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Orion Corporation Orion Pharma plans to consolidate pharmaceutical manufacturing

Orion Corporation Orion Pharma is planning to reduce the number of its plants for pharmaceutical preparations from seven to four by consolidating manufacturing operations, thereby aiming at improved cost-efficiency at long term. The statutory negotiations with the personnel representatives of the Oulu, Kemijärvi and Seinäjoki plants will be started in May.

Orion Pharma, the pharmaceutical division of Orion Corporation, is increasingly focusing on innovative proprietary original preparations with global market potential, as well as on maintaining its strong market position in Finland with a broad product portfolio. The importance of new products is gaining momentum not only in R&D and international marketing but increasingly also in production operations. These products are manufactured at the Espoo and Turku plants of Orion Pharma, where the majority of the manufacturing investments will be allocated even in the future.

Currently, Orion Pharma operates altogether seven plants for pharmaceutical preparations, one of which is in Denmark. The number of plants is large in view of the net sales. The high number is explained by the pharmaceutical industry rearrangements that took place in Finland in the 1980s. The number of the plants is not in line with today's or future business situation, because the maintenance and development of all several minor manufacturing units is not economically feasible.

The profitability of the LVP solutions (large volume parenterals) manufactured at the Oulu plant has weakened essentially in result of heavy price competition on the Finnish market, and the possibilities to continue this business are being critically considered by the Company. The 1999 net sales from the LVP solutions were about FIM 47 million. Also the products of the Kemijärvi and Seinäjoki plants, most of them marketed in Finland only, have experienced reduced profitability in consequence of price competition and the price cuts implemented by the Pharmaceutical Pricing Board.

Orion Pharma aims to continue as the leading pharmaceuticals manufacturer and supplier in Finland. The purpose of the planned measures is to secure the future competitiveness and availability of therapeutically important products, but probably not including LVPs. Improved production economy will be sought by concentrating production in Espoo and Turku and possibly by outsourcing the manufacture of certain products.

The negotiations with the Orion Pharma personnel in Oulu, Kemijärvi and Seinäjoki pharmaceutical plants will be started during May, with an aim to improve cost-efficiency by centralising production operations. The negotiations concern approximately 230 persons, of which approximately 175 are working in Oulu, 30 in Kemijärvi and 27 in Seinäjoki. In the course of the next two years, the measures may lead to changes in tasks, relocation to other sites, but also termination of jobs. The Fermion plants that manufacture active pharmaceutical ingredients in Oulu and Hanko and the pharmaceutical plants in Kuopio and Denmark are not affected by the current plans.

Orion Corporation

Pauli Torkko

Jyrki Mattila