Orion Group Half-Year Financial Report January–June 2019
ORION CORPORATION HALF-YEAR FINANCIAL REPORT JANUARY–JUNE 2019 17 JULY 2019 at 12.00 EEST
Orion Group Half-Year Financial Report January–June 2019
Net sales in January–June 2019 totalled EUR 493 million
(EUR 493 million in January–June 2018).
- Operating profit was EUR 107 (140) million.
- Profit before taxes was EUR 105 (137) million.
- Equity ratio was 73% (67%).
- ROCE before taxes was 27% (65%).
- ROE after taxes was 24% (70%).
- Basic earnings per share were EUR 0.59 (0.78).
- Cash flow per share before financial items was EUR 0.57 (1.75).
- Financial objectives remain unchanged.
- Outlook remains unchanged.
ORION’S KEY FIGURES FOR THE REVIEW PERIOD
4-6/19 | 4-6/18 | Change % | 1-6/19 | 1-6/18 | Change % | 1-12/18 | |
Net sales, EUR million | 251.7 | 246.1 | +2.3% | 492.8 | 493.3 | -0.1% | 977.5 |
Operating profit, EUR million | 52.1 | 69.7 | -25.2% | 107.2 | 139.5 | -23.2% | 252.8 |
% of net sales | 20.7% | 28.3% | 21.7% | 28.3% | 25.9% | ||
Profit before taxes, EUR million | 51.3 | 68.7 | -25.3% | 105.2 | 137.3 | -23.4% | 248.4 |
% of net sales | 20.4% | 27.9% | 21.4% | 27.8% | 25.4% | ||
Income tax expense, EUR million | 10.5 | 13.1 | -19.9% | 21.6 | 28.0 | -22.6% | 51.0 |
R&D expenses, EUR million | 31.5 | 26.0 | +21.3% | 58.0 | 51.7 | +12.1% | 104.0 |
% of net sales | 12.5% | 10.6% | 11.8% | 10.5% | 10.6% | ||
Capital expenditure, EUR million | 12.7 | 3.1 | +310.4% | 18.8 | 19.8 | -5.3% | 64.8 |
% of net sales | 5.0% | 1.3% | 3.8% | 4.0% | 6.6% | ||
Assets total, EUR million | 898.4 | 1,072.9 | -16.3% | 1,146.7 | |||
Equity ratio, % | 73.0% | 67.1% | 68.8% | ||||
Gearing, % | 1.7% | -7.7% | -17.1% | ||||
Interest-bearing liabilities, EUR million | 38.0 | 151.4 | -74.9% | 151.5 | |||
Non-interest-bearing liabilities, EUR million | 220.6 | 219.1 | +0.7% | 222.1 | |||
Cash and cash equivalents and money market investments, EUR million | 27.2 | 205.3 | -86.7% | 283.7 | |||
ROCE (before taxes), % | 27.0% | 65.4% | 44.3% | ||||
ROE (after taxes), % | 23.7% | 70.3% | 45.5% | ||||
Basic earnings per share, EUR | 0.29 | 0.40 | -27.5% | 0.59 | 0.78 | -24.4% | 1.40 |
Diluted earnings per share, EUR | 0.29 | 0.40 | -27.5% | 0.59 | 0.78 | -24.4% | 1.40 |
Cash flow per share before financial items, EUR | 0.17 | 1.36 | -87.3% | 0.57 | 1.75 | -67.1% | 2.32 |
Equity per share, EUR | 4.55 | 4.99 | -8.8% | 5.50 | |||
Personnel at the end of the period | 3,352 | 3,279 | +2.2% | 3,154 | |||
Average personnel during the period | 3,232 | 3,187 | +1.4% | 3,179 | |||
Personnel expenses, EUR million | 110.6 | 104.2 | +6.2% | 200.7 |
The Diagnostics business, sold on 30 April 2018, has been reported as a discontinued operation since the interim report 1–3/2018 and is not included in consolidated statement of comprehensive income. The return on equity and cash flow per share figures in the comparative period also contain discontinued operations, including the capital gain from the sale of Orion Diagnostica.
President and CEO Timo Lappalainen:
Priority Review for darolutamide marketing authorisation application in the United States
”The single most important growth project for Orion in the next few years took a step forward in the review period, as the United States Food and Drug Administration (FDA) granted Priority Review designation for darolutamide for the treatment of non-metastatic prostate cancer resistant to conventional hormone therapy in April. With Priority Review, darolutamide may be granted marketing authorisation in the United States in the coming months. We are eligible to receive significant milestone payments upon first commercial sales, which amount to EUR 45 million in the United States. In May, new research data was published indicating that darolutamide combined with androgen deprivation therapy (ADT) slowed down the worsening of symptoms in men with non-metastatic, conventional hormone therapy-resistant (castration-resistant) prostate cancer (nmCRPC). We also continue our ongoing trial with Bayer which evaluates darolutamide in patients with metastatic prostate cancer. Darolutamide’s commercial potential will grow significantly if this second Phase III clinical trial (ARASENS) yields positive results in around 2022.
Another significant Phase III clinical trial, REFALS, which investigates orally administered levosimendan (ODM-109) in the treatment of amyotrophic lateral sclerosis (ALS), has progressed well. Patient recruitment for the project was completed sooner than expected after the review period in July, and we are expecting results from the REFALS trial in just over a year. We are conducting this trial alone and, if the research findings are positive, it is possible that Orion will commercialise the product on its own not just in Europe but also in some key markets outside Europe.
Our net sales in the first half of 2019 amounted to EUR 493 million and operating profit to EUR 107 million.
In proprietary drugs, the sales of the Easyhaler® product family and Simdax® developed well. Most of the growth in Easyhaler product sales came from the budesonide-formoterol combined formulation. The sales of salmeterol-fluticasone combined formulation have also started, but they have initially developed more slowly than anticipated and for the time being, the product has no material impact on the net sales of the product family. So far there has been no competition for Simdax, but marketing authorisation applications have been submitted for generic versions of the drug in Europe. The sales of Dexdor® was at level with comparative period, but generic competition is expected to intensify in the future.
We have reacquired from Novartis the European sales and distribution rights for the Parkinson’s drugs Stalevo® and Comtan®. Following the reacquisition, we expect the full-year sales of these Parkinson’s drugs to match last year’s despite continuously expanding generic competition. The decline in Parkinson’s drugs sales seen in the first half of the year is explained by the timing of partner deliveries in particular. In 2018, there were more partner deliveries on the first half of the year while this year, we expect there to be more on the second half of the year.
Net sales of specialty products was at level with the previous year although sales in our biggest market, Finland, continued to decline due to price competition. However, the average prices of reference-priced prescription drugs did not decline in the second quarter compared to the first. April to June 2019 was the first quarter in nearly two years when the net sales of this business division increased from the comparative period.
The ongoing projects supporting growth are expected to burden Orion’s profit in 2019 by an estimated
EUR 30 million. This comprises clearly increased depreciation as well as investments in sales and marketing and research. At the same time, operating profit is burdened by intense price competition in the market and gradually expanding generic competition for Orion’s old proprietary drugs.
The outlook remains unchanged. Orion estimates that its net sales in 2019 will slightly increase from 2018. Projected net sales include the possible EUR 45 million milestone payment related to the commercialisation of darolutamide. Operating profit is projected to be on the same level as in 2018. The projection includes the possible EUR 45 million milestone payment associated with the commercialisation of darolutamide as well as significant investments in actions to generate growth. The complete outlook estimate and the basis for it can be found in this report under ‘Outlook for 2019’ and ‘Basis for outlook’.”
Key events in the review period from April to June
1 Apr 2019 The sales and distribution rights in certain European countries for the Parkinson’s disease drug Comtan®, developed by Orion, transferred back to Orion from Novartis. Orion estimates that the return of the sales rights will initially increase its Comtan sales by several million euros on annual level.
29 Apr 2019 The United States Food and Drug Administration (FDA) accepted the marketing authorisation application for darolutamide for review and granted it Priority Review status.
31 May 2019 New findings on darolutamide were presented at the American Society of Clinical Oncology (ASCO) annual meeting 2019.
Events after the period
15 Jul 2019 Orion announced that patient recruitment for the REFALS trial has been finalized.
News conference and teleconference
A news conference and teleconference on the published results will be held on Wednesday 17 July 2019 at 13:30 EEST at Orion’s head office (address: Orionintie 1A, Espoo). President and CEO Timo Lappalainen will give a brief presentation in English on the financial review.
The event can be followed as a live webcast accessible on Orion’s website at www.orion.fi/en/investors. After the presentation, questions can be asked also via teleconference in Finnish and English.
The conference call ID is 5471433 and the telephone numbers to participate in the teleconference are:
Finland: +358 (0)9 7479 0361
Sweden: +46 (0)8 5033 6574
United Kingdom: +44 (0)330 336 9105
United States: +1 929-477-0324
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 Orion’s website during Wednesday 17 July 2019.
Financial report material
Financial reports and related presentation material will be available at www.orion.fi/en/investors promptly after publication. The website also has a form for subscribing to Orion’s releases.
Dates in Orion calendar 2019–2020
Interim Report January-September 2019 | Wednesday 23 October 2019 |
Financial statement release 2019 | Wednesday 5 February 2020 |
Annual General Meeting 2020 | planned to be held on Wednesday 25 March 2020 |
Interim Report January–March 2020 | Tuesday 28 April 2020 |
Half-Year Financial Report January-June 2020 | Friday 17 July 2020 |
Interim Report January-September 2020 | Wednesday 21 October 2020 |
The Financial Statements and Report by the Board of Directors for 2019 will be published on the Company’s website at the latest in week 10/2020.
For additional information about the report:
Jari Karlson, CFO tel. +358 50 966 2883
www.orion.fi/en/investors
Financial review for 1 January–30 June 2019
Net sales
Orion Group’s net sales in January–June 2019 totalled EUR 493 (493) million. Exchange rates impacted net sales positively by EUR 3 million. Net sales of Orion’s top ten pharmaceuticals in January–June were EUR 237 (231) million. They accounted for 48% (47%) of the total net sales.
Operating profit
The Orion Group’s operating profit was down by 23% at EUR 107 (140) million.
Gross profit from product and service sales was EUR 7 million lower than in the comparative period. The negative effect of the decline in net sales calculated in local currencies on gross profit was EUR 2 million, and change in margins reduced the gross profit by EUR 7 million. Exchange rate changes had a EUR 2 million positive effect on the gross profit.
Milestone payments accounted for EUR 1 (3) million and royalties for EUR 7 (9) million of net sales and operating profit. The decline in other operating income also had a EUR 3 million negative impact on the operating profit.
Operating expenses increased by EUR 19 million.
Operating expenses
The Group’s sales and marketing expenses totalled EUR 107 (97) million. The growth was mostly due to depreciation associated with the reacquisition of European rights for Stalevo® as well as investments in the sales of the Easyhaler® product portfolio in particular.
R&D expenses were EUR 58 (52) million. They accounted for 12% (10%) of the Group’s net sales. Research projects are reported in more detail under the ‘Business Review’ part of this report.
Administrative expenses were EUR 24 (22) million.
Other operating income and expenses were EUR 1 (4) million.
Group’s profit
Profit for the period was EUR 84 (109) million.
Basic earnings per share were EUR 0.59 (0.78). Equity per share was EUR 4.55 (4.99).
The return on capital employed before taxes (ROCE) was 27% (65%) and the return on equity after taxes (ROE) 24% (70%). The high figures in the comparative period are explained by the EUR 128 million capital gain recognised for the sale of Orion Diagnostica.
Financial position
The Group’s gearing was 2% (-8%) and the equity ratio 73% (67%).
The Group’s total liabilities at 30 June 2019 were EUR 259 (370) million. At the end of the period, interest-bearing liabilities amounted to EUR 38 (151) million, including EUR 5 (1) million of long-term loans. The change in interest-bearing liabilities was mostly due to the fact that the EUR 150 million bond loan issued by Orion in 2013 matured in June 2019. The company acquired substitutive financing by issuing commercial papers.
After the matured bond loan was paid off, the Group had EUR 27 (205) million of cash and cash equivalents and money market investments at the end of the period. The cash and cash equivalents are invested in short-term money market instruments issued by financially solid financial institutions and corporations.
Orion signed a EUR 100 million loan agreement with the European Investment Bank in January 2019. The loan has not yet been raised.
Cash flow
Cash flow from operating activities was EUR 98 (106) million. Cash flow declined less than the operating profit, since cash tied up in working capital increased more slowly than in the comparative period.
The cash flow from investing activities was EUR -18 (140) million. The cash flow from investing activities was positive in the comparative period due to the sale of Orion Diagnostica.
The cash flow from financing activities was EUR -338 (-203) million. The difference to the comparative period is mostly due to the repayment of the bond loan that matured in June. Orion has also bought back its own shares by EUR 7 million.
Capital expenditure
The Group’s capital expenditure totalled EUR 19 (20) million. This comprised EUR 13 (17) million on property, plant and equipment and EUR 5 (3) million on intangible assets.
Key business targets for 2019
TARGET | DEVELOPMENT 1–6/2019 |
Preparing for the launch and commercialisation of the prostate cancer drug darolutamide in collaboration with Bayer, assuming that the marketing authorisation process progresses as planned. Continued research and development collaboration in the ARASENS trial (metastatic prostate cancer) to expand the indication. |
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Development of orally administered levosimendan (ODM-109) for ALS in phase III clinical trial and preparation for its possible commercialisation. In research and development, the potential of different projects are reviewed with consideration of the total research portfolio. |
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Strengthening Orion’s position as the most significant provider of generic drugs in Finland and competitive pricing. Development of a competitive product portfolio in Specialty Products and strengthening of product launches. |
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Accelerating the growth of the Easyhaler product family and strengthening its market position. The launch of the salmeterol-fluticasone Easyhaler progressing in Europe. |
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Evaluation of new in-licensing opportunities in Europe, particularly in the area of hospital care. |
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Orion regularly monitors the progress of these goals in its financial reports.
Outlook for 2019 (issued on 6 February 2019)
Orion estimates that in 2019 net sales will be slightly higher than in 2018 (net sales in 2018 were
EUR 977 million). The estimated net sales include the possible EUR 45 million milestone payment
associated with the commercialisation of darolutamide.
The operating profit is estimated to be at the same level as in 2018 (operating profit in 2018 was EUR 253 million). The estimated operating profit includes the possible EUR 45 million milestone payment associated with the commercialisation of darolutamide as well as significant investments in actions to generate growth.
Basis for outlook in more detail
Orion continues persistent actions to generate growth more rapidly than growth of the market in the long term. The ongoing projects supporting growth are expected to burden Orion’s profit in 2019 by an estimated EUR 30 million. This comprises clearly increased depreciation as well as investments in sales and marketing and research. At the same time, operating profit is burdened by intense price competition in the market and gradually expanding generic competition for Orion’s old proprietary drugs.
Net sales
The sales of the Easyhaler® product family will continue to grow also in 2019 due to combined formulations (budesonide-formoterol and salmeterol-fluticasone) launched in the past few years.
Orion reacquired from Novartis the European sales and distribution rights for the Parkinson’s drugs Stalevo and Comtan in December 2018 and April 2019, respectively. Due to the anticipated additional sales of slightly over EUR 20 million following the transactions, the sales of Orion’s branded Parkinson’s drugs (Comtess®, Comtan® and Stalevo®) are estimated to remain at the same level as in the previous year despite continuously expanding generic competition.
In several European countries, marketing authorisation has been granted for a generic version of Dexdor®. Generic competition commenced in Germany in 2017 and expanded to a few other European countries during 2018. In 2019, generic competition is estimated to further expand in the EU, and the sales of the product to turn to decline. Orion has also been informed that marketing authorisation applications have been filed for a generic version of Simdax® in Europe. It is, however, difficult to estimate the impact of generic competition on the sales of Dexdor and Simdax. The patent for the Simdax molecule expired in September 2015 but this is still not expected to have a material impact on sales of the product in 2019. Orion is continuing actions to defend its rights.
Sales of generic products account for a significant proportion of Orion’s total sales. Competition in Finland, the most important generic market for Orion, remains intense in 2019. However, product launches continue to support Orion’s position as market leader in Finland. At the beginning of 2017, changes were made to the pricing system for substitutable prescription drugs in Finland by narrowing the so-called price band. The change caused an estimated EUR 15 million yearly sales decline both in 2017 and 2018. Thus the cumulative two-year negative impact was around EUR 30 million. The 2019 outlook assumes that the impact of the system change and its effect in lowering prices will still be significant, but slightly smaller than in the two previous years. In the first half of 2019, the sales of reference priced drugs in the Finnish market declined by 8% and the sales of Orion’s reference priced drugs declined by 7%. The volume of these sales grew by 3% and the volume of Orion’s sales by 4% (Source: Pharmarket sales statistics 1-6/2019).
In 2017, the EUR 57 million sales of the biosimilar Remsima® generated a significant portion of the growth in net sales of the Specialty Products business division, but in 2018 Remsima® sales were materially lower due to intensified competition and declined price level. Besides Remsima®, Orion has launched other biosimilars, such as Ritemvia® (rituximab) and Amgevita® (adalimumab). As a whole, the sales of biosimilars are expected to increase from 2018.
Collaboration agreements with other pharmaceutical companies are an important component of Orion’s business model. Agreements often include payments recorded in net sales that vary greatly from year to year. Forecasting the timing and amount of these payments is difficult. In some cases they are conditional on, for instance, the progress or findings of research projects, which are not known until studies have been completed. On the other hand, neither the outcome nor the schedule of contract negotiations is generally known before the final signing of the agreement. The possible EUR 45 million milestone payment associated with the commercialisation of the prostate cancer drug darolutamide in the United States is included in the outlook for 2019 and is expected to materialise in the coming months.
Expenditure
The start of production at Fermion’s new manufacturing plant in Hanko increases production costs by around EUR 3 million following depreciation. The investment is an important part of Orion’s preparation for the future. In the short term, however, increased depreciation has a negative impact on profit since the new plant replaces the one built in the 1970s.
Marketing expenditure will be higher than in the previous year due to additional promotion of sales of the Easyhaler product portfolio in countries where these products have been launched in recent years. In 2019, expenditure will also be increased by a EUR 12 million depreciation related to the acquisition of European sales and distribution rights for the Parkinson’s drugs Stalevo® and Comtan®. Orion paid a total of USD 28 million for the transfer of the sales rights in December 2018 and in April 2019, and the investment will be depreciated over two years.
Because the registrations and launches of new products are projects that generally take more than a year, the increases in resources and other inputs required in 2019 were mainly planned during the previous year.
Research and development costs are estimated to be higher than in 2018, in particular due to the Phase III REFALS clinical trial evaluating levosimendan (ODM-109) for the treatment of symptoms of ALS. Of the EUR 60 million total investment in the roughly three-year trial, it is estimated that more than EUR 25 million will be spent in 2019. Research and development costs 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 2019 are either continuing from the previous year or at an advanced stage of planning, therefore their cost level can be estimated rather accurately. However, the accrued costs are materially affected by collaboration arrangements and how the costs arising are allocated between Orion and its collaboration partners. For instance, Bayer is paying the majority of the darolutamide research costs.
Investments
The Group’s total capital expenditure in 2019 is expected to be lower than in 2018, when capital expenditure was EUR 65 million.
Near-term risks and uncertainties
The reacquisition of European sales and distribution rights for Stalevo® and Comtan® will generate additional sales for Orion’s branded Parkinson’s drugs in 2019. On the other hand, sales will decline due to continued generic competition. These effects have been taken into account in the outlook estimate for the current year. However, they still entail uncertainty that may materially affect the accuracy of the estimate made at this stage.
The basic Dexdor® and Simdax® patents have expired and Dexdor’s indication patent expired at the end of March 2019. In several European countries, marketing authorisation has been granted for a generic version of Dexdor. Generic competition commenced in Germany in 2017 and expanded to a few other European countries during 2018. In 2019, generic competition is estimated to further expand in the EU, and the sales of the product to turn to decline. Orion has also been informed that marketing authorisation applications have been filed for a generic version of Simdax in Europe. It is, however, difficult to estimate the impact of generic competition on the sales of Dexdor and Simdax. As regards Simdax, the possible generic competition is still not estimated to materially impact its sales in 2019.
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 pharmaceuticals markets in recent years will specifically focus on Orion’s products. Deliveries of Parkinson’s drugs to Novartis, the most important collaboration partner, 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. In addition, changes in market prices and exchange rates affect the value of deliveries to Novartis.
The structural exchange rate risk due to the US dollar has decreased in recent years because the share of Orion’s net sales invoiced in dollars has fallen to below ten per cent and at the same time the value of purchases in dollars has increased. The greatest exchange rate risk at present relates to European currencies such as the Swedish crown and British pound. However, the overall effect of the risk due to currencies of European countries 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. Changes in the Japanese yen exchange rate have become more important as sales of Parkinson’s drugs in Japan have increased. The exchange rate effect related to the Russian rouble has increased due to the strong volatility of the currency. However, Russian sales are not a significant portion of Orion’s entire net sales.
Orion’s broad product range may cause risks to the delivery reliability and make it challenging to maintain the high quality standard required in production. Authorities and key customers in different countries undertake regular and detailed inspections of development and manufacturing of drugs at Orion’s production sites. Any remedial actions that may be required may at least temporarily have effects that decrease delivery reliability and increase costs. Orion’s product range also includes products manufactured by other pharmaceutical companies. Possible problems related to the delivery reliability or quality of the products of those manufacturers may cause a risk to Orion’s delivery reliability. The single-channel system used for pharmaceuticals distribution in Finland, in which Orion’s products have been delivered to customers through only one wholesaler, may also cause risks to delivery reliability. To ensure deliveries, in addition to Oriola Finland Oy, there are also other distributors temporarily distributing certain Orion products.
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. Orion often undertakes the last, in other words Phase III, clinical trials in collaboration with other pharmaceutical companies. Commencement of these collaboration relationships and their structure also materially affect the schedule and cost level of research projects.
Collaboration arrangements are an important component of Orion’s business model. Possible collaboration and licensing agreements related to these arrangements also often include payments to be recorded in net sales that may materially affect Orion’s financial results. In 2014–2018 the annual payments varied from EUR 5 million to EUR 39 million. The payments may be subject to certain conditions relating to the development of research projects or sales, and whether these conditions are triggered and the timing of triggering always entail uncertainties. The possible EUR 45 million milestone payment associated with the commercialisation of the prostate cancer drug darolutamide in the United States is included in the outlook for 2019 and is expected to materialise in the coming months.
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.
Financial objectives
Through the financial objectives Orion aims to develop the Group’s shareholder value and ensure financial stability and profitable growth. Orion’s financial objectives are:
- Growing net sales more rapidly than growth of the pharmaceuticals market. Achievement of this objective requires continuous investment in development of the product portfolio.
- Maintaining profitability at a good level. The aim is operating profit that exceeds 25% of net sales.
- Keeping the equity ratio at least 50%.
- Distributing an annual dividend that in the next few years will be at least EUR 1.30 per share, and increasing the dividend in the long term.
In the short term what actually happens may deviate from the objectives.
R&D projects that have made promising progress will probably somewhat increase the Company’s research expenses in the next few years. However, agreements already made relating to research projects and their good progress, and possible new agreements with partners relating to other projects are expected to generate material milestone payments in coming years. Successful projects will have a positive effect on Orion’s net sales and especially operating profit even before possible approval of new proprietary drugs and before the actual commencement of product sales.
Shares and shareholders
On 30 June 2019, Orion had a total of 141,257,828 (141,257,828) shares, of which 36,821,579
(37,120,346) were A shares and 104,436,249 (104,137,482) B shares. The Group’s share capital is EUR 92,238,541.46 (92,238,541.46). At the end of June, Orion held 765,399 (562,440) B shares as treasury shares. On 30 June 2019, the aggregate number of votes conferred by the A and B shares was 840,102,430 (845,981,962) excluding treasury shares.
At the end of June 2019, Orion had 70,699 (74,436) 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 a General Meeting of Shareholders. The Company itself and Orion Pension Fund do not have the right to vote at an Orion Corporation General Meeting 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. A total of 298,767 A shares were converted into B shares in January–June 2019.
Trading in Orion’s shares
Orion’s A shares and B shares are quoted on Nasdaq 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 that date.
On 30 June 2019, the market capitalisation of the Company’s shares, excluding treasury shares, was EUR 4,517 million.
Orion shares are also traded on various alternative trading platforms in addition to Nasdaq Helsinki.
Authorisations of the Board of Directors
On 26 March 2019, the Annual General Meeting of Orion Corporation authorised the Board of Directors to decide on an acquisition of no more than 350,000 Orion Corporation B shares. Based on this authorisation and a decision by the Board of Directors on 25 April 2019, Orion acquired a total of 250,000 B shares between 2 and 13 May 2019. The Board of Directors was authorised by Orion Corporation’s Annual General Meeting on 26 March 2019 to decide on a share issue in which shares held by the Company can be conveyed. The Board of Directors is authorised to decide on a share issue in which no more than 850,000 B 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 terms and conditions of the authorisations are reported in more detail in a stock exchange release on 26 March 2019.
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 plans
The Group has two currently operating share-based incentive plans for key persons of the Group:
Orion Group’s Long-Term Incentive Plan 2016, announced in a stock exchange release published on 2 February 2016 and Orion Group’s Long-Term Incentive Plan 2019, announced in a stock exchange release published on 6 February 2019.
Share ownership
Orion’s shares are in the book-entry system maintained by Euroclear Finland, and Euroclear Finland maintains Orion’s official shareholder register.
At the end of June 2019, Orion had a total of 70,699 (74,436) registered shareholders, of whom 96% (96%) were private individuals. They held 41% (44%) of the entire share stock and had 61% (63%) of the total votes. There were 48 (43) million nominee-registered and foreign-owned shares, which was 34% (31%) of all shares, and they conferred entitlement to 8% (7%) of the total votes.
At the end of June 2019, Orion held 765,399 (562,440) B shares as treasury shares, which is 0.5% (0.4%) of the Company’s total share stock and 0.09% (0.07%) of the total votes.
Personnel
The average number of employees in the Orion Group in January–June 2019 was 3,232 (3,187). At the end of June 2019, the Group had a total of 3,352 (3,279) employees, of whom 2,682
(2,611) worked in Finland and 670 (668) outside Finland.
Salaries and other personnel expenses in January–June totalled EUR 111 (104) million.
Significant legal proceedings
Companies belonging to the Orion Group are parties to various legal disputes, which are not, however, considered to be significant legal proceedings for the Group.
Business review
Review of human pharmaceuticals market
Finland is the most important individual market for Orion, generating about one-third of the Group’s net sales. According to Pharmarket statistics (1-6/2019), the total sales of Orion’s human pharmaceuticals, including both medicinal and non-medicinal products, was behind market trend. The growth in the Finnish pharmaceuticals market has mostly been generated by proprietary products, while they only account for a small share of Orion’s net sales in Finland.
Orion’s biggest product group in Finland are reference-priced prescription drugs in the pharmacy channel. The sales volume of Orion’s reference-priced prescription drugs developed slightly better than the market, but in euros sales declined from the comparative period due to continuing price competition. The average price of reference priced drugs in the market declined in January–June 2019 by approximately 10% from the comparative period (Source: Pharmarket). The impact of price competition on Orion has been significant due to the Company’s broad product range and significant market share in Finland.
Despite the challenging operating environment, Orion has maintained its position as leader in marketing pharmaceuticals in Finland. Orion has a particularly strong position in reference priced prescription drugs and in self-care product sales, with its market share being a quarter of the market in each.
Sales of human pharmaceuticals in Finland (medicinal and non-medicinal products):
EUR million | 1-6/19 | 1-6/18 |
By: Nasdaq / GlobeNewswire
- 17 Jul 2019
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