CEO's review

Published on 20 October 2021

Operations shift towards normal, while pandemic impacts are still visible

“Orion’s year has mainly progressed as anticipated, and since the summer we have seen gradual recovery in demand. In our estimation, the COVID-19 pandemic continues to affect our operating environment, and risks associated with global supply chains in particular remain clearly elevated. We manage these risks by increasing inventory levels, among other measures. In addition, due to the effects of the pandemic, sales and marketing expenses are still not at a level that we would consider normal and they will be lower for the full year than previously estimated. We continue to focus on looking after the health and safety of our employees and ensuring production continuity, product availability and patient safety in ongoing clinical trials.

Orion’s net sales in January-September 2021 were EUR 765 (823) million and the company’s operating profit was EUR 203 (246) million. The anticipated decline in net sales and operating profit was mainly attributable to three factors: the milestone payments that were clearly smaller than in the comparison period, a drop in the sales of Dexdor® and Simdax® owing to the expiration of their product protection and the expiration of a significant distribution agreement for veterinary drugs in the previous year. 

Although net sales decreased year-on-year, we have seen positive developments in many areas this year. Net sales of the Nubeqa® product recorded by Orion have continued strong growth as expected. The Specialty Products unit’s net sales were at a good level on the whole, although they fell behind the strong comparison period. The prevalence of seasonal illnesses has gradually changed towards normal since the summer, as seen in the demand for Specialty Products and Easyhaler® product family. The Animal Health business has shown strong performance in all markets, in part due to new product launches and distribution agreements, even though the overall numbers are still deflated owing to the expiration of a significant distribution agreement as stated above. Demand for Fermion products has remained good and production capacity has been nearly fully utilised.

During the review period, we received positive news from our research and development projects, as Orion’s veterinary drugs Bonqat® and Tessie® received marketing authorisations from the European Commission. Our clinical research pipeline was strengthened by a new project as we launched a Phase I clinical trial on a molecule based on Orion’s alpha 2 research, intended for the symptomatic treatment of neurological disorders. 

Orion has succeeded in managing the risks of global supply chains throughout the COVID-19 pandemic, and so far we have not experienced any significant disruptions or shortages. However, the risk of disturbances in global supply and logistics chains continues to be higher than usual, and we have taken various measures to mitigate it, such as increasing the inventory levels of products, raw materials and supplies clearly above their long-term averages. Due to worldwide operational bottlenecks, the prices of raw materials and logistics have increased, and the price pressure continues. To our understanding, the difficult situation may prevail for the next couple of years. For pharmaceutical companies, the increase in costs is particularly challenging as raising product prices is often not an option. 

We have continued systematic work to build Orion’s future growth. In summer we were in position to announce two tangible achievements in this area, signing a European-wide marketing and distribution agreement with the US company Marinus Pharmaceuticals for ganaxolone, as well as an early stage research collaboration and licencing agreement with Alligator Bioscience, a Swedish company. Our geographical expansion in Asia-Pacific is progressing, and we continue the search for product and business acquisition targets."

Published on 19 July 2021

Orion's operating profit excluding milestone payments on par with previous year

“2021 has marched on steadily despite the exceptional circumstances brought on by the COVID-19 pandemic. For Orion, this has meant continuing to focus on looking after the health and safety of our employees and ensuring production continuity, product availability and patient safety in ongoing clinical trials.

 

Orion's net sales in January-June 2021 were EUR 524 (572) million and the company's operating profit was EUR 146 (181) million. The anticipated decline in net sales and operating profit was mainly attributable to three factors: the milestone payments that were clearly smaller than in the comparison period, a drop in the sales of Dexdor® and Simdax® owing to the expiration of their product patent protection and the expiration of a significant distribution agreement for veterinary drugs last year. Nubeqa® product net sales booked by Orion increased as strongly as expected. The Specialty Products unit's net sales were at a good level on the whole, although they did decrease from the strong comparison period. In some product groups, the demand has been clearly weaker than normal. This owes itself to various restrictions relating to the COVID-19 pandemic, which have resulted in a reduced prevalence of seasonal illnesses as opposed to the norm and a dip in the number of medical appointments. These consequences of the pandemic also had a negative effect on the demand for the Easyhaler® products. The Animal Health unit's business developed vigorously in all markets due to new product launches and distribution agreements, among other things. On the whole, the unit's net sales fell short of the comparison period because of the said expiration of a significant distribution agreement.

During the review period, we received positive news of our research and development projects, as Tessie®, a veterinary drug developed by Orion, was recommended for marketing authorisation by the Committee for Medical Products for Veterinary Use (CVMP) of the European Medicines Agency (EMA) and Bonqat®, another veterinary drug developed by Orion, received a marketing authorisation from the European Commission.

More good news came in from Orion's digital therapies development projects, as the VIRPI trial, which examined the effects of utilising virtual reality therapy in the treatment of chronic low back pain, reported positive results in June.

In the review period, we decided to discontinue the development of a new dry powder inhaler and focus on developing the existing Easyhaler® platform as well as improving competitiveness. The Easyhaler® technology has been on the market for decades and is the subject of continued development.

The estimate concerning the completion of the Phase III ARASENS clinical trial on darolutamide with Bayer was updated in the review period, and the trial is currently expected to reach primary completion in the final quarter of 2021. Orion's other key clinical development projects proceeded as expected in the review period.

The global pharmaceutical supply chains have functioned fairly well from Orion's perspective throughout the pandemic, and so far we have not experienced any material disruptions or shortages. To our current knowledge, no disruptions or shortages are expected to affect the outlook for the rest of 2021 either. The risk associated with disturbances in global supply and logistics chains continues to be higher than usual, and we have taken various measures to mitigate it, such as increasing the stock levels of products, raw materials and supplies clearly above their long-term averages. Travel and other restrictions resulting from the pandemic have not caused labour shortages at Orion so far, and we have been able to carry out all maintenance procedures and scheduled production shutdowns as planned, even those requiring special expertise.

In the review period, we continued our determined work to achieve Orion's strategic growth target and commenced preparations to expand our non-European operations to Australia and New Zealand, among other things. Last year, we expanded our operations to Singapore, Malaysia and Thailand, and operations in these countries have started as planned. We have also continued our systematic work to identify and evaluate targets for product and business acquisitions."

Published on 27 April 2021

Strong first quarter as exceptional circumstances continue

“In the early part of 2021, the exceptional circumstances brought on by the COVID-19 pandemic are still prevailing. For Orion, this means continuing to focus on looking after the health and safety of our employees and ensuring production continuity, product availability and patient safety in ongoing clinical trials.

 

In January–March 2021, Orion's net sales were EUR 269 (280) million and operating profit EUR 75 (84) million. As anticipated, they fell below the robust comparative period when the peak in demand for pharmaceuticals caused by the COVID-19 pandemic gave a boost to sales and profits. The Specialty Products unit had a good quarter even though due to the coronavirus pandemic and related restrictions implemented in various countries, the prevalence of seasonal illnesses such as the common flu has been lower than normal, and there has been a decline in non-critical procedures and medical appointments. The pandemic and the consequences of related restrictions have had a negative impact also on the net sales of the Easyhaler® products. Despite generic competition, the decline in the net sales of Dexdor® was slower than expected, since the demand for intensive care sedatives remains above normal due to the COVID-19 pandemic. As expected, the sales of Simdax® declined from the strong comparative period due to a decrease in planned hospital visits caused by the pandemic and, in some markets, due to falling prices. The sales performance of the Parkinson's drugs and the strong increase in Nubeqa® net sales were in line with expectations. The decrease in Animal Health net sales was attributable to the expiry of the significant Scandinavian distribution agreement last year, but this decline was, however, mitigated by the timing of partner deliveries taking place early in the year. The very strong growth in Fermion and contract manufacturing is mainly due to the timing of specific Fermion deliveries.

 

The decrease in operating profit is primarily due to the gross margin falling below the comparative period. The change is mostly explained by the very high sales volume induced by the COVID-19 pandemic early last year and the fact that products with above-average margins, such as Dexdor and Simdax, accounted for a considerable share of those sales. Operating expenses in the first quarter were lower than in the comparative period mainly due to the COVID-19 pandemic, which served to slow down the decline in operating profit.

 

Orion's key clinical development projects progressed as expected in the review period, even though the ongoing pandemic still causes extra work in projects. For example, patient recruitment has been launched for the ODM-208 Phase II clinical trial as well as for the joint Phase III ARANOTE clinical trial on darolutamide with Bayer.

 

The global pharmaceutical supply chains have functioned fairly well from Orion's perspective throughout the pandemic, and so far we have not experienced any of the dreaded disruptions or shortages. To our current knowledge, no disruptions or shortages are expected to affect the outlook for the rest of 2021 either. However, as the pandemic drags on, broader concerns are arising with regard to the global supply and logistics chains of goods and raw materials. Any disruptions in them may have unexpected and sudden ramifications, which may be felt as a shortage of ingredients, supplies and equipment needed in the chemical and pharmaceutical industries and as increases in prices.

 

In the review period, we have continued our systematic work to achieve Orion's strategic growth target. Besides building future organic growth, we have allocated more resources to business development over the past few years and are continually assessing products and businesses as potential acquisition targets.”