2010-10-26 10:59:30 CEST
2010-10-26 11:00:00 CEST
REGULATED INFORMATION
Orion - Interim report (Q1 and Q3)
Orion Group Interim Report January-September 2010
ORION CORPORATION / INTERIM REPORT / JANUARY-SEPTEMBER 2010 / 26 October 2010 at
12:00 EEST
Orion's net sales for January-September 2010 totalled EUR 635 million (EUR 578
million for January-September 2009), up by 10% on the comparative period last
year.
* Operating profit was EUR 202 (163) million.
* Profit before taxes was EUR 200 (161) million.
* Equity ratio was 62% (58%).
* ROCE before taxes was 49% (40%).
* ROE after taxes was 46% (38%).
* Diluted earnings per share were EUR 1.05 (0.84).
* Cash flow per share before financial items was EUR 0.82 (0.69).
* Outlook estimate is raised. Operating profit excluding non-recurring items
is now expected to be clearly higher than in 2009. Previously, operating
profit excluding non-recurring items was expected to be higher than in
2009.
ORION'S KEY FIGURES FOR THE REVIEW PERIOD
Q3/10 Q3/09 Change % Q1-Q3/10 Q1-Q3/09 Change % 2009
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Net sales, EUR million 213.2 191.8 +11.1% 635.0 578.2 +9.8% 771.5
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International operations,
EUR million 155.5 136.2 +14.2% 466.8 414.1 +12.7% 548.2
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% of net sales 73.0% 71.0% 73.5% 71.6% 71.1%
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Operating profit, EUR
million 70.6 55.7 +26.7% 201.6 163.1 +23.7% 207.0
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% of net sales 33.1% 29.0% 31.8% 28.2% 26.8%
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Profit before taxes, EUR
million 70.0 54.9 +27.4% 200.2 160.6 +24.7% 203.7
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% of net sales 32.8% 28.6% 31.5% 27.8% 26.4%
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Income tax expense, EUR
million 18.4 14.6 +25.7% 52.2 42.2 +23.8% 52.3
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R&D expenses, EUR million 19.5 20.5 -4.8% 58.9 69.6 -15.3% 95.2
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% of net sales 9.1% 10.7% 9.3% 12.0% 12.3%
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Capital expenditure, EUR
million 10.2 11.2 -9.0% 27.9 51.2 -45.5% 60.4
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% of net sales 4.8% 5.8% 4.4% 8.9% 7.8%
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Assets total, EUR million 693.8 701.6 -1.1% 727.1
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Equity ratio, % 61.9% 57.6% 60.6%
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Gearing, % 1.4% 1.6% -8.9%
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Interest-bearing
liabilities, EUR million 121.3 158.2 -23.3% 131.5
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Non-interest-bearing
liabilities, EUR million 143.3 139.1 +3.0% 156.5
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Cash and cash equivalents,
EUR million 115.4 151.5 -23.9% 170.5
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ROCE (before taxes), % 48.8% 39.6% 37.4%
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ROE (after taxes), % 45.5% 38.4% 35.3%
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Basic earnings per share,
EUR 0.37 0.29 +28.1% 1.05 0.84 +25.0% 1.07
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Diluted earnings per
share, EUR 0.37 0.29 +28.1% 1.05 0.84 +25.0% 1.07
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Cash flow per share before
financial items, EUR 0.34 0.33 +1.3% 0.82 0.69 +18.6% 1.03
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Equity per share, EUR 3.05 2.87 +6.3% 3.11
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Personnel at the end of
the period 3,124 3,125 3,147
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Average personnel during
the period 3,141 3,210 -2.2% 3,192
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Personnel expenses, EUR
million 123.3 123.9 -0.5% 171.4
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President and CEO Timo Lappalainen's review"Continued strong growth""Growth in our net sales and operating profit remained solid in the third
quarter of the year."After a difficult first half year, the Finnish pharmaceutical market picked up
slightly in August and September, but over the whole year, the market was still
down on the previous year. However, Orion's sales in Finland grew clearly faster
than the market as a whole, and our market position further improved."Sales of our Parkinson's drugs continued to grow steadily, but slightly more
slowly than in previous years. Sales of other products in our portfolio again
developed well, especially in Scandinavia and Eastern Europe, where we have
launched many products this year. During the year, the intensive care sedative
Precedex has also become one of our most important products."As anticipated, our operations established in Southern Europe in the second
half of last year increased our sales and marketing expenses. Higher volumes in
the business operations also led to higher distribution costs. Research and
development expenses were lower than in the previous year, mainly due to the
timing of our research programmes. The focus of research is currently on many
early-phase projects and broadening the range of the Easyhaler product family.
Administrative expenses were lower as litigation costs in the United States
decreased."The intensive care sedative dexmedetomidine has an important role in the
renewal of our product portfolio over the near future. We are pleased that our
application for marketing authorisation for dexmedetomidine has been submitted
to the European Medicines Agency, and they started processing it in October. The
centralised procedure for marketing authorisation applications generally takes
more than a year."We update our outlook estimate for 2010. We now estimate that operating profit
excluding non-recurring items will be clearly higher than in 2009. Previously,
we estimated that operating profit excluding non-recurring items would be higher
than in 2009. Our net sales growth estimate remains unchanged. More information
about the outlook estimate and the basis for it can be found on pages 5-6 of
this Interim Report."
Events during the period
On 24 September 2010 Orion announced that Riitta Vartiainen, Senior Vice
President, Business Development and Support, will leave the Orion Group
Executive Management Board as of 1 January 2011 and retire in February 2011. In
a related organisational change, the departments of the Business Development and
Support line function will be transferred to other organisations of the Group.
On 1 September 2010 Orion announced that a total of 2,230 Orion B shares had
been returned to the Company free of consideration, by virtue of the terms of
the Share-based Incentive Plan of 2007. Following the return of these shares,
Orion holds a total of 516,654 B shares in the Company.
On 20 August 2010 Orion commented on the US Food and Drug Administration's
release about the ongoing safety evaluation of Orion's drug Stalevo. The release
related to cardiovascular disease events reported in the results of the STRIDE-
PD study.
In the period 11-18 August 2010 Orion repurchased a total of 300,000 B shares in
the Company for use as part of the long-term incentive plan for the Group's key
persons.
On 13 August 2010 Orion reported two ongoing investment projects at the Turku
production plant: investment of EUR 3 million in the hormonal gel department
with a new production line being built for contract manufacturing of a new
hormonal product, and investment of EUR 2 million in purchasing a new fluidised
bed granulator for tablet manufacture.
On 1 July 2010 Orion reported the investment of EUR 5 million in Fermion's
production plant at Oulu to enlarge it to produce new cancer drugs. The
additional area is expected to be ready for use in the beginning of 2012. The
production plant manufactures active pharmaceutical ingredients for Orion and
other pharmaceutical production plants around the world.
Events after the period
On 1 October 2010 Niclas Lindstedt became Senior Vice President, Animal Health.
His predecessor, Satu Ahomäki, became Senior Vice President, Global Sales, at
the beginning of October. Niclas Lindstedt will report to CFO Jari Karlson.
On 15 October 2010 Orion announced that, as a result of trades on 13 October
2010, the total number of Orion B shares under the management of Capital
Research and Management Company had fallen below one twentieth (1/20) of the
total number of Orion Corporation shares.
News conference and teleconference
A news conference and teleconference on the published results will be held
today, Tuesday 26 October 2010, at 14:30 EEST in Hotel Kämp, address:
Pohjoisesplanadi 29, Helsinki. President and CEO Timo Lappalainen will give a
brief presentation in English on the financial review.
The event can be followed live as a webcast accessible atwww.orion.fi. After the
presentation, questions can be put to the Company's management by telephone in
Finnish and English.
The teleconference code is 877 537 and to participate in the teleconference,
please call:
from the USA: +1 888 222 0364
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
Orion's releases and related presentation material are available on the Group's
website atwww.orion.fi/en/ promptly after publication. The website also has a
form for subscribing to Orion's publications for investors and releases.
Dates in Orion Calendar
Capital Markets Day in HelsinkiThursday 9 December 2010
Financial Statements 2010 ReleaseWednesday 9 February 2011
Annual General Meeting 2011Thursday 31 March 2011
Interim Report January-March 2011Wednesday 27 April 2011
Interim Report January-June 2011Tuesday 2 August 2011
Interim Report January-September 2011Tuesday 25 October 2011
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 Q1-Q3/2010
Net sales
The Orion Group's net sales in January-September 2010 totalled EUR 635 million
(EUR 578 million in January-September 2009), up by 10% on the comparative period
of the previous year. Impact of exchange rate development has been positive. Net
sales would have been EUR 9 million lower if calculated according to the
exchange rates prevailing in the comparative period.
The Pharmaceuticals business's net sales were up by 10% at EUR 603 (547)
million. The products based on in-house R&D accounted for EUR 300 (263) million,
or 50% (48%) of the Pharmaceuticals business's net sales. Net sales of Orion's
Parkinson's drugs were up by 6% at EUR 193 (182) million, which was 32% (33%) of
the Pharmaceuticals business's net sales. The net sales of the other products in
the portfolio excluding Parkinson's drugs were up by 12% at EUR 409 (364)
million.
The Diagnostics business's net sales were up by 3% at EUR 34 (33) million.
Operating profit
The Orion Group's operating profit was up by 24% at EUR 202 (163) million.
The Pharmaceuticals business's operating profit was EUR 202 (165) million, up by
23% on the comparative period. The gross profit grew slightly faster than net
sales. However, operating profit improved clearly more because the fixed costs
of the business operations were slightly lower 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 EUR 5 (4) million, up by 19% on
the comparative period. Net sales and gross profit were slightly higher but
fixed costs were similar to the comparative period.
Operating expenses
The Group's sales and marketing expenses at EUR 134 (114) 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 7 (4) million
of royalties paid to Abbott following its sale of Simdax and increased
distribution costs due to volume growth in the business operations as a whole.
R&D expenses were down by 15% at EUR 59 (70) million and accounted for 9% (12%)
of the Group's net sales. Pharmaceutical R&D expenses amounted to EUR 54 (65)
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 the turn of the year. Ongoing
research projects are reported in more detail under Pharmaceuticals in the
Business Reviews.
Administrative expenses were down by 26% at EUR 28 (38) million. The costs due
to patent litigation in the United States were EUR 2 (7) million. There is more
information on the legal proceedings in the section "Legal proceedings".
Other operating income and expenses decreased profit by EUR 3 million (profit
increase in comparative period EUR 2 million). These expenses include items
arising mainly from foreign exchange hedges.
Profit before taxes
Group profit before taxes totalled EUR 200 (161) million. Basic earnings per
share were EUR 1.05 (0.84) and diluted earnings per share were EUR 1.05 (0.84).
Equity per share was EUR 3.05 (2.87). The return on capital employed before
taxes (ROCE) was 49% (40%) and the return on equity after taxes (ROE) 46% (38%).
Financial position
The Group's gearing was 1% (2%) and the equity ratio 62% (58%).
Total liabilities at 30 September 2010 were EUR 265 (297) million. At the end of
the period, interest-bearing liabilities amounted to EUR 121 (158) million,
including EUR 98 (117) million of long-term loans.
The Group had EUR 115 (152) million cash and cash equivalents at the end of the
period, which are invested in short-term interest-bearing instruments issued by
financially solid financial institutions and corporations.
Cash flow
Cash flow from operating activities was slightly down on the comparative period
at EUR 141 (148) million. Operating profit was clearly higher in the first part
of 2010, but the amount tied up in working capital was EUR 56 million more than
in the comparative period. The rise in working capital was due to an increase in
trade receivables and a decrease in non-interest-bearing liabilities. 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. Orion's non-interest-bearing liabilities fluctuate quite a lot
during the year. The non-interest-bearing liabilities were exceptionally high at
the turn of the year, and the decrease to normal during the first half the year
tied up working capital.
Cash flow from investing activities was EUR -26 (-51) 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 -171 (-122) million. The change is due to repayment
of capital in 2010, repurchase of own shares and higher dividends than in the
previous year. In 2009 a long-term loan was raised, which improved the cash flow
for the comparative period.
Capital expenditure
The Group's capital expenditure totalled EUR 28 (51) million. This comprised EUR
17 (18) million on property, plant and equipment and EUR 11 (33) million on
intangible assets.
Outlook for 2010
Net sales will be higher than in 2009.
Marketing expenditure will be higher due to the increased number of product
launches and expansion of operations into Southern Europe. Research expenditure
and the costs of patent litigation in the United States will be lower than in
2009.
Operating profit excluding non-recurring items will be clearly higher than in
2009.
The Group's capital expenditure will be about EUR 40 million excluding
substantial corporate or product acquisitions.
Previously, the estimated outlook was:
Net sales will be higher than in 2009.
Marketing expenditure will be higher due to the increased number of product
launches and expansion of operations into Southern Europe. Research expenditure
and the costs of patent litigation in the United States will be lower than in
2009.
Operating profit excluding non-recurring items will be higher than in 2009.
The Group's capital expenditure will be about EUR 40 million excluding
substantial corporate or product acquisitions.
Basis for outlook
The reference price system implemented in Finland in April 2009 increased price
competition in the category of substitutable products, which led to a clear
decrease in prices. During 2010 price competition has persisted. Product
launches will support Orion's position as market leader in 2010 too.
In-market sales of the Parkinson's drugs grew by just over 10% in 2009, as in
the previous year. However, the growth was faster than anticipated, and is
forecast to slow down slightly in 2010.
Repurchasing of the marketing rights to Simdax from Abbott in May 2009 will
increase sales compared with the previous year because in-market sales of the
product will appear as Orion's own sales throughout the year. During the first
four months of 2009, for Simdax Orion recorded in its own sales only sales of
the product to Abbott.
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 2010
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 2010 are either ongoing from the
previous year or at an advanced stage of planning, therefore their cost level
can be estimated rather accurately.
Orion Corporation and companies belonging to the Sun Group agreed a settlement
in June. The agreement ended the most important litigation proceedings for Orion
in the United States. As a result, the costs of patent lawsuits for the whole
year can be estimated better than before.
There are no intrinsic seasonal fluctuations in business operations, but for
many reasons, such as fewer days of sales and the timing of purchases by
partners, operating profit in the last quarter of the year has generally been
less than in other quarters of the year.
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 2010.
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.
Orion's 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.
Shares and shareholders
On 30 September 2010 Orion had a total of 141,257,828 shares, of which
47,885,511 were A shares and 93,372,317 B shares. The Group's share capital was
EUR 92,238,541.46. At the end of September 2010 Orion held 516,654 B shares as
treasury shares. On 30 September 2010 the aggregate number of votes conferred by
the A and B shares was 1,050,565,883 excluding treasury shares.
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. In January-September 2010 a total of 3,455,157
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 30 September 2010 the market capitalisation of the Company's shares excluding
treasury shares was EUR 2,069 million.
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. In accordance with the
decision, Orion acquired 300,000 B shares of Orion Corporation during the period
11-18 August 2010. 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 16.47,
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
At the end of September 2010 Orion had a total of 57,293 (50,870) registered
shareholders, of whom 95% (94%) were private individuals holding 52% (51%) of
the entire share stock and 64% (60%) of the total votes. There were altogether
37 (29) million nominee-registered shares, which is 26% (21%) of all shares, and
they conferred entitlement to 4% (5%) of the votes.
At the end of September 2010 Orion held 516,654 (280,030) B shares as treasury
shares, which is 0.4% (0.2%) of the Company's total share stock and 0.05%
(0.03%) of the total votes.
After the review period, Orion was informed that, as a result of trades on 13
October 2010, the total number of Orion B shares owned by the mutual funds under
the management of Capital Research and Management Company had fallen below one
twentieth (1/20) of the total number of Orion Corporation shares.
Personnel
The average number of employees in the Orion Group in January-September 2010 was
3,141 (3,210). At the end of September 2010 the Group had a total of 3,124
(3,125) employees, of whom 2,473 (2,532) worked in Finland and 651 (593) outside
Finland.
Salaries and other personnel expenses in January-September 2010 totalled EUR
123 (124) million.
Legal proceedings
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.
Events after the period
In October Orion was notified that Caraco Pharmaceutical Laboratories, Ltd. had
submitted an application to the US Food and Drug Administration (FDA) 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.
Caraco's application includes a so-called Paragraph IV certification that
challenges Orion's and Hospira's commonly owned US Patent No. 6,716,867 valid
until 31 March 2019 that in the United States protects Precedex, which is
included in the FDA's Orange Book of officially approved drug products. In its
application, Caraco is not applying to launch the product in US markets until
Orion's US Patent No. 4,910,214, which protects the dexmedetomidine molecule in
the United States, expires in July 2013.
Hospira and Orion are currently considering legal options to protect their
rights. If a patent holder files an infringement lawsuit in the United States
against a generic applicant within a 45-day time limit, the FDA cannot grant
final marketing approval for 30 months, unless in the meantime the applicant
wins the lawsuit challenging the patent. Orion anticipates that if Caraco's
application leads to the filing of a lawsuit, the costs will be substantially
less than the costs of the entacapone patent litigation that had previously been
pending in the United States.
Orion points out that, as regards the Company's communications, it does not
consider an application material if it would enable the applicant to launch its
generic product in the markets only after the basic patent has expired. As
explained above, Caraco's application is such an application.
Business Reviews
Pharmaceuticals
Review of human pharmaceuticals market
According to statistics collected by Finnish Pharmaceutical Data Ltd, Finnish
wholesale of human pharmaceuticals in January-September 2010 totalled EUR 1,415
(1,434) million, down by 1% on the comparative period of the previous year. The
decrease in the market as a whole was mainly due to price decreases in
pharmaceuticals covered by the reference price system. About half of the
prescription drug market by volume is covered by the reference price system,
which has been in force since the beginning of April 2009.
Finland is the most important individual market for Orion, generating one-
quarter of the Group's net sales.
Orion continued to strengthen its position as leader in marketing
pharmaceuticals in Finland. According to statistics collected by Finnish
Pharmaceutical Data Ltd, Orion's wholesale of human pharmaceuticals in Finland
in January-September 2010 amounted to EUR 141 (137) million, up by 2% on the
comparative period of the previous year. Orion's market share was 10% (10%),
which was nearly four percentage points higher than for the second-largest
company.
According to IMS Health pharmaceutical sales statistics, in the 12-month period
ending in June 2010 the total sales of all Parkinson's drugs in the United
States were up by 8% at USD 1,029 million (USD 956 million in the previous 12-
month period). The five largest European markets for Parkinson's 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 June
totalled EUR 966 (884) million, and the average market growth was 9%.
The most important individual therapy area for Orion is 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
and clearly faster than the market as a whole in Japan. According to IMS Health
pharmaceutical sales statistics, in the 12-month period ending June 2010, total
sales of Orion's Parkinson's drugs were up by 8% at USD 181 (167) million in the
United States, up by 6% at a total of EUR 154 (145) million in the five largest
Parkinson's drugs markets in Europe, and up by 42% at EUR 39 (27) 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 9% in Japan.
According to IMS Health pharmaceutical sales statistics, sales of the intensive
care sedative Precedex (dexmedetomidine), which is becoming increasingly
important for Orion, were up by 68% at USD 133 million in the 12-month period
ending June 2010 (USD 79 million in the previous 12-month period); 85% of the
sales were in the United States, where Precedex sales grew by 72% to USD 113
(66) million.
Net sales and operating profit of the Pharmaceuticals business
Net sales of the Pharmaceuticals business in January-September 2010 were up by
10% at EUR 603 (547) million. The operating profit of the Pharmaceuticals
business was up by 23% at EUR 202 (165) million. The operating profit of the
Pharmaceuticals business was 34% (30%) of the segment's net sales.
Net sales of Orion's top ten pharmaceuticals in January-September 2010 were up
by 14% at EUR 335 (294) million. They accounted for 56% (54%) of the total net
sales of the Pharmaceuticals business. Among these best-sellers, the fastest-
growing products were the intensive care sedative Precedex and the heart failure
drug Simdax.
Net sales of the products based on own in-house R&D in January-September 2010
were up by 14% at EUR 300 (263) million. These products accounted for about 50%
(48%) of the net sales of the Pharmaceuticals business.
Proprietary Products
The product portfolio of Proprietary Products consists of patented prescription
drugs in three therapy areas: central nervous system drugs; oncology and
critical care drugs; and Easyhaler® pulmonary drugs.
Net sales of Proprietary Products in January-September 2010 were EUR 281 (247)
million, up by 14% on the comparative period of the previous year.
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 January-September 2010 totalled EUR 193 (182) million.
The net sales were up by 6% and accounted for 32% (33%) of the total net sales
of the Pharmaceuticals business. Net sales from deliveries of Parkinson's drugs
to Novartis totalled EUR 118 (111) million, up by 6%. Deliveries of Stalevo to
Novartis increased by 2%, and deliveries of Comtan increased by 14%. Total net
sales generated by Parkinson's drugs in Orion's own sales organisation were up
by 6% at EUR 75 (71) million. Net sales of Stalevo through Orion's own sales
network were up by 12% at EUR 62 (55) million.
Net sales of Simdax® for acute decompensated heart failure (active ingredient
levosimendan) intravenous drug in January-September 2010 were up by 47% at EUR
30 (20) million. Orion has signed agreements with marketing partners for Simdax
in markets outside Europe, such as Turkey, Australia and many countries in Asia,
the Middle East and Africa.
Net sales of the Easyhaler® product family for asthma and chronic obstructive
pulmonary disease in January-September 2010 were up by 13% at a total of EUR 21
(19) million. The largest markets for the product family are Germany, Turkey and
Finland.
Net sales of the Precedex® intensive care sedative (active ingredient
dexmedetomidine) in January-September 2010 were up by 97% at EUR 20 (10)
million. In markets outside Europe the sedative is sold by Orion's partner
Hospira. The indication of Precedex has been expanded in Japan. Previously, the
sedative could be administered for a maximum of 24 hours, but this limit has now
been abolished in, for example, Japan. Orion has submitted an application for
marketing authorisation for dexmedetomidine to the European Medicines Agency,
which has confirmed that the application for marketing authorisation through the
centralised procedure has been validated and processing of it started In
October. The centralised procedure for marketing authorisation applications
generally takes more than a year.
Marketing authorisation has been received for Vantas® (histrelin implant) for
treatment of advanced prostate cancer in nearly all European countries. Price
negotiations and reimbursement applications will be started in each country
following receipt of marketing authorisation, after which the product will be
launched country-by-country.
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 10% at EUR 222
(202) million in January-September 2010. Net sales of Specialty Products in
markets outside Finland were up by 26% on the comparative period. Orion launched
89 (40) generic prescription drugs and self-care products in the first three
quarters of 2010.
Net sales in Finland of Orion's human pharmaceuticals were up by 2% at EUR 154
(150) million in January-September 2010. Specialty Products accounted for most
of the sales. Orion has further strengthened its position as clear 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.
Net sales of Orion's human pharmaceuticals in Eastern Europe in January-
September 2010 were up by 23% at EUR 35 (28) million. Specialty Products account
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. Orion
aims to make its domestic market all the Nordic countries, not just Finland.
Growth in net sales was strong in the first half of the year in Denmark, Sweden
and Norway due to new product launches. Among individual products, sales of
Penomax® antibiotic (active ingredient pivmecillinam), for example, have
developed especially well in all Scandinavian markets. 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 in January-September 2010 wereup by 7% at EUR 49 (46) million. Net sales of the animal sedatives Dexdomitor®
(dexmedetomidine), Domitor® (medetomidine), Domosedan® (detomidine) and
Antisedan® (atipamezole) were up by 20% and accounted for 33% (29%) of the
division's net sales. Pfizer, Orion's marketing partner for animal sedatives,
launched Domosedan gel in the United States at the end of July.
Orion's share of the Finnish market for veterinary drugs was 20% in January-
September 2010. Orion has the second-biggest share of the Finnish market for
veterinary drugs. The Finnish market for veterinary drugs was up by 9% at about
EUR 38 million in the first three quarters of 2010.
Oasmia has developed a new nanoparticle formulation of paclitaxel (trade name
Paccal® Vet) for treating canine mastocytoma, a type of skin cancer. Oasmia
submitted an application for European marketing authorisation in August, and it
is anticipated that approval procedures would take about a year. Orion and
Oasmia have signed a marketing agreement under which Orion will become the
distributor of the drug throughout Europe.
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 January-September 2010 excluding
pharmaceutical ingredients supplied for Orion's own use were up by 5% at EUR 34
(32) million and accounted for about two-thirds of Fermion's entire net sales.
Orders for many key products are still high, even though competition in the
markets remains intense.
Research and development projects
The Group's R&D expenses in January-September 2010 totalled EUR 59 (70) million,
of which the Pharmaceuticals business accounted for EUR 55 (65) million. The
Group's R&D expenses accounted for 9% (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 has confirmed that the
application for marketing authorisation through the centralised procedure has
been validated and processing of it started 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.
Compared with midazolam, dexmedetomidine also decreased the duration of
treatment in a ventilator.
Orion has ongoing projects to broaden the range of the Easyhaler product family.
Orion's aim is not only to utilise Easyhaler technology in current products and
development projects, but also to develop new products. Orion is developing a
budesonide-formoterol formulation that combines budesonide as an anti-
inflammatory agent and formoterol as a long-acting bronchodilator. 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.
More information on the Easyhaler research programmes and their structures will
be given during 2010.
Orion is collaborating with Novartis to develop Stalevo for the Japanese market.
Novartis intends to submit a marketing authorisation application during 2011.
Orion has an alpha 2c receptor antagonist undergoing clinical Phase I studies.
In early research, this compound has been found to be possibly suitable for the
treatment of the symptoms of Alzheimer's disease or schizophrenia.
Orion has several projects in the early research phase investigating selective
androgen receptor modulators (SARM), prostate cancer, neuropathic pain,
Parkinson's disease and other possible indications within intensive care, among
others.
US pharmaceutical company GTx has announced the discontinuance of its studies on
the use of 20 mg doses of toremifene to prevent prostate cancer in men. In May
the company announced that the primary variables set in the study had not been
achieved. GTx also has ongoing new clinical Phase III trials on the use of 80 mg
doses of toremifene for treating the side effects of prostate cancer treatment.
Orion originally developed toremifene for treatment of breast cancer.
Diagnostics
Orion Diagnostica manufactures easy-to-use, rapid in vitro diagnostic tests for
use externally on the body and test systems suitable for point-of-care testing.
Net sales of the Diagnostics business in January-September 2010 were up by 3% at
EUR 34 (33) million.
QuikRead® tests remained the main products. The tests are used in, for example,
detecting infection from the CRP level in a blood sample or streptococcus A
bacteria in a pharyngeal sample. Sales of QuikRead® equipment and infection
tests continued to grow. Sales in the Nordic countries were similar to the
previous year, and sales in China and the Czech Republic were higher than in the
comparative period.
The operating profit of the Diagnostics business was up by 19% at EUR 5 (4)
million and accounted for 15% (13%) of the segment's net sales. R&D expenditure
on diagnostic tests and equipment totalled EUR 4 (4) million, which is 13% (13%)
of the business area's net sales.
Orion Diagnostica has launched in the markets new products resulting from R&D
investments. Sales of a new more user-friendly QuikRead CRP test commenced in
the summer, and QuikRead go®, an easy-to-use, new generation testing instrument
in the QuikRead® product range, was launched at the end of September with the
first deliveries of it to customers in the Nordic countries.
Espoo, 26 October 2010
Board of Directors of Orion Corporation
Orion Corporation
Timo Lappalainen Jari Karlson
President and CEO CFO
Tables
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million Q3/10 Q3/09 Change % Q1-Q3/10 Q1-Q3/09 Change % 2009
--------------------------------------------------------------------------------
Net sales 213.2 191.8 +11.1% 635.0 578.2 +9.8% 771.5
--------------------------------------------------------------------------------
Cost of goods sold -71.6 -66.3 +8.1% -209.4 -196.1 +6.8% -265.2
--------------------------------------------------------------------------------
Gross profit 141.6 125.6 +12.7% 425.6 382.1 +11.4% 506.3
--------------------------------------------------------------------------------
Other operating income
and expenses 1.7 0.0 -2.9 2.2 -228.1% 6.0
--------------------------------------------------------------------------------
Selling and marketing
expenses -45.2 -38.2 +18.3% -134.0 -113.5 +18.0% -160.0
--------------------------------------------------------------------------------
R&D expenses -19.5 -20.5 -4.8% -58.9 -69.6 -15.3% -95.2
--------------------------------------------------------------------------------
Administrative expenses -8.0 -11.2 -28.6% -28.2 -38.2 -26.0% -50.2
--------------------------------------------------------------------------------
Operating profit 70.6 55.7 +26.7% 201.6 163.1 +23.7% 207.0
--------------------------------------------------------------------------------
Finance income 0.7 1.2 -38.1% 3.4 4.3 -21.3% 5.1
--------------------------------------------------------------------------------
Finance expenses -1.3 -1.9 -30.8% -4.8 -6.8 -29.7% -8.4
--------------------------------------------------------------------------------
Profit before taxes 70.0 54.9 +27.4% 200.2 160.6 +24.7% 203.7
--------------------------------------------------------------------------------
Income tax expense -18.4 -14.6 +25.7% -52.2 -42.2 +23.8% -52.3
--------------------------------------------------------------------------------
Profit for the period 51.6 40.3 +28.0% 148.0 118.4 +25.0% 151.4
--------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME INCLUDING TAX EFFECTS
--------------------------------------------------------------------------------
Translation differences -0.9 -0.2 +333.3% 1.2 0.9 +28.3% 1.3
--------------------------------------------------------------------------------
Cash flow hedges 0.3 -0.2 +287.2% 0.3 0.1 +436.8% 0.9
--------------------------------------------------------------------------------
Other comprehensive
income net of tax -0.6 -0.4 +60.4% 1.5 1.0 +54.5% 2.1
--------------------------------------------------------------------------------
Comprehensive income for
the period including tax
effects 51.0 40.0 +27.7% 149.5 119.4 +25.3% 153.5
--------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE TO:
--------------------------------------------------------------------------------
Owners of the parent
company 51.6 40.3 +28.0% 148.0 118.4 +25.0% 151.4
--------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
--------------------------------------------------------------------------------
Owners of the parent
company 51.0 40.0 +27.7% 149.5 119.4 +25.3% 153.5
--------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Basic earnings per share,
EUR 1) 0.37 0.29 +28.1% 1.05 0.84 +25.0% 1.07
--------------------------------------------------------------------------------
Diluted earnings per
share, EUR 1) 0.37 0.29 +28.1% 1.05 0.84 +25.0% 1.07
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Depreciation and
amortisation 11.7 8.8 +32.8% 29.2 25.3 +15.6% 34.4
--------------------------------------------------------------------------------
Personnel expenses 38.8 37.5 +3.3% 123.3 123.9 -0.5% 171.4
--------------------------------------------------------------------------------
1) The figure has been calculated from the profit attributable to the owners of
the parent company.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
EUR million 9/10 9/09 Change % 2009
---------------------------------------------------------
Property, plant and equipment 189.0 190.3 -0.7% 192.0
---------------------------------------------------------
Goodwill 13.5 13.5 13.5
---------------------------------------------------------
Intangible rights 64.1 63.8 +0.5% 63.4
---------------------------------------------------------
Other intangible assets 4.0 3.6 +11.8% 3.7
---------------------------------------------------------
Investments in associates 0.1 0.1 0.1
---------------------------------------------------------
Available-for-sale investments 1.0 1.0 1.0
---------------------------------------------------------
Pension asset 29.8 33.8 -11.7% 29.8
---------------------------------------------------------
Deferred tax assets 5.2 3.8 +38.2% 5.5
---------------------------------------------------------
Other non-current assets 0.9 1.6 -41.9% 0.9
---------------------------------------------------------
Non-current assets total 307.7 311.4 -1.2% 309.9
---------------------------------------------------------
---------------------------------------------------------
Inventories 127.5 121.9 +4.6% 122.7
---------------------------------------------------------
Trade receivables 122.5 101.3 +21.0% 102.6
---------------------------------------------------------
Other receivables 20.7 15.5 +33.8% 21.4
---------------------------------------------------------
Cash and cash equivalents 115.4 151.5 -23.9% 170.5
---------------------------------------------------------
Current assets total 386.1 390.2 -1.1% 417.2
---------------------------------------------------------
---------------------------------------------------------
Assets total 693.8 701.6 -1.1% 727.1
---------------------------------------------------------
EQUITY AND LIABILITIES
EUR million 9/10 9/09 Change % 2009
--------------------------------------------------------------------------------
Share capital 92.2 92.2 92.2
--------------------------------------------------------------------------------
Share premium 17.8 17.8 17.8
--------------------------------------------------------------------------------
Expendable fund 8.9 23.0 -61.2% 23.0
--------------------------------------------------------------------------------
Other reserves 0.4 -0.8 +144.8% 0.0
--------------------------------------------------------------------------------
Retained earnings 309.8 272.1 +13.9% 306.0
--------------------------------------------------------------------------------
Equity attributable to owners of the parent company
total 429.1 404.4 +6.1% 439.1
--------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 +13.2% 0.0
--------------------------------------------------------------------------------
Equity total 429.2 404.4 +6.1% 439.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Deferred tax liabilities 42.2 41.6 +1.6% 43.0
--------------------------------------------------------------------------------
Pension liability 0.8 0.7 +16.5% 0.8
--------------------------------------------------------------------------------
Provisions 0.5 0.5 -3.3% 0.5
--------------------------------------------------------------------------------
Interest-bearing non-current liabilities 98.1 117.2 -16.3% 108.7
--------------------------------------------------------------------------------
Other non-current liabilities 0.1 0.7 -84.5% 0.1
--------------------------------------------------------------------------------
Non-current liabilities total 141.7 160.6 -11.8% 153.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Trade payables 38.7 35.4 +9.2% 42.3
--------------------------------------------------------------------------------
Income tax liabilities 17.0 2.2 +686.2% 3.0
--------------------------------------------------------------------------------
Other current liabilities 44.1 58.1 -24.2% 66.8
--------------------------------------------------------------------------------
Provisions 0.0 0.0 0.0
--------------------------------------------------------------------------------
Interest-bearing current liabilities 23.2 41.0 -43.3% 22.7
--------------------------------------------------------------------------------
Current liabilities total 122.9 136.6 -10.0% 134.8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Liabilities total 264.6 297.2 -11.0% 287.9
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Equity and liabilities total 693.8 701.6 -1.1% 727.1
--------------------------------------------------------------------------------
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 31 December
2008 92.2 17.8 23.0 -0.9 -6.9 293.3 0.0 418.6
--------------------------------------------------------------------------------
Profit for the period 118.4 118.4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other comprehensive
income:
--------------------------------------------------------------------------------
Cash flow hedges 0.1 0.1
--------------------------------------------------------------------------------
Translation differences 0.9 0.9
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Transactions with equity holders and non-controlling interests:
--------------------------------------------------------------------------------
Dividend -133.9 -133.9
--------------------------------------------------------------------------------
Share-based incentive
plan 0.5 0.5
--------------------------------------------------------------------------------
Equity at 30 September
2009 92.2 17.8 23.0 -0.8 -6.0 278.2 0.0 404.4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 148.0 148.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other comprehensive
income:
--------------------------------------------------------------------------------
Cash flow hedges 0.3 0.3
--------------------------------------------------------------------------------
Translation differences 1.2 1.2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Transactions with equity holders and non-controlling
interests:
--------------------------------------------------------------------------------
Dividend -14.1 -141.0 -155.1
--------------------------------------------------------------------------------
Treasury shares -4.6 -4.6
--------------------------------------------------------------------------------
Share-based incentive
plan 0.3 0.3
--------------------------------------------------------------------------------
Equity at 30 September
2010 92.2 17.8 8.9 0.4 -4.5 314.4 0.0 429.2
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR million 9/10 9/09 2009
-----------------------------------------------------------------------------
Operating profit 201.6 163.1 207.0
-----------------------------------------------------------------------------
Adjustments 28.9 22.8 37.7
-----------------------------------------------------------------------------
Change in working capital -54.9 1.0 15.3
-----------------------------------------------------------------------------
Interest paid -4.1 -6.3 -9.7
-----------------------------------------------------------------------------
Interest received 3.6 4.3 4.9
-----------------------------------------------------------------------------
Income taxes paid -34.4 -36.9 -50.6
-----------------------------------------------------------------------------
Total net cash flow from operating activities 140.8 147.9 204.6
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Investments in property, plant and equipment -17.0 -18.1 -24.6
-----------------------------------------------------------------------------
Investments in intangible assets -9.9 -33.6 -36.1
-----------------------------------------------------------------------------
Sales of property, plant and equipment
and available-for-sale investments 0.8 0.8 0.8
-----------------------------------------------------------------------------
Sales of intangible assets 0.2 -0.2 0.5
-----------------------------------------------------------------------------
Total net cash flow from investing activities -25.8 -51.1 -59.5
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Short-term loans raised 0.6 0.6 0.7
-----------------------------------------------------------------------------
Repayments of short-term loans -1.0 -0.9 -19.8
-----------------------------------------------------------------------------
Long-term loans raised 22.8 22.8
-----------------------------------------------------------------------------
Repayments of long-term loans -10.5 -10.8 -21.3
-----------------------------------------------------------------------------
Repurchase of own shares -4.6
-----------------------------------------------------------------------------
Dividends paid and other distribution of profits -155.2 -133.9 -134.4
-----------------------------------------------------------------------------
Total net cash flow from financing activities -170.7 -122.2 -152.1
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Net change in cash and cash equivalents -55.7 -25.3 -7.0
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Cash and cash equivalents at the beginning of the period 170.5 176.1 176.1
-----------------------------------------------------------------------------
Foreign exchange differences 0.6 0.7 1.4
-----------------------------------------------------------------------------
Net change in cash and cash equivalents -55.7 -25.3 -7.0
-----------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 115.4 151.5 170.5
-----------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 9/10 9/09 2009
----------------------------------------------------------------
Carrying amount at the beginning of the period 192.0 192.4 192.4
----------------------------------------------------------------
Adjustments to previous period carrying amount 2.4
----------------------------------------------------------------
Additions 17.2 17.9 25.1
----------------------------------------------------------------
Disposals -0.8 -0.8 -1.7
----------------------------------------------------------------
Depreciation -19.5 -19.2 -26.1
----------------------------------------------------------------
Carrying amount at the end of the period 189.0 190.3 192.0
----------------------------------------------------------------
CHANGES IN INTANGIBLE ASSETS (EXCLUDING GOODWILL)
EUR million 9/10 9/09 2009
-------------------------------------------------------------
Carrying amount at the beginning of the period 67.0 40.4 40.4
-------------------------------------------------------------
Additions 10.7 33.3 35.2
-------------------------------------------------------------
Disposals -0.3 -0.3
-------------------------------------------------------------
Depreciation -9.8 -6.0 -8.3
-------------------------------------------------------------
Carrying amount at the end of the period 68.1 67.4 67.0
-------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
EUR million 9/10 9/09 2009
----------------------------------------------------------------------
CONTINGENCIES FOR OWN LIABILITIES
----------------------------------------------------------------------
Mortgages on land and buildings 32.0 45.0 32.0
----------------------------------------------------------------------
of which those to Orion Pension Fund 9.0 9.0 9.0
----------------------------------------------------------------------
Guarantees 1.1 1.0 1.1
----------------------------------------------------------------------
OTHER LIABILITIES
----------------------------------------------------------------------
Leasing liabilities (excluding finance lease contracts) 4.1 4.0 4.3
----------------------------------------------------------------------
Other liabilities 0.3 0.3 0.3
----------------------------------------------------------------------
DERIVATIVE CONTRACTS
EUR million 9/10 9/09 2009
---------------------------------------------------
FORWARD EXCHANGE CONTRACTS AND SWAPS
---------------------------------------------------
Fair value, EUR million 0.3 -0.0 -0.3
---------------------------------------------------
Nominal value, EUR million 55.6 67.7 86.4
---------------------------------------------------
ELECTRICITY FORWARD CONTRACTS
---------------------------------------------------
Fair value, EUR million 0.3 -1.3 -0.2
---------------------------------------------------
Nominal value, GWh 144 155 160
---------------------------------------------------
RELATED PARTY TRANSACTIONS
EUR million Q1-Q3/10 Q1-Q3/09 2009
-------------------------------------------------------
Management's employment benefits 3.6 2.9 3.5
-------------------------------------------------------
Operating segment performance
NET SALES BY BUSINESS DIVISION
EUR million Q3/10 Q3/09 Change % Q1-Q3/10 Q1-Q3/09 Change % 2009
--------------------------------------------------------------------------------
Pharmaceuticals 203.2 181.8 +11.8% 602.5 546.6 +10.2% 728.5
--------------------------------------------------------------------------------
Proprietary
Products 96.7 81.1 +19.2% 281.0 246.8 +13.9% 324.0
--------------------------------------------------------------------------------
Specialty
Products 77.8 67.9 +14.5% 221.5 201.8 +9.7% 274.8
--------------------------------------------------------------------------------
Animal Health 16.4 15.6 +4.8% 49.1 46.0 +6.7% 62.1
--------------------------------------------------------------------------------
Fermion 8.2 10.4 -21.7% 34.1 32.4 +5.4% 41.4
--------------------------------------------------------------------------------
Contract
manufacturing
and other 4.2 6.6 -36.9% 16.8 19.6 -14.3% 26.2
--------------------------------------------------------------------------------
Diagnostics 10.5 10.5 -0.8% 34.3 33.2 +3.4% 45.2
--------------------------------------------------------------------------------
Group items -0.5 -0.5 +6.6% -1.8 -1.5 +15.1% -2.2
--------------------------------------------------------------------------------
Group total 213.2 191.8 +11.1% 635.0 578.2 +9.8% 771.5
--------------------------------------------------------------------------------
OPERATING PROFIT BY BUSINESS AREA
EUR million Q3/10 Q3/09 Change % Q1-Q3/10 Q1-Q3/09 Change % 2009
---------------------------------------------------------------------
Pharmaceuticals 71.5 56.6 +26.1% 202.4 165.1 +22.6% 210.6
---------------------------------------------------------------------
Diagnostics 1.0 1.0 +0.2% 5.1 4.3 +18.6% 5.6
---------------------------------------------------------------------
Group items -1.8 -1.9 -5.0% -5.8 -6.4 -8.5% -9.2
---------------------------------------------------------------------
Group total 70.6 55.7 +26.7% 201.6 163.1 +23.7% 207.0
---------------------------------------------------------------------
NET SALES BY ANNUAL QUARTERS
2010 2009 2008
+-----------------+-----------------------+-----+
EUR million | Q3 Q2 Q1| Q4 Q3 Q2 Q1| Q4|
---------------+-----------------+-----------------------+-----+
Pharmaceuticals|203.2 196.0 203.3|181.9 181.8 185.9 178.9|169.6|
---------------+-----------------+-----------------------+-----+
Diagnostics | 10.5 12.1 11.7| 12.0 10.5 11.0 11.7| 10.7|
---------------+-----------------+-----------------------+-----+
Group items | -0.5 -0.7 -0.6| -0.6 -0.5 -0.5 -0.5| -0.5|
---------------+-----------------+-----------------------+-----+
Group total |213.2 207.4 214.5|193.3 191.8 196.4 190.1|179.9|
---------------+-----------------+-----------------------+-----+
OPERATING PROFIT BY ANNUAL QUARTERS
2010 2009 2008
+--------------+-------------------+----+
EUR million | Q3 Q2 Q1| Q4 Q3 Q2 Q1| Q4|
---------------+--------------+-------------------+----+
Pharmaceuticals|71.5 60.4 70.5|45.5 56.6 51.6 56.9|35.3|
---------------+--------------+-------------------+----+
Diagnostics | 1.0 1.9 2.2| 1.2 1.0 1.1 2.2| 0.2|
---------------+--------------+-------------------+----+
Group items |-1.8 -2.3 -1.7|-2.8 -1.9 -2.3 -2.2|-2.7|
---------------+--------------+-------------------+----+
Group total |70.6 60.0 71.0|43.9 55.7 50.4 56.9|32.8|
---------------+--------------+-------------------+----+
GEOGRAPHICAL BREAKDOWN OF NET SALES BY ANNUAL QUARTERS
2010 2009 2008
+-----------------+-----------------------+-----+
EUR million | Q3 Q2 Q1| Q4 Q3 Q2 Q1| Q4|
-------------+-----------------+-----------------------+-----+
Finland | 57.6 53.7 56.9| 59.2 55.6 55.0 53.5| 55.2|
-------------+-----------------+-----------------------+-----+
Scandinavia | 28.4 28.1 29.0| 25.9 24.5 25.8 25.4| 23.7|
-------------+-----------------+-----------------------+-----+
Other Europe | 70.0 72.7 72.1| 72.8 68.9 71.8 61.2| 62.0|
-------------+-----------------+-----------------------+-----+
North America| 31.1 26.3 30.3| 12.1 18.1 18.2 22.6| 19.2|
-------------+-----------------+-----------------------+-----+
Other markets| 26.0 26.7 26.1| 23.4 24.7 25.6 27.4| 19.8|
-------------+-----------------+-----------------------+-----+
Group total |213.2 207.4 214.5|193.3 191.8 196.4 190.1|179.9|
-------------+-----------------+-----------------------+-----+
Business reviews
KEY FIGURES FOR PHARMACEUTICALS BUSINESS
EUR million Q3/10 Q3/09 Change % Q1-Q3/10 Q1-Q3/09 Change % 2009
--------------------------------------------------------------------------------
Net sales 203.2 181.8 +11.8% 602.5 546.6 +10.2% 728.5
--------------------------------------------------------------------------------
Operating profit 71.5 56.6 +26.1% 202.4 165.1 +22.6% 210.6
--------------------------------------------------------------------------------
% of net sales 35.2% 31.2% 33.6% 30.2% 28.9%
--------------------------------------------------------------------------------
R&D expenses 18.0 19.3 -6.7% 54.5 65.4 -16.6% 89.4
--------------------------------------------------------------------------------
% of net sales 8.9% 10.6% 9.0% 12.0% 12.3%
--------------------------------------------------------------------------------
Capital expenditure 9.2 10.2 -9.8% 25.9 49.2 -47.3% 57.6
--------------------------------------------------------------------------------
% of net sales 4.5% 5.6% 4.3% 9.0% 7.9%
--------------------------------------------------------------------------------
Sales revenue from
proprietary products 102.9 87.5 +17.7% 299.5 263.2 +13.8% 346.5
--------------------------------------------------------------------------------
Personnel at the end of
the period 2,802 2,806 -0.1% 2,829
--------------------------------------------------------------------------------
NET SALES OF ORION'S TOP 10 PHARMACEUTICAL PRODUCTS
EUR million Q3/10 Q3/09 Change % Q1-Q3/10 Q1-Q3/09 Change % 2009
--------------------------------------------------------------------------------
Stalevo®, Comtess® and
Comtan® (Parkinson's
disease) 67.8 58.9 +15.1% 193.3 182.2 +6.1% 234.9
--------------------------------------------------------------------------------
Simdax® (acute
decompensated heart
failure) 9.6 8.9 +7.8% 29.8 20.3 +46.8% 29.4
--------------------------------------------------------------------------------
Easyhaler® product family
(asthma, COPD) 6.2 5.9 +5.1% 20.8 18.5 +12.5% 24.9
--------------------------------------------------------------------------------
Precedex® (intensive care
sedative) 7.1 3.4 +111.3% 20.0 10.1 +97.4% 14.6
--------------------------------------------------------------------------------
Dexdomitor®, Domitor®,
Domosedan® and Antisedan®
(animal sedatives) 5.3 5.0 +5.3% 16.2 13.5 +19.9% 19.3
--------------------------------------------------------------------------------
Burana® (inflammatory
pain) 5.7 5.0 +12.7% 15.8 14.2 +11.4% 19.9
--------------------------------------------------------------------------------
Divina® range (menopausal
symptoms) 3.0 3.0 +1.1% 9.9 10.1 -2.2% 13.2
--------------------------------------------------------------------------------
Marevan® (anticoagulant) 3.3 2.9 +14.0% 9.7 8.1 +19.4% 11.2
--------------------------------------------------------------------------------
Enanton® (prostate cancer) 3.2 2.8 +12.6% 9.6 8.9 +7.9% 11.9
--------------------------------------------------------------------------------
Fareston® (breast cancer) 3.9 2.3 +67.5% 9.5 8.5 +12.2% 10.2
--------------------------------------------------------------------------------
Total 115.1 98.2 +17.2% 334.6 294.4 +13.7% 389.5
--------------------------------------------------------------------------------
Share of pharmaceutical
net sales 57% 54% 56% 54% 53%
--------------------------------------------------------------------------------
KEY FIGURES FOR DIAGNOSTICS BUSINESS
EUR million Q3/10 Q3/09 Change % Q1-Q3/10 Q1-Q3/09 Change % 2009
--------------------------------------------------------------------------------
Net sales 10.5 10.5 -0.8% 34.3 33.2 +3.4% 45.2
--------------------------------------------------------------------------------
Operating profit 1.0 1.0 +0.2% 5.1 4.3 +18.6% 5.6
--------------------------------------------------------------------------------
% of net sales 9.5% 9.4% 14.9% 13.0% 12.3%
--------------------------------------------------------------------------------
R&D expenses 1.5 1.2 +27.1% 4.4 4.3 +3.5% 5.9
--------------------------------------------------------------------------------
% of net sales 14.4% 11.2% 13.0% 12.9% 13.0%
--------------------------------------------------------------------------------
Capital expenditure 0.9 1.0 -10.0% 1.8 1.9 -3.2% 2.5
--------------------------------------------------------------------------------
% of net sales 8.4% 9.3% 5.3% 5.7% 5.6%
--------------------------------------------------------------------------------
Personnel at the end of
the period 297 292 +1.6% 291
--------------------------------------------------------------------------------
Information on Orion's shares
BASIC SHARE INFORMATION
30 September 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 31.2 61.0 92.2
--------------------------------------------------------------------------------
Counter book value per share, EUR 0.65 0.65
--------------------------------------------------------------------------------
Total number of shares 47,885,511 93,372,317 141,257,828
--------------------------------------------------------------------------------
% of total share stock 34% 66% 100%
--------------------------------------------------------------------------------
Number of treasury shares 516,654 516,654
--------------------------------------------------------------------------------
Total number of shares excluding
treasury shares 47,885,511 92,855,663 140,741,174
--------------------------------------------------------------------------------
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 957,710,220 92,855,663 1,050,565,883
--------------------------------------------------------------------------------
% of total votes 91% 9% 100%
--------------------------------------------------------------------------------
Total number of shareholders 18,678 45,210 57,293
--------------------------------------------------------------------------------
A shares and B shares confer equal rights to the Company's assets and dividends.
INFORMATION ON TRADING
1 January - 30 September 2010 A shares B shares Total
--------------------------------------------------------------------------------
Shares traded 6,557,541 75,095,129 81,652,670
--------------------------------------------------------------------------------
% of the total number of shares 13.2% 81.9% 57.8%
--------------------------------------------------------------------------------
Trading volume, EUR million 98.6 1,125.0 1,223.6
--------------------------------------------------------------------------------
Closing quotation on 31 Dec 2009, EUR 15.06 15.05
--------------------------------------------------------------------------------
Lowest quotation, EUR (A 6 May and B 7 May
2010) 12.21 13.20
--------------------------------------------------------------------------------
Average quotation, EUR 15.04 14.98
--------------------------------------------------------------------------------
Highest quotation, EUR (A and B 23 March
2010) 17.82 17.88
--------------------------------------------------------------------------------
Closing quotation on 30 September 2010, EUR 14.79 14.65
--------------------------------------------------------------------------------
Market capitalisation on 30 September 2010
excluding treasury shares, EUR million 708.2 1,360.3 2,068.6
--------------------------------------------------------------------------------
PERFORMANCE PER SHARE
Q3/10 Q3/09 Change % Q1-Q3/10 Q1-Q3/09 Change % 2009
--------------------------------------------------------------------------------
Basic earnings per
share, EUR 0.37 0.29 +28.1% 1.05 0.84 +25.0% 1.07
--------------------------------------------------------------------------------
Diluted earnings per
share, EUR 0.37 0.29 +28.1% 1.05 0.84 +25.0% 1.07
--------------------------------------------------------------------------------
Cash flow per share
before financial
items, EUR 0.34 0.33 +1.3% 0.82 0.69 +18.6% 1.03
--------------------------------------------------------------------------------
Equity per share,
EUR 3.05 2.87 +6.3% 3.11
--------------------------------------------------------------------------------
Average number of
shares
excluding treasury
shares, 1,000 shares 140,751 140,978 140,977 140,967 140,970
--------------------------------------------------------------------------------
Appendices
Reporting
Orion Corporation is the parent company of the Orion Group. The Group consists
of two business areas, or operating segments, and five business divisions. Orion
reports on its operations segmentally.
* Pharmaceuticals business
* Proprietary Products (patented prescription products for three therapy
areas)
* Specialty Products (off-patent, generic prescription products and self-
care products)
* Animal Health (veterinary products for pets and production animals)
* Fermion (active pharmaceutical ingredients for Orion and other
companies)
* Diagnostics business
* Orion Diagnostica (diagnostic test systems for point-of-care in
healthcare and hygiene tests for industry).
Contract manufacturing and other, i.e. manufacturing for other companies, is
included in the Pharmaceuticals business segment, but it is not a separate
business division, it is part of the Group's Supply Chain organisation.
Accounting policies
This Interim Report has been prepared in compliance with IAS 34 Interim
Financial Reporting applying the same accounting policies as for the Financial
Statements 2009. In addition, the following new standards, interpretations and
amendments approved by the EU have been applied as of 1 January 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 atwww.orion.fi/en/investors.
Other matters
The data in this financial review are not 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 finance expenses
-----------------------------------
Return on capital employed (ROCE), % = Total assets - Non-interest- x 100
bearing liabilities (average
during the period)
Profit for the period
-----------------------------------
Return on equity (ROE), % = Total equity (average during the x 100
period)
Equity
=-----------------------------------
Total assets - Advances received
Equity ratio, % x 100
Interest-bearing liabilities -
= Cash and cash equivalents
Gearing, % -----------------------------------x 100
Equity
Profit available for the owners
= of the parent company
Earnings per share, EUR -----------------------------------
Average number of shares during
the period, excluding treasury
shares
Cash flow from operating
activities + Cash flow from
= investing activities
Cash flow per share before financial -----------------------------------
items, EUR Average number of shares during the period, excluding treasury
shares
Equity of the owners of the
parent company
=-----------------------------------
Number of shares at the end of
Equity per share, EUR the period, excluding treasury
shares
Total EUR value of shares traded
=-----------------------------------
Average share price, EUR Average number of traded shares
during the period
Number of shares at the end of
Market capitalisation, EUR million = the period × Closing quotation of
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, cancer and critical care drugs, and Easyhaler®
pulmonary drugs.
The Group's net sales in 2009 amounted to EUR 772 million. The Company invested
EUR 95 million in research and development. At the end of 2009, the Group had a
total of 3,100 employees, of whom 2,500 worked in Finland and 600 in other
European countries. Orion's A and B shares are listed on NASDAQ OMX Helsinki.
[HUG#1455271]
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