ORION CORPORATION / INTERIM REPORT / JANUARY-MARCH 2012 / 24 April 2012 at
12:00 noon EEST
Orion's net sales for January-March 2012 totalled EUR 247 million (EUR 244
million for January-March 2011), and were at similar level to the comparative
period last year.
* Operating profit was EUR 79 (93) million.
* Profit before taxes was EUR 79 (93) million.
* Equity ratio was 40% (44%).
* ROCE before taxes was 58% (72%).
* ROE after taxes was 55% (66%).
* Basic earnings per share were EUR 0.42 (0.49).
* Cash flow per share before financial items was EUR 0.27 (0.34).
* The outlook estimate for 2012 remains unchanged. Orion estimates that net
sales in 2012 will be at similar level to 2011 and operating profit at
similar level to 2010.
ORION'S KEY FIGURES FOR THE REVIEW PERIOD
Q1/12 Q1/11 Change % 2011
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Net sales, EUR million 247.4 244.1 +1.3% 917.9
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International operations, EUR million 183.4 185.0 -0.9% 677.2
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% of net sales 74.1% 75.8% 73.8%
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Operating profit, EUR million 79.3 92.9 -14.7% 282.9
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% of net sales 32.0% 38.0% 30.8%
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Profit before taxes, EUR million 79.3 92.7 -14.4% 282.0
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% of net sales 32.1% 38.0% 30.7%
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Income tax expense, EUR million 19.7 24.2 -18.6% 72.4
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R&D expenses, EUR million 22.8 19.8 +15.3% 87.5
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% of net sales 9.2% 8.1% 9.5%
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Capital expenditure, EUR million 8.3 7.2 +15.2% 49.5
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% of net sales 3.4% 2.9% 5.4%
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Assets total, EUR million 905.2 812.3 +11.4% 779.1
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Equity ratio, % 39.8% 44.1% 64.2%
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Gearing, % -20.0% -29.3% -6.9%
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Interest-bearing liabilities, EUR million 163.6 110.1 +48.6% 88.7
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Non-interest-bearing liabilities, EUR million 380.9 343.9 +10.8% 190.5
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Cash and cash equivalents, EUR million 235.9 214.9 +9.7% 123.0
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ROCE (before taxes), % 57.8% 72.1% 49.4%
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ROE (after taxes), % 55.4% 66.3% 43.3%
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Basic earnings per share, EUR 0.42 0.49 -13.0% 1.49
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Diluted earnings per share, EUR 0.42 0.49 -13.0% 1.49
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Cash flow per share before financial items, EUR 0.27 0.34 -22.0% 1.10
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Equity per share, EUR 2.56 2.54 +0.5% 3.55
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Personnel at the end of the period 3,453 3,217 +7.3% 3,425
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Average personnel during the period 3,439 3,179 +8.2% 3,328
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Personnel expenses, EUR million 52.6 44.4 +18.5% 186.0
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President and CEO Timo Lappalainen's review
"Anticipated start for the year"
"Orion's sales developed well in the first months of the year. Our total net
sales were slightly higher, even though sales of our Parkinson's drugs were as
anticipated about 14 per cent lower than in the corresponding period in 2011,
which had also included a non-recurring milestone payment of EUR 7 million.
Sales of our Specialty Products grew strongly, as did Fermion and Orion
Diagnostica sales. During the quarter we also made the first deliveries of
generic entacapone products to North America.
"Launching of Dexdor intensive care sedative in Europe has progressed as planned
and the product is already available in over ten European countries. The product
will be launched in most other European countries in 2012 as pricing and
reimbursement processes progress country by country.
"Our delivery capability, especially in Finland, was slightly below normal at
the beginning of the year following the fire at the Turku manufacturing plant at
the end of 2011, although operations at the plant returned to normal during the
first months of the year. However, the financial effects of the incident
remained relatively small.
"Our research projects have progressed as planned. The study results on a new
Easyhaler budesonide-formoterol formulation received early in 2012 were
promising, but not yet sufficient for submission of an application for marketing
authorisation. During the year we will continue developing it and an Easyhaler
fluticasone-salmeterol formulation, as well as developing other molecules in
clinical trial phase.
"Our outlook estimate, which can be found with the basis for it on pages 5-6 of
this report, remains unchanged. We estimate that our net sales will be at
similar level to 2011 and our operating profit at similar level to 2010. In
2011, our net sales were EUR 918 million and in 2010 our operating profit was
EUR 254 million. "
Events during the period
On 7 February Orion announced that study results received early in 2012 on an
inhalable budesonide-formoterol formulation product were promising, but not yet
sufficient for submission of an application for marketing authorisation. The
Company will continue developing the product in 2012.
On 12 March Orion transferred altogether 87,763 Orion Corporation B shares held
by the Company as a share bonus for 2011 to the key persons employed by the
Group and belonging to the Share-based Incentive Plan of the Group.
On 20 March Orion Corporation's Annual General Meeting was held at the Helsinki
Fair Centre.
On 26 March Orion commented on the ANDA filed by Mylan Pharmaceuticals Inc. for
a generic version of Orion's proprietary drug Stalevo(®) (carbidopa, levodopa
and entacapone) in the United States.
Events after the period
In April the first generic entacapone products licensed by Orion entered the
markets in the United States.
News conference and teleconference
A news conference and teleconference on the published results will be held
today, Tuesday 24 April 2012, 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 via the Orion website at
http://www.orion.fi/en/. After the presentation, questions can be asked by
telephone in Finnish and English.
The teleconference code is 914103 and to participate in the teleconference,
please call:
from United States: +1 334 323 6203
from other countries: +44 (0)20 7162 0125
News conference recordings
A recording of the webcast of the event in English and a recording of the
presentation by the President and CEO in Finnish will be available on the Orion
website later today.
Financial report material
Financial reports and related presentation material are available at
www.orion.fi/en/ promptly after publication. The website also has a form for
subscribing to Orion's releases.
Dates in Orion Calendar 2012
Capital Markets Day in Helsinki Thursday 24 May 2012
Interim Report January-June 2012 Tuesday 31 July 2012
Interim Report January-September 2012 Tuesday 23 October 2012
For additional information about the financial review:
Jari Karlson, CFO, tel. +358 10 426 2883
www.orion.fi/en
www.orion.fi/en/investors/
Financial review Q1/2012
Net sales
The Orion Group's net sales in the first quarter of 2012 totalled EUR 247
million (EUR 244 million in the first quarter of 2011). The net effect of
currency exchange rates was plus EUR 3 million.
The Pharmaceuticals business's net sales totalled EUR 233 (231) million. Net
sales of Orion's Stalevo(®) (carbidopa, levodopa and entacapone) and
Comtess(®)/Comtan(®) (entacapone) Parkinson's drugs were down by 14% at EUR 63
(74) million, which is 27% (32%) of the Pharmaceuticals business's net sales.
The net sales of other products in the portfolio totalled EUR 169 (158) million,
and were up by 8% on the comparative period. The products based on in-house R&D
accounted for EUR 105 (114) million, or 45% (49%) of the Pharmaceuticals
business's net sales.
The Diagnostics business's net sales were up by 14% at EUR 16 (14) million.
Operating profit
The Orion Group's operating profit was down by 15% at EUR 79 (93) million.
The Pharmaceuticals business's operating profit was EUR 79 (92) million, down by
14% on the comparative period. Net sales and operating profit in the comparative
period were enhanced by a non-recurring payment of EUR 7 million. Operating
profit was also lower than in the comparative period because products with lower
margins accounted for an increasing proportion of sales as sales of Parkinson's
drugs declined.
The Diagnostics business's operating profit was down by 9% at EUR 2.5 (2.8)
million as costs increased, although sales grew well.
Operating expenses
The Group's sales and marketing expenses were down by 6% at EUR 49 (52) million.
R&D expenses were up by 15% at EUR 23 (20) million and accounted for 9% (8%) of
the Group's net sales. Pharmaceutical R&D expenses amounted to EUR 21 (18)
million. Research projects are reported in more detail under Pharmaceuticals in
the Business Reviews.
Administrative expenses were higher at EUR 11 (9) million.
Other operating income and expenses increased profit by EUR 2 (2) million.
Group's profit
The Group's profit before taxes totalled EUR 79 (93) million. Basic earnings per
share were EUR 0.42 (0.49) and diluted earnings per share were EUR 0.42 (0.49).
Equity per share was EUR 2.56 (2.54). The return on capital employed before
taxes (ROCE) was 58% (72%) and the return on equity after taxes (ROE) 55% (66%).
Financial position
The Group's gearing was -20% (-29%) and the equity ratio 40% (44%). The Group's
total liabilities at 31 March 2012 were EUR 545 (454) million. At the end of the
period, interest-bearing liabilities amounted to EUR 164 (110) million,
including EUR 134 (88) million of long-term loans. The non-interest-bearing
liabilities also include the dividends and repayments of capital paid in the
beginning of April but transferred from equity already in March.
The Group had EUR 236 (215) million of cash and cash equivalents at the end of
the period, which are invested in short-term interest-bearing instruments issued
by financially solid financial institutions and corporations.
Cash flow
Cash flow from operating activities was lower than in the comparative period at
EUR 50 (58) million. Operating profit was lower in the first quarter of 2012,
but the additional amount tied up into working capital was lower than in the
comparative period at EUR 23 (34) million.
Cash flow from investing activities was EUR -12 (-9) million and cash flow from
financing activities was EUR 75 (-0.2) million.
Capital expenditure
The Group's capital expenditure totalled EUR 8 (7) million. This comprised EUR
7 (5) million on property, plant and equipment and EUR 1 (3) million on
intangible assets.
Outlook for 2012
Net sales will be at similar level to 2011.
Operating profit will be at similar level to 2010.
The Group's capital expenditure will be about EUR 50 million excluding
substantial corporate or product acquisitions.
Basis for outlook
Product launches will continue to support Orion's position as market leader in
Finland. However, price competition is expected to continue in 2012.
The generic competition commencing in April 2012 in the United States will
decrease sales of Orion's Parkinson's drugs in 2012. In 2011 US markets
accounted for about EUR 60 million of the net sales of Orion's Parkinson's
drugs. Elsewhere in the world generic competition is not expected to have a
material impact on sales of these products in the current year.
Marketing expenditure will be similar to the previous year. 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
2012 were planned mainly during the previous year.
Research and development costs will be slightly higher than in 2011. 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 2012 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 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 2012. The effects of commencement of generic competition on
Orion's Parkinson's drugs have been taken into account in the outlook estimate.
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 affect Orion's products. Deliveries to Novartis are based on
timetables that are jointly agreed in advance. Nevertheless, they can change,
for example as a consequence of decisions by Novartis concerning adjustments of
stock levels.
Most of the exchange rate risk relates to the US dollar. Typically, only less
than 15% of Orion's net sales comes 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.
Group's financial objectives
Orion's financial objectives are ensuring the Group's financial stability and
creating long-term profitable growth.
The principal means of achieving these objectives are:
* improving the organic development of net sales and operating profit through
product, product portfolio and corporate acquisitions
* increasing the efficiency of operations and cost control
* maintaining a stable financial position, with the equity ratio at least 50%
Sales of Stalevo(®) and Comtess(®)/Comtan(®) currently account for approximately
one-quarter of Orion's net sales. The key patents for these Parkinson's drugs in
Orion's main markets will expire in 2012-2013, which is why their sales are
expected to decline over the next few years. Orion is continuously bringing new
products to the market to replace this drop in net sales.
The development of Orion's net sales and profitability in the next few years
will depend on how fast the sales of Parkinson's drugs will decline and, on the
other hand, how the sales of other products will increase in the future.
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 31 March 2012 Orion had a total of 141,257,828 (141,257,828) shares, of which
44,993,218 (47,483,699) were A shares and 96,264,610 (93,774,129) B shares. The
Group's share capital was EUR 92,238,541.46 (92,238,541.46). At the end of March
2012 Orion held 325,991 (413,754) B shares as treasury shares. On 31 March 2012
the aggregate number of votes conferred by the A and B shares was 995,802,979
(1,043,034,355) excluding treasury shares.
At the end of March 2012, Orion had 61,442 (60,388) registered shareholders.
Voting rights conferred by shares
Each A share entitles its holder to twenty (20) votes at General Meetings of
Shareholders and each B share one (1) vote. However, a shareholder cannot vote
more than 1/20 of the aggregate number of votes from the different share classes
represented at the General Meetings of Shareholders. In addition, Orion and
Orion Pension Fund do not have the right to vote at Orion Corporation's General
Meetings of Shareholders.
Both share classes, A and B, confer equal rights to the Company's assets and
dividends.
Conversion of shares
The Articles of Association entitle shareholders to demand the conversion of
their A shares to B shares within the limitation on the maximum number of shares
of a class. In January-March 2012 there were no conversions.
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 March 2012 the market capitalisation of the Company's shares excluding
treasury shares was EUR 2,089 million.
Orion shares are also traded on various alternative trading platforms in
addition to NASDAQ OMX Helsinki.
Authorisations of the Board of Directors
Orion's Board of Directors was authorised by the Annual General Meeting on 24
March 2010 to decide on a share issue in which shares held by the Company can be
conveyed. The authorisation to issue shares is valid for five years from the
decision taken by the Annual General Meeting.
The Board of Directors is authorised to decide on conveyance of no more than
500,000 Orion Corporation B shares held by the Company. Such shares held by the
Company can be conveyed either against or without payment. Such shares held by
the Company can be conveyed by selling them in public trading on NASDAQ OMX
Helsinki; in a share issue placement to the Company's shareholders in proportion
to their holdings at the time of the conveyance regardless of whether they own A
or B shares; or in a share issue placement deviating from shareholders' pre-
emptive rights if there is a weighty financial reason, such as the development
of the capital structure of the Company, using the shares to finance possible
corporate acquisitions or other business arrangements of the Company, financing
capital expenditure or as part of the Company's incentive plan. The share issue
placement can be without payment only if there is an especially weighty
financial reason in the view of the Company and to the benefit of all its
shareholders. The amounts paid for shares in the Company conveyed shall be
recorded in a distributable equity fund. The Board of Directors shall decide on
other matters related to the conveyance of shares held by the Company. The
authorisation was exercised as described below under the heading "Share-based
Incentive Plan". On 31 March 2012 the Board of Directors had outstanding
authorisation to convey 309,337 Orion Corporation B shares held by the Company.
The Board of Directors is not authorised to increase the share capital or to
issue bonds with warrants or convertible bonds or stock options.
Share-based Incentive Plan
In February 2010 the Board of Directors of Orion Corporation decided on a new
share-based incentive plan for the Group key persons. The Plan includes earning
periods and the Board of Directors will annually decide on the beginning and
duration of the earning periods in 2010, 2011 and 2012. The Board of Directors
will decide on the earnings criteria and on targets to be established for them
at the beginning of each earning period. The target group of the Plan consists
of approximately 30 people. The total maximum amount of rewards to be paid on
the basis of the Plan is 500,000 Orion Corporation B shares and a cash payment
corresponding to the value of the shares.
On 12 March 2012 Orion transferred altogether 87,763 Orion Corporation B shares
held by the Company as a share bonus for 2011 to the key persons employed by the
Group and belonging to the Share-based Incentive Plan of the Group. The transfer
was based on the authorisation by the Annual General Meeting on 24 March 2010.
The price per share of the transferred shares was EUR 16.3848, which was the
volume weighted average quotation of Orion Corporation B shares on 12 March
2012. The total transaction price of the transferred shares was therefore EUR
1,437,979.20.
Share ownership
At the end of March 2012 Orion had a total of 61,442 (60,388) registered
shareholders, of whom 95% (95%) were private individuals holding 52% (53%) of
the entire share stock and 65% (65%) of the total votes. There were altogether
41 (37) million nominee-registered shares, which is 29% (26%) of all shares, and
they conferred entitlement to 6% (5%) of the votes.
At the end of March 2012 Orion held 325,991 (413,754) B shares as treasury
shares, which is 0.2% (0.3%) of the Company's total share stock and 0.03%
(0.04%) of the total votes.
Decisions by the Annual General Meeting
The Annual General Meeting of the Shareholders of Orion Corporation was held on
20 March 2012 at the Helsinki Fair Centre. The following matters were handled at
the meeting.
Adoption of the financial statements for financial year 1 January to 31 December
2011
The Annual General Meeting adopted the financial statements of the Company and
Group as per 31 December 2011.
Dividend EUR 1.30 per share
A dividend of EUR 1.30 per share was approved in accordance with the Board's
proposal. The record date for dividend distribution was 23 March 2012 and the
payment date was 4 April 2012.
Repayment of capital EUR 0.12 per share
It was decided that EUR 0.12 per share be distributed from distributable equity
as repayment of capital to the shareholders. The record date for repayment of
capital was 23 March 2012 and the payment date was 4 April 2012.
Discharge from liability
The members of the Board of Directors and the President and CEO were discharged
from liability for the financial year 1 January to 31 December 2011.
Remuneration of the members of the Board of Directors
As the annual fees for the term of office of the Board of Directors, the
Chairman shall receive EUR 76,000, the Vice Chairman shall receive EUR 51,000
and the other Board members shall receive EUR 38,000 each. Furthermore, as a fee
for each meeting attended, the Chairman shall receive EUR 1,200, the Vice
Chairman shall receive EUR 900 and the other Board members shall receive EUR
600 each. The travel expenses of Board members shall be paid in accordance with
previous practice. The aforementioned meeting fees shall also be paid to the
Chairmen and to the members of the committees established by the Board.
Of the aforementioned annual fees, 60% was to be paid in cash and 40% in Orion
Corporation B shares acquired for the Board members in the period 26-30 March
2012 from the stock exchange in amounts corresponding to EUR 30,400 for the
Chairman, EUR 20,400 for the Vice Chairman and EUR 15,200 for each of the other
Board members. The part of the annual fee paid in cash, which corresponds to the
approximate sum necessary for the payment of the income taxes on the fees, was
to be paid no later than 30 April 2012. The annual fees encompass the full term
of office of the Board of Directors.
Members and Chairman of the Board of Directors
The number of members in the Board of Directors was confirmed to be six. Sirpa
Jalkanen, Eero Karvonen, Hannu Syrjänen, Heikki Westerlund and Jukka Ylppö were
re-elected as members of the Board of Directors for the following term of
office, and Timo Maasilta was elected as a new member. Hannu Syrjänen was re-
elected as the Chairman of the Board of Directors.
Auditor and auditor's fee
Authorised Public Accountants PricewaterhouseCoopers Oy were elected as the
auditor for the following term of office. The auditor's fee shall be paid
against an invoice approved by the Company.
Constitution of the Board of Directors
At its constitutive meeting following the Annual General Meeting, the Board of
Directors elected Jukka Ylppö as its Vice Chairman.
Personnel
The average number of employees in the Orion Group in January-March 2012 was
3,439 (3,179). At the end of March 2012 the Group had a total of 3,453 (3,217)
employees, of whom 2,740 (2,515) worked in Finland and 713 (702) outside
Finland.
Salaries and other personnel expenses in January-March 2012 totalled EUR 53 (44)
million.
Significant legal proceedings
Legal proceedings against the Sandoz companies
On 4 September 2009 Orion Corporation and Hospira, Inc. filed together a patent
infringement lawsuit in the United States against Sandoz International GmbH and
Sandoz Inc. to enforce their patents valid in the United States. Sandoz Canada
Inc. has since been added as a defendant in the lawsuit. The legal proceedings
concern Orion's US Patent No. 4,910,214 and Orion's and Hospira's commonly owned
US Patent No. 6,716,867.
Sandoz Inc. has sought authorisation to produce and market in the United States
a generic version of Orion's proprietary drug Precedex(®) (dexmedetomidine
hydrochloride 100 μg/ml), which is marketed in the United States by Orion's
licensee Hospira.
Orion expects the costs of the legal proceedings against the Sandoz companies to
be substantially less than the costs of the entacapone patent litigation that
had previously been pending in the United States. The main hearing of the case
has been held, and next a ruling will be issued in the case. Orion does not have
any information as to when the court will issue its ruling on this matter.
Legal proceedings against Caraco Pharmaceutical Laboratories, Ltd.
On 12 November 2010 Orion Corporation and Hospira, Inc. jointly filed a patent
infringement lawsuit in the United States against Caraco Pharmaceutical
Laboratories, Ltd. to enforce Orion's and Hospira's joint patent No. 6,716,867
valid in the United States. Gland Pharma Ltd. has since been added as a
defendant in the lawsuit.
Caraco had submitted an application for authorisation to produce and market in
the United States a generic version of Orion's proprietary drug Precedex(®)
(dexmedetomidine hydrochloride 100 μg/ml), which is marketed in the United
States by Orion's licensee Hospira.
Orion expects the costs of the legal proceedings against Caraco to be
substantially less than the costs of the entacapone patent litigation that had
previously been pending in the United States. According to the schedule
confirmed by the court, the main hearing of the case has been rescheduled to
commence on 19 February 2013.
Legal proceedings against Mylan Pharmaceuticals Inc.
On 24 January 2011 Orion Corporation filed a patent infringement lawsuit in the
United States against Mylan Pharmaceuticals Inc. to enforce its US patent No.
5,446,194.
Mylan intends to market in the United States a generic version of entacapone
tablets with strength 200 mg like Orion's Comtan(®) proprietary drug. Comtan is
used as an adjunct to levodopa/carbidopa therapy to treat patients with
idiopathic Parkinson's disease who experience the signs and symptoms of end-of-
dose "wearing-off." Novartis is Orion's exclusive licensee for marketing the
drug Comtan in the United States.
ANDA filed by Mylan Pharmaceuticals Inc. for a generic version of Orion's
proprietary drug Stalevo(® )in the United States
Orion Corporation has been informed that an Abbreviated New Drug Application
(ANDA) has been filed by Mylan Pharmaceuticals Inc. (Mylan) with the US Food and
Drug Administration (FDA) seeking authorisation to produce and market generic
tablets (strengths 12.5/50/200 mg; 18.75/75/200 mg; 25/100/200 mg;
31.25/125/200 mg; 37.5/150/200 mg and 50/200/200 mg) in the United States, with
carbidopa, levodopa and entacapone as active ingredients in the same proportion
as in Orion's proprietary drug Stalevo(®) for treatment of Parkinson's disease.
Stalevo is an enhanced levodopa treatment which is marketed in the United States
by Orion's exclusive licensee, Novartis.
At this point, the process of reviewing Mylan's ANDA is just beginning in the
United States, so generic competition based on this application is not imminent.
Orion is evaluating together with Novartis its legal options to protect its
rights.
Business Reviews
Pharmaceuticals
Review of human pharmaceuticals market
According to statistics collected by Finnish Pharmaceutical Data Ltd, Finnish
wholesale of human pharmaceuticals in January-March 2012 totalled EUR 493 (474)
million, up by 4% on the comparative period of the previous year.
Finland is the most important individual market for Orion, generating about one-
quarter of the total net sales. Orion was able to increase its sales faster than
the markets as a whole, so strengthened its position as leader in marketing
pharmaceuticals in Finland. According to statistics collected by Finnish
Pharmaceutical Data Ltd, Orion's wholesale of human pharmaceuticals in Finland
in January-March amounted to EUR 54 (49) million, up by 10% compared with
comparative period of the previous year. Orion's market share of Finnish
pharmaceuticals markets was 11% (10%).
According to IMS Health pharmaceutical sales statistics, in the 12-month period
ending in December 2011 the total sales of Parkinson's drugs in the United
States were down by 28% at USD 669 million (USD 922 million in the previous 12-
month period). The decrease in in-market sales was due to commencement of
generic competition in certain 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 December 2011 totalled EUR 955 (1,043) million, and the
average market decline was 8%.
The most important individual therapy area for Orion is still the treatment of
Parkinson's disease. Orion's Parkinson's drugs account for one-quarter of the
Group's net sales. Sales of Orion's Parkinson's drugs in the United States
remained stable despite a clear decrease in the market as a whole. In Japan
sales continued to grow well and clearly better than the market as a whole.
According to IMS Health pharmaceutical sales statistics, in the 12-month period
ending in December 2011, sales of Orion's Parkinson's drugs in the United States
totalled USD 181 (USD 180 million in the previous 12-month period) million.
Sales remained stable at a total of EUR 156 (158) million in the five largest
markets in Europe, and up by 18% at EUR 56 (47) million in Japan. The market
share of Orion's Parkinson's drugs was 27% in the United States, on average 16%
in the five largest European markets and 11% in Japan.
According to IMS Health pharmaceutical sales statistics, sales of Orion's
Precedex(®) intensive care sedative (dexmedetomidine) were up by 33% at USD 206
million in the 12-month period ending in December 2011 (USD 155 million in the
previous 12-month period). About four-fifths of the sales amounting to USD 161
(132) million were in the United States, where Precedex sales grew by 22%.
Net sales and operating profit of the Pharmaceuticals business
Net sales of the Pharmaceuticals business in January-March 2012 were EUR 233
(231) million, up by 1% on the comparative period of the previous year. The
operating profit of the Pharmaceuticals business was down by 14% at EUR 79 (92)
million. The operating profit of the Pharmaceuticals business was 34% (40%) of
the segment's net sales.
Net sales of Orion's top ten pharmaceuticals in January-March 2012 were down by
4% at EUR 119 (124) million. They accounted for 51% (54%) of the total net sales
of the Pharmaceuticals business.
Net sales of the products based on own in-house R&D were down by 8% at EUR 105
(114) million in January-March 2012. These products accounted for about 45%
(49%) 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.
Net sales of Proprietary Products in January-March 2012 were down by 13% at EUR
99 (113) million.
Orion's drugs for treatment of Parkinson's disease are Stalevo(®) (active
ingredients carbidopa, levodopa, entacapone) and Comtess(®)/Comtan(®)
(entacapone), and their net sales in January-March 2012 totalled EUR 63 (74)
million. The net sales of Parkinson's drugs were down by 14% and accounted for
27% (32%) of the total net sales of the Pharmaceuticals business. The decrease
in sales is mainly due to commencement of generic competition in the United
States in April 2012, which decreased deliveries to Novartis in January-March.
Net sales from deliveries of Stalevo(®) and Comtan(®) to Novartis were down by
20% at a total of EUR 40 (49) million. Deliveries of Stalevo(®) to Novartis
decreased by 22%, and deliveries of Comtan(®) by 16%. Total net sales generated
by Stalevo(®) and Comtess(®) in Orion's own sales organisation remained at
similar level to the previous year at EUR 24 (25) million. Sales through Orion's
own sales organisation totalled EUR 21 (20) million for Stalevo(®) and EUR 3 (4)
million for Comtess(®).
The US Food and Drug Administration (FDA) has an ongoing safety review of
Stalevo, which began in spring 2009. Orion is assisting the FDA in undertaking
the safety review. The FDA has requested additional data based on databases
concerning the significance of the results of the STRIDE-PD study, and
consequently Orion and Novartis have decided to undertake two epidemiological
studies, which must be completed by July 2012 and will be reported to
authorities in the third quarter of the year.
Net sales of Simdax(®), a drug for treatment of acute decompensated heart
failure, totalled EUR 10 (11) million in January-March 2012.
Net sales of the Easyhaler(®) product family for treatment of asthma and chronic
obstructive pulmonary disease were down by 19% in January-March 2012 at EUR 7
(9) million. Net sales were down mainly because sales to partners were less than
in the comparative period due to the timing of deliveries. Sales of Easyhaler
products through Orion's own sales organisation in Europe maintained further
growth.
Net sales of the Precedex(®) intensive care sedative (dexmedetomidine) were up
by 25% in January-March 2012 at EUR 10 (8) million. In the United States and
markets outside Europe the sedative is sold by Orion's partner Hospira. US
markets account for about four-fifths of net sales of Precedex.
Launching of Orion's dexdor(®) intensive care sedative (dexmedetomidine) is
progressing as planned, and the product is already available in over ten
European countries. The product will be launched in most other European
countries in 2012 as pricing and reimbursement processes progress country by
country. In early 2012 Orion entered into a collaboration agreement with Baxter
concerning marketing of dexdor(®) intensive care sedative in France.
Specialty Products
Net sales of the Specialty Products business division's off-patent, i.e.
generic, prescription drugs and self-care products in January-March 2012 were up
by 13% at EUR 90 (80) million. The growth was enhanced by Orion's generic
entacapone products, sales of which commenced at the beginning of the year and
will be reported as part of the net sales of the Specialty Products business
division.
Net sales of the division in markets outside Finland grew strongly compared with
January-March 2011. The number of launches of generic prescription drugs and
self-care products was at similar level to January-March in the previous year.
As expected, the halt in production at Orion's manufacturing plant in Turku due
to a fire in November 2011 was still causing some delivery problems in early
2012, especially in Finnish markets. However, the financial effects of the
incident remained relatively small.
Net sales of Orion's human pharmaceuticals in Finland were up by 9% at EUR 59
(54) million in January-March 2012. Specialty Products accounted for the
majority of sales. Orion managed to increase its market share, especially in
prescription drugs.
Net sales of Orion's human pharmaceuticals in Eastern Europe in January-March
were up by 15% at EUR 14 (12) million. Specialty Products account for the
majority of sales in the region.
Animal Health
Net sales of the Animal Health business division in January-March were up by 6%
at EUR 18 (17) million. Sales of the animal sedatives at EUR 6 (7) million
accounted for 35% (39%) of the division's net sales. Orion's animal sedatives
are Dexdomitor(®) (dexmedetomidine), Domitor(®) (medetomidine), Domosedan(®)
(detomidine) and Antisedan(®) (atipamezole).
According to statistics collected by Pharma Industry Finland, the Finnish market
for veterinary drugs was up by 7% at about EUR 12 (11) million in January-March
2012. Orion was the second-largest marketer, with a market share of 17% (19%).
Fermion
Fermion manufactures active pharmaceutical ingredients for Orion and other
pharmaceutical companies. Its product range comprises nearly 30 pharmaceutical
ingredients. Fermion's net sales in January-March 2012 excluding pharmaceutical
ingredients supplied for Orion's own use were EUR 16 (13) million and accounted
for about two-thirds of Fermion's entire net sales. Several key products
performed well, even though competition in the markets remained intense.
Capacity utilisation at Fermion's plants was very high during the period under
review. Capacity utilisation was increased by manufacturing active ingredients
required for development work on Orion's own proprietary drugs, in addition to
the normal product range.
Research and development projects
The Group's R&D expenses in January-March 2012 totalled EUR 23 (20) million, of
which the Pharmaceuticals business accounted for EUR 21 (18) million. The
Group's R&D expenses accounted for 9% (8%) of the Group's net sales. R&D
expenses also include expenses relating to development of the current portfolio.
Orion has ongoing projects to broaden the range of the inhalable Easyhaler(®)
drugs product family. Orion is developing a budesonide-formoterol formulation
that combines budesonide as an anti-inflammatory agent and formoterol as a long-
acting bronchodilator. The study results received early in 2012 were promising,
but not yet sufficient for submission of an application for marketing
authorisation. The Company will continue development of the product in 2012. In
addition, Orion has another Easyhaler research programme in progress to develop
a fluticasone-salmeterol formulation. In this formulation fluticasone acts as an
anti-inflammatory agent and salmeterol acts as a long-acting bronchodilator.
Orion is collaborating with Novartis to develop Stalevo(®) drug for the Japanese
markets. The timeline for regulatory submission is under further evaluation by
Novartis.
Orion is continuing to develop an androgen receptor antagonist for the treatment
of advanced prostate cancer jointly with Endo Pharmaceuticals Inc. with the
objective of approval of the drug globally. The development is in Phase I/II
clinical trials.
Orion has Phase II clinical trials with the alpha 2(c) receptor antagonist in
progress. The trials are investigating the efficacy and safety of the drug
candidate in treating Alzheimer's disease.
Orion is developing a new more effective levodopa product based on optimised new
formulations and doses of known compounds. Product development is in the
clinical trials phase.
In addition, Orion has several projects in the early research phase
investigating prostate cancer, neuropathic pain, Parkinson's disease and
Alzheimer's disease, among others.
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-March 2012 were up by 14% at EUR 16 (14)
million. Sales progressed well in China and the Nordic countries, the main
markets.
Sales of QuikRead(®) infection tests remained strong during the review period,
and sales of the new more user-friendly prefilled QuikRead 101 system developed
well. Launching of QuikRead go(®), a new generation testing instrument,
progressed as planned during the review period.
The operating profit of the Diagnostics business was down by 9% at EUR 2.5 (2.8)
million and accounted for 16% (20%) of the segment's net sales. The profit
decreased because expenditure on product development and marketing increased.
Espoo, 24 April 2012
Board of Directors of Orion Corporation
Orion Corporation
Timo Lappalainen Jari Karlson
President and CEO CFO
Tables
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million Q1/12 Q1/11 Change % 2011
-------------------------------------------------------------------------------
Net sales 247.4 244.1 +1.3% 917.9
-------------------------------------------------------------------------------
Cost of goods sold -86.6 -72.7 +19.1% -305.1
-------------------------------------------------------------------------------
Gross profit 160.8 171.4 -6.2% 612.8
-------------------------------------------------------------------------------
Other operating income and expenses 1.5 2.1 -26.2% 3.0
-------------------------------------------------------------------------------
Selling and marketing expenses -49.2 -52.1 -5.7% -204.8
-------------------------------------------------------------------------------
R&D expenses -22.8 -19.8 +15.3% -87.5
-------------------------------------------------------------------------------
Administrative expenses -11.1 -8.7 +27.4% -40.6
-------------------------------------------------------------------------------
Operating profit 79.3 92.9 -14.7% 282.9
-------------------------------------------------------------------------------
Finance income 1.1 1.3 -14.0% 5.0
-------------------------------------------------------------------------------
Finance expenses -1.1 -1.5 -25.4% -6.0
-------------------------------------------------------------------------------
Share of associated companies' results 0.1 0.0 0.0
-------------------------------------------------------------------------------
Profit before taxes 79.3 92.7 -14.4% 282.0
-------------------------------------------------------------------------------
Income tax expense -19.7 -24.2 -18.6% -72.4
-------------------------------------------------------------------------------
Profit for the period 59.6 68.5 -12.9% 209.5
-------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME INCLUDING TAX EFFECTS
-------------------------------------------------------------------------------
Change in value of cash flow hedges -0.1 -0.5 -1.4
-------------------------------------------------------------------------------
Change in value of available-for-sale financial
assets -0.1 -0.3
-------------------------------------------------------------------------------
Translation differences 0.3 -0.6 0.6
-------------------------------------------------------------------------------
Other comprehensive income net of tax 0.2 -1.2 -1.1
-------------------------------------------------------------------------------
Comprehensive income for the period including tax
effects 59.9 67.3 -11.0% 208.4
-------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE TO:
-------------------------------------------------------------------------------
Owners of the parent company 59.6 68.5 -12.9% 209.5
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 0.0
-------------------------------------------------------------------------------
COMPREHENSIVE INCOME ATTRIBUTABLE TO:
-------------------------------------------------------------------------------
Owners of the parent company 59.9 67.3 -11.0% 208.4
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 0.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Basic earnings per share, EUR (1)) 0.42 0.49 -13.0% 1.49
-------------------------------------------------------------------------------
Diluted earnings per share, EUR (1)) 0.42 0.49 -13.0% 1.49
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Depreciation, amortisation and impairment 8.9 12.9 -30.8% 42.5
-------------------------------------------------------------------------------
Personnel expenses 52.6 44.4 +18.5% 186.0
-------------------------------------------------------------------------------
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 3/12 3/11 Change % 12/11
----------------------------------------------------------
Property, plant and equipment 191.5 185.1 +3.5% 190.7
----------------------------------------------------------
Goodwill 13.5 13.5 13.5
----------------------------------------------------------
Intangible rights 65.0 61.0 +6.5% 66.6
----------------------------------------------------------
Other intangible assets 4.6 4.4 +4.6% 4.8
----------------------------------------------------------
Investments in associates 1.4 1.4 +4.8% 1.4
----------------------------------------------------------
Available-for-sale investments 1.1 1.3 -18.7% 1.1
----------------------------------------------------------
Pension asset 38.0 32.7 +16.4% 37.4
----------------------------------------------------------
Deferred tax assets 1.2 2.7 -56.3% 1.4
----------------------------------------------------------
Other non-current assets 1.6 2.3 -30.1% 1.8
----------------------------------------------------------
Non-current assets total 318.0 304.4 +4.5% 318.6
----------------------------------------------------------
----------------------------------------------------------
Inventories 156.9 136.9 +14.6% 151.4
----------------------------------------------------------
Trade receivables 165.1 131.7 +25.4% 155.3
----------------------------------------------------------
Other receivables 29.3 24.5 +19.7% 30.8
----------------------------------------------------------
Cash and cash equivalents 235.9 214.9 +9.7% 123.0
----------------------------------------------------------
Current assets total 587.2 507.9 +15.6% 460.5
----------------------------------------------------------
----------------------------------------------------------
Assets total 905.2 812.3 +11.4% 779.1
----------------------------------------------------------
EQUITY AND LIABILITIES
EUR million 3/12 3/11 Change % 12/11
-------------------------------------------------------------------------------
Share capital 92.2 92.2 92.2
-------------------------------------------------------------------------------
Share premium 17.8
-------------------------------------------------------------------------------
Expendable fund 0.5 0.5 0.5
-------------------------------------------------------------------------------
Other reserves 0.7 0.9 -28.3% 17.6
-------------------------------------------------------------------------------
Retained earnings 267.1 246.9 +8.2% 389.6
-------------------------------------------------------------------------------
Equity attributable to owners of the parent company 360.5 358.3 +0.6% 499.9
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 +20.6% 0.0
-------------------------------------------------------------------------------
Equity total 360.5 358.4 +0.6% 500.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Deferred tax liabilities 41.6 44.3 -6.1% 42.2
-------------------------------------------------------------------------------
Pension liability 0.5 0.7 -30.5% 0.5
-------------------------------------------------------------------------------
Provisions 0.2 0.3 -16.8% 0.3
-------------------------------------------------------------------------------
Interest-bearing non-current liabilities 134.0 87.5 +53.1% 66.0
-------------------------------------------------------------------------------
Other non-current liabilities 0.4 0.1 +248.1% 0.3
-------------------------------------------------------------------------------
Non-current liabilities total 176.8 132.9 +33.0% 109.3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Trade payables 52.1 41.4 +25.8% 66.3
-------------------------------------------------------------------------------
Current tax liabilities 11.2 23.9 -53.4% 6.4
-------------------------------------------------------------------------------
Other current liabilities 274.9 233.1 +17.9% 74.5
-------------------------------------------------------------------------------
Provisions 0.0 0.0
-------------------------------------------------------------------------------
Interest-bearing current liabilities 29.6 22.6 +31.3% 22.7
-------------------------------------------------------------------------------
Current liabilities total 367.8 321.1 +14.6% 169.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Liabilities total 544.6 454.0 +20.0% 279.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity and liabilities total 905.2 812.3 +11.4% 779.1
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
a. Share capital
b. Share premium
c. Expendable fund
d. Other reserves
e. Translation differences
f. Retained earnings
g. Non-controlling interests
h. Equity total
Equity attributable to owners of the
parent company
--------------------------------------------
EUR million a. b. c. d. e. f. g. h.
-------------------------------------------------------------------------------
Equity at 1 January 2011 92.2 17.8 8.9 1.6 -4.4 351.2 0.0 467.4
-------------------------------------------------------------------------------
Profit for the period 68.5 68.5
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Change in value of cash
flow hedges -0.5 -0.5
-------------------------------------------------------------------------------
Change in value of
available-for-sale
financial assets -0.1 -0.1
-------------------------------------------------------------------------------
Translation differences -0.6 -0.6
-------------------------------------------------------------------------------
Transactions with owners:
-------------------------------------------------------------------------------
Dividend and capital
repayment -8.5 -169.0 -177.5
-------------------------------------------------------------------------------
Share-based incentive
plan 1.3 1.3
-------------------------------------------------------------------------------
Other adjustments -0.2 -0.2
-------------------------------------------------------------------------------
Equity at 31 March 2011 92.2 17.8 0.5 0.9 -5.0 251.9 0.0 358.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity at 1 January 2012 92.2 0.5 17.6 -3.8 393.4 0.0 500.0
-------------------------------------------------------------------------------
Profit for the period 59.6 59.6
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Change in value of cash
flow hedges -0.1 -0.1
-------------------------------------------------------------------------------
Translation differences 0.3 0.3
-------------------------------------------------------------------------------
Transactions with owners:
-------------------------------------------------------------------------------
Dividend and capital
repayment -16.9 -183.2 -200.1
-------------------------------------------------------------------------------
Share-based incentive
plan 1.1 1.1
-------------------------------------------------------------------------------
Other adjustments -0.3 -0.3
-------------------------------------------------------------------------------
Equity at 31 March 2012 92.2 0.5 0.7 -3.4 270.5 0.0 360.5
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR million Q1/12 Q1/11 2011
-------------------------------------------------------------------------------
Operating profit 79.3 92.9 282.9
-------------------------------------------------------------------------------
Adjustments 9.2 12.0 39.0
-------------------------------------------------------------------------------
Change in working capital -22.7 -33.9 -42.6
-------------------------------------------------------------------------------
Interest paid -1.0 -1.3 -6.2
-------------------------------------------------------------------------------
Interest received 1.1 1.4 5.0
-------------------------------------------------------------------------------
Dividends received 0.1
-------------------------------------------------------------------------------
Income taxes paid -15.7 -13.4 -79.3
-------------------------------------------------------------------------------
Total net cash flow from operating activities 50.2 57.7 198.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Investments in property, plant and equipment -11.3 -6.0 -25.6
-------------------------------------------------------------------------------
Investments in intangible assets -1.3 -3.7 -19.9
-------------------------------------------------------------------------------
Acquisition of an associate -0.0 -0.0
-------------------------------------------------------------------------------
Sale of a subsidiary less cash and cash equivalents at sale
date 0.3 0.3
-------------------------------------------------------------------------------
Sales of property, plant and equipment
and available-for-sale investments 0.2 0.1 1.2
-------------------------------------------------------------------------------
Sales of intangible assets 0.0 0.0
-------------------------------------------------------------------------------
Total net cash flow from investing activities -12.3 -9.2 -43.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Short-term loans raised 0.1 0.1 0.8
-------------------------------------------------------------------------------
Repayments of short-term loans -0.3 -0.3 -2.1
-------------------------------------------------------------------------------
Long-term loans raised 75.0 19.1
-------------------------------------------------------------------------------
Repayments of long-term loans -40.1
-------------------------------------------------------------------------------
Dividends paid and other distribution of profits 0.0 -0.0 -177.5
-------------------------------------------------------------------------------
Total net cash flow from financing activities 74.9 -0.2 -199.7
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net change in cash and cash equivalents 112.7 48.3 -44.7
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cash and cash equivalents at the beginning of the period 123.0 167.2 167.2
-------------------------------------------------------------------------------
Foreign exchange differences 0.2 -0.5 0.5
-------------------------------------------------------------------------------
Net change in cash and cash equivalents 112.7 48.3 -44.7
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 235.9 214.9 123.0
-------------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 3/12 3/11 12/11
-----------------------------------------------------------------
Carrying amount at the beginning of the period 190.7 187.1 187.1
-----------------------------------------------------------------
Additions 7.0 4.7 30.3
-----------------------------------------------------------------
Disposals -0.2 -0.3 -1.4
-----------------------------------------------------------------
Depreciation and impairments -6.0 -6.4 -25.3
-----------------------------------------------------------------
Carrying amount at the end of the period 191.5 185.1 190.7
-----------------------------------------------------------------
CHANGES IN INTANGIBLE ASSETS (EXCLUDING GOODWILL)
EUR million 3/12 3/11 12/11
---------------------------------------------------------------
Carrying amount at the beginning of the period 71.3 69.5 69.5
---------------------------------------------------------------
Additions 1.3 2.5 19.1
---------------------------------------------------------------
Disposals -0.0 -0.0
---------------------------------------------------------------
Amortisation and impairments -2.9 -6.5 -17.2
---------------------------------------------------------------
Carrying amount at the end of the period 69.6 65.4 71.3
---------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
EUR million 3/12 3/11 12/11
-------------------------------------------------------------------------------
CONTINGENCIES FOR OWN LIABILITIES
-------------------------------------------------------------------------------
Mortgages on land and buildings 41.0 41.0 41.0
-------------------------------------------------------------------------------
of which those to Orion Pension Fund 9.0 9.0 9.0
-------------------------------------------------------------------------------
Guarantees 1.5 1.2 1.6
-------------------------------------------------------------------------------
OTHER LIABILITIES
-------------------------------------------------------------------------------
Leasing liabilities (excluding finance lease
contracts) 5.7 3.8 4.5
-------------------------------------------------------------------------------
Other liabilities 0.3 0.3 0.3
-------------------------------------------------------------------------------
DERIVATIVES
EUR million 3/12 3/11 12/11
-------------------------------------------------------------------------------
CURRENCY FORWARD CONTRACTS AND CURRENCY SWAPS
-------------------------------------------------------------------------------
Fair value, EUR million 0.3 0.7 -0.4
-------------------------------------------------------------------------------
Nominal value, EUR million 44.7 49.4 40.7
-------------------------------------------------------------------------------
CURRENCY OPTIONS
-------------------------------------------------------------------------------
Fair value, EUR million 0.2 0.6 -0.2
-------------------------------------------------------------------------------
Nominal value, EUR million 49.9 41.2 63.1
-------------------------------------------------------------------------------
CROSS CURRENCY SWAPS
-------------------------------------------------------------------------------
Fair value, EUR million -0.1 0.3
-------------------------------------------------------------------------------
Nominal value, EUR million 19.1 19.1
-------------------------------------------------------------------------------
ELECTRICITY DERIVATIVES
-------------------------------------------------------------------------------
Fair value, EUR million -0.5 1.2 -0.4
-------------------------------------------------------------------------------
Nominal value, GWh 151 183 153
-------------------------------------------------------------------------------
RELATED PARTY TRANSACTIONS
EUR million Q1/12 Q1/11 12/11
---------------------------------------------------
Management's employment benefits 2.7 3.0 4.8
---------------------------------------------------
Operating segment performance
NET SALES BY BUSINESS DIVISION
EUR million Q1/12 Q1/11 Change % 2011
------------------------------------------------------------
Pharmaceuticals 232.5 231.0 +0.6% 870.6
------------------------------------------------------------
Proprietary Products 99.0 113.4 -12.7% 408.9
------------------------------------------------------------
Specialty Products 90.2 80.2 +12.5% 320.8
------------------------------------------------------------
Animal Health 18.2 17.1 +6.3% 67.8
------------------------------------------------------------
Fermion 16.0 12.9 +24.0% 43.3
------------------------------------------------------------
Contract manufacturing
and other 9.2 7.4 +23.7% 29.7
------------------------------------------------------------
Diagnostics 15.5 13.7 +13.6% 49.5
------------------------------------------------------------
Group items -0.6 -0.6 +16.3% -2.2
------------------------------------------------------------
Group total 247.4 244.1 +1.3% 917.9
------------------------------------------------------------
OPERATING PROFIT BY BUSINESS AREA
EUR million Q1/12 Q1/11 Change % 2011
-------------------------------------------
Pharmaceuticals 79.4 92.3 -13.9% 287.6
-------------------------------------------
Diagnostics 2.5 2.8 -9.1% 4.9
-------------------------------------------
Group items -2.7 -2.1 +23.7% -9.5
-------------------------------------------
Group total 79.3 92.9 -14.7% 282.9
-------------------------------------------
NET SALES BY ANNUAL QUARTERS
2012 2011 2010
+-----+-----------------------+-----------------+
EUR million | Q1| Q4 Q3 Q2 Q1| Q4 Q3 Q2|
----------------+-----+-----------------------+-----------------+
Pharmaceuticals|232.5|223.8 199.8 215.9 231.0|203.7 203.2 196.0|
----------------+-----+-----------------------+-----------------+
Diagnostics | 15.5| 12.9 11.3 11.7 13.7| 11.8 10.5 12.1|
----------------+-----+-----------------------+-----------------+
Group items | -0.6| -0.6 -0.5 -0.6 -0.6| -0.6 -0.5 -0.7|
----------------+-----+-----------------------+-----------------+
Group total |247.4|236.1 210.7 227.0 244.1|214.9 213.2 207.4|
----------------+-----+-----------------------+-----------------+
OPERATING PROFIT BY ANNUAL QUARTERS
2012 2011 2010
+----+-------------------+--------------+
EUR million | Q1| Q4 Q3 Q2 Q1| Q4 Q3 Q2|
----------------+----+-------------------+--------------+
Pharmaceuticals|79.4|61.4 66.8 67.1 92.3|49.9 71.5 60.4|
----------------+----+-------------------+--------------+
Diagnostics | 2.5| 0.7 0.8 0.7 2.8| 1.0 1.0 1.9|
----------------+----+-------------------+--------------+
Group items |-2.7|-2.5 -2.1 -2.7 -2.1| 1.7 -1.8 -2.3|
----------------+----+-------------------+--------------+
Group total |79.3|59.6 65.4 65.1 92.9|52.6 70.6 60.0|
----------------+----+-------------------+--------------+
GEOGRAPHICAL BREAKDOWN OF NET SALES BY ANNUAL QUARTERS
2012 2011 2010
+-----+-----------------------+-----------------+
EUR million | Q1| Q4 Q3 Q2 Q1| Q4 Q3 Q2|
--------------+-----+-----------------------+-----------------+
Finland | 64.0| 61.7 60.1 59.8 59.1| 61.0 57.6 53.7|
--------------+-----+-----------------------+-----------------+
Scandinavia | 32.4| 28.5 28.1 30.3 33.4| 28.6 28.4 28.1|
--------------+-----+-----------------------+-----------------+
Other Europe | 78.7| 79.6 71.5 77.2 80.2| 77.4 70.0 72.7|
--------------+-----+-----------------------+-----------------+
North America| 38.4| 36.0 24.0 29.2 38.7| 22.1 31.1 26.3|
--------------+-----+-----------------------+-----------------+
Other markets| 33.9| 30.3 26.9 30.6 32.8| 25.8 26.0 26.7|
--------------+-----+-----------------------+-----------------+
Group total |247.4|236.1 210.7 227.0 244.1|214.9 213.2 207.4|
--------------+-----+-----------------------+-----------------+
Business reviews
KEY FIGURES FOR PHARMACEUTICALS BUSINESS
EUR million Q1/12 Q1/11 Change % 2011
-------------------------------------------------------------------
Net sales 232.5 231.0 +0.6% 870.6
-------------------------------------------------------------------
Operating profit 79.4 92.3 -13.9% 287.6
-------------------------------------------------------------------
% of net sales 34.2% 39.9% 33.0%
-------------------------------------------------------------------
R&D expenses 21.0 18.2 +15.3% 81.1
-------------------------------------------------------------------
% of net sales 9.0% 7.9% 9.3%
-------------------------------------------------------------------
Capital expenditure 7.2 6.8 +6.6% 38.8
-------------------------------------------------------------------
% of net sales 3.1% 2.9% 4.5%
-------------------------------------------------------------------
Sales revenue from proprietary products 104.5 114.1 -8.4% 420.2
-------------------------------------------------------------------
Assets 605.6 542.4 597.5
-------------------------------------------------------------------
Liabilities 117.5 88.8 132.2
-------------------------------------------------------------------
Personnel at the end of the period 3,095 2,884 3,079
-------------------------------------------------------------------
NET SALES OF ORION'S TOP 10 PHARMACEUTICAL PRODUCTS
EUR million Q1/12 Q1/11 Change % 2011
-------------------------------------------------------------------------------
Stalevo(®), Comtess(®) and Comtan(®)
(Parkinson's disease) 63.2 73.6 -14.1% 266.7
-------------------------------------------------------------------------------
Simdax(®) (acute decompensated heart failure) 10.4 10.6 -1.8% 44.0
-------------------------------------------------------------------------------
Precedex(®) (intensive care sedative) 10.3 8.3 +24.5% 33.0
-------------------------------------------------------------------------------
Easyhaler(®) product family (asthma, COPD) 7.0 8.5 -18.5% 30.5
-------------------------------------------------------------------------------
Dexdomitor(®), Domitor(®), Domosedan(®) and
Antisedan(®) (animal sedatives) 6.4 6.6 -4.0% 23.2
-------------------------------------------------------------------------------
Burana(®) (inflammatory pain) 5.8 5.8 +0.2% 23.5
-------------------------------------------------------------------------------
Marevan(®) (anticoagulant) 4.4 3.8 +16.0% 15.6
-------------------------------------------------------------------------------
Generic entacapone products (Parkinson's disease) 4.2
-------------------------------------------------------------------------------
Divina(®) range (menopausal symptoms) 3.8 3.4 +12.9% 13.2
-------------------------------------------------------------------------------
Fareston(®) (breast cancer) 3.5 3.2 +9.6% 9.6
-------------------------------------------------------------------------------
Total 118.8 123.6 -3.9% 459.3
-------------------------------------------------------------------------------
Share of pharmaceutical net sales 51% 54% 53%
-------------------------------------------------------------------------------
KEY FIGURES FOR DIAGNOSTICS BUSINESS
EUR million Q1/12 Q1/11 Change % 2011
--------------------------------------------------------------
Net sales 15.5 13.7 +13.6% 49.5
--------------------------------------------------------------
Operating profit 2.5 2.8 -9.1% 4.9
--------------------------------------------------------------
% of net sales 16.2% 20.2% 9.9%
--------------------------------------------------------------
R&D expenses 1.8 1.6 +14.6% 6.4
--------------------------------------------------------------
% of net sales 11.6% 11.5% 12.9%
--------------------------------------------------------------
Capital expenditure 1.1 0.3 +217.6% 10.4
--------------------------------------------------------------
% of net sales 6.9% 2.5% 21.1%
--------------------------------------------------------------
Assets 47.5 36.6 44.4
--------------------------------------------------------------
Liabilities 16.3 7.7 17.4
--------------------------------------------------------------
Personnel at the end of the period 335 309 322
--------------------------------------------------------------
Information on Orion's shares
BASIC SHARE INFORMATION 31 MARCH 2012
A shares B shares Total
-------------------------------------------------------------------------------
Trading code on NASDAQ OMX Helsinki ORNAV ORNBV
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Listing day 1 Jul 2006 1 Jul 2006
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ISIN code FI0009014369 FI0009014377
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ICB code 4500 4500
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Reuters code ORNAV.HE ORNBV.HE
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Bloomberg code ORNAV.FH ORNBV.FH
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Share capital, EUR million 29.4 62.8 92.2
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Counter book value per share, EUR 0.65 0.65
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Total number of shares 44,993,218 96,264,610 141,257,828
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% of total share stock 32% 68% 100%
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Number of treasury shares 325,991 325,991
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Total number of shares excluding
treasury shares 44,993,218 95,938,619 140,931,837
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Minimum number of shares 1
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Maximum number of A and B shares, and
maximum
number of all shares 500,000,000 1,000,000,000 1,000,000,000
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Votes per share 20 1
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Number of votes excluding treasury
shares 899,864,360 95,938,619 995,802,979
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% of total votes 90% 10% 100%
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Total number of shareholders 19,907 48,239 61,442
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A shares and B shares confer equal rights to the Company's assets and dividends.
INFORMATION ON TRADING ON NASDAQ OMX HELSINKI 1 JANUARY - 31 MARCH 2012
A shares B shares Total
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Shares traded 1,231,394 26,754,150 27,985,544
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% of the total number of shares 2.7% 27.8% 19.8%
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Trading volume, EUR million 19.2 414.9 434.1
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Closing quotation on 31 Dec 2011, EUR 15.18 15.05
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Lowest quotation, EUR (A and B 17 Jan 2012) 14.59 14.45
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Average quotation, EUR 15.60 15.51
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Highest quotation, EUR (A 19 and 20 March, B
16
March 2012) 17.00 16.82
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Closing quotation on 31 March 2012, EUR 14.83 14.82
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Market capitalisation on 31 March 2012
excluding treasury shares, EUR million 667.2 1,421.8 2,089.1
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PERFORMANCE PER SHARE
Q1/12 Q1/11 Change % 2011
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Basic earnings per share, EUR 0.42 0.49 -13.0% 1.49
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Diluted earnings per share, EUR 0.42 0.49 -13.0% 1.49
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Cash flow per share before financial items,
EUR 0.27 0.34 -22.0% 1.10
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Equity per share, EUR 2.56 2.54 +0.5% 3.55
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Average number of shares
excluding treasury shares, 1,000 shares 140,862 140,775 140,827
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Appendices
Reporting
Orion Corporation is the parent company of the Orion Group. The Group consists
of two business areas, or operating segments, and five business divisions. Orion
reports on its operations segmentally.
* Pharmaceuticals business
* Proprietary Products (patented prescription products for three therapy
areas)
* Specialty Products (off-patent, generic prescription products and self-
care products)
* Animal Health (veterinary products for pets and production animals)
* Fermion (active pharmaceutical ingredients for Orion and other
companies)
* Diagnostics business
* Orion Diagnostica (diagnostic test systems for point-of-care in
healthcare and hygiene tests for industry).
Contract manufacturing and other, i.e. manufacturing for other companies, is
included in the Pharmaceuticals business segment, but it is not a separate
business division, it is part of the Group's Supply Chain organisation.
Accounting policies
This Interim Report has been prepared in accordance with IAS 34 Interim
Financial Reporting standard. The same accounting policies as for the Financial
Statements 2011 have been applied in preparing the Interim Report, except for
amendments to existing IFRS standards endorsed by the EU that have been adopted
as of 1 January 2012. The amendments to standards had no effects on the
Consolidated Financial Statements.
The policies and calculation methods applied during the period can be found on
the Orion website at www.orion.fi/en/investors.
Other matters
The data in this financial review are not audited.
The figures in parentheses are for the comparative period of the previous year.
All the figures in this report have been rounded, which is why the total sums of
individual figures may differ from the total sums shown.
CALCULATION OF THE KEY FIGURES
Profit before taxes + Interest
= and other finance expenses
Return on capital employed (ROCE), % ----------------------------------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, % Total assets - Advances received x 100
Interest-bearing liabilities -
= Cash and cash equivalents
Gearing, % ----------------------------------x 100
Equity
Profit available for the owners
= of the parent company
Earnings per share, EUR ----------------------------------
Average number of shares during
the period, excluding treasury
shares
Cash flow from operating
activities + Cash flow from
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
shares
Total EUR value of shares traded
=----------------------------------
Average share price, EUR Average number of traded shares
during the period
Number of shares at the end of
Market capitalisation, EUR million = the period × Closing quotation
of the period
Publisher:
Orion Corporation
http://www.orion.fi/en
Orion is a globally operating Finnish company developing pharmaceuticals and
diagnostic tests - 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. Pharmaceutical R&D focuses on central nervous system drugs,
oncology and critical care drugs, and Easyhaler® pulmonary drugs.
Orion's net sales in 2011 amounted to EUR 918 million and the company had about
3,400 employees. Orion's A and B shares are listed on NASDAQ OMX Helsinki.
[HUG#1604993]
