Nycomed confirms positive trend in third quarter 2008

12.11.2008

Encouraging results from Daxas® pivotal phase III studies

Core products with continuous strong growth

Strong sales in most home markets

New manufacturing strategy for improved competitiveness

The financial results reported in this press release are related to Nycomed S.C.A. SICAR and comprise all of the Nycomed Group’s operations. A full interim report is available at www.nycomed.com/en/menu/investors/financials
 
Nycomed’s third quarter 2008 results confirm the positive trend seen in 2008. The key products without Pantoprazole continued with growth of +17.4% (in local currencies) and most home markets showed strong sales. This balanced the negative effects of Pantoprazole due to “at-risk” launch in the United States and generic competition in Canada. Total net turnover reached € 2,526.9 million in the first nine months. This is a decrease by 4.1% (-0.4% in local currencies) compared to the same period 2007. Adjusted EBITDA reached € 948.1 million, which represents an increase of 0.8%. Based on this performance Nycomed increased its outlook for 2008 to an adjusted EBITDA of approximately € 1.2 billion. With the encouraging preliminary results of Daxas® phase III clinical trials reported in October and the newly in-licensed Veltuzumab, Nycomed looks optimistically into the future.
          
“We are satisfied that the third quarter of 2008 confirmed the positive trend of the first two quarters. Our key products continue their strong growth and most of our home markets also achieved results above expectations,” said Håkan Björklund, Nycomed’s Chief Executive Officer.
 
“Our pipeline has seen significant advancement with recently announced encouraging results from four phase III clinical studies of Daxas® in the treatment of symptomatic Chronic Obstructive Pulmonary Disease and the in-licensing of Veltuzumab. Based on the preliminary data, we have decided to move forward with Daxas and expect to file for European and US marketing authorisation in 2009,” he added.

 
Key figures

  Q3 2008
(m€)
Q3 2007
(m€)
Change 2008 YTD
(m€)
2007 YTD
(m€)
Change
Net turnover 812.4  860.2 -5.6% 2,526.9 2,634.2 -4.1%
Gross profit
margin 
589.7
72.6%
632.8
73.7%
-6.8% 1,885.6
74.6%
1,920.0
74.9%
-1.8%
Operating income 109.4 91.0 20.3% 371.2 290.4 27.8%
EBITDA
margin
286.3
35.2%
251.0
29.2%
14.0% 920.8
36.4%
774.9
29.4%
18.8%
Adjusted EBITDA
margin
294.5
36.2%
317.5
36.9%
-7.3% 948.1
37.5%
940.8
35.7%
0.8%

Markets
Most markets performed well and according to expectations for the first nine months of 2008. Sales in Russia/CIS increased by 20.1% for the first nine months (37.0% in local currency). Despite price reductions in many of the Pantoprazole markets, sales developed satisfactorily as a result of strong volume growth. Excluding US and Canada, total volume in Europe and rest of world grew by approximately 14.0% for the first nine months. Sales of key products without Pantoprazole also performed according to expectations and developed positively, with a growth of approximately 17.4% for the first nine months of 2008 compared to the same period last year.
 
In Europe, third quarter sales were 3.6% below previous year. September year-to-date sales declined 2.9% compared to the same period in 2007. Apart from the decline in most of the five largest pharmaceutical markets in Europe (Germany, France, Italy, Spain and the United Kingdom), third quarter sales in Europe were in line with last year (+ 0.7%), driven primarily by double-digit growth in most Eastern European countries and single-digit growth in some Scandinavian countries.
 
In the Latin America, Canada and South Africa region (Argentina, Brazil, Mexico, Canada and South Africa) total net turnover decreased by 12.3% for the first nine months compared to the same period in 2007. The declining growth is mainly caused by considerably lower Pantoprazole sales in the third quarter of 2008 in Canada as a result of a very strong generic penetration. Sales in Argentina and Brazil are showing positive trends (+10.0% respectively). Third quarter sales in Mexico were slightly above sales for the first nine months of 2007.
 
In Russia /CIS, Nycomed’s fastest growing region, high sales growth continued in the third quarter. While sales increased by 20.1% (37.0% in local currency) for the first nine months of 2008 compared to the same period in 2007, sales growth was at 22.9% (39.0% in local currency) for the third quarter.
 
Net turnover of Nycomed US, the company’s specialty business focusing on dermatology and emergency care in the United States, increased by 16.8% for the first nine months. After closing of the acquisition of Bradley Pharmaceuticals, the integration has developed very satisfactorily, with the new sales organisation already in place and key appointments made.
 
The international sales/export business achieved sales of € 64.2 million in the third quarter, an increase of 39.0% compared to the same period in 2007. All regions contributed to the growth, led by Asia.
 
Sales from contract production increased by 15.0% to € 55.7 million for the first nine months of 2008. The growth is positively impacted by the toll manufacturing for Bracco.

Products and pipeline
The key products without Pantoprazole increased revenues by +17.4% (in local currencies) in the first three quarters. This strong development offsets the Pantoprazole development in the United States and Canada and points to the future growth of the company.
 
Sales of Nycomed’s top-earner Pantoprazole were adversely affected by the “at-risk” launch of generic Pantoprazole tablets in the United States. Other core products such as Calcium, TachoSil®, Preotact® and Alvesco® continue to develop strongly.
 
In January 2008, Nycomed and Wyeth launched an own generic version of Pantoprazole in the United States. While this own generic has had some success in the market, its sales have not and cannot offset the substantial harm caused by the launch of infringing generics. Nycomed and Wyeth remain convinced of the validity and enforceability of their patent and will continue to vigorously pursue litigation.
 
In September, Nycomed’s US partner Sepracor launched Alvesco®, an inhaled corticosteroid for the treatment of asthma.
 
End of October, Nycomed announced encouraging results from a preliminary analysis of four Phase III trials of Daxas® (roflumilast) in the treatment of symptomatic Chronic Obstructive Pulmonary Disease (COPD). Two pivotal 12-month studies met their primary endpoints, showing effects on exacerbation rates and pulmonary function (FEV1). Furthermore, two supporting six-month studies confirmed the efficacy of Daxaswhen used with standard bronchodilator treatments. Further analysis including the secondary endpoints is ongoing and full data from all four studies are expected to be published during 2009. In light of an early data analysis, Nycomed expects to file for European and US marketing authorisation next year. The company will also initiate the process of identifying a partner to commercialise Daxas in the United States.

Licensing and acquisitions
Oncology Projects
. Following the introduction of its new research and development (R&D) strategy in 2007, Nycomed reviewed all drug development projects. To clearly focus its resources, Nycomed decided to discontinue its cancer research activities and sell the related projects.

 
Nycomed agreed with 4SC AG, Germany, on the sale of a major part of Nycomed’s R&D projects in the field of oncology. Eight projects in the preclinical and first clinical stage have been transferred to 4SC. The company, based in Martinsried, will assume full ownership of the eight projects, while Nycomed retains rights to research, develop and commercialise outside the scope of the patents sold. The transaction closed on 31 July 2008. Nycomed received a total payment of € 14 million.
 
As the second step in the divestment of its Oncology portfolio, Nycomed signed a contract with Bayer Schering Pharma on 24 July 2008. This agreement comprises two potential drug candidates and an extensive back-up program for which Bayer Schering Pharma will assume full development and commercialisation rights. Nycomed will receive an initial payment, as well as payments upon completion of agreed preclinical and regulatory milestones. Overall compensation could total € 52 million.
 
By closing of the two above-named transactions, the oncology divestment project has been finalised.
 
Veltuzumab. On 14 July 2008, Nycomed and Immunomedics announced a collaboration and licensing agreement on Immunomedics’ Veltuzumab. Under the agreement, Nycomed will receive the exclusive, worldwide rights to develop, manufacture and commercialise the subcutaneous formulation of Veltuzumab for the treatment of all non-cancer indications. Veltuzumab presents a significant enhancement to Nycomed’s autoimmune and inflammation pipeline, and Nycomed will develop Veltuzumab in rheumatoid arthritis (RA) as the primary indication.

Outlook for 2008
Based on the current market conditions and exchange rate movements, we expect an adjusted EBITDA for the year of 2008 of approximately € 1.2 billion.

Financial background
Adjusted EBITDA and EBITDA are key figures used in order to have a more comprehensive analysis of our operating performance and of our ability to service our debt.
 
Adjusted EBITDA means net earnings before net financial items, income taxes, depreciation of tangible assets and amortization of intangible assets, adjusted for certain unusual or non-recurring items.
 
In connection with Nycomed’s acquisition of Altana Pharma AG on 29 December 2006, a new holding structure became effective by way of a share exchange between the private equity investors of Nycomed A/S (the former holding company of the Nycomed Group) and the new holding company, Nycomed S.C.A. SICAR, Luxembourg. At that date, Nycomed S.C.A. SICAR became the ultimate parent company in the Nycomed Group. Comparison figures are presented as if Nycomed S.C.A. SICAR had always been the ultimate parent company.
 
About Nycomed
Nycomed is a privately owned global pharmaceutical company with a differentiated portfolio focused on branded medicines in gastroenterology, respiratory diseases, inflammation diseases, pain, osteoporosis and tissue management.
 
Its R&D is built to be open for partnerships also beyond its core areas in inflammatory, respiratory diseases and pain as in-licensing is a cornerstone in the company’s growth strategy.
 
The company employs 12,000 people worldwide, and its products are available in more than 100 countries. It has strong platforms in Europe and in fast-growing markets such as Russia/CIS, and Latin America. While the US and Japan are commercialised through best-in-class partners, Nycomed will further strengthen its position in key Asian markets.
 
Headquartered in Zurich, Switzerland, the Group generated in 2007 total sales of € 3.5 billion and an adjusted EBITDA of € 1.2 billion.
 
For more information visit www.nycomed.com

 

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