2010 annual report - Meda AB

148 Pages·2011·2.64 MB·English

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2010 annual report
Meda AB, Box 906, SE-170 09 Solna, Sweden
Phone: [phone], Fax: [phone]
E-mail: [email protected]
www.meda.se
MEDA | Contents
Contents
1 Milestones 82 Consolidated notes
2 CEO’s report 111 Parent company accounts
4 2010 in figures 116 Parent company notes
5 Trends and specialty pharma 126 Proposed allocation of profits
12 Strategy and business development 127 Audit report
14 Agreements, partnerships, and key events 128 Financial review
17 Meda in brief 130 Definitions
25 Sales and marketing 132 Risk factors
28 Product portfolio 135 The Meda share
41 Drug development 138 Board of directors
45 Manufacture and product supply 140 Senior executives
47 Meda’s Sustainability Report 2010 142 Product overview
66 Management report 144 Glossary
73 Corporate governance report 145 Shareholder information, Addresses
78 Consolidated accounts
Milestones | 2010 annual report
Milestones
• Completed integration of Alaven, a US specialty pharma company.
• Further reinforced Meda’s pipeline through key progress, such as:
– A novel formulation of azelastine and fluticasone (treatment of allergic rhinitis)
– Flupirtine (pain and fibromyalgia)
– Retigabine/ezogabine (epilepsy)
• Goods results for Meda’s focus on growth markets, with an average sales increase
of more than 20% in countries such as Mexico, Russia, and Turkey.
• Further goal-oriented focus on non-prescription (OTC) drugs, which accounted for
around SEK 2 billion of total sales in 2010.
• Continued strong cash flow, which allows Meda to realize its growth ambitions in
parallel with a higher dividend.
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MEDA | CEO’s report
CEO’s report
As communicated during the year, 2010 was We continue to make substantial investments in
somewhat of an off-year for Meda in terms of sales OTC products. Meda’s OTC portfolio accounted
and EBITDA. Large fluctuations in major currencies, for some SEK 2 billion in 2010, and the addition
price reductions in certain European markets, and of strong brands has continued in 2011.
generic competition for Astelin and Optivar in the In February 2011, Meda acquired Antula, a
US resulted in sales falling to SEK 11,571 million successful nordic company with well-known
(13,178) compared to the preceding year. OTC/consumer products. These products can be
Excluding these effects, underlying growth did launched on other markets where Meda is already
occur, and amounted to 2–3% in 2010. established.
Meda was able to maintain its high EBITDA margin
(excluding non-recurring effects): 35.2% (34.3). GOING FORWARD
In all other respects, however, 2010 has been any- In 2010, expired patents for Astelin and Optivar left
thing but an off-year. It was characterized by key their mark on sales figures and earnings. Fiscal 2011
advances in growth toward attaining our business- is well underway and the current situation is different.
plan goals. Meda has gathered its energies to continue expand-
Meda’s pipeline was further strengthened, and ing—but at a much lower future risk. A growing prod-
several products made great headway during the uct portfolio minimizes dependence on individual or
year, such as Dymista (novel formulation of aze- a few large products with expiring patents. The lower
lastine and fluticasone) and retigabine/ezogabine, risk level can be illustrated with an example: at the end
which are nearing registration. of 2010, Meda’s largest product was responsible for
Meda’s focus on emerging growth markets, such only 7% of sales, and the 10 largest products for one-
as Poland, Russia, and Turkey, produced excellent re- third of Meda’s entire sales.
sults in 2010 with an average sales increase of more We are adhering to the business plan that we drew
than 20%. We are building on this with expanded up several years ago. Our focus remains firmly on:
sales organizations in these countries.
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CEO’s report | 2010 annual report
• Utilizing the company’s robust cash flow, which
paves the way for acquisitions and partnerships.
Meda has effective geographic coverage in Europe
and North America.
• Continuing to expand in emerging growth
markets, with the ambition to establish new
operations in specific selected markets, mainly in
Asia and South America.
• Launching, in an optimal way, new products that
are close to market from the company pipeline and
adding new, interesting products to the company
pipeline.
We also clearly see verification of the market trends
on which we have based our business plan. Our ap-
proach, to act on—instead of reacting to—changes
ensures that we achieve our goals.
In conclusion, I would like to give my deepest
thanks to all employees for their work in 2010.

Anders Lönner
Group President and Chief Executive Officer
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MEDA | 2010 in figures
2010 in figures
• Group net sales reached SEK 11,571 million • Profit after tax decreased to SEK 1,428 million
(13,178). (1,537).
• Operating profit fell to SEK 2,529 million (2,902). • Earnings per share were SEK 4.72 (5.09).

• Proposed dividend per share: SEK 2.00 (1.00).
nET SAlES EBiTDA*
SEK million SEK million
14,000 5,000
12,000
4,000
10,000
3,000
8,000
6,000
2,000
4,000
1,000
2,000
0 0
2009 2010 2009 2010
EBiTDA MARGin* PROFiT AFTER TAX*
% SEK million
40 1,600
35 1,400
30 1,200
25 1,000
20 800
15 600
10 400
5 200
0 0
2009 2010 2009 2010
*) Excluding non-recurring income of SEK 429 million in Q2 2010 and restructuring expenses of
SEK 197 million in Q4 2010 and SEK 131 million in Q4 2009.
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Trends and specialty pharma | 2010 annual report
Specialty pharma—a response to changes and
challenges in the pharmaceutical market
MEDA—BUILDING A WORLD-LEADING has led to an upswing in pharmaceutical market
SPECIALTY PHARMA COMPANY volumes, with increases in both number of prescrip-
Meda’s ambition is to be one of the world’s leading tions and quantity dispensed.
specialty pharma companies. As more people can afford medications and the
The path was chosen in light of global pharmaceu- population continues to age, new-drug R&D is in-
tical market trends and the challenge of steeply ris- creasingly focused on lifestyle diseases and illnesses
ing medication costs faced by authorities in various that were never before subject to drug treatment.
countries. Newly developed drugs are often expensive. In many
cases, such prices can be justified from a complete
A GROwinG PHARMACEUTiCAl MARKET social or medical perspective because they reduce ex-
The most important factors driving growth are penses in other areas. In other cases, pharmaceutical
changes in patient demographics—our populations companies’ marketing has successfully established a
are aging and requiring more medicines—and change in prescribing.
changes in the availability of pharmaceuticals. Most rising pharmaceutical costs in developed
The increasing proportion of elderly persons, pri- countries are due to doctors more often prescribing
marily in developed nations, leads to a gradual in- new, usually more expensive drugs. Conversely, in-
crease in the use of pharmaceuticals. Demand for creases in the total number of pharmaceutical prod-
medicines for age-related diseases is on the rise, ucts can have a cost-lowering effect, for example,
as are costs. The average cost of medications for a with increased prescribing of generic drugs (chemi-
60-year-old is generally estimated to be double that cal equivalents of more expensive brand-name drugs
for a 40-year-old. As a result of treatment successes whose patents have expired).
in health care, more patients survive acute and oth- Sales of both prescription and OTC pharmaceu-
er serious conditions but develop various chronic or ticals are increasing. Between 2001 and 2008, the
secondary conditions that require drug treatment. sales increase for prescribed products was higher, but
Continual drug treatment to prevent illnesses and since then, OTC pharmaceuticals have performed
hospital stays has also received high priority from better. The range of products in existing OTC areas
care providers and greater acceptance from pa- is increasing (e.g. for allergies, pain relief, and sleep
tients. Growth in the number of new patients, cou- disorders), and additional therapy areas are gradually
pled with increased use of medications per patient, emerging for OTC, particularly in growth markets.
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MEDA | Trends and specialty pharma
A CHANGING PHARMACEUTICAL MARKET
MOST GROwTH CURREnTlY OUTSiDE nORTH AMERiCA
AnD EUROPE
North America and Europe continue to dominate the sales figures. Big pharma thus increasingly earmark
global pharmaceutical market, which had a total value their resources to develop drugs for conditions that
of more than USD 800 billion in 2010. North America require long-term treatment, such as obesity, diabe-
represents more than 40% and Europe more than tes, cancer, and arteriosclerosis.
30%. The five largest markets in Europe are France, This approach means that big pharma assign lower
Germany, Italy, Spain, and the UK, which together priorities to numerous medically valuable products.
make up more than 60% of the European market. Current and forecasted sales figures are deemed insuf-
Growth patterns, however, vary. While growth in ficient or the products are local, with sales in a limited
North America and Europe has totaled 4–5% in re- number of geographic markets. In some cases, large
cent years, many other markets have achieved sub- pharmaceutical companies completely abandon cer-
stantially higher figures. China is displaying annual tain therapeutic areas and focus on those more aligned
growth of about 25% and is on its way to becoming with their R&D investment.
the third largest pharmaceutical market in the world. Due to limited resources, small, medium-sized, and
Other emerging growth markets such as Brazil, India, new pharmaceutical companies are forced to concen-
Mexico, Poland, Romania, Russia, South Africa, Turkey, trate on well-defined specialized areas; this has helped
and Ukraine are attaining growth of more than 15%. several new companies find a market niche. As special-
Authorities in many of these countries are investing ists in certain fields, such as R&D, production, or sales
more money in health care, and increasing numbers and marketing, they can offer outsourcing to other
of people can afford and have access to medicines. companies and thus negate the need for big, expen-
sive organizations traditionally associated with the
COnSOliDATiOn AnD COnCEnTRATiOn OF THE pharmaceutical sector.
PHARMACEUTiCAl inDUSTRY
In recent years, consolidation of the pharmaceutical GlOBAl FinAnCiAl CRiSiS CAUSE OF PRiCE REDUCTiOnS
industry has increased, with a clear trend for com- AnD COST CUTS in EUROPE
panies to expand in size through mergers or acqui- In recent years, and in Europe in particular, the total
sitions. The trend is propelled by opportunities for cost of publicly financed medicine has gradually ris-
boosting R&D productivity and leveraging econo- en. Authorities in the majority of European countries
mies of scale in production and marketing. Another have therefore intensified their price control efforts to
characteristic of major multinational pharmaceutical secure price cuts for medicines. In conjunction with
companies—big pharma—is an ever clearer focus on the global financial crisis that struck in 2008, efforts
finding new blockbusters—drugs with extremely high to lower costs further increased and mandatory re-
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Trends and specialty pharma | 2010 annual reportt
ductions were implemented—particularly in Greece, in several east-European countries. In contrast, generic
but also in countries such as Germany, Ireland, Italy, prescriptions remain low in several large markets, such
Portugal, and Spain. as France, Italy, and Spain while Denmark, Germany,
Influence over choice of medications has gradually Sweden, and the UK fall in the midrange. In terms of
shifted from prescribing doctors to various coordinat- value, however, Germany and the UK have the greatest
ing committees and purchasing organizations. Prod- sales of generic drugs.
uct comparisons—of medical properties and price— There is a clear trend for the large generic com-
are increasingly common, and this has greatly altered panies around the world to try and strengthen their
the playing field for the pharmaceutical industry. competitiveness through acquisitions and mergers in
General price control mainly occurs through legisla- the same way as big pharma. Their principal incentive
tion and regulation of subsidies for prescription drugs is to attain economies of scale, mainly in sales and
and by instructing prescribers to always select the least marketing.
expensive equivalent product. Regulations vary from
country to country—even within the EU. To further SElF-CARE MORE SiGniFiCAnT
complicate matters, demands to minimize initial obsta- OTC products are key complements to prescribed
cles for new players and increase competition must be drugs, because they often save patients time and
weighed against demands for secure and safe medica- money and lighten the burden on health care
tion use for consumers. Several previously subsidized services.
medications have had their subsidies withdrawn. Many patients are now very active and search for in-
formation on various ailments and medicines them-
USE OF GEnERiCS On THE UP, BUT VARiATiOnS BETwEEn selves, particularly via the internet. Interest in preventive
COUnTRiES ARE GREAT health care has also risen in recent years. The nature of
Generic drugs—copies of original medicines whose the self-care market differs from the prescription drugs
patents have expired and thus can be produced by market in several ways.
several manufacturers—are increasingly used as alter- OTC products are not as exposed to patent expira-
natives to the more expensive original drugs. tions; a strong brand and customer loyalty are more
The biggest market in the world for generics is the important competitive features. Advertising is used to
US with Europe second, however, fragmentation in the reach customers, especially on television and increas-
various European markets presents some challenges. ingly via social media. Relatively speaking, competition
Generics make up a large portion of total prescrip- is more fragmented.
tions—sometimes more than 70% of market volume—
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MEDA | Trends and specialty pharma
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