CEO's review

Published on 9 February 2021

Strong performance amid challenges brought on by COVID-19 pandemic

“The COVID-19 pandemic made 2020 an exceptional and demanding year for Orion and for the world. The strong spike in demand for pharmaceuticals seen in March and April brought challenges to Orion’s production and logistics. However, we prevailed due to the strong commitment and hard work of our people. We strived successfully – and will carry on striving – to ensure that pharmaceuticals manufactured and sold by Orion continue to be available to patients. Our current inventory status is good, but we need to keep working to this effect, as the risk of disruptions in global pharmaceutical supply chains remains higher than usual owing to the pandemic. In the current exceptional circumstances, we have prioritised looking after the health and safety of our employees and ensuring production continuity and patient safety in ongoing clinical trials, and we will continue to do so. Amidst the pandemic, we pushed ourselves to a good performance, for which many thanks are due to our dedicated and adaptable people at Orion as well as our collaboration partners.

Our net sales in 2020 were EUR 1,078 (1,051) million and our operating profit was EUR 280 (253) million. The COVID-19 pandemic had a variety of impacts on our sales. Full-year sales of some pandemic-related products, such as dexmedetomidine products used in intensive care, were clearly above the level estimated at the start of 2020. On the other hand, the sales of some products fell below anticipated levels in part due to restrictive measures put in place in various parts of Europe. The general strong spike in demand for pharmaceuticals in March and April increased sales somewhat at annual level, although demand did level off as expected over the rest of the year. We do not believe that there has been an increase in the basic need for pharmaceuticals other than those used for treating COVID-19 patients; our estimate is that the growth in demand rather reflects customers’ preparation measures and stockpiling. At this point it is difficult to estimate how customers’ stock levels will evolve in the near future. The coronavirus had visible impacts on Orion’s operations, but at the same time it can be said that our business operations developed favourably in many respects also without consideration to the COVID-19 impact.

The growth of operating profit is mostly due to higher net sales than in the previous year and a decrease in operating expenses owing to the pandemic. Gross margin was improved by the high utilisation rate of Orion’s production facilities and reduced waste following continual development of operations, as well as increased sales, although the level of margins in product sales fell late in the year mainly due to the timing of partner deliveries of Parkinson’s drugs and animal sedatives and a decrease in the sales of Simdax®. In the last months of the year, expenses increased relative to preceding months of the year due to new investments in research and development projects as well as sales and marketing. In our estimate, our operating profit was around EUR 40 million stronger than we anticipated at the beginning of 2020, due to the impacts of the COVID-19 pandemic. More than half of this were attributable to the increased international sales of dexmedetomidine products and the rest to lower than anticipated expenses and increased sales of other products.

The net sales of the Dexdor® sedative, used in intensive care and aimed at the European market, decreased slightly from the comparative period due to generic competition, but the decrease was significantly less than we had anticipated at the start of the year due to the increased demand brought on by the COVID-19 pandemic. The formulation patent of Simdax®, a drug used in the treatment of acute decompensated heart failure, expired in key markets in September. Its sales decreased sharply towards the end of the year due to a decrease in planned hospital visits because of the pandemic and, in some markets, due to falling prices. Year-on-year, its sales fell slightly from 2019.

Sales of the Easyhaler® product portfolio for asthma and chronic obstructive pulmonary disease saw expected strong growth until autumn but developed weaker than anticipated in the end of the year. In our estimate, COVID-19 restrictions cut the number of doctors’ appointments around Europe in the second half of the year, and customers used inventories they had stockpiled in the first year-half, which was reflected in the sales of Easyhaler® products. The net sales of the Parkinson’s drugs Stalevo® and Comtess®/Comtan® remained at the previous year’s level, as anticipated. The fluctuating sales in the course of the year were mostly due to the timing of partner deliveries. 

In 2020, Orion booked EUR 17 million in net sales of Nubeqa®, a drug indicated for the treatment of non-metastatic castration-resistant prostate cancer. In addition, Orion booked a total of EUR 28 million in milestone payments from first commercial sales of the product in the EU and Japan. In the comparative period in August 2019, Orion booked a EUR 45 million milestone payment for the first commercial sales of the product in the USA.

Net sales of the Specialty Products unit increased slightly, but development was uneven in the course of the year, especially in self-care products, due to the spike in demand caused by the COVID-19 pandemic in spring and subsequent levelling out of demand. In a full-year view, the coronavirus somewhat increased demand, but business developed well even without the pandemic effect. We can be satisfied with the growth in a situation in which the net sales of our biosimilar products fell by more than EUR 20 million and the prices of generic prescription drugs continued to fall.

The Animal Health unit also had a robust year, with net sales reaching their highest level ever so far. In June, the U.S. Food and Drug Administration (FDA) granted a marketing authorisation to Orion’s Clevor®, which will be distributed in the United States by our partner Vetoquinol. Orion’s long-term distribution partnership with the animal health company Zoetis in Denmark, Norway and Sweden came to an end in 2020, as Zoetis decided to set up its own sales organisations in these countries. The change will have a negative impact on the unit’s net sales in 2021, but will have no material impact on Orion Group's operating profit. Demand for Fermion products was at a high level all year and production capacity was nearly fully utilised.

COVID-19 also affected Orion’s research and development projects, which experienced some delays due to the situation in 2020. The highest priority, however, was to look after the safety and continued care of patients involved in clinical trials. In July, we completed the Phase III clinical REFALS trial, which unfortunately did not meet its pre-specified endpoints. The trial investigated the efficacy and safety of oral levosimendan in the treatment of amyotrophic lateral sclerosis (ALS).

We are continuing the Phase III clinical ARASENS trial on darolutamide with Bayer, expecting to get results this year, and are jointly initiating the Phase III clinical ARANOTE trial on darolutamide as a new project. The ODM-208 and ODM-209 projects have seen a slight delay due to COVID-19 restrictions, but they are proceeding and ODM-208 has moved on to Phase II clinical trial. Orion’s new Senior Vice President for Research and Development started in her post in June, and in the autumn we renewed the R&D organisation and strategy. The changes are aimed at strengthening the company’s R&D portfolio and speeding up research projects. Orion has also been developing a new-generation dry-powder inhaler, and we have started first product development project using the new device platform.

Orion’s strategic growth target, to reach net sales of EUR 1.5 billion by the end of 2025, remains valid, and we are working determinedly to achieve this target. For example, we have increased resource allocation to business development, and in 2020 we signed several fairly significant in-licensing agreements in the Specialty Products unit. Most of the potential of these agreements can only materialise after 2025. Nevertheless, the agreements indicate that Orion is able to acquire new products to its markets and that it is viewed as an attractive partner.

Orion has systematically invested tens of millions of euros annually in the maintenance, renewing and expansion of its production facilities in Finland. We continued these investments determinedly in 2020, our tangible investments totalling EUR 37 million. A renewal of Orion’s enterprise resource planning system will be one significant investment in 2021–2023. Another major investment, the renovation of Orion’s headquarters in Espoo, will begin in autumn 2021 and be completed in 2023.”

Published on 21 October 2020

Orion is prepared for a second wave of the COVID-19 pandemic

“The COVID-19 pandemic has accelerated in the course of the autumn in Finland, Europe and around the world. At Orion, our priority continues to be safeguarding our employees’ health and safety. Through this, we strive to secure continued manufacturing of important active pharmaceutical ingredients and drugs as well as optimal availability of drugs in the current exceptional circumstances. Ensuring patient safety in ongoing clinical trials is another key priority for us. This year we have been able to increase our stocks of finished products and raw materials, and Orion’s people have worked hard in all other aspects as well to ensure our optimal preparedness for the second wave of the pandemic.

Orion’s net sales from January to September 2020 increased slightly and our operating profit increased clearly from the comparative period. All our reporting units increased their net sales. Some of the growth is partly attributable to a strong increase in demand for pharmaceuticals in March and April in all markets caused by the ongoing COVID-19 pandemic. In several products, however, the impact of the spike in demand has levelled off in the second and third quarters, as anticipated. Furthermore, COVID-19-induced disruptions in the availability of some products have been less severe than expected.

The high capacity utilisation rate of Orion’s production facilities and reduction of scrap and inventory write-offs due to continuous development of operations as well as a favourable sales margin structure served to increase the gross margin from the comparative period. Operating expenses have been lower than in the comparative period owing to the COVID-19 pandemic, with significant reduction in travel, for example. Due to these reasons as well as the increase in net sales our operating profit increased clearly in January–September 2020.

The net sales of Orion’s intensive care sedative Dexdor® for the European market decreased from the comparative period due to generic competition. However, due to the strong demand spike in March and April, the product’s sales were well above the levels estimated at the start of the year. The sales of Simdax®, applied in the treatment of acute decompensated heart failure, remained on par with those of the comparative period. The product’s formulation patent expired in September, but generic competition is not expected to materially impact the sales of Simdax® this year.

Our Easyhaler® product family, used in the treatment of asthma and COPD, saw a marked increase in its sales in March, but subsequently the growth levelled off, and the increase in the product’s net sales from January to September was at the level anticipated at the start of the year. The net sales of the Parkinson’s drugs Stalevo® and Comtess®/Comtan® increased due to the reacquisition of their sales and distribution rights by Orion at the end of 2018 and in early 2019 as well as timing of partner deliveries. Compared with the first half of the year, the growth rate has since evened out as anticipated, and this trend is estimated to continue in the year’s remaining months.

From January to September 2020, Orion booked EUR 11 million in sales of Nubeqa®, a drug indicated for the treatment of non-metastatic castration-resistant prostate cancer. In addition, Orion has this year booked a total of EUR 28 million in milestone payments from the first commercial sales of the product in the EU and Japan. During the comparative period in August 2019, Orion booked a EUR 45 million milestone payment for the first commercial sales of the product in the USA.

The net sales of the Specialty Products unit increased, but the growth rate levelled off as expected once the March hoarding phenomenon and demand spike related to self-care products and generic prescription drugs had passed. However, the full-year sales of some products will be higher than expected at the start of the year. Additionally, the risk of COVID-19-induced lower product availability in 2020 has reduced significantly. The Animal Health unit had a very robust third quarter, partly thanks to the timing of partner deliveries, and its other business has developed well all year. Consequently, the unit’s net sales in January–September increased slightly from the comparative period. The demand for Fermion products has been good, and the production capacity has been utilised nearly in full.

The clinical Phase III REFALS trial, which was completed in July, unfortunately failed to meet its pre-specified endpoints. Therefore, Orion currently has no plans concerning the establishment of commercial operations in the United States. Orion remains focused on managing the safety and continued treatment of patients involved in the clinical trials during the COVID-19 pandemic. It is to be expected that the exceptional circumstances may delay ongoing research and development projects, and some projects have already experienced slight delays. In the period under review in September, we announced plans to revise and refocus the strategy of our research and development function. Through these changes and reorganisation measures, we aim to strengthen the company’s R&D portfolio and accelerate our research projects.

Orion has made sustainable investments amounting to tens of millions of euros per year in maintenance, refurbishment and expansion of our production facilities in Finland. We have systematically continued making these investments this year, and our tangible investments from January to September exceeded EUR 25 million.”

Published on 17 July 2020

Orion has fared well in exceptional circumstances

“During the COVID-19 pandemic, we have primarily been concerned with looking after the health and safety of Orion employees, production continuity and prioritisation of critical products as well as patient safety in ongoing clinical trials. We have fared well and achieved these critical goals in the first half of 2020. I would like to extend my heartfelt thanks to our entire workforce, as these goals could not have been reached without their resolve, flexibility and adaptability in these exceptional circumstances.

Orion's net sales and operating profit from January to June 2020 clearly increased from the comparative period. Our net sales and operating profit, especially the latter, were boosted by milestone payments amounting to more than EUR 30 million, of which EUR 28 million were associated with the commercialisation of darolutamide in Europe and Japan. Another key growth driver was a spike in demand for pharmaceuticals in several markets in March, caused by the COVID-19 pandemic. As expected, the impacts of this spike in demand started to level off in the second quarter, although with some products the demand continued to be stronger than usual also in April. As a whole, our second-quarter product sales were at the same level as in the comparative period. Additionally, in the first year-half, higher-margin products accounted for a larger share of our sales than in the comparative period, which contributed to the increase in operating profit.

The net sales of the intensive care sedative Dexdor® directed at the European market were at the same level as in the comparative period. Due to the COVID-19 situation and shortage of other sedatives available in the European market, the demand for Dexdor® reached a historical high in March and April. Subsequently in May and June, its sales returned to the level that we anticipated for this year following the generic competition that started already earlier. The demand for Precedex®, a sedative sold in non-European markets, spiked in the second quarter.

In March, substantial growth took place in the sales of the Easyhaler® product family, applied in the treatment of asthma and COPD. Since then, the growth has levelled off, and the product family's overall net sales for the first year-half were as expected at the beginning of the year. The sales of Simdax® (levosimendan), applied in the treatment of acutely decompensated heart failure, were at the same level as in the comparative period. The beginning of generic competition is not expected to have a material impact on the sales of Simdax® this year. The net sales of the Parkinson's drugs Stalevo® and Comtess®/Comtan® increased as anticipated due to the reacquisition of their sales and distribution rights by Orion at the end of 2018 and in early 2019 as well as the timing of partner deliveries.

The sales of Nubeqa®, a drug for the treatment of non-metastatic castration-resistant prostate cancer, started in Japan and the first European markets during the review period. Orion received milestone payments from Bayer upon the first commercial sales of darolutamide in Japan and Europe, amounting to EUR 8 million and EUR 20 million, respectively.

The net sales of the Specialty Products unit increased, but the growth pace levelled off as expected once the hoarding effect and spike in demand for self-care products and generic prescription drugs experienced in March had waned. Travel bans and other restrictions put in place around the world due to the COVID-19 pandemic are estimated to cause disruptions in global pharmaceutical supply chains, which may have a negative effect on the net sales, particularly those of the Specialty Products unit. However, the impairment in availability is not expected to have as negative an impact to the whole year net sales and operating profit as assumed earlier.

In June, the US Food and Drug Administration (FDA) granted a marketing authorisation to Orion Animal Health's Clevor® product, the launch of which is already underway in Europe. Clevor®, with ropinirole as the active pharmaceutical ingredient, is an eye-drop formula for inducing vomiting in dogs. Among others, it can be utilised to treat poisoning in dogs. During the review period, we announced that Orion will cease distributing the products of animal health company Zoetis in Denmark, Norway and Sweden after 31 December 2020. This will open up new opportunities to capitalise on Orion's strong and skilled sales network in Scandinavia in cooperation with other animal health companies.

The collection of study data from the REFALS Phase III clinical trial was completed during the review period, and study data validation is underway. During the COVID-19 pandemic, Orion has paid much attention to ensuring the safety and continued treatment of patients involved in clinical trials. However, the exceptional circumstances may lead to delays in ongoing research and development projects, and some projects have already been slightly delayed." 

Published on 28 April 2020

COVID-19 increased demand and challenges

“The COVID-19 pandemic impacted Orion’s operations in many ways in the first quarter of 2020. During this exceptional time, the most important thing for us is to take care of the health and safety of employees, the continuity of production and patient safety in ongoing clinical trials. We have prioritised the production and fully utilised the capacity of medicines that are critical in this situation. Orion is also collaborating with authorities from different countries in these matters.     

 

Orion‘s net sales and operating profit from January to March 2020 clearly increased from the comparative period. The growth is mainly due to a strong increase in demand for pharmaceuticals caused by the COVID-19 pandemic. In some products, growth in demand was a temporary spike due to hoarding and stockpiling, and in some products demand has remained higher than normal or increased even further.  

Net sales of Orion‘s intensive care sedative Dexdor® decreased from the strong comparative period, but notably less than expected. Due to the coronavirus situation and shortages in other sedatives in the European market, the demand for Dexdor® turned to a strong growth in March and demand is forecast to remain steady in the coming months. We have made producing Dexdor® a priority in manufacturing and have introduced full capacity to be able to deliver as much of the sedative as possible to patients in need. Unfortunately the coronavirus pandemic has increased the number of patients in intensive care so much that we are currently not fully able to meet demand.

Sales of the Easyhaler® product family for asthma and chronic obstructive pulmonary disease increased faster than anticipated especially due to very strong sales in March. Demand for products has increased partly because of the coronavirus. The demand for Easyhaler® products is estimated to continue higher than forecast at least for the time being. We have also increased the production of these products to meet growing demand.

The sales of Simdax® (levosimendan), used in the treatment of acute decompensated heart failure, continued to grow well in the first quarter of the year. The first generic levosimendan product has been launched in Germany and Austria, but its product formulation is different from Simdax®. The start of generic competition is not expected to have material impact on the sales of Simdax® this year.

Net sales of Parkinson‘s drugs Stalevo® and Comtess®/Comtan® increased as anticipated due to the reacquisition of their sales and distribution rights by Orion at the end of 2018 and in early 2019 as well as timing of partner deliveries.

Nubeqa®, a drug for the treatment of non-metastatic castration-resistant prostate cancer, received marketing authorisation in the review period, first in Japan in January and then in the EU in March. Sales did not start, however, in Japan or EU in the first quarter. Orion is eligible to receive milestone payments for darolutamide from Bayer, EUR 8 million upon first commercial sales in Japan and EUR 20 million in Europe. In the United States, the product has been in the market since the summer of 2019. Nubeqa® has also been granted marketing authorisation, among others, in Australia, Brazil and Canada, and Bayer has initiated or is planning marketing authorisation application processes in other regions.

The coronavirus situation caused a hoarding phenomenon and a spike in demand for self-care products and generic prescription drugs in March, which resulted in a marked rise in net sales of the Specialty Products unit. In our estimate, however, the basic demand for these products has not essentially changed, and the increase is expected to level off in the course of the year. Travel bans and other restrictions in place around the world due to the COVID-19 pandemic are estimated to cause disturbances in global pharmaceutical supply chains, which may negatively affect the net sales of the Specialty Products unit in particular from the end of the year.

The coronavirus situation and subsequent travel bans and other restrictions in different parts of the world also pose challenges to clinical development projects. Orion focuses on managing the safety and continued treatment of patients involved in clinical trials during the COVID-19 pandemic. However, the exceptional circumstances may cause delays in ongoing projects. Research projects in earlier phases may have delays because, among other things, some of the R&D personnel has transferred to assisting in the Orion supply chain and ensuring continuity of pharmaceutical production. Personnel from other functions has also transferred to assisting the supply chain. I greatly appreciate the great spirit and ability of all Orionees to pull together in this exceptional situation."