ORION CORPORATION / INTERIM REPORT / JANUARY-SEPTEMBER 2012 / 23 October 2012 at
12:00 noon EEST
Orion's net sales for January-September 2012 totalled EUR 726 million (EUR 682
million for January-September 2011), up by 7% on the comparative period last
year.
* Operating profit was EUR 222 (223) million.
* Profit before taxes was EUR 221 (222) million.
* Equity ratio was 59% (64%).
* ROCE before taxes was 50% (53%).
* ROE after taxes was 46% (48%).
* Basic earnings per share were EUR 1.18 (1.17).
* Cash flow per share before financial items was EUR 0.92 (0.77).
* The outlook estimate for 2012 was updated after the review period. It is
currently estimated that in 2012 net sales will be slightly higher than in
2011 and operating profit will be at similar level to 2011.
ORION'S KEY FIGURES FOR THE REVIEW PERIOD
Q3/12 Q3/11 Change % Q1-Q3/12 Q1-Q3/11 Change % 2011
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Net sales, EUR million 245.8 210.7 +16.7% 726.0 681.8 +6.5% 917.9
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International
operations, EUR million 182.5 150.5 +21.2% 536.0 502.8 +6.6% 677.2
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% of net sales 74.3% 71.5% 73.8% 73.8% 73.8%
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Operating profit, EUR
million 76.3 65.4 +16.6% 221.5 223.4 -0.8% 282.9
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% of net sales 31.0% 31.1% 30.5% 32.8% 30.8%
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Profit before taxes, EUR
million 76.0 65.0 +17.0% 220.5 222.4 -0.9% 282.0
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% of net sales 30.9% 30.8% 30.4% 32.6% 30.7%
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Income tax expense, EUR
million 18.9 17.1 +10.4% 54.5 58.1 -6.2% 72.4
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R&D expenses, EUR
million 26.1 19.4 +34.7% 73.2 62.1 +17.8% 87.5
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% of net sales 10.6% 9.2% 10.1% 9.1% 9.5%
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Capital expenditure, EUR
million 12.7 19.4 -34.5% 36.0 36.7 -1.7% 49.5
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% of net sales 5.2% 9.2% 5.0% 5.4% 5.4%
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Assets total, EUR
million 791.9 706.9 +12.0% 779.1
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Equity ratio, % 59.2% 64.2% 64.2%
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Gearing, % 7.6% 2.9% -6.9%
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Interest-bearing
liabilities, EUR million 149.9 99.9 +50.0% 88.7
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Non-interest-bearing
liabilities, EUR million 173.0 153.1 +13.0% 190.5
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Cash and cash
equivalents, EUR million 114.3 87.0 +31.5% 123.0
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ROCE (before taxes), % 50.0% 53.4% 49.4%
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ROE (after taxes), % 45.7% 47.6% 43.3%
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Basic earnings per
share, EUR 0.41 0.34 +19.3% 1.18 1.17 +1.0% 1.49
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Diluted earnings per
share, EUR 0.41 0.34 +19.3% 1.18 1.17 +1.0% 1.49
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Cash flow per share
before financial items,
EUR 0.42 0.23 +84.8% 0.92 0.77 +19.4% 1.10
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Equity per share, EUR 3.33 3.22 +3.2% 3.55
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Personnel at the end of
the period 3,489 3,410 +2.3% 3,425
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Average personnel during
the period 3,500 3,300 +6.1% 3,328
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Personnel expenses, EUR
million 152.8 134.3 +13.8% 186.0
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President and CEO Timo Lappalainen's review
"Good sales growth maintained"
"As anticipated, the entry of generic competitors to Stalevo into US markets in
April reduced our deliveries to Novartis. However, this decrease was partly
offset by a compensatory payment received from them during the past quarter
related to long-term pricing of the product. We were also able to compensate for
some of this decrease in sales through deliveries of generic entacapone
products. Sales from our other product ranges remained at a good level and were
11% higher than in January-September last year. The profit developed better than
anticipated due to the increase in sales.
"Launching of the intensive care sedative Dexdor, which gained marketing
authorisation a year ago, has progressed as planned in Europe. Orion's share of
the Finnish pharmaceuticals markets continued to grow and Specialty Products
business operations have developed well in almost all markets. Fermion, Orion
Diagnostica and Contract Manufacturing sales were over 10% higher than in the
comparative period.
"Our operating expenses excluding R&D expenses were at similar level to the
previous year. Research expenditure was clearly higher than in the comparative
period, as planned. Promising results from Phase I clinical trials of an
androgen receptor antagonist development for the treatment of advanced prostate
cancer were presented in September at ESMO, Europe's largest oncology congress.
We have started clinical trials with a new COMT inhibitor for treatment of
Parkinson's disease. In addition, we have received positive phase II results
from our project to develop a new more effective levodopa product. Our other
research projects in clinical trials and early-phase research have also
progressed as planned.
"Our outlook estimate, which can be found with the basis for it on pages 6-7 of
this report, was updated in early October after the review period. We now
estimate that our full-year net sales will be slightly higher than in 2011 and
our operating profit will be at similar level to 2011."
Events during the period
On 3 July Orion upgraded its full-year outlook for 2012.
On 5 September Orion announced that the total number of Orion Corporation B
shares under the management of The Capital Group Companies, Inc. had increased
to more than one-twentieth (1/20) of the total number of Orion Corporation
shares.
Events after the period
On 9 October Orion upgraded its full-year outlook for 2012.
News conference and teleconference
A news conference and teleconference on the published results will be held
today, Tuesday 23 October 2012, at 13:30 EEST in Hotel Kämp, address:
Pohjoisesplanadi 29, Helsinki. President and CEO Timo Lappalainen will give a
brief presentation in English on the financial review.
The event can be followed live as a webcast accessible via the Orion website at
http://www.orion.fi/en/. After the presentation, questions can be asked by
telephone in Finnish and English.
The teleconference code is 914113 and to participate in the teleconference,
please call:
from United States: +1 334 323 6203
from other countries: +44 (0)20 7162 0125
News conference recordings
A recording of the webcast of the event in English and a recording of the
presentation by the President and CEO in Finnish will be available on the Orion
website later today.
Financial report material
Financial reports and related presentation material are available at
www.orion.fi/en/ promptly after publication. The website also has a form for
subscribing to Orion's releases.
Dates in Orion Calendar 2013
Financial Statements 2012 Tuesday 5 February 2013
Annual General Meeting 2013 Tuesday 19 March 2013
Interim Report January-March 2013 Tuesday 23 April 2013
Interim Report January-June 2013 Tuesday 30 July 2013
Interim Report January-September 2013 Tuesday 22 October 2013
The Annual Report 2012 will be published on the Company's website at the latest
in week 9/2013.
For additional information about the financial review:
Jari Karlson, CFO, tel. +358 10 426 2883
www.orion.fi/en
www.orion.fi/en/investors/
Financial review Q1-Q3/2012
Net sales
The Orion Group's net sales in January-September 2012 were up by 7% at EUR 726
million (EUR 682 million in January-September 2011). The net effect of currency
exchange rates was plus EUR 13 million.
The Pharmaceuticals business's net sales were up by 6% at EUR 687 (647) million.
Net sales of Orion's Stalevo(®) (carbidopa, levodopa and entacapone) and
Comtess(®)/Comtan(®) (entacapone) Parkinson's drugs were down by 5% at EUR 192
(202) million, which was 28% (31%) of the Pharmaceuticals business's net sales.
The net sales of other products in the portfolio totalled EUR 495 (444) million,
and were up by 11% on the comparative period. The products based on in-house R&D
accounted for EUR 319 (310) million, or 46% (48%) of the Pharmaceuticals
business's net sales.
The Diagnostics business's net sales were up by 12% at EUR 41 (37) million.
Operating profit
The Orion Group's operating profit was EUR 222 (223) million.
The Pharmaceuticals business's operating profit was EUR 226 (226) million. Net
sales and operating profit were enhanced by long-term compensatory payments of
EUR 10 million related to the pricing of partner deliveries. In the comparative
period net sales and operating profit were enhanced by a non-recurring payment
of EUR 7 million. Gross profit percentage was lower than in the comparative
period because products with lower margins accounted for an increasing
proportion of sales.
The Diagnostics business's operating profit was down by 27% at EUR 3.1 (4.2)
million as marketing and product development costs increased, although sales
grew well.
Operating expenses
The Group's sales and marketing expenses were EUR 148 (151) million.
R&D expenses were up by 18% at EUR 73 (62) million and accounted for 10% (9%) of
the Group's net sales. Pharmaceutical R&D expenses amounted to EUR 67 (58)
million. Research projects are reported in more detail under Pharmaceuticals in
the Business Reviews.
Administrative expenses were EUR 32 (28) million.
Other operating income and expenses increased profit by EUR 2 (3) million.
Group's profit
The Group's profit before taxes totalled EUR 221 (222) million. Basic earnings
per share were EUR 1.18 (1.17) and diluted earnings per share were EUR 1.18
(1.17). Equity per share was EUR 3.33 (3.22). The return on capital employed
before taxes (ROCE) was 50% (53%) and the return on equity after taxes (ROE)
46% (48%).
Financial position
The Group's gearing was 8% (3%) and the equity ratio 59% (64%).
The Group's total liabilities at 30 September 2012 were EUR 323 (253) million.
At the end of the period, interest-bearing liabilities amounted to EUR 150 (100)
million, including EUR 120 (77) million of long-term loans.
The Group had EUR 114 (87) 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 EUR 168 (143) million. Cash flow was
higher because the amount tied up into working capital grew by less than in the
comparative period and in addition the amount of taxes paid was lower.
Cash flow from investing activities was EUR -38 (-35) million and cash flow from
financing activities was EUR -139 (-188) million. Cash flow from financing
activities improved on the comparative period because new long-term loans were
raised.
Capital expenditure
The Group's capital expenditure totalled EUR 36 (37) million. This comprised EUR
30 (20) million on property, plant and equipment and EUR 6 (17) million on
intangible assets.
Outlook for 2012
Net sales will be slightly higher than in 2011.
Operating profit will be at similar level to 2011.
The Group's capital expenditure will be about EUR 50 million excluding
substantial corporate or product acquisitions.
Basis for outlook
Product launches will continue to support Orion's position as market leader in
Finland. However, price competition is expected to persist in 2012.
The generic competition commencing in April 2012 in the United States will
decrease sales of Orion's Parkinson's drugs in 2012. In 2011 US markets
accounted for about EUR 60 million of the net sales of Orion's Parkinson's
drugs. Elsewhere in the world generic competition is not expected to have a
material impact on sales of these products in 2012.
Marketing expenditure will be similar to the previous year. Because the
registrations and launches of new products are projects that take more than a
year, the increases in resources and other inputs required in
2012 were planned mainly during the previous year.
Research and development costs will be higher than in 2011. They are partly the
Company's internal fixed cost items, such as salaries and maintenance of the
operating infrastructure, and partly external variable costs. External costs
arise from, among other things, long-term clinical trials, which are typically
performed in clinics located in several countries. The most important clinical
trials scheduled for 2012 are either ongoing from the previous year or at an
advanced stage of planning, therefore their cost level can be estimated rather
accurately.
The estimated costs of the ongoing patent litigation in the United States are
based on the planned timetables and work estimates. The costs due to the
litigation will depend on a number of factors, which are difficult to estimate
accurately.
Near-term risks and uncertainties relating to the outlook
The Company is not aware of any significant risk factors relating to the
earnings outlook for 2012. The effects of commencement of generic competition on
Orion's Parkinson's drugs have been taken into account in the outlook estimate.
Sales of individual products and also Orion's sales in individual markets may
vary, for example depending on the extent to which the ever-tougher price and
other competition prevailing in pharmaceutical markets in recent years will
specifically affect Orion's products. Deliveries to Novartis are based on
timetables that are jointly agreed in advance. Nevertheless, they can change,
for example as a consequence of decisions by Novartis concerning adjustments of
stock levels.
Most of the exchange rate risk relates to the US dollar. Typically, only less
than 15% of Orion's net sales comes from the United States. As regards
currencies in European countries, the overall effect will be abated by the fact
that Orion has organisations of its own in most of these countries, which means
that in addition to sales income, there are also costs in these currencies.
Research projects always entail uncertainty factors that may either increase or
decrease estimated costs. The projects may progress more slowly or faster than
assumed, or they may be discontinued. Nonetheless, changes that may occur in
ongoing clinical studies are reflected in costs relatively slowly, and they are
not expected to have a material impact on earnings in the current year. Owing to
the nature of the research process, the timetables and costs of new studies that
are being started are known well in advance. They therefore typically do not
lead to unexpected changes in the estimated cost structure.
Group's financial objectives
Orion's financial objectives are ensuring the Group's financial stability and
creating 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 September 2012 Orion had a total of 141,257,828 (141,257,828) shares, of
which 44,293,218 (45,247,646) were A shares and 96,964,610 (96,010,182) B
shares. The Group's share capital was EUR 92,238,541.46 (92,238,541.46). At the
end of September 2012 Orion held 325,991 (413,754) B shares as treasury shares.
On 30 September 2012 the aggregate number of votes conferred by the A and B
shares was 982,502,979 (1,000,549,348) excluding treasury shares.
At the end of September 2012, Orion had 58,800 (56,539) registered shareholders.
Voting rights conferred by shares
Each A share entitles its holder to twenty (20) votes at General Meetings of
Shareholders and each B share one (1) vote. However, a shareholder cannot vote
more than 1/20 of the aggregate number of votes from the different share classes
represented at the General Meetings of Shareholders. In addition, Orion and
Orion Pension Fund do not have the right to vote at Orion Corporation's General
Meetings of Shareholders.
Both share classes, A and B, confer equal rights to the Company's assets and
dividends.
Conversion of shares
The Articles of Association entitle shareholders to demand the conversion of
their A shares to B shares within the limitation on the maximum number of shares
of a class. In January-September a total of 700,000 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 September 2012 the market capitalisation of the Company's shares excluding
treasury shares was EUR 2,342 million.
Orion shares are also traded on various alternative trading platforms in
addition to NASDAQ OMX Helsinki.
Authorisations of the Board of Directors
Orion's Board of Directors was authorised by the Annual General Meeting on 24
March 2010 to decide on a share issue in which shares held by the Company can be
conveyed. The authorisation to issue shares is valid for five years from the
decision taken by the Annual General Meeting.
The Board of Directors is authorised to decide on conveyance of no more than
500,000 Orion Corporation B shares held by the Company. Such shares held by the
Company can be conveyed either against or without payment. Such shares held by
the Company can be conveyed by selling them in public trading on NASDAQ OMX
Helsinki; in a share issue placement to the Company's shareholders in proportion
to their holdings at the time of the conveyance regardless of whether they own A
or B shares; or in a share issue placement deviating from shareholders' pre-
emptive rights if there is a weighty financial reason, such as the development
of the capital structure of the Company, using the shares to finance possible
corporate acquisitions or other business arrangements of the Company, financing
capital expenditure or as part of the Company's incentive plan. The share issue
placement can be without payment only if there is an especially weighty
financial reason in the view of the Company and to the benefit of all its
shareholders. The amounts paid for shares in the Company conveyed shall be
recorded in a distributable equity fund. The Board of Directors shall decide on
other matters related to the conveyance of shares held by the Company. The
authorisation was exercised as described below under the heading "Share-based
Incentive Plan". On 30 September 2012 the Board of Directors had outstanding
authorisation to convey 309,337 Orion Corporation B shares held by the Company.
The Board of Directors is not authorised to increase the share capital or to
issue bonds with warrants or convertible bonds or stock options.
Share-based Incentive Plan
In February 2010 the Board of Directors of Orion Corporation decided on a new
share-based incentive plan for the Group key persons. The Plan includes earning
periods and the Board of Directors will annually decide on the beginning and
duration of the earning periods in 2010, 2011 and 2012. The Board of Directors
will decide on the earnings criteria and on targets to be established for them
at the beginning of each earning period. The target group of the Plan consists
of approximately 30 people. The total maximum amount of rewards to be paid on
the basis of the Plan is 500,000 Orion Corporation B shares and a cash payment
corresponding to the value of the shares.
On 12 March 2012 Orion transferred altogether 87,763 Orion Corporation B shares
held by the Company as a share bonus for 2011 to the key persons employed by the
Group and belonging to the Share-based Incentive Plan of the Group. The transfer
was based on the authorisation by the Annual General Meeting on 24 March 2010.
Share ownership
At the end of September 2012 Orion had a total of 58,800 (56,539) registered
shareholders, of whom 95% (95%) were private individuals holding 50% (49%) of
the entire share stock and 65% (65%) of the total votes. There were altogether
44 (45) million nominee-registered shares, which was 31% (32%) of all shares,
and they conferred entitlement to 6% (6%) of the total votes.
At the end of September 2012 Orion held 325,991 (413,754) B shares as treasury
shares, which is 0.2% (0.3%) of the Company's total share stock and 0.03%
(0.04%) of the total votes.
Notification threshold
On 5 September 2012 Orion announced that on 3 September 2012 the total number of
Orion Corporation B shares under the management of The Capital Group Companies,
Inc. had increased to more than one-twentieth (1/20) of all Orion Corporation
shares. According to the notification, The Capital Group Companies, Inc. owns
8,313,900 Orion B shares, which is 5.89% of the shares and 0.84% of Orion's
total number of votes.
Personnel
The average number of employees in the Orion Group in January-September 2012 was
3,500 (3,300). At the end of September 2012 the Group had a total of 3,489
(3,410) employees, of whom 2,788 (2,680) worked in Finland and 701 (730) outside
Finland. The number of employees increased mainly in manufacturing due to the
increase in manufacturing output.
Salaries and other personnel expenses in January-September 2012 totalled EUR
153 (134) million.
Significant legal proceedings
Legal proceedings against the Sandoz companies
Orion announced on 1 May 2012 that it had been informed that the United States
District Court for the District of New Jersey had given its decision on the
patent infringement lawsuit that Orion Corporation and Hospira, Inc. filed on 4
September 2009 to enforce US Patents Nos. 4,910,214 and 6,716,867. The
respondents in the case are Sandoz Inc., Sandoz International GmbH and Sandoz
Canada Inc. (hereinafter collectively "Sandoz").
The court found that US Patent No. 4,910,214 is valid and enforceable. Sandoz is
permanently enjoined from the commercial manufacture, use, sale or offer for
sale in the United States or importation into the United States of its generic
dexmedetomidine product until such time as US Patent No. 4,910,214 expires,
including any applicable extensions. The Court also ordered that the effective
date of Sandoz's Abbreviated New Drug Application No. 91-465 shall not occur
until the expiration of Patent No. 4,910,214, including any applicable
extensions. Separately, the court found that US Patent No. 6,716,867 is invalid
as obvious.
Orion's licensee Hospira, Inc. sells Precedex(®) in the United States and in
markets outside Europe.
Orion and Hospira have filed an appeal against the decision to the court of
appeals, and so has Sandoz.
Legal proceedings against Caraco Pharmaceutical Laboratories, Ltd.
On 12 November 2010 Orion Corporation and Hospira, Inc. jointly filed a patent
infringement lawsuit in the United States against Caraco Pharmaceutical
Laboratories, Ltd. to enforce Orion's and Hospira's joint patent No. 6,716,867
valid in the United States. Gland Pharma Ltd. has since been added as a
defendant in the lawsuit.
Caraco had submitted an application for authorisation to produce and market in
the United States a generic version of Orion's proprietary drug Precedex(®)
(dexmedetomidine hydrochloride 100 µg/ml), which is marketed in the United
States by Orion's licensee Hospira.
Orion expects the costs of the legal proceedings against Caraco to be
substantially less than the costs of the entacapone patent litigation that had
previously been pending in the United States. Consideration of the case has been
suspended pending the conclusion of the above-mentioned appeal proceedings
against the Sandoz companies concerning Patent No. 6,716,867.
Legal proceedings against Mylan Pharmaceuticals Inc.
On 24 January 2011 and 26 April 2012 Orion Corporation filed patent infringement
lawsuits in the United States against Mylan Pharmaceuticals Inc. to enforce its
US Patents Nos. 5,446,194, 6,500,867 and 6,797,732.
Mylan intends to market in the United States a generic version of entacapone
tablets with strength 200 mg like Orion's Comtan(®) proprietary drug. Comtan is
used as an adjunct to levodopa/carbidopa therapy to treat patients with
idiopathic Parkinson's disease who experience the signs and symptoms of end-of-
dose "wearing-off." Novartis is Orion's exclusive licensee for marketing the
drug Comtan in the United States.
In addition, Mylan is seeking authorisation to produce and market generic
tablets (strengths 12.5/50/200 mg; 18.75/75/200 mg; 25/100/200 mg;
31.25/125/200 mg; 37.5/150/200 mg and 50/200/200 mg) in the United States, with
carbidopa, levodopa and entacapone as active ingredients in the same proportion
as in Orion's proprietary drug Stalevo(®) for treatment of Parkinson's disease.
Stalevo is an enhanced levodopa treatment which is marketed in the United States
by Orion's exclusive licensee, Novartis.
Business Reviews
Pharmaceuticals
Review of human pharmaceuticals market
According to statistics collected by Finnish Pharmaceutical Data Ltd, Finnish
wholesale of human pharmaceuticals in January-September 2012 totalled EUR 1,489
(1,453) million, up by 2% on the comparative period.
Finland is the most important individual market for Orion, generating about one-
quarter of the total net sales. Orion was able to increase its sales faster than
the markets as a whole, so strengthened its position as leader in marketing
pharmaceuticals in Finland. According to statistics collected by Finnish
Pharmaceutical Data Ltd, Orion's wholesale of human pharmaceuticals in Finland
in January-September amounted to EUR 162 (150) million, up by 8% compared with
the corresponding period in the previous year. Orion's market share of Finnish
pharmaceuticals markets was 11% (10%).
According to IMS Health pharmaceutical sales statistics, in the 12-month period
ending in June 2012 the total sales of Parkinson's drugs in the United States
were down by 11% at USD 679 million (USD 760 million in the previous 12-month
period). The decrease in in-market sales was due to commencement of generic
competition in certain products. The five largest European markets for
Parkinson's disease drugs were Germany, the United Kingdom, France, Spain and
Italy. In these countries, the combined sales of Parkinson's drugs in the 12-
month period ending in June 2012 totalled EUR 952 (1,014) million, and the
average market decline was 6%.
The most important individual therapy area for Orion is still the treatment of
Parkinson's disease. Orion's Parkinson's drugs account for about a quarter of
the Group's net sales. Sales of entacapone drugs in the United States remained
stable despite a clear decrease in the market as a whole. In Japan sales
continued to grow well and clearly better than the market as a whole. According
to IMS Health pharmaceutical sales statistics, in the 12-month period ending in
June 2012, sales of entacapone drugs in the United States totalled USD 182
million (USD 181 million in the previous 12-month period). Stalevo and Comtan
accounted for 92% of these sales and generic entacapone products supplied by
Orion accounted for 8%. Sales remained stable at a total of EUR 157 (158)
million in the five largest markets in Europe, and up by 21% at EUR 62 (52)
million in Japan. The market share of entacapone drugs was 27% in the United
States, on average 17% in the five largest European markets and 11% in Japan.
According to IMS Health pharmaceutical sales statistics, sales of Orion's
Precedex(®) intensive care sedative (dexmedetomidine) were up by 27% at USD 230
million in the 12-month period ending in June 2012 (USD 180 million in the
previous 12-month period). About four-fifths of the sales amounting to USD 178
(146) million were in the United States, where Precedex sales grew by 22%.
Net sales and operating profit of the Pharmaceuticals business
Net sales of the Pharmaceuticals business in January-September 2012 were EUR
687 (647) million, up by 6% on the comparative period of the previous year. The
operating profit of the Pharmaceuticals business was similar to the comparative
period at EUR 226 (226) million. The operating profit of the Pharmaceuticals
business was 33% (35%) of the segment's net sales.
Net sales of Orion's top ten pharmaceuticals in January-September 2012 were up
by 4% at EUR 353 (339) million. They accounted for 51% (52%) of the total net
sales of the Pharmaceuticals business.
Net sales of the products based on own in-house R&D were up by 3% at EUR 319
(310) million in January-September 2012. These products accounted for 46% (48%)
of the net sales of the Pharmaceuticals business.
Proprietary Products
The product portfolio of Proprietary Products consists of patented prescription
products in three therapy areas: central nervous system diseases, oncology and
critical care, and Easyhaler(®) pulmonary drugs.
Net sales of Proprietary Products in January-September 2012 were down by 2% at
EUR 300 (306) million.
Orion's drugs for treatment of Parkinson's disease are Stalevo(®) (active
ingredients carbidopa, levodopa, entacapone) and Comtess(®)/Comtan(®)
(entacapone), and their net sales in January-September 2012 totalled EUR 192
(202) million. The net sales of Parkinson's drugs were down by 5% and accounted
for 28% (31%) of the total net sales of the Pharmaceuticals business. The
decrease in sales is mainly due to commencement of generic competition in the
United States in April 2012, which decreased deliveries to Novartis. Net sales
from deliveries of Stalevo and Comtan to Novartis were down by 8% at a total of
EUR 119 (130) million. Deliveries of Stalevo to Novartis decreased by 2%, and
deliveries of Comtan by 19%. Total net sales generated by Stalevo and Comtess in
Orion's own sales organisation remained at the level of the comparative period
of the previous year at EUR 73 (72) million. Sales through Orion's own sales
organisation totalled EUR 63 (60) million for Stalevo and EUR 10 (12) million
for Comtess.
The US Food and Drug Administration (FDA) has an ongoing safety review of
Stalevo, which began in spring 2009. Orion is assisting the FDA in undertaking
the safety review. The FDA has requested additional data based on databases
concerning the significance of the results of the STRIDE-PD study, and
consequently Orion and Novartis have undertaken epidemiological studies and
results from them were submitted to authorities for review in the third quarter
of 2012.
Net sales of Simdax(®), a drug for treatment of acute decompensated heart
failure, were up by 3% and totalled EUR 32 (31) million in January-September
2012.
Net sales of the Easyhaler(®) product family for treatment of asthma and chronic
obstructive pulmonary disease were down by 12% in January-September 2012 at EUR
20 (23) million. Sales of Easyhaler products through Orion's own sales
organisation in Europe continued to grow strongly, but sales through partners
were lower than in the comparative period. Orion continues its strategy of
repatriating the rights to Easyhaler products, and this transitional phase will
reduce sales through partners in the current year.
Net sales of the Precedex(®) intensive care sedative (dexmedetomidine) were up
by 27% in January-September 2012 at EUR 28 (22) million. In the United States
and markets outside Europe the sedative is sold by Orion's partner Hospira. US
markets account for about four-fifths of net sales of Precedex.
Net sales of Orion's dexdor(®) intensive care sedative (dexmedetomidine) in
January-September 2012 were EUR 8 (0) million. Launching of the product is
progressing as planned, and it is already available in over fifteen European
countries. The product will be launched in Southern Europe and France as pricing
and reimbursement processes progress country by country.
Specialty Products
Net sales of the Specialty Products business division's off-patent, i.e.
generic, prescription drugs and self-care products in January-September 2012
were up by 13% at EUR 270 (238) million. The growth was enhanced by Orion's
generic entacapone products, sales of which commenced at the beginning of the
year and will be reported as part of the net sales of the Specialty Products
business division.
Net sales of the division in markets outside Finland were up strongly compared
with January-September 2011. The number of launches of generic prescription
drugs and self-care products was at similar level to January-September in the
previous year.
Net sales of Orion's human pharmaceuticals in Finland were up by 7% at EUR 175
(164) million in January-September 2012. Specialty Products accounted for the
majority of sales. Orion managed to increase its market share, especially in
prescription drugs.
Net sales of Orion's human pharmaceuticals in Eastern Europe in January-
September were up by 10% at EUR 44 (40) million. Specialty Products account for
the majority of sales in the region.
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-September were up by
7% at EUR 52 (49) million. Sales of the animal sedatives at EUR 16 (14) million
accounted for 32% (30%) of the division's net sales. Orion's animal sedatives
are Dexdomitor(®) (dexmedetomidine), Domitor(®) (medetomidine), Domosedan(®)
(detomidine) and Antisedan(®) (atipamezole).
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-September 2012 excluding
pharmaceutical ingredients supplied for Orion's own use were up by 16% at EUR
36 (32) million and accounted for about two-thirds of Fermion's entire net
sales. Several key products performed well, even though competition in the
markets remained intense. Capacity utilisation at Fermion's plants was very high
during the period under review. Capacity utilisation was increased by
manufacturing active ingredients required for development work on Orion's own
proprietary drugs, in addition to the normal product range.
Research and development projects
The Group's R&D expenses in January-September 2012 totalled EUR 73 (62) million,
of which the Pharmaceuticals business accounted for EUR 67 (58) million. The
Group's R&D expenses accounted for 10% (9%) of the Group's net sales. R&D
expenses also include expenses relating to development of the current portfolio.
Orion has ongoing projects to broaden the range of the inhalable Easyhaler(®)
drugs product family. Orion is developing a budesonide-formoterol formulation
that combines budesonide as an anti-inflammatory agent and formoterol as a long-
acting bronchodilator. In addition, Orion has another Easyhaler research
programme in progress to develop a fluticasone-salmeterol formulation. In this
formulation fluticasone acts as an anti-inflammatory agent and salmeterol acts
as a long-acting bronchodilator.
Orion is collaborating with Novartis to develop Stalevo(®) for the Japanese
markets. Novartis will initiate a clinical bioavailability study in November
2012.
Orion is continuing to develop an androgen receptor antagonist (ODM-201) for the
treatment of advanced prostate cancer jointly with Endo Pharmaceuticals Inc.
with the objective of approval of the drug globally. Phase I/II clinical trials
on safety, efficacy and pharmacokinetics showed that initial results concerning
efficacy were promising, and the product was well tolerated with no significant
adverse events. The results were presented at the ESMO international oncology
congress at the end of September. Development of the product is now in Phase II
clinical trials.
Orion has Phase II clinical trials with an alpha 2(c) receptor antagonist (ORM-
12741) in progress. The trials are investigating the efficacy and safety of the
drug candidate in treating Alzheimer's disease.
Orion is developing a new more effective levodopa product (ODM-101) based on
optimised new formulations and doses of known compounds. The results from Phase
II clinical trials were positive. Negotiations to find a suitable partner for
the next development phase are ongoing.
Orion has begun Phase I clinical safety trials with a new COMT inhibitor (ODM-
103). It is a new molecule that enhances the therapeutic effects of levodopa
used to treat Parkinson's disease by blocking the COMT enzyme. The pre-clinical
study results indicated that the new molecule is more effective than the COMT
inhibitor entacapone, which is already in the markets.
In addition, Orion has several projects in the early research phase
investigating prostate cancer, neuropathic pain, Parkinson's disease and
Alzheimer's disease, among others.
Diagnostics
Orion Diagnostica manufactures convenient and quick in vitro diagnostic tests
and testing systems suitable for point-of-care testing. Net sales of the
Diagnostics business in January-September 2012 were up by 12% at EUR 41 (37)
million. There was further progress in the Nordic countries and sales growth was
strong, especially in China and Japan.
Sales of QuikRead(®) infection tests remained strong during the review period.
Sales of the more user-friendly prefilled QuikRead 101 system and QuikRead
go(®), a new generation testing instrument, developed well. Launching of the FOB
(Faecal Occult Blood) quantitative test for the QuikRead 101 system began during
the review period. The new product version helps to screen gastrointestinal
disorders.
The operating profit of the Diagnostics business was down by 27% at EUR 3.1
(4.2) million and accounted for 8% (12%) of the segment's net sales. The profit
decreased because expenditure on product development and marketing increased.
Espoo, 23 October 2012
Board of Directors of Orion Corporation
Orion Corporation
Timo Lappalainen Jari Karlson
President and CEO CFO
Tables
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million Q3/12 Q3/11 Change % Q1-Q3/12 Q1-Q3/11 Change % 2011
-------------------------------------------------------------------------------
Net sales 245.8 210.7 +16.7% 726.0 681.8 +6.5% 917.9
-------------------------------------------------------------------------------
Cost of goods sold -85.2 -72.4 +17.7% -253.7 -219.8 +15.4% -305.1
-------------------------------------------------------------------------------
Gross profit 160.6 138.3 +16.2% 472.2 462.0 +2.2% 612.8
-------------------------------------------------------------------------------
Other operating income
and expenses 0.7 -0.5 +256.8% 2.1 2.5 -18.5% 3.0
-------------------------------------------------------------------------------
Sales and marketing
expenses -49.4 -44.6 +10.7% -147.5 -151.2 -2.4% -204.8
-------------------------------------------------------------------------------
R&D expenses -26.1 -19.4 +34.7% -73.2 -62.1 +17.8% -87.5
-------------------------------------------------------------------------------
Administrative expenses -9.6 -8.4 +14.1% -32.2 -27.9 +15.3% -40.6
-------------------------------------------------------------------------------
Operating profit 76.3 65.4 +16.6% 221.5 223.4 -0.8% 282.9
-------------------------------------------------------------------------------
Finance income 1.4 0.5 +158.4% 4.8 3.1 +53.6% 5.0
-------------------------------------------------------------------------------
Finance expenses -1.7 -1.0 +69.3% -5.9 -4.1 +44.6% -6.0
-------------------------------------------------------------------------------
Share of associated
companies' results 0.0 0.0 0.1 0.0 0.0
-------------------------------------------------------------------------------
Profit before taxes 76.0 65.0 +17.0% 220.5 222.4 -0.9% 282.0
-------------------------------------------------------------------------------
Income tax expense -18.9 -17.1 +10.4% -54.5 -58.1 -6.2% -72.4
-------------------------------------------------------------------------------
Profit for the period 57.1 47.8 +19.4% 166.0 164.3 +1.0% 209.5
-------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME
INCLUDING TAX EFFECTS
-------------------------------------------------------------------------------
Change in value of cash
flow hedges 0.0 -0.2 -0.3 -1.1 -1.4
-------------------------------------------------------------------------------
Change in value of
available-for-sale
financial assets 0.0 0.0 0.3 -0.2 -0.3
-------------------------------------------------------------------------------
Translation differences 0.6 0.6 1.8 -0.5 0.6
-------------------------------------------------------------------------------
Other comprehensive
income net of tax 0.6 0.4 1.9 -1.8 -1.1
-------------------------------------------------------------------------------
Comprehensive income
for the period
including tax effects 57.7 48.2 +19.6% 167.8 162.5 +3.3% 208.4
-------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE TO:
-------------------------------------------------------------------------------
Owners of the parent
company 57.1 47.8 +19.4% 166.0 164.3 +1.0% 209.5
-------------------------------------------------------------------------------
Non-controlling
interests 0.0 0.0 0.0 0.0 0.0
-------------------------------------------------------------------------------
COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
-------------------------------------------------------------------------------
Owners of the parent
company 57.7 48.2 +19.6% 167.8 162.5 +3.3% 208.4
-------------------------------------------------------------------------------
Non-controlling
interests 0.0 0.0 0.0 0.0 0.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Basic earnings per
share, EUR (1)) 0.41 0.34 +19.3% 1.18 1.17 +1.0% 1.49
-------------------------------------------------------------------------------
Diluted earnings per
share, EUR (1)) 0.41 0.34 +19.3% 1.18 1.17 +1.0% 1.49
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Depreciation,
amortisation and
impairment 10.7 9.2 +17.4% 28.6 33.1 -13.4% 42.5
-------------------------------------------------------------------------------
Personnel expenses 47.1 40.3 +16.9% 152.8 134.3 +13.8% 186.0
-------------------------------------------------------------------------------
1) The figure has been calculated from the profit attributable to the owners of
the parent company.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
EUR million 9/12 9/11 Change % 12/11
---------------------------------------------------------------
Property, plant and equipment 201.7 186.9 +7.9% 190.7
---------------------------------------------------------------
Goodwill 13.5 13.5 13.5
---------------------------------------------------------------
Intangible rights 62.4 67.8 -8.0% 66.6
---------------------------------------------------------------
Other intangible assets 4.6 4.5 +1.4% 4.8
---------------------------------------------------------------
Investments in associates 1.4 1.4 +4.8% 1.4
---------------------------------------------------------------
Available-for-sale financial assets 1.1 1.2 -7.3% 1.1
---------------------------------------------------------------
Pension asset 39.3 34.7 +13.0% 37.4
---------------------------------------------------------------
Deferred tax assets 1.9 2.6 -28.1% 1.4
---------------------------------------------------------------
Other non-current assets 1.6 1.8 -9.7% 1.8
---------------------------------------------------------------
Non-current assets total 327.4 314.4 +4.1% 318.6
---------------------------------------------------------------
---------------------------------------------------------------
Inventories 170.2 147.7 +15.2% 151.4
---------------------------------------------------------------
Trade receivables 147.6 134.4 +9.8% 155.3
---------------------------------------------------------------
Other receivables 32.3 23.4 +38.4% 30.8
---------------------------------------------------------------
Cash and cash equivalents 114.3 87.0 +31.5% 123.0
---------------------------------------------------------------
Current assets total 464.5 392.5 +18.3% 460.5
---------------------------------------------------------------
---------------------------------------------------------------
Assets total 791.9 706.9 +12.0% 779.1
---------------------------------------------------------------
EQUITY AND LIABILITIES
EUR million 9/12 9/11 Change % 12/11
-------------------------------------------------------------------------------
Share capital 92.2 92.2 92.2
-------------------------------------------------------------------------------
Expendable fund 0.5 0.5 0.5
-------------------------------------------------------------------------------
Other reserves 0.8 18.1 -95.6% 17.6
-------------------------------------------------------------------------------
Retained earnings 375.2 343.0 +9.4% 389.6
-------------------------------------------------------------------------------
Equity attributable to owners of the parent company 468.7 453.8 +3.3% 499.9
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 +9.7% 0.0
-------------------------------------------------------------------------------
Equity total 468.7 453.8 +3.3% 500.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Deferred tax liabilities 42.1 44.3 -5.0% 42.2
-------------------------------------------------------------------------------
Pension liability 0.5 0.7 -30.2% 0.5
-------------------------------------------------------------------------------
Provisions 0.1 0.3 -43.3% 0.3
-------------------------------------------------------------------------------
Interest-bearing non-current liabilities 119.7 76.8 +55.8% 66.0
-------------------------------------------------------------------------------
Other non-current liabilities 0.8 0.1 +721.7% 0.3
-------------------------------------------------------------------------------
Non-current liabilities total 163.1 122.1 +33.7% 109.3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Trade payables 51.9 43.0 +20.7% 66.3
-------------------------------------------------------------------------------
Current tax liabilities 10.2 11.3 -10.3% 6.4
-------------------------------------------------------------------------------
Other current liabilities 67.8 53.5 +26.6% 74.5
-------------------------------------------------------------------------------
Provisions 0.0 0.0 -26.3% 0.0
-------------------------------------------------------------------------------
Interest-bearing current liabilities 30.2 23.1 +30.5% 22.7
-------------------------------------------------------------------------------
Current liabilities total 160.0 131.0 +22.2% 169.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Liabilities total 323.2 253.1 +27.7% 279.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity and liabilities total 791.9 706.9 +12.0% 779.1
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
a. Share capital
b. Share premium
c. Expendable fund
d. Other reserves
e. Translation differences
f. Retained earnings
g. Non-controlling interests
h. Equity total
Equity attributable to owners of the parent
company
---------------------------------------------
EUR million a. b. c. d. e. f. g. h.
-------------------------------------------------------------------------------
Equity at 1 January
2011 92.2 17.8 8.9 1.6 -4.4 351.2 0.0 467.4
-------------------------------------------------------------------------------
Profit for the period 164.3 164.3
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Change in value of cash
flow hedges -1.1 -1.1
-------------------------------------------------------------------------------
Change in value of
available-for-sale
financial assets -0.2 -0.2
-------------------------------------------------------------------------------
Translation differences -0.5 -0.5
-------------------------------------------------------------------------------
Transactions with owners:
-------------------------------------------------------------------------------
Dividend and capital
repayment -8.5 -169.0 -177.5
-------------------------------------------------------------------------------
Share-based incentive
plan 1.5 1.5
-------------------------------------------------------------------------------
Transfer between
different components of
equity -17.8 17.8
-------------------------------------------------------------------------------
Other adjustments 0.0 -0.2 -0.2
-------------------------------------------------------------------------------
Equity at 30 September
2011 92.2 0.5 18.1 -4.9 347.8 0.0 453.8
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity at 1 January
2012 92.2 0.5 17.6 -3.8 393.4 0.0 500.0
-------------------------------------------------------------------------------
Profit for the period 166.0 166.0
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Change in value of cash
flow hedges -0.3 -0.3
-------------------------------------------------------------------------------
Change in value of
available-for-sale
financial assets 0.3 0.3
-------------------------------------------------------------------------------
Translation differences 1.8 1.8
-------------------------------------------------------------------------------
Transactions with owners:
-------------------------------------------------------------------------------
Dividend and capital
repayment -16.9 -183.2 -200.1
-------------------------------------------------------------------------------
Share-based incentive
plan 1.3 1.3
-------------------------------------------------------------------------------
Other adjustments 0.0 -0.3 -0.3
-------------------------------------------------------------------------------
Equity at 30 September
2012 92.2 0.5 0.8 -2.0 377.2 0.0 468.7
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR million Q1-Q3/12 Q1-Q3/11 2011
-------------------------------------------------------------------------------
Operating profit 221.5 223.4 282.9
-------------------------------------------------------------------------------
Adjustments 27.7 32.7 39.0
-------------------------------------------------------------------------------
Change in working capital -28.8 -52.6 -42.6
-------------------------------------------------------------------------------
Interest paid -5.6 -4.0 -6.2
-------------------------------------------------------------------------------
Interest received 4.6 3.0 5.0
-------------------------------------------------------------------------------
Dividends received 0.1 0.1
-------------------------------------------------------------------------------
Income taxes paid -51.9 -60.1 -79.3
-------------------------------------------------------------------------------
Total net cash flow from operating activities 167.6 142.7 198.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Investments in property, plant and equipment -32.7 -17.5 -25.6
-------------------------------------------------------------------------------
Investments in intangible assets -6.5 -18.0 -19.9
-------------------------------------------------------------------------------
Acquisition of an associate -0.0 -0.0
-------------------------------------------------------------------------------
Sale of a subsidiary less cash and cash equivalents
at sale date 0.3 0.3
-------------------------------------------------------------------------------
Sales of property, plant and equipment
and available-for-sale investments 0.9 0.7 1.2
-------------------------------------------------------------------------------
Sales of intangible assets 0.0 0.0
-------------------------------------------------------------------------------
Total net cash flow from investing activities -38.3 -34.5 -43.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Short-term loans raised 0.7 0.7 0.8
-------------------------------------------------------------------------------
Repayments of short-term loans -0.8 -0.9 -2.1
-------------------------------------------------------------------------------
Long-term loans raised 75.0 19.1
-------------------------------------------------------------------------------
Repayments of long-term loans -14.1 -10.5 -40.1
-------------------------------------------------------------------------------
Dividends paid and other distribution of profits -200.0 -177.4 -177.5
-------------------------------------------------------------------------------
Total net cash flow from financing activities -139.1 -188.1 -199.7
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net change in cash and cash equivalents -9.9 -79.9 -44.7
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cash and cash equivalents at the beginning of the
period 123.0 167.2 167.2
-------------------------------------------------------------------------------
Foreign exchange differences 1.3 -0.3 0.5
-------------------------------------------------------------------------------
Net change in cash and cash equivalents -9.9 -79.9 -44.7
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 114.3 87.0 123.0
-------------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 9/12 9/11 12/11
-----------------------------------------------------------------
Carrying amount at the beginning of the period 190.7 187.1 187.1
-----------------------------------------------------------------
Additions 29.7 19.6 30.3
-----------------------------------------------------------------
Disposals -0.7 -0.8 -1.4
-----------------------------------------------------------------
Depreciation and impairments -18.1 -18.9 -25.3
-----------------------------------------------------------------
Carrying amount at the end of the period 201.7 186.9 190.7
-----------------------------------------------------------------
CHANGES IN INTANGIBLE ASSETS (EXCLUDING GOODWILL)
EUR million 9/12 9/11 12/11
-----------------------------------------------------------------
Carrying amount at the beginning of the period 71.3 69.5 69.5
-----------------------------------------------------------------
Additions 6.3 17.1 19.1
-----------------------------------------------------------------
Disposals -0.0 -0.0 -0.0
-----------------------------------------------------------------
Amortisation and impairments -10.6 -14.2 -17.2
-----------------------------------------------------------------
Carrying amount at the end of the period 67.0 72.3 71.3
-----------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
EUR million 9/12 9/11 12/11
------------------------------------------------------------------------
CONTINGENCIES FOR OWN LIABILITIES
------------------------------------------------------------------------
Mortgages on land and buildings 41.0 41.0 41.0
------------------------------------------------------------------------
of which those to Orion Pension Fund 9.0 9.0 9.0
------------------------------------------------------------------------
Guarantees 1.4 1.2 1.6
------------------------------------------------------------------------
OTHER LIABILITIES
------------------------------------------------------------------------
Leasing liabilities (excluding finance lease contracts) 5.7 3.5 4.5
------------------------------------------------------------------------
Other liabilities 0.3 0.3 0.3
------------------------------------------------------------------------
DERIVATIVES
EUR million 9/12 9/11 12/11
------------------------------------------------------------------------
CURRENCY FORWARD CONTRACTS AND CURRENCY SWAPS
------------------------------------------------------------------------
Fair value, EUR million 0.6 -0.2 -0.4
------------------------------------------------------------------------
Nominal value, EUR million 51.3 21.4 40.7
------------------------------------------------------------------------
CURRENCY OPTIONS
------------------------------------------------------------------------
Fair value, EUR million 0.1 -0.2 -0.2
------------------------------------------------------------------------
Nominal value, EUR million 59.1 43.7 63.1
------------------------------------------------------------------------
CROSS CURRENCY SWAPS
------------------------------------------------------------------------
Fair value, EUR million -0.1 0.3
------------------------------------------------------------------------
Nominal value, EUR million 14.3 19.1
------------------------------------------------------------------------
INTEREST RATE SWAPS
------------------------------------------------------------------------
Fair value, EUR million -0.3
------------------------------------------------------------------------
Nominal value, EUR million 23.2
------------------------------------------------------------------------
ELECTRICITY DERIVATIVES
------------------------------------------------------------------------
Fair value, EUR million -0.5 0.4 -0.4
------------------------------------------------------------------------
Nominal value, GWh 125 156 153
------------------------------------------------------------------------
RELATED PARTY TRANSACTIONS
EUR million Q1-Q3/12 Q1-Q3/11 2011
--------------------------------------------------------
Management's employment benefits 3.9 4.3 4.8
--------------------------------------------------------
Operating segment performance
NET SALES BY BUSINESS DIVISION
EUR million Q3/12 Q3/11 Change % Q1-Q3/12 Q1-Q3/11 Change % 2011
-------------------------------------------------------------------------------
Pharmaceuticals 234.2 199.8 +17.2% 686.8 646.8 +6.2% 870.6
-------------------------------------------------------------------------------
Proprietary
Products 106.8 91.9 +16.2% 299.9 305.5 -1.9% 408.9
-------------------------------------------------------------------------------
Specialty
Products 92.7 80.5 +15.2% 269.6 238.3 +13.1% 320.8
-------------------------------------------------------------------------------
Animal Health 17.5 14.0 +24.5% 51.6 48.5 +6.5% 67.8
-------------------------------------------------------------------------------
Fermion 8.1 6.6 +22.9% 36.4 31.5 +15.5% 43.3
-------------------------------------------------------------------------------
Contract
manufacturing
and other 9.2 6.9 +33.3% 29.3 22.9 +27.8% 29.7
-------------------------------------------------------------------------------
Diagnostics 12.1 11.3 +7.3% 41.1 36.7 +12.0% 49.5
-------------------------------------------------------------------------------
Group items -0.5 -0.5 +12.2% -1.9 -1.6 +17.2% -2.2
-------------------------------------------------------------------------------
Group total 245.8 210.7 +16.7% 726.0 681.8 +6.5% 917.9
-------------------------------------------------------------------------------
OPERATING PROFIT BY BUSINESS AREA
EUR million Q3/12 Q3/11 Change % Q1-Q3/12 Q1-Q3/11 Change % 2011
----------------------------------------------------------------------
Pharmaceuticals 78.6 66.8 +17.7% 226.1 226.1 287.6
----------------------------------------------------------------------
Diagnostics 0.0 0.8 -94.1% 3.1 4.2 -26.5% 4.9
----------------------------------------------------------------------
Group items -2.3 -2.1 +9.2% -7.7 -7.0 +9.9% -9.5
----------------------------------------------------------------------
Group total 76.3 65.4 +16.6% 221.5 223.4 -0.8% 282.9
----------------------------------------------------------------------
NET SALES BY ANNUAL QUARTERS
2012 2011 2010
+-----------------+-----------------------+-----+
EUR million | Q3 Q2 Q1| Q4 Q3 Q2 Q1| Q4|
----------------+-----------------+-----------------------+-----+
Pharmaceuticals|234.2 220.1 232.5|223.8 199.8 215.9 231.0|203.7|
----------------+-----------------+-----------------------+-----+
Diagnostics | 12.1 13.4 15.5| 12.9 11.3 11.7 13.7| 11.8|
----------------+-----------------+-----------------------+-----+
Group items | -0.5 -0.7 -0.6| -0.6 -0.5 -0.6 -0.6| -0.6|
----------------+-----------------+-----------------------+-----+
Group total |245.8 232.8 247.4|236.1 210.7 227.0 244.1|214.9|
----------------+-----------------+-----------------------+-----+
OPERATING PROFIT BY ANNUAL QUARTERS
2012 2011 2010
+--------------+-------------------+----+
EUR million | Q3 Q2 Q1| Q4 Q3 Q2 Q1| Q4|
----------------+--------------+-------------------+----+
Pharmaceuticals|78.6 68.1 79.4|61.4 66.8 67.1 92.3|49.9|
----------------+--------------+-------------------+----+
Diagnostics | 0.0 0.5 2.5| 0.7 0.8 0.7 2.8| 1.0|
----------------+--------------+-------------------+----+
Group items |-2.3 -2.7 -2.7|-2.5 -2.1 -2.7 -2.1| 1.7|
----------------+--------------+-------------------+----+
Group total |76.3 66.0 79.3|59.6 65.4 65.1 92.9|52.6|
----------------+--------------+-------------------+----+
GEOGRAPHICAL BREAKDOWN OF NET SALES BY ANNUAL QUARTERS
2012 2011 2010
+-----------------+-----------------------+-----+
EUR million | Q3 Q2 Q1| Q4 Q3 Q2 Q1| Q4|
--------------+-----------------+-----------------------+-----+
Finland | 63.3 62.7 64.0| 61.7 60.1 59.8 59.1| 61.0|
--------------+-----------------+-----------------------+-----+
Scandinavia | 30.3 30.3 32.4| 28.5 28.1 30.3 33.4| 28.6|
--------------+-----------------+-----------------------+-----+
Other Europe | 76.5 79.2 78.7| 79.6 71.5 77.2 80.2| 77.4|
--------------+-----------------+-----------------------+-----+
North America| 27.1 30.4 38.4| 36.0 24.0 29.2 38.7| 22.1|
--------------+-----------------+-----------------------+-----+
Other markets| 48.6 30.2 33.9| 30.3 26.9 30.6 32.8| 25.8|
--------------+-----------------+-----------------------+-----+
Group total |245.8 232.8 247.4|236.1 210.7 227.0 244.1|214.9|
--------------+-----------------+-----------------------+-----+
Business reviews
KEY FIGURES FOR PHARMACEUTICALS BUSINESS
EUR million Q3/12 Q3/11 Change % Q1-Q3/12 Q1-Q3/11 Change % 2011
-------------------------------------------------------------------------------
Net sales 234.2 199.8 +17.2% 686.8 646.8 +6.2% 870.6
-------------------------------------------------------------------------------
Operating profit 78.6 66.8 +17.7% 226.1 226.1 287.6
-------------------------------------------------------------------------------
% of net sales 33.6% 33.4% 32.9% 35.0% 33.0%
-------------------------------------------------------------------------------
R&D expenses 24.1 17.9 +34.8% 67.3 57.5 +17.0% 81.1
-------------------------------------------------------------------------------
% of net sales 10.3% 9.0% 9.8% 8.9% 9.3%
-------------------------------------------------------------------------------
Capital expenditure 11.7 10.2 +14.9% 32.6 26.4 +23.4% 38.8
-------------------------------------------------------------------------------
% of net sales 5.0% 5.1% 4.7% 4.1% 4.5%
-------------------------------------------------------------------------------
Sales revenue from
proprietary products 114.0 92.7 +23.0% 318.7 309.7 +2.9% 421.1
-------------------------------------------------------------------------------
Assets 614.1 558.0 +10.0% 597.5
-------------------------------------------------------------------------------
Liabilities 111.6 90.1 +23.9% 132.2
-------------------------------------------------------------------------------
Personnel at the end of
the period 3,120 3,070 +1.6% 3,079
-------------------------------------------------------------------------------
TOP TEN BEST-SELLING PHARMACEUTICAL PRODUCTS
EUR million Q3/12 Q3/11 Change % Q1-Q3/12 Q1-Q3/11 Change % 2011
-------------------------------------------------------------------------------
Stalevo(®), Comtess(®)
and Comtan(®)
(Parkinson's disease) 74.1 59.8 +23.9% 192.2 202.4 -5.0% 266.7
-------------------------------------------------------------------------------
Simdax(®) (acute
decompensated heart
failure) 10.3 10.1 +2.5% 32.1 31.3 +2.6% 44.0
-------------------------------------------------------------------------------
Precedex(®) (intensive
care sedative) 7.2 8.0 -9.4% 28.4 22.4 +27.2% 33.0
-------------------------------------------------------------------------------
Easyhaler(®) product
family (asthma, COPD) 6.2 6.3 -2.5% 20.4 23.1 -11.7% 30.5
-------------------------------------------------------------------------------
Burana(®) (inflammatory
pain) 6.1 6.0 +1.7% 17.5 17.4 +0.7% 23.5
-------------------------------------------------------------------------------
Dexdomitor(®),
Domitor(®), Domosedan(®)
and Antisedan(®) (animal
sedatives) 6.4 3.3 +91.6% 16.4 14.3 +14.4% 23.2
-------------------------------------------------------------------------------
Generic entacapone
products (Parkinson's
disease) 5.9 12.8 0.3
-------------------------------------------------------------------------------
Marevan(®)
(anticoagulant) 3.9 3.6 +8.2% 12.2 11.6 +4.7% 15.6
-------------------------------------------------------------------------------
Divina(®) range
(menopausal symptoms) 3.4 3.0 +13.4% 11.5 9.8 +17.3% 13.2
-------------------------------------------------------------------------------
Fareston(®) (breast
cancer) 3.3 2.2 +49.7% 9.7 6.5 +49.1% 9.6
-------------------------------------------------------------------------------
Total 126.8 102.3 +24.0% 353.1 338.7 +4.2% 459.6
-------------------------------------------------------------------------------
Share of pharmaceutical
net sales 54% 51% 51% 52% 53%
-------------------------------------------------------------------------------
KEY FIGURES FOR DIAGNOSTICS BUSINESS
EUR million Q3/12 Q3/11 Change % Q1-Q3/12 Q1-Q3/11 Change % 2011
-------------------------------------------------------------------------------
Net sales 12.1 11.3 +7.3% 41.1 36.7 +12.0% 49.5
-------------------------------------------------------------------------------
Operating profit 0.0 0.8 -94.1% 3.1 4.2 -26.5% 4.9
-------------------------------------------------------------------------------
% of net sales 0.4% 7.1% 7.6% 11.5% 9.9%
-------------------------------------------------------------------------------
R&D expenses 2.0 1.5 +32.9% 5.9 4.6 +27.7% 6.4
-------------------------------------------------------------------------------
% of net sales 16.2% 13.1% 14.3% 12.6% 12.9%
-------------------------------------------------------------------------------
Capital expenditure 0.6 9.1 -93.1% 2.9 10.1 -70.9% 10.4
-------------------------------------------------------------------------------
% of net sales 5.2% 80.7% 7.1% 27.5% 21.1%
-------------------------------------------------------------------------------
Assets 46.7 44.4 +5.2% 44.4
-------------------------------------------------------------------------------
Liabilities 15.3 15.2 +0.5 % 17.4
-------------------------------------------------------------------------------
Personnel at the end of
the period 346 317 +9.1 % 322
-------------------------------------------------------------------------------
Information on Orion's shares
BASIC SHARE INFORMATION 30 SEPTEMBER 2012
A shares B shares Total
-------------------------------------------------------------------------------
Trading code on NASDAQ OMX Helsinki ORNAV ORNBV
-------------------------------------------------------------------------------
Listing day 1 Jul 2006 1 Jul 2006
-------------------------------------------------------------------------------
ISIN code FI0009014369 FI0009014377
-------------------------------------------------------------------------------
ICB code 4500 4500
-------------------------------------------------------------------------------
Reuters code ORNAV.HE ORNBV.HE
-------------------------------------------------------------------------------
Bloomberg code ORNAV.FH ORNBV.FH
-------------------------------------------------------------------------------
Share capital, EUR million 28.9 63.2 92.2
-------------------------------------------------------------------------------
Counter book value per share, EUR 0.65 0.65
-------------------------------------------------------------------------------
Total number of shares 44,293,218 96,964,610 141,257,828
-------------------------------------------------------------------------------
% of total share stock 31% 69% 100%
-------------------------------------------------------------------------------
Number of treasury shares 325,991 325,991
-------------------------------------------------------------------------------
Total number of shares excluding
treasury shares 44,293,218 96,638,619 140,931,837
-------------------------------------------------------------------------------
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 885,864,360 96,638,619 982,502,979
-------------------------------------------------------------------------------
% of total votes 90% 10% 100%
-------------------------------------------------------------------------------
Total number of shareholders 19,512 45,842 58,800
-------------------------------------------------------------------------------
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 SEPTEMBER 2012
A shares B shares Total
-------------------------------------------------------------------------------
Shares traded 2,620,327 66,258,606 68,878,933
-------------------------------------------------------------------------------
% of the total number of shares 5.9% 68.6% 48.8%
-------------------------------------------------------------------------------
Trading volume, EUR million 40.5 1,019.7 1,060.1
-------------------------------------------------------------------------------
Closing quotation on 31 December 2011, EUR 15.18 15.05
-------------------------------------------------------------------------------
Lowest quotation, EUR (A and B 5 June 2012) 13.31 13.31
-------------------------------------------------------------------------------
Average quotation, EUR 15.44 15.39
-------------------------------------------------------------------------------
Highest quotation, EUR (A 19 and 20 March,
B 16 March 2012) 17.00 16.82
-------------------------------------------------------------------------------
Closing quotation on 30 September 2012, EUR 16.54 16.65
-------------------------------------------------------------------------------
Market capitalisation on 30 September 2012
excluding treasury shares, EUR million 732.6 1,609.0 2,341.6
-------------------------------------------------------------------------------
PERFORMANCE PER SHARE
Q3/12 Q3/11 Change % Q1-Q3/12 Q1-Q3/11 Change % 2011
-------------------------------------------------------------------------------
Basic earnings per
share, EUR 0.41 0.34 +19.3% 1.18 1.17 +1.0% 1.49
-------------------------------------------------------------------------------
Diluted earnings
per share, EUR 0.41 0.34 +19.3% 1.18 1.17 +1.0% 1.49
-------------------------------------------------------------------------------
Cash flow per
share before
financial items,
EUR 0.42 0.23 +84.8% 0.92 0.77 +19.4% 1.10
-------------------------------------------------------------------------------
Equity per share,
EUR 3.33 3.22 +3.2% 3.55
-------------------------------------------------------------------------------
Average number of
shares excluding
treasury shares,
1,000 shares 140,932 140,844 140,909 140,821 140,827
-------------------------------------------------------------------------------
Appendices
Reporting
Orion Corporation is the parent company of the Orion Group. The Group consists
of two business areas, or operating segments, and five business divisions. Orion
reports on its operations segmentally.
* Pharmaceuticals business
* Proprietary Products (patented prescription products for three therapy
areas)
* Specialty Products (off-patent, generic prescription products and self-
care products)
* Animal Health (veterinary products for pets and production animals)
* Fermion (active pharmaceutical ingredients for Orion and other
companies)
* Diagnostics business
* Orion Diagnostica (diagnostic test systems for point-of-care in
healthcare and hygiene tests for industry).
Contract manufacturing and other, i.e. manufacturing for other companies, is
included in the Pharmaceuticals business segment, but it is not a separate
business division, it is part of the Group's Supply Chain organisation.
Accounting policies
This Interim Report has been prepared in accordance with IAS 34 Interim
Financial Reporting standard. The same accounting policies as for the Financial
Statements 2011 have been applied in preparing the Interim Report, except for
amendments to existing IFRS standards endorsed by the EU that have been adopted
as of 1 January 2012. The amendments to standards had no effects on the
Consolidated Financial Statements.
The policies and calculation methods applied during the period can be found on
the Orion website at www.orion.fi/en/investors.
Other matters
The data in this financial review are not audited.
The figures in parentheses are for the comparative period of the previous year.
All the figures in this report have been rounded, which is why the total sums of
individual figures may differ from the total sums shown.
CALCULATION OF THE KEY FIGURES
Profit before taxes + Interest
= and other finance expenses
Return on capital employed (ROCE), % ----------------------------------x 100
Total assets - Non-interest-
bearing liabilities (average
during the period)
Profit for the period
Return on equity (ROE), % =----------------------------------x 100
Total equity (average during the
period)
Equity
=----------------------------------
Equity ratio, % Total assets - Advances received x 100
Interest-bearing liabilities -
= Cash and cash equivalents
Gearing, % ----------------------------------x 100
Equity
Profit available for the owners
= of the parent company
Earnings per share, EUR ----------------------------------
Average number of shares during
the period, excluding treasury
shares
Cash flow from operating
activities + Cash flow from
Cash flow per share before financial = investing activities
items, EUR ----------------------------------
Average number of shares during
the period, excluding treasury
shares
Equity of the owners of the
= parent company
Equity per share, EUR ----------------------------------
Number of shares at the end of
the period, excluding treasury
shares
Total EUR value of shares traded
=----------------------------------
Average share price, EUR Average number of traded shares
during the period
Number of shares at the end of
Market capitalisation, EUR million = the period × Closing quotation
of the period
Publisher:
Orion Corporation
www.orion.fi/
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 2011 amounted to EUR 918 million and the Company had about
3,400 employees. Orion's A and B shares are listed on NASDAQ OMX Helsinki.
[HUG#1651110]
