Better than expected year for Orion

For Orion, 2012 was double-edged – following years of growth, net sales of our Parkinson’s drugs Stalevo®, Comtess® and Comtan® declined as anticipated as the first generic products entered the markets, but at the same time, sales from the rest of our product portfolio grew well and we strengthened our market position in most pharmaceutical markets. In addition, we took clear steps forward in many drug development projects. In 2012 we continued long-term purposeful work to build a successful future for Orion.

Net sales continued to grow

CEO Timo LappalainenIn 2012 Orion’s net sales grew by seven per cent to EUR 980 million and operating profit was similar to the previous year at EUR 281 million. As anticipated, deliveries of our Parkinson’s drugs Stalevo® and Comtan® to Novartis decreased during the year as generic competition commenced in US markets. In Europe, however, total sales of Stalevo® and Comtess® through Orion’s own sales organisation were up slightly. In addition, deliveries of generic entacapone products to the United States entered our list of best-selling pharmaceuticals. During the current year, sales of our Parkinson’s drugs will continue to decline as generic competition increases, especially in the United States. Nevertheless, our current range of Parkinson’s products will remain in Orion’s list of best-selling products for a long time.

Sales from the rest of our pharmaceutical product portfolio grew clearly during the year. We were able to strengthen our market position in many markets where we grew faster than the general growth. This was the case for example in Finland, our largest individual market, and all the other Nordic countries. Product launches of generic drugs and self-care products have created a foundation for growth, and the number of launches remained high. Sales also grew strongly in our other divisions, such as Fermion, which manufactures active pharmaceutical ingredients, Contract Manufacturing and Orion Diagnostica.

Sales of dexdor® intensive care sedative launched at the end of 2011 grew well during the year and the product was well received in markets. It is taking more work and time than before to launch new drugs in European markets as customers and authorities become more demanding as regards the benefits and pricing of new products. We can therefore be pleased with the first full year of sales of dexdor®.

Operating profit grew more moderately than net sales because sales of products with lower margins accounted for a greater proportion of sales than before and, as anticipated, expenditure on research and development rose as various research projects advanced.

Significant progress in research projects

The absolute highlights of 2012 were the significant steps forward taken in many drug development projects. We received positive Phase I and II results with an alpha-2c adrenoceptor antagonist being developed for treatment of Alzheimer’s disease, an androgen receptor antagonist being developed for the treatment of prostate cancer and a new more effective levodopa product. Our project to expand the Easyhaler® product family into combined formulations advanced to the stage of preparing the application for marketing authorisation for the first product (budesonide-formoterol), which we intend to submit in Europe in the first quarter of 2013. We also began Phase I trials with a new COMT inhibitor for Parkinson’s disease.

In recent years we have undertaken resolute work to ensure continuity of our clinical development projects in future. At our Capital Markets Day held in May we said that the number of preclinical research projects has trebled in the past six years from six to eighteen. This was made possible by Orion’s new R&D strategy adopted in 2009, which resulted in increased collaboration with external partners in all sub-areas of R&D. We are confident that in future we will continually be able to bring new molecules into the clinical development phase.

During the past year we made significant investments in research and development work and in Diagnostics business operations. Orion Diagnostica focused on development of its current product portfolio and taking the early-phase technology it had acquired in 2011 into full use in its research and product development programmes.

Important developments during the year also included repatriating the rights to the Easyhaler product family for treatment of asthma and chronic obstructive pulmonary disease in many European countries. That process had an important role in our preparations for the entry of new Easyhaler combined formulation products into markets. We anticipate that the application for marketing authorisation for a budesonide-formoterol combined formulation product could be submitted in Europe in the first quarter of 2013. In addition, Orion has another Easyhaler research programme in progress to develop a fluticasone-salmeterol formulation.

Continuing to build well-being

This year we will take our research projects forward and develop our current product portfolio. Orion’s capacity utilisation rates have risen to high levels following the sales growth in recent years. To develop and ensure future growth, delivery reliability and quality standards, we have commenced investment projects that will continue through 2013. The main investment projects include the packaging and logistics centre to be established in Salo and increasing production capacity in Easyhaler products.

In line with our financial objectives updated in 2012, we aim to increase net sales in coming years, and to keep operating profit over 20% and the equity ratio at least 50%. In our outlook estimate for 2013, we estimated that net sales will be at similar level to 2012 and operating profit will be slightly lower than in 2012.

I would like to thank all Orion’s employees for their dedicated work and the good results and achievements in 2012. We shall continue to build well-being with our collaboration partners.

Timo Lappalainen



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