2017-04-26 11:00:19 CEST
2017-04-26 11:00:19 CEST
SÄÄNNELTY TIETO
Orion - Interim report (Q1 and Q3)
Orion Group Interim Report January-March 2017
ORION CORPORATION INTERIM REPORT
3M 2017 26 APRIL 2017 at 12:00 noon EEST
Orion Group Interim Report January-March 2017
Orion's net sales in January-March 2017 totalled EUR 279 million (EUR 262
million in January-March 2016).
* Operating profit was EUR 92 (80) million.
* Profit before taxes was EUR 89 (80) million.
* Equity ratio was 53% (44%).
* ROCE before taxes was 51% (46%).
* ROE after taxes was 49% (47%).
* Basic earnings per share were EUR 0.50 (0.45).
* Cash flow per share before financial items was EUR 0.34 (0.29).
* The outlook estimate for 2017 remains unchanged. Orion estimates that in
2017 net sales will be at similar level to 2016 and operating profit
excluding material capital gains will be at least EUR 280 million.
ORION'S KEY FIGURES FOR THE REVIEW PERIOD
3M 2017 3M 2016 Change % 2016
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Net sales, EUR million 279.2 262.0 +6.5% 1,073.5
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Operating profit, EUR million 91.7 80.3 +14.1% 314.6
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% of net sales 32.8% 30.7% 29.3%
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Profit before taxes, EUR million 88.8 79.7 +11.4% 310.9
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% of net sales 31.8% 30.4% 29.0%
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Income tax expense, EUR million 18.5 16.4 +13.2% 61.9
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R&D expenses, EUR million 25.7 24.9 +3.0% 118.2
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% of net sales 9.2% 9.5% 11.0%
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Capital expenditure, EUR million 15.4 9.0 +70.1% 51.1
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% of net sales 5.5% 3.5% 4.8%
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Assets total, EUR million 937.3 1,087.9 -13.8% 1,062.9
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Equity ratio, % 53.2% 44.1% 60.8%
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Gearing, % 12.2% -20.3% -12.4%
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Interest-bearing liabilities, EUR million 152.4 185.9 -18.0% 152.5
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Non-interest-bearing liabilities, EUR million 290.1 426.9 -32.0% 269.0
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Cash and cash equivalents and money market
investments, EUR million 92.1 282.5 -67.4% 231.9
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ROCE (before taxes), % 51.0% 46.1% 40.9%
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ROE (after taxes), % 49.5% 47.3% 40.3%
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Basic earnings per share, EUR 0.50 0.45 +11.3% 1.77
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Diluted earnings per share, EUR 0.50 0.45 +11.3% 1.77
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Cash flow per share before financial items,
EUR 0.34 0.29 +15.2% 1.62
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Equity per share, EUR 3.52 3.37 +4.4% 4.57
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Personnel at the end of the period 3,483 3,409 +2.2% 3,469
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Average personnel during the period 3,475 3,401 +2.2% 3,446
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Personnel expenses, EUR million 53.4 53.3 224.4
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President and CEO Timo Lappalainen:
"Orion's centenary year started well"
"Our net sales and operating profit were higher in January-March 2017 than in
January-March of the previous year. The higher operating profit was due to
growth in net sales, and in addition higher milestone payments than in the
previous year.
"The Easyhaler product family for treatment of asthma and chronic obstructive
pulmonary disease continued to grow well, led by the Bufomix Easyhaler combined
formulation. As regards our other key proprietary products, intensive care
sedative Dexdor continued to grow strongly and sales of Simdax for treatment of
acute decompensated heart failure, which has been in the markets for a long
time, also continued to grow well. As expected, sales of Orion's branded
Parkinson's drugs Stalevo, Comtess and Comtan continued to decline, but growing
other products were able to compensate for the decline in sales of Parkinson's
drugs and increase the total sales of the Proprietary Products business
division.
"Net sales of the Specialty Products business division were similar to the
previous year. The halt to growth was due to changes in the market environment
and ever-intensifying competition, for example in Finland, where changes were
made to the pricing system for substitutable prescription drugs at the beginning
of the year that narrowed the so-called price band. In addition, sales of
Remsima, which delivered clear growth in previous years, were slightly lower in
the first quarter than in the comparative period, mainly due to the timing of
the national tendering competition in Norway.
"Fermion's sales grew well in the first quarter. In recent years order cycles in
the trade in pharmaceutical raw materials have become ever shorter, and this has
led to clearly greater fluctuation in business volume than before within each
year and between different years. Our other business divisions were able to
increase their net sales in the first quarter of the year.
"Orion's new Senior Vice President for Research and Development, Christer
Nordstedt, became a member of Orion's Executive Management Board in February.
During the review period we focused on taking forward our ongoing clinical
development projects, which have progressed as planned. After the review period,
in April we submitted a marketing authorisation application for the new
salmeterol-fluticasone combined formulation in the Easyhaler product family in
Europe.
"We estimate that in 2017 net sales will be at similar level to 2016. We
estimate that operating profit excluding material capital gains will be at least
EUR 280 million. Our outlook estimate and the basis for it can be found in this
report under 'Outlook for 2017' and 'Basis for outlook'."
Events during the period
On 13 February Orion announced the appointment of Dr Christer Nordstedt, M.D.,
Ph.D., as Senior Vice President for Research and Development and member of the
Executive Management Board of the Orion Group as of 21 February 2017.
On 1 March Orion transferred altogether 107,965 Orion Corporation B shares held
by the Company as share bonuses for the earning periods 2014-2016 and 2016 to
the persons belonging to the Share-based Incentive Plan for key persons of the
Group.
On 22 March Orion Corporation's Annual General Meeting was held in Helsinki.
Events after the period
On 6 April the amendments to Sections 5 and 9 (1) of Orion Corporation's
Articles of Association were recorded in the Trade Register.
News conference and teleconference
A news conference and teleconference on the published results will be held on
Wednesday 26 April 2017 at 13:30 EEST in Hotel Kämp, address: Pohjoisesplanadi
29, Helsinki. President and CEO Timo Lappalainen will give a brief presentation
in English on the financial review.
The event can be followed live as a webcast accessible at Orion's website at
http://www.orion.fi/en/investors. After the presentation, questions can be asked
by telephone in Finnish and English.
The teleconference code is 8575853 and the telephone numbers to participate in
the teleconference are:
Finland: +358 (0)9 7479 0361
Sweden: +46 (0)8 5033 6574
United Kingdom: +44 (0)330 336 9105
United States: +1 719 325 2385
News conference recordings
A recording of the webcast of the event in English and a recording of the
presentation by the President and CEO in Finnish will be published on the Orion
website during Wednesday 26 April 2017.
Financial report material
Financial reports and related presentation material are available at
http://www.orion.fi/en/investors promptly after publication. The website also
has a form for subscribing to Orion's releases.
Dates in Orion Calendar 2017
Capital Markets Day for analysts, institutional Thursday 18 May 2017
investors and media in Helsinki
Half-Year Financial Report January-June 2017 Wednesday 19 July 2017
Interim Report January-September 2017 Thursday 26 October 2017
For additional information about the financial review:
Jari Karlson, CFO
tel. +358 10 426 2883
http://www.orion.fi/en
http://www.orion.fi/en/investors
Financial review 1/1/2017-31/3/2017
Net sales
The Orion Group's net sales in January-March 2017 were up by 7% at EUR 279
million (EUR 262 million in January-March 2016). The net effect of currency
exchange rates was plus EUR 3 million.
The Pharmaceuticals business's net sales were up by 6% at EUR 265 (249) million.
Net sales of Orion's Stalevo(®) (carbidopa, levodopa and entacapone) and
Comtess(®)/Comtan(®) (entacapone) Parkinson's drugs were down by 7% at EUR 30
(33) million, which was 11% (13%) of the Pharmaceuticals business's net sales.
The Diagnostics business's net sales were up by 7% at EUR 14 (14) million.
Operating profit
The Orion Group's operating profit was up by 14% at EUR 92 (80) million.
Milestone payments accounted for EUR 7 (4) million of the operating profit.
The Pharmaceuticals business's operating profit was up by 13% at EUR 90 (80)
million. Milestone payments accounted for EUR 7 (4) million of the operating
profit.
The Diagnostics business's operating profit was up by 32% at EUR 3.5 (2.6)
million.
Operating expenses
The Group's sales and marketing expenses were EUR 47 (44) million.
R&D expenses were EUR 26 (25) million and accounted for 9% (10%) of the Group's
net sales. Pharmaceutical R&D expenses amounted to EUR 24 (23) million. Research
projects are reported in more detail under Pharmaceuticals in the Business
Reviews.
Administrative expenses were EUR 11 (11) million.
Other operating income and expenses were EUR 0 (0) million.
Group's profit
The Group's profit before taxes was up by 11% at EUR 89 (80) million. Basic
earnings per share were EUR 0.50 (0.45) and diluted earnings per share were EUR
0.50 (0.45). Equity per share was EUR 3.52 (3.37). The return on capital
employed before taxes (ROCE) was 51% (46%) and the return on equity after taxes
(ROE) 49% (47%).
Financial position
The Group's gearing was 12% (-20%) and the equity ratio 53% (44%). The change in
gearing is due to payment of the dividend earlier than in the previous year, and
consequently the Company's cash and cash equivalents were clearly lower than in
the comparative period.
The Group's total liabilities at 31 March 2017 were EUR 443 (613) million. The
non-interest-bearing liabilities in the comparative period include the dividends
(EUR 183 million) transferred from equity in March 2016 but not paid until the
beginning of April 2016. At the end of the period, interest-bearing liabilities
amounted to EUR 152 (186) million, including EUR 150 (176) million of long-term
loans.
The Group had EUR 92 (283) million of cash and cash equivalents and money market
investments at the end of the period. The change is explained by the earlier
payment of the dividend than in the previous year.
Cash flow
Cash flow from operating activities was EUR 63 (52) million. The higher cash
flow was mainly due to the increase in net sales.
Cash flow from investing activities was EUR -16 (-12) million.
Cash flow from financing activities was EUR -186 (-2) million. The change is
explained by the earlier payment of the dividend than in the previous year.
Capital expenditure
The Group's capital expenditure totalled EUR 15 (9) million. This comprised EUR
13 (7) million on property, plant and equipment and EUR 3 (2) million on
intangible assets. Fermion has an ongoing significant expansion investment at
its Hanko manufacturing plant, and Orion has ongoing expansion of Easyhaler
production capacity at its Espoo pharmaceuticals production plant.
Outlook for 2017 (provided on 8 February 2017)
Net sales are estimated to be at similar level to 2016 (net sales were EUR
1,074 million in 2016).
Operating profit excluding material capital gains is estimated to be at least
EUR 280 million (operating profit excluding capital gains was EUR 293 million in
2016).
Basis for outlook
Orion's branded Parkinson's drugs are Comtess(®), Comtan(®) and Stalevo(®).
Generic competition to these products commenced in the United States in 2012 and
has already extended to nearly all markets. As a result of the competition,
Orion's sales of these products have decreased to low levels in the United
States and some other markets, and competition is expected to extend gradually
in all markets. However, in 2017 growth in sales of other products is expected
to continue to compensate for the decline in sales of these products. Sales of
the Easyhaler product family are forecast to continue to grow. A generic
competitor to Dexdor(®) was approved in some European countries. However, the
impact of these approvals is not included in the outlook estimate because at
this stage it is still difficult to estimate the precise timing and significance
of possible competition. The patent for the Simdax(®) molecule expired in
September 2015 but this is still not expected to have a material impact on sales
of the product in 2017.
Sales of generic products account for a significant proportion of Orion's total
sales, and price competition has continued in many markets. Competition in
Finland, the most important generic market for Orion, will remain intense in
2017. In addition, at the beginning of the current year in Finland changes were
made to the pricing system for substitutable prescription drugs by narrowing the
so-called price band. The estimated negative impact of this change on Orion's
sales has been taken into account in the outlook estimate. However, product
launches continue to support Orion's position as market leader. In 2016 sales of
Remsima(®) generated a significant portion of the growth in net sales of the
Speciality Products business division. Sales of the product in the current year
are expected to be similar to the previous year.
Collaboration agreements with other pharmaceutical companies are an important
component of Orion's business model. Often payments related to these agreements,
which vary greatly from year to year, are recorded in net sales. Forecasting the
timing and amount of payments is difficult. Possible future payments relating to
agreements already made have in some cases been conditional on, for instance,
the progress of research projects or results received, which are not known until
studies have been completed. On the other hand, making new agreements is
generally a process for which neither the schedule nor the outcome is known
before the final signing of the agreement.
The Group's total capital expenditure in 2017 is expected to be higher than in
2016, when it was EUR 51 million. The largest single ongoing projects are
expansion of Fermion's Hanko manufacturing plant and increasing Easyhaler
product family production capacity.
Marketing expenditure will be higher than in the previous year due to additional
promotion of sales from the Easyhaler product portfolio, for example. Because
the registrations and launches of new products are projects that take more than
a year, the increases in resources and other inputs required in 2017 were
planned mainly during the previous year.
Research and development costs will be similar to 2016. They are partly the
Company's internal fixed cost items, such as salaries and maintenance of the
operating infrastructure, and partly external variable costs. External costs
arise from, among other things, long-term clinical trials, which are typically
performed in clinics located in several countries. The most important clinical
trials scheduled for 2017 are either ongoing from the previous year or at an
advanced stage of planning, therefore their cost level can be estimated rather
accurately. The accrued costs are materially affected by collaboration
arrangements and how the costs arising are allocated between Orion and its
collaboration partners. For instance, Bayer is paying the majority of the
darolutamide (ODM-201) research costs.
Near-term risks and uncertainties
Sales of Orion's branded Parkinson's drugs will decrease in 2017 due to generic
competition. The effects of the competition have been taken into account in the
outlook estimate for the current year. However, the timing of the extension and
intensity of generic competition to Stalevo in Europe and elsewhere still
entails uncertainty that may materially affect the accuracy of the estimate made
at this stage. The basic Simdax and Dexdor patents have expired. However, the
products have other still valid product protection. Nevertheless, for these
products there is a possibility that generic competition might commence before
expiry of the respective product protection. Orion has become aware that
marketing authorisation for a generic version of Dexdor has been granted in some
European countries. Orion is continuing actions to defend its rights.
Sales of individual products and also Orion's sales in individual markets may
vary, for example depending on the extent to which the ever-tougher price and
other competition prevailing in pharmaceutical markets in recent years will
specifically affect Orion's products. Deliveries of Parkinson's drugs to
Novartis, the most important collaboration partner, are based on timetables that
are jointly agreed in advance. Nevertheless, they can change, for example as a
consequence of decisions by Novartis concerning among others adjustments of
stock levels. In addition, changes in market prices and exchange rates affect
the value of deliveries to Novartis.
The exchange rate risk due to the US dollar has decreased in recent years
because the share of Orion's net sales invoiced in dollars has fallen to below
ten per cent and at the same time the value of purchases in dollars has
increased. The greatest exchange rate risk at present relates to European
currencies such the Swedish crown and British pound. However, the overall effect
of the risk due to currencies of European countries will be abated by the fact
that Orion has organisations of its own in most of these countries, which means
that in addition to sales income, there are also costs in these currencies.
Changes in the Japanese yen exchange rate have become more important as sales of
Parkinson's drugs in Japan have increased. The exchange rate effect related to
the Russian rouble has increased due to the strong volatility of the currency.
However, Russian sales are not a significant portion of Orion's entire net
sales.
Orion's broad product range may cause risks to the delivery reliability and make
it challenging to maintain the high quality standard required in production.
Authorities and key customers in different countries undertake regular and
detailed inspections of development and manufacturing of drugs at Orion's
production sites. Any remedial actions that may be required may at least
temporarily have effects that decrease delivery reliability and increase costs.
Orion's product range also includes products manufactured by other
pharmaceutical companies. Possible problems related to the delivery reliability
or quality of the products of those manufacturers may cause a risk to Orion's
delivery reliability.
Research projects always entail uncertainty factors 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 expected to have a material impact on 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. They therefore typically do not
lead to unexpected changes in the estimated cost structure. Orion generally
undertakes the last, in other words Phase III, clinical trials in collaboration
with other pharmaceutical companies. Commencement of these collaboration
relationships and their structure also materially affect the schedule and cost
level of research projects.
Collaboration arrangements are an important component of Orion's business model.
Possible collaboration and licensing agreements related to these arrangements
also often include payments to be recorded in net sales that may materially
affect Orion's financial results. In 2014-16 the annual payments varied from EUR
8 million to EUR 39 million. The payments may be subject to certain conditions
relating to the development of research projects or sales, and whether these
conditions are triggered and the timing of triggering always entail
uncertainties.
Orion's dividend distribution policy
Orion's dividend distribution takes into account the distributable funds and the
capital expenditure and other financial requirements in the medium and long term
to achieve the financial objectives.
Shares and shareholders
On 31 March 2017 Orion had a total of 141,257,828 (141,257,828) shares, of which
38,100,273 (38,906,154) were A shares and 103,157,555 (102,351,674) B shares.
The Group's share capital was EUR 92,238,541.46 (92,238,541.46). At the end of
March 2017 Orion held 675,401 (283,366) B shares as treasury shares. On 31 March
2017 the aggregate number of votes conferred by the A and B shares was
864,487,614 (880,191,388) excluding treasury shares.
At the end of March 2017, Orion had 48,273 (49,370) registered shareholders.
Voting rights conferred by shares
Each A share entitles its holder to twenty (20) votes at General Meetings of
Shareholders and each B share one (1) vote. However, a shareholder cannot vote
more than 1/20 of the aggregate number of votes from the different share classes
represented at a General Meeting of Shareholders. The Company itself and Orion
Pension Fund do not have the right to vote at an Orion Corporation General
Meeting of Shareholders.
Both share classes, A and B, confer equal rights to the Company's assets and
dividends.
Conversion of shares
The Articles of Association entitle shareholders to demand the conversion of
their A shares to B shares within the limitation on the maximum number of shares
of a class. In January-March 2017 in total 193,881 shares were converted.
Trading in Orion's shares
Orion's A shares and B shares are quoted on Nasdaq 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,
and information on trading in the Company's shares has been available since this
date.
On 31 March 2017 the market capitalisation of the Company's shares, excluding
treasury shares, was EUR 6,863 million.
Orion shares are also traded on various alternative trading platforms in
addition to Nasdaq Helsinki.
Authorisations of the Board of Directors
Orion's Board of Directors was authorised by the Annual General Meeting on 22
March 2016 to decide on acquisition of shares in the Company and on a share
issue in which shares held by the Company can be conveyed. The authorisation to
acquire shares was utilised during 2016. The terms and conditions of the
authorisation were reported in more detail in a stock exchange release on 22
March 2016.
The Board of Directors is not authorised to increase the share capital or to
issue bonds with warrants or convertible bonds or stock options.
Share-based Incentive Plans
Orion has two currently operating share-based incentive plans for key persons of
the Group, which were announced in stock exchange releases published on 5
February 2013 and 2 February 2016.
On 1 March 2017 Orion transferred altogether 107,965 Orion Corporation B shares
held by the Company as share bonuses for the earning periods 2014-2016 and 2016
to the key persons belonging to the incentive plans of the Orion Group.
The transfer was based on the authorisation by the Annual General Meeting on 22
March 2016. The price per share of the transferred shares was EUR 47.1011, which
was the volume weighted average quotation of Orion Corporation B shares on 1
March 2017. The total transaction price of the transferred shares was therefore
EUR 5,085,270.26.
Share ownership
Orion's shares are in the book-entry system maintained by Euroclear Finland, and
Euroclear Finland maintains Orion's official shareholder register.
At the end of March 2017, Orion had a total of 48,273 (49,370) registered
shareholders, of whom 96% (96%) were private individuals holding 39% (41%) of
the entire share stock and 61% (62%) of the total votes. There were altogether
63 (58) million nominee-registered and foreign-owned shares, which was 44% (41%)
of all shares, and they conferred entitlement to 10% (9%) of the total votes.
At the end of March 2017 Orion held 675,401 (283,366) B shares as treasury
shares, which is 0.5% (0.2%) of the Company's total share stock and 0.08%
(0.03%) of the total votes.
Decisions by the Annual General Meeting
The Annual General Meeting of the Shareholders of Orion Corporation was held on
22 March 2017 in Messukeskus Helsinki, Expo and Convention Centre. The following
matters among others were handled at the meeting.
Adoption of the financial statements for financial year 1 January to 31 December
2016
The Annual General Meeting adopted the financial statements of the Company and
Group as per 31 December 2016.
Total dividend EUR 1.55 per share
Based on the adopted statement of financial position for the financial period
ending 31 December 2016, a dividend of EUR 1.35 per share and in addition an
extra EUR 0.20 special dividend per share to commemorate Orion's centenary year,
in total EUR 1.55 per share, were approved in accordance with the Board's
proposal. The record date for dividend distribution was 24 March 2017 and the
payment date was 31 March 2017.
Discharge from liability
The members of the Board of Directors and the President and CEO were discharged
from liability for the financial year 1 January to 31 December 2016.
Remuneration of the members of the Board of Directors
The Annual General Meeting decided that as the annual fees for the term of
office of the Board of Directors, the Chairman shall receive EUR 84,000, the
Vice Chairman shall receive EUR 55,000 and the other Board members shall receive
EUR 42,000 each. Furthermore, as a fee for each meeting attended, the Chairman
shall receive EUR 1,200, the Vice Chairman shall receive EUR 900 and the other
Board members shall receive EUR 600 each. The travel expenses of Board members
shall continue to be paid in accordance with previous practice. The
aforementioned meeting fees shall also be paid to the Chairmen and to the
members of the committees established by the Board.
Of the aforementioned annual fees, 60% was to be paid in cash and 40% in the
Company's shares, so Orion Corporation B shares were to be acquired in the
period 27 April to 4 May 2017 from the stock exchange in amounts corresponding
to EUR 33,600 for the Chairman, EUR 22,000 for the Vice Chairman and EUR 16,800
for each of the other Board members. The part of the annual fee paid in cash,
which corresponds to the approximate sum necessary for the payment of the income
taxes on the fees, was to be paid no later than 31 May 2017. The annual fees
encompass the full term of office of the Board of Directors.
It was also decided that the Company shall pay the transfer tax related to the
portion of the annual fees of the members of the Board of Directors to be paid
in shares.
Members and Chairman of the Board of Directors
The number of members in the Board of Directors was confirmed to be seven. Sirpa
Jalkanen, Timo Maasilta, Eija Ronkainen, Mikael Silvennoinen and Heikki
Westerlund were re-elected as members of the Board of Directors for the
following term of office, and Ari Lehtoranta and Hilpi Rautelin were elected as
new members. Heikki Westerlund was elected as the Chairman of the Board of
Directors.
Auditor and auditor's fee
PricewaterhouseCoopers Oy, authorised public accountants, were elected as the
auditor for the following term of office. The auditor's fee shall be paid
against an invoice approved by the Company.
Amendments to Sections 5 and 9 (1) of the Articles of Association
The Annual General Meeting decided to amend Section 5 of the Articles of
Association by deleting the last sentence of Section 5 concerning the maximum
age (67 years) of a person elected as a member of the Board of Directors.
Following the amendment, Section 5 of the Articles of Association is in its
entirety as follows:
"The Board of Directors shall comprise at least five (5) and at most eight (8)
members. The term of the members of the Board of Directors shall end at the end
of the Annual General Meeting of Shareholders following the election. The
General Meeting of Shareholders shall elect the Chairman of the Board of
Directors and the Board of Directors shall elect the Vice Chairman of the Board
of Directors, both for the same term as the other members."
In addition, the Annual General Meeting decided to amend the first paragraph of
Section 9 of the Articles of Association to correspond to the amended wording of
the Auditing Act. Following the amendment, the first paragraph of Section 9 of
the Articles of Association is in its entirety as follows:
"The company shall have one auditor, which shall be Authorised Public
Accountants."
Constitution of the Board of Directors
At its constitutive meeting following the Annual General Meeting, the Board of
Directors elected Timo Maasilta as its Vice Chairman.
Personnel
The average number of employees in the Orion Group in January-March 2017 was
3,475 (3,401). At the end of March 2017 the Group had a total of 3,483 (3,409)
employees, of whom 2,812 (2,731) worked in Finland and 671 (678) outside
Finland.
Salaries and other personnel expenses in January-March 2017 totalled EUR 53 (53)
million.
Significant legal proceedings
Companies belonging to the Orion Group are parties to various legal disputes,
which are not, however, considered to be significant legal proceedings for the
Group.
Business Reviews
Pharmaceuticals
Review of human pharmaceuticals market
Finland is the most important individual market for Orion, generating about one-
third of the total net sales. According to IMS Health statistics, Finnish
wholesale of human pharmaceuticals in January-March 2017 was EUR 546 (538)
million. Orion was able to increase its sales faster than market growth, and
strengthened its position as leader in marketing pharmaceuticals in Finland.
According to statistics collected by IMS Health, Orion's wholesale of human
pharmaceuticals in Finland in January-March 2017 amounted to EUR 72 (69)
million, up by 4% compared with the previous year. Orion's market share of
Finnish pharmaceuticals markets was 13% (13%).
The most important individual therapy area for Orion is still the treatment of
Parkinson's disease. Orion's branded Parkinson's drugs containing entacapone
(Stalevo(®), Comtess(®) and Comtan(®)) account for slightly over 10% of the
Group's net sales.
Total sales of Orion's branded Parkinson's drugs:
EUR or USD million MAT12/2016 MAT12/2015 Change %
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United States USD 9 12 -27%
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Europe TOP 5 EUR 67 91 -27%
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Japan EUR 78 66 +18%
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Source: IMS Health pharmaceutical sales statistics MAT12/2016 (1/2016-12/2016)
Europe TOP 5: Germany, United Kingdom, France, Spain and Italy.
Sales of Orion's branded Parkinson's drugs decreased in Europe due to
commencement of generic competition. Sales increased in Japan, mainly due to
growth in Stalevo, which was launched in that market in 2015.
According to IMS Health pharmaceutical sales statistics, in Europe total sales
of the most common intravenous anaesthetics and intensive care sedatives
(propofol, midazolam, remifentanil and dexmedetomidine) in the 12-month period
ending in December 2016 were EUR 523 (525) million. According to IMS Health
pharmaceutical sales statistics, sales of Orion's Dexdor(®) intensive care
sedative (dexmedetomidine) were up by 34% at EUR 48 (36) million in Europe.
Net sales and operating profit of the Pharmaceuticals business
In January-March 2017 the Pharmaceuticals business's net sales were EUR 265
(249) million and its operating profit was EUR 90 (80) million. Milestone
payments accounted for EUR 7 (4) million of the net sales and operating profit,
and they comprised payments related to marketing rights. The operating profit of
the Pharmaceuticals business was 34% (32%) of the segment's net sales.
Net sales of Orion's top ten pharmaceuticals in January-March 2017 were up by
8% at EUR 120 (111) million. They accounted for 45% (44%) of the total net sales
of the Pharmaceuticals business.
Proprietary Products
The product portfolio of Proprietary Products consists of patented prescription
products in three therapy areas: central nervous system diseases, oncology and
critical care, and Easyhaler(®) pulmonary drugs.
Net sales of Proprietary Products in January-March 2017 were up by 12% at EUR
98 (88) million. Sales of Parkinson's drugs continued to decline, but sales of
other products grew well.
Orion's drugs for treatment of Parkinson's disease are Stalevo(®) (active
ingredients carbidopa, levodopa and entacapone) and Comtess(®)/Comtan(®)
(entacapone). Their total net sales in January-March 2017 were down by 7% at EUR
30 (33) million. In the United States Orion's Parkinson's drugs have several
generic competitors, and competition is increasing in Europe and also other
markets. In Japan the first marketing authorisations for generic Comtan products
were granted, but generic competition has not yet commenced.
Breakdown of sales of Parkinson's drugs:
EUR million 3M 2017 3M 2016 Change %
--------------------------------------------------------
Stalevo deliveries to Novartis 17 19 -12%
--------------------------------------------------------
Comtan deliveries to Novartis 7 4 +56%
--------------------------------------------------------
Orion's Stalevo sales 6 8 -24%
--------------------------------------------------------
Orion's Comtess sales 1 1 -30%
--------------------------------------------------------
Net sales of Simdax(®), a drug for treatment of acute decompensated heart
failure, in January-March 2017 were up by 12% at EUR 15 (14) million. Simdax is
sold in altogether over fifty countries worldwide.
Total net sales of the Easyhaler(®) product family for treatment of asthma and
chronic obstructive pulmonary disease were up by 15% in January-March 2017 at
EUR 18 (16) million. The increase was mainly due to sales of the Bufomix
Easyhaler(®) combined formulation (budesonide-formoterol). Sales of Bufomix
Easyhaler were up by 38% at EUR 8 (6) million in January-March 2017. In the last
quarter of 2016, through the decentralised procedure the budesonide-formoterol
Easyhaler combined formulation received marketing authorisation for Germany, the
United Kingdom and France. The national approval process has been completed in
Germany and is ongoing in the United Kingdom and France. Orion is expanding
Easyhaler production at the Espoo pharmaceuticals production plant.
Net sales of Orion's Dexdor(®) intensive care sedative (dexmedetomidine) in
January-March 2017 were up by 18% at EUR 17 (14) million. Sales of the
Precedex(®) intensive care sedative were up by 79% at EUR 7 (4) million, mainly
due to greater deliveries of the pharmaceutical ingredient to the partner than
in the comparative period.
Specialty Products
Net sales of the Specialty Products business division's off-patent, i.e. generic
prescription drugs, self-care products and biosimilars in January-March 2017
were EUR 122 (123) million.
Finland, Scandinavia, and Eastern Europe and Russia are the most important
markets for Specialty Products. The business division's sales in Finland in
January-March 2017 were up by 3% at EUR 72 (70) million due to good growth in
sales of self-care products and Remsima(®).
Sales were down by 8% at EUR 20 (21) million in Scandinavia and up by 9% at EUR
13 (12) million in Eastern Europe and Russia.
Net sales of the biosimilar Remsima(®) for treatment of rheumatoid arthritis
among other things were down by 6% at EUR 11 (12) million due to the timing of
the national tendering competition in Norway.
Animal Health
In the Nordic countries and some Eastern European markets Orion itself sells
veterinary drugs, and in other markets the Company operates through partners. In
addition, in the Nordic countries Orion markets and sells veterinary drugs
manufactured by several other companies. Orion's Animal Health business division
has a strong market position in the Nordic countries, its home markets.
Net sales of the Animal Health business division in January-March 2017 were up
by 5% at EUR 19 (18) million. Sales of the animal sedative product family at EUR
7 (7) million accounted for 39% (37%) of the division's net sales. The product
family comprises Orion's animal sedatives Dexdomitor(®) (dexmedetomidine),
Domitor(®) (medetomidine) and Domosedan(®) (detomidine), and antagonist
Antisedan(®) (atipamezole), which reverses the effects of the sedatives.
Fermion
Fermion manufactures active pharmaceutical ingredients for Orion and other
pharmaceutical companies. Its product range comprises nearly 30 pharmaceutical
ingredients. For other pharmaceutical companies Fermion manufactures generic
pharmaceutical ingredients and offers contract manufacturing services for
development and manufacturing of new active pharmaceutical ingredients.
Fermion's sales grew well in the first quarter. In recent years order cycles in
the trade in pharmaceutical raw materials have become ever shorter, and this has
led to clearly greater fluctuation in business volume than before within each
year and between different years. Fermion's net sales in January-March 2017
excluding pharmaceutical ingredients supplied for Orion's own use were up by
47% at EUR 16 (11) million and accounted for over one-half of Fermion's entire
net sales. Fermion has an ongoing significant expansion investment at its Hanko
manufacturing plant.
Research and development
The Group's R&D expenses in January-March 2017 were EUR 26 (25) million, of
which the Pharmaceuticals business accounted for EUR 24 (23) million. The
Group's R&D expenses accounted for 9% (10%) of the Group's net sales. R&D
expenses also include expenses related to development of the current portfolio.
In 2014 Orion commenced global collaboration with Bayer in the development and
commercialisation of the novel oral androgen receptor antagonist darolutamide
(ODM-201). The companies have an ongoing joint Phase III clinical trial (ARAMIS)
for evaluation of the efficacy and safety of darolutamide in patients with non-
metastatic castration-resistant prostate cancer (nmCRPC).
In 2016 Orion and Bayer agreed to expand the darolutamide development programme
and towards the end of the year commenced a new Phase III trial (ARASENS) that
will evaluate the efficacy and safety of the drug candidate in combination with
standard androgen deprivation therapy (ADT) and the chemotherapy drug docetaxel
in patients having newly diagnosed metastatic hormone-sensitive prostate cancer
(mHSPC) who are starting hormone therapy.
In December 2016 Orion completed trials with a salmeterol-fluticasone combined
formulation in the Easyhaler(®) product family. Based on the positive findings,
in April 2017 Orion submitted a marketing authorisation application for the
product in Europe. In this formulation fluticasone acts as an anti-inflammatory
agent and salmeterol acts as a long-acting bronchodilator.
Orion is continuing development of an alpha-2c adrenoceptor antagonist (ORM-
12741) for treatment of symptoms of Alzheimer's disease in collaboration with
Janssen Pharmaceuticals Inc. Orion has an ongoing Phase IIa clinical trial with
a new drug formulation. In the initial Phase IIa clinical trial conducted by
Orion, the efficacy and safety of the drug candidate in treatment of cognitive
and behavioural symptoms related to Alzheimer's disease were investigated with
positive results.
Orion has completed the Phase II clinical trial with orally administered
levosimendan (ODM-109) for treatment of patients with amyotrophic lateral
sclerosis (ALS). Although the trial did not achieve its primary objective, the
findings were, however, promising. Based on the findings, Orion is planning to
continue the development programme. The US Food and Drug Administration (FDA)
has granted ODM-109 Orphan Drug Designation.
Orion has an ongoing Phase II clinical trial with a drug candidate for treatment
of symptoms of Parkinson's disease in which the COMT inhibitor (ODM-104)
developed by Orion is combined with the pharmaceutical ingredients carbidopa and
long-acting levodopa used to treat Parkinson's disease. In the trial the
efficacy of the drug candidate in treating symptoms of Parkinson's disease will
be investigated and the product will be compared with a Stalevo product already
in the markets in which the active ingredients are the COMT inhibitor
entacapone, carbidopa and levodopa.
Orion has an ongoing Phase II clinical trial with a new targeted FGFR+VEGFR
inhibitor (ODM-203) for treatment of cancers. The trial will investigate the
efficacy of the drug candidate in slowing the growth of solid cancerous tumours
in patients in which FGFR changes in cancerous tumours have been detected.
Orion has commenced a Phase I clinical trial with a BET protein inhibitor (ODM-
207) which inhibits transcription of key oncogenes such as Myc in many cancers.
In preclinical studies, ODM-207 has shown antiproliferative effects in several
solid tumour cell lines. The trial will investigate the safety and the
tolerability of the drug candidate and provisionally its efficacy in cancer
patients.
Orion's partner Tenax Therapeutics, Inc. will develop and commercialise
levosimendan in US and Canadian markets for a new cardiovascular indication,
prevention of low cardiac output syndrome (LCOS) in cardiac surgery patients.
The company has completed the Phase III clinical trial for this indication.
According to the preliminary findings, the trial did not achieve its primary
objectives. Tenax has announced that it will continue analysing the findings and
will discuss the trial results and possible continuance of development work with
the US Food and Drug Administration (FDA).
In addition, Orion has several projects in the early research phase
investigating central nervous system diseases, cancer and neuropathic pain,
among others.
Diagnostics
Orion Diagnostica manufactures convenient and quick in vitro diagnostic tests
and testing systems suitable for point-of-care testing. Net sales of the
Diagnostics business in January-March 2017 were up by 7% at EUR 14.4 (13.5)
million.
QuikRead(®) infection tests remained the main product, with sales continuing to
increase. With the help of CRP tests from the QuikRead go(®) product family in
infectious disease diagnostics, antibiotic treatment can be targeted at patients
that need it and unnecessary use of antibiotics avoided in situations in which a
patient would not benefit from them. Avoiding unnecessary antibiotic treatments
helps in tackling the growing problem of antibiotic resistance.
The operating profit of the Diagnostics business was up by 32% at EUR 3.5 (2.6)
million thanks to growth in sales with good margins, among other things. The
operating profit accounted for 24% (19%) of the segment's net sales.
Espoo, 26 April 2017
Board of Directors of Orion Corporation
Orion Corporation
Timo Lappalainen Jari Karlson
President and CEO CFO
Tables
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million 3M 2017 3M 2016 Change % 2016
-------------------------------------------------------------------------------
Net sales 279.2 262.0 +6.5% 1,073.5
-------------------------------------------------------------------------------
Cost of goods sold -103.4 -102.2 +1.1% -421.7
-------------------------------------------------------------------------------
Gross profit 175.8 159.8 +10.0% 651.8
-------------------------------------------------------------------------------
Other operating income and expenses 0.1 -0.2 +173.0% 24.3
-------------------------------------------------------------------------------
Sales and marketing expenses -47.4 -43.7 +8.6% -194.7
-------------------------------------------------------------------------------
R&D expenses -25.7 -24.9 +3.0% -118.2
-------------------------------------------------------------------------------
Administrative expenses -11.1 -10.6 +4.1% -48.7
-------------------------------------------------------------------------------
Operating profit 91.7 80.3 +14.1% 314.6
-------------------------------------------------------------------------------
Finance income -0.1 0.1 -140.4% 0.8
-------------------------------------------------------------------------------
Finance expenses -2.8 -1.2 +134.3% -4.9
-------------------------------------------------------------------------------
Share of associated companies' results 0.4 -100.0% 0.4
-------------------------------------------------------------------------------
Profit before taxes 88.8 79.7 +11.4% 310.9
-------------------------------------------------------------------------------
Income tax expense -18.5 -16.4 +13.2% -61.9
-------------------------------------------------------------------------------
Profit for the period 70.3 63.3 +11.0% 249.0
-------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME INCLUDING TAX
EFFECTS
-------------------------------------------------------------------------------
Change in value of available-for-sale
investments 0.0 0.5 -5.2
-------------------------------------------------------------------------------
Translation differences 0.2 -2.1 -4.6
-------------------------------------------------------------------------------
Items that may be reclassified subsequently
to profit and loss 0.2 -1.5 -9.8
-------------------------------------------------------------------------------
Items due to remeasurement of defined benefit
plans 0.0 -0.0 3.7
-------------------------------------------------------------------------------
Items that will not be reclassified to profit
and loss 0.0 -0.0 3.7
-------------------------------------------------------------------------------
Other comprehensive income net of tax 0.2 -1.5 -6.1
-------------------------------------------------------------------------------
Comprehensive income for the period including
tax effects 70.5 61.8 +14.1% 243.0
-------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE TO:
-------------------------------------------------------------------------------
Owners of the parent company 70.3 63.3 +11.0% 249.0
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 0.0
-------------------------------------------------------------------------------
COMPREHENSIVE INCOME ATTRIBUTABLE TO:
-------------------------------------------------------------------------------
Owners of the parent company 70.5 61.8 +14.1% 243.0
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 0.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Basic earnings per share, EUR (1)) 0.50 0.45 +11.3% 1.77
-------------------------------------------------------------------------------
Diluted earnings per share, EUR (1)) 0.50 0.45 +11.3% 1.77
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Depreciation, amortisation and impairment 10.3 9.9 +3.9% 40.6
-------------------------------------------------------------------------------
Personnel expenses 53.4 53.3 224.4
-------------------------------------------------------------------------------
(1) )The figure has been calculated from the profit attributable to the owners
of the parent company.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
EUR million 3/17 3/16 Change % 12/16
-------------------------------------------------------------------------------
Property, plant and equipment 293.7 275.6 +6.5% 289.1
-------------------------------------------------------------------------------
Goodwill 13.5 13.5 13.5
-------------------------------------------------------------------------------
Intangible rights 38.0 41.0 -7.3% 37.9
-------------------------------------------------------------------------------
Other intangible assets 2.6 2.5 +6.3% 2.5
-------------------------------------------------------------------------------
Investments in associates 0.1 3.0 -97.7% 0.1
-------------------------------------------------------------------------------
Available-for-sale investments 0.3 7.6 -96.5% 0.4
-------------------------------------------------------------------------------
Pension asset 21.5 22.1 -2.6% 22.8
-------------------------------------------------------------------------------
Deferred tax assets 1.4 1.0 +33.0% 1.5
-------------------------------------------------------------------------------
Other non-current assets 2.3 4.1 -44.7% 3.8
-------------------------------------------------------------------------------
Non-current assets total 373.3 370.5 +0.8% 371.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Inventories 236.8 207.7 +14.0% 227.5
-------------------------------------------------------------------------------
Trade receivables 184.1 184.9 -0.5% 200.1
-------------------------------------------------------------------------------
Other receivables 51.0 42.3 +20.4% 31.9
-------------------------------------------------------------------------------
Money market investments 31.0
-------------------------------------------------------------------------------
Cash and cash equivalents 92.1 282.5 -67.4% 200.9
-------------------------------------------------------------------------------
Current assets total 564.0 717.4 -21.4% 691.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Assets total 937.3 1,087.9 -13.8% 1,062.9
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
EUR million 3/17 3/16 Change % 12/16
-------------------------------------------------------------------------------
Share capital 92.2 92.2 92.2
-------------------------------------------------------------------------------
Expendable fund 0.5 0.5 0.5
-------------------------------------------------------------------------------
Other reserves 2.4 7.4 -68.0% 2.0
-------------------------------------------------------------------------------
Retained earnings 399.7 374.9 +6.6% 546.6
-------------------------------------------------------------------------------
Equity attributable to owners of the parent
company 494.8 475.1 +4.2% 641.4
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 -352.9% 0.0
-------------------------------------------------------------------------------
Equity total 494.8 475.1 +4.1% 641.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Deferred tax liabilities 37.0 36.8 +0.5% 37.1
-------------------------------------------------------------------------------
Pension liability 3.1 3.1 +2.1% 3.2
-------------------------------------------------------------------------------
Provisions 0.3 0.3 -0.9% 0.3
-------------------------------------------------------------------------------
Interest-bearing non-current liabilities 150.3 175.7 -14.5% 150.2
-------------------------------------------------------------------------------
Other non-current liabilities 0.0 0.0 +2.5% 0.0
-------------------------------------------------------------------------------
Non-current liabilities total 190.7 215.9 -11.7% 190.8
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Trade payables 96.8 80.8 +19.8% 106.1
-------------------------------------------------------------------------------
Current tax liabilities 13.9 5.9 +137.1% 9.1
-------------------------------------------------------------------------------
Other current liabilities 138.8 299.9 -53.7% 112.9
-------------------------------------------------------------------------------
Provisions 0.0 -100.0% 0.2
-------------------------------------------------------------------------------
Interest-bearing current liabilities 2.1 10.2 -79.1% 2.3
-------------------------------------------------------------------------------
Current liabilities total 251.8 396.9 -36.6% 230.7
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Liabilities total 442.5 612.8 -27.8% 421.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity and liabilities total 937.3 1,087.9 -13.8% 1,062.9
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
a. Share capital
b. Expendable fund
c. Other reserves
d. Items due to remeasurement of defined
benefit plans
e. Translation
differences
f. Retained earnings
g. Non-controlling interests
h. Equity total
Equity attributable to owners of the
parent company
-------------------------------------------
EUR million a. b. c. d. e. f. g. h.
-------------------------------------------------------------------------------
Equity at 1 January 2016 92.2 0.5 6.9 -1.6 -1.5 498.4 0.0 594.9
-------------------------------------------------------------------------------
Profit for the period 63.3 63.3
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Change in value of
available-for-sale investments 0.5 0.5
-------------------------------------------------------------------------------
Translation differences -2.0 -2.0
-------------------------------------------------------------------------------
Items due to
remeasurement of defined
benefit plans -0.0 -0.0
-------------------------------------------------------------------------------
Transactions with owners
-------------------------------------------------------------------------------
Dividend and capital
repayment -183.3 -183.3
-------------------------------------------------------------------------------
Share-based incentive
plan 2.1 2.1
-------------------------------------------------------------------------------
Other adjustments 0.0 -0.4 0.0 -0.3
-------------------------------------------------------------------------------
Equity at 31 March 2016 92.2 0.5 7.4 -1.7 -3.6 380.2 0.0 475.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity at 1 January 2017 92.2 0.5 2.0 2.0 -6.2 550.7 0.0 641.4
-------------------------------------------------------------------------------
Profit for the period 70.3 70.3
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Translation differences 0.2 0.2
-------------------------------------------------------------------------------
Items due to
remeasurement of defined
benefit plans 0.0 0.0
-------------------------------------------------------------------------------
Transactions with owners
-------------------------------------------------------------------------------
Dividend and capital
repayment -218.2 -218.2
-------------------------------------------------------------------------------
Share-based incentive
plan 1.1 1.1
-------------------------------------------------------------------------------
Other adjustments 0.3 -0.3 0.0 0.0
-------------------------------------------------------------------------------
Equity at 31 March 2017 92.2 0.5 2.4 2.0 -6.1 403.7 0.0 494.8
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR million 3M 2017 3M 2016 2016
-------------------------------------------------------------------------------
Operating profit 91.7 80.3 314.6
-------------------------------------------------------------------------------
Adjustments 11.9 12.7 26.8
-------------------------------------------------------------------------------
Change in working capital -24.7 -28.2 -33.0
-------------------------------------------------------------------------------
Interest paid -2.1 -2.3 -11.9
-------------------------------------------------------------------------------
Interest received 0.3 2.5 7.7
-------------------------------------------------------------------------------
Dividends received 0.0 0.1
-------------------------------------------------------------------------------
Income taxes paid -13.8 -12.6 -55.2
-------------------------------------------------------------------------------
Total net cash flow from operating activities 63.3 52.5 249.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Investments in property, plant and equipment -14.0 -9.3 -41.0
-------------------------------------------------------------------------------
Investments in intangible assets -2.9 -2.4 -6.7
-------------------------------------------------------------------------------
Sales of property, plant and equipment, and available-
for-sale investments 0.7 0.2 26.6
-------------------------------------------------------------------------------
Total net cash flow from investing activities -16.2 -11.5 -21.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Current loans raised 0.8 0.2 1.2
-------------------------------------------------------------------------------
Repayments of current loans -1.3 -0.3 -1.5
-------------------------------------------------------------------------------
Repayments of non-current loans -2.3 -36.7
-------------------------------------------------------------------------------
Treasury shares -16.8
-------------------------------------------------------------------------------
Dividends paid and other distribution of profits -185.4 -0.0 -183.6
-------------------------------------------------------------------------------
Total net cash flow from financing activities -185.9 -2.4 -237.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net change in cash and cash equivalents -138.8 38.5 -9.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cash and cash equivalents at the beginning of the
period 231.9 245.2 245.2
-------------------------------------------------------------------------------
Foreign exchange differences -1.0 -1.3 -3.9
-------------------------------------------------------------------------------
Net change in cash and cash equivalents -138.8 38.5 -9.4
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 92.1 282.5 231.9
-------------------------------------------------------------------------------
Reconciliation of cash and cash equivalents in
statement of financial position
-------------------------------------------------------------------------------
Cash and cash equivalents in statement of financial
position at the end of the period 92.1 282.5 200.9
-------------------------------------------------------------------------------
Money market investments at the end of the period 31.0
-------------------------------------------------------------------------------
Cash and cash equivalents in the statement of cash
flows 92.1 282.5 231.9
-------------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 3/17 3/16 12/16
-------------------------------------------------------------------
Carrying amount at the beginning of the period 289.1 276.4 276.4
-------------------------------------------------------------------
Additions 12.7 6.9 44.5
-------------------------------------------------------------------
Disposals -0.2 -0.2 -1.4
-------------------------------------------------------------------
Depreciation and impairments -7.9 -7.5 -30.5
-------------------------------------------------------------------
Carrying amount at the end of the period 293.7 275.6 289.1
-------------------------------------------------------------------
CHANGES IN INTANGIBLE ASSETS (EXCLUDING GOODWILL)
EUR million 3/17 3/16 12/16
-----------------------------------------------------------------
Carrying amount at the beginning of the period 40.4 44.3 44.3
-----------------------------------------------------------------
Additions 2.7 1.7 6.2
-----------------------------------------------------------------
Disposals -0.0 -0.0 -0.0
-----------------------------------------------------------------
Amortisation and impairments -2.4 -2.4 -10.1
-----------------------------------------------------------------
Carrying amount at the end of the period 40.6 43.5 40.4
-----------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
EUR million 3/17 3/16 12/16
--------------------------------------------------------------------------
CONTINGENCIES FOR OWN LIABILITIES
--------------------------------------------------------------------------
Guarantees 4.1 5.2 4.1
--------------------------------------------------------------------------
OTHER LIABILITIES
--------------------------------------------------------------------------
Leasing liabilities (excluding finance lease contracts) 5.5 6.5 6.7
--------------------------------------------------------------------------
Other liabilities 0.3 0.3 0.3
--------------------------------------------------------------------------
DERIVATIVES
EUR million 3/17 3/16 12/16
--------------------------------------------------------------
CURRENCY FORWARD CONTRACTS AND CURRENCY SWAPS
--------------------------------------------------------------
Fair value, EUR million -0.3 -1.0 -0.1
--------------------------------------------------------------
Nominal value, EUR million 52.3 52.4 25.1
--------------------------------------------------------------
CURRENCY OPTIONS
--------------------------------------------------------------
Fair value, EUR million 0.0 -0.1 -0.0
--------------------------------------------------------------
Nominal value, EUR million 53.3 46.5 31.7
--------------------------------------------------------------
FAIR VALUE MEASUREMENT AND HIERARCHY OF FINANCIAL INSTRUMENTS
EUR million Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------------
Derivatives
-------------------------------------------------------------------------------
Currency derivatives 0.4 0.4
-------------------------------------------------------------------------------
Available-for-sale financial
assets
-------------------------------------------------------------------------------
Shares and investments 0.3 0.3
-------------------------------------------------------------------------------
Assets total 0.4 0.3 0.6
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Derivatives
-------------------------------------------------------------------------------
Currency derivatives -0.7 -0.7
-------------------------------------------------------------------------------
Liabilities total -0.7 -0.7
-------------------------------------------------------------------------------
The level 1 financial instrument fair value is based on quotations available
in active markets. The level 2 financial instrument fair value is based on
data feeds available in the markets. The fair value of level 3 derivatives
cannot be estimated on the basis of data available in the markets.
In the Group the principle is applied that transfers between levels of fair
value hierarchy are recognised on the date on which the event triggering the
transfer occurred.
No transfers between levels occurred during the reporting period.
RELATED PARTY TRANSACTIONS
EUR million 3M 2017 3M 2016 2016
--------------------------------------------------------
Management's employment benefits 4.9 4.8 6.8
--------------------------------------------------------
Operating segment performance
NET SALES BY BUSINESS DIVISION
EUR million 3M 2017 3M 2016 Change % 2016
------------------------------------------------------------------
Pharmaceuticals 265.5 249.3 +6.5% 1,021.6
------------------------------------------------------------------
Proprietary Products 98.4 88.0 +11.8% 350.4
------------------------------------------------------------------
Specialty Products 121.8 122.8 -0.9% 507.8
------------------------------------------------------------------
Animal Health 19.1 18.2 +4.9% 77.3
------------------------------------------------------------------
Fermion 15.5 10.6 +46.9% 47.6
------------------------------------------------------------------
Contract manufacturing
and other 10.7 9.7 +10.8% 38.5
------------------------------------------------------------------
Diagnostics 14.4 13.5 +6.6% 54.8
------------------------------------------------------------------
Group items -0.7 -0.8 -6.7% -2.8
------------------------------------------------------------------
Group total 279.2 262.0 +6.5% 1,073.5
------------------------------------------------------------------
OPERATING PROFIT BY BUSINESS AREA
EUR million 3M 2017 3M 2016 Change % 2016
-------------------------------------------------------
Pharmaceuticals 90.2 80.1 +12.6% 316.4
-------------------------------------------------------
Diagnostics 3.5 2.6 +32.5% 8.4
-------------------------------------------------------
Group items -2.0 -2.4 -18.0% -10.2
-------------------------------------------------------
Group total 91.7 80.3 +14.1% 314.6
-------------------------------------------------------
NET SALES BY ANNUAL QUARTERS
2017 2016 2015
+-----+-----------------------+-----------------+
EUR million | Q1| Q4 Q3 Q2 Q1| Q4 Q3 Q2|
----------------+-----+-----------------------+-----------------+
Pharmaceuticals|265.5|267.1 245.7 259.5 249.3|247.3 227.1 242.0|
----------------+-----+-----------------------+-----------------+
Diagnostics | 14.4| 13.5 13.4 14.4 13.5| 15.2 12.5 13.9|
----------------+-----+-----------------------+-----------------+
Group items | -0.7| -0.7 -0.6 -0.7 -0.8| -0.9 -0.5 -0.9|
----------------+-----+-----------------------+-----------------+
Group total |279.2|279.9 258.6 273.1 262.0|261.6 239.1 255.0|
----------------+-----+-----------------------+-----------------+
OPERATING PROFIT BY ANNUAL QUARTERS
2017 2016 2015
+----+-------------------+--------------+
EUR million | Q1| Q4 Q3 Q2 Q1| Q4 Q3 Q2|
----------------+----+-------------------+--------------+
Pharmaceuticals|90.2|59.6 91.8 84.9 80.1|52.1 59.7 75.8|
----------------+----+-------------------+--------------+
Diagnostics | 3.5| 1.7 2.2 1.8 2.6| 1.7 1.1 1.6|
----------------+----+-------------------+--------------+
Group items |-2.0|-2.6 -2.0 -3.2 -2.4|-2.9 -2.3 -3.5|
----------------+----+-------------------+--------------+
Group total |91.7|58.7 92.0 83.5 80.3|50.9 58.6 74.0|
----------------+----+-------------------+--------------+
GEOGRAPHICAL BREAKDOWN OF NET SALES BY ANNUAL QUARTERS
2017 2016 2015
+-----+-----------------------+-----------------+
EUR million | Q1| Q4 Q3 Q2 Q1| Q4 Q3 Q2|
--------------+-----+-----------------------+-----------------+
Finland | 81.9| 91.8 84.4 82.1 80.1| 85.1 78.1 76.9|
--------------+-----+-----------------------+-----------------+
Scandinavia | 44.7| 45.5 39.6 44.3 44.7| 47.0 39.1 40.9|
--------------+-----+-----------------------+-----------------+
Other Europe | 83.0| 89.0 78.1 85.5 83.2| 81.9 70.7 77.5|
--------------+-----+-----------------------+-----------------+
North America| 19.6| 29.7 18.7 19.6 18.2| 16.1 17.9 20.6|
--------------+-----+-----------------------+-----------------+
Other markets| 50.0| 23.9 37.8 41.6 35.8| 31.5 33.2 39.1|
--------------+-----+-----------------------+-----------------+
Group total |279.2|279.9 258.6 273.1 262.0|261.6 239.1 255.0|
--------------+-----+-----------------------+-----------------+
Business reviews
KEY FIGURES FOR PHARMACEUTICALS BUSINESS
EUR million 3M 2017 3M 2016 Change % 2016
-------------------------------------------------------------------------
Net sales 265.5 249.3 +6.5% 1,021.6
-------------------------------------------------------------------------
Operating profit 90.2 80.1 +12.6% 316.4
-------------------------------------------------------------------------
% of net sales 34.0% 32.1% 31.0%
-------------------------------------------------------------------------
R&D expenses 24.3 23.4 +3.9% 111.5
-------------------------------------------------------------------------
% of net sales 9.1% 9.4% 10.9%
-------------------------------------------------------------------------
Capital expenditure 14.9 8.8 +69.9% 49.7
-------------------------------------------------------------------------
% of net sales 5.6% 3.5% 4.9%
-------------------------------------------------------------------------
Sales revenue from proprietary products 100.8 92.9 +8.5% 377.0
-------------------------------------------------------------------------
Assets 779.6 736.9 776.9
-------------------------------------------------------------------------
Liabilities 190.5 185.6 209.0
-------------------------------------------------------------------------
Personnel at the end of the period 3,176 3,090 3,161
-------------------------------------------------------------------------
TOP TEN BEST-SELLING PHARMACEUTICAL PRODUCTS
EUR million 3M 2017 3M 2016 Change % 2016
-------------------------------------------------------------------------------
Stalevo(®), Comtess(®) and Comtan(®)
(Parkinson's disease) 30.5 32.6 -6.6% 124.2
-------------------------------------------------------------------------------
Easyhaler(® )product family (asthma, COPD) 18.0 15.6 +15.4% 63.7
-------------------------------------------------------------------------------
Dexdor(®) (intensive care sedative) 16.7 14.2 +17.7% 56.8
-------------------------------------------------------------------------------
Simdax(®) (acute decompensated heart failure) 15.3 13.7 +11.6% 56.4
-------------------------------------------------------------------------------
Remsima(®) (rheumatoid arthritis, inflammatory
bowel diseases) 11.0 11.7 -5.8% 42.3
-------------------------------------------------------------------------------
Dexdomitor(®), Domitor(®), Domosedan(®) and
Antisedan(®) (animal sedatives) 7.5 6.8 +9.9% 28.1
-------------------------------------------------------------------------------
Precedex(®) (intensive care sedative) 6.9 3.8 +79.3% 19.6
-------------------------------------------------------------------------------
Burana(®) (inflammatory pain) 5.7 5.2 +10.1% 23.1
-------------------------------------------------------------------------------
Generic entacapone products (Parkinson's
disease) 4.2 3.3 +28.7% 13.2
-------------------------------------------------------------------------------
Atorvastatin Orion(®) (hypercholesterolaemia) 4.1 3.7 +10.1% 17.9
-------------------------------------------------------------------------------
Total 119.9 110.6 +8.3% 445.2
-------------------------------------------------------------------------------
Share of pharmaceutical net sales 45% 44% 44%
-------------------------------------------------------------------------------
KEY FIGURES FOR DIAGNOSTICS BUSINESS
EUR million 3M 2017 3M 2016 Change % 2016
------------------------------------------------------------------
Net sales 14.4 13.5 +6.6% 54.8
------------------------------------------------------------------
Operating profit 3.5 2.6 +32.5% 8.4
------------------------------------------------------------------
% of net sales 24.1% 19.4% 15.3%
------------------------------------------------------------------
R&D expenses 1.5 1.6 -9.5% 6.9
------------------------------------------------------------------
% of net sales 10.2% 12.1% 12.6%
------------------------------------------------------------------
Capital expenditure 0.2 0.2 +16.0% 1.1
------------------------------------------------------------------
% of net sales 1.7% 1.5% 2.0%
------------------------------------------------------------------
Assets 49.6 50.8 45.8
------------------------------------------------------------------
Liabilities 9.2 8.5 17.6
------------------------------------------------------------------
Personnel at the end of the period 283 296 284
------------------------------------------------------------------
KEY CLINICAL PHARMACEUTICAL DEVELOPMENT PROJECTS
+----------------------+--------------------+--------------------+-------------+
| | | PHASE | |
| Project | Indication +---+----+-----------+Registration |
| | | I | II | III | |
+----------------------+--------------------+---+----+-----------+-------------+
|Easyhaler(®) |Asthma, COPD |Bioequivalence study|Registration*|
|salmeterol-fluticasone| | | |
+----------------------+--------------------+---+----+-----------+-------------+
|Darolutamide (ODM- |Prostate cancer | I | II | III* | |
|201) (1)) |(nmCRPC) | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|Darolutamide (ODM- |Prostate cancer | I | II | III* | |
|201) (1)) |(mHSPC) | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|Levosimendan (2)) |Low Cardiac Output | I | II | III | |
| |Syndrome | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|ORM-12741 (alpha-2c | | | | | |
|adrenoceptor |Alzheimer's disease | I |IIa*| | |
|antagonist) (3)) | | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|ODM-109 (oral |ALS | I | II | | |
|levosimendan) | | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|ODM-104 (more | | | | | |
|effective COMT |Parkinson's disease | I |II* | | |
|inhibitor) | | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|ODM-203 (targeted |Solid tumours | I |II* | | |
|FGFR+VEGFR inhibitor) | | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|ODM-207 (BET protein |Cancer | I | | | |
|inhibitor) | | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
| | * |= Phase ongoing |
|(1) )In collaboration with Bayer (2) +---+------------------------------+
|)Partner: Tenax Therapeutics, Inc. (3) )In|III|= Status changed vs. previous |
|collaboration with Janssen Pharmaceuticals.| |quarter |
| +---+------------------------------+
| | | |
+-------------------------------------------+---+------------------------------+
Information on Orion's shares
BASIC SHARE INFORMATION 31 MARCH 2017
A shares B shares Total
-------------------------------------------------------------------------------
Trading code on Nasdaq Helsinki ORNAV ORNBV
-------------------------------------------------------------------------------
Listing day 01/07/2006 01/07/2006
-------------------------------------------------------------------------------
ISIN code FI0009014369 FI0009014377
-------------------------------------------------------------------------------
ICB code 4500 4500
-------------------------------------------------------------------------------
Reuters code ORNAV.HE ORNBV.HE
-------------------------------------------------------------------------------
Bloomberg code ORNAV.FH ORNBV.FH
-------------------------------------------------------------------------------
Share capital, EUR million 24.9 67.4 92.2
-------------------------------------------------------------------------------
Counter book value per share, EUR 0.65 0.65
-------------------------------------------------------------------------------
Total number of shares 38,100,273 103,157,555 141,257,828
-------------------------------------------------------------------------------
% of total share stock 27% 73% 100%
-------------------------------------------------------------------------------
Number of treasury shares 675,401 675,401
-------------------------------------------------------------------------------
Total number of shares excluding
treasury shares 38,100,273 102,482,154 140,582,427
-------------------------------------------------------------------------------
Minimum number of shares 1
-------------------------------------------------------------------------------
Maximum number of A and B shares, and
maximum
number of all shares 500,000,000 1,000,000,000 1,000,000,000
-------------------------------------------------------------------------------
Votes per share 20 1
-------------------------------------------------------------------------------
Number of votes excluding treasury
shares 762,005,460 102,482,154 864,487,614
-------------------------------------------------------------------------------
% of total votes 88% 12% 100%
-------------------------------------------------------------------------------
Total number of shareholders 16,711 37,119 48,273
-------------------------------------------------------------------------------
Both share classes, A and B, confer equal rights to the Company's assets and
dividends.
INFORMATION ON TRADING ON NASDAQ HELSINKI 1 JANUARY - 31 MARCH 2017
A shares B shares Total
-------------------------------------------------------------------------------
Shares traded 876,858 16,989,592 17,866,450
-------------------------------------------------------------------------------
% of the total number of shares 2.3% 16.5% 12.6%
-------------------------------------------------------------------------------
Trading volume, EUR million 41.1 789.3 830.4
-------------------------------------------------------------------------------
Closing quotation on 31 December
2016, EUR 42.38 42.29
-------------------------------------------------------------------------------
Lowest quotation, EUR (A 3 and 25 January 2017,
B 25 January 2017) 42.00 41.99
-------------------------------------------------------------------------------
Average quotation, EUR 46.92 46.46
-------------------------------------------------------------------------------
Highest quotation, EUR (A and B 20 March 2017) 51.70 51.95
-------------------------------------------------------------------------------
Closing quotation on 31 March 2017,
EUR 48.68 48.87
-------------------------------------------------------------------------------
Market capitalisation on 31 March 2017, EUR
million 1,854.7 5,008.3 6,863.0
-------------------------------------------------------------------------------
PERFORMANCE PER SHARE
3M 2017 3M 2016 Change % 2016
-------------------------------------------------------------------------------
Basic earnings per share, EUR 0.50 0.45 +11.3% 1.77
-------------------------------------------------------------------------------
Diluted earnings per share, EUR 0.50 0.45 +11.3% 1.77
-------------------------------------------------------------------------------
Cash flow per share before financial items,
EUR 0.34 0.29 +15.2% 1.62
-------------------------------------------------------------------------------
Equity per share, EUR 3.52 3.37 4.57
-------------------------------------------------------------------------------
Average number of shares excluding treasury
shares, 1,000 shares 140,510 140,878 140,671
-------------------------------------------------------------------------------
Appendices
Reporting
Orion Corporation is the parent company of the Orion Group. The Group consists
of two business areas, or operating segments, and five business divisions. Orion
reports on its operations segmentally.
* Pharmaceuticals business
* Proprietary Products (patented prescription products for three therapy
areas)
* Specialty Products (off-patent, generic prescription products and self-
care products)
* Animal Health (veterinary products for pets and production animals)
* Fermion (active pharmaceutical ingredients for Orion and other
companies)
* Diagnostics business
* Orion Diagnostica (diagnostic test systems for point-of-care in
healthcare and hygiene tests for industry).
Contract manufacturing and other, i.e. manufacturing for other companies, is
included in the Pharmaceuticals business segment, but it is not a separate
business division, it is part of the Group's Supply Chain organisation.
Accounting policies
This report has been prepared in accordance with the IAS 34 Interim Financial
Reporting standard. The same accounting policies as for the Financial Statements
for 2016, supplemented by amendments to existing IFRS and IAS standards endorsed
by the EU that have been adopted as of 1 January 2017, have been applied in
preparing the report. The amendments to standards had no effect on the
Consolidated Financial Statements.
The policies and calculation methods applied during the period can be found on
the Orion website at http://www.orion.fi/en/investors.
Other matters
The data in this financial review are not audited.
The figures in parentheses are for the corresponding period of the previous
year. All the figures in this report 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 other finance expenses
Return on capital employed (ROCE), % =----------------------------------X 100
Total assets - Non-interest-
bearing liabilities (average
during the period)
Profit for the period
Return on equity (ROE), % =----------------------------------X 100
Total equity (average during the
period)
Equity
Equity ratio, % =----------------------------------x 100
Total assets - Advances received
Interest-bearing liabilities -
Cash and cash equivalents -
Gearing, % = Money market investments x 100
----------------------------------
Equity
Profit available for the owners
of the parent company
Earnings per share, EUR =----------------------------------
Average number of shares during
the period, excluding treasury
shares
Cash flow from operating
activities + Cash flow from
Cash flow per share before financial investing activities
items, EUR =----------------------------------
Average number of shares during
the period, excluding treasury
shares
Equity of the owners of the
parent company
=----------------------------------
Equity per share, EUR Number of shares at the end of
the period, excluding treasury
share
Dividend to be distributed for
the period
Dividend per share, EUR =----------------------------------
Number of shares at the end of
the period, excluding treasury
shares
Dividend per share
Payout ratio, % =----------------------------------x 100
Earnings per share
Dividend per share
Effective dividend yield, % =----------------------------------x 100
Closing quotation of the period
Closing quotation of the period
Price/earnings ratio (P/E) =----------------------------------
Earnings per share
Total EUR value of shares traded
Average share price, EUR =----------------------------------
Average number of traded shares
during the period
Market capitalisation, EUR million = Number of shares at the end of
the period × Closing quotation
of the period
Publisher:
Orion Corporation
http://www.orion.fi/
http://www.twitter.com/OrionCorpIR
Orion is a globally operating Finnish pharmaceutical company - a builder of
well-being. Orion develops, manufactures and markets human and veterinary
pharmaceuticals, active pharmaceutical ingredients and diagnostic tests. The
company is continuously developing new drugs and treatment methods. The core
therapy areas of Orion's pharmaceutical R&D are central nervous system (CNS)
disorders, oncology and respiratory for which Orion develops inhaled
Easyhaler(®) pulmonary drugs. Orion's net sales in 2016 amounted to EUR 1,074
million and the Company had about 3,500 employees. Orion's A and B shares are
listed on Nasdaq Helsinki. Orion, established in 1917, is celebrating its
centenary in 2017.
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