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Boehringer Ingelheim sees increase in operating income and return on net sales

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Despite some challenges, Boehringer Ingelheim, the research-driven pharmaceutical company, succeeded in increasing its operating income and the return on net sales. The company generated net sales of around €14.1 billion, which represents an increase of 1.4 per cent, currency-adjusted (-4.3 per cent in euro terms). This resulted in a 2.4 percentage point improvement in the return on net sales to 15 per cent. For the current financial year, the company expects net sales to remain at a comparable level to that of 2013. Boehringer Ingelheim now employs more than 47,400 people worldwide, which is three per cent more than in the previous year.

“2013 was for Boehringer Ingelheim a year marked by many successes and some challenges,” said Professor Andreas Barner, Chairman of the Board of Managing, Boehringer Ingelheim, at the recently held Annual Press Conference in Ingelheim. “We concentrated on continuing our work on the long-term development of the company.”

With afatinib, for the targeted treatment of a specific form of lung cancer, Boehringer Ingelheim last year successfully entered the oncology market. The compound was launched in the US under the brand name of Giotrif and the launch has in the meantime started in the European Union under the name of Giotrif. A second new product launch in 2013 was Striverdi Respimat (olodaterol) for chronic obstructive pulmonary disease (COPD).

In the next two years alone, the company is planning more than ten new launches in eight indications: diabetes, COPD, asthma, lung cancer, the rare disease idiopathic pulmonary fibrosis (IPF), a rare form of leukaemia (AML) and the treatment and prevention of deep vein thrombosis and pulmonary embolism. For the last mentioned indication, the company received marketing approval from the US Food and Drug Administration for Pradaxa at the beginning of April. The company is currently working on 90 research and development projects. In the current financial year, Boehringer Ingelheim is planning to take on nine new investigational compounds in phase II clinical studies. “We will strengthen our therapeutic areas immunology and disorders of the central nervous system,” said Barner.

“We can say that Boehringer Ingelheim came through 2013 well, despite extraordinary effects and the negative impact of exchange rate developments,” said Hubertus von Baumbach, Member of the Board of Managing Directors with responsibility for Finance. At around €2.7 billion, the company once again invested substantially in research and development. Expenditure for research and development as a share of net sales rose from 19 per cent in 2012 to 19.5 per cent in 2013.

With a 15 per cent increase in equity to €7.1 billion and an equity ratio up by around three percentage points to 39 per cent, Boehringer Ingelheim is in a sound financial position. The increase in financial funds to €7.5 billion gives the company the financial flexibility for future sustainable, organic growth.

At €1.8 billion, cash flow from operating activities in 2013 ensured that investments were fully covered. In the financial year just ended, Boehringer Ingelheim invested a total of around €600 million in tangible and intangible assets. Among other things, the company increased its production capacity for the Respimat inhaler at its German facilities in Dortmund and Ingelheim at a cost of €57 million. Boehringer Ingelheim invested a further €23 million in the extension of the production facilities and the chemical research and development laboratory in Shanghai, China.

Boehringer Ingelheim last year generated net sales of just under €11 billion in prescription medicines, its most important business. This represents an increase of 1.4 per cent, currency-adjusted (-4.5 per cent in euro terms), and 77 per cent of total net sales. The oral anticoagulant Pradaxa once again proved to be the growth driver, with net sales increasing by more than 16 per cent, currency-adjusted (+8.8 per cent in euro terms), to €1.2 billion. Spiriva for the treatment of COPD remained the most successful medicine. Net sales were up 3.8 per cent, currency-adjusted (-0.3 per cent in euro terms), to around €3.5 billion.

In over-the-counter medicines the company achieved a 6.3 per cent increase in net sales, currency-adjusted (-2.1 per cent in euro terms). Net sales generated in 2013 thus amounted to around €1.5 billion. This represents 11 per cent of total net sales. The international core brands — Buscopan, Dulcolax, Mucosolvan and Pharmaton — were again the most successful consumer healthcare medicines.

In its animal health business, Boehringer Ingelheim in 2013 exceeded the €1 billion mark in net sales. This represents an increase of 4.5 per cent, currency-adjusted (+0.8 per cent in euro terms), and eight per cent of total net sales. The best-selling product, with net sales of €260 million, was the swine vaccine Ingelvac Circoflex, as in the previous year. With an increase of 20.9 per cent, currency-adjusted (+16.2 per cent in euro terms), Ingelvac PRRS, for the active immunisation of pigs against an infectious respiratory disease, achieved the greatest growth.

In biopharmaceuticals, Boehringer Ingelheim generated net sales in 2013 amounting to €449 million.

The three most important markets — the US, Japan and Germany — accounted for around 60 per cent of Boehringer Ingelheim’s total net sales in 2013. In Germany, the company generated net sales of around €1 billion, but the German share of Boehringer Ingelheim’s global business in prescription medicines amounted to only five per cent. In Japan, the company generated net sales of over €1.8 billion and in the US around €5.2 billion. Net sales were last year severely impacted by exchange rate effects in the US and Japan.

In view of the many challenges, no particular signs of growth will emerge in the pharma industry in the course of the next few years. “The market environment for innovative medicines is not going to get any easier in the current financial year,” said Barner. “In view of this and the impact from the expiry of patents, we expect to achieve net sales for our company in 2014 that are comparable to those in the previous year.”

EP News BureauMumbai

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