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Orion CMD 2012
24 May 2012 in Helsinki
Presentations part I
Orion today Timo Lappalainen, President & CEO
Market access of dexdor® Marjo Apajasalo, Director, Market Access & Support
Proprietary Products update Liisa Hurme, SVP, Proprietary Products
Q&A + coffee break
Presentations part II
Financial stability is basis for future Jari Karlson, CFO
R&D pipeline review Reijo Salonen, SVP, Research & Development
Specialty Products success story in Finland Markku Huhta-Koivisto, SVP, Specialty Products
Orion Supply Chain key success factors Virve Laitinen, SVP, Supply Chain
Q&A + closing remarks
Lunch
Agenda
24 May 2012 2 Orion CMD 2012
This presentation contains forward-looking statements which involve risks and uncertainty factors. These statements are not based on historical facts but relate to the Company’s future activities and performance. They include statements about future strategies and anticipated benefits of these strategies.
These statements are subject to risks and uncertainties. Actual results may differ substantially from those stated in any forward-looking statement. This is due to a number of factors, including the possibility that Orion may decide not to implement these strategies and the possibility that the anticipated benefits of implemented strategies are not achieved. Orion assumes no obligation to update or revise any information included in this presentation.
Forward-looking statements
24 May 2012 3 Orion CMD 2012
Orion today
Timo Lappalainen
President & CEO
Ownership base 2007-2011
0
10000
20000
30000
40000
50000
60000
70000
2007 2008 2009 2010 2011 30 Apr 2012
24 May 2012 5 Orion CMD 2012
Ownership structure by number of shares Number of shareholders
0 %
20 %
40 %
60 %
80 %
100 %
2007 2008 2009 2010 2011
Households Foreign held and nominee registered Public sector Private corporations Non-profit organisations Banks and insurance companies
Financial performance in 2007-2011
0,0 %
2,0 %
4,0 %
6,0 %
8,0 %
10,0 %
12,0 %
0
100
200
300
400
500
600
700
800
900
1000
2007 2008 2009 2010 2011
Net sales Annual growth, %
23,0 %
24,0 %
25,0 %
26,0 %
27,0 %
28,0 %
29,0 %
30,0 %
31,0 %
32,0 %
0
50
100
150
200
250
300
2007 2008 2009 2010 2011
Operating profit
Operating profit, % of net sales
24 May 2012 6 Orion CMD 2012
EUR million EUR million
CAGR 7.79% CAGR 10.19%
Net Sales 2007-2011 Operating Profit 2007-2011
200 208 235 253 267
59 70 89
118 142 253 261
275 299
321 67 67 62
68 68
0
100
200
300
400
500
600
700
800
900
1000
2007 2008 2009 2010 2011
Entacapone products Other Proprietary Products Specialty Products
Animal Health Fermion Contract Manufacturing
Diagnostica
Net sales by business divisions 2007-2011
24 May 2012 7 Orion CMD 2012
EUR million
Proprietary Products CAGR 12.03%
Specialty Products CAGR 6.17%
Development of key PP products
0
5
10
15
20
25
30
35
40
45
50
2007 2008 2009 2010 2011
Simdax Precedex Easyhaler
0
50
100
150
200
250
300
2007 2008 2009 2010 2011
Stalevo, Comtess & Comtan
24 May 2012 8 Orion CMD 2012
EUR million EUR million
Key patents or data protection expire
Molecule Product Indication Europe USA Japan
Entacapone Stalevo®,
Comtess® and
Comtan®
Parkinson’s disease November 2012
October 2013 1)
October 2013 2) 2015 3)
Levosimendan Simdax® Acute decompensated
heart failure
September
2015
Not marketed Not marketed
Dexmedetomidine Precedex®
dexdor®
Intensive care
sedative
July 2013
September
2021 4)
July 2013 June 2012
Product protection situation of key products
24 May 2012 9 Orion CMD 2012
1) Stalevo data protection expires
2) Wockhardt and Sun companies on markets since April 2012 3) Data protection expires; currently only Comtan available, project to develop Stalevo for Japanese markets ongoing 4) dexdor® data protection
Turning points of Parkinsons’s franchise
24 May 2012 10 Orion CMD 2012
2011 2012 2013 2014 2015
Euro
pe
Comtess in-market
sales EUR 35
million in 2011
Stalevo in-market
sales EUR 250
million in 2011
USA
Comtan in-market
sales EUR 71
million in 2011
Stalevo in-market
sales EUR 100
million in 2011
Japan
Comtan in-market
sales EUR 60
million in 2011
Entacapone molecule patent expires
11/2012
Stalevo data protection ends 10/2013 Generic versions of
Stalevo
Generic versions of Comtess
Entacapone molecule patent expires 10/2013
Sun and Wockhardt to the market 4/2012
Comtan data protection ends 1/2015 Generic
Comtan
• The austerity measures of governments slow down the pharma
market growth
• In 2011, the global pharma market amounted to ca. EUR 600 billion
• In 2012−2015, the global pharma market is estimated to grow 3−6%
– Sales expected to exceed EUR 780 billion by the end of 2015
• In 2012−2015, the generic pharma market is estimated to grow
11−12%
– The share of the generic drugs of the total value is 27%
Pharmaceutical market continues to grow
24 May 2012 11 Orion CMD 2012
Source : IMS Health
Orion’s strategy
24 May 2012 12 Orion CMD 2012
Orion’s values
Orion
people
Customer
focus
Quality,
reliability
and safety
Achievement
Innovation
Mutual trust
and respect
Partners
and networks
Efficient and competitive operations
Management of complexity in cost efficient way
Balancing mid-term − building long-term
24 May 2012 13 Orion CMD 2012
Operational flexibility and efficiency
Pricing pressure Easyhaler combinations
dexdor® for European markets
Parkinson’s franchise post patent
Precedex royalty stream post patent
Larger portfolio in the Nordics
Continued growth in Eastern Europe and Russia
Contract Manufacturing
Upside potential from
long-term portfolio management
Market access
of dexdor®
Marjo Apajasalo
Obtaining marketing authorization is no longer
the only hurdle on the way to commercial success
16 Orion CMD 2012
On-going Orion commercialisation projects
1 2 3 4 5
EU level
(EMEA)
National level +++
Regional level +
National / Regional / Local (e.g., sickness funds, regional
health authorities and hospitals)
Safety Efficacy Quality
Added value/
Cost-
effectiveness
Budget impact
Market access
Source: National P&R submission guidelines, Orion internal analysis
24 May 2012
Marketing authorisation
Added value of
dexdor®
There is an unmet need for a sedative that:
Improves cooperativeness and communication
with patients
Reduces the complications related to current
sedatives and mechanical ventilation
Enables shortening of ICU stay
The Unmet Need in ICU sedation
24 May 2012 18 Orion CMD 2012
• Patients have an organ failure or a threat of developing an organ
failure, that can lead to death if left untreated
• Typical patients
– Sepsis (infection with multiorgan failure)
– Respiratory failure, e.g. due to pneumonia/neuromuscular disease
– Severe cardiac failure
– Trauma
– Neurologic diseases, e.g. stroke, vascular, infection
– Any major surgery
ICU patients are critically ill
24 May 2012 19 Orion CMD 2012
Unmet Need
The goals in sedation have changed
considerably towards lighter sedation
Refs: Merriman et al, 1981; Mantz et al, 2011
24 May 2012 20 Orion CMD 2012
Unmet Need
1981:
• Patients should
ideally be “detached
from the ICU
environment”
Presently:
To have patients who
are:
• Calm and rousable
• Able to communicate
their needs
• Co-operative and
accepting of care
There is convincing evidence that over-sedation results in increased morbidity and
perhaps mortality due to the prolongation of mechanical ventilation and ICU stay
• There are ≈3.7 million ICU admissions/year in EU Big 5 and Nordic
• ICUs can consume up to 20% of hospital budgets
– Sedation and analgesia represents only a small % of the total ICU costs
• On average, a patient at ICU costs ca EUR 1700/day
– Invasive mechanical ventilation increase the costs by up to 35% vs. off
MV
Any intervention that shortens the time of mechanical
ventilation has the potential to reduce the ICU costs
The burden of ICU care and prolonged
ICU stay is high
24 May 2012 21 Orion CMD 2012
Refs: TforG Direct, 2010 ; Wild et al, 1995 ; Dasta et al, 2005 ; Moerer et al, 2007 ; Martin et al, 2008 ; Cheng et al, 1995
Unmet Need
Current sedatives contribute to certain
complications in ICU patients
24 May 2012 22 Orion CMD 2012
Refs: Whipple et al, 1995; Payen et al, 2007; Jacobi et al, 2002 ; Novaes et al, 1999; Ely et al, 2004; Pandharipande et al,
2006; Pandharipande et al, 2008 ; Pisani et al, 2009 ; Jones et al, 2007; Hopkins et al, 2006 ; Morris et al, 2008; Schweickert et
al, 2009; Needham et al, 2010
Communication and
co-operation
challenging
Suboptimal treatment
of pain/assessment of
patient status
Delirium
Increased mortality,
prolongation of ICU
and hospital stay,
cognitive impairment
Prolonged mechanical
ventilation
Ventilator associated
pneumonia, ICU
acquired weakness,
PTSD
There is a high unmet need for a sedative that
• Improves cooperativeness and communication with patients
• Reduces the complications related to current sedatives and mechanical
ventilation
• Enables shortening of ICU stay
dexdor® is a highly selective alfa 2c
adrenoreceptor agonist
indicated for sedation of adult ICU patients
requiring a sedation level not deeper than arousal
in response to verbal stimulation (corresponding
to Richmond Agitation-Sedation Scale (RASS)
0 to -3)
Therapeutic benefit of dexdor® – basic facts
24 May 2012 23 Orion CMD 2012
Ref: SPC
dexdor® addresses many of the unmet needs
24 May 2012 24 Orion CMD 2012
Refs: Whipple et al, 1995; Payen et al, 2007; Jacobi et al, 2002 ; Novaes et al, 1999; Ely et al, 2004; Pandharipande et al,
2006; Pandharipande et al, 2008 ; Pisani et al, 2009 ; Jones et al, 2007; Hopkins et al, 2006 ; Morris et al, 2008; Schweickert et
al, 2009; Needham et al, 2010
Allows patients to be
calm, arousable and
communicative
Reduces delirium Shortens invasive
mechanical ventilation
Therapeutic
Benefit
dexdor® treated patients were significantly more arousable, co-
operative and better able to communicate than with propofol or
midazolam
49
59
47
35
48
38
0
10
20
30
40
50
60
70
Ability to communicate
pain
Arousability Cooperativeness
Poin
ts
Dexmedetomidine Propofol (N=251) (N=247)
49
59
47
35
48
38
0
10
20
30
40
50
60
70
Ability to communicate
pain
Arousability Cooperativeness
Poin
ts
Dexmedetomidine Midazolam (N=251) (N=249)
24 May 2012 25 Orion CMD 2012
Ref: Jakob et. al. JAMA 2012
VAS score (scale 1-100) assessed by ICU nurses
P<0.001 P<0.001 P<0.001 P<0.001 P<0.001 P<0.001
Therapeutic
Benefit
Refs: Riker RR, et al. JAMA. 2009;301:489-499; Jakob et. al. JAMA 2012
The effect of dexmedetomidine treatment was significant in
reducing delirium, with a 24.9% decrease (95% confidence
interval16%-34%; P<0.001) relative to midazolam treatment
In PRODEX, delirium-
related neurocognitive
adverse events* were
observed in 18.3% of the
dexdor® and 28.7% of the
propofol patients (p=0.008)
ICU patients sedated with dexdor® experienced
significantly less delirium than patients on standard care
24 May 2012 26 Orion CMD 2012
*Agitation, anxiety and delirium were the three most commonly
reported delirium-related AEs
N= 229
118
206
109
175
92
134
77
92
57
60
42
44
34
Therapeutic
Benefit
0
0,5
1
1,5
2
2,5
3
3,5
4
Dexmedetomidine (n=251)
Propofol (n=247)
Media
n t
ime t
o e
xtu
bati
on f
rom
ra
ndom
izati
on (
days)
Gehan-Wilcoxon p=0.041
-1.0
days
2.9
days
(1.6-
7.7)
3.9
days
(1.9-
11.9)
0
1
2
3
4
5
6
7
Dexmedetomidine (n=249)
Midazolam (n=251)
Media
n t
ime t
o e
xtu
bati
on f
rom
ra
ndom
izati
on (
days)
Gehan-Wilcoxon p=0.012
-1.9
days
4.2
days
(2.7-
13.7)
6.1
days
(3.4-
13.5)
dexdor® shortened the time to extubation
by 1-2 days vs. standard care
24 May 2012 27 Orion CMD 2012
Ref: Jakob et. al, JAMA 2012
Therapeutic
Benefit
dexdor® provides cost savings to the hospital and
society
Economic benefit of dexdor®
24 May 2012 28 Orion CMD 2012
1837
0
300
600
900
1200
1500
1800
2100
2400
2700
3000
3300
3600
500 800 1100 1400 1700 2000 2300 2600 2900 3200 3500
Mean s
avin
gs
in ICU
cost
s, €
/pati
ent
Mean cost/ICU day (unit cost)
dexdor® provides ICU savings of over €1800 per patient vs.
standard care. Even in countries with low unit costs, dexdor®
remains clearly cost-saving
24 May 2012 29 Orion CMD 2012
The result with
average European
unit costs
Source: Orion internal analysis based on Jakob et al, JAMA 2012
Economic Benefit
• dexdor® improves the quality of sedation and facilitates patient
management compared to standard care
• dexdor® is likely to reduce the total ICU costs significantly
compared to standard care
• dexdor® has the potential to improve ICU cost-efficiency by
allowing the unit to manage more patients with the same staffing
dexdor® is cost-effective
Conclusions from the pharmacoeconomic
analysis
24 May 2012 30 Orion CMD 2012
Economic Benefit
Market access
status of dexdor®
National market access process are lengthy
24 May 2012 32 Orion CMD 2012
Source: EFPIA, Patients W.A.I.T. Indicator 2010 Report
For new medicines with first EU marketing authorisation in the period 2007-’09
Average time (days) elapsed between date of market authorisation and "accessibility"
date
0 50 100 150 200 250 300 350 400 450
France
Italy
Spain
Portugal
Belgium
dexdor® market access timelines
24 May 2012 33 Orion CMD 2012
2011
2012
Pending
AT
DK EE FI DE PL
SE
LV
NL LT
UA
CZ RU
NO
GR
UK*
SI
IT
HU
FR ES CH
RO
BG PT
IE
BE
*SMC and AWMSG assessment processes on-going
SK
Proprietary
Products Update
Liisa Hurme
Senior Vice President
Entacapone
franchise update
Entacapone brands are the leading global
anti-PD drugs
24 May 2012 37 Orion CMD 2012
568
504
304 277
197
115 107 90
0
100
200
300
400
500
600
Stalevo/ Comtess/ Comtan
Sifrol Azilect Requip Madopar Sinemet Neupro Duodopa
Top-selling anti-PD franchise in the world EUR/MNF (millions)
Prescription shares in USA after generic launches
24 May 2012 38 Orion CMD 2012
Stalevo (levodopa/carbidopa/entacapone) - MS% of TRx
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
TRx 2012/03/30
TRx 2012/04/06
TRx 2012/04/13
TRx 2012/04/20
TRx 2012/04/27
TRx 2012/05/04
TRx 2012/05/11
Novartis Sun Wockhardt
Novartis, 52 %
Sun, 33 %
Wockhardt, 15 %
• Stalevo volume growth in Europe 3,8% (2011 vs. 2010, IMS Health,
EUR/MNF)
• Stalevo protection in Europe
– Data protection until October 2013 (first launches expected H2/2014)
• RoW region is growing both in volume and value 13,1 % and 5,9%
(2011 vs. 2010, IMS Health, EUR/MNF)
– Japan Comtan in–market growth +18 %
– Countries with pending marketing authorisation applications or under
development
Growth potential in Europe and Rest of the World
24 May 2012 39 Orion CMD 2012
Paving the way
for new Easyaler
products
0
5
10
15
20
25
30
35
0
5
10
15
20
25
30
2007 2010 2011
Number of Orion countries
Total number of countries
Net sales (Meur)
Preparing for Easyhaler combination product
launches • Orion is repatriating countries as
license agreements expire
– YTD growth in Orion territory +12%
• Customers and market access
dynamics in Orion hands
– Repeating Simdax aquisition model
before dexdor® launch
• New partnerships for current EH
products in China, Canada, Australia
• Broad collaboration agreement with
Takeda
24 May 2012 41 Orion CMD 2012
EUR million Number of countries
Easyhaler market share in some key markets
24 May 2012 42 Orion CMD 2012
Source: IMS Health 2011, Market share Easyhaler corticosteroid products of the total inhaled corticosteroid market
0%
5%
10%
15%
20%
25%
Finland Germany Turkey UK Sweden
2010 2011
Orion is a unique
player in
European Critical
Care market
SIMDAX (Orion)
METALYSE (Boehringer)
REMODULIN (United
Therapeutics) BRIDION
(Merck & CO)
ARIXTRA (GSK)
XIGRIS (Lilly)
OTHERS (Including Dexdor)
Orion is a unique provider of innovative
treatments in Critical Care
24 May 2012 44 Orion CMD 2012
• Total number of 17
new products were
launched in critical
care sector between
2000-2011 including
– Simdax in 2000
– dexdor® in 2011
Source: IMS Health, non-generic, injectable hospital sector products launched in more than one country in Europe since year 2000
excluding antibiotics and oncology products. Split by sales in 12/2011.
Major Critical Care Products Launched in Europe since 2000
European sales
force in evolution
Expansion of Orion brands and sales force in
Europe provides flexibility of resourcing
24 May 2012 46 Orion CMD 2012
2008 2012
• Evolution from neurology focused Northern European company into
multi product European company
• Entacapone franchise will be significant part of the Proprietary
Division in mid and long term perspective
• Key areas in addition to neurology will be respiratory diseases,
oncology and critical care although more balanced in size
• All new products targeted to global markets with partner
companies outside Europe
Proprietary Products way forward
24 May 2012 47 Orion CMD 2012
Financial stability
is basis for future
success
Jari Karlson
CFO
• Orion has solid financial position
which provides good basis for
future development of the
company
• Maintaining financial strength is
an important goal for Orion
– Capacity to take required R&D risks
– Capacity to act when good
opportunities are identified
(organic growth, licensing, M&A)
– Capability to continue long term
development of the company also
during volatile periods
– Maintaining high dividend level
Orion has solid financial position
24 May 2012 50 Orion CMD 2012
50 55 60 65 70 75
2007 2008 2009 2010 2011
Equity ratio
-20
-15
-10
-5
0
2007 2008 2009 2010 2011
Gearing
Net sales and profitability in next few years depend on rate of:
• Decline in sales of Parkinson’s drugs
• Growth in sales of other products
Orion’s financial objectives:
• Ensuring financial stability
• Creating foundation for long-term profitable growth
Principal means of achieving objectives:
• Improving organic growth of net sales and operating profit through
product, product portfolio and corporate acquisitions
• Increasing efficiency of operations and cost control
• Maintaining stable financial position; equity ratio at least 50%
Efficiency has been part of financial objectives
and strategy for years
24 May 2012 51 Orion CMD 2012
Investment for future
(110 MEUR)
Largest growth
investment (85 MEUR)
New S&M activities
(launches, ..)
Most of R&D
Expansion Capex
(tangible & intangible)
Change in NWC
(launches,…)
Use of cash (during 2011)
24 May 2012 52 Orion CMD 2012
Current Business
(575 MEUR)
COGS
SG&A for old portfolio
R&D for old portfolio
Maintenance Capex
Change in NWC
Change in cash or debt position (+/-)
NET SALES
GROSS PROFIT
EBITDA
Profit distribution
(260 MEUR)
Taxes
Dividends
Orion’s productivity has improved
24 May 2012 53 Orion CMD 2012
• Economics of scale
• Networking
• Continous improvement
• Cost control
2007
2012
Change
%
Net sales
(EUR million)
680 918 +25%
Personnel 3,176 3425 +8%
Sales/person
(EUR thousand)
184 268 +35%
150
170
190
210
230
250
270
290
2007 2008 2009 2010 2011
Sales per person
(€ 1,000)
Re-allocation of resources support growth
143 144 160 189 205
85 90 95
86 88 39
52 50
39 41
0
50
100
150
200
250
300
350
2007 2008 2009 2010 2011
Sales&marketing R&D Admin
24 May 2012 54 Orion CMD 2012
Resources by function (EUR million)
R&D networking
More with same cost
Timing of phase III studies
Growth drivers: Geographical expansion and other
growth iniatives
+25
Increased sales volume +20
Inflation +15
Automation, centralization,
standadization
Product launches
0
20
40
60
80
100
120
140
160
180
200
2007 2008 2009 2010 2011
Specialty Products Proprietary Products
24 May 2012 55 Orion CMD 2012
• Investments for future
• Increase complexity Impact on costs and net working capital
Specialty product
launches in 2011
By geographical area
• Eastern Europe 57
• Finland 21
• Scandinavia 38
• Other 19
By type of product
• Prescription (Rx) 104
• Self-care 31
Sourcing of products
• In-licensing
• Developed for Orion
• Co-development
• Orion’s own
development
Orion’s product launches of
human pharmaceuticals Number of product/country combinations
Proprietary Product
launches in 2011
By geographical area
• Eastern Europe 16
• Finland 2
• Scandinavia 9
• Other 10
By type of product
• Prescription (Rx) 37
• Self-care -
Development of Net working capital
-20 %
-10 %
0 %
10 %
20 %
30 %
40 %
6/07
12/07
6/08
12/08
6/09
12/09
6/10
12/10
6/11
12/11
Receivables Inventories Short-term non-interest bearing liabilities Net Working Capital
-150
-100
-50
0
50
100
150
200
250
6/07
12/07
6/08
12/08
6/09
12/09
6/10
12/10
6/11
12/11
24 May 2012 56 Orion CMD 2012
EUR million % of net sales
Development of Receivables
• Growth mainly from unexpired
trade receivables which have
increased clearly faster than
sales
– About 25 million of the growth
is due to small change in one
distribution agreement
– Growth in sales in regions with
significantly longer payments
terms than in Northern Europe
• Also other receivables (mainly
accruals) have been growing
24 May 2012 57 Orion CMD 2012
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
160,0
180,0
200,0
12/08
3/09
6/09
9/09
12/09
3/10
6/10
9/10
12/10
3/11
6/11
9/11
12/11
Unexpired Trade receivables
Overdue Trade receivable
Other receivables
EUR million
Capital expenditure
• Tangible capex has been
relatively consistent over the
last years
• Volatility in the overall capex
has been due to investments
to intangible assets which are
mainly generated by in-
licensing of products
• In-tangible asset investments
almost half of average capex
during 2007-2011
24 May 2012 58 Orion CMD 2012
5 8 4 5 8 6
22 25
21 19 23 22
8
24 35
15
19 20
0
10
20
30
40
50
60
70
2007
2008
2009
2010
2011
Avera
ge
Buildings Machinery Intangible
EUR million
Dividend distribution
Dividend distribution policy
• Orion’s dividend distribution takes
into account distributable funds and
capital expenditure and other
financial requirements in medium
and long term to achieve the
financial objectives
Taxes
• High payout ratio limits tax planning
opportunities because annual profits
are needed in parent company Orion
Corporation for dividends
• most of profits are generated in
parent company
24 May 2012 59 Orion CMD 2012
0 %
20 %
40 %
60 %
80 %
100 %
120 %
140 %
160 %
0,00
0,20
0,40
0,60
0,80
1,00
1,20
1,40
1,60
2007 2008 2009 2010 2011
Cash flow per share Dividend per share
Repayment of capital Dividend payout ratio
Overall payout ratio
EUR
Dividend distribution history
31 Dec 2011 (EUR million)
Orion
Corporation
Orion
Group
Share capital 92.2 92.2
Reserves 18.3 18.1
Retained earnings
Orion Corporation 229.4 229.4
Subsidiaries 37.0
Consolidation and IFRS adjustments 130.4
Translation adjustments -7.2
Non-controlling interests 0.0
Total equity 339.9 500.0
Equity structure and Profit distribution
24 May 2012 60 Orion CMD 2012
Of these 200
million was
distributed in
April 2012
left EUR
0,34/share
IFRS and
consolidation
items not
available for
profit
distribution
Summary
24 May 2012 61 Orion CMD 2012
• More countries, larger product
portfolios, large number of
product launches
challenge to manage inventories
and trade receivables
• Allocation between current
business, new initiatives and
profit distribution
• Capacity utilization currently
very high
‒ Capacity expansion only in
specific areas
‒ Needs to support both
current and future business
• Make or buy decisions in all parts
of organization but especially in:
‒ Manufacturing (i.e.
continuous analysis to define
in which areas own
competencies and scale are
world class)
‒ R&D (internal work –
networking - in-licensing)
• Tights management of numerous
initiatives in all region and
functions
• One needs to run fast just keep
the current position
Increasing complexity of the
on-going business makes it
challenging to improve the
cash conversion
Capital allocation decisions
are increasingly important
No easy short cuts
Orion R&D
pipeline review
Reijo Salonen, SVP, Research &
Development
Best R&D in the world
and continous improvement
The Best R&D in the World by 2017 – a goal set in
2008
24 May 2012 64 Orion CMD 2012
Best Structure Best Leadership Best Image Best Strategy
Superior return on R&D Investment – higher value R&D assets and more
drugs generated, faster and at lower cost per unit of funding, than any
other Pharma R&D organisation
R&D partnerships and networks cover all phases from discovery to
product registration. Balances risks and enables an increasing number
of new research projects
Internal R&D capability: optimized to bring
products to Proof of concept (POC)
24 May 2012 65 Orion CMD 2012
MarketAc
cess Research
New
Idea Exploratory Development
Pre-
Clinical Confirmatory Development Reg. PoI
Candidate
Start R&D
Project
First-
in-
Human
Marketing
Authorisation
Application
DP
Proof
Concept
30
Active-To-Hit Hit-To-Lead Lead Optimization
CNS B
CNS C
Cardiovascular
Urology
CNS A
Candidate Precandidate
Oncology A
Research projects 2006 (6)
24 May 2012 66 Orion CMD 2012
CTA
Active-To-Hit Hit-To-Lead Lead Optimization
Candidate Precandidate
Research projects 2012 (18)
24 May 2012 67 Orion CMD 2012
CNS D
CNS B
CNS A
Oncology C
CNS B
Oncology A
Oncology D
CNS C
ENDO collaboration in oncology 4x
Oncology B
CNS G
CNS F
CNS E
CNS H Super generic
Oncology spin out for new indication
HIT Finding
CTA
Commercial potential
(why dot it)
Low High
Technic
al fe
asi
bilit
y
Pro
babilit
y o
f su
ccess
Low
H
igh
Generics
New validated targets which belong to
drugable families (such as own platform)
Second generation compounds
New unvalidated targets
Super Generics
Optimized R&D portfolio balance
24 May 2012 68 Orion CMD 2012
Commercial potential
(why dot it)
Low High
Technic
al fe
asi
bilit
y
Pro
babilit
y o
f su
ccess
Low
H
igh
Generics
Potential blockbuster
in late FIII & MAA
New validated targets which belong to
drugable families (such as own platform)
Second generation compounds
New unvalidated targets
Super Generics
Optimized R&D portfolio balance
24 May 2012 69 Orion CMD 2012
CNS
CNS CNS
CNS CNS
CNS
CNS
CNS
CNS
CNS
CNS
Oncology
Oncology
Oncology
Oncology
CC
Oncology
Oncology
Oncology Oncology
Easyhaler
combinations
Stepwise approach as outlined in EMA guidelines
on orally inhaled products*
24 May 2012 71 Orion CMD 2012
* CPMP/EWP/4151/00 Rev. 1
In vitro evaluation
Systemic exposure Lung deposition
Pharmacodynamics
Phase III
Rejection
APPRO
VAL
No
No
No
No
No
Yes
Yes
Yes Yes
Yes
• Acceptance criteria in step 2: classical bioequivalence criteria 0.8 –
1.25 for a test/reference product ratio of the primary parameters
(Cmax, AUC)
• To meet the criteria studies need to demonstrate not only small
mean differences but also a low variability in results
• Factors causing variability with dry powder inhalers
– Inherent variability in the dose delivered
– Differences in device resistance
– Differences in flow-rate dependence
– Differences in patient/device interface
Key features of the studies
24 May 2012 72 Orion CMD 2012
Examples of product comparisons - start point
0,4
0,6
0,8
1
1,2
1,4
1,6
1,8
2
PK parameter 1 PK parameter 2
Test
/Refe
rence r
ati
o a
nd 9
0% C
I
24 May 2012 73 Orion CMD 2012
0,4
0,6
0,8
1
1,2
1,4
1,6
1,8
2
PK parameter 1 PK parameter 2
Test
/Refe
rence r
ati
o a
nd 9
0% C
I
Examples of product comparisons - end point
24 May 2012 74 Orion CMD 2012
Easyhaler®
Accurate and Consistent Dosing
24 May 2012 75 Orion CMD 2012
Palander et al. Clin Drug Invest 2000; 20:25-33
ODM-101
Product APIs Target indications Formulation
Stalevo levodopa,
carbidopa,
entacapone
Parkinson´s
disease and end-
of-dose motor
fluctuations
Currently seven
different strenghts
ODM-101 levodopa,
carbidopa,
entacapone
Parkinson´s
disease and end-
of-dose motor
fluctuations
The ratios,
strengths and
pharmaceutical
formulations of
levodopa,
carbidopa and
entacapone have
been optimized
Background for ODM-101 project
24 May 2012 77 Orion CMD 2012
Status of development of ODM-101
24 May 2012 78 Orion CMD 2012
Phase I
Pharmacokinetics studies
completed
Phase II
Efficacy and safety study
ongoing with Parkinson´s
disease patients
Alpha-2C
adrenoceptor
antagonist
• Alpha-2 adrenoceptors (AR) are promising drug targets having key
modulatory role in adrenergic neurotransmission
• Orion has built a successful proprietary Alpha-2 adrenoceptor
Platform (Domosedan® , Domitor® , Precedex® , dexdor ,
Antisedan®) which has generated exciting novel development ready
leads (e.g. ORM-12741) for human CNS therapeutics
• Alpha-2C AR subtype is expressed mainly in the CNS (striatum and
hippocampus) and has a role as physiological fine tuner of synaptic
neurotransmission
• Possible indications for Alpha-2C AR antagonists are e.g.
Alzheimer’s disease and schizophrenia
Background for Alpha-2C project
24 May 2012 80 Orion CMD 2012
Status of development of ORM-12741
in cognition enhancement in Alzheimer’s disease
24 May 2012 81 Orion CMD 2012
Phase I
Completed and reported
Phase II
Efficacy and safety study
ongoing with Alzheimer’s
disease patients
ODM-201
a new generation
antiandrogen, for
the treatment of
CRPC
• Collaboration agreement for the discovery, development and
commercialization of assets in Oncology between North Americas
and Europe
• R&D collaboration partnership allows to bring forward a total of
eight (8) “discovery phase” candidates by combining an equal
number of programs
• This brings both companies in strong position in developing new
cancer therapies for the benefit of patients
• First-runner: ODM-201
Orion Corporation and Endo Pharmaceuticals
R&D collaboration strengthens further oncology presence
24 May 2012 83 Orion CMD 2012
High unmet need for
Castration Resistant Prostate Cancer
24 May 2012 84 Orion CMD 2012
Abbreviations:
CRPC castration resistant prostate cancer
LHRH luteinising-hormone-releasing hormone
Tumor
volume
& activity
CRPC
Hormone-sensitive Castration-resistant
Non-metastatic Metastatic
Asymptomatic Symptomatic
Chemotherapy Death
Androgen
deprivation
Local
therapy MDV3100
Time A B C 1 2 3 4
Zytiga Alpharadin
• Potentially best-in-class antiandrogen
• Does not enter brain in preclinical models
– No testosterone increase in animal models
• Well tolerated
ODM-201, a new generation antiandrogen,
for the treatment of CRPC
24 May 2012 85 Orion CMD 2012
(1) Foster & al .: Drug Safety Is a Barrier to the Discovery and Development of New Androgen Receptor Antagonists. The Prostate 2010
Study design
24 May 2012 86 Orion CMD 2012
ARADES 3104001 Phase I dose escalation
component ongoing at 700 mg dose level
• 3+3 rule-based design
ARADES-EXT 3104002
After 12 weeks patients with stable
disease can continue study treatment
in Arades extension study
2x100 mg
2x200 mg
2x300 mg
2x500 mg
2x700 mg
2x900 mg
Wk 12 Day 28
Expansion ---------------
ARADES 3104001 phase II expansion component
• 105 enrolled patients
• 3 dose levels to be expanded
Status of development of ODM-201
24 May 2012 87 Orion CMD 2012
Phase I/II study ongoing Phase I/II study results will
be presented in a major
scientific meeting in 2012
or 2013
Specialty Products
Success Story
in Finland
Markku Huhta-Koivisto
Senior Vice President
Orion clear market leader in Finland MAT 4/2012
pharmacy and hospital market
Finnish human pharmaceuticals and
self care market MAT 4/2012
• Wholesale EUR 2105 million (+3%)
Orion in Finnish human
pharmaceuticals and self care
market
• Sales growth 6%
• Orion clear market leader
– Market share 11,3%
– Volume share 29 %
• Orion especially strong in self-
care products and substitutable
prescription drugs
24 May2012 90 Orion CMD 2012 Source: Finnish Pharmaceutical Data 4/2012
99
120 124 130
237
0
50
100
150
200
250
Astra Zeneca
GSK MSD Pfizer Orion
Finland’s biggest pharmaceutical
companies MAT 4/2012 EUR million
Finnish market features and changes
Some special features in the structure
• efficient exclusive single channel
wholesales distribution system
• pharmacies are private businesses, no
pharmacy chains
The most important changes
1.4.2003 generic substitution started
1.1.2006 it was not legal any more to
give rebates in Rx or OTC
1.1.2006 general price cut of 5 %
1.4.2009 reference price system with
price corridor
• suggestion to cut none substitution Rx
product prices 5 % 1.1.2013
24 May2012 91 Orion CMD 2012 Source: Finnish Pharmaceutical Data 4/2012
11 10,5 10,3
9,4 9,6 9,9 10,3
10,7 11,1 11,3
0
2
4
6
8
10
12
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012 M
AT4
Orion’s market share in Finland in
pharmacies and hospitals MAT4/2012 %
Orion Pharma in Finland MAT 4/2012
Finnish pharmacy and hospital market in
MAT 4/2012
• Wholesale EUR 2105 million (+2,7%)
Orion in Finnish pharmacy and hospital
Market in MAT 4/2012
• Sales growth 6%
– Rx sales growth +8,9% (market +3,0%)
– OTC sales growth +1,3% (market +1,7%)
– Non-medicine growth +2,4% (market -
1,3%)
• Orion clear market leader
– Market share 11,3 %
– Rx market share 8,3 %
– OTC market share 26,4 %
– Non-medicine market share 26,6 %
PP 21
Non medicines
29
OTC 54 Generics
123
EUR million
24 May2012 92 Orion CMD 2012 Source: Finnish Pharmaceutical Data 4/2012
Orion Pharma’s human products sales in
Finland MAT4/2012
Orion’s best-selling brands, EUR million MAT4/2012 Change %
1. Burana, OTC & Rx (Inflammatory pain) 21.4 +8%
2. Primaspan, OTC (Antiplatelet) 7.2 +7%
3. Kefexin, Rx (Antibiotic) 5.6 +3%
4. Aqualan, OTC & Rx (Basic ointment series) 5.2 +1%
5. Stalevo, Rx, Proprietary Product (Parkinson’s disease) 5.0 +5%
6. Ketipinor, Rx (Antipsychotic) 4.8 +18%
7. Atorvastatin Orion, Rx (Anticholestrol) 4.6 +20%
8. Devisol, OTC – non-med (Vitamin) 4.6 +25%
9. Cefuroxime Orion Pharma, Rx – hospital product (Antibiotic) 4.5 -10%
10. Metforem, Rx (Antidiabetic) 4.5 +2%
Orion’s Best-selling brands in Finland
24 May2012 93 Orion CMD 2012
Source: Finnish Pharmaceutical Data 4/2012
Orion clear market leader in Finland MAT 4/2012
2003 Specialty Products Business
started in Orion
2005 Very high sales at the end of
the year due to the changes 1.1.2006
2005 SpP made 4 launhces
2007 SpP made 12 launches
2009 SpP made 21 launches
2011 SpP made 21 launches
• Orion launched eg.
– Ketipinor 1.6.2007
– Atorvastatin 1.3.2009
159 158 162
148
161
177 185
189
200 206
100
120
140
160
180
200
220
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012 M
AT4
EUR million
24 May2012 94 Orion CMD 2012
Specialty products sales in Finland
MAT4/2012
• Continuous development and renewal of product portfolio.
• Very high volume share
• Service: availability, volume, variability and demand integration
within supply chain, Pharmaservice
• Long term commitment to the market and distribution channel
• Lean and mean organisation up to the top: cross functional work
• Excellent sales and marketing organisation understanding the
customer need
Key Success Factors
24 May2012 95 Orion CMD 2012
0
10
20
30
40
50
60
70
Orion 2nd best 3rd best
Pharmacy Owner Pharmacist Assistant Pharmacist
The best pharmaceutical companies within
substitution
24 May2012 96 Orion CMD 2012
What pharmaceutical company working within substitution products, you consider
overall the best?
Source: Orion Pharma Pharmacy Study by Success Clinic 2011
2010 2009
Aided awareness (knows at least to some extent)
Orion 97 % (1.) 99 % (1.)
Median 80 % (7.) 93 % (5.)
The worst 31 % (16.) 22 % (16.)
Overall appreciation (excellent or average)
Orion 90 % (1.) 95 % (1.)
Median 85 % (3.) 87 % (3.)
The worst 52 % (16.) 25 % (16.)
Has met with a company representative
Orion 62 % (1.) 50 % (1.)
Median 36 % (6.) 38 % (4.)
The worst 8 % (16.) 6 % (16.)
Summary of the development of key ratios
24 May2012 97 Orion CMD 2012
Source: Finnish Pharmaceutical Companies Image Study 2010
Orion
Supply Chain
Key success
factors
Virve Laitinen
SVP, Supply Chain
Orion Pharma Supply Chain network
24 May 2012 100 Orion CMD 2012
Suppliers Production Sites Partners & own
sales
Customers
• 2 own API plants by
Fermion
• Suppliers for
API+excipients
• Suppliers for
packaging materials
• 3 own final product
manufacturing sites
• External
manufacturers
• In-licensed products
partners and suppliers
• Orion subsidiaries
• European wide
wholesalers and
distributors network
• Strategic partners
• Key customers
• Human products
• Veterinary products
• app. 400 products in
portfolio
• app. 150 new
launches annually
EU, US and Japan GMP
Key priorities for Supply Chain
24 May 2012 101 Orion CMD 2012
Service level Quality Complexity
management
Operations
efficiency
• High service level:
products on time
delivery
• Wide product
portfolio in Finland,-
every third package
sold out is from Orion
• Continuous flow of
new product launches
• Compliance quality:
EU, USA and Japan
GMP approved
• Right first time -
Operations quality
improvement
initiatives
• Integrated supply
chain planning
• Different operating
models
• Operations end to end
process optimisation
• Product portfolio
renewal process with
businesses
• Continuous operations
make or buy
evaluations
• High use of capacity
in in-house
manufacturing
operations
• Operations excellence
improvement
programs
• Low cost Indian based
resources
• Contract
manufacturing
capabilities
Orion – Supply Chain operating models
24 May 2012 102 Orion CMD 2012
Fully integrated
Supply Chain
Orion Own
production
supplies
In-licensed
product supplies
Contract
Manufacturing
partners
• Fermion API + Orion
Final product
• proprietary and other
strategic products in-
house
• Lean bulk
manufacturing and
agile packaging
operations building
• Strategic network building
Orion – Special production capabilities
24 May 2012 103 Orion CMD 2012
Inhalation production
• Easyhaler specific manufacturing technology in-house
• Investment program on-going to increase capacity
Hormone gel production
• Own expertise build through Divigel product portfolio
• Contract manufacturing partner for Axiron Eli Lilly
Orion - Production capabilities
24 May 2012 104 Orion CMD 2012
Tablet production
• Tablet manufacturing capacity
• Espoo:large scale manufacturing
• Turku:small scale manufacturing
Turku plant
• Sytostatics tablets
• Hormone tablets
• Cream and ointments
Small volume parenteral production
• Ampouls and injections
Kuopio plant
• Liquids and solutions
Orion as a Contract Manufacturing partner
24 May 2012 105 Orion CMD 2012
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011
EUR Million
CM Net Sales Contract manufacturing offering
Pharmaceutical
manufacturing
and packaging
Including
Pharmaceutical
& Regulatory
Support
Api contract
research and
manufacturing
Business
development
opportunities
Co-op in
Marketing
How do we improve our operations ?
24 May 2012 106 Orion CMD 2012
Total Quality
Management
Efficiency Costs Agility
• Quality
techniques in use:
green belt and
black belt tools
• Key measures :
Right First Time,
losses, quality
costs
• Productivity
improvement ;
TPM, 5S, SMED
tools
• Optimised
capacity
utilisation level
• Key measures:
Productivity
• In-direct
purchasing
• Streamlined
processes and
operations
• Key measures:
Savings
• Sales and
operation
planning with
integrated
planning tools
• Cross functional
co-operation
• Complexity
management tools
Key success factors for Orion Supply Chain
24 May 2012 107 Orion CMD 2012
Continuous improvement : quality and efficiency
High service level
Networking and partnerships
End to end supply chain optimisation
