Corporate Report 2015 CONTENTS
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Corporate Report 2015 CONTENTS Contents 3 Xellia at a glance 4 2015 highlights 7 Financial highlights 8 Spotlight on the US 10 Business overview 17 Corporate responsibility 26 Corporate governance Forward-looking statement This report contains certain projections and other forward-looking statements with respect to the fi nancial condition, results of operations, businesses and prospects of New Xellia Group A/S (“Xellia”). These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. 2 Xellia 2015 Headquartered Owned by in Copenhagen, Novo A/S since Xellia at a glance Denmark July 2013 Xellia is a specialty pharmaceutical company focused on providing important anti-infective treatments against serious and often XELLIA AT A GLANCEXELLIA AT life-threatening infections Xellia is developing novel antibiotics effective against resistant species in partnership with SINTEF Materials and Chemistry and the Statens Serum Institut supported by a grant from the Research Council of Norway Oslo, Norway State-of–the-art R&D Center of Excellence focused on APIs and discovery of novel anti-infectives Copenhagen, Denmark Xellia’s headquarters. Our biggest operation, manufactures sterile APIs and FDFs. Provides lyophilized and dry powder fill vials, stability Budapest, Hungary Manufactures several unique testing and packaging products and provides additional capacity for Vancomycin Shanghai, China Cleveland, US Acquired in 2015, the site will significantly Commercial organization supporting strengthen Xellia’s manufacturing capacity for the work with partners in the sterile injectable products Chinese market Tokyo, Japan Commercial organization handling the challenging Japanese market Raleigh, US Acquired in 2014 this became our US commercial headquarters in 2015. Expands our capacity for Taizhou, China production of injectable pharmaceutical products Established in 2008 as a in this major market partnership with Zhejiang Hisun Pharmaceutical Company, Ltd. Bangalore, India CMO and commercial group established Manufactures APIs to manage growing network of CMOs and Key: to capitalize on emerging market opportunities Manufacturing Zagreb, Croatia R&D Product and Innovation R&D Center of Sales Excellence focused on innovative formulation technologies and FDFs 1,200 500 100 Xellia has close to 1,200 We supply our anti-infective Over 100 years’ experience in employees in 8 countries products to more than 500 the development, manufacture around the world pharmaceutical companies and supply of fermented and 1 in over 70 countries semi-synthetic APIs and FDFs Xellia is the leading supplier of important anti-infectives Vancomycin and Colistimethate Sodium (CMS) Xellia 2015 3 2015Page highlightsHead 2015 was a busy and productive year for Xellia where we made good progress againstPage our strategy Subhead of increasing manufacturing capacity and capabilities for our range of injectable anti-infective products while continuing to focus on innovation as well as improving our operating performance. Operations During 2015 we continued to considerably in these facilities to integrate the Raleigh manufacturing establish a new cGMP organization to site that we acquired from Fresenius begin commercial production within Kabi in July 2014 into our operation a targeted timeframe of 24 months. network. We were very pleased This will involve bringing around 170 with the site’s first full year of new jobs to the site and working operations. Since the acquisition closely with the US Food and Drug 2015 WAS A BUSY AND we have increased the number of Administration (FDA) to ensure employees at the site by 35% from manufacturing compliance. When PRODUCTIVE YEAR around 80 to 113. We also expanded the site, which is now known as Xellia the Raleigh site in 2015 by taking on Cleveland, becomes operational, FOR XELLIA WHERE WE new adjacent premises to enable the it will significantly increase our relocation of our North American production capacity for sterile MADE GOOD PROGRESS. 2015 HIGHLIGHTS commercial headquarters from injectable products in the US. Grayslake, Illinois. Consolidating Carl-Åke Carlsson the state-of-the-art production The Cleveland facility will operate Chief Executive Officer facility with our headquarters alongside Xellia’s existing sterile Xellia Pharmaceuticals enables us to better serve our many injectable manufacturing sites US customers both with respect to in Copenhagen and in Raleigh. proximity and working relationship, The continued investments and as well as building a stronger, more improvements in our Copenhagen transitioning certain non-production connected US operation. and Raleigh sites, combined with related processes and job roles the additional production capacity from Copenhagen to our facilities We also made good progress during at Xellia Cleveland will help us to in Budapest and Zagreb, and the 2015 at our other manufacturing address not only the increasing optimization of manufacturing sites for both APIs and FDFs; demand for our products locally in processes for certain key products increasing our plant efficiency and the US, but also help to meet global that will allow us both to reduce improving our delivery performance. shortages of critical life-saving production cost and improve Importantly, we have resolved the anti-infectives. This will also support energy efficiencies across our production issues incurred at our the ongoing expansion of our production sites. Copenhagen facility in 2013 and pipeline and prepares us well to take 2014 and have been successful in advantage of future opportunities 2015 was a year where, following streamlining our injectable anti- for growth. the refocus of our strategic infective manufacturing facility priorities, we were able to build in Copenhagen. The combination To remain a leading business in the an organization comprised of the of these improvements and the generic anti-infectives market, Xellia most driven and talented people, restoration of full production at is committed to ongoing improvement across every level and department the site has enabled us to deliver of our cost competiveness as well of our global business. We the planned annual product output, as maintaining our compliance track welcomed Bjørn Thonvold as Head to meet our key performance record with the various regulators of Talent Management, Learning & indicators, and improve customer in the pharmaceutical industry. Development and James Bond as service levels for the year. This was a key focus area in 2015 Vice President, Strategic Marketing during which we continued to and Business Development to the The standout event of the year came invest in our quality systems and Xellia Executive Management in November with the acquisition of successfully passed a total of seven team, and Aleks Engel, currently manufacturing facilities in Bedford, inspections by different regulatory Large Investment Asset Director Ohio from Hikma Pharmaceuticals authorities across our four global at Novo A/S, to the Xellia Board. PLC. The facilities are currently manufacturing sites. The continued recruitment and not operational after the previous development of skilled employees owner, Ben Venue Laboratories, Inc., We implemented several initiatives who live by Xellia’s values is central ceased manufacturing at the site that further strengthened our to the success of the Company as we in December 2013. We will invest competitive positioning including look forward to 2016 and beyond. 4 Xellia 2015 2 015 highlights continued Financial strategic aim of a more balanced As a result of the good operational portfolio with 50% of sales performance in 2015, we were able originating from APIs and 50% from to meet our financial targets for FDFs. The transition to the supply DURING 2015 the year. We posted a 9% increase of FDFs allows us to help simplify in revenue at 220.2 MUSD (2014: and streamline the supply chain WE BENEFITTED 201.4 MUSD) and a substantial for our customers by providing a improvement in EBITDA at 40.7 final product. FROM MUSD (2014: 11.7 MUSD). Our Operating Profit (EBIT) in 2015 We are a global business CONTINUED, increased to 9.5 MUSD. As a result and our customers include STRONG DEMAND of mainly financial charges the branded, specialty and generic Net Result of 2015 was negative pharmaceutical companies in more FOR OUR 2015 HIGHLIGHTS 3.6 MUSD. Our profitability has than 70 countries around the world. improved compared to 2014 and Over recent years we have increased ANTI-INFECTIVE 2013 but is still at a low level our focus on expanding in the US considering the business, and market and, in 2015, more than 40% PRODUCTS continues to be affected by the of our total sales were generated in FROM NEW significant investment following the the US. strategic refocus of the business AND EXISTING on more innovative anti-infectives We are continually extending the that we commenced in 2014. We range of products that we offer CUSTOMERS. continue to prioritize innovation our customers, completing eight and in 2015 12% of our revenue was regulatory filings in 2015, which invested in R&D. was close to our target of 10, with certain projects being re-prioritized. Products and markets In the medium term the number Xellia’s products are generic of filings will be reduced as a starting with line extensions based anti-infectives and anti-fungals consequence of our strategy to on improved formulations and that play a key role in treating develop more