西氏藥業服務 (WST) 2026 年第三季財報電話會議：HVP 成長帶動財測指引上調

重點摘要

• 韋斯特醫藥服務 (West Pharmaceutical Services) 公布 2026 年第三季營收達 8.74 億美元，呈報營收年增 8.7%，有機營收成長 11.9%。調整後稀釋每股盈餘 (EPS) 年增 36% 至 2.66 美元。
• 專利產品 (Proprietary Products) 有機營收成長 16.6%，主要由高價值產品 (HVP) 組件成長 20% 所帶動。HVP 組件貢獻 4.67 億美元，占公司總營收 53%。
• GLP-1 HVP 有機營收成長高達 30% 以上區間，占總營收略低於 12%。GLP-1 以外的 HVP 產品營收則實現 15% 至 19% 的高位雙位數成長。
• 在有利的產品組合、定價、工廠營運表現及 SG&A 費用槓桿效益帶動下，毛利率擴增 310 個基點至 39.7%，調整後營業利益率上升 420 個基點至 25.3%。
• 管理層上調 2026 全年營收展望至 34.1 億美元至 34.2 億美元，並將調整後 EPS 展望上調至 9.38 美元至 9.48 美元。
• 在生物製劑需求、GLP-1 普及率提升，以及 2026 年新增 200 多個 HVP 升級專案支撐下，韋斯特預計 HVP 組件仍將是核心成長引擎。

關鍵財務數據

業務與營運表現

HVP 組件為主要成長引擎。營收有機成長 20%，反映出強勁的生物製劑需求、GLP-1 的持續動能，以及產品結構向更高價值產品轉移的有利影響。管理層表示，包括歐洲 Annex 1 架構在內的監管要求正推動產品升級，其他地區也出現類似趨勢。

GLP-1 HVP 營收加速成長至 30% 以上區間。管理層表示，本季並未包含一次性收益，並指出更廣泛的醫療普及率、新治療應用、下一代分子藥物以及特定市場的學名藥上市為潛在長期驅動力。

HVP 給藥裝置貢獻 9,900 萬美元營收。排除匯率影響及 SmartDose 3.5 處分後，有機成長達 26%，Crystal Zenith 與給藥系統均有貢獻。韋斯特第三季錄得 1,200 萬美元 SmartDose 3.5 營收，低於去年同期的 3,000 萬美元。

West Vantage 有機營收下滑 6.6%。新型高價值藥物處置專案持續量產，但其貢獻被連續血糖監測 (CGM) 專案退場的影響所抵銷。管理層預期此產品組合過渡期將在 2026 年與 2027 年壓抑該部門成長。

按地區劃分，亞太地區成長 42%，主要由印度與中國帶動（包含 GLP-1 產品引進）；美洲地區成長 12%；EMEA 成長 6%，專利產品的成長被 West Vantage 專案退場部分抵銷。

前九個月自由現金流下降約 5% 至 2.78 億美元。客戶應收帳款及庫存水位上升帶來的影響，部分被資本支出減少所抵銷。韋斯特在此期間斥資 6.85 億美元庫藏股回購超過 240 萬股，並發放了 4,700 萬美元的股利。

管理層財測

管理層預計外匯將為全年呈報營收成長貢獻 120 個基點，而 SmartDose 3.5 處分預計拖累 160 個基點。第四季成長預計將由 HVP 組件的雙位數成長引領。

韋斯特正於歐洲及美國啟動新一輪 HVP 後段產能投資。管理層預計專案將利用現有廠區，需約 18 至 24 個月才能產生顯著貢獻。長期而言，公司打算將資本支出控制在營收的 6%-8% 範圍內。

風險與關注焦點

• SmartDose 3.5 在 2026 年前九個月貢獻了 1 億美元營收，但在處分後，韋斯特預計不會再產生額外產品營收。管理層估計這將對 2027 年呈報營收成長造成約 290 個基點的逆風。
• 隨著新型藥物處置專案逐步擴增規模，West Vantage 短期內面臨來自傳統專案（包含 CGM 合約）退場的壓力。
• 管理層在第四季展望中納入了美元走強以及 West Vantage 部分營收提前提列的影響。
• HVP 給藥裝置營收在各季度間可能呈現不均。由於去年同期基期較高，管理層預計第三季的成長率不會在第四季重現。
• 營運資金投資（包括應收帳款與庫存增加）拖累了前九個月的自由現金流。

分析師問答亮點

管理層將亞太地區描述為早期階段的成長機會，近期動能由印度與中國在多個市場的表現所驅動。GLP-1 的引入有所貢獻，而在地開發的新藥亦有望支撐未來需求。

在利潤率方面，財務長 Robert McMahon 表示第三季不含一次性收益。利潤率擴增反映了 HVP 組合、定價、工廠利用率及 SG&A 槓桿效益。管理層並未將第三季利潤率視為新底線，但認為自動化、數位化與持續改善將帶來進一步契機。

執行長 Michel Lagarde 將更緊密的戰略客戶關係與更強大的持續改善流程列為首要任務。韋斯特計畫透過更深入的客戶互動來改善需求規劃、產能配置與創新技術採用。

關於併購，Lagarde 強調有機成長仍是第一優先。他表示併購 (M&A) 的門檻相當高，交易必須能強化韋斯特的財務狀況並為客戶提供明確價值。

管理層預計 HVP 成長速度將快於公司整體表現，儘管尚未提供目標營收占比。公司亦維持 2%-3% 的長期定價假設，低於第三季定價所貢獻的 4 個百分點以上。

完整法說會逐字稿

完整財報電話會議逐字稿

管理層陳述

Operator

Good day, and thank you for standing by. Welcome to the Q3 2026 West Pharmaceutical Services earnings conference call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Michelle Bilinski, Vice President of Communications.

Unknown Executive

Good morning, and welcome to West's Third Quarter earnings conference call, which is being webcast live. With me today on the call are West's President and CEO, Michel Lagarde, and West Senior Vice President and CFO, Bob McMahon.

Earlier today, we issued our third 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 in the accompanying presentation contain forward-looking statements within the meaning of U.S. federal securities laws. Please refer to the accompanying safe harbor statement in today's presentation and press release 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 today's presentation materials.

I'll now turn the call over to our CEO, Michel Lagarde. Michel?

Michel Lagarde

Thank you, Michelle, and good morning, everyone. Thanks for joining us today. We're very pleased to welcome you to our earnings call. And before getting into the details of our strong third quarter performance, I want to begin by saying what a privilege it is for me to now be part of Team West.

Having joined West 2 months ago, my priority has been spending time with our global teams, visiting our sites around the world and meeting with our customers and investors. It's been incredibly rewarding to connect and learn from the company's stakeholder network and start to identify how we can build on our strengths and continue to evolve. These have been valuable conversations and I'd like to give a few examples.

First was my visit to our Eschweiler manufacturing site in Germany. What was immediately apparent was a strong mission-driven culture and teamwork among the colleagues. Confronted with the need to increase output, the team focused on execution and unlocking new efficiencies. For instance, by integrating more automation on to the production floor. This effort is helping to expand capacity and support our global network optimization to improve the service levels for our customers. A great example of our opportunity to drive more impact from continuous improvement across our company.

Second, my conversations with our customers. I've called on these same customers for the last decade. So it wasn't hard to get transparent feedback from them. And from all my conversations, a very clear pattern has emerged. West is firmly on the very short list of preferred partners. Our reputation, combined with our deep technical and regulatory expertise forms an incredible foundation to build upon, and we're invited to establish closer relationships with our customers. By doing so, we will understand that current and future needs even better, so we can drive innovation adoption faster and, of course, keep earning their business every day by a high quality and delivery performance. a clear path to continue to strengthen our enviable leadership position.

These 2 examples point to the opportunity at -- for West to drive more impact from strengthening our continuous improvement efforts and continuing to develop more strategic customer relations, which will provide us with superior insights and allow us to better anticipate their future needs. And they were super excited to start contributing to our company's strategy and performance, built further on 100-plus years of accumulated experience and unlock even more impact from our talented team. And with that, enable our customers to improve the lives of many more patients in need.

Now let me recap our quarterly performance. I'm pleased to report that we've had a great third quarter, exceeding our expectations for both revenues and earnings. Revenues of $874 million grew 12% organically, and adjusted EPS of $2.66 was up 36% compared to last year. Given this strong performance, we are again raising our top and bottom line full year expectations, which Bob will talk about in more detail.

Let me now shift to how our segments performed in the quarter. Our Proprietary Products segment delivered 16.6% organic growth. The highlight was HVP components, which grew 20%, driven by both GLP-1 and on GLP-1 component demand and HVP upgrades. HVP devices grew 26% organically after adjusting for SmartDose 3.5, led by Crystal Zenith and admin systems. While the West Vantage segment revenues declined 7% organically, the performance was slightly better than expected. As a reminder, the strategy of West Vantage is shifting the business to higher value-added parts of drug handling. And as a result, we're rolling off legacy programs as the new programs continue to ramp. This is a muted effect on segment growth this year and next.

To conclude my remarks, I want to thank our team members for their efforts and amazing work. Our end markets remain strong, are positioned as the leader is firm and we will continue to step up our performance to exceed our customers' expectations, which, in turn, will deliver value to all the stakeholders of West.

I now turn the call over to Bob to provide more details on our quarter performance and updated guidance. Bob?

Robert McMahon

Thanks, Michel, and good morning, everyone. Today, I'll provide some additional details on Q3 revenue and take you through the income statement and some other key financial metrics. I'll then cover our updated outlook for the rest of the year.

As Michel mentioned, we had a strong third quarter as revenues of $874 million increased 8.7% on a reported basis and grew 11.9% organically, exceeding our expectations overall. Price contributed just over 4 percentage points of growth in the quarter. This strong performance was driven by our proprietary segment, which increased 16.6% on an organic basis. West Vantage declined 6.6% organically, which was better than expected.

Within proprietary, our HVP components business was a standout and now represents 53% of the total company's revenues. Revenues of $467 million grew 20% organically, exceeding expectations. The performance was broad-based and driven by multiple factors, including robust growth in biologics, continued strength in GLP-1s and positive HVP product mix shift.

Diving a bit deeper into HVP components. We had another strong quarter of growth outside of GLP-1s growing high teens organically. This underscores our view that overall injectable market continues to provide runway for both increased volumes from existing and new drugs and for HVP upgrades across our existing portfolio. Annex 1 regulations have been driving HVP upgrades in Europe, and we're encouraged by increasing signs of upgrade activity in other geographies as regulatory frameworks continue to raise the bar on containment systems. We have added over 200 upgrade projects this year and believe upgrades can be a multiyear tailwind to our business.

Our GLP-1 HVP business also performed very well, accelerating nicely in the quarter, growing well into the 30s organically. HVP GLP-1s represented just under 12% of total revenues in the quarter. We continue to remain optimistic about the long-term growth prospects of the GLP-1 category driven by the continued adoption of existing products, the potential for expansion into new therapeutic categories, the development of next-generation molecules and increasing access in certain markets as generics are launched.

Now looking at other product categories of proprietary segment, HVP delivery device revenues were $99 million in the quarter. This was flat on a reported basis and up 26% organically after excluding currency and the impact of the SmartDose 3.5 divestiture. Both Crystal Zenith and admin systems contributed to growth in the quarter. Of note, in Q3, we generated $12 million in SmartDose 3.5 revenue, which wasn't included in our Q3 guidance. This compared to $30 million in Q3 of last year. Both figures, along with FX, have been excluded to calculate our organic growth in the quarter.

As we've previously mentioned, SmartDose 3.5 product revenues were $55 million in the second half of last year. $30 million in Q3 and another $25 million in Q4. Those figures, along with the $12 million in Q3 of this year, are excluded from our organic growth calculations. And now that we've closed the transaction and do not expect any additional SmartDose 3.5 product revenues going forward, I want to provide the SmartDose 3.5 revenue details for this year to help you with your modeling for next year.

SmartDose 3.5 revenues were $100 million this year, $46 million in Q1, $42 million in Q2 and $12 million this quarter, as I just mentioned. Consistent with this year, we will exclude those revenues from next year's organic growth calculations, but this will result in a roughly 290 basis point headwind to reported growth next year. And lastly, in Standard Products, revenues of $163 million were up 3% on an organic basis.

Now let's move to our West Vantage segment. West Vantage delivered $146 million in revenue, declining 6.6% on an organic basis, slightly better than expected as we were able to fully recover the revenue deferred by the cyber incident in Q3 versus Q3 and Q4. As Michel stated earlier, the year-on-year decline was expected as incremental sales from new programs were more than offset by the decline associated with the roll-off of a CGM program starting this quarter. And looking by geography, we delivered solid growth across each of our 3 geographies. Our smallest geography, Asia Pacific, representing 11% of our total company revenues grew 42%, led by India and China. Americas grew 12% while EMEA grew 6% as good growth in proprietary was partially offset by the CGM program roll off in West Vantage.

Now let's take a closer look at the rest of the P&L. Total company gross margin was 39.7% in the quarter, up 310 basis points year-over-year. The year-on-year increase was primarily driven by better-than-expected proprietary product sales and the associated positive mix shift to HVP components as well as price contribution. We have been able to offset inflationary pressures on our cost base through good plant performance and some cost recovery via pass-through. While West Vantage gross margin was down year-on-year, it improved sequentially.

Adjusted operating margins of 25.3% were up 420 basis points compared to the prior year, driven primarily by the gross margin expansion and leveraging our SG&A cost base. We also benefited from improved below-the-line performance in the quarter as our adjusted tax rate was a better-than-expected 17% and we had 70.8 million diluted shares outstanding. Adding it all up, Q3 adjusted earnings per share were $2.66, up 36% versus last year and $0.47 above the midpoint of guidance we gave on the last earnings call.

Before moving into our updated guidance, I did want to highlight a few additional financial metrics. For the first 9 months of this year, we delivered free cash flow that's operating cash flow plus CapEx of $278 million. This is roughly a 5% decrease compared to the same period in 2025 due primarily to increases in customers' accounts receivable as well as increased inventory levels to support our operations, partially offset by lower capital spending. This is an improvement from Q2's results, and we expect continued improvement in Q4. For the first 9 months of 2026, capital expenditures were $125 million lower than initially planned, and we now expect full year CapEx to be between $215 million to $220 million for the year. This is still within our 6% to 8% of revenue corridor, albeit at the low end.

We continue to be focused on investing for growth and are kicking off a new wave of meaningful capital investments to expand our HVP finishing capacity, both in Europe and the U.S. That said, we expect to remain in that 6% to 8% of revenue range for CapEx spending in the future. The success of our global operations this year has put us on to more solid footing as we have been adding and training new shifts and optimizing global network and increasing capacity. Our Q3 outperformance is a great example of the success of our teamwork. We are well positioned to finish the year strong and the new HVP finishing capacity expansions will further support both in the coming years.

Additionally, from a balance sheet perspective, earlier this week, we upsized our revolver to $750 million and renewed for another 5 years, providing balance sheet flexibility. We also continue to return cash to shareholders via our dividend and share repurchase plans. Year-to-date, we paid out $47 million in dividends and just announced our 34th consecutive year of dividend increases with an 18% increase in the dividend in the quarter. And for the first 9 months of this year, we have repurchased just over 2.4 million shares for $685 million.

Our cash flow and strong balance sheet continue to position us well as we deploy capital for growth and deliver value to our shareholders. In summary, we had a strong third quarter that exceeded our expectations on the top and bottom lines and are pleased that our solid business momentum continues.

And now let me turn to our updated guidance. Given the strong third quarter, we now anticipate full year revenue to be in the range of $3.41 billion to $3.42 billion. up from a prior range of $3.345 billion to $3.38 billion. This revised guidance assumes full year 2026 organic sales growth of 11.3% to 11.6%, up from a prior range of 10% to 11%. FX is expected to have a full year benefit of 120 basis points, while the SmartDose 3.5 divestiture negatively impacts reported growth by 160 basis points. This translates to Q4 revenues of $820 million to $830 million, an improvement from our Q4 implied guidance last quarter and represents 6% to 7% organic revenue growth.

Consistent with the first 9 months of the year, we expect Q4 will be driven by double-digit growth in HVP components. This prudent guide absorbs incremental negative FX as the dollar has strengthened in the past month and the West Vantage Q3 pull forward. Full year 2026 adjusted EPS is expected to be in the range of $9.38 to $9.48, up from a prior range of $8.85 to $9.05. This now represents growth of 29% to 30% year-over-year.

We expect full year operating margins to expand almost 300 basis points, driven by gross margin expansion and SG&A leverage. This is above our long-term growth construct of 100 basis points per year improvement as we have benefited this year from stronger-than-expected revenue growth, portfolio optimization, mix and SG&A leverage. And to help you with your models below the line for the full year, we're projecting $5 million of net interest income, a tax rate for the full year, slightly lower than 18% roughly $18 million in affiliate profits and 71.4 million diluted shares outstanding for the year.

In summary, we're very pleased with how our business is performing. We're well positioned to finish the year strong and we look forward to introducing 2027 guidance on our Q4 earnings call in February.

Now I'd like to turn the call back to Michel for closing comments. Michel?

Michel Lagarde

Thank you, Bob. So early days for me, I'm incredibly excited about the journey ahead. This year, we're on track to deliver over 40 billion highly critical components to our customers. This gives you a good sense of the dimensions of the patient impact our colleagues are focused on delivering. And this is why West is such an incredible company with a great financial profile that allows us to compound EPS consistently and at a high rate. Looking forward to speaking to more of you in the coming weeks and months.

And with that, operator, we're now ready to take the questions. Thank you.

Operator

[Operator Instructions] Our first question comes from Paul Knight with KeyBanc Capital Markets.

分析師問答

Paul Knight

Congratulations to everybody. The China -- Asia growth was spectacular at 42%. Could you talk to the dynamics there, please?

Michel Lagarde

Yes. Maybe I can start just generally, obviously, small base. And so we're excited about the growth as that market continues to provide as with lots of new customer opportunities. And so I would say a great contributor to growth this quarter.

Robert McMahon

Yes. And Paul, this is Bob. Just to follow on what Michel was saying. We've been very pleased with the growth we've had in Asia Pacific. We've had 3 consecutive quarters here, a very strong growth it is the smaller part of our business from a geography standpoint, but it really has been driven in India and China really across a number of different markets. One is obviously the introduction of GLP-1s in both those markets.

And as we think about this over time, I think there is a bigger opportunity to continue to drive growth in Asia as you think about the innovative drugs that are being developed there and so forth. And so we've certainly had -- it's early days for us, but I think there's an opportunity for us to continue to grow there and excited about the progress to date.

Operator

Our next question comes from Daniel Markowitz with Evercore ISI.

Daniel Markowitz

Congrats on the quarter. Can you help us understand some of the moving pieces for the GLP-1 elastomers between the Medicare Bridge program, OUS generics and then offset by some potential mix shift to multi-dose. It was a massive record quarter, super impressive. I was curious, was there anything onetime in the 3Q number? And can you just help us understand the growth outlook here as we turn the page into '27, please?

Michel Lagarde

Yes. Before I turn it over to Bob for some specifics. The way I would think about it, that class of medicines continues to demonstrate that it's transformative in its nature. I would say we're still quite early in the full potential of that class, right? You talked about access, different geographies around the world that are different levels of maturity. And so we think it's a durable growth driver for us in the years to come and certainly nothing one-off-ish in the quarter. Bob?

Robert McMahon

Yes. I was just going to say to build on that, we didn't see any kind of onetime things there. We obviously are going to provide any granular level of details here. But as you know very well, Dan, we do think that this is a longer-term opportunity growth for all the reasons that we talked about in the prepared remarks as well as what Michel just talked about.

The bridge program certainly is one area where it's actually increasing access. And we're glad to participate that in that with our customers. And then certainly, outside the U.S., there's opportunities to continue to grow as generic, the generic opportunity and in various markets comes to bear. And then obviously, down the road, you've got opportunities around next-generation molecules as well.

Operator

Our next question comes from Matt Larew with William Blair.

Matthew Larew

I wanted to actually ask on HVP devices, which sort of ex SmartDose has continued to be strong this year. Is that associated with any particular drug launch or new customer wins? Or perhaps is indicative of customers asking you to do more and sort of a broadening opportunity set for that category.

Robert McMahon

Yes. Let me take that, Matt. Yes, we've been very pleased with that part of the business. I wouldn't say it's indicative of any one particular new launch or molecule. I think as we talked about Crystal Zenith and both the admin systems. They've got a number of different customers and broad-based across different markets as well. And so we've just been able to see, I think, nice kind of broad-based growth there.

I would say, as we think about Q4, sometimes that business can be a little lumpy. I wouldn't say that there was any pull forward, but it had a very strong Q4 of last year. And so we're not expecting the same kind of growth that we saw in Q3 to repeat in Q4. But that being said, we're continuing to work with partners also on the self-injection system, the next-generation SmartDose 10 and so forth. And so feel good about that portfolio going forward.

Operator

Our next question comes from Justin Bowers with Deutsche Bank.

Justin Bowers

I appreciate you sharing your initial observations in your first 2 months to West. Can you discuss your priorities over the next 6 to 12 months and also some of the opportunities you see to 4 to 5 West move?

Michel Lagarde

Yes. No, thanks for the question. It's been a great first 2 months, able to spend time with our colleagues around the sites around the world spend a lot of time with customers and obviously, with our investors. And so what stands out to me first and foremost is our colleagues are just awesome. Really an incredible team mission-driven, really understands the importance of every single component needs to be at the highest quality and obviously deliver for our customers. So it's really a towering strength, I would say. And we've been at it for 100 years. And so the technical depth in the team is another one that I think really is unmatched.

With regards to areas for improvement or priorities, and I highlighted some of them in the prepared remarks, but there is an opportunity to forge even closer relationships with our customers. I would say currently our points of connections are perhaps more at the operational sort of technical level, and we're invited to elevate these relationships. And I think that's exciting because it will provide us with better insights but really allow us to have opportunity to do demand planning together so that we have always the right capacity available as demands go up and then improve the adoption of our innovation. I think as some of the benefits of connecting with these customers at a more strategic level. And so that certainly will be an area of focus in the months to come.

The second one is around continuous improvement. Obviously, that is part of what we do, but it's a muscle group that can be strengthened, I think. I think it's about being even more specific about the scale and dimension of the impact we expect from continuous improvement, raise our ambitions and then help our colleagues with some tools so that we can drive more benefits from digitization, automation and just this general view of, let's find a better way every day. I think that continues to be a real area across the sites, but also in our global functions, and that will also be a priority to make sure that we define that well, help our colleagues through that. And over time, therefore, deliver more impact from that effort.

Operator

Our next question comes from Larry Solow with CJS Securities.

Lawrence Solow

Welcome, Michel. I appreciate your opening remarks and look forward to working with you to invest a lot. I guess just first question, maybe just on the -- Bob, on the margins. I know you mentioned we're running a little bit ahead of about 100 bps annual increase. But -- and you kind of called out nothing really unusual in the quarter. Was there -- it just kind of -- I know Q3 was a strong revenue quarter, but is this kind of a significantly ahead of our expectations? I realized SmartDose is a little bit lower margin. But is this kind of a new floor like should we look at kind of mid-40s on the proprietary side as a good starting point and growing from there? Or I'm just kind of trying to get a little bit better handle on that.

Robert McMahon

Larry, this is Bob. I appreciate the call. And yes, I wouldn't say that this is the new floor, but we are very optimistic about our continued margin expansion growth. We didn't have any onetimers in Q3, but it actually shows when you have the mix shift that we've seen, particularly in our APP business, as well as that above expectation around growth, it shows really the incremental margin strength that we have.

And so we certainly in the quarter and moving forward with the divestiture of SmartDose, that's going to be helpful for us. But the 300 basis points gross margin really was a combination of positive mix shift, continued deleveraging of our existing base given the strong performance that we've had from a filling the factories perspective. Price was also a factor there. And then below the line being able to leverage our SG&A and so forth.

As we think about Q4, we're still in line with very significant margin expansion year-on-year, we are probably investing a little in Q4 as we think about going forward. But I'd leave you with the expectation that I think that's one of the underappreciated opportunities for us going forward and particularly with what Michel was just talking about with continuous improvement, I think we have an opportunity to continue to drive margin expansion going forward. So we're certainly optimistic and not done with driving those margins. over the next several years.

Operator

Our next question comes from Doug Schenkel with UBS.

Douglas Schenkel

Michel, I want to start with one on your view of the portfolio today and whether you see any gaps that represent opportunity as you think about technology, adjacent capabilities, maybe new therapeutic categories. I ask in part because you have a really successful history of M&A most recently across your decade at Thermo. So I just want to see how you're thinking about the portfolio and really what is your M&A criteria.

And then if I could just ask my second one and then I'll get back and listen. Year-to-date, you've grown GLP revenue. I think it's over 30%. That comes after a year of growing around 50% in the prior period. So robust growth against a tough comp. Given this, is approximately 10% still the right planning assumption going forward for GLP-1 revenue. It just seems like you're continuing to have just tremendous momentum there. in spite of any concerns about generics, multi-dose or orals that were prevalent in investor discussions earlier this year. I'm just wondering if that 10% is still the right number.

Michel Lagarde

Good questions. So on portfolio and M&A, this is how I sort of think about it. And obviously, it's early. But the first thought is around the fact that our organic profile here at West is so incredibly strong, right? We have multiple secular growth tailwinds, an enviable market position and a super capability, right? That is what has earned this company, its premium valuation. And so the first focus will always be about continuing to strengthen the organic prospects of the company.

Then having spent a lot of time with our customers here over the last 10-plus years, it's also clear that they are looking for simplification of their supply chain and consolidation of their supplier base. It's hard for them to design supply chains when there's so many people involved that are responsive and resilient and economical. And so they're quite vocal on this point. And I've demonstrated that they would move market share towards their preferred partners. And we're on that very short list. And therefore, have the opportunity to think about what else could we offer these customers and extend our impact.

Obviously, given our financial profile and our organic prospects, the bar for M&A is incredibly high. And that's a good thing from where I sit because it will allow us to be incredibly patient disciplined to only pursue transactions that truly amplify our financial profile and be regarded as very favorable in the eyes of our customers because then they will also deliver great value for our shareholders. So the organic focus, I think, is what it will be. And then over time, as I go through the process here, we'll think about and what other opportunities may arise in the future.

On your point around GLP-1 growth, look, the percentage is indeed at some point become harder to comp when you sort of roll them over. But I do think we stay incredibly bullish about the full prospects of that therapy class. And again, as a company, we have the great opportunity to participate in that market very broadly, right, not only with the current players and continue to do a good job for them. Get -- make sure that we're part of the new entries to the market and the new molecules that are being developed and then, of course, the biosimilar players are the generic player. So I feel good about the fact that GLP-1 will continue to be an important driver of growth here in the periods to come.

Operator

Our next question comes from David Windley with Jefferies.

David Windley

Doug stole a lot of my thunder there. I appreciate your answers on that. I wanted to ask, I guess, on capacity and the commentary around CapEx and thinking kind of strategically around ROI and Michel, in your comments about the strength of the organic franchise. Is there an opportunity to drive efficiency into footprint and supply the demand that you're seeing with a fairly -- what sounds like maybe a fairly efficient CapEx expenditure for expansion? Or I guess, I'm trying to feel out are we about to head into a multiyear elevated CapEx spending regime again?

Michel Lagarde

Thanks, Dave. Look, as Bob mentioned, I think we're very comfortable with the 6% to 8% sort of range. Some years, you're at the lower end of that range, some years at the higher end of the range. But this is not a place where I think we would be outside of it on either side.

I think your point around capacity is a good one, right? That's why I also mentioned we have this opportunity around continuous improvement because a lot of that effort will be going towards de-bottlenecking and increasing output from our current capacity. And so that has a real focus, and we'll continue to strengthen that.

And then in addition, as we mentioned, we are starting on the next wave of finishing capacity, and that's just new investment that will expand our available capacity so that we have the right capacity available for the continued growth of this business, but expect us to operate inside that range as provided.

Robert McMahon

Yes. And David, maybe just to add on what Michel is saying, one of the things that we've done internally in the last year, is really be much more thoughtful about the priorities within the capital spend that we have. And so driving, I would say, disproportionate investment in our highest return areas, which would be HVP. So not only do we have the opportunity to continue to drive efficiencies within the factory footprint that we have through the continuous improvement that we're doing.

We're also doing some tech transfers to better level load our facilities which provides not only multiple sources of product to our customers, which is important. But it also helps us leverage the existing footprint even more efficiently. And as we think about the upgrade opportunities to moving towards less and less contamination, higher and higher regulatory requirements, that finishing capacity has a higher ROI. And it actually doesn't require -- the beauty of that is it doesn't require more units. It's really taking the existing units and upgrading them to higher-value units. And so I feel like we've got a sufficient molding capacity, which is probably the higher areas of investment and then continue to invest in advance of the HVP finishing activities that we were just talking.

Operator

Our next question comes from Luke Sergott with Barclays.

Salem Salem

This is Salem on for Luke. The HHS fairly recently released the draft guidance that has some similarities to Annex 1. It sounds like you've already seen movement over to HVP components outside of Europe. But I just wanted to get an update on how you see this affecting the market just from your previous experience with how Annex 1 kind of progressed and how you expect things to trend within the U.S.? And then also kind of separately, just wanted to hear an update on how drug handling is progressing versus your expectations this quarter and in 4Q.

Michel Lagarde

Thanks for the questions. Good observation on the regulatory front. I think this is sort of how these global regulators work. Sometimes one region is a little bit ahead with an insight and a set of regulations and then others follow, right? And so the way I would think about it is the regulators in Europe when they publish their Annex 1 requirements, obviously, we're trying to solve a very specific problem around contamination, but it has nothing to do with being in Europe, right? It has everything to do with sort of how these products are being manufactured. And so it's quite logical for other regulators in the world to solve or focus on that same problem and suggest ways that companies need to comply.

And so we're seeing now very clearly that in the guidance that the U.S. is now embarking on. And I think our customers are used to that. So when they think about, for instance, upgrading to our HVP components, that's never a regional strategy. And so I think it's in our expectations that therefore, the broader regulatory push towards a higher contamination will continue to be a real secular long-term growth trend for us to upgrade customers to even better solutions.

Robert McMahon

Yes. And maybe to build on that, most of the revenue upgrades that we've seen today have been the European based. But increasingly, as we talk about those new projects, those are in the pipeline. So that's more opportunity, I think, going forward. And as Michel said, so seeing some nice pickup there, mainly on the project side. But think that, that's a multiyear kind of opportunity for us.

Michel Lagarde

Then on the point around drug handling and the sort of strategy in West Vantage, I think it's progressing as per our expectations. So we continue to ramp up those higher value-added contracts and continue to see a good funnel of opportunities and team is doing a good job executing those. And then, of course, are rolling off the more legacy projects. And so I think that's why you see sort of a muted effect on growth this year and next.

Operator

Our next question comes from Brendan Smith with TD Cowen.

Brendan Smith

Congrats again on the [indiscernible], Michel, it's great to have you. Maybe one here on the revenue mix that we should think about moving forward. I guess you guys noted that HVPs are over 50% now of revenues and some of which includes, I think, biologics, around 43% you had in the deck there. I guess, as we look at our models through Q4 and into next year, I guess, where do you think that HVP mix ultimately gets to over the next year? And I guess just related to that, how are you thinking about where the current 26 revenue exit run rate is tracking versus that 7% to 9% LRP you've put out there previously? And just any updated thoughts on that looking ahead.

Michel Lagarde

Yes, maybe 2 thoughts. One, I think the good thing about this business, as I mentioned earlier, is the benefits from multiple tailwinds when it comes to growth. And so we think the upgrade opportunity is 1 that we will be with us as we just talked about globally and therefore, an important driver of revenue growth. And so you'll see the growth in that segment, but similarly on the biologics side because that's driven by record scientific innovation, right? And we're sitting at a record pipeline in clinical development. And a lot of that is biologics increasing percentages. So also that segment will benefit from these growth tailwinds.

So I think we feel good about all aspects of the portfolio benefiting from these trends. And therefore, we feel good about sort of the robustness of the growth profile of the overall company going forward.

Robert McMahon

Yes. I know you asked, Brendan, about kind of revenue mix. We don't have a specific target of revenue, but we do expect that HVP will be growing faster than the overall company. So you could expect that number to continue to rise over time. And that's the nice thing about this business is those secular tailwinds are in the areas that we're providing most value to customers. but also our best-performing products.

Operator

Our next question comes from Curtis Moiles with BNP Paribas.

Curtis Moiles

Welcome to the team, Michel. Looking forward to working with you. So I just wanted to start off on the biologics revenue. I know it's grown 60% -- 26% year-to-date. So just kind of curious how sustainable that is going forward? And maybe could we see that drop off since it's just a high level. And then secondly, I just wanted to quickly ask on price as well. It was 4% of growth in the quarter. Should we expect that to kind of continue going forward?

Michel Lagarde

So on Biologics, as I mentioned, we're very excited to see the continued focus of both pharma and biotech on developing impactful new medicines, right? And if you look at the pace and the scale at which that innovation pipeline now sits, it's at all-time records, both through in terms of overall compound that people are working on but also true for the percentage of that, that represents biologics, which is obviously super relevant to us because those will need to be delivered through injection. And so I think you'll see real continued focus on that part of it because these large molecules are proven to be really the key to addressing some of these unmet medical needs as our customers are developing those products. So that you should see as a continued driver of growth going forward.

On price, I think we've always said 2% to 3%. I think that is still sort of the right long-term assumption. I think this year, a little ahead of it. Part of that has to do with the environment in which we find ourselves. But I think the right planning assumption is probably the one that we talked about previously.

Operator

Our next question comes from Mac Etoch with Stephens.

Steven Etoch

Michel, looking forward to working with you as well. Maybe just a quick one to follow up on maybe Doug's question earlier, but you have a pretty unique multinational services background. I just want to get a sense for how you're thinking about leveraging West Vantage in the future. It's an area that's maybe until recently, it was fairly underappreciated by investors. So I just want to get a broader picture for how you're thinking about that platform long term.

Michel Lagarde

P Yes. Thanks, Mac, for the question. I think if you look at our company, the core of it are its products, right? That represents the vast, vast majority of the revenue, the profit, and I think also sort of the financial profile as we've laid it out, is really one of a products business. And so I think that's an important observation. I think on West Vantage, it's all about improving what we -- the business we have. And in my assessment, we have the right strategy, moving towards the higher value-added components, make sure we execute really well so that the contribution of that part of the business continues to strengthen here in the years ahead.

Operator

Our next question comes from Avantika Dhabaria with Bank of America.

Avantika Dhabaria

Congrats on the quarter. You were starting a new wave of HVP's investments. When should that capacity come online? And can your existing footprint support the demand you're seeing in the near term?

Michel Lagarde

Thank you for your question. Certainly not looking for more dots on the map. So I think these investments are going into our existing footprint. And I think the lead time of these projects is sort of similar to what we have experienced before, right? So if we start on these projects now, the right assumption is probably 18, 24 months for those to come online and deliver a meaningful contribution to the growth of the company.

Robert McMahon

Yes. And just to follow on to that, I think with the existing capacity that we have, we feel good about continuing to support the demand. We've made significant investments in labor to increase capacity at primarily in several of our HVP sites. We've been able to see that drive the performance and would expect us to be able to continue to increased capacity within that footprint as this comes online.

Operator

Thank you. And I see no further questions. This concludes the conference. Thank you for your participation. You may now disconnect.