2009-08-07 11:01:04 CEST
2009-08-07 11:02:26 CEST
REGULATED INFORMATION
Orion - Interim report (Q1 and Q3)
Orion Group Interim Report January-June 2009
ORION CORPORATION INTERIM REPORT JANUARY-JUNE 2009 7
AUGUST at 12:00 EEST
Orion Group Interim Report January-June 2009
Orion's net sales for January-June 2009 totalled EUR 386.4 million
(360.7 million for the first half of 2008), up by 7.1% on the
comparative period.
* Operating profit came to EUR 107.3 (108.6) million.
* Profit before taxes was EUR 105.6 (108.9) million.
* Equity ratio stood at 55.5% (63.0%).
* ROCE before taxes was 40.4% (50.0%).
* ROE after taxes was 39.9% (40.1%).
* Earnings per share were EUR 0.55 (0.57).
* Cash flow per share before financial items were EUR 0.35 (0.25).
ORION'S KEY FIGURES FOR THE REVIEW PERIOD
Change Change
Q2/09 Q2/08 % Q1-Q2/09 Q1-Q2/08 % 2008
Net sales, EUR
million 196.4 180.5 +8.8% 386.4 360.7 +7.1% 710.7
International
operations, EUR
million 141.4 127.0 +11.3% 277.9 251.6 +10.5% 493.6
% of net sales 72.0% 70.4% 71.9% 69.7% 69.4%
Operating profit,
EUR million 50.4 45.2 +11.5% 107.3 108.6 -1.2% 185.0
% of net sales 25.7% 25.1% 27.8% 30.1% 26.0%
Profit before taxes,
EUR million 49.0 44.9 +9.3% 105.6 108.9 -3.0% 184.2
% of net sales 25.0% 24.8% 27.3% 30.2% 25.9%
Income tax expense,
EUR million 12.8 12.1 +6.2% 27.6 29.1 -5.0% 47.8
R&D expenses, EUR
million 25.0 23.7 +5.3% 49.1 44.2 +11.2% 90.0
% of net sales 12.7% 13.1% 12.7% 12.2% 12.7%
Capital expenditure,
EUR million 34.3 21.9 +56.4% 40.0 31.3 +27.6% 56.8
% of net sales 17.5% 12.2% 10.3% 8.7% 8.0%
Assets total, EUR
million 655.9 581.3 +12.8% 695.5
Equity ratio, % 55.5% 63.0% 60.2%
Gearing, % 14.7% 6.8% -7.1%
Interest-bearing
liabilities, EUR
million 164.1 87.0 +88.7% 146.3
Non-interest-bearing
liabilities, EUR
million 127.5 128.4 -0.7% 130.6
Cash and cash
equivalents, EUR
million 110.7 62.2 +77.9% 176.1
ROCE (before taxes),
% 40.4% 50.0% 38.5%
ROE (after taxes), % 39.9% 40.1% 32.1%
Earnings per share,
EUR 0.26 0.23 +10.3% 0.55 0.57 -2.2% 0.97
Cash flow per share
before financial
items, EUR 0.11 0.18 -40.4% 0.35 0.25 +42.3% 0.66
Equity per share,
EUR 2.58 2.60 -0.5% 2.97
Personnel at the end
of the period 3,284 3,351 -2.0% 3,309
Average personnel
during the period 3,232 3,237 -0.2% 3,270
Personnel expenses,
EUR million 86.4 83.9 +2.9% 170.9
The Orion Group changed its accounting policy regarding product
development costs as of 1 January 2009. Costs relating to the
promotion of products already on the market (mainly generic products)
are now recognised in Cost of goods sold instead of Research and
development costs in the Income Statement. This change has no effect
on reported key figures, Operating profit and Balance Sheet, but it
reduces the R&D costs previously reported for 2008 by EUR 13.4
million and correspondingly increases the cost of goods sold.
On 1 January 2009, Easyhaler® business was transferred from Specialty
Products to Proprietary Products. At the same time hormone
replacement products, such as the Divina® product range, and
toremifene products, such as Fareston®, were transferred to Specialty
Products.
The key figures for comparative periods have been adjusted in
accordance with these reporting changes. Furthermore, the adjusted
key figures for previous periods are presented in the table "Adjusted
key figures", which can be found at the end of this release.
CEO Timo Lappalainen's review"Repurchase of Simdax rights helps Orion build its European presence""The key event for Orion in the first half of the year was the
repurchase of the rights to Simdax, a heart failure drug, from Abbott
in May for EUR 26 million. Simdax is a proprietary drug developed by
Orion, and it has previously been part of our product portfolio. It
has been on the market for several years in, for example, Southern
Europe, and together with the prostate cancer drug Vantas, which is
currently in the launching phase, it makes us well-placed to expand
into new countries in Europe in line with our strategy. During the
first half of the year, we set up operations already in Spain, Italy,
Austria, Greece and Portugal.""Orion's first-half net sales were favourable, showing a growth of
approximately 7%. The deliveries of the Parkinson's disease drugs
Stalevo and Comtan to Novartis were clearly up year-on-year, and the
sales of Easyhaler pulmonary drugs, Simdax and Precedex (sedative for
patients in intensive care) also increased considerably.""Despite excellent sales, our operating profit remained below last
year's level due to slightly lower margins and an increase in fixed
costs. The costs rose mainly as a result of the launching of sales
and marketing operations for Simdax in a number of new countries,
outsourced research projects and the patent litigations underway in
the United States.""Our strategy was reviewed in June, and it remained essentially the
same. The key patents for the Stalevo and Comtess/Comtan drugs, which
generate approximately one-third of Orion's sales, will expire in our
main markets in 2012-13. We are continuously bringing new products to
the market to replace the estimated drop in the sales of our
Parkinson's drugs. Our revised financial objectives are ensuring
financial stability and creating a foundation for long-term
profitable growth. Our strategy will continue to be built around
three key themes: a competitive product portfolio, strengthening our
market position in Europe and efficient and competitive operations.""Our current estimate of the Group's outlook for the full year 2009
remains unchanged from the one published earlier in the Financial
Statements and the previous Interim report. We are expecting our net
sales and operating profit to grow slightly from 2008. The outlook
estimate and the related preamble can be found on pages 5-6 of this
report."
Events during the period
In April, Orion and the Wockhardt companies reached an agreement in
the dispute where Orion had filed a lawsuit against Wockhardt in the
United States after Wockhardt had submitted Abbreviated New Drug
Applications (ANDA) for generic versions of Orion's Comtan® and
Stalevo® products.
In May, Orion repurchased the rights to intravenous levosimendan
(Simdax®). Simdax is Orion's proprietary drug for acute decompensated
heart failure.
In June, the distribution of the Sebamed product family in Norway was
transferred to Orion. This change is part of Orion's strategy to
strengthen its self-care product portfolio in Scandinavia.
Events after the review period
Orion Corporation has been informed that an Abbreviated New Drug
Application (ANDA) has been filed by Sandoz Inc. with the U.S. Food
and Drug Administration (FDA), seeking authorisation to produce and
market, in the United States, generic versions of Precedex®
(dexmedetomidine hydrochloride 100 µg base/ml), a product originated
by Orion and marketed in the United States by its exclusive licensee,
Hospira, Inc. The drug is approved as a sedative for patients in
intensive care in the United States. It can be administered by
continuous infusion for up to 24 hours to patients whose breathing is
assisted through intubation as well as to non-intubated patients who
require a sedative prior to or during surgical or other procedures.
News conference and teleconference
A news conference and teleconference on the H1 results will be held
today, on Friday, 7 August 2009 at 14:30 EEST at Hotel Kämp, address
Pohjoisesplanadi 29, Helsinki. CEO Timo Lappalainen will give a brief
presentation in English on the Group's results.
The event can be followed live as a webcast accessible via the Orion
website at www.orion.fi/en/. After the presentation, questions can be
presented in Finnish and English.
To participate in the teleconference, please call:
From the USA: +1 334 323 6201
From other countries +44 (0)20 7162 0025
The on-demand recording of the event will be available later the same
day through a link provided on the Orion website.
Orion's Interim reports for 2009
Interim report January-September 2009 26
October 2009
Orion's financial reports and related presentation material are
available on the Group's website at www.orion.fi/en/ promptly after
the publishing. The website also provides a possibility to register
for Orion's mailing lists for publications and releases.
Additional information:
Jari Karlson, CFO, tel. +358 10 426 2883 or mobile +358 50 966 2883
www.orion.fi/en/
www.orion.fi/en/investors/
Financial review Q1-Q2/2009
Net sales
The Orion Group's net sales for the first two quarters of 2009
totalled EUR 386.4 million (360.7 million for the period Q1-Q2/2008),
up by 7.1% on the comparative period. The net effect of currency
exchange rates was EUR 3.7 million positive.
The Pharmaceuticals business reported net sales of EUR 364.8 (337.0)
million, up by 8.3%. The products based on in-house R&D accounted for
EUR 175.7 (156.5) million, i.e., 48% (46%) of the segment's net
sales. Net sales from Orion's Parkinson's drugs, Stalevo® (carbidopa,
entacapone and levodopa) and Comtess®/Comtan® (entacapone), totalled
EUR 123.3 (105.2) million, or about 34% (31%) of the segment's net
sales.
The Diagnostics business had net sales of EUR 22.6 (24.7) million,
down by 8.5%. The sales of QuikRead® infection tests grew, but the
sales of older product portfolio slackened from the comparative
period.
Operating profit
The Pharmaceuticals business posted an operating profit of EUR 108.5
(108.8) million. The gross profit rate was slightly lower than in the
comparative period, which led to a smaller increase in the
euro-denominated gross profit than that seen in net sales. There was
a rise in fixed costs.
The Diagnostics business had an operating profit of EUR 3.3 (4.9)
million, down by 31.9%. A decline in sales reduced the gross profit,
and operating profit was lower because of increased investments in
product development.
Operating expenses
The Group's selling and marketing expenses were EUR 75.3 (72.3)
million, up by 4.2%. The growth was mainly due to the repurchase of
the Simdax business and related launching of sales operations in
Southern Europe.
Research and development expenditure amounted to EUR 49.1 (44.2)
million, up by 11.2%. The growth was the result of increased
outsourcing of studies, the most significant of which were the Phase
III clinical studies with dexmedetomidine aimed at marketing
authorisation in Europe, Phase I clinical studies with an alfa2c
receptor antagonist and preclinical cooperation with several
partners. Internal research expenditure was at the same level as in
the comparative period despite major redundancies implemented early
in the year. These were mainly due to a substantial rise in salaries
and social security expenses in Finland as a result of pay
settlements made in previous years. R&D expenses made up 12.7%
(12.2%) of the Group's net sales. Pharmaceutical R&D expenses
amounted to EUR 46.1 (42.0) million. Ongoing research projects are
reported in more detail in the business review of the Pharmaceuticals
business segment.
Administrative expenses were EUR 27.0 (21.9) million. They increased
from the previous year mainly due to the EUR 6.0 (2.1) million costs
resulting from the patent infringement lawsuits underway in the
United States. In the comparative period, the processes were just
beginning. More information on the ongoing proceedings can be found
in the section "Legal proceedings".
Other operating income and expenses increased profit by EUR 2.2 (2.5)
million. These comprised mainly items from currency rate hedging.
Profit before taxes
Group profit before taxes totalled EUR 105.6 (108.9) million.
Earnings per share were EUR 0.55 (0.57) and equity per share EUR 2.58
(2.60). The return on capital employed before taxes (ROCE) was
40.4% (50.0%) and the return on equity after taxes (ROE)
39.9% (40.1%).
Balance Sheet and financial position
The Group's gearing was 14.7% (6.8%) and equity ratio 55.5% (63.0%).
Liabilities in the Consolidated Balance Sheet at 30 June 2009
totalled EUR 291.6 (215.4) million. At the end of the period,
interest-bearing liabilities amounted to EUR 164.1 (87.0) million, of
which EUR 123.1 (1.2) million consisted of long-term loans. The rise
in the loans increased the Group's cash and cash equivalents at the
end of the period, which stood at EUR 110.7 (62.2) million, but the
Group's equity ratio and ROCE decreased slightly at the same time.
The Group's cash and cash equivalents are invested in short-term
interest-bearing instruments issued by financially solid financial
institutions and corporations.
Cash flows
Operating cash flow developed favourably, amounting to EUR 91.3
(60.6) million. Operating profit was nearly at the same level as in
the comparative period, and the amount tied to the working capital
during the first half of the year was EUR 31.0 million less.
Cash flow from investing activities was EUR 41.5 (25.5) million
negative.
Cash flow from financing activities was EUR 116.2 (63.1) million
negative. The change was due to a distinct reduction in loans taken
out by the Group compared with the first half of 2008. This was
because most of the Group's financial objectives were covered by the
long-term loans taken out at the end of 2008.
Capital expenditure
The Group's capital expenditure totalled EUR 40.0 (31.3) million.
Property, plant and equipment accounted for EUR 9.2 (15.8) million
and intangible assets for EUR 30.7 (15.5) million. The largest
individual investment was the repurchase of the rights to the Simdax
drug from Abbott in May for EUR 26 million, including signature and
milestone payments as per the agreement.
Outlook for 2009
Net sales will increase slightly compared with 2008. The sales of
pharmaceuticals through Orion's own sales network will increase both
in Finland and other European countries. Global in-market sales of
the Comtess/Comtan and Stalevo drugs will show further growth, but at
a slower rate than before. Deliveries of Parkinson's drugs to
Novartis are expected to increase slightly.
Marketing expenditure will increase due to the launching of sales and
marketing activities for Simdax, which was repurchased from Abbott,
in several countries, as well as the launching of other products.
Research expenditure will remain at the previous year's level. The
costs of the patent infringement lawsuits underway in the United
States are estimated to be higher than in 2008.
Operating profit is estimated to increase slightly from 2008. The
global economic recession is not expected to have a material effect
on the results, but it will complicate the assessment of
profitability.
R&D expenses will be about EUR 90 million. Additionally, about EUR 10
million will be used to promote products already on the market. The
latter item is now included in Costs of goods sold in the Income
Statement, while previously both items were included in Research
expenditure.
The Group's capital expenditure will be about EUR 65 million,
including the repurchase of Simdax but excluding other substantial
company or product acquisitions.
Preamble
The reference price system that was implemented in Finland in April
2009 is not expected to have a material effect on Orion's business.
As expected, the new system has increased price competition in the
category of substitutable products. However, it has also provided
Orion with new business opportunities. As a result of the change,
general market growth is expected to slow down in Finland compared
with 2008. New product launches will support Orion's growth in
Finland. On the other hand, the growth will be slowed down by heavy
price competition affecting mainly substitutable prescription drugs,
which is an important sector for Orion.
As expected, the growth in the in-market sales of the Parkinson's
drugs, Stalevo and Comtess/Comtan, in 2008 was just over 10%, which
is lower than in previous years. The growth is expected to slow down
further during 2009. Orion's own sales are anticipated to develop in
line with the overall market for Parkinson's drugs. Deliveries to
Novartis will depend on the development of Novartis's sales as well
as the change in stock levels. On the basis of current information,
Novartis will not continue to cut its stock levels in 2009.
The repurchase of the rights to Simdax from Abbott will increase
sales in the latter half of the year. Due to the costs from launching
the sales and marketing operations for the product as well as the
transfer from Abbott to Orion, the purchase will have no material
effect on Orion's operating profit in 2009 compared to when Abbott
was responsible for the product's sales.
Because the registrations and launches of new products are projects
that take more than a year, the resources and other material inputs
required for them in 2009 have been planned mostly in the previous
year.
Research and development costs can be estimated quite accurately in
advance. Part of the expenses is caused by fixed internal items, such
as salaries and maintenance of the operating infrastructure, while
part of the expenses result from clinical trials. These are typically
performed in clinics located in several countries. The most important
clinical trials scheduled for 2009 either continue from the previous
year or are at an advanced stage of planning, which is why their cost
level can be estimated rather accurately.
The estimated costs of the ongoing patent litigations in the United
States are based on the planned timetables and work estimates. The
costs resulting from the litigations will depend on a number of
factors, which at the present stage are difficult to estimate
accurately.
Near-term risks and factors of uncertainty relating to the outlook
estimates
The company is not aware of any significant risk factors relating to
the earnings outlook for 2009.
The global economic recession is not estimated to have a material
effect on the short-term development of the pharmaceuticals market,
but it increases uncertainty and thus complicates forecasting. For
example, risks of payment defaults and credit losses relating to
individual countries and customers may increase slightly, and
forecasting of currency rate development will be more challenging,
particularly in Eastern Europe.
The sales of individual products and, on the other hand, Orion's
sales in individual markets may vary slightly depending on the extent
to which the ever-tougher price and other competition that has
prevailed in the pharmaceutical markets in recent years specifically
affect Orion's products. Deliveries to Novartis are based on
timetables that are jointly agreed in advance. Nevertheless, these
can change, for example, as a consequence of decisions by Novartis
concerning the adjustments of stock levels during the year. It is
assumed that the ongoing litigations will not affect the sales of
Comtan or Stalevo in the United States in 2009.
Most of the exchange rate risk is related to the US dollar.
Typically, less than 15% of Orion's net sales come from the United
States. As regards the other most important currencies, such as the
British pound sterling and the Swedish krona, the overall effect will
be abated by the fact that Orion has organisations of its own in the
United Kingdom and Sweden, which means that in addition to costs
there will also be income in these currencies. As regards the
currencies of East European countries, the situation is similar.
Research projects always involve factors of uncertainty that may
either increase or decrease estimated costs. The projects may
progress more slowly or faster than assumed or they may be
discontinued. Nonetheless, changes that may occur in ongoing clinical
studies are reflected in costs relatively slowly, and they are not
estimated to have a material impact on the earnings in the current
year. Owing to the nature of the research process, the timetables and
costs of new studies that are being started are known well in
advance. Therefore, they typically do not lead to unexpected
essential changes in the estimated cost structure.
Financial objectives
Orion's revised financial objectives are ensuring the Group's
financial stability and creating a foundation for long-term
profitable growth.
The principal means to achieve these objectives are:
* Improving the organic development of net sales and operating
profit through product, product portfolio and company
acquisitions
* Increasing the efficiency of operations and cost control
* Maintaining a stable financial position, with the equity ratio
remaining at a level of at least 50%.
The sales of the Parkinson's disease drugs, Stalevo and
Comtess/Comtan, currently account for approximately one-third of
Orion's net sales. The key patents for these drugs in Orion's main
markets will expire in 2012-13, which is why their sales are expected
to decline over the next few years. Orion will also bring new
products to the market to replace the estimated drop in net sales.
The development of Orion's net sales and profitability within the
next few years will depend on how fast the sales of the Parkinson's
drugs will decline and, on the other hand, how other products will
sell in the future. This creates a point of discontinuity in the
Group's operations.
Former financial objectives were to accelerate the moderate organic
growth of the net sales within the next few years via product,
product portfolio and company acquisitions, to increase the operating
profit and to maintain the equity ratio at the level of 50% at least.
Strategy
In June, Orion's Board of Directors confirmed the Group's strategy
according to the same notions as before. Orion's strategy emphasises
profitable growth and increased shareholder value, whilst keeping
business risks under control.
Orion's strategy focuses on three key themes:
* Competitive product portfolio
* Strengthening the market position in Europe
* Efficient and competitive operations.
All of Orion's business divisions play a major role in achieving the
business objectives. Nevertheless, the main focus is on the two
largest divisions, Proprietary Products and Specialty Products. Orion
continues to strengthen synergies between patent-protected
proprietary products, off-patent, i.e., generic prescription drugs
and self-care products. The Animal Health, Fermion and Orion
Diagnostica divisions are also seeking growth.
Competitive product portfolio
Growth is based on a competitive product portfolio, which is
developed through Orion's in-house R&D activities, research
cooperation and active product acquisition. Potential company
acquisitions are also evaluated continuously.
The focus in Orion's R&D operations continues to be on early
research, and partnerships are mainly established for Phase III
clinical studies at the latest. The Group aims to increase the
overall number of research programmes and balance the risks of
individual projects in the research pipeline. Furthermore, the Group
seeks to purchase new product candidates to reinforce the research
pipeline based on its own research projects.
In the acquisition of generic products, Orion will have a
market-specific focus. For example, Orion aims to grow its portfolio
of self-care products in Finland, Scandinavia and Russia.
Strengthening the market position in Europe
With the establishment of new subsidiaries in 2009 and the repurchase
of the rights to Simdax, Orion has continued to strengthen and expand
its presence in Europe in line with its strategy. Orion's sales
network currently covers the key European pharmaceutical markets,
excluding France.
Orion aims to remain the market leader in Finland and to make
Scandinavia its established home market. In Central and Southern
Europe, the focus is on the Proprietary Products and in Eastern
Europe on the Specialty Products business. Outside Europe, Orion
mainly operates through partners.
Efficient and competitive operations
Orion strives to systematically improve its competitiveness
throughout the value chain, which means that increasing the
efficiency of operations and cost control are particularly important.
This translates into more active networking and partnership building,
for instance. At present, Orion's key projects include implementing
the new R&D model, increasing the efficiency of the supply chain and
improving the competitiveness of sales operations.
Dividend policy
In dividend distribution, Orion takes into account the distributable
funds as well as the medium-long- and long-term needs of capital
expenditure and other financial needs required for the achievement of
the financial objectives.
Shares and shareholders
On 30 June 2009, Orion had a total of 141,257,828 shares, of which
51,440,668 were Shares A and 89,817,160 Shares B. The Group's share
capital was EUR 92,238,541.46. At the end of June 2009, Orion held
280,030 Shares B as treasury shares. On 30 June 2009, the aggregate
number of votes conferred by both share classes was 1,118,305,490
excluding treasury shares.
Voting rights conferred by shares
Each Share A entitles its holder to twenty (20) votes at General
Meetings, whereas each Share B carries one (1) vote. However, a
shareholder cannot vote with more than 1/20 of the aggregate number
of votes from the different share classes represented at the General
Meeting. In addition, Orion Corporation and Orion Pension Fund do not
have the right to vote at Orion's General Meetings of shareholders.
Both share classes, A and B, provide equal rights to the company
assets and dividends.
On the basis of the Articles of Association, a shareholder can demand
the conversion of his or her Shares A to Shares B. No share
conversions were carried out during the first half of 2009.
Trading in Orion's shares
Orion's Shares A and B are both quoted on the NASDAQ OMX Helsinki in
the Large Cap group under the Healthcare sector heading under the
trading codes ORNAV and ORNBV. Trading in both of the company's share
classes commenced on 3 July 2006. Information on trading in the
company's shares has been available since this date. On 30 June 2009,
the market capitalisation of the company's shares excluding treasury
shares stood at EUR 1,575.2 million.
Authorisations of the Board of Directors to convey shares
Orion's Board of Directors has an authorisation granted by the Annual
General Meeting on 23 March 2009 to transfer the company's own shares
(treasury shares). This authorisation is in force up to the closing
of the 2010 Annual General Meeting. The Board of Directors does not
have an authorisation to increase the share capital or to issue bonds
with warrants or convertible bonds or stock options.
Altogether 44,806 Shares B held by the company were conveyed in March
as a share bonus for 2008 to persons employed by the company and
belonging to the Share-based Incentive Plan of the Orion Group. This
was based on the authorisation granted by the Annual General Meeting
on 25 March 2008. The transfer price of the shares conveyed was EUR
11.97 per share, which was the weighted average price of the Share B
on 5 March 2009. The total transfer price of conveyed shares was EUR
536,417.43.
After the transfer, Orion holds 280,030 Shares B as treasury shares.
Shareholder structure
At the end of June 2009, Orion had a total of 47,239 registered
shareholders, of whom 93.9% were private individuals. They held 49.9%
of the entire share stock and had 59.6% of the total votes.
Nominee-registered shares totalled 30.83 million, representing 21.8%
of all shares and 4.7% of the votes.
At the end of June 2009, Orion held 280,030 Shares B as treasury
shares. The proportion of the treasury shares was 0.2% of the
company's total share stock and 0.03% of the total votes.
No new transactions exceeding the flagging limits set in the Finnish
Securities Markets Act were brought to the attention of the company
during the review period.
Personnel
The average number of employees in the Group during the first half of
2009 was 3,232 (3,237). At the end of June, the Group had a total of
3,284 (3,351) employees, of whom 2,720 (2,836) worked in Finland and
564 (515) outside Finland. The number also includes persons who were
made redundant at the beginning of the year and whose period of
notice had not ended by the end of June. The increased number of
personnel in entities outside Finland was mainly due to the
reinforcement of the sales organisation in Eastern Europe during
2008.
Salaries and other personnel expenses for January-June totalled EUR
86.4 (83.9) million.
Legal proceedings
Agreement reached in legal proceedings against the Wockhardt
companies
On 29 April 2009, Orion Corporation and Wockhardt USA, LLC and
Wockhardt Limited (jointly "Wockhardt") reached a settlement
agreement in the dispute where Orion had filed a lawsuit against
Wockhardt to enforce its US patents after Wockhardt had filed
Abbreviated New Drug Applications (ANDA) for generic versions of
Orion's Comtan® and Stalevo® products.
Orion filed its first lawsuit against Wockhardt in the United States
in 2007 and two more in 2008. The settlement agreement applies to all
three lawsuits. According to the terms of the settlement agreement,
Wockhardt may launch the generic versions of Comtan and Stalevo in
the US market on 30 September 2012, or possibly before that if
certain conditions are met. The parties have agreed that Orion will
supply the said generic products to Wockhardt. Any other terms of the
agreement will not be made public by the parties.
Due to the settlement, all three lawsuits were terminated and Orion's
US patents No. 5,446,194; 5,135,950; 6,599,530; 6,797,732; and
6,500,867 will remain in force.
In accordance with current US legislation, Orion has delivered all of
the above-mentioned agreements to the U.S. Federal Trade Commission
and the United States Department of Justice.
Legal proceedings against the Sun companies
On 13 November 2007, 7 February 2008 and 12 November 2008, Orion
Corporation filed patent infringement lawsuits in the United States
to enforce U.S. Patents No. 6,500,867 and 5,446,194 against companies
belonging to the Sun Group.
Sun Pharmaceutical Industries Limited seeks to market generic
versions of Orion's Stalevo drug (25/100/200 and 37.5/150/200 mg
strengths of carbidopa, levodopa and entacapone) in the United
States. Sun Pharma Global, Inc. seeks to market a generic version of
Orion's proprietary drug Comtan in the United States.
Business reviews Q1-Q2/2009
Pharmaceuticals
Market review on human pharmaceuticals
Finland is the most important market for Orion, and it generates just
under one-third of Orion's net sales. According to statistics
collected by Finnish Pharmaceutical Data Ltd, Finnish wholesales of
human pharmaceuticals in the first half of 2009 totalled EUR 959.9
million, which was at the same level as in the comparative period
last year. In terms of the number of packages, overall sales fell by
6.7%. Total pharmacy sales rose by 0.6%, while hospital sales fell by
0.9%. The wholesales of prescription drugs grew by 0.1% and the
wholesales of self-care products by 1.2%.
Orion continued to strengthen its position as the leading marketer of
pharmaceuticals in Finland. According to statistics collected by
Finnish Pharmaceutical Data Ltd, Orion's wholesales of
pharmaceuticals in Finland in January-June 2009 amounted to EUR 91.2
million, up by 3.0% year-on-year. Orion's sales grew slightly, while
the overall market remained nearly unchanged from the comparative
period. The development of Orion's sales was supported by the
continuously updated product portfolio. Orion's market share was 9.5%
(9.4%), which was 2.4 percentage points higher than that of the
second largest marketer.
Globally, the most important indication for Orion is the treatment of
Parkinson's disease. Orion's Parkinson's drugs account for
approximately one-third of the Group's net sales. According to IMS
Health pharmaceutical sales statistics, in the 12-month period ending
in March the total sales of Parkinson's drugs to retail distributors
in the United States came to USD 966 million (USD 1,083 million in
the previous 12-month period), down by 11% year-on-year. The rapid
change in market trends was caused by the expiry of the patent for
the leading product, a dopamine agonist, and the resulting
competition created by the launch of generic products. The five
largest European markets for Parkinson's drugs were Germany, the UK,
France, Spain and Italy. In these countries, the combined sales of
Parkinson's drugs to retail distributors in the 12-month period
ending in March totalled EUR 877 (818) million, and the average
market growth was 7%.
The sales of Orion's Parkinson's drugs continued to develop
favourably, at a clearly higher rate than the market as a whole.
According to IMS Health pharmaceutical sales statistics, in the
12-month period ending in March 2009 the sales of Orion's Parkinson's
drugs to retail distributors totalled EUR 402 million (EUR 359
million in the previous 12-month period), up by 12%. In addition, the
hospital sales of Orion's Parkinson's drugs came to EUR 56 million,
up by 28% compared to the previous 12-month period. In the United
States, the sales of Orion's Parkinson's drugs to retail distributors
in the 12-month period ending in March were USD 163 (144) million, up
by 13% year-on-year. The market share of Orion's Parkinson's drugs in
the United States was about 17%. In the five largest Parkinson's
drugs markets in Europe, the wholesales of Orion's Parkinson's drugs
in the 12-month period ending in March totalled EUR 143 (132)
million, up by 8% on the comparative period. Orion's Parkinson's
drugs have an average market share of about 16% in these five
markets.
Net sales and operating profit of the Pharmaceuticals business
For January-June 2009, the Pharmaceuticals business reported net
sales of EUR 364.8 (337.0) million, up by 8.3% year-on-year. The
Pharmaceuticals business had an operating profit of EUR 108.5 (108.8)
million, nearly unchanged from the comparative period. The EBIT
margin of the Pharmaceuticals business was 29.7% (32.3%) of the
segment's net sales.
Proprietary Products
The product portfolio of Proprietary Products consists of patented
prescription products. For January-June 2009, the division posted net
sales of EUR 165.7 (140.5) million, up by 17.9%.
The combined net sales of Orion's Parkinson's drugs in the first half
of 2009 were EUR 123.3 (105.2) million. Sales were up by 17.2% and
accounted for 34% (31%) of the total net sales of the Pharmaceuticals
business. Net sales from deliveries of Stalevo and Comtan to Novartis
totalled EUR 76.0 (60.1) million, up by 26.4% year-on-year.
Deliveries of Stalevo to Novartis increased by 18.3% and deliveries
of Comtan by 43.0%. Net sales generated by Stalevo and Comtess in
Orion's own sales organisation totalled EUR 47.3 (45.1) million, up
by 4.9%. Net sales of Stalevo through Orion's own sales organisation
amounted to EUR 36.8 (32.1) million, up by 14.6%. Euro-denominated
sales were slackened by the weakening of the British pound sterling
and Scandinavian currencies.
Orion has on-going patent litigations in the United States against
the Sun companies. These companies aim to launch generic versions of
Orion's Comtan and Stalevo drugs in the United States. A settlement
agreement was reached in legal proceedings against the Wockhardt
companies in April.
In January-June 2009, the Easyhaler product family had net sales of
EUR 12.6 (10.7) million, up by 17.7%. In addition to Finland, sales
developed favourably in Poland, Germany and Turkey, for example.
In May, Orion repurchased the rights to the intravenous Simdax drug
(levosimendan) from Abbott. Simdax is indicated for acute
decompensated heart failure. After the deal, Orion has worldwide
rights to Simdax, excluding Latin American countries where the right
to market the product remained with Abbott. Orion will continue to
sell Simdax through its own network and its partners in nearly 40
countries where the product has been granted marketing authorisation.
The deal supports Orion's growth targets in Europe. Simdax is Orion's
proprietary drug, fits in well with Orion's critical care product
portfolio and is targeted at a narrow customer segment of
specialists.
Vantas® (histrelin implant), which is indicated for the treatment of
advanced prostate cancer, was launched in Germany and the United
Kingdom in June. Orion purchased the European-wide rights to the drug
from the US-based Endo Pharmaceuticals Solutions Inc. (formerly
Indevus).
Specialty Products
The net sales of the Specialty Products business division in
January-June 2009 totalled EUR 133.9 (129.6) million, up by 3.3%
year-on-year. The product range comprises off-patent, i.e., generic
prescription medicines and self-care products.
Net sales from Orion's human pharmaceuticals in Finland in
January-June 2009 came to EUR 99.7 (96.7) million, up by 3% on the
comparative period. Specialty Products accounted for the majority of
sales in Finland. Despite the deteriorating market conditions, Orion
has managed to improve its market position owing to its continuously
updated product portfolio, particularly in prescription drugs. The
reference price system, which was introduced in April, has both
intensified price competition and expanded the range of substitutable
products. The anti-psychotic drug Ketipinor® (quetiapine), for
example, has been particularly successful.
Net sales from Orion's human pharmaceuticals in Eastern Europe in the
first half of 2009 totalled EUR 18.0 (18.9) million, down by 5%.
Specialty Products accounted for the majority of sales in the region.
The growth of euro-denominated net sales in Eastern Europe has been
slackened by the heavy weakening of exchange rates in the region as
well as the economic recession.
In June, the distribution of the Sebamed product family in Norway was
transferred to Orion. Sebamed skin-care products are distributed
through pharmacies, so the agreement will enable Orion to boost
collaboration with the Norwegian pharmacy network. The new
distribution agreement supports Orion's growth strategy, aimed at
making Scandinavia an established home market by strengthening the
region's self-care product portfolio.
Animal Health
In January-June 2009, Animal Health had net sales of EUR 30.4 (34.4)
million, down by 11.6% on the comparative period. Animal sedatives
accounted for 28% (41%) of the division's net sales: Dexdomitor®
(dexmedetomidine), Domitor® (medetomidine), Domosedan® (detomidine)
and Antisedan® (atipamezole), whose sales were down by 39.7%. The
sales of animal sedatives have been slackened by price competition in
Europe, due to the expiry of patents.
Early in the year, Orion became the Finnish market leader in animal
drugs as well. The Finnish animal health market grew by 6.5% in
January-June 2009 compared with the corresponding period in 2008.
Respectively, Orion's net sales from veterinary medicines increased
by 10.0% in Finland. Orion's share of the Finnish animal health
market was 20.0%. The strong development of sales was mainly due to
Orion's extensive product portfolio and long engagement in the
Finnish animal health market.
Fermion
The net sales of Fermion, a manufacturer of active pharmaceutical
ingredients, stood at EUR 21.9 (19.4) million in the first half of
2009, up by 12.7% on the comparative period. The impact of
intra-Group transactions, that is, deliveries of active ingredients
for Orion's own use, has been eliminated from Fermion's net sales.
Ten best-selling pharmaceutical products
The net sales of the top ten pharmaceuticals in January-June 2009
amounted to EUR 190.9 (172.3) million, up by 10.8%. These products
made up about 52% (51%) of the total net sales generated by the
Pharmaceuticals business. The fastest growth rates were achieved with
Precedex® sedative for patients in intensive care (dexmedetomidine),
the heart failure drug Simdax, the Easyhaler franchise and the
Parkinson's drugs.
Products from in-house research
The net sales of products from in-house research totalled EUR 175.7
(156.5) million in January-June 2009, up by 12.3% on the comparative
period. These products made up about 48% (46%) of the net sales
generated by the Pharmaceuticals business.
Research and development
Orion's pharmaceutical R&D focuses on the following core therapy
areas: central nervous system drugs, cancer and critical care drugs
and Easyhaler pulmonary drugs. In addition to in-house research,
Orion invests in early-stage R&D cooperation with universities and
other pharmaceutical companies. In Phase III clinical studies, Orion
prefers to share the costs with other pharmaceutical companies. In
this way, Orion can ensure an increasing number of new research
projects and reinforce its ability to continue operating as a company
that provides new drugs and engages in pharmaceutical R&D.
The Group's R&D expenses totalled EUR 49.1 (44.2) million, of which
the Pharmaceuticals business made up EUR 46.1 (42.0) million. The
Group's R&D expenses were 12.7% (12.2%) of the Group's net sales.
Orion has applied for an expanded indication for Stalevo with the aim
to extend the indication to the treatment of early-stage Parkinson's
disease in the United States. The application is based on the
positive results from the FIRST STEP study conducted by Orion's
marketing partner Novartis in eight countries in North America and
Europe. Stalevo is currently indicated for the treatment of advanced
Parkinson's disease.
Orion is collaborating with Novartis to launch Stalevo in Japan.
Phase III clinical studies are underway with dexmedetomidine in
patients in intensive care as an infusion administered for over 24
hours. The programme aims to have the product registered in the EU.
Dexmedetomidine is already available, for example, in the US and
Japan as a sedative for patients in intensive care, administrable as
an infusion for a maximum of 24 hours. The efficacy and safety of
dexmedetomidine is compared with midazolam in the MIDEX study and
with propofol in the PRODEX study. Both studies are planned to
involve 500 patients. The studies were launched in summer 2007, and
preliminary results are expected in summer 2010.
The LEVET programme is studying the efficacy of orally administered
levosimendan in the treatment of heart diseases in dogs, with the aim
of obtaining marketing authorisations in the US and the EU.
For the Easyhaler product family, a new formulation is being
developed combining budesonide as an anti-inflammatory agent and
formoterol as a long-acting bronchodilator.
An alpha 2c receptor antagonist is being studied in clinical Phase I.
In early research, this compound has been found to be suitable for
the treatment of the symptoms of schizophrenia or Alzheimer's
disease, for example.
Orion has decided to not to continue the preliminary Phase I clinical
studies aimed at investigating the potential use of orally
administered levosimendan for the treatment of stroke in human
patients.
Orion has several projects in early research phase investigating
selective androgen receptor modulators (SARM), prostate cancer,
neuropathic pain, Parkinson's disease and other possible indications
within intensive care, among others.
Diagnostics
For January-June 2009, the Diagnostics business reported net sales of
EUR 22.6 (24.7) million, down by 8.5% on the comparative period. The
sales of many old product categories fell year-on-year. The
euro-denominated development of net sales was slackened by the
weakening of Nordic currencies, whereas sales to China and the Czech
Republic increased on the comparative period.
The main products were the QuikRead® tests, whose sales continued to
grow. The tests are used, for example, to detect infection from the
CRP concentration of the blood sample and to detect streptococcus A
bacteria in the pharyngeal sample. The increasing QuikRead
paraphernalia in doctors' offices and clinical laboratories create a
solid basis for demand for reagents used in tests in future.
Operating profit, which amounted to EUR 3.3 (4.9) million, fell by
31.9% as a result of a decline in sales and an increase in product
development expenditure.
Espoo, 7 August 2009
Board of Directors of Orion Corporation
Orion Corporation
Timo
Lappalainen
Jari Karlson
President and
CEO
CFO
Tables
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Change
EUR million Q2/09 Q2/08 % Q1-Q2/09 Q1-Q2/08 Change % 2008
Net sales 196.4 180.5 +8.8% 386.4 360.7 +7.1% 710.7
Cost of goods
sold -68.1 -62.9 +8.3% -129.9 -116.3 +11.7% -243.4
Gross profit 128.3 117.7 +9.0% 256.5 244.5 +4.9% 467.4
Other income and
expenses 1.6 0.1 2.2 2.5 -12.0% 3.1
Selling and
marketing
expenses -40.3 -37.2 +8.3% -75.3 -72.3 +4.2% -143.9
R&D expenses -25.0 -23.7 +5.3% -49.1 -44.2 +11.2% -90.0
Administrative
expenses -14.2 -11.6 +22.2% -27.0 -21.9 +23.2% -51.5
Operating profit 50.4 45.2 +11.5% 107.3 108.6 -1.2% 185.0
Finance income 1.0 0.9 +8.3% 3.1 2.4 +31.7% 7.6
Finance expenses -2.4 -1.3 +89.4% -4.8 -2.0 +137.4% -8.5
Profit before
taxes 49.0 44.9 +9.3% 105.6 108.9 -3.0% 184.2
Income tax
expense -12.8 -12.1 +6.2% -27.6 -29.1 -5.0% -47.8
PROFIT FOR THE
PERIOD 36.2 32.8 +10.4% 78.0 79.9 -2.3% 136.3
Other
comprehensive
income
Translation
differences 0.9 0.0 1.1 -0.3 +466.2% -2.8
Cash flow hedges 0.5 0.7 -29.2% 0.2 0.7 -68.8% -1.0
Other
comprehensive
income net of
tax 1.4 0.8 +86.4% 1.4 0.4 +216.0% -3.9
TOTAL
COMPREHENSIVE
INCOME
FOR THE PERIOD 37.6 33.5 +12.1% 79.4 80.3 -1.1% 132.5
of which
attributable to:
Parent company
shareholders 36.2 32.8 +10.4% 78.0 79.9 -2.3% 136.3
Minority 0.0 0.0 0.0 0.0 0.0
Total
comprehensive
income
attributable to:
Parent company
shareholders 37.6 33.5 +12.1% 79.4 80.3 -1.1% 132.5
Minority 0.0 0.0 0.0 0.0 0.0
Earnings per
share, EUR 1)) 0.26 0.23 +10.3% 0.55 0.57 -2.2% 0.97
Depreciation and
amortisation 8.4 7.7 +9.6% 16.4 15.3 +7.7% 31.6
Personnel
expenses 44.6 43.9 +1.6 % 86.4 83.9 +2.9% 170.9
1) The figure has been calculated from the profit attributable to
the parent company shareholders. The company has no items that could
dilute the earnings per share.
.
STATEMENT OF FINANCIAL POSITION
Assets
EUR million 6/09 6/08 Change % 2008
Property, plant and equipment 188.6 189.4 -0.4% 192.4
Goodwill 13.5 13.5 13.5
Intangible rights 63.8 33.3 +91.4% 37.5
Other intangible assets 3.6 2.2 +62.5% 2.9
Investments in associates 0.1 0.1 -18.6% 0.1
Available-for-sale investments 1.0 0.9 +4.7% 0.9
Pension asset 32.3 28.0 +15.4% 29.3
Deferred tax assets 4.1 3.4 +19.9% 4.2
Other non-current assets 1.6 4.6 -65.8% 1.5
Non-current assets total 308.4 275.4 +12.0% 282.3
Inventories 123.8 140.8 -12.1% 131.7
Trade receivables 95.7 87.7 +9.2% 83.1
Other receivables 17.4 15.2 +14.7% 22.3
Cash and cash equivalents 110.7 62.2 +77.9% 176.1
Current assets total 347.5 305.9 +13.6% 413.1
Assets total 655.9 581.3 +12.8% 695.5
Equity and liabilities
EUR million 6/09 6/08 Change % 2008
Share capital 92.2 92.2 92.2
Share premium 17.8 17.8 17.8
Expendable fund 23.0 23.0 23.0
Other reserves -0.6 0.9 -169.5% -0.9
Retained earnings 231.8 231.9 286.3
Equity of the parent company shareholders 364.3 365.9 -0.5% 418.5
Minority interest 0.0 0.0 -10.9% 0.0
Equity total 364.3 366.0 -0.5% 418.6
Deferred tax liabilities 41.5 42.3 -1.7% 42.0
Pension liability 0.7 1.0 -27.4% 0.8
Provisions 0.5 0.5 +12.2% 0.4
Interest-bearing non-current liabilities 123.1 1.2 109.9
Other non-current liabilities 0.6 2.1 -68.8% 0.9
Non-current liabilities total 166.5 47.0 +254.4% 153.9
Trade payables 26.4 32.8 -19.5% 30.2
Income tax liabilities 1.3 4.2 -68.3% 2.4
Other current liabilities 56.4 45.6 +23.6% 54.0
Provisions 0.0 0.0 -100.0% 0.0
Interest-bearing current liabilities 41.1 85.8 -52.1% 36.4
Current liabilities total 125.2 168.4 -25.7% 123.0
Liabilities total 291.6 215.4 +35.4% 276.9
Equity and liabilities total 655.9 581.3 +12.8% 695.5
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
a. Share capital
b. Share premium
c. Expendable fund
d. Other reserves
e. Translation differences
f. Retained earnings
g. Total
h. Minority interest
i. Equity total
EUR million a. b. c. d. e. f. g. h. i.
Equity on 31 Dec
2008 92.2 17.8 23.0 -0.9 -6.9 293.3 418.5 0.0 418.6
Dividend -133.9 -133.9 -133.9
Share-based
incentive plan 0.4 0.4 0.4
Comprehensive
income 0.2 1.1 77.9 79.3 0.0 79.3
Equity on 30 Jun
2009 92.2 17.8 23.0 -0.6 -5.8 237.6 364.3 0.0 364.3
Equity on 31 Dec
2007 92.2 17.8 23.0 0.5 -4.1 301.7 431.1 0.0 431.2
Dividend -140.9 -140.9 -140.9
Repurchase of own
shares -4.8 -4.8 -4.8
Share-based
incentive plan 0.3 0.3 0.3
Transfer in equity -0.3 0.3
Comprehensive
income 0.7 -0.3 79.9 80.3 0.0 80.3
Equity on 30 Jun
2008 92.2 17.8 23.0 0.9 -4.4 236.4 365.9 0.0 366.0
CONSOLIDATED CASH FLOW STATEMENT
EUR million 6/09 6/08 2008
Operating profit 107.3 108.6 185.0
Adjustments 13.9 14.2 28.7
Change in working capital -4.8 -35.8 -15.0
Interest paid -5.1 -1.3 -7.0
Interest received 3.2 2.6 7.5
Income taxes paid -23.3 -27.7 -54.9
Total net cash from operating activities 91.3 60.6 144.4
Investments in property, plant and equipment -10.3 -10.8 -30.8
Investments in intangible assets -31.4 -15.5 -23.0
Sales of property, plant and equipment
and available-for-sale investments 0.4 0.8 1.5
Sales of intangible assets -0.2 0.0 0.5
Total net cash used in investing activities -41.5 -25.5 -51.8
Withdrawals of short-term loans 0.6 103.7 121.7
Repayments of short-term loans -0.6 -20.7 -105.1
Withdrawals of long-term loans 22.8 -0.2 125.0
Repayments of long-term loans -5.1 -0.2 -0.5
Repurchase of own shares 0.0 -4.8 -4.8
Dividends paid and other distribution of profits -133.9 -140.9 -141.1
Total net cash used in financing activities -116.2 -63.1 -4.8
Net change in cash and cash equivalents -66.4 -28.0 87.7
Cash and cash equivalents at the beginning of
the period 176.1 90.4 90.4
Foreign exchange differences 1.0 -0.2 -2.1
Net change in cash and cash equivalents -66.4 -28.0 87.7
Cash and cash equivalents at the end of the
period 110.7 62.2 176.1
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 6/09 6/08 2008
Carrying amount at the beginning of the period 192.4 186.6 186.6
Additions 9.2 15.8 32.8
Disposals -0.4 -0.7 -1.8
Depreciation -12.6 -12.3 -25.1
Carrying amount at the end of the period 188.6 189.4 192.4
CHANGES IN INTANGIBLE ASSETS (EXCL. GOODWILL)
EUR million 6/09 6/08 2008
Carrying amount at the beginning of the period 40.4 23.0 23.0
Additions 30.7 15.5 24.0
Disposals -0.0 -0.0
Depreciation -3.8 -3.0 -6.6
Carrying amount at the end of the period 67.3 35.5 40.4
In May, Orion repurchased the rights to Simdax from Abbott. The
purchase price, EUR 26.2 million,
was recognised in full under Intangible rights in the Consolidated
Balance Sheet.
COMMITMENTS AND CONTINGENCIES
EUR million 6/09 6/08 2008
Contingent for own liabilities
Mortgages on land and buildings 45.0 19.0 19.0
of which those to Orion Pension Fund 9.0 9.0 9.0
Guarantees 1.1 1.4 1.0
Other liabilities
Leasing liabilities (excl. finance lease contracts) 4.0 4.3 4.0
Other liabilities 0.3 0.3 0.3
DERIVATIVES
EUR million 6/09 6/08 2008
Fair value of currency forward contracts 1.6 0.7 2.0
Nominal values of derivatives 70.2 62.4 64.6
Fair value of electricity forward contracts -1.1 0.8 -1.4
Nominal values of derivatives 4.8 2.3 5.7
RELATED PARTY TRANSACTIONS
EUR million Q1-Q2/09 Q1-Q2/08 2008
Management's employment benefits 2.4 2.1 3.1
Performance by operating segment
NET SALES BY BUSINESS AREA
Change Change
EUR million Q2/09 Q2/08 % Q1-Q2/09 Q1-Q2/08 % 2008
Pharmaceuticals 185.9 168.5 +10.4% 364.8 337.0 +8.3% 667.6
Proprietary
Products 84.2 70.1 +20.2% 165.7 140.5 +17.9% 278.1
Specialty
Products 67.8 63.1 +7.4% 133.9 129.6 +3.3% 260.5
Animal
Health 15.2 17.8 -14.7% 30.4 34.4 -11.6% 67.2
Fermion 10.8 10.5 +2.4% 21.9 19.4 +12.7% 36.1
Other 8.0 7.0 +14.2% 13.0 13.0 25.7
Diagnostics 11.0 12.6 -12.9% 22.6 24.7 -8.5% 45.0
Group items -0.5 -0.5 -2.7% -1.1 -1.0 +6.5% -1.9
Group total 196.4 180.5 +8.8% 386.4 360.7 +7.1% 710.7
OPERATING PROFIT BY BUSINESS AREA
EUR million Q2/09 Q2/08 Change % Q1-Q2/09 Q1-Q2/08 Change % 2008
Pharmaceuticals 51.6 45.7 +12.8% 108.5 108.8 -0.3% 188.5
Diagnostics 1.1 2.5 -57.1% 3.3 4.9 -31.9% 6.1
Group items -2.3 -3.1 -25.9% -4.5 -5.1 -12.8% -9.6
Group total 50.4 45.2 +11.5% 107.3 108.6 -1.2% 185.0
NET SALES BY ANNUAL QUARTERS
2009 2008 2007
EUR million Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3
Pharmaceuticals 185.9 178.9 169.6 161.0 168.5 168.5 162.7 153.4
Diagnostics 11.0 11.7 10.7 9.5 12.6 12.2 10.5 9.4
Group items -0.5 -0.5 -0.5 -0.4 -0.5 -0.5 -0.4 -0.3
Group total 196.4 190.1 179.9 170.1 180.5 180.2 172.8 162.5
OPERATING PROFIT BY ANNUAL QUARTERS
2009 2008 2007
EUR million Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3
Pharmaceuticals 51.6 56.9 35.3 44.3 45.7 63.1 41.7 50.1
Diagnostics 1.1 2.2 0.2 1.0 2.5 2.3 0.1 1.2
Group items -2.3 -2.2 -2.7 -1.8 -3.1 -2.1 -3.1 -2.2
Group total 50.4 56.9 32.8 43.6 45.2 63.4 38.6 49.1
GEOGRAPHICAL BREAKDOWN OF NET SALES BY ANNUAL QUARTERS
2009 2008 2007
EUR million Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3
Finland 55.0 53.5 55.2 52.8 53.5 55.7 53.7 48.6
Scandinavia 25.8 25.4 23.7 23.3 26.1 28.1 24.3 23.8
Other Europe 71.8 61.2 62.0 56.2 61.4 64.4 57.5 56.0
North America 18.2 22.6 19.2 21.7 18.5 14.4 15.4 19.1
Other markets 25.6 27.4 19.8 16.1 21.1 17.6 21.9 15.0
Group total 196.4 190.1 179.9 170.1 180.5 180.2 172.8 162.5
Business reviews
KEY FIGURES FOR PHARMACEUTICALS BUSINESS
Change
EUR million Q2/09 Q2/08 Change % Q1-Q2/09 Q1-Q2/08 % 2008
Net sales 185.9 168.5 +10.4% 364.8 337.0 +8.3% 667.6
Operating profit 51.6 45.7 +12.8% 108.5 108.8 -0.3% 188.5
% of net
sales 27.8% 27.2% 29.7% 32.3% 28.2%
R&D expenses 23.4 22.6 +3.6% 46.1 42.0 +9.8% 85.4
% of net
sales 12.6% 13.4% 12.6% 12.5% 12.8%
Capital
expenditure 33.7 20.5 +64.3% 39.0 29.5 +32.0% 53.3
% of net
sales 18.1% 12.2% 10.7% 8.8% 8.0%
Sales revenue
from proprietary
products 88.1 78.9 +11.6% 175.7 156.5 +12.3% 307.5
Personnel at the
end of the period 2,960 3,033 -2.4% 2,995
NET SALES OF ORION'S TOP 10 PHARMACEUTICAL PRODUCTS
Change Change
EUR million Q2/09 Q2/08 % Q1-Q2/09 Q1-Q2/08 % 2008
Stalevo®
(Parkinson's
disease) 42.2 37.8 +11.7% 84.7 72.6 +16.7% 141.0
Comtess® / Comtan®
(Parkinson's
disease) 18.9 15.1 +25.0% 38.6 32.6 +18.3% 67.4
Easyhaler® product
family (asthma,
COPD) 6.2 6.2 -0.1% 12.6 10.7 +17.7% 22.2
Simdax® (heart
failure) 8.6 4.8 +80.0% 11.4 9.5 +20.3% 17.3
Burana®
(inflammatory pain) 4.6 4.1 +12.1% 9.1 9.3 -1.6% 19.4
Domitor®,
Dexdomitor®,
Domosedan® and
Antisedan® (animal
sedatives) 3.5 6.6 -46.7% 8.4 14.0 -39.7% 24.6
Divina® range
(menopausal
symptoms) 3.6 4.1 -13.3% 7.1 7.5 -5.7% 14.7
Precedex® (sedative
for patients in
intensive care) 2.7 1.8 +50.2% 6.8 4.3 +58.0% 9.6
Fareston® (breast
cancer) 2.4 2.5 -2.9% 6.2 5.3 +15.4% 10.5
Enanton® (prostate
cancer) 3.1 3.3 -4.9% 6.1 6.5 -6.8% 12.7
Total 95.8 86.3 +11.0% 190.9 172.3 +10.8% 339.7
Share of
pharmaceutical net
sales 52% 51% 52% 51% 51%
KEY FIGURES FOR DIAGNOSTICS BUSINESS
Change
EUR million Q2/09 Q2/08 Change % Q1-Q2/09 Q1-Q2/08 % 2008
Net sales 11.0 12.6 -12.9% 22.6 24.7 -8.5% 45.0
Operating profit 1.1 2.5 -57.1% 3.3 4.9 -31.9% 6.1
% of net
sales 10.0% 20.2% 14.7% 19.8% 13.6%
Capital
expenditure 0.6 1.3 -52.5% 0.9 1.4 -36.8% 2.8
% of net
sales 5.5% 10.0% 4.0% 5.7% 6.2%
Personnel at the
end of the period 296 290 +2.0% 287
Information on Orion's shares
Basic SHARE information
30 June 2009 Share A Share B Total
ISIN code FI0009014369 FI0009014377
Trading code on NASDAQ OMX
Helsinki ORNAV ORNBV
Reuters code ORNAV.HE ORNBV.HE
Bloomberg code ORNAV.FH ORNBV.FH
Share capital, EUR million 33.6 58.6 92.2
Counter book value of the
share, EUR 0.65 0.65
Total number of shares 51,440,668 89,817,160 141,257,828
% of total share stock 36% 64% 100%
Number of treasury shares 280,030 280,030
Total number of shares
excluding treasury shares 51,440,668 89,537,130 140,977,798
Minimum number of shares 1
Maximum number of shares 500,000,000 1,000,000,000 1,000,000,000
Votes per share 20 1
Number of votes excluding
treasury shares 1,028,813,360 89,537,130 1,118,350,490
% of total votes 92% 8% 100%
Total number of
shareholders 15,269 31,970 47,239
Both Shares, A and B, provide equal rights to the company assets and
dividends.
INFORMATION ON TRADING
1 January-30 June 2009 Share A Share B Total
Shares traded 1,102,133 47,300,722 48,402,855
% of the total number of shares 2.1% 52.8% 34.3%
Trading volume, EUR million 12.9 557.9 570.8
Closing quotation on 2 Jan 2009, EUR 12.55 12.63
Lowest quotation, EUR (A and B, 30
Mar 2009) 10.42 10.35
Average quotation, EUR 11.73 11.80
Highest quotation, EUR (A and B, 30
Jan 2009) 13.95 13.98
Closing quotation on 30 Jun 2009, EUR 11.18 11.17
Market capitalisation on 30 Jun 2009
excluding treasury shares, EUR
million 575.1 1,000.1 1,575.2
PERFORMANCE PER SHARE
Change Change
Q2/09 Q2/08 % Q1-Q2/09 Q1-Q2/08 % 2008
Earnings per
share, EUR 0.26 0.23 +10.3% 0.55 0.57 -2.2% 0.97
Cash flow per
share before
financial
items, EUR 0.11 0.18 -40.4% 0.35 0.25 +42.3% 0.66
Equity per
share, EUR 2.58 2.60 -0.5% 2.97
Average
number of
shares
excluding
treasury
shares, 1,000
shares 140,978 140,933 140,962 141,073 141,003
Appendices
Orion Group structure
Orion Corporation is the parent company of the Orion Group. The Group
consists of two operating segments, or operating segments, and five
business divisions:
* Pharmaceuticals
o Proprietary Products (patented prescription products)
o Specialty Products (off-patent, generic prescription
products and self-care products for humans)
o Animal Health (veterinary products for pets and production
animals)
o Fermion (active pharmaceutical ingredients)
* Diagnostics
o Orion Diagnostica (diagnostic tests).
Accounting policies
This Interim Report of the Orion Group has been prepared in
accordance with the accounting policies set out in International
Accounting Standard 34 on Interim Financial Reporting and in the
Group's Financial Statements for 2008. Furthermore, the following
standard amendments have been applied as of 1 January 2009
* IFRS 8, Operating Segments The Group's operating segments are
based on the Group's internal organisational structure and
intra-Group financial reporting. The monitoring of business by
the Executive Management Board is based on products and
geographical regions. The amendment to the standard had no effect
on the organisation of segments. The operating segments are
Pharmaceuticals business and Diagnostics business. The
geographical regions for reporting are Finland, Scandinavia,
Other Europe, North America and Other Countries.
* IAS 1, Presentation of Financial Statements. The Group has
implemented Statement of Comprehensive Income, presented as one
statement. The amendment to the standard has also been taken into
account in the way in which the Statement of Changes in Equity is
presented.
The following standards and interpretations that came into force in
2009 were applied in the financial year. The application of these
standards and interpretations had no material effect on the
consolidated financial statements:
* IAS 23 (Amendment), Borrowing Costs. Borrowing costs relating to
assets that meet the criteria are capitalised as part of the cost
of the asset.
* IFRS 2, Share-Based Payments.
* IFRIC 11, IFRS 2, Group and treasury share transactions.
The policies and calculation methods applied during the period are
available on the Orion website at http://orion.fi/en/Investors/.
The figures in this Interim Report have not been audited.
The figures in parentheses are for the comparative period, i.e., the
corresponding period in the previous year. The per-share ratios have
been adjusted. All the figures have been rounded, which is why the
total sums of individual figures may differ from the total sums
shown.
CALCULATION OF THE KEY FIGURES
Profit before taxes + interest and
Return on capital other finance expenses
employed (ROCE), % = Total assets - non-interest-bearing x 100
liabilities, average during the
period
Profit for the period
Return on equity (ROE), % = Equity total, average during the x 100
period
Equity ratio, % = Equity x 100 Total assets - advances received
Interest-bearing liabilities - Cash
Gearing, % = and cash equivalents x 100
Equity
Profit available for the parent
Earnings per share, EUR = company shareholders
Average number of shares during the
period excluding treasury shares
Cash flow per share Operating cash flow + investment
before financial items, = cash flow
EUR Average number of shares during the
period excluding treasury shares
Equity of the parent company
Equity per share, EUR = shareholders
Number of shares at the end of the
period excluding treasury shares
Average price of share, Total EUR value of shares traded
EUR = Average number of traded shares
during the period
Number of shares Closing
Market capitalisation, = at the end of x quotation of the
EUR million the period period
ADJUSTED KEY FIGURES
Q2/08 Q2/08 Q1-Q2/08 Q1-Q2/08 2008 2008
Earlier Adjusted Earlier Adjusted Earlier Adjusted
reported reported reported
Gross profit,
EUR million 120.6 117.7 252.6 244.5 480.8 467.4
R&D expenses,
EUR million 27.1 23.7 50.8 44.2 103.4 90.0
% of
net sales 15.1% 13.1% 14.0% 12.2% 14.5% 12.7%
Net sales
Proprietary
Products, EUR
million 71.0 70.1 144.3 140.5 284.7 278.1
Net sales
Specialty
Products, EUR
million 62.2 63.1 126.0 129.6 254.0 260.5 Pro forma Pro forma
2008 2008 2007 2007 2006 2006
Earlier Adjusted Earlier Adjusted Earlier Adjusted
reported reported reported
Gross profit,
EUR million 480.8 467.4 460.7 447.2 434.9 422.3
R&D expenses,
EUR million 103.4 90.0 98.5 85.0 85.7 73.1
% of
net sales 14.5% 12.7% 14.5% 12.5% 13.4% 11.4%
Net sales
Proprietary
Products, EUR
million 284.7 278.1 270.8 259.6 256.6 242.0
Net sales
Specialty
Products, EUR
million 254.0 260.5 241.5 252.5 218.7 233.3
Publisher:
Orion Corporation
www.orion.fi/en/
Orion is an innovative European R&D-based pharmaceutical and
diagnostic company with a special emphasis on developing medicinal
treatments and diagnostic tests for the global markets. Orion
develops, manufactures and markets human and veterinary
pharmaceuticals, active pharmaceutical ingredients as well as
diagnostic tests. Orion's pharmaceutical R&D focuses on the following
core therapy areas: central nervous system drugs, cancer and critical
care drugs and Easyhaler® pulmonary drugs.
The Group's net sales in 2008 amounted to EUR 711 million. The
company invested EUR 90 million in research and development. At the
end of 2008, the Group had a total of 3,300 employees, of whom 2,700
worked in Finland and 600 in other European countries. Orion's Shares
A and B are both listed on the NASDAQ OMX Helsinki.
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