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Orion Group Interim Report 1–9/2021


This is a summary of Orion’s Interim Report 1–9/2021. The complete report is attached to this stock exchange release and is available at

  • The outlook for 2021 has been specified. Orion estimates that net sales in 2021 will be slightly lower than in 2020 (net sales in 2020 were EUR 1,078 million). Operating profit is estimated to be lower than in 2020 (operating profit in 2020 was EUR 280 million). Previously Orion estimated that net sales in 2021 will be slightly lower than in 2020. Previously operating profit was estimated to be lower or clearly lower than in 2020.
  • Net sales totalled EUR 765 million (EUR 823 million in 1–9/2020).
  • Operating profit was EUR 203 (246) million.
  • Profit before taxes was EUR 202 (245) million.
  • Equity ratio was 71% (70%).
  • ROCE before taxes was 32% (40%).
  • ROE after taxes was 29% (34%).
  • Basic earnings per share were EUR 1.15 (1.38).
  • Cash flow per share before financial items was EUR 0.52 (1.52).


 7-9/217-9/20Change %1-9/211-9/20Change %1-12/20
Net sales, EUR million240.9250.3-3.7%764.5822.7-7.1%1,078.1
EBITDA, EUR million68.479.5-13.9%236.5288.7-18.1%336.5
% of net sales28.4%31.8% 30.9%35.1% 31.2%
Operating profit, EUR million57.365.1-11.9%203.4245.9-17.3%280.1
% of net sales23.8%26.0% 26.6%29.9% 26.0%
Profit before taxes, EUR million57.364.6-11.4%202.5244.5-17.2%278.3
% of net sales23.8%25.8% 26.5%29.7% 25.8%
Profit for the period, EUR million45.451.4-11.6%161.0194.4-17.2%219.9
% of net sales18.9%20.5% 21.1%23.6% 20.4%
R&D expenses, EUR million22.725.6-11.3%76.784.8-9.6%123.2
% of net sales9.4%10.2% 10.0%10.3% 11.4%
Capital expenditure, EUR million39.59.3+323.3%65.930.5+116.0%48.5
% of net sales16.4%3.7% 8.6%3.7% 4.5%
Interest-bearing net liabilities, EUR million   -48.2-140.0-65.6%-185.8
Basic earnings per share, EUR million0.320.37-11.7%1.151.38-17.2%1.56
Cash flow per share before financial items, EUR-0.010.62-101.2%0.521.52-65.7%1.85
Equity ratio, %   71.5%70.4% 66.7%
Gearing, %   -6.5%-18.4% -25.4%
ROCE (before taxes), %   32.2%40.1% 34.8%
ROE (after taxes), %   29.1%33.7% 29.1%
Average personnel during the period   3,3683,343+0.7%3,337

President and CEO Timo Lappalainen:
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.”

Outlook for 2021 (specified)

Orion estimates that net sales in 2021 will be slightly lower than in 2020
(net sales in 2020 were EUR 1,078 million).

Operating profit is estimated to be lower than in 2020
(operating profit in 2020 was EUR 280 million).

Previous outlook for 2021 (provided on 9 February 2021)

Orion estimates that net sales in 2021 will be slightly lower than in 2020
(net sales in 2020 were EUR 1,078 million).

Operating profit is estimated to be lower or clearly lower than in 2020
(operating profit in 2020 was EUR 280 million).

Basis for outlook in more detail

Collaboration agreements with other pharmaceutical companies are an important component of Orion’s business model. Agreements often include payments recorded in net sales and operating profit that vary greatly from year to year. Forecasting the timing and amount of these payments is difficult. In some cases they are conditional on terms such as research outcomes which are not known until studies have been completed, the progress of research projects or the attainment of specified sales levels. On the other hand, neither the outcome nor the schedule of contract negotiations is generally known before the final signing of the agreement.

In 2020 Orion received a total of EUR 42 million in milestone payments, most of these in connection with the commercialisation of Nubeqa® in Europe and Japan (EUR 28 million in total) and the transfer of distribution rights to Parkinson’s products to new partners around the world. In 2019, Orion received a total of EUR 51 million in milestone payments, of which EUR 45 million in connection with the commercialisation of Nubeqa® in the United States. The net sales and operating profit estimates for 2021 include less than EUR 5 million of milestone payments, a significantly lower figure than in the preceding years.

Orion estimates that its operating profit in 2020 was around EUR 40 million higher due to the impacts of the COVID-19 pandemic than the Company estimated at the beginning of 2020. More than half of this came from the increased international sales of dexmedetomidine products and the rest from lower than anticipated expenses and increased sales of other products. The outlook for 2021 does not contain similar impacts due to the pandemic.

The outlook is based on the assumption that Orion’s own production can continue to operate normally despite the COVID-19 pandemic. This requires, among other things, continued success in employee protection so that absence rates do not significantly increase, that personal protective equipment, starting materials, intermediate products and materials are available and that there are no material disruptions in the logistics chains.

The outlook does not include any income or expenses associated with possible product or company acquisitions.

Net sales

Orion continues persistent actions to generate growth more rapidly than growth of the market in the long term. However, in 2021 net sales will be negatively affected by significantly lower milestone payments than in the previous years, generic competition and expiration of a major distribution agreement in the Animal Health unit. In addition, the COVID-19 pandemic significantly increased the demand for some Orion products in 2020, but similar added sales beyond normal demand are not anticipated for the same products in 2021, which negatively affects net sales in comparison with 2020. Following the pandemic and various pandemic-related restrictions, the demand for some product groups, such as products used for treatment of common seasonal flu, has been below normal.

Sales of Orion’s Dexdor® and Simdax® will decrease due to generic competition. In 2020, the sales of Dexdor® remained at the previous year’s level due to the increased demand caused by the COVID-19 pandemic, but in 2021 its sales are expected to decline.

Nubeqa®, the drug developed by Orion in collaboration with Bayer, received marketing authorisation in the United States in 2019 and in the EU and Japan in 2020. Nubeqa® has now been approved in several other countries as well, and marketing authorisation application filings in other regions are underway or planned by Bayer. The outlook anticipates that the net sales of Nubeqa® booked by Orion will clearly increase in 2021. Orion’s estimate is based on forecasts received from its partner Bayer.
The sales of the Easyhaler® product portfolio is estimated to be at the previous year’s level. However, some uncertainty is associated with the estimate, one of the reasons for this being that the market situation of dry powder formulations of pulmonary drugs has deteriorated in Europe owing to the effects of the COVID-19 pandemic. 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.

The Scandinavian distribution agreement between Orion’s Animal Health unit and the animal health company Zoetis, in effect for several years, terminated at the end of 2020. As a consequence, the net sales of Orion’s Animal Health unit in 2021 will decrease clearly from the previous year. Distribution of Zoetis products contributed around EUR 28 million to Orion’s net sales in 2020.

Sales of generic products account for a significant proportion of Orion’s total sales. Decline in the price of generic drugs and availability disruptions due to causes other than the COVID-19 pandemic have impacted Orion’s net sales negatively in the past few years. However, the combined negative impact of price decline and product shortages is estimated to be clearly smaller in 2021 than in the previous years. The demand for some generic drugs sold by Orion exceeded normal levels in 2020 due to the COVID-19 pandemic, but the demand for these products is estimated to return to a more normal level this year, negatively affecting net sales development in 2021 in comparison with 2020.

The outlook for 2021 includes under EUR 5 million in milestone payments, which is clearly less than what was booked in 2020 (EUR 42 million) or 2019 (EUR 51 million).

Operating profit

Orion anticipates clearly lower milestone payments in 2021 than in 2020, and the Company’s net product sales are expected to decrease slightly from 2020. Operating profit will also be affected by declining sales of the proprietary products Dexdor® and Simdax® due to generic competition. Growing sales of products like Nubeqa® will not be able to compensate for the resulting decline in operating profit. Orion therefore estimates that operating profit will be lower than in 2020.

The adjustment in the specified outlook for operating profit is mainly due to operating expenses, which will be lower for the full year than estimated at the beginning of the year. Now Orion anticipates that operating expenses will be slightly lower than in 2020. Previously, expenses were estimated to be at the previous year's level. Depreciations related to the acquisition of sales and distribution rights for the Parkinson’s drugs were booked for the final time in 2020, and this will reduce sales and marketing expenses by around EUR 12 million. At the same time, increasing investments are made in the sales and marketing of products that are experiencing growth. Expenses that saw a decline due to the COVID-19 pandemic are anticipated to return to a more normal level in the last quarter of 2021. R&D expenses are estimated to be at a similar level or slightly lower than in 2020.

The Group’s total capital expenditure in 2021 will be more than in 2020, when capital expenditure was EUR 49 million. A contributing factor to the total volume of investments is the acquisition of the European-wide marketing and distribution rights of ganaxolone, in the context of which Orion paid Marinus Pharmaceuticals Inc. a signing fee of EUR 25 million. Orion has launched a project to renew its enterprise resource planning (ERP) system, and renovations of the Company head office in Espoo have also commenced in 2021. Most of the investments in these projects will materialise in 2022–2023.

Near-term risks and uncertainties

The outlook is based on the assumption that Orion’s own production can continue to operate normally despite the COVID-19 pandemic. The sales of Orion-manufactured products depend on the ability of production and the entire supply chain to operate at the planned level. This involves numerous pandemic-related risks that may cause even material production disruptions. Such risks include the infection of employees, poor availability of personal protective equipment, supplies, equipment and spare parts, deteriorating availability of starting materials and intermediate products as well as logistics chain disruptions.

In the course of 2020, as the agreement with Novartis expired, Orion transferred the distribution of the Parkinson’s drugs Stalevo® and Comtan® to new partners in most non-European markets with the exception of Japan. Orion started to sell these products on its own in Singapore, Malaysia and Thailand and continues to sell them in Europe. These changes, as well as continued generic competition affecting sales negatively, have been factored into the outlook for the current year. However, they still entail uncertainty that may affect the accuracy of the estimate.

The basic patents for Dexdor® and Simdax® have expired and generic competition on these products has begun. In 2020, the COVID-19 pandemic strongly increased the demand for intensive care sedatives, and therefore the sales of Dexdor® decreased far less than anticipated. Its sales are estimated to notably decrease in 2021, but this estimate is subject to uncertainty due to the pandemic situation. Generic competition to Simdax® started in the first markets in 2020. In 2021, net sales of Simdax® are estimated to decrease, but it is difficult to make exact estimates of sales at this point. Actual sales will be affected, among other things, by the timing of the beginning of generic competition in the various markets and the intensity of this competition.

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 pharmaceutical markets in recent years will specifically focus on Orion’s products. Product deliveries to key partners are based on timetables that are jointly agreed in advance. Nevertheless, they can change, for example as a consequence of decisions concerning adjustments of stock levels. In addition, changes in market prices and exchange rates affect the value of deliveries. The COVID-19 pandemic significantly increased the demand for some Orion products in 2020, but similar added sales beyond normal demand are not anticipated for the same products in 2021. There is uncertainty around this estimate, since the path of the pandemic and its impacts on the demand for Orion’s products are difficult to assess with any precision. On the other hand, Orion is unaware of how much of the stockpiles acquired by customers in 2020 are remaining and when customers might start using inventories that exceed normal stock levels. Due to the pandemic and various pandemic-related restrictions, the prevalence of many seasonal illnesses has been below normal, whereby the numbers of medical appointments and prescriptions issued have also declined. Non-critical procedures have also been postponed due to the pandemic. These phenomena have negatively impacted the development of the entire pharma market. At present, it is difficult to estimate how long the situation will last or to what extent the eventual waning of the pandemic will manifest as a release of any pent-up demand.

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 weight of the US dollar will increase due to increasing sales of Nubeqa®. The greatest exchange rate risk at present relates to European currencies such as the Swedish and Norwegian 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. The exchange rate performance of the Japanese yen is significant due to increased sales of Parkinson’s drugs in Japan. 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. The impact of availability disruptions on the Company’s net sales has increased in the past few years. The ongoing COVID-19 pandemic has clearly ramped up this risk, as restrictions on travel and other operations and the increase in sick leaves in different parts of the world may cause delayed disruptions in pharmaceuticals’ global distribution and logistics chains. The disruptions, production volume changes and logistical challenges in other industries may also have unexpected and sudden ramifications that can manifest as shortages of necessary raw materials, supplies and equipment in the chemical and pharmaceutical industries and as increases in prices. The impacts of the COVID-19 pandemic on the availability of Orion’s products have not been significant in 2021, but the risk of poorer than normal availability of products is still elevated and will remain so in the ensuing quarters. Authorities and key customers in different countries carry out regular and detailed inspections of drug development and manufacturing 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 contains products manufactured by other pharmaceutical companies and products that Orion manufactures on its own but for which other companies deliver active pharmaceutical or other ingredients. Orion’s product range also contains products manufactured by other pharmaceutical companies and products that Orion manufactures on its own but for which other companies supply active pharmaceutical or other ingredients and components or parts (among these the Easyhaler® products). 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.

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, for example due to the COVID-19 pandemic, are reflected in costs relatively slowly and 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 2014–2020 the annual payments varied from EUR 5 million to EUR 51 million. The payments may be subject to conditions relating to the progress of research projects or sales or to new contracts to be signed, and whether these conditions or contracts materialise and what their timing is will always entail uncertainties.

Webcast and conference call

A webcast and a conference call for analysts, investors and media will be held today on Wednesday, 20 October 2021 at 13.30 EEST. The event will be held only online and by conference call.

A link to the live webcast will be available on Orion's website at A recording of the event will be available on the website later today.

To participate the conference call, please dial:

Finland: +358 9 817 103 10
Sweden: +46 8 566 426 51
UK: +44 333 300 0804
USA: +1 631 913 1422

PIN: 49775482#

Upcoming events

Financial Statement Release for 2021Thursday 10 February 2022
Annual General Meeting 2022Planned to be held on Wednesday 23 March 2022
Interim Report January-March 2022Thursday 28 April 2022
Half-Year Financial Report January-June 2022Friday 15 July 2022
Interim Report January-September 2022Thursday 20 October 2022

The Financial Statements and the Report of the Board of Directors for 2021 will be published on the Company's website at the latest in week 9/2022.

Espoo, 20 October 2021

Board of Directors of Orion Corporation

Orion Corporation

For additional information about the report:

Jari Karlson, CFO                 tel. +358 50 966 2883
Tuukka Hirvonen, Investor Relations        tel. +358 10 426 2721 or +358 50 966 2721

Orion Corporation

Orion is a globally operating Finnish pharmaceutical company – a builder of well-being. Orion develops, manufactures and markets human and veterinary pharmaceuticals and active pharmaceutical ingredients. The company is continuously developing new drugs and treatment methods. The core therapy areas of Orion's pharmaceutical R&D are neurological disorders, oncology and respiratory diseases for which Orion develops inhaled pulmonary medication. Orion's net sales in 2020 amounted to EUR 1,078 million and the company had about 3,300 employees at the end of the year. Orion's A and B shares are listed on Nasdaq Helsinki.