Aachen (Germany), May 14, 2013 – Grünenthal Group achieved total revenues of €973 mn in 2012. Adjusted revenues (excluding revenues from divested businesses) rose by 13 percent. The increase was driven by growth of the global pain brands Palexia®/Tapentadol (up €36 mn) and Versatis®/Lidocaine patch (up €28 mn) as well as increased revenues from licences due to a successful product launch with Grünenthal´s INTAC® tamper resistant formulation technology. Revenues from the tapentadol license in the North American market increased as well. The revenue proportion of Grünenthal’s pain brands amounted to 73 percent of Group revenues (2011: 68 percent) and revenues from young pain products which have been launched a maximum of 5 years before 2012 reached about 30 percent, a significantly higher ratio than the industry average.
Operating earnings before interest, taxes and amortization (Operating EBITA) increased significantly in 2012 to €79 mn (2011: €5 mn). This was the result of increased profitability in core business due to higher revenues, lower marketing and sales costs and efficiency gains in administration. In 2012, the operating EBITA margin of Grünenthal Group improved by 8 percentage points. The other operating result included the one-off effect of the remaining divestment income in 2012, resulting in a €67 mn increase. Consequently, income before taxes (IBT) also increased by 79 percent to €228 mn in 2012 (2011: €127 mn).
Harald F. Stock, PhD., CEO of the Grünenthal Group, commented on the business development: “I am very pleased with our very good result in 2012. It clearly shows that the VISION 2020 strategy with a focus on our global pain business is paying off. We achieved a significant increase in profitability despite our continued high investment in R&D. With an increased revenue proportion from our young pain brands we follow the right growth path that will allow us to further strengthen our R&D investments.”
Continued investment in research and development
Almost one fifth (in Europe) to one third (in the US) of the population suffers from chronic pain with many unmet patients’ needs. That is why Grünenthal Group increased its expenses in R&D by almost 8 percent to €251mn (2011: €233 mn). At 26 percent of revenues, the proportion remains notably above the industry average. In 2012, Grünenthal made progress in building a pre-clinical portfolio of inflammation projects with a view to starting clinical development of selected projects in 2015. Cebranopadol (previously GRT6005), which Grünenthal is developing in collaboration with Forest Laboratories, has now reached Phase IIb and the company aims to start Phase III trials in 2013. For Tapentadol (Palexia® in Europe and Nucynta® in the US) Grünenthal completed an important Phase III study in cancer pain, which will allow the launch of product in new markets where this study is a key component in the approval process.
Pan-regional in-licensing agreements in Latin America
In 2012, Grünenthal also made progress in business development in the growth region Latin America. The company signed two pan-regional in-licensing deals for new pain therapy products: Duexis® from Horizon Pharma and Flupirtine from Tamarang Pharmaceuticals, both of which will be marketed exclusively and as first-in-class. The two agreements are Grünenthal’s first business development projects to cover the entire region and the new presence of the Group in Brazil, the largest market in Latin America, was instrumental in securing the business for Grünenthal. As part of the VISION 2020 strategy, the Group will continue to screen the Latin American market for external growth opportunities.
Strong financial position
Grünenthal Group maintains a strong balance sheet. The balance sheet total has increased by about €134 mn to €1,188 mn at the end of 2012. This was mainly the result of a €161 mn income-related increase in equity. Consequently, the equity ratio increased to 70 percent (2011: 64 percent). As a result of the higher income generated from operations and because final proceeds from divestments were booked in 2012, the cash balance improved by €208 mn to €508 mn. Bank liabilities remained very low, such that the Group is nearly debt-free. A new syndicated loan has further expanded Grünenthal’s capacity to finance growth projects.
Faced with increased pricing pressure and generic competition in key markets, Grünenthal will continue to concentrate on its growth strategy, focusing on organic growth in the pain business in Europe, as well as on accelerated organic and external growth in Latin America. At the same time, the Group maintains its focus on operational excellence initiatives. However, the loss of exclusivity for Zaldiar® and the prospects in the US market represent significant challenges for 2013 and beyond.
“We are confident that the core elements of our VISION 2020 strategy will enable us to bring our current R&D investments to the next level and generate the innovations that patients are urgently waiting for. By doing so, we will sustain our success as an independent, mid-sized pharmaceutical company. Overall, we expect revenues to decline slightly compared to 2012. Because the divestment program has now been completed, IBT for 2013 will be significantly lower. For 2014, we expect a return to our overall growth path, with increased revenues and IBT,” added Harald F. Stock.
The Grünenthal Group is an independent, family-owned, international research-based pharmaceutical company headquartered in Aachen, Germany. Building on its unique position in pain treatment, its objective is to become the most patient-centric company and thus to be a leader in therapy innovation. Grünenthal is one of the last remaining five research-oriented pharmaceutical companies with headquarters in Germany which sustainably invests in research and development. The research and development costs amounted to about 26 percent of revenues in 2012. Grünenthal’s research and development strategy concentrates on selected fields of therapy and state-of-the-art technologies. We are intensely focused on discovering new ways to treat pain better and more effectively, with fewer side-effects than current therapies. Altogether, the Grünenthal Group has affiliates in 26 countries worldwide. Grünenthal products are sold in more than 155 countries and approx. 4,400 employees are working for the Grünenthal Group worldwide. In 2012, Grünenthal achieved revenues of € 973 mn.
More information: www.grunenthal.com.
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