Annual Report 2014
`
`Exhibit 1067
`IPR2017-00807
`ARGENTUM
`
`000001
`
`

`

`The company
`
`The products
`
` 1 2014 in brief
` 2 CEO’s report
` 4 Strategy and business model
` 10
`Investment story
` 12 Employees
` 14 Market
` 21 Sales and marketing
`
`Sustainability report
`
` 44
`
` Follow up of 2014 sustainability
`objectives
` 45 Meda in context
` 46 Meda’s prioritized areas
` 47 Risks and opportunities
` 48 Patient safety
` 49 Manufacturing and distribution
` 50 Acquisitions
` 50 Employees
` 52 Sustainability governance
` 54 Environment
` 56 Community engagement
` 57
` Sustainability objectives for
`2015 and onwards
` 58 GRI index
` 60
` Auditor’s limited assurance
`report on sustainability report
`
` 24 Product portfolio
`
` 28 Respiratory
` 30 Dermatology
`
` 32 Pain and Inflammation
`
` 34 Non-prescription
`
`products: Cx
` 36 Non-prescription
`products: OTC
` 38 Product development
` 40 Manufacturing and supply
`
`
`
`Management report
`and financial reports
`
` 62 Operations
` 67 Risk factors
` 69 Corporate governance report
`
` 72 Board members
`
` 76 Executive team
` 80 Accounts Group
` 86 Notes Group
` 113 Accounts parent company
` 118 Notes parent company
` 124 Statement of the board
` 125 Audit report
` 126 Financial review
` 128 The Meda share
` 130 Definitions
` 131 Glossary and trademark rights
` 132 Shareholder information
`
`000002
`
`

`

`15,352
`
`4,700
`
`Group sales reached
`SEK 15,352 million
`
`
`EBITDA excluding
`nonrecurring eftects
`amounted to
`SEK 4,700 million
`
`5,202
`
`At the end of 2014, Meda
`had 5,202 employees …
`
`
`2,996
`
`… about 2,996 of whom
`in sales and marketing
`
`
` Meda markets
`
`150
`
`60
`
`Our pharmaceuticals
`are sold in more than
`150 countries
`
`Our sales organizations
`are present in over 60
`countries
`
`000003
`
`

`

`Meda in brief
`
`Meda is a leading international specialty pharma
`company with a broad product portfolio reaching
`more than 80% of the global pharmaceutical market.
`Measured in sales, Meda is the 48th largest pharma-
`ceutical company in the world.
`At the end of 2014 Meda had 5,202 (3,326)
`employees, 2,996 (2,009) of which worked in sales
`and marketing. Over the past few years Meda’s pres-
`ence in growth markets has grown. The marketing
`organizations in these markets employ about 1,083
`people (720).
`Meda AB is the parent company and the head
`office is in Solna, Sweden.
`
`The concept of specialty pharma
`
`There are various definitions of specialty pharma.
`In Meda’s case it means the following:
`
`The company has a specialized role in the value
`chain:
`• A focus on sales and marketing
`• No risky in-house drug research in early clinical
`phases
`
`The company has specialist expertise in defined
` therapy and product areas:
`• Respiratory, Dermatology and Pain and
` Inflammation
`• Non-prescription drugs: OTC and consumer
`healthcare products (Cx)
`
`The company offers niche products that meet
`particular medical needs:
`• Comprehensive product portfolio in selected
`therapy areas
`• Strong Cx portfolio
`• Clear synergies in sales and marketing
`
`000004
`
`

`

`Important events in 2014
`
`Italian specialty
`pharma company
` Rottapharm acquired.
`Largest ever
`acquisition by Meda
`
`Now three key
` therapy areas:
`Respiratory,
`Dermatology, and
`Pain and inflamma-
`tion.
`
`Stable underlying
`organic growth.
`
`Good growth in
`several key Emerging
`Markets. Mexico,
`Turkey and CIS all
`growing by double
`digits.
`
`The year in figures
`
`• Group sales amounted to SEK 15,352 million (13,114)
`• Organic growth of 2 (4)%
`• Free cash flow excluding non-recurring effects of SEK 3,000 million (2,688)
`• Free cash flow per share excluding non-recurring effects of SEK 9.28 (8.57)
`•
`Increased focus on the Respiratory therapy area and the OTC portfolio
`• Profit after tax excluding non-recurring effects amounted to SEK 1,181 million (805)
`• Earnings per share excluding non-recurring effects was SEK 3.64 (2.57)
`• EBITDA excluding non recurring effects amounted to SEK 4,700 million (3,734),
`equivalent to a margin of 30.6% (28.5)
`• Proposed dividend per share SEK 2.50 (2.50)
`
`NET SALES
`
`EBITDA
`
`FREE CASH FLOW
`
`MSEK
`15,000
`
`12,000
`
`9,000
`
`6,000
`
`3,000
`
`0
`
`MSEK
`5,000
`
`4,000
`
`3,000
`
`2,000
`
`1,000
`
`0
`
`MSEK
`3,000
`
`2,400
`
`1,800
`
`1,200
`
`600
`
`0
`
`2010
`
`2011
`
`2012
`
`2013
`
`2014
`
`2010
`
`2011
`
`2012
`
`2013
`
`20141)
`
`2010
`
`2011
`
`2012
`
`2013
`
`20141)
`
`1) Excluding non-recurring effects
`
`1
`
`MEDA ANNUAL REPORT 2014
`
`000005
`
`

`

`CEO’S REPORt
`
`A big step forward
`
`”Integration of Rottapharm is not just about
`extracting cost synergies, but creating something
`new and more efficient by combining the best
`from each organization.”
`
`A milestone is passed
`2014 was an exciting year for us. In October we
`completed the acquisition of Rottapharm, our
`largest acquisition to date and an important
`milestone. It is a transformational acquisition
`that propels us into a leading position in Euro-
`pean specialty pharma by increasing our scale,
`reach and profitability potential.
`Specifically, the acquisition ensures a portfo-
`lio of strong clinically-proven consumer health-
`care products, it creates an attractive portfolio
`of specialty products and it strengthens our
`presence in Emerging Markets. All in all, this
`has resulted in a better balance in our portfolio
`and has created a strong platform for future
`growth. The situation has improved in our
`growth segments in particular, where our key
`therapy areas now represent 50% of sales, con-
`sumer healthcare and OTC 40% of sales and
`Emerging Markets 17% of sales.
`
`Integration well under way
`The integration of Rottapharm is well under way
`and proceeding according to plan. Annual cost
`synergies of SEK 900 million are expected to
`be generated in full by 2016. We have a long
`history of speedy and successful integration of
`acquired companies and we are confident that
`we can meet both internal and external expec-
`tations for the Rottapharm integration. It is
`important to remember that integration is not
`just about extracting cost synergies, but creat-
`ing something new and more efficient by com-
`bining the best from each organization. This is
`how to improve and lay the foundation for long-
`term value creation.
`
`Platform for future growth
`With the acquisition of Rottapharm we have
`established a strong platform to leverage future
`investments. This was the right move at the
`right time. And our journey will continue. We are
`committed to continuing the development of
`Meda into a world-leading specialty pharma
`company. This will be done through a combina-
`tion of new acquisitions, organic growth initia-
`tives and continuous efficiency measures. Our
`strong cash flow should enable a relatively
`rapid deleveraging of our balance sheet and
`allow for more value-accretive acquisitions and
`investments as soon as 2016. Meda’s disci-
`plined and outstanding acquisition process
`ensures that we have the right focus and that
`we are able to extract the necessary value at all
`times.
`
`Focused organization and strong
` performance
`I am pleased that within our organization –
`despite being engaged in the extensive pro-
`cess of integrating Rottapharm – we were able
`to stay focused in the fourth quarter and deliver
`sales and profitability improvements exceeding
`our full-year target. Clearly, our stronger-than-
`expected, adjusted full-year EBITDA margin of
`30.6% reflects our ability to generate dual-track
`value by driving the current business forward
`while also executing a successful integration.
`With a seasoned M&A team that has remained
`intact for many years and has a deep under-
`standing of how to integrate companies, busi-
`nesses and products, we are in a good position
`to bring the Rottapharm integration, which has
`had a strong start, to successful completion.
`
`A world-leader in many respects
`Our vision is to become a world-leading spe-
`cialty pharma company. Meda has a resilient,
`strong and for a European company excep-
`tional business model, and we are proud of our
`long history of creating tangible value for our
`stakeholders. Building long-term shareholder
`value is very important to us, but it is equally
`important to be a trusted partner in the commu-
`nities in which we operate, and especially to be
`a good employer. Only by combining these per-
`spectives can we build a truly great company.
`
`Values driving our culture
`At year-end, Meda had a total of 5,202 employ-
`ees within various areas of expertise and coun-
`tries. As we grow, we are focusing on preserv-
`ing the organizational benefits of a small com-
`pany while leveraging the operational strengths
`of a larger one. Meda’s culture of fast decision-
`making, constant learning and client focus is an
`important asset in this respect.
`
`Sustained progress in responsible business
`practices
`We express continued support for the UN
`Global Compact and we have renewed our
`ongoing commitment to the initiative and its
`principles. We believe it is important to be a
`responsible player in the global pharmaceutical
`market. This is also expressed by being a reli-
`able and trustworthy partner within the value
`chain.
`In 2014 we continued the implementation of
`our follow-up system to monitor compliance
`with our Supplier Code of Conduct. We also
`continued to develop our Internal Control Stan-
`
`2
`
`MEDA ANNUAL REPORT 2014
`
`000006
`
`

`

`dards and Business Conduct Guidelines cover-
`ing communication and employee training, as
`well as our internal policies and processes
`relating to the UN Global Compact.
`
`Our future is promising
`We have accomplished great things this year
`and our future is promising. We are well-posi-
`tioned to continue to develop Meda into a
`world-leading specialty pharma company. We
`are proud of our achievements so far and I wish
`to thank all Meda employees for their valuable
`contributions. Within Meda, the employees,
`with their vast knowledge and experience, their
`high level of commitment, their deep passion
`and their remarkable professionalism, are our
`greatest asset.
`Together we will continue to make Meda a
`bigger, better and stronger company.
`
`Dr. Jörg-Thomas Dierks
`Chief Executive Officer
`
`CEO’S REPORt
`
`3
`
`MEDA ANNUAL REPORT 2014
`
`000007
`
`

`

`StRAtEgy AnD BuSInESS MODEl
`
`Clear strategic focus
`
`DEFINITIONS
`
`Rx products are prescription
`based pharmaceuticals prescribed
`by doctors and therapists for
`patients.
`
`OTC products are over-the-coun-
`ter products sold directly to con-
`sumers via pharmacies and retail
`chains.
`
`Cx are clinically-proven consumer
`healthcare products recom-
`mended by doctors and pharma-
`cists to consumers.
`
`Specialized position
`in the value chain
`
`Focus on sales
`and marketing
`
`The company’s main focus is sales and
`marketing. One of Meda’s strongest
`assets is the ability to quickly and effec-
`tively integrate acquired operations and
`commercialize new products. Key activi-
`ties are primarily sales and marketing,
`development of existing products, manu-
`facturing and supply.
`
`Meda offers cost-effective and medically
`well-motivated products. The company’s
`target is to become a world-leading spe-
`cialty pharma company. The means for
`achieving this are an active acquisition
`strategy and organic growth through mar-
`ket adapted product development.
`Based on a broad product portfolio and
`a strong cash flow, Meda’s business con-
`cept is to identify, secure access to, inte-
`grate and commercialize pharmaceutical
`products in the key therapy areas, and
`products for self-treatment and preventive
`healthcare (Cx/OTC).
`After the acquisition of Rotta pharm,
`around 60% of Meda’s product sales are
`in Rx and around 40% are in Cx/OTC.
`Meda’s three key therapy areas – Respira-
`tory, Dermatology and Pain and Inflamma-
`tion – account for around 50% of Group
`sales.
`
`MEDA’S POSITION IN THE PHARMACEUTICAL VALUE CHAIN
`
`Meda holds a special position in the value chain. The company does not conduct any high-risk, in-house, early-stage
` pharmaceutical development. New products are secured through acquisitions. Instead, Meda is focused on market-adapted
`product development in key therapy areas, and sales and marketing.
`
`Drug discovery
`
`Drug development
`
`Manufacturing & supply
`
`Sales & marketing
`
`Specialist advisory
`
`Meda’s position in the pharmaceutical value chain
`
`Market adapted product development in late clinical phase, typically phase III
`
`4
`
`MEDA ANNUAL REPORT 2014
`
`000008
`
`

`

`StRAtEgy AnD BuSInESS MODEl
`
`Market-adapted
`product
`development
`
`Growth strategy
`based on
`acquisitions
`and product
`improvements
`
`Increased scale,
`reach and
`profitability
`
`Meda does not conduct any in-house,
`early-stage pharmaceutical development.
`New products mainly come to the com-
`pany through the acquisition of compa-
`nies, product rights and through partner-
`ships with other pharmaceutical compa-
`nies. Meda does, however, improve the
`properties of existing drugs in a variety of
`ways:
`• Through more efficient and new formu-
`lations (EndWarts and Astepro)
`• Through new product combinations
`(Dymista)
`• Through the internationalization of
`drugs (Novolizer and Aerospan)
`
`Meda’s development work can best be
`described as market-adapted product
`development in late clinical phases with
`the objective of, for example, prolonging a
`drug’s life cycle or securing approval for a
`drug so that it can be re-launched in those
`new markets.
`
`Meda’s growth strategy involves a combi-
`nation of acquisitions and organic growth.
`Acquisitions have historically been the
`main driver of the company’s expansion
`and have been supported on an ongoing
`basis by the company’s investments in
`organic product and market development.
`The combined results are a significant
`product portfolio in Respiratory, Dermatol-
`ogy, Pain and Inflammation and Cx/OTC.
`Between 2000 and 2014 Meda made
`more than 30 major acquisitions of com-
`panies and product rights.
`Meda’s largest acquisition to date was
`completed in 2014 when Italian specialty
`pharma company Rottapharm was
`acquired, adding a sizeable portfolio of
`strong Cx brands and Rx products.
`Several strategic acquisitions have
`added important products to Meda’s port-
`folio, read more on page 6.
`
`Since 2012, in addition to focusing on the
`OTC portfolio and growth markets, Meda
`has focused on a number of selected ther-
`apy areas, particularly Respiratory and
`Dermatology. Products successfully
`launched in these therapeutic focus areas
`in recent years include Dymista and
` Zyclara. The acquisition of Rottapharm
`strengthens the foundation for future
`organic growth through the addition of the
`Cx portfolio, as well as the therapeutic
`focus area Pain and Inflammation.
`Cx is a highly attractive area with
` benefits such as non-reimbursement, free
`pricing, good margins and limited generic
`competition.
`The combination of new launches and
`increased investments in countries with
`higher growth strengthened Meda’s
`organic growth in 2014. Dymista, EpiPen
`and CB12 all had significant impact on
`organic growth.
`
`5
`
`MEDA ANNUAL REPORT 2014
`
`000009
`
`

`

`StRAtEgy AnD BuSInESS MODEl
`
`A disciplined
`acquisition approach
`
`Acquisition criteria
`
`Acquisitions are an important aspect of Meda’s
`strategy. Over the years Meda has acquired
`various companies and lines of businesses
`around the world. In that process, Meda has
`gained a solid understanding of the key drivers
`of success. Two important drivers are continuity
`in the acquisitions team and solid integration
`processes throughout the Meda organization.
`Meda has a disciplined approach to acquisi-
`
`tions and looks for companies and businesses
`that can, for example, strengthen the key
` therapy areas (Elidel), increase focus to prod-
`ucts with promising growth prospects (Dymista)
`or certain geographical areas (Valeant Europe).
`Acquisitions may also be transformational in
`nature (Rottapharm), both in size and/or pro duct
`portfolio.
`
`Strategically important acquisitions
`
`2008–2009
`
`Meda acquired the
`European business of
`Valeant thereby
`establishing Meda in
`Eastern Europe. Meda
`expanded its rights to
`Dymista to Europe
`and other major
`markets.
`
`2005
`
`The acquisition of
` Viatris was of great
`importance for several
`reasons. It trans-
`formed Meda into a
`pan-European
` specialty pharma
` company, strength-
`ened the product
`portfolio and
`generated significant
`synergies.
`
`2006–2007
`
`The acquisition of
`the 3M European
`business strength-
`ened Meda’s
`European product
`portfolio. The Med-
`Pointe acquisition
`established Meda in
`the US and provided
`access to an allergy
`franchise with the
`market-leading
`products Asteline and
`Astepro, as well as the
`development project
`Dymista which was in
`clinical development
`at that time.
`
`2011
`
`Meda acquired the
`global product rights
`to Elidel from Novartis.
`Elidel is one of Meda’s
`more important
`dermatology products
`in the area of atopic
`dermatitis.
` Antula, a Nordic
`company focusing on
`OTC was acquired at
`the beginning of 2011.
`CB12 was one of the
`successful brands in
`the Antula product
`portfolio alongside
`other well-known
`brands such as Zyx
`and Naloc.
`
`2014
`
`Meda acquired
` Rottapharm, its largest
`acquisition to date,
`adding a portfolio of
`strong Cx-brands as
`well as the new key
`therapy area Pain and
`Inflammation.
`
`2013
`
`Meda acquired
`Acton including the
`patented product
`Aerospan, expanding
`Meda’s product
`portfolio in the
`Respiratory key
`therapy area. The
`EB24 acquisition was
`an important addition
`to Meda’s OTC
`portfolio and a
`complement to CB12.
`
`6
`
`MEDA ANNUAL REPORT 2014
`
`000010
`
`

`

`StRAtEgy AnD BuSInESS MODEl
`
`Rottapharm – a key, transformational acquisition
`
`Background
`In 2014 Meda completed the acquisition of
` Rottapharm – a leading Italian consumer-
`focused specialty pharma company. This is
`Meda’s largest acquisition to date and had a
`total purchase price of SEK 21.2 billion on a
`cash and debt free basis.
`
`About two thirds of the product supply is manu-
`factured internally. Sales are conducted either
`through Rotta pharm’s sales organization or
`through third-party distributors or licensees in
`countries where the company is less estab-
`lished. The products are primarily sold in phar-
`macies.
`
`Overview of Rottapharm
`Rottapharm is a leading Cx-focused specialty
`pharma company engaged in development,
`manufacturing, global marketing and distribu-
`tion of branded clinically-proven Cx products
`and Rx products.
`The company has around 2,400 employees.
`and its products are sold globally in over 90
`countries with a sizeable presence in Emerging
`Markets.
`In 2013, Rottapharm generated sales of EUR
`536 million, of which 75% was from Cx-products
`and 25% from Rx-products, with an adjusted
`EBITDA of EUR 149 million, equivalent to a
` margin of around 28%.
`The company has five manufacturing facili-
`ties in Italy (Confienza), Spain (Barcelona), India
`(Goa), Germany (Troisdorf) and Ireland (Dublin).
`
`Product portfolio
`Rottapharm’s total product portfolio consists of
`431 brands diversified across various therapeu-
`tic categories. The top six product families in
`terms of revenue represent five different thera-
`peutic areas. Rottapharm’s top products typi-
`cally hold leading positions in their respective
`markets.
`
`transaction rationale
`The acquisition of Rottapharm has a strong
`transaction rationale based on six strategic
`areas:
`1. Transformational transaction
`The acquisition created a leading European
`specialty pharma company which is better
`positioned to leverage a number of attracting
`brands.
`
`2. Increased revenue profile and durability
`The addition of a strong portfolio of Cx
`brands, combining Rx and Cx products, and
`also adding the new therapeutic area Pain
`and Inflammation, to strengthen Meda’s
` revenue profile and increase revenue sus-
`tainability.
`3. Increased presence in Emerging Markets
`By adding Rottapharm’s sizeable business in
`Emerging Markets, the combined company
`will have around 17% of sales in those markets.
`4. Substantial synergies expected
`Through rationalization in sales, marketing,
`administration and research and develop-
`ment, Meda expects to realize annual cost
`synergies of around SEK 900 million.
`5. Accretive to EPS and cash EPS
`The acquisition is expected to be EPS and
`cash EPS accretive in excess of 20%, follow-
`ing full integration in 2016.
`6. Strong combined cash-flow generation
`The combination is expected to generate
`strong cash flows, enabling a rapid delever-
`aging of the balance sheet to a net debt/
`EBITDA ratio equivalent to pre-acquisition
`levels as early as 2016.
`
`Revenue split Meda and Rottapharm combined
`
`REVENUES BY PRODUCT SEGMENT 2013
`
`REVENUES BY GEOGRAPHY 2013
`
`%
`100
`
`80
`
`60
`
`40
`
`20
`
`0
`
`Cx/OTC products
`
`Rx products
`
`%
`100
`
`80
`
`60
`
`40
`
`20
`
`0
`
`Rottapharm
`
`Meda + Rottapharm
`
`Rottapharm
`
`Meda + Rottapharm
`
`Western Europe
`
`Emerging Markets
`
`US
`
`Other sales
`
`7
`
`MEDA ANNUAL REPORT 2014
`
`000011
`
`

`

`
`
`000012
`
`

`

`Company values
`
`In 2014 we implemented a project to define
`our company values involving employees
`from all parts of the world. The process was
`completed in May and resulted in seven key
`values that define our corporate culture:
`
`#1 Passion for customers
`#2 Respect and trust
`#3 Honesty and transparency
`#4 Focus on priorities
`#5 Fast and effective decision making
`#6 By working together we achieve more
`#7 Getting results through accountability
`
`These values are a reflection of who we are
`and how we work here at Meda – every day
`and in every corner of the organization.
`
`000013
`
`

`

`InVEStMEnt StORy
`
`How Meda
`creates value
`
`A leading inter national specialty pharma
`company
`Meda is a leading international specialty
`pharma company with a well-defined product
`portfolio and clear focus on geographical and
`therapy areas where the growth prospects are
`good. The company has a clear specialization in
`the value chain, an efficient organization and
`strong cash flow generation.
`
`Supporting growth drivers
`Growth drivers exist on several levels, such as
`demographics (increasing and ageing popula-
`tion), economics (higher disposable income)
`and the changing structure of the pharmaceuti-
`cal market (expiring patents). Read more about
`what drives demand on the global pharmaceuti-
`cal market on page 15.
`
`Acquisitions drive growth in two ways
`Acquisitions – both transformational and prod-
`uct related – are the primary source of growth.
`
`Meda has been built based on several transfor-
`mational acquisitions. And in light of the goal of
`remaining a leading international specialty
`pharma company, this will continue to be an
`important pathway for growth. The addition of
`new products will also remain key to Meda’s
`growth over time. Acquisitions drive growth in
`two ways. Firstly by adding acquired growth.
`Secondly by creating new organic growth
`opportunities which are realized through mar-
`ket-adapted product development and com-
`mercialization.
`With the acquisition of Rottapharm, organic
`growth remains a distinct and stable value
`driver for Meda. This is based on an expanded
`position (Pain and Inflammation) and sustained
`potential (Respiratory and Dermatology) in key
`therapy areas, clinically-proven Cx- and OTC
`products – together with the increased expo-
`sure in Emerging Markets.
`
`MEDA TODAY AND TOMORROW
`
`Meda has a solid foundation and a business model supported by several growth drivers. Meda also has the power to affect
`growth and profitability through product launches, acquisitions and operational improvements.
`
`• Targeted acquisitions
`in key therapy areas
`and transformational
`acquisitions
`
`• Emerging Markets
`• Rx
`• OTC and Cx
`
`• Respiratory
`• Dermatology
`• Pain and inflammation
`• OTC and Cx
`• Portfolio efficiencies
`
`ACQUIRED
`GROWTH
`
`ORGANIC
`GROWTH
`
`ORGANIC
`GROWTH
`
`MEDA TODAY
`
`ACQUISITIONS
`
`MARKET
`
`PRODUCTS
`
`MEDA TOMORROW
`
`• Diversified portfolio
`• Scale and efficiency
`• Customer centric
`• Strong cash flow
`• Excellent track record
`
`• Targeted acquisition strategy will add to growth over time
`• Favorable organic growth outlook supported by geography and product launches
`• Operational improvements to leverage our Emerging Market potential
`• Extend the duration (of growth) of our product portfolio
`• Strengthen our position as a leading global company in our key therapy areas
`
`• Bigger
`• Better
`• Stronger
`
`10
`
`MEDA ANNUAL REPORT 2014
`
`000014
`
`

`

`InVEStMEnt StORy
`
`There are three dimensions to Meda’s value-creation efforts, with market
`focus, drive and pace as the common denominators:
`1. Clear therapeutic focus, where Meda has a specialist role in building a
` uniform product portfolio in selected therapy areas and is developing the
`Cx and OTC portfolio.
`2. An effective, global business platform and operational efficiency, where
`Meda develops and commercializes products in attractive markets
` supported by efficient manufacturing and supply, sales and marketing
` processes.
`3. Identification and integration of selected acquisitions, where Meda
` identifies and secures synergy gains in different parts of the value chain,
`and ensures that acquired products can be profitably commercialized.
`
`SALES AND EBITDA (MSEK)
`
`20,000
`
`15,000
`
`10,000
`
`5,000
`
`0
`
`04
`
`05
`
`06
`
`07
`
`08
`
`09
`
`10
`
`11
`
`12
`
`13
`
`141)
`
`Sales
`
`EBITDA
`
`1) Excluding non-recurring effects
`
`Shareholder value is crucial for Meda. It is a function of the company’s value-
`creation activities and its financial results:
`1. Meda has a broad product portfolio and a strong cash flow. The cash flow
`allows Meda to finance necessary investments in future growth, such as the
`company’s own product and marketing investments, as well as acquisitions.
`2. The investments, combined with ongoing efficiency improvements,
`enable Meda to maintain sustainable growth in both profits and cash flow.
`3. Meda has a high cash conversion rate, which means that a large percent-
`age of the company’s profits are converted into free cash flow. This allows
`the company to invest in the business and pay dividends to shareholders
`over time.
`
`FREE CASH FLOW/NET SALES (%)
`
`Free Cash Flow/net sales (%)
`25
`
`04
`
`05
`
`06
`
`07
`
`08
`
`09
`
`10
`
`11
`
`12
`
`13
`
`141)
`
`1) Excluding non-recurring effects
`
`11
`
`20
`
`15
`
`10
`
`05
`
`THREE-DIMENSIONAL VALUE CREATION
`
`1. T
`
`H
`
`ER A P
`
`E
`
`U
`
`T
`
`S
`
`N
`
`COMPANY
`VALUE
`
`UISITI O
`
`Q
`
` 3. AC
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` 2 . G L O BAL B
`
`
`
`
`R
`O
`USINESS P L A T F
`
`
`
`
`
`I C F O CUS
`
`M
`
`CASH FLOW ESSENTIAL FOR SHAREHOLDER VALUE
`
`1. P
`
`R O
`
`F I T
`
`
`
`
`
`
`
`L
`
`E
`
`V
`
`EN T L E
`
` REINVESTM
`
` 3.
`
`
`
`A B L E G ROWTH
`
`SHAREHOLDER
`VALUE
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
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` 2. CASH FL O W
`
`
`
`
`MEDA ANNUAL REPORT 2014
`
`000015
`
`

`

`EMPlOyEES
`
`The Meda Way
`
`Culture of entrepreneurship
`Ever since the start, Meda has focused on cre-
`ating a culture of entrepreneurship and drive.
`The goal has always been to attract people with
`a strong desire to make a difference and take
`ownership.
`We strive towards a working environment that
`clearly defines not only the rules and processes
`but also the amount of flexibility employees can
`use to get things done. We empower people to
`drive the business and take business risk that is
`both necessary and appropriate.
`Meda is committed to creating a stimulating,
`challenging and rewarding work environment –
`one that supports initiatives, fosters commit-
`ment and engagement, and goes beyond com-
`pensation and benefits.
`At Meda we also promote an inclusive and
`diverse workplace where diversity in ideas,
`backgrounds, experiences and perspectives
`are welcomed, respected, and valued.
`
`Our organization
`Meda’s employees are primarily divided into
`four different areas:
`
`• Sales and marketing
`• Product development
`• Manufacturing and supply
`• Administration
`
`Sales and marketing is the largest area with
`2,996 employees in over to 60 countries.
` Following Meda’s rapid expansion in Emerging
`Markets, a majority of recruitments have been
`made in these markets in recent years.
`As a result of the large acquisition of Rotta-
`pharm, in the fourth quarter 2014, the HR orga-
`nization and the local teams have focused on
`integrating the two companies in the affected
`markets. Integrating The Meda Way creates a
`stronger, better and more powerful organiza-
`tion; cost savings are just one part of it.
`
`leadership commitments
`Meda’s future success and the wellbeing of the
`employees rely to a great extent on the capa-
`bilities and leadership of the company’s mana-
`gers. Meda expects the following from every
`leader, regardless of their area of work or level
`of responsibility:
`
`Interview with Rainer Weiß, EVP HR of Meda
`
`• Lead by example based on the company’s
`values
`• Coach and support others to overcome
` barriers and solve problems
`• Recognize and respect the competence and
`needs of every employee regardless of
` position
`• Recognize and reward good performance
`• Empower and trust people to make decisions
`and take action
`• Create focus and simplify work
`
`Further information on Meda’s employees can
`be found in the sustainability report and
`includes relevant employee data.
`
`Eastern Europe and overseas. We now have a
`global market organization.
`
`What were your key priorities in 2014?
`Business expansion in Emerging Markets was a
`key priority, as it continues to be an important
`priority for Meda. I also headed the process of
`developing and implementing guiding con-
`cepts such as vision, mission and corporate
` values. In the latter part of the year, my focus
`was on supporting the integration of the Rotta-
`pharm organization into Meda in the affected
`markets.
`
`Meda has unique expertise in integrating
`acquired companies into the organization.
`What would you say are its strengths?
`We have a very experienced team in place and
`a meticulous focus on priorities. This, coupled
`with our strong corporate culture which encour-
`ages fast decision-making and transparent and
`honest communication, has proved to be a very
`successful recipe for successful integration.
`
`What are the most important post-integration
`issues from an HR perspective?
`It is very important to integrate with speed, to
`be able to maintain the focus on our business
`and delivering on commitments. Local and
`global teamwork is also very important in order
`to support people and teams in the new busi-
`ness landscape. It is often like a giant jigsaw
`puzzle where we need to make sure we have
`the right people in the right place at the right
`time.
`
`Besides the newly formalized corporate val-
`ues, what other key initiatives are in place to
`support the business going forward?
`Now that we have key company concepts in
`place, continuing the process of harmonizing
`our global organizational structure for the new
`larger company is at the top of the HR agenda.
`Expanding the employee development con-
`cepts – such as leadership programs, high
`potential programs and succession planning –
`is also key priority.
`
`You have been with Meda since 2005, what
`have been the major developments within the
`company during your time?
`The organization has grown fast since I joined –
`both organically and fuelled by the many acqui-
`sitions implemented during this time. We have
`created efficient processes for the successful
`integration of acquired companies and prod-
`ucts into our business, which now has become
`part of our modus operandi. We have also
`focused on establishing a local presence in
`
`12
`
`MEDA ANNUAL REPORT 2014
`
`000016
`
`

`

`COMPANY VALUE #1
`
`Passion for customers
`Our customers are the focus of our business.
`We aim to build an enduring and trustworthy
`relationship with our customers.
`
`000017
`
`

`

`MARkEt
`
`Good growth in the global
`pharmaceutical market
`
`Favorable growth outlook
`
`Branded drugs are driving the increase in global growth between 2013–2018 and OTC products are expected
`to generate growth of around 13% globally by 2018.
`
`30%
`
`The global pharma-
`ceutical market is
`expected to grow around
`30% by 2018.
`
`Branded drugs drive growth
`Branded drugs1) are expected to
`continue to grow, driven by spe-
`cialty pharma, increased accessi-
`bility for patients and following
`lower impacts from expiring
` patents in developed markets.
` Specialty medicines driven,
`among other things, by new treat-
`ment options currently account for
`around 40% of total global growth.
`In developed markets branded
`drugs still account for around two
`thirds of spending.
`The compounded annual
`growth rate is estimated to be at
`4–7% until 2018, for the global
`pharmaceutical market which is
`higher than the 5.2% over the past
`five years. The US remains the
`
`largest market, representing more
`than one third of the total market,
`and is expected to grow more than
`over the past five years as a