Slide 1: Orion Investor presentation
Orion Investor presentation Updated on 18 July 2018
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements which involve risks and uncertainty factors. These statements are not based on historical facts but relate to the Company’s future activities and performance. They include statements about future strategies and anticipated benefits of
Slide 3: Content
Content 1) Orion in brief 2) R&D 3) Highlights of 1−6/2018 4) Outlook and financials 5) Business divisions 6) Responsibility 7) Financial calendar Investor Presentation © Orion Corporation 2018 3
Slide 4: Orion in brief
Orion in brief
Slide 5: Orion today – year 2017 in figures
Orion today – year 2017 in figures Sales by business Sales by market area Net sales 1,034 MEUR Operating profit 284 MEUR 5% 4% 14% Personnel 3,182 7% 34% 32% 7% R&D investments 99 MEUR 50% 30% 17% 6 production sites in Finland Proprietary Products Finland Scandinavia Specialty Products Other Europe
Slide 6: Steady development despite patent expiries
Steady development despite patent expiries Net sales Operating profit EUR million EUR million 1,200 10% 350 33% 1,000 300 32% 8% 800 250 31% 6% 200 30% 600 4% 150 29% 400 100 28% 200 2% 50 27% 0 0% 0 26% 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017 Parkinson franchise + Prec
Slide 7: Orion’s product mix has changed
Orion’s product mix has changed Sales by business 2011 Sales by business 2017 Net sales, EUR million 3% 4% 1,200 5% 5% 8% 7% 1,050 45% 34% 900 750 600 450 37% 50% 300 150 Proprietary Products Specialty Products 0 Animal Health Fermion 2011 2012 2013 2014 2015 2016 2017 Contract manufacturing & other
Slide 8: Our businesses
Our businesses Proprietary Products Specialty Products In-house developed drugs and Generic prescription drugs, OTC other drugs with valid product and non-medicinal products, protection biosimilars Animal Health Fermion Medicine and well-being Active pharmaceutical products for animals ingredients (
Slide 9: Orion’s strategy – Mission to build well-being
Orion’s strategy – Mission to build well-being Future R&D Investor Presentation © Orion Corporation 2018 9
Slide 10: Orion had ~74,000 shareholders on June 30, 2018
Orion had ~74,000 shareholders on June 30, 2018 By number of shares By number of votes Households (Finnish 5% 5% retail) 7% 2 % Non-Finnish holders and 8% 8% nominee-registered Private corporations 7% 13 % 44 % Public sector 62 % Non-profit institutions 7% 31 % Financial and insurance corporations O
Slide 11: Research and development
Research and development
Slide 12: Focus areas of Orion’s R&D
Focus areas of Orion’s R&D Proprietary Products Animal Health Fermion • CNS Orion utilises the • APIs to Orion’s • Oncology R&D of proprietary proprietary • Respiratory products to develop products (Easyhaler® new medicines for • Generic APIs product family) animals. • Contract development for pharm
Slide 13: Together we can achieve more in R&D
Together we can achieve more in R&D Late stage Research Early development development Target Hit to Lead Lead Candidate Phase I Phase II Phase III identification generation optimisation selection, and validation preclinical development 8‒24 mo. 12‒24 mo. 18‒36 mo. 12‒24 mo. 12‒14 mo. 12‒36 mo. 18‒48
Slide 14: Clinical trials are progressing
Clinical trials are progressing ● ODM-201/darolutamide ● ODM-109/orally administered levosimendan for prostate cancer in collaboration for ALS: with Bayer: – First patients recruited for the REFALS trial. – ARAMIS progresses on schedule. – Orion conducts the Phase III trial on its own. The Phase III
Slide 15: Orion's key pharmaceutical development projects
Orion's key pharmaceutical development projects Project Indication Phase Registration Easyhaler® salmeterol-fluticasone Asthma, COPD Bioequivalence study Registration Easyhaler® tiotropium COPD Bioequivalence study Darolutamide (ODM-201) 1) Prostate cancer (nmCRPC) I II III Darolutamide (ODM-201) 1)
Slide 16: Darolutamide: An androgen receptor targeted therapy for prostate cancer
Darolutamide: An androgen receptor targeted therapy for prostate cancer Darolutamide (ODM-201) is an androgen receptor antagonist that ● Binds to the androgen receptor with high affinity ● Prevents efficiently androgen receptor signaling ● Low blood–brain barrier (BBB) penetration, potentially resul
Slide 17: Darolutamide: Two trials in phase III proceeding
Darolutamide: Two trials in phase III proceeding ● Patients with non-metastatic, castration- ● Patients with metastatic, hormone-sensitive resistant prostate cancer at high risk for prostate cancer developing metastatic disease ● Treatment: Darolutamide with androgen ● Endpoints: deprivation therapy
Slide 18: ODM-109: Oral levosimendan for ALS
ODM-109: Oral levosimendan for ALS ● First patients recruited in July ● The aim is to apply for marketing authorisation for the Phase III clinical trial (REFALS). in the US and Europe. ● By enhancing respiratory muscle function ● Levosimendan has been granted an Orphan Drug in ALS patients, orally a
Slide 19: ODM-109: REFALS phase III trial
ODM-109: REFALS phase III trial Levosimendan 1-2mg/day (300 patients) 80-100 450 clinical sites patients in US, Canada, Costs of the trial: Placebo (150 patients) Western Europe, ~ EUR 60 million Australia approximately over three years Primary 12 weeks 48 weeks endpoints: SVC% ALSFRS-R + Survival =
Slide 20: ALS (Amyotrophic lateral sclerosis) as a rare disease
ALS (Amyotrophic lateral sclerosis) as a rare disease 1−2∕ ~16,800 ~12,500 ~450−500 100,000 Patients Patients Patients Incidence in the US in 2017 in Europe in Finland Investor Presentation © Orion Corporation 2018 20
Slide 21: ODM-208: Pan-steroid hormone synthesis inhibitor for castration-resistant prostate cancer
ODM-208: Pan-steroid hormone synthesis inhibitor (CYP11A1 inhibitor) for castration-resistant prostate cancer ● Steroid hormones stimulate the growth of hormonally regulated cancers, such as most prostate and breast cancers. ● Hormonal treatments are highly effective, but Steroid producton drug resi
Slide 22: Orion highlights 1−6/2018
1 ical ohvdaad LT 1) th! ol 00) im; S RION ing well-being Build Orion highlights 1-6/2018
Slide 23: Continuing to build the future
Continuing to build the future 1 Profitability was good, profit margin for continuing operations exceeded financial 3 Sales of Proprietary Products were at level with comparative period. Challenging operating target. Strong cash flow. Net environment, tougher price sales and operating profit for com
Slide 24: Key figures 1−6/2018 (continuing operations)
Key figures 1−6/2018 (continuing operations) Net sales Operating profit Operating profit Cash flow per share margin before financial items** 493 140 28% 1.75 MEUR (526) MEUR (159) (30%) EUR (0.40) -6% -12% +334% **) Cash flow per share before financial items for continuing and discontinued operation
Slide 25: Development of net sales and operating profit
Development of net sales and operating profit (continuing operations) Net sales, EUR million Operating profit, EUR million (excl. the sale of Orion Diagnostica) 526 13 159 15 13 7 3 8 8 8 493 2 1 140 24 19 19 19 (1) Excluding sales of biosimilars (1) Product sales without change in margins (2) Chang
Slide 26: The profit impact of the sale of Orion Diagnostica
The profit impact of the sale of Orion Diagnostica closed on 30 April 2018 Capital gain +128 MEUR Pension gain +5 MEUR Administrative costs of the transaction -1 MEUR MEUR Investor Presentation © Orion Corporation 2018 26 6
Slide 27: Geographical breakdown and development of net sales
Geographical breakdown and development of net sales 1−6/2018 1−6/2017 1−6/2018 EUR million 17% -5% 31% 180 -6% 160 6% 140 120 +2% -10% 100 17 % 80 30% 16% 60 -21% 40 Finland Scandinavia 20 Other Europe 0 Finland Scandinavia Other North Other North America Europe America markets Other markets Investo
Slide 28: Net sales by business division
Net sales by business division EUR million 1−6/2018 -9% 300 5% 2% 254 250 232 +1% 8% 200 186 188 38% 150 -6% 100 -8% -50% 47% 50 41 39 28 26 17 8 0 Proprietary Products Specialty Proprietary Animal Fermion Contract Specialty Products Products Products Health manufacturing Animal Health & other Fermi
Slide 29: Best-selling pharmaceuticals 1−6/2018
Best-selling pharmaceuticals 1−6/2018 Net sales Change vs . Indication (EUR million) 1−6/2017 1. Parkinson’s disease 60 + 4% 2. Asthma, COPD 44 +18% 3. Intensive care sedative 34 +1% 4. Acute heart failure 29 -1% Rheumatoid arthritis, inflammatory 5. Biosimilars bowel diseases, lymphoma 15 -47% 6. A
Slide 30: Proprietary Products
Proprietary Products
Slide 31: Proprietary Products: Easyhaler, Simdax, Dexdor, Parkinson’s drugs
Proprietary Products Easyhaler Simdax ● Continued growth driven by ● Sales revived after the Q1 the budesonide-formoterol downswing to the level Easyhaler. with comparison period. ● Preparing for the launch of the salmeterol-fluticasone Easyhaler. Dexdor Parkinson’s drugs ● Sales continued to grow i
Slide 32: Sales of Proprietary Products at comparison period’s level
Sales of Proprietary Products at comparison period’s level EUR million 1−6/2018 +4% 70 6% 6% 58 60 60 +18% 32% +1% 15% 50 44 -1% 40 37 34 34 30 29 30 -15% 20 18% 13 11 23% 10 Parkinson: Stalevo, Comtess & Comtan 0 Easyhaler Parkinson’s Easyhaler Dexdor Simdax Precedex Dexdor drugs family Simdax Prec
Slide 33: Increase in sales of Parkinson's drugs was due to timing of deliveries
Increase in sales of Parkinson's drugs was due to timing of deliveries Sales of Orion's branded Parkinson's drugs by Sales, EUR million market area (MAT3/2018) 60 50 3% 40 29% 36% 30 20 10 0 Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2 Europe 32% 2013 2014 2015 2016 2017 2018 Japan ROW 30 % Deliveries
Slide 34: Easyhaler product family is growing
Easyhaler product family is growing Sales, EUR million ● The product family sales grew by 25 18%, driven by budesonide-formoterol Easyhaler, which grew by 26%. 20 ● Budesonide-formoterol Easyhaler is sold in all key European markets. 15 – Orion's market share of the product varies: 10 in Sweden 38%,
Slide 35: Sales of Dexdor intensive care sedative continued to grow
Sales of Dexdor intensive care sedative continued to grow in most European markets Sales, EUR million Total value of 20 the European sedatives 18 market: EUR 548 million 16 (+3%) 14 12% 12 10 12% 8 64% 6 4 2 11% 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015 2016 201
Slide 36: Specialty Products
Specialty Products GRION Building well-being
Slide 37: Specialty Products
Specialty Products ● Sales grew in Eastern Europe ● Sales of biosimilars decreased and Russia. due to the situation of tendering competitions, tightening competition and declined price level. ● In Finland, sales declined due to tightening price ● Biosilar offering to expand competition. with a third
Slide 38: Specialty Products: challenging operating environment and tightening price competition
Specialty Products: challenging operating environment and tightening price competition showed as a decrease in sales Development of net sales Net sales by market area Net sales by product EUR 1−6/2018 1−6/2018 million -7% 160 145 134 14% 6% 140 120 100 13% 58% 24% 70% -25% 80 +5% 60 47 35 30 31 15 %
Slide 39: Orion's sales declined in Finland due to changing operating environment
Orion's sales declined in Finland due to changing operating environment Human pharmaceuticals sales in Finland in 1−6/2018 Total sales of medicinal and Orion’s non-medicinal products sales in Finland 1,329 155 EUR million EUR million (1,215) (169) Market development Orion's development +9% -8% Tight
Slide 40: Orion remains strong in home market Finland
Orion remains strong in home market Finland Human pharmaceuticals market in Finland 1−6/2018 (medicinal and non-medicinal Human Self-care Prescription products) pharmaceuticals products in drugs in total pharmacy Orion's market EUR million channel 180 share 9% 155 Orion's market Orion's market 160 s
Slide 41: Fermion's new production plant operational in Hanko
Fermion's new production plant operational in Hanko – nearly 100% of production is exported ● Special expertise in demanding production of active pharmaceutical ingredients (APIs), e.g. extremely potent substances. ● The aim is to captively manufacture the APIs for Orion's in-house developed proprie
Slide 42: Outlook
Outlook
Slide 43: Outlook for 2018
Outlook for 2018 Net sales Due to generic and price competition Orion estimates that in 2018 the net sales excluding Orion Diagnostica will be at the same level or slightly lower than in 2017 (net sales were EUR 1,034 million excluding Orion Diagnostica in 2017). Operating Orion continues persistent
Slide 44: Financials
Financials
Slide 45: Orion’s financial objectives
Orion’s financial objectives Growing net sales more rapidly than ≥ growth of the pharmaceuticals market. Achievement of this objective requires continuous investment in Keeping the equity ratio at least 50%. development of the product portfolio. Distributing an annual dividend that > Maintaining p
Slide 46: Financial objectives
Financial objectives Net sales Operating profit Dividend 1,200 12% 30% 1.60 300 27% 1.55 1,000 10% 275 250 24% 1.50 800 8% 225 21% 1.45 200 18% 600 6% 175 1.40 150 15% 12% 1.35 400 4% 125 100 9% 1.30 75 6% 1.25 200 2% 50 25 3% 1.20 0 0% 0 0% 1.15 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 201
Slide 47: Key figures by quarter
Key figures by quarter Net Netsales, sales,EUR EURmillion million Operating Operating profit, profit, EUREUR million million 1,500 400 Q4 Q4 1,000 300 59 Q3 273 255 262 279 266 Q3 66 55 51 71 200 64 59 92 55 Q2 237 238 239 259 242 67 500 Q2 84 71 248 277 255 273 261 246 100 61 86 74 70 Q1 249 245 26
Slide 48: Key figures
Key figures Change vs. Orion’s key figures 2013 2014 2015 2016 ADJ.2017 H1∕2018 H1∕2017 Net sales, EUR million 1,006.9 1,015.3 1,015.6 1,073.5 1,033.6 493.3 -6.2% Operating profit, EUR million 267.7 272.4 266.6 314.6 284.1 139.5 -12.1% Profit before taxes, EUR million 264.0 267.8 262.3 310.9 277,7 1
Slide 49: Income statement
Income statement Change vs. Formation of profits, EUR million 2013 2014 2015 2016 ADJ. 2017 H1∕2018 H1∕2017 Net sales 1,006.9 1,015.3 1,015.6 1,073.5 1,033.6 493.3 -6.2% Cost of goods sold -393.5 -401.7 -405.8 -421.7 -417.6 -187.5 -6.5% Gross profit 613.4 613.6 609.8 651.8 616.0 305.8 -6.1% Other op
Slide 50: Financial position
Financial position 6/ 6/ Change 6/ 6/ Change EUR million 2018 2017 % EUR million 2018 2017 % Non-current assets total 417.2 385.3 +8.3% Inventories 225.8 238.4 -5.3% Equity total 702.4 550.3 +27.6% Interest-bearing non-current Trade receivables 184.0 208.1 -11.% liabilities 0.5 150.3 -99.6% Other re
Slide 51: Development of capital expenditure
Development of capital expenditure Orion Capex, EUR million 90 80 70 60 50 Property, plant and equipment 40 30 Intangible assets 20 Depreciation, amortisation and 10 impairment 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Investor Presentation © Orion Corporation 2018 51
Slide 52: Development of net working capital
Development of net working capital % of net sales EUR million 40% 400 30% 300 20% 200 10% 100 0% 0 -10% -100 -20% -200 -30% -300 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018 Receivables Receivables Inventories Inventories Short-term non-interest bearing liabilities Short-ter
Slide 53: Dividend distribution policy
Dividend distribution policy • Orion’s dividend distribution takes into account distributable funds and capital expenditure and other financial requirements in medium and long term to achieve the financial objectives. EUR Dividend distribution history 1.75 100% 1.50 0.06 0.12 95% 1.25 0.10 90% Repay
Slide 54: Orion B share performance January 2016 – June 2018
Orion B share performance January 2016 – June 2018 Index 31.12.2015=100 200 Orion B 73.57 190 Orion B total return 82.95 180 Europe/Pharmaceutical 87.06 170 OMXH 125.08 160 150 140 130 120 110 100 90 80 70 60 31.12.15 31.1.16 29.2.16 31.3.16 30.4.16 31.5.16 30.6.16 31.7.16 31.8.16 30.9.16 31.10.16 3
Slide 55: Business units
Business units
Slide 56: Proprietary Products
Proprietary Products Net sales ● Mainly Orion in-house developed prescription EUR million drugs with valid product protection 450 Other 400 ● Global sales and R&D partner networks 350 Simdax Key drivers for business 300 250 Easyhaler Easyhaler, Simdax 200 Possible milestones from development pip
Slide 57: Proprietary human pharmaceuticals developed by Orion
Proprietary human pharmaceuticals developed by Orion Product Indication Year Year Indication Sedative for ICU use 2011 Budesonide− 2014 formoterol Easyhaler® Parkinson’s disease 2003 Formoterol Easyhaler® 2004 Acute decompensated 2000 Asthma and COPD heart failure Budesonid Easyhaler® 2002 Sedative
Slide 58: Steady sales growth for Specialty Products
Steady sales growth for Specialty Products Orion Specialty Products = Gx + OTC including also non-medicinal products EUR million Sales split 2017 Net sales in key markets in 2017, 550 22% 500 20% EUR million 450 18% 13% 400 16% Scandinavia Vs. 2016 350 14% 13% 94 +14% 300 12% 250 10% 200 8% Finland
Slide 59: Specialty Products — Portfolio of hundreds of different product
Specialty Products — Portfolio of hundreds of different product Generic prescription OTC and self-care Biosimilars drugs Investor Presentation © Orion Corporation 2018 59
Slide 60: Animal Health
Animal Health In-house developed EUR million proprietary products 105 12% • Medicinal and non-medicinal 90 10% products for companion animals 75 8% and livestock 60 6% • In-house developed proprietary 4% products sold globally both 45 through own sales network and 2% 30 0% through partners 15 -2% •
Slide 61: Fermion has an important strategic role
Fermion has an important strategic role EUR million 70 50% 60 40% 50 30% 40 20% 30 10% 20 0% Generic APIs for APIs for Orion’s Contract 10 -10% Orion and other proprietary development and pharmaceutical 0 -20% products manufacturing companies 2010 2011 2012 2013 2014 2015 2016 2017 Net sales* Growth
Slide 62: Contract manufacturing & other
Contract manufacturing & other EUR million 50 45% 40 30% 30 15% 20 0% 10 -15% Pharmaceutical Orion has special capacity 0 -30% manufacturing for other e.g. in hormonal products companies 2012 2013 2014 2015 2016 2017 Net sales Growth, % Investor Presentation © Orion Corporation 2018 62
Slide 63: Responsibility
Responsibility GRION Building well-being
Slide 64: Patient safety, ethical operations and responsible supply chain are cornerstones
Patient safety, ethical operations and responsible supply chain are the Import cornerstones of Orion's corporate responsibility In 2017: ● 31% of the energy savings target set for 2025 was achieved. ● New water collection systems were introduced in production to minimise pharmaceutical residue emiss
Slide 65: Orion calendar
Orion calendar 2018 Interim Report 1−9/2018 24.10.2018 2019 Financial Statements Release 2018 6.2.2019 Annual General Meeting 26.3.2019 Interim Report 1−3/2019 25.4.2019 Half-Year Financial Report 1−6/2019 17.7.2019 Interim Report 1−9/2019 23.10.2019
Slide 66: Investor Relations
Investor Relations Jari Karlson CFO jari.karlson@orion.fi +358 10 426 2883 Lilli Riikonen Communications Manager lilli.riikonen@orion.fi +358 10 426 2319 Heidi Ahti Executive Assistant (Investor meeting requests) heidi.ahti@orion.fi +358 10 426 2169 www.orion.fi/EN/Investors twitter.com/OrionCorpIR