2011-02-09 11:00:05 CET
2011-02-09 11:00:53 CET
REGULATED INFORMATION
Orion - Annual Financial Report
Orion Group Financial Statement Release for 2010
ORION CORPORATION FINANCIAL STATEMENT RELEASE 2010 9 FEBRUARY 2011 at 12:00 EET
Orion Group Financial Statement Release for 2010
Orion's net sales in 2010 totalled EUR 850 million (EUR 772 million in 2009), up
by 10% on the previous year.
* Operating profit was EUR 254 (207) million.
* Profit before taxes was EUR 253 (204) million.
* Equity ratio was 63% (61%).
* ROCE before taxes was 45% (37%).
* ROE after taxes was 41% (35%).
* Earnings per share were EUR 1.31 (1.07).
* Cash flow per share before financial items was EUR 1.26 (1.03).
* Board's proposal for dividend is EUR 1.20 (1.00) per share.
* Proposal by the Board that EUR 0.06 (0.10) per share be distributed from the
expendable fund in the distributable equity as a repayment of capital.
* Orion estimates that net sales and operating profit excluding non-recurring
items will be slightly higher in 2011 than in 2010.
ORION'S KEY FIGURES FOR THE REVIEW PERIOD
Q4/10 Q4/09 Change % 2010 2009 Change %
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Net sales, EUR million 214.9 193.3 +11.2% 849.9 771.5 +10.2%
International operations, EUR million 153.9 134.1 +14.8% 620.7 548.2 +13.2%
% of net sales 71.6% 69.4% 73.0% 71.1%
Operating profit, EUR million 52.6 43.9 +19.8% 254.2 207.0 +22.8%
% of net sales 24.5% 22.7% 29.9% 26.8%
Profit before taxes, EUR million 52.4 43.1 +21.4% 252.6 203.7 +24.0%
% of net sales 24.4% 22.3% 29.7% 26.4%
Income tax expense, EUR million 15.7 10.1 +55.6% 67.9 52.3 +29.9%
R&D expenses, EUR million 26.6 25.6 +3.9% 85.5 95.2 -10.2%
% of net sales 12.4% 13.2% 10.1% 12.3%
Capital expenditure, EUR million 11.3 9.1 +23.2% 39.2 60.4 -35.1%
% of net sales 5.2% 4.7% 4.6% 7.8%
Assets total, EUR million 745.8 727.1 +2.6%
Equity ratio, % 62.7% 60.6%
Gearing, % -12.2% -8.9%
Interest-bearing liabilities, EUR
million 110.0 131.5 -16.3%
Non-interest-bearing liabilities, EUR
million 168.4 156.5 +7.6%
Cash and money market investments,
EUR million 167.2 170.5 -1.9%
ROCE (before taxes), % 45.0% 37.4%
ROE (after taxes), % 40.7% 35.3%
Basic earnings per share, EUR 0.26 0.23 +11.2% 1.31 1.07 +22.0%
Diluted earnings per share, EUR 0.26 0.23 +11.2% 1.31 1.07 +22.0%
Cash flow per share before financial
items, EUR 0.45 0.34 +31.3% 1.26 1.03 +22.8%
Equity per share, EUR 3.32 3.11 +6.6%
Proposed dividend per share, EUR (1)) 1.20 1.00 +20.0%
Personnel at the end of the period 3,131 3,147 -0.5%
Average personnel during the period 3,137 3,192 -1.7%
Personnel expenses, EUR million 170.3 171.4 -0.7%
--------------------------------------------------------------------------------
(1) )In addition, the Board of Directors proposes to the Annual General Meeting
that EUR 0.06 (0.10) per share be distributed from the expendable fund in the
distributable equity as a repayment of capital.
President and CEO Timo Lappalainen's review"Good progress continued throughout the year""Orion's net sales improved throughout 2010, growing by about 10% on the
previous year.""There was growth in sales of key products based on Orion's own research -
Stalevo Parkinson's drug, Simdax heart failure drug, Easyhaler pulmonary drugs
and Precedex intensive care sedative. Notably, Precedex and Simdax showed strong
growth. Precedex became one of our best-selling products during the year as its
sales clearly increased.""It was also a successful year for generic drugs and self-care products. We
achieved good growth in Scandinavia and Eastern Europe, and succeeded in
increasing sales and market share in Finland, where market conditions remained
very challenging - the Finnish market as a whole has contracted in the past two
years.""Our operating profit was clearly higher than last year due to the good sales.
Strengthening of our market position in Europe and higher distribution costs due
to growth in the volume of business operations increased fixed costs. On the
other hand, research and development expenses were lower than in the previous
year, because of the timing of our research projects, and administrative
expenses were lower as patent litigation costs in the United States decreased.""We made significant progress in research during the year. The most important
individual achievement was submitting the application for marketing
authorisation for the intensive care sedative dexmedetomidine to the European
Medicines Agency in October. Several early-phase projects, such as alpha 2(c)
receptor antagonist and androgen receptor antagonist research, progressed
according to plan, as did the ongoing development of combined formulations to
expand the Easyhaler product family. Orion is also developing a new more
effective levodopa product. In line with our strategy, collaboration with
research partners again reached a new phase when in early 2011 we entered into a
comprehensive agreement with the US company Endo Pharmaceuticals for the
discovery, development and commercialisation of assets in oncology.""We believe this good progress will continue in the current year, and we
estimate that our net sales and operating profit excluding non-recurring items
will be slightly higher than in 2010. The outlook forecast and basis for it can
be found on pages 6-7 of this report."
Events in 2010
On 1 April Orion commented on the US Food and Drug Administration's release
published on 31 March 2010 concerning the ongoing review of the safety of
Orion's drug Stalevo.
On 20 April Orion announced that the initial results of the studies with
dexmedetomidine were positive, and the Company planned to submit an application
for marketing authorisation for the intensive care sedative to the European
Medicines Agency by the end of 2010.
On 22 June Orion Corporation agreed a settlement with companies belonging to the
Sun Group to a dispute in which in order to defend its patents, Orion had filed
a lawsuit in the United States against Sun regarding Sun's submissions of
abbreviated new drug applications ("ANDAs") for generic versions of Orion's
Comtan(®) and Stalevo(®) drugs.
On 20 October Orion announced that the European Medicines Agency had initiated
the review of Orion's dexmedetomidine marketing authorisation application.
On 26 November the Association of Finnish Pharmacies and Orion Corporation
announced Orion's purchase of a 49% stake in Pharmaservice Oy, which provides
dispensing support services for pharmacies.
On 15 December Orion announced that it had been informed that Mylan
Pharmaceuticals Inc. had submitted an application to the US Food and Drug
Administration for authorisation to produce and market a generic version of
entacapone as 200 mg dosage tablets.
Events after the period
On 24 January Orion filed a patent infringement lawsuit in the United States to
enforce Orion's US patent covering Comtan(® )against Mylan Pharmaceuticals Inc.
On 28 January Orion and Endo Pharmaceuticals Inc. announced that they had signed
a novel collaboration agreement for the discovery, development and
commercialisation of assets in oncology. The companies will begin development of
altogether eight drug candidates, one of them in the clinical phase, by
combining equal numbers of research programmes. The companies are sharing all
development costs. For products arising from the development work, Orion will
have the marketing rights in Europe and Russia, and Endo Pharmaceuticals in
North America.
Concurrently with the establishment of the partnership, Endo Pharmaceuticals has
exercised its option to license the lead asset in this collaboration discovered
at Orion, a novel androgen receptor antagonist for the treatment of advanced
prostate cancer. The companies will now jointly develop this drug candidate with
the objective of approval globally. Endo Pharmaceuticals is paying Orion USD 10
million for exercising the option. Clinical trials have started in the first
quarter of the current year in Europe in co-operation with Endo Pharmaceuticals.
News conference and teleconference
A news conference and teleconference on the published results will be held
today, Wednesday 9 February 2011, at 13:30 EET 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 www.orion.fi. After
the presentation, questions can be put to the Company's management by telephone
in Finnish and English.
The teleconference code is 884 964 and to participate in the teleconference,
please call:
from United States: +1 334 323 6203
from other countries: +44 (0)20 7162 0125
News conference recordings
A recording of the webcast of the event in English will be available later the
same day via a link on the Orion website. A recording of the presentation by the
President and CEO in Finnish will be available on the Orion website later on the
same day.
Financial report material
Financial reviews and related presentation material are available on the website
www.orion.fi/en/ promptly after publication. The website also has a form for
subscribing to Orion's releases.
Dates in Orion Calendar 2011
Annual Report 2010 published on the In week beginning 7 March 2011
Company's website
Deadline for registering for Annual General 28 March 2011 at 10:00 EET
Meeting
Annual General Meeting 31 March 2011 at 14:00 EET in
Helsinki
Record date for dividend distribution 5 April 2011
Dividend payment date 12 April 2011
Interim Report January-March 2011 27 April 2011
Interim Report January-June 2011 2 August 2011
Interim Report January-September 25 October 2011
2011
A separate release will be published today on the matters to be handled at the
Annual General Meeting.
For additional information about the financial review:
Jari Karlson, CFO, tel. +358 10 426 2883
www.orion.fi/en
www.orion.fi/en/investors/
Financial review 2010
Net sales
The Orion Group's net sales in 2010 totalled EUR 850 million (EUR 772 million in
2009), up by 10% on the previous year. The net effect of currency exchange rates
was plus EUR 14 million.
The Pharmaceuticals business's net sales were up by 11% at EUR 806 (729)
million. The products based on in-house R&D accounted for EUR 397 (347) million,
or 49% (48%) of the Pharmaceuticals business's net sales. Net sales of Orion's
Parkinson's drugs were up by 8% and totalled EUR 253 (235) million, or about
31% (32%) of the segment's net sales. The net sales of the other products in the
portfolio excluding Parkinson's drugs were up by 12% at EUR 554 (494) million.
The Diagnostics business's net sales were EUR 46 (45) million. Sales of
QuikRead(®) infection tests grew, but sales from the older product portfolio
were lower than in the comparative period.
Operating profit
The Orion Group's operating profit in 2010 was up by 23% at EUR 254 (207)
million.
The Pharmaceuticals business's operating profit was up by 20% at EUR 252 (211)
million. The gross profit grew slightly faster than net sales. However,
operating profit improved clearly more because the fixed costs of the business
operations were only slightly higher than in the previous year. Sales and
marketing expenses were as anticipated higher, but research and administrative
expenses lower than in the comparative period.
The Diagnostics business's operating profit was up by 11% at EUR 6.1 (5.6)
million. The increase in operating profit was mainly due to growth in sales of
products with better gross margin.
Operating expenses
The Group's sales and marketing expenses at EUR 189 (160) million were as
anticipated clearly higher, up by 18%. The increase was mainly due to the launch
of operations in Southern Europe in the second half of 2009, EUR 9 (6) million
of royalties paid to Abbott following its sale of Simdax(®), investments in
developing operations in Scandinavia and Eastern Europe, and increased
distribution costs due to volume growth in the business operations as a whole.
R&D expenses were down by 10% at EUR 86 (95) million and accounted for 10% (12%)
of the Group's net sales. Pharmaceutical R&D expenses amounted to EUR 80 (89)
million. The decrease was mainly due to the timing of the ongoing research
projects, especially as clinical trials of the intensive care sedative
dexmedetomidine with patients concluded at end of the previous year. Research
projects are reported in more detail under Pharmaceuticals in the Business
Reviews.
Administrative expenses were down by 22% at EUR 39 (50) million. The costs due
to patent litigation in the United States were EUR 3 (9) million. There is more
information on the legal proceedings in the section "Legal proceedings".
Other operating income and expenses increased profit by EUR 1 (6) million. This
includes EUR 4 million profit on the sale of a real estate limited company in
the second half of the year and currency hedge items. The comparative period
includes a one-off payment of EUR 4 million from Pfizer related to an agreement
under which animal sedative distribution rights in Europe reverted to Orion.
Profit before taxes
Group profit before taxes totalled EUR 253 (204) million. Basic earnings per
share were EUR 1.31 (1.07) and diluted earnings per share were EUR 1.31 (1.07).
Equity per share was EUR 3.32 (3.11). The return on capital employed before
taxes (ROCE) was 45% (37%) and the return on equity after taxes (ROE) 41% (35%).
Financial position
The Group's gearing was -12% (-9%) and the equity ratio 63% (61%).
Total liabilities in the Consolidated Statement of Financial Position at 31
December 2010 were EUR 278 (288) million. At the end of the period, interest-
bearing liabilities amounted to EUR 110 (132) million, including EUR 88 (109)
million of long-term loans.
The Group's cash and cash equivalents and money market investments at the end of
the year were EUR 167 (171) million. They are invested in short-term interest-
bearing instruments issued by financially solid financial institutions and
corporations.
Cash flow
Cash flow from operating activities was EUR 209 (205) million, slightly higher
than in the comparative period. Operating profit was clearly higher than in the
previous year, but the amount tied up in working capital was EUR 28 million
higher than in 2009. The rise in working capital was due to an increase in trade
receivables. The strong growth in net sales and proportionally greater growth in
countries where payment times are typically longer than average for Orion led to
the increase in trade receivables. Stocks increased slightly due to volume
growth in business operations.
Cash flow from investing activities was EUR -31 (-60) million. In the
comparative period, investments were increased by the repurchasing of marketing
rights to the heart failure drug Simdax(®) for EUR 26 million.
Cash flow from financing activities was EUR -182 (-152) million. The change is
due to repayment of capital in 2010, repurchase of own shares and higher
dividends than in the previous year.
Capital expenditure
The Group's capital expenditure totalled EUR 39 (60) million. This comprised EUR
23 (25) million on property, plant and equipment, EUR 15 (35) million on
intangible assets and EUR 1 (0) million on investments.
Outlook for 2011
Net sales will be slightly higher than in 2010.
Marketing expenditure will be slightly higher due to the increased number of
product launches. Research expenditure will be clearly higher than in 2010.
Operating profit excluding non-recurring items will be slightly higher than in
2010.
The Group's capital expenditure will be about EUR 45 million excluding
substantial corporate or product acquisitions.
Basis for outlook
Price competition in the Finnish market will persist in 2011. However, product
launches will continue to support Orion's position as market leader.
In-market sales of the Parkinson's drugs grew by just under 10% in 2010. The
pace of growth of sales is forecast to continue to slow in 2011. The generic
competition commencing in April 2012 in the United States is not expected to
have a material impact on Orion's sales in 2011.
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 2011
were planned mainly during the previous year.
Research and development costs can be estimated quite accurately in advance.
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 2011 are either ongoing from the
previous year or at an advanced stage of planning, therefore their cost level
can be estimated rather accurately.
The estimated costs of the ongoing patent litigations in the United States are
based on the planned timetables and work estimates. The costs due to the
litigation will depend on a number of factors, which are difficult to estimate
accurately.
Near-term risks and uncertainties relating to the outlook
The Company is not aware of any significant risk factors relating to the
earnings outlook for 2011.
Sales of individual products and also Orion's sales in individual markets may
vary slightly 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 to Novartis are based on
timetables that are jointly agreed in advance. Nevertheless, they can change,
for example as a consequence of decisions by Novartis concerning adjustments of
stock levels.
Most of the exchange rate risk relates to the US dollar. Typically, only less
than 15% of Orion's net sales come from the United States. As regards currencies
in European countries, the overall effect 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.
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.
Financial objectives
Orion's financial objectives are ensuring the Group's financial stability and
creating a foundation for long-term profitable growth.
The principal means of achieving these objectives are:
* improving the organic development of net sales and operating profit through
product, product portfolio and corporate acquisitions
* increasing the efficiency of operations and cost control
* maintaining a stable financial position, with the equity ratio at least 50%
Sales of Stalevo(®) and Comtess(®)/Comtan(®) currently account for approximately
one-third of Orion's net sales. The key patents for these Parkinson's drugs in
Orion's main markets will expire in 2012-2013, which is why their sales are
expected to decline over the next few years. Orion is continuously bringing new
products to the market to replace this drop in net sales.
The development of Orion's net sales and profitability in the next few years
will depend on how fast the sales of Parkinson's drugs will decline and, on the
other hand, how the sales of other products will increase in the future. This
creates a point of discontinuity in the Group's operations.
Dividend 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.
Proposal by the Board of Directors for distribution of profit:
dividend per share EUR 1.20
The parent company's distributable funds are EUR 208,688,471.92, including EUR
178,406,411.05 of profit for the financial year.
The Board of Directors proposes that a dividend of EUR 1.20 per share be paid
from the parent company's distributable funds. No dividend shall be paid on
treasury shares held by the Company on the dividend distribution record date. On
the day when the profit distribution was proposed, the number of shares
conferring entitlement to receive dividend totalled 140,741,174, on which the
total dividend payment would be EUR 168,889,408.80. The Group's payout ratio for
the financial year 2010 would be 91.6% (93.5%).The dividend payment date would
be 12 April 2011, and shareholders registered in the Company's shareholder
register on 5 April 2011 would be entitled to the dividend payment.
The Board of Directors further proposes that EUR 150,000 be donated to medical
research and other purposes of public interest in accordance with a separate
decision by the Board and that EUR 39,649,063.12 remain in the retained earnings
account.
Proposal by the Board of Directors for distribution of equity:
EUR 0.06 per share
The Board of Directors proposes to the Annual General Meeting of Orion
Corporation to be held on 31 March 2011 that EUR 0.06 per share be distributed
from the expendable fund in the distributable equity as a repayment of capital.
The repayment of distributable equity would be paid to the shareholders
registered in the Company's shareholder register maintained by Euroclear Finland
on 5 April 2011, the record date for dividend distribution. The payment date
would be 12 April 2011.
Shares and shareholders
On 31 December 2010, Orion had a total of 141,257,828 (141,257,828) shares, of
which 47,563,565 (51,340,668) were A shares and 93,694,263 (89,917,160) B
shares. The Group's share capital was EUR 92,238,541.46. (92,238,541.46) At the
end 2010, Orion held 516,654 (280,030) B shares as treasury shares. On 31
December 2010, the aggregate number of votes conferred by the A and B shares was
1,044,448,909 (1,116,450,490) excluding treasury shares.
At the end of 2010, Orion had a total of 58,686 (54,323) 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 the General Meetings of Shareholders. In addition, Orion and
Orion Pension Fund do not have the right to vote at Orion Corporation's General
Meetings 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 2010 a total of 3,777,103 shares were converted.
Trading in Orion's shares
Orion's A shares and B shares are quoted on NASDAQ OMX Helsinki in the Large Cap
group under the Healthcare sector heading under the trading codes ORNAV and
ORNBV. Trading in both of the Company's share classes commenced on 3 July 2006,
and information on trading in the Company's shares has been available since this
date.
On 31 December 2010 the market capitalisation of the Company's shares excluding
treasury shares was EUR 2,305 million.
In 2010 a total of 7,779,934 A shares and 93,247,272 B shares were traded on
NASDAQ OMX Helsinki. The total value of traded shares was EUR 1,526 million.
During the year, 16% of A shares and 101% of B shares were traded. The average
turnover in Orion's shares was 72%.
The price of Orion's A shares rose by 9% and the price of the B shares rose by
9% during 2010. On 31 December 2010 the closing quotation was EUR 16.40 for the
A shares and EUR 16.37 for the B shares. The highest quotation for Orion's A
shares in 2010 was EUR 17.82 and the lowest quotation was EUR 12.21. The highest
quotation for the B shares in 2010 was EUR 17.88 and the lowest quotation was
EUR 13.20.
Authorisations of the Board of Directors
Orion's Board of Directors was authorised by the Annual General Meeting on 24
March 2010 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 is valid for 18 months and the authorisation to issue shares for
five years from the respective decision taken by the Annual General Meeting.
The Board of Directors is authorised to decide on acquisition of no more than
300,000 Orion Corporation B shares. Such shares shall be acquired at the market
price at the time of acquisition quoted in public trading on NASDAQ OMX Helsinki
using funds in the Company's distributable equity. Such shares may be acquired
in public trading on the stock exchange in a proportion not corresponding to the
shareholders' holdings. The shares shall be acquired and paid for in accordance
with the rules of the stock exchange and Euroclear Finland. The shares acquired
can be kept, cancelled or further conveyed by the Company. The shares can be
acquired for the purpose of developing the capital structure of the Company, for
use in financing possible corporate acquisitions or other business arrangements
of the Company, for financing capital expenditure, as part of the Company's
incentive plan, or for otherwise conveying or cancelling them. The Board of
Directors shall decide on other matters related to the acquisition of shares in
the Company.
On 18 May 2010 the Board of Directors of Orion Corporation decided to repurchase
shares as authorised by the Annual General Meeting. Orion acquired in total
300,000 B shares of Orion Corporation on 11-18 August 2010 in accordance with
the decision. The shares were acquired for use as part of the 2010 long-term
incentive plan for the Orion Group's key persons.
The Board of Directors is authorised to decide on conveyance of no more than
500,000 Orion Corporation B shares held by the Company. Such shares held by the
Company can be conveyed either against or without payment. Such shares held by
the Company can be conveyed by selling them in public trading on NASDAQ OMX
Helsinki; in a share issue placement to the Company's shareholders in proportion
to their holdings at the time of the conveyance regardless of whether they own A
or B shares; or in a share issue placement deviating from shareholders' pre-
emptive rights if there is a weighty financial reason, such as the development
of the capital structure of the Company, using the shares to finance possible
corporate acquisitions or other business arrangements of the Company, financing
capital expenditure or as part of the Company's incentive plan. The share issue
placement can be without payment only if there is an especially weighty
financial reason in the view of the Company and to the benefit of all its
shareholders. The amounts paid for shares in the Company conveyed shall be
recorded in a distributable equity fund. The Board of Directors shall decide on
other matters related to the conveyance of shares held by the Company.
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 Plan
Altogether 65,606 Orion Corporation B shares held by the Company were
transferred at the beginning of March 2010 as a share bonus for 2009 to key
persons employed by the Group and belonging to the Share-based Incentive Plan of
the Orion Group. The price per share of the transferred shares was EUR 16.4705,
which was the volume weighted average quotation of Orion Corporation B shares on
1 March 2010. The total transaction price of the transferred shares was
therefore EUR 1,080,564.
In February 2010 the Board of Directors of Orion Corporation decided on a new
share-based incentive plan for the Group key persons. The Plan includes earning
periods and the Board of Directors will annually decide on the beginning and
duration of the earning periods in 2010, 2011 and 2012. The Board of Directors
will decide on the earnings criteria and on targets to be established for them
at the beginning of each earning period. The target group of the Plan consists
of approximately 30 people. The total maximum amount of rewards to be paid on
the basis of the Plan is 500,000 Orion Corporation B shares and a cash payment
corresponding to the value of the shares.
Share ownership
Orion's shares are in the book-entry system maintained by Euroclear Finland Ltd
and Euroclear Finland maintains Orion's official shareholder register.
At the end of 2010, Orion had a total of 58,686 (54,323) registered
shareholders, of whom 95% (94%) were private individuals holding 52% (52%) of
the entire share stock and 65% (61%) of the total votes. There were altogether
36 (31) million nominee-registered shares, which is 26% (22%) of all shares, and
they conferred entitlement to 5% (4%) of the votes.
At the end of 2010, Orion held 516,654 B shares as treasury shares, which is
0.37% of the Company's total share stock and 0.05% of the total votes. The total
acquisition price of the treasury shares held by Orion was EUR 7,585,600.01.
Notification threshold
In accordance with Chapter 2, Section 9 of the Securities Markets Act, on 13
October 2010 Capital Research and Management Company notified that on 13 October
2010 trades in the markets decreased its total number of Orion Corporation B
shares under its management below one-twentieth (1/20) of all Orion Corporations
shares. According to the notification, Capital Research and Management Company
had under management 6,979,085 Orion Corporation B shares, which is 4.94% of
Orion's share stock and 0.66% of the total votes.
Management's shareholdings
At the end of 2010, the members of the Board of Directors owned a total of
2,327,818 Orion Corporation shares, of which 1,915,836 were A shares and
411,982 B shares. At the end of 2010, the President and CEO owned 19,050 Orion
Corporation shares, which were all B shares. The members of the Executive
Management Board (excluding the President and CEO) owned a total of 74,987 Orion
Corporation shares, of which 464 were A shares and 74,523 were B shares. Thus,
Orion's executive management held 1.72% of all shares and 3.72% of the total
votes. The figures also include the holdings of minor-aged children and
controlled entities.
The Company does not have stock option programmes.
Corporate Governance
Changes in Executive Management Board
Satu Ahomäki, M.Sc. (Econ.), became Senior Vice President, Global Sales, on 1
October 2010. She was previously Senior Vice President responsible for Orion's
Animal Health business division and member of the Executive Management Board of
the Orion Group. She will remain a member of the Executive Management Board in
her new position. On 1 October 2010 Pekka Kaivola, her predecessor as Senior
Vice President, Global Sales, left the Executive Management Board and became a
Senior Advisor until his retirement on 31 December 2010.
Riitta Vartiainen, Senior Vice President, Business Development and Support, of
the Orion Group and member of its Executive Management Board, left the Executive
Management Board at the end of 2010. She will retire in February 2011.
Corporate Governance Statement
Orion's Corporate Governance Statement for year 2010 is published on company's
website as a separate report.
Personnel
The average number of employees in the Group in 2010 was 3,137 (3,192). At the
end of 2010, the Group had a total of 3,131 (3,147) employees, of whom 2,475
(2,523) worked in Finland and 656 (624) outside Finland.
Salaries and other personnel expenses in 2010 totalled EUR 170 (171) million.
Significant legal proceedings
Legal proceedings against Sun companies ended in settlement
Orion Corporation, and Sun Pharmaceutical Industries Limited and certain other
companies belonging to the Sun Group of companies (together "Sun") agreed in
June a settlement to lawsuits filed by Orion in the United States against Sun
regarding Sun's submissions of abbreviated new drug applications ("ANDAs") for
generic versions of Orion's Comtan(®) and Stalevo(®).
Litigations against Sun by Orion have been ongoing in the United States since
2007. The settlement agreement covers all these lawsuits. Under the terms of the
settlement agreement, Sun will be able to launch generic versions of Stalevo(®)
tablets with strengths 25/100/200 mg and 37.5/150/200 mg (active ingredients
carbidopa, levodopa, entacapone) in the United States on 1 April 2012. In
addition to these strengths, Sun will be able to launch generic versions of
Stalevo tablets with other strengths on 2 October 2012 and generic versions of
Comtan on 1 April 2013 unless certain conditions relating to the launch are
fulfilled even earlier. The parties have agreed that Orion will supply the
generic versions of these products to Sun. The parties will not disclose the
terms of the settlement agreement in other respects.
As a consequence of this settlement, Wockhardt, with which Orion executed a
patent dispute settlement on 29 April 2009, can launch other generic versions of
Stalevo except the strengths 25/100/200 mg and 37.5/150/200 mg in the United
States already on 1 April 2012, and tablets with the strengths 25/100/200 mg and
37.5/150/200 mg approximately six months after Sun is allowed to market them
under the licence from Orion unless certain conditions relating to the launch
are fulfilled even earlier.
The settlement agreement ended the lawsuits and Orion's US Patents No.
5,446,194 and No. 6,500,867, which were challenged, remain in force.
In compliance with the applicable US laws, Orion has filed all of the agreements
related to the settlement with the United States Federal Trade Commission and
the United States Department of Justice.
Legal proceedings against the Sandoz companies
On 4 September 2009 Orion Corporation and Hospira, Inc. filed together a patent
infringement lawsuit in the United States against Sandoz International GmbH and
Sandoz Inc. to enforce their patents valid in the United States. Sandoz Canada
Inc. has since been added as a defendant in the lawsuit. The legal proceedings
concern Orion's US Patent No. 4,910,214 and Orion's and Hospira's commonly owned
US Patent No. 6,716,867.
Sandoz Inc. has sought authorisation to produce and market in the United States
a generic version of Orion's proprietary drug Precedex(®) (dexmedetomidine
hydrochloride 100 µg/ml), which is marketed in the United States by Orion's
licensee Hospira.
Orion expects the costs of the legal proceedings against the Sandoz companies to
be substantially less than the costs of the entacapone patent litigation that
had previously been pending in the United States.
Legal proceedings against Caraco Pharmaceutical Laboratories, Ltd.
On 12 November 2010 Orion Corporation and Hospira, Inc. jointly filed a patent
infringement lawsuit in the United States against Caraco Pharmaceutical
Laboratories, Ltd. to enforce Orion's and Hospira's joint patent No. 6,716,867
valid in the United States.
Caraco had submitted an application for authorisation to produce and market in
the United States a generic version of Orion's proprietary drug Precedex(®)
(dexmedetomidine hydrochloride 100 µg/ml), which is marketed in the United
States by Orion's licensee Hospira.
Orion expects the costs of the legal proceedings against Caraco to be
substantially less than the costs of the entacapone patent litigation that had
previously been pending in the United States.
Events after the period
On 24 January 2011 Orion Corporation filed a patent infringement lawsuit in the
United States against Mylan Pharmaceuticals Inc. to enforce its US patent No.
5,446,194.
Mylan intends to market in the United States a generic version of entacapone
tablets with strength 200 mg like Orion's Comtan(®) proprietary drug. Comtan is
used as an adjunct to levodopa/carbidopa therapy to treat patients with
idiopathic Parkinson's disease who experience the signs and symptoms of end-of-
dose "wearing-off." Novartis is Orion's exclusive licensee for marketing the
drug Comtan in the United States. Because of this lawsuit, there is no imminent
threat of generic competition for this drug.
Business Reviews
Pharmaceuticals
Review of human pharmaceuticals market
According to statistics collected by Finnish Pharmaceutical Data, Finnish
wholesale of human pharmaceuticals in 2010 totalled EUR 1,926 (1,947) million,
slightly down on the previous year.
Finland is the most important individual market for Orion, its share of total
net sales declined a little but was still about a quarter of the total net
sales. Despite a decline in the market as a whole, Orion was able to increase
sales in all areas and strengthen its position as leader in marketing
pharmaceuticals in Finland. According to statistics collected by Finnish
Pharmaceutical Data, Orion's wholesale of pharmaceuticals in Finland in 2010
amounted to EUR 192 (186) million, up by 3% compared with the previous year.
Orion's market share was 10% (10%), which was over three percentage points
higher than the second-largest company's market share.
According to IMS Health pharmaceutical sales statistics, in the 12-month period
ending in September 2010 the total sales of Parkinson's drugs in the United
States were up by 2% at USD 1,005 million (USD 981 million in the previous 12-
month period). The five largest European markets for Parkinson's disease drugs
were Germany, the United Kingdom, France, Spain and Italy. In these countries,
the combined sales of Parkinson's drugs in the 12-month period ending in
September totalled EUR 993 (894) million, and the average market growth was 11%.
The most important individual therapy area for Orion is still the treatment of
Parkinson's disease. Orion's Parkinson's drugs account for just under one-third
of the Group's net sales. Sales of Orion's Parkinson's drugs continued to grow
favourably and clearly faster than the market as a whole in the United States
and in Japan. According to IMS Health pharmaceutical sales statistics, in the
12-month period ending September 2010, total sales of Orion's Parkinson's drugs
were up by 6% at USD 181 (171) million in the United States, up by 6% at a total
of EUR 156 (147) million in the five largest markets in Europe, and up by 39% at
EUR 43 (31) million in Japan. The market share of Orion's Parkinson's drugs was
18% in the United States, on average 16% in the five largest European markets
and 10% in Japan.
According to IMS Health pharmaceutical sales statistics, sales of Precedex(®)(
)intensive care sedative (dexmedetomidine), which is becoming increasingly
important for Orion, were up by 61% at USD 142 million in the 12-month period
ending September 2010 (USD 88 million in the previous 12-month period); 86% of
the sales amounting to USD 123 (74) million were in the United States, where
Precedex(®) sales grew by 67%.
Net sales and operating profit of the Pharmaceuticals business
Net sales of the Pharmaceuticals business in 2010 were EUR 806 (729) million, up
by 11% on the previous year. The operating profit of the Pharmaceuticals
business was up by 20% at EUR 252 (211) million. The operating profit of the
Pharmaceuticals business was 31% (29%) of the segment's net sales.
Net sales of the top ten best-selling pharmaceuticals in 2010 were up by 14% at
EUR 445 (390) million. They accounted for 55% (53%) of the total net sales of
the Pharmaceuticals business. Among these best-sellers, the fastest-growing
products were the intensive care sedative Precedex(®), the heart failure drug
Simdax(® )and the animal sedatives Dexdomitor(®), Domitor(®), Domosedan(®) and
Antisedan(®).
Net sales of the products based on own in-house R&D in 2010 were up by 15% at
EUR 397 (347) million. These products accounted for about 49% (48%) of the 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 drugs, oncology and
critical care drugs, and Easyhaler(®) pulmonary drugs.
Net sales of Proprietary Products were up by 15% in 2010 at EUR 371 (324)
million.
Orion's drugs for treatment of Parkinson's disease are Stalevo(® )(active
ingredients carbidopa, levodopa, entacapone) and Comtess(®)/Comtan(®)
(entacapone), and their net sales in 2010 totalled EUR 253 (235) million. The
net sales were up by 8% and accounted for 31% (32%) of the total net sales of
the Pharmaceuticals business. Net sales from deliveries of Stalevo(®) and
Comtan(®) to Novartis totalled EUR 153 (138) million, up by 11% on the previous
year. Deliveries of Stalevo(®) to Novartis increased by 7%, and deliveries of
Comtan(®) by 18%. Total net sales generated by Stalevo(®) and Comtess(®) in
Orion's own sales organisation were up by 3% at EUR 100 (97) million. Net sales
of Stalevo(®) through Orion's own sales organisation were up by 7% at EUR 82
(77) million.
The US Food and Drug Administration (FDA) has an ongoing safety review of
Stalevo, which began in spring 2009. Orion has no information on when the FDA's
ongoing safety review will be completed.
Net sales of the intravenous drug Simdax(®) for acute decompensated heart
failure (active ingredient levosimendan) in 2010 were up by 36% at EUR 40 (29)
million. Orion repurchased the rights to Simdax from Abbott in 2009. The
transfer of the rights to the product has proceeded according to plan in Orion's
own sales network, and during 2010 Orion signed agreements with marketing
partners for Simdax in markets outside Europe, such as Turkey, Australia and
several countries in Asia, the Middle East and Africa.
Net sales of the Easyhaler(®) product family for asthma and chronic obstructive
pulmonary disease were up by 13% at EUR 28 (25) million in 2010. Orion further
strengthened its presence in European markets, and at the end of the year the
Company was itself marketing the Easyhaler product family in nine countries. The
largest markets for the product family are Germany, Turkey and Finland.
Net sales of the Precedex(®) intensive care sedative (active ingredient
dexmedetomidine) in 2010 were up by 87% at EUR 27 (15) million. In markets
outside Europe the sedative is sold by Orion's partner Hospira. Early in the
year Orion completed its research programme developing dexmedetomidine for
European markets and the European Medicines Agency began reviewing the
dexmedetomidine marketing authorisation application in October. The centralised
procedure for marketing authorisation applications generally takes more than a
year.
Marketing authorisation in Europe has been received for Vantas(®) (histrelin
implant) for treatment of advanced prostate cancer. Price negotiations and
reimbursement applications are in progress in several countries and the product
has been launched in five countries.
Specialty Products
Net sales of the Specialty Products business division's off-patent, i.e.
generic, prescription drugs and self-care products were up by 9% in 2010 at EUR
299 (275) million. Net sales of the business division in markets outside Finland
were up by 22% on the corresponding period. The significant increase in net
sales is the result of long-term work to develop the competitiveness of the
product portfolio and launches of new products in the markets. Orion launched
144 (74) generic prescription drugs and self-care products in 2010. Nearly half
of the launches were in Eastern European markets.
Net sales of Orion's human pharmaceuticals in Finland in 2010 were up by 3% at
EUR 210 (204) million. Specialty Products accounted for the majority of sales in
Finland. Orion has further strengthened its position as market leader owing
above all to its competitive self-care product portfolio and its broad product
portfolio, particularly in substitutable prescription drugs. The implementation
of the reference price system in Finland in April 2009 and intense price
competition due to it continued to reduce the market as a whole, but also
expanded the range of substitutable prescription drugs. Orion's operations in
Finland expanded into a new field when the Company acquired a stake in
Pharmaservice Oy, which provides dispensing support services for pharmacies.
Net sales of Orion's human pharmaceuticals in Eastern Europe in 2010 were up by
28% at EUR 50 (39) million. Specialty Products accounted for the majority of
sales in the region. The growth has been clearly stronger than the market as a
whole in many countries due to the good performance of individual products.
Orion continued to develop its self-care product portfolio in Scandinavia, which
the Company aims to make its domestic market. Growth in net sales in Scandinavia
was strong in 2010 due to new product launches. The markets in Sweden are being
transformed by the abolition of the national pharmacy monopoly. Orion has been
able to strengthen its market position despite the clearly intensified price
competition due to the change in the distribution channels.
Animal Health
Net sales of the Animal Health business division were up by 9% in 2010 at EUR
68 (62) million. Net sales of the animal sedatives Dexdomitor(®)
(dexmedetomidine), Domitor(®) (medetomidine), Domosedan(®) (detomidine) and
Antisedan(®) (atipamezole) were up by 25% and accounted for 36% (31%) of the
division's net sales. Growth in sales were supported by higher than anticipated
sales by marketing partners and launching of Domosedan gel in Europe and the
United States, where Pfizer is Orion's marketing partner.
Orion's share of the Finnish market for veterinary drugs in 2010 was 20% (20%),
which was the second-biggest share and almost the same as the market leader's.
The Finnish market for veterinary drugs as whole was up by 8% at about EUR 49
million in 2010. Orion was one of the three largest marketers of veterinary
drugs in the Nordic countries in 2010.
On 1 October 2010 Niclas Lindstedt became Senior Vice President, Animal Health.
He reports to CFO Jari Karlson.
Fermion
Fermion manufactures active pharmaceutical ingredients for Orion and other
pharmaceutical companies. Its product range comprises nearly 30 pharmaceutical
ingredients. Fermion's net sales in 2010 excluding pharmaceutical ingredients
supplied for Orion's own use were up by 9% at EUR 45 (41) million and accounted
for about two-thirds of Fermion's entire net sales. Several key products
performed well, even though competition in the markets remained intense. In
addition, measures to enhance competitiveness and high capacity utilisation of
plants sustained profitability at a good level.
Research and development
The Group's R&D expenses totalled EUR 86 (95) million in 2010, of which the
Pharmaceuticals business accounted for EUR 80 (89) million. The Group's R&D
expenses accounted for 10% (12%) of the Group's net sales. R&D expenses also
include expenses relating to development of the current portfolio.
Orion has submitted an application for marketing authorisation for
dexmedetomidine to the European Medicines Agency, which began processing it in
October. The centralised procedure for marketing authorisation applications
generally takes more than a year. The initial results of studies with the
sedative dexmedetomidine show that it is as effective as the standard
comparative products midazolam and propofol. The second primary endpoint, time
to the end of mechanical ventilation of the patients was statistically
significantly reduced by dexmedetomidine compared to midazolam.
Orion has an ongoing project to broaden the range of the Easyhaler(®) product
family. Orion is developing a new budesonide-formoterol formulation that
combines budesonide as an anti-inflammatory agent and formoterol as a long-
acting bronchodilator. The results of research with the objective of a marketing
authorisation application are expected during 2011. In addition, Orion has
another Easyhaler(®) research programme in progress to develop a fluticasone-
salmeterol formulation. In this formulation fluticasone acts as an anti-
inflammatory agent and salmeterol acts as a long-acting bronchodilator.
Orion is collaborating with Novartis to develop Stalevo(®) for the Japanese
market. Novartis intends to submit a marketing authorisation application during
2011.
Orion has concluded the alpha 2(c) receptor antagonist Phase I clinical trials
and progressed to Phase II. In early research, this compound has been found to
be possibly suitable for the treatment of Alzheimer's disease and Raynaud's
phenomenon.
Development of an androgen receptor antagonist for the treatment of advanced
prostate cancer has moved to clinical trials in the first quarter of the current
year in Europe in co-operation with Endo Pharmaceuticals Inc.
Orion has in clinical development a new more effective levodopa product
including optimized doses and formulations of existing active ingredients.
In addition, Orion has several projects in the early research phase
investigating prostate cancer, neuropathic pain, Parkinson's disease and
Alzheimer's disease, among others.
During 2010 the US pharmaceutical company GTx announced the discontinuance of
its studies on the use of 20 mg doses of toremifene to prevent prostate cancer
in men. GTx also has ongoing new clinical Phase III trials on the use of 80 mg
doses of toremifene for treating the adverse effects of prostate cancer
treatment. Orion originally developed toremifene for treatment of breast cancer.
Diagnostics
Net sales of the Diagnostics business in 2010 were EUR 46 (45) million. Sales in
the Nordic countries were similar to 2009, but sales to China and the Czech
Republic were higher than in the previous year.
QuikRead(®) tests remained the main products, with reagent and equipment sales
continuing to grow. The tests are used in, for example, detecting infection from
the CRP level in a blood sample. The tests can also detect streptococcus A, the
causative agent of bacterial tonsillitis, in a pharyngeal sample. The increase
in QuikRead(®) equipment in doctors' surgeries and clinical laboratories creates
a solid basis for future demand for reagents.
As regards dip slide tests, sales of hygiene tests for industry increased,
partly because industrial capacity utilisation rates recovered.
Operating profit was EUR 6.1 (5.6) million, up by 11% despite increasing
investment in the business division's product development and sales. The
increase in operating profit was mainly due to higher sales of products with
better gross margin.
In April Orion Diagnostica received the Innovation Award of Chemical Industry
Finland for Orion Clean Card PRO(® )for testing surface cleanliness jointly
developed by Orion Diagnostica and VTT (Technical Research Centre of Finland).
The test can be utilised by, for example, the food and drinks industry and
hospitals, as hygiene requirements become more stringent.
New products launched in the markets by Orion Diagnostica during 2010 include a
new more user-friendly QuikRead CRP test and QuikRead go(®), an easy-to-use, new
generation testing instrument in the QuikRead(®) product range.
Espoo, 9 February 2011
Board of Directors of Orion Corporation
Orion Corporation
Timo Lappalainen Jari Karlson
President and CEO CFO
Tables
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million Q4/10 Q4/09 Change % 2010 2009 Change %
--------------------------------------------------------------------------------
Net sales 214.9 193.3 +11.2% 849.9 771.5 +10.2%
Cost of goods sold -73.7 -69.0 +6.8% -283.2 -265.2 +6.8%
--------------------------------------------------------------------------------
Gross profit 141.2 124.3 +13.6% 566.8 506.3 +11.9%
--------------------------------------------------------------------------------
Other operating income and expenses 4.0 3.8 +6.4% 1.2 6.0 -80.7%
Selling and marketing expenses -55.0 -46.5 +18.2% -188.9 -160.0 +18.1%
R&D expenses -26.6 -25.6 +3.9% -85.5 -95.2 -10.2%
Administrative expenses -11.0 -12.0 -8.2% -39.3 -50.2 -21.7%
--------------------------------------------
Operating profit 52.6 43.9 +19.8% 254.2 207.0 +22.8%
--------------------------------------------------------------------------------
Finance income 0.9 0.8 +6.3% 4.2 5.1 -16.9%
Finance expenses -1.1 -1.6 -30.9% -5.9 -8.4 -29.9%
--------------------------------------------------------------------------------
Profit before taxes 52.4 43.1 +21.4% 252.6 203.7 +24.0%
--------------------------------------------------------------------------------
Income tax expense -15.7 -10.1 +55.6% -67.9 -52.3 +29.9%
--------------------------------------------------------------------------------
Profit for the period 36.7 33.0 +11.0% 184.7 151.4 +22.0%
--------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME INCLUDING TAX EFFECTS
--------------------------------------------------------------------------------
Translation differences 0.2 0.3 -54.4% 1.3 1.3 +6.3%
Cash flow hedges 1.2 0.8 +53.7% 1.6 0.9 +81.8%
Other comprehensive income net of
tax 1.4 1.1 +21.9% 2.9 2.1 +37.1%
--------------------------------------------------------------------------------
Comprehensive income for the period
including tax effects 38.0 34.2 +11.3% 187.6 153.5 +22.2%
--------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE TO
--------------------------------------------------------------------------------
Owners of the parent company 36.7 33.0 +11.0% 184.7 151.4 +22.0%
Non-controlling interests 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
COMPREHENSIVE INCOME ATTRIBUTABLE TO
--------------------------------------------------------------------------------
Owners of the parent company 38.0 34.2 +11.3% 187.6 153.5 +22.2%
Non-controlling interests 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Basic earnings per share, EUR (1)) 0.26 0.23 +11.2% 1.31 1.07 +22.0%
Diluted earnings per share, EUR (1)) 0.26 0.23 +11.2% 1.31 1.07 +22.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Depreciation, amortisation and
impairment 9.7 9.2 +5.5% 38.9 34.4 +12.9%
Personnel expenses 47.0 47.5 -1.2% 170.3 171.4 -0.7%
--------------------------------------------------------------------------------
(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 2010 2009 Change %
------------------------------------------------------------------------
Property, plant and equipment 187.1 192.0 -2.6%
Goodwill 13.5 13.5
Intangible rights 65.3 63.4 +3.0%
Other intangible assets 4.2 3.7 +13.4%
Investments in associates 1.3 0.1
Available-for-sale investments 1.0 1.0 -0.2%
Pension asset 31.6 29.8 +6.3%
Deferred tax assets 2.9 5.5 -47.6%
Other non-current assets 2.4 0.9 +162.2%
------------------------------------------------------------------------
Non-current assets total 309.3 309.9 -0.2%
------------------------------------------------------------------------
------------------------------------------------------------------------
Inventories 131.1 122.7 +6.8%
Trade receivables 118.3 102.6 +15.3%
Other receivables 20.0 21.4 -6.6%
Money market investments 77.7
Cash and cash equivalents 89.5 170.5 -47.5%
------------------------------------------------------------------------
Current assets total 436.5 417.2 +4.6%
------------------------------------------------------------------------
------------------------------------------------------------------------
Assets total 745.8 727.1 +2.6%
------------------------------------------------------------------------
EQUITY AND LIABILITIES
EUR million 2010 2009 Change %
------------------------------------------------------------------------
Share capital 92.2 92.2
Share premium 17.8 17.8
Expendable fund 8.9 23.0 -61.2%
Other reserves 1.6 0.0
Retained earnings 346.8 306.0 +13.3%
------------------------------------------------------------------------
Equity attributable to owners of the parent company 467.4 439.1 +6.4%
Non-controlling interests 0.0 0.0 +6.5%
------------------------------------------------------------------------
Equity total 467.4 439.1 +6.4%
------------------------------------------------------------------------
------------------------------------------------------------------------
Deferred tax liabilities 44.8 43.0 +4.2%
Pension liability 0.7 0.8 -7.8%
Provisions 0.4 0.5 -8.7%
Interest-bearing non-current liabilities 87.5 108.7 -19.5%
Other non-current liabilities 0.1 0.1 -6.2%
------------------------------------------------------------------------
Non-current liabilities total 133.6 153.1 -12.8%
------------------------------------------------------------------------
------------------------------------------------------------------------
Trade payables 49.0 42.3 +15.7%
Income tax liabilities 12.7 3.0 +328.3%
Other current liabilities 60.6 66.8 -9.2%
Provisions 0.0
Interest-bearing current liabilities 22.5 22.7 -0.9%
------------------------------------------------------------------------
Current liabilities total 144.8 134.8 +7.4%
------------------------------------------------------------------------
------------------------------------------------------------------------
Liabilities total 278.4 287.9 -3.3%
------------------------------------------------------------------------
------------------------------------------------------------------------
Equity and liabilities total 745.8 727.1 +2.6%
------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
a. Share capital
b. Share premium
c. Expendable fund
d. Other reserves
e. Translation differences
f. Retained earnings
g. 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
2009 92.2 17.8 23.0 -0.9 -6.9 293.3 0.0 418.6
--------------------------------------------------------------------------------
Profit for the period 151.4 -0.0 151.4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other comprehensive
income:
--------------------------------------------------------------------------------
Cash flow hedges 0.9 0.9
Translation
differences 1.3 1.3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Transactions with owners and non-controlling interests:
--------------------------------------------------------------------------------
Dividend -133.9 -133.9
Share-based incentive
plan 0.9 0.9
Other changes 0.0 0.1 0.1
Equity at 31 December
2009 92.2 17.8 23.0 0.0 -5.7 311.7 0.0 439.1
--------------------------------------------------------------------------------
Profit for the period 184.7 0.0 184.7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other comprehensive
income:
--------------------------------------------------------------------------------
Cash flow hedges 1.6 1.6
Translation
differences 1.3 1.3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Transactions with owners and non-controlling
interests:
--------------------------------------------------------------------------------
Dividend -14.1 -141.0 -155.1
Treasury shares -4.6 -4.6
Share-based incentive
plan 0.5 0.5
Other changes -0.0 -0.1 -0.1
Equity at 31 December
2010 92.2 17.8 8.9 1.6 -4.4 351.2 0.0 467.4
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR million 2010 2009
--------------------------------------------------------------------------------
Operating profit 254.2 207.0
Adjustments 33.7 37.7
Change in working capital -27.6 15.3
Interest paid -5.7 -9.7
Interest received 4.3 4.9
Income taxes paid -49.9 -50.6
--------------------------------------------------------------------------------
Total net cash flow from operating activities 209.1 204.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Investments in property, plant and equipment -22.1 -24.6
Investments in intangible assets -13.3 -36.1
Acquisition of an associate -1.3
Sale of a subsidiary less cash and cash equivalents at sale date 4.5
Sales of property, plant and equipment
and available-for-sale investments 1.2 0.8
Sales of intangible assets 0.2 0.5
--------------------------------------------------------------------------------
Total net cash flow from investing activities -30.8 -59.5
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Short-term loans raised 0.6 0.7
Repayments of short-term loans -2.0 -19.8
Long-term loans raised 22.8
Repayments of long-term loans -21.0 -21.3
Repurchase of own shares -4.6
Dividends paid and other distribution of profits -155.3 -134.4
--------------------------------------------------------------------------------
Total net cash flow from financing activities -182.2 -152.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net change in cash, cash equivalents and money market investments -4.0 -7.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash, cash equivalents and money market investments at the
beginning of the period 170.5 176.1
Foreign exchange differences 0.7 1.4
Net change in cash, cash equivalents and money market investments -4.0 -7.0
Cash, cash equivalents and money market investments at the end of
the period 167.2 170.5
--------------------------------------------------------------------------------
Reconciliation of cash and cash equivalents in Statement of
Financial Position
--------------------------------------------------------------------------------
Cash and cash equivalents at 31 December in Statement of Financial
Position 89.5 170.5
Money market investments at 31 December 77.7
--------------------------------------------------------------------------------
Cash and cash equivalents in Statement of Cash Flows 167.2 170.5
--------------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 2010 2009
----------------------------------------------------------
Carrying amount at the beginning of the period 192.0 192.4
Adjustments to previous period carrying amount 2.4
Additions 23.3 25.1
Sale of real estate limited company -0.5
Other disposals -1.1 -1.7
Depreciation -26.6 -26.1
----------------------------------------------------------
Carrying amount at the end of the period 187.1 192.0
----------------------------------------------------------
CHANGES IN INTANGIBLE ASSETS (EXCLUDING GOODWILL)
EUR million 2010 2009
---------------------------------------------------------
Carrying amount at the beginning of the period 67.0 40.4
Additions 14.6 35.2
Disposals -0.0 -0.3
Depreciation and impairments -12.3 -8.3
---------------------------------------------------------
Carrying amount at the end of the period 69.5 67.0
---------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
EUR million 2010 2009
-----------------------------------------------------------------
CONTINGENCIES FOR OWN LIABILITIES
-----------------------------------------------------------------
Mortgages on land and buildings 41.0 41.0
of which those to Orion Pension Fund 9.0 9.0
Guarantees 1.3 1.1
-----------------------------------------------------------------
OTHER LIABILITIES
-----------------------------------------------------------------
Leasing liabilities (excluding finance lease contracts) 4.1 4.3
Other liabilities 0.3 0.3
-----------------------------------------------------------------
DERIVATIVES
EUR million 2010 2009
----------------------------------------------
FORWARD EXCHANGE CONTRACTS AND CURRENCY SWAPS
Fair value, EUR million -0.8 -0.3
Nominal value, EUR million 56.1 86.4
----------------------------------------------
CURRENCY OPTIONS
----------------------------------------------
Fair value, EUR million -0.0
Nominal value, EUR million 33.4
----------------------------------------------
ELECTRICITY FORWARD CONTRACTS
----------------------------------------------
Fair value, EUR million 1.9 -0.2
Nominal value, GWh 171 160
----------------------------------------------
RELATED PARTY TRANSACTIONS
EUR million 2010 2009
------------------------------------------
Management's employment benefits 4.4 3.5
------------------------------------------
Operating segment performance
NET SALES BY BUSINESS AREA
EUR million Q4/10 Q4/09 Change % 2010 2009 Change %
--------------------------------------------------------------------------------
Pharmaceuticals 203.7 181.9 +12.0% 806.2 728.5 +10.7%
Proprietary Products 89.9 77.3 +16.3% 370.9 324.0 +14.5%
Specialty Products 77.1 73.0 +5.7% 298.6 274.8 +8.7%
Animal Health 18.5 16.1 +14.7% 67.5 62.1 +8.8%
Fermion 10.8 9.0 +19.3% 44.9 41.4 +8.5%
Contract manufacturing and
others 7.5 6.6 +14.7% 24.4 26.2 -7.0%
Diagnostics 11.8 12.0 -2.0% 46.1 45.2 +2.0%
Group items -0.6 -0.6 -5.2% -2.4 -2.2 +9.2%
--------------------------------------------------------------------------------
Group total 214.9 193.3 +11.2% 849.9 771.5 +10.2%
--------------------------------------------------------------------------------
OPERATING PROFIT BY BUSINESS AREA
EUR million Q4/10 Q4/09 Change % 2010 2009 Change %
---------------------------------------------------------
Pharmaceuticals 49.9 45.5 +9.6% 252.2 210.6 +19.8%
Diagnostics 1.0 1.2 -18.0% 6.1 5.6 +10.5%
Group items 1.7 -2.8 +161.2% -4.1 -9.2 -55.2%
---------------------------------------------------------
Group total 52.6 43.9 +19.8% 254.2 207.0 +22.8%
---------------------------------------------------------
NET SALES BY ANNUAL QUARTERS
2010 2009
+-----------------------+-----------------------+
EUR million | Q4 Q3 Q2 Q1| Q4 Q3 Q2 Q1|
---------------+-----------------------+-----------------------+
Pharmaceuticals|203.7 203.2 196.0 203.3|181.9 181.8 185.9 178.9|
| | |
Diagnostics | 11.8 10.5 12.1 11.7| 12.0 10.5 11.0 11.7|
| | |
Group items | -0.6 -0.5 -0.7 -0.6| -0.6 -0.5 -0.5 -0.5|
---------------+-----------------------+-----------------------+
Group total |214.9 213.2 207.4 214.5|193.3 191.8 196.4 190.1|
---------------+-----------------------+-----------------------+
OPERATING PROFIT BY ANNUAL QUARTERS
2010 2009
+-------------------+-------------------+
EUR million | Q4 Q3 Q4 Q3| Q4 Q3 Q4 Q3|
---------------+-------------------+-------------------+
Pharmaceuticals|49.9 71.5 60.4 70.5|45.5 56.6 51.6 56.9|
| | |
Diagnostics | 1.0 1.0 1.9 2.2| 1.2 1.0 1.1 2.2|
| | |
Group items | 1.7 -1.8 -2.3 -1.7|-2.8 -1.9 -2.3 -2.2|
---------------+-------------------+-------------------+
Group total |52.6 70.6 60.0 71.0|43.9 55.7 50.4 56.9|
---------------+-------------------+-------------------+
GEOGRAPHICAL BREAKDOWN OF NET SALES BY ANNUAL QUARTERS
2010 2009
+-----------------------+-----------------------+
EUR million | Q4 Q3 Q2 Q1| Q4 Q3 Q2 Q1|
-------------+-----------------------+-----------------------+
Finland | 61.0 57.6 53.7 56.9| 59.2 55.6 55.0 53.5|
| | |
Scandinavia | 28.6 28.4 28.1 29.0| 25.9 24.5 25.8 25.4|
| | |
Other Europe | 77.4 70.0 72.7 72.1| 72.8 68.9 71.8 61.2|
| | |
North America| 22.1 31.1 26.3 30.3| 12.1 18.1 18.2 22.6|
| | |
Other markets| 25.8 26.0 26.7 26.1| 23.4 24.7 25.6 27.4|
-------------+-----------------------+-----------------------+
Group total |214.9 213.2 207.4 214.5|193.3 191.8 196.4 190.1|
-------------+-----------------------+-----------------------+
Business reviews
KEY FIGURES FOR PHARMACEUTICALS BUSINESS
EUR million Q4/10 Q4/09 Change % 2010 2009 Change %
--------------------------------------------------------------------------------
Net sales 203.7 181.9 +12.0% 806.2 728.5 +10.7%
Operating profit 49.9 45.5 +9.6% 252.2 210.6 +19.8%
% of net sales 24.5% 25.0% 31.3% 28.9%
R&D expenses 25.0 24.0 +4.0% 79.5 89.4 -11.1%
% of net sales 12.3% 13.2% 9.9% 12.3%
Capital expenditure 10.3 8.4 +22.0% 36.2 57.6 -37.2%
% of net sales 5.0% 4.6% 4.5% 7.9%
Sales revenue from proprietary
products 97.6 83.3 +17.1% 397.1 346.5 +14.6%
Personnel at the end of the period 2,803 2,829 -0.9%
--------------------------------------------------------------------------------
NET SALES OF ORION'S TOP 10 PHARMACEUTICAL PRODUCTS
EUR million Q4/10 Q4/09 Change % 2010 2009 Change %
--------------------------------------------------------------------------------
Stalevo®, Comtess® and Comtan®
(Parkinson's disease) 59.4 52.7 +12.6% 252.7 234.9 +7.6%
Simdax® (acute decompensated heart
failure) 10.0 9.1 +10.4% 39.9 29.4 +35.5%
Easyhaler® product family (asthma,
COPD) 7.3 6.4 +13.6% 28.1 24.9 +12.8%
Precedex® (intensive care sedative) 7.2 4.5 +62.2% 27.2 14.6 +86.7%
Dexdomitor®, Domitor®, Domosedan® and
Antisedan® (animal sedatives) 8.0 5.8 +36.9% 24.2 19.3 +25.0%
Burana® (inflammatory pain) 5.7 5.7 +0.1% 21.5 19.9 +8.2%
Divina® range (menopausal symptoms) 3.4 3.1 +11.6% 13.3 13.2 +1.0%
Marevan® (anticoagulant) 3.4 3.1 +9.5% 13.1 11.2 +16.7%
Enanton® (prostate cancer) 3.4 3.0 +12.7% 13.0 11.9 +9.1%
Fareston® (breast cancer) 2.2 1.7 +26.3% 11.7 10.2 +14.6%
--------------------------------------------------------------------------------
Total 110.1 95.1 +15.7% 444.6 389.5 +14.1%
--------------------------------------------------------------------------------
Share of pharmaceutical net sales 54% 52% 55% 53%
--------------------------------------------------------------------------------
KEY FIGURES FOR DIAGNOSTICS BUSINESS
EUR million Q4/10 Q4/09 Change % 2010 2009 Change %
----------------------------------------------------------------------------
Net sales 11.8 12.0 -2.0% 46.1 45.2 +2.0%
Operating profit 1.0 1.2 -18.0% 6.1 5.6 +10.5%
% of net sales 8.6% 10.3% 13.3% 12.3%
R&D expenses 1.6 1.6 +1.3% 6.0 5.9 +2.9%
% of net sales 13.5% 13.0% 13.1% 13.0%
Capital expenditure 0.7 0.6 +8.8% 2.5 2.5 -0.2%
% of net sales 5.9% 5.3% 5.5% 5.6%
Personnel at the end of the period 301 291 +3.3%
----------------------------------------------------------------------------
Information on Orion's shares
Basic SHARE information
31 December 2010 A shares B shares Total
--------------------------------------------------------------------------------
Trading code on NASDAQ OMX Helsinki ORNAV ORNBV
Listing day 1 Jul 2006 1 Jul 2006
ISIN code FI0009014369 FI0009014377
GICS code 30101030 30101030
Reuters code ORNAV.HE ORNBV.HE
Bloomberg code ORNAV.FH ORNBV.FH
--------------------------------------------------------------------------------
Share capital, EUR million 31.0 61.2 92.2
Counter book value per share, EUR 0.65 0.65
--------------------------------------------------------------------------------
Total number of shares 47,563,565 93,694,263 141,257,828
% of total share stock 34% 66% 100%
Number of treasury shares 516,654 516,654
Total number of shares excluding
treasury shares 47,563,565 93,177,609 140,741,174
--------------------------------------------------------------------------------
Minimum number of shares 1
Maximum number of shares 500,000,000 1,000,000,000 1,000,000,000
--------------------------------------------------------------------------------
Votes per share 20 1
Number of votes excluding treasury
shares 951,271,300 93,177,609 1,044,448,909
% of total votes 91% 9% 100%
--------------------------------------------------------------------------------
Total number of shareholders 19,162 46,143 58,686
--------------------------------------------------------------------------------
A shares and B shares confer equal rights to the Company assets and dividends.
INFORMATION ON TRADING
1 January - 31 December 2010 A shares B shares Total
-------------------------------------------------------------------------------
Shares traded 7,779,934 93,247,272 101,027,206
% of the total number of shares 15.8% 101.2% 71.5%
Trading volume, EUR million 117.7 1,407.7 1,525.5
-------------------------------------------------------------------------------
Closing quotation on 31 Dec 2009, EUR 15.06 15.05
Lowest quotation, EUR (A/B 6/7 May 2010) 12.21 13.20
Average quotation, EUR 15.13 15.10
Highest quotation, EUR (A and B 23 March 2010) 17.82 17.88
Closing quotation on 31 Dec 2010, EUR 16.40 16.37
Market capitalisation on 31 Dec 2010
excluding treasury shares, EUR million 780.0 1,525.3 2,305.4
-------------------------------------------------------------------------------
PERFORMANCE PER SHARE
Q4/10 Q4/09 Change % 2010 2009 Change %
--------------------------------------------------------------------------------
Basic earnings per share, EUR 0.26 0.23 +11.2% 1.31 1.07 +22.0%
Diluted earnings per share,
EUR 0.26 0.23 +11.2% 1.31 1.07 +22.0%
Cash flow per share before
financial items, EUR 0.45 0.34 +31.3% 1.26 1.03 +22.8%
Equity per share, EUR 3.32 3.11 +6.6%
Proposed dividend per share,
EUR (1)) 1.20 1.00 +20.0%
Proposed payout ratio, % 91.6% 93.5%
Total proposed dividend, EUR
million 168.9 141.0 +19.8%
Effective dividend yield
according to proposal, %
A share 7.3% 6.6%
B share 7.3% 6.6%
Price/earnings ratio (P/E)
A share 12.52 14.07
B share 12.50 14.07
Average number of shares
excluding treasury shares,
1,000 shares 140,741 140,978 140,917 140,970
--------------------------------------------------------------------------------
(1) )In addition, the Board of Directors proposes to the Annual General Meeting
that EUR 0.06 (0.10) per share be distributed from the expendable fund in the
distributable equity as a repayment of capital.
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
o Proprietary Products (patented prescription products for three therapy
areas)
o Specialty Products (off-patent, generic prescription products and self-care
products)
o Animal Health (veterinary products for pets and production animals)
o Fermion (active pharmaceutical ingredients for Orion and other companies)
· Diagnostics business
o 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
The Consolidated Financial Statements of the Orion Group have been prepared in
accordance with International Financial Reporting Standards (IFRS) approved by
the EU, applying IAS and IFRS standards as well as SIC and IFRIC interpretations
effective as of 1 January 2010.
For the financial year, the Group has adopted the following relevant standards,
interpretations and amendments that became effective in 2010:
IFRS 3 (Revised) Business Combinations
The revised standard continues to apply the acquisition method to business
combinations, with some significant changes. For instance, all payments for
acquisitions shall be recognised at fair value at the time of acquisition, and
liabilities that are classified as conditional payments shall be recognised
later at fair value through profit or loss. For each acquisition, the share of
the non-controlling interests can be measured either as their proportionate
interest in the net identifiable assets of the acquisition or at fair value. All
acquisition-related costs are recognised as expenses. The revised standard
affects business combinations that take place after 1 January 2010.
The following new standards, interpretations and amendments to existing
standards approved by the EU have been adopted as of 1 January 2010. However,
they do not have material effects on the Consolidated Financial Statements:
IAS 27 (Revised), Consolidated and Separate Financial Statements
IFRIC 12, Service Concession Arrangements
IFRIC 15, Agreements for Construction of Real Estate
IFRIC 16, Hedges of a Net Investment in a Foreign Operation
IFRIC 17, Distributions of Non-cash Assets to Owners
IFRIC 18, Transfers of Assets from Customers
IFRIC 9 and IAS 39 (Amendment), Reassessment of Embedded Derivatives on
Reclassification
IAS 39 (Amendment), Eligible Hedged Items
IFRS 2 (Amendment), Share-based Payment - Cash-settled Share-based Payment
Transactions
IASB published changes to 12 standards in April 2009 as part of the annual
improvements to standards. The key changes that the Group has adopted as of 1
January 2010 are presented below, but they will not affect the Consolidated
Financial Statements.
IFRS 2 (Amendment), IFRS - scope
IFRS 5 (Amendment), Non-current Assets Held for Sale and Discontinued Operations
The amendment clarifies the disclosure of information relating to assets held
for sale required by IFRS 5.
IFRS 8 (Amendment), Operating Segments
IAS 1 (Amendment), Presentation of Financial Statements
IAS 7 (Amendment), Statement of Cash Flows
IAS 17 (Amendment), Leases
IAS 18 (Amendment), Revenue
IAS 36 (Amendment), Impairment of Assets
IAS 38 (Amendments), Intangible Assets
IAS 39 (Amendments), Financial Instruments: Recognition and Measurement
IFRIC 9 (Amendment), Reassessment of Embedded Derivatives
IFRIC 16 (Amendment), Hedges of a Net Investment in a Foreign Operation
The policies and calculation methods applied during the period can be found on
the Orion website at www.orion.fi/en/investors.
Other matters
The data in this financial review are audited.
The figures in parentheses are for the comparative 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
Return on capital employed finance expenses
(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 - Money market
Gearing, % = 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
Cash flow per share before flow from investing activities
financial 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 shares
Dividend to be distributed for the period
Dividend per share, EUR =--------------------------------------------
Number of shares a he end of the period,
excluding treasury shares
Dividend per share
Payout ratio, % =--------------------------------------------x 100
Earnin s per share
Dividend per share
Effective dividend yield, % =--------------------------------------------x 100
Closing quota i n of the period
Closing quotation of the period
Price/earnings ratio (P/E) =--------------------------------------------
Earnin s per share
Total EUR value of shares traded
Average share price, EUR =--------------------------------------------
Average number of traded shares during the
period
Number of shares
Market capitalisation, EUR = at the end of the x Closing quotation of
million period the period
Publisher:
Orion Corporation
www.orion.fi/en/
Orion is an innovative European R&D-based pharmaceutical and diagnostic company
with a special emphasis on developing medicinal treatments and diagnostic tests
for global markets. Orion develops, manufactures and markets human and
veterinary pharmaceuticals, active pharmaceutical ingredients and diagnostic
tests. Orion's pharmaceutical R&D focuses on the following core therapy areas:
central nervous system drugs, oncology and critical care drugs, and Easyhaler(®)
pulmonary drugs.
The Group's net sales in 2010 amounted to EUR 850 million. The Company invested
EUR 86 million in research and development. At the end of 2010, the Group had
about 3,100 employees, of whom 2,500 worked in Finland and the rest in other
European countries. Orion's A and B shares are listed on NASDAQ OMX Helsinki.
[HUG#1484986]
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