Orion Group Financial Statement Release for 2020

ORION CORPORATION FINANCIAL STATEMENT RELEASE 2020 9 FEBRUARY 2021 at 12:00

Orion Group Monetary Assertion Launch for 2020

This can be a abstract or Orion’s Monetary Assertion Launch for 2020. The whole report is connected to this inventory alternate launch and is obtainable at https://www.orion.fi/en/Orion-group/investors/financial-reviews-and-presentations/

• Web gross sales totalled EUR 1,078 million (EUR 1,051 million in 2019).

• Working revenue was EUR 280 (253) million.

• Web gross sales and working revenue embrace milestone funds amounting to EUR 42 (51) million.

• Revenue earlier than taxes was EUR 278 (251) million.

• Fairness ratio was 67% (77%).

• ROCE earlier than taxes was 35% (30%).

• ROE after taxes was 29% (26%).

• Primary earnings per share have been EUR 1.56 (1.43).

• Money stream per share earlier than monetary objects was EUR 1.85 (1.68).

• The Board of Administrators proposes cost of a dividend of EUR 1.50 (1.50) per share.

• Orion estimates that internet gross sales in 2021 will probably be barely decrease than in 2020 (internet gross sales in 2020 have been EUR 1,078 million). Working revenue is estimated to be decrease or clearly decrease than in 2020 (working revenue in 2020 was EUR 280 million).

KEY FIGURES

President and CEO Timo Lappalainen:
Robust efficiency amid challenges introduced on by COVID-19 pandemic

Story continues

“The COVID-19 pandemic made 2020 an distinctive and demanding yr for Orion and for the world. The sturdy spike in demand for prescribed drugs seen in March and April introduced challenges to Orion’s manufacturing and logistics. Nonetheless, we prevailed as a result of sturdy dedication and onerous work of our folks. We strived efficiently – and can keep on striving – to make sure that prescribed drugs manufactured and bought by Orion proceed to be accessible to sufferers. Our present stock standing is sweet, however we have to hold working to this impact, as the chance of disruptions in international pharmaceutical provide chains stays greater than common owing to the pandemic. Within the present distinctive circumstances, we’ve got prioritised taking care of the well being and security of our workers and making certain manufacturing continuity and affected person security in ongoing medical trials, and we are going to proceed to take action. Amidst the pandemic, we pushed ourselves to an excellent efficiency, for which many thanks are because of our devoted and adaptable folks at Orion in addition to our collaboration companions.

Our internet gross sales in 2020 have been EUR 1,078 (1,051) million and our working revenue was EUR 280 (253) million. The COVID-19 pandemic had quite a lot of impacts on our gross sales. Full-year gross sales of some pandemic-related merchandise, resembling dexmedetomidine merchandise utilized in intensive care, have been clearly above the extent estimated in the beginning of 2020. Then again, the gross sales of some merchandise fell beneath anticipated ranges partly because of restrictive measures put in place in varied elements of Europe. The final sturdy spike in demand for prescribed drugs in March and April elevated gross sales considerably at annual degree, though demand did degree off as anticipated over the remainder of the yr. We don’t consider that there was a rise within the primary want for prescribed drugs aside from these used for treating COVID-19 sufferers; our estimate is that the expansion in demand moderately displays prospects’ preparation measures and stockpiling. At this level it’s troublesome to estimate how prospects’ inventory ranges will evolve within the close to future. The coronavirus had seen impacts on Orion’s operations, however on the similar time it may be mentioned that our enterprise operations developed favourably in lots of respects additionally with out consideration to the COVID-19 influence.

The expansion of working revenue is generally because of greater internet gross sales than within the earlier yr and a lower in working bills owing to the pandemic. Gross margin was improved by the excessive utilisation fee of Orion’s manufacturing amenities and decreased waste following continuous growth of operations, in addition to elevated gross sales, though the extent of margins in product gross sales fell late within the yr primarily as a result of timing of accomplice deliveries of Parkinson’s medicine and animal sedatives and a lower within the gross sales of Simdax®. Within the final months of the yr, bills elevated relative to previous months of the yr because of new investments in analysis and growth tasks in addition to gross sales and advertising. In our estimate, our working revenue was round EUR 40 million stronger than we anticipated firstly of 2020, as a result of impacts of the COVID-19 pandemic. Greater than half of this have been attributable to the elevated worldwide gross sales of dexmedetomidine merchandise and the remainder to decrease than anticipated bills and elevated gross sales of different merchandise.

The online gross sales of the Dexdor® sedative, utilized in intensive care and aimed on the European market, decreased barely from the comparative interval because of generic competitors, however the lower was considerably lower than we had anticipated in the beginning of the yr as a result of elevated demand introduced on by the COVID-19 pandemic. The formulation patent of Simdax®, a drug used within the therapy of acute decompensated coronary heart failure, expired in key markets in September. Its gross sales decreased sharply in the direction of the tip of the yr because of a lower in deliberate hospital visits due to the pandemic and, in some markets, because of falling costs. Yr-on-year, its gross sales fell barely from 2019.

Gross sales of the Easyhaler® product portfolio for bronchial asthma and continual obstructive pulmonary illness noticed anticipated sturdy development till autumn however developed weaker than anticipated in the long run of the yr. In our estimate, COVID-19 restrictions lower the variety of docs’ appointments round Europe within the second half of the yr, and prospects used inventories they’d stockpiled within the first year-half, which was mirrored within the gross sales of Easyhaler® merchandise. The online gross sales of the Parkinson’s medicine Stalevo® and Comtess®/Comtan® remained on the earlier yr’s degree, as anticipated. The fluctuating gross sales in the middle of the yr have been largely as a result of timing of accomplice deliveries.

In 2020, Orion booked EUR 17 million in internet gross sales of Nubeqa®, a drug indicated for the therapy of non-metastatic castration-resistant prostate most cancers. As well as, Orion booked a complete of EUR 28 million in milestone funds from first industrial gross sales of the product within the EU and Japan. Within the comparative interval in August 2019, Orion booked a EUR 45 million milestone cost for the primary industrial gross sales of the product within the USA.

Web gross sales of the Specialty Merchandise unit elevated barely, however growth was uneven in the middle of the yr, particularly in self-care merchandise, as a result of spike in demand brought on by the COVID-19 pandemic in spring and subsequent levelling out of demand. In a full-year view, the coronavirus considerably elevated demand, however enterprise developed nicely even with out the pandemic impact. We might be glad with the expansion in a scenario through which the web gross sales of our biosimilar merchandise fell by greater than EUR 20 million and the costs of generic pharmaceuticals continued to fall.

The Animal Well being unit additionally had a strong yr, with internet gross sales reaching their highest degree ever up to now. In June, the U.S. Meals and Drug Administration (FDA) granted a advertising authorisation to Orion’s Clevor®, which will probably be distributed in america by our accomplice Vetoquinol. Orion’s long-term distribution partnership with the animal well being firm Zoetis in Denmark, Norway and Sweden got here to an finish in 2020, as Zoetis determined to arrange its personal gross sales organisations in these nations. The change may have a damaging influence on the unit’s internet gross sales in 2021, however may have no materials influence on Orion Group’s working revenue. Demand for Fermion merchandise was at a excessive degree all yr and manufacturing capability was almost absolutely utilised.

COVID-19 additionally affected Orion’s analysis and growth tasks, which skilled some delays as a result of scenario in 2020. The best precedence, nonetheless, was to take care of the security and continued care of sufferers concerned in medical trials. In July, we accomplished the Part III medical REFALS trial, which sadly didn’t meet its pre-specified endpoints. The trial investigated the efficacy and security of oral levosimendan within the therapy of amyotrophic lateral sclerosis (ALS).

We’re persevering with the Part III medical ARASENS trial on darolutamide with Bayer, anticipating to get outcomes this yr, and are collectively initiating the Part III medical ARANOTE trial on darolutamide as a brand new venture. The ODM-208 and ODM-209 tasks have seen a slight delay because of COVID-19 restrictions, however they’re continuing and ODM-208 has moved on to Part II medical trial. Orion’s new Senior Vice President for Analysis and Growth began in her put up in June, and within the autumn we renewed the R&D organisation and technique. The adjustments are aimed toward strengthening the corporate’s R&D portfolio and rushing up analysis tasks. Orion has additionally been creating a new-generation dry-powder inhaler, and we’ve got began first product growth venture utilizing the brand new system platform.

Orion’s strategic development goal, to achieve internet gross sales of EUR 1.5 billion by the tip of 2025, stays legitimate, and we’re working determinedly to realize this goal. For instance, we’ve got elevated useful resource allocation to enterprise growth, and in 2020 we signed a number of pretty vital in-licensing agreements within the Specialty Merchandise unit. Many of the potential of those agreements can solely materialise after 2025. However, the agreements point out that Orion is ready to purchase new merchandise to its markets and that it’s considered as a gorgeous accomplice.

Orion has systematically invested tens of thousands and thousands of euros yearly within the upkeep, renewing and growth of its manufacturing amenities in Finland. We continued these investments determinedly in 2020, our tangible investments totalling EUR 37 million. A renewal of Orion’s enterprise useful resource planning system will probably be one vital funding in 2021–2023. One other main funding, the renovation of Orion’s headquarters in Espoo, will start in autumn 2021 and be accomplished in 2023.”

Outlook for 2021

Orion estimates that internet gross sales in 2021 will probably be barely decrease than in 2020
(internet gross sales in 2020 have been EUR 1,078 million).

Working revenue is estimated to be decrease or clearly decrease than in 2020
(working revenue in 2020 was EUR 280 million).

Foundation for outlook in additional element

Collaboration agreements with different pharmaceutical corporations are an necessary part of Orion’s enterprise mannequin. Agreements typically embrace funds recorded in internet gross sales and working revenue that fluctuate drastically from yr to yr. Forecasting the timing and quantity of those funds is troublesome. In some instances they’re conditional on phrases resembling analysis outcomes which aren’t recognized till research have been accomplished, the progress of analysis tasks or the attainment of specified gross sales ranges. Then again, neither the end result nor the schedule of contract negotiations is usually recognized earlier than the ultimate signing of the settlement.

In 2020 Orion obtained a complete of EUR 42 million in milestone funds, most of those in reference to the commercialisation of Nubeqa® in Europe and Japan (EUR 28 million in whole) and the switch of distribution rights to Parkinson’s merchandise to new companions world wide. In 2019, Orion obtained a complete of EUR 51 million in milestone funds, of which EUR 45 million in reference to the commercialisation of Nubeqa® in america. The online gross sales and working revenue estimates for 2021 embrace lower than EUR 5 million of milestone funds, a considerably decrease determine than within the previous years.

Orion estimates that its working revenue in 2020 was round EUR 40 million greater as a result of impacts of the COVID-19 pandemic than the Firm estimated firstly of 2020. Greater than half of this got here from the elevated worldwide gross sales of dexmedetomidine merchandise and the remainder from decrease than anticipated bills and elevated gross sales of different merchandise. The outlook for 2021 doesn’t comprise related impacts as a result of pandemic.

The outlook relies on the belief that Orion’s personal manufacturing can proceed to function usually regardless of the COVID-19 pandemic. This requires, amongst different issues, continued success in worker safety in order that absence charges don’t considerably enhance, that non-public protecting gear, beginning supplies, intermediate merchandise and supplies can be found and that the logistics chains are sufficiently practical.

The outlook doesn’t embrace any revenue or bills related to doable product or firm acquisitions.

Web gross sales

Orion continues persistent actions to generate development extra quickly than development of the market in the long run. Nonetheless, in 2021 internet gross sales will probably be negatively affected by considerably decrease milestone funds than within the earlier years, generic competitors and expiration of a serious distribution settlement within the Animal Well being unit. As well as, the COVID-19 pandemic considerably elevated the demand for some Orion merchandise in 2020, however related added gross sales past regular demand usually are not anticipated for a similar merchandise in 2021, which negatively impacts internet gross sales as compared with 2020.

Gross sales of Orion’s Dexdor® and Simdax® will lower because of generic competitors. In 2020, the gross sales of Dexdor® remained on the earlier yr’s degree as a result of elevated demand brought on by the COVID-19 pandemic, however in 2021 its gross sales are anticipated to say no.

Nubeqa®, the drug developed by Orion in collaboration with Bayer, obtained advertising authorisation in america in 2019 and within the EU and Japan in 2020. Nubeqa® has now been permitted in a number of different nations as nicely, and advertising authorisation software filings in different areas are underway or deliberate by Bayer. The outlook anticipates that the web gross sales of Nubeqa® booked by Orion will clearly enhance in 2021. Orion’s estimate relies on forecasts obtained from its accomplice Bayer.

The gross sales of the Easyhaler® product portfolio will proceed to develop additionally in 2021 because of mixed formulations (budesonide-formoterol and salmeterol-fluticasone) launched prior to now few years. Nonetheless, development is predicted to be slower than within the previous years. The gross sales of Orion’s branded Parkinson’s medicine (Comtess®, Comtan® and Stalevo®) are estimated to stay on the similar degree as within the earlier yr.

The Scandinavian distribution settlement between Orion’s Animal Well being unit and the animal well being firm Zoetis, in impact for a number of years, terminated on the finish of 2020. As a consequence, the web gross sales of Orion’s Animal Well being unit in 2021 will lower clearly from the earlier yr. Distribution of Zoetis merchandise contributed round EUR 28 million to Orion’s internet gross sales in 2020.

Gross sales of generic merchandise account for a big proportion of Orion’s whole gross sales. Decline within the worth of generic medicine and availability disruptions because of causes aside from the COVID-19 pandemic have impacted Orion’s internet gross sales negatively prior to now few years. Nonetheless, the mixed damaging influence of worth decline and product shortages is estimated to be clearly smaller in 2021 than within the earlier years. The demand for some generic medicine bought by Orion exceeded regular ranges in 2020 as a result of COVID-19 pandemic, however the demand for these merchandise is estimated to return to a extra regular degree this yr, negatively affecting internet gross sales growth in 2021 as compared with 2020.

The outlook for 2021 consists of beneath EUR 5 million in milestone funds, which is clearly lower than what was booked in 2020 (EUR 42 million) or 2019 (EUR 51 million).

Working revenue

Orion anticipates clearly decrease milestone funds in 2021 than in 2020, and the Firm’s internet product gross sales are anticipated to lower barely from 2020. Working revenue will even be affected by declining gross sales of the proprietary merchandise Dexdor® and Simdax® because of generic competitors. Rising gross sales of merchandise like Easyhaler® product portfolio or Nubeqa® will be unable to compensate for the ensuing decline in working revenue. Orion due to this fact estimates that working revenue will probably be decrease or clearly decrease than in 2020.

Orion anticipates that working bills will stay at the same degree with the earlier yr. Depreciations associated to the acquisition of gross sales and distribution rights for the Parkinson’s medicine have been booked for the ultimate time in 2020, and this can cut back gross sales and advertising bills by round EUR 12 million. On the similar time, rising investments are made within the gross sales and advertising of merchandise which can be experiencing development. Bills that noticed a decline as a result of COVID-19 pandemic are anticipated to return to a extra regular degree within the second half of 2021. R&D bills are estimated to stay at the same degree as within the earlier yr.

The Group’s whole capital expenditure in 2021 is predicted to be greater than in 2020, when capital expenditure was EUR 49 million. Nonetheless, the COVID-19 pandemic could decelerate the implementation of deliberate investments. Orion has launched a venture to resume its enterprise useful resource planning (ERP) system, and renovations of the Firm head workplace in Espoo will even begin in 2021. Many of the investments in these tasks will materialise in 2022–2023.

Close to-term dangers and uncertainties

The outlook relies on the belief that Orion’s personal manufacturing can proceed to function usually regardless of the COVID-19 pandemic. The gross sales of Orion-manufactured merchandise depend upon the flexibility of manufacturing and all the provide chain to function on the deliberate degree. This includes quite a few pandemic-related dangers that will trigger even materials manufacturing disruptions. Such dangers embrace the an infection of workers, poor availability of non-public protecting gear, poorer availability of beginning supplies and intermediate merchandise in addition to logistics chain disruptions.

In the midst of 2020, because the settlement with Novartis expired, Orion transferred the distribution of the Parkinson’s medicine Stalevo® and Comtan® to new companions in most non-European markets aside from Japan. Orion began to promote these merchandise by itself in Singapore, Malaysia and Thailand and continues to promote them in Europe. These adjustments, in addition to continued generic competitors affecting gross sales negatively, have been factored into the outlook for the present yr. Nonetheless, they nonetheless entail uncertainty that will materially have an effect on the accuracy of the estimate made at this stage.

The fundamental patents for Dexdor® and Simdax® have expired and generic competitors on these merchandise has begun. In 2020, the COVID-19 pandemic strongly elevated the demand for intensive care sedatives, and due to this fact the gross sales of Dexdor® decreased far lower than anticipated. Its gross sales are estimated to notably lower in 2021, however this estimate is topic to substantial uncertainty as a result of pandemic scenario. Generic competitors to Simdax® began within the first markets in 2020. In 2021, internet gross sales of Simdax® are estimated to lower, however it’s troublesome to make precise estimates of gross sales at this level. Precise gross sales will probably be affected, amongst different issues, by the timing of the start of generic competitors within the varied markets and the depth of this competitors.

Gross sales of particular person merchandise and likewise Orion’s gross sales in particular person markets could fluctuate, for instance relying on the extent to which the ever-tougher worth and different competitors prevailing in pharmaceutical markets in recent times will particularly deal with Orion’s merchandise. Product deliveries to key companions are based mostly on timetables which can be collectively agreed prematurely. However, they will change, for instance as a consequence of choices regarding changes of inventory ranges. As well as, adjustments in market costs and alternate charges have an effect on the worth of deliveries. The COVID-19 pandemic considerably elevated the demand for some Orion merchandise in 2020, however related added gross sales past regular demand usually are not anticipated for a similar merchandise in 2021. There may be uncertainty round this estimate, for the reason that path of the pandemic and its impacts on the demand for Orion’s merchandise are troublesome to evaluate with any precision. Then again, Orion is unaware of how a lot of the stockpiles acquired by prospects in 2020 are remaining and when prospects would possibly begin utilizing inventories that exceed regular inventory ranges.

The structural alternate fee threat as a result of US greenback has decreased in recent times as a result of the share of Orion’s internet gross sales invoiced in {dollars} has fallen to beneath ten per cent and on the similar time the worth of purchases in {dollars} has elevated. The burden of the US greenback will enhance because of rising gross sales of Nubeqa®. The best alternate fee threat at current pertains to European currencies such because the Swedish and Norwegian crown and British pound. Nonetheless, the general impact of the chance because of currencies of European nations will probably be abated by the truth that Orion has organisations of its personal in most of those nations, which implies that along with gross sales revenue, there are additionally prices in these currencies. The alternate fee efficiency of the Japanese yen is critical because of elevated gross sales of Parkinson’s medicine in Japan. The alternate fee impact associated to the Russian rouble has elevated as a result of sturdy volatility of the forex. Nonetheless, Russian gross sales usually are not a good portion of Orion’s complete internet gross sales.

Orion’s broad product vary could trigger dangers to the supply reliability and make it difficult to keep up the top quality customary required in manufacturing. The influence of availability disruptions on the Firm’s internet gross sales has elevated prior to now few years. The continuing COVID-19 pandemic has clearly ramped up this threat, as restrictions on journey and different operations and the rise in sick leaves in numerous elements of the world could trigger delayed disruptions in prescribed drugs’ international distribution and logistics chains. In Orion’s estimate, the COVID-19 pandemic won’t considerably have an effect on the provision of Firm merchandise within the first half of 2021, however there’s a threat of poorer product availability within the second half of the yr. Authorities and key prospects in numerous nations perform common and detailed inspections of drug growth and manufacturing at Orion’s manufacturing websites. Any remedial actions that could be required could not less than quickly have results that lower supply reliability and enhance prices. Orion’s product vary additionally accommodates merchandise manufactured by different pharmaceutical corporations and merchandise that Orion manufactures by itself however for which different corporations ship energetic pharmaceutical or different substances. Attainable issues associated to the supply reliability or high quality of the merchandise of these producers could trigger a threat to Orion’s supply reliability. The only-channel system used for prescribed drugs distribution in Finland, through which Orion’s merchandise have been delivered to prospects via just one wholesaler, can also trigger dangers to supply reliability.

Analysis tasks at all times entail uncertainty elements that will both enhance or lower estimated prices. The tasks could progress extra slowly or sooner than assumed, or they might be discontinued. Nonetheless, adjustments that will happen in ongoing medical research, for instance as a result of COVID-19 pandemic, are mirrored in prices comparatively slowly and usually are not anticipated to have a fabric influence on earnings within the present yr. Owing to the character of the analysis course of, the timetables and prices of recent research which can be being began are recognized nicely prematurely. They due to this fact usually don’t result in surprising adjustments within the estimated value construction. Orion typically undertakes the final, in different phrases Part III, medical trials in collaboration with different pharmaceutical corporations. Graduation of those collaboration relationships and their construction additionally materially have an effect on the schedule and value degree of analysis tasks.

Collaboration preparations are an necessary part of Orion’s enterprise mannequin. Attainable collaboration and licensing agreements associated to those preparations additionally typically embrace funds to be recorded in internet gross sales that will materially have an effect on Orion’s monetary outcomes. In 2014–2020 the annual funds various from EUR 5 million to EUR 51 million. The funds could also be topic to situations referring to the progress of analysis tasks or gross sales or to new contracts to be signed, and whether or not these situations or contracts materialise and what their timing is will at all times entail uncertainties.

Proposal by the Board of Administrators: dividend EUR 1.50 per share

The mother or father firm’s distributable funds are EUR 477,075,050.26 or EUR 3.40 per share. This consists of EUR 216,389,442.49 or EUR 1.54 per share, of revenue for the monetary yr. These per share quantities are calculated excluding treasury shares held by the Firm. The Board of Administrators proposes cost of a dividend of EUR 1.50 (1.50) per share from the mother or father firm’s distributable funds.

No dividend shall be paid on treasury shares held by the Firm on the dividend distribution report date. On the day when the revenue distribution was proposed, the variety of shares conferring entitlement to obtain dividend totalled 140,463,196, on which the whole dividend cost can be EUR 210,694,794.00. The Group’s payout ratio for the monetary yr 2020 can be 95.9% (105.2%) The dividend cost date can be 7 April 2021, and shareholders registered within the Firm’s shareholder register on 29 March 2021 can be entitled to the dividend cost.

The Board of Administrators additional proposes that EUR 350,000 (250,000) be donated to medical analysis and different functions of public curiosity in accordance with a separate resolution by the Board and that EUR 266,030,256.26 stay in fairness.

Information convention and convention name

A webcast and a convention name for analysts, buyers and media will probably be held on Tuesday, 9 February 2021 at 13.30 EET. The occasion will probably be held solely on-line and by convention name.

A hyperlink to the stay webcast will probably be accessible on Orion’s web site at www.orion.fi/en/buyers. A recording of the occasion will probably be accessible on the web site later the identical day.

To take part the convention name, please dial:

Finland: +358 9 817 103 10
Sweden: +46 8 566 426 51
UK: +44 333 300 0804
USA: +1 631 913 1422

PIN: 46768214#

Upcoming occasions

The Monetary Statements and the Report by the Board of Administrators for 2020 will probably be printed on the Firm’s web site on the newest in week 9/2021.

Espoo, 9 February 2021

Board of Administrators of Orion Company

Orion Company

For added details about the report:

Jari Karlson, CFO tel. +358 50 966 2883
Tuukka Hirvonen, Investor Relations tel. +358 10 426 2721 or +358 50 966 2721

www.orion.fi/en/investors

Writer:
Orion Company
http://www.orion.fi/en

http://www.twitter.com/OrionCorpIR

Orion is a globally working Finnish pharmaceutical firm – a builder of well-being. Orion develops, manufactures and markets human and veterinary prescribed drugs and energetic pharmaceutical substances. The corporate is constantly creating new medicine and therapy strategies. The core remedy areas of Orion’s pharmaceutical R&D are neurological problems, oncology and respiratory illnesses for which Orion develops inhaled pulmonary remedy. Orion’s internet gross sales in 2020 amounted to EUR 1,078 million and the corporate had about 3,300 workers on the finish of the yr. Orion’s A and B shares are listed on Nasdaq Helsinki.

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