Annual Report 2008
`
`Our progress is
`Raffaele’s hope.
`
`ARGENTUM Exhibit 1174
`Argentum Pharmaceuticals LLC v. Research Corporation Technologies, inc.
`IPR2016-00204
`
`Page 00001
`
`

`
`My son, Raffaele, is eight years old. One bright,
`sunny afternoon, four years ago, Raffaele
`awoke from his afternoon snooze complaining
`of severe pain in his left arm.
`I didn’t understand what was happening, until
`he was later diagnosed with epilepsy.
`
`This enormous word turned my life upside
`down: so many questions, so many times
`asking ‘why ?’
`
`My husband, daughter and I couldn’t bear to
`watch Raffaele suffer. He could no longer
`speak, hold a pen in his hand, keep his head
`up. One Christmas, my brother-in-law told me
`about a great professor to whom I could entrust
`Raffaele. It was a magic moment. We had found
`someone with the knowledge, professionalism
`and humanity to fi nd the right treatment and
`care for Raffaele. It’s been 19 months since
`Raffaele had an attack. The epilepsy has left its
`mark, but there’s sunshine in my life once more.
`Like any mother, I want the best for my child
`and I won’t let epilepsy compromise his future.
`
`Raffaele, his mother Ernestina and his father
`Giuseppe are Epilepsy Advocates.
`
`Page 00002
`
`

`
`A Long-Term Plan
`
`Focusing on
`Severe Diseases
`
`As a world leader in epilepsy research,
`UCB is committed to improving public
`understanding of epilepsy, supporting
`patients in their efforts to live beyond
`their disease, and encouraging healthcare
`professionals to see patients as more than
`just people with seizures.
`
`Within the epilepsy education and
`support programmes of UCB, Epilepsy
`Advocates describe how they have learned
`to lead normal, everyday lives with epilepsy.
`For those who hear them describe their
`experience of living with a severe disease,
`including the thousands of patients, carers,
`healthcare professionals and all of us at
`UCB, they are an inspiration…
`
`1 UCB Annual Report 2008
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
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`
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`
`
`
`
`
`
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`
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`
`
`48
`
`
`
`
`
`
`
`
`Table of Contents
`
`
`
`02 A Long-Term Plan
`
`02 Our Focus
`04 Our Strengths
`
`
`06 Our Strategy
`
`08 Our Products
`
`09 Our Pipeline
`10
`Facts & Figures - Concrete Results
`12 Highlights - Stepping Stones
`14
` Letter to the Shareholders - Keeping on Target
`18
`
`
` Executive Committee Review
`18 Meeting our Goals
`22 R&D: UCB NewMedicines™
`24 R&D: Global Projects & Development
`Central Nervous System
`26 Epilepsy
`30 Parkinson’s Disease
`32 Restless Legs Syndrome
`34 Other Therapies
`Immunology
`36 Crohn’s Disease
`38 Rheumatoid Arthritis
`40 Systemic Lupus Erythematosus
`41 Bone Loss Disorders
`Human Resources
`42 Managing Talents
`Corporate Social Responsibility
`44 Corporate Care & Concern
`Sources
`
`Glossary
`
`Connecting with Investors
`
`Financial Highlights
`
` Management Report of the Board of Directors &
`Report of the Board of Auditors
` (separate document, inside the back-cover of this report)
`
`Page 00003
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`

`
`A Long-Term Plan
`
`Our Focus
`
`We focus on severe diseases where there are substantial unmet medical and social
`needs, in two therapeutic areas: diseases of the central nervous system (CNS), and
`immunology. In order to prioritise our allocation of resources, and so focus our efforts,
`we have differentiated country markets into ‘Max Countries’, ‘EU Mid-Markets’, and
`‘International Major Markets’.
`
`Name
`
`CNS
`
`Description
`
`Top 7 Markets 1
`Estimated
`Prevalence2
`(million people)
`
`Top 7 Markets 1
`Estimated
`Market Size
`(€ billion)
`
`Diabetic neuropathic pain
`
`Severe pain that diabetics often have in limbs
`
`Epilepsy
`
`Fibromyalgia
`
`Migraine
`
`Multiple sclerosis
`
`Brain disorder causing recurrent seizures
`
`Widespread muscle pain and stiffness
`
`Severe episodic headaches, lasting hours
`
`Produces various CNS disorders from
`muscle weakness to visual impairment
`
`Parkinson’s disease
`
`Degenerative movement disorder
`
`Restless legs syndrome
`
`Uncontrollable urge to move legs
`
`IMMUNOLOGY
`
`Allergy
`
`Bone loss disorders
`
`Crohn’s disease
`
`An infl ammatory reaction to allergens
`
`Disorders such as osteoporosis
`that weaken bones
`
`Chronic gastrointestinal disease causing diarrhoea,
`abdominal pain and other problems
`
`Rheumatoid arthritis
`
`Infl ammation and painful swelling in joints
`
`Systemic lupus
`erythematosus
`
`Autoimmune disease that attacks many organs
`
`1 Top 7 markets:
`2 Prevalence:
`(1) and (2):
`
`(a) to (l):
`
`
`
`France, Germany, Italy, Japan, Spain, U.K. and U.S.
`Total number of cases of the disease in the population (top 7 markets) at a given time
`Sources, see p48
`Sources, see p48
`
` 10.3(1)
`
` 6.1(1)
`
` 14.9 (1)
`
` 67.6(1)
`
` 0.5(1)
`
` 3.1(1)
`
` 53.6(1)
`
` 155.3(1)
`
` 64.1(2)
`
` 0.9(1)
`
` 5.1(1)
`
` 0.6(1)
`
` 0.4(a)
`
` 3.2(b)
`
` 0.7(c)
`
` 3.4(d)
`
` 4.3(e)
`
` 0.8(f)
`
` 0.1(g)
`
` 3.0(h)
`
` 5.7(i)
`
` 0.9(j)
`
` 5.8(k)
`
` 0.7(l)
`
`2 UCB Annual Report 2008
`
`Page 00004
`
`

`
`A Long-Term Plan
`
`Severe diseases in CNS and immunology,
`which range from epilepsy and Parkinson’s
`disease to rheumatoid arthritis, have three
`common characteristics:
`
`Debilitating impacts on patients’ everyday lives
`Virtually all severe diseases have signifi cant physical and social
`consequences, preventing individuals with these diseases from
`enjoying normal, everyday lives and often leading to depression
`and other problems. People with epilepsy, for example, have
`to contend with painful and dangerous seizures, as well as the
`social stigma attached to this condition. Many are not allowed
`to drive and are denied job opportunities.
`
`Complex, interconnected symptoms
`Severe diseases often involve a variety of symptoms that
`affect different parts of the body beyond the original source
`of the disease. Someone with Crohn’s disease, for example,
`might suffer from chronic fatigue and aching joints, as well
`as gastrointestinal pain and uncontrollable urges to rush to
`the bathroom. To address the disease and its full range of
`
`symptoms, a more holistic interconnected approach that treats
`the entire body is required. As we explain on the following
`pages, this demands a more fl uid, networked method of
`developing therapies that brings together multidisciplinary
`teams, involving internal and external expertise, which work
`closely with people with severe diseases from the outset.
`
`Long-term dependence on specialist treatment and care
`Most severe diseases are lifelong conditions and initially
`require diagnosis and treatment by specialist physicians. As a
`provider of therapies for these long-term diseases, UCB is able
`to develop long and strong relationships with physicians and
`patients and their families and carers which in turn provides us
`with the understanding and insights to address the everyday
`realities of these diseases.
`
`The table on page 2 highlights the areas of current therapeutic
`focus, where UCB has therapies that are either already
`available for patients or still in development.
`
` Max Countries
`
` EU Mid-Markets
`
` International Major Markets
`
`UCB Annual Report 2008
`
`3
`
`Page 00005
`
`

`
`A Long-Term Plan
`
`Our Strengths
`
`As the leader in epilepsy in the U.S. and
`Europe, UCB has demonstrated its ability
`to make a difference in severe disease.
`Our SHAPE programme, which sharpens
`our focus and simplifies our organisation,
`enables us to make an even greater difference
`to the lives of patients with severe diseases.
`
`diseases. This is underpinned by unique technologies, such as UCB
`SLAM and A2Hit™, and our proprietary expertise in Synaptic
`Vesicle 2 (SV2) protein biology, supported by an extensive library
`of patent-protected chemicals. We are also investigating the
`potential of new therapeutic approaches such as slow activation
`sodium ion channels and the modulation of CRMP2
`(Collapsin-Response Mediator Protein 2) in epilepsy.
`
`The next generation biopharma leader
`Our concept of ‘the next generation biopharma leader’ means
`more than expertise across small, chemically-derived molecules
`and large, antibody-based molecules. It is about connecting people,
`science and therapies in new ways so that we gain fresh insights
`into the complex interconnections involved in severe diseases.
`With this approach, we can create a new generation of solutions
`that more completely addresses the full spectrum of a disease and
`its symptoms. This involves networking, internally and externally, in
`order to cross fertilise knowledge, expertise and resources.
`
`Empowered, multidisciplinary and multinational teams
`With more than 70 nationalities and numerous educational
`and professional backgrounds, the diversity of our staff is one
`of our greatest assets. To capitalise on the creative potential
`of this diversity, as well as accelerate the development of
`breakthrough therapies, we have created an open, globally
`networked environment so that our staff can share and cross
`fertilise ideas. This includes multidisciplinary, therapeutically focused
`project teams that are fully accountable for delivering results
`throughout the development of our therapeutic compounds.
`
`Close relationships with patients and the people who
`care for them
`Everything we do starts with a simple question: ‘How will this
`make a difference to the lives of people with severe diseases ?’
`Regular, personal contact with patients, as well as their carers and
`physicians, plays a vital role in helping us answer this question.
`We have patient group alliances in the drug discovery, drug
`development and marketing functions of the company.
`We have also created communities for patients to share ideas
`with each other, such as www.parkinsons-disease.com and
`www.crohnsandme.com and provided novel, practical patient
`support programmes such as ‘Canine Assistance’ for people with
`epilepsy (see page 44).
`
`Cutting-edge research that combines biology and chemistry
`Our expertise across large and small molecules enables us to
`approach severe diseases from different angles. We are combining
`our leadership in antibody research and long-established expertise
`in chemistry to better understand and address the complex
`biological pathways and interconnections of these types of
`
`World-class partners across the value chain
`We recognise that the complexity of severe diseases is beyond
`the expertise and resources of a single company. This is why we
`partner for strength across the value chain, from drug discovery
`and drug development to manufacturing and marketing. Our
`partners include Biogen IDEC, deCode, Millenium, Wilex, and
`around 80 top universities in drug discovery; Amgen, Biogen IDEC,
`Immunomedics and Wyeth in drug development; Lonza in
`manufacturing; GSK, Johnson & Johnson, Otsuka Pharmaceuticals,
`Pfi zer and sanofi -aventis in marketing.
`
`A global player with a rich pipeline
`With operations in more than 40 countries, UCB has global
`reach. This includes an established presence in the world’s seven
`major pharmaceutical markets: Germany, Italy, Japan, Spain, the U.K.
`and the U.S., as well as other signifi cant international markets. In
`addition, our pipeline is strong especially in its late stage projects,
`and is focused on severe diseases of the central nervous system
`and immunology.
`
`4 UCB Annual Report 2008
`
`Page 00006
`
`

`
`Everything we do
`starts with a simple
`question: ‘ How
`will this make a
`difference to the
`lives of people with
`severe diseases ? ’
`
`The complexity of
`severe diseases is
`beyond the expertise
`of a single company.
`This is why we
`partner for strength
`across the value chain.
`
`UCB Annual Report 2008
`
`5
`
`We are combining
`our leadership in
`antibody research
`and expertise in
`chemistry to better
`understand the
`complex biological
`pathways of these
`types of diseases.
`
`Page 00007
`
`

`
`A Long-Term Plan
`
`Our Strategy
`
`Intense growth
`In the medium term, we expect to realise the potential of our
`new products, accelerating our growth and providing
`additional funds for investments in new product development.
`Currently, we have 11 molecules in our pipeline across 13
`indications. All but one of these molecules are in our core
`therapeutic areas of CNS and immunology.
`
`Breakthrough
`Using our expertise in biology and chemistry, we are working
`on long-term research projects that could transform how
`severe diseases are treated. One of these, A2Hit™, now at
`proof-of-concept stage, underpins four pre-clinical projects
`that seek to combine the convenience of small orally available
`molecules with the effi cacy and precision-targeting of large
`molecules.
`
`UCB has a clear long-term strategy. In
`2004, UCB management defined a vision
`to transform the company from a diversified
`pharmaceuticals, chemicals and films
`conglomerate into the next generation
`biopharma leader, with patients at the
`heart of everything it does. Since then,
`the company has been bringing this vision
`to life through a five-step strategy.
`
`Transformation (completed in 2005)
`The transformation of UCB into a biopharmaceutical
`company with a development portfolio of large and small
`molecule drugs was achieved through the acquisition in
`2004 of Celltech, the leading British biotech company, and
`the divestment of non-core businesses in 2005. By the end
`of 2005, UCB had a globally networked research organisation
`capable of capturing the combined potential of biology and
`chemistry.
`
`Scale (completed in 2006)
`The acquisition of Schwarz Pharma in 2006 enriched the
`company’s late-stage pipeline, enhancing UCB’s short to
`mid-term commercial potential.
`
`Execution (ongoing since 2007)
`Our current phase is one of signifi cant investment in the
`future. This may limit profi t growth in the short term.
`Investments in R&D to build our new product pipeline
`and in launch activities for several new products have been
`increased. Cost containment is mitigating the loss of patents
`and exclusivity protecting Keppra® and Zyrtec® around the
`world. Country markets have been prioritised. We also
`launched SHAPE. This programme re-allocates resources
`and focuses activities on UCB’s core therapeutic areas of the
`central nervous system (CNS) and immunology, and simplifi es
`the organisation, enabling the company to improve its agility,
`competitiveness and profi tability.
`
`6 UCB Annual Report 2008
`
`Page 00008
`
`

`
`Break-
`through
`
`• Focus on long-term research projects
`• Transform the way severe diseases are treated
`
`Intense
`growth
`
`• Realise the potential of new products
`• Accelerate growth and fund further
`investments in new product development
`
`Execution
`
`• Increase investments in R&D
`• Invest in launch activities
`• Cost containment
`• Maximise life cycle of existing brands
`• Reallocate resources into
`core therapeutic areas
`• Simplify the organisation
`• Improve competitiveness and profi tability
`
`2007
`
`2010
`
`Beyond
`
`UCB Annual Report 2008
`
`7
`
`Page 00009
`
`

`
`A Long-Term Plan
`
`Our Products
`
`With net sales of more than € 3 billion across the globe, UCB has a proven ability
`to turn novel ideas into commercial realities and to successfully manage products’
`life cycles.
`
`Top products
`
`Compound
`
`Indication
`
`Net sales
`2008
`(€ million)
`
`Net sales
`2007
`(€ million)
`
`CNS
`
`Keppra®
`
`levetiracetam
`
`Several types of epilepsy,
`including partial onset-seizures
`
`1 266
`
`1 026
`
`Nootropil®
`
`piracetam
`
`Regulating cerebral functions
`
`Metadate™ CD /
`Equasym® XL
`
`methylphenidate
`HCl
`
`Attention Defi cit Hyperactivity Disorder
`(ADHD)
`
`Neupro®
`
`rotigotine
`transdermal system
`
`Parkinson’s disease
`
`Vimpat®
`
`lacosamide
`
`Immunology
`
`Zyrtec®
`
`cetirizine
`
`Xyzal®
`
`levocetirizine
`
`Several types of epilepsy,
`including partial onset-seizures
`
`Perennial allergic rhinitis, seasonal allergic
`rhinitis and chronic idiopathic urticaria
`
`Allergic rhinitis, including persistent allergic
`rhinitis and chronic idiopathic urticaria
`
`Cimzia®
`
`certolizumab pegol
`
`Crohn’s disease
`
`Other
`
`Tussionex™
`
`hydrocodone polistirex and
`chlorpheniramine polistirex
`
`Coughs and colds
`
`omeprazole
`
`omeprazole
`
`Gastrointestinal ulcers
`and refl ux esophagitis
`
`93
`
`77
`
`58
`
`2
`
`249
`
`173
`
`10
`
`147
`
`75
`
`101
`
`81
`
`52
`
`-
`
`487
`
`168
`
`1
`
`114
`
`147
`
`8 UCB Annual Report 2008
`
`Page 00010
`
`

`
`A Long-Term Plan
`
`Our Pipeline
`
`For a medium-sized biopharma company, UCB has a solid pipeline of 11 large and
`small molecules, spanning 13 separate indications, many in late-stage development.
`Some of these are intended to strengthen the company’s positions in disease areas
`such as epilepsy. Others could take the company into new areas of severe disease
`such as multiple sclerosis, systemic lupus erythematosus and osteoporosis.
`
`CNS
`
`Indication
`
`Phase I
`
`Phase II
`
`Phase III
`
`Filed
`
`Approved
`
`Vimpat® (lacosamide)
`
`Epilepsy adjunctive therapy (U.S.)
`
`Neupro® (rotigotine transdermal patch)
`
`Restless legs syndrome (EU)
`
`Keppra® (levetiracetam)
`
`Neupro® (rotigotine transdermal patch)
`
`Restless legs syndrome (U.S.)
`Epilepsy adjunctive therapy -
`infants and children (EU & U.S.)
`Neupro® (rotigotine transdermal patch) Advanced Parkinson’s disease (U.S.)
`
`Vimpat® (lacosamide)
`
`Diabetic neuropathic pain (EU & U.S.)
`
`Keppra® XR (levetiracetam)
`
`Epilepsy monotherapy (U.S.)
`
`brivaracetam
`
`Vimpat® (lacosamide)
`
`Xyrem® (sodium oxybate)
`
`CDP323
`
`lacosamide
`
`lacosamide
`
`Epilepsy adjunctive therapy
`
`Epilepsy monotherapy (U.S.)
`
`Fibromyalgia
`
`Multiple sclerosis
`
`Fibromyalgia
`
`Migraine prophylaxis
`
`rotigotine transdermal system Fibromyalgia
`
`rotigotine nasal spray
`
`Restless legs syndrome
`
`Immunology
`
`Indication
`
`Phase I
`
`Phase II
`
`Phase III
`
`Filed
`
`Approved
`
`Cimzia® (certolizumab pegol)
`
`Rheumatoid arthritis (EU & U.S.)
`
`Cimzia® (certolizumab pegol)
`
`Crohn’s disease (EU)
`
`epratuzumab
`
`CDP7851 (anti-sclerostin)
`
`CDP6038 (anti-IL6)
`
`Systemic lupus erythematosus
`
`Bone loss disorders
`
`Autoimmune diseases
`
`Other
`
`Indication
`
`Phase I
`
`Phase II
`
`Phase III
`
`Filed
`
`Approved
`
`Toviaz® (fesoterodine)
`
`Overactive bladder (U.S.)
`
` Small molecule drug
`
` Antibody-based (large molecule) drug
`
`UCB Annual Report 2008
`
`9
`
`Page 00011
`
`

`
`Facts & Figures
`
`Concrete Results
`
`Despite the patent expiry of Zyrtec® in the U.S. in 2007 which accounted for
`€ 228 million of net sales and the loss of exclusivity for Keppra® in the U.S. in 2008,
`UCB delivered net sales of € 3 027 million and recurring EBITDA of € 733 million
`in 2008. Net profit was reduced by one-off non-recurring impairment and restructuring
`charges related to the SHAPE programme.
`
`Results 2008
`
`
`
`€ million
`Revenue
`R&D expenses
`Recurring EBITDA
`Operating profit (EBIT)
`Net profit (after minority interests)
`
`Share information
`
`
`
`
`
`€ per share
`Basic earnings
`€ per share
`Gross dividend
`Number of shares*
`
`Share price*
`€ per share
`Market capitalisation* € billion
`
`* year-end
`
`
`2008
` 3 601
`(767)
`733
`113
`42
`
`2008
`0.24
` 0.92
`183 365 052
`23.3
`4.3
`
`2007
`3 626
`(788)
`741
`344
`160
`
`2007
`0.89
`0.92
`183 361 252
`31.02
`5.7
`
`Sales by geographic region - 2008
`Total net sales: € 3 027 million
`
`Sales by therapeutic area - 2008
`Total net sales: € 3 027 million
`
`47% Europe
`40% North America
`13% Rest of World
`
`47% Central Nervous System
`14% Immunology & Allergy
`39% Other
`
`10 UCB Annual Report 2008
`
`Page 00012
`
`

`
`Facts & Figures
`
`Global presence in 43 countries
`
` Headquarters
` R&D sites
` Commercial operating units
`For contact details of the commercial operating units, please visit our website on: www.ucb.com/worldwide.asp
`
`Employees by region - 2008
`Total number of employees: 11 292
`
`62.9% Europe
`21.2% North America
`15.9% Rest of World
`
`With stable revenue and strong
`underlying profitability, UCB continued
`on track in 2008.
`
`Detlef Thielgen,
`Executive Vice President,
`Chief Financial Offi cer
`
`UCB Annual Report 2008
`
`11
`
`Page 00013
`
`

`
`Highlights
`
`Stepping
`Stones
`
`2008 was a year
`of regulatory,
`commercial
`and fi nancial
`achievement,
`despite market
`challenges.
`
`And it was a
`year of change
`as we began
`to SHAPE the
`company around
`its priorities
`and future
`opportunities.
`
`12
`
`UCB Annual Report 2008
`
`7 regulatory
`approvals and …
`
`Cimzia®
`Crohn’s disease
`U.S.
`(April 2008)
`
`Keppra® XR
`Adjunctive therapy
`in epilepsy
`U.S.
`(September 2008)
`
`Neupro®
`Restless legs syndrome
`EU
`(September 2008)
`
`Vimpat®
`Adjunctive therapy
`in epilepsy
`EU
`(September 2008)
`
`Vimpat®
`Adjunctive therapy
`in epilepsy – U.S.
`(October 2008)
`
`Xyzal®
`Oral solution antihistamine
`U.S.
`(February 2008)
`
`Toviaz®
`Overactive bladder
`U.S. , licensed to Pfi zer
`(October 2008)
`
`… 6 filings
`
`Cimzia®
`Rheumatoid arthritis
`U.S.
`(February 2008)
`
`Cimzia®
`Rheumatoid arthritis
`EU
`(July 2008)
`
`Keppra®
`Adjunctive therapy in
`epilepsy (infants and
`children)
`U.S.
`(June 2008)
`
`Keppra®
`Adjunctive therapy
`in epilepsy (infants and
`children)
`EU
`(July 2008)
`
`Keppra®
`Adjunctive therapy
`in epilepsy – Japan
`(November 2008)
`
`Keppra® XR
`Adjunctive therapy
`in epilepsy
`U.S.
`(January 2008)
`
`Page 00014
`
`

`
`Building a
`strong pipeline
`
`Key products in CNS:
`brivaracetam, CDP323
`
`Key products in
`immunology: Cimzia®
`in rheumatoid arthritis,
`epratuzumab, CDP7851,
`CDP6038
`
`Active life-cycle
`management: Cimzia®,
`Keppra®, Neupro®,
`Vimpat®, Xyrem®
`
`5 launches
`
`Cimzia®
`Crohn’s disease
`U.S. within 48h
`(April 2008)
`
`Keppra® XR
`Adjunctive therapy
`in epilepsy
`U.S.
`(October 2008)
`
`Vimpat®
`Adjunctive therapy
`in epilepsy
`Germany and U.K.
`(September 2008)
`
`Xyzal®
`Oral solution
`antihistamine
`U.S.
`(May 2008)
`
`Toviaz®
`Overactive bladder EU,
`licensed to Pfi zer
`(June 2008)
`
`Implementation
`of SHAPE
`
`Focus on severe diseases
`of CNS and immunology
`
`Reallocate resources
`
`Drive innovation to
`deliver solutions for
`patients
`
`Establish agile and
`effi cient organisation
`
`Improve
`competitiveness and
`profi tability
`
`Prioritise
`products
`and markets
`
`Financials
`on track
`
`Financial highlights
`2008
`
`• Revenue of € 3.6 billion
`• Recurring EBITDA
`of € 733 million
`• Net profi t of
`€ 42 million refl ecting
`one-time charges
`related to SHAPE
`• Integration of Schwarz
`Pharma completed
`
`2009 outlook
`• Revenue expected of
`approximately
`€ 3.3 billion
`• Recurring EBITDA
`expected to end the
`year greater than
`€ 680 million
`• Net profi t, as reported,
`expected to exceed
`€ 130 million, excluding
`the expected capital
`gains resulting from
`already announced
`divestments of early
`2009.
`
`UCB Annual Report 2008
`
`13
`
`Page 00015
`
`

`
`Letter to the Shareholders
`
`Keeping on Target
`
`The ‘Execution Phase’ of our strategy is
`gaining momentum. Following the regulatory
`approval of several of our future specialist
`products, we were in a strong position in
`2008 to accelerate the transformation of UCB
`into the next generation biopharma leader
`while delivering better than expected fi nancial
`results.
`
`This acceleration is being driven by SHAPE,
`a programme that is designed to reallocate
`our resources, internally and externally, so
`that we can focus our efforts and investments
`on our core business areas, enabling us to
`improve our competitiveness and profi tability,
`while successfully delivering new medicines to
`as many patients as possible. We are pleased to
`report signifi cant progress by UCB in 2008.
`
`UCB employees and management
`regularly meet with patients. During
`a visit to Brussels, Hanna, one of
`our ’Epilepsy Advocates‘ who is also
`working at UCB for a three-month
`internship, had the opportunity to
`meet with the Chairman and the CEO
`of UCB to discuss how to further
`strengthen patient–centricity at UCB.
`
`14
`
`UCB Annual Report 2008
`
`Page 00016
`
`

`
`Karel Boone,
`Chairman of the Board
`
`Hanna,
`Epilepsy Advocate
`
`Roch Doliveux,
`Chief Executive Offi cer
`
`UCB Annual Report 2008
`
`15
`
`Page 00017
`
`

`
`Letter to the Shareholders
`
`Seven regulatory approvals in 12 months
`During 2008, we obtained fi ve regulatory approvals in the U.S.:
`Cimzia® for Crohn’s disease, Keppra® XR and Vimpat® for epilepsy,
`Toviaz® for overactive bladder (licensed to Pfi zer worldwide)
`and the oral solution of the allergy drug Xyzal®. We also won
`approval for the new epilepsy drug Vimpat® and for Neupro® for
`the treatment of restless legs syndrome in Europe. In addition to
`obtaining paediatric exclusivity for Keppra® from the FDA, the fi ve
`regulatory approvals in less than 12 months in the U.S. included
`the approval of three new molecular entities (NME’s). Given
`that the largest 15 pharmaceutical companies obtain on average
`less than three NME approvals over a fi ve-year period, this is a
`signifi cant achievement. We feel that this record validates our
`strategy, which is to focus our business on making and delivering
`innovations that bring new medicines to patients suffering from
`severe and specialist-treated diseases of the central nervous
`system and immunology.
`
`Focused operations deliver
`From an operational perspective, we also made good progress, as
`outlined in the ‘Highlights’ section of this report (page 12-13). We
`launched Cimzia® for the treatment of Crohn’s disease, Keppra® XR
`for epilepsy, and the oral solution of the allergy drug, Xyzal®, in the
`U.S. as well as the new epilepsy drug, Vimpat®, in Europe. Early in
`2009, we will launch Vimpat® for epilepsy in the U.S.
`
`The integration of Schwarz Pharma was completed 18 months
`ahead of schedule and generated synergies of € 380 million, well
`above of our original € 300 million target.
`
`The SHAPE programme was launched in August 2008.
`SHAPE aims to transform and focus the company on severe
`and specialist-treated diseases of the central nervous system and
`immunology, prioritise investment across products and markets,
`simplify the organisation, improve competitiveness and profi tability.
`In short, to sharpen our ability to bring benefi ts to patients with
`severe disease. This programme required us to reduce UCB’s
`workforce by around 17%. Together with our social partners, we
`managed this in a respectful manner, fi rst through consultation
`
`and then through a negotiated settlement. Employees leaving
`UCB are receiving a comprehensive support package to help
`them pursue their working lives outside the company. We are
`particularly grateful for the commitment and the professionalism
`of everyone at UCB in a period of uncertainty. We thank our
`UCB colleagues most heartily for seeing the company through
`these challenges and producing a successful year in the end.
`
`Overcoming challenges
`In 2008, UCB had to absorb the effect of the Zyrtec® patent
`expiry in the U.S. in December 2007, as well as the loss of
`exclusivity of Keppra® in the U.S. where we have faced new
`generic competition since November 2008. While these
`challenges were expected, a deviation from the product
`specifi cation of Neupro® triggered an unexpected setback in
`the year. Our decision to recall the product created an out-
`of-stock situation in the U.S. and limited availability in Europe.
`In Europe, a cold chain storage and distribution system has
`enabled us to continue to supply Neupro® to patients. In 2009,
`all patients, including new patients, should be able to benefi t
`from this innovative therapy for Parkinson’s disease and restless
`legs syndrome. In the U.S. we have begun a dialogue with the
`regulatory authorities to bring Neupro® back to American
`patients. The rejection of lacosamide in diabetic neuropathic pain
`(DNP) by the U.S. Food and Drug Administration (FDA) was a
`disappointment. While Phase III clinical trials have demonstrated
`clinical effect, the magnitude of effect in this indication has not
`convinced the regulatory authorities. We are reviewing what
`additional steps may be needed to make lacosamide available for
`patients with DNP in the U.S. and Europe.
`
`Better than expected fi nancial results for 2008
`UCB revenue in 2008 reached € 3.6 billion, above our published
`expectation of € 3.3 billion. Despite the Zyrtec® U.S. patent
`expiry and the Keppra® loss of exclusivity in the U.S., revenues
`grew 4 % at constant exchange rates. All regions contributed
`to this good result. Underlying profi tability (recurring EBITDA)
`reached € 733 million, refl ecting a solid fi nancial performance
`above our expectations. Net profi t (after minority interest)
`
`16
`
`UCB Annual Report 2008
`
`Page 00018
`
`

`
`Letter to the Shareholders
`
`reached € 42 million, impacted by signifi cant, one-time,
`non-recurring, restructuring and impairment charges as a
`consequence of the SHAPE programme. Based on the
`company’s dividend policy, which focuses on its long-term
`growth potential irrespective of short term variations in income,
`the Board proposes a gross dividend of € 0.92 per share.
`
`Pursuing our long-term strategy
`Our long-term strategy of achieving leading positions in
`the treatment of selected severe diseases in CNS and
`immunology is being executed. This ’Execution Phase’ has
`gained momentum in 2008 with several regulatory approvals
`and the implementation of the SHAPE programme. Being
`successful with our new product launches will allow us to enter
`our ’Intense Growth Phase’ where we intend to unleash the
`commercial potential of our new medicines such as Cimzia®
`for rheumatoid arthritis, Vimpat® for epilepsy and Neupro® for
`Parkinson’s disease. Looking further ahead, our drug discovery
`organisation is already working on new medicines for our
`‘Breakthrough Phase’.
`
`UCB NewMedicines™, our new drug discovery through to
`proof-of-concept organisation, was rolled out in 2008. At the
`end of the year, its fi rst molecule to enter the development
`pipeline, CDP6038, began Phase I of clinical trials. Several drug
`discovery alliances and more than 80 university partnerships are
`active in a new approach to open innovation. Strong technology
`platforms and this new external focus of UCB NewMedicines™
`are designed to maximise the return from our investment in the
`search for scientifi c and medical breakthroughs.
`
`Beyond new drug research, we shall continue to increase our
`focus on core areas and to partner with the best in the world in
`drug development, manufacturing or commercialisation, as long as
`it is coherent with our strategy.
`
`relatively modest. We believe our concentration on medicines
`for severe diseases makes our revenues less vulnerable to
`changes in the economic environment because demand for
`effective therapies is unlikely to diminish. Our liquidity position
`remains healthy: bank facilities expire at the end of 2011 and
`available cash is invested prudently, with a large portion of cash
`investments in short-dated government bonds.
`
`Looking forward
`In 2009, UCB will launch products in the U.S., in Europe and in
`other markets. The patent expiry of Keppra® in the U.S., in January
`2009 will have an impact on sales in that country. We expect to
`continue delivering strong regulatory performance, in particular
`by progressing the approval of Cimzia® for rheumatoid arthritis in
`Europe and in the U.S. We look forward to learning more about
`the potential of brivaracetam to further strengthen our epilepsy
`franchise with Phase III results expected in the third quarter of the
`year, and to seeing Phase II results of epratuzumab in the middle
`of the year. Additional progress will also be made with our early
`pipeline. UCB expects in 2009 to deliver revenue of approximately
`€ 3.3 billion, recurring EBITDA greater than € 680 million, and net
`profi t above € 130 million excluding the expected capital gains
`resulting from already announced divestments of early 2009.
`
`Also in 2009, we shall continue to SHAPE our organisation for
`the future and to promote the development of our people. While
`the knowledge and expertise of our people are crucial, it is their
`passion that makes the difference. UCB is in business for people,
`in particular to make a real difference for people who live with a
`severe disease.
`
`We want to thank all our staff at UCB for their commitment to our
`mission. And we want to thank our many business partners for
`their confi dence in UCB and for their cooperation. Finally, we wish to
`thank the Board and our shareholders for their support and guidance
`in transforming UCB into the next generation biopharma leader.
`
`The global fi nancial crisis
`While no one can claim to be immune from the current global
`fi nancial crisis, its impact on UCB is currently expected to be
`
`
`Roch Doliveux,
`Chief Executive Offi cer
`
`
`
`
`Karel Boone,
`Chairman
`
`UCB Annual Report 2008
`
`17
`
`Page 00019
`
`

`
`Executive Committee Review
`
`Meeting our Goals
`
`2008 was a year of significant
`achievement for UCB. We also had to
`overcome some challenges but, despite
`these, we remained focused on our goal
`of becoming the next generation
`biopharma leader.
`
`Objective 1
`Maximise Keppra® sales and
`drive Neupro® and Xyzal® growth
`
`Objective 2
`Deliver new products and
`prepare new product launches
`
`Objective 3
`Strengthen core processes,
`invest wise