2007-10-24 10:01:00 CEST
2007-10-24 10:01:00 CEST
REGULATED INFORMATION
Orion - Quarterly report
Orion Group Interim Report 1-9/2007
Group's investments on R&D have been increased from the previous year
Orion's net sales for the first three quarters in 2007 were EUR 509.6
(478.8) million, up by 6.4% compared to the same period last year.
* Operating profit was EUR 154.9 (160.1) million.
* Profit before taxes was EUR 155.8 (160.2) million.
* Equity ratio was 75.7% (74.6%).
* Return on capital employed (ROCE) was 47.7% (52.0%).
* Earnings per share were EUR 0.81 (0.85).
Orion's key figures for the review period*
Q3/07 Q3/06 Change Q1-Q3/07 Q1-Q3/06 Change 2006
EUR million % Proforma % Proforma
Net sales 163.8 149.0 +10.0% 509.6 478.8 +6.4% 641.1
Operating profit 49.6 54.3 -8.6% 154.9 160.1 -3.2% 196.7
(EBIT)
% of net sales 30.3% 36.5% 30.4% 33.4% 30.7%
Profit before taxes 49.7 54.3 -8.5% 155.8 160.2 -2.7% 197.3
% of net sales 30.3% 36.5% 30.6% 33.5% 30.8%
R&D expenses 22.0 18.9 +16.8% 69.1 59.9 +15.3% 84.1
% of net sales 13.5% 12.7% 13.6% 12.5% 13.1%
Capital expenditure 9.3 5.8 +59.2% 23.9 18.0 +33.1% 25.5
% of net sales 5.7% 3.9% 4.7% 3.8% 4.0%
Balance Sheet total 550.5 558.6 -1.4% 588.1
Equity ratio, % 75.7% 74.6% 75.4%
Gearing, % -11.9% -16.4% -22.6%
Interest-bearing 10.6 10.3 +2.8% 9.8
liabilities
Non-interest-bearing 123.2 131.4 -6.2% 134.8
liabilities
Cash and cash 60.1 78.6 -23.5% 110.0
equivalents
ROCE (before taxes), 47.7% 52.0% 46.5%
%
ROE (after taxes), % 35.4% 38.9% 34.5%
Earnings per share, 0.26 0.29 -9.5% 0.81 0.85 -4.4% 1.03
EUR
Equity per share, 2.95 2.95 -0.1% 3.14
EUR
Personnel at the end 3 149 3 052 +3.2% 3 061
of the period
* The proforma figures for periods before 1 July 2006 are based on
the comparable ones carved out from the financial statements of the
demerged Orion.
CEO Jukka Viinanen's review"Orion's net sales have continued to increase steadily after the
previous Interim Report. Sales of the Parkinson's Disease medicines
in Orion's own sales territories grew by 14%. Also the deliveries to
marketing partner Novartis were higher than during the comparative
period. In addition, the sales of generic prescription medicines,
self-care products and veterinary medicines continued to develop
positively.""Expenditure on research as well as selling and marketing has been
increased at the pace of first quarters, as planned. Planned actions
to increase investments in research as well as selling and marketing
have continued like reported early this year. This has slowed down
the development of the Group's EBIT. In 2007 Orion has launched
clinical studies with dexmedetomidine in the sedation of patients in
intensive care, with the new COMT inhibition for Parkinson's Disease,
as well as with levosimendan in heart diseases of dogs. All three
study programmes are ongoing. The number of product launches in
Orion's own European sales units has increased and will continue to
increase as a result of more efficient in-licensing operations.""The development of the in-market sales of Orion's most important
products, those for Parkinson's Disease, continued to be positive."
For further information, kindly contact:
Jukka Viinanen, CEO, tel. +358 10 426 3710
Jari Karlson, CFO, tel. +358 10 426 2883 or mobile +358 50 966 2883
www.orion.fi/english
www.orion.fi/investors
Press conference in Finnish and on-line webcast
A press conference on the Q3/2007 results will be held today on
Wednesday, 24 October 2007, starting at 14.30 EET, at the Diana
Auditorium in Helsinki, address Erottajankatu 5. The language of the
conference is Finnish. The event can be followed on-line through the
Group's Finnish homepage at www.orion.fi, as well as via the
Kauppalehti Live web service at www.kauppalehti.fi/live.
The on-demand webcast recordings of the Q3 presentations will be
available at www.orion.fi/investors (in English) and at
www.orion.fi/sijoittajille (in Finnish) later in the evening of 24
October 2007. The English webcast can also be accessed via
www.earnings.com or Thomson/CCBN's password-protected event
management site, StreetEvents at www.streetevents.com.
Conference call in English
A teleconference for questions and answers in English will be
arranged today on Wednesday, 24 October 2007, starting at 18.00 EET
(17.00 GMT). Advice to participate the conference is provided on the
front page of www.orion.fi/investors.
Orion's events during the end of the year
Capital Markets Day in
London Wednesday 21
November 2007
Orion's publication schedule for financial reporting in 2008
Orion Corporation will publish its financial result for 2007 on
Thursday, 7 February 2008.
The publication dates of the Interim Reports for 2008 are as follows:
Interim Report 1-3/2008 Friday, 25 April 2008
Interim Report 1-6/2008 Tuesday, 5 August 2008
Interim Report 1-9/2008 Tuesday, 28 October 2008
Annual Report 2007 will be published during week 10/2008.
The Annual General Meeting is planned to be held on Tuesday, 25 March
2008, at 14.00 EET, in Helsinki.
Orion's financial reports and related presentation material are
available on the Group's homepage at www.orion.fi/investors promptly
after the publishing. The homepage also provides a possibility to
register on Orion's mailing lists for publications and releases.
Financial performance in 1-9/2007
Net sales
Orion Group's net sales for the first three quarters in 2007 were EUR
509.6 (478.8) million, up by 6.4% from the comparative period of last
year. The net impact of the currency exchange rates, mainly the US
dollar, was a negative EUR 6.2 million.
The net sales of the Pharmaceuticals business were EUR 479.4 (449.1)
million, up by 6.7%. The products based on the in-house R&D accounted
for EUR 220.0 (206.6) million, or 46% (46%) of the business segment's
total net sales. The medicines for Parkinson's Disease, i.e. Stalevo®
and Comtess®/Comtan®, contributed EUR 152.6 (137.2) million, or about
32% (31%) of the total net sales of the business segment.
The net sales of the Diagnostics business were EUR 31.5 (31.1)
million.
Operating profit
The Pharmaceuticals business generated an EBIT of EUR 156.9 (150.4)
million, up by 4.3%. The improvement in the operating profit was
somewhat lower than that in the net sales, because the expenditure on
research as well as selling and marketing were increased as planned.
The Diagnostics business generated an EBIT of EUR 6.4 (6.0) million,
up by 6.8%.
In the comparative period the Group's EBIT included a capital gain of
EUR 9.8 million from the divestment of residential buildings.
Operating expenses
The consolidated operating expenses were EUR 196.9 (180.8) million,
up by 8.9% from the comparative period. Selling and marketing
expenses were EUR 101.2 (93.2) million, up by 8.6%. The Group's R&D
expenses were EUR 69.1 (59.9) million, up by 15.3% and representing
13.6% (12.5%) of the Group net sales. Pharmaceutical R&D expenses
were EUR 66.4 million, representing about 96% of the total. The R&D
function is reported in the segment review of the Pharmaceuticals
business.
Profit before taxes
Group profit before taxes was EUR 155.8 (160.2) million. Earnings per
share were EUR 0.81 (0.85). Equity per share was EUR 2.95 (2.95).
Group ROCE was 47.7% (52.0%) and ROE was 35.4% (38.9%).
Balance Sheet and financial position
Gearing was -11.9% (-16.4%) and equity ratio was 75.7% (74.6%). Total
liabilities in the Balance Sheet of
30 September 2007 came to EUR 133.8 (141.7) million, of which
interest-bearing liabilities accounted for EUR 10.6 (10.3) million.
The Group's cash and cash equivalents were EUR 60.1 (78.6) million.
The cash reserves are invested in short-term interest-bearing
instruments issues by solid financial institutions and corporations.
Cash flows
The cash flow from operations was EUR 115.0 (104.3) million.
Operating profit was slightly lower than in the comparative period,
whereas working capital was EUR 21.1 million less than in the
comparative period of last year.
The cash flow used in investments was EUR -23.1 (-5.9) million. The
corresponding cash flow of the comparative period had a positive
impact from the sales of residential buildings in August 2006.
The cash flow used in financing activities was EUR -141.8 (-144.0)
million. The cash flow improved slightly despite higher dividend
distribution compared to previous year. In addition, two significant
non-recurring items affected the cash flow of the comparative period.
On one hand, the repayment of short-term loans to the companies,
which in the demerger became members of Oriola-KD Corporation, had a
negative impact on the cash flow. On the other hand, the share
capital increase and the share issue based on the executed stock
options in the comparative period affected the cash flow positively.
Capital expenditure
The Group's capital expenditure was EUR 23.9 (18.0) million, of which
machinery and equipment accounted for EUR 16.0 (11.5) million.
Outlook
Outlook for 2007
Net sales will grow slightly from those of 2006. Sales of
pharmaceuticals via Orion's own sales network will grow moderately in
Finland and the markets outside Finland will continue showing growth.
In-market sales of the Parkinson's Disease products will continue
showing steady, although slower growth than in the previous years.
Deliveries to Novartis are anticipated to be slightly higher than in
2006.
Operating profit, excluding non-recurring items, is estimated to grow
slightly from 2006, despite increasing investments in marketing and
research. Marketing expenses will grow especially due to product
launches by Orion's own European marketing units outside Finland.
Research and development expenditure will be about EUR 95 million, of
which pharmaceutical R&D will account for about EUR 90 million. The
higher expenditure is mainly caused by the new clinical studies that
have been started in 2007.
Capital expenditure will be about EUR 35 million.
Preamble
The Finnish pharmaceutical market showed no growth in 2006 due to
Finnish authorities' actions to restrain the growth. On this account,
Orion's sales in Finland decreased last year. During 2007, the
Finnish market has started to show slight growth. In addition,
Orion's growth is boosted by new product launches. On the other hand,
heavy price competition especially in substitutable prescription
medicines is slowing down the total growth.
Novartis clearly piled up its Stalevo and Comtan stocks in 2006, when
Orion's deliveries to Novartis increased by over 40%, almost twice as
fast as the partner's own sales. This year Novartis has not indicated
to increase the stocks. Consequently, Orion's deliveries to Novartis
will be only slightly higher than in 2006, despite the fact that the
in-market sales of Parkinson's products will continue to grow well.
The majority of the expenses of pharmaceutical research are caused by
the clinical research phases. They are typically performed in clinics
that are located in several countries, and the costs are mainly
caused by the use of outsourced research services. R&D expenses also
vary considerably depending on the phase in which the research
programme is. In 2007, Orion has started three significant clinical
study programmes, which are estimated to increase the R&D expenses by
about EUR 10 million from the previous year.
The costs of the legal proceedings regarding the patent infringement
lawsuit in the USA will not have a significant impact on Orion's
results for 2007.
Short-term risks and uncertainties
Orion is not aware of any significant risks related to the near-term
outlook of the Group's financial performance.
Product and market specific sales revenues may vary a bit depending
on how the constantly tightened price and other competition in the
pharmaceutical markets affects especially Orion's products. Stalevo
and Comtan deliveries to Novartis are based on schedules agreed
beforehand. Based on the schedules, the sales for the rest of the
year can be predicted fairly accurately.
The development of the US dollar rate has only a minor effect on
Orion's results, as the great majority of the Group's total sales are
invoiced in euros.
Research projects always involve some uncertainties, which may
increase or decrease the estimated costs. Projects may proceed ahead
of schedule or lag behind it, or they might have to be discontinued.
Changes in the studies are reflected in the costs so slowly that they
do not have a significant effect on the estimated costs for the
ongoing financial year.
Orion has been informed that Abbreviated New Drug Applications (ANDA)
for generic versions of Comtan and Stalevo have been submitted to the
FDA in the USA. Orion has initiated legal actions with regard to the
first application. As to the latter one, Orion is currently
evaluating its legal options together with Novartis. As noted earlier
by Orion, the realisation of generic competition before the
expiration of Orion's patents in the USA is neither certain nor
imminent based on, inter alia, the circumstance that the referred
legal proceedings and the ANDA review process are just in their
initial stage.
Group financial objectives and dividend distribution policy
The moderate organic growth of the net sales within the next few
years is accelerated via product, product portfolio and company
acquisitions. Operating profit will be increased and equity ratio is
maintained at the level of at least 50%.
In the 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.
Changes in the Group's management
President and CEO of Orion Corporation Jukka Viinanen will retire on
29 February 2008 and will as of 1 January 2008 step aside from the
position of President and CEO to act as a Senior Advisor to the Board
of Directors of the company until his retirement. Timo Lappalainen
(M.Sc. Eng.), who currently holds the position of Senior Vice
President responsible for Orion's Proprietary Products and Animal
Health business divisions, has been appointed as the new President
and CEO of Orion Corporation as of 1 January 2008.
Personnel
The average number of personnel in the Group during the first three
quarters of 2007 was 3,156 (3,064). In the end of September 2007,
Orion had altogether 3,149 (3,052) employees, of which 2,656 persons
were employed in Finland and 494 persons were working in other
countries.
The number of employees in the Pharmaceuticals business increased by
103 persons compared to September 2006. The number of employees in
the Diagnostics business decreased by five persons compared to
September 2006.
Shares and ownership base
The share capital of Orion Corporation is EUR 92.2 million and the
total number of shares is 141,257,828, of which 52,990,035 shares are
in Class A and 88,267,793 shares are in Class B at the time of
publishing this review. The counter book value of each share is EUR
0.65. Each Class A share provides 20 (twenty) votes and each Class B
share provides 1 (one) vote at the Annual General Meetings of the
Shareholders. Both shares provide equal rights to the company's
assets and dividends.
Based on the Articles of Association, a shareholder can demand
conversion of his/her Class A shares into Class B shares. During the
third quarter of 2007, a total of 498,000 Class A shares were
converted into Class B shares.
Orion's Board of Directors has been authorised by the Shareholders'
Meeting on 2 April 2007 to acquire and convey the company's own
shares. The Board of Directors decided at its meeting on 6 August
2007 to exercise its right to a total amount of 350,000 Class B
shares of the company. So far, these shares have not been purchased.
The Board does not have an existing authorisation to raise the share
capital or to issue a bond loan, convertible loan or stock options.
Ownership base
At the end of September 2007, Orion had altogether 36,483
shareholders, of which 94.4% were private shareholders. Their
holdings accounted for about 46.1% of the total number of shares and
57.9% of the total amount of votes. The number of nominee-registered
shares was 38.8 million, representing 27.4% of the total number of
shares and 5.5% of the total number of votes. The Company does not
have treasury shares in its possession.
No transactions exceeding the flagging limits set in the Finnish
Securities Market Act have been brought to the attention of the
company.
Legal proceedings
Orion Corporation has on 13 September 2007 filed a patent
infringement lawsuit in the United States to enforce U.S. Patent No.
5,446,194 and U.S. Patent No. 5,135,950 against generic drug
companies Wockhardt USA, Inc. and Wockhardt Limited, who seek to
market generic entacapone (200 mg tablets) in the United States.
Entacapone is the active ingredient in Comtan®, a product originated
by Orion Corporation and marketed in the United States for the
treatment of Parkinson's Disease by its exclusive licensee, Novartis.
Orion Corporation and Novartis will vigorously defend the
intellectual property rights covering Comtan. By virtue of the legal
proceedings, the realisation of generic competition regarding Comtan
is neither certain nor imminent.
Events after the review period
In early October, Orion Corporation was informed that an Abbreviated
New Drug Application (ANDA) has been filed with the U.S. Food and
Drug Administration (FDA) by a generic drug company seeking
authorisation to produce and market generic versions of Stalevo®
tablets (25/100/200 and 37.5/150/200 mg strengths of
carbidopa/levodopa/entacapone) in the United States. Stalevo is an
enhanced levodopa treatment originated by Orion Corporation and
marketed in the United States by its exclusive licensee, Novartis,
for the treatment of Parkinson's Disease.
The ANDA review process is just beginning and the realisation of
generic competition regarding Stalevo is neither certain nor
imminent. Orion is, together with Novartis, currently evaluating its
legal options to protect its intellectual property rights.
Review of the segments
Pharmaceuticals business
Market review
The most important single market for Orion is Finland. According to
the statistics collected by Finnish Pharmaceutical Data Ltd, the
Finnish wholesales of pharmaceuticals in the first three quarters of
2007 rose by 5.2% to EUR 1 338 (1 272) million. Self-care medicine
sales grew by 11.8% from those of the comparative period and hospital
sales grew by 9.5%.
Orion is strongly positioned as the leading marketer of
pharmaceuticals in Finland. In the first three quarters of 2007, the
wholesales of Orion's products totalled EUR 121.1 million, up by 7.9%
from the comparative period. Orion's market share was 9.0% (8.8%),
with which Orion was 1.4 percentage points ahead of the
second-largest marketer.
According to IMS Health pharmaceutical statistics in the 12-month
period up to June 2007, the US wholesales of medicines for
Parkinson's Disease, a core therapy area in Orion's business, were
USD 1,131 (924) million, about 22% more than in the comparative
12-month period. The exceptionally rapid growth is mainly a result of
the broadened indication of one dopamine agonist to encompass also
the restless legs syndrome, in addition to Parkinson's Disease. In
Europe, the five largest markets for Parkinson's Disease medicines
are Germany, the UK, France, Spain and Italy. In these markets, the
combined total sales of Parkinson's Disease medicines in the
respective 12-month periods were EUR 772 (713) million, the average
growth being about 8%.
Net sales and profit of the Pharmaceuticals business
The net sales of the Pharmaceuticals business in the first three
quarters of 2007 were EUR 479.4 (449.1) million, up by 6.7% from the
comparative period. Operating profit was EUR 156.9 (150.4) million,
up by 4.3%. The EBIT margin of the Pharmaceuticals business was 32.7%
(33.5%).
Proprietary Products
The combined net sales of Orion's proprietary products for
Parkinson's Disease, i.e. Stalevo® (levodopa, entacapone, carbidopa)
and Comtess®/Comtan® (entacapone) were EUR 152.6 (137.2) million, up
by 11.3% from the comparative period and accounting for one-third of
the total net sales of the Pharmaceuticals business, as in the
comparative period. The net sales from shipments of Stalevo and
Comtan to Novartis were EUR 91.9 (83.7) million, 9.8% more than in
the comparative period. The net sales generated by Orion's own sales
organisation from Stalevo and Comtess were EUR 60.7 (53.5) million,
up by 13.6%. The strongest sales growth continued in the UK and
Germany.
A marketing authorisation for long-acting Enanton® (leuproreline
acetate) was received in July for Finland and in September for
Sweden. The products, Enanton Depot Dual 30 mg and Enanton Depot Set
30 mg, are used for the treatment of advanced prostate cancer. The
new strength extends the treatment cycle from three months to six
months. A marketing approval in Norway is expected by the end of
2007. Enanton, originated by Takeda Corporation, is marketed by Orion
in the Nordic countries.
Specialty Products
The Specialty Products business generated net sales of EUR 178.4
(163.4) million in 1-9/2007, up by 9.1% from the comparative period.
The net sales from the Easyhaler® franchise of asthma medicines were
EUR 12.1 million, almost at the level of the comparative period. The
sales of Easyhaler have picked up during the third quarter of 2007.
This is mainly a result of the product launches in new markets areas,
like Turkey, where a marketing agreement was signed with Abdi Ibrahim
Pharmaceuticals, a Turkish pharmaceutical company, in the summer
2007.
The business of Specialty Products has expanded well in the eastern
European countries. The increase of Orion's sales has been above
average in several markets in the region, including Russia.
Sales in Finland have also continued at a good level during the year.
Animal Health
The net sales of the Animal Health business were EUR 51.4 (47.9)
million and they grew by 7.3% from the comparative period, thanks to
the continued favourable development of the sales by both Orion's own
Scandinavian marketing organisation and the partners. The net sales
of animal sedatives, Domitor® (medetomidine), Domosedan® (detomidine)
and Antisedan® (atipamezole), continued to grow, now by 8.2%. These
products accounted for about 42% (42%) of the total net sales of the
Animal Health business.
Fermion
Fermion, which manufactures active pharmaceutical ingredients,
generated EUR 26.7 (28.6) million in net sales, down by 6.6% from the
comparative period. The impact of intra-Group transactions, i.e.
supply to Orion's own operations, has been eliminated from the
figures. The sales of the business division were especially affected
by the weakened US dollar. On the other hand, Fermion's deliveries to
Orion's internal use have increased significantly from the
comparative period.
10 best-selling pharmaceutical brands
The net sales from Orion's ten best-selling pharmaceutical brands
increased by 7.2% and they accounted for about 51% (51%) of the total
net sales of the Pharmaceuticals business. The purchases by
pharmacies of Burana® (ibuprofen) have returned to the long-term
average levels since the downswing experienced in the previous year
due to a change in the Finnish pharmaceuticals act.
Proprietary products franchise
The net sales from the proprietary products franchise were EUR 220.0
(206.6) million, up by 6.5% from the comparative period and
accounting for 46% (46%) of the total net sales of the
Pharmaceuticals business. Stalevo and the animal sedatives were the
products showing growth.
Pharmaceutical research and development
Pharmaceutical research and development expenses were EUR 66.4 (56.9)
million, representing 13.9% (12.7%) of the net sales of the
Pharmaceuticals business. In accordance with its strategy, Orion aims
to allocate its R&D resources in such a way that the best possible
support is given to both the proprietary and generic prescription
drugs businesses.
STRIDE-PD study investigates if Stalevo medication can delay
Parkinson's patients' onset of motor complications, i.e. dyskinesias,
compared with conventional levodopa/carbidopa medication. The study
has been on-going since late 2004, and it is being carried out in
collaboration with Novartis in 14 countries. The study involves 747
patients, each being treated for almost three years. The results from
the research programme are expected at the turn of 2008-2009.
The clinical Phase 3 studies have started in May with dexmedetomidine
(Precedex®) in patients in intensive care as an infusion administered
for over 24 hours. The objective of the programme is to have the
product registered in the EU. The product is already available e.g.
in the USA and Japan as a sedative for patients in intensive care,
administrable for up to 24 hours. The current Phase 3 programme
consists of two studies, in which dexmedetomidine is compared with
midazolam and propofol. Both arms are planned to involve 500 patients
and they are estimated to be completed in about two years.
A research programme is under way in clinical Phase 1 for the
development of a new, more efficient COMT inhibitor than entacapone.
The LEVET programme, which is studying the efficacy of levosimendan
in the treatment of heart diseases in dogs, is progressing to the
last research phase with an aim to receive marketing authorisations.
Recruitment started in August 2007 both in the European and the US
arms of the programme.
In early research phases, Orion is investigating molecules affecting
alpha 2 receptors in the central nervous system, and selective
androgen receptor modulators (SARM), among others.
Diagnostics business
The net sales generated by Orion Diagnostica during the first three
quarters of 2007 were EUR 31.5 (31.1) million. The sales of QuikRead®
tests continued to show positive performance. These tests are used
for the detection of infections on the basis of the CRP content in a
blood sample. The sales of Uricult®, a test for the detection of
urinary tract infections, as well as Hygicult® and Easicult®, tests
for industrial hygiene, developed favourably during the period as
well. The declined sales of certain old products slowed down the
business division's net sales development. Additionally, the sales
were affected by the restrictions in international trade with Iran.
Steady growth continued in the sales by the division's own sales
organisation covering the Nordic countries. In the export markets,
the best growth was achieved in China, Czech, Spain and Slovakia.
Operating profit was EUR 6.4 (6.0) million, up by 6.8% from the
comparative period. EBIT was 20.2% (19.2%). The focus of the sales
efforts continued to be on the most profitable products. In addition
to the development of sales, the EBIT of the third quarter was
affected by non-recurring items and increased expenditure on selling
and marketing.
Espoo, 24 October 2007
Board of Directors of Orion Corporation
Orion Corporation
Jukka Viinanen Jari Karlson
President and CEO CFO
Tables
Group Income statement
Financial
Q3/07 Q3/06 Change Q1-Q3/07 Q1-Q3/06 Change 2006 period
EUR million % Proforma % Proforma Q3-Q4/06
Net sales 163.8 149.0 +10.0% 509.6 478.8 +6.4% 641.1 311.2
Cost of goods
sold -53.0 -50.7 +4.5% -160.1 -150.7 +6.2% -205.2 -105.2
Gross profit 110.8 98.2 +12.8% 349.6 328.1 +6.5% 435.8 205.9
Other
operating
income 1.0 10.6 -91.0% 2.3 12.8 -82.1% 13.8 11.6
Selling
and marketing
expenses -32.2 -27.5 +17.0% -101.2 -93.2 +8.6% -128.9 -63.2
R&D expenses -22.0 -18.9 +16.8% -69.1 -59.9 +15.3% -84.1 -43.1
Administrative
expenses -7.9 -8.1 -2.4% -26.6 -27.6 -3.8% -39.9 -20.4
Operating
profit 49.6 54.3 -8.6% 154.9 160.1 -3.2% 196.7 90.9
Financial
income 0.6 0.7 -11.5% 2.5 2.5 +2.9% 3.5 1.8
Financial
expenses -0.5 -0.7 -23.0% -1.7 -2.4 -31.0% -3.0 -1.2
Profit before
taxes 49.7 54.3 -8.5% 155.8 160.2 -2.7% 197.3 91.4
Income tax
expense -13.3 -14.1 -5.7% -41.5 -41.4 +0.2% -52.2 -24.8
Profit for the
period 36.5 40.3 -9.5% 114.3 118.8 -3.7% 145.1 66.6
of which
attributable
to:
Parent company
shareholders 36.5 40.3 -9.5% 114.3 118.8 -3.7% 145.1 66.6
Minority
interest 0.0 0.0 0.0 0.0 0.0 0.0
Earnings per
share,
EUR* 0.26 0.29 -9.5% 0.81 0.85 -4.4% 1.03 0.47
Depreciation
and
amortisation 7.6 8.6 -11.5% 23.8 26.1 -8.9% 34.7 17.2
Personnel
expenses 33.2 31.2 +6.5% 109.3 103.6 +5.4% 145.8 73.3
* The figure has been calculated from the profit attributable to the
parent company shareholders.
Balance sheet
Assets:
9/07 9/06 Change 12/06
EUR million %
Non-current assets:
Property, plant and equipment 186.5 188.0 -0.8% 187.1
Goodwill 13.5 13.5 - 13.5
Other intangible assets 21.7 22.3 -2.8% 21.9
Investments in associates 0.1 0.1 - 0.1
Available-for-sale investments 1.0 1.0 -3.0% 1.0
Pension asset 56.1 50.3 +11.5% 52.7
Deferred tax assets 1.6 1.5 +6.8% 1.4
Other non-current assets 2.3 4.4 -48.2% 3.8
Non-current assets total 282.7 281.1 +0.6% 281.4
Current assets:
Inventories 111.3 107.7 +3.3% 107.2
Trade receivables 83.4 78.3 +6.5% 75.0
Other receivables 13.0 12.9 +0.8% 14.4
Cash and cash equivalents 60.1 78.6 -23.5% 110.0
Current assets total 267.8 277.5 -3.5% 306.6
ASSETS TOTAL 550.5 558.6 -1.4% 588.1
Equity and liabilities:
9/07 9/06 Change 12/06
EUR million %
Equity:
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 0.4 0.5 -3.3% 0.5
Retained earnings 283.1 283.4 -0.1% 309.9
Equity of the parent company shareholders 416.7 416.9 -0.1% 443.5
Minority interest 0.0 0.0 - 0.0
Equity total 416.7 416.9 -0.1% 443.5
Non-current liabilities:
Deferred tax liabilities 50.7 51.7 -2.0% 51.5
Pension liability 1.0 0.9 +19.0% 0.9
Provisions 0.2 0.9 -76.5% 0.6
Interest-bearing non-current liabilities 7.5 7.9 -4.2% 7.5
Other non-current liabilities 0.2 1.4 -89.2% 1.8
Non-current liabilities total 59.6 62.8 -5.1% 62.3
Current liabilities:
Trade payables 28.2 20.9 +35.0% 29.2
Other current liabilities 42.8 55.2 -22.5% 49.9
Provisions 0.1 0.3 -58.8% 0.9
Interest-bearing current liabilities 3.1 2.5 +24.8% 2.3
Current liabilities total 74.2 78.9 -5.9% 82.3
EQUITY AND LIABILITIES TOTAL 550.5 558.6 -1.4% 588.1
Consolidated statement of changes in equity
Equity
of
the
Re- parent Mino-
Share Expen- Other Trans- tained company rity
lation
EUR Share premi- dable reser- different ear- share- inte- In
million capital um fund ves ces nings holders rest total
Equity
on
Jul 06 92.2 17.8 23.0 0.5 -3.5 246.8 376.8 0.0 376.8
Trans-
lation
differen-
ces 0.1 0.1 0.1
Profit
for
the
period 66.6 66.6 -0.0 66.6
Recog-
nised
income
and
expen-
ses
in
total 0.1 66.6 66.7 -0.0 66.7
Other
changes -0.0 -0.0 -0.0
Equity
on
1 Jan
07 92.2 17.8 23.0 0.5 -3.4 313.3 443.5 0.0 443.5
Trans-
lation
differen-
ces -0.2 -0.2 -0.2
Profit
for
the
period 114.3 114.3 0.0 114.3
Recog-
nised
income
and
expen-
ses
in total -0.2 114.3 114.1 0.0 114.1
Dividend -141.3 -141.3 -141.3
Other
changes -0.0 0.3 0.3 0.3
Equity
on
30 Sep
07 92.2 17.8 23.0 0.4 -3.6 286.7 416.7 0.0 416.7
Cash flow statement
Financial
Q1-Q3/07 Q1-Q3/06 2006 period
EUR million Proforma Proforma Q3-Q4/06
Cash flow from operating activities:
Operating profit 154.9 160.1 196.7 90.9
Adjustments 19.3 9.4 16.0 4.3
Change in working capital -18.8 -39.9 -18.6 22.5
Interest paid -1.3 -2.8 -3.8 -1.5
Interest received 2.5 2.4 3.5 1.7
Income taxes paid -41.6 -24.9 -52.5 -36.3
Net cash from operating
activities 115.0 104.3 141.4 81.6
Cash flow from investing activities:
Purchases of property, plant,
equipment and intangible assets -24.0 -17.0 -22.8 -12.3
Acquisition of subsidiary, net
of cash - -1.2 -1.2 -
Proceeds from sale of property,
plant, equipment,
intangible assets and
available-for-sale investments 0.9 12.2 13.0 12.3
Net cash used in investing
activities -23.1 -5.9 -10.9 0.0
Cash flow from financing activities:
Share issue and share capital
increase based on the use of
stock options - 21.4 21.4 -
Change in short-term loans -0.1 -46.7 -47.5 -1.0
Repayments of long-term loans -0.4 -0.5 -0.6 -0.4
Dividends paid and other
distribution of profits -141.3 -118.2 -118.2 0.0
Net cash used in financing
activities -141.8 -144.0 -144.9 -1.4
Net change in cash and cash
equivalents -49.8 -45.6 -14.4 80.2
Cash and cash equivalents at the
beginning of the period 110.0 124.5 124.5 29.8
Foreign exchange adjustments -0.1 -0.2 -0.1 0.0
Net change in cash and cash
equivalents -49.8 -45.6 -14.4 80.2
Cash and cash equivalents at the
end of the period 60.1 78.6 110.0 110.0
Changes in property, plant and equipment
Financial
Q1-Q3/07 Q1-Q3/06 2006 period
EUR million Proforma Proforma Q3-Q4/06
Carrying amount at the beginning
of the period 187.1 196.4 196.4 191.2
Additions 19.2 13.3 19.0 10.5
Disposals -1.1 -2.4 -2.7 -1.9
Depreciation -18.7 -19.3 -25.6 -12.7
Carrying amount at the end of
the period 186.5 188.0 187.1 187.1
Commitments and contingencies
EUR million 9/07 9/06 12/06
Contingent for own liabilities:
Mortgages on land and buildings 25.5 27.9 25.5
of which those to Orion Pension Fund 9.0 11.4 9.0
Guarantees 1.4 1.9 1.8
Other liabilities:
Leasing liabilities (excl. finance lease contracts) 4.4 3.6 5.2
Other liabilities 0.3 0.3 0.3
Derivates
EUR million 9/07 9/06 12/06
Currency forward contracts:
- fair value 0.8 0.1 0.3
- nominal value 68.4 77.1 58.5
Related party transactions
Financial
Q1-Q3/07 Q1-Q3/06 2006 period
EUR million Proforma Proforma Q3-Q4/06
Management benefits 2.2 1.7 2.1 1.0
Non-current liabilities to Orion
Pension Fund at the end of the
period 6.0 6.0 6.0 6.0
Performance by segment
Net sales by business segment Financial
Q3/07 Q3/06 Change Q1-Q3/07 Q1-Q3/06 Change 2006 period
EUR million % Proforma % Proforma Q3-Q4/06
Pharmaceuticals 154.7 139.9 +10.6% 479.4 449.1 +6.7% 601.4 292.0
Diagnostics 9.4 9.5 -0.7% 31.5 31.1 +1.3% 41.5 19.9
Group items -0.3 -0.4 -14.3% -1.3 -1.4 -9.6% -1.8 -0.7
Group total 163.8 149.0 +10.0% 509.6 478.8 +6.4% 641.1 311.2
Operating profit by business segment
Financial
Q3/07 Q3/06 Change Q1-Q3/07 Q1-Q3/06 Change 2006 period
EUR million % Proforma % Proforma Q3-Q4/06
Pharmaceuticals 50.6 45.1 +12.2% 156.9 150.4 +4.3% 189.9 84.6
Diagnostics 1.3 1.5 -12.6% 6.4 6.0 +6.8% 6.6 2.1
Group items -2.2 7.7 -129.0% -8.3 3.7 -322.0% 0.2 4.2
Group total 49.6 54.3 -8.6% 154.9 160.1 -3.2% 196.7 90.9
Net sales by annual quarters
Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Q1/06
EUR million Proforma Proforma
Pharmaceuticals 154.7 156.8 167.9 152.1 139.9 146.4 162.9
Diagnostics 9.4 10.3 11.8 10.4 9.5 10.4 11.2
Group items -0.3 -0.5 -0.5 -0.4 -0.4 -0.5 -0.5
Group total 163.8 166.6 179.2 162.2 149.0 156.3 173.5
Operating profit by annual quarters
Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Q1/06
EUR million Proforma Proforma
Pharmaceuticals 50.6 45.6 60.7 39.5 45.1 43.3 62.0
Diagnostics 1.3 1.8 3.2 0.6 1.5 1.7 2.8
Group items -2.2 -3.2 -2.9 -3.5 7.7 -2.1 -1.9
Group total 49.6 44.3 61.1 36.6 54.3 42.9 62.9
Geographical breakdown of net sales by annual quarters
Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Q1/06
EUR million Proforma Proforma
Finland 48.6 48.6 50.1 49.0 45.2 45.4 44.8
Scandinavia 23.8 25.3 24.1 23.4 21.2 24.2 22.5
Other Europe 56.0 57.5 63.7 58.4 52.8 52.7 69.6
North America 20.4 20.1 24.1 22.0 20.1 20.5 20.4
Other markets 15.0 15.1 17.1 9.4 9.7 13.4 16.2
Group total 163.8 166.6 179.2 162.2 149.0 156.3 173.5
Review of the segments
Pharmaceuticals
Key figures
Financial
Q3/07 Q3/06 Change Q1-Q3/07 Q1-Q3/06 Change 2006 period
EUR million % Proforma % Proforma Q3-Q4/06
Net sales 154.7 139.9 +10.6% 479.4 449.1 +6.7% 601.4 292.0
Operating
profit 50.6 45.1 +12.2% 156.9 150.4 +4.3% 189.9 84.6
% of net
sales 32.7% 32.2% 32.7% 33.5% 31.6% 29.0%
Capital
expenditure 8.5 5.1 +65.3% 22.0 16.4 +34.1% 23.1 11.8
Net sales
from own
proprietary
products 72.9 62.7 +16.4% 220.0 206.6 +6.5% 274.9 131.0
R&D
expenses 21.2 17.8 +19.0% 66.4 56.9 +16.6% 79.7 40.6
Personnel
at the end
of the
period 2 835 2 732 +3.8% 2 742 2 742
Breakdown of pharmaceuticals net sales by business areas
Q3/07 Q3/06 Change Q1-Q3/07 Q1-Q3/06 Change 2006
EUR million % Proforma % Proforma
Proprietary
Products 68.5 58.3 +17.6% 203.5 191.0 +6.6% 256.6
Specialty
Products 57.7 52.6 +9.7% 178.4 163.4 +9.1% 218.7
Animal Health 15.3 15.8 -3.4% 51.4 47.9 +7.3% 63.3
Fermion 6.0 6.5 -8.3% 26.7 28.6 -6.6% 38.5
Other 7.2 6.7 +7.9% 19.4 18.2 +6.6% 24.2
Group total 154.7 139.9 +10.6% 479.4 449.1 +6.7% 601.4
Net sales of Orion's 10 Best-selling medicinals
Q3/07 Q3/06 Change Q1-Q3/07 Q1-Q3/06 Change 2006
EUR million % Proforma % Proforma
Parkinson's
Stalevo Disease 32.9 25.0 +31.9% 94.6 80.2 +18.0% 111,3
Parkinson's
Comtess/Comtan Disease 17.7 17.3 +2.4% 58.0 57.0 +1.8% 74,7
Domitor,
Domosedan and animal
Antisedan sedatives 5.8 6.4 -9.4% 21.8 20.2 +8.2% 26,0
Easyhaler asthma 4.5 3.5 +28.9% 12.1 12.3 -1.2% 15,9
inflammatory
Burana pain 3.8 3.2 +21.0% 11.6 8.4 +37.7% 12,0
menopausal
Divina-series symptoms 4.3 4.3 -1.7% 11.6 12.4 -6.8% 16,2
heart
Simdax failure 3.6 2.7 +31.2% 10.2 10.3 -1.2% 13,2
Calcimagon osteoporosis 2.2 3.8 -42.3% 10.1 9.9 +2.1% 11,7
prostate
Enanton cancer 3.1 3.2 -3.9% 9.7 10.0 -3.5% 13,3
breast
Fareston cancer 2.2 1.6 +38.8% 6.2 8.6 -28.0% 10,3
In total 80,2 71.1 +12.8% 245.8 229.2 +7.2% 304.5
Share of total
pharmaceutical net sales 52% 51% 51% 51% 51%
Diagnostics business
Key figures
Financial
Q3/07 Q3/06 Change Q1-Q3/07 Q1-Q3/06 Change 2006 period
EUR million % Proforma % Proforma Q3-Q4/06
Net sales 9.4 9.5 -0.7% 31.5 31.1 +1.3% 41.5 19.9
Operating
profit 1.3 1.5 -12.6% 6.4 6.0 +6.8% 6.6 2.1
% of net
sales 13.7% 15.6% 20.2% 19.2% 15.9% 10.6%
Capital
expenditure 0.2 0.4 -54.7% 0.6 1.0 -45.4% 1.4 0.8
Personnel
at the end
of the
period 285 290 -1,7% 289 289
Information on Orion Corporation's shares on 30 September 2007
Class A Class B A and B in
total
Share EUR EUR EUR
capital 36.1 million 56.1 million 92.2 million
Total
number of
shares 52 990 035 pcs 88 267 793 pcs 141 257 828 pcs
Minimum
share EUR
capital - - 50 million
Maximum
share EUR
capital - - 2 000 million
Share of
total share
stock 38 % 62 % 100 %
Counter
book value
of share 0.65 EUR 0.65 EUR -
Votes per
share 20 votes 1 vote
Trading
code on
OMX Nordic
Exchange
Helsinki ORNAV ORNBV
Both share classes provide equal rights to the company assets and
dividends.
trading in Orion's A and b shares during 1 janury-30 September 2007
Class A Class B A and B in
total
Total number
of shares
traded 3 002 547 pcs 80 348 086 pcs 83 350 633 pcs
Share of total
share stock 5.5 % 92.4 % 59.0 %
Lowest
quotation 15.07 EUR 15.51 EUR
Highest
quotation 20.49 EUR 20.53 EUR
Closing
quotation on 2
Jan 07 16.50 EUR 16.50 EUR
Closing
quotation on
30 Sep 07 17.68 EUR 17.82 EUR
Market
capitalisation EUR EUR EUR
on 30 Sep 07 936.9 million 1 572.9 million 2 509.8 million
PErformance per share
Financial
Q3/07 Q3/06 Change Q1-Q3/07 Q1-Q3/06 Change 2006 period % Proforma % Proforma Q3-Q4/06
Earnings
per
share,
EUR 0.26 0.29 -9.5 % 0.81 0.85 -4.4 % 1.03 0.47
Equity
per
share,
EUR 2.95 2.95 -0.1 % 3.14 3.14
Average
number
of
shares,
1 000
pcs 141 258 141 258 141 258 140 326 140 561 141 258
Appendices
Orion Group structure
Orion Corporation was established on 1 July 2006 as one of the two
new listed companies that resulted from the demerger of the former
Orion. The parent company of the Orion Group, Orion Corporation
consists of two businesses and five business divisions:
* Pharmaceuticals
o Proprietary Products (patented prescription products)
o Specialty Products (off-patent, generic prescription
products and self-medication products)
o Animal Health
o Fermion (active pharmaceutical ingredients)
* Diagnostics
o Orion Diagnostica (diagnostic tests).
Accounting principles
This interim report 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 Statement
for 2006, with the exception of the following new IFRS-standards and
IFRIC-interpretations as of 1 January 2007
* IFRS 7 Financial Instruments: Disclosures
* IAS 1 amendment to standard, Presentation of Financial
Statements: Capital Disclosures
* IFRIC 9 Re-assessment of Embedded Derivatives
* IFRIC 10 Interim Financial Reporting and Impairment
These new standards, amendments to standards and interpretations do
not have a substantial effect on the Group's interim report nor
reported figures.
The principles and calculation methods are available on the Group's
homepage at www.orion.fi/english/investors.
The figures have not been audited. Those in the parentheses are for
the comparative period of the previous year. The per-share ratios
have been adjusted.
The figures have been rounded. Therefore, the total sums of
individual figures may differ from the total sums shown.
Calculation of the key figures
Return on capital Profit before taxes + interest and
employed (ROCE), % = other financial expenses x 100
Total assets - non-interest-bearing
liabilities (annual average)
Return on equity (ROE), = Profit for the period X 100
% Equity total (annual average)
Equity ratio, % = Equity total x 100
Total assets - advances received
= Interest-bearing liabilities - Cash x 100
Gearing, % and cash equivalents
Equity total
Profit available for the parent
Earnings per share, EUR = company shareholders
Average number of shares
Equity of the parent company
Equity per share, EUR = shareholders
Number of shares at the end of the
period
Market capitalisation, Number of shares Closing quotation
EUR million = at the end of the x of the period
period
Distribution:
OMX Nordic Exchange Helsinki
Respective media
Publisher:
Orion Corporation
Orionintie 1A
02200 Espoo
FINLAND
www.orion.fi
Orion is a European pharmaceutical and diagnostics company which
emphasises the development of innovative medicinal treatments and
diagnostic tests for global markets. Orion develops, manufactures and
markets pharmaceuticals for humans and animals, active pharmaceutical
ingredients as well as diagnostic tests. Orion's clientele consists
mainly of healthcare service providers and professionals. The Group's
net sales in 2006 (proforma) were EUR 641.1 million and in the end of
2006 there were 3 061 employees working for the Group. Orion's stocks
are listed in OMX Nordic Exchange Helsinki. In 2007, Orion celebrates
its 90-year-history.
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