West Pharmaceutical Services Inc (NYSE: WST) Q4 2025 Earnings Call dated Feb. 12, 2026
Corporate Participants:
John Sweeney — Vice President, Investor Relations
Eric M. Green — President and Chief Executive Officer
Robert (Bob) McMahon — Senior Vice President & Chief Financial Officer
Analysts:
Michael Ryskin — Analyst
Daniel Markowitz — Analyst
Justin Bowers — Analyst
Paul Knight — Analyst
David Windley — Analyst
Patrick Donnelly — Analyst
Matt Larew — Analyst
Dan Leonard — Analyst
Brendan Smith — Analyst
Thomas DeBourcy — Analyst
Doug Schenkel — Analyst
Presentation:
operator
Good day and thank you for standing by. Welcome to the Wes Pharmaceutical Services fourth quarter 2025 earnings conference call. At this time all participants are on a listen only mode. After the speaker’s presentation there will be a question and answer session. To ask a question during the session you will need to press Star one one on your telephone. You will then hear an automated message advising your hand is raised. 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 Invest Relations.
Please go ahead.
John Sweeney — Vice President, Investor Relations
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 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 referen has been posted in the Investors section of the Company website located@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 FY26.
Statements made by management on the call and the accompanying presentation contain forward looking statements within the meaning of US Federal securities law. These statements are based on our belief 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 10k and 10q regarding the risks to which the Company is subject to.
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 M. Green — President and Chief Executive Officer
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 and 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 three key drivers the rise of biologics and biosimilars, the increase in global regulatory requirements such as Annex 1, which continue to drive HVP conversion and the expanding GLP1 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 Pre Fillable 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 3.5ml 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 mid year 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 five out of the 10 members having joined in the last 12 months. This season, Leadership Team is already making meaningful contributions to our organization. With that, I’d like to turn to the fourth quarter performance.
Revenues of $805 million exceeded our expectations and were up 7 point reported and up 3.3% on an organic basis. Adjusted operating margins in the quarter were 21.4%. An 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, HBP 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 GLP1 performance and continued recovery in our non GLP1 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 GLP1 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 strategies supported by our growth drivers of Biologics and Annex 1 and GLP1s 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 and container closure integrity requirements outlined in the European regulations that were adopted in 2023 for west this is a multi year opportunity of currently 6 billion west 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 GLP1s and injectable formats. GLP1s will continue to support our growth in 2026. As many of you are aware, oral GLP1s 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 two leading companies that producing GLP1s 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 GLP1s 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 GLP1 elastomers and in 2026 and beyond for the following reasons. First and foremost, the adoption of GLP1s is still in the early stages with penetration the 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 GLP1 generics in Canada, China, India and Brazil represents incremental business for us. In addition, there is an exciting clinical pipeline of GLP1 molecules in development for obesity, diabetes and other metabolic conditions. While many of these GLP1s that are similar to what is currently on the market today, there are also newer combination molecules which potentially offer increased efficacy, improved tolerability or therapeutic benefits for adjacent comorbidities. Finally, there are a number of exciting new GLP1 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 five of these six indications being treated exclusively by injectables. These indications represent potential multi billion dollar therapeutic classes. 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 three 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.
Robert (Bob) McMahon — Senior Vice President & Chief Financial Officer
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 non recurring 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 HPP components business was a standout, delivering $390 million in revenue and growing 15.1% organically. This was driven by robust growth in GLP1s HPP upgrades including Annex 1 and overall continued improving performance in biologic revenues. The business outside GLP1S 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. 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 healthcare 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 and 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 mixed impact of HVP components growth and better than expected performance on our HVP delivery device business outside of smartos. 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 and D and had 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 to $275 million as we move back to the construct of spending 6 to 8% of sales in CapEx. The 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 mid year.
To help you with your models, we generated $55 million in SmartDose sales in the second half of 2025 and we’ve 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 Smart dose 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 five points of total company growth at the midpoint of our guidance. Given the focus of GLP1 elastomers, we felt it would be helpful to provide some additional details on how we established our initial guidance framework. First, we expect the non GLP1HPP components to drive the majority of growth, accounting for four of the five 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 GLP1s to grow in 2026, albeit at a slower pace than in 2025. To get to our midpoint, we’d expect GLP1s to grow roughly 10% year on year to deliver that one point of growth. To put this in context, this represents a greater than 30% oral GLP1 penetration by 2030, which is more aggressive than our current expectation. And to frame the low end of our guidance, GLP1s 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 GLP1 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 Smart Dose 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 in the smartthirst 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 M. Green — President and Chief Executive Officer
Eric, thank you Bob. To summarize, the solid financial performance reported today continues to affirm that our growth strategy is working as we build on 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 and hard work which allowed us to achieve these strong results. Operator, we’re ready to take questions. Thank you.
Questions and Answers:
operator
Ladies and gentlemen, at this time, if you’d like to ask a question, please press star11 on your touchtone telephone and wait for your name to be announced. To withdraw your question, simply press star 11 again. As a reminder, in order to accommodate all participants in the queue, please limit yourself to only one question per person. Please stand by while we compile the Q and A roster. Our first question coming from the line of Michael Riskin with Bank of America. Your line is now open.
Michael Ryskin
Great. Thanks for the question. Appreciate all the color you guys gave on GLP1. 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, 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’m just wondering, has anything changed. In your conversations in recent months with your major GLP1 customers, especially in proprietary products? Is there any change in demand or tone as the orals have launched and ramped? 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.
Robert (Bob) McMahon
Hey Michael. Yeah, 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, as 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 GLP1s and that we can get to our guidance with a lower than expected GLP1 number and feel good about kind of the continued momentum that we see not only in GLP1s but the rest of the business.
Michael Ryskin
Awesome, thanks. Can I squeeze in a quick follow up? Sorry. On the free cash flow you touched. On operating cash Flow and free cash flow and the pr a number of times you had strong free cash on the quarter. You’ve got solid cash balance. You also got the proceeds from the smart dose coming mid year, I think about 120, 130 million. Your capex is moderating. Are you hinting at something? Historically we haven’t really seen west do a ton of M and 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? Thanks.
Eric M. Green
Yeah. Michael, good morning, this is Eric. Thanks for the question. So we think about the opportunities are capital deployment. The 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. With 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. We think about the further differentiation. Differentiation of our product offering to our customers that may be of interest.
It would have to be accretive, but that would be the focus in that area. And Bob, do you want to cover that?
Robert (Bob) McMahon
Yeah, just on the last piece regarding returning cash to shareholders, that is something that we’re actively discussing. I view that as upside to our plan. It’s one of the beauties of this business is that we’ve got a tremendous cash flow business here. And I just leave it at that.
operator
Thank you. And as a reminder, please limit yourself to only one question. Our next question coming from the lineup. Daniel Markowitz with Evercore isi. Your line is now open.
Daniel Markowitz
Hey guys, thanks for taking my question on the high value components. XGLP1s 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 the demand outstripped supply and when you’re expecting to bring on the incremental capacity to service that demand.
Eric M. Green
Yeah, Daniel, let me touch on the capacity and also the demand that we’re seeing build in our HVP Components business outside of GLP1. We’ve commented previously that we had some constraints with their 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 into 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 GLP1 continues to ramp up compared to what we saw the first part of 2025.
Robert (Bob) McMahon
Yeah. 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 say our capacity. If I looked at what Q4 was versus Q1, it grew substantially in, 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.
John Sweeney
And a final point for you there, Daniel. If you notice 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.
operator
Thank you. Our next question coming from the lineup, Justin Bowers with Deutsche Bank, Kalani Salvin.
Justin Bowers
Thank you and good morning everyone. 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 GLP1 molecules that you talk that you are seeing in the pipeline and then some of the newer diabesity groups as well. Are those molecules the basic question is like are they, are they specking in on a different type of HVP component. That is like a NovaPure or a. Floratec or just a different configuration of some of the legacy programs and is. There potential for, you know, is a. Similar ASP from you know, what you’re. Seeing in the broader portfolio?
Eric M. Green
Yeah 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 GLP1 space. We also see new combination molecules that would require some barrier coating that would move it towards floratec, the proprietary technology that we have with our partner Dikeo and also NovaPure. So it is a mix and as we see the pipeline evolve, particularly in that space, there will be more different combinations that will be used. And again just to remind ourselves that it’s not just one format.
We see vial, we see pre filled 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, the pipeline outside of GLP1s, it’s very exciting. As I mentioned in the call, the win rate in biologics and biosimilars is consistently what we always have seen. But what I’m encouraged about is its broader geographies for west and we’re able to respond accordingly. That’s why it’s important. What Bob highlighted is that the capacity expansion, although it’s, 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.
Robert (Bob) McMahon
Yeah. And Justin, 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 what it is today or higher. Given that positive mix.
operator
Thank you. Our next question coming from the line of Paul Knight with keybanculin is now open.
Paul Knight
Hi. Congratulations on the quarter. Eric, Bob and John, the Grand Rapids in 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?
Eric M. Green
Yeah. Paul, good morning. I would characterize those two sites differently. Grand Rapids, Michigan. That’s a little more mature in their ramp up. So 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 in further output. We’re really pleased with the progress and what they’re able to deliver for our customers in Dublin. It’s really two different messages there. One, we’re still in the ramp up phase of auto injectors and multi dose pens.
And as I 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 on aggregate, I guess over the next 12, 18, 24 months.
Robert (Bob) McMahon
Yeah. 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.
operator
Thank you. Now next question coming from the line of David Windley with Jeffries. Your line is now open.
David Windley
Hi, thanks for taking my questions. Question. You I think exceeded our Margin and maybe the Street’s margin expectations in proprietary products pretty nicely. Sounds like or looks like utilization may be mixed, 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 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.
Thank you.
Eric M. Green
Yeah. Dave, good morning. I would focus on the HVP components because that’s what’s driving the mix shift from a margin expansion perspective. And you’ve seen this historically for west as 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 our expectations to still have a mix shift effect moving forward as we continue to drive. As I mentioned earlier, biologics, annexplune and even JLP1 offers that mix shift effect for us, our capacity. When we talk about capacity expansion, it is then 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 five of them. And so we’ll continue to invest. Fortunately, at this point in time, a lot of the investments are more around labor 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’s outstripping supply right now, which we need to get caught up.
Robert (Bob) McMahon
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 where 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.
operator
Thank you. Now, next question coming from the line of Patrick Donnelly with Citi, Lynnis Nelson.
Patrick Donnelly
Hey guys, thank you for taking the. Questions, Bob, maybe for you on the. Margins it Sounds like over 100bps 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 is 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. Thank you guys.
Robert (Bob) McMahon
Yeah, hey 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 yeah, if we talk about 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 products 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 two. 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 and 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 HPP 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 as well, 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.
Eric M. Green
Thanks Bob and Patrick. In regards to the multi dose and auto injectors, particularly in the GLP1 space, just to kind of frame it up real quickly, there’s three different ways we look at from the elastomer point of view. One is we do support the vials 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 plunger and also a line seal on the cartridge and I would say the plungers are not equal between the two.
And it is correct that multi dose pens are approximately four doses per one single use auto injector. There’s two factors to look at when you ask about timing. 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 US is more single dose. So these are significant installed capacities 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 going to ramping in Grand Rapids and Dublin. These are multi year journeys 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 the market acceptance and patient acceptance. They’re very different experiences. And so those are the two factors that we see. But we see it’s a multi year journey, particularly with the lens we have with CM and also the investment order patterns we see with our elastomer business to support it on the primary containment.
Robert (Bob) McMahon
Yeah, 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 US as well. And so that also speaks to the, I’d say the consistency in the stickiness of the auto injector as we see it. Looking forward.
operator
Thank you. Our next question coming from the line of Matt LaRue with William Blair. Your line is now open.
Matt Larew
Hi, good morning, Eric. You know, 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 smart dose 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. If you still see that as a big potential 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.
Eric M. Green
Yeah, Matt, it’s a multi pronged approach. When you look at our proprietary business, particularly around our elastomers. So first priority is continuing 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 RD investments. The second area that you touched on is the launch of West Synchrony pre fillable 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 provide all the data packs that allow them to file with the FDA and simplify, because as everyone knows, these pre filled 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 last business. The economics are very attractive. What I would articulate and 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 of how we’re moving up that curve for our customers. And I would disassociate that with drug delivery devices that we have in the other unit like smart dose 3.5.
Very different economics, very different growth profiles and excited about where we are, but it’s a long term journey.
operator
Thank you. Our next question coming from the lineup. Dan Leonard with uvs Yolanis Malpin.
Dan Leonard
Thank you very much. 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 GLP1 growth will be 10% at the midpoint. What was that growth number in 2025? And then the non GLP1 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 GLP1 and what kind of conservatism in GLP1 that we’re all assuming here?
Robert (Bob) McMahon
Yeah, that’s a good question. I’ll give you kind of ranges. We’re not going to get into the specifics, but GLP1s for the full year grew in excess of 50%. And if you looked at the non GLP1s, 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 that, the non GLP1 business into 2026 at kind of that mid or high single to low double digit growth.
operator
Thank you. Our next question coming from the lineup. Brendan Smith, your line is now open.
Brendan Smith
Great, thanks for taking the questions, guys. Actually wanted to ask a bit more about the Annex 1 cycle upgrade that you referenced. You noted I think that what’s been completed is about 15% of the total opportunity. And Dec, you mentioned that west has met its 2025 goals. Wondering if you could maybe speak any more granularly to West 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. Thanks.
Eric M. Green
Yeah, great Brendan, great question. Thank you. When you look at the Annex 1, we see this as a multi year 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, 36. I mean, I’m sorry, 25, 26 billion is what we call standard and a subset of 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 that rolled off we mentioned 65 in Q4, those start being commercialized throughout 2026 and beyond. So now the customers change their ordering from the previous product that they 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 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 to same in 2026.
operator
Thank you. Our next question coming from the lineup, Thomas Obersi with Nippon Researching Line is now open.
Thomas DeBourcy
Thanks for taking the question. 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, you know, 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 US customers, whether that’s an incremental opportunity or you just support them as you know, depending on where they want to manufacture their product.
Eric M. Green
Thanks. Yeah, 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 there’s announcement of new investments. We’re already at the table having conversations how we can support them on 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 WES 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 be more around labor and equipment versus new facilities. On the contract manufacturing side. Looking at. The business that’s exiting the end of Q2, that space will be our intent is have it re utilized by new customers 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 to utilize that asset to be able to support other customers and other products while other investments will ramp up particularly around the other Dublin site and also Grand Rapids, Michigan.
operator
Thank you. Our next question in the queue coming from the lineup. Doug Shenko with Wolf Research, Illinis Malfin.
Doug Schenkel
And thank you for taking my question. You did a really nice job in your prepared remarks talking about the outlook for GLP1s 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 GLP1s. I’m wondering if we kind of get at maybe a midterm outlook if it’s fair to say you’re comfortable with your GLP1 framework combined with the recovery you’re seeing in non GLP1 HVP, which of course includes the impact of Annex 1.
If you’re comfortable saying as built even in a conservative scenario for GLP1s, that your revenue can grow at least mid to high single digits over the next several years. Thank you.
Robert (Bob) McMahon
Yes. Hey Doug, thanks for the question. And the short answer is yes.
operator
Thank you. We have a follow up question from Daniel Markowitz with Evercore. So Ilan is now open.
Daniel Markowitz
Hey guys, thanks for letting me rejoin the queue and ask another one. 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 suggest this could be a greater area of focus for customers going forward?
Eric M. Green
Yeah, no, you’re absolutely correct. Engaging with our customers, there’s certain events that occur, particularly in the supply chain when they’re having contamination control issues. This comes up during the audits and inspection by the regulatory bodies, particularly 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 quality organizations in place that really support our customers to make those decisions and then be able to provide a final solution with the products such as our washing technology and vision technology, even through sterilization.
So when we, when we think about what we offer our customers, this is a great opportunity. So yes, we’re heavily engaged with our customers and they’re making a decision, do 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 that meet the regulatory requirements and the quality requirements. So we believe this is a long term opportunity and it has multi year impact for us and it fits really well with our HVP component strategy.
Robert (Bob) McMahon
Hey Dan, just to add to what Eric was saying, just a couple of things, you know, we’ve sized that opportunity to $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 specced in in Europe into the US 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’s 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.
operator
Thank you, ladies and gentlemen. That’s all the time we have for our question and answer session today. This does conclude today’s conference call. Thank you for your participation. And you may now disconnect.