Consolidated Annual Report 2017
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Annual Report 2017 CMYK Annual Report 2017 CMYK 4 RECORDATI, 45 FINANCIAL HIGHLIGHTS AN INTERNATIONAL GROUP 46 2017 OPERATIONAL 6 THE FUTURE OF THE GROUP AND FINANCIAL REVIEWS 7 LETTER TO OUR SHAREHOLDERS 65 CONSOLIDATED FINANCIAL STATEMENTS 10 THE GROUP IN FIGURES 95 ATTESTATION IN RESPECT OF THE CONSOLIDATED 12 GEOGRAPHICAL PRESENCE FINANCIAL STATEMENTS 14 GROUP ACTIVITIES 96 AUDITORS’ REPORT HEALTH, A GLOBAL OBJECTIVE CORPORATE PRODUCTS 103 DISCLOSURE OF CONSOLIDATED OUR PRIMARY AND SPECIALTY CARE SUBSIDIARIES NON FINANCIAL INFORMATION RARE DISEASES AND ORPHAN DRUGS 145 INDEPENDENT AUDITORS’ REPORT ON THE CONSOLIDATED 32 RESEARCH AND DEVELOPMENT NON-FINANCIAL STATEMENT 38 PHARMACEUTICAL CHEMICALS 148 CORPORATE GOVERNANCE AND PRODUCTION PLANTS REPORT 42 THE RECORDATI SHARE MANAGEMENT AND SUPERVISORY BODIES 4 Annual Report 2017 Recordati, an international Group REVENUE NET INCOME EMPLOYEES (Million Euros) (Million Euros) 1,288.1 288.8 EXCEED 4,1oo Annual Report 2017 5 In addition to its geographical Recordati has six pharmaceutical expansion the Group has enriched production facilities and a specialized Recordati is a its product portfolio by developing packaging and distribution facility growing international its own pipeline of products and by dedicated to rare disease products all pharmaceutical group. entering the segment dedicated to of which operate with full respect for It actively seeks new rare diseases. Recordati develops, environmental protection regulations produces and sells drugs for the and in compliance with current Good opportunities and faces treatment of rare diseases through Manufacturing Practices (cGMP). the challenges of a Orphan Europe and Recordati Rare Recordati also produces a number of constantly changing Diseases, two companies dedicated active ingredients and intermediates marketplace with mainly to metabolic deficiencies of a for the pharmaceutical industry. It has genetic nature. two pharmaceutical chemical plants determination. one in Campoverde di Aprilia, Latina, The Group’s most important products Italy, and the other in County Cork, are those, in the cardiovascular Ireland. Recordati is a well-established therapeutic area based on The broad geographical coverage growing international pharmaceutical lercanidipine, a latest generation achieved by the Group, its own group listed on the Italian Stock calcium channel blocker indicated efficient network of medical sales Exchange (now part of the London for the treatment of hypertension, representatives in addition to its Stock Exchange) since 1984. The discovered and entirely developed in many years of experience in the Group has its headquarters in Milan the Recordati research laboratories, and its combination with enalapril, a regulatory field and its expertise in and is one of the oldest Italian widely prescribed ACE inhibitor. The the management of highly specialized pharmaceutical companies. Since Group’s presence in this therapeutic products, makes Recordati an ideal it was founded in 1926 Recordati area was further strengthened with partner for the development and has grown constantly for more than the acquisition of the products based marketing of new products in all the ninety years thanks to the success on metoprolol, a beta-blocker mainly territories where it is present with its of its products and to its strategy indicated for the control of a range marketing organizations. for growth and development of conditions including hypertension, based on internationalization and angina pectoris, disturbances diversification through an acquisition of cardiac rhythm, maintenance strategy initiated in the 1990’s treatment after myocardial infarction, and still ongoing. It actively seeks and functional heart disorders with new opportunities and faces the palpitations. challenges of a constantly changing marketplace with determination. In The company’s commitment in the 2017 the group generated revenues uro-genital therapeutic area and its of € 1,288.1 million and has a staff of know-how and expertise accumulated 4,176 employees. over 40 years of research and study has led to its being the European Today the company has many partner of established international subsidiaries, both in Europe and pharmaceutical companies. Silodosin, outside Europe. In addition to the a molecule used in the treatment countries in Western Europe the of benign prostatic hyperplasia Group is also directly present in the discovered by Kissei and developed Czech Republic and Slovakia, Romania, for the European markets by Poland, Russia and the other countries Recordati, is one of the Group’s most belonging to the Commonwealth important specialties. This product of Independent States (C.I.S.), is now marketed successfully in 37 Ukraine, Turkey, Tunisia, U.S.A., countries. Also pitavastatin, a latest Canada, Mexico and in some South generation statin for controlling American countries. Recordati sells its hypercholesterolemia, discovered and products in 135 markets both directly developed by Kowa, was obtained and through license agreements. under license for Europe. 6 Annual Report 2017 The future of the Group Recordati’s proven ability to generate profitable alliances with prominent players in the pharmaceutical industry is the basis of an increasingly intense activity directed at the identification and execution of new license agreements or partnerships for the development of innovative products. In the future Recordati intends to reinforce its presence in the international pharmaceutical market and to extend its rare disease business worldwide. Annual Report 2017 7 Letter to our shareholders To Our Shareholders, The financial results obtained in 2017 emphasize the continued growth of the Group, with revenues and profitability increasing significantly. All business segments and the main corporate products contributed to these results. Group consolidated revenue for 2017 is € 1,288.1 million, up 11.6% over the preceding year. International sales are € 1,029.6 million, up 12.4% and now represent 79.9% of total revenue. Operating income, at 31.6% of sales, is € 406.5 million, a growth of 24.1% compared with the preceding year. Net income is € 288.8 million, an increase of 21.6%, with a further improvement as margin on sales which is now 22.4%. t 1 ecember 21 the roups net financial position records a net debt of € 81.8 million compared to net debt of € 198.8 million at 31 December 2016. During the period dividends were distributed, the acquisition of the marketing rights to the metoprolol based products from AstraZeneca was concluded and three Bayer Consumer Health products were acquired for the French market, for an overall disbursement of € 456.5 million. Shareholders’ equity increases to € 1,027.2 million. In 2017 a number of initiatives were pursued in line with the group’s strategy of continued growth and development. In January the European Union Commission granted the European marketing authorization for its orphan medicinal product Cystadrops® 3.8mg/mL. Cystadrops® is the first eyedrop solution containing cysteamine hydrochloride approved in the European Union for “the treatment of corneal cystine crystal deposits in adults and children from 2 years of age with cystinosis". The European Commission had granted Cystadrops® orphan drug designation in November 2008. Cystadrops® eyedrop solution was developed specifically for cystinosis patients by rphan urope ecordati group. ystinosis is a rare congenital lysosomal storage disorder recognized as a severe life threatening condition. It is characterized by an accumulation of cystine crystals which negatively affects all organs in the body, especially the kidneys and eyes. ystinosis benefits from systemic treatment with cysteamine orally administered. owever, oral cysteamine does not adequately address ocular cystinosis because of the non-vascularization of cornea. Without a proper, continued, local eye treatment, cystine crystals accumulate in the cornea, leading to severe consequences and possibly to blindness in the long term. In February an exclusive worldwide licensing agreement covering the know-how developed by the Meyer Hospital in lorence taly for the development of a treatment for preterm babies affected by retinopathy of prematurity was signed. The treatment is currently being investigated in a phase II clinical trial by the Meyer Hospital, while Recordati will complete the clinical development and the regulatory steps necessary to obtain the marketing approval for the drug. etinopathy of prematurity is a potentially blinding eye disorder that primarily affects premature infants weighing about 1.25 kg or less that are born before 31 weeks of gestation. This disorder, which usually develops in both eyes, is a rare condition, however presenting as one of the most common causes of visual loss in childhood that can lead to lifelong vision impairment and blindness. Furthermore, within the deal, Recordati shall support other Meyer projects in the rare disease area over a period of three years based on a mutually agreed plan. This collaboration between public and private institutions recognizes the important results obtained by the internal research conducted by the pediatric hospital in Florence. In May Recordati signed an agreement with AstraZeneca for the acquisition of the rights to Seloken®/Seloken® ZOK (metoprolol succinate) and associated Logimax® fixed dose combination metoprolol succinate and felodipine treatments in Europe. The transaction was successfully concluded on 30 June (on 10 July for part