ORION CORPORATION FINANCIAL STATEMENT RELEASE 2009 9 FEBRUARY 2010
at 12:00 EET
Orion's net sales in 2009 totalled EUR 771.5 million (EUR 710.7 million in
2008), up by 8.5% on the previous year.
* Operating profit was EUR 207.0 (185.0) million.
* Profit before taxes was EUR 203.7 (184.2) million.
* Equity ratio was 60.6% (60.2%).
* ROCE before taxes was 37.4% (38.5%).
* ROE after taxes was 35.3% (32.1%).
* Earnings per share were EUR 1.07 (0.97).
* Cash flow per share before financial items was EUR 1.03 (0.66).
* Board's proposal for dividend per share is EUR 1.00 (0.95).
· Proposal by the Board that EUR 0.10 per share be distributed from the
expendable fund in the distributable equity as a repayment of capital.
ORION'S KEY FIGURES FOR THE REVIEW PERIOD
Q4/09 Q4/08 Change % 2009 2008 Change %
--------------------------------------------------------------------------------
Net sales, EUR million 193.3 179.9 +7.4% 771.5 710.7 +8.5%
International operations, EUR
million 134.1 124.6 +7.6% 548.2 493.6 +11.1%
% of net sales 69.4% 69.3% 71.1% 69.4%
Operating profit, EUR million 43.9 32.8 +33.8% 207.0 185.0 +11.9%
% of net sales 22.7% 18.3% 26.8% 26.0%
Profit before taxes, EUR million 43.1 32.1 +34.2% 203.7 184.2 +10.6%
% of net sales 22.3% 17.9% 26.4% 25.9%
Income tax expense, EUR million 10.1 7.5 +35.4% 52.3 47.8 +9.3%
R&D expenses, EUR million 25.6 25.5 +0.2% 95.2 90.0 +5.7%
% of net sales 13.2% 14.2% 12.3% 12.7%
Capital expenditure, EUR million 9.1 12.8 -28.6% 60.4 56.8 +6.2%
% of net sales 4.7% 7.1% 7.8% 8.0%
Assets total, EUR million 727.1 695.5 +4.5%
Equity ratio, % 60.6% 60.2%
Gearing, % -8.9% -7.1%
Interest-bearing liabilities, EUR
million 131.5 146.3 -10.1%
Non-interest-bearing liabilities,
EUR million 156.5 130.6 +19.8%
Cash and cash equivalents, EUR
million 170.5 176.1 -3.2%
ROCE (before taxes), % 37.4% 38.5%
ROE (after taxes), % 35.3% 32.1%
Earnings per share, EUR 0.23 0.18 +33.8% 1.07 0.97 +11.1%
Cash flow per share before financial
items, EUR 0.34 0.23 +48.1% 1.03 0.66 +56.9%
Equity per share, EUR 3.11 2.97 +4.9%
Proposed dividend per share, EUR
(1)) 1.00 0.95 +5.3%
Personnel at the end of the period 3,147 3,309 -4.9%
Average personnel during the period 3,192 3,270 -2.4%
Personnel expenses, EUR million 171.4 170.9 +0.3%
--------------------------------------------------------------------------------
1) The Board of Directors proposes to the Annual General Meeting that EUR 0.10
per share be distributed from the expendable fund in the distributable equity as
a repayment of capital.
The Orion Group changed its accounting policy regarding product development
costs as of 1 January 2009. Costs relating to the support of products already on
the market (mainly generic products) are now recognised in cost of goods sold
instead of R&D expenses in the Statement of Comprehensive Income. This change
has no effect on reported key figures, operating profit and Statement of
Financial Position, but it reduces the R&D expenses previously reported for
2008 by EUR 13.4 million and correspondingly increases the cost of goods sold.
On 1 January 2009, the Easyhaler(®) business was transferred from the Specialty
Products to the Proprietary Products division. At the same time, hormone
replacement products, such as the Divina(®) range, and toremifene products, such
as Fareston(®), were transferred to Specialty Products.
The key figures for comparative periods have been adjusted in accordance with
these reporting changes. In addition, the adjusted key figures for previous
periods are presented in the table "Adjusted Key Figures" at the end of this
report.
President and CEO Timo Lappalainen's review
"A successful year"
"Orion's net sales in 2009 grew well to nearly nine per cent higher than in the
previous year. The growth in net sales later in the year was better than
forecast in almost all business divisions and geographic regions.
"Sales of Orion's key proprietary products based on its own R&D - our
Parkinson's drugs, Simdax heart failure drug, Easyhaler pulmonary drugs and
Precedex sedative for patients in intensive care - were clearly higher.
"It was also a successful year for generic drugs and self-care products. We
succeeded in increasing our sales and market share in our domestic market,
Finland, despite very challenging market conditions. The new reference price
system implemented in Finland in April further intensified price competition, so
the domestic pharmaceutical market did not grow during the period under review.
"Thanks to strong sales, our operating profit was higher than in the previous
year and for the first time exceeded EUR 200 million. Fixed costs were higher,
mainly due to repurchasing Simdax in May and starting sales and marketing of it
in a number of new countries. In addition, the costs of outsourced research
projects and the ongoing patent litigation in the United States were higher.
"The transfer of the Simdax marketing rights from Abbott to Orion proceeded
according to plan. Our own sales operations established in Spain, Italy,
Austria, Greece and Portugal in the summer and early autumn were fully
operational by the end of the year.
"Reversion of animal sedative distribution rights in Europe from Pfizer to Orion
was approved by the European Commission in December. Relating to this
arrangement, Pfizer paid Orion four million euros, which is included in the
results under other operating income.
"We believe that in the current year this good progress will continue, and we
estimate our net sales and operating profit will be slightly higher than in
2009. The outlook estimate and basis for it can be found on pages 6-7 of this
report."
Events in 2009
In January 2009, Orion completed the statutory co-determination negotiations to
restructure its pharmaceutical R&D operating model and structure. As a result of
the negotiations, Orion decided on staff reductions of about 205 people in
Finland.
In March, Orion announced that it would withdraw the EU marketing authorisation
application to expand the indication of Stalevo.
At the beginning of April, the price reference system was implemented in
Finland. Since this change, Orion has strengthened its market leadership
position despite the slowing of general market growth in Finland due to
implementation of the system.
In April, Orion and the Wockhardt companies reached an agreement in the dispute
in which Orion had filed a lawsuit against Wockhardt in the United States after
Wockhardt had submitted Abbreviated New Drug Applications (ANDA) for generic
versions of Orion's Comtan(®) and Stalevo(®) products.
In May, Orion repurchased the rights to intravenous levosimendan (Simdax(®)).
Simdax is Orion's own proprietary drug for acute decompensated heart failure.
In September, Orion and Hospira, Inc. started legal proceedings against Sandoz
companies in the United States to enforce their patents covering the proprietary
drug Precedex(®).
In October, Orion withdrew the application in the United States to extend the
indication of Stalevo(®).
In October, Orion and Pfizer Animal Health agreed that the rights in Europe to
an animal sedative product family that Orion had developed would revert to
Orion.
News conference and teleconference
A news conference and teleconference on the published results will be held
today, Tuesday 9 February 2010, at 14:30 EET in Hotel Kämp, address:
Pohjoisesplanadi 29, Helsinki. President and CEO Timo Lappalainen will give a
brief presentation in English on the Financial Review.
The event can be followed live as a webcast accessible via the Orion website at
www.orion.fi/investors <http://www.orion.fi/investors>. After the presentation,
questions can be asked by telephone in Finnish and English.
To participate in the teleconference, please call:
from the USA: +1 334 323 6203
from other countries: +44 (0)20 7162 0125
News conference recordings
A recording of the webcast of the event in English will be available later the
same day via a link on the Orion website. A recording of the presentation by the
President and CEO in Finnish will be available on the Orion website at the
latest on the following day.
Financial report material
Orion's financial reports and related presentation material are available on the
Group's website at www.orion.fi/en/ <http://www.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 2010
Annual Report 2009 will be
published In week beginning
1 March 2010
Deadline for registering for
AGM
19 March 2010 at 10:00
Annual General
Meeting
24 March 2010 at 14:00 in Helsinki
Record date for dividend
payment 29 March 2010
Dividend payment
date
7 April 2010
Interim Report January-March
2010 27 April 2010
Interim Report January-June
2010 10 August 2010
Interim Report January-September 2010 26 October 2010
A separate release will be published today on the matters to be handled at the
AGM.
For additional information about the Financial Review:
Jari Karlson, CFO, tel. +358 10 426 2883
Financial review 2009
Net sales
The Orion Group's net sales in 2009 totalled EUR 771.5 million (EUR 710.7
million in 2008), up by 8.5% on the previous year. The net effect of currency
exchange rates was minus EUR 0.3 million.
The Pharmaceuticals business's net sales were up by 9.1% at EUR 728.5 (667.6)
million. The products based on in-house R&D accounted for EUR 346.5 (307.5)
million, or 48% (46%) of the Pharmaceuticals business's net sales. Net sales of
Orion's Stalevo(®) (carbidopa, levodopa and entacapone) and Comtess(®)/Comtan(®)
(entacapone) Parkinson's drugs totalled EUR 234.9 (208.5) million, or about 32%
(31%) of the segment's net sales.
The Diagnostics business's net sales were EUR 45.2 (45.0) million. Sales of
QuikRead(®) infection tests grew, but sales of the older product portfolio were
lower than in the comparative period.
Operating profit
The Orion Group's operating profit in 2009 was up by 11.9% at EUR 207.0 (185.0)
million.
The Pharmaceuticals business's operating profit was EUR 210.7 (188.5) million.
Although fixed costs increased, operating profit grew by 11.8% due to good
sales.
The Diagnostics business's operating profit was EUR 5.6 (6.1) million, down by
9.1% due to clearly increased investment in product development.
Operating expenses
The Group's sales and marketing expenses were up by 11.2% at EUR 160.0 (143.9)
million. The increase was mainly due to the repurchase of Simdax and the related
establishment of sales operations in Southern Europe. Expenses in 2009 include
EUR 5.7 million of royalties paid to Abbott due to the acquisition of Simdax.
R&D expenses were up by 5.7% at EUR 95.2 (90.0) million and accounted for 12.3%
(12.7%) of the Group's net sales. Pharmaceutical R&D expenses amounted to EUR
89.4 (85.4) million. Ongoing research projects are reported in more detail under
Pharmaceuticals in the Business Reviews.
Administrative expenses were EUR 50.2 (51.5) million. The expenses for the
comparative period include a provision of EUR 3.9 million made in December 2008
for staff reduction costs. The costs of the ongoing patent litigation in the
United States were EUR 8.8 (6.7) million. There is more information on the legal
proceedings in the section "Legal proceedings".
Other operating income and expenses increased profit by EUR 6.0 (3.1) million.
This includes the one-time payment of EUR 4.0 million from Pfizer related to an
agreement under which animal sedative distribution rights in Europe reverted to
Orion.
Profit before taxes
Group profit before taxes totalled EUR 203.7 (184.2) million. Earnings per share
were EUR 1.07 (0.97) and equity per share EUR 3.11 (2.97). The return on capital
employed before taxes (ROCE) was 37.4% (38.5%) and the return on equity after
taxes (ROE) 35.3% (32.1%).
Financial position
The Group's gearing was -8.9% (-7.1%) and the equity ratio 60.6% (60.2%).
Total liabilities at 31 December 2009 in the Consolidated Statement of Financial
Position were EUR 287.9 (276.9) million. At the end of the period,
interest-bearing liabilities amounted to EUR 131.5 (146.3) million, including
EUR 108.7 (109.9) million of long-term loans.
The Group had EUR 170.5 (176.1) million of cash and cash equivalents at the end
of the year, which are invested in short-term interest-bearing instruments
issued by financially solid financial institutions and corporations.
Cash flow
Cash flow from operating activities increased to EUR 204.6 (144.4) million.
Operating profit was EUR 22.0 million higher than in the comparative period, and
the amount tied up in working capital was EUR 30.3 million less than in 2008.
Cash flow from investing activities was EUR -59.5 (-51.8) million.
Cash flow from financing activities was EUR -152.1 (-4.8) million. The change
was because the Group's loans increased by EUR 141.1 million in 2008 and
decreased by EUR 17.6 million in 2009.
Capital expenditure
The Group's capital expenditure totalled EUR 60.4 (56.8) million. This comprised
EUR 25.1 (32.8) million on property, plant and equipment and EUR 35.2 (24.0)
million on intangible assets. The largest individual investment was the
repurchase of the Simdax marketing rights from Abbott in May for EUR 26 million,
including signature and milestone payments as per the agreement.
Outlook estimate for 2010
Net sales will be slightly higher than in 2009.
Marketing expenditure will be higher due to the increased number of product
launches and increased costs of sales and marketing related to Simdax. Research
expenditure will be slightly lower than in 2009. The costs of ongoing patent
litigation in the United States are also expected to be similar to 2009.
Operating profit excluding non-recurring items will be slightly 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 is expected to moderate
slightly compared with the previous year. Product launches will support Orion's
position as market leader in 2010 too.
In-market sales of the Parkinson's drugs Stalevo and Comtess/Comtan 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. These forecasts
assume that generic competition does not yet begin in the United States during
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.
The estimated costs of the ongoing patent litigation in the United States are
based on the planned timetables and work estimates. The costs due to the
litigation will depend on a number of factors, which at present are difficult to
estimate accurately.
Near-term risks and uncertainties relating to the outlook
The Company is not aware of any significant risk factors relating to the
earnings outlook for 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. It is assumed that the ongoing litigation will not affect the
sales of Comtan or Stalevo in the United States in 2010, but it is not
impossible that generic competition will commence already during the current
year.
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 the Parkinson's drugs Stalevo and Comtess/Comtan currently account for
approximately one-third of Orion's net sales. The key patents for these 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 will also bring new products
to the market to replace this drop in net sales.
The development of Orion's net sales and profitability in the next few years
will depend on how fast the sales of Parkinson's drugs will decline and, on the
other hand, how the sales of other products will increase in the future. This
creates a point of discontinuity in the Group's operations.
Dividend policy
Orion's dividend distribution takes into account the distributable funds and the
capital expenditure and other financial requirements in the medium and long term
to achieve the financial objectives.
Proposal by the Board of Directors for distribution of profit,
EUR 1.00 per share
The parent company's distributable funds are EUR 189,019,101.80, including EUR
136,467,859.83 of profit for the financial year.
The Board of Directors proposes that a dividend of EUR 1.00 per share be paid
from the parent company's distributable funds. No dividend shall be paid on
treasury shares held by the Company on the dividend payment record date. On the
day when the profit distribution was proposed, the number of shares conferring
entitlement to receive dividend totalled 140,977,798, on which the total
dividend payment would be EUR 140,977,798.00. The Group's payout ratio for the
financial year 2009 would be 93.5% (97.9%).The dividend payment date would be 7
April 2010, and shareholders registered in the Company's shareholder register on
29 March 2010 would be entitled to the dividend payment.
The Board of Directors further proposes that EUR 150,000.00 be donated to
medical research and other purposes of public interest and that EUR
47,901,303.80 remain in the retained earnings accounts.
Proposal by the Board of Directors for distribution of equity,
EUR 0.10 per share
The Board of Directors proposes to the Annual General Meeting of Orion
Corporation to be held on 24 March 2010 that EUR 0.10 per share be distributed
from the expendable fund in the distributable equity as a repayment of capital.
The repayment of distributable equity would be paid to the Orion Corporation
shareholders registered in the shareholder register maintained by Euroclear
Finland on 29 March 2010, the record date for dividend payment. The payment date
would be 7 April 2010.
Shares and shareholders
On 31 December 2009, Orion had a total of 141,257,828 shares, of which
51,340,668 were A shares and 89,917,160 B shares. The Group's share capital was
EUR 92,238,541.46. At the end 2009, Orion held 280,030 B shares as treasury
shares. On 31 December 2009, the aggregate number of votes conferred by the A
and B shares was 1,116,450,490 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 2009 a total of 100,000 shares were converted.
Trading in Orion's shares
Orion's A shares and B shares are quoted on NASDAQ OMX Helsinki in the Large Cap
group under the Healthcare sector heading under the trading codes ORNAV and
ORNBV. Trading in both of the Company's share classes commenced on 3 July 2006,
and information on trading in the Company's shares has been available since this
date.
On 31 December 2009 the market capitalisation of the Company's shares excluding
treasury shares was EUR 2,122.2 million.
In 2009 a total of 3,815,863 A shares and 84,568,573 B shares were traded on
NASDAQ OMX Helsinki. The total value of traded shares was EUR 1,080.4 million.
During the year, 7.4% of A shares and 94.1% of B shares were traded. The average
turnover in Orion's shares was 62.6%.
Authorisation of the Board of Directors to dispose of shares
Orion's Board of Directors was authorised by the Annual General Meeting on
23 March 2009 to dispose of shares held by the Company (treasury shares). This
authorisation is valid until the close of the 2010 Annual General Meeting.
The Board of Directors is not authorised to increase the share capital or to
issue bonds with warrants or convertible bonds or stock options.
Altogether 44,806 B shares held by the Company were transferred in March 2009 as
a share bonus for 2008 to key persons employed by the Company and belonging to
the Share-based Incentive Plan of the Orion Group. This was based on the
authorisation granted by the Annual General Meeting on 25 March 2008. The
transfer price of the shares transferred was EUR 11.97 per share, which was the
weighted average price of the B shares on 5 March 2009. The total transfer price
of the shares transferred was EUR 536,417.43.
Share ownership
At the end of 2009, Orion had a total of 54,323 (43,119) registered
shareholders, of whom 94.0% (94.1%) were private individuals holding 51.9%
(48.3%) of the entire share stock and 60.6% (59.2%) of the total votes. There
were altogether 31.3 (34.7) million nominee-registered shares, which is 22.1%
(24.5%) of all shares, and they conferred entitlement to 4.2% (6.1%) of the
votes.
At the end of 2009, Orion held 280,030 B shares as treasury shares, which is
0.2% of the Company's total share stock and 0.03% of the total votes.
No new transactions exceeding the notification threshold set in the Finnish
Securities Markets Act were brought to the attention of the Company during 2009.
Management's shareholdings
At the end of 2009, the members of the Board of Directors owned a total of
2,322,438 Orion Corporation shares, of which 1,903,932 were A shares and
418,506 B shares. At the end of 2009, the President and CEO owned 11,950 Orion
Corporation shares, which were all B shares. The members of the Executive
Management Board (excluding the President and CEO) owned a total of 66,733 Orion
Corporation shares, of which 1,228 were A shares and 65,505 were B shares. Thus,
Orion's executive management held 1.7% of all shares and 3.5% of the total
votes. The figures also include the holdings of controlled entities.
The Company does not have share option schemes.
Personnel
The average number of employees in the Group in 2009 was 3,192 (3,270). At the
end of 2009, the Group had a total of 3,147 (3,309) employees, of whom 2,529
(2,726) worked in Finland and 617 (583) outside Finland.
Salaries and other personnel expenses in 2009 totalled EUR 171.4 (170.9)
million.
Significant legal proceedings
Legal proceedings against the Sun companies
On 13 November 2007, 7 February 2008 and 12 November 2008, Orion Corporation
filed patent infringement lawsuits in the United States to enforce US Patents
No. 6,500,867 and 5,446,194 against companies belonging to the Sun Group.
Sun Pharmaceutical Industries Limited seeks to market generic versions of
Orion's Stalevo drug (25/100/200 and 37.5/150/200 mg strengths of carbidopa,
levodopa and entacapone) in the United States. Sun Pharma Global, Inc. seeks to
market a generic version of Orion's proprietary drug Comtan in the United
States.
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. 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 base/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 ongoing entacapone patent litigation
in the United States.
Agreement reached in legal proceedings against the Wockhardt companies
On 29 April 2009, Orion Corporation and Wockhardt USA, LLC and Wockhardt Limited
(jointly "Wockhardt") reached a settlement agreement in the dispute in which
Orion had filed a lawsuit against Wockhardt to enforce its US patents after
Wockhardt had filed Abbreviated New Drug Applications (ANDA) for generic
versions of Orion's Comtan(®) and Stalevo(®) products.
Orion filed its first lawsuit against Wockhardt in the United States in 2007 and
two more in 2008. The settlement agreement applies to all three lawsuits.
According to the terms of the settlement agreement, Wockhardt may launch generic
versions of Comtan and Stalevo in the US market on 30 September 2012, or
possibly before that if certain conditions are met. The parties have agreed that
Orion will supply the said generic products to Wockhardt. Any other terms of the
agreement will not be made public by the parties.
Due to the settlement, all three lawsuits were terminated and Orion's US patents
No. 5,446,194; 5,135,950; 6,599,530; 6,797,732; and 6,500,867 will remain in
force.
In accordance with current US legislation, Orion has submitted all of the
above-mentioned agreements to the US Federal Trade Commission and the United
States Department of Justice.
Business Reviews
Pharmaceuticals
Review of human pharmaceuticals market
Finland is the most important individual market for Orion, generating about
one-third of the Group's net sales. According to statistics collected by Finnish
Pharmaceutical Data Ltd, Finnish wholesale of human pharmaceuticals in 2009
totalled EUR 1,947.3 million, down by 0.5% on the previous year. In terms of the
number of packages, overall sales were down by 2.3%. Total pharmacy sales were
down by 0.9%, while hospital sales were correspondingly up by 0.9%. The
wholesale of prescription drugs in the whole market was down by 0.9% and
wholesale of self-care products up by 3.0%. According to Statistics Finland,
pharmaceutical prices in Finland decreased by 3.6% in 2009.
Orion continued to strengthen its position as leader in marketing
pharmaceuticals in Finland. According to statistics collected by Finnish
Pharmaceutical Data, Orion's wholesale of pharmaceuticals in Finland in 2009
amounted to EUR 186.0 million, up by 3.2% on the previous year. Orion's sales
grew slightly, even though the reference price system implemented in April
reduced the overall market. Orion's market share was 9.6% (9.2%), which was 2.5
percentage points higher than the second-largest company's market share.
The most important individual therapy area for Orion is still the treatment of
Parkinson's disease. Orion's Parkinson's drugs account for approximately
one-third of the Group's net sales. According to IMS Health pharmaceutical sales
statistics, in the 12-month period ending in September 2009 the total sales of
Parkinson's drugs in the United States came to USD 981 million (USD 1,057
million in the previous 12-month period), which is 7.2% less than in the
comparative period. The rapid change in the market trend was caused by the
expiry of the patent for the leading product, a dopamine agonist, and the
resulting competition from generic products. The five largest European markets
for Parkinson's disease drugs were Germany, the United Kingdom, France, Spain
and Italy. In these countries, the combined sales of Parkinson's drugs in the
12-month period ending in September totalled EUR 895 (852) million, and the
average market growth was 5.1%.
Sales of Orion's Parkinson's drugs continued to grow clearly faster than the
market as a whole. According to IMS Health pharmaceutical sales statistics, in
the 12-month period ending in September 2009, sales of Orion's Parkinson's drugs
were up by 15.3% at EUR 492 million (EUR 427 million in the previous 12-month
period).
According to statistics, in the United States sales of Orion's Parkinson's drugs
in the same 12-month period were USD 171 (154) million, up by 10.9% on the
comparative period. The market share of Orion's Parkinson's drugs in the United
States was about 17%. In the five largest Parkinson's drugs markets in Europe,
sales of Orion's Parkinson's drugs in the same 12-month period totalled EUR 147
(138) million, up by 6.3% on the comparative period. Orion's Parkinson's drugs
have an average market share of about 16% in these five markets.
Net sales and operating profit of the Pharmaceuticals business
Net sales of the Pharmaceuticals business in 2009 were EUR 728.5 (667.6)
million, up by 9.1% on the previous year. The operating profit of the
Pharmaceuticals business was up by 11.8% at EUR 210.7 (188.5) million. The
operating profit of the Pharmaceuticals business was 28.9% (28.2%) of the
segment's net sales.
Net sales of the top ten pharmaceuticals in 2009 were up by 11.4% at EUR 378.3
(339.7) million. They accounted for 52% (51%) of the total net sales of the
Pharmaceuticals business. Among these best-sellers, the fastest-growing products
were Simdax heart failure drug, Precedex sedative for patients in intensive
care, Stalevo Parkinson's drug and Easyhaler pulmonary drugs.
Net sales of the products based on own in-house R&D in 2009 were up by 12.7% at
EUR 346.5 (307.5) million. These products accounted for about 48% (46%) of the
net sales of the Pharmaceuticals business.
Proprietary Products
The product portfolio of Proprietary Products consists of patented prescription
products in three therapy areas: central nervous system diseases; oncology and
critical care; and Easyhaler(®) pulmonary drugs. At the beginning of the year,
Easyhaler drugs were transferred from the Specialty Products to the Proprietary
Products division. At the same time, hormone replacement products, such as the
Divina(®) range, and toremifene products, such as Fareston(®), were transferred
to Specialty Products.
Net sales of Proprietary Products were up by 16.5% in 2009 at EUR 324.0 (278.1)
million.
Net sales of Orion's Parkinson's drugs in 2009 totalled EUR 234.9 (208.5)
million. The net sales were up by 12.7% and accounted for 32% (31%) of the total
net sales of the Pharmaceuticals business. Net sales from deliveries of Stalevo
and Comtan to Novartis totalled EUR 137.8 (118.1) million, up by 16.7% on the
previous year. Deliveries of Stalevo to Novartis increased by 20.6%, and
deliveries of Comtan by 9.8%. Total net sales generated by Stalevo and Comtess
in Orion's own sales organisation were up by 7.5% at EUR 97.1 (90.4) million.
Net sales of Stalevo through Orion's own sales organisation were up by 16.8% at
EUR 77.1 (66.0) million. The depreciation of the British pound and Scandinavian
currencies have slowed euro-denominated sales.
Orion has withdrawn the applications in the EU countries and the United States
to extend the indication of Stalevo. Currently, Stalevo is approved for
treatment of advanced Parkinson's disease.
Orion has ongoing patent litigation in the United States against the Sun
companies and Sandoz companies. The Sun companies aim to launch generic versions
of Orion's Comtan and Stalevo, and the Sandoz companies a generic version of
Orion's Precedex in the United States. Legal proceedings against the Wockhardt
companies ended in settlement in April 2009.
In May, Orion repurchased from Abbott the rights to intravenously administered
Simdax (levosimendan), a drug for acute decompensated heart failure. The
transfer of the rights to Simdax has proceeded according to plan and the sales
progressed well.
Net sales of the Easyhaler(®) product family in 2009 were up by 12.2% at EUR
24.9 (22.2) million. The marketing rights to Easyhaler products in the United
Kingdom and Hungary were transferred back to Orion in 2009.
Launches of the Vantas(®) implant (histrelin) for treatment of advanced prostate
cancer began in Europe during 2009. Orion acquired the European-wide rights for
the drug from Endo Pharmaceuticals Solutions Inc. of the United States.
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 5.5% in 2009 at
EUR 274.8 (260.5) million. Depreciation of Scandinavian and Eastern European
currencies in 2009 slowed the growth of euro-denominated net sales of the
business division.
Net sales of Orion's human pharmaceuticals in Finland in 2009 were up by 4.6% at
EUR 204.3 (195.3) million. Specialty Products accounted for the majority of
sales in Finland. Orion improved its market position owing to its broad product
portfolio, particularly in substitutable prescription drugs, although market
conditions deteriorated following the introduction of the reference price system
in Finland in April. The reference price system has further intensified price
competition, but also expanded the range of substitutable products. For example,
the anti-psychotic drug Ketipinor(®) (quetiapine) and cholesterol-lowering drug
Atorvastatin Orion(®) (atorvastatin) launched at the beginning of the year have
been particularly successful.
Net sales of Orion's human pharmaceuticals in Eastern Europe in 2009 were up by
1.8% at EUR 38.7 (38.0) million. Specialty Products accounted for the majority
of sales in the region. The growth of euro-denominated net sales in Eastern
Europe was slowed by the severe depreciation of currencies in the region and the
economic recession.
Orion has strengthened its product portfolio in Scandinavia, especially in
self-care products. Orion aims to make its domestic market all the Nordic
countries, not just Finland. Strong growth in Scandinavia has been supported by
transfer of distribution of the Sebamed product family to Orion and, for
instance, the successful launch of Penomax(®) antibiotic (pivmecillinam) in the
Nordic countries. Orion is preparing for changes in distribution channels in
Sweden too, where the national pharmacy monopoly was abolished in 2009.
A limitation based on new safety data has been added to the product information
for Fareston(®) breast cancer drug (toremifene) stating that the drug should not
be used by patients with arrhythmia, or increased risk of arrhythmia.
Animal Health
Net sales of the Animal Health business division were down by 7.5% in 2009 at
EUR 62.1 (67.2) million. Net sales of the animal sedatives Dexdomitor(®)
(dexmedetomidine), Domitor(®) (medetomidine), Domosedan(®) (detomidine) and
Antisedan(®) (atipamezole) were down by 21.4% and accounted for 31% (37%) of the
division's net sales. Sales of animal sedatives decreased due to price
competition in Europe following the expiry of patents.
The rights in Europe to an animal sedative product family that Orion had
developed reverted from Pfizer Animal Health to Orion at the end of the year.
Following the agreement, Orion will start marketing the product family in some
Eastern European markets in addition to the Nordic countries. Pfizer will
continue to market Orion's animal sedatives in, for example, North and South
America. In other markets partners will market the products. Pfizer paid Orion
four million euros at the end of 2009 in connection with this arrangement.
In late 2009, Orion obtained market authorisation in Europe for Domosedan gel, a
sedative for horses. Product launches in Europe will begin in early 2010.
Orion remained the Finnish market leader in veterinary drugs with a market share
of about 20%. According to statistics for veterinary drugs, the Finnish market
for veterinary drugs was about EUR 46 million in 2009, up by 6.8% on the
previous year. Orion's position as the market leader is due to Orion's extensive
product portfolio and its operations in the Finnish market for veterinary drugs
over a long time.
Following the results of the LEVET research programme, Orion is not intending to
submit marketing authorisation applications for levosimendan in the United
States and Europe. The programme studied the efficacy of orally administered
levosimendan in the treatment of heart diseases in dogs.
Fermion
Fermion manufactures active pharmaceutical ingredients for Orion and other
pharmaceutical companies. Its product range comprises nearly 30 pharmaceutical
ingredients. Fermion's net sales were up by 14.5% in 2009 at EUR 41.4 (36.1)
million, excluding pharmaceutical ingredients supplied for Orion's own use.
Orders for some key products are still high, even though competition in the
markets remains intense. Special attention has been paid to improving cost
efficiency in the business division to maintain competitiveness.
Research and development
Orion's pharmaceutical R&D focuses on the following core therapy areas: central
nervous system drugs, oncology and critical care drugs, and Easyhaler pulmonary
drugs. In addition to in-house research, Orion invests in early-stage R&D
jointly with universities and other pharmaceutical companies. In Phase III
clinical studies, Orion prefers to share the costs with other pharmaceutical
companies. In this way, Orion can ensure an increasing number of new research
projects and balance the risks of projects in the research pipeline. Orion also
seeks to purchase new product candidates to reinforce the research pipeline
based on its own research projects. In this way Orion reinforces its capability
to continue operating as a company that provides new drugs and engages in
pharmaceutical R&D.
The Group's R&D expenses totalled EUR 95.2 (90.0) million, of which the
Pharmaceuticals business accounted for EUR 89.4 (85.4) million. The Group's R&D
expenses accounted for 12.3% (12.7%) of the Group's net sales.
Orion has Phase III clinical studies of the sedative dexmedetomidine in progress
in patients in intensive care as a prolonged infusion administered for over 24
hours. In the United States and Japan, for example, the drug is already
available as a sedative for patients in intensive care administrable for a
maximum of 24 hours. The aim is to have the drug registered also in the EU.
Dexmedetomidine is compared with midazolam in the MIDEX study and with propofol
in the PRODEX study. For both studies, 500 patients have been recruited and
results of the research programme are expected at the latest in summer 2010.
Orion has an ongoing project to broaden the range of the Easyhaler product
family. A new budesonide-formoterol formulation is being developed in this
research that combines budesonide as an anti-inflammatory agent and formoterol
as a long-acting bronchodilator. Orion's aim is to utilise Easyhaler technology
not just in current products and development projects, but also to develop new
products.
Orion is collaborating with Novartis to develop Stalevo for the Japanese market.
Orion has an alpha 2(c) 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.
Orion has withdrawn the applications in the EU countries and the United States
to extend the indication of Stalevo. Currently, Stalevo is approved for
treatment of advanced Parkinson's disease.
Following the results of the LEVET programme, Orion is not intending to submit
marketing authorisation applications for levosimendan in the United States and
Europe. The programme studied the efficacy of orally administered levosimendan
in the treatment of heart diseases in dogs.
Diagnostics
Net sales of the Orion's Diagnostics business in 2009 were EUR 45.2 (45.0)
million. Euro-denominated net sales were slowed by depreciation of the Nordic
currencies, whereas sales to China and the Czech Republic were higher than in
the previous year.
QuikRead(®) tests maintained their position as the main products, with reagent
and equipment sales continuing to grow strongly. The tests are used in, for
example, detecting infection from the CRP level in a blood sample. The tests can
also detect streptococcus A, the causative agent of bacterial tonsillitis, in a
pharyngeal sample. The increasing selection of QuikRead products in doctors'
surgeries and clinical laboratories creates a solid basis for future demand for
reagents.
Sales of dip slide tests, especially sales of hygiene tests for industry,
decreased as capacity utilisation rates in industries declined.
Operating profit was EUR 5.6 (6.1) million, down by 9.1% due to increases in
planned investments in product development.
Espoo, 9 February 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 Q4/09 Q4/08 Change % 2009 2008 Change %
--------------------------------------------------------------------------------
Net sales 193.3 179.9 +7.4% 771.5 710.7 +8.5%
Cost of goods sold -69.0 -65.6 +5.3% -265.2 -243.4 +9.0%
--------------------------------------------------------------------------------
Gross profit 124.3 114.3 +8.7% 506.3 467.4 +8.3%
--------------------------------------------------------------------------------
Other operating income and
expenses 3.8 2.2 +75.5% 6.0 3.1 +96.7%
Selling and marketing expenses -46.5 -39.2 +18.4% -160.0 -143.9 +11.2%
R&D expenses -25.6 -25.5 +0.2% -95.2 -90.0 +5.7%
Administrative expenses -12.0 -18.9 -36.2% -50.2 -51.5 -2.6%
---------------------------------------------
Operating profit 43.9 32.8 +33.8% 207.0 185.0 +11.9%
--------------------------------------------------------------------------------
Finance income 0.8 3.7 -77.7% 5.1 7.6 -32.8%
Finance expenses -1.6 -4.4 -63.1% -8.4 -8.5 -0.9%
--------------------------------------------------------------------------------
Profit before taxes 43.1 32.1 +34.2% 203.7 184.2 +10.6%
--------------------------------------------------------------------------------
Income tax expense -10.1 -7.5 +35.4% -52.3 -47.8 +9.3%
--------------------------------------------------------------------------------
PROFIT FOR THE PERIOD 33.0 24.7 +33.9% 151.4 136.3 +11.1%
--------------------------------------------------------------------------------
Other comprehensive income
--------------------------------------------------------------------------------
Translation differences 0.3 -2.3 +114.6% 1.3 -2.8 +144.0%
Cash flow hedges 0.8 -1.3 +162.7% 0.9 -1.0 +184.5%
Other comprehensive income net of
tax 1.1 -3.6 +131.8% 2.1 -3.9 +154.7%
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE
PERIOD 34.2 21.1 +61.7% 153.5 132.5 +15.9%
--------------------------------------------------------------------------------
of which attributable to:
--------------------------------------------------------------------------------
Owners of the parent company 33.0 24.7 +33.8% 151.4 136.3 +11.1%
Minority interest 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
Total comprehensive income
attributable to:
--------------------------------------------------------------------------------
Owners of the parent company 34.2 21.1 +61.7% 153.5 132.5 +15.9%
Minority interest 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
Earnings per share, EUR (1)) 0.23 0.18 +33.8% 1.07 0.97 +11.1%
--------------------------------------------------------------------------------
Depreciation and amortisation 9.2 8.4 +9.4% 34.4 31.6 +8.9%
Personnel expenses 47.5 50.8 -6.5% 171.4 170.9 +0.3%
--------------------------------------------------------------------------------
(1)) The figure has been calculated from the profit attributable to the owners
of the parent company. The Company has no items that could dilute the earnings
per share.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Assets
EUR million Dec/09 Dec/08 Change %
-------------------------------------------------------
Property, plant and equipment 192.0 192.4 -0.2%
Goodwill 13.5 13.5
Intangible rights 63.4 37.5 +69.0%
Other intangible assets 3.7 2.9 +26.9%
Investments in associates 0.1 0.1
Available-for-sale investments 1.0 0.9 +4.7%
Pension asset 29.8 29.3 +1.7%
Deferred tax assets 5.5 4.2 +30.9%
Other non-current assets 0.9 1.5 -39.3%
-------------------------------------------------------
Non-current assets total 309.9 282.3 +9.8%
-------------------------------------------------------
-------------------------------------------------------
Inventories 122.7 131.7 -6.8%
Trade receivables 102.6 83.1 +23.4%
Other receivables 21.4 22.3 -4.0%
Cash and cash equivalents 170.5 176.1 -3.2%
-------------------------------------------------------
Current assets total 417.2 413.1 +1.0%
-------------------------------------------------------
-------------------------------------------------------
ASSETS TOTAL 727.1 695.5 +4.5%
-------------------------------------------------------
Equity and liabilities
EUR million Dec/09 Dec/08 Change %
----------------------------------------------------------------------------
Share capital 92.2 92.2
Share premium 17.8 17.8
Expendable fund 23.0 23.0
Other reserves 0.0 -0.9 +100.9%
Retained earnings 306.0 286.3 +6.9%
----------------------------------------------------------------------------
Equity attributable to owners of the parent company 439.1 418.5 +4.9%
Minority interest 0.0 0.0 -9.4%
----------------------------------------------------------------------------
Equity total 439.1 418.6 +4.9%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Deferred tax liabilities 43.0 42.0 +2.4%
Pension liability 0.8 0.8 +2.6%
Provisions 0.5 0.4 +24.1%
Interest-bearing non-current liabilities 108.7 109.9 -1.0%
Other non-current liabilities 0.1 0.9 -86.7%
----------------------------------------------------------------------------
Non-current liabilities total 153.1 153.9 -0.5%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Trade payables 42.3 30.2 +40.3%
Income tax liabilities 3.0 2.4 +22.2%
Other current liabilities 66.8 54.0 +23.7%
Provisions 0.0 0.0
Interest-bearing current liabilities 22.7 36.4 -37.6%
----------------------------------------------------------------------------
Current liabilities total 134.8 123.0 +9.6%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities total 287.9 276.9 +4.0%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
EQUITY AND LIABILITIES TOTAL 727.1 695.5 +4.5%
----------------------------------------------------------------------------
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. Total
h. Minority interest
i. Equity total
EUR million a. b. c. d. e. f. g. h. i.
--------------------------------------------------------------------------------
Equity at 1 Jan 2008 92.2 17.8 23.0 0.5 -4.1 301.7 431.1 0.0 431.1
--------------------------------------------------------------------------------
Dividend -140.9 -140.9 -140.9
Repurchase of own shares -4.8 -4.8 -4.8
Share-based incentive plan 0.6 0.6 0.6
Other changes -0.3 0.4 0.1 0.1
Comprehensive income for
the period -1.0 -2.8 136.3 132.4 132.4
------------------------------------------------------------- ------
Equity at 31 Dec 2008 92.2 17.8 23.0 -0.9 -6.9 293.3 418.5 0.0 418.6
--------------------------------------------------------------------------------
Dividend -133.9 -133.9 -133.9
Share-based incentive plan 0.9 0.9 0.9
Other changes 0.0 0.1 0.1 -0.0 0.1
Comprehensive income for
the period 0.9 1.3 151.4 153.5 153.5
--------------------------------------------------------------------------------
Equity at 31 Dec 2009 92.2 17.8 23.0 0.0 -5.7 311.7 439.1 0.0 439.1
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR million 2009 2008
------------------------------------------------------------------------
Operating profit 207.0 185.0
Adjustments 37.7 28.7
Change in working capital 15.3 -15.0
Interest paid -9.7 -7.0
Interest received 4.9 7.5
Income taxes paid -50.6 -54.9
------------------------------------------------------------------------
Total net cash flow from operating activities 204.6 144.4
------------------------------------------------------------------------
------------------------------------------------------------------------
Investments in property, plant and equipment -24.6 -30.8
Investments in intangible assets -36.1 -23.0
Sales of property, plant and equipment
and available-for-sale investments 0.8 1.5
Sales of intangible assets 0.5 0.5
------------------------------------------------------------------------
Total net cash flow from investing activities -59.5 -51.8
------------------------------------------------------------------------
------------------------------------------------------------------------
Short-term loans raised 0.7 121.7
Repayments of short-term loans -19.8 -105.1
Long-term loans raised 22.8 125.0
Repayments of long-term loans -21.3 -0.5
Repurchase of own shares 0.0 -4.8
Dividends paid and other distribution of profits -134.4 -141.1
------------------------------------------------------------------------
Total net cash flow from financing activities -152.1 -4.8
------------------------------------------------------------------------
------------------------------------------------------------------------
Net change in cash and cash equivalents -7.0 87.7
------------------------------------------------------------------------
Cash and cash equivalents at the beginning of the period 176.1 90.4
Foreign exchange differences 1.4 -2.1
Net change in cash and cash equivalents -7.0 87.7
Cash and cash equivalents at the end of the period 170.5 176.1
------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 2009 2008
-------------------------------------------------------------
Carrying amount at the beginning of the period 192.4 186.6
Adjustments to previous period carrying amount 2.4 0.0
Additions 25.1 32.8
Disposals -1.7 -1.8
Depreciation -26.1 -25.1
-------------------------------------------------------------
Carrying amount at the end of the period 192.0 192.4
-------------------------------------------------------------
CHANGES IN INTANGIBLE ASSETS (EXCLUDING GOODWILL)
EUR million 2009 2008
----------------------------------------------------------
Carrying amount at the beginning of the period 40.4 23.0
Additions 35.2 24.0
Disposals -0.3 -0.0
Depreciation -8.3 -6.6
----------------------------------------------------------
Carrying amount at the end of the period 67.0 40.4
----------------------------------------------------------
In May, Orion repurchased the rights to Simdax from Abbott. The purchase price,
EUR 26.2 million, was recognised in full under intangible rights in the
Consolidated Statement of Financial Position.
COMMITMENTS AND CONTINGENCIES
EUR million Dec/09 Dec/08
-----------------------------------------------------------------------
Contingencies for own liabilities
-----------------------------------------------------------------------
Mortgages on land and buildings 32.0 19.0
of which those to Orion Pension Fund 9.0 9.0
Guarantees 1.1 1.0
-----------------------------------------------------------------------
Other liabilities
-----------------------------------------------------------------------
Leasing liabilities (excluding finance lease contracts) 4.3 4.0
Other liabilities 0.3 0.3
-----------------------------------------------------------------------
DERIVATIVES
EUR million Dec/09 Dec/08
------------------------------------------------------------------
Fair value of forward exchange contracts and swaps -0.3 2.0
Nominal values of derivatives -86.4 64.6
Fair value of electricity forward contracts -0.2 -1.4
Nominal values of derivatives 7.0 5.7
------------------------------------------------------------------
RELATED PARTY TRANSACTIONS
EUR million 2009 2008
--------------------------------------------
Management's employment benefits 3.5 3.1
--------------------------------------------
Operating segment performance
NET SALES BY BUSINESS AREA
EUR million Q4/09 Q4/08 Change % 2009 2008 Change %
-----------------------------------------------------------------------------
Pharmaceuticals 181.9 169.6 +7.2% 728.5 667.6 +9.1%
Proprietary Products 77.3 69.4 +11.3% 324.0 278.1 +16.5%
Specialty Products 73.0 68.1 +7.1% 274.8 260.5 +5.5%
Animal Health 16.1 16.5 -2.4% 62.1 67.2 -7.5%
Fermion 9.0 9.9 -8.5% 41.4 36.1 +14.5%
Contract manufacturing and others 6.6 5.8 +13.7% 26.2 25.7 +1.9%
Diagnostics 12.0 10.7 +12.0% 45.2 45.0 +0.4%
Group items -0.6 -0.5 +28.8% -2.2 -1.9 +15.7%
-----------------------------------------------------------------------------
Group total 193.3 179.9 +7.4% 771.5 710.7 +8.5%
-----------------------------------------------------------------------------
OPERATING PROFIT BY BUSINESS AREA
EUR million Q4/09 Q4/08 Change % 2009 2008 Change %
-----------------------------------------------------------
Pharmaceuticals 45.6 35.3 +29.1% 210.7 188.5 +11.8%
Diagnostics 1.2 0.2 +566.6% 5.6 6.1 -9.1%
Group items -2.9 -2.7 +7.9% -9.3 -9.6 -3.0%
-----------------------------------------------------------
Group total 43.9 32.8 +33.8% 207.0 185.0 +11.9%
-----------------------------------------------------------
NET SALES BY ANNUAL QUARTERS
2009 2008
+-----------------------+-----------------------+
EUR million | Q4 Q3 Q2 Q1| Q4 Q3 Q2 Q1|
----------------+-----------------------+-----------------------+
Pharmaceuticals|181.9 181.8 185.9 178.9|169.6 161.0 168.5 168.5|
| | |
Diagnostics | 12.0 10.5 11.0 11.7| 10.7 9.5 12.6 12.2|
| | |
Group items | -0.6 -0.5 -0.5 -0.5| -0.5 -0.4 -0.5 -0.5|
----------------+-----------------------+-----------------------+
Group total |193.3 191.8 196.4 190.1|179.9 170.1 180.5 180.2|
----------------+-----------------------+-----------------------+
OPERATING PROFIT BY ANNUAL QUARTERS
2009 2008
+-------------------+-------------------+
EUR million | Q4 Q3 Q4 Q3| Q4 Q3 Q4 Q3|
----------------+-------------------+-------------------+
Pharmaceuticals|45.6 56.6 51.6 56.9|35.3 44.3 45.7 63.1|
| | |
Diagnostics | 1.2 1.0 1.1 2.2| 0.2 1.0 2.5 2.3|
| | |
Group items |-2.9 -1.9 -2.3 -2.2|-2.7 -1.8 -3.1 -2.1|
----------------+-------------------+-------------------+
Group total |43.9 55.7 50.4 56.9|32.8 43.6 45.2 63.4|
----------------+-------------------+-------------------+
GEOGRAPHICAL BREAKDOWN OF NET SALES BY ANNUAL QUARTERS
2009 2008
+-----------------------+-----------------------+
EUR million | Q4 Q3 Q2 Q1| Q4 Q3 Q2 Q1|
--------------+-----------------------+-----------------------+
Finland | 59.2 55.6 55.0 53.5| 55.2 52.8 53.5 55.7|
| | |
Scandinavia | 25.9 24.5 25.8 25.4| 23.7 23.3 26.1 28.1|
| | |
Other Europe | 72.8 68.9 71.8 61.2| 62.0 56.2 61.4 64.4|
| | |
North America| 12.1 18.1 18.2 22.6| 19.2 21.7 18.5 14.4|
| | |
Other markets| 23.4 24.7 25.6 27.4| 19.8 16.1 21.1 17.6|
--------------+-----------------------+-----------------------+
Group total |193.3 191.8 196.4 190.1|179.9 170.1 180.5 180.2|
--------------+-----------------------+-----------------------+
Business reviews
KEY FIGURES FOR PHARMACEUTICALS BUSINESS
EUR million Q4/09 Q4/08 Change % 2009 2008 Change %
--------------------------------------------------------------------------------
Net sales 181.9 169.6 +7.2% 728.5 667.6 +9.1%
Operating profit 45.6 35.3 +29.1% 210.7 188.5 +11.8%
% of net sales 25.1% 20.8% 28.9% 28.2%
R&D expenses 24.0 24.1 -0.2% 89.4 85.4 +4.7%
% of net sales 13.2% 14.2% 12.3% 12.8%
Capital expenditure 8.4 11.7 -28.4% 57.6 53.3 +8.1%
% of net sales 4.6% 6.9% 7.9% 8.0%
Sales revenue from proprietary
products 83.3 77.5 +7.6% 346.5 307.5 +12.7%
Personnel at the end of the period 2,829 2,995 -5.5%
--------------------------------------------------------------------------------
NET SALES OF ORION'S TOP 10 PHARMACEUTICAL PRODUCTS
EUR million Q4/09 Q4/08 Change % 2009 2008 Change %
--------------------------------------------------------------------------------
Stalevo(®) (Parkinson's disease) 39.9 35.0 +13.9% 167.6 141.0 +18.8%
Comtess(®) / Comtan(®) (Parkinson's
disease) 12.8 17.7 -27.4% 67.3 67.4 -0.1%
Simdax(®) (heart failure) 9.1 4.4 +108.4% 29.4 17.3 +69.6%
Easyhaler(®) product family (asthma) 6.4 5.9 +8.5% 24.9 22.2 +12.2%
Burana(®) (inflammatory pain) 5.7 5.3 +7.5% 19.9 19.4 +2.4%
Domitor(®), Dexdomitor(®),
Domosedan(®) and Antisedan(®)
(animal sedatives) 5.8 5.4 +7.7% 19.3 24.6 -21.4%
Precedex(®) (sedative for patients
in intensive care) 4.5 2.5 +75.7% 14.6 9.6 +51.0%
Divina(®) range (menopausal
symptoms) 3.1 3.5 -12.9% 13.2 14.7 -10.8%
Enanton(®) (prostate cancer) 3.0 3.1 -2.8% 11.9 12.7 -6.8%
Fareston(®) (breast cancer) 1.7 3.0 -41.7% 10.2 10.5 -2.8%
--------------------------------------------------------------------------------
Total 92.0 85.8 +7.2% 378.3 339.7 +11.4%
Share of pharmaceutical net sales 51% 51% 52% 51%
--------------------------------------------------------------------------------
KEY FIGURES FOR DIAGNOSTICS BUSINESS
EUR million Q4/09 Q4/08 Change % 2009 2008 Change %
------------------------------------------------------------------------------
Net sales 12.0 10.7 +12.0% 45.2 45.0 +0.4%
Operating profit 1.2 0.2 +566.6% 5.6 6.1 -9.1%
% of net sales 10.3% 1.7% 12.3% 13.6%
R&D expenses 1.6 1.5 +6.9% 5.9 4.8 +23.3%
% of net sales 13.0% 13.7% 13.0% 10.6%
Capital expenditure 0.6 1.0 -37.5% 2.5 2.8 -9.6%
% of net sales 5.3% 9.6% 5.6% 6.2%
Personnel at the end of the period 291 287 +1.3%
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Information on Orion's shares
Basic SHARE information 31 DECember 2009
31 December 2009 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
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Share capital, EUR million 33.5 58.7 92.2
Counter book value per share, EUR 0.65 0.65
--------------------------------------------------------------------------------
Total number of shares 51,340,668 89,917,160 141,257,828
% of total share stock 36% 64% 100%
Number of treasury shares 280,030 280,030
Total number of shares excluding
treasury shares 51,340,668 89,637,130 140,977,798
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Minimum number of shares 1
Maximum number of shares 500,000,000 1,000,000,000 1,000,000,000
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Votes per share 20 1
Number of votes excluding treasury
shares 1,026,813,360 89,637,130 1,116,450,490
% of total votes 92% 8% 100%
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Total number of shareholders 17,125 43,728 54,323
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A shares and B shares confer equal rights to the Company assets and dividends.
INFORMATION ON TRADING 1 JANUARY - 31 DECEMBER 2009
A shares B shares Total
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Shares traded 3,815,863 84,568,573 88,384,436
% of the total number of shares 7.4% 94.1% 62.6%
Trading volume, EUR million 48.3 1,032.2 1,080.4
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Closing quotation on 2 Jan 2009, EUR 12.55 12.63
Lowest quotation, EUR (A and B, 30 Mar 2009) 10.42 10.35
Average quotation, EUR 12.65 12.21
Highest quotation, EUR (A/B 22/30 Dec 2009) 15.75 15.34
Closing quotation on 31 Dec 2009, EUR 15.06 15.05
Market capitalisation on 31 Dec 2009
excluding treasury shares, EUR million 773.2 1,349.0 2,122.2
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PERFORMANCE PER SHARE
Q4/09 Q4/08 Change % 2009 2008 Change %
--------------------------------------------------------------------------------
Earnings per share, EUR 0.23 0.18 +33.8% 1.07 0.97 +11.1%
Cash flow per share before
financial items, EUR 0.34 0.23 +48.1% 1.03 0.66 +56.9%
Equity per share, EUR 3.11 2.97 +4.9%
Proposed dividend per share,
EUR (1)) 1.00 0.95 +5.3%
Proposed payout ratio, % 93.5% 97.9%
Total proposed dividend, EUR
million 141.0 133.9 +5.3%
Effective dividend yield
according to proposal, %
A share 6.6% 7.9%
B share 6.6% 7.9%
Price/earnings ratio (P/E)
A share 14.07 12.37
B share 14.07 12.44
Average number of shares
excluding treasury shares,
1,000 shares 140,978 140,933 140,970 141,003
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1) The Board of Directors proposes to the Annual General Meeting that EUR 0.10
per share be distributed from the expendable fund in the distributable equity as
a repayment of capital.
Appendices
Reporting
Orion Corporation is the parent company of the Orion Group. The Group consists
of two business areas, or operating segments, and five business divisions. Orion
reports on its operations segmentally.
· Pharmaceuticals business
o Proprietary Products (patented prescription products for three therapy
areas)
o Specialty Products (off-patent, generic prescription products and self-care
products)
o Animal Health (veterinary products for pets and production animals)
o Fermion (active pharmaceutical ingredients for Orion and other companies)
· Diagnostics business
o Orion Diagnostica (diagnostic test systems for point-of-care in healthcare
and hygiene tests for industry).
Contract manufacturing and others, i.e. manufacturing for other companies, is
included in the Pharmaceuticals business segment, but it is not a separate
business division, it is part of the Group's Supply Chain organisation.
Accounting policies
The Consolidated Financial Statements of the Orion Group have been prepared in
accordance with International Financial Reporting Standards (IFRS), applying IAS
and IFRS standards as well as SIC and IFRIC interpretations effective as of 31
December 2009.
For the financial year, the Group has adopted the following relevant standards,
interpretations and amendments that became effective in 2009.
* IAS 1, Presentation of Financial Statements revised standard. The revised
standard affects the presentation of the Consolidated Statement of
Comprehensive Income and the Statement of Changes in Equity.
The policies and calculation methods applied during the period can be found on
the Orion website at www.orion.fi/en/investors
<http://www.orion.fi/en/investors>/.
Other matters
The data in this Financial Statement Release are audited.
The figures in parentheses are for the comparative period of the previous year.
The Company has no items that could dilute the earnings per share. All the
figures have been rounded, which is why the total sums of individual figures may
differ from the total sums shown.
CALCULATION OF THE KEY FIGURES
Profit before taxes + Interest and other
Return on capital employed finance expenses
(ROCE), % =--------------------------------------------x 100
Total assets - Non-interest-bearing
liabilities (average during the period)
Profit for the period
Return on equity (ROE), % =--------------------------------------------x 100
Total equity (average during the period)
Equity
Equity ratio, % =--------------------------------------------x 100
Total assets - Advances received
Interest-bearing liabilities - Cash and
Gearing, % = cash equivalents x 100
--------------------------------------------
Equity
Profit available for the owners of the
parent company
Earnings per share, EUR =--------------------------------------------
Average number of shares during the
period, excluding treasury shares
Cash flow from operating activities + Cash
Cash flow per share before flow from investing activities
financial items, EUR =--------------------------------------------
Average number of shares during the
period, excluding treasury shares
Equity of the owners of the parent company
Equity per share, EUR =--------------------------------------------
Number of shares at the end of the period,
excluding treasury shares
Dividend to be distributed for the period
Dividend per share, EUR =--------------------------------------------
Number of shares t the end of the period,
excluding treasury shares
Dividend per share
Payout ratio, % =--------------------------------------------x 100
Earni g per share
Dividend per share
Effective dividend yield, % =--------------------------------------------x 100
Closing quot t on of the period
Closing quotation of the period
Price/earnings ratio (P/E) =--------------------------------------------
Earni g per share
Total EUR value of shares traded
Average share price, EUR =--------------------------------------------
Average number of traded shares during the
period
Number of shares
Market capitalisation, EUR = at the end of the x Closing quotation of
million period the period
ADJUSTED KEY FIGURES
Q4/08 Q4/08 2008 2008
Earlier Adjusted Earlier Adjusted
reported reported
--------------------------------------------------------------------------------
Gross profit, EUR million 118.2 114.3 480.8 467.4
R&D expenses, EUR million 29.4 25.5 103.4 90.0
% net sales 16.4% 14.2% 14.5% 12.7%
Net sales Proprietary Products, EUR
million 70.9 69.4 284.7 278.1
Net sales Specialty Products, EUR million 66.6 68.1 254.0 260.5
--------------------------------------------------------------------------------
Pro forma Pro forma
2008 2008 2007 2007 2006 2006
Earlier Adjusted Earlier Adjusted Earlier Adjusted
reported reported reported
--------------------------------------------------------------------------------
Gross profit, EUR
million 480.8 467.4 460.7 447.2 434.9 422.3
R&D expenses, EUR
million 103.4 90.0 98.5 85.0 85.7 73.1
% net sales 14.5% 12.7% 14.5% 12.5% 13.4% 11.4%
Net sales Proprietary
Products, EUR million 284.7 278.1 270.8 259.6 256.6 242.0
Net sales Specialty
Products, EUR million 254.0 260.5 241.5 252.5 218.7 233.3
--------------------------------------------------------------------------------
Publisher:
Orion Corporation
www.orion.fi <http://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#1382137]
