ORION CORPORATION / INTERIM REPORT / JANUARY-JUNE 2014 / 29 July 2014 at
12:00 noon EEST
Orion Group Interim Report January-June 2014
Orion's net sales in January-June 2014 totalled EUR 522 million (EUR 497 million
in January-June 2013).
* Operating profit was EUR 153 (135) million.
* Profit before taxes was EUR 151 (134) million.
* Equity ratio was 51% (48%).
* ROCE before taxes was 42% (41%).
* ROE after taxes was 49% (43%).
* Basic earnings per share were EUR 0.86 (0.72).
* Cash flow per share before financial items was EUR 0.93 (0.27).
* Orion and Bayer entered into partnership for development and
commercialisation of ODM-201. Orion received an upfront payment of MEUR 50,
of which MEUR 23 is included in profit for the reviewed period and MEUR 27
is estimated to be used for development costs of ODM-201.
* The outlook estimate for 2014 was updated during the review period. The
current outlook estimate is that in 2014 net sales and operating profit will
be at similar level to 2013.
* Stalevo received marketing authorisation in Japan in the beginning of July
after the review period.
ORION'S KEY FIGURES FOR THE REVIEW PERIOD
Q2/14 Q2/13 Change % Q1-Q2/14 Q1-Q2/13 Change % 2013
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Net sales, EUR million 276.7 248.0 +11.6% 521.7 497.4 +4.9% 1,006.9
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International
operations, EUR
million. 204.7 180.4 +13.5% 379.3 361.9 +4.8% 732.3
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% of net sales 74.0% 72.7% 72.7% 72.8% 72.7%
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Operating profit, EUR
million 86.0 61.1 +40.8% 153.4 135.2 +13.4% 267.7
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% of net sales 31.1% 24.6% 29.4% 27.2% 26.6%
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Profit before taxes,
EUR million 84.7 60.5 +40.0% 151.2 134.3 +12.6% 264.0
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% of net sales 30.6% 24.4% 29.0% 27.0% 26.2%
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Income tax expense,
EUR million 16.7 14.6 +14.1% 30.5 32.9 -7.0% 57.8
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R&D expenses, EUR
million 30.6 26.3 +16.1% 56.9 50.9 +11.6% 101.9
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% of net sales 11.0% 10.6% 10.9% 10.2% 10.1%
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Capital expenditure,
EUR million 13.5 17.3 -22.2% 29.6 36.7 -19.4% 77.9
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% of net sales 4.9% 7.0% 5.7% 7.4% 7.7%
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Assets total, EUR
million 943.0 887.7 +6.2% 979.0
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Equity ratio, % 51.3% 48.1% 53.6%
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Gearing, % 18.9% 32.7% 8.4%
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Interest-bearing
liabilities, EUR
million 252.8 278.2 -9.1% 257.8
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Non-interest-bearing
liabilities, EUR
million 226.0 182.1 +24.1% 207.3
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Cash and cash
equivalents and money
market investments,
EUR million 164.9 138.6 +19.0% 214.7
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ROCE (before taxes), % 42.1% 41.0% 38.5%
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ROE (after taxes), % 49.3% 43.3% 40.3%
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Basic earnings per
share, EUR 0.48 0.33 +48.7% 0.86 0.72 +19.3% 1.46
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Diluted earnings per
share, EUR 0.48 0.33 +48.7% 0.86 0.72 +19.3% 1.46
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Cash flow per share
before financial
items, EUR 0.62 0.19 +221.2% 0.93 0.27 +247.9% 1.02
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Equity per share, EUR 3.30 3.03 +8.9% 3.66
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Personnel at the end
of the period 3,594 3,663 -1.9% 3,519
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Average personnel
during the period 3,507 3,541 -1.0% 3,540
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Personnel expenses,
EUR million 114.0 110.9 +2.9% 218.1
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President and CEO Timo Lappalainen:
"Payments from partners increased net sales and operating profit"
"In the first half of 2014 our net sales were slightly higher and our operating
profit higher than in 2013. Significant part of the increase in net sales and
operating profit were due to milestone payments received from collaboration
partners during the review period.
"At the beginning of June we announced that we had entered into a global
partnership with Bayer for development and commercialisation of the compound
ODM-201. From the upfront payment of EUR 50 million Orion received, EUR 27
million will be used for the currently estimated development costs of ODM-201
during 2014 and EUR 23 million we have recorded in profit, following which we
updated our outlook estimate for the current year as regards operating profit.
"We are pleased with the agreement made with Bayer, under which Orion and Bayer
will jointly develop ODM-201 and Bayer will contribute the major share of future
development costs. Bayer will commercialise the product globally, but Orion has
the option of co-promoting it in Europe, and we are also entitled to receive
from Bayer certain milestone payments related to successful development,
technology transfer and commercialisation phases, and substantial royalties on
future sales. In addition, Orion will be responsible for manufacturing of the
product.
"We received other favourable news about our drug development projects in the
beginning of July when our collaboration partner Novartis announced that it had
been granted marketing authorisation for Stalevo(®) in Japan.
"Deliveries of our Parkinson's drugs to Novartis were clearly lower than a year
ago. Total sales of Stalevo(®) and Comtess(®) through Orion's own sales
organisation were lower than in 2013. In Europe generic competition to Stalevo
has begun in Germany, but this has not yet materially affected our sales.
"Among our other proprietary drugs, the intensive care sedative dexdor(®) and
the Easyhaler(®) product family maintained their strong growth. During the
review period we were granted the first national marketing authorisations for
Bufomix Easyhaler(®), and we have started the launches. In addition, we recorded
a milestone payment of EUR 6 million from Takeda related to national marketing
authorisations granted for Bufomix Easyhaler. Sales of the intensive care
sedative Precedex(®) were clearly lower because the royalties received by Orion
from Hospira decreased. Generic competition has not commenced in US markets.
"The Specialty Products business division continued to grow steadily. Net sales
of generic entacapone products in particular grew strongly, but sales of the
other products in the portfolio also grew slightly. For the other business
divisions, the first half of the year has proceeded as anticipated. The
significant investment and production reorganisation projects have progressed as
planned.
"Our outlook estimate, which can be found with the basis for it under 'Outlook
for 2014' and 'Basis for outlook' in this report, was updated during the review
period. We estimate that our net sales and operating profit in 2014 will be at
similar level to 2013."
Events during the period
On 14 April Orion announced that it had received the first marketing
authorisations in Europe for Bufomix Easyhaler(®).
On 2 June Orion and Bayer entered into an agreement for development and
commercialisation of a novel prostate cancer treatment. At the same time Orion
upgraded its outlook estimate for 2014.
Events after the period
On 4 July Orion's partner Novartis was granted marketing authorisation for
Stalevo(®) in Japan.
News conference and teleconference
A news conference and teleconference on the published results will be held
today, Tuesday 29 July 2014, 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 at Orion's website at
http://www.orion.fi/en/investors. After the presentation, questions can be asked
by telephone in Finnish and English.
The teleconference code is 945663 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 published on the Orion
website during Tuesday 29 July 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 2014-2015
Interim Report January-September 2014 Tuesday 21 October 2014
Financial Statement Release for 2014 Wednesday 4 February 2015
Planned to be held on 24 March 2015
Annual General Meeting 2015
Interim Report January-March 2015 Wednesday 29 April 2015
Interim Report January-June 2015 Tuesday 28 July 2015
Tuesday 27 October 2015
Interim Report January-September 2015
The Financial Statements and Report by the Board of Directors for 2014 will be
published on the Company's website at the latest in week 10/2015.
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
http://www.orion.fi/en
http://www.orion.fi/en/investors
Financial review Q1-Q2/2014
Net sales
The Orion Group's net sales in January-June 2014 were up by 5% at EUR 522
million (EUR 497 million in January-June 2013). The net effect of currency
exchange rates was EUR -9 million.
The Pharmaceuticals business's net sales were up by 5% at EUR 494 (469) million.
The net sales includes milestone payments of EUR 23 million received from Bayer
and EUR 6 million received from Takeda. Net sales of Orion's Stalevo(®)
(carbidopa, levodopa and entacapone) and Comtess(®)/Comtan(®) (entacapone)
Parkinson's drugs were down by 16% at EUR 93 (111) million, which was 19% (24%)
of the Pharmaceuticals business's net sales. The Pharmaceuticals business's net
sales of products in the portfolio other than Stalevo(®) and
Comtess(®)/Comtan(®) and excluding significant milestone payments were up by 4%
at EUR 373 (358) million.
The Diagnostics business's net sales were down by 3% at EUR 29 (30) million. The
decrease was mainly due to the ending of sales of products discontinued in 2013.
Operating profit
The Orion Group's operating profit was up by 13% at EUR 153 (135) million.
The Pharmaceuticals business's operating profit was up by 12% at EUR 155 (138)
million. The increase was due to payments of EUR 23 million and EUR 6 million
received from Bayer and Takeda. The gross profit percentage excluding
significant milestone payments remained similar to the previous year.
The Diagnostics business's operating profit was up by 59% at EUR 2.9 (1.9)
million. The operating profit in the comparative period included EUR 1.4 million
of costs related to contraction of the product portfolio, closure of the Turku
manufacturing plant and personnel reductions.
Operating expenses
The Group's sales and marketing expenses were down by 4% at EUR 96 (100)
million.
R&D expenses were up by 12% at EUR 57 (51) million and accounted for 11% (10%)
of the Group's net sales. Pharmaceutical R&D expenses amounted to EUR 53 (47)
million. Research projects are reported in more detail under Pharmaceuticals in
the Business Reviews.
Administrative expenses were EUR 21 (23) million.
Other operating income and expenses increased profit by EUR 1 (2) million.
Group's profit
The Group's profit before taxes totalled EUR 151 (134) million. Basic earnings
per share were EUR 0.86 (0.72) and diluted earnings per share were EUR 0.86
(0.72). Earnings per share grew more than operating profit because the Finnish
tax rate was reduced. Equity per share was EUR 3.30 (3.03). The return on
capital employed before taxes (ROCE) was 42% (41%) and the return on equity
after taxes (ROE) 49% (43%).
Financial position
The Group's gearing was 19% (33%) and the equity ratio 51% (48%).
The Group's total liabilities at 30 June 2014 were EUR 479 (460) million. At the
end of the period, interest-bearing liabilities amounted to EUR 253 (278)
million, including EUR 227 (251) million of long-term loans.
The Group had EUR 165 (139) million of cash and cash equivalents and money
market investments at the end of the period. The cash and cash equivalents 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 161 (70) million.
The significant improvement was mainly due to the increase in operating profit
and the decrease of EUR 19 million in the amount of cash tied up in working
capital. Working capital increased by EUR 44 million in the comparative period.
The decrease in working capital was mainly due to EUR 27 million of advance
payment received from Bayer that will be used in the research and development
costs of compound ODM-201.
Cash flow from investing activities was EUR -30 (-32) million.
Cash flow from financing activities was EUR -182 (-43) million. The change was
mainly due to the EUR 150 million bond issued in the comparative period.
Capital expenditure
The Group's capital expenditure totalled EUR 30 (37) million. This comprised EUR
27 (32) million on property, plant and equipment and EUR 2 (5) million on
intangible assets.
Outlook for 2014 (updated on 6 June 2014)
Net sales will be at similar level to 2013 (net sales in 2013 were EUR 1,007
million).
Operating profit will be at similar level to 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. In March 2014 the first generic marketing
authorisations for Stalevo were granted in Germany, where generic competition
has commenced. 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. Royalty payments to AbbVie recorded in
marketing expenditure and related to the reacquisition of rights to Simdax ended
in April. About EUR 10 million of royalties were paid in 2013.
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. The major share of the ODM-201 research costs in 2014,
for instance, will be covered by the upfront payment received from Bayer.
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 and the intensity 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 30 June 2014 Orion had a total of 141,257,828 (141,257,828) shares, of which
41,522,816 (42,272,816) were A shares and 99,735,012 (98,985,012) B shares. The
Group's share capital was EUR 92,238,541.46 (92,238,541.46). At the end of June
2014 Orion held 569,665 (188,991) B shares as treasury shares. On 30 June 2014
the aggregate number of votes conferred by the A and B shares was 929,621,667
(944,252,341) excluding treasury shares.
At the end of June 2014, Orion had 53,666 (53,942) registered shareholders.
Voting rights conferred by shares
Each A share entitles its holder to twenty (20) votes at General Meetings of
Shareholders and each B share one (1) vote. However, a shareholder cannot vote
more than 1/20 of the aggregate number of votes from the different share classes
represented at a General Meeting of Shareholders. The Company itself and Orion
Pension Fund do not have the right to vote at an Orion Corporation General
Meeting of Shareholders.
Both share classes, A and B, confer equal rights to the Company's assets and
dividends.
Conversion of shares
The Articles of Association entitle shareholders to demand the conversion of
their A shares to B shares within the limitation on the maximum number of shares
of a class. In January-June 2014 a total of
500,000 shares were converted.
Trading in Orion's shares
Orion's A shares and B shares are quoted on NASDAQ OMX Helsinki in the Large Cap
group under the Healthcare sector heading under the trading codes ORNAV and
ORNBV. Trading in both of the Company's share classes commenced on 3 July 2006,
and information on trading in the Company's shares has been available since this
date.
On 30 June 2014 the market capitalisation of the Company's shares excluding
treasury shares was EUR 3,827 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
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.
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 June 2014 Orion had a total of 53,666 (53,942) registered
shareholders, of whom 95% (95%) were private individuals holding 44% (45%) of
the entire share stock and 61% (64%) of the total votes. There were altogether
54 (50) million nominee-registered shares, which was 38% (36%) of all shares,
and they conferred entitlement to 4% (7%) of the total votes.
At the end of June 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.
Personnel
The average number of employees in the Orion Group in January-June 2014 was
3,507 (3,541). At the end of June 2014 the Group had a total of 3,594 (3,663)
employees, of whom 2,908 (2,953) worked in Finland and 686 (710) outside
Finland.
Salaries and other personnel expenses in January-June 2014 totalled EUR 114
(111) 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 statistics, Finnish wholesale of human pharmaceuticals
in January-June 2014 was up by 4% on the previous year at EUR 1,048 (1,011)
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-June 2014 amounted to EUR 121 (116)
million, up by 5% compared with the previous year. Orion's market share of
Finnish pharmaceuticals markets was 12% (11%).
According to IMS Health pharmaceutical sales statistics, in the 12-month period
ending in March 2014 the total sales of Parkinson's drugs in the United States
were up by 8% at USD 792 million (USD 730 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 993 (965) million in the 12-
month period ending in March 2014, and the average market growth was 3%. In
Japan sales of Parkinson's drugs were down by 15% at EUR 494 (580) million.
According to IMS Health pharmaceutical sales statistics, in the 12-month period
ending in March 2014 the total sales of Parkinson's drugs containing entacapone
were USD 138 (173) million in the United States and EUR 151 (155) 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 March 2014, sales of Orion's branded Parkinson's
drugs in the United States were down by 68% at USD 26 (81) million. Sales were
down by 5% at EUR 128 (134) million in the five largest markets in Europe, and
in Japan sales were EUR 55 (66) 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 3% 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 378 million in
the 12-month period ending in March 2014 (USD 310 million in the previous 12-
month period). About four-fifths of the sales amounting to USD 316 (252) million
were in the United States, where Precedex sales grew by 26%. IMS Health
pharmaceutical sales statistics have become more comprehensive as regards
reporting of Precedex, following which the figures for the reported period and
comparative period are greater than as previously.
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 March 2014 were EUR 479 (472) million. According to IMS Health
pharmaceutical sales statistics, in the 12-month period ending in March 2014
sales of Orion's dexdor(®) intensive care sedative (dexmedetomidine) were up by
46% at EUR 22 (15) million in Europe.
Net sales and operating profit of the Pharmaceuticals business
Net sales of the Pharmaceuticals business in January-June 2014 were EUR 494
(469) million, up by 5% compared with the previous year. The operating profit of
the Pharmaceuticals business was up by 12% at EUR 155 (138) million. The
operating profit of the Pharmaceuticals business was 31% (30%) of the segment's
net sales. The net sales and operating profit include the payments of EUR 23
million received from Bayer and EUR 6 million received from Takeda.
Net sales of Orion's top ten pharmaceuticals in January-June 2014 were down by
4% at EUR 215 (223) million. They accounted for 43% (47%) 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-June 2014 were up by 6% on the
previous year at EUR 204 (193) million. Significant part of the increase was due
to the payments received from Bayer and Takeda.
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-June 2014 totalled EUR 93 (111)
million. Sales of Parkinson's drugs were down by 16% and accounted for 19% (24%)
of the total net sales of the Pharmaceuticals business. Deliveries of Stalevo to
Novartis were down by 12% at EUR 40 (45) million and deliveries of Comtan were
down by 36% at EUR 13 (20) million. Sales of Stalevo through Orion's own sales
network were down by 12% at EUR 37 (41) million. Sales of Comtess were down by
18% at EUR 4 (4) million. In the United States Orion's Parkinson's drugs have
several generic competitors. In Europe Comtess and Comtan have several generic
competitors, and generic competition to Stalevo has commenced in Germany. The
commencement of competition has not yet materially affected Orion's sales.
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-June 2014 were EUR 23 (23) million.
Total net sales of the Easyhaler(®) product family for treatment of asthma and
chronic obstructive pulmonary disease were up by 22% in January-June 2014 at EUR
16 (14) million. Bufomix Easyhaler(®) (budesonide-formoterol), the new combined
formulation in the product family, received the first marketing authorisations
in Europe in April, and the product has already been launched in many countries.
National marketing authorisation has been granted in Belgium, Czech Republic,
Denmark, Estonia, Finland, Hungary, Iceland, Ireland, Latvia, Lithuania, Malta,
Norway, Poland, Romania, Slovakia, Slovenia, Spain and Sweden. Processing of the
national phase of marketing authorisation application is ongoing in the
following EU countries: Bulgaria, Cyprus, Greece, Italy, Luxembourg and
Portugal. In addition, a milestone payment of EUR 6 million was recorded from
Takeda related to national marketing authorisations granted for Bufomix
Easyhaler.
Net sales of the Precedex(®) intensive care sedative (dexmedetomidine) were down
by 29% in January-June 2014 at EUR 16 (23) 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 have 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-June 2014 were up by 38% at EUR 17 (12) 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-June 2014 were up by 9% at
EUR 204 (188) million. Sales of generic entacapone products were up by 180% at
EUR 14 (5) million. Sales of products from the rest of the portfolio were up by
4%.
Finland, Scandinavia, and Eastern Europe and Russia are the most important
markets for Specialty Products. The business division's sales in Finland in
January-June 2014 were up by 6% at EUR 122 (115) million. Orion managed to
increase its sales, especially in prescription drugs. Sales were up by 25% at
EUR 25 (20) million in Scandinavia and sales were down by 6% at EUR 23 (25)
million in Eastern Europe and Russia. The decrease in sales in Eastern Europe
and Russia was mainly due to depreciation of the rouble.
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-June 2014 were down
by 7% at EUR 32 (35) million. Sales of the animal sedative product family at EUR
9 (11) million accounted for 28% (32%) 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-June 2014 excluding pharmaceutical
ingredients supplied for Orion's own use were up by 2% at EUR 35 (34) 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 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-June 2014 were up by 12% at EUR 57 (51)
million, of which the Pharmaceuticals business accounted for EUR 53 (47)
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.
Orion has commenced global collaboration with Bayer in the development and
commercialisation of an investigational novel oral androgen receptor inhibitor
(ODM-201). ODM-201 is in clinical development for the treatment of patients with
prostate cancer. Bayer and Orion jointly have started a clinical Phase III trial
for further evaluation of the efficacy and safety of ODM-201 in patients with
non-metastatic castration-resistant prostate cancer (nm-CRPC). The first
patients will be recruited during the third quarter.
Orion has an ongoing project to broaden the range of the inhalable Easyhaler(®)
drugs product family.
Orion is developing a fluticasone-salmeterol combined formulation for European
markets. In this formulation fluticasone acts as an anti-inflammatory agent and
salmeterol acts as a long-acting bronchodilator.
Orion is preparing to commence additional trials with the Bufomix Easyhaler(®)
combined formulation (budesonide-formoterol). The aim is to obtain marketing
authorisation for the product in at least some of the European countries that
were not included in the decentralised marketing authorisation application
process. In this formulation budesonide acts as an anti-inflammatory agent and
formoterol acts as a long-acting bronchodilator.
Orion is continuing development of an alpha-2c adrenoceptor antagonist (ORM-
12741) for treatment of symptoms of Alzheimer's disease in collaboration with
Janssen Pharmaceuticals Inc. 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. The company has commenced a Phase III clinical trial.
Orion's collaboration partner Recro Pharma, Inc. is developing an intranasal
formulation of dexmedetomidine for treatment of pain. Recro has commenced a
Phase IIb clinical trial with patients suffering from post-operative pain.
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-June 2014 were down by 3% at EUR 29 (30)
million. The decrease was mainly due to the ending of sales of products
discontinued in 2013.
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. In addition, during the review period Orion Diagnostica released for
sale the first reagent kit based on SIBA(®) technology, which is intended for
general laboratory use and promoting licensing and partnering discussions with
potential partners.
The operating profit of the Diagnostics business was up by 59% at EUR 2.9 (1.9)
million. The operating profit in the comparative period included EUR 1.4 million
of costs related to contraction of the product portfolio, closure of the Turku
manufacturing plant and personnel reductions.
Espoo, 29 July 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 Q2/14 Q2/13 Change % Q1-Q2/14 Q1-Q2/13 Change % 2013
-------------------------------------------------------------------------------
Net sales 276.7 248.0 +11.6% 521.7 497.4 +4.9% 1,006.9
-------------------------------------------------------------------------------
Cost of goods sold -99.5 -98.9 +0.6% -195.3 -190.6 +2.4% -393.5
-------------------------------------------------------------------------------
Gross profit 177.2 149.2 +18.8% 326.4 306.8 +6.4% 613.4
-------------------------------------------------------------------------------
Other operating
income and expenses 0.5 1.4 -67.2% 0.7 1.7 -61.8% 5.6
-------------------------------------------------------------------------------
Sales and marketing
expenses -49.2 -51.1 -3.8% -95.5 -99.7 -4.2% -204.9
-------------------------------------------------------------------------------
R&D expenses -30.6 -26.3 +16.1% -56.9 -50.9 +11.6% -101.9
-------------------------------------------------------------------------------
Administrative
expenses -11.9 -12.0 -0.6% -21.3 -22.7 -6.0% -44.5
-------------------------------------------------------------------------------
Operating profit 86.0 61.1 +40.8% 153.4 135.2 +13.4% 267.7
-------------------------------------------------------------------------------
Finance income 1.4 1.2 +22.7% 2.5 2.8 -12.9% 4.4
-------------------------------------------------------------------------------
Finance expenses -2.7 -1.8 +52.8% -5.1 -4.0 +26.3% -8.3
-------------------------------------------------------------------------------
Share of associated
companies' results 0.4 0.3 +55.6% 0.3
-------------------------------------------------------------------------------
Profit before taxes 84.7 60.5 +40.0% 151.2 134.3 +12.6% 264.0
-------------------------------------------------------------------------------
Income tax expense -16.7 -14.6 +14.1% -30.5 -32.9 -7.0% -57.8
-------------------------------------------------------------------------------
Profit for the
period 68.0 45.9 +48.3% 120.7 101.4 +18.9% 206.2
-------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME
INCLUDING TAX EFFECTS
-------------------------------------------------------------------------------
Change in value of
cash flow hedges -0.0 0.1 -0.0 0.1 0.1
-------------------------------------------------------------------------------
Change in value of
available-for-sale
financial assets 3.3 3.3
-------------------------------------------------------------------------------
Translation
differences 0.4 -1.1 0.6 -1.8 -1.3
-------------------------------------------------------------------------------
Items that may be
reclassified
subsequently to
profit and loss 3.7 -1.0 3.9 -1.7 -1.2
-------------------------------------------------------------------------------
Items due to
remeasurement of
defined benefit
plans 0.0 0.0 0.0 0.0 -9.7
-------------------------------------------------------------------------------
Items that will not
be reclassified to
profit and loss 0.0 0.0 0.0 0.0 -9.7
-------------------------------------------------------------------------------
Other comprehensive
income net of tax 3.8 -1.0 3.9 -1.7 -10.9
-------------------------------------------------------------------------------
Comprehensive
income for the
period including
tax effects 71.8 44.9 +59.9% 124.6 99.8 +24.9% 195.3
-------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE
TO:
-------------------------------------------------------------------------------
Owners of the
parent company 68.0 45.9 +48.3% 120.7 101.4 +18.9% 206.2
-------------------------------------------------------------------------------
Non-controlling
interests 0.0 0.0 0.0 0.0 0.0
-------------------------------------------------------------------------------
COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
-------------------------------------------------------------------------------
Owners of the
parent company 71.8 44.9 +59.9% 124.6 99.8 +24.9% 195.3
-------------------------------------------------------------------------------
Non-controlling
interests 0.0 0.0 0.0 0.0 0.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Basic earnings per
share, EUR (1)) 0.48 0.33 +48.7% 0.86 0.72 +19.3% 1.46
-------------------------------------------------------------------------------
Diluted earnings
per share, EUR (1)) 0.48 0.33 +48.7% 0.86 0.72 +19.3% 1.46
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Depreciation,
amortisation and
impairment 9.4 9.2 +1.9% 18.7 18.4 +1.7% 38.5
-------------------------------------------------------------------------------
Personnel expenses 59.3 56.8 +4.4% 114.0 110.9 +2.9% 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 6/14 6/13 Change % 12/13
-------------------------------------------------------------------------------
Property, plant and equipment 259.9 223.5 +16.3% 247.3
-------------------------------------------------------------------------------
Goodwill 13.5 13.5 13.5
-------------------------------------------------------------------------------
Intangible rights 51.5 57.3 -10.2% 54.0
-------------------------------------------------------------------------------
Other intangible assets 2.9 3.7 -20.3% 3.3
-------------------------------------------------------------------------------
Investments in associates 2.1 1.7 +25.0% 1.7
-------------------------------------------------------------------------------
Available-for-sale financial assets 4.6 0.5 +859.4% 0.5
-------------------------------------------------------------------------------
Pension asset 24.1 38.5 -37.5% 26.6
-------------------------------------------------------------------------------
Deferred tax assets 1.0 1.3 -22.0% 1.2
-------------------------------------------------------------------------------
Other non-current assets 0.9 1.3 -26.7% 1.2
-------------------------------------------------------------------------------
Non-current assets total 360.5 341.3 +5.7% 349.2
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Inventories 196.2 196.2 195.5
-------------------------------------------------------------------------------
Trade receivables 175.1 163.8 +6.9% 169.9
-------------------------------------------------------------------------------
Other receivables 46.3 47.9 -3.5% 49.7
-------------------------------------------------------------------------------
Money market investments 3.0 15.0 -80.0%
-------------------------------------------------------------------------------
Cash and cash equivalents 161.9 123.6 +31.0% 214.7
-------------------------------------------------------------------------------
Current assets total 582.4 546.5 +6.6% 629.8
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Assets total 943.0 887.7 +6.2% 979.0
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
EUR million 6/14 6/13 Change % 12/13
-------------------------------------------------------------------------------
Share capital 92.2 92.2 92.2
-------------------------------------------------------------------------------
Expendable fund 0.5 0.5 0.5
-------------------------------------------------------------------------------
Other reserves 5.1 1.4 +272.6% 1.6
-------------------------------------------------------------------------------
Retained earnings 366.3 333.3 +9.9% 419.6
-------------------------------------------------------------------------------
Equity attributable to owners of the parent company 464.1 427.4 +8.6% 513.9
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 +17.8% 0.0
-------------------------------------------------------------------------------
Equity total 464.1 427.4 +8.6% 513.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Deferred tax liabilities 31.1 42.5 -26.7% 32.1
-------------------------------------------------------------------------------
Pension liability 1.5 1.3 +11.0% 1.6
-------------------------------------------------------------------------------
Provisions 0.4 0.1 +260.8% 0.1
-------------------------------------------------------------------------------
Interest-bearing non-current liabilities 227.4 250.5 -9.2% 233.3
-------------------------------------------------------------------------------
Other non-current liabilities 0.3 0.6 -43.9% 0.5
-------------------------------------------------------------------------------
Non-current liabilities total 260.8 295.1 -11.6% 267.6
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Trade payables 59.9 62.7 -4.5% 60.0
-------------------------------------------------------------------------------
Current tax liabilities 4.3 0.3 1.7
-------------------------------------------------------------------------------
Other current liabilities 128.4 74.5 +72.4% 111.2
-------------------------------------------------------------------------------
Provisions 0.1 0.0 +35.1% 0.1
-------------------------------------------------------------------------------
Interest-bearing current liabilities 25.4 27.7 -8.3% 24.5
-------------------------------------------------------------------------------
Current liabilities total 218.0 165.2 +32.0% 197.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Liabilities total 478.8 460.3 +4.0% 465.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity and liabilities total 943.0 887.7 +6.2% 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 101.4 101.4
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Change in value of cash flow
hedges 0.1 0.1
-------------------------------------------------------------------------------
Translation differences 0.0 -1.8 -1.8
-------------------------------------------------------------------------------
Transactions with owners
-------------------------------------------------------------------------------
Dividend and capital
repayment -183.4 -183.4
-------------------------------------------------------------------------------
Share-based incentive
plan 1.8 1.8
-------------------------------------------------------------------------------
Other adjustments 0.4 -0.7 -0.3
-------------------------------------------------------------------------------
Equity at 30 June 2013 92.2 0.5 1.4 0.2 -4.5 337.6 0.0 427.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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 120.7 120.7
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Change in value of cash flow
hedges -0.0 -0.0
-------------------------------------------------------------------------------
Change in value of
available-for-sale
financial assets 3.3 3.3
-------------------------------------------------------------------------------
Translation differences 0.0 0.6 0.6
-------------------------------------------------------------------------------
Transactions with owners
-------------------------------------------------------------------------------
Dividend and capital
repayment -175.9 -175.9
-------------------------------------------------------------------------------
Share-based incentive
plan 1.7 1.7
-------------------------------------------------------------------------------
Other adjustments 0.2 -0.4 0.0 -0.2
-------------------------------------------------------------------------------
Equity at 30 June 2014 92.2 0.5 5.1 -9.5 -3.3 379.1 0.0 464.1
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR million Q1-Q2/14 Q1-Q2/13 2013
-------------------------------------------------------------------------------
Operating profit 153.4 135.2 267.7
-------------------------------------------------------------------------------
Adjustments 22.2 21.6 42.2
-------------------------------------------------------------------------------
Change in working capital 19.2 -44.4 -21.9
-------------------------------------------------------------------------------
Interest paid -7.0 -3.7 -6.1
-------------------------------------------------------------------------------
Interest received 2.3 2.7 3.7
-------------------------------------------------------------------------------
Dividends received 0.2 0.2 0.3
-------------------------------------------------------------------------------
Income taxes paid -29.6 -41.8 -70.8
-------------------------------------------------------------------------------
Total net cash flow from operating activities 160.7 69.9 215.2
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Investments in property, plant and equipment -28.7 -28.6 -65.9
-------------------------------------------------------------------------------
Investments in intangible assets -2.4 -4.4 -7.4
-------------------------------------------------------------------------------
Sales of property, plant and equipment and available-
for-sale investments 0.8 0.7 2.0
-------------------------------------------------------------------------------
Sales of intangible assets 0.0 -0.1 0.0
-------------------------------------------------------------------------------
Total net cash flow from investing activities -30.3 -32.3 -71.3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Current loans raised 1.9 40.7 41.6
-------------------------------------------------------------------------------
Repayments of current loans -1.6 -40.5 -42.6
-------------------------------------------------------------------------------
Non-current loans raised 148.9 149.0
-------------------------------------------------------------------------------
Repayments of non-current loans -5.8 -8.4 -28.1
-------------------------------------------------------------------------------
Treasury shares -9.6
-------------------------------------------------------------------------------
Dividends paid and other distribution of profits -175.9 -183.5 -183.7
-------------------------------------------------------------------------------
Total net cash flow from financing activities -181.5 -42.7 -73.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net change in cash and cash equivalents -51.1 -5.1 70.3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cash and cash equivalents at the beginning of the
period 214.7 145.2 145.2
-------------------------------------------------------------------------------
Foreign exchange differences 1.3 -1.5 -0.9
-------------------------------------------------------------------------------
Net change in cash and cash equivalents -51.1 -5.1 70.3
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 164.9 138.6 214.7
-------------------------------------------------------------------------------
Reconciliation of cash and cash equivalents in
statement of financial position
-------------------------------------------------------------------------------
Cash and cash equivalents in statement of financial
position at the end of the period 161.9 123.6 214.7
-------------------------------------------------------------------------------
Money market investments at the end of the period 3.0 15.0
-------------------------------------------------------------------------------
Cash and cash equivalents in the statement of cash
flows 164.9 138.6 214.7
-------------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 6/14 6/13 12/13
-------------------------------------------------------------------
Carrying amount at the beginning of the period 247.3 205.3 205.3
-------------------------------------------------------------------
Additions 26.8 31.9 70.1
-------------------------------------------------------------------
Disposals -0.7 -1.0 -1.8
-------------------------------------------------------------------
Depreciation and impairments -13.5 -12.6 -26.2
-------------------------------------------------------------------
Carrying amount at the end of the period 259.9 223.5 247.3
-------------------------------------------------------------------
CHANGES IN INTANGIBLE ASSETS (EXCLUDING GOODWILL)
EUR million 6/14 6/13 12/13
-----------------------------------------------------------------
Carrying amount at the beginning of the period 57.3 62.3 62.3
-----------------------------------------------------------------
Additions 2.4 4.5 7.5
-----------------------------------------------------------------
Disposals -0.0 -0.0 -0.2
-----------------------------------------------------------------
Amortisation and impairments -5.2 -5.8 -12.3
-----------------------------------------------------------------
Carrying amount at the end of the period 54.4 61.1 57.3
-----------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
EUR million 6/14 6/13 12/13
--------------------------------------------------------------------------
CONTINGENCIES FOR OWN LIABILITIES
--------------------------------------------------------------------------
Mortgages on land and buildings 32.0 32.0 32.0
--------------------------------------------------------------------------
Guarantees 2.6 1.7 2.4
--------------------------------------------------------------------------
OTHER LIABILITIES
--------------------------------------------------------------------------
Leasing liabilities (excluding finance lease contracts) 5.8 6.2 6.4
--------------------------------------------------------------------------
Other liabilities 0.3 0.3 0.3
--------------------------------------------------------------------------
DERIVATIVES
EUR million 6/14 6/13 12/13
--------------------------------------------------------------
CURRENCY FORWARD CONTRACTS AND CURRENCY SWAPS
--------------------------------------------------------------
Fair value, EUR million 0.4 -0.1 0.5
--------------------------------------------------------------
Nominal value, EUR million 47.0 48.3 67.8
--------------------------------------------------------------
CURRENCY OPTIONS
--------------------------------------------------------------
Fair value, EUR million 0.0 0.1 0.1
--------------------------------------------------------------
Nominal value, EUR million 54.5 56.3 47.2
--------------------------------------------------------------
INTEREST RATE SWAPS
--------------------------------------------------------------
Fair value, EUR million -0.2 -0.1 -0.2
--------------------------------------------------------------
Nominal value, EUR million 17.0 20.5 18.8
--------------------------------------------------------------
CROSS CURRENCY SWAPS
--------------------------------------------------------------
Fair value, EUR million -0.1
--------------------------------------------------------------
Nominal value, EUR million 4.8
--------------------------------------------------------------
ELECTRICITY DERIVATIVES
--------------------------------------------------------------
Fair value, EUR million -0.5 -0.7 -0.7
--------------------------------------------------------------
Nominal amount, GWh 40 83 57
--------------------------------------------------------------
DERIVATIVE CATEGORIES USING FAIR VALUE HIERARCHY
EUR million Level 1 Level 2 Level 3
------------------------------------------------------------------------------
Currency forward contracts and
currency swaps 0.4
------------------------------------------------------------------------------
Currency options 0.0
------------------------------------------------------------------------------
Interest rate swaps -0.2
------------------------------------------------------------------------------
Electricity derivatives -0.5
------------------------------------------------------------------------------
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-Q2/14 Q1-Q2/13 2013
----------------------------------------------------------
Management's employment benefits 4.6 4.6 6.4
----------------------------------------------------------
Operating segment performance
NET SALES BY BUSINESS DIVISION
EUR million Q2/14 Q2/13 Change % Q1-Q2/14 Q1-Q2/13 Change % 2013
-------------------------------------------------------------------------------
Pharmaceuticals 264.8 235.0 +12.7% 494.3 469.2 +5.4% 953.0
-------------------------------------------------------------------------------
Proprietary Products 115.4 92.7 +24.5% 203.6 193.1 +5.5% 390.4
-------------------------------------------------------------------------------
Specialty
Products 101.6 92.0 +10.4% 203.7 187.7 +8.5% 384.9
-------------------------------------------------------------------------------
Animal
Health 16.6 19.8 -15.8% 32.0 34.5 -7.2% 70.8
-------------------------------------------------------------------------------
Fermion 19.9 20.9 -4.8% 34.8 34.3 +1.5% 63.5
-------------------------------------------------------------------------------
Contract
manufacturing
and other 11.3 9.6 +18.0% 20.2 19.6 +2.8% 43.3
-------------------------------------------------------------------------------
Diagnostics 12.7 14.0 -8.8% 29.1 29.9 -2.6% 57.1
-------------------------------------------------------------------------------
Group items -0.9 -0.9 -2.7% -1.7 -1.7 +1.5% -3.2
-------------------------------------------------------------------------------
Group total 276.7 248.0 +11.6% 521.7 497.4 +4.9% 1,006.9
-------------------------------------------------------------------------------
OPERATING PROFIT BY BUSINESS AREA
EUR million Q2/14 Q2/13 Change % Q1-Q2/14 Q1-Q2/13 Change % 2013
------------------------------------------------------------------------
Pharmaceuticals 88.3 64.4 +37.0% 155.0 138.3 +12.1% 272.9
------------------------------------------------------------------------
Diagnostics 0.4 -0.4 +191.3% 2.9 1.9 +58.6% 4.6
------------------------------------------------------------------------
Group items -2.6 -2.9 +10.1% -4.5 -4.9 +8.3% -9.9
------------------------------------------------------------------------
Group total 86.0 61.1 +40.8% 153.4 135.2 +13.4% 267.7
------------------------------------------------------------------------
NET SALES BY ANNUAL QUARTERS
2014 2013 2012
+-----------+-----------------------+- |
EUR million | Q2 Q1| Q4 Q3 Q2 Q1| Q4 Q3|
----------------+-----------+-----------------------+-----------+
Pharmaceuticals|264.8 229.5|259.8 224.1 235.0 234.2|242.1 234.2|
----------------+-----------+-----------------------+-----------+
Diagnostics | 12.7 16.3| 13.7 13.5 14.0 15.9| 13.1 12.1|
----------------+-----------+-----------------------+-----------+
Group items | -0.9 -0.8| -0.8 -0.7 -0.9 -0.8| -0.8 -0.5|
----------------+-----------+-----------------------+-----------+
Group total |276.7 245.0|272.6 236.9 248.0 249.4|254.4 245.8|
----------------+-----------+-----------------------+-----------+
OPERATING PROFIT BY ANNUAL QUARTERS
2014 2013 2012
+---------+-------------------+- |
EUR million | Q2 Q1| Q4 Q3 Q2 Q1| Q4 Q3|
----------------+---------+-------------------+---------+
Pharmaceuticals|88.3 66.7|67.9 66.7 64.4 73.9|62.2 78.0|
----------------+---------+-------------------+---------+
Diagnostics | 0.4 2.6| 0.7 2.0 -0.4 2.3|-0.6 0.0|
----------------+---------+-------------------+---------+
Group items |-2.6 -1.9|-2.8 -2.2 -2.9 -2.0|-2.9 -2.3|
----------------+---------+-------------------+---------+
Group total |86.0 67.4|65.8 66.6 61.1 74.1|58.8 75.6|
----------------+---------+-------------------+---------+
GEOGRAPHICAL BREAKDOWN OF NET SALES BY ANNUAL QUARTERS
2014 2013 2012
+-----------+-----------------------+- |
EUR million | Q2 Q1| Q4 Q3 Q2 Q1| Q4 Q3|
--------------+-----------+-----------------------+-----------+
Finland | 72.0 70.4| 71.5 67.6 67.7 67.8| 67.3 63.3|
--------------+-----------+-----------------------+-----------+
Scandinavia | 34.6 33.3| 33.0 30.7 34.5 32.5| 33.3 30.3|
--------------+-----------+-----------------------+-----------+
Other Europe |104.9 79.1| 91.9 77.6 83.6 75.7| 68.1 76.5|
--------------+-----------+-----------------------+-----------+
North America| 34.0 30.7| 45.2 32.7 33.6 34.5| 54.7 27.1|
--------------+-----------+-----------------------+-----------+
Other markets| 31.2 31.5| 31.0 28.2 28.8 38.8| 31.0 48.6|
--------------+-----------+-----------------------+-----------+
Group total |276.7 245.0|272.6 236.9 248.0 249.4|254.4 245.8|
--------------+-----------+-----------------------+-----------+
Business reviews
KEY FIGURES FOR PHARMACEUTICALS BUSINESS
EUR million Q2/14 Q2/13 Change % Q1-Q2/14 Q1-Q2/13 Change % 2013
-------------------------------------------------------------------------------
Net sales 264.8 235.0 +12.7% 494.3 469.2 +5.4% 953.0
-------------------------------------------------------------------------------
Operating profit 88.3 64.4 +37.0% 155.0 138.3 +12.1% 272.9
-------------------------------------------------------------------------------
% of net sales 33.3% 27.4% 31.4% 29.5% 28.6%
-------------------------------------------------------------------------------
R&D expenses 28.8 24.2 +18.9% 53.2 46.6 +14.3% 93.9
-------------------------------------------------------------------------------
% of net sales 10.9% 10.3% 10.8% 9.9% 9.9%
-------------------------------------------------------------------------------
Capital expenditure 12.4 16.7 -25.8% 30.2 35.2 -14.3% 73.8
-------------------------------------------------------------------------------
% of net sales 4.7% 7.1% 6.1% 7.5% 7.7%
-------------------------------------------------------------------------------
Sales revenue from
proprietary products 90.1 98.2 -8.3% 182.5 206.3 -11.5% 418.5
-------------------------------------------------------------------------------
Assets 716.5 681.8 704.3
-------------------------------------------------------------------------------
Liabilities 179.2 127.8 160.1
-------------------------------------------------------------------------------
Personnel at the end of
the period 3,277 3,298 3,208
-------------------------------------------------------------------------------
TOP TEN BEST-SELLING PHARMACEUTICAL PRODUCTS
EUR million Q2/14 Q2/13 Change % Q1-Q2/14 Q1-Q2/13 Change % 2013
-------------------------------------------------------------------------------
Stalevo(®), Comtess(®)
and Comtan(®)
(Parkinson's disease) 45.5 50.5 -9.9% 92.7 110.8 -16.3% 206.8
-------------------------------------------------------------------------------
Simdax(®) (acute
decompensated heart
failure) 12.0 11.7 +2.4% 22.7 22.6 +0.6% 46.0
-------------------------------------------------------------------------------
dexdor(®) (intensive
care sedative) 8.5 6.2 +37.1% 16.5 11.9 +38.4% 25.3
-------------------------------------------------------------------------------
Easyhaler(®) product
family (asthma, COPD) 8.6 7.3 +17.0% 16.4 13.5 +21.5% 28.9
-------------------------------------------------------------------------------
Precedex(®) (intensive
care sedative) 7.4 11.0 -32.8% 16.4 23.0 -28.5% 59.1
-------------------------------------------------------------------------------
Generic entacapone
products (Parkinson's
disease) 7.5 2.6 +195.1% 14.3 5.1 +179.8% 10.2
-------------------------------------------------------------------------------
Burana(®) (inflammatory
pain) 5.5 5.4 +0.3% 11.0 11.2 -2.4% 23.2
-------------------------------------------------------------------------------
Dexdomitor(®),
Domitor(®), Domosedan(®)
and Antisedan(®) (animal
sedatives) 4.1 6.1 -32.5% 9.0 11.0 -18.3% 24.8
-------------------------------------------------------------------------------
Marevan(®)
(anticoagulant) 3.6 4.1 -11.6% 8.5 8.1 +4.3% 16.1
-------------------------------------------------------------------------------
Trexan(®) (rheumatoid
arthritis, cancer) 3.7 2.7 +38.7% 7.1 5.6 +26.3% 11.4
-------------------------------------------------------------------------------
Total 106.4 107.6 -1.1% 214.6 222.8 -3.7% 451.9
-------------------------------------------------------------------------------
Share of pharmaceutical
net sales 40% 46% 43% 47% 47%
-------------------------------------------------------------------------------
KEY FIGURES FOR DIAGNOSTICS BUSINESS
EUR million Q2/14 Q2/13 Change % Q1-Q2/14 Q1-Q2/13 Change % 2013
-------------------------------------------------------------------------------
Net sales 12.7 14.0 -8.8% 29.1 29.9 -2.6% 57.1
-------------------------------------------------------------------------------
Operating profit 0.4 -0.4 +191.3% 2.9 1.9 +58.6% 4.6
-------------------------------------------------------------------------------
% of net sales 2.9% 2.9% 10.1% 6.2% 8.1%
-------------------------------------------------------------------------------
R&D expenses 1.8 2.2 -16.3% 3.7 4.5 -18.0% 8.3
-------------------------------------------------------------------------------
% of net sales 14.5% 15.8% 12.8% 15.1% 14.5%
-------------------------------------------------------------------------------
Capital expenditure 1.0 0.5 +110.2% 1.6 1.3 +29.1% 3.3
-------------------------------------------------------------------------------
% of net sales 8.1% 3.5% 5.7% 4.3% 5.8%
-------------------------------------------------------------------------------
Assets 45.9 49.7 47.3
-------------------------------------------------------------------------------
Liabilities 9.1 16.0 16.6
-------------------------------------------------------------------------------
Personnel at the end of
the period 293 341 287
-------------------------------------------------------------------------------
Information on Orion's shares
BASIC SHARE INFORMATION 30 JUNE 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 27.1 65.1 92.2
-------------------------------------------------------------------------------
Counter book value per share, EUR 0.65 0.65
-------------------------------------------------------------------------------
Total number of shares 41,522,816 99,735,012 141,257,828
-------------------------------------------------------------------------------
% of total share stock 29% 71% 100%
-------------------------------------------------------------------------------
Number of treasury shares 569,665 569,665
-------------------------------------------------------------------------------
Total number of shares excluding
treasury shares 41,522,816 99,165,347 140,688,163
-------------------------------------------------------------------------------
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 830,456,320 99,165,347 929,621,667
-------------------------------------------------------------------------------
% of total votes 89% 11% 100%
-------------------------------------------------------------------------------
Total number of shareholders 17,838 41,859 53,666
-------------------------------------------------------------------------------
A shares and B shares confer equal rights to the Company's assets and
dividends.
INFORMATION ON TRADING ON NASDAQ OMX HELSINKI 1 JANUARY - 30 JUNE 2014
A shares B shares Total
-------------------------------------------------------------------------------
Shares traded 1,355,211 38,455,890 39,811,101
-------------------------------------------------------------------------------
% of the total number of shares 3.2% 38.7% 28.2%
-------------------------------------------------------------------------------
Trading volume, EUR million 31.8 892.7 924.5
-------------------------------------------------------------------------------
Closing quotation on 31 December 2013, EUR 20.35 20.42
-------------------------------------------------------------------------------
Lowest quotation, EUR (A and B 4 February
2014) 19.13 19.07
-------------------------------------------------------------------------------
Average quotation, EUR 23.48 23.21
-------------------------------------------------------------------------------
Highest quotation, EUR (A and B 23 June 2014) 28.10 28.30
-------------------------------------------------------------------------------
Closing quotation on 30 June 2014, EUR 27.13 27.23
-------------------------------------------------------------------------------
Market capitalisation on 30 June 2014
excluding treasury shares, EUR million 1,126.5 2,700.3 3,826.8
-------------------------------------------------------------------------------
PERFORMANCE PER SHARE
Q2/14 Q2/13 Change % Q1-Q2/14 Q1-Q2/13 Change % 2013
-------------------------------------------------------------------------------
Basic earnings per
share, EUR 0.48 0.33 +48.7% 0.86 0.72 +19.3% 1.46
-------------------------------------------------------------------------------
Diluted earnings
per share, EUR 0.48 0.33 +48.7% 0.86 0.72 +19.3% 1.46
-------------------------------------------------------------------------------
Cash flow per
share before
financial items,
EUR 0.62 0.19 +221.2% 0.93 0.27 +247.9% 1.02
-------------------------------------------------------------------------------
Equity per share,
EUR 3.30 3.03 +8.9% 3.66
-------------------------------------------------------------------------------
Average number of
shares excluding
treasury shares,
1,000 shares 140,688 141,069 140,647 141,023 141,006
-------------------------------------------------------------------------------
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/
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#1840172]
