ORION CORPORATION / INTERIM REPORT / JANUARY-MARCH 2014 / 29 April 2014 at
12:00 noon EEST
Orion Group Interim Report January-March 2014
Orion's net sales in January-March 2014 totalled EUR 245 million (EUR 249
million in January-March 2013).
* Operating profit was EUR 67 (74) million.
* Profit before taxes was EUR 66 (74) million.
* Equity ratio was 39% (41%).
* ROCE before taxes was 39% (51%).
* ROE after taxes was 47% (50%).
* Basic earnings per share were EUR 0.37 (0.39).
* Cash flow per share before financial items was EUR 0.30 (0.07).
* Orion received the first marketing authorisations in Europe for Bufomix
Easyhaler(®) in April after the review period.
* The outlook estimate for 2014 remains unchanged. Orion estimates that in
2014 net sales will be at similar level to 2013 and that operating profit
will be slightly lower than in 2013.
ORION'S KEY FIGURES FOR THE REVIEW PERIOD
Q1/14 Q1/13 Change % 2013
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Net sales, EUR million 245.0 249.4 -1.8% 1,006.9
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International operations, EUR million. 174.6 181.6 -3.8% 732.3
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% of net sales 71.3% 72.8% 72.7%
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Operating profit, EUR million 67.4 74.1 -9.1% 267.7
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% of net sales 27.5% 29.7% 26.6%
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Profit before taxes, EUR million 66.5 73.8 -9.9% 264.0
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% of net sales 27.1% 29.6% 26.2%
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Income tax expense, EUR million 13.9 18.2 -24.0% 57.8
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R&D expenses, EUR million 26.3 24.6 +6.8% 101.9
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% of net sales 10.7% 9.9% 10.1%
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Capital expenditure, EUR million 16.1 19.3 -16.9% 77.9
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% of net sales 6.6% 7.8% 7.7%
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Assets total, EUR million 1,026.9 928.7 +10.6% 979.0
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Equity ratio, % 38.9% 41.2% 53.6%
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Gearing, % -0.1% -4.6% 8.4%
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Interest-bearing liabilities, EUR million 253.9 175.2 +45.0% 257.8
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Non-interest-bearing liabilities, EUR million 381.0 371.2 +2.6% 207.3
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Cash and cash equivalents, EUR million 254.3 192.7 +31.9% 214.7
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ROCE (before taxes), % 38.9% 50.6% 38.5%
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ROE (after taxes), % 46.5% 49.8% 40.3%
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Basic earnings per share, EUR 0.37 0.39 -5.1% 1.46
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Diluted earnings per share, EUR 0.37 0.39 -5.1% 1.46
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Cash flow per share before financial items, EUR 0.30 0.07 +319.4% 1.02
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Equity per share, EUR 2.79 2.71 +2.8% 3.66
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Personnel at the end of the period 3,482 3,514 -0.9% 3,519
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Average personnel during the period 3,485 3,494 -0.2% 3,540
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Personnel expenses, EUR million 54.7 54.0 +1.2% 218.1
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President and CEO Timo Lappalainen's review
"First marketing authorisations in Europe for Bufomix Easyhaler(®)"
"Our net sales were similar to the previous year and as expected our operating
profit was slightly lower than in 2013. The decrease in operating profit was
mainly due to products with lower margins accounting for an increasing
proportion of sales.
"Deliveries of our Parkinson's drugs to Novartis were clearly lower than a year
ago. Total sales generated by Stalevo(®) and Comtess(®) in Orion's own sales
organisation were slightly lower than in the previous year. The first competing
generic versions of Stalevo in Europe were granted marketing authorisation in
Germany.
"Following the expiry of the basic Precedex(®) patent in the United States in
January, the level of royalties received by Orion from Hospira decreased and
consequently the net sales recorded by Orion decreased. Generic competition has
not commenced in US markets.
"Sales of the other products in our portfolio as a whole grew slightly and
almost compensated for the decline in sales of Parkinson's drugs. The Specialty
Products business division continued to grow steadily and became Orion's largest
business division in terms of net sales. In our proprietary drugs, the intensive
care sedative dexdor(®) and the Easyhaler(®) product family grew strongly. We
were also pleased to receive the first marketing authorisations in Europe for
Bufomix Easyhaler(®) in April after the review period. Also for the other
business divisions, the year has started as anticipated.
"Collaboration with Janssen Pharmaceuticals in the clinical phase trial of an
alpha-2c adrenoceptor antagonist (ORM-12741) being further developed for
treatment of symptoms of Alzheimer's disease has commenced. As regards the
androgen receptor inhibitor (ODM-201) for the treatment of prostate cancer, we
are continuing preparations for a Phase III clinical trial and negotiations to
find a suitable partner for collaboration on the next phase of worldwide
development and commercialisation of the product.
"Our significant investment and production reorganisation projects are
progressing as planned. Through the measures being undertaken, we will develop
and ensure future growth, delivery reliability and quality standards. During the
review period we celebrated the inauguration of the Salo plant, where we are
centralising our tablet packaging and logistics functions.
"Our outlook estimate, which can be found with the basis for it under 'Outlook
for 2014' and 'Basis for outlook' in this report, remains unchanged. We estimate
that our net sales in 2014 will be at similar level to 2013 and our operating
profit will be slightly lower than in 2013."
Events during the period
On 3 March Orion transferred altogether 119,326 Orion Corporation B shares held
by the Company as a share bonus for the earning periods 2011-2013 and 2013 to
the persons employed by the Group and belonging to the Share-based Incentive
Plan for key persons of the Group.
On 25 March Orion Corporation's Annual General Meeting was held in Helsinki.
Events after the period
On 14 April Orion announced that it had received the first marketing
authorisations in Europe for Bufomix Easyhaler(®).
News conference and teleconference
A news conference and teleconference on the published results will be held
today, Tuesday 29 April 2014, at 13:30 EET in Hotel Kämp, address:
Pohjoisesplanadi 29, Helsinki. President and CEO Timo Lappalainen will give a
brief presentation in English on the financial review.
The event can be followed live as a webcast accessible at Orion's website at
www.orion.fi/en. After the presentation, questions can be asked by telephone in
Finnish and English.
The teleconference code is 943080 and to participate in the teleconference,
please call:
from United States: +1 334 323 6201
from other countries: +44 (0)20 7162 0025
News conference recordings
A recording of the webcast of the event in English and a recording of the
presentation by the President and CEO in Finnish will be published on the Orion
website during Tuesday 29 April 2014.
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 2014
Interim Report January-June 2014 Tuesday 29 July 2014
Tuesday 21 October 2014
Interim Report January-September 2014
For additional information about the financial review:
Jari Karlson, CFO tel. +358 10 426 2883
Tuukka Hirvonen, Communications Manager tel. +358 10 426 2721 / mobile
+358 50 966 2721
www.orion.fi/en
www.orion.fi/en/investors
Financial review Q1/2014
Net sales
The Orion Group's net sales in January-March 2014 were EUR 245 million (EUR 249
million in January-March 2013). The net effect of currency exchange rates was
EUR -4 million.
The Pharmaceuticals business's net sales were EUR 229 (234) million. Net sales
of Orion's Stalevo(®) (carbidopa, levodopa and entacapone) and
Comtess(®)/Comtan(®) (entacapone) Parkinson's drugs were down by 22% at EUR 47
(60) million, which was 21% (26%) of the Pharmaceuticals business's net sales.
The net sales of other products in the pharmaceuticals portfolio were up by 5%
at EUR 182 (174) million.
The Diagnostics business's net sales were up by 3% at EUR 16 (16) million.
Operating profit
The Orion Group's operating profit was down by 9% at EUR 67 (74) million.
The Pharmaceuticals business's operating profit was down by 10% at EUR 67 (74)
million. The gross profit percentage was lower than in the comparative period as
products with lower margins accounted for an increasing proportion of sales due
to lower sales of Parkinson's drugs and Precedex.
The Diagnostics business's operating profit was up by 14% at EUR 2.6 (2.3)
million mainly because operating expenses decreased.
Operating expenses
The Group's sales and marketing expenses were EUR 46 (49) million.
R&D expenses were up by 7% at EUR 26 (25) million and accounted for 11% (10%) of
the Group's net sales. Pharmaceutical R&D expenses amounted to EUR 24 (22)
million. Research projects are reported in more detail under Pharmaceuticals in
the Business Reviews.
Administrative expenses were EUR 9 (11) million.
Other operating income and expenses were small, as in the comparative period.
Group's profit
The Group's profit before taxes totalled EUR 66 (74) million. Basic earnings per
share were EUR 0.37 (0.39) and diluted earnings per share were EUR 0.37 (0.39).
The decrease in earnings per share was less than the decrease in operating
profit due to a reduction in the Finnish tax rate. Equity per share was EUR
2.79 (2.71). The return on capital employed before taxes (ROCE) was 39% (51%)
and the return on equity after taxes (ROE) 47% (50%).
Financial position
The Group's gearing was 0% (-5%) and the equity ratio 39% (41%).
The Group's total liabilities at 31 March 2014 were EUR 635 (546) million. At
the end of the period, interest-bearing liabilities amounted to EUR 254 (175)
million, including EUR 229 (103) million of long-term loans. The non-interest-
bearing liabilities in 2013 and 2014 include the dividends paid in the beginning
of April but transferred from equity already in March.
The Group had EUR 254 (193) 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 higher than in the comparative period at
EUR 59 (29) million. The Group's operating profit was lower but the additional
amount of cash tied up into working capital in the first quarter was only EUR 6
million, which was clearly less than the EUR 38 million in the comparative
period.
Cash flow from investing activities was EUR -16 (-18) million.
Cash flow from financing activities was EUR -4 (38) million.
Capital expenditure
The Group's capital expenditure totalled EUR 16 (19) million. This comprised EUR
15 (18) million on property, plant and equipment and EUR 1 (2) million on
intangible assets.
Outlook for 2014
Net sales will be at similar level to 2013 (net sales in 2013 were EUR 1,007
million).
Operating profit will be slightly lower than in 2013 (operating profit in 2013
was EUR 268 million).
The Group's capital expenditure will be about EUR 60 million excluding
substantial corporate or product acquisitions (the Group's capital expenditure
in 2013 was EUR 78 million).
Basis for outlook
Competition in the Finnish market will remain intense in 2014. However, product
launches will continue to support Orion's position as market leader.
The generic competition that commenced in April 2012 in the United States has
decreased sales of Orion's Parkinson's drugs. US markets accounted for about EUR
60 million of the net sales of Orion's Parkinson's drugs in 2011, about EUR 33
million in 2012 and about EUR 10 million in 2013. In addition, sales of generic
entacapone products to the United States amounted to about EUR 9 million in
2013. In 2014 sales are expected to be still slightly lower.
The entacapone molecule patent expired in November 2012 in the main European
countries for Orion, and as a result generic competitors to Comtan and Comtess
entered these markets in 2013. Data protection of Stalevo expired in the
European Union in October 2013, and since then many generic pharmaceutical
companies have applied for marketing authorisation for their own products in
different European countries. The first generic marketing authorisations for
Stalevo were granted in Germany in March 2014.
Elsewhere in the world generic competition is not expected to have a material
impact on sales volumes of these products in the current year.
Sales of generic products will account for a greater proportion of Orion's total
sales and price competition will remain intense in many markets. Investments
commenced in 2012 to develop and ensure future growth, delivery reliability and
quality standards, and related reorganisations of production are still
continuing. Their effects in temporarily decreasing production capacity and
increasing production costs will be less than in 2013, but not yet totally
eliminated.
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 2014 were planned
mainly during the previous year.
Research and development costs will be slightly higher than in 2013. 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 2014 are either ongoing from the previous year or
at an advanced stage of planning, therefore their cost level can be estimated
rather accurately. The accrued costs are materially affected by collaboration
arrangements and how the costs arising are allocated between Orion and its
collaboration partners.
Near-term risks and uncertainties relating to the outlook
Sales of Orion's Parkinson's drugs will decrease in 2014 due to generic
competition. The effects of the competition have been taken into account in the
outlook estimate. However, the timing of commencement of generic competition to
Stalevo in Europe entails uncertainty that may materially affect the accuracy of
the estimate made at this stage.
The basic Precedex patent expired in the United States in January. The outlook
estimate already includes the estimated effect of the consequent decrease in the
royalty payment on the product received by Orion and also the assumption that
generic competition will commence during 2014. However, the timing of
commencement of generic competition entails uncertainty that may materially
affect the accuracy of the estimate made at this stage.
Sales of individual products and also Orion's sales in individual markets may
vary, for example depending on the extent to which the ever-tougher price and
other competition prevailing in pharmaceutical markets in recent years will
specifically 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 among others
adjustments of stock levels. In addition, changes in market prices and exchange
rates affect the value of deliveries to Novartis.
A significant proportion of the exchange rate risk is related to the US dollar.
Typically, 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. Changes in the Japanese yen exchange rate have become more important
as sales of Parkinson's drugs in Japan have increased.
Orion's currently high production capacity utilisation rate and its broad
product range may cause risks to the delivery reliability and make it more
challenging than before to maintain the very high quality standard required.
Authorities and key customers in different countries undertake regular and
detailed inspections of development and manufacturing of drugs. Any remedial
actions that may be required may at least temporarily reduce delivery
reliability.
Research projects always entail uncertainty factors that may either increase or
decrease estimated costs. The projects may progress more slowly or faster than
assumed, or they may be discontinued. Nonetheless, changes that may occur in
ongoing clinical studies are reflected in costs relatively slowly, and they are
not expected to have a material impact on earnings in the current year. Owing to
the nature of the research process, the timetables and costs of new studies that
are being started are known well in advance. They therefore typically do not
lead to unexpected changes in the estimated cost structure. Orion generally
undertakes the last, in other words Phase III, clinical trials in collaboration
with other pharmaceutical companies. Commencement of these collaboration
relationships and their structure also materially affect the schedule and cost
level of research projects.
Possible collaboration and licensing agreements may include advance payments
recorded in net sales that may materially affect Orion's financial results.
Group's financial objectives
Orion's financial objectives are ensuring the Group's financial stability and
profitable growth.
These objectives are achieved through:
* Increasing net sales. Achievement of this objective requires continuous
investment in development of the product portfolio.
* Maintaining profitability at a good level, the aim being operating profit
that exceeds 20% of net sales.
* Keeping the equity ratio at least 50%.
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 2014 Orion had a total of 141,257,828 (141,257,828) shares, of which
42,022,816 (43,235,318) were A shares and 99,235,012 (98,022,510) B shares. The
Group's share capital was EUR 92,238,541.46 (92,238,541.46). At the end of March
2014 Orion held 569,665 (188,991) B shares as treasury shares. On 31 March 2014
the aggregate number of votes conferred by the A and B shares was 939,121,667
(962,539,879) excluding treasury shares.
At the end of March 2014, Orion had 55,473 (54,961) 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. The Company itself 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 2014 no 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 March 2014 the market capitalisation of the Company's shares excluding
treasury shares was EUR 3,078 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 19
March 2013 to decide on acquisition of shares in the Company and on a share
issue in which shares held by the Company can be conveyed. The authorisation to
acquire shares was utilised during 2013. The terms and conditions of the
authorisations were reported in more detail in a stock exchange release on 19
March 2013.
The Board of Directors is not authorised to increase the share capital or to
issue bonds with warrants or convertible bonds or stock options.
Share-based Incentive Plans and transfer of own shares
Orion has two currently operating share-based incentive plans for key persons of
the Group, which were announced in stock exchange releases published on 18
February 2010 and 5 February 2013.
On 3 March 2014 Orion transferred altogether 119,326 Orion Corporation B shares
held by the Company as a share bonus for earning periods 2011-2013 and 2013 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 19
March 2013. The price per share of the transferred shares was EUR 23.4802, which
was the volume weighted average quotation of Orion Corporation B shares on 3
March 2014. The total transaction price of the transferred shares was therefore
EUR 2,801,798.35.
Share ownership
Orion's shares are in the book-entry system maintained by Euroclear Finland, and
Euroclear Finland maintains Orion's official shareholder register.
At the end of March 2014 Orion had a total of 55,473 (54,961) registered
shareholders, of whom 95% (95%) were private individuals holding 45% (48%) of
the entire share stock and 62% (64%) of the total votes. There were altogether
49 (47) million nominee-registered shares, which was 35% (33%) of all shares,
and they conferred entitlement to 7% (7%) of the total votes.
At the end of March 2014 Orion held 569,665 (188,991) B shares as treasury
shares, which is 0.4% (0.1%) of the Company's total share stock and 0.06%
(0.02%) of the total votes.
Decisions by the Annual General Meeting
The Annual General Meeting of the Shareholders of Orion Corporation was held on
25 March 2014 at the Helsinki Fair Centre. The following matters among others
were handled at the meeting.
Adoption of the financial statements for financial year 1 January to 31 December
2013
The Annual General Meeting adopted the financial statements of the Company and
Group as per 31 December 2013.
Dividend EUR 1.25 per share
A dividend of EUR 1.25 per share was approved in accordance with the Board's
proposal. The record date for dividend distribution was 28 March 2014 and the
payment date was 4 April 2014.
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 2013.
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 the
Company's shares, so Orion Corporation B shares were acquired in the period 31
March to 4 April 2014 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 2014. 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 seven. Sirpa
Jalkanen, Eero Karvonen, Timo Maasilta, Hannu Syrjänen, Heikki Westerlund and
Jukka Ylppö were re-elected as members of the Board of Directors for the
following term of office, and Mikael Silvennoinen 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.
Amendment of Section 12 of the Articles of Association
It was decided to amend Section 12 of the Articles of Association of the Company
so that the notice to convene a General Meeting of Shareholders shall be
published on the Company's website.
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 2014 was
3,485 (3,494). At the end of March 2014 the Group had a total of 3,482 (3,514)
employees, of whom 2,797 (2,820) worked in Finland and 685 (694) outside
Finland.
Salaries and other personnel expenses in January-March 2014 totalled EUR 55 (54)
million.
Significant legal proceedings
Legal proceedings in the United States concerning patent No. 6,716,867
On 12 November 2010 Orion Corporation and Hospira, Inc. filed a patent
infringement lawsuit in the United States against Caraco Pharmaceutical
Laboratories, Ltd. and Gland Pharma Ltd. to enforce Orion's and Hospira's joint
patent No. 6,716,867, which protects Orion's proprietary drug Precedex(®)
(dexmedetomidine hydrochloride 100 µg/ml).
In addition, there are also other patent infringement lawsuits pending in the
United States relating to patent No. 6,716,867 that were initiated in April
2014 by Hospira and Orion as plaintiffs.
Orion estimates that the costs of the aforesaid legal proceedings will not be
material for the Company.
Business Reviews
Pharmaceuticals
Review of human pharmaceuticals market
According to IMS Health pharmaceutical sales statistics, Finnish wholesale of
human pharmaceuticals in January-March 2014 was up by 3% on the previous year at
EUR 513 (497) million.
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 and
maintained its position as leader in marketing pharmaceuticals in Finland.
According to statistics collected by IMS Health, Orion's wholesale of human
pharmaceuticals in Finland in January-March 2014 amounted to EUR 59 (57)
million, up by 2% compared with the previous year. Orion's market share of
Finnish pharmaceuticals markets was 11% (12%).
According to IMS Health pharmaceutical sales statistics, in the 12-month period
ending in December 2013 the total sales of Parkinson's drugs in the United
States were up by 6% at USD 763 million (USD 720 million in the previous 12-
month period). The five largest European markets for Parkinson's disease drugs
were Germany, the United Kingdom, France, Spain and Italy. In these countries,
the combined sales of Parkinson's drugs totalled EUR 986 (965) million in the
12-month period ending in December 2013, and the average market growth was 2%.
In Japan sales of Parkinson's drugs were down by 17% at EUR 494 (593) million.
According to IMS Health pharmaceutical sales statistics, in the 12-month period
ending in December 2013 the total sales of Parkinson's drugs containing
entacapone were USD 144 (181) million in the United States and EUR 152 (157)
million in the five largest European markets.
The most important individual therapy area for Orion is still the treatment of
Parkinson's disease. Orion's branded Parkinson's drugs containing entacapone
(Stalevo(®), Comtess(® )and Comtan(®)) account for about one-fifth of the
Group's net sales. According to IMS Health pharmaceutical sales statistics, in
the 12-month period ending in December 2013, sales of Orion's branded
Parkinson's drugs in the United States were down by 74% at USD 31 (118) million.
Sales were down by 5% at EUR 130 (136) million in the five largest markets in
Europe, and in Japan sales were EUR 55 (67) million. The decrease in sales in
Japan was due to depreciation of the yen exchange rate. Measured in terms of
local currency, the market as whole and sales of Orion's Parkinson's drugs both
grew. The market share of Orion's branded Parkinson's drugs was 4% in the United
States, on average 13% in the five largest European markets and 11% in Japan.
According to IMS Health pharmaceutical sales statistics, sales of Precedex(®)
intensive care sedative (dexmedetomidine) were up by 22% at USD 327 million in
the 12-month period ending in December 2013 (USD 269 million in the previous 12-
month period). About four-fifths of the sales amounting to USD 266 (211) million
were in the United States, where Precedex sales grew by 26%.
According to IMS Health pharmaceutical sales statistics, total sales of the most
common intravenous anaesthetics and intensive care sedatives (propofol,
midazolam, remifentanil and dexmedetomidine) in Europe in the 12-month period
ending in December 2013 were EUR 475 (473) million. According to IMS Health
pharmaceutical sales statistics, in the 12-month period ending in December 2013
sales of Orion's dexdor(®) intensive care sedative (dexmedetomidine) were up by
82% at EUR 21 (12) million in Europe.
Net sales and operating profit of the Pharmaceuticals business
Net sales of the Pharmaceuticals business in January-March 2014 were EUR 229
(234) million, down by 2% compared with the previous year. The operating profit
of the Pharmaceuticals business was down by 10% at EUR 67 (74) million. The
operating profit of the Pharmaceuticals business was 29% (32%) of the segment's
net sales.
Net sales of Orion's top ten pharmaceuticals in January-March 2014 were down by
6% at EUR 108 (115) million. They accounted for 47% (49%) of the total net sales
of the Pharmaceuticals business.
Proprietary Products
The product portfolio of Proprietary Products consists of patented prescription
products in three therapy areas: central nervous system diseases, oncology and
critical care, and Easyhaler(®) pulmonary drugs.
Net sales of Proprietary Products in January-March 2014 were down by 12% on the
previous year at EUR 88 (100) million. The decrease was mainly due to the
decline in sales of Parkinson's drugs, which was not fully compensated by growth
of other products.
Orion's drugs for treatment of Parkinson's disease are Stalevo(®) (active
ingredients carbidopa, levodopa and entacapone) and Comtess(®)/Comtan(®)
(entacapone), and their net sales in January-March 2014 totalled EUR 47 (60)
million. Sales of Parkinson's drugs were down by 22% and accounted for 21% (26%)
of the total net sales of the Pharmaceuticals business. Deliveries of Stalevo to
Novartis were down by 25% at EUR 19 (25) million and deliveries of Comtan were
down by 47% at EUR 7 (13) million. Sales of Stalevo through Orion's own sales
network were EUR 20 (20) million. Sales of Comtess were down by 14% at EUR 2 (2)
million. In the United States Orion's Parkinson's drugs have several generic
competitors. In Europe Comtess and Comtan have several generic competitors, and
as regards Stalevo, the first generic competitors have been granted marketing
authorisation in Germany.
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 undertaken epidemiological studies, and
results from them were submitted to authorities for review in the third quarter
of 2012 and the study reports in early 2014.
Net sales of Simdax(®), a drug for treatment of acute decompensated heart
failure, in January-March 2014 were EUR 11 (11) million.
Total net sales of the Easyhaler(®) product family for treatment of asthma and
chronic obstructive pulmonary disease were up by 27% in January-March 2014 at
EUR 8 (6) million. Bufomix Easyhaler(®) (budesonide-formoterol), the new
combined formulation in the product family, received the first marketing
authorisations in Europe in April after the review period. The marketing
authorisations in Ireland, Hungary, Sweden, Slovakia and Finland were granted
through the decentralised marketing authorisation process, which included 22
countries, and in which Sweden acted as reference member state. In addition, the
product has received national marketing authorisation in Norway and Iceland.
Processing of the national phase of marketing authorisation application is
ongoing in the following EU countries: Belgium, Bulgaria, Cyprus, Czech
Republic, Denmark, Estonia, Greece, Italy, Latvia, Lithuania, Luxembourg, Malta,
Poland, Portugal, Romania, Slovenia and Spain.
Net sales of the Precedex(®) intensive care sedative (dexmedetomidine) were down
by 25% in January-March 2014 at EUR 9 (12) million. In the United States and
markets outside Europe the sedative is sold by Orion's partner Hospira.
Following the expiry of the Precedex basic patent in the United States in
January, the level of royalties received by Orion from Hospira decreased and
consequently the sales recorded by Orion decreased. About four-fifths of net
sales of Precedex are in US markets, where generic competition has not
commenced.
Net sales of Orion's dexdor(®) intensive care sedative (dexmedetomidine) in
January-March 2014 were up by 40% at EUR 8 (6) million.
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 2014 were up by 7% at
EUR 102 (96) million. Sales of generic entacapone products were up by 165% at
EUR 7 (3) million. Sales of products from the rest of the portfolio were up by
2%.
Finland, Scandinavia, and Eastern Europe and Russia are the most important
markets for Specialty Products. The business division's sales in Finland in
January-March 2014 were up by 5% at EUR 61 (58) million. Orion managed to
increase its sales, especially in prescription drugs. Sales were up by 24% at
EUR 12 (10) million in Scandinavia and sales were EUR 11 (11) million in Eastern
Europe and Russia.
Orion has launched its first biosimilar in Norway and Finland. Remsima(®)
(infliximab) is a drug used for treatment of rheumatoid arthritis and Crohn's
disease, for example, developed by the Korean pharmaceutical company Celltrion.
Orion is marketing the product in Scandinavia, Finland and Estonia.
Animal Health
In the Nordic countries and some Eastern European markets Orion itself sells
veterinary drugs, and in other markets the Company operates through partners. In
addition, in the Nordic countries Orion markets and sells veterinary drugs
manufactured by several international companies. Orion's Animal Health business
division has a strong market position in the Nordic countries, its home markets.
Net sales of the Animal Health business division in January-March 2014 were up
by 4% at EUR 15 (15) million. Sales of the animal sedative product family at EUR
5 (5) million accounted for 32% (33%) of the division's net sales. The product
family comprises Orion's animal sedatives Dexdomitor(®) (dexmedetomidine),
Domitor(®) (medetomidine) and Domosedan(®) (detomidine), and antagonist
Antisedan(®) (atipamezole), which reverses the effects of the sedatives.
Fermion
Fermion manufactures active pharmaceutical ingredients for Orion and other
pharmaceutical companies. Its product range comprises nearly 30 pharmaceutical
ingredients. Fermion's net sales in January-March 2014 excluding pharmaceutical
ingredients supplied for Orion's own use were up by 11% at EUR 15 (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
review period. 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 2014 were up by 7% at EUR 26 (25)
million, of which the Pharmaceuticals business accounted for EUR 24 (22)
million. The Group's R&D expenses accounted for 11% (10%) of the Group's net
sales. R&D expenses also include expenses related to development of the current
portfolio.
The Phase II clinical trial of an androgen receptor inhibitor (ODM-201) for the
treatment of prostate cancer showed that initial results concerning efficacy
were promising, and the product was well tolerated with no significant adverse
events detected. Results have been presented at several international oncology
congresses. Orion has commenced preparations for a Phase III clinical trial and
also continues negotiations to find a suitable partner for collaboration on the
next phase of worldwide development and commercialisation of the product.
Orion has an ongoing project to broaden the range of the inhalable Easyhaler(®)
drugs product family.
Orion is developing a combined fluticasone-salmeterol formulation for European
markets. 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. Novartis submitted an application for marketing authorisation for the
product in June 2013.
Orion is continuing development of an alpha-2c adrenoceptor antagonist (ORM-
12741) for treatment of symptoms of Alzheimer's disease in collaboration with
Janssen Pharmaceuticals Inc. In the initial Phase IIa clinical trial conducted
by Orion, the efficacy and safety of the drug candidate in treatment of
cognitive and behavioural symptoms related to Alzheimer's disease were
investigated with positive results. Orion is preparing to commence an additional
follow-up Phase IIa clinical trial.
Orion has ongoing Phase I clinical safety trials initiated in summer 2012 with a
new COMT inhibitor (ODM-103) and Phase I clinical safety trials initiated in
summer 2013 with another new COMT inhibitor (ODM-104). ODM-103 and ODM-104 are
new molecules that enhance the therapeutic effects of levodopa used to treat
Parkinson's disease by blocking the COMT enzyme. The pre-clinical study results
indicated that they are more effective than the COMT inhibitor entacapone, which
is already in the markets.
In October 2013 Orion and Phyxius Pharma, Inc. agreed on licensing of
levosimendan injection rights to Phyxius Pharma, which in turn has transferred
the rights to Oxygen Biotherapeutics, Inc. Oxygen Biotherapeutics will develop
and commercialise levosimendan in US and Canadian markets for a new
cardiovascular indication, prevention of low cardiac output syndrome (LCOS) in
cardiac surgery patients.
In addition, Orion has several projects in the early research phase
investigating central nervous system diseases, cancer and neuropathic pain,
among others.
Diagnostics
Orion Diagnostica manufactures convenient and quick in vitro diagnostic tests
and testing systems suitable for point-of-care testing. Net sales of the
Diagnostics business in January-March 2014 were up by 3% at EUR 16 (16) million.
QuikRead(®) infection tests remained the main product, with sales continuing
strong. Launching of new QuikRead go(®) tests in markets during 2013 progressed
as planned. With the QuikRead go(®) hsCRP+Hb test, two results - for CRP and
haemoglobin - can be obtained from a single sample. The QuikRead go(®) iFOBT
(Faecal Occult Blood) quantitative test is helpful in screening gastrointestinal
disorders.
The operating profit of the Diagnostics business was up by 14% at EUR 2.6 (2.3)
million mainly due to lower operating expenses.
Espoo, 29 April 2014
Board of Directors of Orion Corporation
Orion Corporation
Timo Lappalainen Jari Karlson
President and CEO CFO
Tables
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million Q1/14 Q1/13 Change % 2013
-------------------------------------------------------------------------------
Net sales 245.0 249.4 -1.8% 1,006.9
-------------------------------------------------------------------------------
Cost of goods sold -95.8 -91.8 +4.4% -393.5
-------------------------------------------------------------------------------
Gross profit 149.2 157.6 -5.3% 613.4
-------------------------------------------------------------------------------
Other operating income and
expenses 0.2 0.3 -38.9% 5.6
-------------------------------------------------------------------------------
Sales and marketing expenses -46.3 -48.5 -4.6% -204.9
-------------------------------------------------------------------------------
R&D expenses -26.3 -24.6 +6.8% -101.9
-------------------------------------------------------------------------------
Administrative expenses -9.4 -10.6 -12.0% -44.5
-------------------------------------------------------------------------------
Operating profit 67.4 74.1 -9.1% 267.7
-------------------------------------------------------------------------------
Finance income 1.0 1.6 -38.4% 4.4
-------------------------------------------------------------------------------
Finance expenses -2.4 -2.3 +5.3% -8.3
-------------------------------------------------------------------------------
Share of associated companies'
results 0.4 0.3 0.3
-------------------------------------------------------------------------------
Profit before taxes 66.5 73.8 -9.9% 264.0
-------------------------------------------------------------------------------
Income tax expense -13.9 -18.2 -24.0% -57.8
-------------------------------------------------------------------------------
Profit for the period 52.6 55.6 -5.3% 206.2
-------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME
INCLUDING TAX EFFECTS
-------------------------------------------------------------------------------
Change in value of cash flow
hedges 0.0 0.0 0.1
-------------------------------------------------------------------------------
Translation differences 0.2 -0.7 -1.3
-------------------------------------------------------------------------------
Items that may be reclassified
subsequently to profit and loss 0.2 -0.7 -1.2
-------------------------------------------------------------------------------
Items due to remeasurement of
defined benefit plans 0.0 0.0 -9.7
-------------------------------------------------------------------------------
Items that will not be
reclassified to profit and loss 0.0 0.0 -9.7
-------------------------------------------------------------------------------
Other comprehensive income net of
tax 0.2 -0.7 -10.9
-------------------------------------------------------------------------------
Comprehensive income for the
period including tax effects 52.8 54.9 -3.8% 195.3
-------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE TO:
-------------------------------------------------------------------------------
Owners of the parent company 52.6 55.6 -5.3% 206.2
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 0.0
-------------------------------------------------------------------------------
COMPREHENSIVE INCOME ATTRIBUTABLE
TO:
-------------------------------------------------------------------------------
Owners of the parent company 52.8 54.9 -3.8% 195.3
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 0.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Basic earnings per share, EUR
(1)) 0.37 0.39 -5.1% 1.46
-------------------------------------------------------------------------------
Diluted earnings per share, EUR
(1)) 0.37 0.39 -5.1% 1.46
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Depreciation, amortisation and
impairment 9.3 9.2 +1.5% 38.5
-------------------------------------------------------------------------------
Personnel expenses 54.7 54.0 +1.2% 218.1
-------------------------------------------------------------------------------
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 3/14 3/13 Change % 12/13
-------------------------------------------------------------------------------
Property, plant and equipment 254.8 216.3 +17.8% 247.3
-------------------------------------------------------------------------------
Goodwill 13.5 13.5 13.5
-------------------------------------------------------------------------------
Intangible rights 52.6 57.4 -8.3% 54.0
-------------------------------------------------------------------------------
Other intangible assets 3.1 3.8 -18.7% 3.3
-------------------------------------------------------------------------------
Investments in associates 2.1 1.7 +25.0% 1.7
-------------------------------------------------------------------------------
Available-for-sale financial assets 0.5 0.5 0.5
-------------------------------------------------------------------------------
Pension asset 25.1 38.5 -34.6% 26.6
-------------------------------------------------------------------------------
Deferred tax assets 1.0 1.1 -6.3% 1.2
-------------------------------------------------------------------------------
Other non-current assets 1.2 1.5 -25.4% 1.2
-------------------------------------------------------------------------------
Non-current assets total 354.0 334.2 +5.9% 349.2
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Inventories 198.0 189.2 +4.6% 195.5
-------------------------------------------------------------------------------
Trade receivables 168.3 164.4 +2.4% 169.9
-------------------------------------------------------------------------------
Other receivables 52.4 48.2 +8.8% 49.7
-------------------------------------------------------------------------------
Cash and cash equivalents 254.3 192.7 +31.9% 214.7
-------------------------------------------------------------------------------
Current assets total 673.0 594.5 +13.2% 629.8
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Assets total 1,026.9 928.7 +10.6% 979.0
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
EUR million 3/14 3/13 Change % 12/13
-------------------------------------------------------------------------------
Share capital 92.2 92.2 92.2
-------------------------------------------------------------------------------
Expendable fund 0.5 0.5 0.5
-------------------------------------------------------------------------------
Other reserves 1.6 0.9 +86.3% 1.6
-------------------------------------------------------------------------------
Retained earnings 297.7 288.7 +3.1% 419.6
-------------------------------------------------------------------------------
Equity attributable to owners of the parent
company 392.0 382.3 +2.5% 513.9
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 +22.9% 0.0
-------------------------------------------------------------------------------
Equity total 392.0 382.4 +2.5% 513.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Deferred tax liabilities 29.7 41.5 -28.3% 32.1
-------------------------------------------------------------------------------
Pension liability 1.5 1.4 +13.2% 1.6
-------------------------------------------------------------------------------
Provisions 0.4 0.1 +533.1% 0.1
-------------------------------------------------------------------------------
Interest-bearing non-current liabilities 229.3 103.4 +121.6% 233.3
-------------------------------------------------------------------------------
Other non-current liabilities 0.4 0.6 -35.4% 0.5
-------------------------------------------------------------------------------
Non-current liabilities total 261.4 147.0 +77.8% 267.6
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Trade payables 63.4 60.2 +5.3% 60.0
-------------------------------------------------------------------------------
Current tax liabilities 2.6 9.0 -71.5% 1.7
-------------------------------------------------------------------------------
Other current liabilities 282.8 258.5 +9.4% 111.2
-------------------------------------------------------------------------------
Provisions 0.1 0.0 +127.4% 0.1
-------------------------------------------------------------------------------
Interest-bearing current liabilities 24.7 71.7 -65.6% 24.5
-------------------------------------------------------------------------------
Current liabilities total 373.5 399.4 -6.5% 197.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Liabilities total 634.9 546.4 +16.2% 465.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity and liabilities total 1,026.9 928.7 +10.6% 979.0
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
a. Share capital
b. Expendable fund
c. Other reserves
d. Items due to remeasurement of defined
benefit plans
e. Translation
differences
f. Retained earnings
g. Non-controlling interests
h. Equity total
Equity attributable to owners of the
parent company
-------------------------------------------
EUR million a. b. c. d. e. f. g. h.
-------------------------------------------------------------------------------
Equity at 31 December
2012 before change in
accounting policies 92.2 0.5 0.8 -2.6 420.5 0.0 511.3
-------------------------------------------------------------------------------
Effect of change in accounting
policies 0.2 -2.0 -1.8
-------------------------------------------------------------------------------
Equity at 1 January 2013 92.2 0.5 0.8 0.2 -2.6 418.4 0.0 509.6
-------------------------------------------------------------------------------
Profit for the period 55.6 55.6
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Change in value of cash flow
hedges 0.0 0.0
-------------------------------------------------------------------------------
Translation differences 0.0 -0.7 -0.7
-------------------------------------------------------------------------------
Transactions with owners
-------------------------------------------------------------------------------
Dividend and capital
repayment -183.4 -183.4
-------------------------------------------------------------------------------
Share-based incentive
plan 1.6 1.6
-------------------------------------------------------------------------------
Other adjustments -0.3 -0.3
-------------------------------------------------------------------------------
Equity at 31 March 2013 92.2 0.5 0.9 0.2 -3.4 292.0 0.0 382.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity at 1 January 2014 92.2 0.5 1.6 -9.5 -3.9 433.0 0.0 513.9
-------------------------------------------------------------------------------
Profit for the period 52.6 52.6
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Change in value of cash flow
hedges 0.0 0.0
-------------------------------------------------------------------------------
Translation differences -0.0 0.2 0.2
-------------------------------------------------------------------------------
Transactions with owners
-------------------------------------------------------------------------------
Dividend and capital
repayment -175.9 -175.9
-------------------------------------------------------------------------------
Share-based incentive
plan 1.4 1.4
-------------------------------------------------------------------------------
Other adjustments 0.0 -0.3 0.0 -0.3
-------------------------------------------------------------------------------
Equity at 31 March 2014 92.2 0.5 1.6 -9.5 -3.7 310.9 0.0 392.0
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR million Q1/14 Q1/13 2013
-------------------------------------------------------------------------------
Operating profit 67.4 74.1 267.7
-------------------------------------------------------------------------------
Adjustments 12.6 10.9 42.2
-------------------------------------------------------------------------------
Change in working capital -5.7 -38.3 -21.9
-------------------------------------------------------------------------------
Interest paid -1.3 -1.7 -6.1
-------------------------------------------------------------------------------
Interest received 1.0 1.5 3.7
-------------------------------------------------------------------------------
Dividends received 0.0 0.3
-------------------------------------------------------------------------------
Income taxes paid -15.0 -17.8 -70.8
-------------------------------------------------------------------------------
Total net cash flow from operating activities 59.1 28.7 215.2
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Investments in property, plant and equipment -15.6 -16.7 -65.9
-------------------------------------------------------------------------------
Investments in intangible assets -1.1 -1.9 -7.4
-------------------------------------------------------------------------------
Sales of property, plant and equipment and available-for-
sale investments 0.4 0.2 2.0
-------------------------------------------------------------------------------
Sales of intangible assets 0.0 -0.0 0.0
-------------------------------------------------------------------------------
Total net cash flow from investing activities -16.3 -18.4 -71.3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Current loans raised 0.9 40.1 41.6
-------------------------------------------------------------------------------
Repayments of current loans -1.1 -0.3 -42.6
-------------------------------------------------------------------------------
Non-current loans raised 149.0
-------------------------------------------------------------------------------
Repayments of non-current loans -4.1 -1.8 -28.1
-------------------------------------------------------------------------------
Treasury shares -9.6
-------------------------------------------------------------------------------
Dividends paid and other distribution of profits 0.0 0.0 -183.7
-------------------------------------------------------------------------------
Total net cash flow from financing activities -4.3 38.0 -73.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net change in cash and cash equivalents 38.6 48.3 70.3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cash and cash equivalents at the beginning of the period 214.7 145.2 145.2
-------------------------------------------------------------------------------
Foreign exchange differences 1.0 -0.8 -0.9
-------------------------------------------------------------------------------
Net change in cash and cash equivalents 38.6 48.3 70.3
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 254.3 192.7 214.7
-------------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 3/14 3/13 12/13
-------------------------------------------------------------------
Carrying amount at the beginning of the period 247.3 205.3 205.3
-------------------------------------------------------------------
Additions 14.6 17.5 70.1
-------------------------------------------------------------------
Disposals -0.3 -0.3 -1.8
-------------------------------------------------------------------
Depreciation and impairments -6.7 -6.2 -26.2
-------------------------------------------------------------------
Carrying amount at the end of the period 254.8 216.3 247.3
-------------------------------------------------------------------
CHANGES IN INTANGIBLE ASSETS (EXCLUDING GOODWILL)
EUR million 3/14 3/13 12/13
-----------------------------------------------------------------
Carrying amount at the beginning of the period 57.3 62.3 62.3
-----------------------------------------------------------------
Additions 1.1 1.8 7.5
-----------------------------------------------------------------
Disposals -0.0 -0.0 -0.2
-----------------------------------------------------------------
Amortisation and impairments -2.6 -3.0 -12.3
-----------------------------------------------------------------
Carrying amount at the end of the period 55.7 61.2 57.3
-----------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
EUR million 3/14 3/13 12/13
--------------------------------------------------------------------------
CONTINGENCIES FOR OWN LIABILITIES
--------------------------------------------------------------------------
Mortgages on land and buildings 32.0 41.0 32.0
--------------------------------------------------------------------------
of which those to Orion Pension Fund 9.0
--------------------------------------------------------------------------
Guarantees 2.6 1.8 2.4
--------------------------------------------------------------------------
OTHER LIABILITIES
--------------------------------------------------------------------------
Leasing liabilities (excluding finance lease contracts) 6.2 6.2 6.4
--------------------------------------------------------------------------
Other liabilities 0.3 0.3 0.3
--------------------------------------------------------------------------
DERIVATIVES
EUR million 3/14 3/13 12/13
--------------------------------------------------------------
CURRENCY FORWARD CONTRACTS AND CURRENCY SWAPS
--------------------------------------------------------------
Fair value, EUR million 0.3 -0.8 0.5
--------------------------------------------------------------
Nominal value, EUR million 58.3 53.1 67.8
--------------------------------------------------------------
CURRENCY OPTIONS
--------------------------------------------------------------
Fair value, EUR million -0.0 -0.4 0.1
--------------------------------------------------------------
Nominal value, EUR million 63.0 54.6 47.2
--------------------------------------------------------------
INTEREST RATE SWAPS
--------------------------------------------------------------
Fair value, EUR million -0.2 -0.2 -0.2
--------------------------------------------------------------
Nominal value, EUR million 17.9 21.4 18.8
--------------------------------------------------------------
CROSS CURRENCY SWAPS
--------------------------------------------------------------
Fair value, EUR million -0.1
--------------------------------------------------------------
Nominal value, EUR million 9.6
--------------------------------------------------------------
ELECTRICITY DERIVATIVES
--------------------------------------------------------------
Fair value, EUR million -0.8 -0.5 -0.7
--------------------------------------------------------------
Nominal amount, GWh 48 97 57
--------------------------------------------------------------
DERIVATIVE CATEGORIES USING FAIR VALUE HIERARCHY
EUR million Level 1 Level 2 Level 3
------------------------------------------------------------------------------
Currency forward contracts and
currency swaps 0.3
------------------------------------------------------------------------------
Currency options 0.0
------------------------------------------------------------------------------
Interest rate swaps -0.2
------------------------------------------------------------------------------
Electricity derivatives -0.8
------------------------------------------------------------------------------
All derivatives are OTC derivatives, and market quotations available at the
end of the reporting period have been used as their fair value.
The fair value of level 1 derivatives is based on quotations available in
the markets. The fair value of level 2 derivatives is based on data
available in the markets. The fair value of level 3 derivatives cannot be
estimated on the basis of data available in the markets.
In the Group the principle is applied that transfers between levels of fair
value hierarchy are recognised on the date on which the event triggering the
transfer has occurred.
No transfers between levels occurred during the reporting period.
RELATED PARTY TRANSACTIONS
EUR million Q1/14 Q1/13 2013
----------------------------------------------------
Management's employment benefits 4.1 4.1 6.4
----------------------------------------------------
Operating segment performance
NET SALES BY BUSINESS DIVISION
EUR million Q1/14 Q1/13 Change % 2013
----------------------------------------------------------------------
Pharmaceuticals 229.5 234.2 -2.0% 953.0
----------------------------------------------------------------------
Proprietary Products 88.2 100.3 -12.1% 390.4
----------------------------------------------------------------------
Specialty Products 102.1 95.7 +6.7% 384.9
----------------------------------------------------------------------
Animal Health 15.4 14.8 +4.4% 70.8
----------------------------------------------------------------------
Fermion 14.9 13.4 +11.3% 63.5
----------------------------------------------------------------------
Contract manufacturing
and other 8.9 10.1 -11.7% 43.3
----------------------------------------------------------------------
Diagnostics 16.3 15.9 +2.8% 57.1
----------------------------------------------------------------------
Group items -0.8 -0.8 +6.5% -3.2
----------------------------------------------------------------------
Group total 245.0 249.4 -1.8% 1,006.9
----------------------------------------------------------------------
OPERATING PROFIT BY BUSINESS AREA
EUR million Q1/14 Q1/13 Change % 2013
---------------------------------------------------
Pharmaceuticals 66.7 73.9 -9.7% 272.9
---------------------------------------------------
Diagnostics 2.6 2.3 +14.0% 4.6
---------------------------------------------------
Group items -1.9 -2.0 +5.5% -9.9
---------------------------------------------------
Group total 67.4 74.1 -9.1% 267.7
---------------------------------------------------
NET SALES BY ANNUAL QUARTERS
2014 2013 2012
+-----+-----------------------+-----------------+
EUR million | Q1| Q4 Q3 Q2 Q1| Q4 Q3 Q2|
----------------+-----+-----------------------+-----------------+
Pharmaceuticals|229.5|259.8 224.1 235.0 234.2|242.1 234.2 220.1|
----------------+-----+-----------------------+-----------------+
Diagnostics | 16.3| 13.7 13.5 14.0 15.9| 13.1 12.1 13.4|
----------------+-----+-----------------------+-----------------+
Group items | -0.8| -0.8 -0.7 -0.9 -0.8| -0.8 -0.5 -0.7|
----------------+-----+-----------------------+-----------------+
Group total |245.0|272.6 236.9 248.0 249.4|254.4 245.8 232.8|
----------------+-----+-----------------------+-----------------+
OPERATING PROFIT BY ANNUAL QUARTERS
2014 2013 2012
+----+-------------------+--------------+
EUR million | Q1| Q4 Q3 Q2 Q1| Q4 Q3 Q2|
----------------+----+-------------------+--------------+
Pharmaceuticals|66.7|67.9 66.7 64.4 73.9|62.2 78.0 67.5|
----------------+----+-------------------+--------------+
Diagnostics | 2.6| 0.7 2.0 -0.4 2.3|-0.6 0.0 0.5|
----------------+----+-------------------+--------------+
Group items |-1.9|-2.8 -2.2 -2.9 -2.0|-2.9 -2.3 -2.7|
----------------+----+-------------------+--------------+
Group total |67.4|65.8 66.6 61.1 74.1|58.8 75.6 65.3|
----------------+----+-------------------+--------------+
GEOGRAPHICAL BREAKDOWN OF NET SALES BY ANNUAL QUARTERS
2014 2013 2012
+-----+-----------------------+-----------------+
EUR million | Q1| Q4 Q3 Q2 Q1| Q4 Q3 Q2|
--------------+-----+-----------------------+-----------------+
Finland | 70.4| 71.5 67.6 67.7 67.8| 67.3 63.3 62.7|
--------------+-----+-----------------------+-----------------+
Scandinavia | 33.3| 33.0 30.7 34.5 32.5| 33.3 30.3 30.3|
--------------+-----+-----------------------+-----------------+
Other Europe | 79.1| 91.9 77.6 83.6 75.7| 68.1 76.5 79.2|
--------------+-----+-----------------------+-----------------+
North America| 30.7| 45.2 32.7 33.6 34.5| 54.7 27.1 30.4|
--------------+-----+-----------------------+-----------------+
Other markets| 31.5| 31.0 28.2 28.8 38.8| 31.0 48.6 30.2|
--------------+-----+-----------------------+-----------------+
Group total |245.0|272.6 236.9 248.0 249.4|254.4 245.8 232.8|
--------------+-----+-----------------------+-----------------+
Business reviews
KEY FIGURES FOR PHARMACEUTICALS BUSINESS
EUR million Q1/14 Q1/13 Change % 2013
-------------------------------------------------------------------
Net sales 229.5 234.2 -2.0% 953.0
-------------------------------------------------------------------
Operating profit 66.7 73.9 -9.7% 272.9
-------------------------------------------------------------------
% of net sales 29.1% 31.5% 28.6%
-------------------------------------------------------------------
R&D expenses 24.5 22.4 +9.4% 93.9
-------------------------------------------------------------------
% of net sales 10.7% 9.5% 9.9%
-------------------------------------------------------------------
Capital expenditure 17.8 18.5 -3.9% 73.8
-------------------------------------------------------------------
% of net sales 7.7% 7.9% 7.7%
-------------------------------------------------------------------
Sales revenue from proprietary products 92.4 108.0 -14.5% 418.5
-------------------------------------------------------------------
Assets 709.9 667.6 704.3
-------------------------------------------------------------------
Liabilities 158.0 124.4 160.1
-------------------------------------------------------------------
Personnel at the end of the period 3,181 3,141 3,208
-------------------------------------------------------------------
TOP TEN BEST-SELLING PHARMACEUTICAL PRODUCTS
EUR million Q1/14 Q1/13 Change % 2013
-------------------------------------------------------------------------------
Stalevo(®), Comtess(®) and Comtan(®)
(Parkinson's disease) 47.2 60.3 -21.7% 206.8
-------------------------------------------------------------------------------
Simdax(®) (acute decompensated heart failure) 10.7 10.8 -1.5% 46.0
-------------------------------------------------------------------------------
Precedex(®) (intensive care sedative) 9.0 12.0 -24.5% 59.1
-------------------------------------------------------------------------------
dexdor(®) (intensive care sedative) 8.0 5.7 +39.7% 25.3
-------------------------------------------------------------------------------
Easyhaler(®) product family (asthma, COPD) 7.8 6.2 +26.9% 28.9
-------------------------------------------------------------------------------
Generic entacapone products (Parkinson's disease) 6.8 2.6 +164.6% 10.2
-------------------------------------------------------------------------------
Burana(®) (inflammatory pain) 5.5 5.8 -5.1% 23.2
-------------------------------------------------------------------------------
Marevan(®) (anticoagulant) 4.9 4.0 +20.6% 16.1
-------------------------------------------------------------------------------
Dexdomitor(®), Domitor(®), Domosedan(®) and
Antisedan(®) (animal sedatives) 4.9 4.9 -0.8% 24.8
-------------------------------------------------------------------------------
Trexan(®) (rheumatoid arthritis, cancer) 3.4 2.9 +15.1% 11.4
-------------------------------------------------------------------------------
Total 108.1 115.2 -6.1% 451.9
-------------------------------------------------------------------------------
Share of pharmaceutical net sales 47% 49% 47%
-------------------------------------------------------------------------------
KEY FIGURES FOR DIAGNOSTICS BUSINESS
EUR million Q1/14 Q1/13 Change % 2013
--------------------------------------------------------------
Net sales 16.3 15.9 +2.8% 57.1
--------------------------------------------------------------
Operating profit 2.6 2.3 +14.0% 4.6
--------------------------------------------------------------
% of net sales 15.7% 14.2% 8.1%
--------------------------------------------------------------
R&D expenses 1.9 2.3 -19.6% 8.3
--------------------------------------------------------------
% of net sales 11.4% 14.6% 14.5%
--------------------------------------------------------------
Capital expenditure 0.6 0.8 -21.3% 3.3
--------------------------------------------------------------
% of net sales 3.8% 4.9% 5.8%
--------------------------------------------------------------
Assets 46.8 51.0 47.3
--------------------------------------------------------------
Liabilities 9.5 17.2 16.6
--------------------------------------------------------------
Personnel at the end of the period 278 349 287
--------------------------------------------------------------
Information on Orion's shares
BASIC SHARE INFORMATION 31 MARCH 2014
A shares B shares Total
-------------------------------------------------------------------------------
Trading code on NASDAQ OMX Helsinki ORNAV ORNBV
-------------------------------------------------------------------------------
Listing day 1 July 2006 1 July 2006
-------------------------------------------------------------------------------
ISIN code FI0009014369 FI0009014377
-------------------------------------------------------------------------------
ICB code 4500 4500
-------------------------------------------------------------------------------
Reuters code ORNAV.HE ORNBV.HE
-------------------------------------------------------------------------------
Bloomberg code ORNAV.FH ORNBV.FH
-------------------------------------------------------------------------------
Share capital, EUR million 27.4 64.8 92.2
-------------------------------------------------------------------------------
Counter book value per share, EUR 0.65 0.65
-------------------------------------------------------------------------------
Total number of shares 42,022,816 99,235,012 141,257,828
-------------------------------------------------------------------------------
% of total share stock 30% 70% 100%
-------------------------------------------------------------------------------
Number of treasury shares 569,665 569,665
-------------------------------------------------------------------------------
Total number of shares excluding
treasury shares 42,022,816 98,665,347 140,688,163
-------------------------------------------------------------------------------
Minimum number of shares 1
-------------------------------------------------------------------------------
Maximum number of A and B shares, and
maximum
number of all shares 500,000,000 1,000,000,000 1,000,000,000
-------------------------------------------------------------------------------
Votes per share 20 1
-------------------------------------------------------------------------------
Number of votes excluding treasury
shares 840,456,320 98,665,347 939,121,667
-------------------------------------------------------------------------------
% of total votes 89% 11% 100%
-------------------------------------------------------------------------------
Total number of shareholders 18,244 43,367 55,473
-------------------------------------------------------------------------------
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 2014
A shares B shares Total
-------------------------------------------------------------------------------
Shares traded 688,372 19,923,841 20,612,213
-------------------------------------------------------------------------------
% of the total number of shares 1.6% 20.1% 14.6%
-------------------------------------------------------------------------------
Trading volume, EUR million 15.6 443.2 458.8
-------------------------------------------------------------------------------
Closing quotation on 31 December 2013, EUR 20.35 20.42
-------------------------------------------------------------------------------
Lowest quotation, EUR (A and B 28 February
2014) 19.13 19.07
-------------------------------------------------------------------------------
Average quotation, EUR 22.68 22.25
-------------------------------------------------------------------------------
Highest quotation, EUR (A 5 and 6 March, B
6 March 2014) 24.67 24.77
-------------------------------------------------------------------------------
Closing quotation on 31 March 2014, EUR 21.80 21.91
-------------------------------------------------------------------------------
Market capitalisation on 31 March 2014
excluding treasury shares, EUR million 916.1 2,161.8 3,077.9
-------------------------------------------------------------------------------
PERFORMANCE PER SHARE
Q1/14 Q1/13 Change % 2013
-------------------------------------------------------------------------------
Basic earnings per share, EUR 0.37 0.39 -5.1% 1.46
-------------------------------------------------------------------------------
Diluted earnings per share, EUR 0.37 0.39 -5.1% 1.46
-------------------------------------------------------------------------------
Cash flow per share before financial items,
EUR 0.30 0.07 +319.4% 1.02
-------------------------------------------------------------------------------
Equity per share, EUR 2.79 2.71 3.66
-------------------------------------------------------------------------------
Average number of shares excluding treasury
shares, 1,000 shares 140,606 140,978 141,006
-------------------------------------------------------------------------------
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 the IAS 34 Interim
Financial Reporting standard. The same accounting policies as for the Financial
Statements for 2013 have been applied in preparing the Interim Report, except
for amendments to existing IFRS and IAS standards endorsed by the EU that have
been adopted as of 1 January 2014. The amendments to standards had no effect on
the Consolidated Financial Statements.
The policies and calculation methods applied during the period can be found on
the Orion website at www.orion.fi/en/investors/.
Other matters
The data in this financial review are not audited.
The figures in parentheses are for the corresponding period of the previous
year. All the figures in this report have been rounded, which is why the total
sums of individual figures may differ from the total sums shown.
CALCULATION OF THE KEY FIGURES
Profit before taxes + Interest
and other finance expenses
Return on capital employed (ROCE), % =----------------------------------X 100
Total assets - Non-interest-
bearing liabilities (average
during the period)
Profit for the period
Return on equity (ROE), % =----------------------------------X 100
Total equity (average during the
period)
Equity
Equity ratio, % =----------------------------------x 100
Total assets - Advances received
Interest-bearing liabilities -
Cash and cash equivalents -
Gearing, % = Money market investments x 100
----------------------------------
Equity
Profit available for the owners
of the parent company
Earnings per share, EUR =----------------------------------
Average number of shares during
the period, excluding treasury
shares
Cash flow from operating
activities + Cash flow from
Cash flow per share before financial investing activities
items, EUR =----------------------------------
Average number of shares during
the period, excluding treasury
shares
Equity of the owners of the
parent company
Equity per share, EUR =----------------------------------
Number of shares at the end of
the period, excluding treasury
share
Dividend to be distributed for
the period
Dividend per share, EUR =----------------------------------
Number of shares at the end of
the period, excluding treasury
shares
Dividend per share
Payout ratio, % =----------------------------------x 100
Earnings per share
Dividend per share
Effective dividend yield, % =----------------------------------x 100
Closing quotation of the period
Closing quotation of the period
Price/earnings ratio (P/E) =----------------------------------
Earnings per share
Total EUR value of shares traded
Average share price, EUR =----------------------------------
Average number of traded shares
during the period
Market capitalisation, EUR million = Number of shares at the end of
the period × Closing quotation
of the period
Publisher:
Orion Corporation
http://www.orion.fi/en
http://www.twitter.com/OrionCorpIR
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 2013 amounted to EUR 1,007 million and the Company had
about 3,500 employees. Orion's A and B shares are listed on NASDAQ OMX Helsinki.
[HUG#1780496]
