We had a positive finish of the year, a year characterized by solid underlying demand but also delays in important projects and other issues. /.../ Our expansion projects will start to deliver towards the end of the first quarter and we will see a gradual ramp-up during the next 4-6 quarters. As projects finish we will see less capex and supported by increased profit, leverage will gradually decrease. Ending operations in the two Swedish facilities is painful. However, with the addition of a modern well invested facility in Spain and competitive operations in India we will get a streamlined and efficient structure, well suited to support our demanding customers’ needs globally. I am confident that we will reach our SEK 8 billion sales target by 2020 and have an EBITDA-margin target of at least 16 per cent.
I am delighted to announce the appointment of Bernard Pluta as President, Development Services. Bernard has managed our operations in Pessac with great success. His industry expertise and solid business competence will play a key role in transforming our development services and ensuring a seamless end to end offering. By providing a wide range of development services we are well positioned to manage challenging projects and complexity on behalf of our customers.
I have been particularly pleased with the way the performance in Nitin Lifesciences has developed since it became part of the Recipharm Group. Both sales and margins have grown in the business despite the recent macro-economic volatility in India and we foresee this favorable development to continue. The transaction will allow us to combine and better exploit operational synergies with our other Indian business. The equity investment will align interests of the Sobti family. As such, I have great pleasure in announcing that current chief executives and members of the founding family Dr Chetan Sobti and Mr Nitin Sobti shall not only continue to spearhead the current business but also in addition take on the responsibility to develop and grow Recipharm’s total business in the Indian and emerging markets.
We are continuing to gain momentum in the CDMO market and this latest agreement is another demonstration of this. I welcome our new colleagues in Spain and look forward to providing Roche with first-class CDMO services.
I am honoured that Recipharm has been acknowledged for our decade-long commitment to France. We have been very pleased with the development of our business there and I would like to thank the Swedish Chamber of Commerce in France for recognising this.
We’ve taken a very proactive approach to tackling serialisation as we understand the critical role that contract manufacturers must play in ensuring continuous supply of vital medicines in key markets. In addition to equipping nine of our sites ahead of the EU deadline and the new US enforcement date, we’ve also introduced a serialisation task force to ensure a consistent roll out of our standard solution across all of our facilities.
We continue to work hard to deliver on our strategies and to meet our targets. We invest heavily to take leadership in markets where demand is expected to be high. We perform optimisation and improvements of our structure in order to increase profitability and offer our customers attractive solutions. We receive positive feedback from our customers both in terms of our long-term strategy and of our current work. We see good opportunities to initiate and deepen important long-term relations with key customers. I therefore feel confident that we will reach our overall financial targets and be a leading global CDMO.
The intended changes will enable us to serve our customers with best in class service and value. We will see immediate efficiency improvements from this change and in the long term, it will allow Recipharm to offer a more competitive manufacturing structure for oral solids. While this is a strategic choice made to optimize our manufacturing, it is a difficult decision as the closure affects approximately 225 of our Swedish employees, who have demonstrated commitment and hard work to provide high quality products and services. It is of course our intention to ensure fair and respectful treatment to all throughout this process. Moving forward, the planned changes will enable us to focus our attention on the most competitive and efficient manufacturing facilities in our group. At a strategic level, we continue to pursue our mission to develop and manufacture pharmaceuticals for demanding customers for global use. As such, our financial objectives remain unchanged.
Recipharm recognised the complexity of implementing serialisation at a very early stage and so we’ve been preparing for the new regulations in the US and Europe for a long time now. The Lisbon facility brings us to over a third of the way through our implementation project and is an important milestone in our journey.
We are continuing to gain momentum in the CDMO market through our various profitable growth initiatives. I am therefore delighted to announce this long-term agreement with Roche. It has become clear during our interactions with Roche that we are closely aligned in our ways of doing business, and we look forward to developing this relationship further by providing high-quality, reliable supplies from Leganés in future. In addition, we see a highly interesting business development opportunity to add new customers.
We are happy to be able to contribute to the development of a new drug with the potential to be of great medical value. We have extensive experience in developing drugs for clinical trials as well as commercial manufacture and this will be very valuable in the collaboration with Kancera.
The decision to commence development of capsules for an active dosage of KAND567 shows that Kancera has reached an important milestone in the Fractalkine project. We are delighted to now be collaborating with Recipharm to produce the pharmaceutical product that will be used to study how KAND567 can help patients.
Our customers often face problems in terms of meeting timelines, adhering to changing regulations and managing trial complexity and it is our job to guide them through the process. Quite simply, Recipharm’s Pathway to Clinic™ service means we take responsibility for the full phase I programme, from formulation to clinical trial implementation with patients. Managing the different aspects of phase I, while reducing risk, time and cost, requires a clear roadmap and close collaboration between the different disciplines. Through partnering with CTC, we have complete control over all the links in the chain so can adjust at each step to avoid delays, meet deadlines and build value for our customers.
Progressing a drug to achieve first in human results is a complex process. Together with Recipharm, we can offer a complete integrated service where all the parts have been optimised to give our customers a fast and cost-effective development program until proof of concept.
Sales and EBITDA developed well and in line with our expectations for the quarter.
We are proud of having reached this important milestone in the development of a new product allowing improved therapy for a serious disease. This has been achieved by the hard work and close collaboration of experts at both LIDDS and Recipharm. LIDDS is a very innovative company and it has been extremely rewarding to work with the team.
With the successful manufacturing performed at Recipharm, LIDDS can offer license agreements for Liproca® Depot with the advantage of having validated production in place, saving both time and money for pharma companies. In addition, we now have an established manufacturing facility ready for other NanoZolid® projects.
As we continue to grow as a company, with our focus on decentralised operations, we are highly dependent on talented people at key posts throughout the Recipharm organisation. With his extensive knowledge of the pharmaceutical sector in the UK & Ireland, we believe Shabbir is the perfect addition to our team and will help to drive our business forward in this key market.
Recipharm is highly regarded as a significant force in the pharmaceutical sector and as the CDMO continues to expand its presence and service offering globally, it’s an exciting time to join the team. Recipharm is focused on simplifying the supply chain and managing complexity on behalf of pharmaceutical companies across the world and I look forward to playing my part by supporting our customers in the UK & Ireland.
With a sales growth of 37 percent we report the highest ever sales for a first quarter. /..../ The underlying business is developing according to plan and we maintain our overall objectives.
At Recipharm, we are focused on managing complexity for our customers and this means providing a full service offering to simplify the supply chain. Bolstering our development business is a key priority and with this investment, we are now able to offer our customers in the US a broader range of services and help them take their projects to the clinical phase in an efficient way. The new suite also meets an industry-wide demand for cGMP manufacturing space for orally inhaled drug products.
Recipharm has been supplying serialised products to markets including Turkey, Korea and China for many years and our investment in the Saudi Arabian market is the latest step in our goal to assist pharmaceutical companies with the complex web of requirements in the US, Europe and Asia.
We made significant progress on our strategic commitments during the year – including the expansion of our geographic footprint beyond our strong European base, and building on our public listing in 2014 to leverage international investment.
I am very pleased to welcome Henrik, his extensive experience and perspectives in finance, business and strategic development in the pharmaceutical industry make him a great fit for Recipharm as we continue on our strong growth path.
I'm looking forward to contributing to the continued success of Recipharm in my new capacity as Chief Financial Officer of this leading company.
We first established a business relationship with Sato in 2012 and this new supply agreement extends our partnership further. We are looking forward to the launch in Japan and cooperating with Sato in developing the business, to the benefit of both companies.
We are delighted to present the 2016 award to Alistair Boxall. His work, which extends far beyond measuring concentration levels, has helped change attitudes and improve understanding of the detection, fate, effect and risks of contaminants on both human health and whole ecosystems. His research has been integral to building commitment towards environmental matters and is providing valuable guidance for future actions to decrease or avoid the negative effects of chemical contamination.
I am delighted to receive the award. Our research on chemical contaminants has been a real team effort and the progress we have made wouldn’t have been possible without the hard work and commitment of my peers, students and postdocs. It is also a great testament to today’s research programmes that the pharmaceutical industry is recognising the importance of environmental impact and actively adapting practices to reduce the effects of contaminants and safeguard the environment.
The fourth quarter marks the end of a transaction intensive year for Recipharm. With an increase in net sales of 54 percent we recorded all time high sales for a quarter. Excluding acquisitions sales was still the highest ever for a fourth quarter with an increase of 16 percent, driven by the Sterile Liquids segment. /.../ During 2017 we will explore the many opportunities we see from our global organisation, start supply from the first of our major capacity expansion investments and begin to supply serialized products to the US market. We will continue to build powerful, long lasting partnerships with strategically important customers, in addition to executing on accretive acquisition opportunities. We are well on track to reach our long-term financial targets and overall objectives.
I am pleased we have now finally completed this important acquisition. We are now in a position to offer our customers access to cost effective development and manufacturing capabilities able to serve international markets including the US. These acquisitions are already showing great promise and I am pleased the current Managing Director, Anurag Bagaria, and VP Corporate Development, Karan Bagaria, will continue in their current positions going forward.
We are disappointed to be losing Mr Westberg and we would like to sincerely thank him for the significant contributions he has made to Recipharm in the past 10 years. He has been a strong leader and has brought invaluable expertise to the company.
Over the past year, Recipharm’s development business has continued to expand, with the integration of new facilities, technologies and capabilities. The new North American sales organisation will be extremely important for Recipharm as it will enable the company to attract US customers to its extensive network of development and manufacturing facilities outside of the US. We are very pleased to have such skilled, ambitious and enthusiastic professionals like Anders and Aaron to lead these two sales teams. Their contributions will be extremely valuable in the development of our business in offering new and existing customers access to our world class contract development and manufacturing services.
We are delighted to be collaborating with Recipharm, they are an expert partner that we can rely on for the commercial supply of our new product. Given the potential market for the product, a major benefit of partnering with Recipharm is that they have a high level of production capacity, which of course gives us the possibility to further scale up the batch size to meet market requirements in the future.
We are really looking forward to the commercial launch of this product, and contributing to something that will make a major difference to the lives of many women across the globe.
Sales, even excluding acquisitions, was the highest ever for a third quarter. Total sales increased 45 per cent. Excluding acquisitions the growth was 5.9 per cent. An important contributor to growth was sales under the new contract in Kaysersberg with strong demand for blow-fill-seal technology. In general, demand continued to be strong in our Sterile Liquids segment and in the Indian market we saw significant underlying volume growth. /.../ We now have global reach and a highly attractive value proposition to our customers combined with a solid financial position. Going forward we will continue to implement our growth-driving strategies, including executing on further acquisition and business development opportunities. We are very well on track to reach our overall financial and growth targets.
This project is of strategic importance to Recipharm, enhancing our ability to offer drug developers a complete service offering from raw material to finished drug product. With the addition of the new laboratory, we are now able to run up to six customer projects in parallel, handling maximum batch sizes of approximately 5 kg, compared to 1 kg previously. As well as increasing our output, we will also be investing in a number of new technologies, including flow chemistry, chromatography and hydrogenation capabilities in line with growing customer demand.
This is a strategic investment for Recipharm as there is a real need for more GLP bioanalysis laboratories in the Nordic region. Bioanalysis requires specialist expertise and establishing the necessary capabilities can be a costly investment, proving a barrier to entry for many contract services providers. Having first started out in a collaboration with a subcontractor, we are now delighted to be able to expand our offering in-house to service an unmet need for bioanalysis capabilities. The new laboratory will dramatically increase our capacity, allowing us to continue to grow our European customer base and expand our expert team of chemists.
Having already provided serialised products in markets including Turkey, Korea and China we understand the complexity of implementing serialisation processes across existing production lines, so we made the decision very early on to be proactive and get ready for the changes as soon as we could. Companies that delay their preparations face a high risk of disruption to their production when the changes come into effect in 2019. By introducing this showcase line so far in advance we’ll be able to overcome any hurdles prior to the deadline and make the transition to serialised products as seamless as possible for our customers. As part of our preparations we’ve listened to our customers concerns surrounding serialisation, which is why we’ve introduced a unique pricing model to help improve the affordability of the process.
We are really pleased that Tillotts Pharma AG has chosen Recipharm for these exciting products and projects. Our technical solutions offer a high level of customisation and we look forward to working with Tillotts to ensure their continued development and success within the gastroenterology area.
We have undertaken a thorough evaluation process to ensure we partner with a CDMO that can meet the needs we have for project management during technology transfer and scale-up, as well as fulfilling our requirements as a reliable commercial supplier. We believe Recipharm is the ideal CDMO partner for this task and look forward to establishing a long term relationship.
We are experiencing greater demand for lyophilisation capabilities from our customers, ranging from some of the largest pharmaceutical companies to small and mid-sized firms. As we continue to receive more requests from existing customers and new enquiries from drug developers in new territories, we needed to increase our capacity.
As expected we comply with our EBITDA-margin and Net debt to Equity targets. Going forward I expect our growth-driving strategies, including executing on further acquisition opportunities, to continue to deliver. The markets we operate in remain competitive but at the same time providing both growth and many opportunities. With our global reach and attractive value proposition to our customers I’m confident that we will reach our long term growth targets set to 2020. We were pleased with the support showed by our shareholders in the recently completed rights issue and we are very well placed to continue to explore the opportunities we see in the market.
Ann brings valuable experience to Recipharm in Research Triangle Park having worked within a variety of roles within the Group. She and her team will contribute greatly to the ongoing development of Recipharm and its establishment in the US.
Having worked with Recipharm for 20 years and enjoyed the spirit and ambition of this fast-growing company, I am excited to now be part of our US endeavor. Our ultimate goal is to ensure Recipharm is the preferred partner for pharmaceutical development services worldwide. I am looking forward to working with the specialists at Research Triangle Park to grow our US platform and create an outstanding development organisation in collaboration with our colleagues in Sweden, Italy, France and Israel.
We are experiencing increased demand for our blow fill seal services from markets including the US, Turkey, Australia and Canada and the new filling line will help us to meet this growing need. The increased capacity will position us well for future growth and allow us to take on new projects from new customers more swiftly. With the site’s big pharma heritage, we are ideally placed to meet the highest quality and regulatory requirements and are committed to investing in the facility to ensure we can continue to deliver the best possible service.
We have undertaken an extensive evaluation process to ensure we partner with experts that will allow us to best support our customers on their serialisation journeys. It was clear that Marchesini and SEA Vision have a very strong relationship, which would allow us to seamlessly implement the hardware and software required for serialisation. As a global CDMO, the flexibility of a cloud-based central repository and the easy network connectivity to our pharma clients were also key factors in our decision to collaborate with TraceLink.
“Having provided serialised products in Asia for a number of years, we understand the scale of the investment involved so are utilising our experience, technologies and capabilities to reduce costs for companies in Europe and the US.”
The markets we operate in remain challenging, but I am convinced that we will benefit from the global reach and our competitive value proposition to customers. There are tremendous opportunities in our new global structure and we are determined to explore these
These transactions represent a significant step in both the consolidation of the CDMO industry and the transformation of Recipharm into a global leader.
I am delighted that we have now completed this transaction. The combination of Nitin and Recipharm represents an important step in the development of both companies and I am pleased that both Dr Chetan Sobti and Nitin Sobti will be continuing in their current positions