2017-10-26 11:00:33 CEST
2017-10-26 11:00:33 CEST
REGULATED INFORMATION
Orion - Interim report (Q1 and Q3)
Orion Group Interim Report January-September 2017
ORION CORPORATION INTERIM REPORT JANUARY-SEPTEMBER 2017 26 OCTOBER
2017 AT 12.00 NOON EEST
Orion Group Interim Report January-September 2017
Orion's net sales in January-September 2017 totalled EUR 804 million (EUR 794
million in January-September 2016).
* Operating profit was EUR 220 (256) million. Operating profit in the
comparative period includes EUR 22 million of capital gains.
* Profit before taxes was EUR 215 (253) million.
* Equity ratio was 62% (60%).
* ROCE before taxes was 38% (45%).
* ROE after taxes was 37% (45%).
* Basic earnings per share were EUR 1.22 (1.43).
* Cash flow per share before financial items was EUR 0.86 (1.23).
* The outlook estimate for 2017 remains unchanged. Orion estimates that in
2017 net sales will be at similar level to 2016 and operating profit
excluding material capital gains will be at least EUR 280 million.
ORION'S KEY FIGURES FOR THE REVIEW PERIOD
7-9/17 7-9/16 Change % 1-9/17 1-9/16 Change % 1-12/16
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Net sales, EUR million 252.7 258.6 -2.3% 804.3 793.6 +1.3% 1,073.5
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Operating profit, EUR
million 56.4 92.0 -38.8% 219.9 255.9 -14.1% 314.6
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% of net sales 22.3% 35.6% 27.3% 32.2% 29.3%
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Profit before taxes, EUR
million 55.4 91.0 -39.1% 214.8 253.2 -15.2% 310.9
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% of net sales 21.9% 35.2% 26.7% 31.9% 29.0%
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Income tax expense, EUR
million 11.3 18.5 -38.7% 44.1 51.8 -14.9% 61.9
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R&D expenses, EUR
million 24.7 26.9 -8.3% 77.0 80.3 -4.1% 118.2
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% of net sales 9.8% 10.4% 9.6% 10.1% 11.0%
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Capital expenditure, EUR
million 22.1 11.8 +87.8% 61.4 34.0 +80.6% 51.1
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% of net sales 8.7% 4.5% 7.6% 4.3% 4.8%
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Assets total, EUR
million 970.1 998.6 -2.8% 1,062.9
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Equity ratio, % 61.6% 59.5% 60.8%
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Gearing, % 3.1% -4.2% -12.4%
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Interest-bearing
liabilities, EUR million 151.4 173.3 -12.6% 152.5
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Non-interest-bearing
liabilities, EUR million 224.2 236.4 -5.2% 269.0
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Cash and cash
equivalents and money
market investments, EUR
million 133.1 198.2 -32.9% 231.9
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ROCE (before taxes), % 38.3% 45.2% 40.9%
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ROE (after taxes), % 36.9% 45.4% 40.3%
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Basic earnings per
share, EUR 0.31 0.52 -39.3% 1.22 1.43 -15.1% 1.77
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Diluted earnings per
share, EUR 0.31 0.52 -39.3% 1.22 1.43 -15.1% 1.77
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Cash flow per share
before financial items,
EUR 0.47 0.67 -30.2% 0.86 1.23 -29.7% 1.62
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Equity per share, EUR 4.23 4.19 +0.9% 4.57
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Personnel at the end of
the period 3,513 3,445 +2.0% 3,469
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Average personnel during
the period 3,527 3,442 +2.5% 3,446
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Personnel expenses, EUR
million 159.1 162.3 -2.0% 224.4
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President and CEO Timo Lappalainen:
"Centenary year has continued as planned"
"Orion turned one hundred years on the 21st of September. So, we have been
building well-being for an entire century. This journey has seen Orion to grow
from a tiny one-room facility to an international pharma company. Today, our R&D
pipeline has several promising projects, and our products are sold all over the
world.
In January-September 2017 our net sales were at the previous year's level.
As regards Proprietary Products, sales of the Easyhaler product family for
treatment of asthma and chronic obstructive pulmonary disease continued good
growth. Geographical expansion of the budesonide-formoterol combined formulation
progressed, and sales of the product have also commenced in Germany and the
United Kingdom. Deliveries to co-marketing partner Menarini have commenced in
Southern Europe.
As expected, sales of Orion's branded Parkinson's drugs Stalevo, Comtess and
Comtan declined, but growth in the Easyhaler product family, the intensive care
sedative Dexdor and Simdax for treatment of acute decompensated heart failure,
has been able partly to compensate for this decline. Generic competition to
Dexdor has commenced in Germany, but competition has not yet expanded into other
countries.
The biosimilar Remsima has been the driver of Specialty Products' growth, and
winning the national tendering competition in Norway in the second quarter of
the year has increased sales of the product. Net sales of the Specialty Products
business division as a whole grew slightly although changes in the market
environment and intensified price competition especially in Finland, continued
to have a negative impact. Delivery problems related to implementation of ERP by
Oriola Finland Oy, the pharmaceuticals distributor that Orion uses, have had a
downward effect on sales in Finland, but the impact has not been material.
Net sales of Fermion, which manufactures active pharmaceutical ingredients,
excluding deliveries for Orion's own use, have clearly increased, and sales of
veterinary drugs were also greater than in the comparative period. However, in
both cases growth is largely due to the timing of deliveries, which differed
from the previous year.
In January-September 2017 our operating profit was lower than in the comparative
period, especially due to EUR 22 million of capital gains received in the
comparative period on shares. The operating profit was also affected by the
decline in sales of Parkinson's drugs and the change made to the pricing system
for prescription drugs in Finland at the beginning of the year, which has had a
greater effect than anticipated. We estimate that the change will decrease our
sales by about EUR 15 million in 2017. In addition, our gross profit was
weakened by summer shutdowns at plants that were longer than in the previous
year. Sales and marketing expenses increased from the comparative period,
especially due to our input into increasing sales of the Easyhaler product
range.
Orion's research and development programmes are proceeding as planned. Next
year, we expect to have results from Phase III trials for darolutamide (ODM-
201), the molecule under development for treatment of prostate cancer. In the
following couple of years news is also awaited concerning continuance of several
other projects. In the meantime we are seeking growth from the Easyhaler
product family in particular, and continue the expansion of its production
capacity and the promotion of sales.
We estimate that in 2017 net sales will be at similar level to 2016. We estimate
that operating profit excluding material capital gains will be at least EUR 280
million. Our outlook estimate and the basis for it can be found in this report
under 'Outlook for 2017' and 'Basis for outlook'."
Events during the period
There were no significant events during the period.
Events after the period
There were no significant events after the period.
News conference and teleconference
A news conference and teleconference on the published results will be held on
Thursday 26 October 2017 at 13.30 EEST in Hotel Kämp (address: Pohjoisesplanadi
29, Helsinki). President and CEO Timo Lappalainen will give a brief presentation
in English on the financial review.
The event can be followed live as a webcast accessible on Orion's website at
http://www.orion.fi/en/investors. After the presentation, questions can be asked
also via teleconference in Finnish and English.
The conference call ID is 5626925 and the telephone numbers to participate in
the teleconference are:
Finland: +358 (0)9 7479 0404
Sweden: +46 (0)8 5065 3942
United Kingdom: +44 (0)330 336 9411
United States: +1 719 457 1036
News conference recordings
A recording of the webcast of the event in English and a recording of the
presentation by the President and CEO in Finnish will be published on the Orion
website during Thursday 26 October 2017.
Financial report material
Financial reports and related presentation material are available at
http://www.orion.fi/en/investors promptly after publication. The website also
has a form for subscribing to Orion's releases.
Dates in Orion's calendar 2018
Financial Statement Release for 2017 Wednesday 7 February 2018
Annual General Meeting 2018 Planned to be held on Tuesday 20 March
2018
Interim Report January-March 2018 Tuesday 24 April 2018
Half-Year Financial Report January-June Wednesday 18 July 2018
2018
Interim Report January-September 2018 Wednesday 24 October 2018
The Financial Statements and Report by the Board of Directors for 2017 will be
published on the company's website at the latest in week 9/2018.
For additional information about the report:
Jari Karlson, CFO tel. +358 50 966 2883
Lilli Riikonen, Communications Manager tel. +358 50 966 2319
http://www.orion.fi/en
http://www.orion.fi/en/investors
Financial review 1/1/2017-30/9/2017
Net sales
The Orion Group's net sales in January-September 2017 were up by 1% at EUR 804
million (EUR 794 million in January-September 2016). The net effect of currency
exchange rates was plus EUR 1 million.
The net sales of Pharmaceuticals business were up by 2% at EUR 768 (754)
million. Net sales of Orion's Stalevo(®) (carbidopa, levodopa and entacapone)
and Comtess(®)/Comtan(®) (entacapone) Parkinson's drugs were down by 22% at EUR
80 (102) million, which was 10% (14%) of the Pharmaceuticals business's net
sales.
The Diagnostics business's net sales were down by 7% at EUR 39 (41) million.
Operating profit
The Orion Group's operating profit was down by 14% at EUR 220 (256) million.
Milestone payments accounted for EUR 9 (11) million of the operating profit.
Operating profit in the comparative period included EUR 22 million of capital
gains on shares.
The Pharmaceuticals business's operating profit was down by 14% at EUR 221 (257)
million. Milestone payments accounted for EUR 9 (11) million of the operating
profit. Operating profit in the comparative period included EUR 22 million of
capital gains on shares.
The Diagnostics business's operating profit was down by 6% at EUR 6.2 (6.6)
million.
Operating expenses
The Group's sales and marketing expenses were up by 7% at EUR 146 (137) million.
The growth is mainly due to input into sales of the Easyhaler product range.
R&D expenses were down by 4% at EUR 77 (80) million and accounted for 10% (10%)
of the Group's net sales. Pharmaceutical R&D expenses accounted for EUR 73 (75)
million of the total R&D expenses. Research projects are reported in more detail
under Pharmaceuticals in the Business Reviews.
Administrative expenses were EUR 33 (34) million.
Other operating income and expenses were EUR 1 (22) million. Income in the
comparative period included EUR 22 million of capital gains on shares.
Group's profit
The Group's profit before taxes was down by 15% at EUR 215 (253) million. Basic
earnings per share were EUR 1.22 (1.43) and diluted earnings per share were EUR
1.22 (1.43). Equity per share was EUR 4.23 (4.19). The return on capital
employed before taxes (ROCE) was 38% (45%) and the return on equity after taxes
(ROE) 37% (45%).
Financial position
The Group's gearing was 3% (-4%) and the equity ratio 62% (60%).
The Group's total liabilities at 30 September 2017 were EUR 376 (410) million.
At the end of the period, interest-bearing liabilities amounted to EUR 151 (173)
million, including EUR 150 (150) million of long-term loans.
The Group had EUR 133 (198) million of cash and cash equivalents and money
market investments at the end of the period.
Cash flow
Cash flow from operating activities was EUR 181 (181) million, the cash flow
from investing activities was EUR -60 (-8) million, and the cash flow from
financing activities was EUR -219 (-216) million. The cash flow from investing
activities in the comparative period was enhanced by EUR 26 million from share
sales.
Capital expenditure
The Group's capital expenditure totalled EUR 61 (34) million. This comprised EUR
53 (29) million on property, plant and equipment and EUR 8 (4) million on
intangible assets. Fermion has an ongoing significant expansion investment at
its Hanko manufacturing plant, and Orion has ongoing expansion of Easyhaler
production capacity at its Espoo pharmaceuticals production plant.
Outlook for 2017 (provided on 8 February 2017)
Net sales are estimated to be at similar level to 2016 (net sales were EUR
1,074 million in 2016).
Operating profit excluding material capital gains is estimated to be at least
EUR 280 million (operating profit excluding capital gains was EUR 293 million in
2016).
Basis for outlook
Orion's branded Parkinson's drugs are Comtess(®), Comtan(®) and Stalevo(®).
Generic competition to these products commenced in the United States in 2012 and
has already extended to nearly all markets. As a result of the competition,
Orion's sales of these products have decreased to low levels in the United
States and some other markets, and competition is expected to extend gradually.
However, in 2017 growth in sales of other products is expected to continue to
compensate for the decline in sales of these products. Sales of the Easyhaler
product family are forecast to continue to grow. Orion has become aware that in
some European countries marketing authorisation has been granted for a generic
version of Dexdor(®), and in Germany a generic version of the product has been
launched in the market. Orion is continuing actions to defend its rights. The
impact of generic competition on sales is still difficult to estimate at this
stage. The patent for the Simdax(®) molecule expired in September 2015 but this
is still not expected to have a material impact on sales of the product in 2017.
Sales of generic products account for a significant proportion of Orion's total
sales, and price competition has continued in many markets. Competition in
Finland, the most important generic market for Orion, will remain intense in
2017. In addition, at the beginning of the year 2017 changes were made to the
pricing system for substitutable prescription drugs in Finland by narrowing the
so-called price band. A decrease in sales caused by this change estimated at
about EUR 15 million in 2017 is included in the outlook estimate. The effect is
greater than anticipated at the beginning of the year. Delivery problems
commencing in September related to implementation of ERP by Oriola Finland Oy,
the pharmaceuticals distributor that Orion uses in Finland, has had a downward
effect on sales in Finland. So far the effect has not been material because of
the temporary arrangements initiated by Orion. The outlook estimate includes the
current estimate of the decrease in sales at annual level, however there is
uncertainty concerning the final extent of the decrease.
However, product launches continue to support Orion's position as market leader
in Finland.
In 2016 sales of Remsima(®) generated a significant portion of the growth in net
sales of the Specialty Products business division. Sales of Remsima in 2017 are
expected to grow from the previous year.
Collaboration agreements with other pharmaceutical companies are an important
component of Orion's business model. These agreements often include payments
recorded in net sales that vary greatly from year to year. Forecasting the
timing and amount of payments is difficult. Possible future payments relating to
agreements already made have in some cases been conditional on, for instance,
the progress of research projects or results received, which are not known until
studies have been completed. On the other hand, making new agreements is
generally a process for which neither the schedule nor the outcome is known
before the final signing of the agreement.
The Group's total capital expenditure in 2017 is expected to be higher than in
2016, when it was EUR 51 million. The largest single ongoing projects are
expansion of Fermion's Hanko manufacturing plant and increasing Easyhaler
product portfolio production capacity in Espoo.
Marketing expenditure will be higher than in the previous year due to additional
promotion of sales of the Easyhaler product portfolio, for example. Because the
registrations and launches of new products are projects that take more than a
year, the increases in resources and other inputs required in 2017 were planned
mainly during the previous year.
Research and development costs will be similar to 2016. They are partly the
Company's internal fixed cost items, such as salaries and maintenance of the
operating infrastructure, and partly external variable costs. External costs
arise from, among other things, long-term clinical trials, which are typically
performed in clinics located in several countries. The most important clinical
trials scheduled for 2017 are either continuing from the previous year or at an
advanced stage of planning, therefore their cost level can be estimated rather
accurately. The accrued costs are materially affected by collaboration
arrangements and how the costs arising are allocated between Orion and its
collaboration partners. For instance, Bayer is paying the majority of the
darolutamide (ODM-201) research costs.
Near-term risks and uncertainties
Sales of Orion's branded Parkinson's drugs will decrease in 2017 due to generic
competition. The effects of the competition have been taken into account in the
outlook estimate for the current year. However, the timing of the extension and
intensity of generic competition to Stalevo in Europe and elsewhere still
entails uncertainty that may materially affect the accuracy of the estimate made
at this stage. The basic Simdax and Dexdor patents have expired. However, the
products have other still valid product protection. Nevertheless, for these
products there is a possibility that generic competition might commence before
expiry of the respective product protection. Orion has become aware that in some
European countries marketing authorisation has been granted for a generic
version of Dexdor, and in Germany a generic version of the product has been
launched in the market. Orion is continuing actions to defend its rights. The
impact of generic competition on sales is still difficult to estimate at this
stage.
Sales of individual products and also Orion's sales in individual markets may
vary, for example depending on the extent to which the ever-tougher price and
other competition prevailing in pharmaceutical markets in recent years will
specifically focus on Orion's products. Deliveries of Parkinson's drugs to
Novartis, the most important collaboration partner, are based on timetables that
are jointly agreed in advance. Nevertheless, they can change, for example as a
consequence of decisions by Novartis concerning among others adjustments of
stock levels. In addition, changes in market prices and exchange rates affect
the value of deliveries to Novartis.
The exchange rate risk due to the US dollar has decreased in recent years
because the share of Orion's net sales invoiced in dollars has fallen to below
ten per cent and at the same time the value of purchases in dollars has
increased. The greatest exchange rate risk at present relates to European
currencies such the Swedish crown and British pound. However, the overall effect
of the risk due to currencies of European countries will be abated by the fact
that Orion has organisations of its own in most of these countries, which means
that in addition to sales income, there are also costs in these currencies.
Changes in the Japanese yen exchange rate have become more important as sales of
Parkinson's drugs in Japan have increased. The exchange rate effect related to
the Russian rouble has increased due to the strong volatility of the currency.
However, Russian sales are not a significant portion of Orion's entire net
sales.
Orion's broad product range may cause risks to the delivery reliability and make
it challenging to maintain the high quality standard required in production.
Authorities and key customers in different countries undertake regular and
detailed inspections of development and manufacturing of drugs at Orion's
production sites. Any remedial actions that may be required may at least
temporarily have effects that decrease delivery reliability and increase costs.
Orion's product range also includes products manufactured by other
pharmaceutical companies. Possible problems related to the delivery reliability
or quality of the products of those manufacturers may cause a risk to Orion's
delivery reliability. The single-channel system used for pharmaceuticals
distribution in Finland, in which Orion's products have so far been delivered to
customers through only one wholesaler, may also cause risks to delivery
reliability. To ensure deliveries, in addition to Oriola Finland Oy, there are
also other distributors temporarily distributing certain Orion products.
Research projects always entail uncertainty factors that may either increase or
decrease estimated costs. The projects may progress more slowly or faster than
assumed, or they may be discontinued. Nonetheless, changes that may occur in
ongoing clinical studies are reflected in costs relatively slowly, and they are
not expected to have a material impact on earnings in the current year. Owing to
the nature of the research process, the timetables and costs of new studies that
are being started are known well in advance. They therefore typically do not
lead to unexpected changes in the estimated cost structure. Orion generally
undertakes the last, in other words Phase III, clinical trials in collaboration
with other pharmaceutical companies. Commencement of these collaboration
relationships and their structure also materially affect the schedule and cost
level of research projects.
Collaboration arrangements are an important component of Orion's business model.
Possible collaboration and licensing agreements related to these arrangements
also often include payments to be recorded in net sales that may materially
affect Orion's financial results. In 2014-2016 the annual payments varied from
EUR 8 million to EUR 39 million. The payments may be subject to certain
conditions relating to the development of research projects or sales, and
whether these conditions are triggered and the timing of triggering always
entail uncertainties.
Financial objectives (provided on 8 February 2017)
Through the financial objectives Orion aims to develop the Group's shareholder
value and ensure financial stability and profitable growth. Orion's financial
objectives are:
* Growing net sales more rapidly than growth of the pharmaceuticals market.
Achievement of this objective requires continuous investment in development
of the product portfolio.
* Maintaining profitability at a good level. The aim is operating profit that
exceeds 25% of net sales.
* Keeping the equity ratio at least 50%.
* Distributing an annual dividend that in the next few years will be at least
EUR 1.30 per share, and increasing the dividend in the long term.
Orion's dividend distribution policy
Orion's dividend distribution takes into account the distributable funds and the
capital expenditure and other financial requirements in the medium and long term
to achieve the financial objectives.
Shares and shareholders
On 30 September 2017 Orion had a total of 141,257,828 (141,257,828) shares, of
which 37,120,346 (38,581,154) were A shares and 104,137,482 (102,676,674) B
shares. The Group's share capital was EUR 92,238,541.46 (92,238,541.46). At the
end of September 2017 Orion held 675,401 (783,366) B shares as treasury shares.
On 30 September 2017 the aggregate number of votes conferred by the A and B
shares was 845,869,001 (873,516,388) excluding treasury shares.
At the end of September 2017, Orion had 50,745 (48,824) registered shareholders.
Voting rights conferred by shares
Each A share entitles its holder to twenty (20) votes at General Meetings of
Shareholders and each B share one (1) vote. However, a shareholder cannot vote
more than 1/20 of the aggregate number of votes from the different share classes
represented at a General Meeting of Shareholders. The Company itself and Orion
Pension Fund do not have the right to vote at an Orion Corporation General
Meeting of Shareholders.
Both share classes, A and B, confer equal rights to the Company's assets and
dividends.
Conversion of shares
The Articles of Association entitle shareholders to demand the conversion of
their A shares to B shares within the limitation on the maximum number of shares
of a class. In January-September 2017 in total 1,173,808 shares were converted.
Trading in Orion's shares
Orion's A shares and B shares are quoted on Nasdaq Helsinki in the Large Cap
group under the Healthcare sector heading under the trading codes ORNAV and
ORNBV. Trading in both of the Company's share classes commenced on 3 July 2006,
and information on trading in the Company's shares has been available since this
date.
On 30 September 2017 the market capitalisation of the Company's shares,
excluding treasury shares, was EUR 5,522 million.
Orion shares are also traded on various alternative trading platforms in
addition to Nasdaq Helsinki.
Authorisations of the Board of Directors
Orion's Board of Directors was authorised by the Annual General Meeting on 22
March 2016 to decide on acquisition of shares in the Company and on a share
issue in which shares held by the Company can be conveyed. The authorisation to
acquire shares was utilised during 2016. The terms and conditions of the
authorisation were reported in more detail in a stock exchange release on 22
March 2016.
The Board of Directors is not authorised to increase the share capital or to
issue bonds with warrants or convertible bonds or stock options.
Share-based Incentive Plans
Orion has two currently operating share-based incentive plans for key persons of
the Group, which were announced in stock exchange releases published on 5
February 2013 and 2 February 2016.
Share ownership
Orion's shares are in the book-entry system maintained by Euroclear Finland, and
Euroclear Finland maintains Orion's official shareholder register.
At the end of September 2017, Orion had a total of 50,745 (48,824) registered
shareholders, of whom 96% (96%) were private individuals holding 38% (40%) of
the entire share stock and 61% (61%) of the total votes. There were altogether
63 (59) million nominee-registered and foreign-owned shares, which was 45% (42%)
of all shares, and they conferred entitlement to 10% (9%) of the total votes.
At the end of September 2017 Orion held 675,401 (783,366) B shares as treasury
shares, which is 0.48% (0.55%) of the Company's total share stock and 0.08%
(0.09%) of the total votes.
Personnel
The average number of employees in the Orion Group in January-September 2017 was
3,527 (3,442). At the end of September 2017 the Group had a total of 3,513
(3,445) employees, of whom 2,819 (2,784) worked in Finland and 694 (661) outside
Finland.
Salaries and other personnel expenses in January-September 2017 totalled EUR
159 (162) million.
Significant legal proceedings
Companies belonging to the Orion Group are parties to various legal disputes,
which are not, however, considered to be significant legal proceedings for the
Group.
Business Review
Pharmaceuticals
Review of human pharmaceuticals market
Finland is the most important individual market for Orion, generating about one-
third of the total net sales. According to IMS Health statistics, Finnish
wholesale of human pharmaceuticals in January-September 2017 was up by 2% on the
previous year at EUR 1,731 (1,692) million. Orion maintained its position as
leader in marketing pharmaceuticals in Finland. According to statistics
collected by IMS Health, Orion's wholesale of human pharmaceuticals in Finland
in January-September 2017 was at the previous year's level at altogether EUR
219 (218) million. Orion's market share of Finnish pharmaceuticals markets was
13% (13%).
The most important individual therapy area for Orion is still the treatment of
Parkinson's disease. Orion's branded Parkinson's drugs containing entacapone
(Stalevo(®), Comtess(®) and Comtan(®)) account for about 10% of the Group's net
sales.
Total sales of Orion's branded Parkinson's drugs:
EUR or USD million MAT6/2017 MAT6/2016 Change %
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United States USD 8 9 -14%
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Europe TOP 5 EUR 60 81 -26%
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Japan EUR 77 72 +7%
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Source: IMS Health pharmaceutical sales statistics MAT6/2017 (7/2016-6/2017)
Europe TOP 5: Germany, United Kingdom, France, Spain and Italy.
Sales of Orion's branded Parkinson's drugs decreased in Europe due to
commencement of generic competition. Sales increased in Japan, mainly due to
growth in Stalevo, which was launched in that market in 2015.
According to IMS Health pharmaceutical sales statistics, in Europe total sales
of the most common intravenous anaesthetics and intensive care sedatives
(propofol, midazolam, remifentanil and dexmedetomidine) in the 12-month period
ending in June 2017 were up by 1% at EUR 536 (530) million. According to IMS
Health pharmaceutical sales statistics, sales of Orion's Dexdor(®) intensive
care sedative (dexmedetomidine) were up by 43% at EUR 58 (41) million in Europe.
Net sales and operating profit of the Pharmaceuticals business
In January-September 2017 the Pharmaceuticals business's net sales were EUR 768
(754) million and its operating profit was EUR 221 (257) million. Milestone
payments accounted for EUR 9 (11) million of the net sales and operating profit,
and they comprised payments related to marketing rights. The operating profit of
the Pharmaceuticals business was 29% (34%) of the segment's net sales. Operating
profit in the comparative period included EUR 22 million of capital gains on
shares.
Net sales of Orion's top ten pharmaceuticals in January-September 2017 were up
by 7% at EUR 356 (333) million. They accounted for 46% (44%) of the total net
sales of the Pharmaceuticals business.
Proprietary Products
The product portfolio of Proprietary Products consists of patented prescription
products in three therapy areas: central nervous system diseases, oncology and
critical care, and Easyhaler(®) pulmonary drugs.
Net sales of Proprietary Products in January-September 2017 were EUR 261 (269)
million. Sales of Parkinson's drugs continued to decline, but sales of other
products developed well.
Orion's drugs for treatment of Parkinson's disease are Stalevo(®) (active
ingredients carbidopa, levodopa and entacapone) and Comtess(®)/Comtan(®)
(entacapone). Their total net sales in January-September 2017 were down by 22%
at EUR 80 (102) million. In the United States Orion's Parkinson's drugs have
several generic competitors, and competition is increasing in Europe and also
other markets. In Japan Comtan has generic competitors, but generic competition
to Stalevo has not yet commenced.
Breakdown of sales of Parkinson's drugs:
EUR million 1-9/2017 1-9/2016 Change %
----------------------------------------------------------
Stalevo deliveries to Novartis 43 54 -20%
----------------------------------------------------------
Comtan deliveries to Novartis 15 22 -33%
----------------------------------------------------------
Orion's Stalevo sales 19 23 -21%
----------------------------------------------------------
Orion's Comtess sales 4 3 +14%
----------------------------------------------------------
Net sales of Simdax(®), a drug for treatment of acute decompensated heart
failure, in January-September 2017 were up by 5% at EUR 43 (41) million. Simdax
is sold in altogether over fifty countries worldwide.
Total net sales of the Easyhaler(®) product family for treatment of asthma and
chronic obstructive pulmonary disease were up by 18% in January-September 2017
at EUR 55 (47) million. The increase was mainly due to sales of the budesonide-
formoterol combined formulation.
Sales of the budesonide-formoterol combined formulation were up by 44% in
January-September 2017 at EUR 28 (20) million. The geographical expansion of the
product continued, and sales have also commenced in Germany and the United
Kingdom. Deliveries to Orion's co-marketing partner Menarini have commenced, and
during the review period products were delivered to Italy, Spain and Portugal.
In France national marketing authorisation was received in September. There are
also ongoing negotiations concerning commercialisation of the Easyhaler product
family in new markets.
In April 2017 Orion submitted a marketing authorisation application for a
salmeterol-fluticasone combined formulation in Europe, and the process is
progressing according to the planned schedule. Orion is currently expanding
Easyhaler production at the Espoo pharmaceuticals production plant.
Net sales of Orion's Dexdor(®) intensive care sedative (dexmedetomidine) in
January-September 2017 were up by 16% at EUR 47 (41) million. In the first half
of the year Orion became aware that in some European countries marketing
authorisation has been granted for a generic version of Dexdor, and in Germany a
generic version of the product has been launched in the market. Competition has
not yet expanded into other countries. Orion is continuing actions to defend its
rights. The impact of generic competition on sales is still difficult to
estimate at this stage. Sales of the Precedex(®) intensive care sedative were up
by 18% at EUR 18 (16) million, mainly due to greater deliveries of the
pharmaceutical ingredient to the partner than in the comparative period.
Specialty Products
Net sales of the Specialty Products business division's off-patent, i.e. generic
prescription drugs, self-care products and biosimilars in January-September
2017 were up by 4% at EUR 387 (372) million.
Finland, Scandinavia, and Eastern Europe and Russia are the most important
markets for Specialty Products. The business division's sales in Finland in
January-September 2017 were EUR 217 (218) million. Sales have been weakened by
the change made to the pricing system for prescription drugs in Finland at the
beginning of the year, which is estimated to reduce sales by EUR 15 million in
2017. In addition, the delivery problems of Oriola Finland Oy, the
pharmaceuticals distributor used by Orion in Finland, were reflected slightly in
sales in September.
In Scandinavia sales were up by 19% at EUR 72 (60) million. In Eastern Europe
and Russia sales were up by 13% at EUR 47 (41) million.
Net sales of the biosimilar Remsima for treatment of rheumatoid arthritis among
other things were up by 44% at EUR 45 (31) million mainly due to winning the
national tendering competition in Norway and commencement of deliveries related
to it in the second quarter of the year. Remsima is a biosimilar infliximab
developed and manufactured by Orion's collaboration partner South Korean
Celltrion, for which Orion has the distribution rights in the Nordic countries
and Estonia. In addition, Orion has the sales, marketing and distribution rights
to Celltrion's biosimilar rituximab in these countries. The schedule for
launching the product and its indications will depend on the country-specific
patent situation.
Animal Health
In the Nordic countries and some Eastern European markets Orion itself sells
veterinary drugs, and in other markets the Company operates through partners. In
addition, in the Nordic countries Orion markets and sells veterinary drugs
manufactured by several other companies. Orion's Animal Health business division
has a strong market position in the Nordic countries, its home markets.
Net sales of the Animal Health business division in January-September 2017 were
up by 4% at EUR 56 (54) million. Sales of the animal sedative product family at
EUR 22 (16) million accounted for 39% (29%) of the division's net sales. The
product family comprises Orion's animal sedatives Dexdomitor(®)
(dexmedetomidine), Domitor(®) (medetomidine) and Domosedan(®) (detomidine), and
antagonist Antisedan(®) (atipamezole), which reverses the effects of the
sedatives.
Fermion
Fermion manufactures active pharmaceutical ingredients for Orion and other
pharmaceutical companies. Its product range comprises nearly 30 pharmaceutical
ingredients. For other pharmaceutical companies Fermion manufactures generic
pharmaceutical ingredients and offers contract manufacturing services for
development and manufacturing of new active pharmaceutical ingredients.
Fermion's sales developed well. The business division's net sales in January-
September 2017 excluding deliveries for Orion's own use were up by 23% at EUR
41 (33) million and accounted for over one-half of Fermion's entire net sales.
In recent years order cycles in the trade in pharmaceutical raw materials have
become ever shorter, and this has led to clearly greater fluctuation in business
volume than before within each year and between different years. Fermion has an
ongoing significant expansion investment at its Hanko manufacturing plant.
Research and development
The Group's R&D expenses in January-September 2017 were EUR 77 (80) million, of
which the Pharmaceuticals business accounted for EUR 73 (75) million. The
Group's R&D expenses accounted for 10% (10%) of the Group's net sales. R&D
expenses also include expenses related to development of the current portfolio.
In 2014 Orion commenced global collaboration with Bayer in the development and
commercialisation of the novel oral androgen receptor antagonist darolutamide
(ODM-201). The companies have an ongoing joint Phase III clinical trial (ARAMIS)
for evaluation of the efficacy and safety of darolutamide in patients with non-
metastatic castration-resistant prostate cancer (nmCRPC).
In 2016 Orion and Bayer agreed to expand the darolutamide development programme
and towards the end of the year commenced a new Phase III trial (ARASENS). The
trial will evaluate the efficacy and safety of the drug candidate in combination
with standard androgen deprivation therapy (ADT) and the chemotherapy drug
docetaxel in patients having newly diagnosed metastatic hormone-sensitive
prostate cancer (mHSPC) who are starting hormone therapy.
In December 2016 Orion completed trials with a salmeterol-fluticasone combined
formulation in the Easyhaler(®) product family. Based on the positive findings,
in April 2017 Orion submitted a marketing authorisation application for the
product in Europe. In this formulation fluticasone acts as an anti-inflammatory
agent and salmeterol acts as a long-acting bronchodilator.
Orion is continuing development of an alpha-2c adrenoceptor antagonist (ORM-
12741) for treatment of symptoms of Alzheimer's disease in collaboration with
Janssen Pharmaceuticals Inc. Orion has an ongoing Phase IIa clinical trial with
a new drug formulation. In the initial Phase IIa clinical trial conducted by
Orion, the efficacy and safety of the drug candidate in treatment of cognitive
and behavioural symptoms related to Alzheimer's disease were investigated with
positive results.
Orion has completed the Phase II clinical trial with orally administered
levosimendan (ODM-109) for treatment of patients with amyotrophic lateral
sclerosis (ALS). Although the trial did not achieve its primary objective, the
findings were, however, promising. Based on the findings, Orion is planning to
continue the development programme. The US Food and Drug Administration (FDA)
has granted ODM-109 Orphan Drug Designation.
Orion has an ongoing Phase II clinical trial with a drug candidate for treatment
of symptoms of Parkinson's disease in which the COMT inhibitor (ODM-104)
developed by Orion is combined with the pharmaceutical ingredients carbidopa and
long-acting levodopa used to treat Parkinson's disease. In the trial the
efficacy of the drug candidate in treating symptoms of Parkinson's disease will
be investigated and the product will be compared with a Stalevo product already
in the markets in which the active ingredients are the COMT inhibitor
entacapone, carbidopa and levodopa.
Orion has an ongoing Phase II clinical trial with a new targeted FGFR+VEGFR
inhibitor (ODM-203) for treatment of cancers. The trial will investigate the
efficacy of the drug candidate in slowing the growth of solid cancerous tumours
in patients in which FGFR changes in cancerous tumours have been detected.
Orion has an ongoing Phase I clinical trial with a BET protein inhibitor (ODM-
207) which inhibits transcription of key oncogenes such as Myc in many cancers.
In preclinical studies, ODM-207 has shown antiproliferative effects in several
solid tumour cell lines. The trial will investigate the safety and the
tolerability of the drug candidate and provisionally its efficacy in cancer
patients.
In addition, Orion has several projects in the early research phase
investigating central nervous system diseases, cancer and neuropathic pain,
among others.
Diagnostics
Orion Diagnostica manufactures convenient and quick in vitro diagnostic tests
and testing systems suitable for point-of-care testing. Net sales of the
Diagnostics business in January-September 2017 were down by 7% at EUR 39 (41)
million.
QuikRead(®) infection tests remained the main product. With the help of CRP
tests from the QuikRead go(®) product family in infectious disease diagnostics,
antibiotic treatment can be targeted at patients that need it and use of
antibiotics avoided in situations in which a patient would not benefit from
them. Avoiding unnecessary antibiotic treatments helps in tackling the growing
problem of antibiotic resistance.
The operating profit of the Diagnostics business was down by 6% at EUR 6.2 (6.6)
million due to the decrease in sales. The operating profit accounted for 16%
(16%) of the segment's net sales.
Espoo, 26 October 2017
Board of Directors of Orion Corporation
Orion Corporation
Timo Lappalainen Jari Karlson
President and CEO CFO
Tables
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million 7-9/17 7-9/16 Change % 1-9/17 1-9/16 Change % 1-12/16
-----------------------------------------------------------------------------
Net sales 252.7 258.6 -2.3% 804.3 793.6 +1.3% 1,073.5
-----------------------------------------------------------------------------
Cost of goods sold -117.5 -106.8 +10.0% -329.0 -308.5 +6.6% -421.7
-----------------------------------------------------------------------------
Gross profit 135.2 151.7 -10.9% 475.3 485.1 -2.0% 651.8
-----------------------------------------------------------------------------
Other operating
income and expenses 0.7 22.4 -96.7% 0.8 22.3 -96.3% 24.3
-----------------------------------------------------------------------------
Sales and marketing
expenses -45.8 -44.6 +2.7% -146.3 -137.4 +6.5% -194.7
-----------------------------------------------------------------------------
R&D expenses -24.7 -26.9 -8.3% -77.0 -80.3 -4.1% -118.2
-----------------------------------------------------------------------------
Administrative
expenses -9.1 -10.5 -14.1% -33.0 -33.9 -2.8% -48.7
-----------------------------------------------------------------------------
Operating profit 56.4 92.0 -38.8% 219.9 255.9 -14.1% 314.6
-----------------------------------------------------------------------------
Finance income 0.1 0.2 -18.6% 0.4 0.6 -27.3% 0.8
-----------------------------------------------------------------------------
Finance expenses -1.1 -1.2 -9.5% -5.4 -3.7 +48.3% -4.9
-----------------------------------------------------------------------------
Share of associated
companies' results 0.4 -100.0% 0.4
-----------------------------------------------------------------------------
Profit before taxes 55.4 91.0 -39.1% 214.8 253.2 -15.2% 310.9
-----------------------------------------------------------------------------
Income tax expense -11.3 -18.5 -38.7% -44.1 -51.8 -14.9% -61.9
-----------------------------------------------------------------------------
Profit for the
period 44.1 72.5 -39.2% 170.8 201.5 -15.2% 249.0
-----------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME
INCLUDING TAX EFFECTS
-----------------------------------------------------------------------------
Change in value of
available-for-sale
financial assets -5.7 -5.2 -5.2
-----------------------------------------------------------------------------
Translation
differences -0.2 -1.4 -1.4 -5.2 -4.6
-----------------------------------------------------------------------------
Items that may be
reclassified
subsequently to
profit and loss -0.2 -7.1 -1.4 -10.3 -9.8
-----------------------------------------------------------------------------
Items due to
remeasurement of
defined benefit
plans -0.0 -0.0 0.0 -0.0 3.7
-----------------------------------------------------------------------------
Items that will not
be reclassified to
profit and loss -0.0 -0.0 0.0 -0.0 3.7
-----------------------------------------------------------------------------
Other comprehensive
income net of tax -0.2 -7.1 -1.3 -10.4 -6.1
-----------------------------------------------------------------------------
Comprehensive
income for the
period including
tax effects 43.9 65.4 -32.9% 169.5 191.1 -11.3% 243.0
-----------------------------------------------------------------------------
PROFIT ATTRIBUTABLE
TO:
-----------------------------------------------------------------------------
Owners of the
parent company 44.1 72.5 -39.2% 170.8 201.5 -15.2% 249.0
-----------------------------------------------------------------------------
Non-controlling
interests -0.0 0.0 -0.0 0.0 0.0
-----------------------------------------------------------------------------
COMPREHENSIVE
INCOME ATTRIBUTABLE
TO:
-----------------------------------------------------------------------------
Owners of the
parent company 43.9 65.4 -32.9% 169.5 191.1 -11.3% 243.0
-----------------------------------------------------------------------------
Non-controlling
interests -0.0 0.0 -0.0 0.0 0.0
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Basic earnings per
share, EUR (1)) 0.31 0.52 -39.3% 1.22 1.43 -15.1% 1.77
-----------------------------------------------------------------------------
Diluted earnings
per share, EUR (1)) 0.31 0.52 -39.3% 1.22 1.43 -15.1% 1.77
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Depreciation,
amortisation and
impairment 10.5 10.2 +2.5% 31.2 30.4 +2.8% 40.6
-----------------------------------------------------------------------------
Personnel expenses 47.0 49.2 -4.5% 159.1 162.3 -2.0% 224.4
-----------------------------------------------------------------------------
(1)) The figure has been calculated from the profit
attributable to the owners of the parent company.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
EUR million 9/17 9/16 Change % 12/16
-------------------------------------------------------------------------------
Property, plant and equipment 317.7 282.0 +12.6% 289.1
-------------------------------------------------------------------------------
Goodwill 13.5 13.5 13.5
-------------------------------------------------------------------------------
Intangible rights 38.5 38.5 -0.1% 37.9
-------------------------------------------------------------------------------
Other intangible assets 2.6 2.5 +7.3% 2.5
-------------------------------------------------------------------------------
Investments in associates 0.1 0.1 0.1
-------------------------------------------------------------------------------
Available-for-sale financial assets 0.3 0.4 -24.6% 0.4
-------------------------------------------------------------------------------
Pension asset 19.6 18.6 +5.3% 22.8
-------------------------------------------------------------------------------
Deferred tax assets 1.1 1.1 -2.4% 1.5
-------------------------------------------------------------------------------
Other non-current assets 2.5 3.9 -36.1% 3.8
-------------------------------------------------------------------------------
Non-current assets total 395.8 360.5 +9.8% 371.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Inventories 218.7 218.4 +0.1% 227.5
-------------------------------------------------------------------------------
Trade receivables 187.8 185.5 +1.2% 200.1
-------------------------------------------------------------------------------
Other receivables 34.8 35.9 -3.0% 31.9
-------------------------------------------------------------------------------
Money market investments 20.0 -100.0% 31.0
-------------------------------------------------------------------------------
Cash and cash equivalents 133.1 178.2 -25.3% 200.9
-------------------------------------------------------------------------------
Current assets total 574.4 638.0 -10.0% 691.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Assets total 970.1 998.6 -2.8% 1,062.9
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
EUR million 9/17 9/16 Change % 12/16
-------------------------------------------------------------------------------
Share capital 92.2 92.2 92.2
-------------------------------------------------------------------------------
Expendable fund 0.5 0.5 0.5
-------------------------------------------------------------------------------
Other reserves 2.4 2.1 +13.8% 2.0
-------------------------------------------------------------------------------
Retained earnings 499.5 494.1 +1.1% 546.6
-------------------------------------------------------------------------------
Equity attributable to owners of the parent
company 594.5 588.9 +1.0% 641.4
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 -306.3% 0.0
-------------------------------------------------------------------------------
Equity total 594.5 588.9 +1.0% 641.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Deferred tax liabilities 35.2 34.4 +2.3% 37.1
-------------------------------------------------------------------------------
Pension liability 3.0 3.0 -1.3% 3.2
-------------------------------------------------------------------------------
Provisions 0.3 0.3 +7.6% 0.3
-------------------------------------------------------------------------------
Interest-bearing non-current liabilities 150.4 150.1 +0.2% 150.2
-------------------------------------------------------------------------------
Other non-current liabilities 0.0 0.0 +5.6% 0.0
-------------------------------------------------------------------------------
Non-current liabilities total 188.8 187.8 +0.6% 190.8
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Trade payables 92.1 83.3 +10.5% 106.1
-------------------------------------------------------------------------------
Current tax liabilities 3.0 15.4 -80.5% 9.1
-------------------------------------------------------------------------------
Other current liabilities 90.5 99.9 -9.4% 112.9
-------------------------------------------------------------------------------
Provisions 0.1 0.0 +634.8% 0.2
-------------------------------------------------------------------------------
Interest-bearing current liabilities 1.0 23.2 -95.5% 2.3
-------------------------------------------------------------------------------
Current liabilities total 186.8 221.9 -15.8% 230.7
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Liabilities total 375.6 409.7 -8.3% 421.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity and liabilities total 970.1 998.6 -2.8% 1,062.9
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
a. Share capital
b. Expendable fund
c. Other reserves
d. Items due to remeasurement of defined
benefit plans
e. Translation
differences
f. Retained earnings
g. Non-controlling interests
h. Equity total
Equity attributable to owners of the
parent company
-------------------------------------------
EUR million a. b. c. d. e. f. g. h.
-------------------------------------------------------------------------------
Equity at 1 January 2016 92.2 0.5 6.9 -1.6 -1.5 498.4 0.0 594.9
-------------------------------------------------------------------------------
Profit for the period 201.5 201.5
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Change in value of
available-for-sale financial
assets -5.2 -5.2
-------------------------------------------------------------------------------
Translation differences -5.2 -5.2
-------------------------------------------------------------------------------
Items due to
remeasurement of defined
benefit plans -0.0 -0.0
-------------------------------------------------------------------------------
Transactions with owners
-------------------------------------------------------------------------------
Dividend and capital
repayment -183.3 -183.3
-------------------------------------------------------------------------------
Treasury shares -16.8 -16.8
-------------------------------------------------------------------------------
Share-based incentive
plan 3.0 3.0
-------------------------------------------------------------------------------
Other adjustments 0.3 -0.4 0.0 -0.0
-------------------------------------------------------------------------------
Equity at 30 September
2016 92.2 0.5 2.1 -1.7 -6.7 502.5 0.0 588.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity at 1 January 2017 92.2 0.5 2.0 2.0 -6.2 550.7 0.0 641.4
-------------------------------------------------------------------------------
Profit for the period 170.8 170.8
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Translation differences -1.4 -1.4
-------------------------------------------------------------------------------
Items due to
remeasurement of defined
benefit plans 0.0 0.0
-------------------------------------------------------------------------------
Transactions with owners
-------------------------------------------------------------------------------
Dividend and capital
repayment -218.2 -218.2
-------------------------------------------------------------------------------
Share-based incentive
plan 1.9 1.9
-------------------------------------------------------------------------------
Other adjustments 0.3 -0.3 0.0 0.0
-------------------------------------------------------------------------------
Equity at 30 September
2017 92.2 0.5 2.4 2.1 -7.5 504.9 0.0 594.5
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR million 1-9/17 1-9/16 1-12/16
-------------------------------------------------------------------------------
Operating profit 219.9 255.9 314.6
-------------------------------------------------------------------------------
Adjustments 35.3 15.3 26.8
-------------------------------------------------------------------------------
Change in working capital -17.7 -45.9 -33.0
-------------------------------------------------------------------------------
Interest paid -5.6 -9.7 -11.9
-------------------------------------------------------------------------------
Interest received 1.3 5.8 7.7
-------------------------------------------------------------------------------
Dividends received 0.0 0.1 0.1
-------------------------------------------------------------------------------
Income taxes paid -52.3 -40.7 -55.2
-------------------------------------------------------------------------------
Total net cash flow from operating activities 180.9 180.7 249.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Investments in property, plant and equipment -52.1 -29.0 -41.0
-------------------------------------------------------------------------------
Investments in intangible assets -8.7 -4.9 -6.7
-------------------------------------------------------------------------------
Sales of property, plant and equipment, and available-
for-sale investments 1.3 26.2 26.6
-------------------------------------------------------------------------------
Total net cash flow from investing activities -59.5 -7.7 -21.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Current loans raised 1.3 1.2 1.2
-------------------------------------------------------------------------------
Repayments of current loans -2.2 -1.1 -1.5
-------------------------------------------------------------------------------
Repayments of non-current loans -15.9 -36.7
-------------------------------------------------------------------------------
Treasury shares -16.8 -16.8
-------------------------------------------------------------------------------
Dividends paid and other distribution of profits -218.0 -183.4 -183.6
-------------------------------------------------------------------------------
Total net cash flow from financing activities -218.9 -216.1 -237.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net change in cash and cash equivalents -97.5 -43.0 -9.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cash and cash equivalents at the beginning of the period 231.9 245.2 245.2
-------------------------------------------------------------------------------
Foreign exchange differences -1.3 -4.0 -3.9
-------------------------------------------------------------------------------
Net change in cash and cash equivalents -97.5 -43.0 -9.4
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 133.1 198.2 231.9
-------------------------------------------------------------------------------
Reconciliation of cash and cash equivalents in statement
of financial position
-------------------------------------------------------------------------------
Cash and cash equivalents in statement of financial
position at the end of the period 133.1 178.2 200.9
-------------------------------------------------------------------------------
Money market investments at the end of the period 20.0 31.0
-------------------------------------------------------------------------------
Cash and cash equivalents in the statement of cash flows 133.1 198.2 231.9
-------------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 9/17 9/16 12/16
-------------------------------------------------------------------
Carrying amount at the beginning of the period 289.1 276.4 276.4
-------------------------------------------------------------------
Additions 53.1 29.3 44.5
-------------------------------------------------------------------
Disposals -0.6 -0.9 -1.4
-------------------------------------------------------------------
Depreciation and impairments -23.8 -22.9 -30.5
-------------------------------------------------------------------
Carrying amount at the end of the period 317.7 282.0 289.1
-------------------------------------------------------------------
CHANGES IN INTANGIBLE ASSETS (EXCLUDING GOODWILL)
EUR million 9/17 9/16 12/16
------------------------------------------------------------------
Carrying amount at the beginning of the period 40.4 44.3 44.3
------------------------------------------------------------------
Additions 8.3 4.2 6.2
------------------------------------------------------------------
Disposals -0.0 -0.0
------------------------------------------------------------------
Amortisation and impairments -7.4 -7.5 -10.1
------------------------------------------------------------------
Carrying amount at the end of the period 41.1 41.0 40.4
------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
EUR million 9/17 9/16 12/16
--------------------------------------------------------------------------
CONTINGENCIES FOR OWN LIABILITIES
--------------------------------------------------------------------------
Guarantees 4.1 4.1 4.1
--------------------------------------------------------------------------
OTHER LIABILITIES
--------------------------------------------------------------------------
Leasing liabilities (excluding finance lease contracts) 5.7 7.0 6.7
--------------------------------------------------------------------------
Other liabilities 0.3 0.3 0.3
--------------------------------------------------------------------------
DERIVATIVES
EUR million 9/17 9/16 12/16
--------------------------------------------------------------
CURRENCY FORWARD CONTRACTS AND CURRENCY SWAPS
--------------------------------------------------------------
Fair value, EUR million -0.8 -0.4 -0.1
--------------------------------------------------------------
Nominal value, EUR million 31.3 35.2 25.1
--------------------------------------------------------------
CURRENCY OPTIONS
--------------------------------------------------------------
Fair value, EUR million 0.0 -0.0 -0.0
--------------------------------------------------------------
Nominal value, EUR million 44.0 37.4 31.7
--------------------------------------------------------------
FAIR VALUE MEASUREMENT AND HIERARCHY OF FINANCIAL INSTRUMENTS
EUR million Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------------
Derivatives
-------------------------------------------------------------------------------
Currency derivatives 0.4 0.4
-------------------------------------------------------------------------------
Available-for-sale
financial assets
-------------------------------------------------------------------------------
Shares and investments 0.3 0.3
-------------------------------------------------------------------------------
Assets total 0.4 0.3 0.7
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Derivatives
-------------------------------------------------------------------------------
Currency derivatives -1.2 -1.2
-------------------------------------------------------------------------------
Liabilities total -1.2 -1.2
-------------------------------------------------------------------------------
The level 1 fair value of financial instruments is based on quotations
available in active markets. The level 2 fair value of financial instruments
is based on data feeds available in the markets. The fair value of level 3
derivatives cannot be estimated on the basis of data available in the markets.
In the Group the principle is applied that transfers between levels of fair
value hierarchy are recognised on the date on which the event triggering the
transfer occurred.
No transfers between levels occurred during the
reporting period.
RELATED PARTY TRANSACTIONS
EUR million 1-9/17 1-9/16 1-12/16
-------------------------------------------------------------------------------
Management's employment
benefits 6.5 6.3 6.8
-------------------------------------------------------------------------------
Operating segment performance
NET SALES BY BUSINESS DIVISION
EUR million 7-9/17 7-9/16 Change % 1-9/17 1-9/16 Change % 1-12/16
-------------------------------------------------------------------------------
Pharmaceuticals 241.5 245.7 -1.7% 767.6 754.5 +1.7% 1,021.6
-------------------------------------------------------------------------------
Proprietary Products 75.2 83.4 -9.8% 261.1 268.7 -2.8% 350.4
-------------------------------------------------------------------------------
Specialty Products 132.2 125.9 +5.0% 386.7 371.9 +4.0% 507.8
-------------------------------------------------------------------------------
Animal Health 14.8 15.4 -3.9% 55.7 53.6 +3.9% 77.3
-------------------------------------------------------------------------------
Fermion 12.4 12.7 -2.6% 40.5 32.9 +22.8% 47.6
-------------------------------------------------------------------------------
Contract manufacturing
and other 6.9 8.3 -16.8% 23.7 27.3 -13.2% 38.5
-------------------------------------------------------------------------------
Diagnostics 11.7 13.4 -12.6% 38.6 41.3 -6.6% 54.8
-------------------------------------------------------------------------------
Group items -0.5 -0.6 -9.1% -2.0 -2.1 -7.9% -2.8
-------------------------------------------------------------------------------
Group total 252.7 258.6 -2.3% 804.3 793.6 +1.3% 1,073.5
-------------------------------------------------------------------------------
OPERATING PROFIT BY BUSINESS
AREA
EUR million 7-9/17 7-9/16 Change % 1-9/17 1-9/16 Change % 1-12/16
-------------------------------------------------------------------------------
Pharmaceuticals 57.4 91.8 -37.5% 221.1 256.8 -13.9% 316.4
-------------------------------------------------------------------------------
Diagnostics 1.4 2.2 -35.0% 6.2 6.6 -6.4% 8.4
-------------------------------------------------------------------------------
Group items -2.5 -2.0 +25.4% -7.5 -7.6 -1.2% -10.2
-------------------------------------------------------------------------------
Group total 56.4 92.0 -38.8% 219.9 255.9 -14.1% 314.6
-------------------------------------------------------------------------------
NET SALES BY ANNUAL QUARTERS
2017 2016 2015
+------------------+-----------------------+-----+
EUR million | 7-9 4-6 1-3|10-12 7-9 4-6 1-3|10-12|
----------------+------------------+-----------------------+-----+
Pharmaceuticals|241.5 260.7 265.5|267.1 245.7 259.5 249.3|247.3|
----------------+------------------+-----------------------+-----+
Diagnostics | 11.7 12.4 14.4| 13.5 13.4 14.4 13.5| 15.2|
----------------+------------------+-----------------------+-----+
Group items | -0.5 -0.7 -0.7| -0.7 -0.6 -0.7 -0.8| -0.9|
----------------+------------------+-----------------------+-----+
Group total |252.7 272.4 279.2|279.9 258.6 273.1 262.0|261.6|
----------------+------------------+-----------------------+-----+
OPERATING PROFIT BY ANNUAL QUARTERS
2017 2016 2015
+------------------------+--------------------+-----+
EUR million | 7-9 4-6 1-3|10-12 7-9 4-6 1-3|10-12|
----------------+------------------------+--------------------+-----+
Pharmaceuticals|57.4 73.5 90.2| 59.6 91.8 84.9 80.1| 52.1|
----------------+------------------------+--------------------+-----+
Diagnostics | 1.4 1.3 3.5| 1.7 2.2 1.8 2.6| 1.7|
----------------+------------------------+--------------------+-----+
Group items |-2.5 -3.0 -2.0| -2.6 -2.0 -3.2 -2.4| -2.9|
----------------+------------------------+--------------------+-----+
Group total |56.4 71.8 91.7| 58.7 92.0 83.5 80.3| 50.9|
----------------+------------------------+--------------------+-----+
GEOGRAPHICAL BREAKDOWN OF NET SALES BY ANNUAL QUARTERS
2017 2016 2015
+-----------------+----------------------------+-----+
EUR million | 7-9 4-6 1-3|10-12 7-9 4-6 1-3|10-12|
--------------+-----------------+----------------------------+-----+
Finland | 81.0 82.8 81.9| 91.8 84.4 82.1 80.1| 85.1|
--------------+-----------------+----------------------------+-----+
Scandinavia | 47.4 50.1 44.7| 45.5 39.6 44.3 44.7| 47.0|
--------------+-----------------+----------------------------+-----+
Other Europe | 75.7 81.7 83.0| 89.0 78.1 85.5 83.2| 81.9|
--------------+-----------------+----------------------------+-----+
North America| 17.2 16.1 19.6| 29.7 18.7 19.6 18.2| 16.1|
--------------+-----------------+----------------------------+-----+
Other markets| 31.4 41.7 50.0| 23.9 37.8 41.6 35.8| 31.5|
--------------+-----------------+----------------------------+-----+
Group total |252.7 272.4 279.2|279.9 258.6 273.1 262.0|261.6|
--------------+-----------------+----------------------------+-----+
Business reviews
KEY FIGURES FOR PHARMACEUTICALS
BUSINESS
EUR million 7-9/17 7-9/16 Change % 1-9/17 1-9/16 Change % 1-12/16
-------------------------------------------------------------------------------
Net sales 241.5 245.7 -1.7% 767.6 754.5 +1.7% 1,021.6
-------------------------------------------------------------------------------
Operating profit 57.4 91.8 -37.5% 221.1 256.8 -13.9% 316.4
-------------------------------------------------------------------------------
% of net sales 23.8% 37.4% 28.8% 34.0% 31.0%
-------------------------------------------------------------------------------
R&D expenses 23.3 25.3 -7.9% 72.6 75.3 -3.6% 111.5
-------------------------------------------------------------------------------
% of net sales 9.7% 10.3% 9.5% 10.0% 10.9%
-------------------------------------------------------------------------------
Capital expenditure 21.6 11.2 +93.0% 59.9 33.0 +81.6% 49.7
-------------------------------------------------------------------------------
% of net sales 8.9% 4.5% 7.8% 4.4% 4.9%
-------------------------------------------------------------------------------
Sales revenue from
proprietary products 83.0 88.0 -5.7% 285.6 282.4 +1.1% 377.0
-------------------------------------------------------------------------------
Assets 773.3 738.2 776.9
-------------------------------------------------------------------------------
Liabilities 174.8 175.9 209.0
-------------------------------------------------------------------------------
Personnel at the end of
the period 3,196 3,140 3,161
-------------------------------------------------------------------------------
TOP TEN BEST-SELLING PHARMACEUTICAL PRODUCTS
EUR million 7-9/17 7-9/16 Change % 1-9/17 1-9/16 Change % 1-12/16
-------------------------------------------------------------------------------
Stalevo(®), Comtess(®)
and Comtan(®)
(Parkinson's disease) 22.2 30.7 -27.7% 79.9 102.3 -21.9% 124.2
-------------------------------------------------------------------------------
Easyhaler(® )product
family (asthma, COPD) 18.3 14.9 +22.6% 55.2 46.8 +17.8% 63.7
-------------------------------------------------------------------------------
Dexdor(®) (intensive
care sedative) 13.3 12.9 +2.6% 47.0 40.6 +15.7% 56.8
-------------------------------------------------------------------------------
Remsima(®) (rheumatoid
arthritis, inflammatory
bowel diseases) 16.9 9.4 +80.6% 44.6 31.1 +43.6% 42.3
-------------------------------------------------------------------------------
Simdax(®) (acute
decompensated heart
failure) 12.9 13.2 -2.3% 42.6 40.8 +4.5% 56.4
-------------------------------------------------------------------------------
Dexdomitor(®),
Domitor(®), Domosedan(®)
and Antisedan(®) (animal
sedatives) 4.2 3.7 +13.3% 21.7 15.8 +37.8% 28.1
-------------------------------------------------------------------------------
Precedex(®) (intensive
care sedative) 5.1 5.8 -12.1% 18.4 15.6 +18.4% 19.6
-------------------------------------------------------------------------------
Burana(®) (inflammatory
pain) 6.3 6.2 +1.8% 17.7 16.6 +6.9% 23.1
-------------------------------------------------------------------------------
Generic entacapone
products (Parkinson's
disease) 7.2 3.2 +123.2% 15.1 9.7 +54.7% 13.2
-------------------------------------------------------------------------------
Marevan(®)
(anticoagulant) 4.4 5.2 -15.5% 13.8 14.1 -2.2% 18.2
-------------------------------------------------------------------------------
Total 110.8 105.2 +5.3% 356.0 333.4 +6.8% 445.5
-------------------------------------------------------------------------------
Share of
pharmaceutical net sales 46% 43% 46% 44% 44%
-------------------------------------------------------------------------------
KEY FIGURES FOR DIAGNOSTICS BUSINESS
EUR million 7-9/17 7-9/16 Change % 1-9/17 1-9/16 Change % 1-12/16
-------------------------------------------------------------------------------
Net sales 11.7 13.4 -12.6% 38.6 41.3 -6.6% 54.8
-------------------------------------------------------------------------------
Operating profit 1.4 2.2 -35.0% 6.2 6.6 -6.4% 8.4
-------------------------------------------------------------------------------
% of net sales 12.3% 16.5% 16.1% 16.1% 15.3%
-------------------------------------------------------------------------------
R&D expenses 1.4 1.6 -14.2% 4.5 5.2 -12.2% 6.9
-------------------------------------------------------------------------------
% of net sales 11.9% 12.1% 11.8% 12.5% 12.6%
-------------------------------------------------------------------------------
Capital expenditure 0.5 0.5 -1.8% 1.2 0.8 +40.1% 1.1
-------------------------------------------------------------------------------
% of net sales 4.5% 4.0% 3.0% 2.0% 2.0%
-------------------------------------------------------------------------------
Assets 48.3 48.0 48.8
-------------------------------------------------------------------------------
Liabilities 7.5 8.1 17.6
-------------------------------------------------------------------------------
Personnel at the end of
the period 293 281 284
-------------------------------------------------------------------------------
KEY CLINICAL PHARMACEUTICAL DEVELOPMENT PROJECTS
+----------------------+--------------------+--------------------+-------------+
| | | PHASE | |
| Project | Indication +---+----+-----------+Registration |
| | | I | II | III | |
+----------------------+--------------------+---+----+-----------+-------------+
|Easyhaler(®) | | | |
|salmeterol-fluticasone|Asthma, COPD |Bioequivalence study|Registration*|
| | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|Darolutamide (ODM- |Prostate cancer | I | II | III* | |
|201) (1)) |(nmCRPC) | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|Darolutamide (ODM- |Prostate cancer | I | II | III* | |
|201) (1)) |(mHSPC) | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|ORM-12741 (alpha-2c | | | | | |
|adrenoceptor |Alzheimer's disease | I |IIa*| | |
|antagonist) (2)) | | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|ODM-109 (oral |ALS | I | II | | |
|levosimendan) | | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|ODM-104 (more | | | | | |
|effective COMT |Parkinson's disease | I |II* | | |
|inhibitor) | | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|ODM-203 (targeted |Solid tumours | I |II* | | |
|FGFR+VEGFR inhibitor) | | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
|ODM-207 (BET protein |Cancer |I* | | | |
|inhibitor) | | | | | |
+----------------------+--------------------+---+----+-----------+-------------+
| | * |= Phase ongoing |
| +---+------------------------------+
|(1) )In collaboration with Bayer (2) )In |III|= Status changed vs. previous |
|collaboration with Janssen Pharmaceuticals.| |quarter |
| +---+------------------------------+
| | | |
+-------------------------------------------+---+------------------------------+
Information on Orion's shares
BASIC SHARE INFORMATION 30 SEPTEMBER 2017
A shares B shares Total
------------------------------------------------------------------------------
Trading code on Nasdaq
Helsinki ORNAV ORNBV
------------------------------------------------------------------------------
Listing day 1.7.2006 1.7.2006
------------------------------------------------------------------------------
ISIN code FI0009014369 FI0009014377
------------------------------------------------------------------------------
ICB code 4500 4500
------------------------------------------------------------------------------
Reuters code ORNAV.HE ORNBV.HE
------------------------------------------------------------------------------
Bloomberg code ORNAV.FH ORNBV.FH
------------------------------------------------------------------------------
Share capital, EUR million 24.2 68.0 92.2
------------------------------------------------------------------------------
Counter book value per
share, EUR 0.65 0.65
------------------------------------------------------------------------------
Total number of shares 37,120,346 104,137,482 141,257,828
------------------------------------------------------------------------------
% of total share stock 26% 74% 100%
------------------------------------------------------------------------------
Number of treasury shares 675,401 675,401
------------------------------------------------------------------------------
Total number of shares
excluding treasury shares 37,120,346 103,462,081 140,582,427
------------------------------------------------------------------------------
Minimum number of shares 1
------------------------------------------------------------------------------
Maximum number of A and B
shares, and
maximum number of all shares 500,000,000 1,000,000,000 1,000,000,000
------------------------------------------------------------------------------
Votes per
share 20 1
------------------------------------------------------------------------------
Number of votes excluding
treasury shares 742,406,920 103,462,081 845,869,001
------------------------------------------------------------------------------
% of total
votes 88% 12% 100%
------------------------------------------------------------------------------
Total number of
shareholders 17,306 39,077 50,745
------------------------------------------------------------------------------
Both share classes, A and B, confer equal rights
to the Company's assets and dividends.
INFORMATION ON TRADING ON NASDAQ HELSINKI, 1 JANUARY - 30 SEPTEMBER 2017
A shares B shares Total
---------------------------------------------------------------------------
Shares
traded 2,573,860 57,320,070 59,893,930
---------------------------------------------------------------------------
% of the total number of shares 6.8% 55.3% 42.4%
---------------------------------------------------------------------------
Trading volume, EUR million 126.7 2,731.3 2,858.0
---------------------------------------------------------------------------
Closing quotation on 31 December
2016, EUR 42.38 42.29
---------------------------------------------------------------------------
Lowest quotation, EUR (A and
B 29 September 2017) 38.55 38.56
---------------------------------------------------------------------------
Average quotation, EUR 49.21 47.65
---------------------------------------------------------------------------
Highest quotation,
EUR (A and B
2 June 2017) 56.40 56.50
---------------------------------------------------------------------------
Closing quotation on 30 September
2017, EUR 39.34 39.26
---------------------------------------------------------------------------
Market capitalisation excluding
treasury shares on 30 September
2017,
EUR million 1,460.3 4,061.9 5,522.2
---------------------------------------------------------------------------
PERFORMANCE PER SHARE
7-9/17 7-9/16 Change % 1-9/17 1-9/16 Change % 10-12/16
------------------------------------------------------------------------------
Basic earnings
per share, EUR 0.31 0.52 -39.3% 1.22 1.43 -15.1% 1.77
------------------------------------------------------------------------------
Diluted earnings
per share, EUR 0.31 0.52 -39.3% 1.22 1.43 -15.1% 1.77
------------------------------------------------------------------------------
Cash flow per
share before
financial items,
EUR 0.47 0.67 -30.2% 0.86 1.23 -29.7% 1.62
------------------------------------------------------------------------------
Equity per share,
EUR 4.23 4.19 +0.9% 4.57
------------------------------------------------------------------------------
Average number of
shares excluding
treasury shares,
1,000 shares 140,582 140,474 140,559 140,737 140,671
------------------------------------------------------------------------------
Appendices
Reporting
Orion Corporation is the parent company of the Orion Group. The Group consists
of two business areas, or operating segments, and five business divisions. Orion
reports on its operations segmentally.
* Pharmaceuticals business
* Proprietary Products (patented prescription products for three therapy
areas)
* Specialty Products (off-patent generic prescription products, self-care
products and biosimilars)
* Animal Health (veterinary products for pets and production animals)
* Fermion (active pharmaceutical ingredients for Orion and other
companies)
* Diagnostics business
* Orion Diagnostica (diagnostic test systems for point-of-care in
healthcare and hygiene tests for industry).
Contract manufacturing and other, i.e. manufacturing for other companies, is
included in the Pharmaceuticals business segment, but it is not a separate
business division, it is part of the Group's Supply Chain organisation.
Accounting policies
This report has been prepared in accordance with the IAS 34 Interim Financial
Reporting standard. The same accounting policies as for the Financial Statements
for 2016, supplemented by amendments to existing IFRS and IAS standards endorsed
by the EU that have been adopted as of 1 January 2017, have been applied in
preparing the report. The amendments to standards had no effect on the
Consolidated Financial Statements.
The policies and calculation methods applied during the period can be found on
the Orion website at http://www.orion.fi/en/investors.
Other matters
The data in this financial review are not audited.
The figures in parentheses are for the corresponding period of the previous
year. All the figures in this report have been rounded, which is why the total
sums of individual figures may differ from the total sums shown.
CALCULATION OF THE KEY FIGURES
Profit before taxes + Interest
and other finance expenses
Return on capital employed (ROCE), % =----------------------------------x 100
Total assets - Non-interest-
bearing liabilities (average
during the period)
Profit for the period
Return on equity (ROE), % =----------------------------------x 100
Total equity (average during the
period)
Equity
Equity ratio, % =----------------------------------x 100
Total assets - Advances received
Interest-bearing liabilities -
Cash and cash equivalents -
Gearing, % = Money market investments x 100
----------------------------------
Equity
Profit available for the owners
of the parent company
Earnings per share, EUR =----------------------------------
Average number of shares during
the period, excluding treasury
shares
Cash flow from operating
activities + Cash flow from
Cash flow per share before financial investing activities
items, EUR =----------------------------------
Average number of shares during
the period, excluding treasury
shares
Equity of the owners of the
parent company
=----------------------------------
Equity per share, EUR Number of shares at the end of
the period, excluding treasury
share
Dividend to be distributed for
the period
Dividend per share, EUR =----------------------------------
Number of shares at the end of
the period, excluding treasury
shares
Dividend per share
Payout ratio, % =----------------------------------x 100
Earnings per share
Dividend per share
Effective dividend yield, % =----------------------------------x 100
Closing quotation of the period
Closing quotation of the period
Price/earnings ratio (P/E) =----------------------------------
Earnings per share
Total EUR value of shares traded
Average share price, EUR =----------------------------------
Average number of traded shares
during the period
Market capitalisation, EUR million = Number of shares at the end of
the period × Closing quotation
of the period
Publisher:
Orion Corporation
http://www.orion.fi/
http://www.twitter.com/OrionCorpIR
Orion is a globally operating Finnish pharmaceutical company - a builder of
well-being. Orion develops, manufactures and markets human and veterinary
pharmaceuticals, active pharmaceutical ingredients and diagnostic tests. The
company is continuously developing new drugs and treatment methods. The core
therapy areas of Orion's pharmaceutical R&D are central nervous system (CNS)
disorders, oncology and respiratory for which Orion develops inhaled
Easyhaler(®) pulmonary drugs. Orion's net sales in 2016 amounted to EUR 1,074
million and the Company had about 3,500 employees. Orion's A and B shares are
listed on Nasdaq Helsinki. Orion, established in 1917, is celebrating its
centenary in 2017.
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