Press release

Galenica 2010: an outstanding year despite significant investments and currency effects

Wednesday, 19 January 2011

The Galenica Group generated sales of CHF 3’104.3 million (+6.6%) in 2010, successfully withstanding a number of recent pharmapolitical challenges. As planned, Galenica reinvested its 2010 earnings growth in growing the business in future years. Despite extraordinary investments in clinical studies for Ferinject® and the European sales organisation and despite negative currency effects, the Group’s earnings are forecast to be above the previous year’s level.
Sales of the Business sector Pharma grew very strongly by 30.1% through internal growth particularly due to Ferinject® (+131.7% in Europe and +24.3% in Switzerland) and to the acquisition of OM Pharma. Sales of the Logistics business sector (-2.3%) were negatively impacted by the loss of sales of Globomedica. On a comparable basis, however, sales were the same as last year’s and outpaced the market. The sales of the Retail business sector grew 30.1% mainly due to the acquisition of Sun Store. The Galenica Group network of pharmacies now comprises more than 400 pharmacies, four times more than the number 2 in the market.

_All Galenica Group activities went as planned in 2010. Sales grew by 6.6% to CHF 3’104.3 million. OM Pharma and Sun Store sales were consolidated for a full year for the first time. Given the current circumstances, these positive results should not be taken for granted. Governments in several countries introduced drastic measures to reduce healthcare costs, including markets such as Germany, Greece, Switzerland, Spain and Turkey, which are extremely important to Galenica’s business. Moreover, the euro and the US dollar continued to significantly depreciate against the Swiss franc.

_The Pharma business sector generated net sales of CHF 578.5 million in 2010 and recorded a year-on-year increase of 30.1% despite significant currency effects. In local currency, adjusted for negative currency effects, the increase was 34.3%. Sales of OM Pharma’s products were consolidated for a full year for the first time and totalled CHF 115.3 million. The launch of generics in various countries and the effects of currency fluctuation reduced income from licensing fees for CellCept. The decline from CHF 302.6 million to CHF 187.5 million was in line with expectations. Since the acquisition of Aspreva in January 2008, Galenica has received approximately CHF 840 million in license income on a net acquisition price of about CHF 620 million. Synergies have been fully exploited and the plans that were defined at the time of acquisition have been very successfully implemented. The contract remains valid until 2017.

Vifor Pharma Rx: continued growth in the demand for iron-replacement products
_Global sales of the intravenous iron products Ferinject® and Venofer® increased by 13.0% - or by 18.1% in local currency - to CHF 254.2 million.

_By the end of 2010, Ferinject® had been approved in about 30 countries and was being sold in 14. In January 2011 Ferinject® was launched in France, one of the most important European markets. The drug generated global net sales of CHF 69.6 million in 2010. This is an increase of 67.7% over the previous year, or in local currency 74.0%. Considering that Vifor Pharma works with distribution partners in markets such as Greece, Poland and Portugal, sales in market prices are estimated at CHF 74.5 million. Sales in Europe were CHF 38.8 million, an increase of 131.7%, and an increase of 147.2% in local currency.

_Venofer® also performed very well, with sales of CHF 184.6 million, a slight increase of 0.6%, reflecting growth in local currency of 5.4%, despite growing competition from copies and new products in Europe and the USA. This development reflects the success of the strategy to market Venofer® in close collaboration with Fresenius Medical Care (FMC).

_An improved market penetration in selected markets increased global sales of the oral iron replacement product Maltofer® to CHF 51.2 million (+15.3% and 19.0% in local currency).

_In the domestic Swiss market, sales of Ferinject® and Venofer® were CHF 36.6 million (+13.7%). Sales of Vifor Pharma’s other prescription medicines in Switzerland increased on a comparable basis by 27.2% to CHF 52.0 million. The most significant successes were the key brands Symfona® (CHF 7.5 million, +40.7%) and Trittico® (CHF 5.0 million, +26.8%). Sales of Bramitob® , a compound for the treatment of cystic fibrosis which was launched in the automn of 2009, were very strong at CHF 1.4 million (+151.1%).

Successful clinical studies
_A sub-analysis of the FAIR-HF study showed that treating iron-deficient chronic heart failure patients with Ferinject® can significantly improve renal function. The FERGI-COR study successfully demonstrated the efficacy and favourable safety and tolerance profile of Ferinject® in the correction of iron deficiency anaemia in patients with inflammatory bowel disease.
The ongoing studies launched to gain approval of Injectafer® (US brand name for Ferinject®) in the USA are proceeding according to plan.

PA21: start of the clinical phase III programme
_Preparations for the clinical phase III programme for the phosphate binder PA21 began. The first patients will be recruited in Q1 2011. Vifor Pharma is working closely with FMC on this programme, and has also concluded an agreement with Kissei Pharmaceutical to develop and market PA21 in Japan.

Far-reaching agreement with Fresenius Medical Care
_Vifor Pharma and FMC have reinforced their existing partnership by creating a specialty pharmaceutical company. Vifor Fresenius Medical Care Renal Pharma Ltd. holds the international marketing rights to Venofer® and Ferinject® in the field of nephrology and to the new phosphate binder PA21. The new company, of which 55% is owned by Galenica and 45% by FMC, exercised its distribution rights in the USA at the beginning of 2011. The agreement is still under review by various competition authorities in the rest of the world. Vifor Pharma contributes its expertise in the areas of iron replacement therapy and phosphate binding. FMC, the leading international provider of products and services for people with chronic renal failure, provides access to its network of dialysis centres, the largest in the world.

OM Pharma: first synergies achieved
_Sales of OM Pharma were CHF 115.3 million and were consolidated for the first time for a full year. Broncho-Vaxom®, the top-selling product of OM Pharma has developed very successfully and achieved global sales of CHF 49.7 million (+8.5%, in local currency +12.2%). Broncho-Vaxom® has meaningful growth potential, geographically as well as in expanding treatment options and in the field of preventive care.

_The integration of OM Pharma is proceeding according to plan; many synergies have already been achieved particularly in the promotion of products and in research. The OM Pharma products and the sales team in Switzerland were integrated into the Vifor Pharma Rx sales team, a step that is also planned for other Vifor Pharma affiliates. Based on this development and the increasing strategic importance of the key products of OM Pharma the sales of OM Pharma will be reported separately in the future and no longer as part of Consumer Healthcare.

Vifor Pharma Consumer Healthcare: Expansion of product lines
Sales of Consumer Healthcare were CHF 110.0 million (+2.0%), adjusted for the sales of OM Pharma which are now reported separately. Sales in Switzerland rose by 1.9% to CHF 81.4 million despite a decline in the size of the market (-2.0%). Specific marketing campaigns and the expansion of various product lines contributed to this positive performance. An example of this is Perskindol®, for which three new line extensions were launched.

Export income rose to CHF 28.6 million (+2.1%) despite unfavourable currency effects. Corrected for this, growth was 7.5%. With double-digit growth rates, Equazen eye q™, Perskindol® and Otalgan® were the most significant growth drivers. Vifor Pharma’s Consumer Healthcare products are now present on all continents.

_Sales for the Logistics business sector reached CHF 2’015.0 million (-2.3%). This decline is mainly due to the fact that sales of Globomedica, a part of Globopharm, were no longer taken into account after its management buyout. In addition, the price and margin cuts on medications introduced by the Swiss Federation on 1 March 2010 had an impact on the revenues as well as the fact that sales were realised in 2009 in connection with the A H1N1 pandemic which were not replicated in the year under review. On a comparable basis and taking these factors into account, sales reached the previous year’s level and outpaced the market.

_In an exclusive agreement with Procter & Gamble Prestige Products, Galexis secured the sole right to distribute these high-quality cosmetics in Switzerland, allowing it to expand its product range and tap new customer segments. Alloga successfully completed the integration of Globopharm, solidifying its position as the leading service provider in the prewholesale business.

_Sales of the Retail business sector increased 30.1% to CHF 1’089.5 million versus the previous year (excluding Coop Vitality). 28.2% of the increase is attributable to the acquisition of the pharmacy chain Sun Store in the second half of 2009 and to other pharmacy acquisitions. Internal sales growth reached 1.9%. The sales of Coop Vitality pharmacies were consolidated at the equity level and totalled CHF 116.9 million, up 10.6% over the previous year; 4.7% from internal growth.

_Through the consolidation of some back-office functions GaleniCare was able to improve the integration of the different pharmacy formats and achieve synergies. The Galenica network of pharmacies is now the largest in Switzerland with more than 400 pharmacies at the end of 2010 – 279 pharmacies operated by Galenica and 133 operated by partners.

_Sales of the Healthcare Information sector were CHF 49.0 million, an increase of 13.9% over last year. The accelerated rollout of the latest version of TriaPharm®, in particular, had a positive impact.

_The ongoing trend toward networking of the the various players in the healthcare market continues to support the development of electronic systems. A key driver is the Swiss eHealth strategy supported by the federal and cantonal governments which Galenica fully supports. In 2010 e-mediat was contracted by the Foundation RefData to build and operate the OID (object identifier) registry for eHealth Switzerland.

_As of 1 July 2011 Philippe Weigerstorfer will take on a new challenge in Singapore for the Asian market. As General Manager for Vifor Pharma Asia/Pacific he will be in charge of a region with promising growth potential. In addition, he will serve as Special Advisor to the Chairman of the Board of Galenica, advising on further developments and projects. He will also report regularly to the Board of Directors on the current situation and prospects.

_To concentrate fully on this new and significant challenge, Philippe Weigerstorfer will resign from his function as Head of Corporate Development of the Galenica Group at the end of June and step down from the Corporate Executive Committee.
The Corporate Development function will no longer be handled at Group level but within each of the business sectors.

Dates for the diary
_The Galenica Group will hold a conference for media and financial analysts on March 15, 2011 to announce the results of the 2010 business year and to inform about this year’s perspectives.

_The Annual General Meeting will be held on 5 May 2011.

Galenica is a diversified Group active throughout the healthcare market which, among other activities, develops, manufactures and markets pharmaceutical products, runs pharmacies, provides logistical and database services and sets up networks. With its two Business units Vifor Pharma and Galenica Santé, the Galenica Group enjoys a leading position in all its core business activities. A large part of the Group’s income is generated by international operations. Galenica is listed on the Swiss Stock Exchange (SIX Swiss Exchange, GALN, security number 1,553,646).


Christina Hertig

Christina Hertig

Head of Corporate Communications

Galenica Ltd.

Corp. Communications
Untermattweg 8
CH-3027 Bern

+41 58 852 85 17
+41 58 852 85 58

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