Orion Group Interim Report January-March 2010
(Thomson Reuters ONE) -
ORION CORPORATION INTERIM REPORT JANUARY-MARCH 2010 27 April 2010 at
12:00 EEST
Orion's net sales for January-March 2010 totalled EUR 214.5 million (EUR 190.1
million for
January-March 2009), up by 13% on the comparative period last year.
* Operating profit was EUR 71.0 (56.9) million.
* Profit before taxes was EUR 70.8 (56.6) million.
* Equity ratio was 44% (43%).
* ROCE before taxes was 56% (45%).
* ROE after taxes was 54% (45%).
* Basic earnings per share were EUR 0.37 (0.30).
* Cash flow per share before financial items was EUR 0.22 (0.25).
ORION'S KEY FIGURES FOR THE REVIEW PERIOD
Q1/10 Q1/09 Change % 2009
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Net sales, EUR million 214.5 190.1 +12.8% 771.5
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International operations, EUR million 157.5 136.5 +15.4% 548.2
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% of net sales 73.4% 71.8% 71.1%
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Operating profit, EUR million 71.0 56.9 +24.9% 207.0
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% of net sales 33.1% 29.9% 26.8%
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Profit before taxes, EUR million 70.8 56.6 +25.1% 203.7
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% of net sales 33.0% 29.8% 26.4%
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Income tax expense, EUR million 18.5 14.7 +25.1% 52.3
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R&D expenses, EUR million 19.2 24.1 -20.5% 95.2
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% of net sales 9.0% 12.7% 12.3%
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Capital expenditure, EUR million 8.0 5.6 +41.9% 60.4
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% of net sales 3.7% 3.0% 7.8%
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Assets total, EUR million 771.8 756.9 +2.0% 727.1
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Equity ratio, % 43.8% 43.2% 60.6%
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Gearing, % -20.9% -20.0% -8.9%
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Interest-bearing liabilities, EUR million 131.6 168.7 -22.0% 131.5
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Non-interest-bearing liabilities, EUR million 303.6 261.6 +16.1% 156.5
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Cash and cash equivalents, EUR million 201.8 234.0 -13.8% 170.5
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ROCE (before taxes), % 55.5% 44.6% 37.4%
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ROE (after taxes), % 54.0% 44.9% 35.3%
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Basic earnings per share, EUR 0.37 0.30 +25.1% 1.07
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Diluted earnings per share, EUR 0.37 0.30 +25.1% 1.07
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Cash flow per share before financial items, EUR 0.22 0.25 -10.8% 1.03
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Equity per share, EUR 2.39 2.32 +3.0% 3.11
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Personnel at the end of the period 3,115 3,200 -2.7% 3,147
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Average personnel during the period 3,123 3,227 -3.2% 3,192
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Personnel expenses, EUR million 40.1 41.7 -3.9% 171.4
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President and CEO Timo Lappalainen's review
"Strong start for the year"
"Our net sales and operating profit in the first quarter of the year were
clearly higher than a year ago.
"Sales of our Parkinson's drugs continued to grow but, as anticipated, slightly
slower than before. The key patents on these products expire in the next few
years. Therefore, it is important to Orion's future that sales from the rest of
our portfolio grew strongly and clearly faster than sales of Stalevo and
Comtess/Comtan. Simdax performed well in Southern Europe as expected, and our
investments in the Scandinavian portfolio of self-care products and development
of Eastern European operations have began to deliver results. In Finland we
again grew faster than the market as a whole and our market share exceeded the
10 per cent level in the first quarter of the year.
"Investments in new markets also increased our sales and marketing expenses.
Expenses increased mainly in Southern Europe, where a year ago we did not yet
have our own operations. In addition, costs were increased by royalties payable
to Abbott for Simdax sales and higher distribution expenses due to volume growth
in business operations. R&D expenses decreased because in our most important
research programme, the intensive care sedative dexmedetomidine, the clinical
trials themselves were concluded and the programme moved to the analysis phase.
Administrative expenses were again lower as litigation costs in the United
States decreased.
"At the end of March, the US Food and Drug Administration issued a release
concerning the ongoing review of the safety of Orion's drug Stalevo. Information
on STRIDE-PD study results we published in February 2009 lies behind the review
process. After receiving these results, Orion undertook a comprehensive safety
review and submitted it to the European Medicines Agency and FDA. Our view,
based on a review of all entacapone studies, was that the prostate cancer
finding does not affect the safety profile of Stalevo. The European Medicines
Agency has already made its own analysis of the matter and in its statement,
which the European Commission confirmed in March 2010, it concurs with Orion's
view. As agreed with the European Medicines Agency, Orion will continue to
monitor adverse effects relating to prostate cancer.
"In April, initial results in clinical trials with dexmedetomidine indicated
that dexmedetomidine is as effective a sedative as standard comparative
sedatives. Based on the positive results, we plan to apply for European
marketing authorisation for dexmedetomidine. We currently estimate that the
application could be submitted to the European Medicines Agency by the end of
2010.
"The first quarter was better than anticipated in terms of growth in net sales
and operating profit. Our good performance was partly due to the timing of sales
and costs, due to which we maintain our view of improving financial results
issued when the Financial Statements were published in February. We estimate
that net sales and operating profit will be slightly higher than in 2009. More
information about the outlook estimate and the basis for it can be found on
pages 6-7 of this Interim Report."
Events during the period
On 18 February 2010 Orion announced the approval of a new share-based incentive
plan for the Group key persons.
On 1 March 2010 Orion transferred altogether 65,606 Orion Corporation B shares
held by the Company as a share bonus for 2009 to the key persons employed by the
Group and belonging to the Share-based Incentive Plan of the Group.
On 11 March 2010 member of the Board of Directors of Orion Corporation,
Academician of Science, Professor Leena Palotie M.D., Ph.D. passed away after a
serious illness.
On 24 March 2010 Orion Corporation's Annual General Meeting was held at the
Helsinki Fair Centre.
Events after the review period
On 1 April 2010 Orion issued a stock exchange release commenting on a release
from FDA on 31 March 2010 concerning ongoing review of safety of Orion's drug
Stalevo.
On 20 April 2010 Orion announced in a stock exchange release that initial
results with dexmedetomidine indicated that dexmedetomidine met its first
primary endpoint in providing similar sedation in intensive care compared to
midazolam and propofol, the standard ICU (intensive care unit) sedative agents.
Based on the positive results, Orion plans to apply for European marketing
authorisation for dexmedetomidine. Orion currently estimates that the
application could be submitted to the European Medicines Agency by the end of
2010.
News conference and teleconference
A news conference and teleconference on the published results will be held
today, Tuesday 27 April 2010, at 14:30 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
atwww.orion.fi/en
can be asked by telephone in Finnish and English.
To participate in the teleconference, please call:
from the USA: +1 334 420 4951
from other countries: +44 (0)20 7162 0125
News conference recordings
A recording of the webcast of the event in English will be available later the
same day via a link on the Orion website. A recording of the presentation by the
President and CEO in Finnish will be available on the Orion website later the
same day.
Financial report material
Orion's financial reports and related presentation material are available on the
Group's website atwww.orion.fi/en
form for subscribing to Orion's publications for investors and releases.
Dates in Orion Calendar 2010
Interim Report January-June 201010 August 2010
Interim Report January-September 201026 October 2010
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 Q1/2010
Net sales
The Orion Group's net sales in the first quarter of 2010 totalled EUR 214.5
million (EUR 190.1 million in the first quarter of 2009), up by about 13% on the
comparative period of the previous year. The net effect of currency exchange
rates was minus EUR 0.2 million.
The Pharmaceuticals business's net sales were up by 14% at EUR 203.3 (178.9)
million. The products based on in-house R&D accounted for EUR 100.6 (87.6)
million, or 49% (49%) of the Pharmaceuticals business's net sales. Net sales of
Orion's Stalevo® (carbidopa, entacapone and levodopa) and Comtess®/Comtan®
(entacapone) Parkinson's drugs were up by 6% at EUR 65.8 (62.2) million, which
is about 32% (35%) of the Pharmaceuticals business's net sales. The net sales of
other products in the portfolio totalled EUR 137.5 (116.7) million, and were up
by 18% on the comparative period (up by about 12% excluding the effects of
repurchasing Simdax).
The Diagnostics business's net sales were EUR 11.7 (11.7) million.
Operating profit
The Orion Group's operating profit was up by 25% at EUR 71.0 (56.9) million.
The Pharmaceuticals business's operating profit was EUR 70.5 (56.9) million, up
by 24% on the comparative period. The gross profit grew at the same pace as net
sales. However, operating profit improved clearly more because the total fixed
costs of the business operations remained at the previous year's level. Sales
and marketing expenses were as anticipated higher, but research and
administrative expenses lower than in the comparative period.
The Diagnostics business's operating profit was EUR 2.2 (2.2) million. Net
sales, gross profit and fixed costs were all similar to the comparative period.
Operating expenses
The Group's sales and marketing expenses at EUR 43.9 (35.0) million were as
anticipated clearly higher, up by 25%. The increase was mainly due to the launch
of operations in Southern Europe in the second half of 2009, royalties of EUR
2.5 million paid to Abbott following the Simdax sales and increased distribution
costs due to volume growth in the business operations as a whole.
R&D expenses were down by 21% at EUR 19.2 (24.1) million and accounted for 9%
(13%) of the Group's net sales. Pharmaceutical R&D expenses amounted to EUR
17.9 (22.7) million. The decrease was mainly due to the timing of the ongoing
research projects, especially as clinical trials of the intensive care sedative
dexmedetomidine with patients concluded at the turn of the year and the research
programme moved to the analysis phase. Ongoing research projects are reported in
more detail under Pharmaceuticals in the Business Reviews.
Administrative expenses were EUR 8.2 (12.8) million. The expenses were lower
mainly because the ongoing patent litigation in the United States was at a stage
in which the costs were only EUR 0.4 (3.0) million, considerably less than a
year earlier. There is more information on the legal proceedings in the section
"Significant legal proceedings".
Other operating income and expenses decreased profit by EUR 2.4 million (profit
increase in comparative period EUR 0.6 million). These expenses include items
arising mainly from foreign exchange hedges.
Profit before taxes
Group profit before taxes totalled EUR 70.8 (56.6) million. Basic earnings per
share were EUR 0.37 (0.30) and diluted earnings per share were EUR 0.37 (0.30).
Equity per share was EUR 2.39 (2.32). The return on capital employed before
taxes (ROCE) was 56% (45%) and the return on equity after taxes (ROE) 54% (45%).
Financial position
The Group's gearing was -21% (-20%) and the equity ratio 44% (43%).
Total liabilities at 31 March 2010 were EUR 435.2 (430.2) million. At the end of
the period, interest-bearing liabilities amounted to EUR 131.6 (168.7) million,
including EUR 108.8 (127.9) million of long-term loans. The non-interest-bearing
liabilities include the dividends for 2009 paid in early April but transferred
from equity already in March.
The Group had EUR 201.8 (234.0) million 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 slightly down on the comparative period
at EUR 39.4 (43.2) million. Operating profit was clearly higher in the first
quarter of 2010, but the amount tied up in working capital was EUR 23.1 million
more than in the comparative period. The working capital was at a higher level
as trade receivables increased. The strong growth in net sales and
proportionally greater growth in countries where payment times for customers are
typically longer than average for Orion led to the increase in trade
receivables.
Cash flow from investing activities was EUR -8.1 (-8.1) million and cash flow
from financing activities was EUR -0.2 (22.4) million.
Capital expenditure
The Group's capital expenditure totalled EUR 8.0 (5.6) million. This comprised
EUR 5.4 (3.7) million on property, plant and equipment and EUR 2.6 (1.9) million
on intangible assets.
Outlook for 2010
Net sales will be slightly higher than in 2009.
Marketing expenditure will be higher due to the increased number of product
launches and the expansion of operations to Southern Europe. Research
expenditure will be slightly lower than in 2009. The costs of ongoing patent
litigation in the United States are expected to be lower than in 2009.
Operating profit excluding non-recurring items will be slightly higher than in
2009.
The Group's capital expenditure will be about EUR 40 million excluding
substantial corporate or product acquisitions.
Basis for outlook
The reference price system implemented in Finland in April 2009 has increased
price competition in the category of substitutable products, which has led to a
clear decrease in prices. During 2010 price competition is expected to persist.
Product launches will support Orion's position as market leader in 2010 too.
In-market sales of the Parkinson's drugs Stalevo and Comtess/Comtan grew by just
over 10% in 2009, as in the previous year. However, the growth was faster than
anticipated, and is forecast to slow down slightly in 2010. These forecasts
assume that generic competition does not yet begin in the United States during
2010.
Repurchasing of the marketing rights to Simdax from Abbott in May 2009 will
increase sales compared with the previous year because in-market sales of the
product will appear as Orion's own sales throughout the year. During the first
four months of 2009, for Simdax Orion recorded in its own sales only sales of
the product to Abbott.
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 2010
were planned mainly during the previous year.
Research and development costs can be estimated quite accurately in advance.
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 2010 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 at present 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 2010.
Sales of individual products and also Orion's sales in individual markets may
vary slightly 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. It is assumed that the ongoing litigation will not affect the
sales of Comtan or Stalevo in the United States in 2010, but it is not
impossible that generic competition will commence already during the current
year.
Most of the exchange rate risk relates to the US dollar. Typically, only less
than 15% of Orion's net sales come 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.
Financial objectives
Orion's financial objectives are ensuring the Group's financial stability and
creating a foundation for long-term profitable growth.
The principal means of achieving these objectives are:
product, product portfolio and corporate acquisitions
Sales of the Parkinson's drugs Stalevo and Comtess/Comtan currently account for
approximately one-third of Orion's net sales. The key patents for these drugs in
Orion's main markets will expire in 2012-2013, which is why their sales are
expected to decline over the next few years. Orion will also bring new products
to the market to replace this drop in net sales.
The development of Orion's net sales and profitability in the next few years
will depend on how fast the sales of Parkinson's drugs will decline and, on the
other hand, how the sales of other products will increase in the future. This
creates a point of discontinuity in the Group's operations.
Orion's dividend policy
Orion's dividend distribution takes into account the distributable funds and the
capital expenditure and other financial requirements in the medium and long term
to achieve the financial objectives.
Shares and shareholders
On 31 March 2010 Orion had a total of 141,257,828 shares, of which 51,140,668
were A shares and 90,117,160 B shares. The Group's share capital was EUR
92,238,541.46. At the end of March 2010 Orion held 214,424 B shares as treasury
shares. On 31 March 2010 the aggregate number of votes conferred by the A and B
shares was 1,112,716,096 excluding treasury shares.
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
Corporation 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. In January-March 2010 a total of 200,000 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 31 March 2010 the market capitalisation of the Company's shares excluding
treasury shares was EUR 2,304 million.
Authorisations of the Board of Directors
Orion's Board of Directors was authorised by the Annual General Meeting in 2010
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
is valid for 18 months and the authorisation to issue shares for five years from
the respective decision taken by the Annual General Meeting.
The Board of Directors is authorised to decide on acquisition of no more than
300,000 Orion Corporation B shares. Such shares shall be acquired at the market
price at the time of acquisition quoted in public trading on NASDAQ OMX Helsinki
Oy ("Stock Exchange") using funds in the Company's distributable equity. Such
shares may be acquired in public trading on the Stock Exchange in a proportion
not corresponding to the shareholders' holdings. The shares shall be acquired
and paid for in accordance with the rules of the Stock Exchange and Euroclear
Finland Ltd. The shares acquired can be kept, cancelled or further conveyed by
the Company. The shares can be acquired for the purpose of developing the
capital structure of the Company, for use in financing possible corporate
acquisitions or other business arrangements of the Company, for financing
capital expenditure, as part of the Company's incentive plan, or for otherwise
conveying or cancelling them. The Board of Directors shall decide on other
matters related to the acquisition of shares in the Company.
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 Oy ("Stock Exchange"); 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 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
Altogether 65,606 Orion Corporation B shares held by the Company were
transferred at the beginning of March 2010 as a share bonus for 2009 to key
persons employed by the Group and belonging to the Share-based Incentive Plan of
the Orion Group. The price per share of the transferred shares was EUR 16.47,
which was the volume weighted average quotation of Orion Corporation B shares on
1 March 2010. The total transaction price of the transferred shares was
therefore EUR 1,080,563.62.
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.
Share ownership
At the end of March 2010 Orion had a total of 57,500 (44,400) registered
shareholders, of whom 94% (94%) were private individuals holding 53% (49%) of
the entire share stock and 61% (59%) of the total votes. There were altogether
32 (34) million nominee-registered shares, which are 22% (24%) of all shares,
and they conferred entitlement to 4% (6%) of the votes.
At the end of March 2010 Orion held 214,424 (280,030) B shares as treasury
shares, which is 0.2% (0.2%) of the Company's total share stock and 0.02%
(0.03%) of the total votes.
No new transactions exceeding the notification threshold set in the Finnish
Securities Markets Act were brought to the attention of the Company during the
first quarter of 2010.
Decisions by the Annual General Meeting
The Annual General Meeting of the Shareholders of Orion Corporation was held on
24 March 2010 at the Helsinki Fair Centre. In addition to handling matters in
accordance with Section 10 of the Articles of Association and Section 3 of
Chapter 5 of the Limited Liability Companies Act, the Annual General Meeting
addressed the proposals concerning a distribution from the unrestricted equity
as repayment of capital, an amendment to Section 12 of the Articles of
Association and authorisation of the Board of Directors to acquire and convey
shares in the Company.
Adoption of the Financial Statements
The Annual General Meeting adopted the Financial Statements of the Company and
Group as per 31 December 2009. The members of the Board of Directors and the
President and CEO were discharged from liability for the financial year 1
January to 31 December 2009.
Dividend EUR 1.00 per share
A dividend of EUR 1.00 per share was approved in accordance with the Board's
proposal. The record date for dividend distribution was 29 March 2010 and the
payment date was 7 April 2010.
Repayment of capital EUR 0.10 per share
It was decided that EUR 0.10 per share be distributed from the expendable fund
in distributable equity as repayment of capital to the shareholders. The record
date for repayment of capital was 29 March 2010 and the payment date was 7 April
2010.
Remuneration of the members of the Board of Directors
As the annual fees for the term of office of the Board of Directors, the
Chairman shall receive EUR 72,000, the Vice Chairman shall receive EUR 49,000
and the other Board members shall receive EUR 36,000 each. Furthermore, as a fee
for each meeting attended, the Chairman shall receive EUR 1,200, the Vice
Chairman shall receive EUR 900 and the other Board members shall receive EUR
600 each. The travel expenses of all Board members shall be paid in accordance
with previous practice. The aforementioned meeting fees shall also be paid to
the Chairmen and to the members of the committees established by the Board.
Of the aforementioned annual fees, 60% was to be paid in cash and 40% in Orion
Corporation B shares, which were acquired for the Board members in the period
29 March 2010 to 1 April 2010 from the stock exchange in amounts corresponding
to EUR 28,800 for the Chairman, EUR 19,600 for the Vice Chairman and EUR 14,400
for each of the other Board members. The part of the annual fee paid in cash,
which corresponds to the approximate sum necessary for the payment of the income
taxes on the fees, was to be paid no later than 30 April 2010. The annual fees
encompass the full term of office of the Board of Directors.
Members and Chairman of the Board of Directors
The number of members in the Board of Directors was confirmed to be six. Sirpa
Jalkanen, Eero Karvonen, Matti Kavetvuo, Hannu Syrjänen and Jukka Ylppö were
re-elected as members of the Board of Directors for the following term of office
and Heikki Westerlund was elected as a new member. Hannu Syrjänen was elected as
the Chairman of the Board of Directors.
Auditor and auditor's fee
Authorised Public Accountants PricewaterhouseCoopers Oy were elected as the
auditor for the following term of office. The auditor's fee shall be paid
against an invoice approved by the Company.
Amendment of Section 12 of the Articles of Association
It was decided to amend Section 12 of the Articles of Association of the Company
so that the Notice to a General Meeting of the Shareholders shall be delivered
no earlier than two (2) months and no later than three (3) weeks before the
General Meeting, however, no later than nine (9) days before the record date of
the General Meeting.
Authorisation of Board of Directors to decide on acquisition of shares in the
Company
The Annual General Meeting authorised the Board of Directors to decide on
acquisition of shares in the Company in accordance with the terms in the
proposal by the Board of Directors.
Authorisation of Board of Directors to decide on a share issue
The Annual General Meeting authorised the Board of Directors to decide on a
share issue in which the Company's own shares held by the Company can be
conveyed in accordance with the terms in the proposal by the Board of Directors.
Personnel
The average number of employees in the Orion Group in January-March 2010 was
3,123 (3,227). At the end of March 2010 the Group had a total of 3,115 (3,200)
employees, of whom 2,497 (2,634) worked in Finland and 618 (566) outside
Finland.
Salaries and other personnel expenses in January-March 2010 totalled EUR 40.1
(41.7) million.
Legal proceedings
Legal proceedings against the Sun companies
On 13 November 2007, 7 February 2008 and 12 November 2008 Orion Corporation
filed patent infringement lawsuits in the United States to enforce US Patents
No. 6,500,867 and 5,446,194 against companies belonging to the Sun Group.
Sun Pharmaceutical Industries Limited seeks to market generic versions of
Orion's Stalevo drug (25/100/200 and 37.5/150/200 mg strengths of carbidopa,
levodopa and entacapone) in the United States. Sun Pharma Global, Inc. seeks to
market a generic version of Orion's proprietary drug Comtan in the United
States.
Legal proceedings against the Sandoz companies
On 4 September 2009 Orion Corporation and Hospira, Inc. filed together a patent
infringement lawsuit in the United States against Sandoz International GmbH and
Sandoz Inc. to enforce their patents valid in the United States. The legal
proceedings concern Orion's US Patent No. 4,910,214 and Orion's and Hospira's
commonly owned US Patent No. 6,716,867.
Sandoz Inc. has sought authorisation to produce and market in the United States
a generic version of Orion's proprietary drug Precedex® (dexmedetomidine
hydrochloride 100 ?g base/ml), which is marketed in the United States by Orion's
licensee Hospira.
Orion expects the costs of the legal proceedings against the Sandoz companies to
be substantially less than the costs of the ongoing entacapone patent litigation
in the United States.
Business Reviews
Pharmaceuticals
Review of human pharmaceuticals market
Finland is the most important individual market for Orion, generating
one-quarter of the Group's net sales. According to statistics collected by
Finnish Pharmaceutical Data Ltd, Finnish wholesale of human pharmaceuticals in
January-March 2010 totalled EUR 464 million, down by 0.5% on the comparative
period of the previous year. The market as a whole decreased most in
pharmaceuticals covered by the reference price system, which has been in force
since the beginning of April 2009.
Orion continued to strengthen its position as leader in marketing
pharmaceuticals in Finland. According to statistics collected by Finnish
Pharmaceutical Data Ltd, Orion's wholesale of human pharmaceuticals in Finland
in January-March 2010 amounted to EUR 47 million, up by 4%. Orion's market share
exceeded the ten per cent threshold, reaching 10.2% (9.7%), which was nearly
four percentage points higher than for the second-largest company.
The most important individual therapy area for Orion is still the treatment of
Parkinson's disease. Orion's Parkinson's drugs account for just under one-third
of the Group's net sales. According to IMS Health pharmaceutical sales
statistics, in 2009 the total sales of Parkinson's drugs in the United States
came to USD 1,000 million (USD 1,020 million in 2008), which is 2% less than in
the previous year. The five largest European markets for Parkinson's drugs were
Germany, the United Kingdom, France, Spain and Italy. In these countries, the
combined sales of Parkinson's drugs in 2009 totalled EUR 909 (868) million, and
the average market growth was 5%.
Sales of Orion's Parkinson's drugs continued to grow clearly faster than the
market as a whole. According to IMS Health pharmaceutical sales statistics, in
2009 total sales of Orion's Parkinson's drugs were up by 13% at EUR 499 (433)
million.
According to statistics, sales of Orion's Parkinson's drugs in 2009 were up by
10% at USD 175 (159) million in the United States. In the five largest
Parkinson's drugs markets in Europe, sales of Orion's Parkinson's drugs were up
by 6% at a total of EUR 150 (141) million. In Japan, sales of Orion's
Parkinson's drugs were up by 77% at EUR 33 (19) million. The market share of
Orion's Parkinson's drugs was 17% in the United States, an average of 16% in the
five largest markets in Europe and 8% in Japan.
Net sales and operating profit of the Pharmaceuticals business
Net sales of the Pharmaceuticals business in January-March 2010 were EUR 203.3
(178.9) million, up by 14%. The operating profit of the Pharmaceuticals business
was up by 24% at EUR 70.5 (56.9) million. The operating profit of the
Pharmaceuticals business was 35% (32%) of the segment's net sales.
Net sales of Orion's top ten pharmaceuticals in January-March 2010 were up by
16% at EUR 108.8 (94.0) million. They accounted for 54% (53%) of the total net
sales of the Pharmaceuticals business. Among these best-sellers, the
fastest-growing products were Simdax heart failure drug and Precedex sedative
for patients in intensive care.
Net sales of the products based on own in-house R&D in January-March 2010 were
up by 15% at EUR 100.6 (87.6) million. These products accounted for 49% (49%) of
the net sales of the Pharmaceuticals business.
Proprietary Products
The product portfolio of Proprietary Products consists of patented prescription
products in three therapy areas: central nervous system diseases; cancers and
critical care; and Easyhaler® pulmonary drugs.
Net sales of Proprietary Products in January-March 2010 were EUR 93.5 (81.5)
million, up by 15%.
Net sales of Orion's Parkinson's drugs in January-March 2010 totalled EUR 65.8
(62.2) million. The net sales were up by 6% and accounted for 32% (35%) of the
total net sales of the Pharmaceuticals business. Net sales from deliveries of
Stalevo and Comtan to Novartis totalled EUR 41.6 (40.0) million, up by 4%.
Deliveries of Stalevo to Novartis were down by 7%, but deliveries of Comtan
increased by 22%. Total net sales generated by Stalevo and Comtess in Orion's
own sales organisation were up by 9% at EUR 24.3 (22.2) million. Net sales of
Stalevo through Orion's own sales network were up by 15% at EUR 19.7 (17.2)
million.
Orion has ongoing patent litigation in the United States against the Sun
companies and Sandoz companies. The Sun companies aim to launch generic versions
of Orion's Comtan and Stalevo, and the Sandoz companies a generic version of
Orion's drug Precedex in the United States.
Net sales of Simdax® drug for acute decompensated heart failure in January-March
2010 totalled EUR 10.3 (2.8) million. This rapid growth is because in-market
sales of the product appeared entirely as Orion's own sales in the period under
review, whereas in the comparative period Orion recorded in its own sales only
sales of the product to its marketing partner Abbott.
Net sales of the Easyhaler® product family for asthma and chronic obstructive
pulmonary disease in January-March 2010 were up by 14% at a total of EUR 7.2
(6.4) million. Reversion of marketing rights to the product family to Orion
continued in the first quarter as they reverted to Orion in Scandinavian
countries too.
Specialty Products
Net sales of the Specialty Products business division's off-patent, i.e.
generic, prescription drugs and self-care products were EUR 73.1 (66.1) million
in January-March 2010, up by 11%.
Net sales in Finland of Orion's human pharmaceuticals, mainly attributable to
Specialty Products, were up by 6% at EUR 52.3 (49.6) million in January-March
2010. Orion improved its market position owing to its broad product portfolio,
particularly in substitutable prescription drugs, although the introduction of
the reference price system in Finland in April 2009 continued to reduce the
market as a whole. The reference price system has further intensified price
competition, but also expanded the range of substitutable products.
Net sales of Orion's human pharmaceuticals in Eastern Europe in January-March
2010 were up by 22% at EUR 10.0 (8.2) million. Specialty Products account for
the majority of sales in the region. The euro-denominated net sales in Eastern
Europe increased also because of the appreciation of currencies in the region.
Orion continued to develop its self-care products portfolio in Scandinavia.
Orion aims to make its established home market all the Nordic countries, not
just Finland. Orion is preparing for changes in distribution channels in Sweden,
where the markets are being transformed by the abolition of the national
pharmacy monopoly.
Animal Health
Net sales of the Animal Health business division in January-March 2010 totalled
EUR 15.3 (15.2) million. Net sales of the animal sedatives Dexdomitor®
(dexmedetomidine), Domitor® (medetomidine), Domosedan® (detomidine) and
Antisedan® (atipamezole) were up by 14% and accounted for 37% (32%) of the
division's net sales. The growth was mainly due to the reversion of the
distributions rights to the animal sedative product family to Orion in late
2009. Since then, Orion has been selling the products not only in the Nordic
countries, but now also in Eastern Europe. In other markets new partners will
market the products. Price competition in Europe following the expiry of the
patents on this product family remains intense.
The launch of Domosedan gel, a sedative for horses, through Orion's own animal
health sales network in Europe began at the beginning of the year and has
progressed according to plan.
Orion is the second-biggest marketer of veterinary drugs in the Finnish market
for veterinary drugs with a market share of about 19 percent, which is two
percentage points behind the market leader. According to statistics on
veterinary drugs, the Finnish market for veterinary drugs was about EUR 10
million in January-March 2010, up by 9%.
Fermion
Fermion manufactures active pharmaceutical ingredients for Orion and other
pharmaceutical companies. Its product range comprises nearly 30 pharmaceutical
ingredients. Fermion's net sales in January-March 2010 at EUR 13.5 (11.1)
million were up by 22%. Pharmaceutical ingredients supplied for Orion's own use
are excluded from the net sales. Orders for some key products are still high,
even though competition in the markets remains intense.
Research and development projects
Orion's pharmaceutical R&D focuses on the following core therapy areas: central
nervous system drugs, oncology and critical care drugs, and Easyhaler pulmonary
drugs. In addition to in-house research, Orion invests in early-stage R&D
jointly with universities and other pharmaceutical companies. In Phase III
clinical studies, Orion prefers to share the costs with other pharmaceutical
companies. In this way, Orion can ensure an increasing number of new research
projects and balance the risks of projects in the research pipeline. Orion also
seeks to purchase new product candidates to reinforce the research pipeline
based on its own research projects. In this way Orion aims to reinforce its
capability to continue operating as a company that provides new drugs and
engages in pharmaceutical R&D.
The Group's R&D expenses in January-March 2010 totalled EUR 19.2 (24.1) million,
of which the Pharmaceuticals business accounted for EUR 17.9 (22.7) million. The
Group's R&D expenses accounted for 9% (13%) of the Group's net sales.
On 31 March 2010 the US Food and Drug Administration (FDA) issued a release
concerning the ongoing review of the safety of Orion's drug Stalevo. Orion
published information on the STRIDE-PD study results on 24 February 2009 in
which it stated that the research showed that in the levodopa/carbidopa group
there were fewer prostate cancer cases but more skin cancer cases than in the
Stalevo group. Orion then undertook a comprehensive safety review and submitted
it to the European Medicines Agency (EMA) and FDA. Based on the review covering
all entacapone studies, the Company's conclusion was that the prostate cancer
finding did not affect the safety profile of Stalevo, but Orion would continue
to monitor the matter. EMA had already made its own analysis of the matter and
in its statement concurred with Orion's conclusion. Concerning prostate cancer
there were no new recommendations on use of the drug and no changes to its
safety profile in the statement that the European Commission confirmed in March
2010. As agreed with EMA, Orion will continue to monitor adverse effects
relating to prostate cancer. FDA's release means that it has begun its own
review on the same matter and no new conclusions or recommendations on the use
of the drug have been issued. Orion and Novartis, Orion's marketing partner for
the product, are assisting FDA with its review, but currently Orion has no
information on the schedule for completion of the review.
Initial results of the MIDEX and PRODEX studies by Orion Corporation with
dexmedetomidine indicated that dexmedetomidine met its first primary endpoint in
providing similar sedation in intensive care compared to midazolam and propofol,
the standard ICU (intensive care unit) sedative agents, in patients requiring
light to moderate sedation for mechanical ventilation. The second primary
endpoint, time to end of mechanical ventilation of patients, was statistically
significantly reduced by dexmedetomidine compared with midazolam but did not
reach statistical significance compared with propofol. Safety findings were
consistent with the known effects of dexmedetomidine and no significant new
safety data was detected. Based on the overall positive results, Orion plans to
apply for European marketing authorisation for dexmedetomidine. Orion currently
estimates that the application could be submitted to the European Medicines
Agency by the end of 2010.
Orion has ongoing projects to broaden the range of the Easyhaler product family.
Orion's aim is not only to utilise Easyhaler technology in current products and
development projects, but also to develop new products. Orion is developing a
budesonide-formoterol formulation that combines budesonide as an
anti-inflammatory agent and formoterol as a long-acting bronchodilator. The
results of the research programme are expected in 2010.
Orion has a new 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 market.
The aim is to submit a market authorisation application during 2011.
Orion has an alpha 2c receptor antagonist undergoing clinical Phase I studies.
In early research, this compound has been found to be possibly suitable for the
treatment of the symptoms of Alzheimer's disease or schizophrenia.
Orion has several projects in the early research phase investigating selective
androgen receptor modulators (SARM), prostate cancer, neuropathic pain,
Parkinson's disease and other possible indications within intensive care, among
others.
Diagnostics
Net sales of the Diagnostics business in January-March 2010 were EUR 11.7 (11.7)
million. Sales of QuikRead® infection tests remained good, but sales of many
ageing product ranges were lower than in the comparative period. Sales of
industrial hygiene products also developed favourably. Sales continued to grow
in China and the Czech Republic, but more slowly than in the comparative period
in the Nordic countries.
QuikRead® tests maintained their position as the main products and sales
continued to grow well. The tests are used in, for example, detecting infection
from the CRP level in a blood sample or streptococcus A in a pharyngeal sample.
The increasing selection of QuikRead products in doctors' surgeries and clinical
laboratories creates a firm basis for growth in future demand for reagents.
The operating profit of the Diagnostics business was EUR 2.2 (2.2) million.
Espoo, 27 April 2010
Board of Directors of Orion Corporation
Orion Corporation
Timo Lappalainen Jari Karlson
President and CEO CFO
Tables
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million Q1/10 Q1/09 Change % 2009
--------------------------------------------------------------------------------
Net sales 214.5 190.1 +12.8% 771.5
--------------------------------------------------------------------------------
Cost of goods sold -69.7 -61.8 +12.7% -265.2
--------------------------------------------------------------------------------
Gross profit 144.8 128.2 +12.9% 506.3
--------------------------------------------------------------------------------
Other income and expenses -2.4 0.6 -471.1% 6.0
--------------------------------------------------------------------------------
Selling and marketing expenses -43.9 -35.0 +25.4% -160.0
--------------------------------------------------------------------------------
R&D expenses -19.2 -24.1 -20.5% -95.2
--------------------------------------------------------------------------------
Administrative expenses -8.2 -12.8 -36.1% -50.2
--------------------------------------------------------------------------------
Operating profit 71.0 56.9 +24.9% 207.0
--------------------------------------------------------------------------------
Finance income 1.0 2.2 -53.9% 5.1
--------------------------------------------------------------------------------
Finance expenses -1.2 -2.4 -50.6% -8.4
--------------------------------------------------------------------------------
Profit before taxes 70.8 56.6 +25.1% 203.7
--------------------------------------------------------------------------------
Income tax expense -18.5 -14.7 +25.1% -52.3
--------------------------------------------------------------------------------
Profit for the period 52.4 41.9 +25.1% 151.4
--------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME INCLUDING TAX EFFECTS
--------------------------------------------------------------------------------
Translation differences 0.4 0.2 +88.7% 1.3
--------------------------------------------------------------------------------
Cash flow hedges -0.2 -0.3 -21.3% 0.9
--------------------------------------------------------------------------------
Other comprehensive income net of tax 0.2 -0.1 +431.1% 2.1
--------------------------------------------------------------------------------
Comprehensive income for the period including tax
effects 52.6 41.8 +25.8% 153.5
--------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE TO:
--------------------------------------------------------------------------------
Owners of the parent company 52.4 41.9 +25.1% 151.4
--------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 0.0
--------------------------------------------------------------------------------
COMPREHENSIVE INCOME ATTRIBUTABLE TO:
--------------------------------------------------------------------------------
Owners of the parent company 52.6 41.8 +25.8% 153.5
--------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 0.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Basic earnings per share, EUR 1) 0.37 0.30 +25.1% 1.07
--------------------------------------------------------------------------------
Diluted earnings per share 0.37 0.30 +25.1% 1.07
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Depreciation and amortisation 8.7 8.0 +8.2% 34.4
--------------------------------------------------------------------------------
Personnel expenses 40.1 41.7 -3.9% 171.4
--------------------------------------------------------------------------------
(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, 31 March 3/10 3/09 Change % 2009
---------------------------------------------------------
Property, plant and equipment 190.9 189.6 +0.7% 192.0
---------------------------------------------------------
Goodwill 13.5 13.5 13.5
---------------------------------------------------------
Intangible rights 63.7 37.4 +70.3% 63.4
---------------------------------------------------------
Other intangible assets 3.7 3.2 +16.2% 3.7
---------------------------------------------------------
Investments in associates 0.1 0.1 0.1
---------------------------------------------------------
Available-for-sale investments 1.0 0.9 +4.5% 1.0
---------------------------------------------------------
Pension asset 29.8 30.8 -3.2% 29.8
---------------------------------------------------------
Deferred tax assets 5.5 4.2 +31.4% 5.5
---------------------------------------------------------
Other non-current receivables 0.8 1.5 -49.6% 0.9
---------------------------------------------------------
Non-current assets total 308.9 281.2 +9.8% 309.9
---------------------------------------------------------
---------------------------------------------------------
Inventories 123.8 128.8 -3.9% 122.7
---------------------------------------------------------
Trade receivables 121.6 94.4 +28.9% 102.6
---------------------------------------------------------
Other receivables 15.6 18.5 -15.6% 21.4
---------------------------------------------------------
Cash and cash equivalents 201.8 234.0 -13.8% 170.5
---------------------------------------------------------
Current assets total 462.9 475.7 -2.7% 417.2
---------------------------------------------------------
---------------------------------------------------------
Assets total 771.8 756.9 +2.0% 727.1
---------------------------------------------------------
Equity and liabilities
EUR million, 31 March 3/10 3/09 Change % 2009
------------------------------------------------------------------------------
Share capital 92.2 92.2 92.2
------------------------------------------------------------------------------
Share premium 17.8 17.8 17.8
------------------------------------------------------------------------------
Expendable fund 8.9 23.0 -61.2% 23.0
------------------------------------------------------------------------------
Other reserves -0.2 -1.2 +81.3% 0.0
------------------------------------------------------------------------------
Retained earnings 217.8 194.7 +11.9% 306.0
------------------------------------------------------------------------------
Equity attributable to owners of the parent company 336.6 326.6 +3.0% 439.1
------------------------------------------------------------------------------
Non-controlling interests 0.0 0.0 -3.2% 0.0
------------------------------------------------------------------------------
Equity total 336.6 326.7 +3.0% 439.1
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Deferred tax liabilities 41.9 42.1 -0.4% 43.0
------------------------------------------------------------------------------
Pension liability 0.8 0.8 +7.9% 0.8
------------------------------------------------------------------------------
Provisions 0.4 0.4 +21.8% 0.5
------------------------------------------------------------------------------
Interest-bearing non-current liabilities 108.8 127.9 -15.0% 108.7
------------------------------------------------------------------------------
Other non-current liabilities 0.4 1.0 -61.3% 0.1
------------------------------------------------------------------------------
Non-current liabilities total 152.3 172.1 -11.5% 153.1
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Trade payables 40.5 28.7 +41.2% 42.3
------------------------------------------------------------------------------
Income tax liabilities 10.7 2.0 +441.6% 3.0
------------------------------------------------------------------------------
Other current liabilities 208.8 186.7
Unternehmensinformation / Kurzprofil:
Datum: 27.04.2010 - 11:01 Uhr
Sprache: Deutsch
News-ID 19740
Anzahl Zeichen: 0
contact information:
Town:
Espoo
Kategorie:
Business News
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Die Pressemitteilung mit dem Titel:
"Orion Group Interim Report January-March 2010"
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Orion Oyj (Nachricht senden)
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