AndhraNews.net
Home » Business News » 2012 » October » October 23, 2012

Orion Group Interim Report January-September 2012


October 23, 2012 - London

ORION CORPORATION / INTERIM REPORT / JANUARY-SEPTEMBER 2012 / 23 October 2012 at 12:00 noon EEST

Orion's net sales for January-September 2012 totalled EUR 726 million (EUR 682 million for January-September 2011), up by 7% on the comparative period last year.

  • Operating profit was EUR 222 (223) million. 

  • Profit before taxes was EUR 221 (222) million. 

  • Equity ratio was 59% (64%). 

  • ROCE before taxes was 50% (53%). 

  • ROE after taxes was 46% (48%). 

  • Basic earnings per share were EUR 1.18 (1.17). 

  • Cash flow per share before financial items was EUR 0.92 (0.77). 

  • The outlook estimate for 2012 was updated after the review period. It is currently estimated that in 2012 net sales will be slightly higher than in 2011 and operating profit will be at similar level to 2011. 

ORION'S KEY FIGURES FOR THE REVIEW PERIOD

Q3/12 Q3/11 Change % Q1-Q3/12 Q1-Q3/11 Change % 2011
Net sales, EUR million 245.8 210.7 +16.7% 726.0 681.8 +6.5% 917.9
International operations, EUR million 182.5 150.5 +21.2% 536.0 502.8 +6.6% 677.2
 % of net sales 74.3% 71.5% 73.8% 73.8% 73.8%
Operating profit, EUR million 76.3 65.4 +16.6% 221.5 223.4 -0.8% 282.9
 % of net sales 31.0% 31.1% 30.5% 32.8% 30.8%
Profit before taxes, EUR million 76.0 65.0 +17.0% 220.5 222.4 -0.9% 282.0
 % of net sales 30.9% 30.8% 30.4% 32.6% 30.7%
Income tax expense, EUR million 18.9 17.1 +10.4% 54.5 58.1 -6.2% 72.4
R&D expenses, EUR million 26.1 19.4 +34.7% 73.2 62.1 +17.8% 87.5
 % of net sales 10.6% 9.2% 10.1% 9.1% 9.5%
Capital expenditure, EUR million 12.7 19.4 -34.5% 36.0 36.7 -1.7% 49.5
 % of net sales 5.2% 9.2% 5.0% 5.4% 5.4%
Assets total, EUR million 791.9 706.9 +12.0% 779.1
Equity ratio, % 59.2% 64.2% 64.2%
Gearing, % 7.6% 2.9% -6.9%
Interest-bearing liabilities, EUR million 149.9 99.9 +50.0% 88.7
Non-interest-bearing liabilities, EUR million 173.0 153.1 +13.0% 190.5
Cash and cash equivalents, EUR million 114.3 87.0 +31.5% 123.0
ROCE (before taxes), % 50.0% 53.4% 49.4%
ROE (after taxes), % 45.7% 47.6% 43.3%
Basic earnings per share, EUR 0.41 0.34 +19.3% 1.18 1.17 +1.0% 1.49
Diluted earnings per share, EUR 0.41 0.34 +19.3% 1.18 1.17 +1.0% 1.49
Cash flow per share before financial items, EUR 0.42 0.23 +84.8% 0.92 0.77 +19.4% 1.10
Equity per share, EUR 3.33 3.22 +3.2% 3.55
Personnel at the end of the period 3,489 3,410 +2.3% 3,425
Average personnel during the period 3,500 3,300 +6.1% 3,328
Personnel expenses, EUR million 152.8 134.3 +13.8% 186.0

President and CEO Timo Lappalainen's review

"Good sales growth maintained"

"As anticipated, the entry of generic competitors to Stalevo into US markets in April reduced our deliveries to Novartis. However, this decrease was partly offset by a compensatory payment received from them during the past quarter related to long-term pricing of the product. We were also able to compensate for some of this decrease in sales through deliveries of generic entacapone products. Sales from our other product ranges remained at a good level and were 11% higher than in January-September last year. The profit developed better than anticipated due to the increase in sales.

"Launching of the intensive care sedative Dexdor, which gained marketing authorisation a year ago, has progressed as planned in Europe. Orion's share of the Finnish pharmaceuticals markets continued to grow and Specialty Products business operations have developed well in almost all markets. Fermion, Orion Diagnostica and Contract Manufacturing sales were over 10% higher than in the comparative period.

"Our operating expenses excluding R&D expenses were at similar level to the previous year. Research expenditure was clearly higher than in the comparative period, as planned. Promising results from Phase I clinical trials of an androgen receptor antagonist development for the treatment of advanced prostate cancer were presented in September at ESMO, Europe's largest oncology congress. We have started clinical trials with a new COMT inhibitor for treatment of Parkinson's disease. In addition, we have received positive phase II results from our project to develop a new more effective levodopa product. Our other research projects in clinical trials and early-phase research have also progressed as planned.

"Our outlook estimate, which can be found with the basis for it on pages 6-7 of this report, was updated in early October after the review period. We now estimate that our full-year net sales will be slightly higher than in 2011 and our operating profit will be at similar level to 2011."

Events during the period

On 3 July Orion upgraded its full-year outlook for 2012.

On 5 September Orion announced that the total number of Orion Corporation B shares under the management of The Capital Group Companies, Inc. had increased to more than one-twentieth (1/20) of the total number of Orion Corporation shares.

Events after the period

On 9 October Orion upgraded its full-year outlook for 2012.

News conference and teleconference

A news conference and teleconference on the published results will be held today, Tuesday 23 October 2012, at 13:30 EEST in Hotel Kämp, address: Pohjoisesplanadi 29, Helsinki. President and CEO Timo Lappalainen will give a brief presentation in English on the financial review.

The event can be followed live as a webcast accessible via the Orion website at http://www.orion.fi/en/. After the presentation, questions can be asked by telephone in Finnish and English.

The teleconference code is 914113 and to participate in the teleconference, please call:

from United States: +1 334 323 6203

from other countries: +44 (0)20 7162 0125

News conference recordings

A recording of the webcast of the event in English and a recording of the presentation by the President and CEO in Finnish will be available on the Orion website later today.

Financial report material

Financial reports and related presentation material are available at www.orion.fi/en/ promptly after publication. The website also has a form for subscribing to Orion's releases.

Dates in Orion Calendar 2013

Financial Statements 2012 Tuesday 5 February 2013

Annual General Meeting 2013 Tuesday 19 March 2013

Interim Report January-March 2013 Tuesday 23 April 2013

Interim Report January-June 2013 Tuesday 30 July 2013

Interim Report January-September 2013 Tuesday 22 October 2013

The Annual Report 2012 will be published on the Company's website at the latest in week 9/2013.

For additional information about the financial review:

Jari Karlson, CFO, tel. +358 10 426 2883

www.orion.fi/en
www.orion.fi/en/investors/

Financial review Q1-Q3/2012

Net sales

The Orion Group's net sales in January-September 2012 were up by 7% at EUR 726 million (EUR 682 million in January-September 2011). The net effect of currency exchange rates was plus EUR 13 million.

The Pharmaceuticals business's net sales were up by 6% at EUR 687 (647) million. Net sales of Orion's Stalevo® (carbidopa, levodopa and entacapone) and Comtess®/Comtan® (entacapone) Parkinson's drugs were down by 5% at EUR 192 (202) million, which was 28% (31%) of the Pharmaceuticals business's net sales. The net sales of other products in the portfolio totalled EUR 495 (444) million, and were up by 11% on the comparative period. The products based on in-house R&D accounted for EUR 319 (310) million, or 46% (48%) of the Pharmaceuticals business's net sales.

The Diagnostics business's net sales were up by 12% at EUR 41 (37) million.

Operating profit

The Orion Group's operating profit was EUR 222 (223) million.

The Pharmaceuticals business's operating profit was EUR 226 (226) million. Net sales and operating profit were enhanced by long-term compensatory payments of EUR 10 million related to the pricing of partner deliveries. In the comparative period net sales and operating profit were enhanced by a non-recurring payment of EUR 7 million. Gross profit percentage was lower than in the comparative period because products with lower margins accounted for an increasing proportion of sales.

The Diagnostics business's operating profit was down by 27% at EUR 3.1 (4.2) million as marketing and product development costs increased, although sales grew well.

Operating expenses

The Group's sales and marketing expenses were EUR 148 (151) million.

R&D expenses were up by 18% at EUR 73 (62) million and accounted for 10% (9%) of the Group's net sales. Pharmaceutical R&D expenses amounted to EUR 67 (58) million. Research projects are reported in more detail under Pharmaceuticals in the Business Reviews.

Administrative expenses were EUR 32 (28) million.

Other operating income and expenses increased profit by EUR 2 (3) million.

Group's profit

The Group's profit before taxes totalled EUR 221 (222) million. Basic earnings per share were EUR 1.18 (1.17) and diluted earnings per share were EUR 1.18 (1.17). Equity per share was EUR 3.33 (3.22). The return on capital employed before taxes (ROCE) was 50% (53%) and the return on equity after taxes (ROE) 46% (48%).

Financial position

The Group's gearing was 8% (3%) and the equity ratio 59% (64%).

The Group's total liabilities at 30 September 2012 were EUR 323 (253) million. At the end of the period, interest-bearing liabilities amounted to EUR 150 (100) million, including EUR 120 (77) million of long-term loans.

The Group had EUR 114 (87) million of cash and cash equivalents at the end of the period, which are invested in short-term interest-bearing instruments issued by financially solid financial institutions and corporations.

Cash flow

Cash flow from operating activities was EUR 168 (143) million. Cash flow was higher because the amount tied up into working capital grew by less than in the comparative period and in addition the amount of taxes paid was lower.

Cash flow from investing activities was EUR -38 (-35) million and cash flow from financing activities was EUR -139 (-188) million. Cash flow from financing activities improved on the comparative period because new long-term loans were raised.

Capital expenditure

The Group's capital expenditure totalled EUR 36 (37) million. This comprised EUR 30 (20) million on property, plant and equipment and EUR 6 (17) million on intangible assets.

Outlook for 2012

Net sales will be slightly higher than in 2011.

Operating profit will be at similar level to 2011.

The Group's capital expenditure will be about EUR 50 million excluding substantial corporate or product acquisitions.

Basis for outlook

Product launches will continue to support Orion's position as market leader in Finland. However, price competition is expected to persist in 2012.

The generic competition commencing in April 2012 in the United States will decrease sales of Orion's Parkinson's drugs in 2012. In 2011 US markets accounted for about EUR 60 million of the net sales of Orion's Parkinson's drugs. Elsewhere in the world generic competition is not expected to have a material impact on sales of these products in 2012.

Marketing expenditure will be similar to the previous year. Because the registrations and launches of new products are projects that take more than a year, the increases in resources and other inputs required in
2012 were planned mainly during the previous year.

Research and development costs will be higher than in 2011. They are partly the Company's internal fixed cost items, such as salaries and maintenance of the operating infrastructure, and partly external variable costs. External costs arise from, among other things, long-term clinical trials, which are typically performed in clinics located in several countries. The most important clinical trials scheduled for 2012 are either ongoing from the previous year or at an advanced stage of planning, therefore their cost level can be estimated rather accurately.

The estimated costs of the ongoing patent litigation in the United States are based on the planned timetables and work estimates. The costs due to the litigation will depend on a number of factors, which are difficult to estimate accurately.

Near-term risks and uncertainties relating to the outlook

The Company is not aware of any significant risk factors relating to the earnings outlook for 2012. The effects of commencement of generic competition on Orion's Parkinson's drugs have been taken into account in the outlook estimate.

Sales of individual products and also Orion's sales in individual markets may vary, for example depending on the extent to which the ever-tougher price and other competition prevailing in pharmaceutical markets in recent years will specifically affect Orion's products. Deliveries to Novartis are based on timetables that are jointly agreed in advance. Nevertheless, they can change, for example as a consequence of decisions by Novartis concerning adjustments of stock levels.

Most of the exchange rate risk relates to the US dollar. Typically, only less than 15% of Orion's net sales comes from the United States. As regards currencies in European countries, the overall effect will be abated by the fact that Orion has organisations of its own in most of these countries, which means that in addition to sales income, there are also costs in these currencies.

Research projects always entail uncertainty factors that may either increase or decrease estimated costs. The projects may progress more slowly or faster than assumed, or they may be discontinued. Nonetheless, changes that may occur in ongoing clinical studies are reflected in costs relatively slowly, and they are not expected to have a material impact on earnings in the current year. Owing to the nature of the research process, the timetables and costs of new studies that are being started are known well in advance. They therefore typically do not lead to unexpected changes in the estimated cost structure.

Group's financial objectives

Orion's financial objectives are ensuring the Group's financial stability and creating profitable growth.

These objectives are achieved through:

  • Increasing net sales. Achievement of this objective requires continuous investment in development of the product portfolio. 

  • Maintaining profitability at a good level, the aim being operating profit that exceeds 20% of net sales. 

  • Keeping the equity ratio at least 50%. 

Orion's dividend distribution policy

Orion's dividend distribution takes into account the distributable funds and the capital expenditure and other financial requirements in the medium and long term to achieve the financial objectives.

Shares and shareholders

On 30 September 2012 Orion had a total of 141,257,828 (141,257,828) shares, of which 44,293,218 (45,247,646) were A shares and 96,964,610 (96,010,182) B shares. The Group's share capital was EUR 92,238,541.46 (92,238,541.46). At the end of September 2012 Orion held 325,991 (413,754) B shares as treasury shares. On 30 September 2012 the aggregate number of votes conferred by the A and B shares was 982,502,979 (1,000,549,348) excluding treasury shares.

At the end of September 2012, Orion had 58,800 (56,539) registered shareholders.

Voting rights conferred by shares

Each A share entitles its holder to twenty (20) votes at General Meetings of Shareholders and each B share one (1) vote. However, a shareholder cannot vote more than 1/20 of the aggregate number of votes from the different share classes represented at the General Meetings of Shareholders. In addition, Orion and Orion Pension Fund do not have the right to vote at Orion Corporation's General Meetings of Shareholders.

Both share classes, A and B, confer equal rights to the Company's assets and dividends.

Conversion of shares

The Articles of Association entitle shareholders to demand the conversion of their A shares to B shares within the limitation on the maximum number of shares of a class. In January-September a total of 700,000 shares were converted.

Trading in Orion's shares

Orion's A shares and B shares are quoted on NASDAQ OMX Helsinki in the Large Cap group under the Healthcare sector heading under the trading codes ORNAV and ORNBV. Trading in both of the Company's share classes commenced on 3 July 2006, and information on trading in the Company's shares has been available since this date.

On 30 September 2012 the market capitalisation of the Company's shares excluding treasury shares was EUR 2,342 million.

Orion shares are also traded on various alternative trading platforms in addition to NASDAQ OMX Helsinki.

Authorisations of the Board of Directors

Orion's Board of Directors was authorised by the Annual General Meeting on 24 March 2010 to decide on a share issue in which shares held by the Company can be conveyed. The authorisation to issue shares is valid for five years from the decision taken by the Annual General Meeting.

The Board of Directors is authorised to decide on conveyance of no more than 500,000 Orion Corporation B shares held by the Company. Such shares held by the Company can be conveyed either against or without payment. Such shares held by the Company can be conveyed by selling them in public trading on NASDAQ OMX Helsinki; in a share issue placement to the Company's shareholders in proportion to their holdings at the time of the conveyance regardless of whether they own A or B shares; or in a share issue placement deviating from shareholders' pre-emptive rights if there is a weighty financial reason, such as the development of the capital structure of the Company, using the shares to finance possible corporate acquisitions or other business arrangements of the Company, financing capital expenditure or as part of the Company's incentive plan. The share issue placement can be without payment only if there is an especially weighty financial reason in the view of the Company and to the benefit of all its shareholders. The amounts paid for shares in the Company conveyed shall be recorded in a distributable equity fund. The Board of Directors shall decide on other matters related to the conveyance of shares held by the Company. The authorisation was exercised as described below under the heading "Share-based Incentive Plan". On 30 September 2012 the Board of Directors had outstanding authorisation to convey 309,337 Orion Corporation B shares held by the Company.

The Board of Directors is not authorised to increase the share capital or to issue bonds with warrants or convertible bonds or stock options.

Share-based Incentive Plan

In February 2010 the Board of Directors of Orion Corporation decided on a new share-based incentive plan for the Group key persons. The Plan includes earning periods and the Board of Directors will annually decide on the beginning and duration of the earning periods in 2010, 2011 and 2012. The Board of Directors will decide on the earnings criteria and on targets to be established for them at the beginning of each earning period. The target group of the Plan consists of approximately 30 people. The total maximum amount of rewards to be paid on the basis of the Plan is 500,000 Orion Corporation B shares and a cash payment corresponding to the value of the shares.

On 12 March 2012 Orion transferred altogether 87,763 Orion Corporation B shares held by the Company as a share bonus for 2011 to the key persons employed by the Group and belonging to the Share-based Incentive Plan of the Group. The transfer was based on the authorisation by the Annual General Meeting on 24 March 2010.

Share ownership

At the end of September 2012 Orion had a total of 58,800 (56,539) registered shareholders, of whom 95% (95%) were private individuals holding 50% (49%) of the entire share stock and 65% (65%) of the total votes. There were altogether 44 (45) million nominee-registered shares, which was 31% (32%) of all shares, and they conferred entitlement to 6% (6%) of the total votes.

At the end of September 2012 Orion held 325,991 (413,754) B shares as treasury shares, which is 0.2% (0.3%) of the Company's total share stock and 0.03% (0.04%) of the total votes.

Notification threshold

On 5 September 2012 Orion announced that on 3 September 2012 the total number of Orion Corporation B shares under the management of The Capital Group Companies, Inc. had increased to more than one-twentieth (1/20) of all Orion Corporation shares. According to the notification, The Capital Group Companies, Inc. owns 8,313,900 Orion B shares, which is 5.89% of the shares and 0.84% of Orion's total number of votes.

Personnel

The average number of employees in the Orion Group in January-September 2012 was 3,500 (3,300). At the end of September 2012 the Group had a total of 3,489 (3,410) employees, of whom 2,788 (2,680) worked in Finland and 701 (730) outside Finland. The number of employees increased mainly in manufacturing due to the increase in manufacturing output.

Salaries and other personnel expenses in January-September 2012 totalled EUR 153 (134) million.

Significant legal proceedings

Legal proceedings against the Sandoz companies

Orion announced on 1 May 2012 that it had been informed that the United States District Court for the District of New Jersey had given its decision on the patent infringement lawsuit that Orion Corporation and Hospira, Inc. filed on 4 September 2009 to enforce US Patents Nos. 4,910,214 and 6,716,867. The respondents in the case are Sandoz Inc., Sandoz International GmbH and Sandoz Canada Inc. (hereinafter collectively "Sandoz").

The court found that US Patent No. 4,910,214 is valid and enforceable. Sandoz is permanently enjoined from the commercial manufacture, use, sale or offer for sale in the United States or importation into the United States of its generic dexmedetomidine product until such time as US Patent No. 4,910,214 expires, including any applicable extensions. The Court also ordered that the effective date of Sandoz's Abbreviated New Drug Application No. 91-465 shall not occur until the expiration of Patent No. 4,910,214, including any applicable extensions. Separately, the court found that US Patent No. 6,716,867 is invalid as obvious.

Orion's licensee Hospira, Inc. sells Precedex® in the United States and in markets outside Europe.

Orion and Hospira have filed an appeal against the decision to the court of appeals, and so has Sandoz.

Legal proceedings against Caraco Pharmaceutical Laboratories, Ltd.

On 12 November 2010 Orion Corporation and Hospira, Inc. jointly filed a patent infringement lawsuit in the United States against Caraco Pharmaceutical Laboratories, Ltd. to enforce Orion's and Hospira's joint patent No. 6,716,867 valid in the United States. Gland Pharma Ltd. has since been added as a defendant in the lawsuit.

Caraco had submitted an application for authorisation to produce and market in the United States a generic version of Orion's proprietary drug Precedex® (dexmedetomidine hydrochloride 100 µg/ml), which is marketed in the United States by Orion's licensee Hospira.

Orion expects the costs of the legal proceedings against Caraco to be substantially less than the costs of the entacapone patent litigation that had previously been pending in the United States. Consideration of the case has been suspended pending the conclusion of the above-mentioned appeal proceedings against the Sandoz companies concerning Patent No. 6,716,867.

Legal proceedings against Mylan Pharmaceuticals Inc.

On 24 January 2011 and 26 April 2012 Orion Corporation filed patent infringement lawsuits in the United States against Mylan Pharmaceuticals Inc. to enforce its US Patents Nos. 5,446,194, 6,500,867 and 6,797,732.

Mylan intends to market in the United States a generic version of entacapone tablets with strength 200 mg like Orion's Comtan® proprietary drug. Comtan is used as an adjunct to levodopa/carbidopa therapy to treat patients with idiopathic Parkinson's disease who experience the signs and symptoms of end-of-dose "wearing-off." Novartis is Orion's exclusive licensee for marketing the drug Comtan in the United States.

In addition, Mylan is seeking authorisation to produce and market generic tablets (strengths 12.5/50/200 mg; 18.75/75/200 mg; 25/100/200 mg; 31.25/125/200 mg; 37.5/150/200 mg and 50/200/200 mg) in the United States, with carbidopa, levodopa and entacapone as active ingredients in the same proportion as in Orion's proprietary drug Stalevo® for treatment of Parkinson's disease. Stalevo is an enhanced levodopa treatment which is marketed in the United States by Orion's exclusive licensee, Novartis.

Business Reviews

Pharmaceuticals

Review of human pharmaceuticals market

According to statistics collected by Finnish Pharmaceutical Data Ltd, Finnish wholesale of human pharmaceuticals in January-September 2012 totalled EUR 1,489 (1,453) million, up by 2% on the comparative period.

Finland is the most important individual market for Orion, generating about one-quarter of the total net sales. Orion was able to increase its sales faster than the markets as a whole, so strengthened its position as leader in marketing pharmaceuticals in Finland. According to statistics collected by Finnish Pharmaceutical Data Ltd, Orion's wholesale of human pharmaceuticals in Finland in January-September amounted to EUR 162 (150) million, up by 8% compared with the corresponding period in the previous year. Orion's market share of Finnish pharmaceuticals markets was 11% (10%).

According to IMS Health pharmaceutical sales statistics, in the 12-month period ending in June 2012 the total sales of Parkinson's drugs in the United States were down by 11% at USD 679 million (USD 760 million in the previous 12-month period). The decrease in in-market sales was due to commencement of generic competition in certain products. The five largest European markets for Parkinson's disease drugs were Germany, the United Kingdom, France, Spain and Italy. In these countries, the combined sales of Parkinson's drugs in the 12-month period ending in June 2012 totalled EUR 952 (1,014) million, and the average market decline was 6%.

The most important individual therapy area for Orion is still the treatment of Parkinson's disease. Orion's Parkinson's drugs account for about a quarter of the Group's net sales. Sales of entacapone drugs in the United States remained stable despite a clear decrease in the market as a whole. In Japan sales continued to grow well and clearly better than the market as a whole. According to IMS Health pharmaceutical sales statistics, in the 12-month period ending in June 2012, sales of entacapone drugs in the United States totalled USD 182 million (USD 181 million in the previous 12-month period). Stalevo and Comtan accounted for 92% of these sales and generic entacapone products supplied by Orion accounted for 8%. Sales remained stable at a total of EUR 157 (158) million in the five largest markets in Europe, and up by 21% at EUR 62 (52) million in Japan. The market share of entacapone drugs was 27% in the United States, on average 17% in the five largest European markets and 11% in Japan.

According to IMS Health pharmaceutical sales statistics, sales of Orion's Precedex® intensive care sedative (dexmedetomidine) were up by 27% at USD 230 million in the 12-month period ending in June 2012 (USD 180 million in the previous 12-month period). About four-fifths of the sales amounting to USD 178 (146) million were in the United States, where Precedex sales grew by 22%.

Net sales and operating profit of the Pharmaceuticals business

Net sales of the Pharmaceuticals business in January-September 2012 were EUR 687 (647) million, up by 6% on the comparative period of the previous year. The operating profit of the Pharmaceuticals business was similar to the comparative period at EUR 226 (226) million. The operating profit of the Pharmaceuticals business was 33% (35%) of the segment's net sales.

Net sales of Orion's top ten pharmaceuticals in January-September 2012 were up by 4% at EUR 353 (339) million. They accounted for 51% (52%) of the total net sales of the Pharmaceuticals business.

Net sales of the products based on own in-house R&D were up by 3% at EUR 319 (310) million in January-September 2012. These products accounted for 46% (48%) of the net sales of the Pharmaceuticals business.

Proprietary Products

The product portfolio of Proprietary Products consists of patented prescription products in three therapy areas: central nervous system diseases, oncology and critical care, and Easyhaler® pulmonary drugs.

Net sales of Proprietary Products in January-September 2012 were down by 2% at EUR 300 (306) million.

Orion's drugs for treatment of Parkinson's disease are Stalevo® (active ingredients carbidopa, levodopa, entacapone) and Comtess®/Comtan® (entacapone), and their net sales in January-September 2012 totalled EUR 192 (202) million. The net sales of Parkinson's drugs were down by 5% and accounted for 28% (31%) of the total net sales of the Pharmaceuticals business. The decrease in sales is mainly due to commencement of generic competition in the United States in April 2012, which decreased deliveries to Novartis. Net sales from deliveries of Stalevo and Comtan to Novartis were down by 8% at a total of EUR 119 (130) million. Deliveries of Stalevo to Novartis decreased by 2%, and deliveries of Comtan by 19%. Total net sales generated by Stalevo and Comtess in Orion's own sales organisation remained at the level of the comparative period of the previous year at EUR 73 (72) million. Sales through Orion's own sales organisation totalled EUR 63 (60) million for Stalevo and EUR 10 (12) million for Comtess.

The US Food and Drug Administration (FDA) has an ongoing safety review of Stalevo, which began in spring 2009. Orion is assisting the FDA in undertaking the safety review. The FDA has requested additional data based on databases concerning the significance of the results of the STRIDE-PD study, and consequently Orion and Novartis have undertaken epidemiological studies and results from them were submitted to authorities for review in the third quarter of 2012.

Net sales of Simdax®, a drug for treatment of acute decompensated heart failure, were up by 3% and totalled EUR 32 (31) million in January-September 2012.

Net sales of the Easyhaler® product family for treatment of asthma and chronic obstructive pulmonary disease were down by 12% in January-September 2012 at EUR 20 (23) million. Sales of Easyhaler products through Orion's own sales organisation in Europe continued to grow strongly, but sales through partners were lower than in the comparative period. Orion continues its strategy of repatriating the rights to Easyhaler products, and this transitional phase will reduce sales through partners in the current year.

Net sales of the Precedex® intensive care sedative (dexmedetomidine) were up by 27% in January-September 2012 at EUR 28 (22) million. In the United States and markets outside Europe the sedative is sold by Orion's partner Hospira. US markets account for about four-fifths of net sales of Precedex.

Net sales of Orion's dexdor® intensive care sedative (dexmedetomidine) in January-September 2012 were EUR 8 (0) million. Launching of the product is progressing as planned, and it is already available in over fifteen European countries. The product will be launched in Southern Europe and France as pricing and reimbursement processes progress country by country.

Specialty Products

Net sales of the Specialty Products business division's off-patent, i.e. generic, prescription drugs and self-care products in January-September 2012 were up by 13% at EUR 270 (238) million. The growth was enhanced by Orion's generic entacapone products, sales of which commenced at the beginning of the year and will be reported as part of the net sales of the Specialty Products business division.

Net sales of the division in markets outside Finland were up strongly compared with January-September 2011. The number of launches of generic prescription drugs and self-care products was at similar level to January-September in the previous year.

Net sales of Orion's human pharmaceuticals in Finland were up by 7% at EUR 175 (164) million in January-September 2012. Specialty Products accounted for the majority of sales. Orion managed to increase its market share, especially in prescription drugs.

Net sales of Orion's human pharmaceuticals in Eastern Europe in January-September were up by 10% at EUR 44 (40) million. Specialty Products account for the majority of sales in the region.

Animal Health

In the Nordic countries and some Eastern European markets Orion itself sells veterinary drugs, and in other markets the Company operates through partners. In addition, in the Nordic countries Orion markets and sells veterinary drugs manufactured by several international companies. Orion's Animal Health business division has a strong market position in the Nordic countries, its home markets.

Net sales of the Animal Health business division in January-September were up by 7% at EUR 52 (49) million. Sales of the animal sedatives at EUR 16 (14) million accounted for 32% (30%) of the division's net sales. Orion's animal sedatives are Dexdomitor® (dexmedetomidine), Domitor® (medetomidine), Domosedan® (detomidine) and Antisedan® (atipamezole).

Fermion

Fermion manufactures active pharmaceutical ingredients for Orion and other pharmaceutical companies. Its product range comprises nearly 30 pharmaceutical ingredients. Fermion's net sales in January-September 2012 excluding pharmaceutical ingredients supplied for Orion's own use were up by 16% at EUR 36 (32) million and accounted for about two-thirds of Fermion's entire net sales. Several key products performed well, even though competition in the markets remained intense. Capacity utilisation at Fermion's plants was very high during the period under review. Capacity utilisation was increased by manufacturing active ingredients required for development work on Orion's own proprietary drugs, in addition to the normal product range.

Research and development projects

The Group's R&D expenses in January-September 2012 totalled EUR 73 (62) million, of which the Pharmaceuticals business accounted for EUR 67 (58) million. The Group's R&D expenses accounted for 10% (9%) of the Group's net sales. R&D expenses also include expenses relating to development of the current portfolio.

Orion has ongoing projects to broaden the range of the inhalable Easyhaler® drugs product family. Orion is developing a budesonide-formoterol formulation that combines budesonide as an anti-inflammatory agent and formoterol as a long-acting bronchodilator. In addition, Orion has another Easyhaler research programme in progress to develop a fluticasone-salmeterol formulation. In this formulation fluticasone acts as an anti-inflammatory agent and salmeterol acts as a long-acting bronchodilator.

Orion is collaborating with Novartis to develop Stalevo® for the Japanese markets. Novartis will initiate a clinical bioavailability study in November 2012.

Orion is continuing to develop an androgen receptor antagonist (ODM-201) for the treatment of advanced prostate cancer jointly with Endo Pharmaceuticals Inc. with the objective of approval of the drug globally. Phase I/II clinical trials on safety, efficacy and pharmacokinetics showed that initial results concerning efficacy were promising, and the product was well tolerated with no significant adverse events. The results were presented at the ESMO international oncology congress at the end of September. Development of the product is now in Phase II clinical trials.

Orion has Phase II clinical trials with an alpha 2c receptor antagonist (ORM-12741) in progress. The trials are investigating the efficacy and safety of the drug candidate in treating Alzheimer's disease.

Orion is developing a new more effective levodopa product (ODM-101) based on optimised new formulations and doses of known compounds. The results from Phase II clinical trials were positive. Negotiations to find a suitable partner for the next development phase are ongoing.

Orion has begun Phase I clinical safety trials with a new COMT inhibitor (ODM-103). It is a new molecule that enhances the therapeutic effects of levodopa used to treat Parkinson's disease by blocking the COMT enzyme. The pre-clinical study results indicated that the new molecule is more effective than the COMT inhibitor entacapone, which is already in the markets.

In addition, Orion has several projects in the early research phase investigating prostate cancer, neuropathic pain, Parkinson's disease and Alzheimer's disease, among others.

Diagnostics

Orion Diagnostica manufactures convenient and quick in vitro diagnostic tests and testing systems suitable for point-of-care testing. Net sales of the Diagnostics business in January-September 2012 were up by 12% at EUR 41 (37) million. There was further progress in the Nordic countries and sales growth was strong, especially in China and Japan.

Sales of QuikRead® infection tests remained strong during the review period. Sales of the more user-friendly prefilled QuikRead 101 system and QuikRead go®, a new generation testing instrument, developed well. Launching of the FOB (Faecal Occult Blood) quantitative test for the QuikRead 101 system began during the review period. The new product version helps to screen gastrointestinal disorders.

The operating profit of the Diagnostics business was down by 27% at EUR 3.1 (4.2) million and accounted for 8% (12%) of the segment's net sales. The profit decreased because expenditure on product development and marketing increased.

Espoo, 23 October 2012

Board of Directors of Orion Corporation

Orion Corporation

Timo Lappalainen Jari Karlson
President and CEO CFO

Tables

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

EUR million Q3/12 Q3/11 Change % Q1-Q3/12 Q1-Q3/11 Change % 2011
Net sales 245.8 210.7 +16.7% 726.0 681.8 +6.5% 917.9
Cost of goods sold -85.2 -72.4 +17.7% -253.7 -219.8 +15.4% -305.1
Gross profit 160.6 138.3 +16.2% 472.2 462.0 +2.2% 612.8
Other operating income and expenses 0.7 -0.5 +256.8% 2.1 2.5 -18.5% 3.0
Sales and marketing expenses -49.4 -44.6 +10.7% -147.5 -151.2 -2.4% -204.8
R&D expenses -26.1 -19.4 +34.7% -73.2 -62.1 +17.8% -87.5
Administrative expenses -9.6 -8.4 +14.1% -32.2 -27.9 +15.3% -40.6
Operating profit 76.3 65.4 +16.6% 221.5 223.4 -0.8% 282.9
Finance income 1.4 0.5 +158.4% 4.8 3.1 +53.6% 5.0
Finance expenses -1.7 -1.0 +69.3% -5.9 -4.1 +44.6% -6.0
Share of associated companies' results 0.0 0.0 0.1 0.0 0.0
Profit before taxes 76.0 65.0 +17.0% 220.5 222.4 -0.9% 282.0
Income tax expense -18.9 -17.1 +10.4% -54.5 -58.1 -6.2% -72.4
Profit for the period 57.1 47.8 +19.4% 166.0 164.3 +1.0% 209.5
OTHER COMPREHENSIVE INCOME INCLUDING TAX EFFECTS
Change in value of cash flow hedges 0.0 -0.2 -0.3 -1.1 -1.4
Change in value of available-for-sale financial assets 0.0 0.0 0.3 -0.2 -0.3
Translation differences 0.6 0.6 1.8 -0.5 0.6
Other comprehensive income net of tax 0.6 0.4 1.9 -1.8 -1.1
Comprehensive income for the period including tax effects 57.7 48.2 +19.6% 167.8 162.5 +3.3% 208.4
PROFIT ATTRIBUTABLE TO:
Owners of the parent company 57.1 47.8 +19.4% 166.0 164.3 +1.0% 209.5
Non-controlling interests 0.0 0.0 0.0 0.0 0.0
COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent company 57.7 48.2 +19.6% 167.8 162.5 +3.3% 208.4
Non-controlling interests 0.0 0.0 0.0 0.0 0.0
Basic earnings per share, EUR 1) 0.41 0.34 +19.3% 1.18 1.17 +1.0%

GlobeNewswire

Comment on this story