UCB Pharma GmbH
SCHWARZ PHARMA On Track
SCHWARZ PHARMA AG / Release of an announcement according to Article 37 of the WpHG [the German Securities Trading Act] Interim report according to Article 37 of the WpHG, transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. ---------------------------------------------------------------------- October 25, 2007 Nine Months Report 2007: SCHWARZ PHARMA On Track SCHWARZ PHARMA achieved net sales of EUR671.2 million in the first nine months of 2007, marking a year-over-year decrease of -6.8%. The operating result rose to EUR72.4 million (+27.0%). The net result amounted to EUR25.0 million, compared to EUR14.0 million last year. Sales of the rotigotine transdermal patch, Neupro(TM), for treating Parkinson's disease reached EUR32.1 million in the first nine months, against EUR5.1 million in the previous year. 'The business trend has remained on track in the first 9 months of the year', says Detlef Thielgen, Chairman of the Executive Board of SCHWARZ PHARMA AG. 'The integration process with the UCB Group is continuously running well.' Trend in Net Sales January to September 2007: Net sales: EUR671.2 million, -6.8% SCHWARZ PHARMA achieved net sales of EUR671.2 million in the first nine months of 2007. After adjusting for exchange rate effects, these fell by 3.7%. US sales fell by 10.8% to EUR281.3 million; in US dollars, sales decreased by 3.9% to US$378.2 million. Generic omeprazole sales fell by 10.0% to EUR130.5 million in the first nine months of 2007. After adjusting for generic products (totaling EUR175.4 million), the group's US business fell by 21.1% to EUR105.9 million. In the first few weeks of its market launch in the USA, rotigotine transdermal patch, Neupro(TM), for treating Parkinson's disease achieved sales of EUR3.9 million (US$5.2). The European affiliates also showed a sales decline in the first nine months of 2007, down -5.1% to EUR358.8 million. German sales fell by 20.6% to EUR126.7 million. This was due to cancellation of the license agreement for the gastrointestinal drug Rifun(TM) (pantoprazole) by the licenser as per January 31, 2007, sales of which had reached EUR30.3 million in the first nine months of 2006. Despite the difficult market environment, the antiasthmatic drug Atmadisc(TM) (fluticasone/salmeterol; +7.4% to EUR36.7 million) and the iron preparation Ferro (iron (II) glycine sulphate complex; +6.5% to EUR11.9 million) recorded sales increases. Neupro(TM) (rotigotine transdermal patch) for treating Parkinson's disease has been successfully established in the German market and achieved sales of EUR11.2 million in the first nine months of 2007, distinctly exceeding expectations. In the other European markets, SCHWARZ PHARMA's affiliates showed a slight increase in sales of 6.2% to EUR232.0 million. The introduction of the Parkinson's patch Neupro(TM) contributed to a sales increase in the UK, Ireland, and Spain as well as the Eastern European countries with the exception of Poland. All in all Neupro(TM) (rotigotine transdermal patch) achieved sales of EUR17.0 million in the other European markets. The sales of SCHWARZ PHARMA's Asian affiliates increased by 5.2% to EUR28.4 million; after adjusting for exchange rate effects, sales declined by 9.7%. Earnings Trend January to September 2007: Operating result: EUR72.4 million; net result: EUR25.0 million SCHWARZ PHARMA achieved a gross profit of EUR442.4 million in the first nine months of 2007, marking a year-over-year decline of 8.8%. The gross margin declined from 67.4% to 65.9%, especially due to the essential increase in price pressure from generic drugs. Selling, general and administrative expenses declined by 11.6% to EUR292.2 million. In the same period of the previous year, increased expenses were incurred by the introduction of the Parkinson's patch, Neupro(TM), by executive stock option programs as a result of the share price trend, and by marketing activities for US products and Rifun(TM) in Germany. In addition, in 2006 consulting costs were incurred in connection with the acquisition of SCHWARZ PHARMA by UCB, the Brussels-based Belgian biopharma group. Research and development costs declined by 21.8% to EUR120.0 million since the clinical trials for these projects are largely completed; for example, marketing applications were submitted to the European Authorities for Vimpat(TM) (lacosamide) for treating epilepsy and neuropathic pain. Other income came to EUR65.7 million in the first nine months of 2007, compared to EUR84.7 million in the previous year. This decline mainly results from the fact that in the comparison period, SCHWARZ PHARMA had received an up-front payment of US$100 million (EUR79.5 million) from Pfizer for exclusive rights to fesoterodine. In 2007, planned milestone payments have hitherto reached EUR51.2 million. The operating result increased by 27.0% in the first nine months of this year to EUR72.4 million compared to EUR57.0 million in the comparison period. Due to the decrease in average liquidity, SCHWARZ PHARMA has a low financial result of EUR4.3 million compared to EUR5.5 million in the previous year. The resulting pre-tax profit of EUR76.7 million compares to EUR62.6 million in the first nine months of 2006. The group's income tax expense came to EUR50.9 million, up from EUR48.3 million. SCHWARZ PHARMA thus achieved a net result of EUR25.0 million in the first nine months of 2007, against a figure of EUR14.0 million in the comparison period. This corresponds to earnings per share of EUR0.52 compared to EUR0.30 per share last year. Cash flow statement, balance sheet, and employees: Net Cash Position EUR43.1 million, Equity Ratio 44.1% Both tax payments and the change in financial structure of the SCHWARZ PHARMA Group due to the domination and profit transfer agreement led to cash outflows from operations of EUR98.2 million. In the previous year, the receipt of the milestone payment for fesoterodine from Pfizer was the main factor contributing to a cash inflow of EUR76.9 million. Cash outflows for investments came to EUR133.9 million in the first nine months of 2007, compared to EUR23.8 million in the previous year. The majority of investments were made in tangible assets (EUR114.8 million), primarily for expanding the company's fine chemistry production in Shannon/Ireland. Shareholders' equity rose 1.9% to EUR576.1 million. The equity ratio of 44.1% was down against the level on December 31, 2006 (52.5%). The net cash position came to EUR43.1 million as per September 30, 2007. On September 30, 2007 the number of employees working in the SCHWARZ PHARMA Group worldwide came to 3.679, marking a decrease of 17.8% over December 31, 2006. Job cuts were made necessary by the expiry of patents on key US products, the termination of Rifun(TM) sales in Germany, and sales force restructuring measures. In addition, job vacancies were not refilled. Outlook for 2007: unchanged SCHWARZ PHARMA expects sales of EUR800 million up to EUR 850 million in fiscal year 2007. Despite a high level of expenses, especially for restructuring, the company seeks to achieve a positive net result. The integration measures under the domination and profit transfer agreement, in force since July 2007, are running as planned. Key data from the Nine Months Report 2007: SCHWARZ PHARMA GroupJan. - Jan. - Income Statement Sept. Sept. Change (IAS/IFRS, EUR million) 2006 2007 in % Net sales 720.2 671.2 -6.8 Cost of goods sold 234.9 228.8 -2.6 Gross profit 485.2 442.4 -8.8 Selling, general and administrative expenses 330.7 292.2 -11.6 Research and development costs 153.5 120.0 -21.8 Amortization of intangible assets 19.6 19.0 -3.1 Impairment loss under IAS 36 9.1 4.5 -50.6 Other income/(expense) 84.7 65.7 -22.4 Operating result 57.0 72.4 27.0 Financial result 5.5 4.3 -22.6 Pre-tax result 62.6 76.7 22.5 Taxes on income 48.3 50.9 5.4 Result after taxes 14.3 25.8 80.4 Minority interests (0.3) (0.8) >100 Net result 14.0 25.0 78.6 Earnings per share in EUR Basic* 0.30 0.52 73.3 Diluted** 0.29 0.52 79.3 EBITDA (excluding one-time effects) 11.7 145.0 >100 EBIT (excluding one-time effects) -20.9 112.8 >100 Number of shares *Annual average, million units 46.965 48.796 3.9 **Annual average diluted, million units 47.848 48.797 2.0 As per 30 June, million units 47.478 48.798 2.8SCHWARZ PHARMA AG (seated in Monheim, Germany) is a company of the UCB Group, Brussels/Belgium (www.ucb-group.com). UCB is listed on the Euronext exchange in Brussels and holds 89% of all SCHWARZ PHARMA shares. SCHWARZ PHARMA develops and markets innovative drugs for unmet medical needs. Its activities are mainly focused on the central nervous system and the cardiovascular and gastrointestinal fields. The company's investments in research and development are aimed at accelerating the development of innovative drugs for treating diseases such as Parkinson's disease, Restless Legs Syndrome, epilepsy, neuropathic pain, and urinary incontinence. The company has a strong international presence with affiliates in Europe, the USA, and Asia. UCB is a leading global biopharmaceutical company whose focus is on researching, developing, and commercialising innovative pharmaceutical and biotechnological products in the fields Central Nervous System, allergic and respiratory diseases, immunological and inflammatory diseases, and oncology. UCB achieved sales of EUR3.5 billion (pro forma) in 2006 and employs more than 10,000 workers in 40 countries. Contact: Sylvia Heitzer,Tel: +49 2173 48 1238; Antje Witte, Tel.: +32 2 559 9414 Internet: www.schwarzpharma.com This press release contains assumptions, expectations, and forecasts on future sector trends, on future legal and commercial developments, and on the future development of the company. These assumptions, expectations, and forecasts are no guarantee for future performance and are subject to change at any time. Consequently, future reports and the factual circumstances of the company may deviate materially from the outlook presented by the above. The company assumes no responsibility for updating such assumptions, expectations, and forecasts on future sector trends, on future legal and commercial developments, and on the future development of the company. 25.10.2007 Financial News transmitted by DGAP ---------------------------------------------------------------------- Language: English Issuer: SCHWARZ PHARMA AG Alfred-Nobel-Str. 10 40789 Monheim Deutschland Internet: www.schwarzpharma.com End of News DGAP News-Service ---------------------------------------------------------------------------
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