Published on 27 April 2023
"In January-March 2023, our net sales increased by 2.7% to EUR 277.9 million and our operating profit decreased by 22.4% to EUR 55.5 million. The operating profit decline from the comparative period was expected, and the year has started largely according to our plans.
The Innovative Medicines business division's revenue increased significantly thanks to the good performance of Nubeqa®, which topped the list of Orion's best-selling products for the first time. The net sales of the Branded Products business division, on the other hand, decreased clearly. The Easyhaler® product family continued to grow, but the timing of partner deliveries of Parkinson's medicines and lower sales of the Divina® series weighed on net sales. In Finland, sales of generics and OTC products increased due to strong volume growth. However, the overall sales of the Generics and Consumer Health division declined due to generic competition and declining prices of Simdax® and dexmedetomidine products for human use, together with the significant contraction of operations in Russia. Net sales of the Animal Health business division include the turnover of the animal health company VMD (Inovet), acquired in June 2022, which explains the strong increase from the comparative period.
The decline in operating profit is explained by lower gross profit and increase in fixed cost. The gross profit was depressed by cost inflation, price declines and product mix. The effect of the contraction of operations in Russia on the gross profit was approximately EUR 7 million negative. The impact of Nubeqa on gross profit was twofold compared to the comparative period. On the one hand, royalties increased significantly, on the other hand Orion supplied Nubeqa to Bayer at a lower price than in the comparative period. The lowered Nubeqa delivery price has only a temporary effect on the timing of Orion's profits, as it will correspondingly decrease the deductions from future royalties. Operating costs increased as expected. Sales and marketing expenses increased because in the comparative period COVID-19 still limited promotional activities in some areas. In addition, sales and marketing expenses as well as administrative expenses now also include the expenses of the acquired animal health company VMD (Inovet), which were absent in the comparative period.
For the full year, we expect operating profit to be slightly higher or higher than in 2022. This estimate is based on assumptions including continued good performance of Nubeqa, easing of cost inflation in the second half of the year, levelling off of the decline in sales of Simdax and dexmedetomidine products for human use, and a EUR 30 million milestone payment related to the sales of Nubeqa.
Research & development pipeline is progressing according to our strategy. During the review period, we expanded our clinical development programme with our partner Bayer for darolutamide and initiated a new multi-year Phase III ARASTEP study in early-stage prostate cancer. Nubeqa also dominated Orion's news flow during the period with the approval of the product in Japan, the European Union and China for the treatment of metastatic hormone-sensitive prostate cancer (mHSPC). With our partner MSD, we plan to take the ODM-208 molecule into Phase III by the end of this year. The Phase II study with ODM-208 continues as planned. Our other active clinical phase development projects, namely the Phase III ARANOTE study with darolutamide in collaboration with Bayer and the Phase I study with ODM-111 for pain, have also continued as planned. We look forward to continuing all our R&D projects to develop new treatments for the benefit of patients who need them.”