West Pharmaceutical Services (WST) Morgan Stanley 24th Annual Global Healthcare Conference summary

Q2 performance and business drivers

• Achieved 13% top-line growth in Q2, surpassing expectations despite a cyber incident, with all business segments contributing and HVP leading at 18% growth.

• Drug delivery device business and HVP drove the majority of the beat, with robust demand throughout the quarter.

• May was softer due to the cyber incident, but operations rebounded in June as facilities ramped up.

• Raised full-year organic growth guidance to 10%-11%, up 250 basis points at the midpoint, reflecting continued strong demand.

• Expect $7 million in revenue catch-up in Q3 and Q4 from lingering cyber incident effects.

GLP-1 and HVP segment trends

• GLP-1 business grew high-teens in Q2 and now represents about 10% of revenues, with a small reclassification from non-GLP-1.

• Next-generation GLP-1s are expected to drive premiumization and higher HVP product demand, potentially adding 100-150 basis points to CAGR by 2030.

• Premium HVP products like NovaPure and Westar are positioned to benefit from more complex biologics.

• Multi-dose pens and orals are expanding the market rather than causing significant switching from auto-injectors.

• Auto-injectors offer better economics per dose, but market expansion and Medicare coverage are expected to drive further growth.

Non-GLP HVP and regulatory tailwinds

• Non-GLP HVP growth has accelerated, driven by broad participation across multiple therapeutic areas, especially biologics.

• Annex 1 upgrades in Europe present a multi-year tailwind, with 6 billion components eligible for upgrade and 1 billion converted so far.

• Regulatory scrutiny in the U.S. is increasing overlap with European Annex 1 standards, driving more upgrade projects.

• Upgrades provide flexibility in pharmaceutical supply chains and support long-term growth.

• HVP growth is lifting overall gross margins, with HVP margins at 50%-60% compared to 20%-25% for standard products.