ORION CORPORATION / INTERIM REPORT / JANUARY-SEPTEMBER 2014 / 21 October 2014 at
12:00 noon EEST
Orion Group Interim Report January-September 2014
Orion's net sales in January-September 2014 totalled EUR 760 million (EUR 734
million in January-September 2013).
* Operating profit was EUR 217 (202) million.
* Profit before taxes was EUR 214 (200) million.
* Equity ratio was 55% (52%).
* ROCE before taxes was 39% (39%).
* ROE after taxes was 44% (41%).
* Basic earnings per share were EUR 1.21 (1.07).
* Cash flow per share before financial items was EUR 1.34 (0.56).
* The outlook estimate for 2014 remains unchanged. Orion estimates that in
2014 net sales and operating profit will be at similar level to 2013.
ORION'S KEY FIGURES FOR THE REVIEW PERIOD
Q3/14 Q3/13 Change % Q1-Q3/14 Q1-Q3/13 Change % 2013
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Net sales, EUR million 238.3 236.9 +0.6% 760.0 734.3 +3.5% 1,006.9
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International
operations, EUR
million. 164.8 169.3 -2.6% 544.1 531.2 +2.4% 732.3
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% of net sales 69.2% 71.5% 71.6% 72.3% 72.7%
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Operating profit, EUR
million 63.8 66.6 -4.3% 217.2 201.8 +7.6% 267.7
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% of net sales 26.8% 28.1% 28.6% 27.5% 26.6%
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Profit before taxes,
EUR million 62.8 65.3 -3.7% 214.0 199.6 +7.2% 264.0
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% of net sales 26.4% 27.6% 28.2% 27.2% 26.2%
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Income tax expense,
EUR million 13.0 16.2 -19.5% 43.6 49.1 -11.2% 57.8
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R&D expenses, EUR
million 21.0 21.2 -0.8% 77.9 72.2 +8.0% 101.9
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% of net sales 8.8% 9.0% 10.3% 9.8% 10.1%
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Capital expenditure,
EUR million 13.2 21.1 -37.3% 42.8 57.8 -25.9% 77.9
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% of net sales 5.6% 8.9% 5.6% 7.9% 7.7%
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Assets total, EUR
million 963.4 926.8 +4.0% 979.0
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Equity ratio,% 55.3% 51.5% 53.6%
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Gearing,% 5.7% 20.5% 8.4%
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Interest-bearing
liabilities, EUR
million 242.9 270.8 -10.3% 257.8
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Non-interest-bearing
liabilities, EUR
million 204.9 178.5 +14.8% 207.3
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Cash and cash
equivalents and money
market investments,
EUR million 213.5 172.8 +23.5% 214.7
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ROCE (before taxes),% 38.7% 39.4% 38.5%
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ROE (after taxes),% 44.1% 40.7% 40.3%
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Basic earnings per
share, EUR 0.35 0.35 +1.8% 1.21 1.07 +13.6% 1.46
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Diluted earnings per
share, EUR 0.35 0.35 +1.8% 1.21 1.07 +13.6% 1.46
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Cash flow per share
before financial
items, EUR 0.41 0.29 +39.4% 1.34 0.56 +138.6% 1.02
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Equity per share, EUR 3.66 3.38 +8.3% 3.66
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Personnel at the end
of the period 3,474 3,530 -1.6% 3,519
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Average personnel
during the period 3,505 3,550 -1.3% 3,540
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Personnel expenses,
EUR million 161.1 156.8 +2.8% 218.1
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President and CEO Timo Lappalainen:
"Advances in pharmaceutical development projects"
"In January-September both our net sales and operating profit were slightly
higher than in 2013. Net sales and operating profit include significant
milestone payments received from collaboration partners that were higher than in
the previous year.
"In the third quarter we took strides forward in our main clinical
pharmaceutical development projects. The collaboration with Bayer on development
of the ODM-201 molecule for treatment of prostate cancer has started well, and
recruiting of patients for Phase III clinical trials has commenced. We completed
Phase I clinical trials with two COMT inhibitors (ODM-103 and ODM-104) for
treatment of Parkinson's disease, and based on the results we have decided to
continue development of the ODM-104 compound. In addition, we began Phase I
clinical safety trials with the ODM-203 molecule, which is a new targeted
FGFR+VEGFR inhibitor. Pre-clinical study results indicate that ODM-203 slows
growth of certain solid cancerous tumours.
"Deliveries of our Parkinson's drugs to Novartis and sales through our own sales
network were clearly lower than a year ago. In Europe generic competition to
Stalevo has commenced in Germany. Competition is expected to have extended
throughout Europe by the end of next year, decreasing Orion's sales. Generic
competition to the Precedex(®) intensive care sedative also commenced in the
United States during the autumn when the first generic products entered the
markets. Following the commencement of generic competition, the royalties to be
received from Hospira will further decrease.
"As a whole the product sales were however at similar level to 2013. Especially
the intensive care sedative dexdor(®) and the Easyhaler(®) product family
maintained their strong growth. The Specialty Products business division
continued to grow steadily. Net sales of generic entacapone products in
particular grew strongly, and sales of the other products in the portfolio also
grew. For the other business divisions, 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, remains unchanged. We estimate
that our net sales and operating profit in 2014 will be at similar level to
2013."
Events during the period
On 22 September Orion announced that the settlement agreement concerning the
proprietary drug Precedex(®) had been amended.
On 24 September Orion announced that it had received from The Capital Group
Companies, Inc. a disclosure under Chapter 9, Section 5 of the Securities
Markets Act according to which the total number of Orion B shares under the
management of The Capital Group Companies, Inc. decreased below five (5) per
cent of the total number of Orion Corporation shares on 22 September 2014.
Events after the period
There were no significant events after the period.
News conference and teleconference
A news conference and teleconference on the published results will be held
today, Tuesday 21 October 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 948474 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 21 October 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 2015
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-Q3/2014
Net sales
The Orion Group's net sales in January-September 2014 were up by 4% at EUR 760
million (EUR 734 million in January-September 2013). The net effect of currency
exchange rates was EUR -10 million.
The Pharmaceuticals business's net sales were up by 4% at EUR 721 (693) million.
Net sales of Orion's Stalevo(®) (carbidopa, levodopa and entacapone) and
Comtess(®)/Comtan(®) (entacapone) Parkinson's drugs were down by 17% at EUR 130
(156) million, which was 18% (22%) 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 559 (538) million.
The Diagnostics business's net sales were down by 4% at EUR 42 (43) 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 8% at EUR 217 (202) million.
The Pharmaceuticals business's operating profit was up by 7% at EUR 219 (205)
million. The increase was due to the significant milestone payments totalling
EUR 32 million received from collaboration partners and included in net sales
being clearly higher than last year. The gross profit percentage on product
sales remained similar to the previous year.
The Diagnostics business's operating profit was up by 25% at EUR 4.9 (3.9)
million. The operating profit in the comparative period included EUR 1.6 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 5% at EUR 138 (145)
million.
R&D expenses were up by 8% at EUR 78 (72) million and accounted for 10% (10%) of
the Group's net sales. Pharmaceutical R&D expenses amounted to EUR 73 (66)
million. Research projects are reported in more detail under Pharmaceuticals in
the Business Reviews.
Administrative expenses were down by 3% at EUR 31 (32) million.
Other operating income and expenses were EUR -0.3 (3) million.
Group's profit
The Group's profit before taxes totalled EUR 214 (200) million. Basic earnings
per share were EUR 1.21 (1.07) and diluted earnings per share were EUR 1.21
(1.07). Earnings per share grew more than operating profit because the Finnish
tax rate was reduced. Equity per share was EUR 3.66 (3.38). The return on
capital employed before taxes (ROCE) was 39% (39%) and the return on equity
after taxes (ROE) 44% (41%).
Financial position
The Group's gearing was 6% (21%) and the equity ratio 55% (52%).
The Group's total liabilities at 30 September 2014 were EUR 448 (449) million.
At the end of the period, interest-bearing liabilities amounted to EUR 243 (271)
million, including EUR 218 (241) million of long-term loans.
The Group had EUR 214 (173) 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 233 (131) million.
The significant improvement was mainly due to the increase in operating profit
and the decrease of EUR 32 million in the amount of cash tied up in working
capital. Working capital increased by EUR 39 million in the comparative period.
Receivables and stocks decreased during the year, and working capital also
decreased due to an 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 -45 (-52) million.
Cash flow from financing activities was EUR -192 (-51) 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 43 (58) million. This comprised EUR
39 (52) million on property, plant and equipment and EUR 4 (6) million on
intangible assets.
Outlook for 2014 (unchanged)
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 has remained intense in 2014. However, product
launches have continued 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.
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.
European markets accounted for about EUR 142 million of the net sales of Orion's
Parkinson's drugs in 2011, about EUR 141 million in 2012 and about EUR 137
million in 2013.
In the United States two competitor companies have been granted approval to
market their own generic versions of Precedex. In addition, the agreement
previously reached with Sandoz was amended in September to allow Sandoz to
launch its generic version earlier than previously agreed. The royalties from
Precedex that Orion will receive during the remainder of the year will be lower
than in January-September.
Sales of generic products have been accounting for a greater proportion of
Orion's total sales and price competition has remained 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 slightly lower than in 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
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 for the current year. 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.
Nevertheless, competition is expected to have extended throughout Europe by the
end of 2015, decreasing Orion's Stalevo sales.
The basic Precedex patent expired in the United States in January and generic
competition has commenced. The current year outlook estimate already includes
the estimated effect of lower royalties on the product received by Orion because
of this. Due to generic competition, the Precedex royalties received by Orion
will be lower during the whole of 2015.
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.
Collaboration arrangements are an important component of Orion's business model.
Possible collaboration and licensing agreements related to these arrangements
also often include significant payments recorded in net sales that may
materially affect Orion's financial results. In 2014 a total of EUR 32 million
of significant payments had been received by the end of September, which was
clearly higher than average for the significant payments received by Orion in
previous years. Payments are often subject to certain conditions relating to the
development of research projects or sales, and whether these conditions are
triggered and the timing of triggering always entail uncertainties.
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. The dividend for 2013 was EUR 1.25 per
share.
Shares and shareholders
On 30 September 2014 Orion had a total of 141,257,828 (141,257,828) shares, of
which 40,962,816 (42,172,816) were A shares and 100,295,012 (99,085,012) B
shares. The Group's share capital was EUR 92,238,541.46 (92,238,541.46). At the
end of September 2014 Orion held 569,665 (188,991) B shares as treasury shares.
On 30 September 2014 the aggregate number of votes conferred by the A and B
shares was 918,981,667 (942,352,341) excluding treasury shares.
At the end of September 2014, Orion had 52,399 (56,142) 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-September 2014 a total of
1,060,000 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 2014 the market capitalisation of the Company's shares excluding
treasury shares was EUR 4,353 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 September 2014 Orion had a total of 52,399 (56,142) registered
shareholders, of whom 95% (95%) were private individuals holding 43% (46%) of
the entire share stock and 61% (64%) of the total votes. There were altogether
55 (48) million nominee-registered shares, which was 39% (34%) of all shares,
and they conferred entitlement to 4% (7%) of the total votes.
At the end of September 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-September 2014 was
3,505 (3,550). At the end of September 2014 the Group had a total of 3,474
(3,530) employees, of whom 2,780 (2,820) worked in Finland and 694 (710) outside
Finland.
Salaries and other personnel expenses in January-September 2014 totalled EUR
161 (157) 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 with Hospira and Orion as
plaintiffs.
Orion estimates that the costs of the aforesaid legal proceedings will not be
material for the Company.
Orion has received information that a company named Par Sterile Products, LLC
has brought a suit in the US District Court for the District of New Jersey
against Hospira, Inc. and Orion Corporation. As regards Orion, the litigation
concerns Orion's and Hospira's joint patent No. 6,716,867.
Settlement agreement concerning proprietary drug Precedex(®) amended
On 22 September 2014 Orion announced that Orion together with Hospira, Inc. and
Sandoz Inc. and Sandoz Canada Inc. (hereinafter collectively "Sandoz") had
amended the settlement agreement published on 5 December 2013 concerning the
market entry of Sandoz in the United States with a generic version of Orion's
Precedex(®) product.
The settlement agreement was amended so that Sandoz could launch a generic
version of Precedex(®) in the United States immediately.
The other terms and conditions of the settlement agreement are confidential.
Business Reviews
Pharmaceuticals
Review of human pharmaceuticals market
According to IMS Health statistics, Finnish wholesale of human pharmaceuticals
in January-September 2014 was up by 4% on the previous year at EUR 1,581 (1,520)
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-September 2014 amounted to EUR 183 (172)
million, up by 6% 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 June 2014 the total sales of Parkinson's drugs in the United States
were up by 9% at USD 805 million (USD 738 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 995 (969) million in the 12-
month period ending in June 2014, and the average market growth was 3%. In Japan
sales of Parkinson's drugs were down by 11% at EUR 491 (554) million.
According to IMS Health pharmaceutical sales statistics, in the 12-month period
ending in June 2014 the total sales of Parkinson's drugs containing entacapone
were USD 130 (161) million in the United States and EUR 149 (154) 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 nearly one-fifth of the
Group's net sales. According to IMS Health pharmaceutical sales statistics, in
the 12-month period ending in June 2014, sales of Orion's branded Parkinson's
drugs in the United States were down by 60% at USD 23 (57) million. Sales were
down by 3% at EUR 129 (132) million in the five largest markets in Europe, and
in Japan sales were EUR 53 (63) 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 17% at USD 397 million in
the 12-month period ending in June 2014 (USD 340 million in the previous 12-
month period). About four-fifths of the sales amounting to USD 332 (279) million
were in the United States, where Precedex sales grew by 19%. 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 June 2014 were EUR 485 (474) million. According to IMS Health
pharmaceutical sales statistics, in the 12-month period ending in June 2014
sales of Orion's dexdor(®) intensive care sedative (dexmedetomidine) were up by
34% at EUR 24 (18) million in Europe.
Net sales and operating profit of the Pharmaceuticals business
Net sales of the Pharmaceuticals business in January-September 2014 were EUR
721 (693) million, up by 4% compared with the previous year. The operating
profit of the Pharmaceuticals business was up by 7% at EUR 219 (205) million.
The operating profit of the Pharmaceuticals business was 30% (30%) of the
segment's net sales. Net sales and operating profit include significant
Proprietary Products related milestone payments received from collaboration
partners totalling EUR 32 million that were clearly higher than in the previous
year.
Net sales of Orion's top ten pharmaceuticals in January-September 2014 were down
by 6% at EUR 314 (333) million. They accounted for 44% (48%) 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-September 2014 were EUR 285 (285)
million.
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-September 2014 totalled EUR 130
(156) million. Sales of Parkinson's drugs were down by 17% and accounted for
18% (22%) of the total net sales of the Pharmaceuticals business. Deliveries of
Stalevo to Novartis were down by 9% at EUR 55 (60) million and deliveries of
Comtan were down by 29% at EUR 19 (27) million. Sales of Stalevo through Orion's
own sales network were down by 19% at EUR 51 (62) million. Sales of Comtess were
down by 19% at EUR 5 (6) 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. During the review period Orion recorded a milestone payment of EUR 3
million from Novartis relating to marketing authorisation for Stalevo in Japan.
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-September 2014 were up by 5% at EUR 35 (33) million.
Total net sales of the Easyhaler(®) product family for treatment of asthma and
chronic obstructive pulmonary disease were up by 18% in January-September 2014
at EUR 25 (21) million. The increase was mainly due to good development of sales
of monoproducts that have been on the markets for a long time. Bufomix
Easyhaler(®) (budesonide-formoterol), the new combined formulation in the
product family, has received national marketing authorisations in 21 European
countries. Processing of the national phase of marketing authorisation
application is still ongoing in Cyprus, Greece and Italy. Sales of Bufomix
Easyhaler have commenced, but because it is not within generic substitution in
pharmacies, growth is slower than for ordinary generic products, especially in
the launch phase. Orion and Takeda have terminated the collaboration agreement
relating to co-promoting of Easyhaler combined formulations in Europe.
Collaboration regarding the Middle East and North Africa remains unchanged, and
the agreement has been extended to cover certain other African countries too.
Net sales of the Precedex(®) intensive care sedative (dexmedetomidine) were down
by 39% in January-September 2014 at EUR 25 (41) 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 royalties received by Orion from Hospira have decreased. About
four-fifths of net sales of Precedex have come from US markets, where the first
generic competitors entered the markets during the review period.
Net sales of Orion's dexdor(®) intensive care sedative (dexmedetomidine) in
January-September 2014 were up by 37% at EUR 25 (18) 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-September 2014 were up by
11% at EUR 310 (279) million. Sales of generic entacapone products were up by
187% at EUR 20 (7) million. Sales of products from the rest of the portfolio
were up by 7%.
Finland, Scandinavia, and Eastern Europe and Russia are the most important
markets for Specialty Products. The business division's sales in Finland in
January-September 2014 were up by 8% at EUR 186 (173) million. Orion managed to
increase its sales, especially in prescription drugs. Sales were up by 20% at
EUR 37 (31) million in Scandinavia and sales were up by 3% at EUR 39 (38)
million in Eastern Europe and Russia. Sales growth in Eastern Europe and Russia
was reduced by 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 other 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 2014 were
down by 5% at EUR 50 (53) million. Sales of the animal sedative product family
at EUR 16 (18) million accounted for 32% (34%) 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-September 2014 excluding
pharmaceutical ingredients supplied for Orion's own use were EUR 46 (46) 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.
Research and development projects
The Group's R&D expenses in January-September 2014 were up by 8% at EUR 78 (72)
million, of which the Pharmaceuticals business accounted for EUR 73 (66)
million. The Group's R&D expenses accounted for 10% (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 Phase III clinical trial
for further evaluation of the efficacy and safety of ODM-201 in patients with
non-metastatic castration-resistant prostate cancer (nm-CRPC).
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 completed Phase I clinical safety trials with new COMT inhibitors
(ODM-103 and ODM-104). Based on the results obtained, Orion has decided to
select ODM-104 for further development and is preparing to commence Phase II
clinical trials with the molecule. ODM-104 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 and pharmacokinetic study results indicated
that it is more effective than the COMT inhibitor entacapone, which is already
in the markets.
Orion has commenced Phase I clinical safety trials with a new targeted
FGFR+VEGFR inhibitor (ODM-203) for treatment of cancers. Pre-clinical study
results indicate that ODM-203 slows growth of certain solid cancerous tumours.
Orion's partner Tenax Therapeutics, Inc. (formerly Oxygen Biotherapeutics, Inc.)
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 announced that
it will terminate the current and commence a new 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-September 2014 were down by 4% at EUR 42 (43)
million. The decrease was mainly due to the ending of sales of products
discontinued in 2013.
QuikRead(®) infection tests remained the main product, with increased sales.
Launching of new QuikRead go(®) tests that entered markets during 2013
progressed as planned. With the QuikRead go(®) hsCRP+Hb test, two results - for
CRP and haemoglobin - can be obtained from a single sample. The QuikRead go(®)
iFOBT (Faecal Occult Blood) quantitative test is helpful in screening
gastrointestinal disorders.
The operating profit of the Diagnostics business was up by 25% at EUR 4.9 (3.9)
million. The operating profit in the comparative period included EUR 1.6 million
of costs related to contraction of the product portfolio, closure of the Turku
manufacturing plant and personnel reductions.
Espoo, 21 October 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 Q3/14 Q3/13 Change % Q1-Q3/14 Q1-Q3/13 Change % 2013
-------------------------------------------------------------------------------
Net sales 238.3 236.9 +0.6% 760.0 734.3 +3.5% 1,006.9
-------------------------------------------------------------------------------
Cost of goods sold -100.2 -96.3 +4.1% -295.5 -286.9 +3.0% -393.5
-------------------------------------------------------------------------------
Gross profit 138.1 140.6 -1.8% 464.5 447.4 +3.8% 613.4
-------------------------------------------------------------------------------
Other operating
income and expenses -1.0 1.7 -158.6% -0.3 3.4 -109.4% 5.6
-------------------------------------------------------------------------------
Sales and marketing
expenses -42.5 -45.1 -5.8% -137.9 -144.7 -4.7% -204.9
-------------------------------------------------------------------------------
R&D expenses -21.0 -21.2 -0.8% -77.9 -72.2 +8.0% -101.9
-------------------------------------------------------------------------------
Administrative
expenses -9.9 -9.4 +4.8% -31.2 -32.1 -2.8% -44.5
-------------------------------------------------------------------------------
Operating profit 63.8 66.6 -4.3% 217.2 201.8 +7.6% 267.7
-------------------------------------------------------------------------------
Finance income 1.6 0.6 +198.8% 4.1 3.4 +21.7% 4.4
-------------------------------------------------------------------------------
Finance expenses -2.6 -1.9 +36.6% -7.7 -5.9 +29.5% -8.3
-------------------------------------------------------------------------------
Share of associated
companies' results 0.4 0.3 +55.6% 0.3
-------------------------------------------------------------------------------
Profit before taxes 62.8 65.3 -3.7% 214.0 199.6 +7.2% 264.0
-------------------------------------------------------------------------------
Income tax expense -13.0 -16.2 -19.5% -43.6 -49.1 -11.2% -57.8
-------------------------------------------------------------------------------
Profit for the
period 49.8 49.1 +1.5% 170.4 150.5 +13.2% 206.2
-------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME
INCLUDING TAX EFFECTS
-------------------------------------------------------------------------------
Change in value of
cash flow hedges 0.0 0.0 -0.0 0.1 0.1
-------------------------------------------------------------------------------
Change in value of
available-for-sale
financial assets 0.3 3.7
-------------------------------------------------------------------------------
Translation
differences 0.9 0.8 1.5 -1.0 -1.3
-------------------------------------------------------------------------------
Items that may be
reclassified
subsequently to
profit and loss 1.3 0.8 5.2 -0.9 -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 1.3 0.8 5.2 -0.9 -10.9
-------------------------------------------------------------------------------
Comprehensive
income for the
period including
tax effects 51.1 49.9 +2.4% 175.7 149.6 +17.4% 195.3
-------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE
TO:
-------------------------------------------------------------------------------
Owners of the
parent company 49.8 49.1 +1.5% 170.5 150.5 +13.3% 206.2
-------------------------------------------------------------------------------
Non-controlling
interests -0.0 0.0 -0.0 0.0 0.0
-------------------------------------------------------------------------------
COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
-------------------------------------------------------------------------------
Owners of the
parent company 51.1 49.9 +2.4% 175.7 149.6 +17.4% 195.3
-------------------------------------------------------------------------------
Non-controlling
interests -0.0 0.0 -0.0 0.0 0.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Basic earnings per
share, EUR (1)) 0.35 0.35 +1.8% 1.21 1.07 +13.6% 1.46
-------------------------------------------------------------------------------
Diluted earnings
per share, EUR (1)) 0.35 0.35 +1.8% 1.21 1.07 +13.6% 1.46
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Depreciation,
amortisation and
impairment 10.2 9.2 +11.3% 28.9 27.6 +4.9% 38.5
-------------------------------------------------------------------------------
Personnel expenses 47.1 45.9 +2.5% 161.1 156.8 +2.8% 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 9/14 9/13 Change % 12/13
-------------------------------------------------------------------------------
Property, plant and equipment 264.2 236.3 +11.8% 247.3
-------------------------------------------------------------------------------
Goodwill 13.5 13.5 13.5
-------------------------------------------------------------------------------
Intangible rights 50.1 56.1 -10.6% 54.0
-------------------------------------------------------------------------------
Other intangible assets 2.8 3.4 -18.9% 3.3
-------------------------------------------------------------------------------
Investments in associates 2.1 1.7 +25.0% 1.7
-------------------------------------------------------------------------------
Available-for-sale financial assets 5.1 0.5 +946.3% 0.5
-------------------------------------------------------------------------------
Pension asset 23.0 38.6 -40.4% 26.6
-------------------------------------------------------------------------------
Deferred tax assets 1.2 1.3 -11.5% 1.2
-------------------------------------------------------------------------------
Other non-current assets 0.8 1.3 -40.9% 1.2
-------------------------------------------------------------------------------
Non-current assets total 362.7 352.7 +2.8% 349.2
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Inventories 185.2 199.6 -7.2% 195.5
-------------------------------------------------------------------------------
Trade receivables 164.1 157.9 +3.9% 169.9
-------------------------------------------------------------------------------
Other receivables 37.9 43.7 -13.4% 49.7
-------------------------------------------------------------------------------
Money market investments 35.0 15.0 +133.3%
-------------------------------------------------------------------------------
Cash and cash equivalents 178.6 157.8 +13.1% 214.7
-------------------------------------------------------------------------------
Current assets total 600.7 574.1 +4.6% 629.8
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Assets total 963.4 926.8 +4.0% 979.0
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
EUR million 9/14 9/13 Change % 12/13
-------------------------------------------------------------------------------
Share capital 92.2 92.2 92.2
-------------------------------------------------------------------------------
Expendable fund 0.5 0.5 0.5
-------------------------------------------------------------------------------
Other reserves 5.4 1.6 +243.0% 1.6
-------------------------------------------------------------------------------
Retained earnings 417.4 383.1 +9.0% 419.6
-------------------------------------------------------------------------------
Equity attributable to owners of the parent company 515.5 477.4 +8.0% 513.9
-------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 -35.8% 0.0
-------------------------------------------------------------------------------
Equity total 515.6 477.4 +8.0% 513.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Deferred tax liabilities 31.7 41.3 -23.3% 32.1
-------------------------------------------------------------------------------
Pension liability 1.4 1.3 +8.7% 1.6
-------------------------------------------------------------------------------
Provisions 0.4 0.1 +348.6% 0.1
-------------------------------------------------------------------------------
Interest-bearing non-current liabilities 217.5 240.8 -9.7% 233.3
-------------------------------------------------------------------------------
Other non-current liabilities 0.3 0.5 -43.2% 0.5
-------------------------------------------------------------------------------
Non-current liabilities total 251.3 284.0 -11.5% 267.6
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Trade payables 51.2 62.1 -17.5% 60.0
-------------------------------------------------------------------------------
Current tax liabilities 2.7 0.2 1.7
-------------------------------------------------------------------------------
Other current liabilities 117.2 72.9 +60.7% 111.2
-------------------------------------------------------------------------------
Provisions 0.0 0.1 -85.6% 0.1
-------------------------------------------------------------------------------
Interest-bearing current liabilities 25.4 30.1 -15.5% 24.5
-------------------------------------------------------------------------------
Current liabilities total 196.5 165.3 +18.8% 197.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Liabilities total 447.8 449.3 -0.3% 465.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity and liabilities total 963.4 926.8 +4.0% 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 150.5 150.5
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Change in value of cash flow
hedges 0.1 0.1
-------------------------------------------------------------------------------
Translation differences 0.0 -1.0 -1.0
-------------------------------------------------------------------------------
Transactions with owners
-------------------------------------------------------------------------------
Dividend and capital
repayment -183.4 -183.4
-------------------------------------------------------------------------------
Share-based incentive
plan 2.0 2.0
-------------------------------------------------------------------------------
Other adjustments 0.6 -0.9 0.0 -0.3
-------------------------------------------------------------------------------
Equity at 30 September
2013 92.2 0.5 1.6 0.2 -3.7 386.6 0.0 477.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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 170.5 170.5
-------------------------------------------------------------------------------
Other comprehensive
income:
-------------------------------------------------------------------------------
Change in value of cash flow
hedges -0.0 -0.0
-------------------------------------------------------------------------------
Change in value of
available-for-sale
financial assets 3.7 3.7
-------------------------------------------------------------------------------
Translation differences -0.0 1.5 1.5
-------------------------------------------------------------------------------
Transactions with owners
-------------------------------------------------------------------------------
Dividend and capital
repayment -175.9 -175.9
-------------------------------------------------------------------------------
Share-based incentive
plan 2.1 2.1
-------------------------------------------------------------------------------
Other adjustments 0.2 -0.4 -0.0 -0.3
-------------------------------------------------------------------------------
Equity at 30 September
2014 92.2 0.5 5.4 -9.5 -2.4 429.3 0.0 515.6
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR million Q1-Q3/14 Q1-Q3/13 2013
-------------------------------------------------------------------------------
Operating profit 217.2 201.8 267.7
-------------------------------------------------------------------------------
Adjustments 33.5 29.6 42.2
-------------------------------------------------------------------------------
Change in working capital 31.5 -39.4 -21.9
-------------------------------------------------------------------------------
Interest paid -8.6 -4.9 -6.1
-------------------------------------------------------------------------------
Interest received 3.6 2.7 3.7
-------------------------------------------------------------------------------
Dividends received 0.2 0.3 0.3
-------------------------------------------------------------------------------
Income taxes paid -44.2 -58.8 -70.8
-------------------------------------------------------------------------------
Total net cash flow from operating activities 233.1 131.4 215.2
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Investments in property, plant and equipment -42.4 -47.8 -65.9
-------------------------------------------------------------------------------
Investments in intangible assets -3.7 -6.1 -7.4
-------------------------------------------------------------------------------
Sales of property, plant and equipment and available-
for-sale investments 1.1 1.6 2.0
-------------------------------------------------------------------------------
Sales of intangible assets 0.0 -0.1 0.0
-------------------------------------------------------------------------------
Total net cash flow from investing activities -45.1 -52.4 -71.3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Current loans raised 1.9 40.8 41.6
-------------------------------------------------------------------------------
Repayments of current loans -2.0 -40.8 -42.6
-------------------------------------------------------------------------------
Non-current loans raised 148.9 149.0
-------------------------------------------------------------------------------
Repayments of non-current loans -15.6 -15.9 -28.1
-------------------------------------------------------------------------------
Treasury shares -9.6
-------------------------------------------------------------------------------
Dividends paid and other distribution of profits -176.0 -183.7 -183.7
-------------------------------------------------------------------------------
Total net cash flow from financing activities -191.6 -50.7 -73.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net change in cash and cash equivalents -3.6 28.3 70.3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cash and cash equivalents at the beginning of the
period 214.7 145.2 145.2
-------------------------------------------------------------------------------
Foreign exchange differences 2.4 -0.7 -0.9
-------------------------------------------------------------------------------
Net change in cash and cash equivalents -3.6 28.3 70.3
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 213.5 172.8 214.7
-------------------------------------------------------------------------------
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 178.6 157.8 214.7
-------------------------------------------------------------------------------
Money market investments at the end of the period 35.0 15.0
-------------------------------------------------------------------------------
Cash and cash equivalents in the statement of cash
flows 213.5 172.8 214.7
-------------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 9/14 9/13 12/13
-------------------------------------------------------------------
Carrying amount at the beginning of the period 247.3 205.3 205.3
-------------------------------------------------------------------
Additions 38.9 51.5 70.1
-------------------------------------------------------------------
Disposals -0.9 -1.4 -1.8
-------------------------------------------------------------------
Depreciation and impairments -21.1 -19.0 -26.2
-------------------------------------------------------------------
Carrying amount at the end of the period 264.2 236.3 247.3
-------------------------------------------------------------------
CHANGES IN INTANGIBLE ASSETS (EXCLUDING GOODWILL)
EUR million 9/14 9/13 12/13
-----------------------------------------------------------------
Carrying amount at the beginning of the period 57.3 62.3 62.3
-----------------------------------------------------------------
Additions 3.5 6.0 7.5
-----------------------------------------------------------------
Disposals -0.0 -0.3 -0.2
-----------------------------------------------------------------
Amortisation and impairments -7.9 -8.6 -12.3
-----------------------------------------------------------------
Carrying amount at the end of the period 52.9 59.5 57.3
-----------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
EUR million 9/14 9/13 12/13
--------------------------------------------------------------------------
CONTINGENCIES FOR OWN LIABILITIES
--------------------------------------------------------------------------
Mortgages on land and buildings 32.0 32.0 32.0
--------------------------------------------------------------------------
Guarantees 2.7 1.9 2.4
--------------------------------------------------------------------------
OTHER LIABILITIES
--------------------------------------------------------------------------
Leasing liabilities (excluding finance lease contracts) 5.9 6.2 6.4
--------------------------------------------------------------------------
Other liabilities 0.3 0.3 0.3
--------------------------------------------------------------------------
DERIVATIVES
EUR million 9/14 9/13 12/13
--------------------------------------------------------------
CURRENCY FORWARD CONTRACTS AND CURRENCY SWAPS
--------------------------------------------------------------
Fair value, EUR million 0.1 0.6 0.5
--------------------------------------------------------------
Nominal value, EUR million 55.5 53.2 67.8
--------------------------------------------------------------
CURRENCY OPTIONS
--------------------------------------------------------------
Fair value, EUR million -0.3 0.1 0.1
--------------------------------------------------------------
Nominal value, EUR million 47.6 41.7 47.2
--------------------------------------------------------------
INTEREST RATE SWAPS
--------------------------------------------------------------
Fair value, EUR million -0.2 -0.2 -0.2
--------------------------------------------------------------
Nominal value, EUR million 16.1 19.6 18.8
--------------------------------------------------------------
CROSS CURRENCY SWAPS
--------------------------------------------------------------
Fair value, EUR million 0.0
--------------------------------------------------------------
Nominal value, EUR million 4.8
--------------------------------------------------------------
ELECTRICITY DERIVATIVES
--------------------------------------------------------------
Fair value, EUR million -0.3 -0.4 -0.7
--------------------------------------------------------------
Nominal amount, GWh 31 70 57
--------------------------------------------------------------
DERIVATIVE CATEGORIES USING FAIR VALUE HIERARCHY
EUR million Level 1 Level 2 Level 3
------------------------------------------------------------------------------
Currency forward contracts and
currency swaps 0.1
------------------------------------------------------------------------------
Currency options -0.3
------------------------------------------------------------------------------
Interest rate swaps -0.2
------------------------------------------------------------------------------
Electricity derivatives -0.3
------------------------------------------------------------------------------
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-Q3/14 Q1-Q3/13 2013
----------------------------------------------------------
Management's employment benefits 5.1 5.4 6.4
----------------------------------------------------------
Operating segment performance
NET SALES BY BUSINESS DIVISION
Q1-
EUR million Q3/14 Q3/13 Change % Q1-Q3/14 Q3/13 Change % 2013
-------------------------------------------------------------------------------
Pharmaceuticals 226.2 224.1 +0.9% 720.5 693.3 +3.9% 953.0
-------------------------------------------------------------------------------
Proprietary
Products 81.3 91.9 -11.5% 284.9 285.0 390.4
-------------------------------------------------------------------------------
Specialty
Products 106.6 91.3 +16.8% 310.3 279.0 +11.2% 384.9
-------------------------------------------------------------------------------
Animal Health 18.0 18.0 50.1 52.6 -4.7% 70.8
-------------------------------------------------------------------------------
Fermion 11.2 11.9 -6.2% 45.9 46.2 -0.5% 63.5
-------------------------------------------------------------------------------
Contract
manufacturing and other 9.0 11.0 -17.6% 29.2 30.6 -4.6% 43.3
-------------------------------------------------------------------------------
Diagnostics 12.8 13.5 -5.4% 41.9 43.4 -3.5% 57.1
-------------------------------------------------------------------------------
Group items -0.6 -0.7 -3.9% -2.3 -2.3 -3.2
-------------------------------------------------------------------------------
Group total 238.3 236.9 +0.6% 760.0 734.3 +3.5% 1,006.9
-------------------------------------------------------------------------------
OPERATING PROFIT BY BUSINESS AREA
EUR million Q3/14 Q3/13 Change % Q1-Q3/14 Q1-Q3/13 Change % 2013
------------------------------------------------------------------------
Pharmaceuticals 63.8 66.7 -4.4% 218.8 205.0 +6.7% 272.9
------------------------------------------------------------------------
Diagnostics 1.7 2.0 -16.2% 4.9 3.9 +25.4% 4.6
------------------------------------------------------------------------
Group items -1.8 -2.2 +18.2% -6.5 -7.1 +7.9% -9.9
------------------------------------------------------------------------
Group total 63.8 66.6 -4.3% 217.2 201.8 +7.6% 267.7
------------------------------------------------------------------------
NET SALES BY ANNUAL QUARTERS
2014 2013 2012
+-----------------+-----------------------+-----+
EUR million | Q3 Q2 Q1| Q4 Q3 Q2 Q1| Q4|
----------------+-----------------+-----------------------+-----+
Pharmaceuticals|226.2 264.8 229.5|259.8 224.1 235.0 234.2|242.1|
----------------+-----------------+-----------------------+-----+
Diagnostics | 12.8 12.7 16.3| 13.7 13.5 14.0 15.9| 13.1|
----------------+-----------------+-----------------------+-----+
Group items | -0.6 -0.9 -0.8| -0.8 -0.7 -0.9 -0.8| -0.8|
----------------+-----------------+-----------------------+-----+
Group total |238.3 276.7 245.0|272.6 236.9 248.0 249.4|254.4|
----------------+-----------------+-----------------------+-----+
OPERATING PROFIT BY ANNUAL QUARTERS
2014 2013 2012
+--------------+-------------------+----+
EUR million | Q3 Q2 Q1| Q4 Q3 Q2 Q1| Q4|
----------------+--------------+-------------------+----+
Pharmaceuticals|63.8 88.3 66.7|67.9 66.7 64.4 73.9|62.2|
----------------+--------------+-------------------+----+
Diagnostics | 1.7 0.6 2.6| 0.7 2.0 -0.4 2.3|-0.6|
----------------+--------------+-------------------+----+
Group items |-1.8 -2.9 -1.9|-2.8 -2.2 -2.9 -2.0|-2.9|
----------------+--------------+-------------------+----+
Group total |63.8 86.0 67.4|65.8 66.6 61.1 74.1|58.8|
----------------+--------------+-------------------+----+
GEOGRAPHICAL BREAKDOWN OF NET SALES BY ANNUAL QUARTERS
2014 2013 2012
+-----------------+-----------------------+-----+
EUR million | Q3 Q2 Q1| Q4 Q3 Q2 Q1| Q4|
--------------+-----------------+-----------------------+-----+
Finland | 73.5 72.0 70.4| 71.5 67.6 67.7 67.8| 67.3|
--------------+-----------------+-----------------------+-----+
Scandinavia | 31.7 34.6 33.3| 33.0 30.7 34.5 32.5| 33.3|
--------------+-----------------+-----------------------+-----+
Other Europe | 81.3 104.9 79.1| 91.9 77.6 83.6 75.7| 68.1|
--------------+-----------------+-----------------------+-----+
North America| 15.2 34.0 30.7| 45.2 32.7 33.6 34.5| 54.7|
--------------+-----------------+-----------------------+-----+
Other markets| 36.6 31.2 31.5| 31.0 28.2 28.8 38.8| 31.0|
--------------+-----------------+-----------------------+-----+
Group total |238.3 276.7 245.0|272.6 236.9 248.0 249.4|254.4|
--------------+-----------------+-----------------------+-----+
Business reviews
KEY FIGURES FOR PHARMACEUTICALS BUSINESS
EUR million Q3/14 Q3/13 Change % Q1-Q3/14 Q1-Q3/13 Change % 2013
-------------------------------------------------------------------------------
Net sales 226.2 224.1 +0.9% 720.5 693.3 +3.9% 953.0
-------------------------------------------------------------------------------
Operating profit 63.8 66.7 -4.4% 218.8 205.0 +6.7% 272.9
-------------------------------------------------------------------------------
% of net sales 28.2% 29.8% 30.4% 29.6% 28.6%
-------------------------------------------------------------------------------
R&D expenses 19.5 19.7 -0.8% 72.8 66.2 +9.8% 93.9
-------------------------------------------------------------------------------
% of net sales 8.6% 8.8% 10.1% 9.6% 9.9%
-------------------------------------------------------------------------------
Capital expenditure 9.1 20.0 -54.5% 39.2 55.1 -28.8% 73.8
-------------------------------------------------------------------------------
% of net sales 4.0% 8.9% 5.4% 8.0% 7.7%
-------------------------------------------------------------------------------
Sales revenue from
proprietary products 87.8 98.3 -10.7% 270.2 304.6 -11.3% 418.5
-------------------------------------------------------------------------------
Assets 686.5 688.0 704.3
-------------------------------------------------------------------------------
Liabilities 158.4 125.6 160.1
-------------------------------------------------------------------------------
Personnel at the end of
the period 3,162 3,193 3,208
-------------------------------------------------------------------------------
TOP TEN BEST-SELLING PHARMACEUTICAL PRODUCTS
EUR million Q3/14 Q3/13 Change % Q1-Q3/14 Q1-Q3/13 Change % 2013
-------------------------------------------------------------------------------
Stalevo(®), Comtess(®)
and Comtan(®)
(Parkinson's disease) 37.2 45.0 -17.3% 130.0 155.8 -16.6% 206.8
-------------------------------------------------------------------------------
Simdax(®) (acute
decompensated heart
failure) 12.0 10.6 +12.9% 34.7 33.2 +4.5% 46.0
-------------------------------------------------------------------------------
Precedex(®) (intensive
care sedative) 8.5 17.6 -51.7% 24.9 40.5 -38.5% 59.1
-------------------------------------------------------------------------------
dexdor(®) (intensive
care sedative) 8.2 6.1 +35.6% 24.7 18.0 +37.4% 25.3
-------------------------------------------------------------------------------
Easyhaler(®) product
family (asthma, COPD) 8.1 7.4 +10.5% 24.6 20.9 +17.6% 28.9
-------------------------------------------------------------------------------
Generic entacapone
products (Parkinson's
disease) 5.2 1.7 +210.7% 19.5 6.8 +187.4% 10.2
-------------------------------------------------------------------------------
Burana(®) (inflammatory
pain) 5.9 5.9 16.8 17.1 -1.6% 23.2
-------------------------------------------------------------------------------
Dexdomitor(®),
Domitor(®), Domosedan(®)
and Antisedan(®) (animal
sedatives) 6.9 7.0 -1.8% 15.9 18.0 -11.9% 24.8
-------------------------------------------------------------------------------
Marevan(®)
(anticoagulant) 4.1 3.7 +11.9% 12.6 11.8 +6.7% 16.1
-------------------------------------------------------------------------------
Divina(®) range
(menopausal symptoms) 4.0 3.1 +25.9% 10.1 10.5 -3.4% 14.8
-------------------------------------------------------------------------------
Total 100.1 108.0 -7.3% 313.8 332.6 -5.7% 455.2
-------------------------------------------------------------------------------
Share of pharmaceutical
net sales 44% 48% 44% 48% 48%
-------------------------------------------------------------------------------
KEY FIGURES FOR DIAGNOSTICS BUSINESS
EUR million Q3/14 Q3/13 Change % Q1-Q3/14 Q1-Q3/13 Change % 2013
-------------------------------------------------------------------------------
Net sales 12.8 13.5 -5.4% 41.9 43.4 -3.5% 57.1
-------------------------------------------------------------------------------
Operating profit 1.7 2.0 -16.2% 4.9 3.9 +25.4% 4.6
-------------------------------------------------------------------------------
% of net sales 13.4% 15.1% 11.6% 9.0% 8.1%
-------------------------------------------------------------------------------
R&D expenses 1.5 1.6 -4.4% 5.3 6.1 -14.4% 8.3
-------------------------------------------------------------------------------
% of net sales 12.1% 12.0% 12.6% 14.2% 14.5%
-------------------------------------------------------------------------------
Capital expenditure 2.6 0.8 +228.0% 4.3 2.1 +106.0% 3.3
-------------------------------------------------------------------------------
% of net sales 20.7% 6.0% 10.2% 4.8% 5.8%
-------------------------------------------------------------------------------
Assets 47.6 48.8 47.3
-------------------------------------------------------------------------------
Liabilities 9.2 15.1 16.6
-------------------------------------------------------------------------------
Personnel at the end of
the period 288 314 287
-------------------------------------------------------------------------------
Information on Orion's shares
BASIC SHARE INFORMATION 30 SEPTEMBER 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 26.7 65.5 92.2
-------------------------------------------------------------------------------
Counter book value per share, EUR 0.65 0.65
-------------------------------------------------------------------------------
Total number of shares 40,962,816 100,295,012 141,257,828
-------------------------------------------------------------------------------
% of total share stock 29% 71% 100%
-------------------------------------------------------------------------------
Number of treasury shares 569,665 569,665
-------------------------------------------------------------------------------
Total number of shares excluding
treasury shares 40,962,816 99,725,347 140,688,163
-------------------------------------------------------------------------------
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 819,256,320 99,725,347 918,981,667
-------------------------------------------------------------------------------
% of total votes 89% 11% 100%
-------------------------------------------------------------------------------
Total number of shareholders 17,509 40,834 52,399
-------------------------------------------------------------------------------
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 2014
A shares B shares Total
-------------------------------------------------------------------------------
Shares traded 1,987,858 57,827,068 59,814,926
-------------------------------------------------------------------------------
% of the total number of shares 4.8% 58.1% 42.3%
-------------------------------------------------------------------------------
Trading volume, EUR million 50.0 1,446.9 1,496.8
-------------------------------------------------------------------------------
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 25.13 25.02
-------------------------------------------------------------------------------
Highest quotation, EUR (A and B 30 September
2014) 31.11 31.33
-------------------------------------------------------------------------------
Closing quotation on 30 September 2014, EUR 30.79 31.00
-------------------------------------------------------------------------------
Market capitalisation on 30 September 2014
excluding treasury shares, EUR million 1,261.2 3,091.5 4,352.7
-------------------------------------------------------------------------------
PERFORMANCE PER SHARE
Q3/14 Q3/13 Change % Q1-Q3/14 Q1-Q3/13 Change % 2013
-------------------------------------------------------------------------------
Basic earnings per
share, EUR 0.35 0.35 +1.8% 1.21 1.07 +13.6% 1.46
-------------------------------------------------------------------------------
Diluted earnings
per share, EUR 0.35 0.35 +1.8% 1.21 1.07 +13.6% 1.46
-------------------------------------------------------------------------------
Cash flow per
share before
financial items,
EUR 0.41 0.29 +39.4% 1.34 0.56 +138.6% 1.02
-------------------------------------------------------------------------------
Equity per share,
EUR 3.66 3.38 +8.3% 3.66
-------------------------------------------------------------------------------
Average number of
shares excluding
treasury shares,
1,000 shares 140,688 141,069 140,661 141,039 141,006
-------------------------------------------------------------------------------
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#1864167]
