3746 Xellia 2017 Corporate Report AW.Indd
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CONTENTS XELLIA AT A GLANCE 2016 HIGHLIGHTS SPOTLIGHT ON THE US BUSINESS OVERVIEW CORPORATE CORPORATE RESPONSIBILITY GOVERNANCE 1 2016 Xellia 2017 Corporate Report Corporate Page Subhead Page Page Head Page Head CONTENTS Page Subhead Contents XELLIA A GLANCE AT 3 Xellia at a glance 4 2017 highlights 7 Financial highlights 2016 HIGHLIGHTS2016 8 Spotlight on Cleveland 10 Spotlight on innovation 12 Business overview 16 Corporate responsibility 25 Corporate governance SPOTLIGHT ON THE US BUSINESS OVERVIEW BUSINESS CORPORATE CORPORATE RESPONSIBILITY Forward-looking statement This report contains certain projections and other forward-looking statements with respect to the CORPORATE CORPORATE GOVERNANCE 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 2016 Headquartered Owned by in Copenhagen, Novo Holdings A/S Xellia at a glance Denmark 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 applying innovative solutions to enable the development of value added anti-infective therapies from core products in its portfolio 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, release Budapest, Hungary Manufactures several unique and stability 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 1,500 500 100 Xellia has We supply our anti-infective Over 100 years’ experience in 1,500 employees in 8 products to more than 500 the development, manufacture countries 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 Xellia 2016 3 sodium (CMS) 2017Page highlightsHead Page Subhead 2017 was an important year for the development of Xellia. A strong financial performance achieved a record revenue of 317.1 MUSD and an operating profit of 51.5 MUSD. We continued to invest significantly in our business as we expand our manufacturing capabilities and advance the development of our innovative pipeline to ensure THIS HAS BEEN the long-term sustainable growth. ANOTHER SUCCESSFUL YEAR FOR XELLIA. 2017 HIGHLIGHTS2017 OUR FINANCIAL PERFORMANCE SIGNIFICANTLY Operations of our new Centralized Laboratory IMPROVED AND WE The preparations for commencing Services building comprising chemical manufacturing at our Cleveland, analytical and state-of-the-art MADE GOOD PROGRESS Ohio sterile injectable facility microbiology laboratories. We also continued to be a key priority for began to recruit the expanded quality IN DELIVERING OUR Xellia during 2017. We finalized team operating the new facilities STRATEGIC OBJECTIVES construction work at the site which will play a significant role in towards the end of the year and Xellia’s global operational strategy, AS WE CONTINUE TO have significantly upgraded strengthening product release and equipment and improved facility stability testing services for Active BUILD OUR PLATFORM designs. We also continued to hire Pharmaceutical Ingredients (APIs) staff and train the new organization and Finished Dosage Form (FDF) FOR SUSTAINABLE to operate the production suites. produced across our sites in the US FUTURE GROWTH. and Europe. Since Xellia acquired the Cleveland site in 2015, we have been working In 2017 we committed 25MUSD closely with the US Food and Drug financing to expand and upgrade the Administration (FDA) to ensure the sterile manufacturing facilities at our Carl-Åke Carlsson start-up at the facility. At the end Copenhagen site. This enabled us to Chief Executive Officer of 2016 the site passed an FDA commence the construction of a new Xellia Pharmaceuticals inspection of the packaging and state-of-the-art multi-story building distribution areas. In September, the in October that will house the latest FDA performed a pre-operational sterile manufacturing equipment and visit at the site and we are now going containment solutions in a purpose To remain a leading business in the through the final stages required to built environment. aggressive global anti-infectives commence commercial production. market, Xellia is also committed We anticipate obtaining the final The investments in these strategic to ongoing improvement of our FDA approvals and resuming full projects combined with other cost competiveness, delivery manufacturing at the facility ongoing investments in facilities and performance and maintaining during 2018. capacity will ensure that Xellia has our compliance track record with the capabilities to continue to provide the different regulators in the In August, we completed the a reliable supply of critical care anti- pharmaceutical industry. In 2017, construction at our Budapest site infectives and stay at the forefront of we successfully passed a total of manufacturing excellence. 4 Xellia 20162017 2 017 highlights continued seven inspections by different integration approach so that we regulatory authorities across our simplify and stream line the supply manufacturing sites and continued chain for our customers by providing the focus on increasing plant the final product. efficiency and improving delivery WE EXPERIENCED performance. We were able to As a global business our customers meet most of our operational include branded, specialty and A CONTINUED, key performance indicators for generic pharmaceutical companies the year, however, we did also in more than 70 countries around STRONG HIGHLIGHTS2017 experience challenges affecting the world. Over recent years we have the manufacture of certain increased our focus on expanding DEMAND FOR products towards the end of the in the US market and in 2017 60% OUR PRODUCTS year, and although we immediately of our total sales were generated in implemented measures to mitigate the US. FROM NEW resulting supply issues we expect there may be a negative impact in During 2017, we witnessed a AND EXISTING the first part of 2018. heightened awareness around the threat of antimicrobial resistance CUSTOMERS Products and markets (AMR) from both the industry AND CONTINUED We experienced a continued, strong and the community. As a leading demand for our products from supplier of anti-infectives, such OUR FOCUS new and existing customers and as vancomycin and colistimethate continued our focus on customer sodium (CMS), that often provide a ON CUSTOMER service throughout the year. As last line of defence against resistant a result of previous investments microbes, we are conscious of the SERVICE in manufacturing and improved role we play in ensuring responsible THROUGHOUT plant efficiencies we were able production and a stable and to increase the supply of several reliable supply. In January 2017, THE YEAR. key products for our customers. Xellia joined international industry This contributed to our growth associations and over 100 leading in revenue for the year. However, pharmaceutical, biotech, diagnostic we also experienced increasing and generic drug companies by competition in certain markets, signing the “Davos Declaration,” particularly from manufacturers which calls for collective action operating in Asia. This re-enforces against the global crisis of AMR, the importance of our ongoing focus including increased investment on delivering performance and cost and support from government. competitiveness. In signing the Declaration, Xellia supports antimicrobial stewardship Our business has implemented a to help slow the rise in AMR and vertical integration strategy which preserve the long-term effectiveness enables us to supply customers with of existing antibiotics. multiple product forms, improve supply security by utilising multiple Financial Revenue grew by more than 23% to manufacturing sites and provide a The combination of good operational 317.1 MUSD in 2017 (2016: 257.4 ‘one-stop-shop’, offering both the performance and enhanced sales of MUSD). Profitability for the year API and the FDF. This year, we were key products meant we were able also significantly improved; EBITDA delighted to achieve our long-term to exceed our financial targets for increased 36% to 86.5 MUSD strategic goal of having more than the year and achieve