line up in '26. But it is a -- it's well on its way to improving the profitability this year as well as into next year.

Okay. Okay. We'll keep an eye out for that update. Maybe we can turn to GLPs, surprisingly to you're going to cover those. I guess...

I've never had this before. I don't know what question it is, but...

Maybe we'll start at a high level and we'll work our way down to the nitty-gritty on this one. But maybe just high-level frame up where you guys participate. Obviously, you have the Proprietary Product side, you have the Contract Manufacturing side. On the injectables and we can start from there.

Yes. Maybe I'll start with the one that's probably the least question, which is the Contract Manufacturing. So in total, GLP-1s make up 17% of our revenues in Q3. 8% of that revenues were in our Contract Manufacturing, where we both make single dose as well as multi-dose pens. And those are well-known programs that we work with our key customers. The other 9% is part of our high-value components part where we also provide -- we have a very good participation across all the players within that marketplace. And that has been growing very nicely in line with the growth of GLP-1s. And so we have stoppers, plungers as well as lined seals. So we provide products for all the current platforms that are out in the marketplace today.

Yes. And how are you guys thinking about -- maybe we can stick to the Proprietary Product side. How are you thinking about the growth rate as we work our way forward the next couple of years? Obviously, the oral piece has come up a lot with the Orfo launch looming in 1Q. How do you think about the injectables market? What are you hearing from your clients there?

Yes. I think it's important to think about this in a couple of different ways. One is the level of penetration of these products today is still in its early innings, not only here in the U.S. but globally as well. And so we think that over the next -- the rest of the decade, the penetration and access for GLP-1s will continue to grow. And so I don't think it's an either/or, it's an and from the standpoint of the adoption of orals.

If you just look here in the U.S., just most recently, there have been a number of developments with the White House and the administration for both the major players lowering the cost for Medicaid and Medicare, which will increase access. We think that, that's a positive sign for not only the number of patients that could be covered under our insurance that will drive volume and it will benefit West.

But then also looking at the global nature of the business as well. You've got a number of products that are, I think, going to be launching here relatively soon on the generic side, which should help improve access. And we have a very high participation rate across all the major players in GLP-1. So I think the way we think about the oral adoption is it will take a portion of the market since it will be a new modality, but it is a different side effect profile, different efficacy. And given where we see things over -- by the end of the decade, we think about 30% of the market will be oral.

But when we look at kind of the number of -- the amount of penetration, both oral as well as injectables will continue to play an important role and both will grow. And we're expecting growth next year in our GLP-1 franchise, maybe not at the level that it is this year. But what's really exciting to see from our standpoint, I'm sure we'll talk about it is if you look at our high-value business ex-GLP, every quarter has improved. And in Q3, we grew mid-single digits in HVP components ex-GLP-1. And our expectation is that will continue to improve going into next year. So while GLP-1s, we're not solely dependent on GLP-1 for growth. It is certainly a benefit, and I'd rather be in GLP-1s than not, but it's not the only growth driver for us.

Yes. No, absolutely. And I guess when you think about the right way to think about your guys' business, is it injectable volumes that's what matters most. Pricing, you guys are obviously not really sensitive to. So again, price coming down, volumes going up, presumably a very good thing for you guys. What are the variables in that?

Yes, that's the right way to think about it. We're still a relatively small component of the price of these drugs. And so volume is the right way to think about this. Access is king for us because that will drive volume. And we play across all of the platforms, which is a good thing for us as well.

Yes. And another dynamic inside GLPs is kind of the single-use versus the multi-dose. It seems like some pieces are swinging towards multi-dose. What's your view of how this is playing out, and then we can get into what it means to you guys?

Yes. Our view is that there's room for both single-use as well as multi-dose. If you think about Europe, it's largely a multi-dose format and has been for a number of years. So we're familiar with that. We actually, on our Contract Manufacturing side, produce some of those products. And in the U.S., it's largely a single dose, but we do expect multi-dose to play a role here.

Now we don't expect it to switch immediately. I think it will switch over time. There's some inherent benefits associated with single dose. You do have to change the formulation on a multi-dose, different preservative, different regulatory pathway and so forth. And so -- and we participate in both. So we see this as being a slower transition. Both will grow, and we'll participate in both of those as well.

Yes. And is there a simplistic way to think about just the economics for West, when you look at multi-dose versus single-use vials, injectors, whatever it may be. Is there some way you can just kind of frame up what this transition could mean if we do see a...

Yes. It gets a little closer to discussing the economics associated with the customers, which we don't do. What I can say is vials and single dose, the economics are roughly the same. The multi-dose doesn't have as many parts per dose. So you -- but there are some other elements associated with it. So I'll just kind of leave it at that. I don't want to give it a formulaic because it's not as easy to do.

Yes. Is it as simplistic for some of these as if multi-dose is 4 shots, it's a 1/4 as much to you guys? Or is that the wrong way to?

I'd say directionally, that's probably accurate, but it's not that formulaic.

Yes. Okay. Understood. But again, to your point, I guess, high level, GLP is still a good market to be in. Injectables still confident in growth. And again, maybe some changes under the hood in terms of single-use versus multi-dose.

Yes. And I think if you think about -- we're talking about the products that are out in the marketplace today. As we think about products that are still in the clinic, we still have a very high participation rate, not only with GLP-1s, but also without ex-GLP-1s as well, particularly in the biologics space, where if we look at our overall market share, it's 70%, 75% in biologics, our participation rate, which is the best proxy we have there, it's 90-plus percent. So certainly, as more and more injectable biologics come out, that helps us from a standpoint of market share perspective. And then in addition, there -- these new indications that are currently being investigated for GLP-1s as well as new molecules. So I think that there will continue to be opportunities for these newer modalities to come out and West to benefit from that.

Yes. And I guess in a similar vein to GLPs, I mean, another big growth opportunity for you guys, you mentioned biologics, biosimilars even we had the FDA Commissioner this morning kind of pushing hard to say, we want more biosimilars, make it easier. Biologics are too small, a piece of the market. Maybe talk about that opportunity for you guys, what it could mean to see some more of those get over the finish line.

Yes. We very much agree with that kind of view. And when we think about the biologics, you just look at the pipeline and so forth. And anything that can help speed up the approval of biosimilars and make it easier from an access perspective or even a cost perspective, I think will benefit not only patients, but West as well. When we think about biosimilars, it's actually, in many cases, almost the exact same product that the branded product has because the regulatory pathway is the same.

And so from an economic perspective, we're somewhat agnostic between branded and generics once they go generics. And so we think that there is an opportunity to continue to grow that part of our business even faster as products come to market. And at the end of the day, as we were talking about one of the things with the GLP-1s, you're seeing the lower cost to increase access. Biosimilars do the same thing across the entire portfolio. So I think that, that not only helps control costs for the health care, it increases access and helps benefit our business indirectly.

Yes. And then another growth driver kind of outside GLPs is the Annex 1 piece. Those project numbers continue to move higher, a nice shift for you. I guess what are you guys seeing there? How big of a tailwind can that be as we move forward?

Yes. It's one of the things, and this is a growth -- or a growth driver that's non-GLP-1 related. So Annex 1 for those is increased regulatory requirement in Europe first. But now what we're seeing is more broad adoption of these, not necessarily through regulation, but just in terms of increased regulatory scrutiny and pharma companies wanting to kind of harmonize across -- some wanting to harmonize across their geographies.

And so it's taking standard products or lower high-value products and providing more value-added services to them, which is very beneficial for us, but it also provides value to our customers as well because you're able to either sterilize, wash or inspect the products before they come into the warehouse on the incoming QC side, so they don't have to do as much QC and can get product out the door faster.

We're seeing this -- we saw this as -- at the beginning of the year, 150 basis point tailwind to our growth. We've actually just recently upped that to 200 basis points of growth here in '25. And we have, as you mentioned, 375 ongoing programs that are currently being tech developed with our customers. Our portfolio or pipeline of projects is even greater than that. And so we expect this to continue to be a growth driver for multiyears. We've sized the opportunity just in Europe alone at 6 billion parts -- we're in the early innings of converting that number of components. And so we think that this will really be able to be a nice mix shift going forward, and it's a win-win for us as well as our customers.

Yes. And you mentioned, obviously, Europe is where it's happening. Are you seeing other countries look at this? Are you seeing biopharma companies that are multinationals kind of say, hey, why don't we just fall in line with this because at some point, it's going to come? What's the right way to think about that?

Yes, we are. We haven't seen any formal regulations, but what you're seeing is this kind of regulation of continued -- regulators looking at the concept of continuous improvement, continuing to drive improvements in the manufacturing process. And a lot of this has to do with containment -- or contamination and sterility and those like areas. And so we are seeing increased questions and some scrutiny in places like the U.S., the FDA continuing to ask questions here. And that, I think, is helping facilitate some of the programs.

We are seeing -- as you're saying, some of our customers saying, well, this is a European, it's good for an entire business. It also provides them with flexibility to be able to take our products and redirect them if they need to, also gives them flexibility. And that's increasingly important, obviously, in the world of tariffs, right? And as we think about giving flexibility to supply chain. So while it started in Europe, it certainly isn't confined to Europe. And so we see this as a kind of a multiyear growth driver.

Yes. And you mentioned the contribution ticked up higher as the year goes. I mean, is that folks finishing projects earlier? Is it customers moving up the HVP curve higher? What's the right way there?

Yes. The good news is it's a little of both. So we've been -- projects, depending on kind of what the complexity of it can take anywhere from 12 to 18 months, but they can also take shorter time frames than that if it's a simple -- a more simple transfer. And so what we've seen is both projects being able to be executed a little faster, but actually more projects happening as well. And if you think about that, they don't happen all on January 1, right? They happen throughout the year. So this increase should pay dividends into '26 as well. And so we feel good about kind of the momentum that we have in that and the relationships that we have with our customers to help them along that journey as well.

Yes. And where are you seeing in terms of the HVP curve where most of these customers are showing up? I think the range, the low end of the margins are maybe 45% and NovaPure at the top is 70%, 80%. So obviously, a great mix shift coming your way. But where are folks kind of shaking out in terms of that traction.

Yes. It's really across the board. We're meeting our customers where they're asking us to meet them. And so this is a situation where we're trying to help solve problems together. And so you're seeing it along across that continuum. And it -- we would expect that to continue. And the real question is how often? There may be multiple kind of bites at the apple over time here, as we continue to look for ways to continue to provide services and so forth. And so we see this as not a discrete event, while it -- there is discrete regulations. We have an opportunity to do this for several years.

Yes. And obviously, the HVP stuff, I mean we talk about GLPs, Annex 1, biologics, biosimilars. I mean, are there any other key areas you'd call out as big growth opportunities where you look at, again, particularly that ex-GLP number in terms of some drivers?

I think if you just look at the level of investment that's happening in the R&D pipeline, it's in this -- it's in West sweet spot in the biologics, in the injectables area. And so I don't know if we'll ever see -- never say never, but we're not dependent on the next GLP-1. I think if we look at -- we've got a lot of I think, opportunities to continue to invest in our business and drive with the tailwinds that we have, given that we are the market leader, we don't intend to see that to anyone. We're continuing to invest not only in capacity, but also in making sure that we've got the right products for the customers when they need it. And so we're really excited about that opportunity going forward.

And then maybe sticking on the margins, that 4Q number, you are talking about a sequential step down 3Q to 4Q. It sounds like maybe some increased investments. What is the bridge there? Where are those investments going? Is it a little bit of kind of creating a more supportive base into '26? What's the right way to think about it?

Yes. It's creating -- so there's a couple of areas when we think about that. So obviously, we were preparing for the launch of our prefillable syringe, Synchrony which we want to get off to a good start. We're not launching that until -- commercially until January, but getting all the product and training and efforts there and creating some momentum so that we've got a nice momentum going in. So the good news is we're not draining the tank, so to speak, to try to get into the rest of this year and building ourselves so that we've got a good start into 2026. So think about it as investments for growth as opposed to cost for cost's sake.

Yes. And then to your point on '26...

And maybe some element of prudence.

Some prudence, yes. In terms of '26, you gave some initial commentary in terms of the moving pieces of the CGM exit, the drug handling piece, the SmartDose automation. I guess maybe just high level, talk us through how you're thinking about the variables into next year and the things we should be keeping an eye on as we start to dust off the models here.

Yes, yes. I think we came into the third quarter call with some nice momentum. We expect that momentum to continue here. And we talked about looking at where the Street was and feeling that it was in a good place. We're still going through our budgeting process and still feel that that's the case. One of the things I see is continued momentum on the biggest part of our business, the HVP business. And so while our growth algorithm for next year isn't dependent on GLP-1s growing at the same level that they are this year, we actually expect a slowdown. Now still faster than the company, but not at the same levels of growth that we have this year. But more than making that up is actually going to be the growth of the core HVP business. And so continue to see good demand there going forward.

In terms of puts and takes, obviously, we'll have a decision here to make on the SmartDose and keep that kind of discrete on the side. But within Contract Manufacturing, we talked about a CGM contract that expires at the end of Q2, and that creates roughly a $40 million headwind in the back half of the year. Partially offsetting that is a $20 million-plus ramp for drug handling in Contract Manufacturing. Now that's throughout the course of the year. And so -- and we're actively looking to fill the remaining, call it, $20 million there with a portfolio of programs that we're currently bidding on.

So if we think about GLP-1 still growing, but not as fast. We don't need it to grow as fast if it grows as fast. Certainly, life will be real good. Continued growth in our HVP business. And I would say, standard products growing the way that it has in the last couple of quarters as we move up the value chain from Annex 1 and then the Contract Manufacturing puts and takes.

Yes. And with the -- I guess, the CGM piece, I know there's an effort to backfill some of it. What do those conversations look like? What could that therapeutic modality look like? Would the margins be better than it used to be? Maybe just talk through the opportunities that are there.

Yes. I think maybe if we look at our Contract Manufacturing business more holistically, one of the things that we are trying to do is we recognize we've got to improve the economics there. It is a different model than the rest of the business. And so we've been very thoughtful about what are some of the new programs that we can go after that actually help close the gap between our company average and kind of where we are today. And so that was one of the reasons we chose not to bid on the next-generation CGM program, because we just didn't feel like the economics were going to be there for us to be able to make the investment worth our while.

And so we're continuing to look for higher value-added being more important to our customers from a wallet share perspective that will actually improve our profitability standpoint. So those are -- we have ongoing conversations with a number of customers today or potential customers, some are existing customers, some are new customers across a number of different modalities. So I'd probably -- without getting into too much detail, what I'd say is it's more similar to some of the newer programs that we have. We're not dependent on just one. We're looking at varying sizes of opportunities to fill it as well. And so our goal would be to be able to highlight when we are able to do -- make some of the announcements around being able to fill that in due course.

Yes. And then on the drug handling side, I had it down at $25 million to $30 million, but maybe that's a little bit semantics. How much of that is kind of filled versus going after? And what's the right way to think about when you guys will have visibility into that number?

Yes. So maybe to your first point, it's more semantics than anything else. We're not taking down our expectations on drug handling. If anything, we feel very good about that. I would say right now, we're in the midst of qualifying the lines. We're doing some of the regulatory and are on track to ramping that throughout the course of this year. The real question is how fast can we ramp it.

I think it's important to say whatever the number is this year in '26, that's not the peak number. $20 million to $30 million is not the peak. It's much higher than that as we think about kind of the ongoing. And I think this is a real opportunity for us to be able to showcase that higher value opportunity that we're providing. And maybe for the benefit in the short period of time, we make the pens today.

What drug handling is for us is we're taking the vials that are already filled. So we don't doing the fill finish but we're taking that finished vial and putting it in to make a finished pen. And so what that requires us to do is have incremental cold storage. We have to verify that the API is, in fact, the right ingredient and then we have to create lot tracking for all this -- the systems associated with that. That creates value for our customers because it should increase the speed of production because it is reducing a step, so to speak, in terms of at least shipping product back and forth. And so it should be a value to not only our customer, but also more value for us as well. So we're excited about that, and we'll see how things go.

Maybe in the last minute or so, the margin piece, again, I know it's an area where you're excited about coming in. Not only do you have that mix shift, we talked obviously about the high-value stuff, but you also have, again, maybe some operational improvements to make. How do you think about the potential for not only '26, but just going forward when you look at whether it's the footprint, obviously, the mix shift, what's the overall...

Yes, I'm really excited. Obviously, the beauty of that is it's largely in our control. And so when I think about that, I'm seeing more opportunities today than I did when I came in. I thought there were some opportunities, both in the near term, medium term and long term.

So I think our opportunity to expand, not only do we have the mix shift positive, but we're not just relying on that. I think there's real cost improvements around sourcing, improving our yields and utilization of our factories, increasing automation, which will also increase the output of the capacity that we have and then long term, looking at our footprint, is it the optimal footprint and working with our customers to do that. So I'm more excited about opportunities and margin expansion today than I was 3 months ago.

All right. We'll leave it there, Bob. Thanks you so much. I appreciate it.

Great. Thanks, Patrick. Thank you.

Welcome to day 3 of Stephens 2025 Investment Conference here at Nashville. I'm Mac Etoch, the Life Science Tools and Pharma Services Analyst. And I'm pleased to be joined by the team over at West Pharmaceuticals. John Sweeney, Head of IR; John McMahon, newly anointed Chief Financial Officer; As well as Shane Campbell, the Chief Proprietary Segment Officer.

Maybe to kick things off, I'll turn it over to you for any opening comments, and we'll watch in the Q&A.

Yes. Thanks, Mac. It's great to be here. Really excited. This is my first time -- our first -- my first time attending this conference, and I've been really pleased about the opportunities here. It's also really been with the company for 3 months now, and it's really excited to be part of ratio's a great company and a wonderful opportunity. As you know, there's many secular tailwinds for the company, particularly the growth of our high-value components were a critical component to the supply chain for injectable drugs, one of the fastest-growing segment of the pharmaceutical pipeline going forward. And we also see growth in GLP-1s, and I'm sure we'll get into that as well as Annex 1.

And I have not been in a company that has not as many -- as many tailwinds but also the strong competitive position being the market leader in primary containment or elastomers going forward. And such a strong competitive moat. And so when you put all these things together, along with opportunities to drive increased leverage earnings, I see a lot of opportunity for value creation and excited to be here. So I'd also want to introduce Shane and let him speak, but both he and I are relatively new to the company and really excited about the opportunities ahead of us.

Yes. So hi, everyone, Shane Campbell. I have about 6 months with West. So also relatively new, as Bob just said, spent about 20 years of my career with DuPont prior to joining West. So leading a lot of elastomers and polymers businesses, including into the packaging space, which gives some relevant experience to what we do here at West. Much as Bob described, joining West now is just a great position, right, market leader, clear value in its products and the value to the world that we're providing for our customers as well, but not without opportunity for improvement, and that's what really attracted me as well. So happy to go into that in more depth as we go forward. But with that, I'll turn it over to John for an intro.

Hi there. John Sweeney. I'm the Vice President of Investor Relations at West. Delighted to be here, and thanks for hosting us today.

Absolutely. I appreciate the time. Well, maybe to kick things off, could you just give us a quick update on how you're feeling about the business exiting 2025, what you're seeing across high-value products, devices and the broader demand environment towards the next year?

Yes, let me kick that off. What we're seeing -- we feel really good about the momentum of the business, if you look at what we've done over the course of last quarters we see improving underlying momentum in the business, really driven by our high-value components business. That business represented in Q3, 48% of the total company revenues and grew 13% organically. And we've got line of sight and are expecting in Q4 to that momentum to continue to actually grow to low to mid-teens. That -- but we're not just looking at that business is growing. We're actually seeing strong performance in the rest of the business. So we actually are feeling very good about not only the recovery of our core business, and I'm sure we'll probably talk about some of the things around destocking that's largely behind us now, but also some of the key growth drivers such as GLP-1s and Annex 1 I was talking about before. that are really what we see are multiyear growth opportunities going forward. So we're headed with some nice momentum here in Q4 and expect that momentum to continue into 2026.

I appreciate that. Maybe just quickly touching on destocking, as you highlighted, it's largely behind you at this point. So what are you observing in terms of order flow and near-term demand from clients?

Yes, I'll kick it off and then turn it over to Shane as well. I think what we're seeing is throughout the course of this year, a more -- a return to more normalized ordering patterns, which I think is really important. We see that in various types of customer activities and so forth. We also are looking at the pipeline as well as the backlog or the orders that we currently have and are not seeing anyone push out demand or changing in canceling demand, which I think is also a positive. But I know Shane has looked at this in detail in his business, and we can probably talk about it as well.

Yes. I think the -- it was a learning. The destocking period was a learning for us and others in the industry. And I think what it really emphasized for West that we're working on doing differently in the future is just a closer partnership with our customers to understand their inventory levels, understand their true demand. So we're having those conversations now and have a lot better sense of kind of where overall volume is. And it's really a -- it's a win-win for our customers and for us. They don't have to sit on inventory for a number of years and buy early and tie up cash. and we have a more stable and steady sell-through.

Is there any element of more of an inventory catch-up or normalization as you move towards normalization? How sustainable is that uptick towards -- as you move into the next year?

Yes, we don't think that there has been a "catch-up" where they had taken their stocks below kind of normal levels and then are trying to recover. Based on our conversations with customers, we do expect kind of a more normalized going forward. We are -- as Shane was mentioning, in constant conversations with our customers, we are seeing some -- many of them are asking to expedite where we can, which is a good sign. But we don't feel like that is a symptom that they had taken their stocks down too low and are trying to kind of restock. I think it's in line with kind of underlying demand.

Got it. And you emphasized better visibility lately and more predictable growth as you exit 2025. So what's changed operationally or in customer behavior that gives you that increase confidence?

Yes. I think Shane talked a little bit about this. I'll turn it over to him to some of the things that we're doing in the processes that we've put in place and continue to put in place in terms of that spirit of continuous improvement. Some of the things like the S&OP process and our quarterly conversations with customers.

Yes, for sure. The S&OP process. And what we're really thinking about, too, is for our high-value product components, specifically, there can be a little bit more volatility, right, and then some of our standard business that's just a little bit more predictable. Sometimes it's legacy business that is recurring year-over-year or very often, I should say, not sometimes. And so we're confident there where we see more fluctuations like the company saw during COVID. That was a surprise, right? It was hard to predict that in advance. And West made a lot of investments over time to support that business. GLP-1, which as you said, I'm sure we're going to go into more detail. That's another growth area, right?

And fortunately, we have some level of flexibility with investments that we've made in the past. And I think we're going to continue to look at our business in that way to ensure that we've got the flexibility to support business that isn't always quite as predictable as some of our standards. So we're thinking about it differentially in that way also, which helps us, I think, stabilize to some extent.

Yes. And just to add on that, if you go back West was a critical component to the COVID delivery of the vaccines and so forth. And what that ended up doing is placing COVID volume ahead of everyone else, just given the importance of that and the government intervention. That increased lead times quite substantially and required companies when they did produce or purchase more than they would normally have. And then as we've gone through this kind of destocking period, I think you've seen less of that kind of situation certainly with -- and we've invested in the capacity to be able to kind of manage that, I think, better than we had given that time frame.

Appreciate that. Maybe before diving a little bit deeper into the proprietary products and Shane, pretty interesting background. You've been a number of different companies, but what attracted you to West? And where do you see opportunities to put your skills out to work?

Yes. I touched on this briefly in my intro, but I'll go a little bit deeper here. I mean, as I said before, West is just an outstanding company. It's been in business for over 100 years, right, has been delivering high-value products to the market for longer than I've been active professionally for sure. And so I saw a very strong base. But I also -- I think one of the things that really impressed me the most is we have a CEO that Eric Green, who's been in place for 10 years. And Eric recently made a change in our operating structure, right, moving to operating units to drive accountability versus -- and collaboration versus kind of functional units that reported into him as West has grown over the past decade. And that's something that really attracted me.

I think that cross-functional collaboration and clear accountability that I have now for the proprietary segment has unlocked a lot of value. And it's just a testament to Eric's leadership and really is ability to realize that there may be a different model that can drive even more value kind of an openness to change versus just relying only on what's worked in the past. And allowing us to identify additional efficiency opportunities, additional ways to support growth for our customers. And so it was really a combination of all of those things that drew me to West.

I appreciate that. Maybe just looking at as we think about high-value products, GLP-1s, Annex 1 represents two pretty strong secular tailwinds in addition to the core biologics and biosimilars growth. Just on Annex 1. I believe you highlighted 375 projects as a net number. But what portion of projects have transitioned to commercial revenues thus far?

Yes. I'll start, and then Shane can add. Annex 1, we see as a multiyear kind of opportunity for us and really excited about the ongoing momentum there. As a matter of fact, as you know, we've increased our contribution of growth from 150 basis points of growth in earlier this year to 200 basis points of growth. And we think we're still in the very early innings. So as you mentioned, that 375 is an ongoing project. Once the project is completed, it kind of finishes and then moves into commercial production. So you can get a sense for the amount of opportunity that we have. If we size the opportunity in Europe, it's roughly 6 billion pieces as an opportunity to potentially upgrade.

We're still in the very early innings of that. And so if we think about kind of our ongoing pipeline of opportunity, it's greater than the 375, the ongoing -- the work that we're doing right now in 375 is current projects, the ones that we've actually completed are less than the number of 3.75. So we're continuing to build the opportunities, which gives us an opportunity to continue to deliver that growth, we think, over multi-years.

Well, not just adding new projects into the commercial flow, but how long would you say it takes an average-sized project to reach its full run rate potential?

Yes. It's a really good question. It depends on the complexity of the program. But on average, it could take anywhere from 12 to 18 months to upgrade the product from its current -- into kind of the Annex-1 version. And they complete throughout the course of the year. So think about the 200 basis points this year is value that will also result in incremental value next year plus the ongoing opportunities to continue to complete. And we see this continuing throughout the course of the year, not just in Europe but increasingly also opportunities to upgrade products in the U.S., while Annex 1 is a U.K. -- excuse me, U.K. European regulation. We are seeing some of our companies look to want to standardize their supply chain and so taking opportunities in Europe and having the same products for the U.S., so they have flexibility in their supply chain. So we see this as an ongoing opportunity going forward.

Another portion of the segment that's driving growth is GLP-1s, as we mentioned. We've been an increasingly larger number -- a larger portion of revenue both proprietary products but also contract manufacturing. So maybe it would be helpful to level set for audience here today, just how much revenue you're generating from GLP-1s, where you see it going and how this relationships have trended?

Yes. Let me just address one other important point on Annex 1 because I think it's important. These are the same products before and after. And so once we have these added value services, we can actually scale the production very quickly because we know how to do it, it's not necessarily a totally new product. It's just adding some products that are already -- or services in. So that's the thing that we feel really good about. In terms of GLP-1s, it's continued to grow as a component of our business. In Q3, it was 17% of total company revenues broken out between 8% of our of revenues being on the contract manufacturing side and 9% being on the elastomer side. And for we don't have dedicated lines. I'll let Shane talk about some of the opportunities going forward here. But we do have across our business. But we do expect to see this continuing to grow over time, just given the patient population penetration, some of the ongoing, what I would say, tailwinds in terms of access, most recently with the Trump administration covering for Medicare and Medicaid and the more access for patients, that's beneficial for West. And I don't know if you have anything that you would want to add?

I think you covered it really well. It's clearly a growth area for us. I think we're well positioned with the existing products on the market, and we're working closely with some of the generics that are coming on as well as some of the products that are out there today are going off patent in the next few months and years. So I think we're well positioned. It's an important part. It's not the only driver of our growth, of course, but it's one we're happy to participate in, and we're going to continue to participate in.

Question on GLP-1 -- so GLP-1, do you supply pretty much all the majors?

So the question is does West supply all the majors?

We don't talk about individual competitors -- or excuse me, customers, but what I would say is we have a very high participation rate in GLP-1.

Do you have a view on the talk about the injectables?

And then the follow-up question is whether or not the pill will have much of an impact versus the injectables.

Yes, it's something that's obviously been a topic of conversation, we think there will be a role to play for both injectables as well as oral GLP-1s. I think if we look at our conversations as well as external. Our modeling suggests that orals will be roughly 30% of the GLP-1 population by the -- by 2030. But both injectables as well as orals will grow throughout that course of that time frame. I would say we're in a unique position at West because we do participate on the contract manufacturing side as well. And so we have insight into the opportunities to bid on volume requirements on the injectable side across multiple customers. And so we have the visibility, not only on that side, which helps inform our view on kind of what capacity is necessary to continue to support the expansion of injectable GLP-1s going forward.

Appreciate it. Maybe just a follow-up on that audience question. It's GLP-1s are becoming a larger portion of the portfolio at this point. How does the company manage those relationships just given the higher customer strategic importance?

I mean we try to support all of our customers, right? I think certainly, the ones that are growing quickly, we pay very close attention to, but there's a lot of products in our portfolio that are also really important life-saving drugs as well. So Certainly, the growth of GLP-1s over the last 12 months has been significant. We see it as continue to be significant. So our relationships with the key participants and the emerging participants in that space is critical and paramount important. So yes, I mean, I would just answer it that way.

Yes. And I would just add, we've got a strategic accounts program, which for certain customers, we have a more regular interaction with and work very closely with them to understand what their expectations and needs are from a growth perspective because as we build out capacity and ensure to invest for the future, it does take some time to invest. And so those customers that has changed as we do that for every customer, but certain customers, we have much more in-depth conversations to ensure that we have the capacity in our network to be able to continue to supply the demand that they are asking for.

Maybe touching on a few of the specific products that I think recently you had a press release run an integrated packaging offering, but it's being used in more heavily discussed topic. So I believe the company just announced this. Can you just remind us of the importance here both from a customer and competitive perspective?

Yes. Sure. We launched a product we're calling Synchrony. It's a prefillable syringe, and it's unique from what's on the market today in that we're essentially bringing together all of the components. So elastomer glass, the needle itself and bundling them together, right, creating a single system from a single supplier that can be used in a master drug file different than what's available today, right? So today, the supplier or the customer would have to purchase all of those somewhat separately or have multiple different packages that go into their filing. And so this is a simpler opportunity for a customer to bring a product to market, bring a drug to market.

And we believe it's something that it's going to enable pharmaceutical companies to streamline their design, accelerate the regulatory submission and ultimately secure a reliable and predictable supply chain. So we're very optimistic about this. The customer feedback so far has been very positive. We're officially commercially launching it in Q1. We did announce that at CPHI worldwide last month, as you said, Mac.

Fundamentally, how do you stay ahead of the competition with innovations like that? How do you do what you do that allows you to be ahead of the current on innovation?

So before you answer, the question is how do you stay ahead of the curve when it comes to product introductions like this?

Yes, I'll start and then turn it over to Shane. I think one of the things that's, I think, perhaps underappreciated about West is our scientific connection with our customers. So they are -- they see us as the experts in the interaction of the elastomer with molecules. And so we have a unique position where we're working very closely early on as a drug is being developed to ensure that they have the right containment system to ensure sterility efficacy and continue reliability going forward.

And so we take that knowledge and are able to build that into kind of our innovation pipeline, which helped inform some of the things that we were just talking about with the prefilled syringe. But more importantly, what are the next generation of technologies and elastomers. And we just brought on a new CTO, and I know that Shane and he are working on how do we ensure that we've got innovation going forward? And maybe you can talk a little bit about some of the things that we're talking about there.

Yes, you set that up really well, Bob. I mean I think that partnership between our customers including our sales organization, our marketing organization, leveraging both the knowledge that our customers have about their future needs and then also sometimes what we see that the customers may not yet see as a trend in that, as I mentioned, that elastomer and drug interaction and then partnering very closely with R&D to make sure that the innovations and the items we're investing in are the ones that have the highest likelihood of success and they're going to be the ones that our customers really have a demand for. So it's kind of a combination of all those things. And so as Bob said, I've been working really closely with the new CTO as well, who, I think, joined right around the time you started. So he's roughly 3 months in as well.

And I would say if you look at the level of spend that we have within the total company. We spend about 2.5% of sales. But all of that is within the proprietary business. So focused on exactly what we were just talking about.

Maybe touching on another product portfolio delivery devices, particularly SmartDose and SelfDose have been a little bit more of a conversation lately and ongoing investment for West. So you bring on these automated lines in 2026, how are you thinking about the broader strategy for that business, both in terms of?

Yes. It's a great question. And so we've got a two-pronged strategy on SmartDose 3.5. One is continuing to drive down cost and we've been on that journey this year, every quarter, we've been able to be continuing to improve our cost per unit. That's largely on the manual lines that we currently are producing on today. But we have, as you mentioned, an automated line that's on track for coming in first quarter of 2026 that will ramp up over time. That will not only provide additional capacity, but also lower cost. And so that's the strategy of evaluating how do we continue to drive value and cost down within that business as it. But we're also looking at -- are we the -- and we've talked about this before, are we the best home for this business going forward. And so both of those evaluations are ongoing. And we do expect to have an answer on that before we give formal guidance at the end of the year. End of our -- when we give guidance for 2026, excuse me,

With that in mind, how do you think about maybe the broader strategic fit within the portfolio just as you make these considerations?

Yes. So outside of SmartDose 3.5 that we do have some other devices within our portfolio. And I think these devices are really well positioned, right? These are -- this is a strong portion of the portfolio. We see strong organic growth with them. particularly our CZ and our admin systems businesses or product portfolios there. And it's really driven by the trends in biologics and the overall trend of self-administration with the shift kind of from hospitals to home care. And so they're really well positioned there. We like them. They're operating well. And so yes, that is a continued area of drive and growth for us as we go forward.

I appreciate it. Maybe before we move on to the Contract Manufacturing segment, I'll see if the audience has any additional questions.

Just one more just on glass with the innovative system that you were referring to, is that something that you ever think capability you have yourself or [indiscernible].

So the question is whether or not West will have glass opportunities within their portfolio, so to say.

Yes. I think we feel -- given our strength in elastomers and the differentiation there and the fact that we work with all manufacturers. I think we think we're well positioned to be able to work the way we are today. And I think we can achieve our aspirations without necessarily needing to have glass in our portfolio.

Appreciate it. All right. Well, maybe touching on the Contract Manufacturing segment. It's been -- there has been a strategic shift in that business recently, so focusing more on the higher value capability customer projects. Can you just touch on the actions being taken today in the long-term vision?

Yes, it's a great question. So for the audience, our contract manufacturing business is roughly 20% of our revenues. And what we have been focusing on is how to -- at a lower margin than the total company. But what we've got is employing a strategy to provide more value-added services for our contract manufacturing customers that will help improve not only the value that we provide to our customers, but also improve the profitability. A great example of that is drug handling.

And let me maybe explain a little bit about what that is. So today, we do manufacture pens and auto-injectors for certain customers today. Those one of those customers actually asked us if we could do drug handling. So what is drug handling is actually taking the -- we don't do the sterile fill finish but a cartridge and then that has been produced by somebody else and actually assemble the final product.

That is something that requires additional steps for us in terms of cold storage, additional QA/QC to ensure that the product is the right product put into the pen and so forth. But the value for our customer is actually you have a more continuous supply chain there as opposed to us taking our pen, giving it to somebody else that establishes that should reduce the variability because there's less touch points as well as increase the cycle time for it.

So there is an opportunity to add these higher value kind of downstream opportunities within our contract manufacturing where we think we're uniquely positioned do that versus some of our competitors. It's an opportunity to increase our scope of opportunity within contract manufacturing, but also increased the profitability of that business going forward.

Just on that example, are you cutting with production line of the customer? Or is the product facility in the earlier phase of the ingredients?

Yes. So the question was, are we co-locating with a customer? Or is the product coming to us in short terms, the finished product in the cartridge is coming to us. So we are not doing the fill finish and the sterilization of that cartridge that has the API. They're sending that to us. And then we are taking what we had at the front end, which was assembling the pen components and then actually marrying it up with the final API and then producing the finished good.

And so -- we have it. It's co-located with the initial manufacturing of the pen. But it does require additional handling from a cold storage investment for us as well as additional quality and regulatory requirements to ensure that we've got segregation as well as making sure that the product that comes in is, in fact, at spec.

You mentioned it's a higher margin product offering? How do those margins compare to what the underlying contract manufacturing business?

We're in active discussions with multiple customers on building that capability. I would say it's helpful, but it's not the sole thing that we would be looking to potentially fill that with. But we do think that it provides an opportunity and an expectation that we can handle a higher value opportunities going forward, which is helpful for our contract manufacturing business in general.

I appreciate the context there. And maybe thinking about the broader portfolio as a whole. Pricing has really supported margins over the past few years as supply conditions normalize, how do you see the pricing environment changing moving into 2026?

Yes, I think we've talked before, we continue to see 2% to 3% price opportunity as we go forward on an annual basis. I think the other trend that we've talked about a little bit is the improvement in the upgrade from -- due to Annex 1 and some other trends like that, that are moving products from kind of a standard product and lower margin to a higher-priced, higher-value product. And so we see that as being accretive to. We can't count that in mix rather than price, but I think that's also an important part of our growth story.

So it sounds like customer conversations are still fairly constructive despite.

Yes. Yes. So I would say they're still fairly constructive. I think there's still value and understanding overall of whatever it is that's increasing and providing.

And then maybe just looking at tariffs, you spent several years localizing production capacity across your global network. If tariff structures or trade policies were to shift in 2026. How well positioned do you feel West is today?

Yes, I'll take that, and I'll add Shane. I think we're -- I think one of the compelling opportunities that West has is, if you look at our supply chain network, we've employed a local foot local strategy for many years. And so we've got the ability to provide product primarily through local manufacturing close to the customer supply chain already today. And as we think about the opportunities around shifting tariffs -- we've got a couple of strategies to employ.

First of all, we're looking at ways to diversify our own supply chain to eliminate incoming tariffs from our sampling.

We also have the ability to pass on certain tariffs if there's an incremental cost. But we're also working with customers to potentially move products from one facility to another to help them, and typically, it's from Europe into the U.S. to help reduce some of the tariff costs. This also has the dual benefit as we think about some of the investments that many of our customers now making in the U.S. to be able to scale up capacity. As we mentioned before, we've made some significant investments over time. In capacity during the COVID time frame that we now can leverage as more investment and more manufacturing capacity is coming here into the U.S. And so we're working very closely with our customers to be able manage that. And I think that's a unique opportunity that West has in the marketplace.

I believe earlier this year, you had a little bit of a shift and where some sort of products were manufactured which created a little bit of a headwind has that been resolved at this point?

Yes. We're -- we have a -- I'll start and then let Shane add to it. So we did have a bit of a load imbalance as a result of some changing customer requirements earlier in the year. And what we've done throughout the course of this year is hired additional labor. So it wasn't necessarily a machinery capacity was around labor capacity in one of our plants in Europe. We hired most of those folks by the end of Q3 and are ramping that up quite nicely and feel good about the progress.

Yes. Yes. I mean the only thing I'd add is that we're continuing to focus there, like every -- and I think as we go through into 2026, we're going to see that constraint relieved even further.

Well, just on that point, I think CapEx has been running a little bit above historical averages, just given the automation and capacity build out. So how would you think -- or how should we think about normalized levels as you look towards exit 2025 and look into 2026?

Yes, it's a good question. And so one of the things that we have been investing disproportionately in CapEx anywhere from 10% to 15% of revenue over the last several years. And we think we're -- our view is that we're going to be able to live into some of that capacity over the next several years. and get back to our historical levels kind of on a glide path to 6% to 8% of revenue in CapEx, I'd say that's a combination of maintenance of existing CapEx as well as growth. It's probably 40-60 going forward. I think we're going to end this year roughly slightly higher than that range, but much lower than we did in the years before. And I feel -- as we think about 2026, I it's reasonable to assume we'll be in that sweet spot.

Maybe Just to wrap up, I'd like to turn it over to you for any closing comments that you might have. Anything that you want to get across the investor base.

Yes, I'll start and then maybe turn it over to Shane. I think I'll start somewhat as I was finishing. I think there's a number of growth drivers at West with the newer leadership team coming in and looking at the business, I think that we're on the path of getting back to improved execution. The market is -- we're benefiting from market recovery as well, the elimination of destocking. And we've talked a lot about GLP-1s and they certainly have been a core component of our growth. But I want to emphasize that West is not just a GLP-1 story. If we look at the core business in ex GLP-1s.

Every quarter, that business has continued to grow, given the underlying momentum that we see, it went from negative in double-digit in Q1, roughly flattish, slightly down in Q2 to mid-single-digit growth in Q3, and our expectation is that momentum will continue. And when we look at our market shares, we are by far and away the market leader within elastomers, 70% to 75% market share. But as you look out, the fastest-growing area is really around biologics. And when we think about our participation rate in biologics, it's higher. It's higher than 90%. And so -- and that's on new products that are coming to market. So we feel very good about the position of West how we continue to grow and recover and get back and execute -- continue to execute in the marketplace. So I'm excited about it. And I don't know, Shane, if you had anything else to say?

Yes. No, I would just add to it. I mean, I fully agree with all the things you highlighted around the growth opportunities and there's a lot of tailwinds there, but we've also got opportunity on the efficiency and productivity side to drive margin improvements even further than what we have today. So we're working already and continue to work on automation, working on yield loss, right? So improving our quality. So we're even more robust there procurement strategies. All of these things, I think, are going to continue to be accretive to our margin and continue to drive cost down.

And so optimism for me as well. It's one of the reasons I joined, and I've been very happy to see that there's the openness and the support for it within the organization to go after some of these opportunities that we have in front of us here, too.

So if you have 80% plus market share, you're implying in all biologics that come into market, how are you managing price in those relationships? Is it inflation? Is it -- are you trying to win on price to maintain that market position. How do you think about that?

Yes. So just real quick before we run out of time. Pricing is an area that I think we've been generally in the 2% to 3% window. I do think that there's more opportunities to ensure that we're sharing in the value that we're creating with our customers. So it is a -- what we look at because we have kind of a made-to-order in almost a unique SKU customer. We don't have price list. We really work with them to make sure that we understand what we're providing to customers going forward. We are not the price -- we are a price premium in the market because we think our quality and reliability affords us that ability, and we'll continue to do that going forward. So we don't think price is a lever as being the low-cost entry is what our pharma customers are looking for or needing what they want is assurance of supply and high-quality repeatable business.

And particularly in biologics, when you think about our price per unit versus the value of the drug, it's a relatively small piece. And so we feel like there's continued opportunity to get smarter about pricing but -- and feel very comfortable about the 2% to 3% going forward. And in addition to the high-value mix, biologics are almost all high-value products, which typically are higher priced than the standard products.

Well, Bob, John, Shane, I think that's a great place to wrap. Thank you for joining us here, Stephens.

Thank you.

Thank you.

Good morning. I'm Dave Windley with Jefferies Healthcare Equity Research. I'm based in the States, and I cover CROs and pharma supply chain players. In this case, a sterile injectable container manufacturer supplier, West Pharmaceutical Services is a company that I've covered for about 15 years and enjoyed it. It's a very interesting and complex business and fun to cover.

Having said that, I haven't had the opportunity until today to meet Bob McMahon in person. So that's a great introduction. Very much appreciate, he and John Sweeney, the company's Investor Relations lead to be here at our Jefferies London Conference soon into your tenure. So Bob is the CFO. I didn't mention that, but recently joined West as the CFO.

So that leads us into, bob, just talk about your early experience in these first few months at West. What have you seen? Where do you think some opportunities are and just kind of lay that out for us.

Great. Thanks, David, and good morning, everyone. It's certainly a pleasure to be here. A lot of excitement and energy in the room and in this conference. It's my first time here in London in this conference as well. So -- and super excited about being here at West. I've been here for a little over 3 months now. And one of the things that drove me to West was really the strength of the core business, our core elastomer business, which we are the leading provider there. And over the last 3 months, I've had a chance to visit many sites, meet with folks, both customers internally and external stakeholders as well.

And I'm coming away from those meetings really energized about the opportunities that are in front of us on a couple of facets. One is around the core growth recovery of the business. I think we've seen that in the last couple of quarters, most recently here in Q3, growing 5% on an organic basis, really led by our high-value products, our HVP components growth of 13%, which represents about 13% -- or 48% of the company. And then just as importantly, the opportunity to really improve the operational execution of the business. Eric Green, the CEO, has brought in a number of new leaders, myself included, and moved into an operating unit structure, which has really helped us drive, I think, increasing accountability and focus.

And I think that really helps set the stage for not only the rest of this year, but going into the back half of this decade, driving very strong growth. So excited about the opportunities, a lot ahead of us, but looking forward to having a chat here with you, David, and continuing to dive in.

Yes. Great. Thank you. So you mentioned the HVP components business, certainly the biggest contributor to the revenue stream, very important in an area where investors are highly focused, a business that you have a lot of competitive advantages in. So one of the questions that I know you've gotten that we get is the relative contribution and mix of GLP-1s in that business, the growth that you've seen there and then by complement the perhaps lower growth or less growth in the non-GLP 1s. So maybe talk us through the balance of that business and where the relative drivers are falling for your components elastomers business.

Thanks, David. Yes. As I mentioned, our HVP components are almost 50%. 48% of our business and grew 13%. That growth has really been driven by both GLP-1s as well as the core business. If we look at across our quarterly progression, both GLP-1s as well as the core business has continued to improve quarter-on-quarter. And we would expect that to continue into Q4. As many of you know, we've been dealing with some production constraints in one of our facilities here in Europe.

We've hired the folks that are needed. It's not a machinery constraint. It's really a labor constraint. And so those folks are up and running and those constraints are being alleviated through the second half of this year and should be continuing to drive additional production capacity in 2026. And so certainly, it's good to be a leader in the GLP-1 business. But certainly, that is not the only thing that's driving our growth in HVPs, our HVP business grew mid-single digits ex GLP-1s in Q3 and expect -- and the expectation is that will continue to drive recovery into Q4 and 2026.

The -- so I want to make sure I heard that last point right. So ex GLP-1s, the remaining business grew mid-single digits.

That's correct, in Q3.

In Q3 year-over-year. .

Yes. Yes.

In -- the biologics pipeline has been quite strong, approvals of injectable drugs is a tailwind for you. And you mentioned this capacity constraint. So I guess I want to try to take those 2 things together and understand how much is the capacity constraint limiting growth in the core business?

Yes. Yes. So certainly, our Biologics business, one of the things that is even better for West is our participation rate on biologics is even higher than our total market share. So our total market share is 70% to 75% of elastomers. But on the biologics side, it's an -- our participation rate is in excess of 90%. So certainly, as more biologics and injectable medicines are coming to market, that benefits West long term. And we expect and are looking to continue to drive that. .

As you are talking about our capacity constraints, I would say it has probably disproportionately impacted our core business just because of the number of different SKUs and so forth. But we're seeing both that capacity constraint being alleviated both in GLP-1s as well as in our core business.

Is it right to think on that, that you mentioned both GLP-1s and core. Is it right to think that because of maybe not to the extreme when you weren't with the business during COVID, but during COVID, supplying COVID vaccine got preferential treatment. Is it right to think that GLP-1s are getting some amount of preferential supply ahead of the non -- or sorry, the non-GLP-1 or the core.

Yes. What I would say is we're trying to provide support to all our customers. And given the strong growth in GLP-1s, that is becoming a bigger piece. It is a fewer number of SKUs. So that certainly has helped from that standpoint as -- from an efficiency standpoint. But I would say both of them, we're continuing to work and support our customers in providing the critical products that we are producing.

Got it. Okay. I want to come back to a point that you made about Eric adding the number of leaders that the earlier part of this year, I think late last year or one of the other investor questions that we got fairly often was turnover in the senior executive, kind of probably the executive committee level of the organization. Talk about the kind of the bulking up of the executive leadership team. And is that complete? Is that a stable group now?

Yes. It's -- I think one of the most challenging things to do is always continue to look at do we have the right leaders to take the business to the next level. And I think Eric has been able to do that over the last couple of years. What he's been able to do as part of the developing the operating unit structure is increase kind of the accountability, as I mentioned before, but also focus. And with people bringing in folks like myself and Shane Campbell, who runs that business, we've got experience from the larger companies, global experience. And I think bringing in new ideas about how to run the business and not just look at things the way that they have been done in the past, but how do we actually continue to improve them.

And so I think that the team is gelling very nicely. I think it's a team that's really focused on the future and driving improved execution. And I think we've got probably one more role to fill, which is our General Counsel, who is -- our current General Counsel is retiring at the end of the year, and we're recruiting for that right now. And so I think it's actually a real good time for me to come in because everyone else is working nicely together in driving the next chapter of growth for West.

Got it. Let's come back to GLP-1s and focus on that for a moment. The business is -- the market environment is growing rapidly, the aspirations for GLP-1s continue to be high. We recently ran an update there, and I was surprised to see that it was still $150 billion in terms of kind of peak sales expectations. One of the things that seems to be a growing talking point is around the delivery of those medicines, getting enough of that medicine into the market. What do you see in terms of a switch from single dose to multi-dose. And are you -- how would your economics vary between a single-dose, say, syringe versus a multi-dose vial or cartridge?

Yes. So I think that if we look at that, first of all, maybe I'll take a step back and look at just a recent development that happened in the United States where 2 of the leading companies in the GLP-1 market struck an agreement with the Trump administration to increase access to a fairly large population of the U.S. And we see that as just symptomatic of continued development and growth in the opportunities and in terms of increasing access and driving a continued penetration of this market, not only in the U.S., but then as we also think about worldwide.

So we're very optimistic about the long-term growth opportunities within GLP-1s. To your specific question, we see a platform of both self-injection or auto-injectors as well as multi-dose pens. In Europe, you probably have more the multi-dose pens versus the self-injectors in the U.S. We don't see that changing too much over time, maybe some more going into multi-dose, but that will be a transition over time as opposed to a fast transition just given kind of the convenience and the use of the current formats.

Obviously, there is some economic -- the economics are slightly different for us. We've taken that into account in terms of our long-term growth algorithm and still expect GLP-1 growth going forward. Maybe not at the level that we have here in '25, certainly which has been outsized growth, but we do expect GLP-1s to grow faster than the overall company market throughout the rest of this decade.

Okay. Has West been participating or benefiting from the compounders participation in this market?

Yes. It's -- we do participate in that. That's part of the GLP-1 ecosystem, so to speak. It's a relatively small component, but growing. I would also say we also participate or expect to participate in the upcoming generics as some of those products are going generic in places like Canada, Brazil and China as an example. So that's one of the strengths of West is we are viewed as the key leader in elastomers. And so when we think about those products, they do come to us for -- not both branded, but also generic opportunities.

And I think I'm glad you brought it up, the generic opportunity kind of got highlighted on the last call. Where do you see the generics specking in from a SKU standpoint, what's their preference in terms of level of quality.

Yes, it's a great question. So the biosimilars or the generics typically have the same product spec as -- from the standpoint of GLP-1s and even biologics as the branded products. And so it is at a higher product, the high-value components, not a standard component, which generates the higher profitability for our standpoint. And why do they do that? They want to increase their chance and reduce the risk of their regulatory path, and we're a relatively small piece of that cost. And so they just basically take the same packaging components that are on the branded product and transfer that into kind of their drug master file.

Got it. So maybe a bridge question here would be, in addition to the elastomers participation in GLP-1s, you're also seeing quite a strong push in other parts of your business, namely contract manufacturing and the molding of the device. Maybe talk about how that is growing. How many -- how diversified is that revenue stream in and of itself. And then I want to take you into integrated systems after that.

Okay. Sure. Yes. So I think we're unique from that standpoint where we both have the elastomer side of the business as well as our Contract Manufacturing business. Our Contract Manufacturing business is fairly diverse, although we have a higher participation rate or penetration of GLP-1s in that business. It's roughly 40% of the total contract manufacturing and 8% of the total company. And if we think about that business going forward, one of the things that we are looking at continuing to drive efficiencies in that business and drive into higher-value contract manufacturing. Drug handling is a perfect example of that.

And that's where not only do we make the device, but now what we're doing is putting the active pharmaceutical ingredient that's in the cartridge into the device to produce the final finished good. What that does is that actually helps -- the thesis here is that it improves the cycle time for our customers because you don't have to ship the components to somebody else and then make that final part. But it also should be something that, given that we know how to make those -- the pens and injectors that should create higher yields as well and for our customers. And so something that's more profitable. So we're moving up the value chain, driving profitability. And so still early days there, but our goal is to be more diversified from that standpoint and then being more important to our customers.

Got it. So on your diversity point, so you're more diversified in that you're generating revenues, you're touching the customer in multiple ways across that GLP-1 continuum.

That's correct.

The elastomer, the device, the compilation, the assembly of all of those pieces, how are you contractually protecting yourselves relative to this point. We talked about moving to multi-dose. There's oral potential approvals that we didn't talk about, but another factor that can influence the growth of the GLP-1 class itself as it relates to number of containers essentially. How are you contractually protecting yourselves across these various revenue touch points?

Yes. We typically don't provide a lot of details about our contracts with customers. But that being said, with contract manufacturing, typically, you do have a 5- to 7-year contracted life. We work very closely with our customers in understanding what the capital requirements are, what the tooling requirements are from that standpoint. So we do understand what the forecasts are from that standpoint. And it's important to be able to do that to not only support our customers, but then also have good visibility into what the footprint looks like. So I'd leave it at that.

And I think also as we think about our elastomer side of our business as well as we're trying to define kind of the capacity across our network, we work very closely with our customers to understand what their demand forecasts are because these -- as we build out capacity, it's not something that we can do in 6 months. It usually takes multiyears to be able to put in incremental capacity. And so we do have, I'd say, constant conversations with our customers, not just in GLP-1s, but more global -- more broadly to understand kind of what that demand is.

I think one of the things that's important is while we were talking a little bit about a capacity constraint in Europe. We do have capacity available in the U.S. And so as we think about some of the onshoring capabilities that are happening with our pharmaceutical partners, the ability to produce product in the U.S. is something that not only from a tariff perspective, but being close to where they manufacture product is something that they're also looking at as well. And so I think we have that opportunity to kind of leverage that capacity over time.

One of it is through tech transfers, taking products from existing facilities and moving into other facilities, but then also driving better utilization across our network.

On that capacity optimization, how long do those tech transfers take? How -- we should set our expectations up.

It can take 12 to 18 months depending on timing from an engineering perspective. It also requires sign-off from our customers. So it's not something that we do to our customers. It's something that we work collaboratively with our customers on. So it is something that we've got some of those in flight already today in terms of being able to manage across our network, but it isn't something that you can just move from one quarter to another. It does require planning.

So I want to transition to what I'll integrated systems but in a loose sense. And I guess the way I think about the trade-off of West has -- in the elastomers business has this beautiful business, wide moat, high participation rate, as you said, lots of regulatory kind of protections around that, you're spec-ed in, but there's 15 -- I think we learned during the pandemic that the supply chain for an injectable drug to ultimately get to us has 15 different pieces. And you're kind of aspiring to be more than one of those pieces. How does West move longitudinally into those other pieces in a way that is economically competitively attractive to the beauty of the existing core business.

Yes. That's a great question. And to your point around the integrated systems. So one of the things that we see and one of the reasons that we have such a strong, I'd say, competitive moat is the importance of the elastomer to the drug and the interaction thereof and the fact that we are in almost every one of these drug master files. And so how do we actually leverage that strength across kind of the containment continuum, so to speak.

Our first is the West Synchrony integrated prefilled syringe, which we launched at CPHI in Frankfurt, soft launched and will be commercially available in January. And what this is, is really taking the elastomer, but then also adding the syringe components to it to have a fully verified kind of platform from a single supplier. You have platforms today, but they're bundled. So they'll take an elastomer from West. They'll take the glass from somebody else and put it together with a syringe.

What we are doing is providing a platform from a single supplier. It's got a single design verification and characterization package so that the drug master file only has to point to one supplier as opposed to multiple suppliers the way it currently does today. And so we think that, that will be a streamlined submission process for our customers. And we think that, that will be value added over time.

Now this is something obviously that is more -- got more players in it than the elastomer side. And so we do think that this is a way to be more important to our customers, but also we think it's going to grow over time. It's not going to be something that will be immediately hit. We don't -- we're not planning on drugs actually switching to this. It would be more on a go-forward basis.

Got it. So -- and on the -- so interesting point that you make about not a compiled solution, but a single vendor solution. And so on the elastomer, obviously, we know where that comes from. The glass piece is what? Is that Valor? Is that your Corning partnership feeding into that? Is that your Crystal Zenith material feeding into that? Where does the...

Yes. So both of those are -- Corning is a very important partner to us as well as Crystal Zenith being an important product for us. It actually is Gerresheimer that is the exclusive supplier for the syringe. It's actually our specifications and detailed design, but they are the exclusive manufacturer at this time for that first product.

Okay. Got it. And then this sits alongside -- I assume these other initiatives continue forward.

That's correct.

Got it. Okay. And then while maybe not under the umbrella of specifically integrated systems, another angle to this, how do you participate more are your high-value devices. So let's talk about those a little bit and particularly like a SmartDose. So how does the desire to kind of commercialize proprietary delivery devices, be they on-body like SmartDose, how does that fit into this broader strategy of wanting to participate more.

Yes. That's exactly what it does. It's providing unique delivery devices to our patients -- or to our customers and to ultimately to patients. So with SmartDose, that's something that is IP owned within West, which is different than the contract manufacturing side where the IP is owned by our customers. And so this is another way of delivering product -- active pharmaceutical ingredients to customers. And so obviously, we're -- with SmartDose, we've got 2 large pieces. We've got the 3.5 milliliter as well as the 10-milliliter. We're evaluating the options on 3.5. We're going down a cost-down journey as well as looking at whether or not we're in that best position to own that long term.

Yes. And I'll sneak in a last one here. On the SmartDose and on the automated line, you've said you're on track to kind of have that in place early '26. That will need to ramp. But I think management maybe even before you arrived, described that, that would double the productivity of SmartDose. How should we think about that mathematically from a margin standpoint?