Year-end report April 2019 – March 2020

CEO’s comments

We continue to show a strong growth with sales increasing by 45 percent for the 2019/20 financial year compared with the previous year and a 29 percent growth for the quarter. Sales for the totalled SEK 18.9 million for the quarter, our second strongest quarter ever, and SEK 72 million for the year. The gross margin for the quarter fell to 47 percent due to a product mix with large sales of, amongst others, Paracetamol, a product with several competitors, which is therefore sold at a lower margin.

The quarter has been marked by the Covid-19 pandemic as the company has its supply chain to a significant extent in China and India. For China, the world's largest exporter of generic APIs, the impact was noteworthy for a couple of months, but we believe that China is now at full capacity. On March 4, India, the world's largest exporter of generic drugs, imposed export restrictions on 26 APIs and their corresponding pharmaceuticals with impact on several products we manufacture there, including Paracetamol. However, in order to be a reliable supplier to hospitals and pharmacies, we have previously made the decision to have security stocks that are far larger than industry practice.

This means that we are relatively unaffected in the short terms by the delivery problems that many generic pharmaceutical companies are suffering from today, but that we still have to put extra energy into securing supply for the second half of the current financial year.

We present new financial targets that apply for the next five-year period, 2020/21 to 2024/25, where we raise the growth target to 40 percent on average over the five-year period. For our current five-year period, the corresponding target is more than 30 percent growth. The target for our EBIT margin is set to be higher than 25 percent at the end of the new five-year period.

The drug Hevicain Spinal Tung, our first hospital product, has won a procurement in Denmark and deliveries have begun. Medicines sold through procurement for healthcare will grow significantly in importance for us over the next five-year period.

After the end of the quarter, Axel Schörling, the company's COO, has been appointed COO and executive vice president with increased responsibility for the entire workflow from the start of new projects to launch and sales.

After the end of the quarter, we received a large order for protective equipment from one of the hospital regions in Sweden. For many years, we have worked closely with leading Chinese life science companies and have employees who are Chinese citizens. This has enabled the acquisition of rights to medical protective equipment. I would like to take this opportunity to thank the company's staff, where a small team has worked very hard to make this possible, and the purchasers at the hospital region who have shown a tremendous grit to solve all the challenges and finally the Chinese suppliers that have been decisive for this to happen.

Due to the Covid-19 pandemic and the focus we need to increase in securing supply for our products, both medical device and pharmaceutical products, the company's move to Nasdaq Stockholm's main list will be postponed until the first quarter of the financial year 2021/22.

For further information, please contact:
Christer Fåhraeus
CEO, EQL Pharma AB (publ)

Phone: +46 (0) 705 – 60 90 00
E-mail: christer.fahraeus@eqlpharma.com
Website: www.eqlpharma.com

EQL Pharma AB (publ) in short

EQL Pharma AB specializes in developing and selling generics, i.e. medicines that are medically equivalent to originator medicines. The company currently has 18 niche generics (i.e. generics with little or no competition apart from the originator drug) approved in the Nordic markets. In addition to these, there exist a significant pipeline of additional niche generics for launch in 2020 and beyond. The business is currently entirely focused on prescription drugs. EQL Pharma AB conducts its operations in Lund, employs 9 people and is listed on the Spotlight Stock Market. EQL Pharma AB conducts extensive development work in collaboration with leading contract manufacturers and major pharmaceutical companies in the EU, India and China, among others.